Resource Insights

The contrarian long view: AI, bonds, and oil

noreply@blogger.com (Kurt Cobb) — Sun, 25 Oct 2026 13:01:35 +0000

It seems that everywhere you look in the financial media these days there is persistent hype about artificial intelligence (AI) and the companies developing it. Right alongside this great investment boom is doom and gloom about the future value of bonds. Oil, too, is frequently covered for two reasons, the inability of oil futures prices—which seem suspiciously low—to reflect the long-term effects of what is happening in the Persian Gulf and the high prices of refined products such as gasoline and diesel where the real squeeze seems to be right now.

It's hard to resist the constant din of such news in order to arrive at an independent assessment. But that is precisely what we should strive to do in the face of what seems like the overwhelming consensus. However, I am not writing to give you financial advice which often requires precise timing to be of much value. In the financial markets—as I have learned again and again—being early is almost always the equivalent of being wrong. What I hope to do is to help you understand the financial news better. First, let me declare that I have no financial interest in anything mentioned in this piece lest you think I am "talking my book."

To be a contrarian with a long view requires a lot of mental armor as near-term events almost always contradict your prognostications. Trends in financial markets tend to go on longer than any skeptic can conceive. As famed economist John Maynard Keynes is quoted as saying, "Markets can remain irrational longer than you can remain solvent." Taking the long view, not surprisingly, requires not only patience but also fortitude.

It turns out that one of the best indicators for contrarians like me are covers of The Economist magazine which historically have signaled an important inflection point in the market highlighted. This is not because the magazine's editors believe an inflection point is near. On the contrary, they believe the trend is intact and will persist for much longer, if not indefinitely. But history suggests that when the conventional wisdom has penetrated the editorial offices of The Economist and specifically those in charge of covers, that wisdom is about to be proved obsolete.

My favorite example is the March 6, 1999 cover of The Economist which shows two oil workers covered in crude oil which is gushing upwards from a valve they are desperately trying to close. The headline is "Drowning in oil." At the time the spot price for the world benchmark Brent Crude, that is, the price for immediate delivery, was hovering around $10 per barrel. This is after Brent Crude registered the unfathomably (by today's standards) low price of $9.44 per barrel during the second week of the previous December. The markets really were drowning in oil.

What's more is that The Economist suggested in the same edition that prices might settle around $5 per barrel given the incentive of producers to produce more to generate sufficient income to meet their obligations and given the presumed surfeit of oil available to be exploited.

As it turns out, that edition very closely marked the nadir of oil prices which by the second week of March 2000 had reached $30 per barrel and were on their way to over $140 per barrel by mid-2008, the all-time top. (Prices never did decline to the aforementioned $5 per barrel.)

And so, much more recently The Economist opined about the direction of bond prices. (For anyone who doesn't keep track of such things, bonds are simply financial instruments that allow you to lend money to a government or corporation at a specified interest rate with a promise to repay what you originally lent by a specific date. For example, a 10-year bond will be repaid in 10 years.) The magazine believes a government bond crisis is in the offing, something it announced on its cover on October 8. Interest rates have catapulted worldwide from historic lows meaning governments now have to pay much more to borrow. To understand what this means to bondholders, that is, those lending to governments, you need to do a little math. If you buy a bond for $1,000 which pays 2.5 percent interest for 5 years, you almost certainly will not be able to sell that bond to someone else for what you paid if interest rates go up.

Let's assume that interest rates have risen to 5 percent. An investor can now buy a $1,000 bond directly from the government and get 5 percent in interest per year ($50), twice what your bond pays ($25). Since your bond pays interest that is only half of what any investor can now get by buying from the government directly, if you want to sell, you'll have to discount the price of your bond considerably. You'd have to sell your bond for half of what you bought it for to match the interest payments on the new 5-percent bonds. (I'm simplifying the situation a bit to make the example easy to understand.) Those bonds pay $50 in interest per year and yours only pay $25, so an investor would need two of your bonds to equal the $50 in interest which means that investor will only offer you $500 for your bond. The $25 per year interest now equals 5 percent for the new owner.

In its cover piece The Economist is offering a double warning, one for governments and their citizens and one for investors. High interests rates tend to slow down the economy while making it more expensive for governments to pay interest on their debt. Investors become gun-shy about investing in government bonds if they believe interest rates will shoot up undermining the value of the bonds—which in turn forces governments to offer higher interest payments to attract bond buyers. This can become a vicious circle that threatens a loss of confidence in the government and its currency.

I'm inclined to think that because this looming crisis has hit the front cover of The Economist that it will shortly dissipate and interest rates will head down pushing bond prices up. (Reversing my example above, a 5 percent bond fetches a much higher price when new bonds only yield 2.5 percent.) The likely cause of this reversal will be an economic recession that shrinks economic activity thereby lowering the demand for credit and thus reducing its price, that is, the interest rate charged. I'm not prophesying the kind of bull market in bonds that lasted 40 years from 1980 to 2020 and took the 30-year U.S. treasury bond from nearly 15 percent down to 1 percent during the COVID pandemic. But I do think a medium-term reversal might be in the offing.

What might cause that recession? Now we circle back to AI. The AI industry is in what is almost certainly a financial bubble. The bubble will inevitably burst one day bringing down stock prices and investment in the economy. Another thing pushing down on the economy: high oil prices and the prices of oil products such as gasoline and diesel. I happen to think the resulting recession will be worse than 2008. Back then high oil prices also played an important part in creating the financial crash.

The financial headlines today do, in fact, presage tomorrow, just not in the way most people think. They often signal an important top or bottom in the prevailing trend, which is just the opposite of what those headlines are saying or implying. I'm reminded of Stein's Law, the amusingly obvious observation made by economist Herbert Stein: "If something cannot go on forever, it will stop." It's easy to forget that in the frenzy that is now gripping world markets which are in thrall to the AI industry's hype machine.

P. S. For a short tour of magazine covers that got it wrong while inadvertantly giving fodder to the contrarian readers, see this summary.

Kurt Cobb is a freelance writer and communications consultant who writes frequently about energy and environment. His work has appeared in The Christian Science Monitor, Resilience, Common Dreams, Naked Capitalism, Le Monde Diplomatique, Oilprice.com, OilVoice, TalkMarkets, Investing.com, Business Insider and many other places. He is the author of an oil-themed novel entitled Prelude and has a widely followed blog called Resource Insights. He can be contacted at kurtcobb2001@yahoo.com.

Sulfur and the emerging food crisis

noreply@blogger.com (Kurt Cobb) — Sun, 18 Oct 2026 13:54:15 +0000

Sulfur has become an indispensable element for the modern industrial system including for agriculture. Before the outbreak of the Iran war, 24 percent of the world's supply of sulfur passed through the Strait of Hormuz. I can find no reliable information on whether sulfur is being shipped through the strait now after the Iranian government claimed control. I suspect the amount is close to zero.

The sulfur price at the start of the Iran conflict was approximately $500 per metric ton for sulfur originating from the the Middle East. It now sits above $800. Some customers paid more than $1,000 in June for Canadian-origin sulfur, a record. These high prices are threatening worldwide phosphate fertilizer supplies which depend on sulfuric acid for their production. To understand why this is happening, it's important to have some background.

In the densely interconnected web of global production, sulfur sits in the middle as the basis for sulfuric acid, a chemical that finds wide application in industry including for improving octane in gasoline; as raw material for detergents, resins, dyes, and explosives; for the "pickling" of metals, that is, the removal of oxidation from the surface; as an electrolyte in lead-acid batteries; as a laboratory reagent, that is, a chemical used for analysis and synthesis of chemicals; and for the production of phosphate fertilizer, an essential plant nutrient critical to obtaining high yields in today's industrial agricultural system. In fact, 50 percent of all sulfuric acid is used to make fertilizers, 42.5 percent to make phosphate fertilizer and 7.5 percent to make ammonium sulfate (a source of nitrogen) and sulfur fertilizer products. (Sulfur is an important soil nutrient by itself.)

I mention all these competing uses because they are implicated in the emerging world food crisis that is in large part the result of a dramatic reduction in the availability sulfur, nitrogen fertilizer and natural gas (from which most nitrogen fertilizer is derived) from Persian Gulf countries—which are, of course, currently embroiled in the Iran war. When Iran seized control of the Strait of Hormuz—the only waterway exiting the Persian Gulf to the ocean—not only were shipments of oil seriously curtailed, but also other key materials including helium, aluminum and those just mention

To understand the nexus between the Iran war and sulfur, it is important to know that sulfur used to be mined directly from underground and surface deposits, first from surface deposits in Sicily and later from underground salt domes in Texas and Louisiana and near volcanoes in Indonesia, Chile and Japan. Some sulfur is still obtained as a byproduct of mining metal sulfide ores which, of course, must have the sulfur removed to obtain the elemental metal.

By the early 1990s government policies were in place to curtail acid rain caused by the burning of fossil fuels including oil and natural gas which contain naturally occurring sulfur. The sulfur released from this combustion forms sulfuric acid which becomes dissolved in rainwater. Thus, it became a priority for the oil and natural gas industry to remove sulfur from its oil and natural gas streams. The sulfur was essentially a waste product of refining at this point.

But the industry soon realized that sulfur could be sold to other industries at a profit. Eventually, so much sulfur was being produced by the oil and gas industry worldwide that it undercut the price of sulfur from surface and underground deposits. Now 90 percent of all sulfur comes from oil and gas refineries. It would be hard to replace this with production from previously exploited deposits in the short- or even medium-term because most of them were closed down more than two decades ago.

With so much competition for a reduced supply of sulfur, producers of phosphate fertilizers are struggling to afford the sulfuric acid they need. This is because they are unable to pass the increased costs on to farmers who are already reeling from soaring prices for diesel and nitrogen fertilizers. One competitor for sulfur, however, is having no trouble getting what it needs: the mining industry. That's because the price of the two metals for which miners which use sulfuric acid to free those metals from ore, copper and uranium, are both soaring. In fact, copper has been hitting record highs.

Of course, the fertilizer and fuel price hikes are coming just as we head into what is expected to be possibly the worst El Niño ever recorded. That can mean too much moisture or not enough depending on where you are, but the unpredictability is increasingly a problem. The combination of high prices for inputs and unfriendly weather suggests that worldwide food output in the coming year will be lower. This is not certain, but the uncertainty is unnerving for those living close to the edge and for policymakers trying to figure out what to do.

Altman to humanity: Accept some bad things to get benefits of AI

noreply@blogger.com (Kurt Cobb) — Sun, 11 Oct 2026 12:53:03 +0000

The leader of the most visible company hawking the future of artificial intelligence (AI), Sam Altman, CEO of OpenAI, told Politico a little over a week ago that "the world should accept some bad things happening for the benefits of this technology." Let me provide additional context. Previously Altman has said the following:

1. "It is terrifying because of the power that superintelligent AGI wields to destroy human civilization, intentionally or unintentionally." -- Lex Fridman Podcast #367 (March 25, 2023)

2. "Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war." -- Center for AI Safety statement (No date)

3. "I was very intent on not destroying the world before having kids." -- Vanity Fair interview (October 5, 2026)

I do not know for a fact that AI can destroy civilization, and I'm not sure exactly what Sam Altman means when he says that. But I do know one very important thing that bears repeating again and again: Any product or system that has a nonzero chance of destroying all of human civilization should be abandoned. There is no amount of benefit that can justify risking the destruction of the entire human project no matter how small the risk.

This principle, of course, has been regularly violated by human society in the modern industrial era. We have built enough nuclear weapons to destroy us in the resulting nuclear winter. We are engaging in an uncontrolled experiment in the environment with genetically engineered crops. Their failure could have catastrophic effects on food supply. Their unmodeled effects on the environment could lead to unforeseen cascades that could have severe consequences. And, of course, climate change is the manifestation of our uncontrolled experiment with the burning of fossil fuels and with our vast changes in land use which have unleashed vast amounts of heating-trapping carbon into the atmosphere.

So, who thinks there is a nonzero chance that AI could destroy human civilization? Well, lots of people as is evidenced by the signatories to the Center for AI Safety statement linked above, many of whom work in the AI industry. And, Sam Altman uses the word "nonzero" in his recent interview with Vanity Fair (linked above) regarding the risk of civilizational collapse.

The apologists for technologies that threaten all of civilization typically point to the fact that humans are still around despite those technologies. That's like saying that you've been smoking for 40 years and you never once got cancer. These apologists also like to say that the probability of such a wipe-out is very small.

Here it is essential to understand what happens when you do something that has even a very small chance of producing catastrophe, and you iterate it again and again well into the future. You make it almost certain that the catastrophe will occur because that small chance becomes a big chance if you repeat the steps that could lead to catastrophe repeatedly with no intention of stopping. The world's nuclear powers are not dismantling all their nuclear weapons. The agricultural seed giants are not putting any limit on the number of genetically engineered crops they will design. And, of course, we are doing very little to avert the catastrophic outcomes of climate change (which could include dramatic declines in crop yields due to drought, heat, and flooding depending on where the crops are grown).

I believe that the current version of AI based on what are called Large Language Models has far fewer benefits than the industry is touting which keeps leaning on what AI supposedly will do, not what it can do now. For a thorough takedown of AI's supposed benefits, I recommend keeping up with journalist Ed Zitron.

But even if AI were to end up having all the benefits the industry is touting, it simply cannot be justified if continuing to use it will risk the entirety of civilization. Implied in Sam Altman's so-called risk/benefit analysis is that AI would continue to be used far into the future—until, of course, we destroy ourselves. One analogy I've used to understand this risk is Russian roulette:

Now imagine we are playing Russian roulette using a gun with 100 chambers in which only one bullet has been loaded. If we pull the trigger one or twice, there is indeed a very small chance that we will kill ourselves. But, if we place the gun to our heads and pull the trigger 100 times, we will almost certainly perish.

The risk could be one a million or one in a billion or even one in a trillion and the analogy would still hold. And, if you think about the number of operations AI systems around the world can perform, we could bring on disaster rather quickly. Remember: If you keep repeating something that has a nonzero chance of producing catastrophe, you will eventually produce catastrophe. If Sam Altman is right, that is where we must head if we want the so-called benefits of this technology.

U.S. Supreme Court to decide whether climate suits can go forward

noreply@blogger.com (Kurt Cobb) — Sun, 04 Oct 2026 12:01:02 +0000

Tomorrow, the U.S. Supreme Court will hear arguments about whether a lawsuit filed in state court in Colorado seeking damages from two major oil companies for the climate-change related damage inflicted on Boulder County can go forward.

Here's the short version: The Canadian-based Suncor Energy Inc. and Texas-based ExxonMobil say that policies regarding climate change and any alleged damages resulting from it are matters for the federal government and courts only and that therefore the state suit should not be allowed to go forward. Boulder County says that it merely seeks compensation for damage done to Boulder and its residents by decades of emissions from these two companies. It is not seeking to change the policies of the federal government.

The energy companies contend that a victory for Boulder County would allow many similar suits to proceed and could bankrupt the oil industry by essentially creating a judicially ordered "carbon tax" in the form of damages.

I do not have an opinion about whether the Supreme Court will allow Boulder's suit to go forward. But I do know that saying that you will go bankrupt if you lose a lawsuit is not much of defense. Just ask the asbestos industry that suffered a rash of bankruptcies after losing cases for destroying the health of people who worked with and were exposed to their products.

Now, here's the key thing to know about bankruptcies. Large companies with valuable assets very often reorganize under court supervision and continue to operate while paying their debts. Even if the oil industry were hit with hundreds of billions in damages, it would most likely reorganize so that much of its future profits go to those entities that sued successfully. That would mean that shareholders would probably have little remaining value or get wiped out. Bondholders might take a serious drubbing. And, of course, executives owning their company's stock would fare no better. No wonder the industry is apoplectic at the prospect of these suits going forward!

In the extreme, the large jury awards could be satisfied by handing over chunks of ownership of the losing companies to the municipalities, states and others who have sued. Perhaps the most prominent recent example of this is a lawsuit against podcaster Alex Jones whose InfoWars empire was ordered sold to satisfy a $1.3 billion jury verdict against him, an order that, as far as I can tell, remains under litigation.

But I am, of course, getting ahead of myself. Months from now the Supreme Court will decide whether these cases can go forward. If they do go forward, prepare for a huge cry from the industry that if the plaintiffs prevail, it will be the end of the world as we know it—when all that would really change is who owns the profits and possibly the assets of the industry. In other words, a key industry that profited from damaging the climate would finally have to pay for that damage.

Taking a break - no post this week

noreply@blogger.com (Kurt Cobb) — Sun, 27 Sep 2026 12:08:57 +0000

I am taking a break this week and plan to post again on Sunday, October 4.

All energy is local: The emerging physical delivery problem for petroleum fuels

noreply@blogger.com (Kurt Cobb) — Sun, 20 Sep 2026 10:14:43 +0000

Even as U.S. diesel and gasoline prices soared in the wake of the U.S.-Israeli war with Iran, both fuels remained widely available, just more expensive. Now, a few station owners are saying they are out of diesel though this appears to be an isolated problem for the moment. However, if the diesel and gasoline supply situation does not change, more and more stations may find themselves without one or both of these two crucial motor fuels.

Proximity to supply is starting to matter more and more. For example, in Texas (where many refineries and oil fields are located), the statewide average for diesel as of September 20 was $5.9779 per gallon. Regular gasoline was $3.9480 per gallon. In California (where refineries and oil fields are not as plentiful and air pollution rules complicate refining requirements) the statewide average for diesel was $8.4244 per gallon, while regular gasoline was $6.1533 per gallon.

And, it's not just ground transportation that is being affected, of course. Several airlines have announced they are cutting back on flights as a response to higher aviation fuel prices.

With the disruption to the oil markets, we are about to see that not only do local costs differ when it comes to energy, but local availability. In this piece, the author makes the case that "the market has crossed from a pricing problem, which money solves, to a deliverability problem, which money alone does not." Delivery of gasoline, diesel and aviation fuel in particular is going to be governed by two factors:

1. Proximity to supply. Can the products be physically delivered when and where needed? It does no good to promise delivery of jet fuel to an airport hours or days after scheduled flights that needed it have been canceled.

2. The ability to make the necessary payments. Prices are rising and many companies may have had sufficient cash resources to pay for fuel previously, but now find themselves struggling to do so with the same cash resources.

Here are some points of vulnerability:

[I]mport-dependent Northwest Europe and inland markets facing winter demand on top of freight fuel; the US Gulf Coast, whose refining and export weight makes any local outage a global event; import-dependent emerging markets where foreign exchange and cargo finance can fail before physical stocks do; and airports with concentrated, hard-to-substitute supply. The common thread is that substitution is hardest exactly where the stakes are highest.

He concludes: "Either supply recovers or consumption falls, and consumption falling is not the crisis being escaped. It is the crisis arriving."

We are entering the next phase of the energy crisis initiated by the U.S.-Israeli war with Iran. Petroleum product inventories have fallen close to the minimum operating requirements. That means daily consumption will have to come into balance with daily production. Somebody (probably a lot of somebodies) is going to be using less petroleum or going without it altogether for some uses.

Pipeline "solution" to Strait of Hormuz closure gone in a flash

noreply@blogger.com (Kurt Cobb) — Sun, 13 Sep 2026 10:51:35 +0000

The East-West Pipeline in Saudi Arabia which delivers oil to the shores of the Red Sea has been an important workaround to the choking of tanker traffic by Iran in the Strait of Hormuz, the only exit for tankers from the Persian Gulf to the open sea. The Saudi government claims that 7 million barrels per day (mbpd) of crude oil can flow westward through the pipeline to the port of Yanbu though the current exports are thought to be lower (perhaps 5 mbpd) than that given infrastructure restraints.

But, now that pipeline has been bombed and put out of service. The Saudis are saying that the pipeline has been closed "as a precautionary measure." But that statement seems to underplay what has happened. Satellite images show that the attacks damaged at least two pumping stations. Repairing or replacing these stations may be more involved than simply replacing a section of damaged pipeline since the pipeline sits mostly above ground. And, of course, once repaired the pipeline could simply be attacked again. The 1200-mile length of the pipeline is not easily defended.

The oil-starved importers of the world have been gushing about how much oil has been getting out of the Persian Gulf right under the noses of a threatening Iranian Revolutionary Guard Corp (IRGC) who are standing watch with missiles and drones on the shores of the Strait of Hormuz. But even these surreptitious transits have carried volumes far below those transported before the war began, only 7 mbpd versus 20 mbpd. The East-West Pipeline became a crucial source of oil to the world after the Iranians closed the Strait of Hormuz.

Now a single missile and drone attack has put to rest the idea that pipelines are, in fact, a genuine solution to the current and any future closure of the Strait of Hormuz. Given how obvious it is that pipelines are easy to attack with drones and missiles, it has been puzzling to read all the talk about building new pipelines in and around the Persian Gulf region to lessen dependence on the Strait of Hormuz. Only a simpleton would believe that these pipelines would somehow escape attack during a conflict in the region.

The pipeline "solution" demonstrates perfectly 1) how one-dimensional much of media coverage of the U.S.-Israeli war with Iran has been and 2) how one-dimensional the strategic thinking on the part of the United States has been.

All any observer needs to do is look up in the sky and discover that there are second and third dimensions making it possible for aerial weapons to come from far away to destroy any pipeline. It is difficult not to ridicule those who failed to make this simple observation before committing their typing fingers or their mouths to such a nonsense solution to the Strait of Hormuz closure as pipelines.

Strategic metals literally going up in smoke

noreply@blogger.com (Kurt Cobb) — Sun, 06 Sep 2026 10:39:46 +0000

I've been writing for more than a decade and a half about a broad category of metals often nowadays dubbed "strategic" because they are crucial to high-tech applications such as solar photovoltaic panels, wind turbines, electric vehicles, flat screens, semiconductors, batteries, optics, aerospace and a wide array of military applications including night vision, radar systems, communications satellites, radiation shielding, vehicle armor, submarine hulls, precision weaponry, and on and on.

It is the military applications which interest me here because much of the volume of strategic minerals in most civilian devices can be recycled when devices containing them are junked. But, of course, in warfare the whole point in many cases is to just blow stuff up. And, once you do that to something containing any of the strategic minerals important for military applications, there is no chance to recover the metals and use them again.

That's why this headline caught my eye: "Ukraine's Drone Warfare Devouring 4% Of Global Germanium Demand As China Chokes Supplies." I can't verify whether this claim is true, but some nonzero amount of germanium is being consumed by drone warfare, not just in the Ukraine-Russia war, but also in the Iran war with the United States and Israel. It's important to note that germanium has many civilian applications such as semiconductors, solar energy, autonomous vehicles, scientific instruments, battery technology and a variety of health care applications.

Now with the rush of the world's militaries to embrace drone and missile warfare and other high-tech weapons, we can expect much larger amounts of germanium to be tied up and ultimately to be scattered to the winds if that germanium is in weapons to be exploded. And, the same is true for all the other metals associated with modern, high-tech warfare.

This has me thinking about Romanian economist Nicholas Georgescu-Roegen who was the first major economic theorist to point out that the law of entropy (commonly referred to as the Second Law of Thermodynamics) insures that all nonrenewable resources such as metals will be degraded to the point that they become unrecoverable. Of course, when explosive military applications are involved, this degradation is instantaneous and total for each weapon detonated. However, even the most careful recycling of civilian and nonexploding military devices will never recover 100 percent of the original nonrenewable material. Eventually, all metal ores worth mining will be exhausted and all existing objects with metals in them will degrade and the loss of the use of metals will move from being theoretical to actual. Our modern technical society, however, will almost certainly collapse before that point due to many reasons that will, of course, include the increasing difficulty over time of maintaining our access to metals.

One might think that given this reality—one firmly anchored in physics—that our modern society would be carefully husbanding the remaining minable and recyclable metals and working out ways to recycle them with ever more completeness. While interest in recycling metal fluctuates with price, the mining industry is being called upon to dramatically increase its output.

I called into question whether such a dramatic increase in output is sustainable in a July 2022 piece entitled, "Acceleration forever? The increasing momentum of mineral extraction." To understand our current trajectory, it's helpful to know the following: Half of all the copper ever extracted as of 2018 from the Earth has been mined between the year 2000 and 2018.

Copper is central to the emerging electronically oriented technology future. Could we double the production of copper in the next 19 years all over again? And, could we do it once again in the following 19 years? As I have argued repeatedly, it is the rate of extraction that matters more than the stock of any resource. Increasing the rate of extraction will require more and more energy and other resources as lower and lower grade resources are tapped. Therefore, increases will require more and more effort, possibly slowing the rate of increase and maybe even stopping the increase altogether or even putting it in reverse.

From 1970 through 2022, the rate of extraction of lithium increased 2,539 percent. Could we continue with that rate of increase in the rate of extraction in the next 52 years, that is, increase the extraction rate by a factor of 25 again?

This is what I think about when I read about the importance of so-called strategic metals: the current scramble to secure supplies, the emphasis on their use in warfare, the seeming indifference to the fact that they are nonrenewable, and the failure to address seriously the need for recycling. All this tells me that the quest of the United States and other countries to secure access to supplies which are not in the hands of adversaries will almost certainly fall dramatically short of stated goals. And, strategic metals wasted on warfare will mean less available to create the high-tech world our tech overlords are promising to build which, as it turns out, requires huge physical resources. While there are many reasons to believe that this high-tech world will not emerge as promised (and that may actually be a relief!), there can be no dispute that a lack of physical resources would prevent it from being built out at scale.

Conflict combines with climate change to push food supply down and prices up

noreply@blogger.com (Kurt Cobb) — Sun, 30 Aug 2026 11:06:24 +0000

Two weeks ago I wrote about how conflict and climate change are combining to impede navigation across the globe. That same combination is also pushing food supply down and prices up worldwide. Climate change is no longer coming; it's here and we're mixing it with our human folly in war in ways that make matters worse.

A single headline can only tell a fragment of the story. For example, "Britain faces food shortages within months, warn farmers," one article blares. Why? The writer explains: "The worst harvest since 1984 and a spike in livestock deaths have left many farmers without the cash needed to sow their fields for the coming year." Contemplate that for a moment. Many farmers in Great Britain may not even be able to afford to plant crops next season. As of now, a decision to plant would almost certainly cause farmers to lose money.

But we need to dig deeper for the cause. One farm leader explained: "Rain has come too late for lost harvests and slashed yields, while livestock farmers are dealing with the worst bluetongue outbreak [a disease in sheep] to reach our shores." So we now know that climate change is likely involved as warming temperatures tend to increase both droughts and floods depending on where you are. And, there is an increase in animal disease which can be traced to the warmer temperatures: "Bluetongue, a disease that causes fertility problems and deaths in sheep, has been particularly bad this year because high temperatures have led to a larger-than-normal number of midges, which spread the virus."

And, then, of course, there are the skyrocketing prices of fertilizer and diesel, both essential to modern mechanized farming. And, those costs are up because supplies of fertilizer and the oil from which diesel is made have been dramatically curtailed from the Persian Gulf area, a major source, because of the closure of the Strait of Hormuz by Iran in response to the attack on the country by the United States and Israel.

Diesel has also become scarce because in the conflict between Ukraine and Russia, Ukraine has been damaging Russian oil refineries forcing Russia to temporarily stop all diesel exports. (For context, Russia is the second largest producer of oil in the world after the United States, and Russia routinely exports large amounts of oil and refined products such as diesel.)

In the southwestern United States long-term drought is drying up both the Colorado River upon which 40 million people including many farmers and ranchers depend for water and the Rio Grande which is crucial contributor of water for agriculture and public water systems for much of its 1,900 mile length from southwestern Colorado through New Mexico and then along the border of Texas and Mexico. But the Rio Grande at times runs almost dry in various locations below the New Mexico-Texas border because so much water is being withdrawn in the face of an ongoing drought (which, of course, increases demand for water).

According to the U.S. Department of Agriculture, as of August 26 drought is affecting large areas of U.S. cropland for key crops including barley (80 percent), durum wheat (62 percent), rice (61 percent), spring wheat (80 percent), sugarbeets (75 percent), sunflowers (80 percent), and winter wheat (56 percent). A non-food crop, cotton, is suffering, too, with 52 percent of the area cultivated under drought conditions.

The devastating heatwaves and drought in Europe are dramatically reducing yields of commodity crops such as corn, rice and soybeans as well as vegetables crops. In France, for example, vegetable production is down dramatically for lettuce (35 percent), peas (40 percent) and broccoli (60 percent). Corn harvests are expected to be down by 35 percent in France which is one of Europe's largest producers.

In Brazil a fall in sugar production is linked to a shift to increasing ethanol production from sugar. Here the line to the U.S.-Israeli war with Iran is direct. Iran's closing of the Strait of Hormuz has lifted prices for oil and especially for refined products such as gasoline. Most Brazilian gasoline-fueled automobiles and trucks are designed to run on high mixes of ethanol in gasoline. In the wake of rising oil prices the Brazilian government lifted the minimum requirement for the ethanol portion of the gasoline/ethanol mix from 30 to 32 percent. (For comparison, U.S. gasoline generally contains about 10 percent ethanol.) As long as the price of ethanol remains below that of gasoline, it makes sense for Brazilian drivers to fill up with gasoline/ethanol mixes higher in ethanol and that means that sugar mills are finding it increasingly profitable to favor production of ethanol over sugar.

Elsewhere, production of sugar and other key crops such as cotton, soybeans, corn and beans has been curtailed by the smallest monsoon rains in India in 15 years. India earlier this year suspended exports of sugar to keep domestic prices in check. The emerging El Niño—which is expected to be the strongest in history and to peak in early 2027—could further affect the Indian monsoon negatively next year. And the effects of El Niño could ripple across agriculture across the globe, having both positive and negative effects depending on where you live.

In Africa, Sudan is a prime example of the intersection of conflict and climate change. The ongoing civil war which began in 2023 has displaced millions and killed tens of thousands. Now, comes the U.S.-Israeli war with Iran which has resulted in high fuel and fertilizer costs. On top of that a drought and an emerging El Niño which could make that drought worse are robbing fields usually flooded by the Nile River of the water they need.

Meanwhile, back at the front of the Ukraine-Russia war, grains terminals and grain ships are being targeted, primarily threatening wheat exports to the world. That has sent wheat futures to their highest in three years. Both Russia and Ukraine are large wheat exporters and have been attacking each other's grain terminals and ships.

Conflict has always had consequences for commodities depending on whether major producers or consumers of particular commodities are involved in the war. But from here on out climate change will be one of the parties to every conflict, and it will be affecting farm fields around the globe whether the countries in which those fields are located are part of the conflict or not.

All this means that it is going to be increasingly difficult to import one's way out of food shortages as the whole of world agriculture becomes affected. Few in positions of civilian or military leadership have yet to comprehend this.

AI destroys transgenerational memory by tearing apart rare books to scan them

noreply@blogger.com (Kurt Cobb) — Sun, 23 Aug 2026 12:39:07 +0000

When I read that artificial intelligence (AI) companies are destroying rare books as they feed their contents into what are called their large language models (LLMs) which power their AI applications, I was reminded of a conversation I had many years ago that seems to illustrate what is at stake. (For the record, the companies cut off the spine to give them better access to all the pages and then after scanning the pages, dispose of those as well.)

Regarding that conversation, the town where I used to live decided to give its public library a thorough rework. After it was completed, I was lamenting the aesthetic result during a conversation with someone who was a local hero for having meticulously restored historic homes and other buildings in and near the downtown area, restorations that helped propel a revival in the downtown and adjacent neighborhoods.

I observed that the exterior facing of the renovated library changed color and materials at strange intervals. The result gave the impression that the contractor more than once had run out of one type of facing and then gone to the hardware store and picked up whatever was on sale to continue the job, but still didn't have enough to finish the job and so repeated the process. My take was that the cartoonish modernism of the building exterior would quickly move beyond its sell-by date.

To my surprise, my aesthetically minded friend said he liked the result and praised the new library design. This struck me as a very odd response from someone who had dedicated his life to historic preservation. I asked him what he thought the purpose of a library is. He said without hesitation, "An information center." I responded saying that to me, a library is a "repository of memory" and that the architecture ought to reflect that.

Regarding our current topic, the destruction of rare books, the AI companies are definitely thinking of themselves as information centers and not repositories of memory. Now, part of what makes libraries "repositories of memory," of course, are the books in them. Collective transgenerational memory is critical for the cohesiveness and functioning of any society. Collective transgenerational memory includes such things as the law, religious practices and especially any religious calendar which re-enacts the key principles of any religion, literature, art, music, history, the sciences and many other manifestations of culture which preserve things learned through the generations. What we are as humans and what we can become relies heavily on what we can remember about who we've been.

For the AI companies the purpose is decidedly NOT preserving these books digitally. In fact, the companies are not at all interested in sharing the digital copies of the rare books they scan with either the public or, of course, their competitors.

Digital copies of rare books for public consumption are currently being produced by such organizations as the Internet Archive in conjunction with major libraries and are done one page at time without destroying the books. For AI companies, however, the idea is to get more "information" as cheaply as possible to put into the word blender they call AI, the output of which neither preserves the text of the originals nor presents the context provided by them. So yes, AI can act as an "information center" as my friend suggested libraries should. But it cannot preserve memory.

Memory is more delicate. It is highly contextual and cannot be randomly merged with other "information" taken from other sources and other centuries. AI, after all, does NOT think. It acts probabilistically to determine what the next word should be regarding any particular topic. It does not therefore think about the past or the context. And, in fairness, AI purveyors don't claim that it does because for them the product is the amorphous substance called "information."

But information can be mistaken, intentionally false or misleading, incomplete and downright wrong. All this can be true of books and other forms of communication, but AI is facing special problems as various state and non-state actors try to influence its output using "biased and manipulated data," and bots to "flood platforms with engineered content" and "[amplify] false narratives and [silence] opposing ones." For example, the so-called "Pravda network" is flooding the internet with Russian propaganda, hoping to influence LLMs with the sheer volume of articles and reports.

By definition the text of an existing book cannot be influenced in this manner. A book, of course, needs to be understood in its historical and social context and should be interrogated like any other piece of information. But it does not typically present a moving target the way an AI application does.

The loss of books, of memory, is a well-documented historical tragedy. Perhaps the most famous was the burning of the Library of Alexandria, thought to be the most comprehensive library in the Ancient Roman world containing the works of philosophers and scientists across the known world past and present. The library is thought to have consisted of several buildings which were destroyed chiefly by fire at disparate times from 48 BCE to 391 CE.

As we digitize more and more publications and discard the physical substrate from which they come, we should ask ourselves what is more likely to exist for our descendants centuries from now, electronically stored written materials such as ebooks or actual books themselves?

The destruction of rare books to feed AI models is on an altogether different level than the unintentional burning of much of the Library of Alexandria in 48 BCE by the forces of Julius Caesar. Today, AI companies are intentionally seeking out rare books and destroying them in the process of devouring their words to help them operate systems of doubtful veracity. It's true that even if a book is rare, there may still be more copies of it left on bookseller and library shelves. But as the whole world moves toward adoption of AI, how many more copies of the rare books that are left will be consumed in an orgy of competitive book destruction to satisfy the maw of the LLMs?

AI will not maintain the transgenerational memory contained in books. It's not designed to. The least the companies could do is to let rare books survive the ordeal of assimilation into the companies' LLMs and be returned to shelves where they can perform their age-old task of keeping our collective memories available through the generations.

Military conflicts combine with climate constraints to impede navigation across the globe

noreply@blogger.com (Kurt Cobb) — Sun, 16 Aug 2026 11:36:54 +0000

Since early March a previously obscure waterway between Iran and Oman that very few people could name has become the subject of daily reporting around the world after Iran closed it as a response to the attack on Iran by the United States and Israel. The Strait of Hormuz, which remains closed to most ships, is now known around the world as the transit point for 20 percent of the world's oil and high percentages of key materials including fertilizers such as ammonia (23 percent), urea (34 percent) and phosphate (20 percent), helium (30 percent), and sulfur (24 percent), all of which are derived from or are co-products of oil or natural gas except phosphate.

On the other side of the Arabian peninsula, a long-festering conflict between Ansar Allah (which controls part of Yemen) and Saudi Arabia has escalated. Not surprisingly, Ansar Allah, also known as the Houthis, have resorted to a tactic used previously in the conflict. They have closed the Bab el-Mandeb Strait near their the territory to Saudi vessels.

The strait connects Red Sea shippers with ocean-going routes to Asia. This includes ships coming through the Suez Canal on the northern end of the Red Sea. The Houthis say that commercial shippers not serving Saudi Arabia may continue using the strait, but many have chosen to avoid it as the Houthis attack Saudi ships. In practice this means primarily a prohibition on Saudi oil tankers which carry Saudi Arabia's main export. For now, the Saudi ships are taking a trip around Africa to reach Asia despite the added costs. But the Houthis have shown they can hit Saudi ports on the Red Sea and could escalate to shut down even this traffic.

Human-made problems to navigation are now being joined by climate-induced troubles that are reducing or crippling shipping elsewhere in the world. The Panama Canal relies on sufficient rain to fill artificial lakes that feed water into the canal locks. Once released to the canal, that water is lost to the ocean and must be replenished. But ongoing drought is limiting the number of ships the canal can handle each day. Ships must now wait 10 days to transit the canal unless they enter a special auction and pay a premium to skip the line. (For a more detailed explanation of how the canal uses water and why this competes with domestic water supplies, see my previous coverage of September 2023, "Climate change and the hidden water cost of the Panama Canal.")

In Europe, what is arguably the main water shipping route, the Rhine River, is experiencing its lowest levels since records began in 1880. As heatwave after heatwave continue to hit the continent, drought has starved the river of water. Vessels must now carry less cargo to avoid scraping the bottom of the river and getting stuck. As a result, some freight normally carried on the river is now going by truck and rail. In fact, according to shipping industry sources, the river has now been effectively bisected between an upper and lower region because the Rhine is effectively impassable to barges at Kaub, southeast of Cologne.

It may seem as if our human-induced shipping bottlenecks in the Strait of Hormuz and the Bab el-Mandeb Strait are passing problems. But it's important to note that since the Houthis first curtailed traffic through the Bab el-Mandeb in November 2023, maritime traffic has never recovered even after a cease-fire in May 2025 with the United States which had entered the conflict on the side of the Saudis. Now strait traffic has taken another dive as the Houthis renew their fight with Saudi Arabia.

As for the Iranians, they have rejected negotiations with the United States for now and are believed to be waiting for oil prices to move much higher (thus creating more damage to the U.S. and world economies) before engaging the United States again in hopes of getting most or all of their demands met.

Therefore, expecting traffic through either strait to expand dramatically anytime soon seems overly optimistic.

As for the nature-induced shipping troubles in Panama and Europe, we may be faced with ongoing challenges to shipping there as well except that we have no one to negotiate with in order to solve the problem. Nature is unyielding and silent in the face of our hopes for more rain.

It is no small irony that in Southwest Asia shipping has been curtailed by a conflict which centers around the world's largest deposits of fossil fuels, the very fuels the burning of which are a major cause of climate change and thus contributing to the drought bedeviling Panamanian and European navigation. I wonder if our leaders will ever put the two together.

As U.S. oil and refined product exports soar, will the Trump administration impose an export ban?

noreply@blogger.com (Kurt Cobb) — Sun, 09 Aug 2026 10:59:11 +0000

The U.S. oil industry got a scare last week. News reports say that the Trump administration may be considering an export ban on crude oil and refined petroleum products such as gasoline and diesel in order to bring those prices down—prices which have been elevated considerably by the reduction of oil supplies worldwide in the wake of the Iran war. But, a Trump administration spokesperson said the administration has no plans to ban exports of oil or natural gas products.

It's important to note that there is an old adage in Washington, D.C.: "Nothing is true until it is officially denied." The administration has probably discussed such a ban. Whether it will implement one is the question. With exports of distillate fuels (which include diesel and fuel oil) hitting the highest on record and gasoline exports bouncing between about 750,000 and 1 million barrels per day, American consumers may be wondering why the administration doesn't act now.

The answer is complex as I detailed in my piece in May entitled "Will the U. S. curtail oil exports as fuel prices rise?" But the short version is two-fold:

1. The oil industry has always enjoyed the right to export refined products such as gasoline and diesel. The U.S. has refinery capacity in excess of its needs and so the industry has sold the excess abroad. Only more recently did the industry gain the unfettered right to export crude oil and natural gas arguing that nearly every other American industry has the right to sell its products to the highest bidder across the world. Why should the oil and gas industry be singled out? Well, it no longer is and it's been that way for more than a decade.

2. Until a recent tirade against the oil companies over high gasoline prices, President Donald Trump touted his support of the oil industry and delivered on many industry-friendly policies. His support was not surprising since by one estimate the industry spent $450 million on campaign contributions, lobbying and advertising to support Trump and Republicans in the 2024 election cycle. It's hard to see now how Trump would defy an industry which is so powerful and which supported him to such a great degree.

To implement an export ban, the president would have to declare an emergency. It's not hard to see how the closing of the Strait of Hormuz by Iran would be seen as an emergency. But it's not clear how much such a ban would lower prices. It depends on whether such a ban included refined products such as gasoline and diesel and not just crude oil. As it turns out, not all oil is the same. The United States produces more than it needs of what is called light sweet crude ("sweet" because it is low in sulfur content, a pollutant that must be removed) and less than it needs of what is called heavy sour crude (which not surprisingly has higher sulfur content).

U.S. refineries are set up to use a certain mix of light and heavy crude; hence we export some light crude and import some heavy crude to get the right supply of both. Therefore, restricting exports of light crude won't help refineries make more finished products since the key to that is having the aforementioned right balance of light and heavy crude.

My guess is that unless gasoline and diesel prices remain elevated for months more, export controls will remain off the table. But if the high prices don't dissipate by then, the American public will be clamoring for a solution. Don't be surprised if the opposition party starts pounding the table for some type of export restrictions in order to score some points with the public and against the president.

The Iran war is a monkey trap for the United States

noreply@blogger.com (Kurt Cobb) — Sun, 02 Aug 2026 11:29:29 +0000

A monkey trap offers a reward such as food that when grasped makes the hand too large to withdraw from the hole in the trap giving access to that food. Unless the monkey lets go, the animal is stuck. Now, the obvious choice when danger arrives is to simply let go and run. But, supposedly, monkeys won't let go even as human hunters approach and then club them to death.

The war with Iran has become the Trump administration's monkey trap; potential victory over Iran is the prize in the trap. Strangely, the only prize now available is something that was already available before the war started: freedom of transit through the Strait of Hormuz. But now that Iran has seized control of the strait and effectively closed it to unfriendly traffic, that seizure has become the most important leverage Iran has over the United States and its allies.

As long as the war continues, Iran says there will be no shipments of oil, natural gas, petrochemicals, helium, fertilizers and other key commodities except for its own and a few select shipments from friends of the regime. Since these shipments make up substantial fractions of the world's supplies, closure of the strait has sent prices of these products skyward with shortages already appearing in many places across the globe.

If the Trump administration were to let go and simply withdraw from the conflict, the move would be seen as an acknowledgment of defeat. That is something that the administration and President Donald Trump, in particular, are eager to avoid. First, the acknowledgment that a presumed-to-be second-rate power such as Iran can defeat the United States is an invitation to others to challenge American hegemony elsewhere. The South China Sea and Taiwan come to mind.

Second, support from pro-Israeli groups and megadonors to the Republican party would plummet. Third, losing a war that the vast majority of Americans opposed will only confirm that majority's view and lead to damaging defeats at the polls in the November midterm elections. And, fourth, that loss would be a huge personal embarrassment for Trump who has always portrayed himself as a winner and who frequently calls people he dislikes losers.

A victory on the other hand would presumably avoid all four consequences. In that regard, it is worth remembering that at the beginning of the war, the American goals had been variously explained as 1) regime change, 2) the elimination of Iran's missile capability, and 3) preventing Iran from acquiring nuclear weapons. Of course, re-opening the Strait of Hormuz to unfettered navigation was not on the list because the strait was already open. Now, items one, two and three appear unattainable. All that remains is to re-open the Strait of Hormuz without Iranian control or tolls.

But the Iranians are making it a matter of having to control all or most of Iran to take control of the Strait from it. After all, they have already demonstrated that they can launch missiles and drones from hundreds of miles away from any target including the strait and hit what they want with precision. Even if the U.S. military gained control of the shoreline and immediate inland areas around the strait—a dangerous and potentially costly move in treasure and life—the military could not prevent attacks by Iran on shipping from further inland.

To complicate matters, dwindling U.S. munitions, both offensive and defensive, are making it more challenging for the United States to defend its bases in the Persian Gulf region and to attack Iran, especially from positions outside Iranian airspace in order to prevent U.S. aircraft from being shot down. Replenishing many of the high-tech munitions expended during the Iran war will take not months but years. Moving ahead with continuing offensive operations risks using up the remaining low inventories of anti-missile batteries and precision long-range ordnance.

The choice for the Trump administration is stark:

1. Go on the offensive and risk exposing the United States and its allies including Israel to greater damage as Iranian missiles and drones overpower depleted missile defense. And, if Iranian energy infrastructure is targeted, risk having much or all of the energy infrastructure in Israel and the Persian Gulf targeted in retaliation by Iran. Such destruction would almost certainly create a worldwide economic depression due to acute global shortages of oil and natural gas that could not be overcome for years.

2. Simply withdraw and thereby accept Iranian control of the Strait of Hormuz and Iran's de facto dominance in Southwest Asia.

3. Maintain the American embargo on Iran without advancing or retreating militarily, something that will lead to the same global economic depression over time as the Strait of Hormuz remains closed.

As I'm writing this piece, I'm hearing in my head the chorus of a tune made famous as the theme music for the television streaming series "Bosch." The tune is called "Can't let go" and has a chorus that repeats over and over the following line: "I got a feeling that I can't let go."

It appears that President Trump has a feeling that he can't let go. Whether and when he ever does let go should concern everyone on the planet.

Does Elon Musk think AI is socialist?

noreply@blogger.com (Kurt Cobb) — Sun, 26 Jul 2026 11:50:48 +0000

Our tech overlords tell us that artificial intelligence (AI) will soon create a world of abundance while solving our major problems such as climate change. Just so you know who I'm talking about, I have previously defined our tech overlords as "a grab bag technology companies, technology scientists and inventors, and technology investors and journalists who have bewitched the modern world through inventions that speed up our daily lives without necessarily making them better."

In a recent interview with The Economist magazine, tech overlord-in-chief Elon Musk explained that "[i]f you have vast numbers of robots with vast amounts of digital intelligence, you have a sort of a quasi-infinite economy." In such an economy, "anyone can have anything they think of." He added that "money won't matter in 2036" because everyone will have a high income without working. This is a Star Trek version of the future, he explained.

Musk's views exemplify the tech industry fantasy of a push-button, voice-activated future world of abundance portrayed in the many Star Trek television series and movies. Any serious viewer of the series and movies knows that in the Star Trek future, poverty has been eliminated, people do not need money and in fact, everything you want or need is available to you.

Given that, a friend of mine once asked, "If you have a replicator and a holodeck, why would you need to go anywhere?" But Star Trek denizens do travel quite a bit in order "to seek out new life and new civilizations. To explore brave new worlds, to boldly go where no man has gone before.” (This was later updated in the Star Trek: The Next Generation series to say "where no one has gone before.")

Musk said that in his future of abundance, some people may choose to work, the way some people choose to have gardens in their back yards even though they can get all the food they need from the grocery store.

Now, here's the key element of this fantasized future: In 10 years AI will be running the world without humans. If that happens, the interviewer wonders, how will companies make money? How will they even exist? Musk has no answer.

And that leads to a second question: How will people get money to buy the things they need? Musk said that the government can just issue checks to people. This is an interesting view from a man who joined the Trump administration to cut government spending while heading its ill-defined and ill-fated Department of Government Efficiency. What Musk is proposing, it seems, is a form of AI-induced socialism. Many years ago he styled himself as a socialist. But, it's hard to take that claim seriously now given his publicly demonstrated political views and actions and the types of political candidates he is funding.

First, it's important to subject this fantasy of the future to what I'll call the "will" test invented by AI critic Ed Zitron. He asks AI boosters to explain what current AI models are capable of doing without using the word "will." Those advocates have little they can point to.

The tech overlord fantasy outlined above depends entirely on the word "will" with regard to AI. Nothing current AI models can do remotely fits this view of the future. Those models—called Large Language Models (LLMs)—produce so many errors that handing over mission-critical systems across the economy to AI as suggested by Musk would almost certainly create catastrophe rather than prosperity. The problem of so-called "hallucinations" is an inherent feature of the way LLMs operate and cannot be eliminated. And the kind of intelligence needed to run most mission-critical systems, that is human intelligence, simply isn't achievable with LLMs.

The idea that the current large tech companies that are controlling the development of AI are going to become extinct as worldwide prosperity spreads appears to be tale designed to lull the public into passivity. It makes sense that this narrative is okay with the industry given that the emerging literal killer apps using AI are surveillance and military weapons systems. Governments seem ready to pay the high cost of AI in order to obtain better surveillance of citizens and more effective weapons. That such systems will inevitably make many mistakes seems not very consequential to the governments that use them.

Businesses and consumers may be finding some benefit to using AI, especially for enhanced searching on the internet. But the true costs of such limited benefits is many, many times what they are currently paying. And given the way AI works, that is, requiring additional data center capacity for each new user, there are really no economies of scale that will bring down costs. Simply said, each new user costs the AI provider more money. AI as it is currently conceived is unlikely to be profitable except for niche users who find its output worth paying the true costs for.

The tech overloads have been singing the same tune for years: Trust us, sit back, and let us take you into an ever grander techno-uptopian future. New claims that AI will be the vector for this future are part of a propaganda campaign designed to keep you from having a say about AI and its uses. Fortunately, many communities are saying that they do not want to bear the costs and disruptions of new data centers associated with the AI build-out. That concern needs to be extended to the uses and abuses of AI itself.

Taking a break - no post this week

noreply@blogger.com (Kurt Cobb) — Sun, 19 Jul 2026 10:51:27 +0000

I am taking a break this week and plan to post again on Sunday, July 26.

Plankton decline, 'Soylent Green' and the future of civilization

noreply@blogger.com (Kurt Cobb) — Sun, 12 Jul 2026 10:34:43 +0000

Last week I watched the 1973 dystopian film thriller "Soylent Green" for the first time in probably 30 years. The film depicts a society in which climate change has put most of the world into a hellish, near perpetual heat wave (at least during the summer), dramatically increased the inequality of wealth (with the fortunate few living in luxury apartments with air-conditioning), and caused a scarcity of food such that most people are reduced to eating what is called "soylent," a processed wafer-like food that supplies essential nutrients (the production of which is monopolized by one huge corporation called the Soylent Corporation).

You don't have to stretch your mind all that much to see that a lot of what is depicted in "Soylent Green" is already coming true. I found one part of the plot particularly prescient in predicting the decline of plankton in the oceans. You see, in the film plankton form the basis for one type of soylent, namely soylent green. (Soylent red and yellow are also available but less desirable.)

Ostensibly a crime drama, the film follows a police detective played by Charlton Heston who is trying to solve the murder of one of the members of the board of directors of the Soylent Corporation. Ultimately, the detective stumbles onto a forbidden secret: The plankton in the oceans are dying thus threatening the worldwide food supply. As the investigation continues, the detective penetrates a production facility for soylent green where he discovers (spoiler alert!) that soylent green is now being made from recycled bodies of the dead, a sort of civilization-wide cannibalism.

Fast forward to today, recent surveys suggest that plankton, the basis of the global ocean food chain and the generator of 50 percent of the globe's natural oxygen production, is now in decline. It would likely take several centuries for oxygen in the atmosphere to decline to levels which affect human health. A more immediate effect would be on the pace of global climate change itself since the wide variety of microscopic ocean plants and plant-like creatures which are collectively called plankton absorb a considerable amount of the carbon dioxide in the atmosphere, a major driver of climate change. Atmospheric levels of carbon dioxide would likely be twice what they are today without the action of ocean plankton.

Plankton are also the crucial lowest level of the ocean food chain providing sustenance for sea creatures ranging "[f]rom the largest of whales to the smallest of fish larvae."

Carbon dioxide itself poses a threat to plankton even as the same gas provides nourishment to its many organisms. As more and more carbon dioxide has dissolved in the ocean forming carbonic acid, it has increased the acidity of ocean waters thereby inhibiting the growth of some plankton organisms and increasing the growth of others. This is scrambling the makeup of the base of the ocean food chain and affecting creatures higher up that chain that rely on adequate supplies of now declining organisms or that proliferate as a result of increases in certain organisms that act as food. The imbalances could have cascading effects that "could threaten the stability of entire food webs."

Microplastics as well pose a threat to plankton—first, by preventing phytoplankton from getting enough sunlight and, second, by sending those microplastics up the food chain and concentrating them in seafood and fish eaten by humans.

So great is the reach of plankton that they powerfully affect "cycles of carbon, nitrogen, phosphorous, silica and other, often limiting, elements." In addition, "[p]lankton produce dimethyl sulfide that enters the atmosphere and affects cloud formation and climate regulation."

The microscopic world of plankton puts them out of sight and therefore out of mind for most people. That's understandable. But that does not prevent the drama currently unfolding in the Earth's oceans from proceeding. Our lack of understanding of plankton and the myriad other living communities on Earth put our own health and existence as a species into question. In 2017 I wrote a piece entitled "Which species are we sure we can survive without?" Today, with regard to plankton, we humans seem to be intent on finding out if some of the species that make up plankton are among those we can live with less of or altogether without.

Something's gotta give: The American West and the dwindling Colorado River

noreply@blogger.com (Kurt Cobb) — Sun, 05 Jul 2026 11:18:19 +0000

Depending on whom you talk to the Colorado River serves either 35 million or 40 million people, all of whom are having to reconsider how much water they use and how they use it in the wake of an ongoing megadrought that arrived at the beginning of this century. The changes are no longer in the "let's-discuss-this" phase as the federal government threatens to impose up to a 40 percent cut in river water allocations over the next 10 years if the seven western states—Colorado, New Mexico, Wyoming, Utah, Arizona, Nevada, and California—and the 30 recognized tribal jurisdictions with water rights don't agree among themselves about how to divvy up the dwindling Colorado River.

There isn't as much water as there used to be and that means that not everything people are using water for now will get its previous allotment. No doubt the volume of water representing the 52 percent of the total river withdrawals currently taken for agriculture could be reduced through conservation and efficiency measures. But it turns out that "conservation" in some instances might mean simply leaving fields unplanted for lack of water. And, it's not as if efficiency measures haven't already been implemented as irrigated agriculture in the Colorado basin has been transitioning to the much more efficient drip irrigation away from traditional surface irrigation. I could not find any statistics for this, however. So, it's not clear how much more water savings could be achieved through the installation of additional drip irrigation in place of surface irrigation.

Then, there is the 18 percent of the water withdrawals currently going to municipal water systems. The people in those cities have taken seriously the need to reduce water use. Even though those systems now serve 24 percent more residents today than in the year 2000, those systems use 18 percent LESS water. How much further could these cities reduce water consumption? It's almost certain that the easiest forms of reduction have already taken place. The next leg down in water consumption will be harder.

About 11 percent of the current withdrawals from the Colorado River are in the form of evaporation, mostly from reservoirs created by dams along the river. The total amount of evaporation has been going up due to higher temperatures and fewer rainy days. Absent some vast sci-fi fantasy geoengineering project to somehow harness or slow down the evaporation, evaporative loss will continue to increase.

Which brings us to the hydroelectric stations embedded in major dams along the river. Water levels behind those dams have fallen so much already that current trends imply reaching so-called "minimum power pool" early next year for Glen Canyon Dam which forms Lake Powell. Falling below the minimum power pool level means that no water could reach the dam's turbines and so no electricity could be generated. Glen Canyon Dam produces some of the cheapest electric power in the country and a loss of this source of electricity would mean much higher prices for the 5 million utility customers who currently rely on the dam's output. In addition, such a loss would strain the reliability of the rest of the electric grid as grid operators try to make up for that loss.

As if all this were not enough to worry about, the push for finding and mining more critical metals in the United States—to reduce the country's dependence on China and others for these metals—means that another voracious user of water is coming for the Colorado's water. The most promising deposits of lithium in the United States are being discovered in the drought-parched southwest just when water availability is dropping to crisis levels. The irony, of course, is that climate change—which lithium, a key green energy metal, is needed to help address—is drying up the very water resources needed to mine the metal.

In the coming months and years, something in the Colorado River basin has to give. Probably all parties will give up something, city-dwellers, farmers and electricity customers. That implies something even more basic, namely, that the unbridled growth in population and agricultural and mining activities in the Colorado basin will dwindle and perhaps reverse for the first time in the history of the modern West.

Taking a break - no post this week

noreply@blogger.com (Kurt Cobb) — Sun, 28 Jun 2026 11:02:20 +0000

I am taking a break this week and plan to post again on Sunday, July 5.

Why the U.S.-Iran MOU (probably) won't prevent the approaching energy cliff

noreply@blogger.com (Kurt Cobb) — Sun, 21 Jun 2026 11:52:07 +0000

The outline of conditions and topics for a negotiated settlement of the U.S.-Iran conflict called a Memorandum of Understanding (MOU) and signed by both sides last week in all probability won't prevent the approaching energy cliff. That cliff will be the result of fast-depleting commercial and strategic inventories of oil and oil products around the world that have acted as buffers in the wake of the suspension of almost all tanker traffic through the Strait of Hormuz during the conflict—tankers believed to carry about 20 percent of the world's daily needs of oil.

As I explained in a previous piece, the world is fast approaching "tank bottoms," that is, the depletion of usable oil and oil products inventory. When that inventory effectively runs out, there will be a bidding war for oil and oil products to replace the millions of barrels per day that will still be needed but unavailable from inventories as the drama in the Persian Gulf continues.

As of this writing, the Strait of Hormuz has been closed by Iran in response to continuing attacks by Israeli armed forces in Lebanon. The first provision of the MOU is that hostilities are to cease immediately everywhere including Lebanon as a pre-condition to further negotiations. Just as important as whether the strait is open are what each side means by the word "open" and how shipping companies and the insurance firms who insure their tankers understand the risk of transiting the strait.

According to frequent unofficial spokesman for the Iranian government Seyed Marandi who is a professor of English and Orientalism at the University of Tehran, the strait will likely be managed in a way to carefully meter traffic at rates far below those seen before the beginning of the war, that is, assuming it does, in fact, re-open.

Although insurance has been available for ships passing through the strait at costs believed to be five times pre-war rates, the cost of hiring tankers for the journey appears to be skyrocketing, that is, when such tankers are even available. One of the biggest fears of shippers continues to be that they cannot be certain that ships entering the Persian Gulf will be allowed to come back out—as conditions appear to be changing from day to day. The many uncertainties are therefore likely to keep many shippers away, and uncertainty works in Iran's favor as Iran's newly minted Persian Gulf Strait Authority can claim the strait is "open" while also saying it can't force shipping companies to come through.

There is every reason for the Iranians to keep traffic to just the minimum required to claim that the strait is open so as to allow negotiations to move forward while simultaneously continuing to deny the world economy adequate supplies of oil, liquefied natural gas, and other key products such as sulfur and fertilizer.

As the energy cliff approaches, oil prices will likely regain and perhaps exceed their previous highs. As the resulting pain transmits through the world economy including the United States, the Trump administration will be incentivized to come to a stabilizing agreement as quickly as possible. The United States can't do that without successful negotiations and Iran has now made it clear that those negotiations may not move forward unless the United States lives up to the conditions set in the MOU. Even as the Iranian foreign minister traveled to meet American negotiators in Switzerland, Iran's Fars News Agency reported that the Iranian delegation will "demand the other side implement its commitments" agreed to in the MOU. Iran can and will open and close the Strait of Hormuz when it chooses in response to the fulfillment (or nonfulfillment) of those U.S. commitments. Control of the Strait of Hormuz has now become the central way in which the Iranians can enforce the provisions of the MOU.

In addition, even if the current strait closure is resolved quickly and negotiations proceed, the MOU calls for 60 days of negotiations. The Iranians can count, and they must have known when they signed the MOU that tank bottoms around the world would almost certainly arrive DURING the negotiations. That would lead to price spikes in oil that would weaken the position of the United States forcing U.S. negotiators to give Iran more of what it wants in exchange for a quick resolution.

It is not certain as of this writing that negotiations will actually proceed anytime soon apart from the Iranians demanding that the pre-conditions set forth in the MOU be honored. That means the euphoria of last week upon the signing of the MOU will likely dissipate as the reality of continuing drawdowns of oil and oil product inventories comes to the fore.

No doubt the Trump administration will once again try to jawbone the oil market downwards and that may work for a short time as it has in the past. But eventually no jawboning from the administration or from anyone else will be able to overcome the loss of inventories—unless those wanting lower oil prices have figured out how to repeal the laws of physics. If that happens, I promise complete coverage of the event as it will be the most important scientific marvel of the age.

Here's comes the AI bailout: Why government stakes in AI companies are a sucker's bet

noreply@blogger.com (Kurt Cobb) — Sun, 14 Jun 2026 11:47:15 +0000

When Bernie Sanders and Donald Trump agree on something, that agreement deserves examination. Both are touting the idea that the federal government should have an ownership stake in major artificial intelligence (AI) companies. For Sanders this would be a way for the American people to share in the wealth generated by AI companies that those companies accumulated through the theft of other people's writing, art works, photos, videos and recordings. And it would give government a seat at the table as a representative of the public in deciding how AI companies will operate in the future. Just how Trump views the purpose of government ownership of a share of AI companies is not yet clear.

Problem is, AI companies are not really generating any wealth. Right now they are simply burning through billions of investor dollars that are heavily subsidizing users with no clear path to profitability. And no, the AI industry is not following the path of previous technologies such as the internet and the smartphone in which costs will rapidly fall as the technology matures and greater numbers of people adopt AI. Years into the AI boom the cost of providing its promised outputs is going up, again with no clear path to bringing the cost down. Adding users does not bring down unit costs because more users require more resources. It's the opposite of the software model where the cost of distributing a piece of already written software to the next customer is close to zero.

I warned last November that artificial intelligence (AI) companies were setting the stage for a bailout, one that will be the result of their deeply flawed AI models that won't remotely deliver what they are promising. AI critic Ed Zitron said in a recent interview that when he asks AI industry boosters to tell him what AI can actually do without using the word "will," they have little to offer. Zitron agreed that while search engines are using AI to provide more sophisticated outputs, those outputs have become more unreliable. "You have to check every single bloody thing. You can't rely on anything," he said.

As if to put a fine point on it, just two days after the Zitron interview, the Financial Times published a story about a report on the uses of AI put out by KPMG, one of the Big Four accounting firms, in which the KPMG made several false claims about corporate, governmental and nonprofit uses of AI. The false claims were apparently the product of AI "hallucinations," that is, stories concocted by AI that are simply made up or not factually correct. The report appears to have been withdrawn. The KPMG report was promoting its services to help its clients integrate AI into their organizations. Oops!

And to add insult to injury, the Ohio Business Roundtable, a well-connected business lobby, is trying to get the Ohio legislature to change eminent domain laws to allow AI companies to seize private land for energy projects needed by their data centers WITHOUT PAYING FOR IT FIRST! Why would supposedly wildly successful AI companies not be able to pay people for their seized land BEFORE occupying it and instead be allowed to wait months or years to pay? A big fight is brewing in Ohio and the Ohio Farm Bureau is leading the charge.

There is a lot more to say about why AI based on current models is likely to be a much smaller and less impactful technology than is being advertised. But the financial facts don't lie. If the government is lured into taking an ownership stake in AI companies, it will be walking into a trap. The first clue is that the CEO of the most prominent AI company, OpenAI, proposed the idea to Trump early last year. Why would the top executive of the best-known AI company offer to dilute his wealth and the wealth of his shareholders to give the government a share? Why would that CEO want the government looking over his shoulder as he runs his company? Unless he knows he is going to need a bailout.

And that is likely where we are headed for two reasons: 1) The AI industry has convinced lawmakers and the current administration that AI is somehow the future of technology and therefore the industry (as opposed to the technology) cannot fail and 2) the AI industry's capital expenditures are the main thing driving the economy and the stock market and a bust among major industry players (again, as opposed to the technology) would lead to too much pain in pocketbooks and portfolios.

Bernie Sanders wants the government to obtain its share of AI company ownership through a tax paid in shares of stocks giving the government 50 percent. How the Trump administration would finance such a purchase and how much of a stake it would take is not known. But no matter how such a government stake in the AI industry is achieved, buying it now would almost certainly be buying in at the top. Governments are actually very poor at making financial investment decisions, in part, because they are not set up for that. They make decisions for policy reasons that have little to do with shrewd market timing.

When the current AI bubble bursts, the federal government will be tempted to throw good money after bad to bail out its investment since the government has something private industry lacks, the power to tax and the ability to print money as needed. And, the government will be heavily lobbied by its new partners, AI company management, to proceed with the bailout even as there is no clear path to profitability.

Two clear facts suggest that government involvement in AI for now should be relegated to regulating it. First, the industry cannot explain how, using the current Large Language Model framework, it can both bring down costs and eliminate hallucinations (which make AI very dangerous for any task that would be autonomous, that is, operate without human intervention). Second, the income the industry would have to generate to justify its investments to date and future commitments require something like $2 trillion in NEW revenue over the next four years, according to Zitron.

The entire global software industry had revenues of about $719 billion in 2025. And that was for products that presumably work and have a marginal distribution cost close to zero. So far, according to one recent report, "80 percent of AI projects fail to deliver business value." And, "[o]nly 21% of S&P 500 companies can cite a measurable AI benefit, per Morgan Stanley, even as global AI spending is projected to hit $527 billion in 2026 capex [capital expenditures] alone."

Current AI models may offer at least some value to a wide range of users. Perhaps someone (not me) could make an argument for subsidizing AI as a public good, the way we do with public transportation. The alternative is to have businesses alone continue to deliver AI to various users. But that won't work unless users are willing to pay many times more than AI companies are currently charging for so-called pro or premium services ($100 a month for ChatGPT and Claude). Keep in mind that most users currently pay little to nothing to use AI. The much higher prices needed to make AI a profitable venture would almost certainly cause most users to abandon it since the value it creates is not worth that kind of money (perhaps many hundreds of dollars per month) either to individuals or most businesses—especially given the continuation of widespread errors and "hallucinations" which as Zitron points out means every output has to be thoroughly checked by an actual human.

Let the marketplace sort it out. If someone, somewhere can come up with an AI model that is profitable for businesses to sell to typical business customers and the broad public, let it emerge without government intervention. Right now the AI industry is simply looking for a government sugar daddy to pay the bills that its leaders foolishly incurred so that those leaders can have their personal wealth backstopped when the AI bubble bursts.

Our oil "savings account" is dwindling rapidly, more oil price spikes likely

noreply@blogger.com (Kurt Cobb) — Sun, 07 Jun 2026 11:35:32 +0000

In the coming weeks readers will increasingly see two rarely used phrases in stories covering our dwindling worldwide oil inventories: "operational minimum" and "tank bottoms." The phrases more or less signify the same thing, though the former is more abstract and precise, while the latter is more visual. They signify rapid depletion of existing oil inventories and presage price spikes to come due to the loss of oil supplies from the Persian Gulf because of Iran's closure of the Strait of Hormuz, the maritime artery through which 20 percent of the world's oil previously flowed.

Think of it this way: Let's say you are currently spending your entire weekly salary for living expenses. Then, you suddenly have your salary cut by 20 percent. Believing that the cut is temporary, you dip into your savings account to make up for the loss of income. At the current rate of withdrawal, your savings will last four months. As the weeks go by, your savings account balance dwindles as you continue to live in the style to which you were accustomed before the salary cut. Your boss tells you (frequently!) that your full salary will soon be restored. So rather than cut back on your expenses, you keep spending down your savings believing that all will return to normal before you exhaust your bank account.

That's what is happening in the global economy which had about four months of buffer stocks—essentially, an "oil savings account"—to draw from at the beginning of March. We are getting closer and closer to using up those savings which are in the form of commercial inventories. We are rapidly drawing down those inventories to make up for the loss of oil and oil products from the Persian Gulf.

In fact, a recent analysis suggests that the world oil system will start to experience "operational stress" sometime in June. Operational stress "is the point at which the system begins to experience significant functional strain: price volatility becomes extreme, rationing of refined products begins in the most exposed markets, and the margin for error in supply chain management drops to near zero." This analysis takes into account ongoing strategic petroleum reserve releases around the globe and states that "[e]ven full deployment of strategic reserves buys weeks, not months, at current drawdown rates."

Another prominent analyst believes we have a few more weeks before that stress kicks in. A senior executive at ExxonMobil, the second largest oil company in the world, told investors and analysts at a recent conference: "We're approaching unheard of inventory levels." Oil executives have shared their concerns with the Trump administration with one telling Politico, “We have shared those concerns at the highest levels of government about what’s coming in mid-to-late June. … I hope they are paying attention to inventories right now. You’re hitting tank bottom.”

High oil prices usually destroy demand, i.e., some people and companies buy less gasoline, diesel and other oil products because those buyers are unable to afford as much as they did before. However, "government fuel subsidies in several countries are artificially shielding consumers from the price shock, weakening this automatic balancing mechanism." In addition, considerable jawboning by the Trump administration promising on a weekly and even daily basis that the war with Iran will soon be over has kept participants in the oil futures markets from bidding up the price of future supplies. So confident are oil market traders that oil markets will return to normal, that the price for delivery of West Texas Intermediate crude oil, a world benchmark, for a year from now is around $75 per barrel, only about $8 above where the price stood on February 27, the day before the Iran war began.

To understand why the world economy is about to hit a wall with regard to oil supplies, you need to understand exactly what "operational minimum" means. While there appear to be many billions of barrels of oil inventories left as of now, most of those barrels are what is known as "system fill." They fill pipelines, refineries, oil tankers, rail tank cars, and tanker trucks. It is not feasible to operate a pipeline without any product moving through it. It is not feasible to operate refineries without any feedstock in them. It is impossible to operate a seaborne or land fleet of tankers without having some of that fleet actually carrying oil and/or oil products to their destination, products which are unavailable for use while in transit.

The absolute operational minimum floor for the global oil system is estimated to be about 6.8 billion barrels. Below that the system will simply not function. On our current trajectory, the world will reach that point in September, if not before. It turns out there really weren't 8.5 billion barrels of available oil inventories across the world at the beginning of the war, only 8.5 billion minus 6.8 billion or 1.7 billion. Big difference!

The moment we reach "tank bottoms" actually comes before we reach operational minimum. Technically, "tank bottoms" refers to the sludge the builds up on the bottoms of storage tanks which must be periodically cleaned out and disposed of or processed to extract valuable products. In this context, this moment is when practical commercial storage runs very low so as not to be a reliable buffer between current supply and demand. That's when a bidding war will begin and oil prices are likely to spike to $150 a barrel or higher, oil industry executives say. That moment is not far away even as the world sleepwalks through the greatest oil crisis in history. And, the evidence that we are sleepwalking comes from the oil futures market where West Texas Intermediate oil (mentioned above) that must be delivered no later than July 31 settled at just $90.54 a barrel of Friday. July 31 is well after the expected arrival of "tank bottoms."

An agreement to end the Iran war within the next few days would not change the outcome because it would take at least three months to normalize traffic through the Strait of Hormuz under the absolute best of circumstances. And, I don't think we'll see anything like the absolute best of circumstances arise anytime soon or probably ever again. That means that if the closure of the Strait of Hormuz continues for a few more months, as I expect it will, the price estimate of $150 a barrel will likely be a conservative one.

Taking a break - no post this week

noreply@blogger.com (Kurt Cobb) — Sun, 31 May 2026 11:29:33 +0000

I am taking a break this week and plan to post again on Sunday, June 7.

South by Southwest: Water crises hit America

noreply@blogger.com (Kurt Cobb) — Sun, 24 May 2026 11:19:13 +0000

Policymakers, politicians and the media have been talking about the need for better water policy in the desert southwest of the United States for decades. As the Colorado River, a major source of water for much of that area, continues to shrink, policymakers are having a hard time keeping up with nature. A new 10-year plan contemplates cutting water supplies for Arizona, Nevada and California by up to 40 percent depending on availability. Not surprisingly, these states don't like the plan that the Trump Administration said it will impose on the states since they have been unable to come up with an agreement.

The century-old Colorado River Compact governed water allocations to the upper and lower basins of the river. But the compact overestimated water flows and the states along the Colorado have been dealing with that error ever since. Now, a drought that has spanned more than two decades has made matters worse.

I can remember flying into Las Vegas in 2009, looking out my window and seeing the so-called "bathtub ring" around Lake Mead, the lake created by Hoover Dam. The top of the ring indicated where the water level had previously been before the ongoing multi-year drought noticeably lowered the lake level. Las Vegas was at the time involved in what was essentially an emergency project to build a water intake at a deeper level for fear that the surface of Lake Mead would fall below the current intake and deprive the city of 40 percent of its water. The water authority succeeded in building the intake, but, of course, that didn't do anything to increase water supplies from the Colorado River.

In fact, the same problems that plagued Las Vegas and its Colorado River neighbors are only worse now as continued growth and poor planning have finally hit the brick wall of water shortages. Not surprisingly, when serious problems arise the solution to which requires serious sacrifice, fantasy solutions arise with them. A group focused on recreational access to public lands has proposed legislation that would fund eight large desalination plants for southern California to dramatically reduce that state's need for Colorado water and thereby return most of California's current allocation to the river. The energy for such energy-intensive facilities, the group says, would likely have to come from new nuclear power plants. The group can't be faulted for thinking small!

Elsewhere, the city of Corpus Christi, Texas, located on the Gulf of Mexico coast faces the unwelcome prospect that its water reservoirs could come close to running out sometime next year. Heavy rain in April has delayed the crisis, but much more rain would be necessary to end the extreme drought which has gripped the city and its environs. This set of rain maps gives you an idea what has been happening month-to-month. While one of the city's three reservoirs rose from 55 percent capacity to 76 percent due to recent rain, its other two slumped to historic lows of 10 percent and 7 percent of capacity. (It should be noted that one good hurricane could substantially replenish these reservoirs.)

Your humble author takes a special interest in the situation because I was a reporter for the Corpus Christi Caller, the city's morning daily newspaper, in 1980 when I wrote a five-part series on water supplies in Corpus Christi and the areas served by its water system. I suggested that the city's then under construction water project, Choke Canyon, might not turn out to be as reliable as anticipated. That's the reservoir that is currently at 7 percent of capacity.

The Corpus Christi water system serves 500,000 residents in and around the city and a host of industrial facilities including oil refineries, chemical plants and others. Water system officials are planning for cuts of 25 percent probably starting in June after the city council considers the issue.

If the rains don't return to Corpus Christi anytime soon, more draconian cuts may be necessary. But, no city can store enough water to endure an extreme drought that goes on year after year. Corpus Christi and its surrounding area normally get about 30 inches of rain a year—or at least they used to. Compare that to Portland, Oregon, a place I've also lived that has a reputation for being quite rainy, with average annual rainfall of around 39 inches. But Portland, too, is having issues this year because of the record low snowpack in the mountains that supply it with water.

For Americans, water crises that threaten a dramatic reduction of available water are something that happen far away in countries that are poor and desperate. But climate change, the catalyst behind the broadening shortages, is no respecter of wealth or privilege. Even if you live in the United States or another relatively wealthy country, a water shortage could be coming to a town near you—or even to your town.

Fertilizer, Energy and Liebig's Law of the Minimum

noreply@blogger.com (Kurt Cobb) — Sun, 17 May 2026 11:36:45 +0000

The loss of fertilizer shipments coming from the Persian Gulf as a result of the Iran war got me thinking about the chemist Justus von Liebig, a prominent 19th century proponent of the mineral theory of plant nutrition. Liebig is the popularizer of what is now known as Liebig's Law of the Minimum. The law states that the least available essential nutrient limits the growth of plants. This means once a grower runs out of one essential nutrient, adding extra of others will not make up for the lack of the one that is limited.

Liebig's eponymous law is about to assert itself in a big and distressing way in the coming growing season. That's because the Persian Gulf region supplies 36 percent of the world's urea (a form of nitrogen fertilizer), 29 percent of its anhydrous ammonia (another form of nitrogen fertilizer), 26 percent of diammonium phosphate and 13 percent of monoammonium phosphate.

Just to review a little high school biology, nitrogen, phosphorus and potassium are primary nutrients that cannot be obtained from the air or water and must come from the soil. (With regard to nitrogen, legumes such as soybeans are an exception in that they can fix nitrogen from the air for use in the plant.) Adding these primary nutrients to the soil improves the quality and quantity of plant growth. Huge of amounts of two of the three primary nutrients mentioned above are no longer flowing out of the Persian Gulf.

In addition, 20 percent of the world's liquefied natural gas (LNG) is no longer flowing from the gulf. In places such as India, imported LNG is the feedstock for making nitrogen fertilizers in domestic factories. And, there are probably other complications that are impacting fertilizer supplies that I'm not aware of.

The rising price of fertilizer is causing wheat farmers in Argentina to consider using less urea fertilizer which would limit the availability of nitrogen, an essential nutrient. It's either that or plant another crop that won't require so much fertilizer and thus limit wheat production. In Egypt one farmer decided not to grow wheat (which requires a lot of fertilizer) in favor of other crops while cutting the area used for growing to just half of what he normally sows—all because he cannot afford any help this year due to high prices for fertilizer, seeds and other farm chemicals (presumably herbicides and pesticides that often consist of petrochemicals). The American Farm Bureau Federation recently released a survey showing that 70 percent of American farmers cannot afford all the fertilizer they need.

Now, as you may already have surmised, Liebig's law can be applied beyond fertilizer input for crops. Farm equipment runs almost exclusively on diesel. The high cost of diesel came on mostly after farmers in the United States made their planting decisions and so this year will simply eat into profits rather reduce output. But persistent high prices for diesel could lead to decisions to reduce planting or at least shift to other crops farmers believe will be less costly to grow. Clearly, diesel must be considered an essential input just like fertilizers.

But we can also take Liebig further afield and apply his law to essential inputs to the broader society. Energy expert Vaclav Smil has posited four essential inputs required for the modern world: cement, steel, plastics, and ammonia. Ammonia, of course, is essential for the production of nitrogen fertilizers which we've already covered. The other three are ubiquitous enough that their importance to the modern world ought to be self-evident.

Smil notes a connection that is particularly relevant just now because of the cutoff of oil and natural gas from the Persian Gulf: All four essential inputs require copious use of fossil fuels to produce. Beyond these, we are about to find out that the loss of significant amounts of oil and natural gas will limit the production of a very wide array of products for which these fossil fuels and their derivatives are essential inputs—just as Liebig's law predicts.

The danger such limits posed for the global economy were always there for people to see. But there has been a belief that such limits would never arise or if they did, they would only be temporary. That belief is now being tested. If, as petroleum consultant Art Berman says, we are unlikely ever again to reach world oil production levels experienced before the Iran war, then the belief that we face no limits will have to make way for a new reality of constrained production of many of globe's most essential materials.

Chinese ag theft, pathogen research only point up dangers of GMO crops and monoculture

noreply@blogger.com (Kurt Cobb) — Sun, 10 May 2026 10:38:00 +0000

I'm shocked, shocked, to find out that the Chinese are stealing America's agricultural technology!

It can hardly come as a surprise that the Chinese government actively encourages and organizes the theft of intellectual property from other nations and their companies, in this case, agricultural technology in the United States. College students are some of the most active players in these thefts as between 250,000 and 300,000 routinely attend U.S. colleges and universities in any given year, most of them studying in scientific and engineering fields.

Not only is the theft of proprietary seeds an issue, but also research on and transportation of plant pathogens. No one has been accused of actively introducing pathogens into America's farm fields so far. But the combined problems of theft and possible biological attacks on crops merely lays bare the bankruptcy of the modern conventional agricultural system.

Genetically engineered seeds are by design narrowly similar in their genetic makeup. They have to be if they are going to consistently deliver the properties they are advertised to have such as immunity to certain herbicides—glyphosate comes to mind.

Seeds for genetically engineered soybeans, for example, are sold and planted around the world and this presents multiple problems. First, worldwide distribution makes such plants a systemic risk if something goes wrong. Second, lack of genetic diversity makes the plants easier targets for naturally occurring pathogens or intentional biological attacks. And third, the fact the most farmers using these engineered seeds are growing monocultures create another vulnerability that combined with the others could lead to widespread crop failures due to natural factors or intentional attacks.

So, what kind of defenses does the United States need to thwart these threats? First and foremost, it would be useful to recognize that the threat of theft is an artifact of the idea that lifeforms can be patented. Were it not for what I believe is a hideous legal mistake made by the United States Supreme Court after the U.S. Patent and Trademark Office rejected a patent filed for a lifeform, theft of intellectual property in the form of seeds would not exist. The court struck down that rejection and the race to control the world's living organisms through patents was on.*

Now, I understand that if I steal a bag of seeds someone has purchased, I'm stealing that person's property. If I'm the one who buys the seed and the seed is genetically engineered and I save the seeds from the crop I grow, now according to the Supreme Court I'm stealing the seed. If a researcher, Chinese or otherwise, steals newly created engineered seed from the laboratory of a school (which usually has property rights in such "inventions") or a private company, then that's theft, too, the Supreme Court says.

But, there is an alternative and always has been. And, it does not infringe on any private ownership of the genetic code of lifeforms (though I believe such ownership is morally indefensible) and it is available to anyone who wants to participate. It's called open source seeds (which in the olden days used to simply be called "seeds"). These days, if you want to make sure no one can lock up the genes in your seeds, you have to do something affirmative to protect yourself and others who want to use them.

It works in a manner similar to that of Creative Commons which is used for any work that can be copyrighted. Essentially, you have to agree to allow the next person to use the genetic endowment in the seed freely. You can sell any seed you raise, but you cannot prevent the person you are selling it to from saving the seed from the resulting crop. This allows people to share, trade and sell seeds as they see fit (as they have since the beginning of agriculture).

Lots of seed research and testing used to be done by public institutions: universities and agriculture departments in federal and state governments. The fruits of that research were generally available to anyone who wanted it because it came from publicly funded research. For a good summary of how the various regimes governing seeds evolved over time, see this article. Now most of the seed research is done by private companies who naturally want to control completely the genetic information embedded in their seeds.

Some countries such as India have developed genetically engineered seed technology that is publicly owned and thus made available based on government policy. Whether or not publicly owned genetically engineered seed is a good idea, it does take the genetic endowment of such seeds out of the realm of private property.

The furor over seed technology theft is really just the major seed companies trying to enlist the world's governments and various international bodies in their quest to protect their patents. If a country as a matter of national policy wants to rid itself of concern over the theft of intellectual property in the form of seed genetics, all it has to do is focus on promoting open source seeds. It's easy: If there is no private genetic property, there can be no theft of such property!

Okay, one problem solved. What about the vulnerability of the world's crops to naturally occurring or intentionally placed pathogens?

I have two suggestions. First, go to polyculture instead of monoculture. Raising a variety of plants protects all plants and ensures yields of at least some under most conditions. Second, move toward a system that encourages a wide number of varieties of important food crops. This admittedly makes it more difficult for food processors to get consistent basic food ingredients. But this is not an insuperable problem. And it is well worth the protection it provides in the face of the growing threat of plant pathogens. Biodiversity is a natural barrier to pathogens. Those pathogens have a much more difficult time attacking and adapting to a multitude of varieties of a plant than just a few.

The author of the article cited at the beginning of this piece makes it seem as if the system of agriculture and seed production that we have today was simply inevitable. It wasn't. It resulted from a particular set of policy choices. That means we can choose better ones that will make our food crops more resilient within a system that includes growers and hobbyists in the creation of the kind of biodiversity we need—instead of leaving the seed system to a few behemoth corporations that want to have total control.

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*It is amusing to contemplate Big Ag running to the Supreme Court to claim that their genetically engineered crop varieties are each unique products eligible for patent protection while simultaneously claiming to the U.S. Food and Drug Administration (FDA) that these products are basically the same as non-engineered crop varieties and so require no premarket testing for safety. The Supreme Court treats genetically engineered crop varieties as if they were novel patentable drugs (new drugs must be tested thoroughly before coming to market) while the FDA treats them as if they are simply like any other food. I can think of no other product that is treated in such a divergent way by the government.