Saturday, November 13, 2010

Successful Bakken Drilling Technology May Start to Go Global: That's Why "Peak Oil" is "Peak Idiocy"

I reported earlier today on the ongoing oil boom in North Dakota's Bakken region, which has set fresh oil production records in six out of the last seven months and now produces 6% of America's crude oil.  And all of this is taking place in an area that was never expected to produce so much oil, despite the 4.3 billion barrel estimate of reserves there, because the dense, nonporous rock in the Bakken region makes extraction extremely difficult and costly.

That all changed when advanced horizontal drilling and hydraulic fracturing techniques started successfully tapping Bakken oil two miles below the surface in 2006.  After some initial success with the new technology, the original estimates were for peak Bakken production of only 220,000 to 280,000 barrels per day, but daily production went above 280,000 in April this year by September had reached 341,384 barrels.  Oil production is expected to hit 400,000 barrels per day by next year, and remain at that level or higher for the next 10-15 years.

"Know-how gained from North Dakota's once-perplexing Bakken shale formation is being used to exploit other onerous oil plays across the globe.  Oil companies and countries a world away have taken notice of North Dakota's success, said Lynn Helms, director of the state Department of Mineral Resources.

Companies say they are aiming to apply technology learned from the Bakken to geologically similar shales in China, France, Poland, Canada and in some U.S. states, including Wyoming, Utah and Colorado. Companies already have used Bakken technology to successfully tap the rich Three Forks-Sanish formation, directly below the Bakken."

MP: New, advanced techniques for drilling oil have revolutionized the domestic oil industry in North Dakota in ways that couldn't have even been predicted just a few years ago, and will likely also open up new oil production in other parts of the world in the near future (like the Alberta Bakken in Canada) that also would have been unimaginable before this year. That's one reason that "peak oil" is peak idiocy: it always underestimates the ultimate resource - human capital (i.e. human ingenuity and the resulting innovation, advances, new technology) - which is endless and boundless, and will never peak.

World Stock Markets Set Record Three-Month Gain

For the third month in a row, the World Federation of Exchanges reported a significant gain in world stock market capitalization for the month of October, with a $1.6 trillion increase that pushed the total value of world stocks to $51.8 trillion (see chart).  The October increase follows gains of $2.8 trillion in August and $3.8 trillion in September, for a cumulative three-month gain of $8.2 trillion from August-October, one of the largest three-month gains ever.  From the cyclical low of $26.6 trillion in February 2009, the world stock valued has almost doubled to just under $52 trillion last month, and provides further evidence of a worldwide economic recovery and global bull market rally.   

Sept. Bakken Boom: ND Sets Another Oil Record

North Dakota pumped another record amount of oil in the month of September, producing more than 10 million barrels in a single month for the second month in a row and beating the previous record set in August by almost 50,000 barrels (see chart above, data here). Compared to September of last year, oil production has increased by 43.4%, and oil production in North Dakota has doubled in a little more than two years - from slightly fewer than 5 million barrels in June of 2008 to more than 10 million barrels in both August and September this year.  North Dakota's rich oil fields now produce 6% of America's domestic crude oil production, up from less than 2% in 2006 (data here).  

Partly because of its ongoing oil boom in the Bakken area, North Dakota continues to lead the nation with the lowest unemployment rate at 3.7% in September, almost 6 full percentage points below the nation's average 9.6% rate. The oil boom has fueled an employment boom for oil workers in North Dakota (data here) - the number of oil-related jobs has grown from fewer than 4,000 at the beginning of 2005 to almost 9,000 in September of this year.

Through September of this year, North Dakota has already produced more oil (81 million barrels) than all of last year (79.7 million barrels), and is on a pace to produce about 112 million barrels in 2010, which would be almost twice as much as 2008 (62.8 million barrels) and almost three times as much as 2007 (45.1 million barrels).  In recent years, North Dakota has surpassed oil production in Oklahoma, Louisiana, New Mexico and Wyoming, and North Dakota, and has gone from the 9th highest producing oil state to the #4 rank now, behind only Texas, California and Alaska.

Virginia's Tax Collections Improve 3.7% in October

"Virginia Gov. Bob McDonnell announced Friday that October revenue collections increased by 3.7 percent over the prior year.  This is the seventh month out of the last eight in which state revenue collections exceeded the previous year’s amount. The revenue increase was primarily driven by individual withholding (+4 percent) and sales tax (+6.5 percent) collections."

McDonnell notes, “We have now seen seven of the last eight months feature increases in revenue collections, and this has occurred in tandem with a slight decrease in our unemployment rate. Clearly, these are signs of a modest turnaround in Virginia’s economy."

Other highlights: It was the first time in three years that Virginia's tax revenues have grown three months in a row, and the first time since April 2008 that income tax withholding taxes have increased for six consecutive months (source).

Friday, November 12, 2010

Chinese Workers Build 15-story Hotel in Just 6 Days

Yahoo! News -- "A construction crew in the south-central Chinese city of Changsha has completed a 15-story hotel in just 6 days. The work crew erected the hotel -- a soundproofed, thermal-insulated structure reportedly built to withstand a magnitude 9 earthquake -- with all prefabricated materials. In other words, a crew of off-site factory workers built the sections, and their on-site counterparts arranged them on the foundation for the Ark Hotel project.

Despite the frenetic pace of construction, no workers were injured -- and thanks to the prefab nature of the process, the builders wasted very few construction materials. Above is a time-lapse video that shows the hotel being built from the ground up in less than a week."

HT: My co-author Seyed Mehdian, who asks "Would this have been possible under central planning and communism?"

From Darren in the comments: "I see this as a testament to how well capitalism has worked. Does anyone doubt that the technology to enable such a thing was created through a free market system that rewards innovation? The fact that a totalitarian regime has embraced capitalism at a pace and degree to which no one 10 years ago would have predicted just reinforces the power of free markets."

Making the Case for More Nuclear Power

From yesterday's Detroit News:

To be sure, we also need to consider all forms of renewable energy as they become cost-effective, but the unavoidable truth is that nuclear plants occupy a small fraction of the land required for solar and wind power. And while nuclear plants produce electricity about 90 percent of the time, wind turbines generate power, on average, only 30 percent of the time and require back-up electricity from fossil fuel turbines on days when the weather isn't cooperating. Solar energy is less efficient, providing electricity only 20 percent of the time.

Nuclear power, therefore, must play a larger role in maintaining our nation's energy security and reducing atmospheric pollution and acid rain. Nuclear power also has economic benefits, as it provides a stimulus for new jobs and revenue.

The Saudis can build nuclear plants. The Turks can build nuclear plants. We can, too. The enormous power at the heart of the atom promises to benefit economies worldwide.

Toast Yourself

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6 Blogs That Will Help You Understand Economics


Five Ways the Cell Phone Is Changing the World

From Newsweek:

1. Exposing state secrets in repressive regimes like N. Korea.

2. Advancing democracy in places like Iran and China.

3. Enabling commerce in many African countries and in India.

4. Distributing medicine and helping to identify which critical medicines (penicillin, anti-malaria medicine) are out of stock in isolated clinics in Africa.

5. Waging war - both NATO forces and the Taliban are strategically using cell phones  in Afghanistan .   

This website adds a few more ways the cell phone is changing the world, including profoundly improving the lives of millions of deaf people.  

Thursday, November 11, 2010

Five More States Report Improvements in October

1. Georgia's economy continued to show signs of improvement as state tax collections rose in October, the fifth straight month they have climbed.  Tax collections for the month are up 8.2 percent from the same month a year before, an increase of almost $93 million. Individual income tax collections -- considered an important economic indicator -- rose 4.1 percent. Sales tax collections jumped 7.4 percent. Corporate income taxes dipped 10.5 percent. Motor fuel taxes increased 14.1 percent.

2. Kentucky's general fund tax collections rose 8.1 percent in October from the same month a year ago, the best monthly improvement in two years but one that the state's budget director says isn't sustainable. Thanks in part to last month's strong performance, revenue collections have risen 5.3 percent for the first four months of the fiscal year. The 8.1 percent revenue upswing was the state's best monthly improvement since April 2008.

3. Texas sales tax receipts grew 6.6 percent in October compared to the same month a year ago. The $1.6 billion jump marks the seventh consecutive month of growth following a 14-month slump.

4. Tennessee's tax revenue grew 6.4 percent in October compared to the year before, a sign that the state may be starting to feel an economic recovery. It was the third straight month of year-over-year gains.
5. October tax collections for Minnesota were $46 million ahead of earlier projections, as the individual income tax, sales tax and corporate tax were all better than expectations.

Wednesday, November 10, 2010

Is The U.S. A Currency Manipulator?

The U.S. dollar has depreciated by about 30% over the last 8 years, and during that time period U.S. exports as a share of GDP increased from about 9% in 2002 to 13.2% in mid-2008, and then fell through early 2009 as a result of the recession and a stronger dollar (see chart).  Since early 2009, the dollar's decline has continued, and exports as a share of GDP have been increasing. Is the U.S. guilty of manipulating its currency to increase exports? 

Note: The chart has been updated to reflect U.S. exports as share of GDP on a quarterly basis.  I previously divided quarterly exports by annual GDP, and have corrected the data and chart above.  Thanks to Scott Grannis. 

Protecting Toads To Keep Private Land Private

NPR -- "A small environmental miracle has occurred in Beatty, Nev., a former mining town that sits on the eastern edge of Death Valley between Jackass Flats and Sober Up Gulch. The people of Beatty have helped revive the Amargosa toad, a warty, speckled, palm-sized creature that's unique to the area and, just a few years ago, seemed headed for extinction. But this is not your typical story of environmental action — the toad owes its comeback to an unlikely coalition that includes ranchers, miners, off-road racers, opponents of big government and the local brothel.

"What you're seeing tonight are the results of active land management, active habitat management," says rancher David Spicer. He has run miles of underground pipe around his property to create breeding pools and wet habitat for the toads. Spicer grew up with the toads and wants to preserve them, he says. But here's the surprising thing: Another reason, and perhaps the major reason Spicer has gone to such lengths is because he really, really does not like the Endangered Species Act.

"Nobody trusts the government anymore," Spicer says. "Nobody wants to work with the government. The government always wants to take something from you." So Spicer got worried more than a decade ago when some scientists declared that there were only a few dozen Amargosa toads left. Soon after that, when a group petitioned the federal government to add the toad to the endangered species list, Spicer came up with a plan.

Spicer feared the government would try to protect the toads by telling him he couldn't raise cattle or ride off-road vehicles on his own property. So he helped start a group called STORM-OV, which stands for Saving Toads thru Off-Road Racing, Mining and Ranching in Oasis Valley.

It's a quirky kind of environmentalism. But it seems to be working. This year's toad counts show that their numbers remain in the thousands. And earlier this year, the U.S. Fish and Wildlife Service rejected the latest petition to place the Amargosa toad on the endangered species list."

Jobless Claims (4-Week Avg.) Fall to Two-Year Low

(Reuters) - "Claims for unemployment benefits fell more than expected and a moving average fell to a two-year low, pointing to some relief in the weak jobs market, a government report showed on Wednesday. Initial claims for state unemployment benefits fell to a seasonally adjusted 435,000 in the week to November 6 from a revised 459,000, the Labor Department said. Analysts were expecting claims to slip to 450,000 from an initially reported 457,000. The four-week moving average of claims, considered a better measure of underlying market trends, eased to 446,500, the lowest since September 2008 (see chart)."

Highly Paid Federal Workers Making $150,000 Or More Increases More Than 10 Times In Just 5 Years

"The number of federal workers earning $150,000 or more a year has soared tenfold in the past five years and doubled since President Obama took office, a USA TODAY analysis finds (see chart above).  Federal workers earning $150,000 or more make up 3.9% of the workforce, up from 0.4% in 2005.

The fast-growing pay of federal employees has captured the attention of fiscally conservative Republicans who won control of the U.S. House of Representatives in last week's elections. Already, some lawmakers are planning to use the lame-duck session that starts Monday to challenge the president's plan to give a 1.4% across-the-board pay raise to 2.1 million federal workers."

Tuesday, November 09, 2010

Illinois Loses 1,000 More Union Jobs, and Another Manufacturing Plant to Right-to-Work Mississippi

EAST ALTON, ILLINOIS -- "Some union workers were making plans Wednesday to hit the bricks to look for new jobs after Olin Corp. announced it will move its Winchester Centerfire Operations and 1,000 jobs from Illinois to Oxford, Miss.  The company made the announcement one day after members of District 9 of the International Association of Machinists (IAM) and Aerospace Workers rejected a contract that would have frozen wages for seven years.

The company told the union leaders in August that it was considering relocating to Mississippi to make the operation more competitive. The company and union leaders negotiated a concession deal for two months.

"Our focus always has been on ensuring that we continue producing high-quality products for our customers in an increasingly competitive marketplace," said Joseph D. Rupp, chairman, president and chief executive officer of Olin Corp.

"While I am disappointed that employees represented by IAM chose to reject a proposal that would have allowed us to remain competitive in East Alton, we look forward to expanding our existing operations in Mississippi," Rupp said."

Even The Michigan Economy is Coming Back

DALLAS/November 9, 2010 – "Comerica Bank’s Michigan Economic Activity Index rose two points in September to a level of 89, the highest Index reading since June 2008. September’s reading is up 14 points from the year-ago level, and up 18 points, or 25 percent, from the Index cyclical low (see chart). September marks the seventh month of consecutive double digit year-on-year increases in the Index. Year-to-date the Index has averaged 11 points, or 15 percent, above the Index average for all of 2009."
“Over the three months through September, our Index showed a renewed uptrend after having stalled from February through June,” said Dana Johnson, Chief Economist at Comerica Bank. “My sense is that Michigan’s economy was re-accelerating along with the national economy as the summer drew to a close. Looking ahead, the Michigan economy should continue to make modest gains over the last quarter of 2010, against a background of sluggish but sustained national growth.”

MP: In another sign that the Michigan economy is slowly coming back, average statewide home prices increased in September by 6.9% compared to last year, and year-to-date home prices through September have increased by 9.3% compared to 2009.   

Another Company That Might Leave California

158 companies have left California this year to relocate to other states, and here's a new story about another one that is seriously considering leaving after evaluating six key issues of concern. 

Debunking Pro-Tax Increase Propaganda

Oct. Monster Employment Index Europe Up By 23%

The Monster Employment Index Europe increased by 23% on an annual basis to a level of 122 in October, a strong improvement from the 99 index level last October, and an increase from the 21% gain in September.  There was relatively strong online recruitment activity across most European Union countries, with especially strong growth in Germany (30% growth in October, the largest gain in online recruitment demand since late 2005), Sweden (36% annual gain in hiring activity). By sector, transportation (+50%), manufacturing (+44%), tourism (32%) and automotive (30%) registered the largest annual gains in hiring activity.  

Overall, a very positive report for a steadily improving European labor market that is gaining strength and momentum as the European economies recover. In related news, Reuters reported recently that German unemployment in October fell to its lowest level (2.945 million) in 18 years (since October 1992).  

Monday, November 08, 2010

Sneaky Trick Football Play

Markets in Everything. Or Not: Criminal Barbering

Orlando Sentinel -- "As many as 14 armed Orange County deputies, including narcotics agents, stormed Strictly Skillz barbershop during business hours on a Saturday in August, handcuffing barbers in front of customers during a busy back-to-school weekend.

It was just one of a series of unprecedented raid-style inspections the Orange County Sheriff's Office recently conducted with a state regulating agency, targeting several predominantly black- and Hispanic-owned barbershops in the Pine Hills area.

In "sweeps" on Aug. 21 and Sept. 17 targeting at least nine shops, deputies arrested 37 people — the majority charged with "barbering without a license," a misdemeanor that state records show only three other people have been jailed in Florida in the past 10 years."

HT: Stuart Anderson

NY Fed Reports Q3 Declines in Consumer Debt, Delinquency Rates, Foreclosures and Bankruptcies

Some highlights from the NY Fed's quarterly report on "Household Debt and Credit," released today with third quarter updates:

1.  Aggregate consumer debt continued to decline in the third quarter, continuing its trend of the previous seven quarters. As of September 30, total consumer indebtedness was $11.6 trillion, a reduction of $922 billion (7.4%, and almost $1 trillion) from its peak level at the close of 2008Q3.

2.  Total household delinquency rates declined for the second consecutive quarter in 2010Q3. As of September 30, 11.1% of outstanding debt was in some stage of delinquency, compared to 11.4% on June 30, and 11.6% a year ago. Compared to a year ago, delinquent balances are down 8.2%, and serious delinquencies have fallen 4.6%.

3. About 457,000 individuals received home foreclosure notices on their credit reports between July 1 and September 30, 2010, a 5.5 percent decrease from the second quarter and a 6.4 percent drop from a year earlier.

4. The number of new bankruptcies noted on credit reports fell 16 percent from the previous quarter (from 621,000 to 522,000), but is 1 percent higher from a year earlier.

5. The proportion of current mortgage balances that transitioned into delinquency rose slightly from 2.6 percent to 2.7 percent, after about a year of decline. Given the similar pattern observed in the third quarter of 2009, one might suggest this is a seasonal effect.

MP: Except for the slight, seasonal  uptick in mortgage delinquencies, there are a number of positive trends reported for household debt and credit in Q3 that provide further evidence of an economy that is gradually recovering.   

One Vote Can Decide Outcome

A "wet-dry" vote in Alabama was decided by a single vote: 219-218. 

HT: Division of Labour

Percent of Population on Facebook By State

Via Google Fusion Tables, showing that the percent of state populations on Facebook ranges from 16.04% in New Mexico to 40.45% in Kansas.