Saturday, June 20, 2015

Massive hydraulic fracturing proves a point I made more than five years ago

Maybe you remember it. Whether you remember or not—remember this: I was right then, and I’m still right, now. In the post linked above, I attempted to explain how advances in technology change not only how we estimate energy reserves, but also our ability to extract and exploit reserves once believed to be inextractable and unexpolitable. The recent advances in massive hydraulic fracturing technology have led to significant increases in the efficiency of current and expected future extraction methods. These advances have also led to changes in how we estimate reserves in the ground.

The result? The shift in the Production Possibilities Curve that I predicted in May 2010. These advances have also positioned North America as the global leader in proven oil and gas reserves, and a long run drop in oil and gas prices.

Here are some excerpts from the May 2010 post:

What the doom-and-gloom crowd don't tell you about is the economic concept of production possibilities, time and the effect technological change has on production.  This is not an oil only concept.  It applies in every market.

I'm an economist, so I can't have a discussion on economics without a chart.  To the right is what's called the Production Possibilities Curve.  The vertical axis, C, represents capital (plant, equipment, etc).  The horizontal axis, L, represents labor. Any point on one of the curved lines represents a mix of capital and labor that produces the same quantity of a good or service.  It doesn't matter if the good or service is oil, gas, coal, legal services, cars, buildings, widgets, software or blog posts--substituting more labor for capital will not increase production any more than substituting more capital for labor.  Certain industries, like oil production, are very capital intensive.  Oil producers spend hundreds of billions of dollars on capital but don't spend as much on labor.  Conversely, legal services are labor intensive.  What this means is that most industries have mixes of capital and labor that are defined by the nature of the industry itself, rather than the decisions of the producer.  The producer may fiddle a little here and there with the mix, but his or her industry most likely determines the general neighborhood of the mix.

What the producer will not do is produce an amount that falls to the left or below the curve.  The profit motive causes the producer to add more capital and labor until the curve is reached.

What the producer cannot do is produce an amount that falls to the right or above the curve, and the limit is imposed by the state of technology at the time the production commences.  This is important to understand.  The production possibilities chart I have presented here shows two curves--one for period t and one for period t+1.  As a result of the growth of technology between the two time periods, the same mix of capital and labor is capable of producing a greater quantity. Only a change in technology can cause the entire curve to shift out and up (conversely, only external intervention in the market can cause the entire curve to shift in and down, but that's a blog post for another day).  And, technology tends to have a larger impact on capital-intensive industries than labor-intensive industries, because technology tends to affect the productivity of capital more than it does the productivity of labor.  That is, more efficient capital tends to make labor more efficient, but more efficient labor has a much more limited effect on the productivity of capital.

These are basic tenets of microeconomics and are—or should be—taught to every sophomore economics student (we don’t let freshmen take economics).

What is great about such tenets is that empirical data tend to demonstrate how effective they are in describing economic phenomena, and what you are seeing in the explosive growth of energy production and the precipitous decline in energy prices constitutes all the empirical data you need to reach the most reasonable, most logical conclusions.

When I published my 2010 paper, the “peak oil” folks and Paul Ehrlich neo-Malthusians came after me with vitriol. How dare I say that we would never run out of fossil fuels!

 Read that 2010 post. It’s a chapter right out of a Microeconomics 205 lecture.

Five years later, I’ve been proven right.

And I’ll be right in another, 5, 10, 15 years. The data don’t lie. People do.

Wednesday, June 17, 2015

The Office of Personnel Management gave up my personal data

To the Chinese, it appears. My name, my address, my social security number. Not only that, but my wife’s name, the names of my children and all of their social security numbers, too. They also have the names and locations of my references that I used to apply for a Top Secret clearance in 1990. All of which is now in the hands of potentially bad actors who might attempt to use that information for nefarious purposes.

The letter displayed below says that my personal information “may have” been compromised. Right. Trust me—it was compromised.

I was disappointed to say the least, but I did not panic because:

  1. Anyone who knows me knows that I am somewhat anal when it comes to system security. If you’re good enough to get through my security system you get an IP address of A Black Hole.
  2. I haven’t had a Top Secret security clearance since leaving the Department of the Army in 2006, nine years ago almost to the day. I still maintain an active Secret security clearance.

In my circle, I’m known as a white hat hacker. I’m the kind of guy who goes down the hall and checks a door knob. If it’s unlocked and there’s something valuable behind it, I alert the person responsible for securing it .I don’t wait until my black hat peers compromise, pilfer or otherwise steal that stuff of value.

But that’s what OPM has done in this case—they let the black hats walk through that door and take everything they wanted. Then they decided to tell us what “may have” transpired?

Here’s the letter I received from OPM on Monday. I’m only posting the first two pages, with certain parts blacked out.



Two things worth observing here. OPM is offering me an 18-month, no cost-to-me credit monitoring service. Please refer back to bullet No. 1 above. I already have LifeLock; and who wants to trust the lowest bidder on a government “security” contract? CSID may be great. But that’s Ok—no thanks.

The second thing, and the one that bothers me the most, is that there will likely be no one held accountable for this egregious negligence. Just like the VA scandal, the IRS scandal and the disaster in Benghazi. No one in this administration pays a price for incompetence or inattention to duty. We do, however.

And that’s what it is, ladies and gentlemen: Gross negligence and incompetence. Because the people responsible for protecting my sensitive info were asleep (or drunk) at the switch that data is now in the hands of God knows who.

Am I mad? Hell yes. Am I worried? Not even a little. I’m a low value target and I’m really hard to get to. You’re gonna have to come to the door to get anything, and if you do, you’ll be staring down the barrel of my brand new Browning tactical shotgun, loaded with buckshot.

Monday, January 5, 2015

Standing on the edge of history, Alabama fell off

clip_image001On January 1 in the Sugar Bowl, Alabama fell off the cliff. Slipped into the Dark Side. Blew it.

Wile E. Coyote style.

You may recall this post from December, in which I explained how the Crimson Tide could make history while sticking a thumb in the eye of the talking heads who were incensed over Alabama’s rematch against LSU a coupla years ago.

You might also remember this post from November, where I expressed discomfort over Alabama’s apparent attempts to match speed and tempo of teams that play basketball on grass.

But my discomfort actually goes all the way back to January 2014, where I first lamented the exasperating tendency of trying the up-tempo style against teams that are designed for it.’s Senior Editor JessN picks up on what happens when a team tries to do what it was never recruited or designed to do:

4. Offensive playcalling got too cute by half. Alabama fell in love with the pass early, likely because defensive scouting told the coaches to do it. Ohio State’s presumed defensive soft spot was a secondary that was short on experience, albeit long on turnover-forcing ability. Alabama got to see too much of the latter. Alabama never tried Tyren Jones at running back, and didn’t use T.J. Yeldon enough even though he appeared reasonably healthy. Derrick Henry only got 13 carries. As talked about in the preview, OSU DE Steve Miller was extremely vulnerable to the run and Alabama had good success going at him, but Kiffin didn’t do it enough. And when Blake Sims did make a mistake throwing the football, Ohio State made him pay, unlike so many other teams before. …

5. Turnovers again come up big. It was touched on above, but this was the season’s real pink elephant and it showed up again in the Sugar Bowl. Blake Sims was picked off three times and the second one was arguably even more damaging than the first, which went for an Ohio State defensive touchdown. Alabama finished the season on the wrong side of the turnover margin, which speaks both to the more chance-taking nature of Kiffin’s offense and the inability of the defense to force turnovers, particularly in the passing game. Cyrus Jones also missed the ability to possibly pick-six Cardale Jones but dropped the pass. For 2015, Alabama has to figure out what went wrong here in 2014, on both sides, and fix both.

When Blake Sims got rattled, he either made a play with his feet, or he tossed an interception. It seemed that there was no willingness to simply throw the ball away, something QB’s have been doing since the inception of the forward pass. I appreciate his competitive spirit and desire to make something out of nothing, but sometimes, you just have to give up on a play and try again.

But you don’t do that 10 seconds after the ball is set and the down marker is flipped. Jess is right—the playcalling was too cute and it was costly. He also correctly points out that some of our most effective offensive weapons watched much of the game from the sidelines. How does Derrick “The Hammer” Henry only get 13 carries? Why is TJ Yeldon watching?

Mark Ingram and Trent Richardson must have been watching that game, shaking their heads in some truly sore WTF moments.

Another point along my line of thinking that this is not Alabama Football: Against Auburn in the Iron Bowl, Alabama had a time of possession of 26:06 versus Auburn’s 33:54. Against Mizzou in the SECCG, it was 23:17 to 36:43. And against Ohio State, it was 28:14 to 31:19. Those numbers mean something—and what they mean to me is that slowing down and playing smashmouth football produces more wins than not. We went 2-1 in those games, but I’m not comfortable seeing my team’s offense on the sidelines more than the other team’s offense. That’s… well… just not right.

Jess however is right—changes need to be made, and my opinion is that the changes need to include a serious examination of what has made Alabama such a dominant program in the conference and in the country, and see if that style of play can be implemented as successfully as it was beginning with Saban’s first step on the campus in Tuscaloosa.

As far as I’m concerned, Alabama had a great season. Blake Sims  turned out much better than many people expected. Amari Cooper deserved the invitation to New York. Landon Collins proved equal to the hype. Lane Kiffin turned out to be a gifted—even if aggressive—playcaller and QB coach.

In 2014, the Tide got yet another SEC Title and had yet another shot at the Crystal. We’ve got a great team coming back in 2015 by any measure.

But it could have been better, and it could have been historic.

Sunday, January 4, 2015

Y’all, please… “Golf” is not a verb

clip_image001There is a recent article from the New York Times describing how President Barack Obama plays Golf. In essence, it seems that the semi-retired President has a game that is not all that good, despite his well-publicized and multiple attempts to practice it. Well, mine isn’t all that hot either; primarily because I don’t have time to hit the links as much as I used to. But the point I’m trying to make here is that “Golf” is no more a verb than football, basketball, hockey or soccer.

It’s kind of a pet peeve of mine. Another one is that I don’t think “text” is a verb, either. That battle I’ve already lost, apparently. I won’t dwell on the fact that I’m an analog boy in a digital world.

But anyway…

Ever hear of someone going footballing? Nope. Me, either. How about someone going basketballing? Uh uh. Me either. Football is a sport. Basketball is a sport. And Golf is a sport. So when even the Grey Lady uses the word “Golf” as a verb, I haz a face palm.

I’m gonna keep this post short and simple by saying that if you enjoy the sport, you don’t “Golf.” You are not a “Golfer.” You don’t go “Golfing.” what you do is tee the ball up and play Golf. Just like you tee the ball up and play football, or tip the ball off and play basketball.

Okay? Okay.

Happy New Year, and may your New Year’s resolution to improve your Golf game take your handicap to a happier and more productive level.

Friday, December 19, 2014

One of the last of “Bear’s Boys” goes bowling

clip_image001The University of South Alabama, in only its second year of Division I bowl eligibility, has made it to the Camellia Bowl. With a 6-6 record for the 2014 season, coach Joey Jones is taking the Jaguars to Montgomery for what could be an interesting matchup against Bowling Green.

Joey Jones and I were classmates at Murphy High School. Although we ran with different crowds, I remember Joey as an affable, polite but competitive fella. Another thing about him was his popularity, especially among the girls. To put it bluntly, you had to wait until he’d decided who was going to the dance with him before you asked a pretty young lady for the pleasure of her company.

Oh, and he could run like the wind. I’ve never seen a white boy run that fast (that’s not racist; it’s the truth and the truth is never racist). My bet is that at age 52, he can still probably outrun most of his players.

Jones is also the last of a dying breed—coaches with ties to legendary Alabama coach Paul W. “Bear” Bryant. Coach Bryant recruited Jones as a wide receiver, and he lived up to the hype. He lettered for four years, graduating in 1983. While you might look at 71 catches for 1,386 yards and 15 touchdowns as somewhat pedestrian given the work of men like Julio Jones and Amari Cooper, consider the fact that Jones was playing in the Wishbone system, which rarely featured the pass catching ability of a 5-9, 165 lb speedster. He averaged nearly 20 yards per catch, which means that every time he touched the football it was First Down Alabama.

Coach Bryant referred to him as something of a secret weapon—a player that no one would pay much attention to until he was beating every defender to the end zone for the score. He did that 15 times in his career at Alabama in a system that emphasized the ground game.

As a coach, he’s pretty much doing the same thing at South Alabama. No one paid much attention to USA until they started beating more established FBS schools like Troy and Kent State, Nick Saban’s alma mater.

A 6-6 record is certainly no world beater. USA has taken its share of beatings in so-called “paycheck games,” where a team travels to a major program’s home field, takes a whoopin’ and collects a nice fee from its host. This is the same thing Southern Miss, Florida State and others have used to build their college football programs.

But through his time at USA, Jones has served with class, dignity and integrity. There are butts in the seats at every home game, and USA doesn’t have to print tickets in the local newspaper to get them there. People in Mobile eagerly pay to go to Jag games because… well… it’s a Jag game. He’s taken a brand new program to heights that make UAB fans gasp in horror. UAB is giving up its football program, while the nascent Jags program is making gains no one really believed to be possible so early in the program’s life.

One thing about the crowds you see at Ladd Peebles on game day: There are Alabama fans, Auburn fans and LSU fans sitting right next to the fans and alumni wearing red white and blue. This is a football program embraced by the entire community.

Consider this as well: Only five years into college football, USA is actively considering probably not if, but where to build an on-campus stadium. Could this sort of speculation be happening if it weren’t for Joey Jones? I’m laying odds on “no.”

One of the great things about college football is history and tradition. You build things one brick at a time, and before you know it, you have something standing before you that is legendary and remarkable.

Coach Jones is on his way to doing just that and on December 20 in Montgomery, a very important step will be taken with the Jags first ever bowl game. Win or lose, Coach Bryant must surely be smiling from Heaven over this. One of the last of his boys stands on the edge of greatness, and the future looks quite bright.