The Navy of the future

Practicing to block the Straight of Hormuz

Member of the Iranian Parliament says the military was set to practice operations to block the Straight of Hormuz, one of the key choke points for world energy supplies. The Iranian military has not confirmed this, but you can probably expect a rise in oil prices just on the emotional impact of the possibility.

As it is, most of the crude oil and liquefied natural gas of Saudi Arabia, Qatar, Kuwait, Iraq, the Emirates (and Iran) have to pass through the four-mile wide shipping channel, currently patrolled by the U.S. Navy.

UPDATE 1-Iran army declines comment on MP's Hormuz exercise remarks | Energy & Oil | Reuters

Oil on the flames (cute title, huh?)

Exxon-Mobil is throwing in with the Kurds in the upcoming battle over Iraq.  The battle takes off again.

Whatever the prospects of finding oil in the north of Iraq, observers are surprised that Exxon is prepared to hang its future in Iraq on the outcome of the power struggle between Iraqi Kurdistan and the central government. Control of the right to explore for oil and exploit it is crucial to the authorities on both sides since they have virtually no other source of revenue. 

The Kurds have won a degree of autonomy close to independence since the fall of Saddam, and the ability to sign oil contracts without reference to Baghdad will be another step towards practical independence and the break-up of Iraq. A parallel would be if the Scottish government were to sign exploration contracts in the North Sea without consulting London. 

What makes the Exxon-KRG deal particularly inflammatory, says Mr Shahristani, is that three of the six blocs where Exxon is planning to drill are understood to be "across the blue line – that is outside the border of the KRG". This means they are in the large areas in northern Iraq disputed between Arabs and Kurds since 2003, but where the Kurds have military control. 

The government must now decide if it will make good on its threats and replace Exxon at a mammoth oil field called West Qurna 1 at the other end of the country, north of Basra. Iraqi oil officials hint that Royal Dutch Shell might replace the American company. 

Both sides have much at stake. The Iraqi government is totally reliant on its oil revenues to pay its soldiers, police force and civilian officials. It needs vast sums to rebuild the country after 30 years of war, civil war and sanctions. In 2009, it began to expand its oil industry by signing contracts with firms such as BP, Royal Dutch Shell and Exxon to boost production in under-exploited and poorly maintained fields. 

These companies thereby gained access to some of the largest fields in the world, each with reserves of more than five billion barrels. Vast sums are being invested, mostly around Basra in the south of Iraq. Oil output, now at 2.9 million barrels a day, is due to rise to a production capacity of 12 million b/d by 2017, potentially putting Iraq on a par with Saudi Arabia as an oil exporter.

Since the Kurds have had a bad deal for generations, my sympathies are with the Kurds.  But even if they succeed to get the state they want, the transition is going to be hard.

Exxon's deal with the Kurds inflames Baghdad

Boldly going where we've never been before

From the Institute for the Future, a visualization of trends and where they may be leading us

A look at 'the future of science: 2021, from CNN.com

Would anyone care to speculate on what some of these imply for politics and economics?  It sometimes seems like most political discussion is analogous to medieval debates over angels, pins, and biblical interpretation.  I suppose it seems important in its own context, but the world is passing it by.

Globalization

A view of the global transportation system.

Yet another World Wide Web.

Russia and China

STRATFOR has an interesting comparison of the immediate prospects for Russia and for China.  For Russia, the fact that the (nearly bankrupt) Greek government is going to them for help--after being rejected by the EU--is a blow to the eurozone and a boost for Russia's prestige.

This was an avenue that both Iceland and Serbia took during their economic crises, and each time the EU responded with financial aid of its own to counter Moscow’s rising influence. A Russian loan to Greece — no matter what the actual size of the aid package — would be a psychological blow to EU unity. An EU member state — a eurozone state no less — finding financial assistance in Russia rather than among its fellow euro users would lay bare the EU’s inefficiency, particularly in times of crisis management. Moscow would therefore send a powerful message to Central European states that see the EU as a counter to Russian spheres of influence on their borders.

China has the problem that it's stuck between saying no to helping Iran resist American sanctions--which would undermine its claim to counterbalance American power in the region--or try to block the sanctions--which it doesn't have the immediate infrastructure to do, and would encourage more Sino-US tensions.

While sanctions may not specifically target Iranian oil exports, Beijing reasonably fears they could create a chain reaction jeopardizing its oil supplies not only from Iran, but also from the rest of the Gulf, since these shipments pass through the Strait of Hormuz where Iran is most likely to aim any retaliation. While China’s economic growth rate is high, serious vulnerabilities exist in the banking, property and export sectors, all of which the government is attempting to address without triggering a destabilizing slowdown. Now would be an exceedingly bad time for a sudden energy shock.

Moreover, much of the credibility of China’s claims to rising international status rest on its ability to defend smaller states like Iran that are antagonistic to the United States. If China drops Iran at the first sign of American coercion, a host of other states — in Latin America, Africa and Southeast Asia — will rethink whether they can rely on China for support. In such a case, Chinese leaders would struggle to allay domestic outrage at yet another example of acquiescence to the United States, while much of the political capital they have painstakingly built up in recent years through speeches, state visits and investments across the world would be squandered.

From the Chinese perspective, it's one more reason to develop a much greater naval presence, or to work out some kind of arrangement that makes China's access to oil less dependent on the good will of the US Navy.

I wonder how the debt issue fit into this?  By some measures, the British economy is in even worse shape than the economy of Greece, and American problems are growing rapidly.  Can the Chinese find a way to use the debt as a lever?

"This report is republished with permission of STRATFOR"

Here's a report to read

A pretty good short review of some of what might be coming down the road. Best of all, the authors don't describe a single "future" but point out some of the directions current trends might take us.

Foreign Policy: The Next Big Thing

Cycles and reforms

There's a very good discussion at The Baseline Scenerio (an all-around source for thought on the financial crisis). The short form: the US has done as well as it has because of the rule of law, but this has been undermined on more than one occasion by corruption and the concentration of power. Although there can still be "banana booms" (I love that term--comparing the current structure to banana republics), they aren't sustainable. These problems have led to course corrections in the past (under Johnson, TR, and FDR), but it isn't easy, and the reform period has averaged five to ten years. If it can't be fixed, we are doomed to a cycle of "oligarchy-boom-bust-oligarchy".

Global Crisis And Reform: Starting A Long Journey « The Baseline Scenario

Zero point energy

Next Big Future links to a patent and several interesting articles regarding one of my favorite speculations, zero-point energy extraction. It sure looks like something interesting is going on here, even if there is no agreement on how to account for it, or what it means for our general understanding of physics. People are trying various proof-of-principle devices. If success can be replicated, I’ll leave it to the physicists to argue why it works. The human-level prospects—economic, political, social—would be more than enough to keep me busy.

From the patent:

A system is disclosed for converting energy from the electromagnetic quantum vacuum available at any point in the universe to usable energy in the form of heat, electricity, mechanical energy or other forms of power. By suppressing electromagnetic quantum vacuum energy at appropriate frequencies a change may be effected in the electron energy levels which will result in the emission or release of energy. Mode suppression of electromagnetic quantum vacuum radiation is known to take place in Casimir cavities. A Casimir cavity refers to any region in which electromagnetic modes are suppressed or restricted. When atoms enter into suitable micro Casimir cavities a decrease in the orbital energies of electrons in atoms will thus occur. Such energy will be captured in the claimed devices. Upon emergence form such micro Casimir cavities the atoms will be re-energized by the ambient electromagnetic quantum vacuum. In this way energy is extracted locally and replenished globally from and by the electromagnetic quantum vacuum. This process may be repeated an unlimited number of times. This process is also consistent with the conservation of energy in that all usable energy does come at the expense of the energy content of the electromagnetic quantum vacuum. Similar effects may be produced by acting upon molecular bonds. Devices are described in which gas is recycled through a multiplicity of Casimir cavities. The disclosed devices are scalable in size and energy output for applications ranging from replacements for small batteries to power plant sized generators of electricity

Next Big Future: Jovion Corporation Gets Patent for Zero Point Energy Extraction