Energy Efficiency

What’s the difference between America and Australia?

Not much, we’re both highly dependant on oil (mostly from outside our country) and both our ‘leaders’ are borrowing money hand over fist from wherever it can be got and little prospect to pay it back.

When Captain kRudd is asked how we are to pay it back, he is unable to answer other than to say that Treasury modelling – based on an assumed economic growth that will take place in his second term as Prime Minister (if the people are silly enough to vote for / trust him again) – will be able to in about 6 years but it could go out to 2022.

Economic growth is measured by GDP (gross domestic product – goods and services sold in Australia) however; GDP has been artificially manipulated for years by both government and corporations alike. The all time favourite terminology I like to borrow from marketing is ‘value adding’, whereby a company adds stuff to your purchases with inflated prices. [For my regular readers you will recall the cardboard tubing analogy].

But the real problem is that all that economic growth is a lie, and we all know that the banks collective greed has sunk us and the happy days will never return … why ? Because the money that was being passed around so quickly was Monopoly money and now its gone; the money that came from the sale of our resources has dropped because the demand for all the crap coming out of greater China no longer has a market.

Is Obama a more honest politician that Rudd … it appears so as some exerts from an interview on May 23rd 2009 with C-SPAN host Steve Scully who broke from a meek Washington press corps with probing questions for the new President.

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

President OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we’ve made on health care so far. This is a consequence of the crisis that we’ve seen and in fact our failure to make some good decisions on health care (see the movie by Michael Moore titled ‘Sicko’) over the last several decades.

So we’ve got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it’s putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off; (sic) we also have a long-term problem. The short-term problem is dwarfed by the long-term problems like Medicaid and Medicare; if we don’t reduce long-term health care inflation substantially, we can’t get control of the deficit.

So, one option is just to do nothing. We say, well, it’s too expensive for us to make some short-term investments in health care; we can’t afford it; we’ve got this big deficit; let’s just keep the health care system that we’ve got now.  (sic) Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything… and ‘WE’RE OUT OF MONEY’

SCULLY: When you see GM though as “Government Motors,” you’re reaction?

OBAMA: Well, you know – look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven’t seen since the 1930’s. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries…

So what will be the words from Rudd or the Prime Minister following him in 5 – 10 years time ?

And just as America relies on oil imports (where their money goes off-shore just like ours does) the difference is they have a far more expansive public transport system whereas Australia has developed into one of the most car dependent nations on Earth; 80% of fuel for our cars and trucks being imported or refined from imported oil. So petrol imported is 24%, and diesel imported is 44%; 70% of our refinery output is from imported oil so 77% of petrol is from foreign sources and 83% of diesel is from foreign sources.  Oil prices are on the increase ($65 a barrel May 29th) and we have a further potential problem,

From ABARE Mineral Statistics, March 2009 http://abareonlineshop.com/PdfFiles/ams09.1_marchqtr08_report.pdf

ML in 2008Q4
Petrol
Production    4,238
Exports          32
Imports       1,331
Consumption   5,537

Diesel
Production    3,180
Exports         153
Imports       2,384
Consumption   5,411

Crude Oil + Condensate
Production    7,368
Exports       4,777
Imports       5,977
Consumption   8,568

PetroChina Co. agreed to pay as much as $2.2 billion to buy Singapore Petroleum Corp. to gain a foothold in Asia’s largest oil trading centre in an acquisition that may extend China’s influence over global resources pricing. Singapore Petroleum has stakes in oil fields in Indonesia, Australia, Vietnam and Cambodia and also owns undersea pipelines carrying gas from Indonesia to Singapore and storage terminals. The company jointly owns Singapore Refining Co., one of the three biggest oil-processing plants in the city state, with Chevron Corp., the second-largest U.S. oil company. The refinery has capacity to process 285,000 barrels of oil a day.

China agreed to give Russia, Kazakhstan, Brazil and Venezuela $49 billion in loans this year in exchange for oil supplies. The government plans to tap its $1.95 trillion foreign-exchange reserves, the world’s largest, for acquisitions. The government of the world’s second-largest oil user is encouraging local companies to buy commodities and energy assets made cheaper by crude’s 58 percent decline from a record in $147.27 a barrel in July.

And if anyone thinks the Chinese are over a barrel with hundreds of billions invested in USA $, recently China and Brazil did a deal for long-term oil contracts which were actually ‘paid for’ with US Bonds, which Brazil used as collateral for a loan to finance the development of their oilfields. This way China didn’t have to sell the bonds and drive the price down or cause a panic and China shifted the risk onto someone else.  Brazil doesn’t have 10 year bonds but has 8 year bonds with a yield 12.01% compared to US yield today (May 27th) at 3.61%, so they are happy to take some risk for the savings.

Oh what a tangled web we weave when we first attempt to deceive …