Oh, dear. Pity the oil lobby and its “facts.”

Good story in the Times today. Boils down to this: The federal government wants more money and more oversight on oil and gas drilling in public lands out West. Makes sense to me. It’s been well-reported that the Bush administration gave drilling companies copious rights at bargain prices while undervaluing oil and gas resources owned by the American people.

American Petroleum Institute’s president, Jack Gerard, makes an appearance in the article. He said the decision by the Interior Department was a setback for the economy. I’m not sure about that. It might be a setback, however, for some of API’s members who have grown used to sucking oil out of places such as Colorado and Wyoming and paying next to nothing in royalties.

Next Gerard cleverly misuses a fact to try and illustrate how the Obama administration has been starving the American people of home-grown energy. According to the Times, Gerard says “that federal revenue from oil and gas leases in the region known as the intermountain West had fallen by more than 80 percent” during 2009.

That might be true. But he failed to cite the fact that the price of oil in 2009 was basically HALF of what it was in 2008. So there’s a 50% drop right there. Add in the fact that demand and consumption is WAY down in the U.S. since the spring of 2008 and, whoa, there you have your 80% drop. (The oil and gas fields of the Mountain West will be some of the first to shut off when demand drops as their production costs tend to be quite a bit higher than those in Alaska and Texas.)

Nice use of a “fact” by the API. Too bad it came with none of the relevant context.

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What does orange juice have in common with oil?

Not a whole lot, really, except that both commodities owe their existence to the amazing properties of solar power. One product, oranges, manifests after a short growing season and the other, oil, takes several hundred thousand years longer…

But it’s also interesting that the prices for both staples swing higher on the news of extreme cold across the country. I live in Chicago. This winter has arrived with a fierceness that I don’t recall seeing for years. The orchard farmers of Florida are seeing the same thing (albeit at temperatures 40 degrees warmer than Chicago’s). New England and the West, same thing. So the price of oil has jumped to more than $83 this week as people’s furnaces burn more natural gas and heating oil from Dallas to Maine.

And the price of orange juice futures, on fears some of the crop could be lost to frost, jumped to $1.50 per pound today, the highest level in two years. Today’s oil price, incidentally, is the highest since October 2008.

So high oil — in the winter — means high orange juice? Perhaps it does. But what does this mean? Not a whole lot, I suppose, unless you’re an inflation hedger.

More interestingly — is there a way to play statistical arbitrage between these markets? I can’t imagine the orange juice market is as efficient as the oil market. Or perhaps I have that reversed? Clearly, I’m no quant.

If I were, I’d be working on my orange juice-oil algorithm right now and preparing to print money. My shingle: OJ-Petrol Traders.

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Iranian soldiers allegedly go into Iraq, occupy oilfield. Oil spikes $2. Mahmoud? Or is it Goldman?!

Interesting.

Iranian troops go into Iraq, occupy a giant oil field. Then they leave. The price of oil predictably shoots up for much of the day in the U.S. before falling back, though it was still up 60 cents on the day.

Has ol’ Mahmoud Ahmadinejad become a canny manipulator of commodities markets?  Or are his talents still limited to wearing strangely casual Western sport coats and cracking unbelievable rhetoric?

Or — perhaps even more sinister — has Goldman Sachs figured out a way to control battalions of Iranian troops?   A-ha!

Quick, who knows if Lloyd Blankfein speaks Farsi?

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Bloomberg today named $20 Per Gallon one of the 10 Best Books of the Year.

Very exciting! Nice momentum for the new year.

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Boeing 787 gets off the ground this morning; 25,000 plane geeks showed up.

I remember standing inside the body of the first 787 on the assembly line in May 2008. They told me it would fly later that year — and that was after Boeing had already pushed the schedule back three times.

Regardless, today’s news is exactly what Boeing needed. This is the first plastic plane to put together by one of the two big commerical airline makers (Airbus) and it’s the largest advance in fuel efficiency for large jets in decades. Boeing, I’m sure, is watching their gas tanks closely to see if their predicted fuel efficiency gains of 20% will stand up.

For the travelers among us, let’s hope they do. And it wouldn’t hurt me to make this Forbes magazine article seem a bit more prescient.

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Exacerbating a trend, the recession has blunted U.S. innovation.

There are countless things this recession has affected, most of them obvious.  And while this particular effect may not be unexpected, it’s yet another reminder that the U.S., for reasons that go from a weakening education system to a tougher stance toward immigrating graduate students, has slipped in the innovation department.  Are we still the preeminent innovation force in the world?  Yes.  But if we weren’t, we’d be on our way to the third world.  So maintaining our vigor here should be something at fore of all our leaders’ minds.

Patents filed in the U.S. this year have fallen 2.3% to 485,000, according to the patent office.  What’s worse, patents issued to foreign firms rose 6.3%.  This could be the beginning of a spiraling trend.  Let’s hope it’s not and that’s it’s merely an effect of what has been a battering period of economic retraction in the U.S.

CNN story on 2009 patent drop.

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In going after student journalists, Chicago state’s attorney behaves like a typical Chicago politician: arrogant, indignant and childish.

I don’t usually write on these matters, but this issue deserves all the attention it can garner, including the very modest contribution I can make here.

Bravo to the New York Times for giving this subject the attention it deserves. In the Times’ business section today, David Carr rounds up the situation in Cook County, Illinois, where the state’s attorney, who apparently has had enough of students exonerating ill-convicted death row inmates, has brought the full weight of her office to bear on the students, their professors and Northwestern University’s Medill School of Journalism.

I went to Medill myself.  But that is of no issue here.

What is going on here is hackneyed, Chicago-style intimidation.

Since the mid 1990s, the Innocence Project at Medill has exonerated 11 incarcerated people.  Five of those people were on death row.  Medill students are currently working on the case of Anthony McKinney, who was convicted of a 2004 murder that, according to piles of evidence the students have uncovered, he may not have committed.  Wrongful murder convictions, of course, are nothing new in Illinois, where dozens of cases have been overturned in addition to the cases Medill has misproven.  Things got so bad former Illinois governor and pro-capital punishment man George Ryan, who himself now resides in jail, suspended Illinois’ death penalty in 2000 because Illinois’ system was, he said, “deeply flawed.”

Medill’s progress on the McKinney case is just the latest dollop in a history of botched convictions and, of course, NU students’ own history of digging deeper than Cook County prosecutors.  For this latest case, the Center on Wrongful Convictions at Northwestern’s law school has filed for a hearing based on the new evidence on McKinney’s behalf.

This development brought Anita Alvarez, who was elected Cook County State’s Attorney a year ago, lurching to action.  Alvarez has drawn a line.  It’s a line that says, “Don’t play in my sandbox.  Don’t exonerate innocent people.  Don’t make me look bad.  Prosecutors will do the prosecuting, truth be damned.”

The county has subpoenaed everything it can possibly think of when it comes to the students involved in this case.  They want notebooks, emails, tapes, class materials, syllabi, tests, papers, assignments, homework. They even want report cards — report cards that might show a grade-derived motivation to find evidence that shows innocence.  And, by the way, what of the motivation?  If there’s trenchant new evidence, there’s trenchant new evidence.  What does it matter if the students were drawing a grade?  As if there isn’t motivation and pressure within the state’s attorney’s office to convict, convict, convict.

Alvarez clearly has had enough of meddling students who drive down death row conviction rates for her squad — not to mention the ugly publicity that comes with every overturned case.  So she’s dumping these students’ and professors’ lives on their heads in what’s tantamount to a legal shakedown.  Outsiders aren’t welcome in the justice process, apparently.  She thinks she can cow, frighten and outmaneuver a group of journalism students by filing copious and intrusive subpoenas.  Perhaps if she makes an example of this group, she thinks, the next group will be more reticent before it starts digging into one of her cases.  What she wants to precipitate, quite simply: for Medill to stay out of the County’s justice process.

Let’s hope Northwestern fights this bully with both fists.  Let’s hope the clarity of justice wins out over the murky entitlements of Cook County politics.  Let’s hope Alvarez and her cronies — Mr. Todd Stroger and others — learn that indignance has no place in governance but that transparency and accountability do.

Thank you, Medill.  And thank you, David Carr and the New York Times.

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IEA defectors assert the agency has been downplaying peak oil’s reality because of U.S. pressure.

This has been reported in a couple of spots and it’s legitimate big news.

Several economists from the IEA, which has actually sounded a more cautionary tone lately, say that the Paris-based agency has not acknowledged that most of its own experts think not only are the IEA’s future production estimates too high, but also that we are likely in the peak oil zone now.

The economists say the U.S. wants to avoid an oil-buying panic that such an outlook might cause.  That makes perfect sense.  But the fact remains that the oil coming out of the ground has to go somewhere; it has to be burned by someone.  For this reason, it’s very hard to price oil accurately for future demand and future scarcity, even though it is a finite resource.

Producers with shareholders such as BP need money now. Same for oil-producing countries such as Iran.  For that reason, they’ll keep producing and people will keep buying just as if oil was a commodity such as corn or soy beans.  The problem of course, is that we can grow more corn.  We can’t grow more oil.

Here is Popular Science’s quick coverage on the IEA whistleblowers. It sums things up nicely.

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China’s economy heating up, world will consume more oil in 2010 than previously thought.

China will clearly be driving demand in all things energy within a decade, if they aren’t already. They’ll also be driving nearly 50% of greenhouse gas emissions, too, unfortunately.

OPEC says world to drink more oil than expected next year.

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New report from UK think tank says oil production likely to peak before 2020.

Moreover, the report from the UK Energy Research Centre says that maintaining global production at today’s level will require that we find the equivalent of a Saudi Arabia every three years. That’s more dire a prognosis than that of the International Energy Agency, which said in July that we need to find three Saudi Arabias by 2030 to maintain production and six Saudi Arabias if we wish to keep up with projected demand.

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