World on Brink of New Temperature Record (Despite a Coy El Niño)

Usually, a big, fat El Niño sets the world up for a new temperature record; see the correlation in the chart below. (For a good explanation of why, read this post by Bill Chameides of Duke University.)

TempAnomElNino jpeg

And for most of 2014, forecasters have been debating whether a big one would or wouldn’t show sometime soon. However, in its latest ENSO forecast, out 6th November, the US government’s National Oceanic and Atmospheric Administration (NOAA) has grown far more “iffy”:

The CPC/IRI ENSO forecast has dropped the likelihood of El Niño again, to 58%, despite the presence of “borderline” El Niño conditions (i.e. warmer equatorial Pacific sea surface temperature, and some reduction in rain over Indonesia). El Niño is still expected, but with less confidence.

But the Australians, in an even more recent update (18th November), think we may see a last minute appearance for this year’s elusive El Niño:

The Pacific Ocean has shown some renewed signs of El Niño development in recent weeks. Above-average temperatures in the tropical Pacific Ocean have warmed further in the past fortnight, while the Southern Oscillation Index (SOI) has generally been in excess of El Niño thresholds for the past three months. Climate models suggest current conditions will either persist or strengthen. These factors mean the Bureau’s ENSO Tracker Status has been upgraded from WATCH to ALERT level, indicating at least a 70% chance of El Niño occurring.

Regardless of whether El Niño shows, it is too late in the year for it to significantly pump up global temperature anomalies. So it should be tough for 2014 to take the number one spot. Or will it?

From Columbia University’s Earth Institute, we can see where the records stand:

Top 10 Warm Years jpeg

Note: the slight differences between the anomalies recorded by the two US government agencies, NOAA and NASA, are due to different measurement procedures. Nonetheless, for both time series, the years from the last decade dominate the table and broadly align. And for 2014?

The NASA data (here) have been published out to October and show an average temperature anomaly for the first 10 months of the year of 0.66 ⁰C. The nine months of data put out so far by NOAA (here) average 0.67 ⁰C. While the Pacific Ocean may not be characterised as exhibiting a full-blown El Niño, it certainly is on the warm side, with the result that the final months of the year are likely to come in well above average, temperature-wise.

So the annual global mean temperature record looks almost in the bag for 2014. Whether this record will be enough to put paid to the climate skeptic meme that global warming stopped in 1998 is doubtful (the old records will likely be beaten but not smashed). But the evolving data do show that when the next El Niño arrives, it will build on an ever hotter base.

Thus mankind presses ever further into unchartered temperature territory. The foolhardiness of this risk-taking amazes me.

One Percentism

Since the 2008 financial crisis, we have seen a flurry of interest over the issue of inequality. Most recently, Thomas Piketty’s book “Capital in the Twenty-First Century” has drawn  a lot of attention. Yet there are a number of other academics who have been writing on this topic for some time, not least Danny Dorling, a social geographer now at Oxford University.

Dorling’s output is prodigious, and encompasses not just academic articles but also books aimed at the general public. You can get an idea of the breadth of his work by looking at his personal web site here. Last week, my daughter and I had the good fortune to see Dorling introduce his latest book, “Inequality and the One Percent“, to a packed house at the London School of Economics (LSE).

The LSE has done an invaluable service to the intellectual life of London and beyond by hosting free and open public lectures by just about everyone who is anyone in the field of economics or politics today. Furthermore, you can access podcasts, videos and slides of the events if you are not able to attend in person. The one for Danny Dorling’s lecture is here.

Apart from being a gifted speaker, Dorling is noted for using innovative data visualisation techniques to communicate his arguments, so we can get a sense of London’s monopolisation of UK wealth through looking at a slides such as this one (click for a larger image):

London Wealth jpeg

A key driver of this wealth disparity is the value of property in London:

London Home Value jpeg

Actually, there are two categories of “one percenters”: income and wealth. To qualify as a one percenter by income, you need to be earning £160,000 a year. To get into the top one percent by wealth, you need £2.8 million. This is a chart taken from the work of the LSE academic John Hills (see here):

Total UK Wealth jpeg

And from such data, Dorling produces infographics for both the UK and US:

UK Land by Wealth jpeg

US Land by Wealth jpeg

Dorling is a proud left-winger: as such, a polemic against the super rich is to be expected. Nonetheless, I am surprised by how Dorling’s arguments are resonating across the political spectrum. In particular, he argues that the one percent has, in effect, detached itself from its natural allies the top 10% and the top 50%. Even the upper middle class is feeling the squeeze, with much of it going backwards in terms of financial security. In short, what economic growth there is is being monopolised by the super-rich.

The arch Tory Charles Moore, no friend of any socialist, has an article in The Daily Telegraph with this headline echoing Dorlng’s analysis:

Today’s political leaders don’t realise how vulnerable voters feel

Followed by this subhead:

Capitalism’s benefits are not felt by all, and the main parties are not talking about it

Moore goes on to argue that fewer and fewer are benefitting from the current political game:

Socialists love saying that the Tories are the party for the rich. If that were the case, they would never have won an election in the era of the universal franchise, since the rich are, by definition, a small minority. Labour’s underestimation of Margaret Thatcher in the Eighties arose from this error: it could not understand why she also appealed to many who were poor and to even more who were middling. So it lost. But now that the Conservatives have, as I say, not hit 40 per cent of the vote for 22 years, perhaps the criticism has greater validity. Perhaps they have got themselves on the wrong side of the divide between those who are comfortable and those who are struggling. And perhaps – stranger thought – the same problem applies even to the party which takes its name from the workers. For 13 years, Labour too has not hit 40 per cent. Those years have encompassed the crisis of capitalism, out of which it should have done well.

Moore finishes with an extraordinary paragraph that could have been written by Danny Dorling himself.

For six or seven years now, voters in the West have realised that capitalism was disastrously captured by those who operated it, so that it stopped benefiting the rest of us. No leader, of Left or Right, has yet worked out what to do about this. In Britain, both main parties have tacitly agreed not to discuss it at the next election.

The analysis here from someone of the political right is interchangeable with someone of the political left. Is a strange world we live in.

Links for the Week Ending 16 July 2014

I haven’t posted for quite a while. Basically, family commitments have eaten into my blogging time, and this state of affairs will likely continue for an indefinite period longer. Nonetheless, I will try to get some posts out as we grind through the last few innings of what I would term the ‘Great Hiatus’: a hiatus period—or pause— amid the longer term trend of rising global mean temperatures, higher oil prices, increasing resource constraints and greater global economic instability.

For example, with a 70-80% chance of an El Nino by year-end, temperature records have the potential to start falling again. Further, oil has built a solid base above $100 per barrel but appears poised to go higher in the next year or so as oil companies struggle to find new fields that can be developed at the right price.

At the same time, many of the financial fragilities in the system posed by ageing demographics, declining productivity and increasing resource constraints have to date been countered by the super easy monetary policy pursued worldwide. The aggressive, unprecedented and unorthodox monetarism  led by the Federal Reserve Board has been a policy triumph over the short term. Since the credit crunch of 2008/2009, the sky has not fallen down.

Yet the jury is still out as to whether the provision of free money can be maintained long enough to see a return to sustainable economic growth, or whether it will beget a new cycle of chronic instability through having fostered the extension of credit into intrinsically poor investments and a generalized asset price inflation that benefits few but the rich.

In the meantime, here are some links which I hope will flesh out some of the themes of this blog:

  • Occasionally, my left-learning friends berate me for reading the right-of-centre Daily Telegraph. I offer two defences: first, you need to read opinion with which you may instinctively disagree, but find of some merit with a bit of reflection. Second, a good newspaper has intellectual mavericks—and The Telegraph has many (probably more than The Guardian). Here is an article by Ambrose Evans-Pritchard portraying the fossil fuel industry as poor capitalists; in short, the oil majors have been investing ever more, to reap ever less; while renewables are slowing sloughing off their subsidies. Joseph Schumpeter would be proud of this epic creative destruction.
  • And despite all the new technology we are bringing to bear on oil extraction, when fields go into decline it is damn tough fighting the tide. North Sea oil was a much ignored saviour of the British economy in the 1980s, but is decline is inexorable and, according to the Office for Budget Responsibility (OBR), accelerating. The Financial Times has the story here (access to FT articles after free registration), but if you want to go to the primary OBR source you can find it here.
  • We are still seeing a lot of commentary over “Capital in the Twenty-First Century” by Thomas Piketty. Piketty argues that the relative reduction in inequality in advanced countries over the post-war period was something of an aberration. Accordingly to his analysis, without direct political intervention (or in the most extreme case revolution), capital will gradually accrue to a relative few. In short, when the return on capital is greater than the growth rate, it is the owners of capital who prosper most, not those in capital’s employ. For a fuller treatment, I recommend Cory Doctorow’s summary here,  and an interview by Maththew Yglesias of Vox  a while back with Piketty here.
  • You can also slice growing inequality in different ways. The Institute for Fiscal Studies (IFS) in the UK has just issued a report detailing how the real incomes of young people are falling much faster than those of any other age cohort (here). Meanwhile, I have often commented on how London has detached itself form the rest of the UK. In the US, Emily Badger of The Washington Post’s Wonk Blog charts a similar divergence between cities showing a virtuous cycle of education and growth and those showing a vicious cycle of poor education and decline (here)
  • Climate sceptics love to start any global mean temperature chart with a data point centred on 1997/98, which happens to coincide with the largest El Nino for a century. This monster El Nino ushered in the record breaking hot year of 1998 (slightly eclipsed in later years depending on which data set you look at, but still one of the hottest years on record: see NASA’s data set here). Global mean temperature is a construct of short-term weather volatility, long-term green-house gas induced temperature rise and the medium-term ENSO cycle. Eventually, CO2 will do its stuff and records will fall regardless of whether we have an El Nino. But for us to quickly retire all the talk of a hiatus in temperature rise will require a new and powerful El Nino. True, an El Nino appears on the cards by year-end, but quite how strong it will be is still clouded in uncertainty as this post at Skeptical Science explains here.
  • If you visit London, take time to visit some of the quirky, smaller museums. One of the most intriguing (and downright disturbing) is the Old Operating Theatre that used to be part of St Thomas Hospital just south of The Thames. This is no Disney Land reconstruction, but a perfectly preserved part of pre-antiseptic medical history.  Despite appearing to be a set from a particularly dark Harry Potter movie scene, the Old Operating Theatre shows how and where surgeons removed a damaged limb in around two minutes flat, with minimal anaesthetic. The museum demonstrates how far we have come health-wise in an historical blink of an eye (150 years or so). And for those who would welcome an economic collapse as a route toward a more authentic form of living, I direct you to a post at Club Orlov explaining a world of post-collapse, or village, medicine. Humanity is put right back on the St Thomas Hospital’s operating table. Pray for four strong men to hold you down—and a surgeon who has not only washed his hands, but is also quick with blade and saw.

Data Watch: UAH Global Mean Temperature April 2014 Release

On May 6th, Dr Roy Spencer released the University of Alabama-Huntsville (UAH) global average lower tropospheric temperature anomaly as measured by satellite for April 2014.

The anomaly refers to the difference between the current temperature reading and the average reading for the period 1981 to 2010 as per satellite measurements.

April 2014: Anomaly +0.19 degrees Celsius

This is the 6th warmest April temperature recorded since the satellite record was started in December 1978 (35 April observations). The warmest April to date over this period was in 1998, with an anomaly of +0.66 degrees Celsius. Incidentally, April 1998 was also the warmest month ever recorded for this time series.

The El Nino Southern Oscillation (ENSO) cycle is the main determinant of when global mean temperature hits a new record over the medium term (up to 30 years). In this connection, the U.S. government’s Climate Prediction Center is now giving a 65% chance of an El Nino developing this summer or fall (here). Should this happen, I would expect the UAH anomalies to head back up into the 0.5s, 0.6s or higher.

As background, five major global temperature time series are collated: three land-based and two satellite-based. The terrestrial readings are from NASA GISS (Goddard Institute for Space Studies), HadCRU (Hadley Centre/Climate Research Unit in the U.K.), and NCDC (National Climate Data Center). The lower-troposphere temperature satellite readings are from RSS (Remote Sensing Systems, data not released to the general public) and UAH (Univ. of Alabama at Huntsville).

The most high profile satellite-based series is put together by UAH and covers the period from December 1978 to the present. Like all these time series, the data is presented as an anomaly (difference) from the average, with the average in this case being the 30-year period from 1981 to 2010. UAH data is the earliest to be released each month.

The official link to the data at UAH can be found here, but most months we get a sneak preview of the release via the climatologist Dr Roy Spencer at his blog.

Spencer, and his colleague John Christy at UAH, are noted climate skeptics. They are also highly qualified climate scientists, who believe that natural climate variability accounts for most of recent warming. If they are correct, then we should see some flattening or even reversal of the upward trend within the UAH temperature time series over a long time period. To date, we haven’t (click for larger image).

UAH Global Temp Apr 14 jpeg

That said, we also haven’t seen an exponential increase in temperature either, which would be required for us to reach the more pessimistic temperature projections for end of century. However, the data series is currently too short to rule out such rises in the future. The Economist magazine published a very succinct summary of the main factors likely accounting for the recent hiatus in temperature rise (here).

One of the initial reasons for publicising this satellite-based data series was due to concerns over the accuracy of terrestrial-based measurements (worries over the urban heat island effect and other factors). The satellite data series have now been going long enough to compare the output directly with the surface-based measurements. All the time series are now accepted as telling the same story (for a fuller mathematical treatment of this, see Tamino’s post at the Open Mind blog here).

Note that the anomalies produced by different organisations are not directly comparable since they have different base periods. Accordingly, to compare them directly, you need to normalise each one by adjusting them to a common base period.

Data Watch: US Natural Gas Monthly Production February 2014

The US government agency the Energy Information Administration (EIA) issues data on U.S. natural gas production, including shale gas, on a monthly basis with a lag of roughly two months. The latest data release was made on April 30th, and covers the period up until end-February 2014. Data is reported in billion cubic feet (bcf) and can be found here. Key points:

  • February 2014 natural gas dry production: 1,896 bcf, plus 2.8% year-on-year
  • Average monthly production for the 12 months to February 2014: 2,034 bcf, +1.7% over the same period the previous year
  • Since the end of 2011, production growth has stalled (click chart below for larger image), with the year-on-year 12-month average bumping along a plateau.

U.S. Dry Gas Production Feb 14 jpeg

There was significant natural gas price volatility over the winter period due to unusually high gas demand prompted by periods of extreme cold. Critically, however, natural gas prices have remained elevated into spring at around $5 per million British thermal unit (Btu).

Natural Gas Spot Price May 14 jpeg

To put the current price of $5 in perspective, a long-term chart of natural gas prices is given below (click for larger image). Note that 1 million Btu is roughly equivalent to 1,000 cubic feet; the unit price is, therefore, comparable even though one chart refers to Btu and the other cubic feet.

U.S. Natural Gas Well Head Price April 2014 jpeg

As can be seen in the chart, two natural gas spikes took place in the 2000s, with the price temporarily moving above $10. However, the average price for the period was between $5 and $7. The current well head price has now moved into that zone. Adjusting for inflation, the current price is still cheaper than the price in the late 2000s—but not that much cheaper.

Much commentary on natural gas compares the 2012 price lows of around $2-$3 dollars with the $10 highs of the 2000s. This is very misleading and obscures the fact that shale gas is expensive to produce. My definition of a product revolution would be one with lower price and higher volume—integrated circuits being the classic case. Shale gas does not fulfil this definition. When price falls, production growth struggles; only with high price do you get production uplifts.

Nonetheless, despite U.S. gas prices trending above $5, the U.S. spot price remains significantly below the price in other markets as the chart below shows (taken from BG Group presentation here, click for larger image). Note that NBP refers to the ‘national balancing point’, the benchmark wholesale spot price of natural gas in the UK.

Global Natural Gas Prices jpeg

Until liquid natural gas (LNG) production and export facilities come on stream in the U.S., traders cannot arbitrage between domestic and international markets, so the divergence in prices will remain. When such facilities are available, the critical question is whether U.S. production can be ramped up to allow exports, and whether the volumes will be significant enough to impact on global market prices.

 

Data Watch: US and Global Crude Oil Monthly Production April 2014 Releases

On April 30th, the U.S. government agency The Energy Information Administration (EIA) announced provisional U.S. crude oil production figures for February 2014. Key points:

  • February crude oil production was 224.9 million barrels, equivalent to 8.0 million barrels per day (bpd)
  • Change over February 2013 on a barrel-per-day basis: +12.8% y/y
  • February total crude oil plus natural gas liquids reached 300.0 million barrels, equivalent to 10.7 million bpd
  • Growth continues to remain in the double digits year-on-year.

As can be seen from the chart below (click for larger image, link to original data here), the fracking of tight oil formations in the U.S. has made a major impact on U.S. crude production over the last few years.

US Field Crude Oil Production April 2014 jpeg

Given crude oil is a globally traded commodity, U.S. production numbers need to be placed in the context of world supply and demand. The International Energy Agency (IEA), in its latest Oil Market Report (OMR) dated 11 April 2014, recorded global ‘all liquids’ (oil and condensate) production of 91.8 million bpd for March 2014. Year-on-year supply growth is averaging around 1 million bpd, or a little over 1%.

OPEC and Non-OPEC Oil Supply March 2014 jpeg

Mirroring supply, benchmark crude prices continue to bump along a plateau. Increased U.S. production is being offset by a reduction in OPEC output, particularly with respect to Libya and Iraq. As a result, both WTI and Brent have remained above $100 per barrel.

Crude Futures March 2014 jpeg

Full quarterly IEA world supply-and-demand figures, including 2013 provisional supply and demand numbers, together with 2014 forecasts, can be found here. Interestingly, 2013 supply is now given as averaging 91.6 million bpd, up only 0.6 million bpd from 2012. Successive articles in the media have pronounced peak oil dead due to the fracking of shale. This story is everywhere—except in the actual numbers, where almost no increase in supply can be seen.

Links for the Week Ending 27 April 2014

  • The success or failure of greenhouse gas emission mitigation really rests on Chinese coal consumption. The BP Statistical Review of World Energy 2013 showed global coal consumption rising 2.5% in 2012, with China accounting for all of the net growth. China alone now accounts for more than 50% of global coal consumption. (Note: BP’s 2014 edition containing 2013 numbers will be released in June.) The Financial Times (free access to articles after registration) highlights new talks between the US and China on emission reductions (here) and also has a good piece of analysis looking at the efforts China is making to cap coal production and consumption (here).
  • The launch of Voc.com by Ezra Klein and colleagues will, I hope, give us a new platform to access decent news analysis. The start looks promising, with a solid article by Brad Plummer on the disappearing two degree Celsius global warming target. The site promises continuity of analysis (see a good review of the concept behind Vox by The New York Times here), and I wish them well.
  • Thomas Piketty’s “Capital in the 21st Century” has received extensive coverage in almost every heavy-weight newspaper and magazine, plus, of course, on the blogosphere. If you want to get acquainted with his arguments (and his critics), then a great place to start would be this article by Vox again.
  • The inequality question is squaring up to be central to the UK general election, now only a little over a year away. The economist David Blanchflower has a good article in The Independent looking at the issue. Like Blanchflower, I would prefer Labour to come up with a coherent set of policies that deal with low growth, energy, inequality and sustainability. I haven’t seen anything yet.
  • The probability of an El Nino event starting this summer is growing as can be seen in this review of the situation by The Carbon Brief. Against this background, expect food prices to remain volatile, a trend already highlighted by this article in The Financial Times.