Carpe Diem

Professor Mark J. Perry’s blog for economics and finance

Carpe Diem

IEA: Supply shock from North American shale oil and gas is transformative and is rippling through global markets

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From the International Energy Agency’s press release today:

The supply shock created by a surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15, the International Energy Agency (IEA) said in its annual Medium-Term Oil Market Report (MTOMR) released today. The shift will not only cause oil companies to overhaul their global investment strategies, but also reshape the way oil is transported, stored and refined.

According to the MTOMR, the effects of continued growth in North American supply – led by US light, tight oil (LTO) and Canadian oil sands – will cascade through the global oil market. Although shale oil development outside North America may not be a large-scale reality during the report’s five-year timeframe, the technologies responsible for the boom will increase production from mature, conventional fields – causing companies to reconsider investments in higher-risk areas.

“North America has set off a supply shock that is sending ripples throughout the world,” said IEA Executive Director Maria van der Hoeven, who launched the report at the Platts Crude Oil Summit in London. “The good news is that this is helping to ease a market that was relatively tight for several years. The technology that unlocked the bonanza in places like North Dakota can and will be applied elsewhere, potentially leading to a broad reassessment of reserves. But as companies rethink their strategies, and as emerging economies become the leading players in the refining and demand sectors, not everyone will be a winner.”

From the report’s overview:

Following several years of stronger-than-expected North American supply growth, the shockwaves of rising United States (US) shale gas and light tight oil (LTO) and Canadian oil sands production are reaching virtually all recesses of the global oil market. This North American supply revolution is not happening in a vacuum. Sustained high oil prices helped unleash it. Its impact is also compounded by other market developments, most prominently social and political turmoil in the MENA region in the wake of the ‘Arab Spring’ and the shift in demand to East-of-Suez markets. Together, these powerful forces are redefining the way oil is being produced, processed, traded and consumed around the world. There is hardly any aspect of the global oil supply chain that will not undergo some measure of transformation over the next five years, with significant consequences for the global economy and oil security.

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Carpe Diem

Markets in everything: Black-market handicapped tour guides at Disney World to jump to the front of the lines

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Via the New York Post:

Some wealthy Manhattan moms have figured out a way to cut the long lines at Disney World — by hiring disabled people for $130 per hour (or $1,040 for an 8-hour day) to pose as family members so they and their kids can jump to the front of the lines.

“My daughter waited one minute to get on ‘It’s a Small World’ — the other kids had to wait 2 1/2 hours,” crowed one mom, who hired a disabled guide through Dream Tours Florida.

The woman said she hired a Dream Tours guide to escort her, her husband and their 1-year-old son and 5-year-old daughter through the park in a motorized scooter with a “handicapped” sign on it. The group was sent straight to an auxiliary entrance at the front of each attraction.

HT: Roger Weber

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Carpe Diem

Population Bomb? No, there’s been a massive global drop in human fertility that has gone largely unnoticed by the media

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worldTFR

Update: Chart with zero on the Y-axis:
worldfertThe chart above shows the significant, downward trend in the world’s Total Fertility Rate (births per woman) over the last half century, which has fallen in half, from almost 5 births per woman in 1960 to only 2.45 births per woman in 2010. Martin Lewis, a senior lecturer at Stanford University, comments in a recent article that the massive global drop in human fertility in recent years has gone largely unnoticed by the media, partly because it’s contrary to the narrative of overpopulation, mass starvation, resource depletion, environmental devastation, and societal upheaval predicted by Paul Ehrlich and others in the 1960s and 1970s. The decline in fertility rates is also happening for reasons never predicted or advocated by Ehrlich, who proposed government solutions like population controls and sterilization. Rather, the decline has been facilitated by market-based forces like modernization, mass electrification, economic development, and television.

Here’s an excerpt from Martin Lewis’s article “Population Bomb? So Wrong. How Electricity, Development and TV Reduce Fertility“:

India’s declining fertility rate (at 2.5), now only slightly higher than that of the United States (2.1), is part of a global trend of lower population growth (see chart above). Yet the media and many educated Americans have entirely missed this major development, instead sticking to erroneous perceptions about inexorable global population growth that continue to fuel panicked  rhetoric about everything from environmental degradation and immigration to food and resource scarcity.

In today’s world, high fertility rates are increasingly confined to tropical Africa. Birthrates in most so-called Third World countries have dropped precipitously, and some are now well below the replacement rate. Chile (1.85), Brazil (1.81), and Thailand (1.56) now have lower birthrates than France (2.0), Norway (1.95), and Sweden (1.98).

I find it extraordinary that the massive global drop in human fertility has been so little noticed by the media, escaping the attention of even highly educated Americans. The outdated idea that Mexico has a crushingly high birthrate continues to inform many discussions of immigration reform in the United States, even though Mexico’s TFR (2.32 in 2010) is only slightly above that of the United States.

It almost seems as though we have collectively decided to ignore this momentous transformation of human behavior. Scholars and journalists alike continue to warn that global population is spiraling out of control. A recent LiveScience article, for example, quotes a co-author of an April 2013 Science report who argues that “the poorest nations are caught in a downward spiral that will deplete resources and cause a population explosion.” The article goes on to argue that “with the world population slated to hit 9 billion by the year 2050, many scientists and others worry that unchecked population growth and increasing consumption of natural resources will cause dire problems in the future.”

Although the LiveScience article notes that the original report focused on sub-Saharan Africa, it does not mention the fact that high birthrates are in fact increasingly confined to that part of the world, or that fertility rates are persistently declining in almost every country in Africa, albeit slowly. Many African states, moreover, are still sparsely settled and can accommodate significantly larger populations. The Central African Republic, for example, has a population of less than 4.5 million in an area almost the size of France.

Some scholars have argued that recent fertility decreases in India and elsewhere in the Third World are more specifically linked to one technological innovation: television. The TV hypothesis is well-known in the field, discussed, for example, in the LiveScience article on the African population explosion mentioned above. In regard to India, Robert Jensen and Emily Oster argue persuasively that television works this magic mostly by enhancing the social position of women. As they state in their abstract:

This paper explores the effect of the introduction of cable television on women’s status in rural India. Using a three-year, individual-level panel dataset, we find that the introduction of cable television is associated with significant decreases in the reported acceptability of domestic violence towards women and son preference, as well as increases in women’s autonomy and decreases in fertility. We also find suggestive evidence that exposure to cable increases school enrollment for younger children, perhaps through increased participation of women in household decision-making. We argue that the results are not driven by pre-existing differential trends.

I suspect that the rapid drop in fertility in such countries as India and Brazil, as well as its association with television, has been missed in mainstream U.S. commentary in part because it flies in the face of deeply ingrained expectations. That television viewing would help generate demographic stabilization would have come as a shock to those who warned of the ticking global population bomb in the 1960s.

MP: In response to a claim in a comment from Chris Katy that the top chart is “intentionally misleading,” I provide a new chart above with a y-axis that starts at zero.  Chris Katy also said “One look at the graph and it was clear that there was no point reading the article — any pretense of intellectual honesty was already out the window.”

In defense of the original graph, which I don’t think could be accurately characterized as “intentionally misleading,” I would point out the following:

1) In the graphics program I use – Eviews – the default setting is to “zoom in” on the relevant range of data, without regard to forcing the y-axis to start at zero.  To “force zero” on the y-axis requires extra work to change the default setting, and I usually don’t bother.

2. Showing the relevant range of the data, without necessarily forcing the y-axis to start at zero, is standard procedure for graphs. For example, see charts below from the St. Louis Fed’s FRED economic data website:

HOUST_Max_630_378 gdp
sp

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Carpe Diem

Legal double standard: Obama administration gives wind energy industry a pass on killing birds, but not oil and gas

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Photo Credit: Shutterstock

Photo Credit: Shutterstock

The video above (***Warning: graphic***) shows a magnificent eagle getting killed by a wind turbine, which is actually a federal crime. According to a 2009 estimate from the US Fish and Wildlife Service (reported on the American Bird Conservancy website here), those bird fatalities happen more than 1,200 times every day (440,000 deaths annually and 50 deaths every single hour of the day on average). For the millions of documented wind-related bird fatalities that have taken place in recent years, how many wind companies have been prosecuted by the Obama administration? None – they get a pass, as explained in this AP article “Wind Farms Get A Pass on Eagle Deaths“:

Killing these iconic birds [golden eagles] is not just an irreplaceable loss for a vulnerable species. It’s also a federal crime, a charge that the Obama administration has used to prosecute oil companies when birds drown in their waste pits, and power companies when birds are electrocuted by their power lines.

But the administration has never fined or prosecuted a wind-energy company, even those that flout the law repeatedly. Instead, the government is shielding the industry from liability and helping keep the scope of the deaths secret.

Wind power, a pollution-free energy intended to ease global warming, is a cornerstone of President Barack Obama’s energy plan. His administration has championed a $1 billion-a-year tax break to the industry that has nearly doubled the amount of wind power in his first term.

But like the oil industry under President George W. Bush, lobbyists and executives have used their favored status to help steer U.S. energy policy. The result is a green industry that’s allowed to do not-so-green things. It kills protected species with impunity and conceals the environmental consequences of sprawling wind farms.

More than 573,000 birds are killed by the country’s wind farms each year, including 83,000 hunting birds such as hawks, falcons and eagles, according to an estimate published in March in the peer-reviewed Wildlife Society Bulletin. Getting precise figures is impossible because many companies aren’t required to disclose how many birds they kill. And when they do, experts say, the data can be unreliable.

Eagle deaths have forced the Obama administration into a difficult choice between its unbridled support for wind energy and enforcing environmental laws that could slow the industry’s growth.

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Carpe Diem

Stunning college degree gap: Women have earned almost 10 million more college degrees than men since 1982

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collegegapAccording to data from the Department of Education on college degrees by gender, the US college degree gap favoring women started back in 1978, when for the first time ever, more women than men earned Associate’s degrees. Five years later in 1982, women earned more bachelor’s degrees than men for the first time, and women have increased their share of bachelor’s degrees in every year since then. In another five years by 1987, women earned the majority of master’s degrees for the first time. Finally, within another decade, more women than men earned doctor’s degrees by 2006, and female domination of college degrees at every level was complete.

For the current graduating class of 2013, the Department of Education estimates that women will earn 61.6% of all associate’s degrees this year, 56.7% of all bachelor’s degrees, 59.9% of all master’s degrees, and 51.6% of all doctor’s degrees. Overall, 140 women will graduate with a college degree at some level this year for every 100 men.

For bachelor’s degrees, women have earned the majority of those degrees for every college class since 1982, and the female share of degrees has risen every year.  But what about the cumulative gender gap for bachelor’s degrees (and all college degrees) over the last 30 years?  The chart above shows that since 1982, women have earned 4.35 million more bachelor’s degrees than men (22.43 million degrees for women vs. 18.08 million degrees for men). For all college degrees, women have earned 9.7 million more degrees than men (44.1 million vs. 34.4 million) since 1982.

MP: Just as a thought experiment – imagine the public reaction if the educational degree imbalances of 4.35 million bachelor’s degrees and 9.7 million college degrees overall favored men, and not women? I don’t think it would be an exaggeration to say that a college degree imbalance that large in favor of men would be considered a “national crisis.” College degree disparities, when women are over-represented, never seem to be much of a concern. And with those enormous gender imbalances in higher education favoring women, do we really need hundreds of women’s centers on college campuses all over the country, women’s only study lounges, and female-only campus housing for STEM degrees?

Bottom Line: The reality is that the concern about gender imbalances and gender equity in higher education is very selective, imbalanced and inequitable – there is only concern when women are under-represented and never any concern when men are under-represented. There likely won’t be any commencement addresses this year lamenting the huge gender disparities in college degrees over the last 30 years, which is now approaching 10 million on a cumulative basis. Instead, it would be much more likely that we’ll hear about female under-representation in certain fields like engineering, physics and computer science. The selective concern about gender disparities continues.

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Carpe Diem

Monday morning links

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1. Proclamation of Amnesty and Pardon Granted to All Persons of European Descent, from GMU Professor Walter E. Williams, Gracious and Generous Grantor.

2.  The Northern spotted owl might very well be the most expensive avian sub-species on the planet, and our government is actually shooting striped wood owls to stop them from breeding with the spotted owls??

3. Nucor Executive Chairman: “Allowing unlimited exports could stifle our economic recovery.”  Oh and he failed to mention that it would also lower his company’s profits….

4. Related from AEI: America’s foolhardy ban on natural gas exports.

5. Twin Cities housing market is HOT: Buying frenzy, wall-to-wall open houses, and bidding wars breaking out in some areas.

6.  Tweet from Charles Murray: “Thank God I was working for Chris DeMuth and AEI, not Jim DeMint and Heritage, when The Bell Curve was published. Integrity. Loyalty. Balls.”

7. Related from NRO: “Heritage Was Wrong: The Think Tank Should Have Defended Jason Richwine.”

8. Global LTE connections quadruple to 100M in less than a year.

9. Isn’t it strange that UFO sightings are less frequent now that we all carry HD video recording equipment with us 24/7?

10. Obama Promised a 21st Century Approach to Drugs, but his administration continues to push policies that punish drug users.

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Carpe Diem

No commencement speaker will mention the huge gender college degree gap for the class of 2013 favoring women

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College

The chart above shows the huge college degree gap by gender for the class of 2013 (data here). Based on Department of Education estimates, women will earn a disproportionate share of college degrees at every level of higher education this year, and overall, women in the class of 2013 will earn 140 college degrees at all levels for every 100 men. Over the next decade, the gender disparity for college degrees is expected to increase, so that by 2022, women will earn 148 college degrees for every 100 degrees earned by men, with especially huge gender imbalances for associate’s degrees (162 women for every 100 men) and master’s degrees (162 women for every 100 men). It’s unlikely that any college commencement speaker will mention the significant, and growing, gender imbalances in America’s higher education system.

The huge gender inequity in higher education for the class of 2013 is nothing new — women have earned a majority of US college degrees in every year since 1981 and since then have earned an increasingly larger share of college degrees compared to men in almost every year, so that men have now become the “second sex” in higher education. Despite the huge and growing “degree gap” over the last 30 years in favor of women, there are still almost 200 women’s centers on college campuses around the country (list here), some receiving public funding, most with the stated goal of “promoting (or advocating) gender equity” and promoting “women’s success.” Here are some examples:

The University of Minnesota’s Women’s Center advances equity for women students, staff, faculty, and alumnae across identities by increasing connections for women’s success, cultivating socially responsible leaders, and advocating for organizational culture change toward excellence for all.

The University of Virginia Women’s Center educates U.Va. students in how to create change in self, community, and the world by providing programs and services that advocate gender equity.

The Duke University Women’s Center is dedicated to helping every woman at Duke become self-assured with a kind of streetwise savvy that comes from actively engaging with the world. We welcome men and women alike who are committed to gender equity and social change.

The mission of the University of Idaho Women’s Center is to promote and advocate for gender equity on campus and in the community through programs and services that educate and support all individuals in building an inclusive and compassionate society.

The University of North Carolina Women’s Center strives to be a leader on efforts and initiatives related to gender equity.

MP: Even though the publicly stated goal of almost every Women’s Center is “gender equity,” there seems to be a very selective concern about sex imbalances, with no concern at all about the gender inequities at every level of higher education favoring women to the point that men have clearly become the “second sex” in higher education.

Here is apparently the gender activist “logic”:

Rule A: Any outcome where women statistically represent less than 50% of a population is a case of gender inequity, sexism, and/or discrimination that must be addressed with awareness, public funding for women’s centers, legal action, regulation, legislation (Title IX), scholarships for women, etc. to correct the sex imbalances, with the ultimate goal being perfect statistical gender parity, i.e. perfect gender equity.

Rule B: Any outcome where women represent more than 50% of a population (e.g. higher education at all levels: associate’s, bachelor’s, master’s, and doctor’s degrees) isn’t really gender inequity, or at least it is gender inequity that doesn’t really count and can be completely ignored because that statistical gender disparity is a natural outcome of women being more talented and/or more highly motivated than men. 

Bottom Line: Now that there’s a huge (and growing) college degree gap in favor of women and men have become the second sex in higher education, maybe it’s time to stop funding hundreds of women’s centers that promote a goal of gender equity that was achieved thirty years ago.

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Carpe Diem

It’s not government’s job to intervene to depress price of nat gas just because Big Chemical prefers cheap supplies

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Steve Chapman writing for Reason.com:

Some [US] corporations oppose what they call “unfettered exports” [of natural gas]. Among them are Dow Chemical, Alcoa, Nucor and Eastman Chemical. They argue that selling American natural gas to Americans is good but selling it to foreigners is bad. They fret that foreign buyers will bid up the price of something they buy in great quantity.

The correct response to that fear is: So what? It’s not the job of the federal government to intervene to depress prices of a commodity just because someone prefers cheap supplies. We don’t forbid exports of wheat to control bread prices. We don’t ban exports of electronics to keep Best Buy in business.

Every dollar that export controls save one corporation is a dollar that gas producers won’t get. There is no compelling reason for the Energy Department to favor one over the other. If buyers in Europe are willing to pay more for gas, American petroleum companies should be free to sell to them.

Dow complains that exports could “disrupt natural gas supply and pricing.” It has not, however, objected to the “disruptions” that in the past five years have increased supply while slashing prices by two-thirds.

Besides, it’s not clear that allowing sales abroad would have much impact on American purchasers. The Energy Department says that if exports climb, prices could increase by a quarter over the next five years. But that would leave them considerably below the levels that prevailed before 2008.

Our usual approach in matters like these is to let prices be determined by the free interplay of supply and demand. If American gas companies can get a better return selling abroad, who is the government to stop them? If a foreigner offered you the highest price for your house, would you want someone in Washington to veto the deal?

Behind the opposition to gas exports is the suspicion that shipping a vital commodity to foreigners instead of keeping it for ourselves must be a mistake. But international trade is built on people in each country producing and selling what people elsewhere want.

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