Rationing in China, Pakistan, Venezuela, Japan, Argentina; China Resorts to Punitive Prices to Curb Demand

Electric power shortages caused by insufficient water levels at hydroelectric stations in some places, and unaffordable oil prices in others, have led to rationing, blackouts, and other problems.

China Resorts to punitive Prices to Curb Demand

Bloomberg reports China’s Zhejiang Plans Punitive Power Prices to Curb Consumer Demand

China will impose punitive power prices on businesses that exceed consumption limits in Zhejiang province, a manufacturing hub bordering Shanghai, to curb demand during an expected electricity supply shortfall this summer.

China faces the worst power shortage in seven years as the economy grows faster than forecast and some utilities cut production or shut, hit by rising coal prices and government caps on tariffs. Zhejiang, on the eastern coast to the south of Shanghai, is host to companies including automaker Zhejiang Geely Holding Group Co., owner of Volvo Cars.

The province’s 35.4-gigawatt generation capacity is 3.5 gigawatts short of what it needs during peak summer demand, the local government said.

High Coal Prices Cause Plant Closures

Please consider China’s Power-Capacity Utilization at Record Low

China’s power plants are operating at a record-low utilization rate as many have closed, potentially causing the most severe electricity shortage since 2004, Mirae Assets Securities said.

“Burdened by bulging losses, many power generators have shut,” Gordon Kwan, the Hong Kong-based head of energy research at Mirae, said in an e-mailed note today. “High coal prices and the capped electricity price have also reinforced fears” that power rationing may spread to manufacturing hubs including Guangdong, Zhejiang and Jiangsu, Kwan said.

China’s April electricity output fell from a seven-month high as the cost of coal rose. Prices of the fuel at Qinhuangdao port, a domestic benchmark, climbed for a sixth week as of May 9 to the highest in more than two years, according to the China Coal Transport and Distribution Association.

The country may face a summer shortage of 30 gigawatts as supply lags behind demand growth, the China Electricity Council said on April 29. That deficit is about twice the shortfall Japan faced after the March 11 earthquake, Mirae’s Kwan said.

Venezuela Plans Rationing

Bloomberg reports Venezuela Plans to Ration Power for Second Year

Venezuela will ration power again this year, planning steps similar to those taken in 2010 amid an energy crisis, Electricity Minister Ali Rodriguez said.

“We’re going to reapply the measures we applied in Caracas last year nationwide, which punishes the wasting of electricity and encourages energy savings,” Rodriguez said in an interview on state television today. Any rationing measures require President Hugo Chavez’s approval, Rodriguez said.

Venezuela has struggled to boost energy-generating capacity to keep pace with an estimated 6 percent increase in demand this year. The consumption jump, if it persists, would require an additional 2,000 megawatts of new capacity a year, which is “unsustainable,” Rodriguez said.

Energy Shortages Spreading

Please consider the ASPO May 23 Energy Review

Pakistan and China continue to top the list of countries with the most serious power shortages. Last week brought in reports of energy shortages developing or worsening in Egypt, Guyana, the Dominican Republic, India, Japan, El Salvador, Bangladesh, Libya, Mozambique, Nepal, Venezuela, Argentina, Zimbabwe, Kenya, and Tanzania. Most of the reported shortages are of electric power caused by inadequate water levels at hydro dams or insufficient coal, but some of these shortages stem from unaffordable oil prices or the inability to import sufficient quantities of liquid fuels.

In most countries, electricity shortages quickly translate into increased demand for gasoline and diesel as organizations strive to keep important activities such as computers, elevators, hospitals, refrigeration and even factory production functioning with back-up generators.

Pakistan probably is suffering the worst from electricity shortages, the country simply does not have enough foreign exchange to import large quantities of expensive fuels. China however is a different situation. Beijing is committed to maintaining its economic growth which it can’t do without increasing supplies of electricity.

The Chinese only report their oil imports and electricity consumption monthly so the complete picture of their energy situation will not be known for a while, but if past shortages are any indication we can expect imports to increase, perhaps significantly, in coming months. Beijing is being unusually open concerning the seriousness of its growing electricity shortages which are said to be the worst since 2004. Rationing of power has started and reports of production shortfalls are starting to appear. In the past year the price of coal has increased by 20 percent while electricity rates have increased by only 2 percent leading to substantial losses for many Chinese electricity producers.

Summer is nearing, and temperatures across parts of South Asia are already running above 40o C. so the use of air conditioning is putting further strains on power grids. Wide spread blackouts and lost industrial production can be expected this summer if current trends continue. The liquid fuel shortages being reported in a number of the world’s poorer countries suggests that demand may indeed be outstripping available supplies with the poorer countries losing out in bidding for available supplies.

The June OPEC meeting is likely to be an interesting one. Iranian President Ahmadinejad appointed himself Iran’s acting Oil Minister over the objections of the Iran’s Guardian Council and plans to chair the OPEC meeting where he may attempt to drive up oil prices by challenging any Saudi effort to increase production officially.

Rogers Predicts Oil Price to Rise "Beyond Anybody’s Expectations"

Speaking with the British BBC, last Tuesday 17 May 2011, famed investor Jim Rogers chairman of Rogers Holding said he believes that the oil prices will rise “beyond anybody’s expectations” in the foreseeable future and that America is in serious trouble.



I do not know how high oil prices go and in what timeframe. Nor does anyone else. However, I do know that the price of oil (and everything else) will not rise above people's willingness to pay for it. Demand for oil will drop with rising prices.

Currently, much of the rise in oil has been speculation, just as it was in 2008. Rampant credit expansion and overheating in China has also contributed to higher prices. Near-term, slowing global growth seems likely to put a damper on prices.

Long-term, those who assume the Chinese economy can grow at 10 percent a year for another decade are in Fantasyland. Energy constraints will not permit it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

F-35 now 'unaffordable': Defense official

The cost of building the F-35 fighter jet, set to replace a large part of the US warplane fleet, is "unaffordable" in its current version and must be reviewed, the Pentagon's top acquisition official said Thursday.

"Over the lifetime of this program, the decade or so, the per-aircraft cost of the 2,443 aircraft we want has doubled in real terms," said Ashton Carter, the under secretary of defense for acquisition, technology and logistics.

"That's our forecast for how much the aircraft's going to cost.

"Said differently, that's what it's going to cost if we keep doing what we're doing. And that's unacceptable. It's unaffordable at that rate."

The cost of the plane has jumped to $385 billion, about $103 million per plane in constant dollars or $113 million in fiscal year 2011 dollars, said Christine Fox, the Defense Department's director of cost assessment and program evaluation.

Republican Senator John McCain called the figure "truly troubling," considering the original price was $69 million per airplane.

"The facts regarding this program are truly troubling," said McCain. "No program should expect to be continued with that kind of track record, especially in our current fiscal climate," said McCain.

"It seems to me we have to start at least considering alternatives"

The F-35 or Joint Strike Fighter (JSF), made by Lockheed Martin, is the Pentagon's most costly weapons program.

An additional appropriation of $4 billion brings the cost of development of the plane to $51 billion, "dismaying" figures," said Michigan Senator Carl Levin, who chairs the Senate Armed Services Committee.

"These are dismaying; indeed, they are disturbing numbers in costs to us and to the taxpayers of the United States," Levin said.

Carter attributed the cost overruns and delays to the plane's complexities and its radar-evading equipment, as well as the short-takeoff and vertical takeoff versions. And he said the culture of easy money at the Pentagon since 9/11 was also to blame.

"In the decade of ever-increasing defense budgets, which we just enjoyed, it was always possible for our managers, when they ran into a technical problem or a difficult choice, to reach for more money," said Carter. "And the money was available in the decade after 9/11."

DSK's DNA Found On Maid's Shirt

(AP)

A forensic test has turned up Dominique Strauss-Kahn's DNA on the shirt worn by a hotel maid accusing him of rape, sources tell a French website and NBC New York. The NY Post, which is really in its element with this scandal, reports that Strauss-Kahn's "reputation may be stained for good." Guess you could say its unusual to see men as powerful as Strauss-Kahn in this much trouble! But the positive DNA match might also help explain why his lawyers were quick to claim that the encounter was consensual—if they knew there was a chance of DNA surfacing, that strategy makes a lot more sense.

The 32-year-old Sofitel maid maintains that Strauss-Kahn groped her, locked her in a bedroom and forced her to perform oral sex. DNA testing on other evidence from the scene is continuing, a source tells NBC New York.

The Real Reason for NATO Attacking Libya EXPOSED

Is this a taste of the future? Outsourcing goes full circle as Indian firms look to the U.S. for cheap labour

It's a frustration experienced by most people when they've made phone calls to large companies.

An unfamiliar voice answers the phone in a call centre hundreds of miles away where cheap labour is commonplace.

But in a reversal of fortunes it now appears that large Indian companies are actually now themselves outsourcing - to U.S. shores.

Reversal of fortunes: Indian companies are now outsourcing their work to the U.S. where a struggling economy has caused lower wages

Large corporations that have boomed in India amid the country's nimble economy have been drawn to the U.S. where unemployment has soared.

Struggling residents desperate for work are paid between $12 and $14 a hour to be stationed in tiny cubicles for long shifts of telesales work.

Once the employees are established, many are offered the chance to be flown to India themselves - the same tactic Western countries have done in India.

Experts said that the phenomenon, which could become more widespread in the coming years, is partly due to Indian workers demanding higher wages and higher living standards.

'The U.S. became the fastest-growing location for us last year. We expect that to continue this year,' Genpact chief executive V.N. 'Tiger' Tyagarajan said.

Joseph Vafi, an analyst at Jefferies & Co. in San Francisco told the Washington Post: 'What you have going on in India are salary hikes. As these companies get larger and larger, it just makes sense for them to do some hiring in the States.'

Cheap: A number of large companies have targeted Manhattan in New York due to high unemployment, particularly among African Americans

The Indian economy - boosted by a savings culture of large cash deposits - has boomed and is this year predicted to outpace China.

Businesses around the world have targeted India - part of the 'BRIC' emerging economies - for their global expansion.

Residents there have seen an increase in living standards and higher wages, which has led to higher spending.

WHO OUTSOURCES THE MOST JOBS TO THE U.S?

1.Tata Consultancy Services

Tata Consultancy Service is based in Mumbai and had a turnover of $8bn in 2011. They employ more than 200,000 worldwide with a significant number of those, believed to be around 15,000 based as outsourced jobs in the U.S.

2. Aegis Communications

Technology firm Aegis is part of the Essar group based in Mumbai with an annual revenue of $15bn. Aegis employs 9,000 in the U.S. at offices throughout the country.

3. Wipro

Based in Bangalore, IT specialists Wipro employ around 4,000 people in jobs that have been outsourced to the U.S.

4. Genpact

The IT outsourcing company employs 1,500 people in the U.S. but that is expected to triple over the next two years as bosses find it cheaper than employing Indian staff at home.

5. Infosys

The company is based in Bangalore with an annual revenue of $100m. They have 130,000 employees worldwide.

But in a stark contrast and further sign that global power is shifting from the West to the East, the economies of the U.S.- and many European countries - have spiralled downwards.

Around nine per cent of the work force is now estimated to be unemployed in the U.S. Massive debts have also seen harsh spending cuts.

Indian companies had previously used call centres at home, or shipped large numbers of local workers to the U.S. to work cheaply.

But a crackdown on visas by the Government combined with optimism in India has meant that fewer people want to leave. For Indian companies , it is just as efficient to open offices in America, where there are daily queues of people willing to work.

There is also a growing trend that companies want to have workers based in the countries where organisations have large customer bases, or wish to expand into.

Aegis Communications, based in Mumbai, joined the growing number of overseas companies opening centres in the U.S. to take advantage of the high unemployment.

They have nine centres in the U.S. which employ 5,000 people but that is expected to triple to 15,000 employees.

In Lower Manhattan, the call centre employs a large number of African Americans with few qualifications.

Line manager Ray Capuana said: 'Our recruitment model is simple. I don't care if you come from Park Avenue or the park bench. If you can do the job, we want you.'

He calls the process of hiring U.S. workers instead of local workers in India 'near-sourcing', 'diverse sourcing' or 'cross-shoring'.

But compared with Indian workers, managers have complained that those from the U.S. are 'spoiled' and 'lazy'.

The Revolution Has Started In Spain (Update 4)

The revolution has started in Spain as tens of thousands take to the streets in protest of high unemployment and draconian austerity measures.

In Spain, protesters rally a battered nation as Anti-system movement vows to press beyond election day

In the shadow of a landmark building in Madrid’s center, a village of unhappy Spaniards on Friday kicked off their sixth day of protesting against capitalism and a system they say is not representing them.

Slide show: Madrid protests on eve of elections.

Directly in front of it, the turtle-shaped dome that covers the Sol train station is plastered with banners that read “Spain is not a business, we are not slaves,” and “Now is the time, young people, do not stop.”

And stopping they are not.

Protests have swelled each evening from a clutch of 200 mostly young people who have been camping out into the tens of thousands. The protests have spread beyond Madrid to other cities and reportedly to Italy as well.

Complaints about austerity measures taken to keep Spain from a forced financial bailout are on visible display in Madrid.

Jorge Herrero, 34, has been coming to join the protests each evening after his job as a security worker. He said the government for years has been stripping away workers’ rights, with pensions frozen and labor rights diminished.

“We are 5 million unemployed here in Spain,” said Herrero. “A colleague of mine was fired five months ago just for being sick.”

Read More: In Spain, protesters rally a battered nation as Anti-system movement vows to press beyond election day

THE REVOLUTION HAS STARTED – SPAIN

PUT THIS INTO YOUR BROWSER (LIVE SPANISH TV)
http://ustream.tv/channel/motionlook
(Cliquez sur le lien en haut)

My thanks to eloyente for this snippet of spanish TV videotaped earlier today 21st MAY 2011

Je remerci eloyente a youtube pour la mourceau de video de TV espagnol et aussi a amosLee a Ustream pour la rapportage de mis a jour et actuelle.

Also amosLee at Ustream for the continued TV coverage

Watch The Revolution Live

Live Streaming by Ustream.TV

Media Coverage Of The Spanish Revolution

Time Magazine writes:

Protests: Has the Revolution Come to Spain?

Protesters gather at the Puerta del Sol square in Madrid on May 19, 2011, to speak out against Spain’s economic crisis and its sky-high jobless rate – Pedro Armestre / AFP / Getty

Two political earthquakes have shaken Spanish life in the past week. First were the massive sit-ins that had tens of thousands of citizens camping out in the public squares of major cities in protest of the country’s capsized economy and unresponsive political class. The second came Sunday night, May 22, when voters in regional and municipal elections delivered a sound drubbing to the governing Socialist Party (PSOE). Now, in Monday’s harsh light, no one seems sure whether the first phenomenon had anything to do with the second. And everyone is wondering what both mean for the future of Spain.

Since May 15, tens of thousands of Spaniards have taken over squares in 60 cities, clamoring for political, economic and social reform. As articulated by the group Real Democracy Now, which helped organize the protests, unemployment (21.3% among the general population; a shocking 40% among youth) is high on the list of complaints. But so too are political corruption (more than 100 candidates in Sunday’s elections are currently under judicial investigation), social-welfare cuts and a general sense that elected officials in both of the two main political parties aren’t listening to them. “This isn’t solely about unemployment or the upcoming election,” says Raúl, 29, who works for a marketing agency when he isn’t volunteering in Madrid’s Puerta del Sol. “We’re after a more responsible society.”

The protests, whose success has taken even organizers by surprise, have transformed the public squares of Madrid, Barcelona and other cities into models of the participatory democracies their members would like to create, reminding some observers of the huge examples of civil disobedience in Egypt and Tunisia. Amid a festive air of concerts and impromptu theatrical performances, volunteers have organized themselves into committees to provide food to protesters, organize cleanups, set up an open-air reading room complete with a comfortable sofa and a battered copy of Franz Kafka’s The Trial and even plant an organic vegetable garden. Meanwhile, daily meetings of individual commissions (electoral policy, environmental protection, women’s rights) and a general assembly have helped the spontaneously formed movement elucidate its concerns and propose solutions.

So popular have the protests become that on May 19, when Spain’s electoral commission ruled the gatherings illegal because they would break the ban on political activities the day before elections, participation grew only stronger, even incorporating foreign cities like London, Mexico City and New York. “It’s incredible how fast this is spreading,” said protester Yanira Castro, a 30-year-old musician, as she prepared signs for a rally in Madrid. “On Monday I wasn’t sure about what it meant, but once I came down here, I knew I had to pitch in.”

[...]

Source: Time Magazine

Decay heat in Fukushima reactors

As we noted last week, the Tokyo Electric Power Company (TEPCO) announced it believes the fuel in Fukushima Daiichi reactor 1—and possibly reactors 2 and 3—has melted and is sitting in a lump at the bottom of the reactor vessel. But it believes that workers have been able to keep the lump cool enough that it has not melted through the bottom of the reactor.

Such a melt-through is a concern since it would mean that highly radioactive gases released from the melting fuel would be released into the primary containment. Moreover, the molten fuel mass would then react with the concrete floor of the primary containment and create additional radioactive gases. If these are released to the atmosphere, either through venting or a leak in the containment (which could be caused by the molten fuel), it could add significantly to the total radiation released by the accident.

TEPCO believes the fuel melting occurred on March 12, within a day of the earthquake. If all this is correct, it means that, despite the ongoing problems with the reactors, workers have so far managed to cool the fuel and avoid a reactor breach for more than two months.

The decay heat generated by the fuel is one factor that could result in a breach of the reactor vessel.

The decrease in the level of decay heat with time is shown in the plot below. It shows that after 2 months the decay heat would be about 30% of its value at the time the fuel melted, after 6 months it will be less that 20% of that value, and after a year it will be down to about 10% of that value.

Unfortunately, it’s not clear how the reduced heat load of the fuel affects the overall probability of a breach of the reactor vessel since that depends on a lot of unknown factors, such as the current configuration of the fuel and possible ongoing corrosion of the vessel.

The plot shows that after 5 years, which is the length of time after which people talk about moving spent fuel to dry casks, the decay heat is about 2% of the early value.

Decay heat as a function of time from 0.01 years (about 4 days) to 100 years for spent-fuel burnups of 33, 43, 53 and 63 MWd/kgU. The lowest burnup was typical for the 1970s. Current burnups are around 50 MWd/kgU.