Well, at least me and a few fellow Montanans. There’s an earthquake swarm in Yellowstone right now. The supervolcano is sure to blow us all to Kingdom Come. This elk my wife met seems unconcerned though:
A guy at Wolfram made a nice visualization example out of the data, though it’s not exactly a gripping movie.
With oil back at $70, I got curious how Hotelling is holding up. The observation that resource prices ought to rise at the interest rate is looking almost plausible now, if you squint, whereas it looked rather foolish for most of the 80s and 90s. Of course, the actual production trajectory has nothing to do with Hotelling’s simple model, which produces a monotonic decline. The basic problem with Hotelling, as I see it, is that there’s a difference between equilibrium and expectations subject to uncertainty. Moreover the extraction trajectory is largely controlled by the rate at which governments lease or otherwise exploit resources, and governments have more than the usual dose of bounded rationality. (I got interested in this because I’ve been investigating Montana’s management of mineral rights on its school trust lands. So far, the state’s exercise of its fiduciary responsibility looks suspiciously like a corporate welfare program. More on that another time.)
The figure compares the nominal oil price trajectory to actual risk-free rates (3month T-bills and the federal funds rate), as well as three constant rates for good measure. At those rates, one would have to conclude that a large risk premium must apply to oil production, or that there’s been an awful lot of uneconomic production over the years (for example, everything from about 1986 to 2006), or that current prices are just a blip and will continue to revert to some more moderate long-term level.
A spruce budworm outbreak here has me worried about the long-term health of our forest, given that climate change is likely to substantially alter conditions here in Montana. The nightmare scenario is for temperatures to warm up without soil moisture keeping up, so that drought-weakened trees are easily ravaged by budworm and other pests, unchecked by the good hard cold you can usually count on here at some point in January, with dead stands ultimately burning before a graceful succession of species can take place. The big questions, then, are what’s the risk, how to see it coming, and how to adapt.
To get a look at the risk, I downloaded some GCM results from the CMIP3 archive. These are huge files, and unfortunately not very informative about local conditions because the global grids simply aren’t fine enough to resolve local features. I’ve been watching for some time for a study to cover my region, and at last there are some preliminary results from Eric Salathé at University of Washington. Regional climate modeling is still an uncertain business, but the results are probably as close as one can come to a peek at the future.
The future is generally warmer. Here’s the regional temperature trend for my grid point, using the ECHAM5 model (downscaled) for the 20th century (blue) and IPCC A2 forcings (red), reported as middle-of-the-road warming:
Continue reading “Flying South”