Climateer Investing: "A World Built on Sand and Oil"

Sunday, March 24, 2019

"A World Built on Sand and Oil"

We too have experienced the allure of sand.
Usually at the beach but on the blog as well.

From Lapham's Quarterly:

When natural resources become essential commodities.

Oil and sand are not often commodities conjoined in discussions of global trade. The first is the motive engine of industry and transportation, fuel for heating and illumination, the spirit that animates much global politics. Even when priced cheaply—as I write, the price of oil hovers around fifty dollars per barrel (or just under four hundred dollars per ton)—it is considered precious. Humble, ordinary, oft-overlooked sand is, by contrast, the second most consumed good in the world by volume after water. It makes concrete and glass and electronics possible. According to the UN Environment Programme, at least fifty billion tons of sand (often measured in aggregate with gravel) are used annually, in contrast with four billion tons of oil. But sand is not often thought of as valuable: its trade is more domestic than global, and its market price per ton is under nine dollars in the United States and far less than that in the rest of the world.

But there are similarities, too. While China is the biggest consumer of both products, the United States follows close behind as the world’s second-largest consumer of oil and the third-largest user of sand. Depending on its market price, crude oil is often the first or second most exported good in the world by value. Today’s relatively low prices put crude oil exports in second place, after automobiles. At the end of 2015, the U.S. government rescinded a forty-year ban on the export of crude oil from the States, and since then the country has aggressively reentered the global oil market, becoming the world’s third-largest exporter of petroleum and its refined products, behind Saudi Arabia and Russia. (Despite being the largest oil producer, the U.S. is not the world’s largest exporter, because it consumes most of what it produces.) The vast majority of the trade in sand is domestic, and the U.S. and China extract the sand they need for construction and industry from their own territories. The world’s biggest importer of sand, however, is Singapore, which uses a great volume of the stuff in its frenetic projects of land reclamation.

The two commodities converge in one other regard. Their commodification and trade hold mirrors to global inequalities and ecological plunder. Both are produced over eons, the one a product of fossilization of prehistoric flora and fauna, the other the debris of rocks’ encounter with wind and water. Both tar and dirt symbolize inferior material. And yet the moment at which they became pivotal to industrialization and urbanization, rocks are blasted, wells are drilled to sepulchral depths, rivers are dredged, beaches are bulldozed away to enable the transformation of these natural resources into commodities. The inexorable proliferation of oil and sand on the global circuits of trade tells us about the shape-shifting ways of production, colonial forms of exploitation, and our reckless wrecking of the global environmental commons. It is about how the commodification of prosaic everyday things affects lives here, now, and half a world away.

If you look around you, you will inevitably see objects, places, things containing sand. Sand is dredged out of a riverbed or a seafloor in one place and poured into the shallows in another place to conjure land out of the sea. Sand and gravel are used in the making of concrete, today the most widely used building material in the world. Mixed with tar, sand and gravel constitute asphalt. The silica in sand is extracted to manufacture all grades of glass, as well as semiconductors and integrated circuits used in electronics. Even hydraulic fracturing, or fracking, requires sand. The urbanization of the world, the meteoric growth in the production of electronics, and the expansion of the use of glass in everything from windows and fiberglass to screens for automobiles and electronics all have increased the demand for sand. But the largest consumer remains the construction industry.

Throughout human history sand and gravel have been used to raise buildings, pave roads, and make glassware. Monumental structures of ancient times—the Great Wall of China, Roman aqueducts and amphitheaters, and ziggurats and pyramids in Mesopotamia and the Americas—used either early versions of concrete (blending some adhesive with sand and gravel) or fired mud bricks made from a mixture of sand and clay. The massive blocks of stone for the pyramids in Egypt were dragged into place on beds of sand. Glass-cutting techniques were employed in the Sassanian Empire, and glass windowpanes made from sand quartz and ash were known in Roman Alexandria nearly two thousand years ago, though they were opaque, small, and thick. (Until the early modern period, glass panes were—like many other technologies—reserved for elite sacred and profane institutions: cathedrals, jami’ mosques, and grand administrative buildings.) The glorious Hagia Sophia, built in the sixth century, was illuminated by large glass panes in its dome. Urbanization in the early modern era fueled the usage of sand and gravel needed for the expansion of cities and the arteries that facilitated circulation within and between them. But until recently, the sand and gravel used for these purposes were almost always mined and transported locally. (The exceptions were prized construction materials such as specially colored marbles and hardwood timber.) Transporting such heavy cargo using either human or animal motive force was costly and slow.

Oceanic transport of building materials took off only from the fifteenth century onward, with the colossal expansion of maritime trade across the globe that came with colonialism. Sand and gravel were not immediately considered commodities to be traded across the seas; their large-scale maritime transportation was a side effect of seaborne trade itself. Ships are “in ballast” when not carrying cargo: when not laden, they float too close to the surface of the sea and can list. Ships not in cargo have to carry ballast to sail true. Before steamships fueled by coal (which acted as ballast), sand, gravel, and shingle were used. Landscapes were harvested for ballast, which was then dumped on quaysides halfway around the world. The discarded gravel and shingle from the ballast hills were employed in roads, buildings, and railroads, all of which underwent continent-wide expansion in the Americas, Europe, and their colonies in the nineteenth century.

The trade in sand and gravel as commodities in their own right began in earnest in the twentieth century. The efflorescence of modernist concrete architecture with large windows and the later fashion for glass cladding in ever-expanding cities demanded concerted and organized trade in sand, rather than the accidental use of ballast. And with the invention and upward spiral in the usage of electronics at the end of the twentieth century, the search for industrial-quality sand became more urgent.

Not all sand is created equal. The fine sand of the desert, stretching for miles across the arid climates, has been eroded by wind, becoming too uniform in size and too even in shape to make good concrete. Concrete is manufactured by mixing cement with a larger proportion of sand; unevenly sized and shaped grains of sand better facilitate the adhesive effect desired of cement. The grains of water-eroded sand are irregular in shape and dissimilar in size and thus ideal for making concrete. As the demand for concrete has skyrocketed and technologies for making it have improved in the past fifty years, the world has grown famished for sand. Residential and commercial buildings, agglomerations of skyscrapers, and sprawling exurbs all devour concrete. Land reclamation requires pouring dredging by-products, sand, and concrete blocks into the sea, creating property ex nihilo. Islands such as Bahrain and Singapore have pushed their landmass further into the sea through this process. A 2014 Financial Times investigative report showed that a secretive investment vehicle owned by Bahraini royals was granted deeds to undersea plots of land; after reclamation these became coveted and expensive ground for the development of luxury hotels and commercial buildings. By some accounts China has used more cement between 2011 and 2013 than the U.S. did in all of the twentieth century. If concrete requires at least twice as much sand as cement, then the volume of sand involved in producing billions of tons of concrete today boggles the mind.

Over the millennia oil, naturally seeping out of the earth, has been used as fuel for lamps and heaters and as an emollient for skin ailments. The industrial exploitation of petroleum via hand-dug wells had begun in Russia’s Azerbaijan region a decade or so before oil gushers were drilled in mid-nineteenth-century Pennsylvania....MUCH MORE

Possibly also of interest (I know it's a longshot):

The World Is Running Out of Sand (Elon Musk to the rescue!)

Commodities: The Next Big Thing Is Sand

Sand Wars - China and developing countries need tens of billions tons of sand for urbanization and economic growth
The link that starts this piece goes to Sand Wars: Beijing’s Hidden Ambition in the South China Sea a 22 page PDF, hosted at the College of William & Mary.

What the Frac: "The Past Year’s Hottest IPO Is… " (EMES; SLCA)

From MoneyBeat:

The hottest initial public offering from 2013 isn’t a cloud technology stock, or a biotech company with a promising cancer drug.

The company behind the top-performing IPO in the past 18 months digs sand.

Through Friday, sand-mining company Emerge Energy Services LP has rallied 462% since its debut on May 8, 2013, for the biggest share-price gain since its IPO among companies that went public last year, according to Dealogic....

Having concluded that oil and gas were just a passing fad, this is what we were posting the month Emerge came public:

The Internet of Things: Huggies App Sends You a Tweet Whenever Your Kid Pees...
The Ethics of Torturing Robots
British Psychologists Bashing British Psychiatrists