JOURNAL: A Demonstration US of Network Vulnerability

An explosion and consequent fire shut down four oil pipelines that together carry 1.5 million barrels a day, or 15% of US imports (the Endbridge system), from Canada to the US. Two of the pipelines have been restarted, but the third and fourth (at 450,000 bpd and 700,000 bpd respectively) are still inactive. Besides the significant "co-location" vulnerability shown here (as in multiple pipelines damaged by a single explosion/fire/leak), another key element is the "input" vulnerability of maxed out refineries (see the brief: "Infrastructure Meltdowns" for an overview of the different types of network vulnerabilities) -- these pipelines feed landlocked refiners in the Midwest, beholden to Canadian supplies of crude.

NOTE: This comes on the heels of a mass arrests in Saudi Arabia (200+) to prevent what has been termed a multi-cell plot to sabotage a oil logistics site (which is potentially indicative of attempts to use indirect attacks on dependent networks to cause cross network cascades).

Comments

[P-]

Is the damage more signficant for a single explosion/fire/leak if it were gas rather than crude

[Duncan Kinder]

There are a number of posts on the India's Naxalite Rage website that seem to be pertinent in this context, the upshot of which is that the Naxalites appear to be using threats of system disruption to extort money.

Jharkhand In Focus: The Naxalite Tax
http://www.naxaliterage.com/?p=29

Jharkhand In Focus: The Compounding-Bandh Tax
http://www.naxaliterage.com/?p=28

Zeroing In On Mumbai’s Urban Transit Network
http://www.naxaliterage.com/?p=12

The Short-Lived Collapse of Kolkota
http://www.naxaliterage.com/?p=24

[S]

I was reading a comment on a financial blog in the great debate which weaved togethe subprime, fed rate cutting, systemic risk, democracy and confidence. Also got into an exchange this weekend surrounding the question: would you rather live under Lee Kwan Yoo (sp) or current US democracy? That is to say, what is a better relative trade? In a cursury think through, you pooed into my mind. I for the most part buy into the Westphalian system, but that said, when i read this post about loss of confidence in the financial system (aka why the Fed and treasury are so deathly afrais of this "crisis") I immediatly circled back to the notion of balkanization.

It is interesting that Americans take forgranted the US financial markets as being all but immune to the forces of creative destruction. Arguably they are the fertilizer. I am reminded of US action regarding the british Pound after Suez. Some argue this ws the final nail in the coffin of the former british empire. Perhaps it is worth more time mapping the US financial system rather than oil pipelines. As they say, follow the money.

Also would be interesting to explore the notion of confidence. If/When do Americans finally say there is an alternative to a a good idea turned bad in what can hardly be called a federalist system anymore. What i am trying to say7 is that i am increasingly comning to agree with your thesis but for very different reasons. I see the roots ofdestruction in the economic system and the bifurcation of production and reward.

As someone else put it: " will the bueracracy be strong enough (will) to retard the powerful (and very American) forces against collectivism/individualism?

Fed action and treasury Sec begging are very correlated to the themes you write about. both parts of Gov't are fighting a "guerrilla" information op to butress confidence in a long ago broken system. Once the Aelectorate finds out that debt may have bought them a new car and micro, it masked the rape and pillage. Will natural forces be to strong to retard the tsunami

[S]

I was reading a comment on a financial blog in the great debate which weaved togethe subprime, fed rate cutting, systemic risk, democracy and confidence. Also got into an exchange this weekend surrounding the question: would you rather live under Lee Kwan Yoo (sp) or current US democracy? That is to say, what is a better relative trade? In a cursury think through, you pooed into my mind. I for the most part buy into the Westphalian system, but that said, when i read this post about loss of confidence in the financial system (aka why the Fed and treasury are so deathly afrais of this "crisis") I immediatly circled back to the notion of balkanization.

It is interesting that Americans take forgranted the US financial markets as being all but immune to the forces of creative destruction. Arguably they are the fertilizer. I am reminded of US action regarding the british Pound after Suez. Some argue this ws the final nail in the coffin of the former british empire. Perhaps it is worth more time mapping the US financial system rather than oil pipelines. As they say, follow the money.

Also would be interesting to explore the notion of confidence. If/When do Americans finally say there is an alternative to a a good idea turned bad in what can hardly be called a federalist system anymore. What i am trying to say7 is that i am increasingly comning to agree with your thesis but for very different reasons. I see the roots ofdestruction in the economic system and the bifurcation of production and reward.

As someone else put it: " will the bueracracy be strong enough (will) to retard the powerful (and very American) forces against collectivism/individualism?

Fed action and treasury Sec begging are very correlated to the themes you write about. both parts of Gov't are fighting a "guerrilla" information op to butress confidence in a long ago broken system. Once the Aelectorate finds out that debt may have bought them a new car and micro, it masked the rape and pillage. Will natural forces be to strong to retard the tsunami

[S]

Key Judgments (NIE on Iran)

"We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons
program1; we also assess with moderate-to-high confidence that Tehran at a minimum is
keeping open the option to develop nuclear weapons. We judge with high confidence
that the halt, and Tehran’s announcement of its decision to suspend its declared uranium
enrichment program and sign an Additional Protocol to its Nuclear Non-Proliferation
Treaty Safeguards Agreement, was directed primarily in response to increasing
international scrutiny and pressure resulting from exposure of Iran’s previously
undeclared nuclear work."

Q: when tensions only being wratched up since 2003, why would they jettison the effort? Also, with their eye on the mortal enemy and nuclear armed Israel, not to mention finally a possiblility to shift balance of power in ME, whyn halt the effort? Paulsen trying to resue the financial system, and now wala iran isn;t pursuing nukes.

moving up estimated timeframe on prior post

[Duncan Kinder]

"Perhaps it is worth more time mapping the US financial system rather than oil pipelines. As they say, follow the money."

S:

If you have not done so already, read Paul Krugman's latest column, in which he states:

"This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created."

http://www.nytimes.com/2007/12/03/opinion/03krugman.html?ref=opinion

In principle, I would advocate the regulation of the financial markets. However,this begs the question of precisely what regulations I would prescribe ( or more pertinently what regulations anyone could prescribe. )

Contrast this with the Great Depression, where the New Deal implemented Keyneian economics. Better still, contrast this with Keynes' _The Economic Consequences of the Peace_ , which - in 1919 - he was able to predict the coming crisis.

We could fruitlessly debate whether Keynesianism actually did solve the Great Depression. Of course we don't want to here; it is too far off the point. What is the point is that in the 1930's a credible solution, Keynesianism, did exist which sufficed to hold the ship together until a solution finally, for whatever reason, emerged.

We have no such colorable solution to solve the current problem. This, needless to say, undermines the federal government because it cannot deliver basic services, much as global guerrilla attacks on Iraq infrastructure undermine governmental legitimacy.

( Note to John Robb: this situation also undermines the corporate structure upon which Blackwater, etc. depend. )

I have spent some time of this morning speculating that - since the current financial crisis is a crisis of risk management and of the stock market - that we should consider regressing back to the origins of both - the coffee house culture of late 17th and early 18th century London and - having done so - just let things percolate from there. Whatever problems such a regression may have, I humbly submit that it would be no worse than whatever our vaunted financial experts might propose.

[S]

I promise to spell check nxt post - that was a rather random free association.

DK, I hear your on the system being broken, although broken suggests a fix. Much is made in academic management circles about US system resilience; those conclusions are questionable for a variety of reasons. From the 10,000 ft view, the system has been built on an ever increasing debt load as shown very nicely here (http://suddendebt.blogspot.com/2007/12/deja-vu-fighting-wrong-war.html) and exploding consumer (see relative GDP per capita comparisons). Recall book when genius failed? ever greater leverage to take advantage in minute inefficiencies. That to me is the story of America's declining competitiveness, relatively. Wa la leverage.

I would also agree that Keynesianism debate is fruitless - economics is a social science as we both know. That said let's talk math. At some point too much debt causes insolvency and we are almost there. Keynes prescription (if mistakenly taken to an extreme) put in place the foundation for the current system of ever greater leveraged returns. The notion that you can stimulate demand and savings can be a bad thing) is the story of the American consumer, no?

The question becomes when does your average citizen say enough is enough. The Fed gov't is out of control and the only way to fix it is to inflate your way out (always ends badly) or write down its liabilities (equally ends badly).

I agree that this complex web of interlaced relationships economically is unmanageable. Ironic (perhaps) that the solution for everything nowadays is more and more of it (T Barnett).