Oil Burden: amount on money spend on energy vs global GDP

The concept of oil burden allows us to set upper bound for oil price, which now is probably around $200 per barrel

News Peak Cheap Energy and Oil Price Slump Recommended Links Energy Bookshelf Secular Stagnation Energy returned on energy invested (ERoEI) A note of ERoEI decline
MSM propagated myth about Saudis defending this market share Deflation of the USA shale oil bubble Oil glut fallacy Why Peak Oil Threatens the Casino Capitalism      
Energy Geopolitics Ukraine: From EuroMaidan to EuroAnschluss Russian Ukrainian Gas wars The fiasco of suburbia Fiat money, gold and petrodollar The Great Stagnation Big Fukushima Debate
Casino Capitalism Inflation, Deflation and Confiscation All wars are bankers wars Why Peak Oil Threatens the International Monetary System Financial Quotes Financial Humor Etc

Empirical evidence suggests that the “oil burden” (total amount of oil consumption X price of oil) becomes unaffordable for the global economy, when it reaches 5% of global GDP. At $65 it would be only between 2 and 2.5%.

Energy and the Economy – Twelve Basic Principles

Posted on August 14, 2014 by   There is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. My view of how energy and the economy fit together is very different. It is based on the principle of reaching limits in a finite world. Let me explain the issues as I see them.

Twelve Basic Principles of Energy and the Economy

1. Economic models are no longer valid, as we start getting close to limits.

We live in a finite world. Because of this, the extraction of energy resources and of resources in general operates in a way that is not at all intuitive as we approach limits. Economists have put together models of how the economy can be expected to act based on how the economy acts when it is distant from limits. Unfortunately, these economic models are worse than useless as limits approach because modeled relationships no longer hold. For example:

(a) The assumption that oil prices will rise as the cost of extraction rises is not necessarily true. Instead, a finite world creates feedback loops that tend to keep oil prices too low because of its tight inter-connections with wages. We see this happening right now. The Telegraph reported recently, “Oil and gas company debt soars to danger levels to cover shortfall in cash.”

(b) The assumption that greater investment will lead to greater output becomes less and less true, as the easy to extract resources (including oil) become more depleted.

(c) The assumption that higher prices will lead to higher wages no longer holds, as the easy to extract resources (including oil) become more depleted.

(d) The assumption that substitution will be possible when there are shortages becomes less and less appropriate because of interconnections with the rest of the system. Particular problems include the huge investment required for such substitution, impacts on the financial system, and shortages developing simultaneously in many areas (oil, metals such as copper, rare earth metals, and fresh water, for example).

More information is available from my post, Why Standard Economic Models Don’t Work–Our Economy is a Network.

2. Energy and other physical resources are integral to the economy.

In order to make any type of goods suitable for human use, it takes resources of various sorts (often soil, water, wood, stones, metals, and/or petrochemicals), plus one or more forms of energy (human energy, animal energy, wind power, energy from flowing water, solar energy, burned wood or fossil fuels, and/or electricity).

Figure 1. Energy of various types is used to transform raw materials (that is resources) into finished products.

Figure 1. Energy of various types is used to transform raw materials (that is resources) into finished products.

3. As we approach limits, diminishing returns leads to growing inefficiency in production, rather than growing efficiency.

As we use resources of any sort, we use the easiest (and cheapest) to extract first. This leads to a situation of diminishing returns. In other words, as more resources are extracted, extraction becomes increasingly expensive in terms of resources required, including human and other energy requirements. These diminishing returns do not diminish in a continuous slow way. Instead, there tends to be a steep rise in costs after a long period of slowly increasing costs, as limits are approached.

 

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

One example of such steeply rising costs is the sharply rising cost of oil extraction since 2000 (about 12% per year for “upstream costs”). Another is the steep rise in costs that occurs when a community finds it must use desalination to obtain fresh water because deeper wells no longer work. Another example involves metals extraction. As the quality of the metal ore drops, the amount of waste material rises slowly at first, and then rapidly escalates as metal concentrations approaches 0%, as in Figure 2.

The sharp shift in the cost of extraction wreaks havoc with economic models based on a long period of very slowly rising costs. In a period of slowly rising costs, technological advances can easily offset the underlying rise in extraction costs, leading to falling total costs. Once limits are approached, technological advances can no longer completely offset underlying cost increases. The inflation-adjusted cost of extraction starts rising. The economy, in effect, starts becoming less and less efficient. This is in sharp contrast to lower costs and thus apparently greater efficiency experienced in earlier periods.

4. Energy consumption is integral to “holding our own” against other species.

All species reproduce in greater numbers than need to replace their parents. Natural selection determines which ones survive. Humans are part of this competition as well.

In the past 100,000 years, humans have been able to “win” this competition by harnessing external energy of various types–first burned biomass to cook food and keep warm, later trained dogs to help in hunting. The amount of energy harnessed by humans has grown over the years. The types of energy harnessed include human slaves, energy from animals of various sorts, solar energy, wind energy, water energy, burned wood and fossil fuels, and electricity from various sources.

Human population has soared, especially since the time fossil fuels began to be used, about 1800.

 

Figure 3. World population based on data from "Atlas of World History," McEvedy and Jones, Penguin Reference Books, 1978  and Wikipedia-World Population.

Figure 3. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and Wikipedia-World Population.

Even now, human population continues to grow (Figure 4), although the percentage rate of growth has slowed.

 

Figure 4. World population split between US, EU-27, and Japan, and the Rest of the World.

Figure 4. World population split between US, EU-27, and Japan, and the Rest of the World.

Because the world is finite, the greater use of resources by humans leads to lesser availability of resources by other species. There is evidence that the Sixth Mass Extinction of species started back in the days of hunter-gatherers, as their ability to use of fire to burn biomass and ability to train dogs to assist them in the hunt for food gave them an advantage over other species.

Also, because of the tight coupling of human population with growing energy consumption historically, even back to hunter-gatherer days, it is doubtful that decoupling of energy consumption and population growth can fully take place. Energy consumption is needed for such diverse tasks as growing food, producing fresh water, controlling microbes, and transporting goods.

5. We depend on a fragile self-organized economy that cannot be easily replaced.

Individual humans acting on their own have very limited ability to extract and control resources, including energy resources. The only way such control can happen is through a self-organized economy that allows people, businesses, and governments to work together on common endeavors. Development of a self-organized economy started very early, as bands of hunter-gatherers learned to work together, perhaps over shared meals of cooked food. More complex economies grew up as additional functions were added. These economies have gradually merged together to form the huge international economy we have today, including international trade and international finance.

This networked economy has a tendency to grow, in part because human population tends to grow (Item 4 above), and in part because greater complexity is required to solve problems, as an economy grows. This networked economy gradually adds more businesses and consumers, each one making choices based on prices and regulations in place at the particular time.

This networked economy is fragile. It can grow, but it cannot easily shrink, because the economy is constantly optimized for the circumstances at the time. As new products are developed (such as cars), support for prior approaches (such as horses, buggies and buggy whips) disappears. Systems designed for the current level of usage, such as oil pipelines or Internet infrastructure, cannot easily be changed to accommodate a much lower level of usage. This is the reason why the economy is illustrated as interconnected but hollow inside.

Another reason that the economy cannot shrink is because of the large amount of debt in place. If the economy shrinks, the number of debt defaults will soar, and many banks and insurance companies will find themselves in financial difficulty. Lack of banking and insurance services will adversely affect both local and international trade.

6. Limits of a finite world exert many pressures simultaneously on an economy.

There are a number of ways an economy can reach a situation of inadequate resources for its population. While all of these may not happen at once, the combination makes the result worse than it otherwise would be.

7. Our current problems are worryingly similar to the problems experienced by earlier civilizations before they collapsed.

In the past, there have been civilizations that were confined to a limited area that grew for a while, and then collapsed once resource availability declined or population outgrew resources. Such issues led to a situation of diminishing returns, similar to the problems we are experiencing today. We know from studies of these prior civilizations how diminishing returns manifested themselves. These include:

When collapse came, it did not come all at once. Rather a long period of growth was succeeded by a period of stagnation, before a crisis period of several years took place.

Figure 6. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.

Figure 6. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.

We began an economic growth cycle back when we began using fossil fuels to a significant extent, starting about 1800. We began a stagflation period, at least in the industrialized economies, when oil prices began to spike in the 1970s. Less industrialized countries have been able to continue growth their growth pattern longer. Our situation is likely to differ from that of early civilizations, because early civilizations were not dependent on fossil fuels. Pre-collapse skills tended to be useful post-collapse, because there was no real change in energy sources. Loss of fossil fuels would considerably change the dynamic of the outcome, because most jobs would become obsolete.

Most models put together by economists assume that the conditions of the growth period, or the growth plus stagflation period, will continue forever. Such models miss turning points.

8. Modeling underlying the book Limits to Growth shows why depletion can be expected to lead to declining economic growth. It also shows why extracting all of the resources that seem to be available is likely to be impossible.

We also know from the analysis underlying the book The Limits to Growth (by Donella Meadows and others, published in 1972) that growing demand for resources because of Items listed as 6a to 6g above will take an increasingly large share of resources produced. This dynamic makes it very difficult to produce enough additional resources so that economic growth can continue. The authors report that the behavior mode of the modeled system is overshoot and collapse.

The 1972 analysis does not model the financial system, including debt and the repayment of debt with interest. The closest it comes to economic modeling is modeling industrial capital, which it describes as factories, machines, and other physical “stuff” needed to extract resources and produce goods. It finds that inability to produce enough industrial capital is likely to be a bottleneck far before resources in the ground are exhausted.

As an example in today’s world, there seems to be a huge amount of very heavy oil that can be steamed out of the ground in many places including Canada and Venezuela. (The existence of such heavy oil is one reason the ratio of oil reserves to oil production is high.) To actually get this oil out of the ground quickly would require a huge physical investment in a very short time frame. As a practical matter, we cannot ramp up all of the physical infrastructure needed (pipelines, steaming equipment, refining equipment) without badly cutting into the resources needed to “grow” the rest of the economy. A similar problem is likely to exist if we try to ramp up world oil and gas supply using fracking.

9. Our real concern should be collapse caused by reaching limits in many ways, not the slow decline reflected in a Hubbert Curve.

One reason for being concerned about collapse is the similarity of the problems our current economy is experiencing to those of prior economies that collapsed, as discussed in Item 7. Another reason for this concern is based on the observation from physics that an economy is a dissipative structure, just as a hurricanes is, and just as a human being is. Such dissipative structures have a finite lifetime.

Concern about future collapse is very different from concern that one or another resource will decline in a symmetric Hubbert curve. The view that resources such as oil will gradually decrease in availability once 50% of the resources have been extracted reflects a best-case scenario, where a perfect replacement (both cheap and abundant) replaces the item that is depleting, so that the economy is not affected. Hubbert illustrated the kind of situation he was envisioning with the following graphic:

 

Figure 7. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

Figure 7. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

10. There is a tight link between both oil consumption and total energy consumption and world economic growth.

This tight link is evident from historical data:

 

Figure 8. Comparison of three-year average growth in world real GDP (based on USDA values in 2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014.

Figure 8. Comparison of three-year average growth in world real GDP (based on USDA values in 2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014.

The link between energy and the economy comes both from the supply side and the demand side.

With respect to supply, it takes energy of many types to make goods and services of all types. This is discussed in Item 2 above.

With respect to demand,

11. We need a growing supply of cheap energy to maintain economic growth.

This can be seen several ways.

 

Figure 9. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Figure 9. Average wages in 2012$ compared to Brent oil price, also in 2012$.
Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population.
Thus, they reflect changes in the proportion of population employed as well as wage levels.

12. Oil prices that are too low for producers should be a serious concern. Such low prices occur because oil becomes unaffordable. In the language of economists, oil demand drops too low.

A common belief is that our concern should be oil prices that are too high, and thus strangle the economy. A much bigger concern should be that oil prices will fall too low, discouraging investment. Such low oil prices also encourage civil unrest in oil exporting nations, because the governments of these nations depend on tax revenue that is available when oil prices are high to balance their budgets.

It can easily be seen that high oil prices strangle the economies of oil importers. The salaries of consumers go “less far” in buying basics such as food (which is raised and transported using oil) and transportation to work. Higher costs for basics causes consumers cut back on discretionary expenditures, such as buying new more expensive homes, buying new cars, and going out to restaurants. These cutbacks by consumers lead to job layoffs in discretionary sectors and to falling home prices. Debt defaults are likely to rise as well, because laid-off workers have difficulty paying their loans. Our experience in the 2007-2009 period shows that these impacts quickly lead to severe recession and a drop in oil prices.

The issue we are now seeing is the reverse–too low oil prices for oil producers, including oil exporters. These low oil prices are contributing to the unrest we see in the Middle East. Low oil prices also contribute to Russia’s belligerence, since it needs high oil revenues to maintain its budget.

Conclusion

We seem now to be at risk in many ways of entering into the collapse scenario experienced by many civilizations before us.

One of areas of risk is that interest rates will rise, as the Quantitative Easing and Zero Interest Rate Policies held in place since 2008 erode. These ultra-low interest rates are needed to keep products affordable, since the high cost of oil (relative to consumer salaries) has not really gone away.

Another area of risk is an increase in debt defaults. One example occurs when student loan borrowers find it impossible to repay these loans on their meager wages. Another example is China with the financing of its big recent expansion by debt. A third example is the possibility that businesses extracting resources will find it impossible to repay loans with today’s (relatively) low commodity prices.

Another area of risk is natural disasters. It takes surpluses to deal with these disasters. As we reach limits, it becomes harder to mitigate the effects of a major hurricane or earthquake.

Clearly loss of oil production because of conflict in the Middle East or in other oil producing countries is a concern.

This list is by no means exhaustive. Many economies are “near the edge” now. Recent news is that Germany has slipped into recession as well as Japan. One economy failing is likely to pull others with it.

Related

Oil Limits and the Economy: One Story, Not TwoIn "Book draft"

Why a Finite World is a Problem In "Financial Implications"

Our Energy Predicament in Charts In "Alternatives to Oil"

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.

This entry was posted in Financial Implications and tagged , , , , , . Bookmark the permalink.

 

 BC, 11/05/2015 at 12:45 pm

... ... ...

http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

Peak Oil, population overshoot, resource depletion per capita, global peak demographic drag effects, excessive debt to wages and GDP, low labor share of GDP, regressive taxation of labor, worsening inequality, decelerating productivity, falling money velocity and contracting acceleration, and fiscal constraints will combine to result in the price of oil falling to the $20s-$30s, no growth of trade, and real GDP per capita trending at 0% or slower indefinitely hereafter.

The current neo-Keynesian/neo-liberal canon is utterly ill-equipped to even recognize and acknowledge the foregoing converging, self-reinforcing factors, let alone devise comprehensive policies to adapt to and mitigate the worst effects hereafter.

Donn Hewes, 11/05/2015 at 9:23 pm
Here is the question. Are the economic models and rules that we apply to everything, and have developed and believed for the last 100 years; tied to an expanding energy supply or, are they distinct from energy; or decoupling from energy, in a way that will ensure they are just as relevant to decline as they were to growth? Second if these models are tied to our continuously expanding energy supply, what new “rules” or models, can replace them to help describe the energy decent? I am surprised at the resistance to new economic theories here.

Here is a simple example. Everyone agrees that in the past, “Declining price = declining production = higher price = higher production” and yet peak oil says that at some point one of these links must fail. Which one? Where? How? When?

Suggesting that declining price could lead to declining production, could lead to more price and production declines is just an attempt to describe how the chain might break. The chain will break.

962 Responses to Energy and the Economy – Twelve Basic Principles

> Gail Tverberg says:

August 19, 2014 at 8:12 am

I also started from being very worried about IPCC findings back several years ago. As I dove in and looked at the details, I figured out that there were huge “issues” with what they were doing.

We are dealing with a very political issue. The IEA had been warning of Peak Oil, up through its 1998 World Energy Outlook report. There was no 1999 report. When the 2000 report came out, the US Geological Service had come up with a new set of very optimistic findings with respect to possible future oil supply. The IEA adopted higher forecasts based on the 2000 USGS reports as a way of getting around the peak oil issue.

The year 1999 was the high point of North Sea oil production. When this became apparent, the IEA (which is a part of OECD) needed a way of telling European oil users especially, that they needed badly to dial back on oil usage. Telling them the truth, after they had just buried the truth, was not an option. The IPCC reports provided a way of doing this, because political leaders could point to a distant problem that people could theoretically do something about, without having to point out the very real problem the area was facing currently. Taxes could be added to usage of oil by individual drivers that would lead to the use of smaller cars.

The IEA (as I recall) was actually involved in the fossil fuel input variables to the IPCC reports. But the fossil fuel assumptions used in the IPCC reports were ridiculously higher than the IEA was putting out in reports to members.

When I first got involved with oil issues in detail back in the 2005-2007 period, one of my first correspondence with a well known peak oil person was with Kjell Aleklett, President of Association for the Study of Peak Oil. He was very upset with the IPCC, with respect to the fossil fuel assumptions being made. (I later learned that this was a longstanding argument, and Kjell wasn’t the first involved.) There was a strong feeling on the part of some that the reasons for all of these biased calculations was to “bury” the peak oil issue and raise the visibility of a different, more politically correct issue.

A great deal of the “push” for “New Policies” with respect to climate change is coming from the IEA (which is part of OECD, and in the same building as I recall). If a person looks at my “Twelve Basic Principles,” one discovers that these New Policies have no chance of working in a finite world. But they do give politicians something they can do, and they do reduce oil imports for countries that are very concerned about not being able to afford oil imports. They give a lot of false hope that politicians can point to. They don’t fix the world situation, either for Peak Oil or Climate Change.

Rodster , August 16, 2014 at 10:20 am

I’m reminded by a great quote from Gerald Celente who said: “I’m not going to get into it whether global warming or climate change is real or BS. That’s for you to decide. All I can tell you is that NOTHING good comes about when you pour billions of tons of crap in the air, water and land”.

Paul, August 16, 2014 at 12:24 pm

Try visiting China … you can barely see across the street at times… likewise in Hong Kong much of the year you cannot even see across the harbour…

When people get into this denial stuff on global warming I have one question for them — do you like breathing that shite? Do you like your children breathing that shite? They shuffle about and say well uh ya well ya uh — not I don’t.

Enough said.

http://www.nytimes.com/2013/04/23/world/asia/pollution-is-radically-changing-childhood-in-chinas-cities.html?pagewanted=all&_r=0

Paul, August 16, 2014 at 1:56 am

Keep an eye on shale oil — that and to some extent tar sands – is the only thing that is keeping the global oil supply growing since conventional peaked in 2005….

If not a black swan between now and then that is likely the trigger — when total oil production stops growing then oil spikes — then the economy collapses — the price of oil collapses… and what is left remains in the ground…

The central banks have done a stellar job of holding this together for 6 years…. however they cannot print oil…

InAlaska, August 16, 2014 at 8:37 pm

I often wonder if our model, and thus our understanding, is too simple, and that is why the big event is always 2-5 years in the future. Its been 2-5 years in the future for like 10 years now. Just sayin’…

 
Paul, August 16, 2014 at 11:35 pm

I certainly hope so — but when I look at the desperate tactics BAU is now using — I find it difficult to believe this can go on for many more years…

 
Bill Simpson, August 18, 2014 at 8:49 am

I suspect that the rapid development of horizontal drilling, where they can now drill out nearly 2 miles horizontally from the rig, while staying inside a thin lawyer of oil saturated rock, and now fracture up to 15 zones along the well hole, has done nearly as much to increase oil production as drilling in actual shale deposits has. I’m pretty sure that most of the increase in West Texas Permian Basin oil output is coming from such layers, which sometime sit stacked 5 deep on top of each other. And the high price of oil makes such costly wells profitable. It is like the Bakken oil deposits. Oil companies knew that there was oil there for 50 years, but the price was too low to make money with the high cost of drilling only vertical wells. These thin layers will be depleted a lot faster than conventional oil fields which can be hundreds of feet thick. US production will probably peak in another 7 or 8 years. I would love to be wrong.

Paul, August 18, 2014 at 2:17 pm

I would be overjoyed if the time frame as 7-8 years…. but I am seeing analysis that indicates a peak in the next couple of years — because we have been fed lies about how much shale oil can be extracted within a reasonable price range.

One of the basins recently reduced their projections of recoverable oil by 96%

Keep in mind conventional oil finds are depleting — so even if shale can keep increasing production for 7-8 years… is it enough to offset the drops in conventional?

 

        •  
    • Gail Tverberg says:

      August 14, 2014 at 7:57 pm

      I see Sinny Cool posted a link to my article Why I Don’t Believe Randers’ Limits to Growth Forecast. I am told that Randers was a graduate student who got his name put the English version of “Limits to Growth.” A different graduate student got his name on the German version of Limits to Growth. He is definitely not an expert on energy today.

      Randers is good at picking out a future economic scenario he would like, and building a model of future energy consumption (using current thinking about growing efficiency, ability of renewables to do great things) to support his thinking. There is definitely not the kind of model underlying the current analysis as underlying the 1972 analysis. His analysis is pretty much incorporated in a single spreadsheet. It shows the economic scenario he would like, and the energy supplies needed to get there. If it does incorporate fossil fuel forecasts, the are very optimistic Hubbert Curve type forecasts, that further more use the assumption that when one fuel (say oil) decreases in supply, others (coal and later natural gas) can step in, until they too are depleted. Given the impact on the financial system, and our lack of ability to switch from one fuel to another quickly, this is an incredibly optimistic view.

      • Rodster says:

        August 14, 2014 at 8:06 pm

        But isn’t that what John Michael Greer does as well? I love his writing but i’m amazed how one individual can tell what North American will or could look like 500 years from now as if it’s almost a given.

         
        • dolph9 says:

          August 14, 2014 at 10:16 pm

          My view is perhaps a little more nuanced still.

          I fully agree with Gail that we face a fast collapse. However, I don’t think it’s going to look or feel like a fast collapse, at least how we imagine it from Hollywood. Instead, it’s going to look sort of like aging…every year things get worse. A new part of your body breaks down, a friend of yours dies, your wife dies, you go broke using all of your savings, you have to live with your kids, they go broke too, all the while the nation you loved goes bankrupt or falls into civil war, etc. etc. Think of a British imperial officer who served in WW2 and returns to Britain and just sits around as the world he knew comes to an end.

          So historically it’s pretty fast, but it will feel slow. That’s the way I think about it. But I think we can make guesses about which areas will do better, and who will do better. Obviously, areas with abundant local water and food relative to population will do better, the fit and healthy will do better than the diseased, the informed will do better than the willfully ignorant, etc.

          So I think for those of us that are informed, we do have to make changes, to do something. Not necessarily go all out survivalist, but we do have to act and live in our lives like we know what is going on, and face the consequences good or bad.

          I for one have spoken about these things to my limited circle of family and friends and have alienated them all. But I won’t be silenced, I will put my voice and actions out into the world.

          • Stilgar Wilcox says:

            August 14, 2014 at 11:42 pm

            dolph9, when what you have described to the people you know becomes the new reality quickly or over time, they will not turn to you and give credit for seeing what was coming, but instead blame you for having wished it true. That’s how simplistic most people’s minds are.

            Although I see your angle, I prefer to remain silent with the anticipation of their surprise and consternation once shtf. Almost like a scientific experiment, watching, waiting for that look of realization, but purely as an observer only. I don’t even want to rustle the leaves around their feet for fear of leading them to the truth, but instead remain at arms length of the topic hoping they will be caught completely unawares, shocked henceforth into what will undoubtedly be some very interesting reactions. Then they will begin asking hard questions and it will be fun to explain to them why it happened that way. This way they won’t think I wished it into reality, but instead value the information to fill in the blanks.

            And when they ask why I never explained this before, I’ll tell them they would have never believed me and they will reluctantly agree. But they will also say, “I’m glad I didn’t know it was coming.” As absurd as they may seem to you and me, most people linger in a childlike state, not wanting to be jolted into mature coherence.

            • xabier says:

              August 15, 2014 at 2:53 am

              Stilgar

              Very true reading of the situation: those who predict unpleasant events will most probably be blamed for having in some way inducing them – it’s a common response of the more primitive elements of the human psyche. Much better to keep one’s own counsel…..

            • Paul says:

              August 15, 2014 at 3:07 am

              I think most people will still see this as a financial crisis — and blame the bankers and the politicians.

              I am not sure there will be a told you so moment — 1. because they will still not believe this is oil related… and 2. because most people will be dead.

            • Gail Tverberg says:

              August 15, 2014 at 11:17 am

              I think you are right. People will never see the connection to oil. They will assume the issue is all financial, and can be fixed with a new financial system.

               
            • Paul says:

              August 15, 2014 at 2:13 pm

              A friend with many years in finance is shorting the yen (I did as well and made a bit off that but exited when it stabilized) — I sent him an article on that crash of Japan’s GDP of 6+%…. he was gleeful hoping that would kill the yen…

              When I asked him what he thought would happen when one of the key hubs goes — say Japan or China — hesuggests there will be some difficulties but we’ll just reset the system…

              He does not believe high priced oil is a problem rather he believes we will adapt (in spite of the fact that we have never in the past adapted to oil price spikes)

              It is amazing what faith people have in the PTB to fix things…. whether its the economy, global warming, resource depletion….

              There is a word for that — hubris.

            • kesar says:

              August 15, 2014 at 7:55 am

              I agree with Paul here. There are so many narratives/ideologies/myths/fairy-tailes around that everybody will choose the most favourite and suitable: banksters, capitalism, politicians, neighbor country, corrupt elites, industrial-military complex, god’s vengence or any other. They will never believe it anyway, so don’t waste your time trying. Wisdom is built from small bricks of facts, concepts and laws. You will never sell the whole LTG story, unless you have a lot of time and patiently listening audience.

              The second thing is, that making too many people aware of civiliztion’s situation is a little counter-productive. They will abandon the system and above certain population level, it will only accelerate collapse. We should postpone this as much as we can. I know a few of commenters wish otherwise, but for sure it won’t be pleasant, regardless of the scenario. Every day and every year is a gift here, IMHO.

              kesar

            • tfouto says:

              August 15, 2014 at 11:46 am

              Maybe economists think they can just print money and give it to oil companies…

               
            • Paul says:

              August 15, 2014 at 12:08 pm

              And they would be right.

              That is already happening — Big Oil is tapping QE ZIRP cash — and using it to buy back shares… which raises the price of their shares — and money managers see that — and they pile into these shares (or at least do not sell out) because they can see that although the share price by any logic should drop — gravity is being defied — so why not join the party — which of course also helps to keep share prices buoyant….

              This is not only happening in the oil industry — it is happening ACROSS THE BOARD:

              http://www.reuters.com/article/2014/08/14/column-markets-saft-idUSL2N0QI0SJ20140814

              BUYBACKS AND THE END OF QE

              Of course much of this has not been done with free cash flow. Rather the boom in share buybacks has coincided with a boom in debt issuance, meaning that companies are in essence taking on leverage with which to buy back equity.

              Gross corporate debt has risen from about 55 percent of U.S. GDP just before the recession to 65 percent today. That has slumped recently though, with the quarterly change in nonfinancial corporate debt issuance falling to near zero, from more than 10 percent growth in the early part of the year.

              Again – someone asked on the last article how this is different from any of the doom predictions from the past 40 years —- never has this happened before — the Fed is printing money and handing it to banks who loan it to corporations who use it to ramp their share prices… because without that cash the share prices would crash and we’d be in a world of hurt very quickly.

              You do NOT do such a thing unless you are at the end of your tether. This is incredible desperation…. the camel’s back looks like this ‘U’ because of all the festering shite we have piled onto him…

              Yet most people look at that article and think nothing … so what … let’s get back to Facebook… or re-runs of Dancing with the Stars — or practicing twerking while self filming and loading that to yootoob….

              Frogs boiling slowly in the pot they are …

            • Gail Tverberg says:

              August 16, 2014 at 7:41 am

              Thanks for the link. The article also points out:

              . . .the spreads on BBB issuer bonds have widened by about 10 percent in the past month. High-yield or so-called junk bond issuers are having a worse time of it, with the yield premium investors demand up by more than 15 percent.

              Those are small changes in absolute yield, but perhaps indicative of a change in the wind.

              As QE winds down this autumn, we may well see these trends accelerate, with fewer corporations issuing debt and investors wanting more compensation for holding it.

               
            • InAlaska says:

              August 16, 2014 at 8:44 pm

              Something about “shooting the messenger” comes to mind.

               
            • InAlaska says:

              August 16, 2014 at 8:48 pm

              Paul, but regarding your statement “It is amazing what faith people have in the PTB,” very similar to the faith that you have in a Deep State that controls everything?

               
            • Paul says:

              August 16, 2014 at 11:34 pm

              I don’t see the connection….

              The masses having faith in the PTB to keep BAU going is completely different from being aware that there are unelected men in America who are running the show…

              I honestly cannot see how you cannot see that – throughout history that has always been the case — democracy has always been a sham — the elites feed you this sham and they let the politicians vote on gay marriage and such — to make you feel empowered — but when it comes to issues that involve power and money — the politicians kowtow to the rich and powerful

              You are aware that to win a presidential race you need hundreds of millions of dollars – if not billions?

              Where do you think that money comes from? The tooth fairy?

              Of course it comes from the rich and powerful — do you think they give it without strings attached? Do you think that if a president or politician did not do what he was paid to do (the lobbyists of course brief them before handing over the bribes).

              So how can you not accept that the money men are making the decisions? Of course they are – they have every single elected official in their pockets.

              They may run the show but by no means do I think they can keep BAU going.

              There are some things that are beyond the control of even the most powerful men on earth.

            • Peter S says:

              August 18, 2014 at 6:47 am

              InAlaska
              “Paul, but regarding your statement “It is amazing what faith people have in the PTB,” very similar to the faith that you have in a Deep State that controls everything?”

              Yes, I’ve pointed that out to him before too. I have to say, I don’t have much faith in people who appropriate information that suits their worldview. This whole situation is beyond our politics. Any talk of The Powers That Be or blaming some unknown conspiracy theory is just creating a scapegoat, and by that refusing to accept responsibility for our own actions.

              TPTB is a scapegoat. Everybody wants to deny responsibility, including some people here on this message board.

            • Paul says:

              August 18, 2014 at 2:46 pm

              Is it a ‘conspiracy theory’ that mega corporations and special interest groups (e.g. AIPAC) are permitted to legally bribe politicians by giving them billions of dollars (in aggregate) via lobbyists?

              Why do you think corporations give money to politicians? Is it some sort of charity? Or could it be their way of controlling the politicians?

              Is it a ‘conspiracy theory’ that many of the people who were tasked with creating new financial regulations after 2008 are now employed by the big banks making big money?

              Why do you think corporations offer high paying jobs to government officials? Is it charity? Or could it be a way of bribing government officials directly as in — if you help us — and we can make you very wealthy down the road.

              If you can’t see that this is evidence of the Deep State in action then I am afraid you are blind.

            • Peter S says:

              August 19, 2014 at 4:08 am

              There are conspiracies everywhere. Many are discovered, many are not. If I make a deal with my friend to not invite a 3rd friend on our fishing trip – that’s also a conspiracy. Nobody can dispute lobby groups’ power and influence, but that doesn’t make them part of “TPTB”. There are “Powers That Be” – but they are not a scapegoat for our situation. We are ALL responsible.

              You are ignoring the uncomfortable truth (and this is where I part company with a lot of liberals, progressives, libertarians etc.: people are NOT fundamentally good, selfless, empathetic creatures. People don’t “just need more information and they will make the right choices”. Most people are selfish and deny responsibility. Good people are always the minority. That is the reality: these corrupt systems we have just happen because of human nature. You don’t need a conspiracy theory about TPTB to explain how we naturally destroy our own species. That’s the uncomfortable truth: you live in a chaotic universe, part of a species that naturally destroys itself.

              You’re joining dots into a pattern you want to see. The dots are obvious and worthy of attention. But the pattern you’re drawing may or may not exist. The world you want to change is not the world we live in. (And please don’t call me blind for “not seeing” something which even you say is hidden and secret!)

            • Paul says:

              August 19, 2014 at 3:02 pm

              You are correct peter … we seem to think that the default position of human nature is one where we do a days hard work in the fields then retire to a camp fire with the villages and sing koombaya…

              Sounds nice — but it never was and never will be…

              Doesn’t mean we should not oppose the worst excesses of a tyrant — not because we want to sing Koobaya by the camp fire and convince him to join — rather because it is in the interest of self-preservation to check excessive behaviours — because the tyrant will eventually come after what we have.

              http://whynationsfail.com/ An excellent book … in countries with the most brutal tyrants in charge you seldom see innovation primarily because if you innovate and succeed you draw attention to yourself… and the tyrant or one if his cronies — will notice your affluence — and confiscate the source…

              Better to just put your head down and get by….

            • Peter S says:

              August 20, 2014 at 10:54 am

              To Paul
              Thanks for the book reference, I’m putting it on my list. But I already read a LOT about all these themes and concepts. I’m also studying social/cultural anthropology at master’s level, so I have a pretty broad reading list on these themes already. But I will look into this book too.

               
          • Paul says:

            August 15, 2014 at 3:17 am

            dolph — when the next shoe drops I think this does go very fast… as in weeks…

            I think this manifests in a credit crisis — banks don’t trust each other so trade dries up because Letters of Credit are not honoured… that means the economy seizes — literally within days — because in this globalized world the momentum of the supply chain must be maintained –and for that you need credit…

            The just in time supply chain withers and dies — that means within days the shops empty — and the fat lady sings… I suppose the leaders make their speeches telling us how we need calm… and how we must not loot — and how we need martial law…

            And then we sit waiting — for food — and water — and help … and it doesn’t come … and if we venture out to try to get help — we are shot dead… and if we try to fight back — we are shot dead…

            There will be no tolerance for any dissent — there will be no help because there can be no help. You cannot feed 7.2 B people – not even for a week….

            The PTB know this.

            The orders have already been issued — see the response to Ferguson – that is a military operation… and it is a fraction of what is coming.

            • dolph9 says:

              August 15, 2014 at 4:07 pm

              I suppose everybody has their interpretation.

              I personally have been through many emergency triage situation at hospitals, I have lived through two major hurricanes coming in from the Gulf. Thankfully that’s the worst I’ve experienced, my life has otherwise been pretty comfortable. But I guarantee that even in those situations, it was nothing like you describe. It was much more mundane; boring in fact.

              We could lose half our transportation and half our industry and still march on. Things basically have a way of organizing, even if at a lower level. That’s the stair step model down.

            • Paul says:

              August 15, 2014 at 6:56 pm

              When the financial system busts — and credit stops — it will not be mundane.

              The grocery stores will empty — and they will not be refilled – ever.

              Electricity will stop – permanently.

              Clean water will stop – because there will be no way to clean it because there will be no chemicals to clean it — and no power to pump it.

              The sewage system will back up because there will be no pumping stations to move it.

              I don’t think a hurricane is a good parallel at all — I have been through a couple in Hong Kong (typhoon 10s…) and the clean up crew comes and picks up the broken trees and busted signs… and within a couple of days you wouldn’t have even known a storm had passed.

              If you want to see what this looks like — take a spin down to Haiti — it is a living hell for those people — but they still have aid agencies helping them — they are being fed — they have medical care — because BAU is still helping them…

              Now imagine Haiti — but without the aid agencies.

              When this hits nobody will help. There will be no reset — there will be no recovery…. when the financial system busts — and it is gonna bust — we are done with BAU.

              As we saw in 08 this happens very quickly — if the central banks don’t step in to backstop the system the stuff that was rotting on the docks does not move — the spare parts that are part of the just in time supply chain do not move…

              And the world grinds to a complete halt — literally within days.

              See p. 56 onwards for what this looks like http://www.feasta.org/wp-content/uploads/2012/06/Trade-Off1.pdf

              This is by far the most thought out summary of what is likely to happen when the SHTF.

            • Lizzy says:

              August 21, 2014 at 10:21 am

              Hi Paul, could you please explain to me – non-American! – what “When the next shoe drops” means? You use it a lot. I’ve searched on Google but can’t see it. Thanks.

               
            • Jarle B says:

              August 21, 2014 at 10:40 am

              Maybe Cinderella is about to loose a second shoe?

               
            • Paul says:

              August 21, 2014 at 12:33 pm

              As someone has already pointed out the meaning … this is borrowed from those silly finance people who love metaphors… next shoe to drop… pushing on a string… etc….

              Isn’t it cool how they self-congratulate each other when they come up with one of these things — oh Jim you are so clever — heh heh heh … on no its you who’s clever Jeremy — no Jim you are the smartest guy in the room — golly gee Jim how clever is that — smartest guy in the room! — since you came up with that then you surely are the smartest guy in the room…. hoo hoo hoo oh Jeremy I can see why you were top of your class at Wharton …

              Oh enough of that Jim — let’s go to Yankee stadium — Jim Cramer has a private box and he’s lined up some smokin hookers and a bag of blow + a case of Crystal…. now you are talking Jeremy — let’s do it — lock and load – we are all good – good to guy bruther!

            • Siobhan says:

              August 21, 2014 at 11:11 am

              @Lizzy
              “the next shoe” is a metaphor for the inevitable
              “When the next shoe drops” the inevitable happens…

              http://idioms.thefreedictionary.com/wait+for+the+other+shoe+to+drop

              (Paul, I hope you won’t mind my answering.)

          • Gail Tverberg says:

            August 15, 2014 at 10:57 am

            I think you may be right about the collapse, saying that no matter how fast the collapse is from a historical perspective, it will seem slow.

            When we write and think about collapse every day, we assume that what we know today will be processed and effective by the end of the week. This isn’t really the case though. There are a lot of interconnected pieces. Some pieces will continue to work, even when others fail. For example, our clothes will continue to be wearable for quite a while, even if we happen to lose weight, and electricity is no longer reliable.

          • Gail Tverberg says:

            August 15, 2014 at 10:57 am

            I think you may be right about the collapse, saying that no matter how fast the collapse is from a historical perspective, it will seem slow.

            When we write and think about collapse every day, we assume that what we know today will be processed and effective by the end of the week. This isn’t really the case though. There are a lot of interconnected pieces. Some pieces will continue to work, even when others fail. For example, our clothes will continue to be wearable for quite a while, even if we happen to lose weight, and electricity is no longer reliable.

          • InAlaska says:

            August 16, 2014 at 8:41 pm

            Dolph9 your aging metaphor is very good. I think its the best one I’ve heard and thank you for that. This is the scenario we certainly can all hope for, otherwise a fast collapse will be very grim.

             
          • James says:

            August 17, 2014 at 8:50 am

            The picture you paint seems pretty accurate to me. When will collapse begin? Depends on who you ask. For most in the third world and many in the marginal first it already has. Think of it as a ship going down. The waterline will continually rise as we all scramble to remain above it. Eventually we’ll all end up in the drink treading water waiting for the inevitable, although the uber rich have fashioned themselves a few lifeboats, which may or may not be watertight. Gonna be an interesting century ahead for sure! Too bad I won’t be alive for most of it. Just hope immediate reincarnation ain’t in the plan.

             
          • So long and thanks for all the fish says:

            August 24, 2014 at 4:34 am

            dolph9. This is a sensible way of looking at it and I agree this would be the most likely way things will play out. I don’t think it will be like the earth gets hit by an asteroid (unless it does!) with an instant demise into disorder and apocalypse. I feel for you on speaking out, because I’ve learnt to shut my mouth about my ideas which I can’t even speak about with my husband as he gets really angry. You’re braver than me because I keep my ideas to myself these days. It’s lonely. I found it easier now I’ve been through the 5 stages of grief: denial, anger, bargaining, depression and acceptance, but it took more than 20 years.
            Great article Gail. Some of the most sensible and clearly presented writing I’ve read so far. There are some great replies, too.

         
        • Harry says:

          August 15, 2014 at 6:13 am

          A gradual erosion of prosperity is what we are already experiencing. The system only has a certain amount of elasticity. At a certain unknowable point it will snap and there will be a very rapid loss of retail, financial services, electricity, water etc. Paul, I agree it is likely that most people will frame this as a purely financial catastrophe.

           
    • Gail Tverberg says:

      August 14, 2014 at 8:02 pm

      At best, shale oil extraction can continue for a few more years. Even doing so, it is very hard on balance sheets.

      The whole game of “More oil production will come from somewhere–not sure where” seems likely to stop, once oil prices drop too low. Or if oil prices do spike, the spike will be brief, as countries fall into recession following the price spike.

      • InAlaska says:

        August 14, 2014 at 8:45 pm

        Gail, what is the price break point where oil prices will not be high enough to continue extraction?

         
        • Gail Tverberg says:

          August 15, 2014 at 10:31 am

          Every dollar drop in price has some effect on decisions made by oil companies and on the ability of oil exporting countries to continue to function. There won’t be a uniform cut off on extraction, unless an oil exporter falls to such a level of civil war that it cannot produce anything.

          There are timing lags built into all of this. If a company decides to sell a piece of property it might have developed next year, the question is whether the new owner will try to drill (but perhaps with a lower cost basis, because the property dropped in value). If a company decides not to add new infill wells, that is likely to mean that depletion will hit faster and harder.

        • dolph9 says:

          August 15, 2014 at 3:55 pm

          The dollar price that producers need climbs over time, the price that consumers can afford drops over time.

          When these begin to cross, the financial system of the entire world will go kaput. We’re probably no more than a few years away.

          At that point, I think much of the discuss of oil prices is moot, as everything will have to be worked over from scratch. It’s not impossible that we see wildly different oil prices worldwide.

      • Paul says:

        August 16, 2014 at 2:16 am

        Kinda like 2008 — from 147 to 30 in the speed of light … then the stimulus drove it over 100

        Next time no stimulus — the powder has been used — so agree quick spike then a plunge… and like that— the industrial age and the age of oil — ends

        • raf says:

          August 17, 2014 at 5:09 am

          “But then I have also seen research that indicates that even that breaks down when food is extremely short — no point in teaming up — it’s every man for himself at this point (people even turn on their families).”

          Could you point me toward this or these research ? thanks a lot

          • Paul says:

            August 17, 2014 at 1:39 pm

            There were some studies posted by other members on earlier articles — sorry I don’t recall the links

             
  • james says:

    August 14, 2014 at 4:59 pm

    I love you gail

     
    • Gail Tverberg says:

      August 14, 2014 at 8:17 pm

      Thanks! Would you also say this if I were a man?

       
      • edpell says:

        August 14, 2014 at 8:24 pm

        I just got a book by an academic scientist who dedicates it to his two beautiful daughters. If he had two sons would he say that. I think not. Gender roles are alive. Some may be helpful and some may be harmful and different people may voluntarily, freely, and fully informed choose different parts to accept and reject. This is one of the nice features of physics a lack of emotional contentious topics. The apples falls, for republicans and democrats alike.

         
      • james says:

        August 15, 2014 at 3:20 am

        I would, your articles are very insightful, thanks for enlightening me.

         
      • Harry says:

        August 15, 2014 at 6:18 am

        Mainstream-media and the bulk of received wisdom is unfortunately so clueless and wrongheaded that the truth is refreshing to hear, however unpalatable it might be. So count me as another adoring groupie!

         
  • Pingback: Energy and the Economy - Twelve Basic Principle...
  • finaltable (@finaltable) says:

    August 14, 2014 at 5:12 pm

    They say ignorance is bliss; the corollary should be “knowledge can mean sheer terror.” The only thing that keeps me from running around screaming when I read Gail’s posts is the comfort I get knowing that somebody much smarter than me is trying to help us understand what is happening so that just maybe we can structure our lives today to prepare for a future with limits.

     
    • Leo Smith says:

      August 19, 2014 at 10:26 am

      What comforts me is that I will be safely dead. Or maybe not.

      Things are hotting up on the economic refugee with AK47/my god is better than your god/God its effin EBOLA in the USA and EUROPE FFS/ front.

      USA will be back burning coal by the way – for about 100 years more anyway.

      • Mr Bill says:

        August 19, 2014 at 4:26 pm

        Leo,
        What do you mean “USA will be back burnung coal”? The USA never stopped burning coal! According to the Energy Information Administration (EIA), coal production in the USA has been steadily growing (doubled) since the 1960’s. to a 2008 peak production of 1172 million short tons. Then, by 2011, coal production had a “massive” (7 percent) decline to 1094 million short tons. Incidentally, coal accounts for about 20 percent of the total USA energy consumption. Coal accounts for over 90 percent of total USA electric power generation. Now, isn’t it so totally ironic that there is so much talk about reducing coal consumption and increasing electric power consumption (recharging batteries in electric vehicles). Does this proposition make any sense at all?

        Leo, I was being tongue in cheek above. I really agree with .your last sentence about burning more coal for 100 years are so, or until it becomes too expensive. Then What? The same applies for the other two fossil fuels, petroleum and natural gas. These three fossil fuels accounted for over 80 percent of the total USA energy consumption (97 quadrillion BTU) This energy consumption addiction is just so great that the USA population, and that of other developed counties, will have to hit the proverbial “rock bottom”. Hitting rock bottom then working for recovery from the addiction will not be easy nor pleasant.

  • momist says:

    August 14, 2014 at 5:21 pm

    Thank you Gail for another lucid and clear exposition of the way I believe the way things are. I don’t know where you get the energy and persistence from, to keep telling us believers the same message in different ways, and yet so few others hear what you are saying. Still, buisness continues as usual, and the world focus moves from local celebrities with scandalous lives to the Islamic jihadists, without recognising the cliff edge we currently stagger along. In the UK just now, the news is that the ‘recovery’ is under way, even though as ‘production’ rises (service industries only) and there are forecasts of rising interest rates, wages continue to fall and the standard of living declines. The rich get richer and the poor get poorer, apparently without any limits – just like infinite growth.

     
    • edpell says:

      August 14, 2014 at 8:17 pm

      There is always the limit of starvation. This is always known but to talk about it could create civil unrest so we do not mention it in polite society.

       
    • xabier says:

      August 15, 2014 at 3:00 am

      Momist

      Living in the ‘recovered’ UK one feels like a Soviet citizen forced to listen with suspended belief to proud announcements of factory targets met, etc.

      Spain, which I also know well, is rather the same, although the unemployment figures cannot be argued away there.

      There is also a rather nasty element of criticism of the unemployed for not participating in the ‘evidently booming’ economy: if you don’t have a good job, it’s your fault, etc!

      First the ‘jobless recovery’, now the ‘inadequate wage recovery’.

    • kesar says:

      August 15, 2014 at 8:16 am

      So when do you expect riots and revolutions in UK? Is it inevitable? So far Labour Party keeps the masses calm. How long it will take? The story won’t be sold forever.

       
      • xabier says:

        August 15, 2014 at 3:48 pm

        Kesar

        Revolution in England? When it’s not raining! The climate is the best ally of stability.

        • kesar says:

          August 15, 2014 at 4:03 pm

          Well, xabier. Maybe not. But the other choice would be ‘1984’ like fascist state and possibly a war to achieve the overshoot mitigation. Not pleasant either.

          Look at 1920’s after british peak-coal. But this time coal is too deep to reach without oil…

          • xabier says:

            August 16, 2014 at 2:25 am

            Kesar

            I suspect that in most places the decline will see a great increase in crime and personal insecurity, rather than revolution, however much some seem to dream of it. Just sordid and depressing, rather than dramatic.

            • kesar says:

              August 16, 2014 at 4:36 am

              Xabier,

              Society reaction to ‘increased crime and personal insecurity’ is either tough hand of fascist state or exchange of the elite for those with more populist headlines. Like in sociology schools we have two options: integration around common good or disintegration with more stratification and oppressive treatment of the masses (mix of both is most probable). People usually don’t lay down and die quietly in times of hunger and misery. There is a limit beyond which they go out to the streets. The anger must find the outlet either way.

              No one knows the outcome, but there is no other way to deal with the chaos. WW2 was reaction to similar conditions to these, which we are approaching now and the elites prefered war than revolutions. This time though, war is not the answer. There is much less to fight for and the war is very costly in terms of limited resources.

              We’ll see.

              kesar

          • InAlaska says:

            August 16, 2014 at 9:00 pm

            If the collapse is fast, we might be lucky to end up with a 1984 type world.

             
    • Gail Tverberg says:

      August 15, 2014 at 8:45 am

      The Eurozone isn’t doing very well now. That can’t help the UK either.

      Greater wealth disparity is one of the things I should have included in the issues regarding prior collapses.

      • SlowRider says:

        August 15, 2014 at 10:04 am

        But wealth disparity can also save resources and therefore extend BAU.
        There has been huge wealth disparity for hundreds of years between the industrialized world and the rest. Now that countries like China are catching up, the reality of resource limits comes closer.
        We could also imagine that all the wealth of the “1%” would be distributed to the people. What would we do? Spend it on homes, cars, travel etc. … So again, brings us closer to resource limits, and as we know it is them who will be at the core of the real changes in the near future.
        BTW, wealth disparity survived well throughout history, it didn’t go away when empires collapsed. Only that our general standard of living is much higher now (today everyone lives like a king of ancient), so we don’t suffer as much as the poor did before. Watch for food shortage, it is the best indicator for riots and civil war.

         
        • Gail Tverberg says:

          August 15, 2014 at 8:13 pm

          You are right–wealth disparity is a way of keeping resources in the ground. The 1% or 10% don’t spend nearly all their money. They eat roughly the same amount of food as others. The might drive a car a little more, but not a lot more. The will have bigger homes, but not in proportion to their incomes, generally.

          Poor people, if given more to spend, would indeed spend it, quickly using up resources.

          Wealth disparity assures that if there is not enough to go around, there will be some survivors.

      • Leo Smith says:

        August 19, 2014 at 10:27 am

        that’s why we want to leave it

        Lifeboats and the titanic, complete with deckchairs.

  • Bill Hulston says:

    August 14, 2014 at 5:51 pm

    Thank you Gail for another well detailed and understandable post concerning our energy situation and how it will effect all of us,sometime very soon.A couple of day`s ago the Daily Telegraph (UK) reported a glut in oil, and the probability of a drop in fuel costs at the petrol stations, and even speculated on oil droping to $80 pb.This reminded me of an earlier post you wrote predicting this very situation, and how after a short period of time oil prices would begin to spike to unimaginable price levels.Been reading you since you wrote on The Oil Drum when I had no Idea that we had an energy problem Gail,and how interlinked every part of our way of living revolved around energy use,so your lone voice I imagine has alerted many like myself to a rude awakening of our energy needs.Thankyou

     
    • Harry says:

      August 15, 2014 at 6:23 am

      In that article: The IEA said in its monthly report that the oil market seemed “eerily calm in the face of mounting geopolitical risks spanning an unusually large swathe of the oil-producing world”.

      Eerily calm – much like the icy North Atlantic one April night in 1912. Is there any metaphor that cannot be squeezed from the poor old Titanic?! :)

    • Gail Tverberg says:

      August 15, 2014 at 8:53 am

      You are welcome. I suppose it is possible the oil will drop to $80 barrel. If it does, it will slow down new investment and perhaps lead to what people describe as “peak oil”. The issue is ultimately affordability of oil.

       
  • worldofhanuman says:

    August 14, 2014 at 6:02 pm

    Perhaps we are about to conclude a wider-larger cycle, let’s say a robust growth pattern started around the renaissance (with explosion phase after 1800s), plus that undercurrent cycle resulting from the “6th extinction activities” going back dozens of thousands years of organized human activity. If these two cycles/trends are about to commingly soon, it’s not going to be pretty.

     
    • vyselegendaire says:

      August 14, 2014 at 7:22 pm

      I agree with your general time-trajectories. We are in for a hard landing whether its played out slow or long. Folks need to get serious about where we are in history and stop fantasizing…

       
    • Gail Tverberg says:

      August 15, 2014 at 8:57 am

      Perhaps Nature has different plans for the earth in the future. When one species declines in prevalence, other species increase to replace it.

      As I have said before, I would not rule out the possibility of a higher power being behind all of the changes we are seeing. The “Big Bang” that seems to have happened to start the universe didn’t just come out of nowhere. There is unbelievable organization underlying all of our physical systems.

      • Rodster says:

        August 15, 2014 at 10:49 am

        I second the above. The world and universe is to complex, balanced and organized to just come out of nowhere. I truly believe there is a HIGHER power who made this all happen. That’s as far as i’ll go without getting into a religious debate.

        Back in early 2005 there was a program on PBS regarding quantum physics which was just fascinating which proposed that we are not dealing with 3 dimensions but actually four. IIRC the forth dimension was either time or order. I forget which as it was too long ago. Just utterly fascinating stuff that just makes you think, how did all of this stuff happen by itself?

        • kesar says:

          August 15, 2014 at 11:06 am

          It was Nobel Prize laureate Ilya Prigogine

          http://en.wikipedia.org/wiki/Ilya_Prigogine

          who said that.
          He’s the author of ‘dissipative structures theory’ mentioned many times in Gail’s articles.

          “Prigogine’s formal concept of self-organization was used also as a “complementary bridge” between General Systems Theory and Thermodynamics, conciliating the cloudiness of some important systems theory concepts with scientific rigour.”
          He strongly supported non-deterministic physics.

          http://press.anu.edu.au/info_systems/mobile_devices/ch11s05.html

        • Paul says:

          August 15, 2014 at 7:29 pm

          I also do not rule out a higher power — but if one exists — I cannot imagine it is one of those that requires us to pray to it on bended knee…. anything capable of this surely is beyond being worshiped on bended knee — one would hope such an entity would not be on an ego trip.

          That’s as far as I will take the religion debate….

          • Gail Tverberg says:

            August 17, 2014 at 6:29 am

            I am not convinced a higher power is one that requires us to pray to it on bended knee, either. At best, all scriptures of various religions tell us is humans’ interpretations of what is happening and what is needed.

             
        • Leo Smith says:

          August 19, 2014 at 10:38 am

          “The world and universe is to complex, balanced and organized to just come out of nowhere.”

          Mathematical analysis shows that is false logic.

          All it takes is a few natural laws.

          As to why those laws are in place? well if they weren’t we wouldn’t be here as we are. so its chicken and egg.

          And of course if you want to equate those natural laws with ‘higher powers’ you are free to do so, but remember. there is no guarantee that the higher power is animate, intelligent, sentient, or his operating for the benefit of mankind.

          I am sure the chickens in the factory farm think the farm managers who bring the feed are gods dedicated to the good of chicken kind. They simply dont see all the McChicken burgers coming out the far end.

          There is a fine SF book by IIRC Kurt Vonnegut, where the whole of human civilisation was in fact designed to bring a spare part – a piece of ,metal – to a marooned spacecraft on was it Titan?

          http://en.wikipedia.org/wiki/The_Sirens_of_Titan

          Stick to your faith if it gets you through the night, but I wouldn’t bet n it guaranteeing mankind’s survival. No sirree bob.

      • tfouto says:

        August 15, 2014 at 5:40 pm

        We as humans, sometimes need to suffer in the flesh to learn something. We only learn what sticks to us and penetrates us. Abstraction or an concept, an idea becomes real and alive. It fuses with ourselves. It becomes part of what we are. It adds to us, and redifine us. All of a sudden we will value tremendously energy and resources. We will nourish them.

        Our civilization thought that tecnhology progress was enough. It was the main driver of our evolution. Technology as a spiritual route for our progress as human beings and civilization. Innovation and tecnhology pushed ethics aside.

        Next civilization, generations will learn from us. They will try again, but differently. They know that they must first answer the question, is this sustainable? Is this road, way of evolution sustainable? We can use tecnhology if that route is sustainable, if not we must discard this. Technology will be just a tool. Sustainability is first. Energy, resources and even financial systems, all have to be sustainable.

        It’s is also a lesson of humility. I just cant to whatever i want. I cant just use energy, use things and throw it away like if it was nothing. The more we are aware of it, the more we become connect to our real self. The less selfies we become and hopefully less selfies we take. When future look at our archives and look at facebook they will see all this selfies, which are perhaps 70% of Facebook nowdays, and think how selfish and distracted this persons were.

        I am sure there will be “soon” a deep energy crises. The more you think about it, the more it becomes noticeable and clear. And it’s going to be ugly. I am new to this. I am still in shock and not knowing yet what i should do. I dont know if it will be just a deep crises like we havent experienced before in our civilization, a collapse of our civilization or human extinction. I personally dont believe in human extinction, it possible but i dont believe. Even with all nuclear, there might a couple of humans far away. Maybe Africa? I dont know exactly.

        Of course i want this energy crises to be just nothing, that we just find a unknown (huge reserve of cheap oil, like the Saudi Arabi) and meanwhile manage to transit to an sustainable way of life. But maybe this shock and devastation would be the only way our civilization would learn from this. Maybe we must need to experience it.

        • Paul says:

          August 15, 2014 at 6:17 pm

          I don’t see there being a next time. This is as impressive as it gets in terms of technology.

          The industrial revolution was built upon cheap energy — which fosters technological advances – including those that have allowed us to keep the cheap energy flowing — until recently.

          If we can’t get energy out of the ground cheaply now — and we cannot invent replacements now — I fail to see how we do any of this when we are at Ground Zero…

          If we are around at all we will scraping the soil trying to eke out a living using the left over tools of this civilization — and when those wear out … we’ll be back to a very primitive existence.

          No more rockets to the moon I am afraid

          • tfouto says:

            August 15, 2014 at 6:20 pm

            I dont know, you dont know, no one knows. Coal will be around, maybe we can find an algae fuel that can be slowly implemented. Maybe not. Future will tell…

             
          • Jarle B says:

            August 15, 2014 at 6:33 pm

            Paul wrote:
            “No more rockets to the moon I am afraid”

            When I was young I used to dream about mankind travelling they great void and maybe meet other lifeforms that we could communicate with. I’s not going to happen. Now I’m hoping that someone find us instead…

            • Paul says:

              August 15, 2014 at 6:46 pm

              If a superior being finds us — they will likely examine us — and conclude that we are an abomination — cancer on the planet — and put us down like one would a rabid dog….

              Leaving the planet to the other life forms that co-exist in harmony.

            • Jarle B says:

              August 16, 2014 at 11:07 am

              Paul wrote:
              “Leaving the planet to the other life forms that co-exist in harmony.”

              It’s sad, but you are probably right…

            • kesar says:

              August 16, 2014 at 4:28 pm

              I am really disappointed reading this kind of statement. There is zero species living in harmony with the rest of the environment. All species struggle for resources. The homeostatsis is a temporary state in nature. And it concerns all the species. Human is one of them. We just got the bigger brain in evolutionary lottery.

               
            • Paul says:

              August 16, 2014 at 11:43 pm

              I suppose relative harmony is a better way to describe it….

              No other species other than humans exterminate other species — none engage in wars — none engage in the industrial farming of other species locking them in small cages and torturing them — none have developed WMD that can wipe out the planet — none bulldoze nature to put in condos (or farms) — none kill for joy…

              There is no comparing the human race to any other animal on the planet — we are an abomination.

            • kesar says:

              August 17, 2014 at 12:40 am

              ‘Relative harmony’ – yes, I can agree on that.

               
          • Julian Brown says:

            August 16, 2014 at 1:00 pm

            There can be a next time. The next civilization (post population collapse) just won’t be nearly so technological. I would imagine that scientific knowledge will still be available and valued, but there will be an inability to apply it on anything like the scale we do today. Under such chastened conditions it certainly seems likely that mankind in general will adopt some sort of stoic philosophy able to contemplate the follies of our age, and in that sense I expect some sort of spiritual evolution/enlightenment to evolve naturally.

             
            • Paul says:

              August 16, 2014 at 1:58 pm

              The operator of Japan’s crippled Fukushima nuclear plant is preparing to remove 400 tons of highly irradiated spent fuel from a damaged reactor building, a dangerous operation that has never been attempted before on this scale.

              Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area.

              http://www.reuters.com/article/2013/08/14/us-japan-fukushima-insight-idUSBRE97D00M20130814

              I am doubtful there is a next time at all — there are 4000 of these ponds around the world — very sophisticated installments that require high tech robots to manage their lethal contents…

              How do you keep such things operational when the supply chain is busted – oil flow has stopped — and the global economy is in chaos…

              See p.56 http://www.feasta.org/wp-content/uploads/2012/06/Trade-Off1.pdf

              Unless someone has a way to keep those ponds cool — and I cannot see how as they need to be maintained for decades — then I struggle to see how this is not an extinction event… or at the very least a total hell on earth for survivors who will be riddled with cancer…

            • tfouto says:

              August 16, 2014 at 2:02 pm

              Australia, New Zealand and Central Africa dont have any nuclear facilities… http://www.euronuclear.org/info/encyclopedia/n/nuclear-power-plant-world-wide.htm

               
            • Paul says:

              August 17, 2014 at 12:01 am

              Southern hemisphere would be the best for avoiding radiation issues…

               
            • kesar says:

              August 16, 2014 at 4:43 pm

              I only hope you are right. My intuition says though, that we will encounter the reverse path of building civilization, but 100 times faster. There are two authors, who made me thinking about this: Aldous Huxley with ‘Island’ and virtual response of Michel Houellebecq in ‘La Possibilité d’une île’. The last one is the most probable, but not very comforting, outcome, IMHO.

               
            • Julian Brown says:

              August 17, 2014 at 4:52 am

              Paul,
              OK to be completely honest, the issue you raise also keeps me awake at night sometimes. Although I was once an atomic (not nuclear) physicist, I had always assumed that nuclear power plants were designed to gracefully going to sleep at some reasonable temperature in the absence of any power input. When I discovered a few years ago that, no, uranium reactors require active cooling indefinitely or else they melt down, I was first horrified and then absolutely disgusted. How could we consider ourselves civilized if we were prepared to leave a future technologically-compromised generation with a problem that they might not be able to deal with ?
              I think it was this issue more than any other that led to my conviction that mankind is simply not spiritually enlightened enough to deal with high technology. Period. Since there is no way our view is going to prevail, I suppose we must just wait for the inevitable design of this vile system (I am not going to grace it with the epithet “civilization”).
              Notwithstanding, should there be a global breakdown in power delivery systems, it may not be as bad as you fear. Fukushima is perhaps (?) the largest repository on the planet, and in the worst case scenario, the 60 000 spent rods will just melt their way done into the earth’s crust and presumably just pollute water supplies in the immediate vicinity ?
              (I am not too hot on geology, so I may be wrong about this.).

               
            • Paul says:

              August 17, 2014 at 1:59 pm

              It would be interesting to get someone in the industry to comment on this… All I have to go on is the Reuters article.

              With Fukushima we never get the truth — but as far as I can see the core is exposed but it is still being cooled with sea water — which is bad enough as tonnes of radioactive water is pouring into the Pacific on a daily basis —- but what happens if the fuel did not have water poured on it?

              Chernobyl holds some of the clues — I understand that there were high rates of deformaties in children born as far away as Germany and France where the radiation cloud drifted for many years after the disaster… of course there were cancers in undetermined numbers in the areas around Chernobyl…

              It is important to keep in mind that Chernobyl was entombed in concrete using helicopters — so the full impact of the meltdown was not felt — if they were not sealed off they would continue to this day I assume — to be billowing radiation into the atmosphere.

              So if over a short period major health affects were felt in the adjacent countries — what happens if you have not one plant but hundreds spewing radiation out of control — along with thousands of spent fuel ponds.

              The PTB are not stupid — if we can anticipate this potential extinction problem so too have they…

              Perhaps Chernobyl offers another clue — cement entombment — I would suggest that the PTB have a plan for when the collapse is at the door step.

              While BAU is still functional — the military engineers in all countries with nuclear facilities are ordered to entomb all these facilities with tonnes of concrete sealing them off for eternity.

              That does give me some comfort that we may be able to avert an extinction event for all life on the planet.

            • Anon says:

              August 17, 2014 at 11:26 pm

              Greetings Julian, Paul, and the community,

              I hope this message reaches you. I am a young thinker working with some internationally-renowned artists, likely to be familiar to this site’s audience; we hope to recruit some high-profile computer scientists and physicists in the coming months to assist with technology development, model/simulation-building, and to help grow a network of researchers.

              The issue of reactor meltdowns in the case of systemic collapse has become my primary concern of late. This does strike me as a possible extinction-causing event. While I do hope to assist in preservation efforts to maintain some of the scientific, artistic, and intellectual insights and related technologies for potential future civilizations, my highest priority is in spreading awareness of what I believe are our greatest dangers:

              1. Thermonuclear war, fallout, nuclear winter, etc
              2. ~450 reactor meltdowns following systemic instability or collapse

              I have read David Korowicz study “Trade-Off,” Kjell Aleklett’s book “Peeking at Peak Oil,” listened to countless lectures, watched many films, read dozens or hundreds of editorials, papers, etc. I have come to the conclusion that we have the resources to make a somewhat elegant transition toward permaculture-based societies, given unprecedented unity, careful conservation, etc. Of course, we will see many strategies, from hunting and gathering to more traditional agricultural methods from various epochs. Mass die-off and the loss of most technologies seems unavoidable, but I think it at least possible that we may have energy surpluses in some parts of the world such that we are able to maintain sophisticated libraries and various academic disciplines.

              The energy output of our agricultural production can support 7-9 billion humans, in terms of joules/calories, according to Aleklett, a physicist. He and his team at UGES are aware of the energy losses that happen during production, processing, distribution, vending, and home-waste; as I understood it, the data was offered for us to have an idea of what kind of yield can be gotten from the land under ideal circumstances. Nutrient deficiencies are rampant, but that is symptomatic of how we segregate our crops and divorce them from their ancestral ecosystems. Food forests etc offer higher yields per acre if well-designed, and allow for nutrient-cycles to develop, replenishing the land and simultaneously offering more complete nutrition for humans and wildlife. I think it’s intuitive to people studying our compounding issues that population will not be 7-9 billion, and that such numbers of people could ruin the ecosystem even without any machines. How many people there will ultimately be is anyone’s guess, but it seems at least plausible that we could have a gradual decline in population rather than a precipitous one.

              I was very excited to see this thread discussing the reactor issue; others will read your comments and, gradually, awareness will build. I hope it is somewhat comforting to know that you are not the only ones thinking about it and working to prevent it.

              I have had some difficulty determining the magnitude of the threat, though. Opinions on the severity of Fukushima are all over the place. This is actually the first conversation I’ve came across online discussing reactor meltdown in the context of systemic collapse.

              May I request your assistance in locating information and experts? Ideally we will model such a catastrophe in software so that we may more simply communicate the predicament to a wider audience. I am keenly aware that any sort of mass panic can trigger collapse, and so discussion of the issue will likely remain outside of public view. Perhaps a carefully-laid contingency plan such as Paul describes with concrete encasement could be implemented, as I am not sure it’s possible to decommission the reactors without causing infrastructural instabilities in the global system. It is my hope that such safeguards are being planned already, but the response to Fukushima doesn’t inspire confidence.

              While I worry that humanity will not realize this threat and address it, I refuse to give up hope. We committed great folly in using energy resources as we have, but out of this period came many revelations that will be perhaps impossible for future civilizations to come to without first reaching the state we are in now (seems very unlikely). I can still envision something like utopia for the biomes of earth in the distant future, with humans operating harmoniously among them. I think it at least possible to progress in our scientific understanding of the universe given enough eons, but any progress is predicated upon our ability to preserve a vast, seemingly-irreproducible body of research.

              As a species that came to understand some of the workings of the cosmos at the risk of all large lifeforms on the planet, we should protect these insights; we represent the cosmic awareness of the greater mind of our planet. We are as sacred as all the rest that inhabit this sphere; the world will be enriched by our continued presence should we learn humility from the mistakes of this epoch.

              ***

              Above I have offered what I consider to be highly-optimistic possibilities. I do expect any number of terrible, abrupt ends/shifts. However, we are in the middle of a renaissance. We have extraordinary capabilities, and like all lifeforms, we have survival instincts. I do think that scenarios benefiting most lifeforms are plausible.

              I have subscribed to this comment thread should anyone have research to contribute, or wish to collaborate. Many thanks to those who read this. Please remain optimistic! =) The earth and the cosmos will be fine without us, but the human story needn’t end in our time.

            • Paul says:

              August 18, 2014 at 8:38 pm

              “The energy output of our agricultural production can support 7-9 billion humans, in terms of joules/calories, according to Aleklett, a physicist.”

              I wonder — how does he think this can happen when 98% of the world’s ag land is farmed using oil and gas based fertilizers and pesticides — take those away and what you have is dead soil – it will not support a crop without years of intensive organic inputs.

              Good on you for trying to do something — however elegant is not a word I would associate with the incredible starvation, suffering and dying that is headed our way.

            • Christian says:

              August 18, 2014 at 8:17 am

              Anon

              Goog to know there is a newwork trying to address nuclear issues. Among all problems we are reaching, it really looks the worst and perhaps this is the reason why almost nobody has the courage to say a word on it. This is why I prefer this forum among many others: here we don’t discard any possible catastrophe, no matter how tragic it could be.

              Getting people in the nuke field to work on this would of course be crucial, while they doesn’t seem to come here. Where to find such specialists, given their own field is likely happening to be the most damaging human activity? And it’s striking atomic stuff had given us just a few of the kwh we use while it creates the majors environmental disruption. A very bad choice from a thermodinamic view: little internal order added to the system and huge disorder in its surrounding as an aftermath.

              It is hard to figure governments will even try to fix this issue, not to say to imagine they will succeed. As for the used rods in the ponds, there are so much differencies it becomes difficult to get the point. In Argentina, for instance, there are two big ponds -one for each nuclear facility supplying the grid-, and a smaller one receiving just experimentation and medical related stuff. The big ponds are subject to different treatement: in one case the rods are parked in just for six years and later go to dry casking, while in the other it’s 15 years but I’m not sure what they do with them after this. There is no a big need to entomb reactors in case the fuel is removed (while it could be a second layer of protection), and I rather wonder if the ponds themselves could be entombed in order to prevent radation going into the air and confining it to the ground (and related waterstreams).

            • Paul says:

              August 18, 2014 at 2:23 pm

              Agree — it is the ponds that need to be entombed.

              One concern that just occurred to me — if entombing spent fuel rods in thousands of tonnes of concrete is feasible — then why do we bother with these pools at all?

              Why have we not already been simply doing that with spent fuel all along?

            • Anon says:

              August 19, 2014 at 5:25 pm

              Thank you for your comments! I will focus on the issue of containment ponds and spent fuel rods, then. Does anyone happen to know if this is a permanent solution? We may not have the technology to do more sophisticated entombment in the future should there be a long-term issue with concrete enclosures. Hopefully analysis of Fukushima will give us a better understanding of how radiation spreads when it seeps into groundwater.

              Paul, I agree that transitions this century will not be elegant; I use the term as dark humor. Mass starvation, perpetual warfare, and unfathomable suffering are reality now. I do think it’s possible for us to avoid extinction and transition toward a state of more enlightened equilibrium with the earth. As it shares our biology, we would see rapid improvements in health shifting away from modern foods, medicines, environments, etc; this to me is elegant. I am not someone who expects electricity to exist outside of perhaps city centers; a state of ultra-low energy use while maintaining the knowledge and insights we gained in our time seems feasible. Our problems are of such magnitude that avoiding extinction in the madness that is developing would be very graceful, to me; it requires great cooperation among people who will at some point realize they are almost certainly doomed where they are.

              As for Aleklett: I don’t think he nor UGES were making any claims as to the feasibility of feeding 7-9 billion for a prolonged period. He was careful to state that they have not researched this sector extensively; he was merely offering data as a physicist. The problem of converting the energy content of the land into humans is left as a problem for those studied in other disciplines.

              I offer permaculture as a possible way of gaining remarkable yields from the land without depleting topsoil or losing nutrients; this has to be coupled, though, with egress from suburbs and cities. Chris Dixon’s beautiful food forest requires about a day per week of cultivation now that it’s done, with some extra days (ten, I think he said?) throughout the year. I believe we can use big computation to simulate nutrient cycles, optimizing for various regions, topographies, soil types, etc. Once grown, these largely self-cultivating lands leave much time for the cultivators to help build towns and critical infrastructure.

              According to UGES, global energy production looks like it will be decreasing by about 2% per year, independent of accelerating forces. Our wasteful use is such that we may well be able to match consumption with the rate of decline, at least for a while. I think the reality of economic growth ending will come before long, and if we survive that transition, I do think it possible we may wisen up and decide to use our remaining energy to downscale.

              Again, I am very cynical, very skeptical, but I see plenty of reasons to be optimistic. If we are at peak energy, peak population, and therefore peak technology: then, well, we have more computational power between brains and microprocessors than we are likely to ever have again. We have ample resources for problem-solving. Our brains and big computers are largely wasted currently; it needn’t remain this way.

              I don’t like our chances. But many unexpected things may happen. We are perhaps at Peak Spectacle also: I believe in the possibility of rapid shifts in ideology. People will abandon the old paradigms more and more as they begin to struggle more and more. We can see from events all over the world that populations are willing to endure unthinkable conditions to survive; I believe this survival extinct may yet be channeled toward solving our highest-priority crises as they arise.

            • Paul says:

              August 19, 2014 at 5:34 pm

              ” Does anyone happen to know if this is a permanent solution? We may not have the technology to do more sophisticated entombment in the future should there be a long-term issue with concrete enclosures. Hopefully analysis of Fukushima will give us a better understanding of how radiation spreads when it seeps into groundwater.”

              If we had a long term solution for the fuel ponds when why haven’t we already used it? Why are we still holding the fuel in containment ponds?

              If Fukushima is the poster child for providing a better understanding then we are really really screwed — because the only understanding we have gained from that never ending disaster — is that we never should have developed nuclear power in the first place — because when it goes wrong — we are completely incapable of fixing things.

              if we can’t fix Fukushima with all the resources of BAU at our disposal — then how do we manage the nightmare of nuclear energy — when BAU is collapsed?

            • Anon says:

              August 19, 2014 at 8:59 pm

              Well, things have to change, that’s for sure. I don’t think the might of our civilization is being directed at addressing Fukushima, though. The wealth and technology available to the elites, governments, and corporations is formidable. It may be that we have a global shortage of nuclear experts; if that’s not the case, our resources are probably sufficient to address the problems there and other potential nuclear problems. It’s a matter of priority. Most people are operating under the assumption that things will continue as they are indefinitely. While I think mass panic would probably hasten collapse, maybe we will be surprised: perhaps we will start to understand our priorities when it proves impossible to continue growth or even maintain the status quo. Enormous amounts of time and money are being spent in industries destined for failure; when it becomes clear there are no careers left for people in these fields, they will be quick to want to work on nuclear problems, agriculture, etc rather than starve.

              Obviously people can’t just hop fields easily, but a lot of the skills and technologies in superfluous fields translate well to pragmatic fields. One could dream that the genius tacticians and computer scientists of each nation’s military are repurposed for resource analysis and management. Or that the databanks of NSA, Google, etc are used to map critical infrastructure, trade flow, etc and algorithmically prioritize resource distribution to prevent systemic collapses. It’s a slippery slope, for sure, but already the current uses of big-computing have been concentrating power to the owners of big computers. Computers are not inherently evil and so I think they could be used benevolently. The Google advertising model, for example, will not function in a contracting economy. The people working there are naive, but they are also highly-intelligent. If they recognize just how fragile our current structure is, they and others may well start to prioritize scientific modeling.

              If it turns out that we need years of R&D to create technologies that will allow us to establish permanent radiation containment, then we probably are screwed. We would, in that case, have to outlast a handful of major crises just to address that one.

              My generation is struggling to eat and remain sheltered; we don’t have the time or money to collaborate each day, or network as extensively as is needed. In effect, we are locked into the solutions the ruling classes have offered. It is mad, absolutely, but everyone: please try to have some optimism. I have met countless brilliant people to this point, and seen enough online, to believe that some ecstatic visions might coalesce as if from nowhere, generated by the sum-total of all human thought prior to this point. I think this would have happened by now if income inequality weren’t so severe. It may have happened in spite of that had totalitarianism not arisen, and global surveillance. I think it can still happen, but a perfect storm needs to erupt. I think there are a lot more people tackling the most difficult issues than we realize; they are all careful to stay in the shadows because they understand how critical their contributions are.

              While I haven’t had the time to read all of them, I’ve noticed a lot of masterpieces being published lately. A sophisticated internet has been around for a while now, and a trade and travel network to access old physical texts. As such, countless gifted people are coming to crystalline understandings of their focus of research. They are witnessing the decay of contemporary civilization, and it makes it easier for them to determine what a properly-functioning system should look like (whether it be in economics, industry, trade, health, government, agriculture, etc). Many lucid theories are beginning to emerge. While it might be unlikely, I think it is at least possible that we will implement them to replace the absurd ones. The problem probably won’t be a lack of solutions, but the bickering and time-wasting between the crowds with the correct solutions and the crowds clinging to archaic models. Only the people who made the breakthroughs will be able to understand the breakthroughs, at first; other experts may adapt to the ideas quickly, but it takes a long time for the concepts and lexicon to be translated to a common vernacular. This process and delay is unavoidable, and we don’t really have the time for there to be a lag between discovery of correct solutions and their implementation. As such we are seeing the implementation of ancient solutions: conquest, theft, coercion, etc.

              There are almost certainly more polymaths alive today than ever in history, so I think it’s too early to prophesy the end. That we are on the precipice, looking into the abyss is clear. I find optimism difficult, but I have tried to validate fatalistic pessimism through research and have been unable to. We have a lot less time than we thought, but our collective thought offers us time.

            • Paul says:

              August 19, 2014 at 9:35 pm

              My money is on crashing to a level slightly beyond the stone age… assuming we are able to somehow extinguish the nuclear time bomb that is ticking…

               
            • Mr Bill says:

              August 19, 2014 at 9:01 pm

              I am not fully knowledgeable about the nuclear industry, but I know of a couple who are quite knowledgeable about the industry. One of them is Arnie Gundersen at http://www.Fairewinds.org. I don’t know him, but he has offered up several, apparently valid, analyses about the Fukushima The second one was one of my former students who became a career nuclear engineer. He has designed them, operated them, performed maintenance on them, designed capacity expansions, all of it. Most important, he was personally licensed by the NRC as a Senior Nuclear Operator. That license and the required training basically made him ultimate decision authority in any nuclear plant he was evaluating.

              I guess I maybe got carried away, but he remains my good friend. We had several discussions about the nuclear industry and Fukushima. So keeping with your suggestion, if you have some serious requests, I can at least try to get a non political response.

              Let me share some of our dialogs, mixed with public info for some background. :
              – He points out that there are several FuKushima nuclear reactors in operation. I think it
              was 4. They were built in that location over various design phases to expand capacity.
              – The original reactors at Fukushima were designed and built (via contractors) by GE
              The reactor design was the same state of art designs built in the USA in the same
              time frame. There were design changes to the GE reactors, say Type II etc I don’t
              recall any detail about any design changes..
              – The Fukushima site is located at a nearly sea level location. There is public info that
              suggests the original site was a seaside bluff. For operating efficiency the bluffs were
              removed for a plant space near sea level. Part of the carefully designed containment
              vessel was presumably below sea level, but sump pumps were installed to remove any
              water inflow, which included underground runoff plus rainwater within the plant basin.
              – My friend has repeatably said they use a stabilizer. I think it is boron. The plant
              robots move the active fuel rods up and down and control the extent of the nuclear
              reactor.needed to make the electricity. A nuclear plant is a carefully controlled steam
              generator.
              – As I recall from my friend, the spent rods that were periodically removed from the
              reactor were originally stored within the nuclear containment of the reactor. But, over
              time, international decisions were made to allow spent rod storage “at ground level”
              with “appropriate controls in place to maintain integrity”.
              – But along comes a tidal wave and an earthquake at the same time! What is the
              likelihood that this event occurred? It is very, very small. But it happened. The official
              analysis is correct it is an act of god.
              – The Japanese government chooses to propagandize their situation, The government position seems to have a ” move along, nothing important here” attitude. Present rosy images, declare food safety, etc. While dumping millions of gallons of various radiation, firat near Japan, then due to established ocean currents, into the Pacific and on to the USA West Coast.

              But, after this little walk through to Fukushima, I recognize a familiar pattern. That is, at each stage of a critical decision, the risk assessment in the decision package seems to be based on the probability of event occurrence at that stage. But what is missing is the consequence factor. What is the expected consequence if the events happen versus the expected consequence if the event does not happen.

              There were so many interesting topics to explore.I find this to be a great site I am a newby to the site, so I apologize in advance for inappropriate manners. I hope to chat more.

            • Paul says:

              August 19, 2014 at 9:27 pm

              Can you ask him what he thinks would happen if every nuclear power plant on the planet melted down and were just left to fester (i.e. nobody made an effort to put water onto the core)

              Also what if our ability to keep all spent fuel ponds cooled was for some reason stopped permanently.

            • Robert Wilson says:

              August 19, 2014 at 10:45 pm

              Arnie Gundersen is controversial https://www.google.com/?gws_rd=ssl#q=arnie+gundersen+credibility&safe=off

               
            • Paul says:

              August 19, 2014 at 11:05 pm

              I pulled this juicy bit from one of the sites that came up on that search:

              “He recently appeared on Democracy Now, a liberal news program that recognizes the ills of unfettered capitalism and an economy that is dependent on using the atmosphere as a waste dump for massive quantities of fossil fuel waste. Unfortunately, the presenters and producers at Democracy Now also have a huge blind spot regarding the use of atomic energy. They think of it as something to fear and attack instead of recognizing it as the most powerful tool in the tool box for reducing that dependence on burning fossil fuel and dumping the waste into our shared atmosphere.”

              Meanwhile — Fukushima continues to pour hundreds of tonnes of radioactive water into the Pacific Ocean every single day — and there is nothing anyone can do to stop it…

              It appears that rather salient fact was lost on the author of this smear piece…

              I didn’t bother to read the other links after seeing that…

            • Robert Wilson says:

              August 19, 2014 at 11:40 pm

              The radioactivity that pours into the ocean is trivial compared to the radioactivity that already exists in the ocean

               
            • Anon says:

              August 20, 2014 at 1:43 am

              Thank you so much, Mr Bill, for your post. The information is very helpful; I will be sure to read from that site, and will write you more in this thread when I have a better understanding of the topics, and which questions to ask. I am compiling a research report (of which nuclear issues are a small component) for some computer scientists next month. If possible, I would love to correspond with your connection before then. I would also like to correspond with you via e-mail, although I would like to avoid posting my address in a comment.

              “But, after this little walk through to Fukushima, I recognize a familiar pattern. That is, at each stage of a critical decision, the risk assessment in the decision package seems to be based on the probability of event occurrence at that stage. But what is missing is the consequence factor. What is the expected consequence if the events happen versus the expected consequence if the event does not happen.”

              This is very eloquent; thank you. I wonder: how often are these mistakes with radioactive compounds repeated throughout the cosmos? I met a physicist at UC Berkeley who was trying to figure out why stars created elements heavier than iron; there was an energy loss in the synthesis of heavier elements (I don’t quite understand this, and don’t remember how he phrased the mystery. I am probably not recounting it correctly). Have always had a strange perspective on radioactive isotopes since then; utilizing them is like unbottling the stored energy of dead stars. It is folly to mess around with them too much when one’s species is restricted only to one planet.

              **

              I want to add some notes to my previous comment. I regret bringing up Google and the NSA, as I would like to avoid involving any particular groups in discussions, especially on an online forum. Humanity has obviously been enriched in many ways by Google. I should have elaborated on the point I was making: any computing paradigms with global systemic growth as a prerequisite need to be rethought. All organisms must adapt with changing environment; ostensibly any corporation like theirs would thrive should their software be tooled to address what are the greatest computational needs at any moment.

              With regard to their advertising business: I have heard some critical opinions from philosophers in the computer science world, but I am pretty indifferent about it. It simply jumped to mind as something implemented for profit and is presumably vulnerable to economic winds. Am not sure how computationally intensive it is. And I think it should probably remain as it is; it’s so ingrained in the internet that I worry significant changes in that area could cause market instabilities. I wish I had taken more time to think of a non-specific example of big-computation likely to be affected by economic turmoil.

              Also, Google search has perhaps saved humanity already, so I don’t want to come across as critical of them. I find the chrome browser very stable and powerful, which has been invaluable in research. Many of their other technologies are brilliant, also. Their dataset simply came to mind as one of the largest, with untapped potential for systems analysis.

              As for the NSA: while their actions are distasteful, I am not really interested in the ethics of what they are doing. That is a nuanced topic; the possible consequences of mass-surveillance are already well-theorized, anyway. I brought them up, instead, to suggest that indiscriminate data-mining may actually help us. Their datacenter could be considered something like a massive brain, but without cognition. It knows more about civilization than any human or group ever could. It lacks, however, the unifying abilities of a human brain given a smaller dataset. Whether creating powerful analytic toolsets for this data is a good idea or not is something society needs to discuss. I think any datacenter may be used for altruism. Seems like that would confer a survival advantage for it; the humans would continue to support it.

              Sorry to rant but I was worried about appearing too political with my previous posted comment. I don’t think any entity or organization is comprehensible, nevermind reducible to a “net-positive” or “net-negative” influence. And I certainly don’t think of the actions of large organisms like companies and governments in terms like “good” or “evil;” they are simply phenomenon, and have survival instincts like any organism. To this end, I see some decisions as, “risky,” “misguided,” “inefficient,” etc in the context of the compounding crises of this century. Nature exists in perpetual war, so I try not to judge even that– but no species should play with thermonuclear fire. I don’t affiliate with any organizations, nor individuals even; our problems have to be addressed by billions of minds. I offer my opinion when I think it may be of benefit, but I represent no ideology or geopolitical stance.

              The human brain is finite in its capacity to understand complex systems. Clearly we have created problems beyond the human intellect. The examples I have offered in these posts are not to be suggestive, but to illustrate a certain type of thinking. I see a global culture of competition, and I think: that is wasteful. We no longer have the resources for anything like that. Dominance in any sphere will have more repercussions than it used to. Peace and conservation are much more sustainable practices. Once our technologies are gone, they may simply be gone; whatever exists now should become more adaptive. I am of the opinion that things are so fragile that large changes shouldn’t be made, at least until we have finished theorizing new modalities of trade and finance. Existing paradigms shouldn’t be counted on existing forever; if paradigms change suddenly, computing needs to change suddenly in lockstep. We don’t have surplus energy anymore; all decisions we make have to take this into consideration. We can’t count on the next generation having access to the educational resources the past few have had, either; it may be that the vast majority of 21st century problems must be solved with the current workforce.

              I’ll write tomorrow if I am able to read a sufficient chunk of that website. Thanks again, Mr Bill! =)

            • Anon says:

              August 20, 2014 at 2:17 am

              Thanks for chiming in, Robert. It may be that the risks are relatively minor. I will take a look at the various criticisms of Arnie Gundersen in addition to evaluating his research; thanks for the link. The opinions on radioactivity really are all over the place. I saw part of a lecture from some guy who used to eat uranium, spark plutonium at lectures, and swim in containment pools; he lived til, I think, 82. A comment claimed he died of leukemia, but he did live years longer than the average male. It would be a great relief to learn that the scenario we are hypothesizing isn’t cause for concern of extinction. Our other problems seem comparatively simple to address.

               
            • Steve Rodriguez says:

              August 20, 2014 at 11:52 am

              @ Anon
              RE the effort to preserve knowledge and a vestige of the most efficient / current technological capacity you should also give thought to maintaining production of basic medical supplies. Production of many medical compounds using RDNA yeast strains has become almost as easy as brewing beer; and I know beer will be brewed after the great ‘re-adjustment’. Further, using current medical and technical knowledge, we are on the verge of curing some very tragic conditions such as Type 1 diabetes and many cancers. Who is to say these efforts must be abandoned?

              Yes social priorities could change to raw survival mode in the face of future uncertainties and resource bottlenecks. Might priorities also change from cowardly hoarding to more altruistic notions of community and shared property, such as soil conservation , soil water and clean air. Seems this is the direction we must take in order to salvage not just the species but our very humanity. You cannot have one without the other.

            • Paul says:

              August 20, 2014 at 12:45 pm

              Why do you think the human species is so important to save? What is it that make us so special — is it that are so kind — is it that we respect the earth and live sustainably — is it that we treat other species with respect and do not enslave them in horrendous conditions injecting them with Frankenstein hormones and other drugs so we can feed off them?

              Plenty of other species have gone extinct — to my knowledge we are the only species that is so stupid that we are extincting ourselves.

              Surely the planet would be much better off — as would the other organisms — without us?

            • Mr Bill says:

              August 22, 2014 at 4:15 pm

              Paul,
              I suppose I stepped into the proverbial thorny briar patch when I volunteered to share comments from my nuclear Engineer friend. I have not chatted with him recently, but I will try to catch up with him in the next couple of weeks and ask him to comment on your questions. This particular forum will probably have moved to another topic by then. But, I will plan to share his comments here on this site when I get them from him. In the mean time, I will share some more of our general discussion on nuclear stuff.

              I was able to contact my friend quicker than had thought. But, wow he shocked the heck out me. Over his many years in the nuclear industry, he had been pro nuclear energy. But, he is pragmatic and reasonable in dialoging about the pro and con issues for nuclear plants. He has long argued the point that a properly operating nuclear is less harmful to the environment than the allowable discharges from petrochemical, chemical and coal fired power plants. His position has been that the nuclear plants have so much redundancy and backup, so much automated shutdown and startup sequences, so much frequent and detailed reviews, so much rigorous procedures and other checks and balances and so much rigorous containment requirements, the risk of a serious mishap is very, very low. He does acknowledge concerns on shifting policies and practices over the long term that do not maintain the same attention to detail.

              So, when I spoke to him yesterday specically about the tqo questions you raised, his response was quick and shocking. He informed me that he was now a strong opponent of all nuclear power plants. His current position is “Shut Down All Nuclear Power Plant In The World”.

              His change of heart was based solely on FUKUshima disaster, To quoate him verbatum, ” I have worked and trained intimately on all of the operating intricacies and procedures in a variety of nuclear facilities. I was absolutely convinced that the operating safety was well estabilhed. But, Fukushima scared the hell out of me. I had operated plants virtually identical to Fukushima. But, it was clear that Fukushima was a total mess that had been a disaster in waiting. So when I realized that a plant I was so familiar with could be so compromised by such operating incompetence and procedural violations creating this event it became so apparent that no nuclear power plant can be regarded to be sufficiently safe enough to avoid the future real long term risks of their continued operation”.

              We did have a couple of hour chat on and around the questions you raised. I will summarize our insightful discussion a little further down these posts. i

            • Mr Bill says:

              August 22, 2014 at 8:08 pm

              Anon
              I have not thoroughly read your posts at this site. But, my first impression is that I would like to have some more private conversations with you. we do not know each other, so I would suggest that we proceed with some caution. I would hope we can find an acceptably private interface. I understand your relutanace to post your direct email address. I don’t immediately have a solution. Make other suggestions. In any event I will continue to monitor your input on this site. Is a temporary Yahoo email account a suitable option?

               
            • Mr Bill says:

              August 23, 2014 at 8:45 pm

              Paul,
              Well taking a little liberty with an old Rolling Stones lyric – I may have spent too long, waiting for a friend. I am concerned that my summary of discussions with my nuclear friend is posted so late that you may have passed on to elsewhere. But, here is my summary post anyway. on your questions. This particular forum will probably have moved to another topic by then. But, I will plan to share his comments here on this site when I get them from him. In the mean time, I will share some more of our general discussion on nuclear stuff.

              Sorry, but I will be a bit windy on the topic. I will try to briefly highlight my expected response to your questions from my friend and defer you to later comments on the details..I will try to touch on the highlights at the top of this post, then comment on more general details further down the page.

              I think your two questions address the worst case scenario. That is an event or events that releases, in a short time frame, radiation from all nuclear reactors and all spent fuel rod facilities in the world..It is unfortunate that even one has occurred or that future nuclear accidents are likely to occur. The only cause for such a worst case scenario that I can imagine would be wholesale international sabotage.I think this is most highly unlikely but I suppose it is possible. In my opinion the most likely scenario, would be periodic accidents with various degrees of consequence continuing around the world, caused either by operator error, equipment failure or natural disaster. We already have expereince with this situation (Three Mile Island Chernobyl and, Fukushima

              At some point, as these localized accidents continue over time, we may hope the world leaders conclude the long term consequences and costs are to great and agree to shut down the bulk of the nuclear industry, including nuclear power plants (and throw in military nuclear weapons). If the learship is rational, we may also think the governments and nuclear industry would plan for an orderly and safe shutdown program. That includes, addressing all of the active and spent scattered all over the world. Such orderly and thorough action would be required to avoid hazardous nulear radiated facilities left to disintergrate and create really deadly and uncontrolled waste sites capable of contaminating water, soil and air with radioactive water and particles scattered about large areas. This is my opinion but my friend only briefly discussed this issue. There are simply too many twists and turns to do any meaningful reponces.

              Now our conversation summary –

              In the simplest terms, each nuclear power plant.has three main parts (1) a controlled nuclear reactor facility, (2) steam turbine electricity generation and distribution facility, and (3) spent fuel rod cooling facility. There are many oher pieces, but that will just complicate our summary.There are different designs in place at the various
              plants. All plants do basically the same thing : use a conrolled nuclear reaction to boil water for steam turbines and, when the active reactor fuel in the rods much of its reaction, they become spent fuel rods. At some point the spent fuel rods are transfered to the spent fuel rod cooling facility for cooling off residual heat and further stabilization. But there are various designs having different types of control rods, different moderators, different containment, etc. So there is lots of variability among the plants.

              In normal operations, various control rods are adjusted up and down slightly to stabilize the nuclear reaction.. But for most emergencies, the basic nuclear reaction can be shut down quickly by fully inserting all of the contol rods into the running reactor. My friend indicated it only takes a few seconds to drop from full power to a small fraction of residual power. All of the plants he had most experience also had very substabtial steel and concrete cladding and other significant reactor facility containment. Fukushima was a nuclear plant with nuclear components that he has a lot of experience. He cannot comment about many of the other plants.
              in any case, it appears the world will continue to encounter nuclear accidents of varying degrees of threat.The most probable impact will be radiation contaminated water, typically as a variety of ions with different degrees of badness.

              The worst case accident in the reactor facility is explosions. Explosions not only destroy critical components, but also is the major source for breakout into the outside to release radioactive fuel particles into the air and water. The degree of badness from a severe explosion depends on how severe the explosion and how strong the containment. The most serious problem here is from ruptured or corroded metal clad fuel rods and escape of these fuel particles into the air or water. This is much worse than ions in the water..

              Keep in mind that the spent fuel rods in the cooling ponds (sophisticated tanks) had been physically moved from the reactor. These rods are alloy metal cladding (tubes) with the nuclear fuel sealed inside.They are placed in the cooling pond but we really didnot get into the cooling water process. We discussed that there are a large number of spent fuel rods waiting to either be reprocessed or shipped to the designated central permanant storage area for spent nuclear fuel (Yucca Mountain facility in the USA). But apparantly, the notion of “waiting to be collected’ for the original plan was abandoned and the operating plants thus either stockpiled their spent fuel on site or contracted with specialized third party offsite storage.

              Some countries have facilities to “reprocess” the spent fuel back to “fresh” fuel. But this technology basically prepares new fuel to go back to a nuclear, but at least it would cut down on the volume. The USA made “reprocessing” illegal in the 70 80’s (Savanna River Works) and moved toward enternment (Yucca Mountain) but hey all plans can’t work.If you are interested in nuclear messes, I urge you to check out the situation in Hansford Washington., the storage site for early 40-s plus nuclear stuff.

              So, I return back to your original questions. The basic hazardous radiation from a nuclear plant will be either be radiated water with a variety of radioactive ions in the local waterways or from fuel particles that have escaped from a ruptured or corroded fuel into the air, solid or water. I repeat that any human exposure to solid fuel particles can be bad juju! The technology and logistics are complex, but it is there. There are ion exhange resins, similar to the household Brita, to remove certain radioactive ions, there are high efficiency air and water filtration technology, there is permiable membrane technology. And, with all the effort to get ready for Yucca Mountain I assume there is technology to entomb the spent rods and store them indefinitely. .

              But the hard part is establishing political and social will to address the issue. But, as a worst case scenario approached, technically, existing plants could be shut down and spent fuel rods could be relocated to a more central but isolated location. But, will any steps be taken?

            • Paul says:

              August 24, 2014 at 1:25 am

              I have suggested entombing them — but then I realized that my logic was flawed… If entombing them was the answer then why are we storing them on ponds now? Why haven’t we always entombed them.

              Sabotage is not the problem – that is unlikely – the problem is that when the global economy collapses and oil stops — there is no way to power these plants — no way to get spare parts for these complex operations.

              The worst case scenario is that these installations not only explode — but that once they run out of control they continue to do so for decades… day after day … year after year…. pumping massive amounts of toxicity into the environment

            • Mr Bill says:

              August 26, 2014 at 2:23 pm

              After our rounds of call and response via these various posts, I think I get your most critical concern. That is, the slow and steady deterioration and collapse of operational integrity of nuclear power plants throughout the world. I fully share your concenn if society foolishly allows the plants to fall apart over time for any reason. But, I just cannot fathom a sane world leadership, in the case of serious and worsening worldwide chaos, would not take actions to decommission all the nuclear plants and to minimize the environmental hazards from dispersed nuclear fuel spread around the globe. I believe there are technologies, albeit complex, available to resolve these potential disasters systematically. Of course, we do need to have sane leaders influencing rational decisions to get the job done. Are they sane and rational?

              Just to restate in the most simple terms, there are three fundamental technologies required to tackle this potential nuclear disaster in waiting, (1) to systematically decommission the operating nuclear reactors, (2) to safely collect and contain all fuel rods, spent and active, at each location, ensuring no fuel rod metal cladding is punctured and (3) to treat any contaminated water at each location to remove and collect any radioactive ions before releasing the uncontaminated water into local waterways.In principle, these are the three basic issues to be addressed. After these three have been addressed at each location, there is a fourth action required – arrange to move the contained fuel rods from each location to a central, but isolated site (or sites) for very long term care and storage.

              The technologies for decommissioning the nuclear reactors, for collecting and containing the fuel rods and for decontaminating radiated water are already in place at each operating reactor. All of these technologies have been used over the years and the plant personnel are trained to routinely implement each of the them. I do not know details about processing active fuel rods versus spent fuel rods nor about matching the best ion exchange resin to the specific ions to be recovered. I presume that the personnel fully trained for operations at their specific plant sites. But, the technologies to operate a fully functional plant are in place. Indeed, the reactors and ion exchange systems are able to be shut down in a relatively short time period. Unfortunately, routine operation of the cooling ponds require multiple years (5 – 10) before the rods are considered safe for relocation to alternative storage sites.

              Now, to the gorillas in the room, the spent fuel rod assemblies. First off, the nuclear fuel inside the rods is the really bad juju. The rule is make sure that you do not corrode, break or penetrate a fuel rod. The more severe damage to the exposed fuel, which may cause severe pulverizing the fuel pellets into powder, the greater the health hazards.Presumably, very small ingestions of nuclear fuel dust particles can result in quick death or serious disease. The technology to cool and deradiate spent nuclear fuel rods is in place, but it requires continuous cooling for those multiple years. At that point, the cooled and deradiated rods may be transferred and sealed in sophisticated steel casks and move them to storage forever.

              Unfortunately, the US NRC never approved nor opened the Yucca Mountain facility as a giant, central, isolated and presumably impermeable cave for extreme long term storage. Apparently other nations have failed to establish permanent long term storage for these nuclear wastes. Consequently, a proliferation of nuclear waste storage sites scattered all over the globe is the standard procedure. This situation seems to be under control under normal conditions. I wonder how that may change following an very extreme economic collapse or other cataclysmic occurrence. In my opinion, the worst case scenario will most likely involve spent fuel rod assemblies being scattered hither and yon about the landscape, just lying there deteriorating and waiting to be burst open, by whatever means, and being scattered over even larger landscapes. That risk s and consequences of that scenario may be minimized by transporting the stored rod assemblies to a more central and isolated facility or facilities.

              I wonder why you decided that your entombing suggestion was flawed logic. I don’t know how you were defining entombing., but I suggest the broadest one. Thus, entombing includes containment in concrete, fusing and encapsulation in glass, encapsulating in polymers, seeing into steel casks . Even a long term isolated impervious cave in a mountain may be considered entombing. I believe that the entombing criteria should at least (1) prevent any nuclear fuel from ever being allowed to escape into the environment and (2) physically isolate any radioactive material far enough away that any remaining radiation dosage cannot be exposed to the environment or any people and animals. Achieving These criteria would seem to support entombing as one logical thing to do.

              Your statement ” If entombing them was the answer then why are we storing them on ponds now? Why haven’t we always entombed them” is the flaw. In fact, at least in the USA, the Yucca Mountain project was put forth as the best option for storing nuclear waste. But, this in entombing on a grand scale. This is consistent with your original logic. The logic called for the nuclear plants to stockpile the spent fuel rod assemblies on a temporary basis. Then, when Yucca Mountain became operational, the temporary stockpiles would be relocated to the permanent site., and future temporary stockpiles would be scheduled for Yucca Mountain as well. Good logic? But, after the fact, Yucca Mountain never opened. According to NRC website, Yucca Mountain was targeted for operation in 2004, but ultimately fell off the radar screen. I presume other nations followed a similar path. It would seem more logical to reexamine entombment and move away from the current permanent stockpiling system.

            • Paul says:

              August 26, 2014 at 6:20 pm

              Thanks for the thorough response. If any form of entombing is a solution then surely there must be a plan in place to do exactly that.

               
            • Mr Bill says:

              August 27, 2014 at 5:47 pm

              It has been rewarding to join in on these chats. I just found Gail’s site a couple weeks back. Indeed, the site contents and the interesting comments have been enjoyable. Thanks for conversing with me.

              Paul, I don’t really know what the nuclear agencies are the world are up to, but you would think there would be major efforts on entombing the waste and otherwise minimizing the potential for major international nuclear crises. If what I read from the US NRC reflect the total, then it appears doubtful there are any plans for a Grand Plan anything like Yucca Mountain. The NRC is touting the storage of the sealed steel casks after the cooled fuel rods have been removed from the cooling ponds. I suppose the dry cask storage is a suitable entombment, but probably still quite widely scattered over the landscape.

              I accessed the web site for the US NRC trying to ensure comments from my friend and me were factual and consistent with the official info. Our comments were valid, but brief The NRC site contains a tremendous amount of technical and policy info. I have attached two specific documents from that site, one on spent fuel rod storage in general and a second on dry cask storage. Both contain much more specific details than my comments, Note that you can go to the Home page for the site and find access to much more details regarding the whole nuclear cycle, at least for the USA.

              http://www.nrc.gov/waste/spent-fuel-storage/faqs.html

              http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/dry-cask-storage.html.

              I also observed as I read through the NRC site, that they do not appear to pay much attention to long term consequences. They clearly seem to take the position that their approved designs can handle any emergencies in any situation, including natural disasters and bomb attacks. HMM, Do they really have our interests fully covered?,

              Here is also a 2011 article from The Nation magazine that presents some interesting info about the early days of the Fukushima disaster. I believe that events there have become worse as time passes.

              http://www.thenation.com/article/159234/fukushimas-spent-fuel-rods-pose-grave-danger

        • InAlaska says:

          August 16, 2014 at 9:08 pm

          tfouto,
          Your thoughts about how the next civilization may learn from us, is very much like the story line in JMG’s “Star’s Reach.” A very well thought out and thought provoking look at a possible peak oil future.

           
        • Leo Smith says:

          August 20, 2014 at 2:47 am

          They will actually laugh at us for ever imagining anything was ‘sustainable’ and regard it as an aberrant superstition.

          I have conjectured that the public understanding of the world reflects the science and philosophy of 200 years ago, and never was this more true of the Green movement and ecology in general. The science such as there is is barely Newtonian. And the logic is barely Greek, let alone Descartes.

          And the thing that would be amusing if it were not so tragic, is the belief that this is all new and modern, and the coming thing.

          • Gail Tverberg says:

            August 20, 2014 at 7:50 am

            Sustainability in a finite world means that humans would need to give up all uses of external energy–cooking our food, wearing clothing, training dogs to help in hunting, using biomass fires for any purpose (flushing out animals for food, warmth, making sharper rock tools, making metals). We might use a few small tools, such as throwing rocks, as other animals do. We would in general, go back to doing what chimpanzees would be doing. It is doubtful that we could get enough calories from this approach–our digestive apparatus and chewing apparatus have shrunk as our brain has grown. We certainly would have to chew all day, to try to get enough calories. Without external energy, our “range” would shrink back to a very small warm area of the earth.

             
            • Steve Rodriguez says:

              August 20, 2014 at 12:02 pm

              To live within the limits you posit will require an evolutionary step that makes us both smarter and more capable of cooperation and co-existence. I am not saying it couldn’t happen…

               
      • Leo Smith says:

        August 19, 2014 at 10:30 am

        Mr Ebola president of the Ebolians says ‘I foresee a huge increase in our GIP ‘(gross international product).

        Meanwhile, stock up with ammo and chinese copy AK47’s. Gonna be worth three wives and two cows soon.

    • Gail Tverberg says:

      August 15, 2014 at 8:57 am

      Perhaps Nature has different plans for the earth in the future. When one species declines in prevalence, other species increase to replace it.

      As I have said before, I would not rule out the possibility of a higher power being behind all of the changes we are seeing. The “Big Bang” that seems to have happened to start the universe didn’t just come out of nowhere. There is unbelievable organization underlying all of our physical systems.

      • Jarle B says:

        August 15, 2014 at 9:02 am

        Gail,

        I for one would not be surprised if there there is a greater scheme than we are able to see now…

      • Harry says:

        August 15, 2014 at 9:04 am

        Agreed. Who are we really to second-guess the universal intelligence?

         
      • Coilin MacLochlainn says:

        August 17, 2014 at 3:31 pm

        Gail, – You already posted that message above, and in previous discussion threads as well, so you must feel pretty confident you are right.

        I disputed that point in previous threads, but you took nothing from my messages or you would not be repeating it here again.

        However, your point is deeply flawed. Nature does not have a plan, it doesn’t think, it is not God. God is a human conceit, imagined by consecutive cultures and civilisations to give them hope in the face of their own mortality. Only humans, of all species on Earth, can contemplate their own death, which is why they try to imagine an afterlife. This is exactly what you, with all your qualifications and extraordinary intelligence, are doing. You, too, are only human, Gail.

        You make the point that if humans decline, another species or other species will fill the vacuum and replace us. That would be true in a functioning global biosphere, Gail, but you forget that human beings are destroying the ability of ecosystems to function properly, permanently, everywhere. If fossil fuels continue to be burnt at present levels until 2050 or later, the Earth will warm by an average of 8°C, and with positive feedback loops the warming will continue until we are 10 or 12°C hotter across the globe, on average. This will render all of the world uninhabitable for human beings and virtually all other species, apart from some microbes such as blue-green algae or some other very primitive life-forms. So we’re not talking about people being replaced by monkeys, we are talking about total wipeout of almost all life on Earth and we are presently on that very trajectory and doing almost nothing to head it off.

        Certainly, there is astonishing organisation in the natural world; the laws of physics have that effect, and these are laws that ultimately govern how the universe works. It is beyond our understanding to explain why the universe has such laws. The natural assumption we make is that a higher power must have put everything in place at the beginning and let things unfold.

        But what is the beginning: the Big Bang? If that were the beginning, then what came before? More likely, there was no beginning and the Big Bang was a simple perturbation in the multi-verse, the system of multipile universes proposed by string theorists. You do believe that the Big Bang did not come out of nowhere, and so do I. However, I cannot believe that a supernatural power, or God, was the prime mover.

        I used to think that alien life forms would have evolved and be structured around systems not found on Earth, but perhaps in a different dimension. It is now believed there are eleven dimensions, as compared to the four we are familiar with (three in space and one in time).

        But scientists who are searching for signs of life in the heavens are looking for organic life much the same as ours, based on carbon, like life on Earth, or possibly silicon, which is considered less likely, but either way, found on planets orbiting stars, with similar conditions to those found on Earth.

        In short, they don’t believe there are other possible avenues for life to come into existence, and they do not believe there is a god.

        For these reasons, I think the message you are sending out, saying we shouldn’t worry about destroying the Earth because Nature, whoever that is, has higher plans for us is misleading and is going to encourage BAU, as your correspondents like to call it, until TSHTF, as they like to say.

        You need to look seriously at this question, Gail, and ask that everyone please turn their attention to phasing out fossil fuels use completely in their own countries. The world economy needs to be zero carbon by 2050 and it needs to have completed the bulk of that transformation by 2030. Do your best, Gail, and thank you.

        • Jarle B says:

          August 17, 2014 at 4:02 pm

          Coilin MacLochlainn wrote:
          “The world economy needs to be zero carbon by 2050 and it needs to have completed the bulk of that transformation by 2030.”

          Relax, it will. No need to do anything, though – just kick back and watch it happen as modern economy crashes for good…

          • Paul says:

            August 17, 2014 at 4:11 pm

            If I live to see 2030 … it will be a miracle…. not because I will be particularly old rather I probably won’t make it through the collapse and if I do I am certain life expectancy will shorten dramatically.

             
        • Paul says:

          August 17, 2014 at 4:09 pm

          Colin — I am with you this — particularly on the danger of relying on a supernatural power’s plan for us — and thereby absolving us of all responsibility for this mess we have made.

          There is absolutely no evidence for a god entity — but I don’t rule it out anymore than I can’t rule out that this all came from nothing — I simply don’t know — and anyone who claims they are certain – well good on them — that would be a huge stress reliever to know that the big guy has big plans for them… so why be afraid of what is coming?

          However, at the end of the day I don’t think there is anything we can do to stop the forces that are ramping up re both oil and climate change — so I don’t think it much matters what any chooses to believe.

          • Coilin MacLochlainn says:

            August 18, 2014 at 5:49 am

            Yes, we cannot be certain, it is beyond our understanding, but I do think we can act to stop climate change. I am worried by Gail’s laissez faire attitude to climate change. The collapse of industrial civilisation may not happen soon enough to prevent the quantities of greenhouse gases building up in the atmosphere to a level that will tip everything past the point of no return.

            If all life on Earth is destroyed apart from primitive life-forms in deep-sea vents, it could take 300 million years for evolution to restore the diversity of life, including higher life-forms like mammals (or equivalent). But we may not have 300 million years. The Earth’s orbit is changing very slowly and could drift out of the habitable zone before the 300 million years is out. That would leave Earth too near the sun, and lifeless, like Mars. So what we have now is maybe all we are ever going to have. And we are destroying it. We cannot be laissez faire about that.

            • Jarle B says:

              August 18, 2014 at 5:54 am

              Coilin MacLochlainn wrote:
              “… I do think we can act to stop climate change. I am worried by Gail’s laissez faire attitude to climate change.”

              How? Realistic, please.

            • Paul says:

              August 18, 2014 at 3:00 pm

              Exactly.

              It all sounds lovely — but how do you stop climate change without collapsing the global economy?

              For example – do we stop flying? Right — but then what happens to supply chains that rely on parts flown from Germany or China or Japan? And what happens to the hotels around the world and the millions they employ — and what happens to the economies of tourist dependent countries?

              As you can see — you remove just a single card — and the whole house collapses.

            • Paul says:

              August 18, 2014 at 3:01 pm

              Colin – do you have any specific ideas as to how we can stop climate change — without collapsing the global economy which would result in the death of billions?

               
        • Peter S says:

          August 18, 2014 at 7:35 am

          ” Nature does not have a plan, it doesn’t think, it is not God.”

          Considering this is like 2 goldfish arguing about whether polar bears exist or not on the other side of the solar system, how can anyone be sure of what you just claimed? We know only the tiniest percentile of all there is to know. There may well be a “God”, but we can’t know that there is no plan. You can’t prove a negative.

          • Coilin MacLochlainn says:

            August 18, 2014 at 7:42 pm

            Hi, Paul, Jarle, Peter, etc,

            We need to collapse the global economy to a level that will make it possible for the human species to survive, and for natural ecosystems such as forests and oceans to remain intact, because ultimately we depend completely on a healthy, functioning biosphere.

            Everything necessary to prevent further global warming and revert to sustainable living is within the competency of man.

            We can reduce the population by birth control. We need to get back to under one billion people. Or half a billion people, to be on the safe side. Coercive methods may be required in some countries, but it should be possible to do it peacefully in advanced cultures.

            We can stop burning fossil fuels. We must switch completely to alternative energies including wind, solar, water, biomass and geothermal. Putting these technologies in place will require fossil fuels, but this will buy us time to prepare for the end game, when there will be no oil or gas available at all and a diminishing availability of coal. At that stage, as Gail has noted, it will become impossible to maintain the renewables infrastructure, so they will fail too, except where they use only wood (as in old-time windmills).

            Of course this means no flying. Anybody who is still flying and knows what impact it has on the planet should be ashamed. But the airline industry is on its last legs and will soon collapse: fuel will become too scarce and too expensive.

            It doesn’t matter if tourism collapses. Did the people of 18th-century Europe moan and wail when they couldn’t get from England to Italy in two hours? No, they took the boat and trains and spent a week getting there. Overseas travel was a luxury back then and will soon become a luxury again. We will cope, it’s no big deal. Most Americans have never been beyond the borders of the United States, they are happy to stay at home. I am already thinking that tourism will collapse everywhere, but many nations still promote tourism as though it were a growth industry and vital to their interests. It’s not, it’s almost over. Look at Greece, or Egypt. They were huge tourism destinations; what are they becoming now? It’s sad for countries that rely heavily on tourism, but nothing can be done about that.

            In time, we will depend exclusively on renewable energies, by which time our civilisation will have been rationalised and simplified. The horse and cart will come back with a vengeance. Those driverless cars we keep hearing about that will transform our driving experience and eliminate traffic jams (or gridlock), well, that’s never going to happen, it’s too late. We’re going to go down well before that can happen.

            If the world decides to go out with a bang instead of a whimper, then the world powers will go to war over remaining resources and make any transition to a sustainable zero-carbon, low-population economy more difficult and probably impossible. We can do it that way, and billions will die, probably 5-6 billion, or we can start planning to do it in a humane way and the die-off will take place more gradually and less painfully, leaving us with about one billion people. Either way, industrial civilisation will collapse and billions will die, and they have already started dying (see Iraq, Syria, Egypt, Libya, Sudan, for example). There is no way that billions are not going to die prematurely this century. I’m sorry, but I don’t see any way out of that.

            What’s happening in Iraq right now would suggest that the world is not going to plan a civilised withdrawal from industrial civilisation but will go down in flames, with billions dying in horrendous circumstances.

            The only reason Obama is bombing Iraq (again) is because it holds a substantial proportion of the world’s remaining oil reserves, which the US wants. This is no noble intervention by Obama, to save Kurds from the maniacs of Isis, it is simply a response to big corporations demanding that America keep the Iraq spigots open so they can stay in business.

            The big powers don’t like this scenario, it suggests there will be rebellions everywhere, which is why they are putting in place legislation so they can control public order with military force. When the SHTF, major powers will impose martial law and any resistance will be terminated with extreme prejudice (i.e. summary executions). This will continue until the governments themselves collapse and power falls to warlords and gangs. That is what we are facing – unless governments start working together to power down, removing fossil fuels from the economy completely.

            My argument is a little bit all over the place, sorry about that, but I hope you understand what I’m saying.

            Best wishes to all.

            • Paul says:

              August 18, 2014 at 11:02 pm

              You really need to read through Gail’s archives..

              I will address a couple of things only…

              Stop population growth — if you do that civilization collapses — less people mean we buy less stuff which means people get laid off which means they buy less stuff which means more people lose their jobs and governments go broke because they collect less and less taxes…

              Dont burn fossil fuels — ok so air travel is over — shipping is over — see my other post on what happens if tourism crashes… also where do you think solar panels come from? Do they grow on trees? Of course not — they are made in China mostly — and massive amounts of dirty coal are involved in manufacturing these…

              And also renewables do not work

              Ten Reasons Intermittent Renewables (Wind and Solar PV) are a Problem

              http://ourfiniteworld.com/2014/01/21/ten-reasons-intermittent-renewables-wind-and-solar-pv-are-a-problem/

              Solar – After Hundreds of Billions of Dollars of Subsidies and R&D and this is what we get?

              The German Solar Disaster: 21 Billion Euros Burned

              http://www.thegwpf.org/german-solar-disaster-21-billion-euros-burned/

              Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

              http://energyskeptic.com/2013/tilting-at-windmills-spains-solar-pv/

              The thing is the green brigade has all these fancy ideas — but they are not through through — and if someone suggests that none of them work… they tend to get insulted… and often angry.

              Funny that…

            • Jarle B says:

              August 19, 2014 at 7:06 am

              Coilin MacLochlainn,

              sorry, but this is just wishful thinking. The only global changes we will see is those beyond our control…

            • Gail Tverberg says:

              August 19, 2014 at 8:31 am

              Everything necessary to prevent further global warming and revert to sustainable living is within the competency of man.

              I strongly disagree. We are “dissipative systems.” Our role in the world is to turn available energy into waste heat. We cannot live without the economic system and (indirectly) food system we have built up. We may not consider the current system ideal, but we don’t have a replacement that would feed more than a small fraction of the world’s population.

              We can reduce the population by birth control.

              We need a huge population reduction, in only a few years. I would argue that the population needs to be less that one billion because we don’t have the soil quality or the systems in place that we had in place in 1800.

              It is not physically possible to reduce population very fast using birth control. Even when modern birth control is used, it requires the whole integrated world-wide system that allows the devices and pills to be manufactured. It requires that we have a delivery system for these pills and devices. We also need world-wide supply chains that include petroleum, because petroleum is used in making and transporting these items. We also have to have a way of convincing women, in for example, Niger, who are now having an average of 7.8 children each, to have and average of, say, 0.2 children each. This is not going to happen! For one thing, the resulting system would not have enough young people to take care of all of the old people in their old age.

            • InAlaska says:

              August 22, 2014 at 3:47 pm

              Coilin. I understand what you are saying and agree with some of it , but also you’ve got some serious disconnects going here, dude. One, there is no way for us to humanely reduce birth control down to 1 billion people. The only way that is going to happen is overshoot (accomplished) die-off (pending). Two, once that happens, we don’t need to worry about tourists taking 2 hours or 2 weeks to get from England to Italy because it ain’t gonna happen at all. Three, we will never rely exclusively on renewables, because by the time we would be in such a position, most of us will be dead and there won’t be any kind of electrified economy for it to rely on. Lastly, the US isn’t bombing Iraq (again) for the oil. I’m so sick of this lame argument from people. If Iraq was about oil, we never would have exited it last year like we did. That doesn’t make sense. We spent billions to get it and if we wanted the oil, we had it. But we left voluntarily, so we don’t have it again, which tells me that we were not there in the first place to get the oil. Its about confronting ISIS now in Iraq rather than later in DC and New York.

               
            • kesar says:

              August 23, 2014 at 2:07 am

              quote: “the US isn’t bombing Iraq (again) for the oil. I’m so sick of this lame argument from people. If Iraq was about oil, we never would have exited it last year like we did.”

              I have to disagree with the above. The invasion of the Iraq was about oil. It didn’t mean that US wanted to grab the oil for themselves. The whole idea had several goals:
              1. remove Saddam, who tried to destabilise Midlle East nad destroy Israel; this way the whole oil production would be severely decreased and caused global depression and started the collapse of western countries. Saddam knew that and he was messing with US for many years (remember Kuwait?).
              2. introduce again IOCs to Iraq to pump more oil out with their advanced technology;
              3. bring stabilisation to the region as it is a main swing producer.
              4. reinforce US position as the global hegemon able to fight wars around the globe and keep military presence in Middle East.

            • Paul says:

              August 25, 2014 at 2:00 am

              Agree – it didn’t matter if US companies actually pumped the oil — the key was the oil got to the market and Saddam could not leverage his position…

              We are now seeing Russia use it’s energy to try to pry Europe away from the US…. Putin is no Saddam… and he has China and many other allies on board….

        • Gail Tverberg says:

          August 18, 2014 at 8:22 pm

          Sorry, I disagree with you.

           
          • Coilin MacLochlainn says:

            August 19, 2014 at 2:42 pm

            Thank you Gail, Paul, Jarle, etc, for your considered responses. I may not be right, but I hope I have contributed something to the debate. Now I must go and find out what a ‘dissipative system’ is! Thanks, Gail. Your site is most valuable for explaining our predicaments, and you are doing a fantastic job!

             
            • Coilin MacLochlainn says:

              August 19, 2014 at 3:08 pm

              Gail, – I’m not sure you’re right about the family planning question. Women have many ways of controlling their own fertility or number of offspring and it doesn’t require prophylactics. If women want to have just one child and no more, they can do that, they know how. I think, with this kind of voluntary family planning (encouraged by national governments giving subsidies or tax breaks), together with involuntary family planning brought about by deteriorating circumstances (such as drought and plummeting farm yields, the global population will decline very quickly indeed, unbelievably fast if there is also famine in many parts of the world, as there is sure to be.

               
            • kesar says:

              August 20, 2014 at 1:53 am

              Quote: “the global population will decline very quickly indeed”.

              Actually you are wrong again. As Paul Ehrlich says: even 5 times WW2 wouldn’t change the trend. The demographics machine has high inertion.

              There are too many obstacles – religion, personal liberty, state interest, pension funds, etc. We have built a system based on growth. It is not easy to remodel it for slow decline in terms of population, GDP and many other factors.

            • Gail Tverberg says:

              August 20, 2014 at 7:22 am

              Women don’t generally have the “power” to control their number of offspring, though, especially in traditional societies. Women generally need the protection of a man, unless a society uses a great amount of fossil fuels. They don’t get such protection without providing the man with the number of children the man desires (or something close). When there are multiple wives, a wife can gain favor by having more offspring. It is very hard to get help in the fields, and help for old age, without having children.

               
            • Jarle B says:

              August 20, 2014 at 7:30 am

              Gail wrote:
              “Women don’t generally have the “power” to control their number of offspring, though, especially in traditional societies.”

              True. It’s not just like saying “no”, cultural forces are a lot stronger than that.

        • Steve Rodriguez says:

          August 20, 2014 at 12:06 pm

          Does it really matter whether God is a human conceit, Humanity is a divine conceit or Nature is God. The gift of death is life and vce versa.

           
  • sunweb says:

    August 14, 2014 at 6:13 pm

    I think reviewing Charles Hall’s work would introduce you to someone on a similar page. What is below is only part of his many research papers. This part of an editorial I wrote:

    New scientific studies show it takes years to payback the energy used in solar electric devices. EROI (Energy Returned on Energy Invested) says it takes energy – mining, drilling, refining, transporting, installing, maintenance, and replacement parts – to make the devices necessary to capture solar energy.
    Spain’s Photovoltaic Revolution: The Energy Return on Investment by Prieto, Pedro A., Hall, Charles 2013.

    http://www.springer.com/energy/renewable+and+green+energy/book/978-1-4419-9436-3

    and http://energyskeptic.com/2013/tilting-at-windmills-spains-solar-pv/
    also
    Energy in Australia: Peak Oil, Solar Power, and Asia’s Economic Growth
    By Graham Palmer. 2014. SpringerBriefs.

    Spain’s Photovoltaic Revolution presents the first complete energy analysis of a large-scale, real-world deployment of photovoltaic (PV) collection systems representing 3.5 GW of installed, grid-connected solar plants in Spain. Prieto and Hall conclude that the EROI of solar photovoltaic is only 2.45, very low despite Spain’s ideal sunny climate. Germany’s EROI is probably 20 to 33% less (1.6 to 2), due to less sunlight and efficient rooftop installations.

    • Paul says:

      August 15, 2014 at 3:20 am

      Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

      http://energyskeptic.com/2013/tilting-at-windmills-spains-solar-pv/

    • Gail Tverberg says:

      August 15, 2014 at 9:27 am

      Thanks for your suggestions. I am quite familiar with the studies you mention, and also know Charles Hall well. Charles Hall certainly has his heart in the right place, and has advanced the study of energy. His studies and those of Graham Palmer have shown that Solar Power cannot be relied on from an energy point of view, because when broader cost are included, the EROEI of solar energy are quite low.

      My differences are mostly with folks who latch on to one or another report and declare that because Wind has an EROEI of 18, it must be the world’s energy savior. I have dug too deeply into how EROEI is calculated, what is left out of these calculations, and what distortions occur when comparing one EROEI to another EROEI to be comfortable with such comparisons.

      EROEI can “work” for eliminating something (solar) as an energy possibility. I think it is too “blunt” a tool to prove the opposite–that something like wind is a worthwhile addition to a total system. A wind turbine may be a worthwhile addition in one place (onshore, little wind already on the system, lots of hydro backup, little need for additional long distance transmission lines), but a terrible addition in another place.

      There are other issues as well. If the intent is to reduce CO2 emissions, there are less expensive options than wind (or solar). Many people believe that wind and solar PV can extend the life of the grid. Everything I can see says that the opposite is the case. They make the grid harder to manage, and the pricing schemes that are put in place to “help” wind and solar create financial problem for other sources of energy generation. Driving other electricity generation is not really helpful to the whole system. This is a kind of issue that depends on the actual implementation. The life of the system depends in part on how long we are able to keep transmission lines repaired. Wind and solar are not helpful in the least in this.

      I know

  • gerryhiles says:

    August 14, 2014 at 6:35 pm

    Yes again Gail.
    All of the economic theories developed from the 1700s onwards are redundant and can never be re-applied, because this time around we have globally used just about everything required for an industrial form of civilisation.
    No one can tell what comes next … if anything if WW3/4 happens and/or control is lost for the hundreds of nuclear power stations around the world.
    “May you be cursed to live in interesting times.” All one can do is live according to circumstance and keep informed, so that nothing will come as a debilitating shock/surprize … don’t panic.
    I hope that your son has recovered Gail.

     
    • Gail Tverberg says:

      August 15, 2014 at 9:31 am

      My son got out of the hospital after seven days, and is now back at work. He is now receiving follow-up care from a physician. Thanks for asking.

       
      • Steve Rodriguez says:

        August 20, 2014 at 12:22 pm

        Hope I am not intruding here. Best to you and your son. I mention because, while I had been a regular commenter on the whole sustainability crisis so deftly presented by you on ‘Our finite World’, my outlook has recently changed. After a week of hospitalization this summer my son was diagnosed with Type 1 diabetes. I will leave it at that for now.

         
        • Gail Tverberg says:

          August 21, 2014 at 7:49 am

          Type 1 diabetes is very bad. My sympathies! I have a sister who was diagnosed with Type 1 diabetes as a young adult. She seems to do very well now with the new types of insulin available and frequent monitoring of her blood sugar level. She needs to have refrigerated packs with her if she travels, and she is careful to keep her exercise level uniform (neither low nor high) from day to day. It would be a very hard path for a young person to follow.

           
  • Paul says:

    August 14, 2014 at 7:00 pm

    Thanks for another excellent article Gail.

     
    • Stefeun says:

      August 15, 2014 at 11:10 am

      Same comment from me.
      This article would even deserve publication in some prestigious review (but… what for?)

       
  • InAlaska says:

    August 14, 2014 at 7:02 pm

    Gail,
    I think that this blog stands alone in clearly pointing out the failure of current economic models to take into effect a world of limits. Standard economic models were developed at a time in world history when it appeared that there were no limits, or limits were so far in the future as to be ignored. Well now that future is here. Standard economic theory is very much like Classic Newtonian Physics. Newtonian physics works well to explain the physical world that is obvious to us. But Newtonian physics breaks down when applied to the world of the very small, the very fast or under very high gravity. Standard economic theory works well when applied to a limitless world, but breaks down when applied to the real world, a world of finite resources. One could argue that economics as a science is invalid in any closed system, otherwise there would be a whole new branch of economics for a resource constrained world. Thanks again for the post.

     
    • edpell says:

      August 14, 2014 at 7:59 pm

      Classical economics can be used, it just needs to add the feature of fixed resources supplied by mother nature and renewable resources supplied by mother nature. There is a whole spectrum of resources of any particular type like energy for example.

      wood renewable harvest per year A1, energy yield per year A2, cost to produce A3
      coal non-renewable harvest per year B1, energy yield per year B2, cost to produce B3
      uranium
      thorium
      He3
      oil
      tar sands
      tight oil
      tight natural gas
      natural gas
      algae
      animal power
      human power
      solar for plant growth
      solar thermal
      solar PV
      solar thermal stored
      solar PV stored
      etc

      and there is some level of elasticity with the amount of money you are willing to throw at the endeavor.

      • edpell says:

        August 14, 2014 at 8:14 pm

        just to be clear with non-renewables there is the net amount ever producible X1 at cost Y1, producible X2 at cost Y2, etc… at some point the demand and supply curves cross as they have already done for some consumers of oil for some applications.

         
        • Gail Tverberg says:

          August 15, 2014 at 10:14 am

          What the supply/demand model doesn’t tell you is that there is a feedback loop from oil price to demand. If oil price is low, it helps make the future demand curve higher. If oil price is high, it helps make the future demand curve lower. A person reading a textbook would think that the supply curve and the demand curve are independent.

           
    • Gail Tverberg says:

      August 15, 2014 at 9:51 am

      Thanks for the information about similarities to Classic Newtonian Physics.

      I suppose in some ways the Earth is a closed system, in others it is an open system. Clearly, with respect to energy from the sun, the earth is an open system. The existence of solar energy allows all of the dissipative systems we have on earth

      The soil is regenerated over time from the wearing away of rocks, deep underneath. If we think as the outer surface of the earth being the area of interest, the new soil entering it allows it to be a “sort of” open system. Our big problem is using that soil faster than it regenerates.

      Minerals and fossil fuels seem to be close to a one-time endowment. The higher concentrations that are best for mining are what we seek out first. Once they are gone, we are pretty much out of luck.

      • InAlaska says:

        August 15, 2014 at 1:44 pm

        Yes, I agree. Although over massive time scales, the Earth is an open system, in terms of economics on a human scale, it is a closed system. As such, you can’t apply classic economic models to a closed system, just as you can’t apply Newtonian physics to the quantum world.

         
  • Stilgar Wilcox says:

    August 14, 2014 at 7:11 pm

    Great article, Gail! Germany and Japan both slipping into recession should be of great concern to world leaders, as both in the past have been leading economic powerhouses producing many high tech. products, including vehicles.

    My impression is the days of stimulus to kick the can down the BAU road are waning, both in the EU, Japan and the US. We will see if China tries to extend the game a while longer with their forms of stimulus. In any case, it seems as we head towards fall & winter, that by early 2015 things will most likely become quite dismal, with recession also hitting the US. Whether we are at the leading edge of a Thelma & Louise moment remains to be seen. The Fed could always backtrack and decide to throw another hail mary QE pass to buy just a little more time. But certainly my opinion is the goose is pretty much cooked.

    • Harry says:

      August 15, 2014 at 6:31 am

      I think the EU is going to introduce at least one more round of stimulus. It looks very much on the cards. Also, although the US is formally tapering its QE, there does seem to be lots of behind-the-scenes activity to suggest that it is continuing in different guises: http://www.hangthebankers.com/why-the-hell-is-belgium-buying-so-much-us-debt/

      But we are clearly entering a phase now when even our absurdly inflated GDP figures (which here in the UK include drugs, prostitution, insurance claims and now military spending) are struggling to indicate growth, so 2015 may well be dismal.

    • InAlaska says:

      August 15, 2014 at 1:48 pm

      North America is the only economy in the world that is showing any type of growth (2-4%). This will keep inflation here low and attract investment from all over the world. Some bond funds here are yielding 8%. Italy is in recession, Japan, Germany, UK, and all of South America is in recession. China is a mystery, but their growth will only be based on borrowing.

       
      • Paul says:

        August 15, 2014 at 1:59 pm

        If the US were not using fake CPI numbers it would be printing negative GDP too…

        Also the US and UK are engaging in money printing… subprime lending … props for their housing. stock and bond markets… basically doing the same things pre 08 but on a much larger scale…

        The numbers out of the US are totally worthless — the ‘growth’ they are quoting is built on dry piles of sand…

      • Harry says:

        August 16, 2014 at 4:16 am

        Officially UK is growing. (3.2% rise for Q2) – but the metric is absurd. Velocity of money and median income tell the true story. US growth is bogus also.

         
      • Julian Brown says:

        August 16, 2014 at 1:18 pm

        One of the (unexpected ?) effects of the energy/resource crisis has been that governments have replaced economic indices such as GDP and CPI that used to be grounded in some sort of reality with complete fabrications. Please do not waste any of your time trying to make any sense of the numbers flying around official/mainstream media outlets. The USSR resorted to exactly the same tactics in the years before its sudden demise.

         
        • Paul says:

          August 16, 2014 at 1:38 pm

          Spot on.

          I don’t even bother to look at the numbers out of the US — all I need to know is that 50M people are on food stamps — most of the new jobs being created are part time and low paid — tens of millions are collecting disability benefits — subprime auto loans are rife … and on and on…

          The country is a basket case — shot through with rot — and I am supposed to believe there is real growth?

          Nope.

          • InAlaska says:

            August 16, 2014 at 9:20 pm

            When I meant 2-4% growth in the US, I should have qualified that by saying “perceived growth” and that is what really matters. As long as the average Joe around the world perceives that the US is still the best house in a bad neighborhood, this country will benefit from the flight to safety and do better than the rest. This is good because it’ll keep the ball rolling longer everywhere.

             
            • Paul says:

              August 16, 2014 at 11:17 pm

              Yep – and he’ll pop another xanax to relieve the frustration of not being able to live large.

               
  • dingo blue says:

    August 14, 2014 at 7:30 pm

    “Twelve Reasons Why Globalization is a Huge Problem”
    “Energy and the Economy – Twelve Basic Principles”

    The number 12 again. Clearly Gail is being instructed by the Disciples and the Divinity. Everyone must listen.

    • Gail Tverberg says:

      August 14, 2014 at 7:31 pm

      Twelve is as high as I can count.

       
      • edpell says:

        August 14, 2014 at 7:44 pm

        We physicists can only deal with one or two objects after that it is many. So, twelve is pretty impressive. It is also evenly divisible by so many small integers 2, 3, 4, 6

         
      • kesar says:

        August 15, 2014 at 8:38 am

        It’s a lot, btw. Regular human’s brain can count to maximum 3 or 4 in some cases with very developed cognitive perception. The rest – mathematics – is only the intelectual, artificial construct.

        You can test it by simply laying down matches on the table. Above 3-4 you have to count or divide to pairs/threes and add/multiply.

    • Jarle B says:

      August 15, 2014 at 5:49 am

      12 is two times six. If Gails ups to 18 it’s three times six, and we all know what that means…

       
    • Paul says:

      August 17, 2014 at 12:12 am

      Why are there 12 eggs in a standard box?

       
  • edpell says:

    August 14, 2014 at 7:40 pm

    Gail you say oil prices too low are a problem. I say it is substitution as the economists predicted. The only difference from their prediction is that people are substituting not driving for driving with a “new fuel”, not heating for heating with a “new fuel”, not working for working at wages that do not pay the cost of commuting, living in southern states for living in northern states, working in China for unemployment due to non-existent jobs in the U.S., etc….

     
  • Paul says:

    August 14, 2014 at 8:18 pm

    And here we see why the stock market continues to bust records in spite of a horrible economy:

    http://www.reuters.com/article/2014/08/14/column-markets-saft-idUSL2N0QI0SJ20140814

  • Jerry McvManus says:

    August 14, 2014 at 8:58 pm

    Thank you Gail for another good analysis.

    I am a big fan of the Limits to Growth study, it has greatly informed my thinking in the 10 years since I first learned about peak oil. Resource depletion and the resulting knock-on effects in the form of diminishing returns to the economy are indeed critical limits, but students of the dynamics of complex systems know there is another equally important limit in the form of “sinks”.

    In basic ecological terms, setting aside for the moment economic or social justice issues, the three pillars of sustainability are (as taken from “Limits to Growth: 30 year update”)

    1. Not using renewable resources at a rate greater than they can be replenished
    2. Only using non-renewable resources to maximize renewable resources
    3. Not filling waste sinks at a rate greater than can be safely absorbed by the environment

    The ongoing climate crisis is a textbook example of violating the 3rd pillar, we have badly overflowed the atmosphere’s ability to safely absorb our outrageously high carbon emissions. The resulting increase in greenhouse gases is triggering a number of positive feedback loops that are driving the climate out of equilibrium and into a chaotic state not seen in the 10,000 year history of human agriculture and city-state civilizations.

    There is evidence that climate played a big role in the collapse of previous civilizations:

    Climate change heralds end of civilizations:

    http://www.climatenewsnetwork.net/2014/08/climate-change-heralds-end-of-civilisations/

    In addition to the climate crisis, the ongoing disaster in Fukushima Japan is another example of the limits to sinks. The 400-and-counting other nuclear reactors in the world are all potentially capable of becoming just as toxic, and on time scales of thousands of years.

    Yes, energy and economy are going to be big problems in the next few decades, but don’t forget the other “e”, the environment. It is just as capable of abruptly ending our increasingly futile attempts to sustain the unsustainable.

    • Gail Tverberg says:

      August 15, 2014 at 10:45 am

      Near the end of the post, I mention natural disasters such as hurricanes and floods as one of the issues that could push our current situation along. The issues you are talking about are an extension of this.

      Climate change is a possibility. The part we see now is related to the hurricane issue. If we hit financial collapse, overuse of sinks with respect to globular warming gases will be less of an issue. But burning of wood for fuel and attendant problems may become more of an issue.

      There certainly are a lot of nuclear power plants in existence. How these will eventually end their lives is a concern, as is all of the spent fuel.

      • Revert2Mean says:

        August 15, 2014 at 9:42 pm

        Climate change is not a possibility, Gail, it is a reality. It’s already happening.

         
        • Woofpacker75 says:

          August 15, 2014 at 11:16 pm

          Please SHOW me the link between CO2 as a greenhouse gas and the last 17 years of ABSOLUTELY NO GLOBAL WARMING even though global CO2 output has steadily increased.

          There is no scientific evidence to show this relationship, only lies, spin, strawmen and “flat earth” comments from desperate, loony lefties. Seriously, all you Global Warming hucksters are going to be holding your head in shame pretty soon because our sun is being very quiet these days and if the Solar Physicists are correct, we may be headed into some cooler weather for the next several decades.

          • Paul says:

            August 16, 2014 at 2:03 am

            Hey Bud —- I think the finals of American Idol 2009 are being rerun on channel 897… and Domino’s has a buy 1 get 3 big slops tonight — say I sent you and they’ll give you a family size cola with that….

            That ought to keep you away from the keyboard for a while….

          • Julian Brown says:

            August 16, 2014 at 2:28 pm

            As a physicist, I can’t let that uninformed comment go by without pointing out that :
            It is a FACT, not a belief, theory or opinion, that triatomic molecules (e.g. CO2,NO2,H20) let high temperature radiation (ie surface of sun) through, but stop low temperature radiation (ie earth’s surface) going back into space. ergo, thermal energy of this planet is increasing at a slow, predictable rate that is proportional to the amount of such trace triatomic gases added since pre-fossil fuel times.
            Whether the earth heats up here or there, or whether more clouds form etc etc are secondary effects that may counter the primary trend, or amplify it (e.g loss of arctic ice).
            Whilst the first, primary (radiative forcing) cause is extremely simple to understand, the secondary effects involve interactions between every aspect of the planetary system and are probably not calculable with today’s models. However, the extra heat has got to go somewhere and hence global warming – even if it is at present largely confined to the deep ocean – is inevitable. It is not going to stop in 2100 or even 2200, so this is a life-or-death issue for future generations.
            People who don’t understand the basic physics shouldn’t embarrass themselves by voicing their opinions. This is too important an issue to be left to propagandists of whatever persuasion.
            Sorry for my sounding arrogant.

             
            • Woofpacker75 says:

              August 16, 2014 at 10:22 pm

              Please do let us know whether you, as a physicist, have ever received any taxpayer-funded government grants for ‘research’ purposes. Clearly if your livelihood depends on receiving money from people pushing a radical global wealth redistribution agenda your research is going to have to go along with the agenda. IMO the scientists who truly believe in global warming should be forced to donate all their belongings to some third world family, burn down their home and plant a bunch of trees on the land. You guys want to keep driving your car to the store, you want to a nice home with heat and AC, you want to barbeque on the 4th of July, etc. etc., but you want others to give up all their modern necessities to live in caves and serve you. You cant have it both ways!

               
            • Russell says:

              August 17, 2014 at 9:01 pm

              Thanks for that. What’s the reasoning for the more powerful pentatomic GHG – methane please?

               
            • Julian Brown says:

              August 18, 2014 at 4:45 am

              Russell,
              In answer to your question: the number of ways a molecule can rotate and vibrate goes up rapidly with the number of atoms is is composed of.
              This is the reason why CH4 is about 100 times more more potent as a greenhouse gas than CO2 (and why O2 and N2 have no effect whatsoever).
              BTW, Every time I hear some ignorant climate change buffoon spout off that “CO2 is only a trace gas, so how can it be such a big deal ?” , my internal temperature goes up a good deal more than 1.4 C.

               
            • Hugoton2 says:

              August 20, 2014 at 3:17 am

              I know a lot of scientists as well. The ones like you involved in the greeny-weeny climate disciplines all HAVE TO believe in global warming or else they lose their grants and careers. They HAVE TO do all they can to perpetuate the lie. Most real scientists know global warming is a bunch of nonsense. How is lowering the natural trace element of CO2, by taking away a lot of my own HARD EARNED MONEY, going to actually help the environment?

               
            • Jarle B says:

              August 20, 2014 at 3:20 am

              Hugoton2 wrote:
              “Most real scientists know global warming is a bunch of nonsense.”

              Oh, do they? Show me some facts, you troll you.

            • Gail Tverberg says:

              August 20, 2014 at 7:58 am

              Even if 100% of the model assumptions from the climate disciplines are correct, if the modelers get the fossil fuel estimates completely wrong, the model still has a big problem. Climate scientists can’t be expected to understand the situation with fossil fuels, so the vast majority will not recognize the “flaw” in the model. They will see the model as correct, even if the selected values of fossil fuel use is wrong, and also the values of other variables that indirectly depend on fossil fuel use are wrong (like industrial outputs of gasses that tend to raise global temperatures).

               
        • Gail Tverberg says:

          August 17, 2014 at 6:34 am

          Climate change has been happening as long as the world has been in existence. It wasn’t until we built huge infrastructure in one place that we cared whether climate changed. (It may be changing worse now.)

           
      • DrCiber says:

        August 16, 2014 at 5:20 pm

        Climate change, resource depletion, financial collapse, war, etc., etc., pretty much any one of these & certainly more in combination are going to be enough to pull the rug out from under our global civilization – and not with the finesse of a great stage magician. I find myself currently convinced that while they may be partly, slightly (at this late date) avoidable, they are all overwhelmingly inevitable. Still, my favorite candidate for a precipitating event causing a cascading if not an outright collapse before anything on the list except war, maybe, could set us back 200 years would be a coronal mass ejection from the sun that hits us dead on. Recently and briefly mentioned in the mass media was the event of July 2012, during which, had the Earth been a few days farther back in its orbital track would have caught us right between the eyes with a force determined to be equal or greater than the Carrington Event of 1859. An informative article with a video illustrating what happened long ago as well as two years ago is available at NASA at: http://science.nasa.gov/science-news/science-at-nasa/2014/23jul_superstorm/ ,take a look.

        This is no “tin-foil hat” lunacy, and as the article explains, the probability of Earth getting nailed by one of these solar superstorms -which will be an unprecedented catastrophe in our modern electrical/electronic age- is calculated to be about 12% within the next ten years. Just shooting from the hip I’d say that makes it close to 50-50 by mid-century and near certain by 2100, and neither the climate nor the resource threats will have receded any by then. NASA says we need to be prepared, so here we have yet another trillion dollar plus infrastructure conundrum that needs to be addressed concurrently with all the others for which there is no possibility of adequate funding. I guess it’s a case of “higher power” help us all.

        • InAlaska says:

          August 16, 2014 at 9:31 pm

          DrCiber
          Yes it is easy to forget about all of the naturally occurring hazards to our civilization and our planet. A coronal mass ejection, a very large meteor, a polar magnetic shift…who knows if one of these takes us out before we take ourselves out. A few posts back, Gail mentioned how our current global warming may actually be protecting us from an ice age that otherwise would already be upon us with devastating effect. In fact, if you look at the ice core records, our interglacial period has already been too long and we are (or were) due for another big ice age. So, it has all become too complex for us to predict, but having something like CME take us out, at least relieves us of feeling guilty about how terribly we have behaved toward the planet in the last 200 years.

           
          • DrCiber says:

            August 17, 2014 at 2:46 pm

            Well I’m going to go ahead and still feel somewhat guilty, at least to the extent that it helps control destructive behavior. If something “gets” us that we could never have had any control over, that’s one thing, but to have allowed our own cleverness to seriously threaten our own and so many other species natural span of existence…paints us as too smart by half and kinda argues against “intelligence” as an evolutionary advance. Like Arthur C. Clark once remarked: “It has yet to be proven that intelligence has any survival value.”

             
            • Paul says:

              August 17, 2014 at 4:13 pm

              In fact the opposite — our intelligence has lead to our downfall….

              “progress” should be a dirty word…

        • Gail Tverberg says:

          August 17, 2014 at 8:19 pm

          You are right. If we can continue along this path, our electricity system is very much a candidate to be hit by a coronial mass ejection.

           
        • Julian Brown says:

          August 18, 2014 at 5:02 am

          It is indeed no tin-foil lunacy.
          In contemplating the smorgasbord of single causes that could precipitate the end of the party for all time, one is really spoilt for choice.
          A propos the 1.2 percent p.a. risk of a Carrington-type event, it begins to look as though nature/providence/God never intended for us to have a techno-civilization on this planet – the ice is just too thin.
          As Jim Kunstler is fond of saying, we are going to have to find out some other living arrangement here on this planet – of which I believe there are several viable alternatives.
          One of the most powerful memes of our time, assiduously propagated by the mainstream, is that there is no alternative to the current paradigm, so don’t even think of swimming against the stream. This is in essence an absolutist, quasi-religious position, akin to the old edict “thou shalt have no gods but Jehovah”, and it has a suitably numbing effect on the aspirations of nearly everyone.
          I am a great fan of the literature of alternative histories, and I don’t think it takes a great deal of imagination to see that the path leading up to the disfunctional present was only one of a multitude of possible outcomes. Consider, for example, a timeline in which Rome had decided to make peace with Carthage, to their mutual benefit…….or one in which the Austrians had failed to check the advance of Ottomans before Vienna…..

           
  • Paul says:

    August 14, 2014 at 9:16 pm

    http://www.zerohedge.com/news/2014-08-14/ice-wall-go-eth-japan-scraps-fukushima-freezing-plan

    As we can see even with the full power of BAU — we are unable to do anything about a melted reactor…. so what happens when they all melt down….

    And for anyone who says technology will solve the oil problem — there’s a perfect example of how technology fails…

    Meanwhile Fukushima continues to pouring tonnes of radioactive water into the ocean…

  • Pingback: Gail Tverberg: Energy and the Economy – Twelve Basic Principles » Plan B Economics
  • Paul says:

    August 14, 2014 at 11:34 pm

    http://www.zerohedge.com/news/2014-08-14/we%E2%80%99ve-opened-gates-hell

    Ain’t that special…. again — there are 500+ atomic plants around the world — and 4000+ spent fuel ponds…

    All waiting to go Fuckushima — when we are no longer able to cool them.

    • Harry says:

      August 15, 2014 at 6:38 am

      I am trying to get some sense of just how catastrophic the more-or-less simultaneous melt-down of several hundred nuclear power stations around the world would be. Is this an extinction-level event? And, if so, over what sort of timescale? How long would it take for the effects to be felt by people in the southern hemisphere, where there are only four or five?

      There is a lot of conjecture out there – can anyone point me to some well-reasoned science?

      • Gail Tverberg says:

        August 15, 2014 at 12:53 pm

        We do know that huge numbers of people have not died directly from the events we have had so far. We also know that a lot of people live in naturally high radiation areas. I think those facts give us some hope that the direct and indirect effects of nuclear power stations will not cause an extinction level event. We have so many other things going on, why worry excessively over that one, unless you are very close by to such a station?

         
        • Paul says:

          August 15, 2014 at 1:47 pm

          Keep in mind Fukushima is still being cooled by thousands of tons of seawater that is being pumped onto the site…. so we are not experiencing the full fury of the meltdown….

          What would happen if the water stopped stopped?

          I have also seen info that a spent fuel container is far more dangerous than a live reactor — I suppose the main difference would be the ponds are chock a block with these rods vs the reactors which have fewer fissionable materials in them at one time.

          http://uk.reuters.com/article/2013/08/14/us-japan-fukushima-insight-idUKBRE97D00M20130814

          The operator of Japan’s crippled Fukushima nuclear plant is preparing to remove 400 tons of highly irradiated spent fuel from a damaged reactor building, a dangerous operation that has never been attempted before on this scale.

          Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area.

          So assuming that is correct — I believe there are 4000 spent fuel ponds around the world…

          14,000 x 4000 = 56 MILLION Fukushima bombs exploding across the planet. Add another 500 active plants melting down and completely out of control…

          And keep in mind unlike a nuclear weapon which explodes once —- these ponds will continue to spew massive amounts of radiation for many decades…. think of them as the gift from hell — that never stops giving…

          If there is no way to keep these ponds cool —- and I can’t see how we can in the long run — my money would be on an extinction event… anyone who survived the initial period of death due to starvation — would be exposed to enormous and endless amounts of radiation ….

          Perhaps we could get someone in the industry to comment on this on an anonymous basis?

          Or perhaps we don’t have to. We can see that the sky is blue without having to ask van Gogh…

      • edpell says:

        August 16, 2014 at 9:49 pm

        As long as someone exists to throw the spent rods into either a river or an ocean we are good.

         
        • Paul says:

          August 16, 2014 at 11:13 pm

          Somehow I can’t see that working out very well — those particles need to be contained — (‘containment ponds’) — if we throw these rods in the ocean surely that would just result in spewing radioactive toxins throughout the world — killing all life in the oceans … keep in mind throwing them in a body of water does not mean they fizzle out… they will be emanating cancer causing materials for decades….

          It might not cause an extinction event — but cancer rates would surely go off the charts for those who survived the big die off

      • Ann says:

        August 17, 2014 at 11:15 pm

        The best source, Harry, is Arnold Gunderson, former nuclear industry executive. His website is here:

        fairewinds.com

        You should also read his bio on Wikipedia for more information.

        • Julian Brown says:

          August 18, 2014 at 5:10 am

          Gunderson always impresses me as a little boat of integrity and humanity floating in a swamp of deception and slime. May God Bless Him !

           
  • SlowRider says:

    August 15, 2014 at 12:57 am

    You say: “When energy costs rise, the rise in energy costs puts pressure on wages”.

    Pressure on wages –> pressure on consumption –> pressure on prices –> pressure on production costs –> more pressure on wages –> shipping jobs overseas –> unemployment –> more pressure on wages, etc.

    Eventually, this is really a race to the bottom, even if it is creating some new wealth along the way, offering discount stuff for the masses.

  • reverseengineerre says:

    August 15, 2014 at 2:16 am

    The bottom line is that the amount of energy which can be accessed at positive EROEI diminishes each day, while the population continues to increase, basically on inertia.  So, everybody’s standard of living begins to fall, and the Resource Wars over what remains begin.  This is the phase we are in now, and those wars represent everything from Ukraine to ISIS to Ferguson, MO. (not too far from you there Gail!)

    Monetary economics are unlikely to remain the driving factor much longer, the physical fight is beginning in earnest here now.  Meanwhile, the climatic conditions continue to deteriorate and credit is constained everywhere to rebuild in the face of further climate related disasters.  Long Island got hit by torrential rains in the same neighborhood that Sandy hit, underwater once again there.

    The spin down is well underway everywhere now, so it is just a matter of time and pace in terms of when it shows up in your neighborhood.  What will be left at the end of it remains to be seen at this point, but for the forseable future, COLLECTIVE INSANITY will rule the day.

    Part II of Collective Insanity up shortly on the Doomstead Diner.

    RE

    • Paul says:

      August 15, 2014 at 2:51 am

      Re Ferguson … a very good friend of mine in HK – black American – MBA grad — runs his own biz… when I ask him about this stuff …. he says — this is not new — this has always been going on — the police beatings… shootings… harassment … racial profiling…

      Recall the movie Crash… that says it all….

      Things are coming to a boiling point — there seem to be more of these incidents — and people are video taping them… everyone is angry now — they know this recovery stuff is bs… the youth have no jobs –no hope…

      I can see this erupting in massive race riots,… all that is needed is the match…

      • worldofhanuman says:

        August 15, 2014 at 12:25 pm

        Call it a very shallow observation but what I see from the pictures of recent US riots is a very clear distinction, two worlds appart, perhaps almost evidence of two casts. The people on the “public order” side in riot gear are usually muscular, clean shaved. However the rioters are often either very obese or “narcotic thin”, over tatooted, dressed in clownish outfits, presenting naive banners and slogans.. It’s almost like a scene from a Kunstler.

        It’s actually quite sad, the other impoverished side at the moment has absolutely no chance of wining, it’s in effect almost darwinian struggle . Probably in the near future as more people from formely “middle class” niveau start to openly question the status quo the riots or “civil war” could be separated into another additional cast. The history would offer some fiting parallels into it as well.

        • Don Stewart says:

          August 15, 2014 at 12:40 pm

          Dear worldofhanuman
          See this street view:

          https://www.google.com/maps/@38.736429,-90.275411,3a,75y,264.12h,90t/data=!3m5!1e1!3m3!1sJ16zj6OqNe_w7iZNyrG67g!2e0!5s2008-10!6m1!1e1

          This is a very common street view of neighborhoods which are suffering from poverty more of the imagination than lack of money. Not a single plant which is being taken care of. No garden for food or birds or to support pollinators.

          I don’t know the people who live here…so I am treating this as simply an abstraction. The US is so accustomed to having an inert underclass that buys fancy cars on credit, that buys most of their food in fast food joints, and doesn’t have a decent knife to prepare a home cooked meal, that these sorts of scenes are very common. The poor people have been promised that ‘the economy is improving’ and that a split shift part time job in fast food makes them ‘middle class’. Meanwhile, they should rush down to the mall or the car dealership and buy something on credit.

          At the other end of the spectrum we have a class of people who never do any real work (except when they go to the gym) but have a 5 million dollar house on the beach and a 3 million dollar boat in the marina and a second home in the tropics somewhere. They have beautiful yards because they hire a lawn service, which does all the work with illegal immigrant labor.

          Can you imagine what might go wrong?
          Don Stewart

          • Paul says:

            August 15, 2014 at 2:06 pm

            According to Lord Blankfein they do indeed do work – he refers to it as god’s work… far more important that doing manual labour…

            If you think about that deeply… and from a certain perspective… he is right…

            Let’s listen to Lord Blankfein — cat caught your tongue? http://www.youtube.com/watch?v=dlRzbBEAVFE

          • Ann says:

            August 15, 2014 at 5:13 pm

            I read this editorial in the latest issue of National Geographic. In part, it reads:

            “I’ll never forget the words of the Cleveland school administrator or how awful I felt when he uttered them. It was 2007 and as the new editor of the Plain Dealer, the city’s daily news paper, I was meeting with a group involved in improving public education. The topic turned to Cleveland’s “lake effect” which dumps about 68 inches of snow on the city every year. “The kids must love all the snow days, ” I joked. The room went silent. People exchaned glances. “We try never to close the schools,” one man finally said. “When we do, a lot of kids won’t eat.” I’m embarrassed to admit this had never occurred to me before.”

            “Emergency food programs have ballooned from a few hundred in 1980 to 50,000 today. At the same time schools quietly have become de facto food banks for an astonishing number of children. Last year about 19 million students received a free school lunch and another 2.5 million got a reduction in the price.”

            There’s more. Is this a sign of a healthy nation? What happens when these programs stop? Or when California dries up once and for all?

          • Julian Brown says:

            August 16, 2014 at 2:34 pm

            Wasn’t this the street where Marty Mcfly lived in 1985 ?

             
        • Paul says:

          August 15, 2014 at 1:10 pm

          At some point this will broaden and it won’t just be the bottom of society that feels the wrath of those all American brown shirts… eventually the former middle class gets drawn in… and a lot of them are armed to the teeth (just have a look at Zero Hedge comments when a gun article runs… a lot of those people are primed for action … just need the fuse to be lit)

          Of course the NSA knows who they are … and they will be dealt with accordingly.

          The Deep State is experimenting in Egypt using their puppet regime there — and they know how to keep an unruly crowd under control. They also have some experience in Gaza with this.

          There will be zero tolerance and zero mercy. If you raise your hand you get a sniper bullet in the head. When the masses know that protest is not allowed – under penalty of death – most will cower in their basements — and they will turn on the few who dare to fight back — because they will see that fighting back only brings further wrath upon them and more chaos.

          In Egypt that is exactly what has happened — anyone opposing the new junta is labelled the bad guy — because they have seen what protest means — it ruins the economy — and it ultimately fails….

          In Egypt they have embraced the heavy hand — because the heavy hand brings stability. They are beaten dogs. They have no fight left.

          And all these tough talking gun toting rebels in America … most of them will quickly scamper back to their bunkers to hide (where the NSA will find them and the all American boys will deal with them) or they will be shot down in the street like rabid dogs.

          That is what is coming.

          • xabier says:

            August 15, 2014 at 3:33 pm

            Paul

            Not sure about the Deep State experimenting in Egypt: it’s just what life has always been like there – one poor man in a uniform with a stick beating another poorer man like a mule. It’s the way the Turks ran their Empire, it’s the way Spain was, and is becoming again, etc……

            • Paul says:

              August 15, 2014 at 7:10 pm

              Egypt was not always like this — I have American friends who have lived there for over 20 years — the wife taught at the university there… they were advising some of the leaders of the protests (some were former students)… there was a true desire for a fairer country — and paid thugs were deployed to put an end to this…

              The man beating the people with the stick was given the stick by the Deep State… Mubarak was a Deep State puppet — as was Morsi USC Grad by the way) … as is the current junta leader.

              The tear gas and APVs all supplied by America.

              Democracy is not allowed in Egypt — Egypt is too important for that. Just like democracy was not allowed in Iran under Mossadegh — because that is not good for the corporations who loot these countries — and it is not good for Israel to have a major country next door who is antagonistic to them…

              Morsi was simply another Mubarak — another US puppet — but he failed so he was thrown under the bus… because he could not control the people…

              The new guy did not make the same mistake — he shot dead (with US supplied weapons – 3 billion $ per year i believe) — did the US lift a finger? Nope.

              They would have sanctioned this — because the last thing they want is a failed state — better to gun people down in the streets — and observe…

              As we can see – the Egyptians are beaten dogs — the message is — stop any protest in its tracks — do not let the protestors generate momentum — jail and torture the leaders — never let them out — and gun down people until they get the message — you cannot win.

              You will see the formula deployed in America — because it works…

            • xabier says:

              August 16, 2014 at 2:18 am

              Paul

              The point is there are deep continuities in human existence, and the stick, the whip, the axe, the garrot have always been the lot of most people at the bottom if they step out of line. And most of the misery in the world is caused by poor people doing down their fellows.

              Cairo was certainly a very pleasant place indeed under the Europeans. But there has always been a sordid underworld in Egypt: it’s standard procedure among small shopkeepers to use hired thugs against business rivals. Then those thugs can be hired for ‘political’ action when needed.

              We can perhaps blame too much on the USA and its manipulations: people have to take responsibility for their own actions. We need to keep a sense of balance when judging events – everyone has dirty hands to some degree.

            • Paul says:

              August 17, 2014 at 12:11 am

              Hong Kong is no different — and it is one of the most admired economies in the world.

              One of the partners in a legal firm we use in HK is Chinese — she was explaining to me how virtually every single business in the city pays protection money — every single shop keeper is paying ‘Tony Soprano’

              One of the wealthiest expats in the city Allan Zeman had his offices trashed by the triads about 15 years ago — one assumes he was defying them

              To understand Egypt you have to understand the hopelessness of the situation — the US has put in place total thugs like Mubarak — he was a criminal – a gangster — he cared nothing for the people — he sold them out so he could be rich and powerful …

              The people have lived in misery for many years — and they despised Mubarak of course — but make a peep and into the dungeon you go — to be tortured by US trained animals…

              And a few years ago they had had enough — there was a legitimate democratic movement — but as I have said – that is not allowed — the US and Israel want to run the show — so the movement failed.

              And the people sink back into misery — knowing that they have failed – and that there is no way out…

            • Gail Tverberg says:

              August 17, 2014 at 6:53 am

              Agreed!

               
          • edpell says:

            August 15, 2014 at 9:27 pm

            Sorry Paul, Americans are cowards. They talk big but will never take action. As they say in Boston USA, USA, USA

             
            • Paul says:

              August 16, 2014 at 1:33 am

              A lot of those people voted for George Bush — a guy who likes to talk the talk as a tough guy — but whose actions throughout his life reek of cowardice.

               
            • InAlaska says:

              August 17, 2014 at 12:14 am

              Pretty hard to stereotype 350 million Americans as cowards. The two physicians working in Liberia on the Ebola outbreak aren’t cowards and their are millions of Americans who don’t fit your narrative…

               
            • Lizzy says:

              August 21, 2014 at 11:02 am

              Agreed, InAlaska.

               
      • edpell says:

        August 15, 2014 at 5:42 pm

        I forget who told me the story. The story line was when there are Africans, possibly also Americans but one can not tell by looking, rioting in Florida the police, sheriffs, from all the surrounding states go to Florida as a chance to shoot Africans. Basically, a sporting event. Nothing new, the problem is now the police are branching out to shooting everyone. Maybe we can be proud that racism is dead.

         
  • Paul says:

    August 15, 2014 at 2:19 am

    “But once oil and natural gas became expensive, and industrialization spread around the world, the warm countries regained their advantage.”

    Gail – which countries are you referring to here — as I see it no countries have an advantage at the moment – Germany is the cleanest shirt in the dirty pile of laundry — and even they are faltering — they are a cold climate country… even China – which is a total mess – cannot be considered warm climate.

    Perhaps in the post collapse world the warmer countries with adequate rainfall would fair better than colder countries — because we will be reverting to economies based primarily on agriculture.

    I do not envision an industrial renaissance.

    • Jarle B says:

      August 15, 2014 at 3:33 am

      People in warm countries don’t need the robust houses and a lot of heating, so they can live on less. The growing season is longer. This means that warm countries can produce more at a lower cost = advantage.

       
      • kesar says:

        August 15, 2014 at 8:57 am

        There is a downside for the warmer climate types. When there is overshoot (and those countries encounter it the same as cold countries) the epidemics is much more probable. Cold kills instantly both humans and disease infections. Cleansing period. Tropical countries don’t have it. Overshoot = overshoot. The only difference is the scale. Research the populations from 1500-1600 per country. This is the level we are heading in the first downward secular cycle.

         
        • Jarle B says:

          August 15, 2014 at 9:00 am

          kesar,

          anyway a post oil life is easier in a warm country, I think – what do you say, Gail?

          • kesar says:

            August 15, 2014 at 9:25 am

            Mildly warmer with sweet water available, arable land and low current population definately yes. I just mentioned one downside, I didn’t tried discredit the idea.

             
          • Gail Tverberg says:

            August 15, 2014 at 12:59 pm

            A post oil life is easier in a warm country, if there aren’t too many others fighting for food. As humans, we are adapted to a warm climate. We are hairless and have sweat glands to keep ourselves cool.

             
            • Paul says:

              August 15, 2014 at 1:17 pm

              One issue with warmer countries is that if you were not born in one and you move to one — you might be getting yourself into a micro Clash of Civilizations… when resources (food in this case) are short — we tend to go at each other on the basis of ethnicity….

              But then I have also seen research that indicates that even that breaks down when food is extremely short — no point in teaming up — it’s every man for himself at this point (people even turn on their families).

              I’d say ideally a place that is warm, agrarian, decent rainfall, low population, similar culture

        • Gail Tverberg says:

          August 15, 2014 at 12:57 pm

          You are right about warmer climate types being in overshoot as well.

          Part of the epidemic problem relates to lack of a cold period to kill off insects and other disease carriers. Warmer countries seem to be especially at risk.

      • Paul says:

        August 16, 2014 at 2:14 am

        Right so I assume the reference is to a world that is primarily agrarian … yes certainly place with moderate climates good soil and water and low populations would be best…

        South Island New Zealand comes to mind

        • Simple Simon says:

          August 17, 2014 at 11:05 pm

          I’m a 6th generation New Zealander, and I’m seriously worried about how NZ (New Zealand) will fare.
          1. We have a population that is 30 x larger than it was pre-fossil fuels, a mere 150 years ago. It is thought that it had reached maximum non-fossil fuel levels before the fossil fuel/immigration impetus hit. In other words, post-collapse, it is not unreasonable for 29 out of 30 of the present population to not survive.
          2. Farming here is VERY dependent on fossil fuels. I have talked with farmers who have told me bluntly that it just won’t work without diesel, petrol, oil. They also routinely carry multimillion debts on their large properties.
          3. NZ as a nation has very high levels of indebtedness (public and private) – one of the worst in the “developed” world.
          4. South Island has just had a week or so of snow. People using a lot of electricity and fossil fuels to get through!
          5. NZ is incredibly dependent on international trade – and with thousands of miles of ocean to cross, that implies dependence on fossil fuels for transport.

          In short, NZ is often held out as a safe haven.
          I wish it was, but I’m not at all confident.

          • Jarle B says:

            August 18, 2014 at 3:00 am

            Simple Simon wrote:
            “In short, NZ is often held out as a safe haven.
            I wish it was, but I’m not at all confident.”

            A bit like Norway then – a good place to be when the economy goes to pieces – but for a lot less people than today…

            • Paul says:

              August 18, 2014 at 3:04 pm

              Likely nothing is safe — however the south island is probably one of the better places to be no?

               
          • Paul says:

            August 18, 2014 at 8:48 pm

            If we speak of NZ in terms of maintaining some sort of BAU where they farm with tractors. debt etc… then of course they will fail.

            But what I see happening is that when the global economy collapses — people will have no BAU jobs — they will be forced to go into the fields and work together to produce food – organic faming is labour intensive — not a problem when nobody has an office job any longer

            Certain areas will no doubt fare better than others — for instance an area with a decent amount of established permaculture…

            By no means perfect but it would be on my short list of places to be when the SHTF.

          • Lizzy says:

            August 21, 2014 at 11:08 am

            As a fellow 6th generation kiwi, don’t forget, the Maori were stone-age with very limited agriculture. They had no wheels, no pottery, and the indigenous crops and fruits were sparse. I’m not blind to the problems we will face, but I reckon the land can support many more than before. Even North Otago.

             
    • Gail Tverberg says:

      August 15, 2014 at 11:13 am

      The countries with the advantage are the wet, warm countries, including where you live now. I don’t see that industrialization will ever be prevalent again. Overpopulation is of course an issue practically everywhere, though.

      China is divided with respect to climate. The coastal and southeaster areas tend to be quite warm. My impression is that industrialization has tended to take place in the more populated warm areas of China. The areas with more severe climate have not been as much affected by recent changes.

      It is a miracle to me how China has stayed together as one country for as long as it has. I am sure different areas of the world (and of China) will be affected differently. I can’t say that I understand China well enough to know how it will fare. It certainly has a lot of people there, but it has worked harder than most countries to hold population down.

      • InAlaska says:

        August 15, 2014 at 2:01 pm

        China stays together over millenium because it is a culturally united civilization. Its confucian outlook on life binds it together. I imagine that the same forces that have held China together for 4000 years will continue to be potent through this bottleneck. Once it loses about a billion citizens that is…

         
        • edpell says:

          August 15, 2014 at 5:47 pm

          I have had people in Vermont tell me they like the cold it keeps the undesirable people out, yes they were referring to Africans of whatever passport.

           
        • Lizzy says:

          August 16, 2014 at 9:37 am

          As I understand it, InAlaska, China has been the country it is since the 1300’s. The Ming dynasty. Still a long time, but before it was warring, separate states.

           
          • dashui says:

            August 16, 2014 at 8:16 pm

            The warring state and spring and autumn period ended in 221 bc by chin shi wang di who unified most of the country we know as china today. The first emperor of china who gave his name to the Chinese people. Ironically Mr.Chin might have been more of a mongol or Turk than Chinese.

             
          • InAlaska says:

            August 17, 2014 at 3:54 am

            Yes, Lizzy, separate warring states, but cultural unified nevertheless. Despite the internecine warfare, there has been a continuous “chinese” culture for thousands of years.

             
  • stephenhinton says:

    August 15, 2014 at 3:11 am

    Reblogged this on Stephen Hinton Consulting and commented:
    Reposted from Gail Tverberg’s blog. If anyone was in doubt that the assumptions underlying economic policy are flawed, Gail gives you 12 basics to gain a much clearer understanding.

     
  • Anselmo says:

    August 15, 2014 at 4:09 am

    I request your permission to add as a comment the translation of your post to Spanish

     
    • Gail Tverberg says:

      August 15, 2014 at 12:38 pm

      There are various people around the world who make translations of my posts from time to time. Do you have an existing website where you could post the translation? I am not sure that posting the translation as a comment would work well. I know that there is a Spanish “peak oil” website. It might be willing to host the translation.

       
  • Stilgar Wilcox says:

    August 15, 2014 at 4:21 am

    http://www.oil-price.net/

    WTI dropped today 2.01 to 95.58 a barrel & Brent dropped 2.27 to 102.01!
    Gail, looks like your concerns of oil price dropping are being realized as recessionary GDP’s out of the EU and bad data out of Japan are sending oil prices lower. Recent drop in oil prices is unmistakable and the further it drops the more pressure on marginal and future supply.

    • Stilgar Wilcox says:

      August 15, 2014 at 10:02 am

      To follow up with more info. for the above post, here is a link from peak oil dot com:

      http://peakoil.com/business/billions-in-oil-investments-at-risk-from-low-crude-prices

      Billions in oil investments at risk from low crude prices

      More than half a trillion dollars of investments in major oil projects over the next decade are at risk from high costs and low crude oil prices, an environmental think tank said on Friday, warning that shareholders’ returns could suffer.

      “The majors have a potential capital spend of $548 billion over the period 2014-2025 on projects that require a market price of $95/barrel,” CTI said, adding that $357 billion of this is earmarked for as yet undeveloped, high-cost ventures.

      The diminishing returns pie is getting sliced thinner all the time.

    • Gail Tverberg says:

      August 15, 2014 at 12:40 pm

      With recessionary pressures growing in Europe, I think the pressure on oil prices is down. Hopefully the drop stops soon.

       
      • Stilgar Wilcox says:

        August 15, 2014 at 1:11 pm

        Gail, here is an article by the Wall Street Journal about this topic. I was not able to copy & paste from their article so just a bit of information below.

        http://online.wsj.com/articles/oil-prices-tumble-as-demand-flags-1407972596

        ‘Oil prices tumble as demand flags’

        Investors & traders are less worried about oil supplies and more worried about soft demand, due to recession in Europe and less stockpiling by China.

        Oil prices rebounded somewhat from yesterday but Brent is just over 104 a barrel. Also, the stock market was beginning to rebound then tanked, down last I looked over a 100 on the Dow today, but up a bit for the week.

        • Stilgar Wilcox says:

          August 15, 2014 at 1:15 pm

          I just went back to the WSJ link and now it requires a subscription. Oh well.

           
          • Paul says:

            August 15, 2014 at 1:19 pm

            Here’s a secret — when WSJ articles are behind the paywall… copy the headline into a google news search … and voila — the full article

            NEW YORK—The U.S. is staging airstrikes in Iraq, Russian troops are amassing on the Ukraine border and Israel and Hamas are at war.

            Investors and traders say they are worried less about geopolitical threats to oil supplies and more about soft demand. Nicole Friedman joins MoneyBeat with Paul Vigna. Photo: Getty Images.

            All three conflicts have the potential to threaten oil output. But investors and traders say they are worried less about oil supplies and more about soft demand.

            They have sent Brent crude, the benchmark for world oil prices, tumbling this week. Brent hit a 13-month low during intraday trading Wednesday before recovering to end at $104.28 a barrel. Prices have gradually ticked lower since mid-June, retreating more than 9%. The drop has helped bring relief at the pump for U.S. drivers, who are paying an average $3.47 for a gallon of regular gasoline, down from $3.62 a month ago, according to AAA.

            The most recent losses came after the International Energy Agency on Tuesday lowered its demand forecast for 2014, citing weaker-than-expected second-quarter economic growth in developed countries and a drop in oil stockpiling in China.

            Some traders fear sputtering European economies will need less oil, after Italy reported last week it had slipped back into recession.

            Brent hit a 13-month intraday low after the IEA cut its demand view. Associated Press

            Investors are concerned that if demand doesn’t pick up, the market will be swimming in crude. U.S. oil production hit a 27-year high in July, the Energy Information Administration reported Tuesday.

            On Wednesday, the first oil shipment left Libya’s Ras Lanuf terminal since the port was blockaded last year. The supply threats that drove prices higher earlier this year haven’t materialized, either. Fighting in Iraq remains far from the country’s oil fields, while Western sanctions against Russia have largely steered clear of punishing the oil sector.

            For bearish investors, “time is on your side,” said Donald Morton, senior vice president for investment bank Herbert J. Sims & Co. in Haverhill, Mass.

            The bank’s trading desk has been recommending clients bet that oil prices will fall further. “There’s no problem with crude oil in the world,” he said.

            Money managers, including hedge funds, in June placed record bets on rising U.S. and Brent oil prices, but many traders have unwound those wagers since.

            As of Aug. 5, their cumulative bets on rising prices on the Nymex fell to the lowest level since January, while speculative wagers on higher prices for Brent hit the lowest level since February.

            To explain the recent drop in prices, traders and analysts point to mounting evidence that the physical market is oversupplied.

            On Wednesday, the EIA reported an increase of 1.4 million barrels in oil supplies for the week ended Aug. 8, surprising analysts, who had generally predicted a decline. Oil futures on the New York Mercantile Exchange, the U.S. benchmark, ended up slightly at $97.59 a barrel.

            The contract has fallen by about the same amount as Brent since mid-June.

            In Europe, refineries ran at sharply lower rates in June, the IEA said Tuesday.

            Market watchers say cargoes of West African crude, which normally head for Europe or the U.S., had trouble finding buyers at the end of July, a sign of weak demand.

            “It’s a well-supplied market at this stage of the game,” said Roland Austrup, chief executive of Integrated Managed Futures Corp. in Toronto, which manages about $50 million. Mr. Austrup’s fund has a small bearish position on Brent.

            To be sure, many analysts think the market is underestimating the risk of a supply disruption somewhere in the world. A loss of supplies from Iraq, the fifth-largest net oil exporter in 2013, or Russia, the second-largest net exporter, could send prices shooting higher.

            After the supply-driven rally in June, “all of a sudden…demand was essentially playing catch up,” said Harish Sundaresh, commodity strategist and portfolio manager for Loomis, Sayles & Co., a Boston asset manager that oversees about $221 billion. “Unless emerging-market growth picks up, we would have to look to geopolitical reasons or another form of supply disruption to balance the market.”

            Mr. Sundaresh is betting that oil prices will rise as threats to supply will eventually resurface.

            A price spike is “a fair concern to have, certainly, if we do see any surprises on the geopolitical front,” said Lee Kayser, portfolio manager at Russell Investments in Seattle, which manages about $279 billion, including $1.6 billion invested in commodities.

            Russell’s commodity funds have larger investments in oil than is recommended by the index they use as a benchmark, Mr. Kayser said.

            But others say that barring a surprise drop in oil supplies, prices could keep drifting lower. Rising U.S. and Canadian production should keep the market well supplied, reducing the impact of disruptions elsewhere, oil bears say.

            “This reaction over the past week is, I think, highlighting how much of a buffer U.S. oil production growth is to geopolitical risk,” said Ed Kevelson, head of over-the-counter energy markets at brokerage Newedge USA, which is owned by Société Générale. “The pressure’s still on the downside.”

          • Paul says:

            August 15, 2014 at 1:27 pm

            Not a word in that article about the impact lower oil prices will have on capex…. the obvious implication is that big oil was cutting on 110 oil… what will they do with a sub 100 price?

             
            • Stilgar Wilcox says:

              August 15, 2014 at 3:50 pm

              Good point, Paul. But they tend to stick with basic cause and effect, rather than delving into deeper underlying trends, because their advertisers don’t want the stuff that could spook people. BAU or bust! should be the caption under all MSM headlines.

              “…what will they do with sub 100?” Back off the pedal for exploration and acquisitions. As we tick down in price, if the trend continues, all sorts of marginal oil sources start getting mothballed. Starting them back up would require a high price. We are now in the Zone where:

              Oil price drops due to recession
              stocks go down, slow or fast
              consumption increases due to low oil price
              GDP begins to pull us closer to flat-lining
              price of oil rises but is less than the previous price zone due to lower EROEI
              rinse
              repeat
              until oil is dirt cheap & plentiful
              but economy is too weak to mount a rally to break out of a deep recession
              All hell breaks loose

              That’s my take on it anyway

            • Paul says:

              August 15, 2014 at 6:58 pm

              That sounds about right.

               
        • Gail Tverberg says:

          August 16, 2014 at 7:51 am

          Thanks! Clearly a lot of people read falling oil prices a good problem–no problem with supply; oil more affordable. But it has a very definite bad side: cutbacks in future production by oil producers; more civil disorder in oil exporters, in some cases even leading to cut offs of production.

           
      • St. Roy. says:

        August 15, 2014 at 4:00 pm

        Gail. What are sanctions doing to oil demand?

         
        • Gail Tverberg says:

          August 16, 2014 at 8:03 am

          I am not sure if sanctions are having much effect. To the extent that they do have an effect, they would tend to reduce oil demand, because they are making the world a more disconnected place. Russia is no longer importing chickens from the United States, so demand for chickens drops, and the oil that is used to raise those chickens declines. Presumably Russia raises a few more chickens, but it is doubtful that their approach would be as oil-intensive as ours. Perhaps oil exploration is cut back somewhat. Oil exploration also requires oil use. Workers lose their jobs in these industries, also leading to less demand.

           
          • tfouto says:

            August 16, 2014 at 5:05 pm

            Oil should be expensive. Even if economies might have an recede. That would make economies trying to be more oil independent and produce more local food. Be more auto-sufficient.

             
    • InAlaska says:

      August 15, 2014 at 2:03 pm

      Brent is back up to 103.15. I just invested in the ETF to make a quick profit. Maybe I can buy a few more solar panels (;-D

       
    • SlowRider says:

      August 16, 2014 at 12:38 am

      My bet would be that oil doesn’t drop much further at the moment. We should be back to 110 rather than down to 90. For the past 2 years, it almost looks like someone has been keeping it in a tight range. Especially, I like the “analysts” explaining every little move.

       
      • Paul says:

        August 16, 2014 at 2:00 am

        The Fed has tasked their think tanks to work out how they can force the price higher… Clearly they cannot allow oil to drop much below 100…

         
  • Jarle B says:

    August 15, 2014 at 5:33 am

    “UK economy grows at fastest rate since before the financial crisis – live”

    http://www.theguardian.com/business/blog/live/2014/aug/15/markets-end-week-on-a-higher-note-business-live

    Hands up those who believe in these numbers!

    • Rodster says:

      August 15, 2014 at 4:13 pm

      There’s an old saying: “It goes to show how figures lie and liars figure”.

      It’s the same in the US. More people are unemployed and quit looking for work because there are NO GOOD JOBS left, they are overseas but the MSM and Govt keeps telling us how the economy is doing so well and unemployment is at around 6%.

      Yet if you listen or read economist John Williams from Shadowstats.com the real unemployment figure in the US is approaching 26 PERCENT. Big difference between 6 and 26%.

      Oh and the Dollar stores are filing for bankruptcies because their customers don’t have the expendable cash to buy $1 items. This is why we PREPARE. ;)

      • Paul says:

        August 15, 2014 at 6:48 pm

        Indeed – ignore the numbers governments are feeding … and remember — without the massive stimulus that gets pumped out day after day…

        We would sink to the bottom in a second.

      • xabier says:

        August 16, 2014 at 2:07 am

        Rodster

        I think I saw an article about £1 stores in the UK being challenged by……89p stores! I haven’t seen one yet.

    • dolph9 says:

      August 15, 2014 at 4:44 pm

      Well let’s think about it for a second.

      Is human population worldwide still growing? Yes. Is global production of energy still growing? Yes.

      Both of these mean that, incredibly enough, the world system is still growing, and any economy which successfully integrates itself with the global system will thus show growth itself.

      Still, eventually these trends have to reverse, and at roughly the same time.

      • Paul says:

        August 15, 2014 at 6:41 pm

        Look for closely as the UK economy — it is moribund — grocers other than the mega discounters are reporting horrible earnings… the UK is stimulating — primarily with subsidies for housing … they are also continuing to run up massive debts…

        This does not mean they are doing anything better than any other country… the have their own currency so they have the luxury of engaging in such policies while others cannot (or refuse to)

        The global economy is only growing because of massive stimulus projects — see China’s Ghost Cities — building stuff for the sake of building — they might was well employ a 1000000 people with spoons to dig a hole from China to LA.

        They don’t do that because building stuff means raw materials are needed — which stimulates the global economy

        Yes those that still have the means to stimulate by borrowing and printing are faring better than the rest in terms of overall GDP numbers — but if you look at the situation on main street — it is a blood bath.

        There is no recovery in these places — there is only window dressing – Potemkin Villages — all they are doing is the same stuff pre 2008 — we are building to one giant crescendo of a financial collapse..

        You simply cannot print money or build stuff that people do not need — or hand money over to people just to get them to buy houses…

        Even with all these trillions of stimulus we are at stall speed….

        • Lizzy says:

          August 16, 2014 at 9:49 am

          And yet, restaurants in this small town are full; there are queues at the supermarkets; most cars on the road seem recent models; there is a lot of house-building, and no empty homes; there is zero unemployment and very low crime in this area. How can this be? Surveys by the Bank of England show that personal debt levels are much reduced. Je ne comprends pas.

           
          • xabier says:

            August 16, 2014 at 10:12 am

            Lizzy

            The economics editor of the Guardian did a tour of Britain and said that he had the general impression of a third sinking, a third just hanging on, dangerously in debt, and the upper third doing very well thank you with lots of access to even more credit: that’s more than enough to account for the full restaurants, house extensions I suppose? The rather expensive pub-restaurants in all the villages here are usually packed, often with pensioners!

            • xabier says:

              August 17, 2014 at 2:58 am

              One thing to bear in mind about the UK is that the very last things that the modern English will stop spending on -even borrowing to pay for – are food and drink eaten out, and a couple of holidays each year in the sun. Clothes as well, among the fairer sex: so many clothes shops here! And there are still some very well-off pensioners around, eager to enjoy themselves before their personal sun goes down.

              But I’ve noticed talking to owners of smaller businesses in the town that live off discretionary income that things went down in 2008 and haven’t really recovered. A friend with a good art gallery here, selling solid investment-quality pieces rather than limited edition rubbish, saw a whole tier of middle-class customers disappear in 2008, and they haven’t returned -similar story for many. A 40% loss of turn-over since 2008 is very common among these businesses.

              The region I live in -with lots of bio-tech industry and a large and expanding world-class university, has practically zero unemployment, except among the drugged and drunken unemployables of the housing estates (often displaced in menial jobs by Eastern Europeans imported on contracts), and as someone I passed in the street said: ‘This place is buzzing isn’t it?!’ Real estate values make one’s eyes pop out – a lot of income is going to pay that: when interest rates go up, Bang! All pumped up to suit the politicians and banks.

              So, superficially all looks well. But the real stats on indebtedness and quality of work for ordinary people tell their own story about the UK. 60 million plus credit-addicts on a chilly, damp, resource-depleted island without energy or food security and a services economy does not bode well.

            •  Don Stewart says:

              August 17, 2014 at 6:16 am

              Dear Xabier and Other Britain Watchers

              This article contains some facts and some anecdotes about British spending proclivities:

              http://www.economist.com/news/briefing/21611074-how-new-technology-shaking-up-oldest-business-more-bang-your-buck

              ‘The most striking trend our analysis reveals is a drop in the average hourly rate of a prostitute in recent years (see chart 1). One reason is surely the downturn that followed the 2007-08 financial crisis. Even prostitutes working in places that escaped the worst effects have been hit. Vanessa, a part-time escort in southern England, finds that weeks can go by without her phone ringing. Men see buying sex as a luxury, she says, and with the price of necessities rising it is one they are cutting back on. Even when she offers discounts to whip up interest, clients are scarcer than they were.’

              Don Stewart

            •   Paul says:

              August 17, 2014 at 1:27 pm

              Further evidence that the UK GDP numbers are not a reflection of the true economic realities there

               
            •   Paul says:

              August 17, 2014 at 2:04 pm

              A very good point re interest rates… normally if interest rates were so low we’d have hyperinflation … but in times when the deflationary pressures are overwhelming … ZIRP simply keeps things humming … but of course there are massive toxic side effects of ZIRP (too lengthy to get into here) which will eventually unravel the ball of yarn.

               
          •   Paul says:

            August 16, 2014 at 12:32 pm

            When I see such info I ask myself — the EU is a basket case on life support — Japan’s GDP just crash nearly 7% — the US is a total mess — even Germany is now negative on GDP — China is an enormous disaster waiting to happen…

            And yet the UK is immune? How can it be…

            Friends of ours returned the UK a couple of years ago and report that it took forever to find jobs — they ended having to take rather low paid positions and felt lucky to have them.

            The restaurants were full etc.. in the US in early 2007…. because the US was engaging (and continues to engage) in all sorts of games that created false prosperity — kinda like if you had just lost your job and were continuing to live the same lifestyle by charging everything on your credit cards…

            That works for a while — but the end result is obvious.

            The UK – using various tools including piling on incredible amounts of debt onto their existing massive debt…

            It is window dressing — it will not last.

            •   Lizzy says:

              August 16, 2014 at 2:49 pm

              Paul, Xabier, a couple of years ago I would have agreed. But despite everything, today, it seems it’s going well. I haven’t read that article, Xabier. I watch the news, I read papers (but not, ahem! the Guardian), I have friends who are doing very nicely. If either of you were to look here, in South Northants, you’d see the same. As I said, Paul, there is zero unemployment here — employers are advertising everywhere. But yet I know what’s happening, I read the figures. Paul, you’re spot on about the terrible status of the UK economy from a macro level. There is no doubt at all.
              But so far things are carrying on nicely, sort of.

               
            •  Paul says:

              August 16, 2014 at 11:47 pm

              There are without some pockets that are doing ok — I am in Canada this month — the economy is reasonable ok — no sense of doom and gloom — but as a resource exporter Canada is riding the coat tails of countries that are stimulating with trillions of dollars… (China, Japan, US, UK)

              NZ as a food exporter would be in a similar position — likewise Australia…

              But this does not mean all is ok…

              It’s like you are out of a job and your friend is out of a job — and your friend has much bigger limit on his credit card — so he shouts drinks and meals for you every night of the week…

              Sounds like fun…. but of course it will not last…

            •  xabier says:

              August 17, 2014 at 3:01 am

              Paul

              All correct I’d say. But the electorate love well-dressed windows, and that’s what the government are serving up for them in advance of the elections soon to come.

      •  Gail Tverberg says:

        August 16, 2014 at 7:36 pm

        It is tempting to look at totals and think that if population and energy supply are both increasing, everything is OK, but the issue is really keeping the overall system working. Even if energy consumption is rising, there can be huge problems.

        For one thing, expensive energy of a particular kind is not equivalent to less expensive energy of the same kind. For example, high priced oil will make economies that use much of it in their energy mix less competitive. It will tend to push them into recession, and lower their sales, compared to countries that use less oil (and more coal) in their energy mix. It will push the governments of countries using oil into funding deficits.

        High pried electricity is also not equivalent to cheap electricity. Germany is now learning this lesson, as it enters recession. High priced electricity tends to make either governments poor, or citizen’s poor, or both. It tends to make businesses less competitive in the world marketplace. The way Germany has priced renewables, it also tends to drive out electricity generated using natural gas.

        A different issue is the need for oil exporters to make enough revenue from taxes. This can only happen if oil prices are high enough. If they are not, oil exporters start having internal problems, because the government cannot put in place programs citizens expect (food subsidies, jobs programs, desalinization plants for water). Of course, if oil prices are high enough for exporters, they will be too high for the big oil importers.

        With rapidly rising supplies of cheap energy of many types, there tend to be few problems. (This is a reason we have not had a World War since the 1940s.) But once supply energy supply gets tighter and the price for even some types of energy rises, it tends to strangle economies. The most vulnerable economies succumb first (like Egypt and Syria, both former oil exporters), and Greece and Cyprus (both heavy users of oil in their energy mix). The concern is that financial problems will spread to the world as a whole.

    •  atmugh says:

      August 21, 2014 at 5:44 am

      The efficiency of Italy’s economy is also improving since the start of the crisis, as pointed by Ugo Bardi:

      http://cassandralegacy.blogspot.com/2014/08/italy-training-donkey-to-work-without.html

      (I am ironic, naturally)
      Hmm… regular reader of this blog, first time I comment, and take the opportunity to salute Gail’s efforts to explain patiently the nature (and depth) of our predicament.

  •  Jarle B says:

    August 15, 2014 at 5:36 am

    Thanks for this overview, Gail. It’s hard not to believe that you are dead on. Will send the link to some people that need an awakening…

     
  • Pingback: Newsletter AUGUST 2014 Vol. 2 Issue 7 The funnel, the game change and the dialogue. | Stephen Hinton Consulting

  • Top Visited
    Switchboard
    Latest
    Past week
    Past month

    NEWS CONTENTS

    Old News ;-)

          • AlexS says:

            01/16/2016 at 8:23 pm

            I do not think that oil price can reach $65 this year, not to say to average $65.
            But not because "The economy cannot resist high oil prices right now".

            What is particularly wrong with the global economy, that it cannot afford $65?
            Do we have a worldwide recession?
            China's economy is slowing not because of high oil prices, but because of long-term structural issues. Meanwhile, China's oil demand continues to grow.

            Empirical evidence suggests that the "oil burden" (total amount of oil consumption X price of oil) becomes unaffordable for the global economy, when it reaches 5% of global GDP. At $65 it would be only between 2 and 2.5%.

            The key reason for the current glut in the oil market is excess supply, not the weakness of the global economy.

    BC, January 22, 2015 at 6:44 pm

    Economics is politics. Politics is war by other means. War is the business of empire (hegemony). War is good business for imperialists.

    Therefore, economics is the intellectual and political rationalization for the business objectives of imperial expansionism, expropriation, and co-optation of client-states' elites by means of state violence when necessary, which is more often than not when resources become increasingly scarce and the hegemonic frontiers of expansionism are threatened.

    Yet, most Americans do not yet perceive the US as an empire (successor to the British Empire), not surprisingly, which would necessarily require the inference that empires peak, decline, and eventually collapse, and we have been in relative decline since the 1970s-80s, which most of the working-class bottom 90% would have to concede were they honest with themselves and their fellows. And, no, McConnell, Romney, Rubio, Paul, et al., care not about the working-class bottom 90% but themselves and those deep-pocketed Republicans who cut the largest campaign finance checks.

    But one suspects that the 80-90% of the population who were slaves during the Greek city-state dominance and later Roman Empire neither perceived themselves living in the context of imperial decline and incipient collapse, as their daily life experience was preoccupied with acquiescing to their imperial masters' demands and the imperative to survive and thereafter subsist within their circumstances, if they/we're luck . . ., or not.

    Same as it ever was . . .

    Coilin MacLochlainn, January 22, 2015 at 8:19 pm

    Malthus was not wrong, he was right. The reason for that is, the Earth is finite and has limited resources. The human population has reached 7 billion. If it continues to grow, or even if it doesn't, it will exceed the ability of the Earth's remaining land base to support us.

    In fact, it already has. Several of the Earth's planetary limits have already been exceeded and we are cannibalising what remains of the Earth's surviving natural resources just to keep going. What I mean is, we are using up the very resources that we rely on as a species to survive into the future. And at the same time, we are making it impossible for much of the rest of life on Earth to survive, which is why so many species are going extinct now and most will be wiped out before we are done.

    For those of us living in the developed world, it is hard to picture this, because we are living off the exploitation of resources and labour in less well off countries.

    There are also glaring examples of excessive exploitation in the developed world. For example, in California, which leads the world in the production of almonds, walnuts and pistachio nuts, there is not enough surface water available to supply the industry and so nut farmers are irrigating their crops using underground water. With the ongoing drought in California, the underground aquifer is not being recharged, so it won't be long before the nut farmers run out of water and the industry goes bust. It will go bust and it will also leave the aquifer dry, with no possibility of refilling with water while the drought lasts, which could be for years or forever.

    Jan Steinman, January 22, 2015 at 6:26 pm

    "Capital is embodied energy."

    Are you talking about physical capital, such as factories, machines, and such?

    A lot of very smart people seem to think "capital" is little bits of coloured paper, or even invisible magnetic bits on a spinning disk. But I think that's where the second half of your essay (debt) comes into play.

    It would be nice to have some simple term-of-art to distinguish between the two forms of "capital." I agree that physical plant is capital. It may even be that, pre-Bretton Woods, money was an adequate symbol for capital. But it seems to me that there is way more money around than there is physical capital these days.

    garand555, January 21, 2015 at 5:24 pm

    Economics is a pseudo-science, at least the way it is practiced.

    ... ... ...

    InAlaska, January 21, 2015 at 7:58 pm

    Economists endorsed the idea of globalism after it became apparent that without it, national economies could no longer grow. Globalization is going to kill us because it removes from local control the basic production of necessities. Speaking of economics, here is part of a post on The Automatic Earth from yesterday concerning the Davos crowd and the World Economic Forum:

    "When it comes to basic necessities, to food, water and shelter, we shouldn't strive to compete with other economies. That is not good for us, or for our peers in those other economies; it's good only for those who skim off the top. The larger and more globalized the top, the more there is to skim off. All the 'reform' is geared towards making our economies ever more dependent on the global economy. And that is not in our best interest.

    It's not all just even about money, it's about our security, and independence. Everybody likes the idea of being independent, but at the same time few realize that globalization is the exact opposite of independence. Global trade is fine, as long as it's limited to things we don't need to survive, but it's not fine if and when it takes away the ability of a community or a society to provide for itself.

    Protectionism has acquired a really bad reputation, as if it's inherently evil to try and protect your community from being gutted by economic ideas and systems it has no defense against, or to make sure it can generate and provide for its own basics at all times. But that's just propaganda too.

    If our societies are not designed and constructed to provide for themselves, they'll end up with no choice but to go to war with each other. Along the same lines, if our societies don't have strict laws in place that guarantee we can't and won't destroy the natural resources of the land we live on comes with, we'll also end up going to war with each other.

    We're not going to solve the Gordian knot of the entire global economy and all the hubris and propaganda the present leading politicians, businessmen and 'reporters' bring to the table. And we probably shouldn't want to. Our brains did not develop to do things on a global scale. The clowns will blow themselves up sooner or later. We should focus on what we can do, meanwhile, in our immediate surroundings.

    And it's pretty easy from there, really. The economic problems we have are mostly artificial. They have been induced by the broken economic model the Davos crowd, the central bankers and you know who else would have us believe is the one and only, and that they are busy fixing for our sake and greater glory. But they care only about their own glory."

    Gail Tverberg, January 22, 2015 at 8:38 pm

    On the other hand, without the growth that was obtained from globalization, the financial system would have collapsed earlier. So in some sense, we are better off, even if it is not sustainable.

    The US started hollowing out its manufacturing not too long after the oil problems of the 1970s. Japan came first in globalization, before the other Eastern countries.

    InAlaska, January 21, 2015 at 7:24 pm

    Liquid Assets,

    Economists run the Federal Reserve Bank and all the central banks in the world. How has their "straight thinking" worked out? Has the world ever been in such a fiscal mess before? How have all of those over-educated PhDs in Economics done better than an Actuary could do?

    Economics is the dismal "science" in part because it is predicated on the assumption that their can be infinite inputs into the system. Before you insult Gail and suggest she get a "real education," consider that this whole edifice of "Economics" and endless growth is based on and within a finite world.

    escravaisaurabr, January 22, 2015 at 7:33 am
    InAlaska,

    Two perceptive posts you wrote. Thank you.

    I would like to add this post. I think most of you will appreciate. I sure love this post….

    By falak pema

    Economics is a means to achieve an end, like language.

    So linguists are capable of understanding the logic of communication for DECISION MAKING; whether it be in words and intellectual concepts or in numbers/statistics and algorithms.

    The issue here is that perfect markets like perfect speech do not exist for themselves in society, except for the "initiated", but have a different function as a VEHICLE for body politic; which defines the AIMS and uses the means, all the means : of language as of images and of statistics and mathematical constructs.

    So the thesis of the Mises/Hayek type Shamans that Economia is the "be-all" of society is just wrong. No more than the works of Shakespeare or Hugo, or of Picasso etc.

    They do not define politics and power in society. They may influence it but they don't define it's objectives.

    Linguists like economists can add substance to a political construct that defines the power play in civilization. And in that respect markets are just a means and their perfection as important as a perfect face on the screen.

    All imagery or conceptual work in life is virtual.

    It becomes real when it faces the real world of power and its continual balancing act; facts and irreversible acts that define our future as they have our past.

    Chomsky is more relevant today to society than Mises.

    The first analyses real political acts and consequences the other confines himself to theoretical pontification about the real economy looked at through the lens which keeps referring to the mantra of perfect markets.

    Not saying markets are not important just saying they are not ALL important.

    For the Mises theory to become reality we would have to live in a perfect "anarchy" state without government. The last time they wanted the state to "shrivel away" it was called the "ultimate step of communism" and it parented Stalinism. So…you have to know what you wish for in the REAL world.

    History says you are wrong. You keep harping about a system that has gone off the cliff twice because of market forces being spiraled into Vesuvian eruption under irrational exuberance and greed and thanks to lack of Government regulation : in 1929 and 2008.

    You are into DEEP denial of historical FACTS.

    The historical thread shows us neo-feudal oligarchs are just as destructive of wealth creation as are statist hegemonists.

    The only realistic solution is to balance state power and private oligarchy power and make sure NEITHER is in dominant position by having transparent control of public and private spending and by ensuring due diligence and SANCTIONS.

    Today we have a Mussolinian economy of crony collusion between statists and oligarchs. We have the worst of both worlds.

    We need good state governance and non monopolistic private sector innovative investment, compatible with "general good", that does not run us off the cliff in mad speculation nor poison the planet.

    The GDP should be run on an equitable basis between both power structures.

    Whether this divide is 30/70 or 50/50 between private and public and how its used and how its controlled and monitored is the role of the Republic. And it should be debated and then voted and then executed in a legal framework which is NOT CORRUPT.

    http://www.zerohedge.com/news/2014-08-24/you-cant-run-economy-spreadsheets#comment-5138074


    Top Visited
    Switchboard
    Latest
    Past week
    Past month

    NEWS CONTENTS

    Old News ;-)

    Why Energy is Central to the Economy

    Our Finite World

    If the economy is a dissipative system, it is clear that energy must be central to its operation. But suppose that we are coming from a step back, and trying to show that the economy is an energy-based system that grows as more external energy is added.

    Let's start even before humans came onto the scene. All plants and animals need energy of some kind so that the organism can grow, reproduce, move, and sense changes to the environment. For plants, this energy often comes from the sun and photosynthesis. For animals, it comes from food of various kinds.

    All plants and animals are in competition with other species and with other members of their own species. The possible outcomes are

    1. Win and live, and have offspring who might live as well
    2. Lose out and die

    Access to adequate food (a source of energy) is one key to winning this competition. Outside energy can be helpful as well. The use of tools is as approach that is used by some types of animals as well as by humans. Even if the approach is as simple as throwing a rock at a victim, the rock amplifies the effect of using the animal's own energy. In many cases, energy is needed for making a tool. This can be human energy, as in chipping one rock with another rock, or it can be heat energy. By 70,000 years ago, humans had figured out that heat-treating rock made it easier to shape rocks into tools.

    A bigger step forward for humans than learning to use tools–in fact, what seems to have set them apart from other animals–was learning to use fire. This began as early as 1 million years ago. Controlled use of fire had many benefits. With fire, food could be cooked, cutting the amount of time needed for chewing down drastically. Foods that could not be eaten previously could be cooked and eaten, and more nutrition could be obtained from the foods that were eaten. The teeth and guts of humans gradually got smaller, and brains got larger, as human bodies adapted to eating cooked food.

    There were other benefits of being able to use fire. With time freed up from not needing to chew as long, there was more time available for making tools. Fire could be used to keep warm and thus expand the range where humans could live. Fire could also be used to gain an advantage over other animals, both in hunting them and in scaring them away.

    Humans were incredibly successful in their competition with other species, killing off the top carnivore species in each continent as they settled it, using only simple tools and the burning of biomass. According to Paleontologist Niles Eldridge, the Sixth Mass Extinction began when humans were still hunter-gatherers, when humans first moved out of Africa 100,000 years ago. The adverse impact of humans on other species grew significantly greater, once humans became farmers and declared some plants to be "weeds," and selected others for greater use.

    In many ways, the energy-based economy humans have built up over the years is simply an approach to compensate for our own feeble abilities:

    A key component in any of these types of adaptations is energy of some appropriate kind. This energy can come in various forms:

    One key use of supplemental energy is to reduce the amount of human labor needed in farming, freeing-up people to work at other types of jobs. The chart below shows how the percentage of the population working in agriculture tends to drop as the amount of supplementary energy rises.

    Figure 2. Percent of Workforce in Agriculture based on CIA World Factbook Data, compared to Energy Consumption Per Capita based on 2012 EIA Data.

    Figure 2. Percent of Workforce in Agriculture based on CIA World Factbook Data, compared to Energy Consumption Per Capita based on 2012 EIA Data.

    The energy per capita shown on Figure 2 is includes only energy sources that are bought and sold in markets, and thus that can easily be counted. These would include fossil fuel energy and electricity made from a variety of sources (fossil fuels, hydroelectric, nuclear, wind, solar PV). It does not include other sources of energy, such as

    Besides reducing the proportion of the population needed to work in agriculture, the other things that "modern" sources of energy do are

    1. Allow many more people to live on earth, and
    2. Allow those people to have much more "stuff"–large, well-heated homes; cars; lighting where desired; indoor bathrooms; grocery stores filled with food; refrigeration; telephones; television; and the Internet.

    Figure 3 below shows that human population has risen remarkably since the use of modern fuels began in quantity about 200 years ago.

    Figure 3. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

    Figure 3. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

    Besides more and better food, sanitation, and medicine, part of what allowed population to rise so greatly was a reduction in fighting, especially among nearby population groups. This reduction in violence also seems to be the result of greater energy supplies. In the animal kingdom, animals similar to humans such as chimpanzees have territorial instincts. These territorial instincts tend to keep down total population, because individual males tend to mark off large areas as territories and fight with others of their own species entering their territory.

    Humans seem to have overcome much of their tendency toward territoriality. This has happened as the widespread availability of fuels increased the use of international trade and made it more advantageous for countries to cooperate with neighbors than to fight with them. Having an international monetary system was important as well.

    How the System of Energy and the Economy "Works"

    We trade many products, but in fact, the "value" of each of these products is very much energy related. Some that don't seem to be energy-related, but really are energy-related, include the following:

    Two closely related concepts are

    Technology and specialization are ways of building complexity into the system. Joseph Tainter in the Collapse of Complex Societies notes that complexity is a way of solving problems. Societies, as they have more energy at their disposal, use the additional energy both to increase their populations and to move in the direction of greater complexity. In my Figure 1 (showing my representation of an economy), more nodes are added to the system as complexity is added. In a physics sense, this is the result of more energy being available to flow through the economy, perhaps through the usage of a new technology, such as irrigation, or through using another technique to increase food supply, such as cutting down trees in an area, providing more farmland.

    As more energy flows through the system, increasingly specialized businesses are added. More consumers are added. Governments often play an increasingly large role, as the economy has more resources to support the government and still leave enough resources for individual citizens. An economy in its early stages is largely based on agriculture, with few energy inputs other than free solar energy, human labor, animal labor, and free energy from the sun. Extraction of useful minerals may also be done.

    As modern energy products are added, the quantity of energy (particularly heat energy) available to the economy ramps up quickly, and manufacturing can be added.

    Figure 4. Annual energy consumption per head (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Wrigley

    Figure 4. Annual energy consumption per head (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Wrigley

    As these energy products become depleted, an economy tends to shift manufacturing to cheaper locations elsewhere, and instead specialize in services, which can be provided with less use of energy. When these changes are made, an economy becomes "hollowed out" inside–it can no longer produce the basic goods and services it could at one time provide for itself.

    Instead, the economy becomes dependent on other countries for manufacturing and resource extraction. Economists rejoice at an economy's apparently lesser dependence on fossil fuels, but this is an illusion created by the fact that energy embodied in imported goods is never measured or considered. The country at the same time becomes more dependent on suppliers from around the world.

    The way the economy is bound together is by a financial system. In some sense, the selling price of any product is the market value of the energy embodied in that product. There is also a cost (which is really an energy cost) of creating the product. If the selling cost is below the cost of creating the product, the market will gradually rebalance, in a way that matches goods and services that can be created at a break-even cost or greater, considering all costs, even indirect ones, such as taxes and the need for capital for reinvestment. All of these costs are energy-related, with some of this energy being human energy.

    Both (a) the amount of goods and services an economy produces and (b) the number of people in an economy tends to grow over time. If (a), that is, the amount of goods and services produced, is growing faster than (b), the population, then, on average, individuals find their standard of living is increasing. If the reverse is the case, individuals find that their standard of living is decreasing.

    This latter situation, one of a falling standard of living, is the situation that many people in "developed" countries find themselves in now. Because of the networked way the economy works, the primary way that this lack of goods and services is transmitted back to workers is through falling inflation-adjusted wages. Other mechanisms are used as well: fewer job openings, government deficits, and eventually debt defaults.

    If the situation is reversed–that is, the economy is producing more goods and services per capita–the way this information is "telegraphed" back to the people in the economy is through a combination of increasing job availability, rising inflation adjusted-wages, availability of new inexpensive products on the market place, and government surpluses. In such a situation, debt is likely to become increasingly available because of the apparently good prospects of the economy. The availability of this debt then further leverages the growth of the economy.

    External Energy Products as a Way of Leveraging Human Energy

    Economists tell us that value comes from the chain of transactions that are put in place whenever one of us buys some kind of good or service. For example, if I buy an apple from a grocery store, I set up a chain of payments. The grocer pays his employees, who then buy groceries for themselves. They also purchase other consumer goods, pay income taxes, and perhaps buy oil for their vehicles. The employees pay the stores they buy from, and these payments set up new chains of transactions indirectly related to my initial purchase of an apple.

    The initial purchase of an apple may help also the grocer make a payment on debt (repayment + interest) the store has, perhaps on a mortgage. The owner of the store may also put part of the money from the apple toward paying dividends on stock of the owners of the grocery story. Presumably, all of the recipients of these amounts use the amounts that initially came from the purchase of the apple to pay additional people in their spending chains as well.

    How does the use of oil or coal or even the use of draft animals differ from simply creating the transaction chain outlined above? Let's take an example that can be made with either manual labor plus some embodied energy in tools or with the use of fossil fuels: shoes.

    If a cobbler makes the shoes, it will likely take him quite a long time–several hours. Somewhere along the line, a tanner will need to tan the hide in the shoe, and a farmer will need to raise the animal whose hide was used in this process. Before modern fuels were added, all of these steps were labor intensive. Buying a pair of shoes was quite expensive–say the equivalent of wages for a day or two. Boots might be the equivalent of a week's wages.

    The advantage of adding fuels such as coal and oil is that it allows shoes to be made more cheaply. The work today is performed in a factory where electricity-powered machines do much of the work that formerly was done by humans, and oil-powered vehicles transport the goods to the buyer. Coal is important in making the electricity-powered machines used in this process and may also be used in electricity generation. The use of coal and oil brings the cost of a pair of shoes down to a much lower price–say the equivalent of two or three hours' wages. Thus, the major advantage of using modern fuels is that it allows a person's wages to go farther. Not only can a person buy a pair of shoes, he or she has money left over for other goods.

    The fact that the wage-earner can now buy additional goods with his income sets up additional payment chains–ones that would have not been available, if the person had spent a large share of his wages on shoes. This increase in "demand" (really affordability) is what allows the rest of the economy to expand, because the customer has more of his wages left to spend on other goods. This sets up the growth situation described above, where the total amount of goods and services in the economy expands faster than the population increases.

    Thus, the big advantage of adding coal and oil to the economy was that it allowed goods to be made cheaply, relative to making goods with only human labor. In some sense, human labor is very expensive. If a person, using a machine operated with oil or with electricity made from coal can make the same type of goods more cheaply, he has leveraged his own capabilities with the capabilities of the fuel. We can call this technology, but without the fuel (to make the metal parts used in the machine, to operate the machinery, and to transport the product to the end user), it would not have been possible to make and transport the shoes so cheaply.

    All areas of the economy benefit from this external energy based approach that essentially allows human labor to be delivered more efficiently. Wages rise, reflecting the apparent efficiency of the worker (really the worker + machine + fuel for the machine). Thus, if a worker has a job in the economy affected by this improvement, he may get a double benefit–higher wages and plus the benefit of the lower price of shoes. Governments will get higher tax revenue, both on wages (because of the new value chain and well as the higher wages from "efficiency"), and on taxes paid relating to the extraction of the oil, assuming the extraction is done locally. The additional government revenue can be used on roads. These roads provide a way for shoe manufacturers to deliver their goods to more distant markets, further enhancing the process.

    What happens if the price of oil rises because the cost of extraction rises? Such a rise in the cost of extraction can be expected to eventually take place, because we extract the oil that is easiest and cheapest to extract first. When additional extraction is performed later, costs are higher for a variety of reasons: the wells need to be deeper, or in more difficult to access location, or require fracking, or are in countries that need high tax revenue to keep local populations pacified. The higher costs reflect that we are using are using more workers and more resources of all kinds, to produce a barrel of oil.

    Some would look at these higher costs as a "good" impact, since these higher costs result in new payment chains, for example, related to fracking sand and other products that were not previously used. But the higher cost really represents a type of diminishing returns that have a very adverse impact on the economy.

    The reason why the higher cost of oil has an adverse effect on the economy is that wages don't go up to match this new set of oil production costs. If we look back at the previous example, it is somewhat like going part way back to making shoes by hand. Economists often remark that higher oil prices hurt oil importers. This is only half of the problem, though. Higher costs of oil production result in a situation where fewer goods and services are produced worldwide(relative to what would have otherwise been produced), because the concentrated use of resources by the oil sector to produce only a tiny amount more oil than was produced in the past. When this happens, fewer resources (including workers) are left for the rest of the world to produce other products. The growing use of resources by the oil sector is sort of like a growing cancer sapping the strength of a patient. Oil importing nations take a double "hit," because they participate in the world drop in output of goods, and because as importers, they miss out on the benefits of extracting and selling oil.

    Another way of seeing the impact of higher oil prices is to look at the situation from the point of view of consumers, businesses and governments. Consumers cut back on discretionary spending to accommodate the higher price of oil, as reflected in oil and food prices. This cutback triggers whole chains of cutbacks in other buying. Businesses find that a major cost of production (oil) is higher, but wages of buyers are not. They respond in whatever ways they can–trimming wages (since these are another cost of production), outsourcing production to a cheaper part of the world, or automating processes further, cutting more of the high human wages from the process. Governments find themselves saddled with more unemployment claims and lower tax revenue.

    In fact, if we look at the data, we see precisely the expected effect. Wages tend to rise when oil prices are low, and lose the ability to rise when oil prices are high (Figure 5). The cut off price of oil where wages stop rising seems to be about $40 per barrel in the United States.

    Figure 5. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

    Figure 5. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

    What if oil prices are artificially low, on a temporary basis? The catch is that not all costs of oil producing companies can be paid at such low prices. Perhaps the cost of operating oil fields still in existence will be fine, and the day-to-day expenses of extracting Middle Eastern oil can be covered. The parts of the chain that get squeezed first seem to be least essential on a day to day basis–taxes to governments, funds for new exploration, funds for debt repayments, and funds for dividends to policyholders.

    Unfortunately, we cannot run the oil business on such a partial system. Businesses need to cover both their direct and indirect costs. Low oil prices create a system ready to crash, as oil production drops and the ability to leverage human labor with cheaper sources of energy decreases. Raising oil prices back to the full required level is likely to be a problem in the future, because oil companies require debt to finance new oil production. (This new production is required to offset declines in existing fields.) With low oil prices–or even with highly variable oil prices–the amount that can be borrowed drops and interest costs rise. This combination makes new investment impossible.

    If the rising cost of energy products, due to diminishing returns, tends to eliminate economic growth, how do we work around the problem? In order to produce economic growth, it is necessary to produce goods in such a way that goods become cheaper and cheaper over time, relative to wages. Clearly this has not been happening recently.

    The temptation businesses face in trying to produce this effect is to eliminate workers completely–just automate the process. This doesn't work, because it is workers who need to be able to buy the products. Governments need to become huge, to manage transfer payments to all of the unemployed workers. And who will pay all of these taxes?

    The popular answer to our diminishing returns problem is more efficiency, but efficiency rarely adds more than 1% to 2% to economic growth. We have been working hard on efficiency in recent years, but overall economic growth results have not been very good in the US, Europe, and Japan.

    We know that dissipative systems operate by using more and more energy until they reach a point where diminishing returns finally pushes them into collapse. Thus, another solution might be to keep adding as much cheap energy as we can to the system. This approach doesn't work very well either. Coal tends to be polluting, both from an air pollution point of view (in China) and from a carbon dioxide perspective. Nuclear has also been suggested, but it has different pollution issues and can be high-priced as well. Substituting a more expensive source of electricity production for an existing source of energy production works in the wrong direction–in the direction of higher cost of goods relative to wages, and thus more diminishing returns.

    Getting along without economic growth doesn't really work, either. This tends to bring down the debt system, which is an integral part of the whole system. But this is a topic for a different post.

    Rodster, January 21, 2015 at 11:27 am

    "I have been investigating this topic and have come to the conclusion that both energy and debt play an extremely important role in an economic system."

    Spot on Gail, as usual !

    Michael Pinto did an interview with Greg Hunter and he said there is a direct correlation between low fuel prices and economic activity and the reverse is true. When energy pricing GOES UP, they economy goes in the opposite direction. In fact as he mentioned fuel and energy pricing also affects demand for things like copper, etc. The Baltic Dry Index activity reflects lower growth in the global economy. ALL feedback to energy costs.

    grobertson1, January 21, 2015 at 6:43 pm
    .Knowing this.
    What if you were to create a crisis,

    or take a modest concern and blow it out of proportion,

    and then have the Government spend billions of dollars to solve it.

    And though billions spent artificially supported job creation, while solving little.

    Spending did in fact increase employment, as well divert attention from other crisis.

    Hmmmm.

    Of course you would have to pay the debt later, but years from now and someone

    else could figure that out.

    Hmmmm.

    Global warming. Could that possibly fit the category.

    Matthew Krajcik, January 21, 2015 at 6:56 pm
    Has any carbon capture or emissions reductions actually occurred? No? Huh. Looks like this isn't the crises you are looking for.
    grobertson1, January 21, 2015 at 7:05 pm
    Matthew, you are correct. Carbon capture has not been significant neither have carbon reductions, in fact, carbon emissions over the past 20 years have increased significantly.

    However, despite the fact carbon emissions have increased significantly over the past 20 years, the global temperature has not, in fact it increased little if not at all, it is commonly referred to as a "pause".

    It is man's arrogance to believe we may control the climate, certainly all forms of pollution should be curtailed, from plastic bottles, to nuclear, but a concern that global temperature may rise 1 degree C over the next 100 years, whilst we all know technology will increase exponentially over the next 100 years, makes carbon emissions to me, a modest concern blown into a crisis. I don't think there is any justification for companies like Solyndra being granted millions, I think there are far better ways to spend your and my dollars.

    Matthew Krajcik, January 21, 2015 at 7:09 pm
    "whilst we all know technology will increase exponentially over the next 100 years,"

    I don't think most of us even suspect technology will continue to increase exponentially, let alone know it.

    You expect BAU to continue for 100+ years? Exponential growth forever? How?

    Gail Tverberg, January 22, 2015 at 7:53 pm
    I suppose if you look at the models of mainstream economists, that is your conclusion.
    grobertson1, January 21, 2015 at 7:10 pm
    It is estimated the in some 2 year time period Solyndra spent $344 million building a factory and $660 million on production, creation, administration, etc etc. Perhaps my numbers are off, I welcome yours.

    I surmise, had that same nearly 1 billion dollars been spent on cleaning plastic from the oceans, I believe we would all be a lot better off.

    Had that same 1 billion dollars been spent buying rain forest in the Amazon and protecting land, indigenous people, and the environment, I know we would all be better off.

    Matthew Krajcik, January 21, 2015 at 9:29 pm
    "Had that same 1 billion dollars been spent buying rain forest in the Amazon and protecting land, indigenous people, and the environment, I know we would all be better off."

    We cannot know how execution of a plan will be until it happens. Obviously, if it was known that Solyndra would fail, it would not have been subsidized or even invested in, in the first place.

    Likewise, we cannot know what would happen if the US Federal government started buying up land in Brazil, what the costs and consequences would be until after it happened.

    Or if the US Federal government spent $1 billion on cleaning up the Great Pacific Garbage patch, how that would have turned out; would they have used the Navy, or auctioned it off to a private bidder, or simply given the contract to some cronies without competition? Would they have screwed up and ended up with a huge oil spill along with the plastic, or succeeded wonderfully and made the world a better place?

    Ken Barrows, January 21, 2015 at 7:13 pm
    Not again with the "temperature hasn't risen at all." 1998 was an outlier. 13 of the 15 hottest years globally on record (135 years) in the 21st century. Grobertson1, do a little more than talking points.
    grobertson1, January 21, 2015 at 7:37 pm
    Ecuador offered 8.1 million hectares of its rainforest for sale to the world.

    http://www.theguardian.com/world/2013/aug/16/ecuador-approves-yasuni-amazon-oil-drilling

    Offered for 3.6 Billion.

    Estimated is the world spends some 22 billion a year on global warming.

    Had the UN/ World Governments come together and spent 3.6 Billion they could have bought and preserved the environment, the indigenous tribes, and stopped oil from being drilled and stopped carbon from being released.

    No one cared, and keeping the oil in the ground, may have prevented 400m tonnes of carbon dioxide.

    Now the Chinese are drilling oil.

    – If the world really wanted to do something the fastest, cheapest, easiest, least expensive thing to do would have been to buy that rainforest.

    Why didn't they buy the rainforest if the real goal was to stop carbon emissions and global warming ?
    Matthew Krajcik, January 21, 2015 at 9:47 pm
    "Why didn't they buy the rainforest if the real goal was to stop carbon emissions and global warming ?"

    Who said that was their goal?

    There were/are two competing plans. One is cap-and-trade energy credits, which simply moves pollution from developed countries to developing countries to get developing countries to have industrial jobs and consume more goods and borrow more money, while lining the pockets of big financial firms.

    The other plan is carbon taxes, which is to create new bureaucracies with more government employees with more regulations and paperwork.

    If all they wanted was to reduce carbon emissions, they could just increase taxes directly on oil, coal and natural gas based on their average contribution to global warming. What people want, and what the lobbyists, politicians, bureaucrats and bankers want are often times not the same thing.

    Gail Tverberg, January 22, 2015 at 8:28 pm

    Too busy collapsing otherwise.

    Olsen, January 22, 2015 at 4:36 pm

    http://arctic-news.blogspot.ca/2015/01/temperature-rise.html

    Øyvind Holmstad, January 22, 2015 at 12:28 am

    While most sceptics think IPPC overestimates, there are too very serious people that think they underestimate a lot. The joker is methane. There is thousands of Gt methane stored in the permafrost. An estimate suggests about 50 Gt is about to be released, a tenfold of todays levels. But nobody really knows: http://permaliv.blogspot.no/2015/01/the-methane-disaster-awaits-us.html

    I think the best is a rapid collapse of civilization, as this might give survivors and allows a new start for humanity. The alternative might mean a collapse in methane release, which could ultimately lead to Venus-conditions.

    Matthew Krajcik, January 22, 2015 at 2:21 am
    "The alternative might mean a collapse in methane release, which could ultimately lead to Venus-conditions."

    Why now? Why didn't the methane destabilize and turn the planet into another Venus when the planet was 8 degrees warmer?

    Matthew Krajcik, January 22, 2015 at 6:51 pm

    If Guy McPherson is right, we're all going to die and there is nothing we can do about it except pray. There is zero value in believing in what he says.

    Julian Brown, January 23, 2015 at 10:03 am

    Although I am physicist, I was unaware of the methane threat until very recently. Since each CH4 is about 100 times more heat-trapping than each CO2 (BTW: the times 28 factor one reads is rubbish and the result of double-counting), the contribution to radiative forcing from methane is already comparable to that due to CO2. Whilst a methane burp would push up global temperatures even further, we know it wouldn't destroy the ecosphere, for the simple reason that it has happened periodically in the planet's recent past. Just because humans will be the trigger this time around doesn't alter the size of the bomb. There is a lot of silly scaremongering on this issue e.g. the NatureBatsLast blog.

    A methane burp is very likely to occur in the coming century and would probably destroy modern civilization though.

    Just trying to be positive !

    Coilin MacLochlainn, January 22, 2015 at 2:36 pm

    For one, technology will not increase in the absence of energy and, as Gail has pointed out, the supply of cheap energy is dwindling and will soon dry up.

    Secondly, to think that man is incapable of influencing climate is quite frankly, crazy, given the scale of damage to the Earth's atmosphere, climate and biosphere already on record, as well as the sixth mass extinction which began 100,000 years ago and is now accelerating to the point where few if any wild creatures of any size will survive this century, and all because of us; we started the problem that long ago, my friend. We are in the Anthropocene, man! This means we, the human species, is now affecting all life on Earth and changing how the biosphere functions. Fasten your seatbelts, we're in for a very rough ride and if there is still a billion living human beings left on the planet by 2100, it means we will have done a good job in saving something out of this human-induced disaster.

    grobertson1, January 21, 2015 at 7:01 pm

    I mention briefly, this is not to say I do not support what Germany did in

    cutting off all nuclear.

    Until and unless we are able to properly dispose of nuclear waste, certainly

    we should not produce it in abundance. Until and unless we are not able

    to safely run a nuclear facility, we should run very few, and those very few

    should be with the most recent technology and on the safest ground.

    Fukishima has given us a lesson, unfortunately few have realized it.

    baldski, January 21, 2015 at 10:44 pm

    So, I take it, grobertson, you are a climate change denier. Have you ever asked yourself the question of how all that carbon got into the ground in the first place? What were the climate conditions in the pre-Cambrian or other such era, that allowed huge algae blooms to occur and fall to the bottom of shallow seas and be subducted by plate tectonics into the earth strata as modern petroleum theory postulates? What do you think? Was the earth hot in order to bury oil in Alaska?
    Gail Tverberg, January 23, 2015 at 8:47 am
    Let's stop talking about climate change. If financial collapse brings down the economy, hardly any of us are going to be around to observe it, assuming it happens. The earth's ecosystems will recover from climate change; it is human civilization that likely won't–but human civilization has huge other challenges, as I keep pointing out.

    Climate change models haven't built financial collapse into them, so the story they are telling is seriously distorted. Climate change is popular from a political point of view, because it takes peoples eyes off of our (other) close at hand problems. It is popular with scientists, because it generates huge funding for studying this subject, whether or not we can do anything about it. The one thing we can do that is likely to impact the course of climate change is to collapse the economy, and that seems to be happening already.

    grobertson1, January 21, 2015 at 6:52 pm
    To be candid, I think the Bible taught us this.

    Cycles, 7 years production, 7 years famine.

    OPEC was able to control production and price, but now that control was lost, so these cycles for a time were periodically held, now we see the cycles because the control was lost.

    Soon we will see oil rig cut back, exploration and drilling cut back, then excess consumed, and then demand exceed supply because rig, exploration and drilling were cut back.

    The price shall then rise again. Cycles – then when price rises, more drilling, exploration and rigs, and the price falls.

    Biblical.
    Matthew Krajcik, January 21, 2015 at 6:58 pm
    "To be candid, I think the Bible taught us this.

    Cycles, 7 years production, 7 years famine."

    The Famine in Egypt was a one-time thing, not a repeating cycle. You are perhaps confusing that with leaving fields fallow every seventh year, and the 50th year of Jubilee with debt forgiveness and returning property to the original owners.

    grobertson1, January 21, 2015 at 7:23 pm
    The Bible I believe to be based in good part on fact. But I believe the Bible is in large part written to provide moral teachings.

    The moral teaching of the 7 year famine, in my opinion, is to count on cycles, in times of plenty, put something aside in case there are times of little.

    Whether that be money or food, be prepared, put a little in the bank.

    The point was, that If not for OPEC, meaning price and quantity control, the price of oil would not have done what it did. Just like De Beers diamond cartel.

    As OPEC lost its control over price and quantity, normal cycles resumed.

    I do not think Gail, with all due respect to Gail, mentioned OPEC and its control.

    Clearly for many years OPEC set the quantity and pricing, and did so based on

    part on wages and economy. The price of oil was artificially controlled for many years, we are just now, and for many reasons, seeing the loss of that control.

    Matthew Krajcik, January 21, 2015 at 9:32 pm
    "As OPEC lost its control over price and quantity, normal cycles resumed."

    OPEC has not lost control. Demand fell below supply, due to recession partially caused by higher oil prices, and partially due to US fracking bringing more oil online.

    They requested that the US set production targets the same as OPEC countries, America refused, so OPEC chose to allow the market to be glutted to wipe out their high cost competitors.

    Gail Tverberg, January 22, 2015 at 8:09 pm

    I am not convince that OPEC has the control that most people think it has.

    There is one theory that I think might have some validity, and that is that the relatively high but level prices we had from 2011 to mid 2014 were the result of some sort of futures market manipulation, using lease and buy-backs of oil in the futures market using more or less free QE money. The perpetrators could have been anyone who wanted prices high–Saudis, or US shale or Canadian interests. Once the United States QE money disappeared, the price fell flat. The oil prices starting rising at the end of 2008, precisely at the time the QE money was added, making a person suspicious that something involving QE money could be going on behind the scenes.

    Coilin MacLochlainn, January 22, 2015 at 3:13 pm

    The Bible? You really are clutching at straws, Grobertsoni. Don't you know that anything in the Old Testament, including '7 years production, 7 years famine,' was based on conditions pertaining over 2,000 years ago? A time when, incidentally, the total human population on planet Earth was only 241 million and they had barely discovered how to produce iron.

    Even then, humans were destroying the biosphere very rapidly, burning down the forests to keep warm, smelt iron and build ships. Besides ridding the Earth of most of its great mammals (the size and number of which are barely imaginable today), we turned rainforests into Sahara Desert, turned the Australian outback from lush forest into arid desert, denuded the landscapes of Greece and southern Spain which are now almost desert but were once covered in lush forests, and so on.

    We really are in the last stages of destroying the biosphere, with deforestation proceeding so quickly it is unlikely any tropical rainforests will survive by the end of this century.

    And that is just a nano-second of time in geological terms. It is happening with incredible speed, like all of the other devastating human assaults on nature. The fisheries of the seas are expected to be wiped out, extinct, by 2050. Nothing is protected anymore. The world has been captured by corporate interests and every last resource in nature is being monetised, exploited and depleted as we speak. The Canadian boreal forests are being turned into lifeless lunar landscapes to expose their tar sands. This is what 'greed is good' really means. This is the impact of Wall Street with no bounds and the corporate world destroying what is left of what humanity, and life on Earth, needs to survive. Get your head together, Grobertsoni, and pray to your god, and mine, that we deal with all this in time, or we are totally ruined.

    Coilin MacLochlainn, January 22, 2015 at 8:33 pm
    That was millions of years ago. Climate changes within the last 10,000 years enlarged a small Sahara. Deforestation by humans did the rest and it continues today. The Romans got most of their lions for the Colosseum from the Sahara, when it still had grasslands. The southern boundary of the Sahara has been creeping south, through the Sahel, as deforestation and drought kills off all vegetation.

    VPK, January 21, 2015 at 12:32 pm

    "Eni warns oil may shoot up to $200 without Opec cuts

    Italian oil group Eni has warned oil could shoot up to $200 a barrel if the Opec cartel fails to cut supplies.

    Eni's chief executive, Claudio Descalzi, said the oil industry would cut capital spending by 10-13% this year because of slumping prices.

    He said that would create longer-term shortages and sharp price rises in four to five years' time.

    Mr Descalzi was speaking at the World Economic Forum in the Swiss resort of Davos.

    He said: "Opec is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way."

    Politicians, economists and industry leaders in Davos have been voicing their worries over the impact of lower prices.

    We worry a little bit that the price signal may give disincentive for new energy types to develop, and could reduce investment in new non-fossil energy" Zhou Xiaochuan People's Bank of China governor

    Total and BHP Billiton both said on Wednesday that they would cut back on shale oil projects.

    Opec secretary general Abdullah al-Badri, also speaking at Davos, defended the group's decision not to cut output. …"We will go back to normal very soon," he said.

    http://www.bbc.com/news/business-30913321

    Thank you again, Gail, for fitting all the pieces of the puzzle together for us all.

    As you stated, interesting times ahead!

    Matthew Krajcik, January 21, 2015 at 3:46 pm
    It seems Claudio is assuming that if supply falls and prices rise, demand will stay the same. I suspect demand will collapse well before $200 per barrel.
    Gail Tverberg, January 22, 2015 at 11:37 am
    Our system needs oil. There is a real chance that there will be other changes as well at high prices – businesses closing, debt defaults. Everything is hooked together.
    Prices don't respond as expected. I need to write about that also.
    michael jones, January 21, 2015 at 5:44 pm
    Schreiber ended his presentation that day with a quote from economist Rudi Dornbusch: "In economics, things take longer to happen than you think they will, and then happen faster than you thought they could."

    Druckenmiller Alums at PointState Make $1 Billion on Oil

    By Katherine Burton, Kelly Bit and Simone Foxman

    Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction.

    "We believe crude oil is going lower - much lower," Schreiber, 42, told the audience of roughly 3,000 investors, including some of the biggest money managers in the industry. "If you are long, I'm sorry for you." Then he showed a slide of a car stuffed with clowns.

    The New York-based investment firm's profit was about $2 billion in 2014 with about half of that from the oil trade, according to people familiar with the matter, who asked not to be identified because the firm is private.

    Quoting Led Zeppelin's "The Song Remains the Same," he said the same scenario had unfolded in the natural gas market, where increased production had driven the commodity down.

    For PointState, it was a blip. The firm's other $1 billion profit last year included a big wager on healthcare stocks and other macroeconomic themes, said the people.

    You can make $$$ on thw way up or on the way DOWN!

    Trevor J, January 22, 2015 at 9:51 am
    The fact that the 'cream' of our society is fixated on making $$$ and not creating wealth (a big difference) is what will help cause our downfall.

    Gail Tverberg, January 22, 2015 at 5:18 pm

    True. It's only the oil drillers who (after their hedges run out) can't make profit on the way down.
    richard, January 22, 2015 at 6:11 pm
    Prof Keen had something recently – a lecture in Berlin IIRC, debunking buyer preferences – I'm not sure if that is what you meant.

    Also, regarding the oil price, I have to wonder what is "normal".

    richard, January 23, 2015 at 3:22 am
    http://www.debtdeflation.com/blogs/2014/12/08/talks-in-germany/

    "Berlin Lec­ture Pow­er­point Slides: Why Neo­clas­si­cal Eco­nom­ics can't explain mar­ket demand or supply"

    Liquid Assets, January 21, 2015 at 12:50 pm

    An Actuary explaining economics is like having your auto mechanic remove your appendix.

    Attend your local junior college and take an economic and physics class. Get a real education.

    garand555, January 21, 2015 at 1:19 pm
    An economist explaining economics is like a voodoo priest performing voodoo.
    Liquid Assets, January 21, 2015 at 4:28 pm
    Straight Thinking in Economics

    Straight thinking is hard work. Few of us have acquired the careful, orderly mental habits and discipline demanded by straight thinking. For many people straight thinking is especially difficult in economics. Not that economics is inherently more difficult of more complex than many other fields. But economics is so mixed up with our everyday lives that, without realizing it, we have accumulated a mass of opinions, ideas, hearsay and half-truths that subtly dominate our minds when economic questions arise.

    Matthew Krajcik, January 21, 2015 at 4:36 pm
    Also, Economics is not a real science with repeatable tests and results except very small tests with small groups of people testing for very specific things. There are several schools of Economics, each with their own doctrines and perspectives and solutions.
    Liquid Assets, January 21, 2015 at 4:48 pm
    Social scientist, unfortunately can seldom controlled experiments to validate theories. So how can economists be sure their theories are right?

    The answer is that when they state a theory they then go out into the real world to see how well it works.

    unwillinglemming, January 21, 2015 at 5:09 pm
    It would seem according to several academics in the know that many economists are unable to do this.

    Daniel Kahneman, Steve Keen, Charles Hall, David Murphy (astrophysics, I know you like physics as well!)

    As for beliefs and opinions, we all swim in a see of them and by their very nature we often miss our own assumptions (see Kahneman)

    ps I still not clear what the specific issue(s) that you have with Gail's post are?

    Liquid Assets, January 21, 2015 at 6:12 pm

    Unwilling,

    To start with, devices, humans and animals are not energy in the context of economics and physics, unless you want to burn them as a heat source which is not the context here. They consume energy, produce waste, transfer energy and made products.

    In economics humans are labor. Animals and devices are capital which all can be used in the production of goods and services.

    Gail Tverberg, January 22, 2015 at 6:19 pm

    Maybe the division is arbitrary, and wrong for understanding what is really happening. The various types of energy I describe are substitutable. Capital is embodied energy.

    Jan Steinman, January 22, 2015 at 6:26 pm

    "Capital is embodied energy."

    Are you talking about physical capital, such as factories, machines, and such?

    A lot of very smart people seem to think "capital" is little bits of coloured paper, or even invisible magnetic bits on a spinning disk. But I think that's where the second half of your essay (debt) comes into play.

    It would be nice to have some simple term-of-art to distinguish between the two forms of "capital." I agree that physical plant is capital. It may even be that, pre-Bretton Woods, money was an adequate symbol for capital. But it seems to me that there is way more money around than there is physical capital these days.

    Jan Steinman, January 21, 2015 at 7:37 pm

    "when they state a theory they then go out into the real world to see how well it works."

    Want to know the difference between science and economics?

    Science uses mathematics to predict the future; economics uses statistics to predict the past.

    garand555, January 21, 2015 at 5:24 pm

    Economics is a pseudo-science, at least the way it is practiced. Most economists include neither debt nor resource scarcity in their models. That's why economic crises hit and they start bellyaching that they never saw it coming. Their models don't match the real world, but policy is made based on the assumption that they do.
    Liquid Assets, January 21, 2015 at 6:27 pm
    Had you had ever attended a beginning level economics course. You would know scarcity is the corner stone of economics
    garand555, January 21, 2015 at 6:30 pm
    Yes, I have. Tell that to the economists at the fed who completely ignore it. Everything today is about aggregate demand, not supply constrained models.

    Liquid Assets, January 21, 2015 at 6:53 pm

    All resources are supply constrained. That's a given. It's assumed and you shouldn't have to be reminded every time you here something from an economist. Did you miss the first day of class? Also, the study of economics doesn't guarantee the continued increase in standard of living. You have just become accustom to it from your perspective of past economic success.

    Matthew Krajcik, January 21, 2015 at 7:01 pm

    You need to spend more time reading mainstream economists to see what they say. Read some Krugman, Bernanke, Friedman, Keynes.

    garand555, January 21, 2015 at 6:55 pm

    Yet the models used by the people making policy decisions don't take supply constraints into account beyond a very narrow view that unwisely assumes that more capital always means more resources.

    InAlaska, January 21, 2015 at 7:58 pm

    Economists endorsed the idea of globalism after it became apparent that without it, national economies could no longer grow. Globalization is going to kill us because it removes from local control the basic production of necessities. Speaking of economics, here is part of a post on The Automatic Earth from yesterday concerning the Davos crowd and the World Economic Forum:

    "When it comes to basic necessities, to food, water and shelter, we shouldn't strive to compete with other economies. That is not good for us, or for our peers in those other economies; it's good only for those who skim off the top. The larger and more globalized the top, the more there is to skim off. All the 'reform' is geared towards making our economies ever more dependent on the global economy. And that is not in our best interest.

    It's not all just even about money, it's about our security, and independence. Everybody likes the idea of being independent, but at the same time few realize that globalization is the exact opposite of independence. Global trade is fine, as long as it's limited to things we don't need to survive, but it's not fine if and when it takes away the ability of a community or a society to provide for itself.

    Protectionism has acquired a really bad reputation, as if it's inherently evil to try and protect your community from being gutted by economic ideas and systems it has no defense against, or to make sure it can generate and provide for its own basics at all times. But that's just propaganda too.

    If our societies are not designed and constructed to provide for themselves, they'll end up with no choice but to go to war with each other. Along the same lines, if our societies don't have strict laws in place that guarantee we can't and won't destroy the natural resources of the land we live on comes with, we'll also end up going to war with each other.

    We're not going to solve the Gordian knot of the entire global economy and all the hubris and propaganda the present leading politicians, businessmen and 'reporters' bring to the table. And we probably shouldn't want to. Our brains did not develop to do things on a global scale. The clowns will blow themselves up sooner or later. We should focus on what we can do, meanwhile, in our immediate surroundings.

    And it's pretty easy from there, really. The economic problems we have are mostly artificial. They have been induced by the broken economic model the Davos crowd, the central bankers and you know who else would have us believe is the one and only, and that they are busy fixing for our sake and greater glory. But they care only about their own glory."

    Gail Tverberg, January 22, 2015 at 8:38 pm

    On the other hand, without the growth that was obtained from globalization, the financial system would have collapsed earlier. So in some sense, we are better off, even if it is not sustainable.

    The US started hollowing out its manufacturing not too long after the oil problems of the 1970s. Japan came first in globalization, before the other Eastern countries.

    InAlaska, January 21, 2015 at 7:24 pm

    Liquid Assets,

    Economists run the Federal Reserve Bank and all the central banks in the world. How has their "straight thinking" worked out? Has the world ever been in such a fiscal mess before? How have all of those over-educated PhDs in Economics done better than an Actuary could do? Economics is the dismal "science" in part because it is predicated on the assumption that their can be infinite inputs into the system. Before you insult Gail and suggest she get a "real education," consider that this whole edifice of "Economics" and endless growth is based on and within a finite world.

    escravaisaurabr, January 22, 2015 at 7:33 am
    InAlaska,

    Two perceptive posts you wrote. Thank you.

    I would like to add this post. I think most of you will appreciate. I sure love this post….

    By falak pema

    Economics is a means to achieve an end, like language.

    So linguists are capable of understanding the logic of communication for DECISION MAKING; whether it be in words and intellectual concepts or in numbers/statistics and algorithms.

    The issue here is that perfect markets like perfect speech do not exist for themselves in society, except for the "initiated", but have a different function as a VEHICLE for body politic; which defines the AIMS and uses the means, all the means : of language as of images and of statistics and mathematical constructs.

    So the thesis of the Mises/Hayek type Shamans that Economia is the "be-all" of society is just wrong. No more than the works of Shakespeare or Hugo, or of Picasso etc.

    They do not define politics and power in society. They may influence it but they don't define it's objectives.

    Linguists like economists can add substance to a political construct that defines the power play in civilization. And in that respect markets are just a means and their perfection as important as a perfect face on the screen.

    All imagery or conceptual work in life is virtual.

    It becomes real when it faces the real world of power and its continual balancing act; facts and irreversible acts that define our future as they have our past.

    Chomsky is more relevant today to society than Mises.

    The first analyses real political acts and consequences the other confines himself to theoretical pontification about the real economy looked at through the lens which keeps referring to the mantra of perfect markets.

    Not saying markets are not important just saying they are not ALL important.

    For the Mises theory to become reality we would have to live in a perfect "anarchy" state without government. The last time they wanted the state to "shrivel away" it was called the "ultimate step of communism" and it parented Stalinism. So…you have to know what you wish for in the REAL world.

    History says you are wrong. You keep harping about a system that has gone off the cliff twice because of market forces being spiraled into Vesuvian eruption under irrational exuberance and greed and thanks to lack of Government regulation : in 1929 and 2008.

    You are into DEEP denial of historical FACTS.

    The historical thread shows us neo-feudal oligarchs are just as destructive of wealth creation as are statist hegemonists.

    The only realistic solution is to balance state power and private oligarchy power and make sure NEITHER is in dominant position by having transparent control of public and private spending and by ensuring due diligence and SANCTIONS.

    Today we have a Mussolinian economy of crony collusion between statists and oligarchs. We have the worst of both worlds.

    We need good state governance and non monopolistic private sector innovative investment, compatible with "general good", that does not run us off the cliff in mad speculation nor poison the planet.

    The GDP should be run on an equitable basis between both power structures.

    Whether this divide is 30/70 or 50/50 between private and public and how its used and how its controlled and monitored is the role of the Republic. And it should be debated and then voted and then executed in a legal framework which is NOT CORRUPT.

    http://www.zerohedge.com/news/2014-08-24/you-cant-run-economy-spreadsheets#comment-5138074

    BC, January 22, 2015 at 6:44 pm
    Economics is politics. Politics is war by other means. War is the business of empire (hegemony). War is good business for imperialists.

    Therefore, economics is the intellectual and political rationalization for the business objectives of imperial expansionism, expropriation, and co-optation of client-states' elites by means of state violence when necessary, which is more often than not when resources become increasingly scarce and the hegemonic frontiers of expansionism are threatened.

    Yet, most Americans do not yet perceive the US as an empire (successor to the British Empire), not surprisingly, which would necessarily require the inference that empires peak, decline, and eventually collapse, and we have been in relative decline since the 1970s-80s, which most of the working-class bottom 90% would have to concede were they honest with themselves and their fellows. And, no, McConnell, Romney, Rubio, Paul, et al., care not about the working-class bottom 90% but themselves and those deep-pocketed Republicans who cut the largest campaign finance checks.

    But one suspects that the 80-90% of the population who were slaves during the Greek city-state dominance and later Roman Empire neither perceived themselves living in the context of imperial decline and incipient collapse, as their daily life experience was preoccupied with acquiescing to their imperial masters' demands and the imperative to survive and thereafter subsist within their circumstances, if they/we're luck . . ., or not.

    Same as it ever was . . .

    Massinissa, January 21, 2015 at 2:20 pm
    An atheist attending a seminary school is probably more useful than a rational person attending a modern neoliberal economics class.
    Liquid Assets, January 21, 2015 at 4:39 pm
    Economics is the study of how the goods and services we want produced and how they are distributed among us. This is called economic analysis. Economics is also the study of how we can make the system of production and distribution work better. This is called economic policy.

    Another slightly different definition of economics favored by may economists is the study of how our scarce productive resources are used to satisfy human wants. This definition emphasizes two central points. First, productive resources are scarce (in the sense that we are not able to produce all of everything that everyone wants for free, thus we must "economize" our resources). Second, human wants, if not infinite, go so far beyond the ability of our productive resources to satisfy them that we face a major problem in trying to make the best possible use of our productive resources.

    Liquid Assets, January 21, 2015 at 5:04 pm

    Robert Malthus, one of the first economists saw economics as a dismal science. He predicted that population growth would persistently out run the earth's capacity of feed it. So that man's standard of living would seldom rise much above the subsistence level.

    That was 200 years ago.

    http://en.wikipedia.org/wiki/Thomas_Robert_Malthus

    unwillinglemming, January 21, 2015 at 5:11 pm
    It seems it was Thomas Carlyle in response to Malthus

    Matthew Krajcik, January 21, 2015 at 5:26 pm

    " He predicted that population growth would persistently out run the earth's capacity of feed it."

    And without petroleum based fertilizers, he would be correct. While any problem may be miraculously overcome by a revolutionary technology, I do not think it is good policy to simply believe that any disaster will be averted by a last-minute breakthrough.

    Liquid Assets, January 21, 2015 at 6:19 pm
    And yet from the beginning of man, revolutionary technology has advanced man kinds standard of living and you sit at the keyboard of a computer not in a cave.
    garand555, January 21, 2015 at 6:52 pm
    It has been a bumpy ride, not all ups, and the fact that we are higher than we were during the paleolithic by leaps and bounds is no guarantee. Past performance is no guarantee of future returns. Either we find a replacement for oil (oil, not coal or natural gas, but oil,) or we will settle into a much less energetic lifestyle. Those are our choices, and the former may not be a realistic choice.

    Matthew Krajcik, January 21, 2015 at 6:54 pm

    Yes, but most of the innovations enabled growth; they were not there to save humanity from mass die-off at the last second.

    It may yet happen, but I do not think blind faith in technological innovation is a good policy. Better to be pleasantly surprised than shockingly disappointed.

    Jan Steinman, January 21, 2015 at 7:43 pm

    "Robert Malthus, one of the first economists saw economics as a dismal science"

    Uhm, Malthus was a theologian, and Thomas Carlyle coined the phrase "dismal science."

    Got any more "junior college" wisdom to share with us?

    Gail Tverberg, January 22, 2015 at 11:49 am

    My article on Why Malthus was Wrong has been very popular.

    http://ourfiniteworld.com/2012/12/12/why-malthus-got-his-forecast-wrong/

    Jan Steinman, January 22, 2015 at 12:53 pm
    Thank you for reminding us of that, although it seems the title should rather be, Malthus wasn't wrong, he was just off by a few centuries. Through that article, it was good to find Garrett Hardin's analysis of Malthus's "Feast" paragraph that only made it into the second edition.
    Coilin MacLochlainn, January 22, 2015 at 8:19 pm
    Malthus was not wrong, he was right. The reason for that is, the Earth is finite and has limited resources. The human population has reached 7 billion. If it continues to grow, or even if it doesn't, it will exceed the ability of the Earth's remaining land base to support us.

    In fact, it already has. Several of the Earth's planetary limits have already been exceeded and we are cannibalising what remains of the Earth's surviving natural resources just to keep going. What I mean is, we are using up the very resources that we rely on as a species to survive into the future. And at the same time, we are making it impossible for much of the rest of life on Earth to survive, which is why so many species are going extinct now and most will be wiped out before we are done.

    For those of us living in the developed world, it is hard to picture this, because we are living off the exploitation of resources and labour in less well off countries.

    There are also glaring examples of excessive exploitation in the developed world. For example, in California, which leads the world in the production of almonds, walnuts and pistachio nuts, there is not enough surface water available to supply the industry and so nut farmers are irrigating their crops using underground water. With the ongoing drought in California, the underground aquifer is not being recharged, so it won't be long before the nut farmers run out of water and the industry goes bust. It will go bust and it will also leave the aquifer dry, with no possibility of refilling with water while the drought lasts, which could be for years or forever.

    InAlaska, January 23, 2015 at 4:55 am

    I read Garrett Hardin's "Tragedy of the Commons" back in Ecology 101. I found it much straighter thinking than Economics 101.

    ktos, January 22, 2015 at 5:17 pm

    "That was 200 years ago."

    I would say that was 0.2% of our existence as humans, ago.

    Gail Tverberg, January 21, 2015 at 5:08 pm

    Someone needs to figure out what is really going on.
    VPK, January 21, 2015 at 5:59 pm

    interguru, January 21, 2015 at 5:58 pm

    A friend of mine who worked at NIH noted that breakthroughs usually came about from people outside the subject area. For example a dentist might make a very important cancer finding. This is because an outsider is not plugged into the current thinking ( which may be leading to a dead end.)

    As an example, Jane Jacobs, who only had a high school education, completely redirected urban planning.

    Whatever you think of Gail, she was not part of the misdirected herd thinking that dominated economics before 2008.

    Gail Tverberg, January 22, 2015 at 6:15 pm
    I have posted a link previously to my post that foresaw the 2008 disaster: http://www.theoildrum.com/node/3382

    I sent links to a few economists I have corresponded with (James Hamilton, Steve Keen, and Kent Klitgaard). Let me know if you think of others I should send links to.

    escravaisaurabr, January 21, 2015 at 7:00 pm
    Liquid Assets,

    Go easy there cowboy.

    Research Says: Studying Economics Turns You Into a Liar

    http://www.theatlantic.com/business/archive/2012/12/research-says-studying-economics-turns-you-into-a-liar/266423/

    FrY10cK, January 22, 2015 at 3:21 pm

    An actuary explaining economics is like a mechanic explaining how your car works. An economist explaining economics is like a car salesman explaining how your car works.

    There's a lot to be said for working in the grease pit where your paycheck depends on results not claims and predictions you are never held to account for.

    richard, January 22, 2015 at 6:15 pm

    Mainstream economics are the 20th Century version of Astrology ;-)
    BC, January 21, 2015 at 12:59 pm
    Brilliant, Gail. Thanks.

    A bit of arcane information related to the post:

    https://app.box.com/s/vgdd8qqkw4s23dd7y0gumlgmdppevx4g

    Adjust the value of US "oil" production for the change in the money supply (M2) and population, and the adjusted value of US "oil" production is where it was 40-50 years ago, and it's down more than 50% since 1959-60. That is, the M2-adjusted, per capita supply of the primary energy source for the US economy and society is no higher than in the mid- to late 1960s to mid-1970s.

    It should be no surprise, then, why real wages for the bottom 80-90% are no higher than 50 years ago. Those in the top 1-10% who have seen net gains in compensation over the same period received the bulk of the gains from the effects of the growth of debt to wages and GDP and the resulting "financialization" of the economy, i.e., gains to income from interest, dividends, capital gains, pass-through income, and fees for services from the financial and other "financialized" sectors, including health care and education ("financialized" via the insurance industry for the former and student loan debt for the latter).

    For the vast majority of American households, their purchasing power after taxes and the increase in the cost of living is no higher than in the 1960s; for Millennials coming of age, it's even worse.

    Given the adjusted value of US oil production and the level of debt to wages and GDP and associated wealth and income inequality and its effects, our domestically produced primary energy source is insufficient to sustain even a 1960s-like, real, after-tax purchasing power for the bottom 80-90%, let alone increase it hereafter.

    Eventually, if not already today, the value and supply of our primary energy source per capita will be insufficient to sustain the current production of the energy source, which will mean a further decline in available liquid fossil fuel net energy for the economy, a reduction in the real, after-tax available income and purchasing power of the bottom 80-90%, and thus a reduction in the overall standard of material consumption and standard of living.

    Without the sufficient amount and growth of primary energy, there is no way we will be able to afford in net energy terms to build out a renewables/alternative energy infrastructure to necessary scale AND grow or sustain the economy AND simultaneously sustain the existing fossil fuel infrastructure indefinitely hereafter.

    Finally, the growth of unprecedented debt to wages and GDP did not create REAL "productive wealth" for the bottom 80-90% or for the society over the past half century but rather a MASSIVE rentier claim on production, wages, profits, and gov't receipts by the top 0.01-0.1% to 1% in perpetuity, a debilitating constraint that will preclude growth of real GDP/final sales per capita indefinitely hereafter.

    James, January 21, 2015 at 6:08 pm
    Excellent analysis! Shorter: we're truly screwed!

    BC, January 21, 2015 at 6:19 pm
    LOL! James, I need you as my editor. :-D
    Gail Tverberg, January 21, 2015 at 9:05 pm
    Wouldn't you use US oil consumption, rather than US oil production, in your analysis? After all, consumption represents what folks can afford.

    It is also tied in with job use.

    BC, January 22, 2015 at 8:07 pm
    Yes, good suggestion, Gail, but my intention was to show the relative CAPACITY of what we can afford domestically TO PRODUCE at a given cost and supply that we can implicitly AFFORD to consume.

    We first have to be able to afford to produce domestically what we consume as a final product for firms, households, and gov't at a price we can afford to produce profitably domestically AND consume to sustain our living standard.

    yuri, January 21, 2015 at 1:15 pm

    Based on numbers that I have access to 70% of all fuel consumed in USA is used for transportation. Of the fuel consumed for transportation, 65% is consumed by personal vehicles.

    From the perspective of dissipative structures in biological systems, I think that this would be best illustrated by cancer cells in a tumour…

    Is there analysis for "core" industrial fuel use for industries such as agriculture, manufacturing and military?

    yuri, January 21, 2015 at 2:56 pm
    Further comments…

    The graph for figure 3 is quite "thin" on logic. A better graph would show population, production/use of antibiotics (and perhaps a few other medical innovations) and world agricultural production. Otherwise it is open territory for people to point out the most extravagant users of fuel typically have much lower population growth (and population) than those who consume the least fossil fuels.

    Perhaps a better way to approach the topic of modern economy would be taking a look at a few case examples of countries (perhaps the top, middle and lowest on the chart of agriculture) and seeing what would impact their economies the most. For example, the US losing a lot of fuel import (say, due to massive problems in Mexico and simultaneously in the ME) probably would impact a lot of the frivolous driving. But "there's an app for that" problem in that people could start riding transit, using bikes and even carpooling (using an Uber-like app)…A hack attack that takes out electronic banking would likely have a far greater impact.

    Globally the effects of multi-drug resistant bugs (particularly since we are now using human antibiotics on fish and other animals) is likely far worse impact than losing a large amount of global oil production. The effects of climate change are also likely now more important an effect on food production.

    The question is perhaps: how leveraged has the fuel use in a particular country become? While economy might seem like the Leonardo sticks perhaps it is more like a mess of sticks in Kerplunk?

    Gail Tverberg, January 22, 2015 at 10:56 am
    We are not talking about a change that somehow nicely allows economies to "use less". So I expect all economies of the world will be close to equally affected. Perhaps some in Africa and parts of India are far enough removed, but once we become dependent on the system, anything that breaks it is a problem.

    If we look back to before fossil fuel use, world population grew very slowly. Fossil fuel use allowed the rate of growth to speed up, primarily by letting more children live to maturity, and by letting more old folks continuing to live. Better nutrition and sanitation played a big role in this–medicine, except possibility for antibiotics, a much lesser role. Once we have lots of energy, people can afford birth control. Governments make lots of promises that they will take care of citizens in their old age, implying that they don't need children to take care of them. The minor detail is that governments can't really do this, but it is the promise that gets people to cut back on number of children.

    To some extent, the cutback on number of children today reflects the fact that many young people today are too poor (after student loans etc) to afford to have a family. Wages are too low. It is really a sign of collapse not being far away.

    yuri, January 22, 2015 at 5:03 pm
    Hi Gail,

    First, I agree with your general analysis as well as your assessment of the final outcome: collapse is not far away. However, I do think if you are going to perform an analysis of this nature that it be something that really is solid. I still think that simply overlaying oil usage and population is not strong enough to really convince people; I also think that by looking a bit deeper some of the real weaknesses of "industrial civilization" may be exposed.

    Data such as these ( http://blogs.berkeley.edu/2011/11/02/lost-children/) show a distinct knee in the graph for infant mortality. That knee definitely seems to correspond to increasing oil usage but also to things like increasing use of antibiotics, access to hospitals with well-trained personnel and general improvement in supply chain for these hospitals. Definitely all are emergent from fossil fuels but I think is would be good to clarify how solid these "threads" are to the fuel use.

    Have you seen this paper by Turchin?

    http://isites.harvard.edu/fs/docs/icb.topic1123356.files/Peter%20Turchin%20Paper.pdf

    The question, in my mind, is where energy links in with events he's mapped which should really drive home the point of where things are at for BAU. See also Martin Armstrongs predictions for "big bang" starting in 2015 with major troubles going along to 2020 (http://armstrongeconomics.com/2014/12/07/big-bang-2015-75/) in that this problem is not confined to just USA but is global…

    BC, January 22, 2015 at 8:28 pm

    "To some extent, the cutback on number of children today reflects the fact that many young people today are too poor (after student loans etc) to afford to have a family. Wages are too low. It is really a sign of collapse not being far away."

    https://app.box.com/s/75sa0oswimkdphhdia5g

    Indeed, Gail. I invite you and readers to see the link above for the rate of change of deceleration of the 10-year change of world population. By no later than 2020-21, the rate of deceleration will achieve a first order exponential decay from the peak in early to mid-1970s***, implying an accelerating decay rate thereafter, meaning that world population will peak as soon as the end of this decade or early 2020s, with population commencing a decline by the mid-2020s.

    Consider the myriad coalescing factors we face that will coincide with the peak of world population in the next 5-6 years and the decline thereafter. The human ape population will not reach anywhere near 9 billion as the UN anticipates.

    ***It will have taken ~50 years for the first order of exponential decay to occur from the 1970s, whereas it will require as few as 5-6 and then no more than 2-3 years for the second- and third-order deceleration regimes before population declines.

    InAlaska, January 21, 2015 at 7:33 pm

    yuri

    I think that you are on to something, here, with your question about "core" fuel use. Not necessarily a command economy, but one that refocuses effort on maintenance of vital functions of a civilization. If you eliminate trivial motoring and the manufacture of useless cheap plastic junk, the economy may shrink and people will be hurt by it, but a FF-based civilization may be sustained for decades if not centuries to come.

    Gail Tverberg, January 22, 2015 at 8:23 pm
    I think too many people think our problem is a liquid fuels problem. It really is a broken financial system problem, which comes from the limits we are reaching that happen to include liquid fuels. It is hard to see how a new system would be any better, though. The new system would need debt as well, and it wouldn't work any better. The thing that looks likely to break is the banks and the financial system. It is hard to pay workers without banks.

    Matthew Krajcik, January 22, 2015 at 8:29 pm
    "The new system would need debt as well, and it wouldn't work any better."

    Why must a system be based on debt and not savings? It would be slower to accumulate the initial energy, but without the burden of compounding interest, it seems it would be more stable and not require growth?

    InAlaska, January 23, 2015 at 5:02 am

    This is an excellent point, Gail. It really isn't a liquid fuels problem, but a financial one. It all comes down to finite resources and its interface with the built economy.

    Gail Tverberg, January 21, 2015 at 9:28 pm

    The EIA has numbers that are fairly confusing. The total energy consumed in the US is something like 98 quads per year considering coal, natural gas, oil, biofuels, etc. Of this 27 quads is transportation fuel. Of the 27 quads of transportation fuel, about 16 quads is gasoline (ex ethanol additives), and about 6 quads is diesel.

    I prefer to look at "heat content" charts, because then the numbers can be compared across sectors. This is some places there is some data. http://www.eia.gov/totalenergy/data/annual/index.cfm#petroleum

    http://www.eia.gov/totalenergy/data/annual/index.cfm

    Ferran P. Vilar, January 21, 2015 at 1:16 pm
    Dear Gail, I've been touching this topic

    http://ustednoselocree.com/background-climatico/otros/hasta-que-punto-es-inminente-el-colapso-de-la-civilizacion-actual-indice-tentativo/to-what-extent-is-global-civilization-collapse-near-summary/

    in the last few days, and I guess you will appreciate it. You're comprehensively quoted. Can read your text tomorrow. Best regards.

    Gail Tverberg, January 21, 2015 at 9:31 pm
    Thanks for the link. I need to learn Spanish.
    David L. Cooper, January 21, 2015 at 2:18 pm
    http://www.technologyreview.com/news/534266/hawaiis-solar-push-strains-the-grid/?utm_campaign=newsletters&utm_source=newsletter-daily-all&utm_medium=email&utm_content=20150120 Has a piece about Kauai, Hawaii's attempts to use & store solar-PV-generated energy, for their power grid - they haven't made it work YET (of course), but, the underlying questions of how such a thing could "scale up" in the world (e.g., getting & transporting lithium from places like the Andes), without the fossil-fuel-based infrastructure, don't get asked in that piece.
    Matthew Krajcik, January 21, 2015 at 3:52 pm
    Although lossy, it seems to me it would make more sense to use the surplus electricity to pump water uphill into a dam and use hydro when there is not enough sunlight or demand surges.

    Actually, other than the environmental damage and impact on tourism, it seems Hawaii could use more hydro anyways, since they have mountains with the most rainfall in all the world at something like 6 meters per year of rain.

    They also seem good candidates for geothermal, and for using cold deep ocean water cooling to replace air conditioners.

    InAlaska, January 21, 2015 at 7:35 pm
    Yes, and also what about wave and tide turbines?

    Matthew Krajcik, January 21, 2015 at 9:42 pm
    "Yes, and also what about wave and tide turbines?"

    The reports I've seen, wave and tide power is somewhere in the $0.25 to $0.50 per KwH range, about triple solar and five times coal or hydroelectric. Perhaps a massive investment in R&D would eventually bring that price down, but for now it is massively expensive compared to other sources of electricity. Hawaii would be a good candidate for those as well.

    Gail Tverberg, January 23, 2015 at 8:35 am
    Wave and tide power machines are subject to huge surges in water forces. They tend to degrade quickly. I see this process as close to building shale wells. You need to keep building replacements all the time, or the process cannot work for very long, regardless of what the cost might be. You also need the whole rest of the economy (including oil) to support the process. I see these approaches as ways of generating a lot of revenues for academic papers, but not of much use otherwise.

    Gail Tverberg, January 22, 2015 at 7:26 am

    This is a shorter link to the article. http://www.technologyreview.com/news/534266/hawaiis-solar-push-strains-the-grid/

    They need batteries or something to balance the load, but so far batteries don't work well enough. Of course, no one figured out the whole cost before attempting to go this direction.

    Northwest Resident, January 21, 2015 at 3:00 pm
    It seems to me that economic growth has always depended on the discovery and exploitation of new resources - whether those new resources were a new forest, a new hunting ground, a new place to catch fish, new materials that can be mined and shaped into something worth having, or new energy sources.

    We really aren't so much different than the yeast in a petri dish who grow and multiply rapidly into new untapped sources of food and energy, but who end up spoiling every area we grow into to the point where the only end result possible is mass die-off.

    Since the age of oil began, new and vast discoveries of oil propelled human civilization into a growth frenzy, and our total population count right along with it. With each new boom came the inevitable bust, but even on the downslope of each bust and in the resulting doldrums, there was ALWAYS a new boom shaping up on the horizon - a new oil discovery to be thoroughly exploited as fast as could be accomplished, injecting a new burst of "wealth" and frenzied activity into the economy.

    Today, sadly, we have reached the end of the line. There is no BOOM on the horizon - no vast new source of oil or energy to re-gear for, no hyper economic growth coming that will pay off all the old debt and create a new batch of debt to be paid off by yet some other future boom.

    This BUST is the last BUST. We have scraped and scoured planet earth and there is nothing left except the tired old legacy oil fields pumping the last of their once magnificent reserves, and probably a half million stripper wells coughing up a barrel or two per day. The fracking boom was the last boom, and the bust we are seeing now will be the last bust.

    I suspect that as the financial system, completely incapacitated by the lack of new vast quantities of oil coming online, will simply creak to a halt and fall over at some point in time. We see that happening now. The signs are unmistakable. Where will you be when BAU violently unwinds - that hollowed out economy collapses on itself - leaving a puff of noxious smoke where it once existed?

    garand555, January 21, 2015 at 7:49 pm
    "Where will you be when BAU violently unwinds - that hollowed out economy collapses on itself - leaving a puff of noxious smoke where it once existed?"

    I suppose that depends on where I need to be, which depends on how the collapse plays out, not only globally, but also locally. Does it play out in a major war? Do we wake up one morning to find that the banking system is frozen, accounts and retirement accounts have been largely cleaned out except for a pittance? Do supply chains break suddenly, or a little bit here, then a little bit there? What happens to the rule of law?

    Where you should be when BAU unwinds is something that you should be very flexible on. I'd prefer to stay right where I am, but if I need to go hide in a remote cave, I know where to find caves that are both remote and have water. Having some flexibility in your thinking will be necessary, IMO.

    InAlaska, January 21, 2015 at 7:59 pm

    Paul, is that you?

    Gail Tverberg, January 22, 2015 at 11:03 am

    I think part of it too is that even now, when we do discover large amounts of new oil, as in the shale states, the direct and indirect costs of extraction are so high that all of the benefit of the oil now stays in the shale states. Nothing is left over for the rest of the United States and the world. If the cost were only $20 barrel, we could get that same oil out. The shale states would have much less benefit–fewer workers, drilling rigs, less in royalties. But the rest of the economy would have the benefit of the $20 oil to use. It is as if the $100 oil absorbs all of the benefit of the oil, right where it is drilled, in new bigger houses, new grocery stores, new schools. The rest of the economy loses out.
    David Gower, January 22, 2015 at 11:55 am
    People can and do move for greater opportunity whether agricultural land or jobs in the oil patch. The "putting down" or holding back of more productive areas doesn't do a thing for less productive areas sans transfer payments (un-earned?). Some areas choose to not tap their local resources such as NY and shale formations.

    PeterEV, January 21, 2015 at 3:16 pm

    Matt Simmons many years ago said we have a liquid fuels problem due mainly to our transportation system. We convert a lot of crude to gasoline, diesel, and aviation fuels. If we were to use other forms of transportation and fuels, we might not be having this discussion for several more decades. This begs the question what should we be doing?

    His analysis said that the transportation system that will survive will be the ones that can ship people and cargoes with the lowest unit of energy per mile. He pointed first to barge companies, rail companies, and last was aviation companies. I see a lot more people on bikes these days.

    I have a stated position on this site as touting electric vehicles. The concept of capturing sun light, storing it in batteries and using that electricity to power a car, heat and power aspects of our homes, and provide surplus energy to the grid is a goal I think we can embrace. Are we there yet? No way. We are making progress. We do have PV cells with efficiencies of around 45%. Batteries such as lead acid held 20 whr/kg and lithium based batteries are currently in the 90 to 180 whr/kg range with announcements of having 3 times as much energy stored in various laboratories. The potential is there.

    I have presented calculations on this site that "shows" that the amount of capital spent on the Iraq war, if spent on PV, could drive enough EVs to make us "energy independent" - for a while. I have done some personal calculations that point to the fact that I can produce enough solar thermal to be relatively warm in a SE USA winter. It's not 100% nor is it 73 degrees year round but it does not involve cutting down our forests for heat.

    I like to eat and stay warm. I enjoy my family and friends. I have to ask myself and you all, what do we have to do to as a society to prepare for what Gail has outlined? I can give up driving a car but a bicycle would be a good alternative. I can cut back on fossil fuel usage using PV and various types of solar thermal. I can encourage others who have a knack for electronics and chemistry to find cheaper ways to create PV cells and better batteries. I can encourage those reading these words to change your mindset to be adaptive as outlined by Gail, John Michael Greer, Nicole Foss, Chris Martenson, and others. I can and have grown food. I have yet to make my own clothing, house paints, and other materials

    If solar were to replace most fossil fuels, we would only be discussing our global debt problem and not debt and energy. Considering the alternatives to not doing anything, doing something is better.

    Has anyone noticed that our politicians are fairly quite on this topic? I wonder what's up? If "Drill, Baby, Drill" does not work out, what's **their** Plan B?

    Matthew Krajcik, January 21, 2015 at 3:57 pm
    "I have a stated position on this site as touting electric vehicles. The concept of capturing sun light, storing it in batteries and using that electricity to power a car, heat and power aspects of our homes, and provide surplus energy to the grid is a goal I think we can embrace."

    The problem is that you need to burn oil and coal to get the electric motors, the new cars, the lithium, the batteries.

    Do the batteries plus solar PV system combined have the ability to produce as much energy as is embedded in them, or are you simply storing coal energy at home? Just moving the energy consumption and pollution to China, so you can have nice clean air where you live?

    The bigger problem I see is that we do not have enough time to do thorough research and development to make sure we are making solar systems that will actually provide more than they consume.

    BC, January 21, 2015 at 5:11 pm
    Yes, so far EVs are not economical and represent a tiny fraction of total vehicle sales.

    Now with the crash in the price of oil, EV sales will likely cease growing and contract YoY hereafter.

    At the trend rate of growth of EV and total vehicle sales and as a share of the total fleet, it would take until late next decade for EVs to reach 10% of sales.

    Moreover, about one-third of total US vehicle sales since 2011 have been financed with subprime auto loans. Without these loans, vehicle sales would be 12-13 million instead of 16-17 million.

    The auto-, oil-, debt-, and suburban housing-based economic model is over, and there is nothing set to replace it to permit further growth. The "financialization" that emerged in the 1980s with falling nominal interest rates has reached diminishing returns with "financial repression" and total net annual flows to the financial sector equaling annual growth of GDP.

    We are clearly experiencing the structural effects of Peak Oil, "Limits to Growth", the end of growth, the end of capitalism, and an emerging permanent era of "austerity" and what I expect will be a kind of neo-monasticism or neo-asceticism for the bottom 90%+ amidst increasing inequality, gov't reaction and surveillance, and fiscal constraints.

    Gail Tverberg, January 22, 2015 at 11:14 am
    If we "only" had a liquid fuels problem, we would be in good shape. It would be even better if we could count on a Hubbert Curve for depletion. Unfortunately, both of this stories are not really true. They have been passed around by the peak oil community.

    If order to plan for anything else, we would somehow need to set up a parallel system that could provide for our needs and be served by whatever limited energy we can find in the future. Figuring out government would be a big issue. That absorbs a lot of current energy. Another issue would be importing goods from afar. That would pretty much have to go away as well (unless we can make enough wooden sail boats to handle our needs). I can see why politicians are quiet on this topic.

    Don Stewart, January 21, 2015 at 3:23 pm
    Dear Gail and All

    'the debt system, which is an integral part of the whole system'…and then a note that you will write a separate article on that subject.

    Not wishing to raise issues prematurely, but Charles Hugh-Smith writes today on 'debt-serfdom', and the parallels between today and the Irish Potato Famine:

    http://www.oftwominds.com/blogjan15/debt-serfdom1-15.html

    What Charles is describing is also similar to the 'company store' in a mill or mining town, or the loans from the bank in town to a very small farmer. There is a realistic scene in the movie The Chase (Marlon Brando and a whole raft of Hollywood luminaries) where a poor black farmer comes into town to talk to the banker about his loan. Written by Horton Foote and screenplay by Lillian Hellman.

    I think that advertising is also used to keep people in debt-serfdom. I see lots of low income people driving very expensive cars. The Sales executive at Honda says the loans are suicidal…does financial capitalism finally eat its own tail?

    Don Stewart

    Rodster, January 21, 2015 at 3:56 pm
    "I think that advertising is also used to keep people in debt-serfdom."

    Of course it is and that's the whole purpose of the Ponzi scheme known as fractional reserve banking. You need to make the serfs keep paying into the system. Why is that some of the more lucrative businesses are Payday Loans, Quicken Loans, and JP Morgan Chase going in bed with the Federal and State govt in behalf of the EBT systems? It's a HUGE business for people who don't have the money to pay now. Chase bank gets a cut from every EBT transaction. They rake in BILLIONS every year off the backs of the poor and taxpayers.

    InAlaska, January 21, 2015 at 7:45 pm
    And the irony of it all is that JPMorgan and all those other big banks didn't really ever EARN that money that now get interest from. It was printed out of thin air and given to them (loaned into existence and then loaned out again!)

    garand555, January 21, 2015 at 7:53 pm
    And now the total US debt, both public and private is $60 trillion. That interest has more than caught up to our ability to pay. It's going to leave a mark when those defaults really start piling up. A skid mark.

    Rodster, January 22, 2015 at 10:09 am

    Don, Chris Martenson posted a new article which explains the need for debt slaves quite nicely. Hint: It's required for the system to function

    http://www.peakprosperity.com/blog/91558/when-ends-everybody-gets-hurt

    Gail Tverberg, January 22, 2015 at 11:28 am
    Thanks! A person would think that educational loans would be an "investment in a productive asset." At one time, they really would be–your enhanced brain would make the loan worthwhile. But now, young people are over a barrel:

    (1) Not nearly enough jobs, and very poor pay for those without advanced education.

    (2) Even if you do get a loan and go to school, a large share of folks will have bad outcomes–dropping out of school; not being able to find a job in the field; finding a job in the field, but it not paying enough to pay back the loan; temporarily finding a job in the field, but finding that additional retraining is quickly needed, because "technology" is changing–your degree no longer is what is needed.

    richard, January 22, 2015 at 6:25 pm

    I did some work on the great famine a while back, and was surprised by some facts. Among others, that event marked the end of an era where famine was a fact of life, not just in Ireland, but throughout Europe.

    We see the world quite differently today.

    Matthew Krajcik, January 21, 2015 at 4:27 pm
    A big part of the lower price of shoes and goods in general is not technology or oil, but globalization. By simply having people in developing countries make the goods for $1 per day, and without all the regulations for safety, pollution, etc that we have in the developed world, it is possible to make goods at much lower prices.

    Whether such a system could exist with sail-powered ships, or whether diesel-powered freighters are required, I don't know.

    "Any change that is made must be small and incremental–adding a few horses at the edge of the city, for example. Trying to add very many horses would be disruptive. Horses would get in the way of cars and would leave messes on the city streets."

    Or rather, instead of doing it bit by bit everywhere, it would work far better to do it 100 percent in a small area at a time – switch one town from cars to bicycles and horses all at once.

    Gail Tverberg, January 22, 2015 at 11:47 am
    Globalization has played a big role in getting the price of goods down, but it has also played a big role in getting wages down, especially for folks who are not in the top few percent of the work-force in earning capacity. In many ways, globalization is a big part of our problem.

    Low priced production areas are often in warm parts of the world that don't need as much heating or as sturdily built homes. Using coal also keeps costs down. So does the omission of health care, pensions, safety, and pollution control. Trying to compete with this just doesn't work. I don't see any way of making enough sail boats for more than an occasional luxury product for the rich.

    Pingback: A New Theory Of Energy & The Economy, Part 1 - UNCLE - UNCLE

    Pingback: A New Theory Of Energy & The Economy, Part 1 | ZombieMarkets

    Stefeun, January 21, 2015 at 5:56 pm
    Thank you Gail, excellent post.

    I especially liked "the selling price of a product is the market value of the energy embodied in the product". Actual price is the result of a power-struggle (so "market value" is important to precise), and we start having problems when this price (ie what customers can afford) becomes lower than its all-included cost.

    Also liked "external energy is used to leverage human labor", which helps to make products cheaper, as long as the energy is cheap.

    Both images are quite simple to understand, and very useful to understand the situation and its trends.

    Gail Tverberg, January 22, 2015 at 5:19 pm
    Thanks for your vote of support. It seems like a lot of people have made other assumptions about how the economy works.

    Curtis, January 21, 2015 at 6:18 pm
    Gail

    Great piece. A thought to ponder. I have been working on how large corporations through efficiency are now taking Human energy out of the economy. In an equilibrium based economy 60% of productivity gains go to capital and 40% to labor. Now corporations are taking over 100%. This is unsustainable. I have some materials at http://outofozeconomics.weebly.com/ Our current day model is not only at peak oil but also peak efficiency. Adding more productivity where the corporation takes all gains concentrates energy on balance sheets versus the economy as a whole. The whole ecosystem is moving in the wrong direction. Thanks

    Curtis

    Gail Tverberg, January 22, 2015 at 7:45 pm
    Thanks for the link.

    As I see it, businesses are just middle men. They should be treated like overhead expense in creating jobs. Getting more profits for owners, and more debt payments for rentiers, does not help the ordinary citizen.

    I often think we don't understand what true efficiency is. Education and medicine in recent years have been adding far more costs than they do benefits, for example. See my post http://ourfiniteworld.com/2014/12/29/how-increased-inefficiency-explains-falling-oil-prices/

    alturium, January 21, 2015 at 7:17 pm
    Great article Gail!

    It appears that energy and debt are part of every transaction in our economy, but their effects have not been modeled correctly. In a way, we measure the amount of transactions in money amounts but don't account for the energy component. Viewing a galaxy through different telescopes is a good illustration of how the invisible (to the naked eye) can have a different structure than the visible.

    If we could visualize the visible economy perhaps it would look like a galaxy:

    The intensity of red to white could indicate complexity or vertical integration of money structures. We could also perceive energy being used in the same economy with a different spectrum filter:

    And debt is really important to the economy too. With yet another spectrum filter we could perceive its effects:

    An equation or simulation that modeled the effect of energy and debt would be useful, such as:

    SizeOfEconomy$ = EconomyAtWork(energy, debt)

    Gail Tverberg, January 22, 2015 at 8:01 pm
    Exactly! Debt isn't some evil thing that was thought up by fractional reserve bankers; it is essential to the system. The low interest rates and low wages now are symptoms of real problems with the system. Now the problems seem to be flowing through to low commodity prices too. It is hard to keep up repayment of the debt, when all sources from which repayment might come (except more debt) are sinking.

    Ric Steinberger, January 21, 2015 at 7:35 pm
    It's important to note that while average living standards may be flat or in decline, it's still very possible for a tiny segment of a national or global society to experience rapidly increasing living standards. This is the world Thomas Piketty's Capital in the 21st Century describes.

    The continuing rise in living standards of a tiny minority has provided them with enormous, outsized political power, power that they use to influence the world's larger countries to extract the maximal amount of fossil fuel energy regardless of the short and long term consequences. This very extraction of energy helps further increase their wealth and power, thus creating an unstable positive feedback loop that temporarily greatly benefits the world's wealthy while blocking the (albeit limited) ability of everyone else to try to plan for descending living standards and work to develop the next economies that will be need to support some level of human survival.

    Gail Tverberg, January 22, 2015 at 8:26 pm
    In some respects, I think today's international businesses have taken on the role of the very wealthy. They can escape taxes by moving to different jurisdictions. They can pay their leaders outsize wages. I would worry more about manipulation by very wealthy businesses than be very wealthy individuals, myself.
    Jan Steinman, January 21, 2015 at 7:47 pm
    This is a particularly ambitious posting - thanks! It ties together a number of things that people don't normally tie together.

    Øyvind Holmstad, January 22, 2015 at 3:53 am
    Very well said! Normally people think energy is just a small part of the system. They don't get that without energy, no culture, no education and so on. But energy is the system.

    I just discussed with a woman who said we should try better to understand the system, not just criticize it. I linked to this post, explaining that energy is a core matter to understand the system we live in. She was rather mad on me, and said this was a matter of the ideology of capitalism, not a matter of energy.

    xabier, January 22, 2015 at 5:57 am
    One of the principal characteristics of life in the 20th century industrial economies was political activism, usually conceived as a way to Utopia. In that world-view, all is ideology, politics, struggle.

    Bring the fundamental importance of energy to the attention of such people and they are inclined to get angry, as you are thereby taking their Utopian future away from them and disabusing them of their belief that it is all about politics.

    Ideology all too often gets a man or woman to kill; but, Left or Right, it never made a mule budge, a calf fatten, the sun shine or a river flow…..

    garand555, January 22, 2015 at 11:59 am
    A lot of times, it is about politics. Politics and energy often intertwine, and politicians often get it wrong. Take using corn to produce ethanol for fuel, for instance. That is one of the dumbest things to do, unless you are a farmer who profits from it or a politician who gets reelected because of it.

    InAlaska, January 23, 2015 at 5:08 am

    xabier,

    Haven't "seen" you much around the blogosphere much lately. How ya been?

    Jan Steinman, January 22, 2015 at 12:50 pm
    "She was rather mad on me, and said this was a matter of the ideology of capitalism, not a matter of energy."

    (A native English speaker would say "mad at me.")

    If one sees life as a dissipative mechanism, I think that capitalism is arguably better at that than the alternatives. But ultimately, they're two sides of the same coin, no?

    Under capitalism, man exploits man. Under communism, it's just the opposite.

    - JK Galbraith

    Gail Tverberg, January 22, 2015 at 8:31 pm
    Thanks! When it gets this long and complicated, I worry that many people will give up on the post–find something shorter and more entertaining to read.

    grobertson1, January 21, 2015 at 8:26 pm
    Gail, What if the answer, is In fact "less efficiency".

    Certainly a too high price of oil is harmful,

    but a too low price perhaps equally or greater harm.

    Certainly a low price of oil means fewer rigs, fewer drillers,

    means a reduced need for housing, transportation, food preparation,

    certainly at a point, a point where production cost is equal or greater

    than price, low oil price means reduced employment.

    What if in many areas we have reached the peak of efficiency verse employment

    and more efficiency simply means less employment.

    Efficiency too has diminishing marginal returns.

    Certainly robotics are more efficient than humans in many areas

    but certainly they will result in far less employment of humans.

    If an abundance of energy increases population, as is proposed, then

    why does Japan have declining population, fewer children per couple,

    whilst many poor countries, have many more children per couple

    At a point, Efficiency drives reduced population; not vice versa.

    If food is abundant you need less people to farm and harvest it.

    If medicine is abundant, you need fewer family, you are less concerned

    that an heir may pass.

    If energy is abundant you need less people to say collect firewood.

    You need fewer family.

    Matthew Krajcik, January 21, 2015 at 9:54 pm
    "If an abundance of energy increases population, as is proposed, then

    why does Japan have declining population"

    Japan has an abundance of energy? I think they are massively dependent on imports.

    There are many things that contribute to bringing down fertility rates to around replacement levels. I would say that energy abundance equals more population is more of a general rule, certainly not an absolute one.

    Gail Tverberg, January 22, 2015 at 8:49 pm

    As I told someone else, the primary purpose of an economy is to serve human beings. It is really easy for all of the efficiency efforts to remove human jobs. The other thing they do is make goods like cars much more expensive, requiring workers to borrow more money in order to afford one.

    At this point, things are so badly messed up, I am doubtful things are fixable, regardless what we do.

    Japan is very short of energy. About all it can do is make nuclear electricity from imported fuel. It also has too many people in a small area. It is not sustainable as it is. People sense this, and are having small families. Also, with government pension programs, there appears to be no need to have children to support you. (In reality, the government plan is not really guaranteed.)

    People from poor countries know that many of their children are likely to die before adulthood. They generally can't afford birth control. They know that every family has several children. So they do what others do. If they want to have a reasonable chance of having children to support them when they are old, they need to have several children.

    Harry Gibbs, January 23, 2015 at 6:48 am
    It is fascinating the way in the Japanese seem to intuit the gravity of their net energy crisis and the ways in which the young especially are responding by retreating into fantasy, turning their backs on romance and family-making, and in many instances holing themselves up permanently in their rooms: http://www.bbc.co.uk/news/magazine-23182523

    bwhill, January 21, 2015 at 8:36 pm

    Hi Gail,

    I would like to add that there is an important concept that escapes most people. Most people normally equate energy, and work. They are not the same thing, although they are measured with the same units, such as BTU. Energy is a property of matter, it can be neither created nor destroyed. Work is not a property. Work is created when energy is transferred. That process ALWAYS results in losses. One BTU of energy never results in one BTU of work. It takes work (goods and services) to produce petroleum, and its products, not energy.

    We have put up a page that explains this important concept for petroleum production:

    http://www.thehillsgroup.org/depletion2_019.htm

    On average it takes 4.9 BTU from the well head in the form of energy from petroleum to put one BTU of work back into it. This is the reason that a small increase in the cost to produce petroleum has a large impact on the economy it is supporting. What we call high cost oil is in actuality low energy oil for the economy. A one dollar increase in the cost to extract petroleum takes almost $5 out of the non energy goods producing sector of the economy. Since the work to produce petroleum has been increasing since the first barrel was extracted, and will continue to increase, without rapidly growing production to compensate, its negative impact on the economy will continue to intensify.

    Nice article, thanks.

    BW Hill

    http://www.thehillsgroup.org/

    Don Stewart, January 21, 2015 at 8:48 pm
    'On average it takes 4.9 BTU from the well head in the form of energy from petroleum to put one BTU of work back into it. '

    Dear Mr. Hill

    I am not sure I understand that statement. Can you elaborate?

    Thanks….Don Stewart

    bwhill, January 22, 2015 at 11:13 am
    Don Stewart says:

    "I am not sure I understand that statement. Can you elaborate?

    Thanks….Don Stewart"

    A gallon of 37.5 API crude has an energy content (exergy) of 140,000 BTU (5.88 million per barrel). Because petroleum is used primarily as an energy source it must be able to supply enough energy to power its own extraction, otherwise it would be an energy sink, and not of much value. To use that energy it must be converted to work; goods and services (drilling rigs, pumps, etc.) That conversion takes place with an efficiency of about 20%; which is similar to an internal combustion engine.

    When wells get deeper, water cut increases, and permeability declines it requires more work to extract the oil. When the work to extract it increases by one BTU, it takes 4.9 BTU of energy from the petroleum stream (the original 140,000 BTU/gal) because of the efficiency of the conversion. The oil has less value to the economy on a 1:4.9 ratio. That is why many oils actually have very little value to the economy, such as shale. Shale wells are often very deep (up to 11,200 feet), and have very low permeability (close to zero).

    Factoring in the production of waste heat (that thermodynamics says is required to make the process go forward) brings the maximum energy that can be used to extract oil from the initial 140,000 BTU per gallon to about 20,000 BTU (840,000 per barrel). That is very close to what many high production cost oils are now requiring for extraction.

    Our site has many pages dedicated to explaining this phenomena, and many graphs. Oil production is primarily an energy production process, and is only indirectly related to the volumetric quantities that are produced. The value of a barrel of oil is the result of the energy it delivers to the economy. The relationship between energy, and volume changes with time, production costs, and the increasing difficulty of extracting it.

    http://www.thehillsgroup.org/

    Don Stewart, January 22, 2015 at 12:06 pm
    Dear Mr. Hill

    Thanks for your response.

    'Factoring in the production of waste heat (that thermodynamics says is required to make the process go forward) brings the maximum energy that can be used to extract oil from the initial 140,000 BTU per gallon to about 20,000 BTU (840,000 per barrel). That is very close to what many high production cost oils are now requiring for extraction.'

    Is the end product that you are calculating relative to directly useful? Is it gasoline at the pump, including the cost of processing the credit card? Does it include the cost of the car? …In other words, I am trying to figure out where the boundary is in your analysis.

    If it is petroleum products at the refinery gate, then there is generally another 'trophic level' before a human gets any benefit. For example, diesel fuel has to be used to drive a tractor or power a truck or shovel. If so, that would seem to make the whole enterprise very shaky.

    A similar set of choices of boundaries applies to food. On farm food production is pretty fuel efficient. But once the food leaves the farm, the real fun with fuels begins as the food is sliced and diced and delivered and refrigerated and cooked and the net result is 10 calories consumed by the system for every dietary calorie delivered.

    If your boundary is the refinery gate, and we try to add on to that the industrial food system, it seems that we are definitely in trouble.

    Am I thinking about this the right way?

    Thanks…Don Stewart

    garand555, January 22, 2015 at 12:10 pm

    Let me see if I understand this in simplistic terms:

    To drill a well, you have to do work. That work is breaking up and moving dirt and rock. You are saying that, for every joule work done of moving dirt and rock out of the way, 3.9 joules are wasted, i.e. one joule of work done plus 3.9 joules of wasted energy equals 4.9 joules of energy expended for every joule's worth of dirt and rock moved?

    Gail Tverberg, January 22, 2015 at 9:29 pm

    I know that when you get mechanical/electrical energy by burning a fuel, you get heat energy as well. We have decided in this country to treat the heat energy as waste. In some countries (like Sweden and Russia) there is a real attempt at cogeneration. We have said "no" to this–it creates a natural monopoly. So in this country, the heat by-product is waste.

    In fact, the major type of energy that has been needed in most economies in the past is heat energy. Look at my Figure 4. Heat is what is used to break chemical bonds. It is used in smelting, baking, heating homes and businesses, and to run turbines to generate electricity. "Waste" heat from my ICE is what keeps my automobile warm in winter.

    Now, the current fad seems to be to work backward–generate electrical energy using wind or solar, when very often what we need is heat for someone's apartment, or to heat a frying pan. Electricity is more convenient to transport, I suppose. But it seems like a waste to me. Instead of putting solar PV panels on the roof, the person would be better off using a solar reflecting oven, or even burning some wood.

    The market price brings all of these things together in my mind. I don't find discussing these things very enlightening to readers who aren't engineers. We rarely use oil to make electricity, so that isn't an issue. We use oil where another less expensive fuel doesn't work well, whether or not there is theoretical waste in the process.

    Jan Steinman, January 22, 2015 at 9:55 pm
    "Now, the current fad seems to be to work backward–generate electrical energy using wind or solar, when very often what we need is heat for someone's apartment, or to heat a frying pan."

    HT Odum would say that electricity is a form of energy with "high transformity," meaning it contains a lot of embedded energy. You only get about 35% of the energy out of coal, and you lose another 10% in transmission losses, so watt for watt, electricity is "worth" about four times as much as coal.

    So yes, it does seem like a stupid waste to heat things with electricity. In the Pacific Northwest, we built big dams and had very cheap electricity, which caused us to be wasteful.

    And yet, it's so convenient! I'm heating seed trays with electricity right now. How difficult it would be to heat seed trays by most other means! I want to take a stab at heating them with compost heat one of these days.

    Don Stewart, January 22, 2015 at 10:16 pm
    Jan

    It's rather humbling to me to look at what the French market gardeners were able to accomplish, without electricity or plastic or refrigeration. You note the convenience. It would be hard for most of us to go back to doing things the old ways.

    Don Stewart

    allcoppedout, January 21, 2015 at 8:59 pm

    Reblogged this on Allcoppedout's Blog.

    Cal Abel, January 21, 2015 at 9:01 pm

    Gail,

    Wonderful post. A few years ago I was working on modeling oil production only as a function of price, but ran into a problem, the price and the volumetric flowrate of oil didn't correlate well in my model. I tried normalizing to gold, GDP, CPI and non of those worked. After reading the work of Benjamin Ayers and Robert Warr, and doing some of my own work over at http://statisticaleconomics.org I developed a measure of marginal utility of a currency by determining the amount of energy that can be bought by the currency. I call this the Energy Price Index. I use the data from EIA's Monthly Energy Review with a little modification as the delivered nuclear fuel costs are no longer reported. When I applied the marginal utility of the dollar to the WTI price as a proxy for global production the model worked rather well.

    Where this gets interesting is when you apply the EPI to the Social Security Administration's Average Wage Index. When we look at the distribution of wages and specifically the mean and variance of the log of the wages, we see a picture where the complexity of our economy should be growing (variance greater than 1) but since 1999 the mean wage adjusted by the EPI is declining. Curious I plotted the money supply (M2) vs the EPI (marginal utility of money) What I saw was the same powerlaw form as of a polytropic process. What this means is that the QE that has been ongoing since the dotcom bubble has been actively cooling the economy (reducing the average utility of our income).

    My understanding of debt is different. I see it as an expectation of the future path of an endeavor, The interest rate and terms dictate what the debtor thinks is the value of their share of the future of that endeavor.

    I disagree with the idea of high capital cost of energy production being the correct metric. The better metric is the delivered cost of exergy to the economy. If we lower the cost of delivered exergy and increase the supply of available exergy then that is how we achieve growth. Don't discount nuclear so quickly, much of the cost is tied up in dealing with a regulator that has unlimited regulatory warrant, predicated on the false hypothesis of Linear no threshold. But that is a different topic for another day.

    Gail Tverberg, January 23, 2015 at 8:07 am
    Thanks for your thoughts on the subject. I would be interested in seeing a copy of your work on EPI and wages if it is available. An Internet link would be ideal. Otherwise, an e-mail to GailTverberg at comcast dot net would work.

    I think debt can have multiple conflicting definitions. The reason we encounter a problem is because the expectation of the future path of the endeavor is not correct in a finite world–it is invariably too optimistic. There is no real tie with the underlying resources, the cost of extracting these resources, and the ability of workers to pay for these high-cost resources, in their mix of goods they buy, which includes food and fuel.

    I have not studied the delivered cost of exergy. I think it is easy to forget that nuclear has its own challenges. Decommissioning cannot be done with electrical energy, as far as I can see. It needs oil products, given the machinery we have today. Also, high quality deposits of any mineral are limited in size. After that, we need to move on to smaller deposits in harder to access location, requiring more fuel products of the right type to access. Thus, the cost rises and our ability to actually keep the supply line working becomes increasingly difficult.

    There is also the theoretical alternative of getting a substantial part of the nuclear fuel back through reprocessing, but this involves building and maintaining plants, and the supply lines needed for this process, including the maintenance of roads. There is also the issue that many of our nuclear plants are already near the end of their working lifetimes. We will need oil to build new ones–we don't have machinery using electricity that do this. We need many supply lines to be in place to build these new plants. One of these is the continued education of engineers who can build nuclear power plants. I don't believe exergy measures this kind of energy. It is measured by Howard Odum's transformities, however.

    We can think of technologies of increasing complexity as forming a mountain. In this mountain, nuclear energy is near the top. It is easy to say–this is very efficient–Let's just use nuclear power (or LED light bulbs, or electric cars). What we forget is that we need the whole mountain of the rest of the economy, including the continued functioning of our banks and the continued functioning of oil supply, to actually make these products. They look like salvation, but they really aren't.

    Pingback: Uma nova teoria de Energia e Economia, por Gail Tverberg | Haraquiri - mostrando as entranhas

    Pingback: A new theory of energy and the economy – Part 1 – Generating economic growth | Зеленое будущее

    Øyvind Holmstad, January 22, 2015 at 12:13 am

    You talk about shoes. Have you heard about the new "Shoe City" the Chinese are building in Ethiopia: http://www.doorsofperception.com/development-design/shoe-city-vs-sole-rebels-2/

    It's a very strange world. 100 years ago shoes were made locally, now soon all shoes are made in Ethiopia! And when the economy collapses, nobody will know how to make shoes anymore. Not even the Ethiopians, as they just operate the machines for the Chinese.

    Gail Tverberg, January 23, 2015 at 9:17 am
    Interesting point!

    I might mention that the need for shoes is much greater in cold parts of the world than in warm parts of the world. In warm parts of the world, it is often possible to go barefoot comfortably, unless a person is trying to, say, traverse hot sand or rocks. Even then, sandals will provide adequate protection. These can be made very simply.

    In cold parts of the world, protection from the cold is needed. This is very difficult to obtain. I know when we visited a place in Norway where living conditions of the period around 1100 were reproduced, one issue the guide mentioned was the virtual impossibility of keeping feet warm enough in the winter, when working outside. This seems to have been a source of foot problems. I suppose one response would be to stay inside as much as possible during winter. Any kind of enclosure would help keep body heat inside.

    Øyvind Holmstad, January 22, 2015 at 3:46 am
    @Matthew, maybe because the process was much slower back then? The rapid increase in methane release now is anyway a fact. Nobody knows all the variables, but why take the chance?

    For my part I hope start making biochar in some years. If you don't want to take this chance, make biochar!

    Øyvind Holmstad, January 23, 2015 at 12:40 am
    - Arctic and American Methane in Context: http://www.realclimate.org/index.php/archives/2013/11/arctic-and-american-methane-in-context/

    (Shakhova et al (2013) did not find or claim to have found a 50 Gt C reservoir of methane ready to erupt in a few years. That claim, which is the basis of the Whiteman et al (2013) $60 trillion Arctic methane bomb paper, remains as unsubstantiated as ever. The Siberian Arctic, and the Americans, each emit a few percent of global emissions. Significant, but not bombs, more like large firecrackers.)

    reverseengineerre, January 22, 2015 at 5:36 am
    It' a consumption based economy, not a lot different from yeast in a vat of sugar. You grow until you run out of sugar, then you die off until there are only so many yeast cells as can consume sugar produced by other photosynthetic organisms daily.

    Once the stored energy is depleted down to the extent it cannot be drawn up with less energy than it takes to draw it up, then you survive only on what is available on a pay as you go basis. Very simple really.

    The only real question is how rapidly the demand destruction occurs, and whether that is more rapid than the resource depletion. The demand destruction comes first from the current population using less per capita energy, then after that comes from fewer humans consuming the energy.

    RE

    step back, January 23, 2015 at 9:12 am
    RE:

    I think we are more like a beehive than a Petri dish full of yeast.

    In the Petri dish, each yeast cell fends for itself.

    In the beehive, the 99% work for the 1% (the Queen)

    and they all depend on a nearby field providing sufficient resources (nectar).

    I hope you do a podcast on your Doom Diner site about this topic.

    Gail Tverberg, January 23, 2015 at 9:26 am

    Maybe so. I think pollution plays a role too, both in the case of yeast, and in the case of human populations. We don't always know what the pollution is. We hear about the lead drinking containers in ancient Rome causing lead poisoning. Someone examining our civilization a thousand year from now may talk about plastics poisoning our environment, or the use of herbicides and pesticides on food, or a whole list of other things (mercury, lead, prescription pills in drinking water, hormones in meat, materials in land fills, materials collected in filters from coal fired power plants, food coloring in grocery products, etc.)