Oil Limits, Recession, and Bumping Against the Growth Ceiling

The issues we are confronted with today seem to be a subset of the issues foretold in the book Limits to Growth back in 1972. At some point, the economy cannot continue to grow as rapidly as it did in the past. It appears to me that the most immediate limit we are hitting today is inadequate low-priced oil, but there are other limits lurking not far away–inadequate fresh water and excessive pollution, for example. When the economy cannot grow as fast, or actually starts declining, recession sets in. Governments start having debt problems. Financial markets start behaving strangely.

This issue is a difficult one to talk about, because there really is no good solution. I have talked to a couple of groups recently (one a church group; one a peak oil group), about this issue. This is a copy of the presentation I used (Bumping up against the Growth Ceiling (PDF) or Bumping up against the Growth Ceiling (PowerPoint)). In this post, I will discuss my presentation.

Slide 1

Slide 2

The world is finite. We know that, logically, the amount of any resource extracted from the world’s crust cannot continue to increase year-after-year, forever. But most of us have never thought about the idea that economic growth might eventually stop because of limits we hit.

Slide 3

It seems to me that the financial problems we are reaching today reflect a fundamental mismatch. We have a financial system that requires growth. At the same time, world oil supply has stopped rising enough to keep oil prices down. This mismatch threatens to put a cap on economic growth, especially for large users of oil such as the United States and many European countries.

Slide 4

Let me start by describing why our economy needs economic growth.

Slide 5. Image by Tony Wrigley http://www.voxeu.org/index.php?q=node/6781

Europe has used coal for about 450 years, according to Tony Wrigley. The use of coal helped reduce the amount of firewood needed (cream-colored area), and thus helped prevent deforestation. The use of coal also led to economic growth, because its energy could be put to many uses. According to Wrigley’s analysis, wind and water never produced a large share of the total energy supply.

In recent years, oil and natural gas have been added to the energy mix. All of these fossil fuels have helped increase the amount of food produced and the quantity of manufacturing done, and thus, economic growth.

The fact that we have had fossil fuel driven economic growth for such a long time–at least 450 years–has helped create the belief that economic growth is the natural state of affairs. It is easy to believe that it will always continue.

Figure 6.

Our financial system today depends on the use of debt, and the repayment of that debt with interest. We don’t usually think of it, but in a growing economy, it is much easier to repay debt with interest than in a declining economy, because, on average, things are getting better over time. This is easiest to see for an organization like the government that funds its borrowing with taxes. These taxes tend to rise when the economy is growing, making it easier to repay debt and the interest on that debt.

The same principle works for other individuals and businesses. If an economy is growing, a person is more likely to be able to keep his job, to get a new job if he is laid off, and to get promotions, so it is easier to repay loans and the interest on those loans.

Slide 7

Of course, the reverse is true in a shrinking economy, or even a level economy. The loan plus interest leaves the borrower with less money left over for other things, so is more difficult to repay.

Slide 8

Reinhart and Rogoff wrote a well-known academic paper, and made the observation quoted in Slide 8, apparently not understanding why this relationship existed. It seems to illustrate the relationship that a person would expect, based on Slides 6 and 7.

Figure 9

Economic growth provides many types of benefits. If the economy is growing, people have jobs, and many are getting raises. People can afford to buy bigger homes, so home prices tend to rise. The stock market tends to rise, because companies are making increasingly large amounts of money, and people believe that they will continue to make more money in the future. The number of people employed tends to rise, because of rising demand for goods and services.

Governments find that taxes rise, even without raising tax rates, because citizens are prospering. Charitable organizations, like churches, see rising contributions.

Slide 10

With the use of fossil fuels, it was possible to greatly increase food production. Population grew in the same time period that fuel use grew. World population is now about 7 billion, compared to about 450 million in 1500 . Thus, population is now more than 10 times as high as it was in 1500.

Slide 11

In this slide, I show a few of uses of oil. Oil is especially important for growing and transporting food. Thus, its use helps explain the recent population rise.

Slide 12

Thee unfavorable outcomes shown on slide 12 are just the reverse of the favorable outcomes mentioned earlier, when there was adequate economic growth. We recognize them as problems we have seen during recent recession.

Slide 13

Next I would like to talk about how limited oil supply is constricting economic growth.

Slide 14

On this slide, I divide world oil production into two parts–oil produced by the Organization of Petroleum Exporting Countries (OPEC) and oil produced by Non-OPEC countries. OPEC countries claim to have plenty of spare capacity, but it is hard to see that such capacity actually exists from their actions. Neither OPEC or Non-OPEC production has increased very much since 2005, even when prices spiked very high in 2008. OPEC cut back production somewhat when oil prices dropped, but that is more or less expected, because at a low price, some extraction may no longer be profitable.

Readers should be aware that statements made by OPEC countries are not audited. When US oil companies were involved in the Middle East prior to 1980, oil reserves were much lower than today. After state-owned oil companies took over, there was competition to raise reported reserves. Some of these increases may be simple exaggerations; others may be correct, if a person includes oil that can be produced at a dribble a year, over many, many years. But we are likely kidding ourselves if we think the high reserves indicate spare capacity, or likely higher production in the future.

Also, statements about OPEC raising oil production aren’t necessarily very truthful. If they do raise production, it may only be to cover rising internal consumption, with virtually no impact on exports.

Slide 15

We often read that there is a huge amount of oil available, in the oil sands in Canada or in the oil shale in Colorado, for example. The problem is that not all oil is equivalent. Some oil is a liquid, and is easy to extract. Other oil is not a liquid, or is in very inconvenient locations. Our problem is that a lot of the easy-to-extract, cheap-to-extract oil from the top of the triangle was extracted first, and is now gone. What is left is mostly oil that is much harder to extract. As an example, some oil is very “heavy” and oil companies may need to use steam to heat the oil, and then collect the dribbles of melted oil.

Slide 16

To elaborate a bit further on why we can’t get the oil out, one problem is that quite a bit of the cheap oil has been extracted, and expensive oil (which we have plenty of) seems to cause recession. Economist James Hamilton has shown that 10 out of 11 of the most recent recessions occurred in conjunction with oil price spikes. (We will talk a more later about why high oil prices tend to cause recession.)

In order to justify extracting the very expensive-to-extract oil, companies need very high prices for a long time, so that they have reasonable confidence that prices will be sufficiently high when the oil is extracted and ready to sell. But oil prices don’t seem to stay high long enough–high oil prices seem to lead to recession, and recession brings them back down again.

I might mention, too, that there is a theoretical upper bound for prices. Just as you wouldn’t use more than one barrel of oil to extract a barrel of oil, at some point, the resources that go into extracting the oil become too high, relative to the benefit to be obtained from using that oil. If this happens, there is no point in extracting the oil–it makes more sense to leave it in the ground. For some of the oil resources, we may be approaching the too-expensive-to-extract limit.

Slide 17

The fact that world oil production is more or less on a plateau is not entirely unexpected. In many countries, oil production has risen, reached a peak or plateau, and then begun declining. If the world is the sum of production of individual countries, the world might also eventually get to a peak or plateau.

For the United States – 48 states (blue on Slide 17), oil production suddenly started declining in 1971, after hitting a peak in 1970. When we realized that there was a problem, we quickly got to work on extracting oil from other areas. We ramped up production in Alaska in the late 1970s (red “layer” on the map), and added a pipeline so that the oil could be transported better. The amount of oil obtained from Alaska has now dropped to less than half of its peak amount.

Eventually, we started drilling in the area designated as “Federal offshore,” mostly in the Gulf of Mexico (light green layer on graph). The oil from the Federal Offshore area is still increasing, but no one expects that it will bring us back up to the 1970 level of peak production. Last year’s oil spill occurred in the Federal offshore area.

The decline in US oil production had been predicted in advance, although oil companies did not believe the forecasts. M. King Hubbert had predicted in 1956 that oil production in the United States would peak between 1965 and 1970. In the same paper, he also predicted that world oil production would reach a peak around the year 2000.

Hyman Rickover, a four star admiral in the US Navy, gave a speech in 1957 in which he explained the importance of oil, and talked about the fact that oil supplies were expected to run short around 2000, and natural gas and coal not too much later. Because of the likely shortfall, he said the nation should conserve its resources and should tell its children about the upcoming problem, so that planning could be made for the difficult transition away from fossil fuels. Needless to say, schools have not taught much about this problem.

Slide 18

On Slide 18, I show oil production of two areas that were brought on-line after it became clear that US oil production was falling shortly after 1970. The top graph shows European crude oil, which is mostly oil from the North Sea. Its production was on a plateau from 1996 to 2001, but is now declining.

The bottom graph shows Mexican crude oil production. It was ramped up quickly after it became clear that US crude oil production was declining. The graph indicates that since 2004, Mexican oil production has been declining as well.

With all of these areas experiencing declining production, it is not surprising that world oil production has been close to flat. There theoretically is non-liquid oil that could be steamed out, and very deep oil that could be extracted at great cost, but all of this would require huge expense, long lead-times, and assurance that oil prices would be high at the time the oil was finally extracted.

Figure 19

Having flat (or close to flat) world oil production wouldn’t be a major problem, if world demand for oil weren’t rising. But what is happening is that countries like China and India are using a greater percentage of the available oil. Oil exporters are also using more, because their populations are growing rapidly. When these countries use more, this leaves less oil for the United States and other “developed” nations to consume.

Slide 20

I’d like to talk a little now about what happens when an economy doesn’t have enough inexpensive oil.

Slide 21

One thing that tends to happen when oil prices rise is that food prices tend to rise as well. This occurs mostly because oil is used in food production and transport. The fact that food and fuel prices rise at the same time causes a double problem for consumers, since food and fuel for commuting are both necessities. As a result, consumers tend to cut back on discretionary expenditures when oil prices rise.

Higher food prices can have other impacts as well. If people’s incomes haven’t risen and the increase in food price is severe, or if many are unemployed, there may be riots, and governments may be overthrown. We have already seen this in the Middle East and North Africa. If governments cut back on programs for the poor, as in London, this may further raise the potential for riots.

Slide 22

The graph shows that there tends to be a tie between world economic growth and growth in oil use. The tie may be less close after 2005, because of greater coal use in recent years.

Slide 23

Slide 23 shows the steps I see that lead from rising oil prices to recession. I might add that when discretionary spending drops–such as fewer trips to restaurants–employers tend to lay off workers. The fact that these workers have been laid off further adds to the cutback in the purchase of discretionary goods and further adds to debt defaults.

If many people are laid off from work, governments start finding themselves with increasing financial problems for several reasons:

  • Lower taxes collected, because fewer people are working
  • Higher expenditures, because there are more unemployed people
  • Need for stimulus funds, to try to increase employment
  • Need for funds to bail out banks and insurance companies

Slide 24

What seems to happen when there is a shortage of cheap oil is that the whole economy tends to shrink. The way I think of it is similar to making a batch of cookies. If a baker finds that he has a recipe that calls for four cups of flour, but he only has three, he needs to make a smaller batch. When he does this, he uses less of his other ingredients as well – sugar, eggs, shortening, and chocolate chips. If he had planned to use a whole bag of chocolate chips, he may only need to use part of a bag.

The economy seems to work in a similar fashion. If oil is too high-priced, the economy shifts to a mode of operation that uses less oil, but also employs fewer workers, uses less steel and copper, and uses less electricity. We call it recession.

Slide 25

Now I’d like to talk a little about what happens after an economy starts hitting the ceiling with respect to economic growth.

Slide 26

One thing that seems to happen is that oil prices seem to keep spiking.

The last recession ran from December 2007 to June 2009. This period started while oil prices were rising, before they hit a peak in July 2008, and ended after prices had collapsed and were again on the upswing.

We are now in the midst of another oil price (and food price) spike. We don’t know for certain that we are headed into a recession, but evidence is starting to point in that direction. Reported economic growth has been less than 1% in the first half of 2011. Given the past history of recessions being associated with oil price spikes, we shouldn’t be surprised if this spike leads to recession in the not too distant future.

Slide 27

Another thing that seems to happen as we start hitting limits is that private debt (blue on Slide 27) starts to decline. This is related to what I said on Slides 6 and 7 about the need for economic growth in order for debt to work out well. If oil prices are high, and recessionary forces are starting to hit, people don’t want to take out loans to expand their businesses, because it doesn’t look like there will be enough sales to support the expansion. Workers don’t want to move up to new bigger homes, partly because they haven’t gotten raises recently, and partly because future prospects don’t look all that good. Some credit card consumers find their cards cut off, because they have failed to make required payments.

Government debt (in red) tends to increase rapidly, but not rapidly enough to keep total debt rising the way it was prior to hitting growth limits. (Government debt in red is added to the private debt in blue, to produce the total debt.)

Government debt grows for a couple of reasons. First, tax revenues tend not to rise as rapidly, or to actually fall, because of higher unemployment rates. Second, government expenditures are higher, both for programs to help the unemployed, and for stimulus programs. This combination leads to the type of debt limit crisis that we recently experienced. Many European governments are experiencing similar difficulties.

Figure 28 - Source of Graph: Paul Chefurka http://www.paulchefurka.ca/Adaptive%20Cycles.html

We can’t know precisely how things will turn out, or exactly what the time frame will be. But at least some estimates are that things will turn out very badly. The shape of the graph shown in Slide 28 is sometimes called “Overshoot and Collapse.”

The problem we have is that the world’s population has grown to 7 billion people. If we substantially cut back on oil (or on fossil fuels in general), there is a question as to whether we will have enough food and water to support the 7 billion people alive today. If we had very many fewer people, we would have much less of a problem.

Some of the particular problems we are running into now relate to government debt, and inability to fund government programs for the unemployed at reasonable tax rates. It is not clear how these can be resolved. It is virtually impossible to raise tax rates enough to cover the cost of currently promised benefits, especially if unemployment rates rise even higher in the future. At the same time, cutting benefits can lead to riots–or even the overthrow of governments.

Slide 29

At this point, alternatives look like they will be too little, too late.

The closest substitute for oil is biofuels, but the ethanol we use today tends to use a huge amount of our corn crop, with very little ethanol yield. In 2011, ethanol is expected to use a little more than half of America’s corn crop. The energy content of a tank of ethanol is equivalent to the amount of food needed to feed a small person for a year. And of course, using a large amount of corn for ethanol tends to keep food prices up.

Most of the mitigations we hear about are electric–wind, and solar photovoltaic, and geothermal, and biogas. One problem with electric mitigations is that they don’t directly fix our oil shortage problem. The cars you and I drive today don’t run on electricity; they run on gasoline or diesel fuel.

Another problem with electricity mitigations is that they tend to produce only a small quantity of electricity. The layer I show as renewables includes all of the “new renewables” I listed above, plus wood scraps and sawdust, which are sometimes burned for electricity. The renewables line is getting thicker, but its growth is almost matched by the shrinkage in hydroelectric over the years. So in total, we aren’t getting very far, very quickly.

Also, I should point out that even if an alternate source of energy is called “renewable,” it doesn’t really mean that it could be maintained for very long, without the use of fossil fuels. Our electricity transmission wires are maintained using trucks and helicopters that use oil-based fuels. Wind turbines (and replacement parts for repairing wind turbines) are shipped using oil-based fuels. It requires fossil fuels to make solar panels.

Another issue is that alternative fuels are often expensive. If high-priced oil is leading to recession, it is difficult to see how even higher-priced alternatives will fix the situation.

Slide 30

Let me conclude by talking a little about where we go from here.

Slide 31

It seems to me that we have to take one day at a time. Worrying about tomorrow doesn’t do a lot of good.

I think we can probably expect another recession and more layoffs. The recession will probably be severe, because governments are in worse financial condition than they were last time around, and will tend to contribute to the recessionary problems, rather than offset them with stimulus funds.

It seems as if there is the possibility of a cutback of government programs. If this happens, there may be people who are hungry, and in need of assistance. There may even be riots.

If  a bad recession occurs, almost every business, charity, and church congregation will be in similar circumstances. If sales or donations decrease, they will need to choose between laying off staff or defaulting on debt. Banks and insurance companies are likely to be faced with a large number of debt defaults. It is not clear that these debt defaults will necessarily result in evictions–it wouldn’t work for banks to own a large number of houses, and have people out on the streets.

Slide 32

It seems to me that we should do what we can do today, and not wait until sometime in the future, when the world situation may not be as good. My husband and I took a trip to China in May, figuring that our opportunity might not be as good in a few years.

We should also count our blessings. We live today with luxuries that even kings did not have a few hundred years ago. Life expectancies a few hundred years ago were only  30 to 40 years. Many readers have already lived longer than could be expected, not too long ago.

There is no real solution to our predicament. Even if a cheap liquid fuel could be found in abundance tomorrow, at most what it would do would be move the problem down the road a little way. Population would continue to grow. Pollution would become a greater and greater issue. We would have more problems with fresh water. We would likely come to another limit, in not too many years.

What should we do individually? One possible remedy is to keep some water and food on hand, in case of temporary unavailability. This can work for a short time, but it is really not feasible to store, say, 20 years worth of food and water.

I think that we should plan as if  electricity may someday may not be available, or may be available only intermittently, because all of the various systems (financial, oil, electricity) are closely connected, so a disruption in one system may affect other systems. It is good to plan for windows that open, and non-electrical approaches for key business functions.

Gardening sounds like a good idea, and it is. But I don’t think we can count on a garden to save us, if there are starving people near by. In some sense, we really need a solution for everyone, but with 7 billion people in the world, this is difficult to do.

I would not count on paper investments, because of the potential for a large number of debt defaults. If governments are in poor condition, their guarantee of bank accounts and pension plans means less than it did in the past.

High population is clearly an issue. It would be great to be able to fix this problem through smaller family sizes, but doing so is not as easy as it sounds. If there is economic decline in the future, birth control may become less available and governments may not be able to continue to fund their retirement programs. These changes may lead to families having more children, rather than fewer.

I don’t know that any of us have the right answer as to what to do. The best we can do is pool our thoughts. Those who believe in a higher power may want to seek guidance from above, as well. But there are clearly no easy answers.

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 financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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115 Responses to Oil Limits, Recession, and Bumping Against the Growth Ceiling

  1. Terry Berg says:

    Always insightful … Thank you for sharing this.

  2. Bicycle Dave says:

    High population is clearly an issue……Those who believe in a higher power may want to seek guidance from above

    And, what “higher power” is that? http://www.venganza.org/

    I have yet to hear of a mega church shaman encourage smaller families. Clearly, there is no solution at all until humans are able to move beyond irrational beliefs in the existence of a supernatural dimension to our existence – beliefs that suck all of our energy and creativity away from finding a way to live in harmony with nature on this planet.

    It may be of some comfort to believe that a community of like-minded believers will provide shelter-in-the-storm – like a song fest on the Titanic.

    • My church talk was in a Lutheran church. My words there were actually somewhat different.

      There are several different branches of Lutheran. The background I am from is the liberal end–not everything is literally true. The Bible is a collection of writings (or written down versions of oral traditions), written by different people for different purposes. The Lutheran Church doesn’t usually take strong stands on things, other than a need to help the poor, and to forgive one another. There isn’t an issue with smaller family sizes.

      If churches can help people live together peaceably in difficult times, it seems like this in itself is an important role.

      • John Shuck says:

        Thank you for this report. I appreciate that you presented it to your church. I try to get this information into my church and do and I hope in doing so that we somewhat more psychologically prepared when we feel more effects of these limits. I do think churches will (or can be) useful institutions. I am a Presbyterian minister (also liberal) and I have been following Peak Oil and the Oil Drum for some time.

        • Good luck with your project. I know several people have made the comment that churches can be useful institutions for passing around information, and also for supporting one another.

          I have cousins and uncles who are/were pastors. My sister Lois Tverberg writes religious books.

    • schoff says:

      Please don’t take the mega-churches as representative, last time i looked the average Christian church in the US was 125 people or so. What gets talked about at the Sunday afternoon pot luck, let alone the pulpit is pretty diverse. Population control was an issue discussed beginning in the 60’s in the United Methodist Church as an example.

    • Joel in SF says:

      You have a right to your opinions but boy are they nasty and hateful towards religion and the religious. I view religion as a group of decent people banding together to protect ourselves from nihilists like you. You will always lose because religion is about unity and not selfishness as you seem to be an advocate of.

      • wappledoo says:

        I don’t necessarily agree with the tone or specific points made by Bicycle Dave, but I also don’t think it’s fair to say that us non-believers will “always lose” — the massive growth of self-identified secularly-minded people over the last century or so shows we are slowly winning over the hearts and minds of the world. People should be good and decent to one another for the sake of goodness and decency, not because some religious leader or religious text tells them to be good and decent.

        Please don’t view Bicycle Dave as representative of the non-religious, any more than you want us to think of mega-church ministers as representative of the religious. The vast majority of non-believers are just decent people who don’t think it makes sense to have our beliefs about morality dictated by other people who are claiming those mandates come from some higher power.

        • Andrew in the Bay Area says:

          I am not terribly religious although raised to be somewhat so. Frankly, I think the anti-religious people are as much of a religion as the religious and equally annoying and nuts. I will say that, having lived in areas that are more “liberal” (NYC, L.A. and S.F.) my entire adult life that I think I can make the assumption that contain the most atheists in the U.S. I have seen no evidence of decency or morality among any of these people. They treat each other terribly. They ignore their neighbors. They run down kids and grandmas so they can get to Starbucks faster than if you had got in their way. Sorry, but whether it’s lack of religion, modern “liberalism”, or just a complete degeneration of our decency values not tied to any of this…I see a lot of evidence that the religious, in say Oklahoma, are much better people than the non-religious in the areas I’ve lived that I listed above. Smugness, arrogance, elitism, and sometimes wealth don’t make up for decency, politeness, and values that push you and your community forward instead of backwards. I think you either have to have grown up in these areas and around these people to think this is normal or are just in denial.

          And as a reminder: Churches have historically been at the forefront of most “progressive” movements. Of course, I think many of them feel as though some of these more recent movements have become contrary to the values they believe are important but I have no interest in opening up a whole other can of worms here.

          • I know that church members tend to have longer life expectancies–but I think part of that is selection. People who are high on drugs all of the time, or drunk, tend not to be church members. There are good things to be said for sitting down once a week, talking about how to live better, singing some songs together, making some friends, and drinking a little coffee together.

      • Jeff says:

        She’s just reporting the facts, not a nihilist coming after you, you paranoid idiot. How is she an advocate of selfishness?

    • DownToTheLastCookie says:

      Dave, I couldn’t agree with you more. I just wish I would have wrote it.

  3. robert wilson says:

    Warren Buffet was on Charlie Rose – 60 minute streaming video available. He seems to have no concept of Limits to Growth. It is difficult for me to believe that he doesn’t really know what is going on http://www.charlierose.com/schedule/?date=2011/8/15

    • Denial is a popular response. Even quite a few “peak oil” folks can only think of our problem in terms of something that might be fixed with the next version of nuclear, or better efficiency.

      • DownToTheLastCookie says:

        A few years ago Warren Buffet invested in Rail Roads because of there efficiency. I think he gets it !

  4. Larry Shultz says:

    In the past major religious leaders and their followers have been on the side of expanding population and were aligned with the political system to support most wars, The default religious position has been the 4 horseman as the earth and its carrying capacity is finite and nature culls to carrying capacity. The carrying capacity added by ancient sunlight will wane by definition. Religions have said little about topsoil loss or aquifer depletion (and done even less) so the eventual decline in food production per capita is the default position as diseases and wars have yet to stop the worlds population from increasing. About 75 million a year are currently added to our numbers. Anothere default position is a greenhouse world as religions in general have yet to say much (or do even less) about the buildup of greenhouse gases, This also implies decline in food production per capita. Pray ins at gas pumps will not create any more energy captured from ancient sunlight nor will pray ins at grocery stores create any more food as the default position lowers net primary planetary productivity proving the correctness of the 4 horseman “theory”.

  5. wappledoo says:

    My solution is for us to focus our resources (while we still have them) on colonizing space, with a clear mandate that we must find a way to reduce growth and live sustainably before we inhabit the entire solar system. If we dedicated a few hundred billion dollars per year of global resources to putting a significant human presence in space, we could start tapping the vast resources of our solar system to fuel our growth until we find a way to live sustainably.

    • I am afraid the energy cost of tapping resources from other planets (and even farther out) would be way too high to work.

      • wappledoo says:

        I don’t think the issue is tapping resources from other planets to supply Earth — maybe some space-based solar power arrays in Earth orbit for electricity, but not much more than that — the real goal is to capture near-Earth asteroids for precious rare-Earth metals (which many are rich in), which could be used for batteries and solar panels, as well as just giving people a place to explore and inhabit beyond the planet.

        If we can get significant populations of miners, explorers, farmers, and energy harvesters living in space (not on other planets, but on the moon, asteroids, and man-made structures), you can begin to harness the mind-boggling amount of energy our sun puts out, which dwarfs the energy capacity of any Earth-bound civilization.

        The problem is it would take significant dedicated resources over a matter of a few decades to really start to develop self-sufficient small-scale habitations in space, and it seems unlikely that will happen. But if it did happen, I think that’s the best potential the human race has for long-term survival. If we don’t do that soon, the energy constraints will become so great that I fear we will never manage to colonize space. Which means we get wiped out the next time there’s a global catastrophe caused by a collision or supervolcano.

        • SqueakyRat says:

          You’re missing Gail’s point about energy costs. Getting a spacecraft from here to the asteroids and back (with a cargo) would take so much energy as to make the transport of even very valuable raw materials economically unfeasible. Unfortunately, that’s just about baked into the physics.

        • wappledoo says:

          No, I understand her point, but I take issue with it. Energy costs are big for launching stuff from Earth every time you want to explore an asteroid or the Moon, but if you start building infrastructure in space and having human beings living in space, you only have the cost of reentering the final product, which has a very low energy cost. Also, energy is cheap once you’re in space if you have solar panels and something for propellant (pretty much any liquid or gas should work).

          The key is to stop thinking about space transportation costs as including a launch component every time you are trying to mine an asteroid. You just launch the miners and equipment once, and then they are long-term inhabitants of space, and the mining equipment doesn’t come back down again. A simple solar sail or low-power ion drive can be used to bring your block of finished product into a decaying orbit, and you just need some minimal shielding and a parachute to bring down the (unmanned) block of rare earth metals.

          Most importantly, the goal would be to start making products in space *to be used in space*. Encourage people to emigrate to space and live and work there, rather than go on a mission and return to Earth afterward. If that’s the mentality, the energy costs are a lot more one-off, and a lot less daunting.

          • You need an awfully lot of things on the ground to be working right (electricity, financial, roads, government, education, etc.) to be working well, to support a big space endeavor, so it doesn’t look like it would have a long life, if launched.

            Also, if governments are not making ends meet, they certainly won’t put any money toward a large space platform and other infrastructure. I don’t see private industry funding this kind of thing either.

        • wappledoo says:

          I think the goal would be to bill it as a way to escape the stagnant, dying planetary society and forge out and make something new and better again. If you can get people to pay enough for that opportunity per seat, you can pay for a lot of the initial costs. The more quickly you can get an economy going that’s relatively independent of Earth the better, though — probably a good 50 years to really extricate itself from our decay. I mean sure you’re leaving behind a lot of great people and only taking people who are either wealthy enough to pay a boatload or a high risk-taker willing to do dangerous work, but it seems like a way to create an offshoot of human civilization that may be able to rejuvenate Earth again at some point down the line.

          Obviously the costs are high, and the risks are high, and it’s not the sort of thing with a high chance of success. But I think you’re too quick to discount the possibility that it could succeed, and the potential benefits if it does succeed.

        • Larry Shultz says:

          This may be our only moment in the sun to leave the planet, or It may have passed. The sun will die out so humans will die out by then or before unless we can leave this solar system (unless some other extra terrestrial civilization helps us which I view as very unlikely).

        • wes R says:

          We have about a maximum 30 year oil supply so you can forget deep exploration of the universe. If energy were cheap like the early space program, it would be easy, but for now forget it.

          Look to 2013 – 2015 as the dramatic esclation price point starting in the energy industry and huge problems developing because of it..

      • jdwheeler42 says:

        I think everyone is missing the real point. Space colonization, at least for the foreseeable future, will not allow us to transcend our terrestrial limits. What it does do is force us to learn how to live within even more extreme limits than are present on this planet. When you are on Mars and shipping something from Earth costs $25,000 a pound and takes 6 months, you are going to develop very robust, self-sufficient life support systems. Those technologies which will make life possible on another planet will make life even more abundant on this one.

        We don’t even need to actually move to get started. Just the inspiration of working towards colonizing new worlds can be sufficient to develop the technology.

        • Stravinsky7 says:

          jd, your point is valid. 🙂

          First in a long line of space colonization effort related points that I’ve ever seen.

          I just can’t believe we can survive the inhospitable reaches of cold space when we bumble about so bad that we seemingly work towards the ruination of the near-ideal mother earth. blahdee blahdee blah.

      • Ikonoclast says:

        Do you remember Kubrick’s movie: “2001 – A Space Odyssey.”? This movie was released in 1968 and made predictions about 2001. Among the items depicted were;

        1. Commercial Space shuttles to and from earth.
        2. An orbiting international space station with floorspace equal to a massive hotel.
        3. Shuttles to the moon.
        4. An enormous underground moon base.

        You get the picture. And what do we see in 2011? Absolutely none of these things, merely an abandoned shuttle program, a bunch of small satellites and an orbiting space station the size of a small caravan. The reason? ENERGY (or lack thereof) exactly as Gail says.

  6. David F Collins says:

    There are many major points in this essay/presentation, which presents a coherent set of concepts in condensed, sensible form. Perhaps the major one is that growth-as-natural has become a fundamental, unquestioned part of our society’s Weltanschauung — for at least the past couple of centuries or so. And this poses perhaps the biggest obstacle to dealing with the limits imposed by the finiteness of resources.

    In the biography of John Adams by David McCullough, I read of Adam’s trip across the Atlantic during the Revolutionary War. In the course of one horrid storm, he stayed in the cabin with his son John Quincy, passing the time by teaching the kid some basic fundamentals of Differential Calculus. So Adams Sr. and Jr. were well aware of calculus, and should have been aware of the limits on exponential growth in a finite environment. But both remained blissfully unconcerned, both working for continued exponential growth, of economy, of population, etc. although they never evinced any awareness of it in such terms.

    Considering that neither Adams was even remotely challenged regarding intellectual horsepower, and that they were amazingly open-minded and original thinkers, does not bode well for fundamental change in our society’s Weltanschauung.

    Separately, I would appreciate an end to putting down religion. It is off-topic and contributes nothing.

  7. Thank you Gail.

    I think the western public is beginning to understand the situation even if we don’t quite consciously tie it to oil and resource extraction in general. Our leaders don’t seem to intuit the situation quite yet however, it seems they are on the same page as the Chamber of Commerce types seen nightly on the financial news, at least according to their talking points.

    Hopefully they are right and sustainability and green shoots are just around the corner.

    BTW, here is a paper from ’09 on the updated Limits to Growth model:

    Finally, I won’t put down religion but I will point out the fact that 40% of Americans believe that the universe and of course, humans, appeared fully formed less than 10,000 years ago. I think that is an important factoid to remember in considering what our response might be to evidence relating to such things as the end of growth, peak oil, GW, etc.

    • My own view is that the current version of the Limits to Growth model has a lot of deficiencies. For one thing, the demand model is not right–it doesn’t consider how much people have to pay for goods and services. For another, the model does not consider the role of the financial system at all (which is part of the reason the demand model is wrong). I think the model makes things look better for longer, than they really are.

      The people I have talked to so far are probably self-selected not to be in the group that believes that the universe was formed less than 10,000 years ago. I am supposed to give a similar talk to a university class in a couple of weeks, and that might be different. The area where I live is heavily Baptist, and they are generally of the “less than 10,000 year ago” belief. But the students did sign up for a course related to peak oil and limited resources, so I expect that there will be some self-selection there as well.

    • Annew says:

      Using a common sense approach, although not necessarily a popular one, the best course of action could be for all humans to develop the same habits as the Amish. I am pretty sure that the majority of Americans could not come together long enough to build a house from scratch (no home depot delivery), nor could they grow their own food (animals included), and I’m pretty sure that going for a ride in a hand built, hand forged buggy would be beyond them. I can’t say that ALL would have a problem with it, but the majority would fail or swoon in horror at having to get dirty, do without makeup, and soooo many would faint without their daily television programs. The Amish take care of their own and the planet far better than most. I would say it’s a marvelous accomplishment, be it for religious reasons or for self preservation. Not only are they eco friendly, but they are economically sound.

  8. Robert says:

    One of the things that has always amazed me when reading about resource depletion and especially overpopulation is that the issue is almost always talked about in a global fashion and rarely about the need to attack it locally. This is especially true for left leaning environmental types as addressed in a new book by conservationist Dave Foreman:

    • Population is a difficult subject. Back in the 1960s and the early 1970s, there was a lot of publicity about population growing too rapidly. People paid attention, and the birth rate per 1000 population dropped from 25.7 in 1957, to 17.8 in 1967, to 14.8 in 1975. The latest birth rate on this display is 2009, at 13.8.

      When birth rates are close to replacement levels, it is hard to make an argument that they should be lower, unless you can show that some dire thing will happen if population will stay its current level. I think that is why people don’t talk about it now.

  9. Robert says:

    Yes Population is a difficult subject and the world’s population is currently growing at about 80 million people a year. What the author of the book was pointing out was that even though the U.S. has a replacement level birth rate, we are artificially growing our population due to the high level of immigration being allowed. Between 1922 and 1965 the U.S. had more or less replacement levels of immigration. The immigration laws were changed in 1965 to allow far more people than prior with our current levels of legal immigration being 1 to 2 million per year and that’s not even addressing the levels of illegal immigration currently being experienced. This is an emotional and touchy issue for some but I do feel it needs to be addressed if we want to make the coming resource shortages a little less harsh. Thank you for writing on these issues as I value your insight.



  10. schoff says:

    Gail, can you share the citation on hydropower declines matching renewable increases? That is new to me.

    It would be interesting to look at the changes in both geographic distribution as well as “use of generation”. A decline in Washington State hydropower for aluminum smelting for Pennsylvania farming is actually a great trade.

    I tend to look at the PV and sub 10kw wind generation as I did the transition into the Internet from the previous (proprietary) communication methods, it added significant more reliability.

    • Regarding the hydropower declines and renewable increases, the observation is really mine, relating to the electricity sector, based on putting together graphs of the pieces, using EIA data such as this exhibit. http://www.eia.gov/totalenergy/data/annual/pdf/sec10_3.pdf The linked exhibit has biofuels, as well, which is of course not electricity. Or look at Generation by Source from the Electricity Data page . As a percentage of total electricity production or consumption, renewables including hydroelectric have been pretty much flat.

      • schoff says:

        Fascinating, this requires a paper and presentation all of itself! By continent or by country if you can gather the data. I’m always interested in best practice, so it would be interesting to know who is holding steady in hydro and growing in renewables.

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