High-Priced Fuel Syndrome

Governments and economists around the world have not figured out that what the world economy is suffering from, to varying degrees, is “high-priced fuel syndrome“.

High-priced fuel syndrome has a number of symptoms:

  • Slow economic growth, or contraction
  • People in discretionary industries laid off from work
  • High unemployment rates
  • Debt defaults (or huge government intervention to prevent debt defaults)
  • Governments in increasingly poor financial condition
  • Declining home and business property values
  • Rising food prices
  • Lower tolerance for immigrants
  • Huge difficulty in funding retirement programs, programs for disabled, and regular pension plans
  • Rising international tensions related to energy supply

The countries with the most problem with high-priced fuel syndrome are the industrialized countries that are big importers of oil. This is the case because oil has been a particularly high-priced fuel in the past few years. Importing high-priced oil adds challenges of its own, since funds used for imported oil flow out of the country.

Figure 1. Historical inflation adjusted oil price per barrel, (Brent equivalent in 2011$), based on amounts shown in BP’s 2012 Statistical Review of World Energy.

While oil is the biggest culprit in high-priced fuel syndrome, high-priced fuels of other sorts can play a role as well. Natural gas is recently high-priced in Europe and Japan, but not the USA. The higher natural gas price contributes to a higher average energy cost level for these countries.  High-priced renewables, such as off-shore wind and solar photovoltaic, can be expected to act in a similar fashion, because they add to the price challenge customers face.

At this point, Europe is hardest-hit by high-priced fuel syndrome. In part this is because Europe is a big importer of both oil and gas,  and both are high-priced. European countries have also encouraged the use of high-priced renewables, adding to their difficulties.

While many people have laughed at the issue of the world “running out of oil” (or natural gas, or some other substitute fuel), it seems to me that they have basically missed the point. There is always lots of fuel in the ground, or available through devices we create that produce “renewable” fuel. The major issue is that the fuel becomes too expensive for the economy to afford.

The United States, Europe, and Japan were industrialized back when fuels were cheap, in the pre-1972 era (Figure 1, above). The cost structure of government welfare programs (such as Social Security, Medicare, unemployment) also assume that the economy will continue as it did with low-priced fuels. Substituting ever more-expensive fuels can be expected to push a country toward economic contraction, reduction in programs that the economy can no longer afford, and the symptoms listed above.

Why We are Encountering Rising Fuel Prices

When companies begin extracting oil (or natural gas, or coal), they start with the easiest, cheapest-to-extract first. In Figure 2, oil (or natural gas or coal) extraction starts at the top of the triangle, and gradually works down the triangle.

Figure 2. Author’s illustration of impacts of declining resource quality.

As we require more and more fuel, we gradually seek out less-desirable sources of fuels. These fuels tend to be slower to extract, and are more expensive for what we get. They are often more polluting as well.

Oil is the fuel that we recently have had a problem with easy-to-extract supply running low. We had a somewhat similar problem in the mid 1970s and early 1980s. At that point there was still plenty of cheap oil left in areas where we had not yet drilled (Alaska, North Sea and Mexico, for example), so the problem was temporary, lasting only until we could drill more oil.

This time, the problem seems to be permanent. The chief executives of oil companies Total and Shell have been quoted as saying, “The days of so-called ‘easy oil’ are over, making it harder to meet demand without complicated and expensive projects.”(Voss, 2007). Examples of such expensive-to-extract oil include deep-water oil and tight oil that must be “fracked”. The fact that the cheap oil is mostly gone is the major reason why oil prices are higher than they were five or ten years ago. If oil prices had not risen, it is likely that the amount of oil extracted each year would be declining.

There are alternative fuels such as ethanol and biodiesel, but they also tend to be expensive.

Natural gas and coal aren’t immediate substitutes for oil. For example, they won’t act as fuels in most of today’s cars, trucks and airplanes. While there are long-term possibilities for substitution, the high-priced fuel syndrome is today’s problem, not a future problem.

Rising Fuel Costs Cause the Economy to Contract

There are a number of ways rising fuel costs can cause the economy to contract. The problem is that consumers’ incomes don’t rise, just because oil prices rise. If consumers are required to pay more for a necessity, they will cut back on discretionary goods and services. A few examples:

Food prices. If oil prices rise, the price of food tends to rise as well, because oil is used in many ways in producing food: cultivation of fields, planting fields, chemical sprays (herbicides, pesticides), transporting soil amendments, harvesting fields, and transporting food to market.

Figure 3. Comparison of Food and Oil Prices. Food Prices indices are as published by the Food and Agriculture Organization (FAO) of the United Nations, available at http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/
Oil prices are monthly average Brent Oil spot prices, as published by the US Energy Information Administration. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rbrte&f=m

Low-income customers tend to be disproportionately affected by rising food prices. They especially tend to cut back on discretionary spending, such as buying a car or going out to a restaurant, in order to be able to afford enough food. As a result, workers in discretionary industries are laid off.

Commuting cost. If oil cost rises, the price of auto travel rises. Some auto travel, particularly commuting, is a necessity. Consumers, particularly lower-income consumers, tend to cut back on discretionary spending, such as vacation trips, to afford essential trips.

Businesses. Businesses are affected in multiple ways by rising oil prices. First, businesses in discretionary industries find that their “unit-sales” are down, because customers are spending more on food and commuting, as a result, need to cut back elsewhere. Lower unit-sales are likely to lead to lay-offs.

In many instances, businesses also use oil directly in the products they sell. For example, airlines use jet fuel. If oil prices rise, they have they either face lower profits, or need to raise prices to recoup their higher costs. This type of price increase further stresses customers’ budgets.

Electricity. While the current US problem is oil prices, rising electricity prices would be expected to have a similar effect. Every business today uses electricity in various ways–electric lights, running computers, running elevators, operating tools of various sorts. If electricity costs rise because of higher natural gas prices or because of greater renewable surcharges, it will raise the cost of the product produced.

Businesses again have the choice of raising the price to consumers, or facing declining profits. If they raise prices, they will be less competitive with suppliers from other countries, who may not be facing rising electricity costs, if their source of electricity (perhaps coal or nuclear) is not rising in price as fast.

If electricity prices rise, consumers’ budgets will be stressed in a similar way to the way that they are stressed by rising oil prices. This, too, can be expected to lead to a cutback in discretionary expenditures.

Follow-on effects. Laid-off workers may move in with relatives and cut back on driving to save on costs. This helps reduce demand for both homes and automobiles. With less demand for homes, housing prices may decline, especially in parts of the country with significant layoffs and plentiful housing supply.

Laid-off workers may default on loans, creating financial distress for banks. Even people who still have jobs may find the hours they work reduced, so that their take-home pay is lower. They too may cut back on discretionary expenditures.

Impact on Governments

Governments suffering from high-priced energy syndrome can expect a number of negative impacts:

  1. Laid-off workers expect to collect unemployment benefits. If there are other kinds of benefits that they might collect under some other program (disability, retirement, low-income assistance), they will want them as well.
  2. If citizens are working fewer hours or laid off, the amount of taxes they pay is lower.
  3. Banks and other industries are likely to need bailing out, as borrowers default on loans.
  4. The government will be faced with direct increases in costs, because the government uses oil to fuel its autos and jets.
  5. The government will face increasing costs on products it buys that use oil, such as asphalt for highway projects.
  6. Local governments may face reduced tax revenue because of declining home and business property values.

Figure 4 below shows US Federal Government Income and Outlays, in recent years:

Figure 4. US Government Income and Outlay, based on historical tables from the White House Office of Management and Budget (Table 1.1). *2012 is estimated. http://www.whitehouse.gov/omb/budget/Historicals

It is clear from Figure 4 that income had dropped at the same time outlay has risen. Even though the crisis is supposedly past, there is still a huge gap between income and outlays. Outlays in recent years are higher than would be expected based on pre 2005 trends, while revenues are lower than would be expected. Revenue would need to be more than 50% higher, to match outgo, for 2009 through 2012 fiscal years.

The amounts shown in Figure 4 are consolidated, so include programs such as Social Security and Medicare, besides “on budget” spending. How many readers could afford to contribute 50% more than they currently pay for the sum of (Federal Income Taxes + Social Security + Medicare funding)? If the government were to actually raise taxes this much, there would be a huge new round of lay-offs, because consumers would find their after-tax income much reduced, leading to even more cuts in discretionary spending.

Needless to say, the US government will do everything in its power to cover up its problems. In a later section, we will discuss how this huge deficit is being hidden.

Note that the only years during which US Federal Government income exceeded outgo in Figure 4 are 1998 through 2001. These years approximately coincide with the time period when historical oil prices were at the lowest level in recent years (Figure 5, below).

Figure 5. Historical average annual oil prices, (“Brent” or equivalent) in 2011$, from BP’s 2012 Statistical Review of World Energy.

Impacts of the Oil Price Increase in 2006 – 2008 Period

While most people now don’t think of oil prices in 2006 as being high, according to Figure 5, oil prices already had more than doubled from 2002 levels by 2006. If we look back at the financial situation in 2006-2007, we see impacts very similar to what we would expect from rising oil prices.

Sub-prime borrowers began to default as early as 2006 (Bernanke, 2007). As mentioned earlier, it was people who were on the “edge” financially who were most at risk of defaults on home loans. Sub-prime borrowers would seem to be on the “edge” financially and thus were particularly as risk, because they lacked the financial qualifications to obtain “prime” interest rates.

Figure 6. S&P/ Case-Shiller 20 City Home Price Data, using seasonally adjusted data. June 2006 is the peak month. Data from http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us—-

Home prices started to drop in 2006 as well (Figure 6, above), and they haven’t been able to recover yet. We don’t think of homes as being discretionary spending items, but people can’t move into more expensive homes unless their incomes are rising. First-time buyers will also tend to put off purchases, if their financial situation is tight. The construction industry was one of the industries to face large lay-offs.

Defaults on loans caused considerable problems in the financial industry. “Short sales” (in which the sales price of a home is insufficient to pay off the remaining mortgage because the price of a home has fallen) also caused losses to the financial industry. The financial system was not set up with the idea that there may be a systemic problem of this sort. As a result, many banks found themselves in financial difficulty and needed governmental bailouts.

Other industries, such as auto manufacturing and insurance, also required bailouts. These patterns are precisely what one might expect from rising oil prices.

I make arguments similar to these in Oil Supply Limits and the Continuing Financial Crisis. James Hamilton (2009) has shown that the rise in oil prices alone were sufficient to bring on recession in the 2007-2008 recession.

One other important factor also affecting the 2006 to 2008 period was target interest rates. The Federal Reserve Open Market Committee (FOMC) raised interest rates during the 2004 to 2006 period (Figure 7, below).

Figure 7. Intended Federal Funds Interest Rates, as set by the Federal Reserve Open Market Committee http://www.federalreserve.gov/monetarypolicy/openmarket.htm

The basic idea in manipulating interest rates is that low interest rates are supposed to increase economic activity, because low interest rates make it less expensive to buy a car, using a loan, or to take out a home improvement loan. They also make it less expensive for businesses to finance expansion with a loan. Higher interest rates are supposed to decrease economic activity, because of the opposite impact.

Ludlum (2009) reviewed the minutes of the Federal Reserve Open Market Committee (FOMC). The FOMC noticed rising energy and food prices as early as December 9, 2003. It wasn’t until June 2004, though, that the FOMC first raised interest rates, in an attempt to “damp down” demand for oil. The committee’s view (not stated in the minutes, but implied by rising interest rates) was that the rapid expansion of the US economy was leading to rising oil and food prices. The expectation was that raising interest rates would damp down US demand for oil, and bring inflationary pressures affecting oil prices under control. The FOMC continued to raise interest rates by 0.25% at each of its meetings (the minutes repeatedly comment about rising energy and food prices), until the target interest rate reached 5.25% in June 2006). The FOMC did not start bringing interest rates down again until September 2007.

If the problem were really rising US demand for oil, this approach might have worked. In fact, the real issue was rising oil demand elsewhere, especially China, India and other Asian countries. China had joined the World Trade Organization in December 2001, and was ramping up its exports starting in 2002 and 2003. It also didn’t help that world oil supply was not rising very quickly, so rising demand led to rising oil prices.

Figure 8. Oil Consumption for Selected Areas, based on BP’s 2012 Statistical Review of World Energy

The combination of higher interest rates and rising oil prices provided a “double whammy” to the US economy, helping push the US economy into recession. Europe and Japan also experienced major recession. The parts of the world with rapidly growing oil consumption generally did not experience recession.

The Growing Economy Problem

At least part of the reason for the High-Priced Fuel Syndrome is the fact that with all of the world’s debt, there is a need for growth to continue indefinitely. In a growing economy, it is as if we can always “borrow from the future,” because the future is always bigger and better than the past. We start running into huge problems if this is not true.

Figure 9. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

Part of the problem is that repaying loans is difficult in a shrinking economy (Figure 9), because less funds are “left over” after loan repayment. If we think of the situation as a government whose revenues start declining, we can understand what the problem is with repaying debt, plus interest on that debt. (Arguably inflation could play a role for a while, but lenders soon would catch on, and require higher interest to compensate for inflation.)

As long as the economy grows each year (and government revenue is higher), it makes sense for the government (and many others) to keep borrowing.  But if the economy starts shrinking, we have a serious issue, because the government not only needs to stop borrowing more, but it also has to face the prospect of repaying what it already owes.

The situation is not too different for individual borrowers and for businesses. For individual borrowers, the risk is of being laid off from work, and not being able to find new job. For businesses, it is the risk of fewer buyers for their products, and because of this, less revenue in the future. With less revenue, fixed costs become a larger and larger share of total revenue, making it harder to repay debt.

Thus, in a shrinking (or even a flat) economy, debt defaults become more and more of a problem. Banks find themselves in more and more financial difficulty. This is basically the issue referred to earlier, with respect to high oil prices causing loan defaults.

Paying for Social Security and Medicare benefits is another area where growth makes a big difference. If an economy is growing, there is always a growing population of young workers to pay for benefits to the elderly. If the number of workers shrinks relative to the retired population because of high unemployment or few children, funding becomes a problem. This is yet another area where we have been counting on growth to continue indefinitely, to keep the model functioning as planned.

Recent Government Cover Up of High-Priced Fuel Syndrome

We noted above that the Federal Reserve raised interest rates in the 2004 to 2006 period, in an apparent attempt to damp down oil demand. Starting in September 2007, the FOMC took the opposite tack. Instead of raising interest rates, they brought them down, bringing them as close to zero as they could by late 2008. See Figure 7, above. The intent of this move was to stimulate the economy, by making borrowing less expensive.

Then the Federal Reserve decided to go further, and take up what it called Quantitative Easing, which is what other people call “printing money”—buying the government’s own debt, and some related debt.  Target interest rates affected only short-term debt. Through the use of Quantitative Easing, it hoped to lower longer-term interest rates, as well, and thus provide even more of the low-interest rate benefit to potential borrowers. The United Kingdom and the Eurozone are taking a somewhat similar approach.

A major reason for Quantitative Easing (besides the stated business reasons for decreasing interest rates) seems to be lowering the amount of interest payments that the government itself would need to pay. This would help reduce the big gap between governmental outgo and income (Figure 4, above).

A second reason for Quantitative Easing is that it was a way of enabling the huge amount of deficit spending taking place. Without Quantitative Easing, the government would have had to go, “hat in hand”, to the world market, asking for additional loans. There might be a possibility of not all of the loans being sold, or of higher interest rates being required. By buying back a large share of the US’s own debt, it was able to make certain that interest rates would stay low, and that there would be an adequate market for the debt.

Impacts of Government Cover-up

One problem with artificially low interest rates is that the interest rates, in effect, steal from one segment of society, and use it to subsidize a different segment of the economy. The segment of the economy that is “stolen from” consists of pension plans, and people who would otherwise be saving their money, perhaps for retirement, and would benefit from interest income. Part of the reason that pension plans are having so much difficulty with funding now is because of artificially low interest rates. Pensions plans will need to be bailed out, or contributions will need to be much higher, if the system continues with artificially low interest rates.

Another even more major problem is that without a return to growth, there is no nice way to end the low interest rate/Quantitative Easing policy. One possibility is that at some point, the dollar will drop relative to other currencies, and the price of imported oil will become even higher. This will make the situation worse.

Somehow the situation must be resolved. One possibility is that the government will greatly reduce benefits and raise taxes, so as to balance its budget. Alternatively, there could be a major governmental change, perhaps leading to a totally new governmental structure and different currencies. It is possible that there will be hyperinflation, or some type of break in international trade. Countries may trade more with trusted partners, or may require collateral for trade.

Impact of High-Priced Fuel Syndrome on Exporters

This post has mostly been about the impact of High-Price Fuel Syndrome on energy importers, such as the United States, Europe, and Japan. The situation isn’t quite as bad for energy exporters, but they are not completely spared.

Energy exporters are usually in a better position financially than importers, because they collect funds from the oil or other type of high priced energy they sell. These funds can be used to fund government programs. If the energy exporter is fortunate to still have some “cheap to extract” oil left, the energy exporter can perhaps subsidize oil prices for its own people. This approach works much better when population is relatively small, such as Saudi Arabia, than when population is large, such as Russia, because with subsidy, internal use tends to rise, and exports decline.

Even when a country is an energy exporter, high oil prices or other high energy prices can be a problem. One issue is that those who benefit from high oil prices (oil companies, oil workers, local economies, governments that tax oil production) are not the same as the economy in general. For example, if oil prices are high, the major producing areas, such as Alberta, Canada can benefit, even as the rest of Canada behaves much like an oil importer, with job losses.

Another issue is the one illustrated in Figure 3, that of food prices tending to rise as oil prices rise. The Middle East is an oil exporter, but a food importer. If food prices rise at the same time as oil prices, the government finds it necessary to cushion this cost increase for the poor. To do this, they must raise food subsidies, or increase the level of payments to those who are unemployed. Making these changes quickly is not necessarily easy. There is considerable evidence that the 2011 “Arab Spring” uprisings were related to high food prices (Lagi, 2011).

So even for oil exporters, high oil prices may lead to problems.

In Summary

In summary, we are running short of cheap energy, especially cheap oil. High priced oil (or high priced energy of any type) tends to slow down the economy, leading to economic contraction. Our financial system is not made for contraction. Ben Bernanke and others have used artificially low interest rates and Quantitative Easing to try to cover up our current problems, but this is not a long-term solution. At some point, the underlying problems will become evident, and some type of discontinuity will take place. The economic situation will change from one of growth to decline.

Our system of benefits and taxes to pay for those benefits is based on the cost structure that was possible with cheap energy, and the growth that was possible with cheap energy. Very major changes will be needed, if government outgo is to made to match income. Basic programs such as  unemployment, Medicare, and Social Security will either have to be reduced, or taxes raised substantially. Maintenance of huge amounts of infrastructure (such as roads, water and sewer pipelines, electricity transmission lines, and schools) can be expected to be increasingly expensive as well.

It is not clear exactly how the current situation will play out, but a return to cheap energy and robust economic growth seems very unlikely. A more likely outcome is a serious discontinuity, with affected countries much poorer afterward.


Bernanke, B. S., The Subprime Mortgage Market, Speech at the Federal Reserve Bank of Chicago’s 43rd Annual Conference on Bank Structure and Competition, May 17, 2007. Available at http://www.federalreserve.gov/newsevents/speech/bernanke20070517a.htm

Hamilton JH. Causes and consequences of the oil shock of 2007-08. Brook-
ings Papers on Economic Activity
:215e61. Accessible at http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2009_spring_bpea_papers/2009a_bpea_hamilton.pdf; Spring 2009.

Lagi M., Bertrand, K., and Bar-Yam, Y. The Food Crises and Political Instability in North Africa and the Middle East, Complex Systems Institute, 2012 Available at http://arxiv.org/pdf/1108.2455v1.pdf

Ludlum, S. Further Evidence of the Influence of Energy on the US Economy – Part 2, The Oil Drum, April 23, 2009. Available at http://www.theoildrum.com/node/5326

Tverberg, G. Oil Supply Limits and the Continuing Financial Crisis, Energy, 2012, 37 (27-34).

Voss S. and Patel, T. Total, Shell Executives Say ‘Easy Oil’ Is Gone (Update 1), Bloomberg, April 5, 2007 Available at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aH57.uZe.sAI

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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192 Responses to High-Priced Fuel Syndrome

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  6. Don Stewart says:

    This will add a few facets to my earlier post on the proposition that Bernanke use his newly minted money to buy farmland and make it available for homesteaders rather than giving it to giant banks.

    Today at the farm, I canvassed the young people on the proposal. The young people are mostly fans of Libertarianism. One likes Obama, none like Romney, and five like Ron Paul. The average education is around 18 years. Most of them are working at the farm because they need food. So…having experienced the fruits of QE and Financial Folly for several years now, how do they react to the idea of freedom plus a homestead free of debt? Six ‘yea’ votes and not a single ‘nay’. All of them think they could do quite well on their own. I will hasten to add that these are not bunker survivalists. All of them have formed wide associations among local young people in roughly the same predicament. So you could expect a self-organizing group following no recognizable political theory and enjoying life among similar people.

    Then along comes Dmitry Orlov’s excellent essay today which pretty much states that what I anticipate will, indeed, happen if we can get government and social pressure out of the picture. Just a couple of quotes:

    Why submit to an arbitrary external authority when a sufficiently cohesive and egalitarian community can be self-governing? All of these questions demand accurate and reasoned answers. If we find ourselves unable to provide these answers, but nevertheless demand that our young people participate in the failing program of industrial employment, then we won’t have them as friends for very long.

    It is the degree and the success of cooperation that is the most important determinant of the success of any given species; the gregarious, cooperative animals thrive while the selfish loners are left behind.

    Which leads us to Kropotkin’s second observation, which is that animal societies can be quite highly and intricately organized, but their organization is anarchic, lacking any deep hierarchy: there are no privates, corporals, sergeants, lieutenants, captains, majors or generals among any of the species that evolved on planet Earth with the exception of the gun-toting jackbooted baboon

    Back to me. One of the young men, when reacting to my description of the homesteading plan, stated ‘Bernanke could do this if he really wanted to’. Which led to a discussion of how Bernanke doesn’t want to save people–just banks.

    For all of you over 40, I suggest that you spend some time with young people. It may be enlightening.

    Don Stewart

    • Do you really think this kind of “freedom” will not evolve into anarchy and chaos? For good law abiding people its natural to assume everyone else is also good, but I feel history teaches us that some people need a system and leaders for them to behave. Before there were clan leaders, and we had clashes between clans, now we have a government that keeps people on their toes.

      Humans are after all quite like animals when you strip away the system. A youth is in a special kind of state in their lives where they are ready to conquer the world and assume a lot about their own capabilities. Little do they appreciate or understand that the system around them is whats keeping it all from falling apart changing their optimism into fear for their own lives. Many people around the world live like this today in totalitarian regimes and where certain groups of the population is not “wanted”.

      I think its important that a good legal system with elected leaders follow us into the new future of less energy and climate change challenges. I believe when the shit hits the fan we need people around us to hold us in our ears so we dont go completely bonkers and start pillaging and all that fitting in a mad-max scenario.

    • We have lived in a special period–a time of plenty. There are a lot of “If’s” to make what you suggest work.

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  8. Leo Smith says:


    I am mostly partial to central heating hot water and decent toilets.

    You can keep the I-phones but you will prise my flush toilet from my cold dead hands. Oh and books. I want my books too.

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  11. Perknoy Von Trapp says:

    Great post Gail! I really like that there’s someone out there like you that has a great ability to draw summary conclusions about the big picture of peak oil. discontinuity: defined as an interruption in the normal physical structure. What a benign way of inferring major changes on the way or even collapse followed by something new, we presume. I’ve noticed that’s a real art in writing about these situations, i.e. to avoid words like collapse, etc., in an effort not to come across as too negative. We live in a culture where discontinuity is much more appreciated so I fully understand it’s usage here.

    I have a hard time understanding why it is so difficult to use only the revenue received to pay for things at the govt. level, but even as DC tries to curb spending with upcoming spending cuts on Jan. 1, 2013, the very politicians that orchestrated that decree are now distancing themselves from it claiming we will drive off a fiscal cliff. That’s pretty bad when the perception is we cannot even make a dent in a trillion dollar a year deficit. It’s like everything gets held in a pattern regardless of how much information there is to let us know it no longer works the way it use to, until that pattern is forced under stremendous pressure to alter. Is everybody enjoying the stress test of post peak oil?

    The cheap oil is gone but maybe even worse, is all there is in front of us is ever more expensive fuel. I liken it to a wave that crests then gets undermined by the shore or reef and then falls. The illusion right now is the crest (we call empire) can just keep stretching out there infinitely farther on non-conventional oil and deep water drilling, but all the while higher fuel prices are acting as a reef we are cresting over. Maybe the juxtapoint where peak oil and global warming (via ice volume loss) meets in the Arctic, as the irony of those colliding problems so far fails to drive home our unfortunate need to face certain discontinuity.

    • It is hard to write about discontinuity. It looks like The Oil Drum won’t run the post, probably because it brings up a topic that is too hard for their readers to deal with.

      • Don Stewart says:

        Gail and Perknoy
        I just received Joe Romm’s book Language Intelligence: Lessons On Persuasion From Jesus, Shakespeare, Lincoln, and Lady Gaga. One of the things which struck me was his citation of Jesus’ answer:
        ‘Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s.’

        It seems to me that those of us who believe that the slope of the Net Energy curve is down (both those who think the curve is continuous and those who think the curve is discontinuous) may need to make such a distinction. Consider the phrase ‘The Best Things in Life Are Free’. Suppose every analysis of energy availability began with the slogan ‘The Best Things in Life Are Free (and don’t involve fossil fuels)’. The slogan might call to mind all the joys of life that are actually free of the money economy and don’t require fossil fuels. Failure to call these joys to mind leaves the reader up to their necks in worrying about the problems connected with the ‘render to Caesar’ part of the equation. Since there are no real solutions to the Caesar problems, the reader can become a deer in the headlights while the truck runs them over.

        Dmitry Orlov and others have pointed out that the people most likely to kill themselves after the collapse of the Caesar economy are those who had woven elaborate stories explaining their relatively important places in that economy. Those who were too poor in terms of the Caesar economy to have achieved any importance in the Caesar economy seem to cope a lot better.

        So my (not very well thought out) idea is that perhaps better use of rhetoric (as recommended by Romm) might be an important communications tool.

        It would, of course, be a falsehood to suggest to people that they can be happy through the collapse if, indeed, we believe that there will be suffering and death at the hands of the Four Horsemen. What I happen to think is that we have to let the political and financial worlds implode, untie those millstones from around our necks, let them sink into the muck, and swim to shore under our own power. (How’s that for flowery speech? Maybe a few too many metaphors?) There are a few other segments of the economy that I would also jettison. I am cautiously optimistic that someone who deliberately sets out to ‘render to God’ (broadly interpeted), can live a satisfying life in descent.

        Don Stewart

        • It is hard to say how things will work out. Clearly, a person who is not too attached to the way things are now is better off than one who is very much attached to the way things are today. But a lot has to do with the impact of financial and political changes on local trade. It is hard to imagine that people living in Las Vegas, for example, will do very well, regardless of their views. It seems like there may be a lot of local variability, but the general trend will be down.

  12. Interesting insight given Brazil’s current emphasis on cutting the price of energy to stimulating its laggard-status economy among the BRICs…


    • The numbers I see say that Brazil’s electricity is mostly hydro-electric–about 86% hydroelectric in 2011, according to BP data. This article says,

      Brazil’s National Confederation of Industry says in a statement that the cuts announced late Thursday will significantly help the sector, noting that the energy costs in Latin America’s biggest economy are among the most expensive globally.

      Why would hydroelectric costs be among the most expensive electrical energy in the world? I am not sure, except that Brazil seems to be building more hydroelectric, while most of the older industrialized countries are living off hydroelectric that was developed years ago. If we had to build hydroelectric with today’s costs, it might very well be more expensive. Also, hydroelectric may not be near population centers. (I haven’t checked.) Long distance transmission adds to costs. Holding down prices is a good way to make certain that no more production gets built. Is that really the intended result?

      • Leo Smith says:

        Its fairly simple to answer that one Gail. Like oil, all the good sites are taken! There aren’t that many places where you have a huge catchment area leading to a dammable valley or a massive Niagara sized waterfall. Most of the cost of hydro is in the dam and if that has to be bigger, it costs more. And if it has a smaller catchment area, it generates less.. Power is down to the amount of water you can drop times the size of the drop.
        So hydro needs three things. Lots of rainwater. A big place to trap it, and a big drop beyond the trap. And also it needs no people living in an area that you flood that cant be rehoused, shot or simply left to find somewhere else to live.
        Finally its deeply disruptive of the environment. The lake created is an entirely different ecosystem than the fast flowing river there used to be. That may or may not be seen as positive depending on who you are.
        Finally the energy stored in a dam is massively dangerous. The collapse of a damn in china is estimated to have killed as many as 170,000 people which is a record for renewable energy. Well any energy actually. !
        “The dam failures killed an estimated 171,000 people; 11 million people lost their homes. It also caused the sudden loss of 18 GW of power, the equivalent of roughly 9 very large modern coal-fired power stations or about 20 nuclear reactors, equalling about 1/3 the peak demand on the UK National Grid.”


        • That makes sense! I visited the bid dam on the Yangtze River in China in May 2011. One tour guide explained that while farmers were being resettled from the fertile plain (to high rise buildings on cliffs), they were asked to transport some of the fertile soil up to little fields on ledges. Many people are leaving farming. The hope was that tourist trade would increase greatly, and that many would make their living as tour guides!!

          • Don Stewart says:

            Have you seen the movie Up The Yangtze? It was made by a Chinese person living in Vancouver. It follows two young people who go to work on the tour boats. (I am afraid that the tourists are treated like sheep). But pay attention to the family of the girl. They are subsistence farmers who are building a shack just above the water line and moving every few years. The girl comments that ‘we have a very poor house, but we eat a lot better than most people’ because her illiterate father is an excellent farmer. At the end of the movie, for the first time in his life, the father has been forced into the money economy. He isn’t happy about it.

            Don Stewart

            • I am afraid I haven’t. From what we heard, quite a few older people were not happy about the changes being made. Young people often took the money offered, and moved to the city, leaving their parents behind.

        • A long and fascinating and intelligent series of discussions on renewable energy, and while I can’t pretend to read every word of the exchanges, (much as I’d like to,) the broad thrust of it, certainly over the last couple of days seems to have been about the production of electricity from a variety of sources. While electricity is essential to support our civilised infrastructure, it’s pretty useless without all the other stuff that actually lets us use it. Most of that ‘other stuff’ seems to have a hydrocarbon element built into its manufacture somewhere. Generate all the electricity you want, but remove the hydrocarbon insulation from wiring and civilisation is over. When electricity first came into use, they used natural materials, but we use insulation on an infinitely bigger scale now. That’s just one example, there are thousands more.
          The catch-all headline seems to be “to supply all our energy needs” as if energy is in some way fungible. That might make good reading on a piece of paper that economists can wave under politicians noses, but it’s not actually true in any real sense. This is why I sign myself “Medieval future”, our pre-industrial world population was around 500m to 1 billion people. Given that nature is self regulating in a rather brutal fashion, that would appear to be what our planet can sustain long term. Humanity has used the anomaly of hydrocarbon the break natures rules, one might say humanity is going to be expelled for doing that. We are only short term tenants here, and like any tenant who trashes where they live, sooner or later the owners are going to show up and kick us out.
          Now, who are the owners? Well, bacteria outnumber us by many trillions to one, they were here long before us, and will be here after we’ve departed. we used hydrocarbon energy to try to control them, but we have failed, simply because wiping out trillions of the little critters just left the field wide open for their stronger brethren to mutate and breed and come after us. It is after all their planet, we fooled ourselves that we owned it after we invented the steam engine
          This is one of the difficulties created by over use of hydrocarbons, which is rarely mentioned, yet it presents our greatest danger. You cannot control disease with electricity even if it is ‘unlimited’

          • Leo Smith says:

            All good points, but they are refutable to a large degree.

            First of all I have never claimed that an ‘all nuclear’ society would be easy.

            However the issues are not where you think they are.

            The amount of petrochemicals that are used in wiring insulation are totally insignificant compared to the amount burnt for fuel. Neither are they especially price sensitive, Nor are they intrinsically un synthesisable. Various processes exist to make hydrocarbons from water and and carbon feedstock – they are not economic compared with digging up oil or coal but they exist. And could be used if oil prices escalated. So that problem CAN be solved. we can make hydrocarbons, just not as cost effectively as using fossil ones. And of course ‘organic’ ( in the lay sense) wastes – plant waste and so on – makes hydrocarbon. Methane is a great place to start a ‘petrochemical’ industry, as are the alcohols from fermenting cellulose and sugars made in plants, and oil crops like canola already are used to make biodiesel – a bit of extra heat, pressure and a catalyst, and you have plastics. And of course we don’t NEED plastics – we use them because they ARE cheap. In my youth the world was awash with sacks and bags made of hemp or sisal, that cost next to nothing, were biodegradable and long lasting, and paper bags which were short lived, and that’s what everything was carried in. Today its all plastic. Because its cheap. But its no better, largely. You could pack a computer monitor in wood shavings just as well as in polystyrene beads. In fact you could make cases out of steel and wood or aluminium instead of plastic. At a higher cost, but with far more life expectancy. And no eco hazard when they rotted or rusted. If the throwaway society was built on plastic enough to be called a ‘plastic;’ society by people of my generation, then a different society could be built out of different materials.
            No, the biggest issue we face with peak oil, is transport. And a cheap feedstock for some industrial processes. hydrocarbon or pure carbon is a good reducing agent as well as a heat source, and metal smelting without carbon fuel is ..more difficult. Nevertheless it can be done. Aluminium and titanium, are both smelted using largely electrolytic techniques. Titanium betas plastic hands down as a structural material too.!

            But what this all means is that such a society would be highly labour intensive in energy and material production even if it was much less so in actual manufacturing. That leads by dint of markets still being free, to a rise on the value of scrap materials and a vibrant recycling industry.

            As I see it the two areas where there are insoluble problems are off grid cars and other machinery – battery electric simply doesn’t cut the mustard in any way compared to fuel and never will – and air transport. You can fir sure build an electric aeroplane running off batteries. I’ve built dozens. BUT they cant say up even without a payload for more than an hour or so.

            So using nuclear power we can at least solve electricity and fixed site (on grid) production, and with access to plenty of it, we can solve MOST of the other manufacturing problems with good recycling. We can solve shipping with nuclear ships, land transport with electric trains and short haul electric vehicles, but we can’t solve air transport or generalised off grid mechanical power without hydrocarbon fuel. In the limit we can MAKE that, with cheaper off peak nuclear power BUT not at a price that will make aircraft, cars and tractors, and military vehicles anything more than a massively expensive luxury. You are more likley to see portable nuclear generators being deployed in the field 🙂 In fact some of the Russian nuclear icebreakers can be adapted to provide electricity to land based installations – a sort of floating nuclear power station for emergency use in northern coastal parts. But that is realistically as compact as it gets. Nuclear powered cars remain a pipe dream, along with aircraft, although feasible designs were drawn up, the weight of the shielding and the problems of spitting out radioactive wakes were generally too great to overcome.

            BUT if really cheap nuclear power became available, nothing is simpler than to recycle carbon dioxide and water back into non fossil fuel! then the only final waste product is heat. Which would be the final issue to solve. But at least we could use that to keep us warm in winter and reduce the amount of energy needed. Heat is the one thing we DO know how to store reasonably cheaply safely and well. In te ground if nowhere else. ready to drive heat-pumps in winter.

            • It seems to me that one of the more intractable issues in a lower energy society would be the need for paved roads. Asphalt is made from oil; concrete is very energy intensive. We would have to be able to create a lot of things to keep these going–enough asphalt through other processes or sufficient energy to make concrete, machines to move dirt and spread the asphalt or concrete, and fuel to operate the machines. Asphalt could be recycled; I doubt concrete could. It seems like we would find a need to cut back to a few major roads, rather than trying to pave everything.

            • Leo Smith says:

              Its an interesting point. But once again if there is anything we have left it will be tar sands, and tar – asphalt is fairly recyclable. And not a huge part of the process of road making. Tarmac – Tarred Macadam – was essentially an adaptation of a road making process that was well established anyway using various grades of hardcore – limestone and hard granite chippings to make roads, but when et car arrived, so did dust, big time, and tar was used to simply bind the top layers together,. In this contexts its just a cheap glue…and anything else suitable could be used.
              And without cheap gasoline or diesel, who will need the roads anyway? Freight goes by rail instead.

          • You make a good point.

            There is one minor exception. I think some people think we could use unlimited electricity (in far greater amounts than we have today) to essentially reverse combustion–take carbon dioxide and water, and create them back into fossil fuels. If scientists could do that, then they could use the fossil fuels to make medicines, for example. But I agree with you generally. I think vastly ramped up electricity, and technology to reverse combustion, are not going to happen.

            • Leo Smith says:

              It is not only possible it is entirely feasible Gail and indeed we do in fact do it already in special cases. Where the exact hydrocarbon needs to be pure, and the value of it is so high that there is not much pressure on costs.

              What we can’t do is make bulk fuel for energy economically. At the moment off peak electricity in the UK costs the same as pump price diesel which incorporates around twice as much tax as it actually costs So the raw diesel price is less than one third of the electricity cost – which reflects the general efficiency of making electricity from carbon fuels at about 30%. To to turn that back into fuel using synthesis at 30% efficiency also, is to make synthetic fuel ten times the price of fossil.

              And since currently nuclear power is bucking similar costs to fossil overall you are looking at the feasibility of using it to make hydrocarbon fuel but at ten times the current price. Now for some applications, that’s actually still reasonable. But for most purposes its way too expensive – and this is the key point – compared with the *alternatives*.. If you want to go from New York to San Francisco and the choices are a 5 hour plane trip that now costs $3000 each way, or a 24 hour trip on a sleeper train that costs $300, most people are going to either not go at all, or take the train.

              Here’s a rather good page from someone who seems to have his head screwed on. Note now MUCH of the solution is nuclear, and bio-fuels for the irreducible bits left, and how little is ‘renewable energy’


              I have to say at a cursory glance, I think his numbers are well in the ball park.

            • THanks!

              Your guesstimate of cost of creating a new fuel at 10 times the cost of the original fuel to used to make electricity is an interesting relationship. I had been aware of the 30% conversion rate, going from fossil fuel to electricity. I hadn’t realized that it would be somewhat similar the other direction.

            • Leo Smith says:

              “Carbon dioxide reuse:
              In 2009, chemists working for the U.S. Navy investigated a modified Fischer–Tropsch process for generating fuels. When hydrogen was combined with the carbon dioxide over a cobalt-based catalyst, the reaction produced mostly methane gas. However, the use of an iron-based catalyst reduced methane production to 30 per cent with the rest being predominantly short-chain, unsaturated hydrocarbons, The introduction of ceria to the catalyst’s support, functioning as a reverse water gas shift catalyst, furthermore increased the yield of the reaction. The short chain hydrocarbons were successfully upgraded to liquid fuels over solid acid catalysts, such as zeolites.
              The process ranges in efficiency from 25 to 50 percent.”
              I think they mean energy wise, but with chemists you can never tell.
              I suppose drilling to the heart of the matter, is that having putative access to cheap-ish more or less unlimited nuclear energy means that we don’t have an availability problem for most industrial materials, we have a different price matrix instead. Civilisation changes, but it doesn’t quite collapse.

              As such its part of the solution, even an important part, but certainly not the whole solution.

            • Mel Tisdale says:

              I hope that they make use of the methane. Simply releasing it to atmosphere would be a waste and not good for the environment.

            • Leo Smith says:

              you can polymerise methane into longer chain hydrocarbons fairly easily, but they were trying to get longer chains directly as well

          • In an attempt to respond to Leo (there’s no ‘reply’ below his post) I’ll try to come at the energy use problem from a different direction
            Our global ecosystem works on a closed loop self-recycling system, or it did until man started burning things to alter his environment. In other words, every biological species (including ourselves) absorbs sun-energy during its allotted lifespan, then falls over, which meant that it gets eaten as something else’s energy source and recycled into the global loop.
            Apart from the odd asteroid impact, this worked for billions of years.
            Things are now at a different stage however. Humanity has broken that loop. Instead of everything being consumed and recycled through the normal life-death-life cycle which keeps energy flowing round the system, we have added a burning cycle. We are setting fire to everything in order to sustain our ‘now’, but we are burning our childrens future.
            because of this we are convincing ourselves that we can reverse combust whatever we burn, so that we can re use it.
            If by chance this is possible, the energy needed will be so colossal that we will be sprinting to achieve a semblance of standing still.
            Most of the processes (I did say thousands of things besides wiring insulation) require lots of heat to alter their composition into something useful to us, and heat seems to be one of the overriding problems that we face. I may be wrong, but I don’t think you can alter any plant based material significantly without a heat process? That is our ‘burning cycle’. I’m no scientist, but it seems you usually have to set fire to something in order to change something into something else.
            One of the greatest developments in man’s history would have been firing clay to make a pot.
            Leo’s writings are genuinely informative, but I do rather boggle at the thought of ‘driving heat pumps in winter’ in a de-industrialised society. But maybe I’ve missed something, I often do. the race seems to be on to maintain our status quo lifestyle, I fear it is one that we will lose.

            • Leo Smith says:

              Well that’s where your view is a bit wrong. The sun is ‘burning’ its hydrogen and there never is was has been or ever will be ‘sustainability’.

              All the fossil energy represents sunlight at a rotten conversion ratio left over from years ago when animals didn’t know how to burn fuel to keep warm, Now we do.

              Your mind may well boggle at heatpumps in winter, but that’s because you accept that civilisation is tied to energy that cant be replaced. Of course that in the limit it true. The universe will die an entropy/heat death in a few hundred billion years, but in the time-scales we are talking about nuclear energy will last at least 10 times as long as coal and oil have at current consumption and we don’t even mention fission, which has enough fuel – well to make our own sun essentially if that were technically possible at some future time. renewable energy is after all only another word for living off the suns very dangerous nuclear fusion reactor at rather a great distance in a thoroughly inefficient way.

              I can’t understand the double think of people who want to actually drive us back to medieval ways of living with a necessary 99% population decrease, who in the same breath talk about ‘making the planet safe for our grandchildren’ Which ones would those be, then? The ones that starved to death, froze to death or died of disease because all they had were windmills?

              There are no renewable solutions. There are no sustainable solutions, there is no normal, There is a constant flux in the universe and we are part of it whether we like it or not. Its our choice whether we use what is available, that works, to help preserve what we have, or throw it all away on a religious Green whim and condemn the populations to mass death.
              Neither am I concerned to regard the pre-industrial ‘renewable’ past as some sort of golden age: It was in fact for most people, hell. Any cut could kill you through sepsis. The water you drank could kill you if not boiled or diluted with alcohol. 50% of your children would die before reaching puberty. If you yourself didn’t due in childbirth,. If you broke a bone, you were crippled for life if you didn’t die. People lived with massive disfigurements – small pox, Leprosy, St Anthonies fire, syphilis – from diseases and poisons they didn’t know existed or how to deal with. They were infested with fleas intestinal worms and lice. Syphilis and gonorrhoea were prevalent. Polio, TB, typhus typhoid, plague, cholera,malaria ..you name it, it was there. You might not get run over by a car, but death rate from horses was a hundred times higher. If you were an average peasant rather than a lord, your life would consist of backbreaking (literally ) manual drudgery throughout the whole day and very little food – perhaps a bit of vegetable stew with some cereal thrown in (pottage) and a bit of boiled bone – and if that gave you a bad stomach, out to a freezing outhouse where you shivered your guts out into at best, a hole in the ground. And then spread the stinking remains over the vegetable garden to help next years crop and ensure that it, too was covered in E Colii to ensure lethal bacterial colonies were preserved into the kitchen.

              And if you survived 40years of that you would be crippled by arthritis, if you didn’t succumb to rickets, scurvy or some other form of malnutrition. Or get cut down by someone else’s peasant serf on the promise of more land (yours) .

              And that is what you want is to engineer society towards? To condemn future generations to? Your ‘renewable’ future?

              Been there, done that, got the T-shirt. Nothing is worse than a zero degrees raining experience getting to an from an outside toilet – apart fro dealing with it months later.

              I’d rather have nuclear power. And take the 1 in ten million chance I’ll get cancer. At least there will be a hospital to treat me in.

            • Mel Tisdale says:

              Leo, you have just raised the importance of The Industrial Revolution by many orders of magnitude!

            • Leo Smith says:

              Well my theory is that plants developed animals and finally humans to deal with a tricky recycling problem of how to turn their useless and toxic waste – oil coal and oxygen, back into plant food to create a warmer CO2 rich environment suitable for more and bigger plants…this is why people are smart enough to burn oil, but not smart enough to realise that windmills won’t help.

              Now I’ve told you that, a plant will probably have to kill you.

              watch out for any three legged vegetables…

            • Mel Tisdale says:

              Thanks for the warning! I have been on the lookout for three legged vegetables eversince reading The Day of The Triffids. So far, I have only seen about a dozen, usually after consuming alcohol.

            • Sorry. The lack of reply button relates to the depth of comments allowed. I had had a longer set of comments permitted, but changed the setting down (I think to 5) because of complaints that the column was getting too narrow and hard to read, if the chain of comments was allowed to be too long.

          • ‘burning fuel to keep warm’ is exactly my point. That jump to fire technology put humanity on the path to world domination of all other species. Man quickly learned that even the biggest, strongest food source animals would run from fire. A fire might kill hundreds of animals, man was concerned with eating one or two—the rest rotted and were consumed by other animals or bacteria in due course.
            So even in our earliest stages of development, we were guilty of over exploitation of resources. It is a matter of record that as man reached new continents, big fauna vanished shortly after
            It’s not a matter of ‘wanting’ a medieval lifestyle, merely that removing our industrial energy sources will push us back in that direction eventually.
            considering the alternatives, (nuclear) one assumes that some kind of employment (and hence wages) will be the norm. Right now all our employment is dependent on the ever increasing consumption of hydrocarbon energy. No trade or profession is free of it, we built our ‘industrial economy’ on it
            Our factories freed themselves from dependence on watermills through steampower, and gave employment to millions. Factories made bigger profits, consumed yet more power, employed more people, and so on for 250 years. we are now at the stage where energy is too expensive to burn to provide employment. Thats why the world economy is on a downspiral. You can’t have large scale employment unless its backed up by a source of energy. That’s why pre-industrial societies didn’t have large factories. It was one man–one hammer or whatever
            while nuclear energy can power factories, it cannot supply the paraphernalia that IS a factory. or the physical input/output from that factory.
            but everyone wants a job, because we live in a paid-employment economy, and that level of employment has also got to support non workers too.
            It’s important to remember that in many western societies, only perhaps 40% of adults are actually productive, maybe much less. They have to support the young, the old, all service personnel and paid officials. They can only do that as long as we have spare energy available to make it possible and by being engaged in some kind of ‘profitable enterprise’

          • Michael Lloyd says:

            I want to reply to Leo’s comment on CO2 to CH4 and, hopefully, this will appear in the correct thread.

            When chemists talk about efficiencies for reactions, they tend to think first of the percentage of required product of the reaction rather than the energy efficiency. When you get into process chemistry, you are really looking for very high yields of the required product, minimal by-products and minimal pollutants for disposal. You also need to be aware of any high energy inputs.

            My view is that any future chemical plants to turn CO2 to CH4 are a long way into the future, will have a much higher energy requirement than processing fossil fuels into chemical feedstocks (hydrocarbons are very energy dense and hence require a lot of energy for their synthesis), and will only be developed when fossil fuels are sufficiently scarce and costly to develop.

            It would be sensible to keep fossil fuels for materials production if we can develop alternative sources of energy.

            • Leo Smith says:

              Thanks for that clarification. I was aware as I was writing it that (from chemistry lessons years ago) reaction efficiency is not necessarily thermal/energy efficiency. You are absolutely right that its not realistic or economic now, but my point as to demonstrate that, as nuclear energy* sets an up[er limit on the price of energy – other sources will simply be replaced by nuclear if its cheaper – the ability to synthesise hydrocarbons sets an upper ceiling on prices there also. That doesn’t mean they can be used as fuels, for sure, but it does mean than ‘plastic critical’ components can be manufactured out of synthetic plastics if the value is high enough.
              I.e. the the general shortage of chemical COMPOUNDS can always be solved by adding energy to ELEMENTS. We are not short of carbon or hydrogen, and therefore given enough energy we can always make hydrocarbons.

              We cant make ELEMENTS though. Copper shortage is a different problem altogether. Only nuclear processes can make elements. And although synthesising elements is theoretically possible no practical method to do that, in the general case, exists.

              So in then end the real shortages boil down to cheap energy and elements
              One of which nuclear energy partially solves.

              *In a free market, which is manifestly not the case in this politicised energy world

  13. Ikonoclast says:

    Renewable energy denialism is funded by billionaire oil and coal interests who do not want to be left with stranded assets. They want to burn every last recoverable skerrick of fossil fuel and do not care what happens after their own lives are over.

    • Leo Smith says:

      Renewable energy is funded by fossil fuel interests. Renewable energy absolutely necessitates fossil fuel co-operation to provide the dispatch that renewable solutions cannot.

      You are right that fossil fuel companies are mounting a campaign of lies and deceit, and you and the AGW supporters are part of it. That’s the irony.

      • Mel Tisdale says:

        While it is correct to say that fossil fuel energy is essential to act as a load balance for when renewable energy is unavailable, that need not be the case long-term. Current nuclear power generation is not capable of load following. However there are designs that are perfectly capable of load following and the longer we put off developing them, the longer will be the need for fossil fuel energy production. Ideally load following should not be too important, but it looks like we are destined to have a landscape despoiled by wind turbines, so some form of load following energy generation will be essential.

        The final clause in your comment “… fossil fuel companies are mounting a campaign of lies and deceit, and you and the AGW supporters are part of it.” beggars belief. Climate change is far too important an issue not to treat seriously. While you and others may not believe in it, 97% of all leading climate scientists (i.e. they have published peer-reviewed papers in prestigious journals) do and are alarmed by what they see.

        I have no objection to your expressing disagreement with the idea of climate change/AGW, I just wish you could support your position with some science. Until then, as far as I am concerned, any argument that you make based on what appears to be simply a ‘feeling’ on the matter is not worthy of consideration. (Indeed, anyone who has similar views is advised to visit skepticalscience.com for in-depth information in ranges of accessibility from basic to advanced.)

        Energy generation forms the core around which most, if not all, of the posts on this site are built and combating climate change is central to what pollution is emitted in the process of generating that energy. Unless the above 97% of scientists are wrong on the issue, we are destined as a species for a very dire time of it. It will not have escaped the notice of those that have studied the issue that the climate and its attendant effects on the environment are happening a lot quicker than the IPCC had conservatively predicted. It will not have escaped the notice of all, even those who think it is all nonsense, that we are experiencing a lot of extreme weather events and suffering as a result, which is entirely in line with the science. That same science says that we can expect even more extreme weather as the climate warms further.

        It can only be a matter of time before the public realises just how much they have been deceived regarding climate change and one expects that they will be angry, very angry. Only then will it be possible for sites such as this to consider with any degree of certitude future energy production and usage. Old Mother Nature cannot be bought. If we increase the level of CO2 in the atmosphere, she turns up the thermostat accordingly.

        • Leo Smith says:

          Mel you are right to say we don’t need fossil to load follow with renewables, and we can indeed use dispatchable nuclear power which creates no emissions and replaces fossil fuel completely. But guess what stance all the alleged ‘eco warriors’ take against nuclear? Totally rabidly against it. Now, given that it is actually the optimum approach to reducing emissions why would they do that if they weren’t being manipulated by interests that see nuclear energy, not as the threat to mankind it is portrayed as, but as a threat to their near monopolistic stranglehold on energy.

          I.e Big Oil.

          And not even Big Coal either. Because that is being driven out of business by regulation, too.
          If you look not at what people purport to be saying, but at the actual result that their propositions lead, you will find that the reality of a ‘massive switch to renewables’ would ACTUALLY be a ‘massive switch to gas’

          Why do renewables help the gas industry? well its very simple. If energy prices from coal are cheaper than gas can be fracked, no gas gets fracked and no profits get made. If nuclear power is cheaper than gas, and you haven’t driven it out of the grid by scaremongering, no gas gets fracked.

          But if windmills and solar panels are legislated as mandatory things to have, and nuclear is essentially banned regulated to insane cost and deliberately phased out,. they set a much higher price on energy – a price into which the last fossil reserves can be profitably sold. All the cheap competition has been legislated away. Coal because its ‘dirty’ Nuclear because its scary. All you have left to compete with is renewable energy which simply wont ever fill more than a small fraction of the needs, which gas will supply!

          It is classic marketing,. elegant, simple, and employs your erstwhile enemies to work for you. The eco groups are now the tools, not the enemies of big business. Funded by it and castrated by it, the global warming/ renewable bandwagon rolls on.

          The final aspect of this magnificent piece of black theatre is with Goebbels like chutzpah, to declare that in fact the real conspiracy you are mounting is to pretend that global warming doesn’t exist and we don’t need renewables. This of course the case most likely, BUT by using your proxies to associate this with the unpleasant corporate entities who actually stand to make the most OUT of global warming and renewable energy – the gas suppliers – you actually short-circuit any possible criticism before it arrives. How can Big Oil and Gas be behind climate scare and renewable energy when ‘everybody knows’ (because its all part of the marketing campaign) that they secretly fund climate denial! In fact they may well fund both. So as to give credence to the whole narrative.

          Once you realise the true state of affairs, that renewable energy

          (a) isn’t needed with nuclear power at all, because that is emissions free
          (b) involves a huge transition to gas in reality, even whilst the myth that it can replace fossil fuel is peddled and believed by your eco groupies.
          (c) can be used with coal, but that can be dealt with by taxing carbon heavy coal more than gas.

          then all one can say is that the current state of affairs and the way the energy market is being manipulated by governments on ostensibly ‘green’ lines is:

          – not actually green
          – will in the end make gas the sole means of generating the bulk of our electricity.
          – will raise energy prices to levels that will enable oil and gas to be sold profitably far longer down the extraction cost curve than otherwise.

          This might be happenstance. But I doubt it.

          • Mel Tisdale says:

            A very interesting analysis, as always, Leo. Obviously, a lot is down to conjecture and very difficult to counter factually, especially as there is a ring of truth about it. Perhaps the least believable would be the idea that governments could act in unison. Perhaps John leCarré could take your comment and knock up a complete story based on the interwoven relationships you envisage.

            You have answered my original comment by pointing to the Green’s attitude to nuclear power. Had you tied your original comment to the Greens, I would not have replied to it. I have said before, perhaps on this particular site even, that the Greens have a lot to answer for regarding their knee-jerk response to all things nuclear. It would be a nice gesture on their part if they were to apologise for all the harm their behaviour has caused. I am sure that had it not been for them, we would have been generating nearly all our electricity from nuclear by now and climate change would not be the worry that it has become.

            The problem is, assuming your analysis to be correct, that all the while the various parties are playing some clever political game centred on profits, the temperature just keeps on rising. Even if we stopped all our CO2 emissions tomorrow, which is impossible, the temperature rise would not cease as a result. From what I can gather, we are guaranteed at least a doubling of the rise to date simply from what is working its way through the system, especially since we have had a series of La Niña events which have tended to put the heat into the deep ocean instead of the atmosphere. However, it will eventually appear in the troposphere. (Please don’t ask me how. Apparently it is down to the fact that it is a dynamic system, but from there the science and I part company as far as fully understanding this aspect of the issue is concerned.) So the worry that I have is not so much for me, it is for my son and his children, should he ever settle down and make me a granddad. Assuming that society continues to function, and future generations have access to today’s media and the like via archives, then I am sure they will lament the opportunities that we have squandered. Heaven knows, it looks like they are in for a pretty awful time of it as it is, without climate change adding to their woes.

            To repeat, for every increase in atmospheric CO2, Old Mother Nature turns up the thermostat. I just hope that the powers that be are better briefed on the issue and are not simply playing silly buggers.

            • Leo Smith says:

              Mel,. there are plenty of models that I personally find equally plausible that show that the impact of the (inevitable) CO2 rise will be almost negligible on climate, and, furthermore, the signs are that what we are about to see is a 200 year+ mini ice age instead. Which would be MORE damaging than global warming. I don’t want to get into a shouting match so I wont go further than that.

              In terms of determining a rational policy towards climate change, my take is cynical, and rational.

              Unless we can so something about China and India we cant stop human CO2 emissions. Realistically that means that we have to deal with it, we cant stop it, and bankrupting ourselves trying to, is the worst of all possible options.

              Finally – and I am busy writing something that is far too long to post here – to show how renewable energy is the worst of all possible solutions either to power generation post peak oil, and indeed reducing CO2 emissions, if in fact those do anything harmful. It has nothing to recommend it apart from appealing to an emotional narrative that attracts the naive, and making extra profit for oil and gas companies and renewable energy companies at the absolute expense of the populations of any country that espouses it.

              In short the worst legacy you could leave your grandchildren would be a renewable energy strewn landscape that didn’t actually work and no money left to build anything else.

            • Mel Tisdale says:

              I agree, Leo, that a shouting match is not the way to go, if for no other reason than this is not the forum for such a discussion. Regarding the work you are putting together on the issue, I can only repeat that scepticalscience.com is an excellent source of scientific discussion on the topic. The comments policy is strict, so there is little contribution from the looney fringe (on both sides of the debate). Your position on climate sensitivity is out of step with that of the main body of climate scientists and in particular I recommend that you at least look at Lindzen’s Illusions. Lindzen is a senior climate scientist, who shares your ‘low sensitivity’ view. From there you will see other lines of investigation. In any event, I think it is a sight to which you should subscribe, if only for research.

              Your mini ice age is difficult to accept when looking at all the graphs on the matter. They are all pointing north at an alarming rate. The only possible route to such a dramatic change that I can see would be a slowdown of the thermohaline circulation, but as far as I am aware the oceanic scientists do not see that as very likely. If you have other information, I would be interested to know what that is as it is something that used to concern me, but the science persuaded me that that concern was unfounded.( I have just tried to search skepticalscience.com, but their server, or someone’s server, is apparently down. I am sure that they will have something on it.)

              Regarding renewables, I share your view that they are a distraction from the way the world should tackle the need for energy for its chosen lifestyle, with emphasis on ‘chosen’. I am sure that I am not alone in not wanting to be forced to change my lifestyle when I know well that it is not necessary. The Green movement would improve their popularity by leaps and bounds if it could accommodate such views. I.e. leave the yurts and come into the twenty-first century.

              I would like to see you debate your views on climate change on skepticalscience.com. I am not sure that you would win, but I think we might all gain from such discussions.

              Finally, until your views on climate change gain prominence, be they right or wrong, the way the climate debate is progressing is that the mainstream position is correct and that the temperature is rising dangerously. When the public realises that that danger will lead to hardships for their families, they will have views on energy ‘production’ that will influence policy probably in a very different way to the way their current views do. That at least should be recognised as a caveat to any conclusions discussions on this site might arrive at.

            • This is the part of the story that many people miss:

              In short the worst legacy you could leave your grandchildren would be a renewable energy strewn landscape that didn’t actually work and no money left to build anything else.

            • Mel Tisdale says:

              Gail, I deliberately “missed” it when I replied to Leo because I wanted to concentrate on other aspects. What worries me is that both you and Leo are obviously intelligent, yet can subscribe to such a view.

              Leaving my grandchildren a world that will not be able to feed them and thus committing them to live in circumstances where there is a free-for-all when it comes to food is what I am trying to avoid. Those most likely to survive will be those that have formed themselves into ‘prides’ or possibly something akin to herds. Those so grouped will look to the alpha male to see that the food that they have managed to rob is distributed equally while being certain that the act of robbing it from other ‘prides’ or ‘herds’, or even individuals will commit the robbed to starvation.

              I’ll settle for a load of ugly windmills that don’t manage to provide today’s level of energy availability (or anything like) any day. At least some energy will be available for a society that still functions. There will be privations, but nothing like that of living in a modern sort of hunter gatherer one where other humans, or at least their food supplies, are targeted by the hunters.

              While Leo may think that we are due for another ice age rather than the opposite, there is little evidence for such a view. The only factor that comes close is the excess of meltwater from the rapidly warming Arctic that, being more buoyant than seawater, will impact on the thermohaline circulation. Oceanographers are of the view that this will have little effect. The science says that we are committed to at least breaching the too high, politically chosen 2 C temperature rise simply due to the dynamics of the situation and that is if we stop CO2 production today. (No chance of that, is there?) What the final temperature rise will finally be is certainly higher than 2 C and probably in excess of 3 C. Some even put it as high as 6 C or higher. If you think this summer was bad, then imagine what an extreme summer will be like when such summers are the norm. Imagine what food supply will be like, especially in a world of around 10 million (hungry)souls. The main thing will be unpredictability of the weather, so farmers will not be able to plan.

              Much as I dislike wind turbines, I’ll leave them, with all their faults, to my grandchildren any day if what I see from the science is the alternative. I am very glad to be in my 60s and likely to miss most of the bad times, at least climatologically speaking. Sort out the imminent financial cataclysm and I can settle down and enjoy my retirement and the inevitable visit from the Grim Reaper!

            • Leo Smith says:

              Mel; everything you say would be true IF renewable energy actually worked.

              Understand that from my perspective at least, I have spent YEARS doing sums and exploring possible engineering solutions and have come to the conclusions it is nothing more than an expensive gesture.
              That leaves me in a position where hand on heart I can say these things.

              1/. I really don’t know for sure whether the world will get warmer or colder. No really I don’t. The maths of climate change is WAY harder and the models WAY more complicated then the simplistic junk being peddled about CO2. Let’s say I am arrogant, or intelligent, enough to know when I don’t know the answer and can’t see a way to find the answer when lesser men claim absolute knowledge.

              2/. Historical evidence shows it would be insane that, CO2 or not, the climate will stay the same. It never has before and it isn’t now. We have to be as prepared as we can be. That means a rich healthy society with access to plenty of energy to take whatever steps to mitigate the effects of that climate change will be.

              3/. Renewable energy can never work to replace fossil fuel. At best it is a minor fuel saving device, at worst it is a monumentally expensive way of increasing global fuel burn. This is key to understanding my position. That’s what the analysis says. You may believe it or not, but since I did it, I must perforce believe it.

              4/. Pragmatically, if the West does manage to reduce its carbon footprint by driving energy prices up, realistically all that means is heavy industry will ‘eff off’ to China and India who will simply burn more coal. As Peter Lilley said, generating a minuscule global benefit at huge national cost will not in the end be to anyone’s advantage. Worse, you probably are generating no benefit globally at all. Without a global totalitarian government to enforce global solutions (which for sure is the dream of the European Union) its madness to act as if such a state existed (but it doesn’t stop the European unelected ‘technocrats’ from doing just that).

              5/. On the numbers, nuclear power which admittedly has issues (but SOLUBLE issues), is capable of delivering 5-6 times more carbon reduction at half the price of any renewable.

              Now given that we all want to pass the best possible result to our grandchildren (although in my case I never wanted or felt I could afford to bring a child into this world, and never quite did, though it was close) what solutions we choose are down to what we believe will achieve that.
              Therefore there is no point in you holding me to account for not wanting what you want to happen, because I DO want it to happen in fundamental terms. I am merely pointing out that my honest and deeply researched view is that the methods that are being held up to achieve it, are (wittingly or unwittingly) essentially fraudulent in their claims and deeply damaging in their effects. Furthermore I am not even convinced that the problem that they purport to address – excess CO2 – is actually a problem on the scale its being presented as. .

              Which eaves me in the position of trying to oppose something I am utterly convinced will not solve a problem that I am not convinced even exists. But I don’t want to take a stand on climate change itself, so I restrict my arguments to saying that even IF the alarmist view of climate change is correct and IF its down to CO2, then actually the best solution is nuclear power, and renewable energy is a complete waste of time. Furthermore if the climate goes the other way – colder – and there are those who say it will, and make good cases as well – then what we probably need is lots more power. And CO2 be dammed!

              In short I don’t know and I am not convinced about most things, bar one, which is my speciality, and that is renewable energy is essentially a political and corporate fraud.

              And that in the face of the true position with respect to climate change which is that we in te West are powerless to really affect emerging market emissions, and we simply really do NOT know what direction the climate will go in – because its wobbled about on far greater a scale before than it is now, and over just as short time-scales – what we need to spend money on is surplus energy and contingency plans. Katrina, the Tsunamis we have seen recently – Haiti, fr example. These are not climate *change* related events. But they were devastating NATURAL events. Which were met with more, or less, botched responses.

              THAT is where the money should go. A sort of paramilitary organisation that can get to any part of the world and be really effective in alleviating the worst, backed up by science and research and engineering that can analyses future risk from flood, rainfall and temperature change and so on and advise, and even fund, and finally some commitment to deploy aid to prevent the next disaster from doing what every disaster does. Kill lots of people. I’d far rather see that, and nations solidly backed by reliable nuclear power, than a bunch of windmills that no one can repair and a mediaeval subsistence economy in a planet whose temperature stubbornly refused to actually change at all, or got a lot colder.

            • Mel Tisdale says:

              Leo, you have no idea just how much you are pushing at an open door in my case. Like you, I am convinced that nuclear is the way to go regarding our static energy needs. Obviously, transport is a problem, except, as you say, with shipping and trains. I would like to see a concerted effort that on developing new nuclear technologies. I am sure that when the public wakes up to the state of affairs regarding climate change, they will be so concerned about CO2 that they will support the equivalent of a Manhattan project to support the development of such technologies as Thorium fuelled molten salt reactors, which can consume nuclear waste from the current fleet of nuclear reactors and are very safe. Such a project would not take anything like the 15 years another commenter has reported.

              I did wonder if I would be misunderstood after posting (as is often the case with me!) The point that I was trying to make, but perhaps not very successfully, is that my son and such children he manages to sire will have a pretty poor time of it if what those who study climate change are generally predicting comes to pass. I, like you, find the science of climate change pretty daunting. My opinions are based on what those I respect say. (They are also influenced, but negatively, by what those I don’t respect say. I honestly believe you would find scepticalscience.com interesting. It is based in Australia, but don’t hold that against it. I can also recommend Potholer 54 channel on Youtube.
              (Try: http://freethoughtblogs.com/lousycanuck/2011/02/20/potholer54-rips-apart-christopher-monckton-then-reveals-his-identity/ for starters. I am sure that you will enjoy it. After that you can watch his series on climate change, which I am also sure you will enjoy. His ‘Who am I?’ video reveals his true identity and the original reason for the nom deplume.)

              To return from the tangent I have just disappeared along, I was not endorsing renewables – far from it. I was trying to say that I would accept renewables if they were the only alternative to what the scientists seem to be fairly sure is going to happen with climate change if we simply carry on with business as usual. I took your comment that having spent money on installing renewables, society would not have any money left to correct the error to mean that there would still be a functioning society, albeit a very poor one, that my family would be part of. As you will have seen from my reply, I see climate change leading to a complete collapse of society when hunger overrides all other motivations, as Maslow’s hierarchy of needs indicates. My comment then was that I would settle for renewable if that was the only alternative. The idea being that if it takes the installation of renewables to get the population to take climate change seriously, at last.

              What I hope will happen is for next year to set a new temperature record (an el niño is currently building) and from that the public will, to a large extent, realize at last that they have been conned (the denialati repeatedly claim that warming has stopped, which it hasn’t). From then on all bets are off. Whether the Greens are up to coming on the side of nuclear, I doubt, but perhaps they can at least learn to shut up so that future generations can stand a chance. Let’s hope their yurts and teepees need redecorating or new kitchens or whatever.

          • Its probably right that our tiny contribution to an energy shift from fossil fuels to renewables will only make a bump in the road down unless all the worlds nations are focused on the same thing. But once we subscribe to this outcome, we present ourselves indeed as “doomers” and noone wants to listen to a whiner. I guess most AGW’ers have a secret hope that the more they write about this and talk about it, more people will notice, and indeed there is a growing awareness among people that “maybe what we are doing now isnt the best for the future”. I know you cant convince most businessmen and bankers since their whole life depends on consumption and flow of money, but even they will have to bow to a forceful change no matter how much they will it or lobby it away. What it takes is a serious wakeup call and I think mother earth might do that for us one way or another soon. Then more people might question why it happened, and perhaps look at what 97% of the climate scientists have been trying to tell us.

            The same way, media hardly connects the dots between energy and the economy in a way that explains what the root cause of the problem is and a doubling of the gas price for a consumer obviously isnt enough for us to truly understand the energy crisis. Perhaps a 10x price will do that, but every time the price of oil rises too high, it affects the economy, and since most people cant think longer than their nose they think its a problem in the economy. I do now know what would be a suitable wakeup call for people to really consider their energy dependency as a major contributor to the cause of the problems. People have just been taking it for granted for too long, and neither state leaders or the media have been very good at telling us there is a high probability of reduced access to energy in the near future (not only energy, quite a lot of raw materials). Neither do they analyse and question the fact that as the climate worsens so will our ability to handle reduced energy access in production and food supply. As I often say, its a “double whammy” for those of us who believe in AGW.

            So I think renewables can give people a view into a future with less dependence on fossil fuel for a number of areas within our current consumption (but not get rid of it totally). It is the message bearer of an alternative where we think about energy consumption and not just consume it. Saying that it wont make any difference essentially means “to give up” and “to loose hope” – and who wants that? Most people are just ignorant to the predicaments, but acknowledging and “giving up” is the same as committing suicide in my eyes. Its better to use this time to prepare ourselves for a time with less access to energy, but still having access to some energy for vital tasks in life.

            • Leo Smith says:

              The problem is John, that operated the way it is in today’s political environment and with the technological limitations that exist in the real world – largely the lack of cheap, safe mass storage of energy beyond hydrocarbon or unclear fuels – its highly arguable as to whether renewable energy reduces our dependence on fossil fuel one iota.

              For the reasoning behind that statement and why I see nuclear as the only viable non fossil primary energy source in the net few decades, see here.


              I hope your maths and science is good enough to follow the arguments.

              Its important to note that I share common cause with all those who want a clean cheap fossil free energy world. The difference is that having analysed renewable energy in the precise context in which its being deployed, I can only conclude that its is a complete distraction and diverts attention away from the problem into a non solution. And, furthermore its limitations are insoluble by the application of further advances in the technology, because they are intrinsic to the energy source itself. Namely you cant make the sun shine in winter, the wind blow in a flat calm, or get more energy out of them at any given time than is in them.

              Whereas nuclear energy offers a low cost zero fossil grid whose problems are technical and soluble and really the only barrier is pyschological. Although as I point out, humans being what they are, most would rather change the world, than their own minds, or leave it altogether.

              Which I wouldn’t mind. If all the ‘Greens’ committed suicide ‘to help save the planet’ or even forbore from having children, I’d say at least that was a honorable statement of belief, rather than forcing me to fund a program that I know with absolute certainty will not achieve what they claim it will.

          • Leo, I don’t oppose nuclear energy as an alternative supplement, but is there really enough fuel for these to run in substantially increased number for any length of time into the future? Also, we have not really found good ways to treat the waste from these plants yet besides storing them somewhere we hope noone or mother nature wont tamper with them. While nuclear is indeed exceptionally energy dense and have no CO2 emissions, the waste treatment leaves me somewhat puzzled. Perhaps more research into Thorium plants might be a viable alternative, and no doubt it will probably be part of the energy mix in the future.

            Also I don’t know what your assumption about sustainability is. Do you want to keep status quo with regards to energy use and globalism? Or do you see this severely limited as well? I think Gail and others here view the future of one where we have to live with less energy, and that also means less energy for the production of goods as well and definitely less transportation and globalism in general. A man can live on his own on bare ground with a patch of earth to grow food on, the only energy used is his hands, sweat and toil. Any improvement on this will naturally make his life easier through the use of additional energy sources. But he does not need the vast abundance of energy that we normally take for granted today. Quite possibly he could live decently on 1/100th of what a normal person use today in the western society. 1/10th would be enough to give the planet “a breather”. But what cannot survive under this scenario is the average banker or economist – the economies will be severely scaled down to more bare bones trade for the most essential stuff – in other words a more sustainable future.

            I think at least Gail is trying to be somewhat optimistic about our future possibilities with less reliance on fossil fuel, providing insightful ideas and scenarios how possible futures can pan out based on the fact that the world is indeed finite. Naturally any change from status quo is generally regarded as “a doomers view”, but is basically based on the idea that what we have now is the best way to live life, while clearly the serious impact we are having on the planet proves us wrong all the time. There is nothing doomer about trying to preserve the planet and its wildlife, its the exact opposite. But as long as “cash is king” there is nothing we can “buy them with” since our ideas generally oppose the free market and possibly pave way for more socialism (unfortunately socialism has been made synonymous with lazy free riders and totalitarian leaders, while in truth the idea is a much more noble one in sharing the planets resources fairly among its inhabitants).

            So yes Leo, I understand the reasoning, and this is the common opposition I also meet in people I speak about these issues, because its based on the notion that we want to keep up status quo but with green energy. That is most likely not possible as you say, but there are parallel changes that needs to be done as we do the transition.

            • Leo Smith says:

              John: yes there is enough fuel and since the current pricing is very low and the EROI simply massive, there’s scope for considerable price increases as well. Also, new technology reactors are perfectly possible that utilise more of the fuel, and burn most of the nastier waste as well. Finally breeder reactors can be produced that actually create more fuel from – say U238 (depleted uranium) than they burn U235.

              What’s holding this all back is public antipathy and the economics. When U235 is dirt cheap, there is no incentive to even recycle used fuel and plutonium waste, let alone use breeder reactors.

              There is also heaps of fissile material (or is it fissionable) in the sea and everywhere on the planet. Its not worth harvesting because the price is higher than mining raw uranium. Thorium can be kicked into fission if you hit it with a U235 spark plug. Or you can use high energy accelerators or particle beams to fission material that doesn’t naturally do it. Like U238

              Conservative estimates put ultimately economic reserves at several thousand years of giving the whole CURRENT population of the earth the same sort of average energy needs that Europeans have. I.e. not quite as high as the USA, but fairly civilised. Ad then there is fusion, which is still decades away, but has virtually unlimited fuel in the shape of sea water.

              The point I keep saying is that whilst nuclear power is expensive, because people want guarantees of unbelievable safety, its both not as expensive as the true cost of renewables and it actually offers a more environmentally friendly way to generate power and most importantly, developing it will actually make it better cleaner safer and cheaper and more economical. In short there is the chance to go through technological development and make better cheaper cleaner power stations. Whereas with renewable energy you are always hamstrung by the twin intrinsic issues of low power density and intermittency. About which you can do absolutely nothing.

              In short we have more chance of developing a good cheap clean nuclear power station that developing large capacity small footprint safe electrical energy storage that would make renewables actually useful. And we already can generate nuclear power below renewables costs, so adding that storage to renewables can only make them even more expensive, so that even if the intermiittency is ‘solved’ by adding storage, the overall solution is far more expensive than nuclear, and it still uses vast areas of real estate to do the same job. And those vast areas mean you need fossil powered vehicles to access and service it too. At least with nuclear power its all in a power station with lots of power available. And probably a train line going straight to it and an electric train at that. Taking a new gearbox to an offshore wind farm needs a boat crane or a helicopter.

              As David Mackay says, we all like the idea of renewable energy, but we like maths as well.
              And it simply doesn’t stack up. It aint brilliant for nuclear either. But it is at least possible.

              If we could in the current situation, mass produce reactors at about half the price they currently are, and get the maintenance down to not much more than 15% of the value annualised, then nuclear is as cheap as coal. Fuel cost is not high. at worst 15% of the final electricity cost, so there is scope for that to rise without it hurting too much.

            • John,

              I agree with Leo. Intermittent renewables, regardless of how they are advertised, are not going to help the grid last any longer. Maybe some reader with their own battery system can make them go for a while, outside the grid. But, the idea that intermittent renewables are helpful for extending the life of the grid is simply not true. It is a nice “green” sounding view that has helped politicians look like they are doing something. That is all.

          • Michael Lloyd says:

            It is worth pointing out what David Mackay has to say about fast breeder reactors and using uranium from the oceans:

            “At last, a sustainable figure that beats current consumption! – but only with the joint help of two technologies that are respectively scarcely developed and unfashionable: ocean extraction of uranium, and fast breeder reactors.”

            Also, you may not have seen an article on Thorium in Royal Society of Chemistry News August 2012 by Kevin Hesketh, Senior Fellow in Reactor Physics at the National Physical Laboratory. These are some of his comments from the article:

            “To benefit from the thorium dual cycle it is necessary to recycle U233 and this poses technical difficulties….. fabrication of U233 fuel is complicated by the presence of U232, whose radioactive decay chain yields very intense gamma emissions from one of its daughter nuclides. That introduces substantial shielding requirements….”

            His concluding comments are:

            “Opinions differ on the development timescales, but they are unlikely to be less than 15 years and perhaps, more realistically, longer. Therefore the thorium fuel cycle remains for the time being as a long-term strategic option that has promise, but will need considerable investment to realise that promise.”

            We are going to have to wait on India to develop this technology as they are sitting on a large proportion of the thorium reserves.

            My personal opinion is that we will need to have nuclear power but that it would be foolish to rely solely on that power. We need to hedge our bets with other options, which also have their defects.

            • Leo Smith says:

              Our positions are very similar, and that is broadly that there is a ‘here now’ opportunity to use existing nuclear technology to start to take the strain of baseload power, but its the start of a long process of development over several decades.

              Where I differ from many is my utter condemnation of renewable energy which I see as a political distraction only, that has no possibility to deliver what our society actually needs, even though it appears – or is portrayed – as something our society wants.

              The Indians and IIRC te South Africans are looking at thorium, which has issues as you say. several countries had experimental breeder reactors that worked, but were at the time not commercially viable. The UK alone has tonnes of plutonium left over from fuel reprocessing and at least one new reactor being built somewhere is designed to use plutonium, mixed oxide fuel (MOX) the USA have stockpiled in old cold war weaponry. Burning that improves world security!

              And the Japanese and others have been looking at extracting uranium from seawater..they have some nano engineered meshes that show great promise already.

              The key thing is that fission reactions are not the only ones – one day, some day, fusion will work and that provides the ‘next 10,000 years’ of fuel and the means to get off planet and mine somewhere else maybe. Remember that no energy is renewable. The sun will run out. All the energy there ever was happened at the big bang and we are living off the echoes..we don’t need nuclear fission to last more than a couple of hundred years.

              In a sense we can see – and I do – fossil energy as the way to bootstrap nuclear fission, and that as a way to bootstrap fusion power. Or whatever other form of sub quantum energy we might unlock at CERN.

              Right now we can build Gen IV PWR and ABWR and CANDU style reactors that are known to work and have known, if higher than we would like, costs, and known waste issues that can be addressed.

              Up the line there are several options. Staying with fission, there are MOX burning reactors energy amplifiers, the thorium reactors and possible laser ignited nuclear waste burners all of which offer access to new fuels including utilising what is today ‘toxic waste’. These offer better usage of existing fuels and the potential to breed more fuels. Remember nuclear power doesn’t ‘burn uranium’ like you ‘burn oil’ Its actually ‘burning mass’ and it is simply the fact that the most readily available spontaneously fissioning element we have that is sufficiently radioactive to work, but not radioactive to have worked already in nature, is uranium. In short its half life is similar to the age of the planet, that’s why its still here! BUT that doesn’t mean that by firing protons and neutron at other stale elements we cant make them into elements that will fission. Thats what causes ‘decay heat’ lots of radioactive stuff is made in the reactors, and when the reactor is shut down that stuff still fizzes and pops and creates heat decaying into stable stuff.
              Breeder reactors are designed to create more stable stuff that can be stored and used as fuel. For every atom of fissile U235, there are a thousand atoms of fissionable U238. At the moment its waste. We use it for weights – yacht keels, armor piercing shells – aircraft mass balancing. Add a neutron or two and its plutonium – bomb makers dream and a very good reactor fuel. That’s what early reactors did – take low grade uranium which was very hard to separate into weapons grade uranium and make plutonium, which is chemically NOT uranium, so is much easier to separate. And that made good A-bombs, so that kept it to wave at the Russians.

              All uranium reactors breed plutonium anyway, but the fast breeders were designed to breed more plutonium from U238, than the uranium 235 they used.

              Wiki says:
              “Breeder reactors could in principle extract almost all of the energy contained in uranium or thorium, decreasing fuel requirements by nearly two orders of magnitude compared to traditional once-through light water reactors, which extract less than 1% of the energy. This could greatly dampen concern about fuel supply or energy used in mining. In fact, with seawater uranium extraction, there would be enough fuel for breeder reactors to satisfy our energy needs for as long as the current relationship between the sun and Earth persists, about 5 billion years at the current energy consumption rate (thus making nuclear energy as sustainable in fuel availability terms as solar or wind renewable energy)”

              Obviously written by a fan, but probably true.

              So post next phase nuclear, the way to go is to start being clever with fuel and reducing what they need. There is for sure enough fuel, if we do that – the world population cannot keep increasing even if we solve energy – there’s no space! – so we cannot honestly see that we will need huge amounts more energy per capita than the West uses now. Or more capitas, either.

              That’s not the whole answer of course. What nuclear energy gives you is an affordable, if not cheap source of electrical energy that is enough that you don’t have to worry too much about being uber frugal with it. It solves the heating lighting computing and mechanical needs of fixed installations. It does nothing for transport below electric train or nuclear ship size. It doesnt directly solve food shortages, medical care, what to do on a wet Saturday afternoon, or where to put the resultant babies.

              But it does at least mean you can stop worrying about energy and carbon dyed oxhide. And get on and tackle the other problems that are harder to solve, like too many babies and not enough food, and how to run aeroplanes of electrickery, and cutting down rainforests and stuff. And of course which numpty to put in the white house. As if it made any difference to the real world.

          • Leo, you might be right that indeed nuclear can come and save the day – you sure sound convincing about its future prospects. As long as people can be convinced its safe to operate the plant in all kinds of conditions as well as the way we treat the waste is not going to be a terrible problem for our grandchildren, I think many would be convinced.

            As for what nuclear energy doesn’t help, I see electricity as much as a fuel as a light/heating source. I still think there is much to be done with advances in battery technology, and seeing the statistics for electric vehicles here in Norway, makes me believe people can shift to non-fossil fuel transportation (although I believe good effective public transport is a better way to go in the long run). But it doesnt solve the issues of what stuff is built from with the immense depletion of minerals we see happening. Ofc recycling will help out a lot (and indeed for e.g. copper its essential), but as we all know our good old friend Mr Entropy messes things up – everything is diluted at one point where immense energy is required to bring it back to a somewhat pure form. But then again, if nuclear (and hopefully fusion in the future) can provide this energy, there is perhaps no limits to our re-moulding of recycled waste as long as the CO2 footprint is severely limited in the process as well.

            When I hear that we can make fuel from bio-waste – I normally comment that in nature there is no bio-waste – its essentially food for the next generation. While the planet is indeed finite, some serious recycling is inherent in its evolution of life. Lets hope we have the necessary power source in the future to continue this trend on our own “techno-evolution”. At present I see the “waste bins” of the planet being filled faster than we are able recycle it due to economic growth being king. Time is indeed getting short for us to change our ways.

  14. b_f says:

    although many engineers love to laugh at solar, the reality is that solar is one of the few types of portable energy and can at least provide for residential needs. I’m a materials scientist in this field; new thin film technologies for photovoltaics are very cheap. organic solar cells can be manufactured roll to roll instead of batch production for wafers, and it is a solution state process and doesn’t require the vacuum, high temperatures or any of the other things that silicon does. despite lower efficiency it is just so much cheaper if they scale up. the problem right now is lack of investment; just as a gigantic petrochemical refinery costs billions yet can produce products that cost cents per gallon, the organic solar cells are more of a “petrochemicals” approach rather than the current “workshop” approach of batch production that dominates right now.

    for discrete devices, higher efficiency silicon, or even multijunction devices can be used.

    The reality is, solar doesn’t need to be grid connected at all. Discrete devices use solar all the time; calculators for example. This can be scaled up to at the very least, residential level, and able to provide for daytime lighting, air conditioning, refrigeration, an electric bike and personal computing needs.

    The grid can be reserved for industrial uses. While this does not totally solve the problem no one technology can, and engineers should know this. If it reduces energy consumption by even 15%, it is worth it.

    • I totally agree with you. It also means you are allowed to “waste energy” whenever you have it, instead of now where you waste it all the time since you take it for granted. Its interesting that one could have a relation to energy in the way they did back when windmills ground the grains, you could only do it whenever there was any wind. A combination of wind and solar is in that sense a perfect supplement to any home really, and you will only use whatever they can provide at any given time. The biggest problem with both of these is in the northern part of the hemisphere (where I live) with winter and little sun during the day. I believe that the biggest challenge is being able to store energy for the winter, just like the biggest challenge 100 years ago was to store enough food for the winter. It would be very hard to live disconnected to a grid in my parts as a lot of energy would be used to generate heat (preferably held in stones/thick tiles at the bottom floor to dissipate over night). If I had the money I’d love to build a home like this and try to live off the grid as much as possible – it would be a fun challenge and one that could provide valuable lessons for a less energy dense future.

      • Don Stewart says:

        A common source of heat in the winter were domesticated animals. A common building strategy was to place the animals on the bottom floor, with the humans on the second floor. The heat from the animals rose to the second floor. Of course, you had to harvest fodder for the animals during the growing season and store it for the winter. Fine houses by Palladio in Italy followed this pattern. Even rich people understood something about energy in those days. Anne Hathaway’s house in Britain used animal heat.

        Don Stewart

        • One problem I see is that people already have their homes built. The time and energy that goes into building a new home, built over domesticated animals, hasn’t entered into their thinking. Home-builidng resources will be increasingly scarce. Unless we can take down existing homes, and reconfigure them in a new way, it will be hard to find the materials we need for changing to such an arrangement. (But I do agree with you–this is the arrangement that makes sense. I understand “Three Dog Night” in the song comes from an Australian expression. It relates to needing three dogs to keep you warm at night, because it is so cold.)

          • Don Stewart says:

            If I were foolish enough to try to write a post-apocalypse movie for Hollywood, I might have bands of people with crowbars (which are indestructible and will be here long after humans have gone) roaming the landscape demolishing McMansions for the building materials and then constructing sensible housing with the salvage.

            A less extreme proposal would be to take one bedroom and pile lots and lots of people (and maybe 3 dogs) into it. Teepees on the Plains worked that way. Igloos also. The only point is that humans solved these problems tens of thousands of years ago. Given enough pressure, some of us can do it again. The inflexible will die.
            Don Stewart

            • Leo Smith says:

              Sadly the real point is, Don, that whereas 10,000 people solved these issues 10,000 years ago in Britain, today the population is 70 million.

              Once I was a teenager and into rock music: we attended Britains first ever rock festival. 150,000 people descended on a couple of fields in the isle of Wight. We were students and so went early and pitched our tents in the corner of a field by a little copse of trees.

              4 days later when we left, there was no copse. It had all been cut down for campfires. All there was was piles of stinking human excrement and toilet paper. I remember sitting myself, perched over the only toilet facilities p[provided, a 30 foot deep slit trench cut by a digger (back hoe) perched on a scaffolding pole . It remains one of the most vivid memories of the festival. When we reached the car ferry to get off the island, the first thing we all did was to make for the toilets, and take care of business and get a decent wash. When I reached the parental home I slept for 22 hours solid.
              I finally realised the real value if civilisation. And the point of all those men digging up roads laying pipes and cables and all those power stations making power to pump water electricity and sewage in and out, of the value of permanent dwellings, with insulation and heating and water laid on, of beds off the hard ground, with mattresses pillows and blankets, and later on when I learnt more about engineering, I worked out what the price was we had to pay to have all of those things.

              Not only is it a price worth paying, it is a price that must be paid if you want top stick seventy million people on a set of islands that realistically without it, could support at best 2 million.

              When I lived in a rented hovel on a farm I had a conversation with the old farmer who owned it, whose main crop was potatoes. A primary school had been to ‘visit’ the farm, and being pumped full of eco propaganda asked him what he did before tractors and diesel “We used to pick the potatoes by hand, this whole area was full of people who lived here and picked potatoes and weeded the fields by hand” “And what would you do if there was no diesel and you had to do it again like that” He paused “OI think I would probably commit suicide” he said.

            • Don Stewart says:

              As the death rate statistics hint, survival is hugely influenced by one’s expectations. The big decline in males in the Soviet Union has been explained by Dmitry Orlov largely in terms of one’s story about oneself and what one’s expectations are. If you look at the big increase in mortality among lower income women in the US, and compare that to the increased life expectancy in Hispanics and Blacks, you can’t help but speculate that lowered expectations among the white women are part of the answer. When my wife and I married, a low income white girl could expect to marry a boy from a similar economic background, work a while, then quit and have babies, and then maybe go back to work when the kids were more or less on their own. (That is our story.) It simply doesn’t work that way anymore among lower income white girls in the US. And yet the propaganda continues to insist that one’s dreams will all come true.

              When dreams fail, bad things happen.

              I can’t imagine anything worse than being stuck in a big muddy field with a bunch of clueless suburban kids out for a lark. Neither do I think the prospects for Britain are very bright. As I understand it, the country has systematically destroyed its ability to feed itself–one minister of agriculture said he could care less whether there were any farms left in Britain (which is neo-liberal economics at its most hubristic). In my responses I have emphasized that rebuilding complex networks from the ashes is going to take a lot of time and some peculiar skills. So, yes, I expect a lot of people won’t make it because they are either mentally ill-prepared or because they don’t have the health and skills to do the work or just because they are unlucky. My own opinion is that everyone needs to be working on their survival plan and getting busy.

              Don Stewart

          • Leo Smith says:

            The absolute best study ever done on what actually our carbon footprint consists of was done by David Mackay in his book (its online as well if you can’t afford a few dollars) “Sustainable energy – Without the hot air” at http://www.withouthotair.com. As a dissection of whatever we actually use and in what form its the definitive book. It is also very accurate in its analysis of the power density – that is how much space we need to use – to generate power by various technologies.

            It glosses over intermittency however, and ‘assumes’ storage can be made to work and is very sketchy on costs. Which is why I wrote http://www.templar.co.uk/downloads/Renewable%20Energy%20Limitations.pdf as a sort of couple of additional chapters for it, to demonstrate in the absence of suitable low cost storage, renewable energy costs a lot more than it is presented as (and that’s bad enough) by causing additional cost elements elsewhere in the grid, and both cannot be operated without fossil power and finally negates (by virtue of its intermittency) from a considerable fraction, to potentially more than all of the gains its should have made in fuel reduction.

            My final conclusion was – arrived at over a long period of research and analysis, that as I keep saying there is no better replacement for fossil fuel in electricity generation than nuclear power, in fact it is the only replacement we currently have. Realistically, and at huge cost to the nation in financial and engineering terms most countries will see no better than 5%-10% reduction in generated electricity carbon footprint by using renewables. And the net result is to drive energy intensive business to nations that do NOT have such policies. Thus increasing carbon footprint more than the saving accrued locally, elsewhere.

            If ecology taught us one thing, it was to analyse things holistically: And yet all the marketing of renewable energy relies on localising the benefits. For sure the solar panel or wind turbine generates carbon free electricity, but if the result of deploying it is to increase fuel burn in coal power stations used to dispatch it and to move industry from efficient generation plant in the EU or USA to cheaper low efficiency coal plant in China, then on a global scale its actually making things worse, not better.

        • While indeed a smart idea I highly doubt the average man would have domestic animals to heat their homes in the future. One advantage though in colder climates (like Norway) is that we have gotten increasingly good at insulating homes, reducing the amount of energy required into heating. But as I say, if you have serviceable solar and wind power on your home, those could perhaps even provide enough power to heat a home during the winter time as well, although a lot of other electronic devices would have to be sparingly used. The question is whether we can uphold any industry that is able to create the solar and wind hardware, and if we are able to make it in a simple way so that its very easy and cheap to service. Like some people say that some of Edison’s batteries still work today, there is a certain skill we need to master in creating things that last a long time. Again going back to the problem I mentioned earlier, that “technological evolution” is just going too fast for standards and serviceable work to settle. When your horse lost a shoe, you normally took it to the blacksmith and got a new shoe – today we’d just shoot the horse and buy a new one (to make an extreme point). Its plain silly that many have to take a car to service in order to change a light bulb today, or that e.g. an iPhone does not allow the user to change the battery himself. This is the kind of stuff that hampers standardisation and self servicing – and I cannot fathom that so many people just accepts this as the new future while its just making people dumber and dumber.

          • Leo Smith says:

            Indeed. A case in pint. My car has a cluster of lights in the roof for use by the front passengers. some of which stopped working.. What had happened is at some time the sliding sunroof must have been left open and water had connected in the connector that connected it to the wiring loom, this had corroded and the connector was now partially broken.
            To repair that would have meant the stripping of the entire car interior and the replacement of the whole wiring loom part that fed that cluster; hours of fruitless searching did not reveal a source for the connector itself. Then I wondered why it had a connector at all! And realised that cars are made of parts that are plugged. bolted, riveted or welded together on an assembly line: with automatic cable making equipment the cheapest way to connect one electrical assembly to another is to make a plug and socket – and yet its a plug and socket that will never ever be taken apart again!

            I cut the socket off and soldered the wires directly to where they needed to go. 15 minute job including tidying up afterwards. But one no garage would have done.
            The pint is that the way things are done is driven by cost, and in a highly mechanised production environment that means low labour. All cost is wages in the end. The cost of anything you buy reflects how many man hours at various skill and age levels have gone into the product that you buy. Nothing more. Well; plus the cut that governments take to ensure that you have a stable society to produce in, up to and including paying welfare to all the people who are NOT involved in production.If that means that reducing labour input at manufacture results in a product that is so cheap that fixing it is uneconomic, that’s what will happen.

            Only when the human cost of material extraction rises to start to dominate the cost of a product, more than its manufacture, will we see economy of repair – and even then, its likely that what will happen is that scrap (cars) will rise in value – as they are doing – rather than be refurbished. That is so long as the overall labour cost of building mechanised factories is lower than the cost of paying for things to be done by hand. hat may force a transition back to a more labour intensive situation and more reparable equipment is cost of transportation. If everybody is involved getting oil out of the ground, oil is going to get expensive. And that means that fuel efficiency measures will start to dominate international manufacturing. And that is a force for localisation too: stuff built from local materials to reduce the impact of scarce transport fuel.

            McDonalds sells sub-standard burgers world wide, but it doesn’t make its burgers and buns in the USA alone, or ship its salads in on cargo jets! It sources locally, and a burger in the USA is a different price and a different taste to the European burger. Not that either is worth eating mind you. Its already had to localise production because of transport costs. Food – because its cheap to start with – suffers massively from transport prices. Here in the EU legislation multiplies the effect: You are not allowed to sell cuts of the pig you reared and slaughtered yourself. No, the animal must be transported miles – sometimes internationally – to a registered and inspected slaughterhouse, where it must be dispatched humanely with a captive bolt pistol (or if its Halal or Kosher, have its throat scientifically slit) and then be butchered and jointed and packed before being frozen and returned to you. The process of slaughter and distribution means that meat on a supermarket shelf is around 3 times the on the trotter/hoof price you can get for it ex farm gate.

            Post war America pioneered consumerism. It was a very good way to get everybody involved in making wealth and distributing it, and to generate a large GDP and spread it around fairly, all fuelled by impossibly cheap (because few people were involved) energy. The problem is that if the resources run out, the whole thing implodes. As it is now doing. The economic costs of carrying employees whose actual contribution to wealth creation is nil, or even negative start to outweigh the social benefits of having them employed rather than sitting at home picking their noses. In fact , overall it would be cheaper to pay them to stay at home, where they wouldn’t get in the way of everyone else, and be burning gasoline to rush from employer to school to supermarket and home again. Unemployment ought to be the sign of a healthy efficient society that only needs a few people to generate its GDP.

            I’ll stop there an let that sink in. Its been puzzling me a bit how economics – real economics – as against manipulation of imaginary numbers – works. I have a bit of an epiphany: we usually ask ‘why do things cost so much? In a moment of inspiration I realised that the true question is ‘why does anything cost at all? ‘ and the next thing I write will be entitled that I think. 🙂

          • Indeed Leo, the consumerism has created a system of immense energy usage per capita than it used to be. Admittedly, life expectancy has risen as food is handled in a more hygiene way, perhaps to the absurd point of everything vacuum sealed in neat oil made plastic. Actually while I am at that, I still dont understand why we dont buy more food using recycled “Tupperware” kind of packaging, just like we recycle bottles. A lot of jam jars are also in glass but they get melted into new glass instead of being cleaned and refilled. As energy costs rise I guess more recycling of packing material will come back. I guess this comes back to the markets economy’s right to “be different” and “stand out in the shelves” kind of nonsense. A standardized set of packagings with a sticker slapped on should have been sufficient imo.

            Does anyone have a crystal ball they can look into about when we will see serious changes in available energy and the effects of it? I know most people regard the current economic crisis in Europe and America as clear side effects of oil production which plateaued around 2004. But its been fairly stable since then. The question is when its going to drop and how fast it will drop, and indeed how the world economy and population will react to this. When I mention the coming problems (predicaments) I keep getting pictures from “mad max” by my brother – obviously indicating that I have a doomer-view on things. But hey, who knows how people will react? How likely is it that people will willingly accept lower living standards, less driving, less food, less heating? Some people will ofc be intelligent about it (those who believe in peak oil), but I am not sure about the majority of uneducated people with crushed expectations of the future.

            The more I read about it, the more I feel its about to burst… but from what I know it might not be until another 25 years into the future. Perhaps in the meantime we might get some serious climate change effects…

            I still don’t know how I can prepare my kids for this, and I am unsure at how much more research I need to confirm and get an estimated look at the future prospects before I do share it. My young daughter told me the other day she wanted to be a flight attendant, and it slipped out of me that there possibly wouldn’t be any big airlines left when she was finished with school. How can there be with no liquid fuel around?

            • It seems to me that the US economy is being propped up by a huge amount of deficit spending, artificially low interest rates, low contributions to pension funds (pretending high growth and interest rates are around the corner), and “quantitative easing”. European governments are in increasingly poor condition. The world economy as a whole is increasingly poor condition.

              All of the programs the US government is undertaking to cover up its problems are not sustainable. Unless the economy goes back to fairly rapid “growth” on its own, at some time (probably in the not too distant future) it will be shown to be a “bridge to nowhere”.

              I am afraid that the current bubble is about to burst, but I don’t know the exact timing. Yearend 2012 is one critical time. The government has been able to cover up its problems for an amazing length of time. This “Fiscal Cliff” at December 31, 2012 may start affecting the economy even before the end of the year. The problems in Europe could very well take a shift for the worse, as well.

              I wish I had a good answer for preparing for this. Hoarding doesn’t get you very far. Learning to garden with very little fossil fuel support might help. Also, it might also be helpful to look carefully at security of water supplies.

            • Leo Smith says:

              Id say the reality is that everybody is about 30% poorer than they thought they were. The activity boils down to seeing who is gong to take the hit – with banks politicians and others with powerful political lobbies, making sure it isn’t them.

          • I am sure there will be no growth again like we used to know, the oil supply surely will limit that unless the Saudis conjure up some major superextraction-rate-machine to again give the market a booster like the last one they had. But I am actually more realistic about these things and believe that all oil producing nations have reported reserves way higher than whats actually around. And when the true state of the reserves dawn I think we will truly be in for a heck of a rollercoaster and indeed fuel supply could probably be hampered quicker than we can imagine for many parts of the world. There is no way leaders can prepare its people for that unless they start now. Its like a child blaming others for taking part of breaking windows in a building, “it was they who started it” – it doesnt change the fact that the windows are broken. Same way, leaders really need to be realistic about the current reported reserves and treat the worst case scenario (that it its in fact half of that reported) as the actual way ahead. No good is going to come from them pointing at the Saudis, “they said there was more”…

            Some people here say end of 2012 already, but I don’t know… perhaps the same problems in the economy that we have now. But when will the demand outgrow supply by so much that its clearly visible to all that the world truly have an energy crisis (most people I talk to don’t think we have an energy crisis ahead). I guess I support Chris Martinsons words that “the next 10 years is going to look quite unlike the previous 10 years”. I guess the last 4 years already have… so the question is what the next 4 has in store for us. I am not overly optimistic about this.

  15. Don Stewart says:

    I won’t try to offer a critique of Smith or Olson’s proposed solutions. The most complete proposal–and it is pretty specific–is by Smith. He foresees a collapse of the current system. The collapse will offer the citizens a chance to seize back power from the State and Finance. Smith wants the banks broken up, fractional reserve banking severely restricted, and governmental powers severely restricted. Much like Ron Paul, he thinks the Constitution is a good foundation–but has been stretched way beyond anything useful by political influence.

    You can read the last chapter in his book and draw your own conclusions as to whether the program will help or hurt, is possible or impossible. I merely wouldn’t want to disallow conversations which put forward solutions to our problems, so I include them in the framework.

    Don Stewart

  16. Ikonoclast says:

    Ultimately “authenticity” is in the mind of the beholder. I would agree that much of what the “marketing/ State complex (present) as real is actually abstract and illusory”. The same is true of all history right back to and including primitive tribalism. Replace marketing with witchdoctors, shamans, tabernacle, temple, church and mosque. Replace state with proto-state, King and court, Duke, Feudal Lord, chief and headman.

    At least since the evolution of speech and the organised cognitive and logical thought that speech facilitates, humanity has been wrestling with distracting thoughts of being “authentic” (measuring up to some ideal) and “inauthentic” (failing to measure up to some ideal).

    There are only two ways in which collapse and the devolution of civilization will solve our authenticity issues. The first is by death, the second is by making survival so tough it occupies ALL of our attention.

    • Leo Smith says:

      Except authentic doesn’t mean living up to some ideal. It means representing something real rather than illusory.

      So authenticity is therefore anywhere BUT in the mind of the beholder. Unless you believe in the magical power to effect changes in reality through Aleister Crowley’s Magickal Will of course.

      Which might explain a lot, actually…..

      • Ikonoclast says:

        In the context, “authentic” means living up to ideals or cultural norms. How else could you define “authentic” in the sense in which the quoted passages use it? In the arena of personal, cultural and civilizational activity, defining what is real and what is illusory is not so simple as defining real and illusory in purely material or energy (physics) terms.

        The resort to a single, simplistic and very basic dictionary definition completely misses the context and the point. “Authenticity” in full refers to the truthfulness of origins, attributions, commitments, sincerity, devotion, and intentions. Many of these are qualities not quantities. Judgement of the presence, value, validity or falseness of these qualities is very much in the mind of the beholder and determined by education, enculteration and personal attitude, religion, philosophy and so on.

        As usual, in your derisive mode Leo, you resort to emotive nonsense. You ought to think before you write. Your best posts illustrate you are far too intelligent to be making silly posts like the one above.

  17. Don Stewart says:

    How To Organize Thinking About The Future and Gail’s Analysis Of Our Predicaments

    Quite frequently I observe that we talk past each other on this blog. For example, if I suggest that solar PV panels might make sense for some people over the next couple of decades, Leo Smith will immediately reply that solar PV panels can’t be manufactured after the Collapse. Someone else may respond that solar PV can make all the energy we could ever want and so no Collapse is necessary unless we are too stupid to deploy a lot of solar PV.

    I would like to offer a particular formulation which I think may help us at least organize our thoughts and responses to each other. I will rely heavily on two recently published books: Resistance, Revolution, Liberation by Charles Hugh Smith and Unlearn, Rewild by Miles Olson.

    I. I would like to start by asking what succession looks like? And Olson gives us a very good description on page 76 and following where he traces the fate of the ecosystem in a gully created by clear-cut logging. The bare land is first colonized by weedy plants such as scotch broom which are replaced in a couple of decades with brambles and alders and those in turn will be replaced by climax forest dominated by cedar and hemlock. And then a catastrophically hot forest fire will sweep through and destroy the climax forest and things will start over again. If we think we see stability, we are failing to truly understand.

    I.A. Are we globalized humans about to experience the equivalent of a hot forest fire which will sweep away our climax forest due to social pathologies, resource scarcity, and financial folly?

    II. How does a society become more complex? Smith, I think, gives us the answer on pages 30 and 31. ‘Ecosystems provide endless examples of the dynamics that affect humanity as well as all other organisms: competition, cooperation, feedback, mutation, adaptation, selection, and diversity.’ And ‘The forces of low-intensity instability (LII)–risk, threat, failure, feedback, fluctuation, variation, volatility, mutation, innovation, experimentation, competition, transparency, natural selection (meritocracy), accountability, consequence, accurate communication of facts and the free exchange of information’

    II. A. As the LII forces operate they select for good organizations and good ideas and competent people which has the effect, in human societies, of increasing complexity and production–within the capacity of the resources available.

    II. B. The LII forces operate over chronological time. As Gail has noted, it takes a couple of decades for new technologies to pervade the petroleum business. I used email about 2 decades before most people had ever heard of it. So it takes time for all the players to organize themselves to actually implement some potential benefit from increased complexity.

    III. Your own prescription for which choices globalized humanity, your particular cultural groups, and your clan and your family and you as an individual should make will depend both on the clarity of your thought and the interaction between your thought processes and your emotional apparatus–but also with what you expect to happen as a result of the predicaments Gail points out.

    III.A. If you think the future will be pretty much Business As Usual, then you will be interested in getting the Debt Engine turning again and either Drill, Baby, Drill or a crash deployment of renewable energy.

    III. B. If you think we face a long, continuous function decline, then you will be looking for incremental changes which can make the transition easier.

    III. C. If you expect a hot forest fire (catastrophic collapse to a very much lower level of complexity), then you will be looking for quite fundamental change.

    IV. The Hot Forest Fire scenario is the most interesting and challenging (not necessarily the most likely). At the most basic level, you must:

    IV. A. Arrange for the survival of your genes through a bottleneck event. In order to get through the collapse, you may need a Dmitry Orlov type tool kit from current technology–with the full understanding that it won’t last forever. (Which is where I put things like solar PV and water filters.)

    IV. B. Smith, page 78: ‘Being both solitary and social, we have two intertwined insecurities. As social beings, we have a profound emotional need to establish and actively renew our standing within the social matrix of marriage, family, group, workplace, and culture. As individual beings with inner states and dialogs, we hunger for an internally coherent framework that bestows meaning on a chaotic world and establishes our identity within that framework. If we fail to establish a rewarding social identity and a framework for making sense of our experience of the world, then our default state is a gnawing, debilitating insecurity that expresses itself as angst, anxiety, depression, and alienation.’

    IV. C. Smith, page 91: ‘All that is presented by the marketing/ State complex as real is actually abstract and illusory, as the sources of authenticity have been derealized and replaced by a monoculture of inauthenticity, consumerism, and State control.

    This derealization manifests in many ways: eating disorders and obesity; difficulty sleeping; trance-like apathy; lack of engagement with real life; inability to maintain meaningful relationships; a life devoid of intimacy, passion, and purpose; reliance on medication and drugs; addictive behaviors and attachments; inability to concentrate; fragmented sense of self; avoidance of responsibility; proclamations of soaring rhetoric for logic; escapism; serial lying; chronic hate, frustration, depression, and anxiety and a generalized sense of emotional hunger, incoherence, imbalance, disquiet, and loss.’

    IV D. So we must, in addition to passing our genes forward, also create a satisfying social and inner life in the new, very much less complex, environment.

    Conclusion: I suggest that this framework can be used to clarify what it is we are talking about.

    • Leo Smith says:

      Y’know Don, I rather liked that post!
      “a monoculture of inauthenticity, consumerism, and State control”

      Yup, that’s renewable energy to a T. 🙂

    • It seems like one area of differences in discussion is the scope of changes hoped for. One group is looking particularly at how a small group might be able to move forward, in spite of major changes (forest fire, or not quite that bad). Another group is looking at what governments might do, to try to save the world as a whole, or their country as a whole. This version seems like it would be very difficult to accomplish. Our current predicament is too severe.

      But if we do make changes, even a small residual group will need to be creating a new social structure that works, as you point out. Somehow, they must not repeat the mistakes humans have made to date (defeat of survival of the fittest, without reduction in number of children), or they will reach collapse all over again.

      At some point, there comes a need for a new ecosystem to evolve that uses what was the pollution of this system as one of its building blocks. If we have too much CO2, this might mean that plants will dominate the new ecosystem. Humans may still play a role in the new ecosystem, but a much smaller role.

      • Don Stewart says:

        Question Everything agrees with you that ‘our current predicament is too severe’:

        Over the past five years I have seen one after another hopeful optimist realize that all of their optimism hinged on the notion that somehow the leaders would see the truth and we would all get on board with programs to save society. But the rates of decline are catching up. Weather anomalies from global warming/climate change becoming the norm and economic decay spreading and accelerating are overwhelming that optimism.

        Question Everything recommends telling the truth. As a humble example of that, consider this post on my local small farm listserve:

        I’ve been following the feed price/egg price discussion closely, and must say as a feed store retailer, the grain prices I’m seeing lately are equally frustrating for me, who wants to sell good quality grain/feed at a good price. From everything I’m hearing from the feed mills I work with, grain prices are not expected to drop significantly any time soon although I’ve at least seen prices stabilize a bit in recent weeks. The midwest drought is partly to blame, but also the futures markets and how they escalate the prices to control demand when supply is short. I would love to buy in local corn from growers in Chatham to offer a cheaper alternative not only to farmers but also deer hunters, but everything I hear is just what you said, Billy, local growers are holding out for as close to the same price as bagged feed/corn right now. And it’s hard to blame them with the cost of inputs, especially conventional inputs (petroleum based fertilizers) are also at an all time high. Even organic inputs like feather meal are at all all time high – cost of inputs to chickens goes up, so do the outputs, even what is considered the waste.

        I have been buying in an increasing number of forages this fall to help growers offset feed prices with some grazing. I think your idea of planting greens is right on target. Rape, smooth kale, and turnip are all reasonably priced, will go a long way, and are well eaten by poultry, hogs, etc. I have all of these at the store as well as the more usual fare like rye, wheat, oats.

        I’d also recommend keeping diatomaceous earth out free choice to keep parasites at bay. Animals will go through much less feed when you’re just feeding them and not their parasites, too, but I know I’m probably preaching to the choir on that one.

        Now let’s unpack that a little. This feed store grain retailer is telling the truth as best she can to her customers. She is making some movements which she thinks may limit the damage to both the growers and to her business. But the methods she recommends don’t have the simplicity of overpowering all the problems with fossil fuel powered grains and commercial feed mixes with medicines mixed in. In other words, the farmer needs to become smarter and behave differently. The chickens are smart enough to eat some diatomaceous earth if they need it to control parasites, the farmer just has to make it available to them. About a year ago Gene Logsdon, the Contrary Farmer, expressed the idea that commercial chicken feeds were just a plot to make money all along and get the farmers dependent on Big Ag. So maybe the rational thing to do is to go back to a system which is physically simpler but requires more human work and more knowledge.

        Would this proposal be catastrophic to anyone? I don’t think so. It means probably fewer chickens and hogs eating more waste products and more planted forage crops. Incidentally, the animal manures can prepare a bed nicely for spring planting. And hogs can be used to turn compost if you use Joel Salatin’s clever methods.

        Will eggs and pork get more expensive? Probably so. But Americans need to eat more leafy greens anyway. The smooth kale the retailer recommends can be used in mesclun mixes or sold as a large leaf. Change? Yes. Catastrophe? No.

        But it DOES require telling intelligent, flexible people the truth.

        Don Stewart

    • Bicycle Dave says:

      Hi Don,

      Thanks for the book review. I found this paragraph to be quite thought provoking:

      ‘Being both solitary and social, we have two intertwined insecurities. As social beings, we have a profound emotional need to establish and actively renew our standing within the social matrix of marriage, family, group, workplace, and culture. As individual beings with inner states and dialogs, we hunger for an internally coherent framework that bestows meaning on a chaotic world and establishes our identity within that framework. If we fail to establish a rewarding social identity and a framework for making sense of our experience of the world, then our default state is a gnawing, debilitating insecurity that expresses itself as angst, anxiety, depression, and alienation.’

      It seems to me that us folks in the US (generally speaking) have neither a social identity or individual framework that bodes well for either individual “well-being” or good long term prospects for our species. I see the dominant traits of our culture as:

      1. We are a car culture – just as the Mongols or Huns were a horse culture. Nearly every aspect of our collective lives are organized around the concept of a personal car. The only exceptions being some big city dwellers. The “Car”, as we currently idolize, is simply not a paradigm that can endure and yet it’s pretty much viewed as “Un-American” to suggest this mode of transportation represents a delusion.

      2. We are a religious culture – according to many studies the US is one of the most religious nations in the world. Macro level problem solving must contend with belief systems that defy rationality and hence make rationality just another competing voice in a chaotic world.

      3. We are “Growth” culture – we celebrate population growth, GDP growth, technology growth, personal wealth growth, etc. Of course, in a Our Finite World, endless growth is a delusion.

      4. We are a “Sex” culture in all sorts of ways except what should be obvious – sex and reproduction are two different things. Instead, here in the US, sex a is marketing tool to bolster consumerism without regard for the natural consequences of engaging in this behavior. Or, sex is used as a political weapon to promote some ideology. Just another delusion that gets in the way of finding societal and individual frameworks that might actually help humanity survive over the long haul.

      Surely this is an incomplete list and there are many cultural traits that are more positive. Our universities are often enclaves of truly enlightened thought, our political system is still far superior to dictatorships, our work ethic and willingness to “play by the rules” is exemplary, our bureaucracies are remarkably free of corruption compared to many other countries, and other admirable traits. However, it doesn’t seem that the positive traits are winning the survival challenge.

      I find it difficult to understand how we might move to societal/individual frameworks that might mitigate what the author describes as the default state. Momentum is a powerful force. There are no counseling centers for delusional cultures.

      • “There are no counseling centers for delusional cultures.” I think that sums up a major part of our problem. The fact that energy use is pretty much invisible keeps the real problem hidden–another part of our problem.

        • Indeed, but the western civilisation can do more to make sure that users of energy are informed of an estimated “total cost” of consumption. We are very good at marking food today with energy, fat, sugar and all. Basically everything we buy or consume should have the same visible markings about energy used to manufacture the product to make people more aware. Whether people choose to act on the information is another matter altogether. But I feel if a home for example had a screen with statistics on electricity use per room/appliance, one would be more educated about what really counts and a little “competitive” feeling about trying to use less power would be immediately visible (and rewarding).

          But very few people see the benefit of knowing these things and make judged choices around energy use, simply because most people don’t believe energy use is a problem and neither do they believe CO2 is a greenhouse gas or that climate change is caused by human activity. Unless we are able to convince people that this is our doing and that only we can undo it, we are in for a serious crash when it dawns on us that the world was indeed finite.

          • Most of our energy use is embedded energy–in the products we buy, rather than the electricity or oil we use. We can mostly see the cost of energy by the price of the product. For example, bottled water is expensive because of the energy used in bottling and shipping the water. Buying an expensive home takes involves the consumption of a huge amount of embedded energy. When we see an electric car has a high cost, we should be able to figure out that there is a lot of embedded energy in the price of the car. In fact, if the higher priced car doesn’t pay for itself in reduced gas prices very quickly, that should tell us something as well. The miles-per-gallon limits are aimed at reducing oil use. It is not immediately obvious whether they reduce total energy use.

    • It’s known as the ‘hole in my bucket’ syndrome.

  18. Ikonoclast says:

    Calculations of full energy input costs (total embodied energy) in manufactured products and plant, including power generating plant, are very complex. It is little wonder that we have continuous disagreement on this blog about questions surrounding the viability, non-viability, safety and sustainability of solar power, wind power and nuclear power (the main non-fossil power sources).

    If only we could agree on a national framework to;

    (1.) Require ALL energy generation and fuels prospecting to occur with zero subsidies i.e. at real cost.
    (2.) Require ALL energy generation and fuel storage to meet equivalent safety standards and carry insurance cover on that basis.
    (3.) Require ALL energy generation and fuel storage to meet equivalent negative externality cost standards.

    I realise the above would be impossible to achieve perfectly, though point 1 should have no technical obstacles, only political obstacles. Points 2 and 3 would require assumptions and compromises but when eventually hammered out (based on science so far as possible) the resultant framework would be considerably better than no attempt to cover these issues at all.

    Once the above were achieved, we could leave it to the market to develop the best, most feaible and most cost-effective energy solutions. So I am saying we don’t necessrily have to solve the argument on complex energy input modelling, if only we politically and economically implement the above points. An undistorted market could then solve the problem for us as far as it might be solvable.

    I am not an across-the-board advocate of free market solutions for every one of society’s issues but I do favour the free, undistorted market solution for the power issue. Using this market solution makes sense as power is a ubiquitous requirement for all other processes. Power as exergy (energy available for useful work) is a single product in essence and thus directly comparable and able to be put into direct competition regardless of source. This is true even though there are differences in fuel types, engine types and in the handling and delivery of various fuels. Un-subsidised fuel and power formats as different as coal, oil, gas and electric power could still compete on un-subsidised cost alone in the transport sector, for example.

    • It seems like it is really hard to define what is a subsidized price and what is not.

      Governments get their money from taxes. Now that businesses that are “portable” can move anywhere, they have gotten their tax rates down very low, because they can go to low tax domicile countries. This leaves countries with only individual citizens and “non-portable” businesses to tax. Oil, gas, coal, and mining in general are all non-portable, so end up being high on the list of businesses that are taxed. Lots of businesses (insurance included) can escape taxes, leaving the non-portable businesses to pick up their share. If other businesses paid their share, it would make the tax situation easier.

    • If alternative power production was not funded partially by subsidies there wouldnt be any alternative power production of any considerable size. Most humans and economic thinking is just plain dumb with 100% focus on max profit. That is what the free market is bringing us, the cheapest bad quality energy and goods. Unless the governing powers are able to tell what to expect from the “free market” by regulations and subsidies, the only alternative is a “good dictator” who command their people to only manufacture clean energies. I am afraid we are kinda short of those leaders, so subsidies and “hints” is the only way for us to even provide a foundation for the development of clean energies. The only way we can influence this is by voting and electing leaders who want clean energies, after all most western lifestyle countries do live in Democracy. But the general public doesn’t seem to want green energies, as most people are indeed dumb and just want the cheapest stuff they can afford. So we will for a long time have a minority voting for candidates that fight for a change, and a majority wanting status quo (preferably one who can bring cheaper gas on the table). Free will and the free market will bring the planet to its knees, and the only change happens when it all collapses is what I think. But I hope sites like this, the oildrum, even guys like Kunstler can shake people out of their shells although the only feedback I get for the moment is “doomer this and doomer that”. What people dont understand is that I dont “want doom”, I want to prevent it – or at least take measures to limit the height of our fall.

      • Leo Smith says:

        “Most humans and economic thinking is just plain dumb with 100% focus on max profit. That is what the free market is bringing us, the cheapest bad quality energy and goods.”

        Indeed. And so the easiest thing to do if you want to ensure those bad quality energy and goods don’t get overtaken by a possible competitor and that ‘most humans’ becomes ‘all humans’ is forget about selling them a million times over to the public: All you have to do is ell them once, to a president, and he makes it law that those shoddy inefficient goods are what everyone HAS to buy!

        Welcome to Enrons renewable Energy plan B.

        Actually the free market only brings cheapest bad quality goods to people who are stupid enough to buy them. Politics that enforces state educated stupidity with dumb self assurance and puts money in the pockets of those with no power of discrimination guarantees a marketplace full of shoddy bling, and I-Bling.

        Civilisations don’t collapse because people are too stupid and lazy to run them, they collapse when people are so stupid and lazy they can’t even recognise who CAN run them and nor will they pay them, to do it.

        • Yes indeed, but I guess all people are born with a free will and we are taught by a system and the media what is expected from us. So far this teaching has been about “fulfilling yourself” and consume, consume, consume. Take a trip into any store with magazines and the shelves are just packed with teachings about self-indulgence. The educational system is somewhat neutral and is truly trying to teach us facts about the world, but it does not really tell us that what we are doing now is wrong. Basically history teaches us how we got here, but does not judge whether it was bad or not in the defence of national identity, blah, blah. If people truly are to learn something they have to look at the whole planet as the society they live in and have a responsibility towards, not a place to snap a picture with your latest iBling and post on facebook to strengthen their egos.

          I welcome teachings and ideas from people who oppose the current way of living, as evidence is pointing towards our current lifestyles as the cause of the chaos ahead. Media and leaders should talk more about these essentials in life to make more people think out of their “boxes”. For us living in democratic countries there is a way to elect people who does bring out this information and take actions to limit the impacts of our lifestyles. For example, the food industry adds all kinds of chemicals to the food in order for it to “look better” – as consumers we can buy the cheapest stuff which is most likely full of the stuff, or choose better products. But more essentially we can push manufacturers to stop using these chemicals through the government and laws. The problem though is that these are all very painfully slow processes of “evolution” and with regards to the energy crisis and global warming, there is simply not enough time for a handful of people to influence the mass population fast enough or make governments change policies. Especially when you also have to face an increasing number of corporate lawyers and lobbyists carving out paths for their cheap products.

  19. Prof Ken says:

    “As long as the economy grows each year (and government revenue is higher), it makes sense for the government (and many others) to keep borrowing. But if the economy starts shrinking, we have a serious issue, because the government not only needs to stop borrowing more, but it also has to face the prospect of repaying what it already owes”.

    Gail this is simply not a correct reflection of how a modern fiat currency system works. With the exclusion of the EU, no sovereign issuer of currency (ie a government) in a floating exchange rate system is ever revenue constrained. They do not “borrow” from the rest of the world and have to repay it sometime in the future and they definitely do not have to balance their budget. The Fed doesn’t actually “print” anything when it initiates QE. The Fed simply electronically swaps an asset with the private sector. In most cases it swaps deposits with an interest bearing asset. Your statement that “without Quantitative Easing, the government would have had to go, “hat in hand”, to the world market, asking for additional loans” is just simply not correct. Again this is a total myth that the US government borrows money from the rest of the world to fund expenditure.

    Your assessment of “Impacts of Government Cover-up” is again simply not factually correct. The topic of how a modern monetary system works is extremely complex but I do not wish to elaborate further here as I do not wish to detract from the overall theme and correct conclusions of the paper that increasingly reduced supply of cheap fossils fuels will greatly impact economic activity for all countries in future.
    In regard to the your work on global energy demand and supply, excellent as always.

    • We live in a finite world. If economic growth could continue indefinitely, what you say might be true. Or if people were really, really stupid. At some point the system can’t work, whether economists believe that or not.

      • philsharris says:

        I agree with your conclusions.
        The 2010 report by the UK Royal Society of Engineers (see link by another contributor here), talks about the necessity of “demand reduction” to meet UK 2050 targets of reduced fossil fuel use. Whether this target is achieved ‘voluntarily’ or by force of circumstance is a moot point here. We must presume, in my opinion, similar although not perhaps extreme reduction in the USA. US could still hypothetically produce perhaps by 2050 a quantity of energy still a large fraction of that produced now (coal, NG). Regarding US oil production there is likely to be a considerable ‘fat-tail’ of oil production augmented with Canadian imports. We are still talking of a significant fraction of the 6Mbo/day US produces just now. This ‘continuing’ oil (and coal/N) will of course come with increasing cost to the US economy, as you rightly point out. Therefore, regarding especially oil, it is difficult to think that in 30 or so years USA will be using as much energy as used today, or even half the oil it uses now. (The USA still has very long term hypothetical access to some continuing NG, at a cost of course. I note BTW plans to reverse a trend and build a large nitrogen fertilizer plant in N Dakota near the NG, reversing the trend of recent decades.)

        The big question as I think you rightly point out, remains whether inevitable ‘demand reduction’ can sustain enough viable business to keep sufficient wheels turning for an industrially underpinned urban population, or whether the current economic structure is actually a ‘package deal’ and will take a sudden decline in the face of reduced demand. (It seems possible to envisage a deflationary-type regression into multiple bankruptcies and a collapse in the means for forward construction, and even a failure of necessary maintenance.) I actually see, though, the USA in terms of basic resources capable hypotheticallyof maintaining significant industrial underpinning for many decades yet.

        Goodness knows, however, whether or not I sketch ‘the boundary conditions’ correctly, let alone a realistic outcome for USA suffering a collapse say in its global outreach or ’empire’!
        very best


        • Thanks, Phil.

          THe United States is at least theoretically better off than a lot of the world. Its population is lower compared to the amount of arable land and compared to fossil fuel resources. If any country can sustain a reasonably large percentage of its existing population, it seems like the United States would be in a place to do so.

          But as you say, this question is whether this is a “package deal”. We really need a high tech society to maintain a lot of the things in their current form–oil production, natural gas production, food production, making of metals from ore, making of computers. I think the government of the US is one of the most vulnerable points in the package deal. If it goes by the wayside, it will be hard for groupings of states to “make it” on their own. But we don’t know for sure.

          • If the temperature rises by much more over the coming years, even arable land in USA is threatened, or at least an unstable source for food production. I think perhaps many countries will be in for a double whammy if the climate predictions we see now are real. Remember the polar ice melting was worse than the UN’s most pessimistic estimates, and very few models they publish take into account possible self-amplifying effects of heating and the release of methane from the permafrost.

            I believe a possible scenario might be that climate change might affect the economy more immediately than the reduced access to fossil fuels in the near future. But it all depends on how cyclic variations has affected these latest trends in global heating. Serious weather change will at least hit economies pretty badly if it continues to escalate, so lets hope its not as bad as some of the models show.

            Actually from what I have read, northern countries like Canada and Norway (where I live) might get much better conditions for growing food, although in my parts we will also see way more rain (its already over 230 days of rain a year here, and we get more every year).

      • Prof Ken says:

        Im not debating the issue of a finite world with finite resources. I am simply alerting you to the fact that your understanding and resulting interpretation relating to government monetary policy, is not correct. Im sure you may wonder who this person who thinks he knows it all, but when the chairman of the Federal Reserve, Dr Bernanke tells you exactly the same thing 3 days later it is probably worth sitting up and taking note.I quote from his speech yesterday;

        “By buying securities, are you “monetizing the debt”–printing money for the government to use–and will that inevitably lead to higher inflation? No, that’s not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates”

        While I am sure that you may find it shocking that your government is not bankrupt and “printing money through QE” etc etc with a clearer understanding of fiat currency systems and how they actually work you may wish to go back and review some of your scenarios you have detailed and how they can potentially play out post peak. That I would certainly find extremely interesting.
        BTW I am not an economist I am an engineer

        • Don Stewart says:

          Dear Gail and Prof Ken
          Here is what I understand:
          1. The Treasury has no way to engage in deficit spending unless it is able to sell bonds. At the present time, much Treasury debt is being sold to the Federal Reserve which prints money in order to buy the Treasury debt. If the Federal Reserve was not buying the debt, then the Treasury would, indeed, have to go ‘hat in hand’ to the world to get the money.

          2. Bernanke claims that the Fed is not creating inflation. Yet the empirical evidence shows that they are. Medical and college costs have risen steeply–and no one can imagine that they would be doing so without the support of the federal government. And the only reason the federal government can continue to pour money into them is because the Fed is buying the Treasury debt. See:

          3. Another serious issue with what the Fed is doing is the encouragement of mal-investment. For example, the Fed is enabling not only increasing expenditures on dubious health care and college education, but also dubious investments in yet more highways and housing and real assets in general. Whether stocks will necessarily benefit is doubtful:

          4. It is true (as everyone knew during the Depression of the 30s) that unemployment is a disaster for all concerned. It destroys lives and it deprives society of whatever the unemployed might have produced. The ‘brokenness’ of our system of governance is illustrated by the poverty of our solutions for unemployment. The best we can come up with is to put them to work producing more roads and houses and going to college and working in pharmacies dispensing pills.

          5. Bernanke claims that the Fed will have no problems ‘unwinding’ all their purchases. Yet, if you buy into the Finite World scenario at all, it seems unlikely that the Treasury is going to be in a position to repurchase all those bonds from the Fed and pay market rates of interest in our lifetime. Zero Hedge had a story within the last day or two about the failure of Venture Capital to make money over the last decade or so. Perhaps Venture Capital can’t make money because we really do live in a Finite World. And in a Finite World, why would the US Government be any smarter than Venture Capital?

          Not an economist either, by the way…Don Stewart

  20. Pingback: LA Jewelry District» Blog Archive » Report: ‘High-priced fuel syndrome’ the undiagnosed cause of the ailing global economy

  21. Pingback: High-Priced Fuel Syndrome « Transition Brockville

  22. tulkas says:

    Hi Gail.
    I diagree with your currency vision, so sometimes you should think different (it seems you are not used to think in €, Y, £, …):
    “One possibility is that at some point, the dollar will drop relative to other currencies, and the price of imported oil will become even higher. This will make the situation worse.”

    The oil is paid in USD all over the world; the twenty years war is a clear evidence that US will not permit to any oil producer to trade oil in other currencies, except for those that have a nuke bomb, of course.

    The situation will change when the USA will have to purchase other currencies to buy oil. That time your sentece will be right, but we will be here no more.

    Thank you for your great ideas you share with us.
    Best Regards

  23. Pingback: Report: ‘High-priced fuel syndrome’ the undiagnosed cause of the ailing global economy | India Crusher Manufacturer

  24. Ikonoclast says:

    “Change comes slowly, if at all, to the Shire.” – Bilbo Baggins.

    I wonder how much of Millenarianism has at its roots a nostalgia for the bucolic idyll as the model for future utopia? However, it seems pretty clear we are heading for one type or other of dystopia or at least a dystopian transition.

    The bleakest possibility is a general breakdown of global civilization as energy and materials run out. Even some lower level of civilization seems unlikely to be sustainable in this scenario. For example, it seems we could not even return to the “wood” age, an age when wood was the main fuel (along with its derivative charcoal) and wood was also the main construction material. Most of the great forests of the world are long gone.

    The best possibility is that some kind of transition to a renewable fuels (mainly solar) and rnewable materials economy is energetically possible. Many technological and social advances could be retained under this scenario. However, it is pretty clear that a population of 7 billion plus could not be supported (due to already existent damage from over-shoot) and that maybe 1 billion or 2 billion might be more realistic under this scenario; that is a leaned-down, but still advanced and sustainable civilization. However, it would take a lot of starvation, war and grief over about 50 to 100 years to lean down to this level. Could civilization survive such an avalanche of cataclysms even if the end goal of advanced sustainability was technically feasible?

    I for one am impatient for the real changes to begin. There is nothing worse than sitting at the end of a decaying civilization knowing that business as usual is simply a recipe for accelerating collapse not avoiding it. I want something new to arise but also naturally fear it.

    “And what rough beast, its hour come round at last,
    Slouches towards Bethlehem to be born? ” – W. B. Yeats.

    • I would just as soon put the changes off as long as possible. I don’t know how they will work out, but my guess is that they will get progressively worse over time.

      We can’t really go back to what worked before, because we lack the systems that we had in place (one room schools people could walk to, small windmills to pump water, vehicles to run on unpaved roads, etc.) as well as a huge number of draft animals. Going from a system that works, to a broken system, is likely to rank as one of our major problems.

      • Leo Smith says:

        I too favour not trying to stop changes but playing them out as slowly as is feasible. Rapid change destroys where slow change forces adaptation.

        Oddly enough I think that many things will in fact revert naturally to ‘the way they were;’ where that works. I can see that happening here – more locally produced food less imported. Less use of cars. I’ve just put on a woollen rather than turned on the heating 🙂

        And as I keep saying, there in no reason we should be short of reasonably affordable electrical power as long as we don’t go with renewables.

        The bigger issues are transport fuel and social disorder as standard of living decreases are enforced – by governments or simply by lack of paid employment.

        And the possibility of the return of infectious diseases with no real way to combat them left.

        • The ravages of infectious diseases will probably never return to the levels before sanitation, provided we remember the lessons learned in the last two centuries, cleanliness and vaccination.

          Reading between the lines, the discontinuity mentioned by Gail in the summary is a
          die-off, since food production rates are propped up by fossil fuels, and population equals food. Is that fair?

          If so, then the only way to avert a discontinuity in population under conditions of contraction of the food supply is to contract the population to match the food supply. Naturally this is easier said than done. The usual response is “you first.” But the population will decline one way or another, through starvation and social unrest, or though effective family planning. I suppose we should choose the latter!

          I believe the real underlying issue is population, yet we so often fail to meet it head-on. Instead we focus on energy, the economy, and keeping food production high. Do you agree?

          • You talk about remembering the lessons of the last two centuries: cleanliness and vaccination.

            Cleanliness has a lot to do with commercial water purification systems and sewage treatment center. Neither of these is sustainable for very long. If nothing else, we need to start recycling human wastes as fertilizer, and this tends to lead to more problems with introducing microbes into the food and water supply. Dmitry Orlov has remarked about how cleanliness declined following the collapse of the Former Soviet Union. I forget where I read this–perhaps in his book Reinventing Collapse: The Soviet Experience and American Prospects.

            Vaccination requires a long chain of fossil fuel inputs as well. For example, usually eggs are used, and the vaccine that is prepared must be refrigerated and transported. Making the syringes requires fossil fuels, and the nurses going to work requires fossil fuels. A nurse involved with international immunizations whom I talked to recently told me that there was a drop off in immunizations in the Former Soviet Union after its fall. An article I found says something similar:

            Immunization rates in the Soviet Union were high and herd immunity was achieved for most vaccine preventable diseases. However, there were significant gaps in the coverage through the 1990s. The collapse of the Soviet Union led to the collapse of the supply chain for vaccinations and restricted access to care as underfunded health care providers started having to charge patients out of pocket – even for routine procedures such as vaccinations. Poor access meant lower uptake, particularly for booster doses. The ruptured supply chain meant that vaccines were not always available and where they were they had often been stored incorrectly – this can significantly limit their efficacy. Immunization rates subsequently recovered, but a cohort of older children were left unprotected.

            So the fact that we understand the connection doesn’t necessarily mean that we can maintain these two items. They are just too embedded in our current energy system.

  25. Mel Tisdale says:

    The worrying aspect with this report is that it is highly likely that it is correct and that governments simply are not aware of the realities surrounding our fuel supply and its relationship to economic growth. They can’t face up to something that they don’t realise exists.

    If it is true that they are genuinely unaware, then it is perhaps worth my repeating the suggestion that we need to examine just how we govern ourselves. Looking at what feels like a whole host of blog posts, the general feeling seems to be that we are on the verge of some financial cataclysm. Perhaps our lords and masters really are fully aware of the fuel situation relative to growth and are just waiting for a certain presidetial election to be over and done with before breaking the bad news to us all. Let’s face it, there cannot be a lot of can left to kick down the road after all the miles it has already been kicked along, so something has to happen soon. Perhaps our governments will get a new can to kick down the road some more, but I doubt that there is much road left to kick it down..

    • Its odd yes, but it almost seems like world leaders are quite oblivious to the facts around energy supply, particularly in oil. In Norway we have hardly noticed the economic problems both USA and Europe have had lately, mainly because we benefited from the increased oil price. But whats plain obvious is that Norway produces about half the amount of oil we did 10 years ago and looking at current fields we are in for another halving of current production in 10 years (offset by a new field coming into production). I dont really see this being discussed in mainstream media here at all – but they do like to print in large letters “BIG NEW OIL FIND FOR STATOIL” – whereupon I have to laugh when I do the long division and realise the whole new find would last a week with the currents world consumption. Its really about time for some facts on the table to inform people about the current state of things and that we cant pretend it will keep up like this for much longer or its going to crash really badly.

      Just like Albert Bartlett say, very little things about the world is linear, but rather exponensial, and as Chris Martenson likes to exemplify with his stadium, we can go from half full to full (or empty with regards to oil and other resources) within a very short time. This scares me a bit because the instability in the economies is very likely a hint of things to come while its hard to predict when and how it will unfold. An economic crash will ofc limit globalism and oil consumption quickly, resulting in cheaper energy again, and we get this “bumpy ride down” as many have described here and other peak oil forums.

      I just wonder if we are able to adapt fast enough to this ride down or if media and governments will still keep feeding us false signals about the future in the belief that it will go back to what it was again. I’d rather have an honest brutal message than being told lies or hopes.

      • Mel Tisdale says:

        It is a pity that Chris Martenson’s Crash Course is not distributed to all and sundry, especially to our politicians.

      • No government wants to let its people know something embarrassing. The rise in oil prices has helped cover up the decline so far. I suppose politicians are hoping this will continue (and engineering miracles will occur as well). Perhaps the problem will just go away by itself, or the next elected official can handle it.

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  27. Bob Carver says:


    A great article with which I agree. Just one point, however, having to do with the statement, “High-priced renewables, such as off-shore wind and solar photovoltaic, can be expected to act in a similar fashion, because they add to the price challenge customers face.” With solar PV panels falling to well less than $1/watt, aren’t we likely to see this as a boon to consumers as they switch from high-priced grid electricity to self-generated electricity? Right now, PV panels represent only 1/3 of the cost of installing solar. In the future, those installation costs are likely to follow panel prices lower as well, so I see this as a technological boon for consumers (and a problem for the grid operators).

    • I don’t think that installation costs are going lower. They basically include a lot of human costs and fossil fuel costs.

      Costs are not properly calculated either. They do not count the cost of fossil fuel load-balancing that is required. Often they reflect the impact of subsidies as well, and these will go away as countries become poorer. I expect variable renewables will make the grid operate less long, because they add to the complexity of keeping supplies even. Any calculation of the benefit/cost of variable renewables should take this into account as well. All in all, I have a very hard time seeing that their contribution is positive, except in a few off-grid applications (such as pumping water).

      You may have seen this article yesterday The end of the honeymoon period for renewables. (Free registration required.)

      • Don Stewart says:

        I agree that renewables and most current industrial uses of electricity are not very compatible.

        I have lived for several days in an off-grid, solar house. It had a modest battery system. If you lived there, you just got used to the idea that there wasn’t a lot of electricity after dark. But it was convenient to be able to come into a dark house, flip a switch, and get a modest amount of light which let you easily navigate around. Then to bed and flip another switch and the light goes off. It’s like an oil lamp except its more convenient. During the daytime hours, you could operate electric appliances in the kitchen or power a drill or a hand held electric saw. So the electricity was quite convenient. To say that renewables are ‘useless’ unless they look like the current grid is, I think, wrong. Anybody who has camped can appreciate that a modest solar system will be convenient and useful.

        I can also imagine that some industrial applications would be appreciated. For example, solar could probably power a saw mill or a grist mill during daylight hours. Whether a solar PV system can manufacture a solar PV system is something I am not sure about. It may be wise to set up a PV system now which is not grid connected and get used to using it if you have the money to invest.

        In short, I see some uses for renewables, but they will require us to live quite differently than we have become accustomed to living. To sell them as ‘transparent’ is, I think, a mistake.

        Don Stewart

        • Bob Carver says:

          It’s pretty straighforward to simply install enough green batteries to last for several days. Lead-acid is the past. Nickel-iron batteries can last 80 years or more and they’re very green. You will end up willing them to your descendents!

        • Stu Kautsch says:

          I’m with *you* – I’d rather have *some* electricity than *none*. Dismissing alternatives because they don’t give you *everything* is the road to heartache (or worse).

        • Leo Smith says:

          “During the daytime hours, you could operate electric appliances in the kitchen or power a drill or a hand held electric saw.”

          Now try an MAKE that electric kettle or those electrical tools without a proper grid supply..

          People for some reason focus on the domestic part of electricity consumption.

          What you have to understand that if your whole grid is operating at a 15% capacity factor like a wind farm – or, worse, 10% like solar..then so is your whole industrial base. That essentially multiplies the cost of everything you do by 4-10.

          What that means is you pay say 5 times as much for an electric drill that you can only use 1/4 of the time. Which is a MASSIVE waste of materials.

          People simply do not appreciate what intermittency means: Its not just that stuff happens sporadically, its that you are spending far more on making the kit in the first place than it delivers in value.

          Think sailing ships. In essence the sailing ship died commercially because you can get far more tonne miles in a year out of the same ship if its isn’t subject to the vagaries of wind. And by mechanising it, it needs far less crew to run it as well.

          If your refrigerated truck can only run one day a week on the renewable powered railway, that means a lot of food spoils. You cant guarantee supplies to cities. In fact cities completely DEPEND on regular access to a lot of energy to survive, at all.

          Arguably pre-industrial conurbations are just small market towns only. Apart from a few ports which could be larger.

          Rome tried growing wheat in N Europe to feed itself. Basically by the time the horses had eaten most of it hauling it back to Rome, there wasn’t any left to eat.

          Humanity can survive on renewable energy. A small part of it anyway. Civilisation cannot.

          • Don Stewart says:

            I think when you actually get into it you will find that there are certain functions where electricity and certain tools are worth paying quite a lot for. I visited a community with a community saw mill powered by solar energy. The sled which carries the tree through the saw blade was pushed by humans. The saw was turned by solar PV electricity. I won’t deny that fabricating a saw blade is an expensive proposition in terms of a society short of energy. It is even expensive (in terms of human effort) to build the superstructure of the sawmill out of wood. But the value of a sawmill is very high. The alternative is to build log cabins out of whole logs notched with axes. Log cabins were the usual way of construction on the frontier in eastern North America. And when land was being cleared for crops, one had plenty of logs anyway. But pretty quickly it becomes necessary to make more economical use of trees, and one needs a sawmill pretty badly. So the cost of the metal blade and the cost of the solar PV may be quite a bit less than the value of the services that the sawmill can perform.

            Similarly with a grist mill. Someone recently made a movie based on a 16th century Flemish painting of a landscape dominated by a big windmill. Of course the windmill was expensive to build–but it was worth the effort because it facilitated the consumption of grains which produce a lot of calories. The windmill basically only functioned during the day after the miller and his family rose from sleep and got to work–and, of course, wouldn’t work if the wind wasn’t blowing. Whether you call 16th century Flanders civilized or not is an exercise in word play.

            The little creek near my house has quite a number of small dam remains. These were doubtless mills. The creek would not have supplied a reliable flow of water in the summer, so it worked only intermittently–most reliably in the spring. But the mills were deemed worth the trouble to build. Larger rivers with good gradients typically had a mill per mile.

            One creek not far from me still has a sturdy dam built by slaves which is about 25 feet tall. It is a beautiful job of construction. The mill itself was scavenged and only the rock mill race is left.

            So a lot can be done with a little when the tool is really needed.

            It’s also a mistake, in my opinion, to discount the value of salvage over the next 50 years. We are not suddenly going to reclaim the knowledge required to build dams and mills on small creeks to grind our grains. If we have an electric grain mill (I do), then having a solar PV panel on the roof to run that mill so long as it lasts and when the sun is shining may get us through some tough times.

            Permaculture people (at least those who survive) give a lot of thought to transition issues. One generally has to make enough money to pay one’s way, even if living very frugally. And, as a practical matter, that requires using things like 5 gallon plastic buckets. Miles Olson, writing in Unlearn, Rewild: Earth Skills, Ideas, and Inspiration for the Future Primitive concludes that the important thing is to get started. Don’t worry too much about conforming to someone else’s ideas about how things need to go. Just get into it and start doing it. My observation of young people actually living with solar PV off-grid tells me that they are probably making a wise choice.

            Don Stewart

            • Leo Smith says:

              If I was logging, I’d be using a steam powered saw running off wood chips 🙂
              Damn sight more practical than solar panels that you cant possibly fix onsite.

              Given wood and a bit of iron ore you can bootstrap your way to nearly all the tools needed to make and repair a basic steam engine and a sawmill. And use the waste heat to keep your log cabin warm as well.

              But even there, you realise that a basic steam engine and saw depends on loads of other industries – copper pipes, glass for pressure gauges – lubricating oils and cotton waste to make seals..steam engines became possible when these industries existed: The basic blacksmithery is not QUITE enough to make a steam engine, although its close.

              I don’t think you have ANY idea of how much technology it takes to make a solar panel…its all very well saying ‘I can buy one and go off grid’ but that is only because an entire COUNTRY full of other industries is ON GRID, to make it. Given iron ore and wood, I could make a steam engine. Given copper and shellac, at a pinch I could make an electric motor. I could not ever make a solar panel. The actual process of refining silicon requires materials and facilities that are totally beyond any individual or small group. Let alone doping it and packaging it. I’d be hard pushed to make a battery as well. Lead I could probably smelt in a disgustingly polluting sort of way, but sulphuric acid? well give me the sulphur and I am halfway there..and maybe some sort of plastic could be made out of wood tars and wood fibres.

              So to pretend that running a sawmill on ‘sustainable solar panels’ is sustainable as a long term solution in the absence of a massive industrial infrastructure to support it, is self delusion of the highest order.

            • Don Stewart says:

              By D Day, everyone knew how the WWII was going to end. There was no doubt that Britain, the US, and the Soviet Union were going to win. But if you were a soldier on an LST headed toward the beach, your problem was to live through this day.

              So if you ask how is the best way to optimize your chances for survival over the next few years, then solar panels may well play a part in your plan. You do have to get them while you can. And anything you plan to use them to run needs to be as maintenance friendly as possible.

              As time goes along, I think that electrical equipment will go by the wayside, and we will refigure out how our ancestors did it. If you take a look at Unlearn, Rewild, you will see some instructions for making snares to catch animals ranging in size from squirrels to deer. Why do you have to do that? Because those critters can eat everything you can grow and you will starve. You can, of course, also eat the critters, but after you have trapped them, there won’t be many left. If 7 billion people trap them, they will disappear very quickly.

              How do you make the snares? All country people used to know how. There are poor people today living on the fringes who make snares every day. The best material is wire. But snares can also be made out of lots of other materials. So part of your ‘collapse plan’ might be to stockpile a modest amount of ‘snare wire’ now. That doesn’t mean that wire will be available in 50 years…just that it’s perhaps a good idea for now. Same for PV panels.

              Don Stewart

          • Leo,

            You did a good job of explaining the problem. I know I tried to explain this issue to someone else by e-mail, and didn’t do it as elegantly.

            It is not the household sector that “kills us;” it is the industrial sector.

            We can use solar panels for quite a while with good batteries. But at some point, we stop being able to buy light bulbs and other equipment that the solar panels will run. You also have to keep repairing 100% of the infrastructure (water pipes, sewer pipes, electric transmission lines, major roads). This badly eats into the 10% or 15% renewable energy you have, or these things “go-away” as well.

          • Excellent point, well put. Sharing stuff will give us a bit more time but in the long run it’s going to be tricky.

        • Some electricity is indeed better than none. And I think there will be enough “junk” around for a long time for us to still harvest some use for electricity. I think what people need to figure out is what a “quality” electrical appliance really is. For example, its very convenient to have things working on 12v DC rather than 17.8v or something like that. Its also good to buy electrical things that are simple and servicable in construction as there might not be parts around in the future. Actually the latter is a big problem with all technological advancement. Its simply going too fast in that we are not able to establish a good standardized set of parts. Manufacturers want you really to buy the latest model and throw away the old one. This is hardly a very sustainable way of running the future, especially in a low energy/economy world.

          As consumers you have some influence over this, and the most important one is to push for longer guarantees in everything you buy. Here in Norway we have rather good laws around this so many bad quality goods are just filtered out by the sheer amount of returns they get. People also need to be wise about what to buy. Its really better to buy something with a 5 year track record for working fine than buying something brand new and hoping it will last a year. This speed of technology replacement is one of the worst effects of the free market economy – neither consumers or standards are able to settle before something new comes around.

          • The whole “parts” and “repairability” issue is a big one. I don’t see any move by manufacturers to make goods more durable, or parts more standardized, though. The assumption with anything smaller than a motor vehicle is that a person will throw the old one away, and buy a new one after a short time.

            One repairman I talked to claimed that the high efficiency washing machines that are being sold now (I have one) are harder to keep repaired than older, more traditional machines. There is such a diversity of expensive parts that repair companies don’t keep parts in stock–they order them from the manufacturer when they are needed. The machines are much more expensive to begin with–much more embedded energy. His view was that they didn’t last as long, either, before they need to be replaced. So while they may save some water and the energy used in heating that water, this savings would need to be compared to seemingly higher energy cost otherwise.

          • I have a 40 year old gas boiler, (furnace to colonials) it runs perfectly well but I know Im going to have to replace it soon
            I also know that whatever I replace it with will start to go wrong after about 5-7 years, and need replacing after 10, because it is just so complex with lots of electronic whizzy bits in it.

          • As an example my house was built around 6 years ago, and even though we had 5 years guarantee on the parts installed with the house, both the central vacuumer and ventilation system broke down after about 5.5 years – its almost as it was designed to last the guaranteed time but not longer. Fortunately the ventilation only needed a $10 part that was easy to change yourself, but the vacuumer had a faulty motor which would cost just as much a new machine to replace.

            As consumers we are often oblivious to these things, naturally a consequence of our “use and throw away” kind of life. The other day I found two 17″ Compaq LCD screens and some USB powered PC speakers in the electronics return bin outside a shop here. They both looked ok although they had gotten a bit of rain on them. I took them home, dried them up thoroughly, and wouldnt you know, both LCDs and the speakers work just fine! I cant understand why this went in the bin. Why not at least give it away to a flee market or something? This is the kind of behaviour that is truly ruining the world and makes me sad. 🙁

      • Bob Carver says:

        The article assumes tie-in to the grid. If you don’t tie-in to the grid, you have an advantage: outages on the grid don’t affect you. Nor are the installation costs as high. You do have to provide storage, but that’s relatively cheap, a one-time expense if you use the proper battery technology (Nickel-Iron batteries can last more than 80 years and don’t require a charge controller, plus they are a very green technology compared to lead-acid). Even without subsidies, I can buy a 235-watt PV panel for just $200 today. Those costs are going lower over time. Smart consumers are going to move to the technology which treats them best and PV has a long way to go.

        • Off-grid solar I can live with (but I don’t think we will be manufacturing them long term). It is the idea that adding intermittent renewables to the grid that I have a problem with. Maybe a little wind in can be added in nearby where wind energy is produced, but the farther away from that model you get, the worse it works.

          I was not aware that there are any batteries that work for 80 years. Wikipedia says “more than 20 years”. This reference says often lasts in excess of 40 years.

          The main issue with nickel-iron batteries seems to be the high cost of manufacture. Is this because of high energy requirements at the time of manufacture?

          • Bob Carver says:

            The problem with Nickel-Iron is that we are being ripped-off by the Chinese and the Russians, the two nations which still manufacture them. The two metals which make up the battery are two of the most abundant metals on Earth. Nickel is about $8/pound and Iron is so cheap I didn’t even look it up. The potassium hydroxide solution is dirt cheap as well.

            The only American manufacturers of Nickel-Iron batteries are actually taking 80+ year old Edison Nickel-Iron batteries, cleaning them up and re-selling them! A battery testing company in New Jersey took some Edison batteries from an old hunting lodge in New York, verified they were an average of 85-years-old, poured out the old electrolyte (some were bone dry, by the way), poured in new electrolyte and tested them. Good as new after 85 years. I can send you the PDF if you want to see the proof. The document is entitled, “Nickel-Iron, This all but forgotten technology has a very important place to occupy with users that desire very long life and the ability to suffer abuse in their battery systems.” It’s authored by Peter J. DeMar, Battery Research and Testing, Inc., Oswego, NY, USA, pjd@batteryresearch.com and appeared in an IEEE Journal (978-1-4577-1250-0/11/$26.00 ©2011 IEEE)

            Recently, Stanford researchers grew Nickel-Iron electrodes on graphene and found they could turn the Nickel-Iron battery into a supercapacitor. They could charge it in just two mintues and discharge it in 30 seconds. They believe it could finally realize Edison’s dream of powering electric cars and eliminating the internal combustion engine.

            • If they are not that hard to make, I would think someone would start making them. High prices always suggest to me that there is an energy-intensive process for making the batteries or some other problem that we are not aware of.

        • Leo Smith says:

          But that $1 a watt capital cost has to be assessed in the light of (sic!) the availability of sunlight. I dont have US figures to hand, being a Limey SOB, bit here you would be lucky to get 10% of that power out of it on an annualised average basis, and most of that in summer when you need it least.

          That puts the actual capital cost compared with – say – nuclear power – at $10 a watt,. or $10bn a GW. Compared with nuclear at say $5bn/GW, give or take, and nukes last longer..and take up less space.And need less maintenance..and don’t need batteries.

          THEN if you start thinking that winter is when you need the lights on, and summer is when the sun shines, you are looking at a battery store that can last through the winter.

          These arguments for renewables are just the same as arguments for ‘no peak oil’ – they rely on never looking at the costs – in material or energy terms – of achieving the desired results.

          There is an old saying in these parts “If it were that easy, everyone would be doing it”. Indeed. In a society that is capable of designing a portable computing device that can probably do in 20 minutes what a team of mathematicians would have spent 20 years doing, or send a robot top Mars, we can’t produce a reliable cost effective way to harness and store sunlight or wind in bulk. That should tell you something about the relative difficulty of the projects.

          I have said it before and I will say it again. As an engineer, I don’t ask the question that physicists do – ‘can it be done’? I ask the question ‘How can I build it’?. Because that introduces the whole gamut of technology and practical real world systems into the equation. Not just ‘is there enough sunlight to run the USA’? but ‘Given that there is, how do you harness it at sane cost, low environmental impact, and high availability and dispatchability’ and the answer is ‘you can’t.’ And if you could, we would have done it years ago.

          And to build such a system – I even costed it out for the UK – you need cheap fossil fuel to build it because my calculations for a all renewable electricity grid – just electricity – not even transport or industrial fuel replaced – came out at £9.97p per unit electricity. Electricity that wholesales at £0.05p, currently.

          Now imagine having to repair that grid, with energy that expensive.

          That cheap Chinese solar panel is cheap because China used cheap dirty polluting coal to drive the chip foundries, and effectively slave labour to build it. A point Gail has made very well elsewhere.

          Everybody, myself included, wants renewable energy to be a simple clean cheap reliable way to occupy a few unused acres in uninhabited parts of the country and run the world off. But like David Mackay (http://www.withouthotair.com) as much as we like renewable energy, we also like, trust, and respect mathematics.

          You seem to trust engineers to deliver you solar panels I-Bling and windmills. Why do you not trust engineers when they tell you ‘you can have em, we can make em,. but a solution for the civilisation, they ain’t!’

          I am aghast at the level of denial that exists in the proponents of renewable energy. They are deluding themselves. Some partial solutions exist – nuclear energy is one. And they need looking at, but renewable energy is not a solution for anything beyond keeping a car battery charged up in summer with solar, or in winter, with wind. And you can’t run civilisation of banks of car batteries, or we would be doing it already.

          Peope like to cite Germany as a country that has succeeded. But the reality is that whilst the headline figures for German renewable generation are rosy, the reality behind them is far less so. Industrial electricty has to be subsidised by swingeing tariffs that consumers pay. Despite generating vast amounts of renewable energy they need to build new coal plant to guarantee supply, and they switched from export to net importers of (French nuclear/Austrian coal) electricity when they dumped half their nuclear fleet. And the grid is becoming unstable enough to cause some industrial concerns to have to install – you guessed it – car batteries. At their own cost, to keep a reliable grid available.

          When you look at the alternatives once the rosy glasses of renewable energy are removed, the stark facts are that we have absolutely no option whatsoever but to continue to burn fossil fuel: To stop doing that would destroy far more of civilisation and result in far more deaths than any putative climate change ’caused by CO2′ could ever do.

          And as fossil fuel climbs in price, society has to change to accommodate that – the whole thrust of Gail’s calculations is to show that this is already happening. Those societies that abandon prejudice and engage in accurate cost benefit calculations will fare better. Those that stay affixed to faith based policies and fantasy will destroy themselves.

          And the results of those calculations show that, right now, you need to burn coal and gas to make electricity, and probably coal, as gas is a potential feedstock that is better for transport fuel synthesis. If coal runs out, the logical switch is to advanced nuclear power – its way cheaper and cleaner and safer than any alternative. BUT that only solves electricity. Not how to run the rest, especially transport.

          That is the least worst alternative. On the numbers. And its not an attractive prospect either. It means significant changes are inevitable. It means we are all going to suffer reduced standards of living. It means the days of private motoring and cheap air transport are probably numbered. It means that life expectancy will fall, and it means population will probably have to fall – that or standard of living, even faster.

          It probably means a resurgence in railways – especially high speed transcontinental ones. It probably means a new breed of transport ships running on nuclear power. It probably means food and energy will become the major costs in anyone’s budget that doesn’t happen to be obscenely rich.

          It means the end of the consumer society (which I look forward to!) It probably means the end of globalisation as the de facto way to generate more profit. It means a resurgence in maintenance and repair and refurbishing industries instead of manufacturing, marketing and distribution.

          That’s making the best choices we have. Making worse choices means the total slow collapse into situations of extreme social and political instability, of entire nations. And the worst of all things is to pin our faith in things that we know cannot ever work..Even if politicians (or ex-politicians with axes to grind and films to make) with no competence in those areas assure us that they will, for their own short term benefit.

          • Michael Lloyd says:

            Probably this is worth a read:

            Generating the Future: UK energy systems fit for 2050

            A quote from the conclusions:

            “The experience of engineers shows that implementing fundamental changes to a system as large and complex as the UK’s energy system to meet the 2050 greenhouse gas emissions targets will bring with it many challenges for government, business and industry, engineering and the public alike. Turning the theoretical emissions reduction targets into reality will require more than political will: it will require nothing short of the biggest peacetime programme of change ever seen in the UK.”

            • Leo Smith says:

              And a change we simply cant afford to make, just to achieve and arbitrary target that has nothing to do with emissions reduction or generating usable electricity.

              We call it ‘green willy waving’ My renewable is bigger than…

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  29. Doug W. says:

    Gail – Congratulations on the recent Christian Science Monitor article. Good to see you are getting wider circulation. This is a great post. It is very frustrating to watch the current campaign here in the US. No one is talking about the central issue of our time! In regard to the safety net, it sounds like you are saying that peak oil may take us to the same place Republicans are talking about taking us intentionally–cuts or elimination of to social security, pensions,medicare.

    • seems if you want a safety net, you’d better think of setting up your own
      the big problem with safety nets though, is you can’t hold them up and fall into them at the same time

      • Don Stewart says:

        That is a wonderful last phrase…Don Stewart

      • If you can’t trust banks and insurance, it is hard to set up financial safety nets. This is a big reason why children have always been the safety net of choice. If you don’t have children, I suppose there might be groups you could affiliate with, or you might try to set up a close relationship with someone who needs a parent (nephew or niece without parents, for example).

        • But perhaps stocking a bit of food and other essentials isnt so bad, you’d be trading your paper money into physical objects of necessity instead (some think silver and gold is also good because of its intrinsic value being more usable in a situation where currency has collapsed). With current supermarkets only a short trip away, most people have moved away from the idea of pantries. I think one would be wise to invest some time into having a buffer in case troubles arise, as it can be rather terrible to find anything once hoarding starts. At least its a small safety net that one could circulate yourself so the food dont go bad in storage. I’d love to know of some website who suggests good storage facilities and what food and stuff to keep around.

    • Thanks. I understand Christian Science Monitor will be running more of my posts. They seem to have an issue with lots of images. Hopefully, this won’t be too big of a problem.

      Unfortunately, it was low oil prices that allowed growth, and allowed us to fund all of the programs we have today. It is hard for me to see a way that we can continue to provide as generous benefits, unless taxes are very high (including on international corporations, for example). I expect that either intentionally, or through collapse, we will find major changes are necessary. For example, it is hard for medical care to continue to take such a huge percentage (18% ?) of GDP. Somehow, we will need to collapse back to basics. Many fewer will work outside the home/farm, or if people do work outside the home/farm, they will get paid relatively less for it.

  30. philsharris says:

    Thanks again Gail
    Recent estimates for production costs of ‘tight oil’ or shale oil from Bakken in USA is 80 – 90 usd per barrel, although Rune Likvern in an infomed paper on TOD thinks that the ‘break even’ cost of the average well on Bakken just now is nearer 100 usd. http://www.theoildrum.com/node/9506

    I think that the current link between world prices for oil and traded food prices could be even more important than you outline. I found the following in a recent report UK Sussex University / Oxfam which says:
    “Rising oil prices
    Between late 2001 and July 2008, the price of crude oil rose from less than US$20 to more than US$130 per barrel (Wiggins, Compton and Keats 2010), driving up the cost of fertilizer and fuel inputs, as well as raising transport costs. For instance, when the oil price doubled between January 2005 and July 2008, the world market prices of urea and di-ammonium phosphate fertilizers increased by 3 and 4.5 times respectively. Conversely, when crude oil prices subsequently declined by 44 per cent from July 2008 to June 2010, the prices of these fertilizers declined by around 65 per cent (Development Committee 2011). According to Baffes and Haniotis (2010), the price transmission links between crude oil and agricultural markets have considerably strengthened in recent years. Their estimates suggest that the pass-through elasticity from crude oil to agricultural prices has risen from 0.22 pre-2005 to 0.28 towards 2009. The emergence of biofuels has added an important new transmission channel from oil to crop prices.

    The same Report discusses as its main subject the effects of extreme weather events and their increasing probability and their impact on food prices . For food add vulnerability to weather as well as price of oil.
    very best

    • Thanks for the links.

      Part of the issue with oil such as Bakken oil is that we pump out the easiest to get out Bakken oil first, just as we do other oil. So even if the break even is now $100, it is pretty likely to be higher next year, and the following year (unless there are marvelous improvements in technology). This is another point of the post you link to.

      I am not sure how the food fuel link is changing. I know that China uses coal for making nitrogen fertilizer, and is in fact exporting some of this. This would tend to be less tied to oil price. Also, variability in weather is not tied to oil price. The link is not a dollar for dollar one, but even a partial pass through is a problem for consumers.

      • Don Stewart says:

        This may be a cold comfort. I was in soil science class this evening. We saw a stunning example of rotational grazing of cows causing lush vegetation to grow on an abandoned copper mine in Arizona where nothing had grown in 60 years. The next slides in the instructors deck were Alan Savory’s pictures from Africa demonstrating conclusively that it isn’t the amount of rain that falls, it ‘s what you do with it after it falls. Alan Savory visited our county a couple of years ago. Very persuasive presentation on the dynamics of herds of prey herbivores. And yet, still perhaps one percent of the farmers here use rotational grazing. I asked the instructor if there was some overwhelming reason for the reluctance, such as economics, and she replied that ‘no, they could have much larger herds and a healthier ecosystem…the barriers are inertia and a lack of knowledge’.

        Then I asked her to cite the best local example of the soil science principles she is teaching. She cited a personal friend of mine (who shall remain nameless) who has not used added fertilizers of any kind for a number of years and hasn’t used a moldboard plow in 30 years. A very successful farmer for 35 years (which means he hasn’t gone broke as yet). So it can all be done. Yet we don’t do it because it requires thought and skill and fossil fuels are so cheap and they just power over all the problems.

        The real problem isn’t the disappearance of fossil fuels, it is the stupid squandering of attention to the fundamentals of growing food in a sustainable system. We had a nice discussion in class of how this particular farmer has transitioned to a very low till system (without benefit of Monsanto or Cargill) over the years, and has greatly increased the carbon content of his soils. Again, it’s not rocket science. It’s just tending to business.

        Humans will be condemned for lack of paying attention, IMHO.

        Don Stewart

        • In the oil and gas industry, it takes 17 years for an innovation to come into widespread use. Here, there doesn’t seem to be a profit motive, so I would expect the rate of uptake would be even lower.

          It is frustrating, I agree. I hadn’t realized until I did the research for The long-term tie between energy supply, population, and the economy, that until the ramping up of coal production, we could not make barbed wire. As a result, it was not practical to herd animals from one area to another (or for that matter, to contain them in the West). If we plan to use this approach, we need to get started while we can make barbed wire. I suppose it can be made from recycled materials as well. It is something we don’t think of as a limiting factor.

          • Don Stewart says:

            This is speculation on my part. Cattle and other prey animals natural tendency in the presence of carnivores is to herd closely together. The carnivores keep the herd moving, and that dynamic is what makes the prey animals so valuable for building soil. The conventional alternative of just turning a few cows out into a large pasture insures that the cows will heavily graze the most nutritious plants, and those plants will have shallow roots. The cows will leave low-nutrient weeds alone. But if the animals are herded together, they have to eat all the plants. And then they are moved and the plants recover and grow deep roots.

            The way we keep the animals together today is with portable electric fences and portable water. The fences can be solar PV powered and that is frequently the cheapest method of electrifying them. We move the animals by just opening the fence and letting them into the next paddock–they go eagerly because that is where the fresh green grass is.

            The biggest problem I see is actually moving the water tank. If we have done a good job building permaculture type water management systems with plenty of ponds on contour, then the solution may be a simple as having a pond in every paddock.

            The confinement in a small area in the absence of electricity and barbed wire can perhaps be solved with herd dogs–maybe border collies. I heard a young man describing his experiences on a buffalo farm. The huge bison were penned in with flimsy wire. The rancher told him ‘they could easily break the fence down, but they know they aren’t supposed to’. If a couple of border collies are nipping at the cows heels keeping them in a tightly packed herd, perhaps the cows will learn that ‘they aren’t supposed to wander off’.

            Don Stewart

  31. Leo Smith says:

    Nothing to say but well done. Neatly summarises everything I’ve been thinking for years. At least I don’t feel totally mad or alone 🙂

    Keep up the good work.

  32. yt75 says:

    Another great synthetic summary, thanks a lot for that !

  33. While Gail’s conclusions are indisputable, I think the scariest aspect to all this is that if you try to put over these stark facts to other consenting adults, you’re looked on as some kind of social pariah. There is a communal certainty that what we’re experiencing now is no more than some kind of industrial hiccup, and that we will be able to carry on with our ‘society on wheels’ like we’ve always done, if only we go on spending more and more money, and that some kind of ‘new technology’ will fix everything. You cannot convince people (I’ve given up anyway) that passing coloured bits of paper or plastic around does not create wealth, and there is no new technology.
    One of the favourite fantasies I have to listen to: Well, if we all worked half as many hours, twice as many people could have a job.

    • I think that there may be some possibilities to “Well, if we all worked half as many hours, twice as many people could have a job.” What would happen is that the most poorly paid jobs would be reduced in hours. Thus there would be even more people who are working, but not earning enough to really support their families. All of these people would be just hourly workers, instead of getting vacation, sick days, etc.

      I am not sure this really would work very well, though. One issue is that even a low-paid worker needs to commute to work. The job split would need to be in a way that does not increase total commuting needs–full days, for example. Another issue is that each of these workers needs to be trained. To some extent, this job splitting has already happened. Cashiers and carry out people in grocery stores tend to be part time workers, since they can be paid less. Some clergy jobs are called part time (even though those in them work 60 hours a week), because the parishes cannot afford more. Nurses in hospitals are often part-time.

      • Johan says:

        Except they already do it in Germany and it works. Not sure if they do it with the poorly paid jobs, but at least this way income is more evenly distributed. You don’t need that much money to get by if you live frugally, which doesn’t have to be a horrible either.

        • Germany is always mentioned as the country that has kept average wages down. This is given as a major reason that they are doing better financially than other countries. I understand they use quite a bit of foreign labor. We have done that in the US too, with Mexican laborers doing work for barely more than minimum wages. I haven’t looked at German data myself.

          • Bob Carver says:

            According to what I’ve read, Germany has been able to keep demand up by paying companies not to layoff workers. Seems like a strategy that would have worked here in the US. Since we’re so dependent on consumer demand, it’s only logical that paying for jobs would help allieviate the short term problem of higher unemployment. It helps workers and it helps the economy. Instead, we let companies layoff massive numbers of workers. This pushed the burden of support onto the government anyway. And left the workers in an inferior lifestyle.

            I believe that someone calculated that had the government bought up all the subprime mortgages, it would have cost $50 Billion, a far cry from what we actually spent (over $10 Trillion). Sometimes ideology gets in the way of common sense.

          • Ikonoclast says:

            Keeping wages down is not necessarily good for your economy if you rely on domestic consumption. Workers need good wages if they are going to be able to purchase the output of an advanced economy.

      • Gail. I think you might be confusing the concept of jobs, hours worked. money, job descriptions and so on. They are details by which we have come to describe our essential means of day to day living. they are not relevant to the actual employment problem.
        In order to survive, it is necessary for each of us (as adults) to expend sufficient effort to obtain enough food-energy to live on. If we don’t we must either persuade someone else to do it on our behalf, or die. To facilitate the former, we have, over millennia, established a trading system that allows this to happen. In nations or regions where the trading (employment) system has collapsed, people are fed by charity, or they die. There is no real shortage of food in East Africa, but millions have no means of buying it. that’s why they are dying. that is your ongoing example of societal/trading breakdown,. Before western ‘civilisation’ interfered with their functioning society, they had a simple pastoral society, with a basic pattern of trade and exchange, it was balanced and it worked perfectly well. Now they are trying to feed tens of millions from a desert environment destroyed by overpopulation.
        Essentially we are heading into the same trap.
        Money, when paid as wages, is merely a tokenisation of work done and it has to be sufficient to buy enough energy (food) to live on. However money is passed around, that is what it does. money has no value in itself.
        So, if I only expend half a weeks’ energy in terms of work, I cannot expect to receive the results of a full weeks’ energy from someone else in payment for it. If I get only half a weeks pay, then by definition I can only expect half a weeks food energy, on which I might have to support not only myself, but my family as well.
        If through some government munificence I receive a full weeks’ wages for a half a weeks’ work, then the difference has to be made up from somewhere. Either the government prints that extra money, or takes it out of the general tax pot. (which means fully employed citizens are making up my pay). There may be a third way, if there is I can’t think of one.
        It can only give the ‘illusion’ of working if the halftimer doesn’t really need a full time job

        • I am not sure I understand where there is a misunderstanding.

          The amount of money a person earns in a week is normally more than food for an entire week, at least in today’s society. It hopefully is enough for clothing, transportation, taxes, debt repayment, charitable contributions, and a bunch of other things as well.

          If people have to work less hours, and get paid less, they have to cut back on what they otherwise would spend. They may not be able to buy clothing. They may have to sell their car, and walk to work, or carpool.

          Whether or not the government prints extra money has essentially nothing to do with how much grain is grown and how much food is transported, especially over the long run. Perhaps over the short run, the government can run up huge deficits by spending far more than it takes in, giving the unemployed money to buy food and clothing. But at some point, this system is going to break down, especially if the imbalance is as great as it is currently. The fact that it hasn’t broken down yet doesn’t mean that it won’t break down.

          • I was trying to strip back the concept of food and earnings to their original roots. Living in a ‘western’ style economy, it takes maybe 5% of hours worked to buy my necessary calorific intake, say 2500cal., based on a nominal 40 hour week. but our agricultural food supply system is so arranged that it takes 25000 kcals of energy to grow and deliver that amount of food to me. Very few of us can ‘grow our own’ to any significant degree.
            That energy 90% energy differential is derived from oil input, tractors, trucks, fertilizer and so on,
            if I work 20 hours a week, my body still needs 2500kcal of energy to stay alive, so my food supply must still get 25000kcal of energy from somewhere.
            the cost of that 25000kcal of fuel is rising constantly, and will go on rising, while my income will not, simply because oil itself is costing more to get out of the ground, which means there is less oil profit to give me a payrise in real terms. (which is why printing money doesn’t add to national wealth..only energy input does that)
            we have created a market environment where the cost of fuel and food are effectively the same thing, each plays leapfrog with the other. which is why my income cannot keep pace with the rising cost of food, no matter what other necessities I cut back on.
            So far I’m not feeling it, because I’m financially secure, but others less fortunate are being badly hit simply because oil prices are driving their food prices higher and higher, and their incomes are stretched beyond breaking point in desperate attempt to stay fed.
            this is why foodbanks are springing up everywhere, things really are that tight.

            • We don’t appreciate all of the work that farmers and the whole distribution system is doing for us now, and how much it keeps costs down. In some parts of the world, lower-income people are spending 30% to 50% of their income (or more) for food. Even in this country, there are family groups trying to get along on one minimum wage job, and finding it difficult to keep up. If the system comes unglued, we are in for a huge change.

  34. Bill Simpson says:

    And worse, guess what the oil exporters could do, once they realize that global production is declining with everyone pumping as much as they can? I took a walk outside when I figured that out about 2 years ago. That year isn’t too far in the future.
    Hopefully, they will realize that causing an instant global economic collapse by purposefully decreasing exports in order to explode the oil price, would not be in their interest, no matter where they are. Money isn’t much good if there is nothing to buy with it. Collapse of the global financial system would accomplish that. Nancy Pelosi said that Bernanke and Paulson told the leaders in the US Congress on a Wednesday, that if the Congress failed to act quickly, the USA might not have an economy by the next Monday evening. Were they bluffing? Maybe. Maybe not.

    • Oil exporters are finding their own people increasingly unhappy. They need a high price for oil, just to provide programs to pacify their people. If exporters can’t pacify their own people, they risk the possibility of governmental overthrows, and reduced oil production, whether they want this outcome or not.

  35. Pingback: High-Priced Fuel Syndrome | Sustain Our Earth | Scoop.it

  36. PeteTheBee says:

    Wow, that oil price chart is pretty inconsistent with what everyone else reports. For example, look here.


    Just looking at nominal prices – oil prices hit the 130’s in july, 2008, they’re in the 110s now. So for your char to be correct, $1.20 of today’s dollars would only by a dollar’s worth of goods in 2008. That would map to about 5% annual inflation, or about double of what we’ve been seeing.

    You should go back to your source material and study it carefully, you’ve thrown up a very misleading chart. If oil was currently trading at an inflation adjusted all time high, you’d be reading about it on the front page of the NY times, not on the blog of an obscure doomer. (No offense).

    • Stu Kautsch says:

      Pete, the chart reads “Brent or equivalent” (which is not surprising for a BP chart).
      Brent *was*, historically, lower-priced than WTI. This, as I’m sure you know, reversed about 4 years ago (?can’t remember exactly), and this makes the chart a little funny-looking to Americans.
      Using WTI for the same chart would result in a different shape, but would simply have different distortions.
      The benchmarks are not too exact over a course of decades.

    • I am showing Brent oil price, which is more the European oil price. West Texas Intermediate is typically shown in US papers. It represents a price level for part of US oil (generally related to the center part of the US). The rest of US oil is still more tied to Brent oil prices.

      For a long time Brent and WTI traded at about the same level. In the past couple of years, WTI price has been depressed relative to Brent, because of pipeline and refinery issues. US pipelines/refineries could not handle more heavy crude from Canada (among other issues), and that helped depress oil prices in parts of the US. US papers show only this depressed price that relates to only part of US oil production. (Canada is the real loser in this–they are quite unhappy about the situation. US consumers and refiners benefit.)

      There is also an issue of where the dollar trades relative to the Euro. This has recently helped US oil prices relative to Europe, also helping out US prices relative to Europe.

      As an indicator of world oil costs, Brent price is considered by most to be far better than WTI. It is not even clear that WTI is a very good indicator of US costs–it really needs to be weighted with Brent, to reflect the mix, if the US is able to get away with an average oil cost that is below the world average cost.

      Articles that help explain these issues include

      Why are WTI and Brent Prices So Different?

      Pipeline changes to fix WTI/Brent spread are likely to add new problems

      Why high oil prices are not affecting Europe more than the US

      • PeteTheBee says:

        Nope – still wrong. Brent was trading in the 135 range for most of June 2008. You’re showing up ceiling by 100. So you’re saying the dollar has lost ~30% of it’s value since 2008, or roughly 7% inflation. Nope, nope, nopity nope. You’re doing something funny with the numbers – chopping off the spike or doing some weird rolling average or something.

        I say again – if Brent was hitting the all time inflation adjusted high (if it was, in fact, breaking the high by 10% or more) it would be front page news. The Wall Street Journal has smart financial people (as do the NY Times, the Post, etc) and “all time inflation adjusted high” for any relevant flavor of spot-priced oil is big news. You’re just drawing a goofy graph – or, more likely, graphing data in an odd way. People look at those charts and expect to say the prices tracked by daily close or daily average, not by rolling averages over long time spans (if that’s even what you’re doing, I honestly wonder if you’re just gaming the numbers).

        • PeteTheBee says:

          ahhh, I see it in the fine print. “Annual average”. Geez louise, nice propaganda there. There was a massive price crash in the last quarter of 2008.

          Pretty cheezy. Everyone associates 2008 with a massive price spike. Then you post up a graph that implies that prices have passed the spike. Lame reporting.

          We’re on the undulating plateau of “moderately affordable” prices that the “peak oil realists” (admittadly a small camp) have been predicting for some time.

          Why not graph oil as an overall proportion of the total American energy budget over time? It would be a different graph, showing the high prices of the late 70s as being far more relevant to the American economy.

          I agree with the idea that high oil prices are murdering the “frack free Euro-zone” though, if that’s what you’re getting at. The US is sitting pretty though, we have privately held mineral rights and lots of fossil fuels, of all flavors.

          • Mike Manos says:

            Gail has already noted the response to the claims of “we have [,,,] lots of fossil fuels”.

            It doesn’t matter how much you have when it costs progressively more to extract them from the ground.

            At some point, the price at which you sell your extracted fuel is too high for others to pay, and they will simply not buy your fuel.

          • Robert wilson says:

            During my lifetime oil has traded as low as 10 cents a barrel. It is up about three orders of magnitude

          • PeteTheBee says:

            “Gail has already noted the response to the claims of “we have [,,,] lots of fossil fuels”.”

            I guess the assumption here is that Gail’s crude graph represents some reasonable accounting for shale oil.

            Shale oil costs about $40 bl to extract. So oil priced at $100 is more than enough to insure rapid growth of this energy source. Eagle Ford, Bakken are current proof enough of this. Utica shale will be next.

            Putting up a graph with big arrows doesn’t prove that shale oil is exorbitantly expensive to extract. The $35 to $50 range for shale oil extraction is pretty standard.

            Shale fracking is booming. How can this be happening if it isn’t profitable? Is Gail predicting shale fracking to stop? To decline? If she making similar prediction for the booming business of tar sands oil in Canada? These would be very, very bad predictions. She sort of gives vague hand wavings that these ventures will stop, but stops short of saying were they will be in 2015 or 2020. That’s disingenious – both of these energy sources will be at least 50% bigger in 2020 than they are now.

            • This is a link to a recent post showing that Bakken costs are $80 to $90 a barrel, and rising rapidly. It is hard to see why Eagle Ford would be a whole lot better. Prices are high enough now to cover their costs.

              I don’t say that production of these areas was going to stop. It will stop, when there is recession and prices drop too low, or when there is too much disturbance of the economy. Even if the areas you mention increase production, there is the problem with world production.

              You will note that I did not say anything about declining world production–just high prices. Prices in the current range are too high.

          • Stu Kautsch says:

            Pete asks how fracking can be going on if it is not profitable. One way this can happen has been discussed in the blogosphere for a couple of years vis-a-vis natural gas. Activity is supported by new money being thrown in by investors who have been tricked into believing that the breakeven price is much lower than it actually is. This has been analyzed at length on The Oil Drum among others.
            Besides, many activities are carried on despite not being profitable, because the investment’s already been done and sometimes the month-to-month cash flow is still sufficient to pay distributions (or even dividends).

          • PeteTheBee says:

            “. One way this can happen has been discussed in the blogosphere for a couple of years vis-a-vis natural gas. ctivity is supported by new money being thrown in by investors who have been tricked into believing that the breakeven price is much lower than it actually is. This has been analyzed at length on The Oil Drum among others.”

            Right, analyzed by the Oil Drum, and by the Oil Drum alone. Apparently, fracking is a Ponzi Scheme that will go on forever and ever. The skepticism in 2009 was perhaps a worthwhile counterbalance, the skepticism in 2012 is verging on conspiracy theories.

            At any rate, Bloomberg is part of the conspiracy.

            “Falling costs to find and extract oil from the Bakken is luring producers such as Exxon and ConocoPhillips, according to Jason Wangler, a Houston-based analyst for SunTrust Robinson.
            Costs at Enid, Oklahoma-based Continental Resources, the most leveraged explorer to the Bakken after Whiting, have plummeted about 60 percent to $9.63 a barrel of oil equivalent since 2008, data compiled by Bloomberg. That’s $4.58 less per barrel than Exxon’s expense.”


            Of course, these are extraction costs – there are also transport costs out of the Bakken. Those are going down as the relevant section of Keystone XL has been approved.

            $90 a bl to market oil from the Bakken – that’s a real hoot. You’re not going to find “news” like that outside of the Oil Drum, that’s for sure!

            • Pete,

              What I look at is actions, rather than words. North Dakota drilling rigs are down by more than 10% (from 203 at 6/8/2012 to 181 at 9/28/2012) after WTI spot oil prices dropped from a high of 107.52 on 3/2/2012 to 80.23 on 6/29/2012, and have somewhat recovered. There is a lag in rig count change after price changes, because there are contracts associated with each rig, and existing contracts can’t be gotten out of immediately. But if Bakken oil were really profitable at $50, it is highly unlikely that producers would be sending rigs away. Their actions suggest that a price of $90+ is needed.

              A much deeper drop-off in rig counts occurred after the big oil price drop in mid 2008.

          • PeteTheBee says:


            So the all in price for the Bakken – probably $50. That’s a number you hear a lot. Definitely not $90.

            They’re marketing more and more of the Bakken natural gas as well, so $50 oil and $5 gas might work. Originally, the Bakken flared a lot of gas, but the infrastructure to capture that is mostly online, and will be complete within 12 months or so. That would be a nice historical average – oil 10X gas, $50 and $5.

            But I suppose it’s all academic. Fracking is and will continue to boom in the US, and the price of oil will stay in the low triple digits or high double digits, and the US economy will continue to outperform the Eurozone. The high oil price will continue to subsidize natural gas production, which will continue to go into the stratosphere. Coal will get driven more and more out of the electrical market, and so the US will export more and more coal. That’s the pattern for the next 2 or 3 years.

          • Stu Kautsch says:

            PeteTheBee, your question was how an unprofitable activity can continue, and I just pointed out one way. (Another good example: Have you ever heard of the “.com bubble”, in which many grossly unprofitable internet firms continued operations by blowing through investors money? Investors continued pouring good money in after bad.)

            I was also using fracked natural gas as an example. That industry is finally shaking out – the number of drilling rigs in the US is falling practically every week, as can be seen at http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm?showpage=na (Baker Hughes’ Rig Count), and has fallen by over 50% in the past year.

            The fracking industry will also run into a lot of political headway because citizens understand that infractions by the fossil fuels industries are almost never punished, and the safest course is to just not allow it in the first place. This has become my personal stance, and will not change until I see some fossil fuels executives going to the pen for 10 years.

          • PeteTheBee says:

            Stu – if by “shaking out” you mean “putting up record production numbers” … then yes, that’s what the industry is doing.


            If by “political headwinds” you mean “both major presidential candidates strongly support it”, then yes, the fracking industry is facing the headwinds of knowing that, re:less of the election’s outcome, there will be a pro-fracking president for the next 4 years. What other industry can say that?

          • PeteTheBee says:

            “What I look at is actions, rather than words. North Dakota drilling rigs are down by more than 10% (from 203 at 6/8/2012 to 181 at 9/28/2012) ”

            What I look at is production and not rigs.


            600 bl per day from the Bakken.

            Here is what you said 4 years ago

            “If we can reach 225,000 barrels of oil per day, the history of Bakken suggest this level would be short-lived – the peak production will probably last for a year or less – because as we shall see below, total Bakken production can be expected to decline to 50% or less of its peak rate within a few years, because of the steep decline rate of individual wells.”


            So the Bakken is now almost tripling the level you thought would only be a “short lived peak”. It’s now clear the Bakken will be producing in excess of 225K per day for the next decade. Don’t you feel at all sheepish when you continue to comment on this particular play? Your 2008 prediction was spectacularly off.

            • You will recall this is not what I said, but that of what a guest poster named Piccolo said. But your point is well-taken, the estimate was too low.

              Higher prices and improved technology can indeed make a difference. We have not seen the long-term runout of this. The fact that number of drilling rigs is falling raises questions, though. This is a leading indicator, not something that shows up in current data. If people were getting more and more enthusiastic about drilling there, the number of rigs would likely rise, not fall.

          • PeteTheBee says:

            It might be helpful for Gail to look at these two charts. I guess she must have missed them in her research.

            The first is http://www.undeerc.org/bakken/pdfs/stateoilchart.pdf oil production in the N Dakota

            The second is the http://ycharts.com/indicators/crude_oil_spot_price – wti spot prices.

            By cross referencing the two – you see pretty clearly that there must not be some “break even” at $90. Oil production in N Dakota absolutely skyrockets throughout 2009 and 2010 – most of this time oil is well below $90.

            Bear in mind there is lots of activity in this area, and there is lots of competition for rigs. Reading a break even price based on a fine grained cross reference between a spot price and the monthly rig count is perhaps silly. One aspect of the business is to drill fewer rigs and get more oil from each one. Clearly, the massive increase in gas and oil production that is occuring with relatively muted growth in rig counts must demonstrate this, even to you Gail.

            • There has been an improvement in technology, agreed, that allows more oil with a single drilling rig. Once this has been phased in, the question then in a what price is this new technology profitable. I would contend that we are likely looking at something like $90 barrel.

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