Renewables Are Overrated, We Need Cheap Oil – Interview with Gail Tverberg

This article originally appeared at

What does our world’s energy future look like? Does renewable energy feature as much in the energy production mix as many hope it will? Will natural gas and fracking help reduce our dependence upon oil and how will the world economy and trade fare as supplies of cheap oil continue to dwindle?

To help us take a look at this future scenario we had a chance to chat with Gail Tverberg – a well-known commentator on energy issues and author of the popular blog, Our Finite World

In the interview Gail talks about:

•    Why natural gas is not the energy savior we were hoping for
•    Why renewable energy will not live up to the hype
•    Why we shouldn’t write off nuclear energy
•    Why oil prices could fall in the future
•    Why our energy future looks fairly bleak
•    Why the government should be investing less in renewable energy
•    Why constant economic growth is not a realistic goal

Gail Tverberg is an independent researcher who examines questions related to oil supply, substitutes, and their impact on the economy. Her background is as a casualty actuary, making financial projections within the insurance industry. She became interested in the question of oil shortages in 2005, and has written and spoken about the expected impact of limited oil supply since then to a variety of audiences: insurance, academic, “peak oil”, and more general audiences. Her work can be found on her website, Our Finite World.

Interview conducted by James Stafford of Do you believe that shale gas is the energy savior we have been hoping for and can deliver all that has been promised? Or have we been oversold on its potential?

Gail Tverberg: I am doubtful that shale gas will be the energy savior that we have been hoping for. There are several issues: (a) It is hard for US natural gas prices to rise to the point where shale gas extraction will truly be profitable, because of competition with coal in electricity generation. (b) While natural gas can be used for transportation, it takes time, investment, and guaranteed long-term supply for it really to happen. This will be a long, slow process, if it occurs. (c) People won’t stand for “fracking” next door, if the end result is LNG for Europe or Japan. We have otherwise “stranded” non-shale gas in Alaska that would be a better option to develop and sell abroad.

If shale gas does come into widespread use, it will take many years. The quantity will be helpful, but not huge. Furthermore, it will still be natural gas, rather than the fuel we really need, which is cheap oil. The old dream of US energy independence has been finding its way into the headlines again as a combination of resurgent domestic oil production, improvements in vehicle fuel efficiency and the shale boom have led many experts to predict that although it is unlikely, it’s no longer the fantasy it once was. What are your thoughts on US energy independence?

Gail Tverberg: I think that the direction in years ahead will be toward reduced trade of all sorts. By definition, every country will become “more independent,” including more “energy independent”.  Whether or not current lifestyles are supportable with lower trade is another question. Japan recently made the announcement that they aim to phase out nuclear power by 2040. What is your opinion on this decision and on nuclear energy in general? Can the world live without it?

Gail Tverberg: The decision by Japan is worrisome, because there aren’t many good replacement options available. Japan has volcanoes, so it may have an option to use geothermal as an option. Also, 2040 is far enough away that other options may become available.

Phasing out nuclear in other countries is likely to be difficult. In most countries, this will likely mean “less electricity” or “more coal.” It may also mean higher electricity cost, and lower competitiveness for manufacturers. Germany has already started the process of phasing out nuclear. It will be interesting to see how this works out.

In general, I think we should be taking a closer look at nuclear, because we have so few other low-carbon options. There is considerable dispute about the extent to which radiation from nuclear is a problem. This question needs to be examined more closely. To use nuclear long-term, we need to find ways to do it cheaply and without a huge amount of hot fuel that needs to be kept away from people indefinitely. Renewable energy continues to be a favorite amongst many politicians – yet advances are slow and expensive. Do you see renewables making a meaningful contribution to global energy production? And if so over what time period?

Gail Tverberg: I have a hard time seeing that intermittent renewables (wind and solar photovoltaics) will play a big role in maintaining grid electricity, because of the stress they place on the grid, and the high cost of needed grid upgrades to handle them. Renewables from wood and biomass are hard to scale up, because wood supply is limited and because biomass use tends to compete with food production. Renewables from waste (left over cooking oil, for example) are not something we can count on for the long term, as people stay at home more, and dispose of less waste.

All renewables depend heavily on our fossil fuel system. For example, it takes fossil fuels to make new wind turbines and solar panels, to maintain the electrical grid, and to repair roads needed for maintaining the grid system. Biofuels depend on our fossil fuel based agricultural system.

I expect that the contribution renewables make will occur primarily during the next 10 or 20 years, and will decline over time, because of their fossil fuel dependence.

Quite a few individuals living off-grid would like to guarantee themselves long-term electricity supply through a few solar panels. This is really a separate application of renewables. It will work as long as the solar-panels work, and there are still the required peripherals (batteries, light bulbs, etc.) available—perhaps 30 years. Are there any renewable energy technologies you are optimistic about and can see breaking away from the pack to help us extend the fossil fuel age?

Gail Tverberg: The technology that is probably best is solar thermal. It works like heating a hot water bottle in the sun. This is especially good for reducing the need to use fossil fuels to heat hot water in warm climates. But even this is not going to do a huge amount to fix our problems, especially if they are primarily financial in nature. Renewable energy innovation has been coming under fire lately, with the Solyndra scandal and now Tesla motors are looking to be in trouble – both of whom were backed by government loan guarantees. Do you believe the government should be investing more or less in renewable energy companies?

Gail Tverberg: Less. I think we should be looking for inexpensive solutions. Anything that is high-priced starts with two strikes against it.

Also, I think if the true picture is considered, the amount of environmental benefits of renewables is very low, or perhaps negative. Their higher cost tends to make countries using them less competitive, sending production to China or other Asian countries where coal is the primary fuel. This may raise world carbon dioxide emissions.

Since 2000, world carbon dioxide emissions have increased far more than would have been expected based on prior patterns. A major cause seems to be the shift in industry to Asian countries, as countries attempted to reduce their own carbon footprint. In a recent article you mentioned that the world economy is currently suffering from high-priced fuel syndrome. Would you be able to let our readers know a little more about this? And also if there is anything that can be done economically to help move beyond this syndrome?

Gail Tverberg: High priced fuel syndrome is primarily (but not entirely) a problem of fuel importers. It has symptoms such as the following:

•    Slow economic growth or contraction
•    People in discretionary industries laid off from work
•    High unemployment rates
•    Governments in increasingly poor financial situation
•    Declining home and property values
•    Rising food prices

Part of the problem seems to occur when fuel prices rise, and people cut back on discretionary spending. The result is layoffs. Fewer people pay taxes, and more collect unemployment benefits, causing financial problems for governments. The other part of the problem seems to be lack of competitiveness with countries (such as China and India) that use a cheaper fuel mix.

While oil is the fuel with the big price-problem in the US, high-priced natural gas contributes to the problem in Europe and Japan. High-priced renewables also contribute to the problem.

To keep costs down, we really need to consider cost first when considering alternatives to oil. Alternatives that need subsidies or mandates are likely to be a problem. Thus, in the US, natural gas right now might “work” as a substitute, but not offshore wind.

Regarding the competitiveness aspect, tariffs on international trade might help, but would reduce world output. What is your position on peak oil? Have we already reached the peak in oil production? Or do you side with Daniel Yergin in saying we have decades more of production growth?

Gail Tverberg: I think the peak in oil production will be determined based on financial considerations. Such a peak is probably not very far away, because we are already experiencing lower economic growth and the governments of several countries are in dire financial straits.

As the oil price gets too high (or already is too high), governments of oil importing nations will be increasingly stressed by high unemployment and low revenue. Any way of fixing this problem (higher taxes, government layoffs, or reduced programs like Medicare, Social Security, and unemployment insurance) is likely to lead to lower disposable income and less “demand” for (that is, ability to pay for) products using oil.

With lower ability to pay for products using oil, the price of oil will drop. Fewer producers will be able to extract oil at this lower price, and the supply of oil will decrease. What is your view on our energy future? Is it as bleak as some commentators point out – or is there a ray of hope for us?

Gail Tverberg: I see the future as fairly bleak. The big issue is the way high oil prices affect the economy, leading to recession, joblessness, and huge government deficits. The issue is really a lack of cheap oil.

This is an issue that can’t be expected to go away, even with new (high-priced) oil supply in the US, or with the possibility of more natural gas supply. We are right now experiencing adverse financial impacts from high oil prices, but these impacts are being disguised by artificially low interest rates and huge amounts of deficit spending.

I find it hard to see much of a ray of hope for avoiding some kind of discontinuity, because the problem seems to be already at hand. For example, I see Europe’s current financial problems and the US’s fiscal cliff as being a direct result of lower energy affordability, especially oil, in recent years. We recently published a news piece on a broker who in a drunken stupor managed to move the oil markets. What do you believe moves oil prices – is it supply and demand or energy market traders – or a bit of both?

Gail Tverberg: I think that over the long run it is mostly supply and demand that moves prices. (Of course, demand has to be read as “affordability”. People who are paying higher taxes can afford less oil products, so “demand” less.)

There may be some short-term impact of energy market traders, but it is likely quite small as a percentage of the total. If oil prices continue to rise do you see Americans changing their driving and energy consumption habits?

Gail Tverberg: I think some changes will take place, but they will not be as fast as many would like. New car buyers are likely to be unwilling to pay large upfront costs for fuel-saving features, because they may not own the car for very long. Getting their money’s worth will depend on getting a high resale price for the car.

People in poor financial condition are more likely to make big changes. People who lose their jobs may sell their cars, and share with others. Teenagers who don’t get jobs will not buy a car. People with low wages and long commutes will look for people to share rides with. A short while ago Forbes ran a piece on Thorium as possibly being the biggest energy breakthrough since fire and both China and India have announced their intentions to develop thorium reactors. What are your thoughts on thorium as a possible replacement for uranium?

Gail Tverberg: From everything I have heard, it is still a long ways away—at least 15 years. If it would work, it would be great. In another article you have linked energy to employment and recession. Are you suggesting that without growth in energy production the economy will not grow, and employment levels will not rise?

Gail Tverberg: It takes external energy to make anything that we make in today’s economy. It takes energy to operate construction equipment, or to operate a computer, or to manufacture and transport goods. Even making “services” requires energy.

So if we have a lot less energy, today’s jobs are likely to be impacted. It is possible that we can create more half-time (and half-pay) jobs, but the result will still be that the world will be a lot poorer. We can still do jobs that don’t require external energy (such as make a basket out of reeds, or wash clothes in a stream), but our productivity will be much lower than when electricity or oil was available to leverage our production. What is the most pressing matter that will affect the world in your opinion? food shortage, water shortage, energy shortage, climate change, etc?

Gail Tverberg: I think the immediate problem will be financial, but caused by high-priced energy.

The big concern I have is that financial problems will lead to political disruption. The natural tendency of countries with less energy supply is to break into smaller units—for example, the Soviet Union broke up into Russia and its member nations. There is now talk about whether Catalonia can become independent from the rest of Spain, and whether the Euro can hold together. If breakups become a major pattern, even spreading to the New World, it could make international trade much more difficult than today.

Financial problems could also lead to debt defaults and rapidly shifting currency relationships. These, too, could lead to a reduction in international trade. Economic growth is what the public expects, anything less is treated as a recession, but is constant economic growth a realistic goal? Is it achievable?

Gail Tverberg: Constant economic growth is not a realistic goal. We live in a finite world. This is obvious, if a person stops to think about it. There are only a finite number of atoms in the earth. There are interrelated biological systems on earth, and humans are one part. Humans cannot become too numerous without destroying the ecosystems that we depend on.

In a finite world, it is clear that eventually extraction will become more expensive. When we first started extracting fossil fuels, we started with what was easiest (and cheapest) to obtain. As we move to more difficult locations, such as deep under water, or the Arctic, the cost becomes more expensive. It is these high costs that seem to be disturbing economies now.

It appears to me that we are now hitting some version of “Limits to Growth”. Most economists haven’t figured out the connection between the economy and the natural world, so are oblivious to our current predicament. If the transition from fossil fuels to renewable energy is ever actually made, what do you believe will be the effect on GDP?

Gail Tverberg: I don’t see renewable energy as being sustainable on its own. If it were, we might expect a GDP level of perhaps 10% or 15% of today’s GDP. Other than a severe reduction in the global population what solutions are available to humanity as it reaches the limits of the planet?

Gail Tverberg: Unfortunately, solutions seem few and far between.  Our biggest problem seems to be a lack of time to fix a financial problem that seems very close at hand.

A partial solution for some people may be a reduced standard of living combined with local agriculture.

Regardless of what happens, we do have quite a lot of “stuff” that humans have made that will cushion any down slope—roads, houses, clothing, and tools, for example. Many people would like a solar panel or two for their long-term use. We also have knowledge that we did not have on the upslope.

The past 10,000 years for humans has been real miracle, first with the discovery of agriculture, and later with the discovery of fossil fuels. If there is a Guiding Hand behind what is happening, there may be other miracles in store, as well. In your opinion, who will make the better president in terms of energy policies and saving the economy, at the upcoming elections?

Gail Tverberg: The last presidential candidate that I had real enthusiasm for was Ross Perot in 1996.  He would have put the United States (and the world) on much more of an isolationist path. In retrospect, this is the one thing that would have helped put off the predicament we are in today, because it would have slowed world economic growth, and with it the extraction of resources. World population would probably be lower now, too.

In this election, I would probably slightly favor Romney, because he seems to have some grasp of the issues we are up against. As I look at the numbers, it is absolutely essential that we start cutting programs, if we are to balance the budget. As bad as fossil fuels may be, they provide our jobs, our food, light, and heat so we need to continue to extract them. We don’t seem to have very good alternatives at this time. Even what we consider renewables depend upon fossil fuels.

In the next four years, I expect we will find ourselves doing a U-turn on economic growth. I don’t think either candidate (or for that matter, any leader) will be able to handle this well. Ideally, the new leader should be looking at the issue of how to deal with a low-energy future. Do we move to local agriculture, and if so, how? If rationing is done, how should it be done? If there are not enough jobs for everyone, should we go to more part-time jobs?

Romney has been accused of flip-flopping, but in some ways, with such big changes coming, I think that what we need is someone who is willing to change his views with changing circumstances. We seem to be headed for truly uncharted territory. Gail thank you for taking the time to speak with us. If you are interested in learning more about Gail and her work please do take a moment and visit: Our Finite World

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137 thoughts on “Renewables Are Overrated, We Need Cheap Oil – Interview with Gail Tverberg

  1. A lot of people are saying that shale gas and oil proves that conventional oil has not peaked…. But it’s not conventional.

    I’m surprised that production has gone that high, but I am surprised that we’re intent to destroy our nation for a fast buck. Future generations are going to spit on the ground when we come up in conversation.

  2. Yes water is plentiful in some parts of the world. But not where the Bakken Shale is being produced.

    People do protest and complain about water usage at golf courses. But I think you knew that.

  3. Dear Gail and Medieval Future

    This response will be rather long and rambling and I have started a new thread to avoid losing all the space to the indent. Also, I am not going to load this down with a lot of citations. Those who are interested can look it up for themselves from the original sources or from my previous comments.

    First, let’s consider George Washington–one of the signers of the Declaration. Of course he was a privileged planter. But he was bled to death by a doctor. So just being wealthy by the standards of the time did not make one immune to life’s misfortunes. More broadly, if we look carefully, we can find societies where ordinary people thrived to very respectable old ages. As the eminent scientist Stephen Jay Gould said, ‘don’t tell me the mean, show me the dispersion’. Focus on what is possible, not what is probable. If Peter Bane in a plain old house on the outskirts of Bloomington has achieved a good deal of resilience, then he is an outlier and Gould would study him closely.

    I want to contrast Bane’s approach with a farm which just went on the market in my county:

    Now if you look carefully, you will see that this couple put a lot of thought into their farm. They are taking care of first things first: water, food, deer fence, etc. And so we get the rather rare circumstance of a 450,000 dollar property featuring a luxury two-holer. Now I can imagine circumstances where buying this property might be the right thing to do (roving gangs of thugs in all the towns, hyperinflation so that 450,000 dollars becomes chump change, total collapse and inability to collect debts), but I suspect that Peter Bane’s approach is probably the right one.

    I just made a decision and that decision will have consequences. There is no way to avoid risk no matter which fork of the road you take.

    Second, I will try to describe the evolution in my thought on the matter over the course of my life. I was one of the last of the depression babies–because my family never got out of the depression. My father was sick a lot (from bad habits and stress) and we never had any money. I grew up with a fear of debt. My wife’s family never had any money either. So we lived consistently below our means and achieved debt freedom in our late 40s. And somewhere along the line I acquired a Buddhist perspective on life–life is uncertain so don’t fret about it. I won’t claim total victory on that one. In connection with my work in agriculture, I have learned a great deal about food webs and how Mother Nature creates life out of death. Stop death and you stop the creation of new life. So I try not to take my own death too seriously–I just aspire to being really high grade humus.

    Five or seven years ago I became concerned about the debt bubble. Later I added concerns about energy peaks and climate change and resource depletion in general and the toxification of the world. So I began to work on those issue which I perceive to be weak links in the chain which sustains my wife and me.

    Hard manual labor day after day is not good for humans. So I have studied and practiced the agricultural and dwelling and social principles of Permaculture and Teaming With Microbes and The Holistic Orchard. Finding the leverage points.

    Loss of social status can be deadly. Robert Sapolsky has written some excellent (but a little dated now) essays on this subject. Dmitry Orlov wrote about it in connection with the Soviet collapse, and we are now seeing a collapse in life expectancy among US women. I try to avoid this danger using the same strategy I used on debt–avoid social status. Associate with people who have little money and only earned status.

    Poor lifestyle provides the fertile ground in which chronic disease flourishes. So I try to eat for health and exercise for health and defuse stress and transact my business with people who are friends. In terms of food, I have greatly expanded food production in my yard, I belong to a community garden which is 3 miles from my house, and I work at a farm which is 8 miles from my house. I bought a cargo bike to haul food and supplies if autos die.

    Poor lifestyle also subjects us to infectious diseases. I haven’t had a cold in 10 years. None of the inevitable cuts and scrapes I get at the farm have become infected problems. My immune system (which is supposed to decline with age) is obviously strong. Which means it is also doing its appointed task in terms of cancer. A strong immune system is the only effective prevention or treatment for cancer.

    I decided to live right where we already do rather than move to some sort of homestead. There are lots of considerations in that decision, and if I was 40 years younger it might well have been different. Which requires that I keep the house habitable. The house has its strong points and its weak points. I try to keep up the maintenance (new roof, recently)–but there are things I would like to do (metal roof to collect water) that I cannot do because of legal restrictions. I am not worried about freezing to death, but I am worried about water freezing in pipes. Yesterday I was watching the water company shut off the valve at the meter using a special tool, and I thought that would be a good thing to have. So water can be a problem if the system dies, or if it doesn’t die but you can’t heat your house. I plan to give myself a Big Berkey filter for Christmas this year. On the plus side, I have a good expanse of ground on the south side for fruits and berries and some vegetables.

    One of the things you learn pretty quickly if you get serious about resilience is putting food by. The hand’s down winner, I think, is fermentation. Fermentation keeps most of the nutritional value of the food and doesn’t require heat. It doesn’t even require very much skill. But you do need crocks (there are many, many potters in my neighborhood) and you do need some experience. There have been a dozen fermentation workshops offered in my neighborhood this fall. Get involved.

    Part of being healthy is expanding one’s comfort zone. If you are fat, you are going to suffer in summer heat. If you are thin, and you let your body acclimate, things aren’t too bad. The farmer I work for is in his 60s and very thin. He hates to go into an air conditioned room because it upsets his acclimation to working in the heat. This attitude is the exact opposite of what Duke Power pushes in their advertisements: just set the comfort dial and we do the rest. Local laws prevent us from doing many of the common sense things done in the tropics (e.g., sleeping on roof tops), but there is still a lot we can do.

    Some things are essentially beyond one’s control. Many people think the enormous production of toxins in the 20th century are a major contributor to the appearance of previously unknown or rare chronic diseases (e.g., the cancer rate is now about 4 times what it was in the 19th century). I saw an interview with a scientist who volunteered for work at the south pole–and a contributor to his decision was the desire to get as far away as possible from environmental toxins. Dollar bills have BPA in them and mercury is everywhere. So I do the best I can by assiduously avoiding industrial food and eating lots of brassica (which have strong anti-cancer properties when they are properly prepared).

    I want to close by describing an unpublished short story I wrote. I begin with a cynical hero who is selling ‘financial products’ to old people. He stops in to see the old man, and notices a tombstone with the man’s name on it near the front door. To make conversation, he asks about it. The old man tells him that in his young and cynical years he bought the tombstone on a lark and put it in his bedroom. When he brought girls home, the tombstone established his identity in some pitiful sense. Finally, when he was about 30, one of the girls he brought home said ‘so we should (verbal expletive deleted) like there’s no tomorrow’. And they did. And the man had an epiphany . What would you do if there really was no tomorrow? The old man explained that he and his wife kept the tombstone in the bedroom for many years. It went into the yard when she died. The salesman stumbled out, dazed and confused.

    Last evening I went to an entertainment where local people sang and told stories and did performance pieces. One of my neighbors, who is my age, told the story of his wife’s death about 10 years ago and his trips to heaven to try to get in touch with her and how all that related to Bob Dylan and Peter Lorre and Julia Child. But he failed to find his wife. And his conclusion was to live each day as if there is no tomorrow and All You Really Need is Love–which the audience sang with him.

    Don Stewart

    • Thanks for all of your thoughts. You have a lot of good ideas there.

      I agree that the variation in outdoor temperature is not a big problem, if you get used to it. We have eaten pretty much all of our meals outside our porch this summer and fall. Maybe it was a little warm some days, and now a little cool other days, but it was pleasant being outside, and we enjoyed it. If we go out to a restaurant, we always ask for outdoor seating, if it is available. We don’t have to endure the television sets, and the noise.

      I agree with your view of living if there is no tomorrow. I think if you look back at my posts on the subject, you will see comments are pretty much in this direction. While you have some good ways of fixing some things, there are other things that we can’t fix. Worrying and fretting about what may come won’t really help. I always say I “bounce along”. If something goes wrong, I pick myself up, and try a new direction. I usually dress in bright colors.

      By the way, I will be speaking at an energy conference in Mumbai, India later this month. I will have a little time afterward to do some sightseeing. It is a little out of my comfort zone–usually my husband is able to go with me on long trips, but he will be teaching then. Hopefully I will be able to learn some too while I am there.

  4. FYI, I invest in Texas oil wells.
    Fracking can be done at different levels in the same well. However it is horrendously expensive, 1 million dollars a frack.

    Another thing is during boom times the price of labor, renting equipment, and oil leases also escalates, so that eats into an oil companies profit.

  5. Hi Gail
    You are very insightful. Please consider taking those insights and shifting the underlying premise a bit.

    Freight railroads average 480 ton-miles per gallon. By changing the transportation networks to Personal Rapid Transit, the integration of ultra-light railroads and computer networks, energy per vehicle-mile can easily be cut by 90%. By deploying solar (sun, wind and tide) power collection into the distributed transportation infrastructure, the infrastructure becomes a very large collector. JPods networks will collect about 5 megawatt-hours per mile of rail per day. Using about 200 watts per vehicle-mile equates to about 25,000 vehicle-miles of power collected per mile of rail per day.

    Discussions of this are censored at the Oil Drum, but The PRT network in Morgantown, WV has delivered 110 million oil-free, injury-free passenger-miles since being built as a solution to the 1973 Oil Embargo. The first US city to adopt Performance Standards so we can start building in the US is Fayetteville, GA (Atlanta area). My expectations is we will have something up by spring.

    • And unicorns. Don’t forget unicorns.

      There are lots of better scenarios we could dream about. Civilizations in decline, never act rationally. You can dream about things that will never happen, but we’re going to war instead.

    • I will have to find time to stop by and see it, since I live in the Atlanta area. One of the issues I am concerned about is that we don’t have the time/resources to build a lot of new “stuff,” especially if a lot of other changes are going on at the same time. But perhaps I am wrong, and your idea would work, at least in some places.

      • Oil is already dead. The infrastructure is frail. When Iran and Israel go to war (likely by next August). We should anticipate they have had sabotage teams in the US waiting a call to arms for decades. I was an infantryman, with limited resources always attack logistical targets. Oil infrastructure is unbelievably soft and creates great secondary fires.

        The Richmond fire and Torrance power failure could be acts of sabotage, I do not think so, but that is exactly the kinds of attacks that a well planned person with my skills, with decades to prepare, would do. No silly suicide bombs, just industrial accidents that will cumulatively wobble the wheels until the fall off the cart.

        I cannot seem to locate my comment to add to it. The Transcontinental Railroads were built in 4 years. Winning World Wars was accomplished in less than a decade. We will need cheap oil and natural gas. There was a 4 mb/d spike in oil consumption for 10 years after the 1973 Oil Embargo. It takes a lot of energy to retool.

        I studied nuke engineering at West Point. Two members of our team are my classmate who spend much of their lives in the nuclear industry. We understand, oil and nukes. They will not save us. Our centralized systems are failing. Water, energy and food will all experience discontinuities, my guess within 18 months. People will raid substations to scrap the metal.

        There are 140,000 miles of surviving freight rail. These will be the logistical arteries. We need to build 500,000 miles of PRT (about 12.5% of road miles) to be the logistical capillaries.

        We will lose 50% access to oil in the next few years (likely by next August if there is war). If we do not allocate oil resources to farmers, oil crisis will be a famine crisis.

        • I found it. All solutions are niche solutions. JPods are a niche solution.

          The Internet (1969) and cell nets (1946) started as niche solutions. Neither could commercialize until after free markets were restored in 1984:
          – Central planners strive for consistency. To them everything was the analog network.
          – People want many things. This creates niches where 1.0 versions of innovations can find markets to polish themselves into commercial viability.

          Based on profits, value added relative to resources consumed, niche solutions will grow.

          Please consider 5 aspects of the failure of socialism, government control of the means of production in power and transportation:
          1. Life requires energy. Less affordable energy, less life.
          2. I was an infantryman and will likely always be fond of the Infantry. I have only one problem with trading blood of soldiers for survival of the nation; the blood of those soldiers should be consumed only so long as is essential to resolve and win the cause of war. Counting “no-fly missions” we have been trading the blood of our soldiers for oil since 1990 without addressing oil addiction. That is an obscenity.
          3. US Peak Oil was 1970 when national debt was $.4 trillion. Now it is 40x bigger as we exported economic strength to consume foreign oil. Must of the $16 trillion in debt should be capitalized into the price of oil. To protect the Federal highway monopoly, the Federal government socialized vast oil costs into debt.
          4. Social upheaval. Debt is the tax on future labor, the labor of children that did not consent to owing the Federal government $52,409 each; add about $1 million in unfunded liabilities. As oil supply shocks hit, promises to repay debts and wishes (lies) will be liquidated by reality; children simply do not have the personal property government can confiscate to yield between $67 and 136 trillion in liabilities (government accounting is pretty amazing in it range of uncertainty). Without great care, there will be a war between the people who depend on those promises, and the people whose property must be confiscated to fulfill those promises. I go back to being an infantryman, it is going to be messy. There will be a lot of dead people. We goofed.
          5. The Constitution intended to protect us from socialism. But on Aug 1, 1918 we allowed the Federal government to monopolize/socialize communications, power and transportation as natural monopolies. The great innovations of Ford, Edison, Bell and the Wright Brothers were institutionalized and protected from competition.

          Our future is certainly interesting.

        • It is interesting to hear your perspective. Electricity transformer infrastructure is very much out in the open as well–much of it with only small fence around it. We cannot replace it easily, either I understand.

          I think part of our problem now is that we have moved from thinking “simple and cheap” to “fast and expensive”. When we built the first transcontinental railroad, it was with local materials and local labor, using fairly simple technology. I expect the seats were fairly simple, and the doors were functional. If either broke, they could easily be replaced with local materials.

          Now our minds are so fixed on “fast and expensive” that we can only imagine trains that go ultra-fast, are air-conditioned, and have doors that will reverse if something gets caught in them. Building the trains goes to the lowest bidder. But as often as not, the bidder is overseas, and the parts come from many other countries. If a door breaks, the car is out of service for months until a replacement can be made.

          If we could start thinking, “We are poorer now; we need to go cheaper and more utilitarian,” we would be much farther ahead, IMO. I think this is the big block to making changes. Whatever we do has to be perceived as “better” than the past, or at least fit in with current laws and regulations, so it is hard to make changes.

          • Hi Gail
            Thinking local, “simple and cheap” is exactly the point. Build local economic communities into economic lifeboats. Self-reliance is local. The lifeboat paradox is that if every community has one, they will not be needed.

            Our entire power and transportation infrastructure is on huge, fragile and aging system. Socialism, government control of the means of production in communications, power and transportation radically distorts our perception of costs. In 1935 there were about 600,000 electric and water windmills that were sold against the headwinds of WWI and the Depression. The Rural Electrification Administration taxed people to subsidize the central grid. If all the poles deployed the electrical grid had been windmill poles, we would have vast excesses of renewable electricity.

            The same is true for highways. Interstates account for 1.4% of US roads and 25% of car-miles. The fundamental nature of post WWII cities is shaped by sprawl. In 1950 it was not mandatory to own a car to be economically competitive. Today families need to cars to be competitive. The Constitution specifically limits to the Federal mission to “promote” not “provide” welfare. “Provide” defense is mandated. The Interstates massively provided welfare to support the sale of cars and oil. Instead of capitalizing the cost of wars to defend access to foreign oil, we socialized the cost into national debt; increase from $.4 to $16 trillion since US Peak Oil. Instead of capitalizing the cost of pollution, we socialized it into risk to our Posterity. Instead of capitalizing the cost to restore resources to like condition for use by our posterity, we socialized the risks that make us desperate for oil today. In an odd reverse, instead of socializing the blood sacrifice by having everyone serve in the military to defend our oil addiction, we capitalized it into the “all volunteer” military where members have served multiple tours in the continuous war (counting “no-fly”) since 1990.

            Communications provides the free market case study. Under socialism, we had a century of rotary telephones. Restored to free markets, a century of learning has been applied creating millions of jobs, better services at lower costs and vast wealth.

            The success with communications can be repeated in power and transportation. The Net Energy of solar is 20:1, new oil fields about 3:1; a 6x advantage. Freight railroads average 480 ton-miles per gallon, or 136 times the efficiency of moving a person in cars, buses or passenger-trains. JPods, by removing the parasitic mass (500 pound vehicles carry 1200 pounds of payload) and the repetitive start-stops (applications of power) it is practical to approach freight rail efficiencies in moving people, cargo and trash in cities. Like communications under socialism, we have had a century where the “highway is the answer to everything” problem. Tens of thousands of railroads were abandoned as Federal subsidies removed efficiency and self-reliance as market forces.

            It costs about 56 cents a vehicle-mile to operate a car (ignoring socialized costs). It costs about 6 cents a mile to operate JPods vehicles. That 10x savings is enough to drive a paradigm shift. It will start in niches, just as the Internet did. That 10x savings combined with the 6x savings over energy will create so much wealth that millions of jobs will be created building systems. The wealth generated will be as spectacular as that of the Internet, cell nets and Transcontinental Railroads.

            The telephone is the right device. The monopoly analog telephone network was the wrong network. The car is the right device, the highway is the wrong network. Allowing free markets in networks. Government monopolies prevented a century of learning from being applied to communications, power and transportation networks.

            By 2020 I think we can build 500,000 miles of PRT to be the logistical capillaries in support of the 140,000 miles of railroads, logistical arteries. Cheap, simple, local.

            If we were good capitalist,

  6. Well, I have said this before but I will say it again. If we burn all the fossil fuels available then we will wreck our climate with up to 6 degrees of global warming. That is a global average. Some regions could be up to 10 degrees hotter and some regions only 2 degrees hotter. The climate and all agriculture and human activity will be disrupted by massive droughts, floods and super storms. Not only will civilization collapse under this scenario but it is quite likely that humans will go extinct.

    Therefore, we need to rapidly depower from fossils as we face a global existential emergency. This means the equation is renewables or death. It’s as simple as that. We have to switch to a full renewables economy or die in the attempt.

    It’s not good saying “renewables won’t work so lets stick with fossils”. Fossils equal 100% certain catastrophe. Renewables equal possible salvation. Even if the chance is 1% we must make the attempt.

  7. I don’t get the dismissive attitude towards renewables. They were expensive 10yrs ago but costs have fallen and they are now price-competitive in many locations and are only becoming more so. With respect to reliability recent data out of Germany shows that a grid with a high contribution from renewable sources can be extremely reliable – in this case more reliable than the US’s FF-heavy grid.

    Furthermore, the fact that renewables require an upfront FF input is a great argument FOR intense deployment now, not against it. All power generation requires oil inputs (mining/drilling, fuel transport, etc.). The rising cost of oil will drag up the costs of FF-based electricity generation, but for renewables this is a one-time cost for the 20-40yr lifespan of the installation. The economies that will prosper as oil goes through the roof are the ones whose electricity system oil costs are already sunk. Sure, these installations will not last forever, but the more we can do now while oil is still abundant the better off we will be down the road.

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  9. Hi Gail, great interview. I have two questions regarding your comment, “I see the future as fairly bleak. The big issue is the way high oil prices affect the economy, leading to recession, joblessness, and huge government deficits. The issue is really a lack of cheap oil.” Isn’t the issue also a weak US dollar? Bernanke’s Quantitative Easing schemes (i.e. inflation) have to shoulder some of the blame. Please have a look at the M1 money stock provided by the St. Louis Federal Reserve. If the slope of this curve were to lessen, do you think oil prices would go down? Thank you.

    • I think that we are headed for a fiscal cliff, partly because of the deficit spending and partly because of QE. This is a huge problem, that is related to high oil prices /limited supply.

      The weak US dollar admittedly does cause high oil prices to be higher (relative to what some other buyers are paying). Thus, with the lower dollar, the United States gets less of the oil that the world is producing. If the dollar were higher, it seems like oil prices would be lower. But QE is also aimed at other issues, like low interest rates, and even being to sell of the debt the US is issuing. Once it is started, it is hard to stop.

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