Our Energy Predicament in Charts

A friend asked me to put together a presentation on our energy predicament. I am not certain all of the charts in this post will go into it, but I thought others might be interested in a not-so-difficult version of the story of the energy predicament we are reaching.

My friend also asked what characteristics a new fuel would need to have to solve our energy predicament. Because of this, I have included a section at the end on this subject, rather than the traditional, “How do we respond?” section. Given the timing involved, and the combination of limits we are reaching, it is not clear that a fuel suitable for mitigation is really feasible, however.

ENERGY BASICS

Energy makes the world go around

Figure 1.  Source: Jewish World Review

Figure 1. Source: Jewish World Review

Energy literally makes the world turn on its axis and rotate around the sun.

Energy is what allows us to transform a set of raw materials into a finished product.

Figure 2. Energy is what allows us to transform raw materials into finished products. (Figure by author.)

Figure 2. Energy is what allows us to transform raw materials into finished products. (Figure by author.)

Energy is also what allows an us to transport goods (or ourselves) from one location to another. Services of any type require energy–for example, energy to light an office building, energy to create a computer, and human energy to make the computer operate. Without energy of many types, we wouldn’t have an economy.

Increased energy use is associated with increasing prosperity.

Figure 3. World growth in energy use, oil use, and GDP (three year averages). Oil and energy use based on BP's 2012 Statistical Review of World Energy. GDP growth based on USDA Economic Research data.

Figure 3. World growth in energy use, oil use, and GDP (three-year averages). Oil and energy use based on BP’s 2012 Statistical Review of World Energy. GDP growth based on USDA Economic Research data.

Energy use and oil use have risen more or less in tandem with GDP increases. Oil is expensive and in short supply, so its increases have tended to be somewhat smaller than total energy increases. This happens because businesses are constantly seeking ways to substitute away from oil use.

Figure 4. China's energy consumption by source, based on BP's Statistical Review of World Energy data.

Figure 4. China’s energy consumption by source, based on BP’s Statistical Review of World Energy data.

China is an example of a country with very high growth in energy use. China’s energy use started growing rapidly immediately after it joined the World Trade Organization in December 2001. China’s energy use is mostly coal.

Figure 5. Per capita oil consumption in countries with recent bank bailouts, based on data of the US Energy Information Administration.

Figure 5. Per capita oil consumption in countries with recent bank bailouts, based on data of the US Energy Information Administration.

European countries with bank bailouts show declining oil consumption.

Increased fuel use is also associated with rising population growth. 

Figure 6. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

Figure 6. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

On Figure 6 above, the fuel use and population growth rise very rapidly, after fossil fuels were added about 1800. In fact, the lines overlay each other, so it is not possible to see both. Adding fossil fuels allowed much better food supply, sanitation, and medical care, all leading to huge population growth.

Figure 7. World Population 1980 to 2011, based on EIA data.

Figure 7. World Population 1980 to 2011, based on EIA data.

World population is still growing rapidly, especially outside of the developed countries. The countries with the most population growth (blue) are only now beginning to obtain goods and services that the developed world takes for granted, like better medical services, cars, and electricity for every home. Their fuel use is growing rapidly.

There are many sources of usable energy. 

Figure 8. Examples of usable energy sources. Images from Wikipedia and Power Point clip art.

Figure 8. Examples of usable energy sources. Images from Wikipedia and Power Point clip art.

Figure 8 illustrates a few sources of usable energy. Clearly, there are great differences among them, both in terms of how the energy they provide is created, and in terms of the types of energy services they can most easily provide. Businesses will substitute a cheaper source of energy whenever they can. Businesses especially seek ways to substitute away from human energy, since it is the most expensive type. One approach is automation. This substitutes machines (running on electricity or oil) for human labor. Another approach is outsourcing the manufacturing of goods to countries that have lower-cost labor.

One factor that limits fuel switching from oil to electricity is the amount of machinery currently using oil.  Robert Hirsch says 

Worldwide machinery operating on oil is valued at $50 to $100 trillion (Automobiles, airplanes, tractors, trucks, ships, buses, etc.)

There is also a huge investment in roads, bridges, refineries, and pipelines. Past transitions have taken more than 30 years, because it usually makes economic sense to wait for current machinery to reach the end of its economic life before replacing it.

LIMITS WE ARE REACHING

Unfortunately, we live in a finite world. At some point we start reaching limits.

Figure 9. Humans at this point are winning the competition with other species for resources.

Figure 9. Humans at this point are winning the competition with other species for resources.

One limit we are reaching is how many people the world will support, without unduly affecting other species. There are now over 7 billion humans on earth, compared to fewer than 200,000 gorillas and chimpanzees, which are also primates.

The natural order is set up so that each species–including humans–reproduces in far greater numbers than is needed to replace itself. Natural selection chooses which of the many organisms will survive. With the benefit of fossil fuel energy, humans (as well as their cows, pigs, goats, chickens, dogs and cats) have been able to survive in far greater numbers than other species. In fact, paleobiologists tell us that the Sixth Mass Extinction has begun, thanks to humans. At some point, interdependencies are disturbed, and we can expect more population collapses.

Figure 10. Air pollution in Taiwan, from Wikipedia.

Figure 10. Air pollution in Taiwan, from Wikipedia.

Another limit is pollution of many types. This image is of air pollution, but there is also water pollution and CO2 pollution. Even what we think of as renewable energy often poses pollution challenges. For example, battery recycling/disposal can pose pollution challenges. Mining of rare earth minerals, used in electric cars, wind turbines, and many high tech devices is often cited as being very polluting in China.

Another limit is declining soil quality. In the natural order, soil is not disturbed by plowing, and the nutrients animals use are recycled back into the soil, after they use them.

As we disturb this natural order, we find erosion reduces top-soil depth. The amount of organic matter in the soil is reduced, making crops less drought-resistant. Nutrients such as phosphorous and potassium are often depleted, and need to be added as soil amendments, requiring fossil fuel transport. Soils often suffer from salinity related to irrigation. Nitrogen levels also become depleted.

It is possible to mitigate these problems using fossil fuels. However, we discover that our ability to feed 7 billion people becomes increasingly dependent on continued fossil fuel use. If we increase biofuel production, this tends to make the situation worse. Techniques such as regrading of hills to improve rainwater absorption can help the situation, but this too requires energy.

Another limit is imposed by the Second Law of Thermodynamics.  Entropy happens. Things fall apart. All of the “stuff” humans have produced (including roads, bridges, pipelines, electricity transmission equipment, cars, synthetic diamonds, and computers) keeps degrading, and eventually needs to be replaced. If we intend to continue to have roads, we need to keep repairing them and building new ones. Using current technology, this requires an increasing amount of fossil fuel energy.

Figure 11. Declining resource quality image by author.

Figure 11. Declining resource quality image by author.

Another limit arises because we extract the cheapest, easiest to extract resources first. (Figure 11) As a result, at some point, the cost of extraction rises, because the cheap resources have already been depleted. Outside observers don’t necessarily notice a difference as the quality of resources drops over time; it always looks as if there is an increasing quantity of reserves available as we move down the resource triangle.

Unfortunately, the apparently increased resources are not really comparable to what was already extracted. The resources lower down in the resource triangle, such as oil and gas that requires “fracking” to extract, require the use of increased energy resources. The speed of extraction is often remarkably slower–light oil flows like milk, while heavy oil can be the consistency of peanut butter. Extracting oil using fracking has been compared to getting oil from the pores of a concrete driveway.

Another example is fresh water. Initially we take it from a local stream, or from a shallow well, where little energy (and cost) is required to obtain it. As this resource depletes, we  seek other sources–deeper wells, or water piped from afar, or desalination. All of these approaches use much more energy. If the world’s total energy supply is not growing rapidly, using more energy for water supply is likely to mean less energy is available for other uses. I discuss this issue in Our Investment Sinkhole Problem.

OIL LIMITS

Figure 12. US crude oil production, based on EIA data. 2012 data estimated based on partial year data. Tight oil split is author's estimate based on state distribution of oil supply increases.

Figure 12. US crude oil production, based on EIA data. 2012 data estimated based on partial year data. Tight oil split is author’s estimate based on state distribution of oil supply increases.

An example of how resource depletion can work is illustrated with US oil supply. US oil production (blue) suddenly began to decline in 1970, despite the oil industry’s best efforts to extract more. By scrambling around quickly, it was possible to add more oil production from Alaska (red), but this soon declined as well.

It wasn’t until oil prices rose in the late 2000s that it made economic sense to use technology which had been developed much earlier to extract tight oil. Tight oil is expensive oil to extract. How much production will rise from current levels depends to a significant extent on how much oil prices are able to increase in the future. The higher that oil prices rise, the greater the recessionary impact that can be expected, but the more oil that can be produced.

Figure 13. World crude oil production based on EIA data. *2012 estimated based on data through October.

Figure 13. World crude oil production based on EIA data. *2012 estimated based on data through October.

World oil supply is now about level, except for the small increase added by US and Canadian oil supply. (Figure 13) One concern with world oil supply as flat as it is, is that at some point, world oil supply will suddenly take a nosedive, just as US oil production did.

Figure 13. Oil consumption by area, based on BP's 2012 Statistical Report. FSU is Former Soviet Union.

Figure 13. Oil consumption by area, based on BP’s 2012 Statistical Report. FSU is Former Soviet Union.

Another concern is that the developing world will get the majority of the world oil supply, leaving little for historically large users (Figure 13). US, Europe, and Japan experienced severe recession in the 2007-2009 period, and still are seeing economic headwinds, at the same time that countries that were able to obtain the oil continued to experience economic growth.

I think of our current situation as being like that of a host who gives a party for 10 people. There is enough food to go around, but just barely. The host decides to invite another 50 people to the party. Surprise! Suddenly there is a shortfall. Globalization has its downside!

Figure 15. World oil supply and price, both based on BP's 2012 Statistical Review of World Energy data. Updates to 2012$ added based on EIA price and supply data and BLS CPI urban.

Figure 15. World oil supply and price, both based on BP’s 2012 Statistical Review of World Energy data. Updates to 2012$ added based on EIA price and supply data and BLS CPI urban.

A third concern is that oil prices will disrupt economies of oil importing nations. Oil prices rose sharply after US oil production dropped in the 1970s. They began rising rapidly again about 2003, as the world became more globalized. In addition, oil resources became increasingly expensive to extract. There is little possibility now that oil prices can decline for long without a drop in oil production.

Oil price spikes lead to recession. Economist James Hamilton has shown that ten out of the most recent 11 US recession were associated with oil price spikes. When oil prices rise, food prices tend to rise at the same time. Consumers cut back on discretionary spending, because fuel for commuting and the price of food are necessities. This cutback in spending leads to layoffs in the discretionary sector and recession.

Figure 15. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

Figure 15. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

High oil prices also seem to lead to depressed wages.  (Figure 15. Here, I am dividing total wages for all non-government employees or by the total US population, and then taking this average wage, and adjusting if for inflation.) This is the effect we would expect, if the major substitution caused by high oil prices is a loss of human employment. This shift tends to occur because human energy is very expensive, and because wages tend to be a big share of a company’s costs.

Figure 16. Illustration by author of ways oil price rise could squeeze wages. Amounts illustrative, not based on averages.

Figure 16. Illustration by author of ways oil price rise could squeeze wages. Amounts illustrative, not based on averages.

Figure 16 shows an illustration of the effect that happens. If oil prices rise, the cost of making goods and transporting them to their destination rises. If the sales prices of goods doesn’t rise, a business’ profits will shrink. (Before and after the oil price rise shown in black box). The company will consider low profits unacceptable.

The company has several ways of fixing its lower profit. Wages tend to be one of the company’s largest costs, so these are a likely target. One approach is automation. This may slightly raise electricity costs, but it will lower wage costs, and raise profits. Another approach is outsourcing production to a low-cost country like China. This will lower wage costs and probably other costs, leading to higher profit for the company.

A third approach is what I call “making a smaller batch.” It involves closing unprofitable offices, or flying fewer jets, so that the quantity produced matches the new lower demand for the product, given the higher required sales’ price, now that the oil price is higher. Any of these approaches reduces the amount of wages paid to US employees.

HOW DOES THIS CONCLUDE?

A person could argue that any of the limits could eventually bring the system down. The pressure on wages is particularly a problem, since a further rise in oil prices would seem likely to lead to more job loss, and further pressure on wages of those who keep their jobs. The large amount of debt outstanding is another issue of concern.

Figure 17. Author's view of how various limits might work together to produce different symptoms.

Figure 17. Author’s view of how various limits might work together to produce different symptoms.

My personal view is that the most likely scenario is that the various limits will work together to produce secondary effects, and it is the secondary effects that are likely to bring society down. These secondary effects are Financial (wealth disparity, debt defaults, inability to collect enough taxes), Political (not enough taxes, uprising by the lower classes, government collapse) and Disease Susceptibility (inadequate food, medicine, and sanitation due to inadequate wages and government cutbacks).

These effects are similar to ones experienced in the past when economies started reaching resource limits, based on the research of Peter Turchin and Sergey Nefedov reported in the book Secular Cycles. In the past, societies seemed to go through about 300 year cycles. The first was Growth, lasting over 100 years. The second was Stagflation, lasting perhaps 50 or 60 years. This third was Crisis, with population decline, lasting up to 50 years (but perhaps a much shorter time). The fourth was Depression/ Intercycle.

If we estimate that today’s complete cycle started in 1800 with the use of coal, and the Stagflation period started about 1970 with the decline in US oil production, then we now seem to be nearing the Crisis stage. Of course, each situation is different. This is the first time we are reaching resource limits on a world-wide basis.

Figure 18. Government receipts divided by private industry wages, and government expenditures divided by private industry wage, based on BEA data.

Figure 18. Government receipts divided by private industry wages, and government expenditures divided by private industry wage, based on BEA data.

There is considerable evidence that we are already reaching the situation where governments are encountering financial distress of the type shown in Figure 17. With wages being depressing in recent years (Figure 15), it is difficult to collect as much taxes as required. At the same time, expenses are elevated to handle the many issues that arise (such as payments to the unemployed, subsidies for alternative energy, and the higher costs of road repairs due to higher asphalt costs). The big gap between revenue and expense makes it hard to fix our current financial predicament, and increases the likelihood of political problems.

REQUIREMENTS FOR A FUEL TO FIX OUR CURRENT PREDICAMENT

Is it possible to fix our current situation? To really fix the situation, we would need to reproduce the situation we had in the post-World War II period–when energy was cheap, and growing very rapidly. Economists have observed that historically, the cost of energy was very low. Given the importance of energy, its low price was an important feature, not a bug.  It is what allowed society to have plenty of energy for growth, at minimal cost.

In order for a new alternative fuel to truly fix our current predicament, it would need the following characteristics:

  1. Abundant – Available in huge quantities, to meet society’s ever-growing needs.
  2. Direct match for current oil or electricity – Needed to avoid the huge cost of building new infrastructure. Electricity needs to be non-intermittent, to avoid the cost of mitigating intermittency. We also need an oil substitute. This oil substitute theoretically might be generated using electricity to combine carbon dioxide and water to create a liquid fuel. Such substitution would require time and investment, however.
  3. Non-polluting – No carbon dioxide or air and water pollution.
  4. Inexpensive – Ideally no more than $20 or $30 barrel for oil equivalent; 4 cents/kWh electricity. Figure 15 shows wage growth has historically occurred primarily below when oil was below $30 barrel.
  5. Big energy gain in the process, since it is additional energy that society really needs – This generally goes with low price.
  6. Uses resources very sparingly, since these are depleting.
  7. Available now or very soon
  8. Self-financing – Ideally through boot-strapping–that is, generating its own cash flow for future investment because of very favorable economics.

It is interesting that when M. King Hubbert originally made his forecast of the decline of fossil fuels, he made his forecast as if an alternative fuel would become available in huge quantity, by the time of the decline. His original idea (in 1956) was that the new fuel would be nuclear. By 1976, his view was that the new fuel needed to be some version of solar energy.

What kind of solar energy might this be? Solar panels PV located on the ground are heavy users of resources, because they have a low capacity factor (percentage of the time they are actually collecting sunlight), and because they need to be fairly sturdy, to withstand wind, rain, and hail. Space solar theoretically would be much better, because it is much more sparing in its use of resources–it would have over a 99% capacity factor, and the PV film could be much thinner. Timing for space solar would be a big issue, however, assuming financial issues can be worked out.

Also, even if space solar or some other fuel should provide the fuel characteristics we need, we still need to address the population issue. As long as world population keeps rising,  humans are an increasing strain on earth’s resources.

183 thoughts on “Our Energy Predicament in Charts

  1. This reality is so depressing, and everyone I speak to about it thinks Im some crazy conspiracy theorist. Most people cant bare to accept even most of the basic facts.

    • Speaking of conspiracies.
      I always wondered: why were the Oil Sheiks exporting their one time wealth for relatively few paper dollars during the period between and after the oil shocks of the 1970’s and 1980’s? Oil became dirt cheap for almost two decades. Were they doing it in exchange for military protection? Seemed insufficient as a reason. Were they just naive, corrupt elites like some African despotic regimes? Maybe not.
      This most elegant “conspiracy” (it’s more like a deal) goes like this: They are doing it only as long as they get a fixed part of the oil value in physical gold (for real savings), while using the paper dollars for immediate consumption. The West was supplying this gold directly to them at a premium ever since 1971, avoiding the open gold market in order not to drive the price up – that was “the deal”. Of course, at a fixed percentage of oil value (say 10%) that connects the oil price to the gold price. Then in the 1990’s, the Chinese got into the game, right at the time when central bank gold selling became more difficult anyway, and the deal started to fail, threatening the petro dollar and cheap oil. Western traders also became aware of a gold/commodity “bull market” and took more supply off the market. The gold price startet rising. But the Sheiks still wanted their share of physical gold. So the oil price went up together with gold. Looking at the gold-oil ratio shows flucutations around an average of around 2,3. In terms of gold, oil is at the price of 1950.
      Now, when “all paper burns” and the dollar loses reserve status, the Sheiks will still want their gold, or else they leave the oil in the ground. Then, oil will become very cheap if you have gold, or very expensive if you don’t.
      Another implication: we are using unconventional oil sources because a) it makes economic sense at these prices, b) because we don’t want or are unable to spend enough physical gold and c) a global depression with continuing high oil prices makes the system go on even longer.
      The new jet-setting elite could very well consist of Indian ladies and German gold savers as well.
      All this can be found at FOFOA, it’s not me being a genius, and it is much more complex than described here.

      • I am sorry, I have not been following the physical gold for oil story. I do know that quite a few countries (Saudi Arabia, Russia, Venezuela) will need increasing dollar amounts for their oil, just to fund the programs they expect to have. The Sovereign Wealth Funds that have been set up will, in fact, be worth considerably less than expected, because of problems related to lack of oil growth. So these countries need lots of money now, gold or no gold.

        • Interesting perspective / arguments.

          On another account: The exporters need rising oil prices to finance what they what to do or promised their people to do. The right timing for a official note on peak-oil 😉

        • “…will need increasing dollar amounts for their oil”
          The point is, knowing the dollar so well, they want something else 🙂

    • @ain

      Yes, and because it is so, most people want NOT to go into that thought direction. A well know german forum that also discusses these topics hat a quite line that basically translated to: “Those who fully understand, losse the will to life”. Some can handle that and search for solutions to prolong – but must of our current society that is centered arround consumption and status can’t confront them with the topics discussed here – its simple self protection.

      @SlowRider

      FOFOA is a great place of though, allthrough one does need a whole lot of time to follow that route. Nevertheless, I think that Au might be part of the next world currency – but if that comes true, all nations may confiscate private Au like the US in 1933. A system like Keynes Bancor may be a solution, but if push comes to shove thrust will have eroded and only hard thinks will matter for a lot of international trade.

      On another account, the Saudis have realized that they might need the rest of what is there for themself – or at least – stretch it out for the next generations to come: http://arabmoneymatters.com/saudi-king-halt-to-oil-exploration-to-save-wealth/. They know – we know – everyone who wants to know knows!

      • The Saudis are also running out of water and have no means to feed themselves. Apparently they are buying up land in Africa but for those agreements to work [like a guarantee of no revolution and repatriation of land] the host nations will be looking for better oil deals. The west has technology and military might [although in the last days of Rome it didn’t help them] and the Saudis will need allies. Perhaps the west will be ignored in favour of India/china and Africa and the more they are empowered with the last of fossil wealth the more the West has to come up with the tech that made us top in the first place.

        • Oil is the ultimate barter. Military mighty or gold are only substitutes – or better said a worse derivate of oil. If the Saudis are not stupid, they will preserve part of their oil barter capability, since they have no way of sustaining themselfes otherwise.

    • Reality is hard to take: propaganda and advertising are so much more agreeable!

      One of my customers is a very senior businesman who has also been in government: in the last year he has gone from being blandly reassuring (‘just wait for the cycle to come round and it will pick up’) to looking quite rattled and anxious.

      He did say to me, that he has always found that when things are really bad, people just stop looking at the problem, and that’s when the really bad decisions are made.

      On the whole, it’s best not to raise the topic unless asked: or you’ll be labelled a ‘doomer’ or ‘prepper’!

    • In some ways, I don’t blame people. The story doesn’t have a happy ending unless a Higher Power intervenes, and somehow sorts this out for us. I am not willing to entirely discount this possibility, since there are fewer other options that really work.

      If there were things we could easily do to fix the situation (or even not-so-easily do), the situation would be better. I think a lot of what passes for mitigation now is a waste of time and money. and may even make things worse.

  2. One way the world’s population problem could be solved would be for the relationship between Russia and the U.S.A. to break down completely. It cannot have escaped anyone’s notice that the peace that broke out in the eighties is only a shadow of its former self. That we have a coming fight for resources to contend with is food for thought.

    The problem lies in the fact that modern nuclear weapons – specifically the MX and Trident D5 missiles – are obviously counter-force weapons and thus designed to deliver a pre-emptive first-strike. They are not intended to deter, not even Iran, who is more likely to deliver them in the boot of a car or the keel of a yacht than by a missile of known origin. We have moved away from the ‘blunderbusses’ (represented by the old Poseidon and Trident C4 missiles) to the snipers’ rifles represented by the current generation. The only ‘sensible’ policy is to fire first and fire them all at the first sign of trouble. Gone is the Pyrrhic victory. It has been replaced by one of ‘winner take all’. While it would make sense to ban MIRV delivery systems, and thus destroy any hope of a successful pre-emptive first-strike, there is no political will to address the nuclear weapons issue, even despite their new hair-trigger launch status.

  3. Pingback: Our Energy Predicament in Charts | PRACTICAL TACTICAL

  4. Seems to me that one of the worst things than could happen to us is that we do discover a clean, renewable, portable, cheap, energy source. It would undoubtedly remove all concerns about limits that some people (yes, even politicians and business folk) are beginning to recognize. Then it would be full-speed ahead and economic growth would continue its steamroller effect on ecosystems and their biodiversity, severely reducing their ability to function and provide the life support services of the planet. At a time when ecologists have pointed out that we need to preserve at least 50% of all ecosystems in their natural state in order to supply sufficient ecosystem services, we’re still looking to economic growth to solve our economic and environmental problems, the very thing that’s causing them. Homo sapiens, indeed.

    • Absolutely Correct! A cheap inexhaustible supply of energy will mean BAU growth forever or until it destroys what’s left of the planet. Let’s hope that this technology, if it is possible ,comes with STRICT population decline mandates back to a very low 1 billion. But of course this will NEVER happen.

      • Not sure how to call that meeting of the world’s peoples and tell all that we’re cutting back on lots of things, including certain tubes in the bodies of both genders. Any acceptable solutions?

    • We are in a tough spot. No matter what we do, we can’t win. More fuel does theoretically have a chance of putting off the day of reckoning for a while, but then we hit a different limit.

  5. To nkdawe: A few observations.

    1. Societies begin to restrict their populations naturally after they reach a certain economic level. We’ve seen this repeatedly for more than a few generations. However, as long as people remain poor, uneducated and needy, they tend to pop out more babies. Japan is looking at cutting its population from 150 million to 85 million (I think those numbers are right).

    2. A clean, renewable, abundant, portable, cheap energy source — such as a good battery or supercapacitor charged by a very inexpensive electrical system (five pennies per kwh) could seriously affect the global economy.

    3. Among other things, water purification and pumping will require plenty of power, the cheaper the better.

    4. Reforestation and vertical farms in urban settings can both be undertaken if adequate water and power are available.

    5. As long as extracted minerals are prized as fuels, the environmental threat will remain.

  6. Gail; The critical parameter on energy & standard of living of a civilisation is the net energy available per capita.
    This applies on a per country basis as well as globally. Countries with a marked decline of living standards such as Haiti, Egypt etc will have marked declines in the per capita availability of net energy.
    This is the true parameter that each country & the world as a whole needs to watch very closely. It is negatively affected by both a decline in available net energy AND population increase. Both effects now in serious cumulative trends..
    If you have data on this it would be a fabulous report for you to publish.
    Thank you so much for this report. This is the major parameter of our (& every) civilisations decline.
    More please.
    wotfigo

    • Thanks, I fixed it. I don’t usually include numbers in titles of charts, so I don’t usually do much checking of them (beyond what spell-check gives). Spell check isn’t good on numbers.

  7. The mention of conspiracies brings to mind the need to risk assess the situation. I have been anti- apocalyptic attitudes for years but find my self informed to a point of ‘alarm’. I don’t see the solution as a survivalist [guns and bible] mentality or getting back to nature although I have recently switched to horticulture as a living. A green solar home has always made sense as I would rather spend the money on fun things and it occurs to me that now is the time to shop for the long term as well as enjoy the fruits of cheap travel and out of season food.

    It would be a real shame to get to a point in a few years when I would look back and think ‘why did I not travel more, eat more exotic food and benefited from humanities 2 short centuries of abundance.

    But risk assessment is key. a 3-5% decline will mean the end to growth but we will be still very wealthy. Sure, the pretend wealth of the derivatives market may fall apart but perhaps not as the super rich will still visit their casino. Social divide between the poor and the rest of society will always be the issue in any country but this could happen without peal oil/climate change as societies decline just like Greece is currently going through and have other nations at the expense of new up and coming nations like BIC.

    We are not going to run out of food as around twice as much food per person is produced, it is just the rich put the extra half into meat production. Countries like Egypt which do not have the means to feed their growing and youthful population will see more extremism which may get exported along with refugees and migrants.

    The west won’t run out of fuel- we will just spend more on it or use less. Europe pays twice the price for fuel than the US but owns cars that do twice the mileage and invest in rail with public funds.

    And even if diesel were 4 or 5 times the cost my tractor does more work than a person for a quarter of the cost.

    We will have to get used to the idea that our homes will be worth less, and that we need to do something useful to earn $200/£150 a day. We may need to learn to work less for less pay otherwise we will spend all our taxes on the police and social services.

    • “a 3-5% decline will mean the end to growth”
      The end of growth means the USA is bankrupt.
      “we will still (be) very wealthy”
      Well, that’s good. What will your wealth consist of? Remember, the USA is bankrupt, along with pretty much every other government of consequence, so what will you be buying diesel with? Currency as you know it will not exist. Will you barter for fuel? Pay in gold or silver? And what currency will those workers out there, getting that fuel out of the ground and refined and delivered to your tractor be using? Will they be paid in goats?

      • wealth is an abstract concept, the only real measure of it is the amount of work you can buy for what you have to offer in exchange for it. ie barter, …..I will exchange this pig for your labour in fixing my roof. So you get the food energy from the pig which gives you the muscle energy to fix my roof, with some excess to feed your wife and kids at home.
        Not having a leaky roof means I can conserve my energy by using less to keep warm and dry and healthier.
        So wealth is clearly the ability to buy and exchange energy in one form or another for mutual benefit.
        Few people realise that we have an energy exchange system, not a money exchange system.
        No matter how far removed from energy sources, or how high flown and sophisticated you think your employment is, that is how our ‘civilisation’ functions.
        We trade energy with one another. Money is just an abstract token of that exchange, it has no value without the certainty of energy input. This is why industrial nations are bankrupt, because the certainty of energy input (ie cheap oil) is no longer there.
        We cannot support an economy built on cheap oil by using expensive oil, but our leaders borrow money to convince us that we can. (and to keep their jobs of course)
        Blame the bankers and politicians all you want, but ultimately our problems are due to energy costs.
        If you can’t sustain an energy exchange system in some way roughly along those lines, then ultimately you have to gather your own energy from your immediate environment.
        And that makes you a hunter-gatherer. Just how legal that will be in our future depends where you do your gathering I guess

        • EOM, I agree with and am aware of everything you are saying here. My point was really that of course running an oil-based, energy-intensive civilization is not going to be possible based on goat exchange.

        • not a lot, given our current environment
          in a hunter gatherer situation, your wealth in that context was entirely dependent on physical prowess. You killed better, ate better became physically stronger and in so doing attracted the most breeding females and passed on your characteristics.
          In our money orientated situation, in the broadest sense wealth and/or intellect attracts the best females, because, like it or not, your wealth will give her offspring the best start in life. Hunting skills are no longer important, but it explains bimbos on the arm of billionaires and otherwise dim footballers.
          so wealth begets wealth, so for instance you have generations of Rothschilds going back to the 18th c, or monarchies passing down their wealth by heredity.
          Slowly the wealth accumulates in bigger and bigger pools controlled by fewer and fewer
          people.
          When an explosive tipping point is reached, there’s a revolution, the tumbrils roll and everybody expects a share of the spoils, But it doesnt work like that. The smartest revolutionaries just take over the vacancies left by the aristos, and it starts over again
          Its called human nature.

          • Is it not true that revolutions are sustained by the flesh and energy of their members? What is remarkable about the most recent agglomeration of wealth in the USA is that it happened so quickly, within a decade.

        • it is true yes, and the flesh of the revolutionaries is being torn apart right now in Syria, and across the middle east.
          I think the speed of it is just the function of the way the financial system is working at this time, it’s an acceleration into oblivion because those accumulating wealth are convinced that money is wealth and energy is a side issue, when in fact the reverse is true,
          Ultimately you can’t eat money, and I think it will inevitably come to that as cash gets totally devalued

          • I know of a very wealthy – and very disagreeable – man who likes to ‘joke’: ‘Friends? I’ve got millions and millions of them: little green foldable ones!’

            Not being able to buy anything with those green friends certainly has never occurred to him, and he certainly takes on-tap power for granted, as – to be frank – we all more or less do if brought up in the second half of the 20th century, historical anomaly as it is.

      • Well yes the end of growth does mean those in debt will have no means to pay it back but it also means those that have lent money have no means of reclaiming it. The financial world has been running a confidence trick for the last few years- which begs the question as to how the world revalues its self.

        Real wealth are the skills, technology, services and resources a nation has. 2008 crisis was the trailer to the coming main feature- all the QE- bail-outs and extra borrowing are fake solutions based on a future of growth that might not exist. But countries will still have real value wealth, they will still produce technology, food, energy and finished goods- what will be in question is the financial sector as well as the consumer reliant wealth. in the UK too much growth has simply been in the retail/consumer sector based on imagined wealth of property prices. The idea of people buying their way into growth seemed absurd even before peak oil or AGW.

        The future will be interesting!

      • “The end of growth means the USA is bankrupt.”
        And was bankrupt from the point in time when debt rose faster than growth.
        They will print their way out Weimar Style.

        • talkin about going broke—run out of energy and you run out of money an all
          has anyone caught up on todays EU news?
          Cyprus, an EU member, has just lifted 10% out of everybody’s bank account to pay its EU bailout
          That cuts out the argument about whether banks are just doing creative accounting, or just plain robbing their customers. the Cypriots don’t mess about, they just stick up their own banks

          • Regarding Cyprus, should we not be careful and first determine who was assaulting whom? One can almost expect Greek Cypriots to proclaim Turkish Cypriot banks are theirs for the plucking, and vice versa. Or perhaps they hit some of those banks that have been receiving major transfers from wealthy and somewhat unscrupulous Chinese wealthies (more billionaires last year than anywhere else…) that have been shifting their funds there.

          • Yes, I read that, just some hours ago, really a nice robbery.
            But ECB does it’s single mandate perfectly: maintain 2% inflation (and patiently wait for dollar collapse). No overprinting until now! Remember Draghi said he will save the Euro, but not that he will protect individual countries and their debt. They are given the choice between exit and austerity. The first governments on earth who cannot print their currency, that’s the secret. And until now, everybody wants to stay in! Moderate inflation is part of the plan. I repeat, no overprinting, just what was necessary for saving the crazy banking system. They are smart and successful. Gail as most Americans is pessimistic about the Euro – time will tell!

            • It will be interesting to see how this all works out. There are a lot of other countries and banks with problems not that different from Cyprus’.

          • Cyprus seems to be panning out in a sort of economic parallel with a lot of stuff discussed on here in a number of posts—in ways nobody had anticipated. who would have imagined that a bank would rob its own customers—must be a first?
            But maybe it’s given the world the nasty jolt it needed, suddenly all the world’s banks can be seen to be supporting a ponzi scheme
            So perhaps we should thank cyprus

            • Somebody has to be first.

              In the US (and a lot of lot of other places) there are ultra-low interest rates. This is good for some segments of the market (real estate, buyers of cars, investors in businesses, governments paying interest on debt) but is a disaster for other segments (pensions with guaranteed payouts, some bank products dependent on differences in long-term and short-term interest rates, long term care health insurance). The ultra low interest rates also cause bubbles that are likely to break, if interest rates ever go up again. So a rise in these low interest rate is one potential source of problems. Another is defaults related to the low interest rates. The US Pension Benefit Guarantee Corporation guaranties pensions, but doesn’t collect enough premiums. It seems like the Federal Government may need to print money to cover its obligations. At some point, all of the money printing becomes too much.

        • That should read: ‘They will print, Weimar style, to postpone the inevitable for a bit longer.’

          For people wanting to continue their affluent lifestyles, that is what they’ll want to. “Nobody ever rioted for austerity”.

          • Of course, it’s not really what you would call a sustainable solution 🙂
            But they might avoid nominal bankruptcy somehow. Just close the system down for national security and then reset with austerity FOR GOOD.

      • Bankrupt governments devalue their currency so we won’t be bartering, home grown goods should remain stable but imports will become expensive. The US is at least food self sufficient but most of Europe is not. I think Africa which is less susceptible to globalisation will turn the tables on the west and sell it food and resources – how shall say- competitively.

  8. Pingback: Our Energy Predicament in Charts | Doomstead Diner

  9. You might also enjoy Elizabeth Warren’s talk of a few years ago, titled “The Coming Collapse of the Middle Class.” This has been building for more than a decade, and it appears to be getting worse. Are more middle class going bankrupt as the richest few get richer and fewer? Is anyone publishing or announcing the truth?

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