Rising Energy Costs Lead to Recession; Eventually Collapse

How does the world reach limits? This is a question that few dare to examine. My analysis suggests that these limits will come in a very different way than most have expected–through financial stress that ultimately relates to rising unit energy costs, plus the need to use increasing amounts of energy for additional purposes:

  • To extract oil and other minerals from locations where extraction is very difficult, such as in shale formations, or very deep under the sea;
  • To mitigate water shortages and pollution issues, using processes such as desalination and long distance transport of food; and
  • To attempt to reduce future fossil fuel use, by building devices such as solar panels and electric cars that increase fossil fuel energy use now in the hope of reducing energy use later.

We have long known that the world is likely to eventually reach limits. In 1972, the book The Limits to Growth by Donella Meadows and others modeled the likely impact of growing population, limited resources, and rising pollution in a finite world. They considered a number of scenarios under a range of different assumptions. These models strongly suggested the world economy would begin to hit limits in the first half of the 21st century and would eventually collapse.

The indications of the 1972 analysis were considered nonsense by most. Clearly, the world would work its way around limits of the type suggested. The world would find additional resources in short supply. It would become more efficient at using resources and would tackle the problem of rising pollution. The free market would handle any problems that might arise.

The Limits to Growth analysis modeled the world economy in terms of flows; it did not try to model the financial system. In recent years, I have been looking at the situation and have discovered that as we hit limits in a finite world, the financial system is the most vulnerable part of the system because it ties everything else together. Debt in particular is vulnerable because the time-shifting aspect of debt “works” much better in a rapidly growing economy than in an economy that is barely growing or shrinking.

The problem that now looks like it has the potential to push the world into financial collapse is something no one would have thought of—high oil prices that take a slice out of the economy, without anything to show in return. Consumers find that their own salaries do not rise as oil prices rise. They find that they need to cut back on discretionary spending if they are to have adequate funds to pay for necessities produced using oil. Food is one such necessity; oil is used to run farm equipment, make herbicides and pesticides, and transport finished food products. The result of a cutback in discretionary spending is recession or near recession, and less job availability. Governments find themselves in  financial distress from trying to mitigate the recession-like impacts without adequate tax revenue.

One of our big problems now is a lack of cheap substitutes for oil. Highly touted renewable energy sources such as wind and solar PV are not cheap. They also do not substitute directly for oil, and they increase near-term fossil fuel consumption. Ethanol can act as an “oil extender,” but it is not cheap. Battery powered cars are also not cheap.

The issue of rising oil prices is really a two-sided issue. The least expensive sources of oil tend to be extracted first. Thus, the cost of producing oil tends to rise over time. As a result, oil producers tend to require ever-rising oil prices to cover their costs. It is the interaction of these two forces that leads to the likelihood of financial collapse in the near term:

  1. Need for ever-rising oil prices by oil producers.
  2. The adverse impact of high-energy prices on consumers.

If a cheap substitute for oil had already come along in adequate quantity, there would be no problem. The issue is that no suitable substitute has been found, and financial problems are here already. In fact, collapse may very well come from oil prices not rising high enough to satisfy the needs of those extracting the oil, because of worldwide recession.

The Role of Inexpensive Energy

The fact that few stop to realize is that energy of the right type is absolutely essential for making goods and services of all kinds.  Even if the services are simply typing numbers into a computer, we need energy of precisely the right kind for several different purposes:

  1. To make the computer and transport it to the current location.
  2. To build the building where the worker works.
  3. To light the building where the worker works.
  4. To heat or cool the building where the worker works.
  5. To transport the worker to the location where he works.
  6. To produce the foods that the worker eats.
  7. To produce the clothing that the worker wears.

Furthermore, the energy used needs to be inexpensive, for many reasons—so that the worker’s salary goes farther; so that the goods or services created are competitive in a world market; and so that governments can gain adequate tax revenue from taxing energy products. We don’t think of fossil fuel energy products as being a significant source of tax revenue, but they very often are, especially for exporters (Rodgers map of oil “government take” percentages).

Some of the energy listed above is paid for by the employer; some is paid for by the employee. This difference is irrelevant, since all are equally essential. Some energy is omitted from the above list, but is still very important. Energy to build roads, electric transmission lines, schools, and health care centers is essential if the current system is to be maintained. If energy prices rise, taxes and fees to pay for basic services such as these will likely need to rise.

How “Growth” Began

For most primates, such as chimpanzees and gorillas, the number of the species fluctuates up and down within a range. Total population isn’t very high. If human population followed that of other large primates, there wouldn’t be more than a few million humans worldwide. They would likely live in one geographical area.

How did humans venture out of this mold? In my view, a likely way that humans were able to improve their dominance over other animals and plants was through the controlled use of fire, a skill they learned over one million years ago  (Luke 2012).  Controlled use of fire could be used for many purposes, including cooking food, providing heat in cool weather, and scaring away wild animals.

The earliest use of fire was in some sense very inexpensive. Dry sticks and leaves were close at hand. If humans used a technique such as twirling one stick against another with the right technique and the right kind of wood, such a fire could be made in less than a minute (Hough 1890). Once humans had discovered how to make fire, they could use it to leverage their meager muscular strength.

The benefits of the controlled use of fire are perhaps not as obvious to us as they would have been to the early users. When it became possible to cook food, a much wider variety of potential foodstuffs could be eaten. The nutrition from food was also better. There is even some evidence that cooking food allowed the human body to evolve in the direction of smaller chewing and digestive apparatus and a bigger brain (Wrangham 2009). A bigger brain would allow humans to outsmart their prey. (Dilworth 2010)

Cooking food allowed humans to spend much less time chewing food than previously—only one-tenth as much time according to one study (4.7% of daily activity vs. 48% of daily activity) (Organ et al. 2011). The reduction in chewing time left more time other activities, such as making tools and clothing.

Humans gradually increased their control over many additional energy sources. Training dogs to help in hunting came very early. Humans learned to make sailboats using wind energy. They learned to domesticate plants and animals, so that they could provide more food energy in the location where it was needed. Domesticated animals could also be used to pull loads.

Humans learned to use wind mills and water mills made from wood, and eventually learned to use coal, petroleum (also called oil), natural gas, and uranium. The availability of fossil fuels vastly increased our ability to make substances that require heating, including metals, glass, and concrete. Prior to this time, wood had been used as an energy source, leading to widespread deforestation.

With the availability of metals, glass, and concrete in quantity, it became possible to develop modern hydroelectric power plants and transmission lines to transmit this electricity. It also became possible to build railroads, steam-powered ships, better plows, and many other useful devices.

Population rose dramatically after fossil fuels were added, enabling better food production and transportation. This started about 1800.

Figure 1. World population based on data from "Atlas of World History," McEvedy and Jones, Penguin Reference Books, 1978  and Wikipedia-World Population.

Figure 1. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and UN Population Estimates. 

All of these activities led to a very long history of what we today might call economic growth. Prior to the availability of fossil fuels, the majority of this growth was in population, rather than a major change in living standards. (The population was still very low compared to today.) In later years, increased energy use was still associated with increased population, but it was also associated with an increase in creature comforts—bigger homes, better transportation, heating and cooling of homes, and greater availability of services like education, medicine, and financial services.

How Cheap Energy and Technology Combine to Lead to Economic Growth

Without external energy, all we have is the energy from our own bodies. We can perhaps leverage this energy a bit by picking up a stick and using it to hit something, or by picking up a rock and throwing it. In total, this leveraging of our own energy doesn’t get us very far—many animals do the same thing. Such tools provide some leverage, but they are not quite enough.

The next step up in leverage comes if we can find some sort of external energy to use to supplement our own energy when making goods and services.  One example might be heat from a fire built with sticks used for baking bread; another example might be energy from an animal pulling a cart. This additional energy can’t take too much of (1) our human energy, (2) resources from the ground, or (3) financial capital, or we will have little to invest what we really want—technology that gives us the many goods we use, and services such as education, health care, and recreation.

The use of inexpensive energy led to a positive feedback loop: the value of the goods and service produced was sufficient to produce a profit when all costs were considered, thanks to the inexpensive cost of the energy used. This profit allowed additional investment, and contributed to further energy development and further growth. This profit also often led to rising salaries. The additional cheap energy use combined with greater technology produced the impression that humans were becoming more “productive.”

For a very long time, we were able to ramp up the amount of energy we used, worldwide. There were many civilizations that collapsed along the way, but in total, for all civilizations in the world combined, energy consumption, population, and goods and services produced tended to rise over time.

In the 1970s, we had our first experience with oil limits. US oil production started dropping in 1971. The drop in oil production set us up as easy prey for an oil embargo in 1973-1974, and oil prices spiked. We got around this problem, and more high price problems in the late 1970s by

  1. Starting work on new inexpensive oil production in the North Sea, Alaska, and Mexico.
  2. Adopting more fuel-efficient cars, already available in Japan.
  3. Switching from oil to nuclear or coal for electricity production.
  4. Cutting back on oil intensive activities, such as building new roads and doing heavy manufacturing in the United States.

The economy eventually more or less recovered, but men’s wages stagnated, and women found a need to join the workforce to maintain the standards of living of their families.  Oil prices dropped back, but not quite a far as to prior level. The lack of energy intensive industries (powered by cheap oil) likely contributed to the stagnation of wages for men.

Recently, since about 2004, we have again been encountering high oil prices. Unfortunately, the easy options to fix them are mostly gone. We have run out of cheap energy options—tight oil from shale formations isn’t cheap. Wages again are stagnating, even worse than before. The positive feedback loop based on low energy prices that we had been experiencing when oil prices were low isn’t working nearly as well, and economic growth rates are falling.

The technical name for the problem we are running into with oil is diminishing marginal returns.  This represents a situation where more and more inputs are used in extraction, but these additional inputs add very little more in the way of the desired output, which is oil. Oil companies find that an investment of a given amount, say $1,000 dollars, yields a much smaller amount of oil than it used to in the past—often less than a fourth as much. There are often more up-front expenses in drilling the wells, and less certainty about the length of time that oil can be extracted from a new well.

Oil that requires high up-front investment needs a high price to justify its extraction. When consumers pay the high oil price, the amount they have for discretionary goods drops.  The feedback loop starts working the wrong direction—in the direction of more layoffs, and lower wages for those working. Companies, including oil companies, have a harder time making a profit. They find outsourcing labor costs to lower-cost parts of the world more attractive.

Can this Growth Continue Indefinitely?

Even apart from the oil price problem, there are other reasons to think that growth cannot continue indefinitely in a finite world.  For one thing, we are already running short of fresh water in many parts of the world, including China, India and the Middle East.  Topsoil is eroding, and is being depleted of minerals. In addition, if population continues to rise, we will need a way to feed all of these people—either more arable land, or a way of producing more food per acre.

Pollution is another issue. One type is acidification of oceans; another leads to dead zones in oceans. Mercury pollution is a widespread problem. Fresh water that is available is often very polluted. Excess carbon dioxide in the atmosphere leads to concerns about climate change.

There is also an issue with humans crowding out other species. In the past, there have been five widespread die-offs of species, called “Mass Extinctions.” Humans seem now to be causing a Sixth Mass Extinction. Paleontologist Niles Eldredge  describes the Sixth Mass Extinction as follows:

  • Phase One began when first humans began to disperse to different parts of the world about 100,000 years ago. [We were still hunter-gatherers at that point, but we killed off large species for food as we went.]
  • Phase Two began about 10,000 years ago, when humans turned to agriculture.

According to Eldredge, once we turned to agriculture, we stopped living within local ecosystems. We converted land to produce only one or two crops, and classified all unwanted species as “weeds”.  Now with fossil fuels, we are bringing our attack on other species to a new higher level. For example, there is greater clearing of land for agriculture, overfishing, and too much forest use by humans (Eldredge 2005).

In many ways, the pattern of human population growth and growth of use of resources by humans are like a cancer. Growth has to stop for one reason or other—smothering other species, depletion of resources, or pollution.

Many Competing Wrong Diagnoses of our Current Problem

The problem we are running into now is not an easy one to figure out because the problem crosses many disciplines. Is it a financial problem? Or a climate change problem? Or an oil depletion problem? It is hard to find individuals with knowledge across a range of fields.

There is also a strong bias against really understanding the problem, if the answer appears to be in the “very bad to truly awful” range. Politicians want a problem that is easily solvable. So do sustainability folks, and peak oil folks, and people writing academic papers. Those selling newspapers want answers that will please their advertisers. Academic book publishers want books that won’t scare potential buyers.

Another issue is that nature works on a flow basis. All we have in a given year in terms of resources is what we pull out in that year. If we use more resources for one thing–extracting oil, or making solar panels, it leaves less for other purposes. Consumers also work mostly from the income from their current paychecks. Even if we come up with what looks like wonderful solutions, in terms of an investment now for payback later, nature and consumers aren’t very co-operative in producing them. Consumers need ever-more debt, to make the solutions sort of work. If one necessary resource–cheap oil–is in short supply, nature dictates that other resource uses shrink, to work within available balances. So there is more pressure toward collapse.

Virtually no one understands our complex problem. As a result, we end up with all kinds of stories about how we can fix our problem, none of which make sense:

“Humans don’t need fossil fuels; we can just walk away.” – But how do we feed 7 billion people? How long would our forests last before they are used for fuel?

“More wind and solar PV” – But these use fossil fuels now, and don’t fix oil prices.

“Climate change is our only problem.”—Climate change needs to be considered in conjunction with other limits, many of which are hitting very soon. Maybe there is good news about climate, but it likely will be more than offset by bad news from limits not considered in the model.

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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606 Responses to Rising Energy Costs Lead to Recession; Eventually Collapse

  1. Chris Johnson says:

    @ Andrew Gray:
    Happy Veteran’s Day, Andrew. There are some things I would say that may be inappropriate for this public forum. I would appreciate you shouting at me at cwjwashdc@gmail.com.
    Cheers, Chris

  2. Andrew Gray says:

    @ Chris Johnson

    Chris, I must admit that I do not see “more of the same” after 20-25 years. I see this, which was published in Nat Geo:
    However, (IMHO) the Great Collapse of 2030 (as seen in the graph) has been put off until 2040 because of the fracking boom in oil and gas. You see, as Gail has pointed out, economic collapse and cheap energy disappearance go hand-in-hand. So luckily, I will be 84 by the time of the Great Collapse of 2040. The 9,000,000,000 people on Earth at that time will be some of the most unfortunate in the history of mankind. I just do not see humanity as an optimist right now. The lead nation on Earth right now, the United States, has far too many SHEEPLE and greedy corporations. So I do not see a turnaround in my crystal ball. NO GENERATION wants to be THE generation that stops the “exponential economic growth and exploitation” cycle and then suffers the consequences. And many people of good “religious character” are STILL calling for more human “economic growth” to supply more jobs to those “poor working families”. But Poor Mother Earth should be a MUCH GREATER CONCERN. The “be fruitful and multiply crowd” is going to win out over the Greenpeace crowd, mark my word. This “more of the same” majority has doomed the coming generations to a Dark Age. I think that the only change that can come now is “change by crisis” or “change after collapse”.

    Chris, are you young enough to be affected? If so, how do you feel about moving to the country and surviving on a small farm, defending your vegetables from marauding/starving migrants? Does your religious background allow you to share so they take all of your corn at the expense of your family? Or will you blast a hole in one of the marauders’ heads at 60 yards with a high powered rifle and then dispose of the body after the rest have run off? Or if your grandson gets antibiotic resistant tuberculosis, will you let him suffer unmercifully as he dies, or will you “put him out of his misery” and euthanize him? Religious morals and choices get more extreme and difficult in a Dark Age, now don’t they Chris? What say you?

    Andrew Ancel Gray

    P.S. I am not familiar enough with the Old Testament to make the analyses that you request. And even tho’ I am not religious, I would tend to think that the “turn-the-other-cheek” man has more relevant things to say than the writers of the Old Testament about the coming Great Collapse. Perhaps his philosophy will become much more relevant again when we go back to regional tribal government and desperate gangs roving the countryside (until the human population gets back into equilibrium with non-cheap-oil-supported-levels).

  3. Chris Johnson says:

    @ Andrew Gray:

    Thanks for the challege and the citation, which I duly googled and read. I could have given you a Tang poem in characters to get a similar effect — but I can’t do those anymore either. I’m impressed not only with your engineering and scientific inclinations, but that you also studied a difficult foreign language, albeit one of limited utility — unless you’re a genuine optimist…

  4. Chris Johnson says:

    @ Andrew Gray:
    What do I see after 5 or 10 or 20 years? More of the same, but with some changes, mostly moderate and mostly based on ideals that architects and artists concocted. As far as human behavior is concerned, that won’t change much. Humanity will scrape by, and might even make some big strides.
    Your comments about nuclear fusion triggered my view that ‘science is always wrong, by definition.’ A lot of people’s nose gets out of joint when they hear this, but when you think that science is always improving its and our understandings, it means that the previous understandings were wrong. Ergo, science is always wrong. That’s a good thing.
    If you were to compare Deuteronomy with Blade Runner, which would you say is more gruesome? Are you capable of comparing Deuteronomy with 2nd Kings (latter days and the fall)?
    If you have studied this, then you’ll agree that the fearful warnings in Deuteronomy were far less gruesome than what actually transpired. Why is that important? Maybe it’s not, but maybe we should consider that the warnings of Deuteronomy apply to us as well, and that the Almighty can unleash His wrath, or the final days, whenever He chooses. For those (mostly non-believers) who are offended by the ‘vicious god of the bible’, I can only offer the discomfort that the actuality will likely be much more severe than the warning for those who choose to disregard His Word.
    In another sense, Is it worth trying to combine biblical with scientific or science fiction ‘end of days’? I don’t know, of course. Nor do I know if it’s even worthwhile asking such questions; scripture warns against trying to predict the day or the hour.
    And finally, should any contributor to this blog be allowed to force his personal religious opinions on others? I don’t know. All I do know is that nobody is forcing anyone else to read anything. If I have offended, I apologize. And I promise to read whatever responses may arrive.
    How about you, Andrew? What do you see?
    Cordially, Chris

  5. Justin Williams says:

    I believe we have a comfort problem, we humans are highly insecure in our ability to perform at our full potential. Discontinuing consuming resources is an uncomfortable thought and quality of life diminishing isn’t believed to be an option.

  6. Chris Johnson says:

    @ Andrew Gray
    “What do you see?” Well, sir, I have to admit that I see snapshots rather than moving picture video, and a fair amount of them are from decades ago. If one tries to reconcile or combine influences such as ‘Blade Runner’ with Deuteronomy, the results can be explosive. How much Heinlein have you read? Do any of his paradigms fit any of the more likely futures that we can conjure up today? You want some fodder to blast away at? Okay, here are some ‘potentials’ unfettered by recent economic / political history.

    But first, let me ask a few questions: How many serious ‘look ahead’ think tanks are out there squeezing the high IQ brains of people who are actually getting paid to think about these issues?

    How many years will it take us to really solve the energy conundrum? (And I don’t mean solar and wind, but genuine deep hot rock geothermal and fusion.) US Department of Energy pointed out that there is 50 thousand times as much energy at 10 km depth than all the fossil fuel in the world. This should be that difficult, but we’re still working with 300 degree water and 10% efficiency rankine engines. Which leaves the idiot politicians and the wind and solar barons in place to peddle their very inefficient wares.

    How many years will it take to develop a system to grow graphene sheets that can be used to build structures? Of all types: boats, cars, aircraft, spacecraft, space ladders and elevators, etc.
    And use to make batteries and electronic devices of all sorts that can replace (or inexpensively substitute for) silicon, Rare Earth Elements, as well as power storage and propulsion systems.

    For those who are not familiar with graphene, please google it. It’s one atom thick carbon sheet, hexagonal like chicken wife, and is about 200 times as strong as steel, conveys electrons without friction (no heat build up), can store massive volumes and densities of electrons (the equivalent of a soccer field of electrons in the mass of your thumbnail) and also discharge huge quantities of electrons as power. It also could be used to make a car (or other craft) that weighs just a few hundred kilograms, et cetera, et cetera, et cetera, to quote the King of Siam.

    Graphene and its associated production technologies could provide the kind of very lightweight, very powerful thrust craft that could get us to the moon and Mars affordably. Perhaps further. I won’t waste our time by trying to list all the ‘on earth’ uses.

    How about Warp Drive? Believe it or not, there are people working on it. Ditto with hydrogen fusion power that is scalable and could be adapted to propulsion drives.

    Okay, Andrew, those are some ‘visions’ I can actually see. I also see farmers and peasants all over the world, and the traffic of our wonderful congested freeways and lots of other crap that we’ve managed to screw up badly. I think most of us will tend to share lots of ‘visions’ we’ve accumulated over the years. You got any you’d like to share?

    Cordially, Chris

    • Andrew Gray says:

      @ Chris Johnson
      Well, some of your questions I have credentials to answer (google “theory of intermittent electrons”).
      1) There are not too many high IQ brains out there (IMHO) who are qualified to make future “guestimations”, especially brains blinded by U.S. Propaganda. I think that there are really FEW U.S.ers who actually see what is REALLY coming. So any realistic “guestimations” about the future would have to come from outside the U.S.
      2) Fusion? No. Physics is in a Dark Age. Quantum Mechanics is clueless gobbledygook. They do not have a clue about microscopic reality. I sh#% you not, they even claim that “there is no microscopic reality”. Physicists still do not know what a nucleus is yet, much less how to fuse nuclei together. It will be another generation (or two) before physics pulls its head out. Geothermal has more potential than fusion right now.
      3) Warp Drive? No. Even if a spacecraft could be propelled up to nearly the speed of light, the space wanderer could not “slow down” upon arrival at the destination. He would just fly right by at nearly the speed of light. He would have to take as much mass-energy with him to slow down as he used to speed up in the first place.
      4) Graphene is coming. Electric cars are coming. But NOT fast enough to avert a 15 meter sea level rise. Florida is doomed, as is New York City and New Orleans. So what? By then we will be overrun with 10 BILLION people, no fish in the oceans to speak of, and perhaps economic calamity.

      So Chris, you see lots of “farmers and peasants” along with “lots of highway traffic” and other “screwed up things”. How screwed up do you see things? Are the farmers and peasants armed with rifles guarding their fields for dear life? Is the traffic fleeing the urban jungle for the countryside where all the land is really already spoken for? You really did not complete much of a vision. You just asked more questions. Is your future vision just so cloudy that nothing appears? Or do you see a weird Heinleinian Deuteronomy BladeRunner mixture of a society that you do not really care to think about?
      Andrew Gray

    • We need fossil fuel subsidies to get any of these new ideas to the expandable and workable stage. How long do we really have enough fossil fuel subsidies to do this?

      • Chris Johnson says:

        @ Gail Tverberg

        Gail, Please forgive my thickheadedness, but I don’t understand the use of the word ‘subsidies’ when added to ‘fossil fuel’. Are you saying that the government should subsidize our use of fossil fuels? Or that the government should subsidize the use of ‘energy souces other than fossil fuels’ – – as the government did with solar and wind and some other ‘clean renewables’.
        Good intentions and the road to hell redux; it gets money flowing and politicians elected, what could be better?
        I’m not ready to jump off the Golden Gate Bridge just yet. For the wannabe historians among us, perhaps your next blog could be something like, ‘has humanity ever been in a worse predicament?’

        With admiration, Chris

        • I am saying that fossil fuels provide the subsidies that are needed for all kinds of so-called renewable energy. Without subsidies from fossil fuels, they are dead in the water.

          • Chris Johnson says:

            Thanks Blog Lead. Copy all. I just have insufficient knowledge to address or argue one way or the other. Howsomever, I accept your statement as accurate.
            Cheers, Chris

  7. José from France says:

    “To produce the clothing that the worker wears.”
    I’m OK to go to work naked in summer 😉
    More seriously, do you allow me to translate this paper to french (qutoing my source, of course)?

  8. poorboy says:

    I must say this is a good discussion. Lot’s of viewpoints on the issues and facts, compared with other venues which too often deal in personalities and venom.

    I’d like to illustrate the importance of total life cycle costs with an example in my locale of western Washington state. As a retired engineer, I now enjoy part-time farming. In my area the dairies have been disappearing and moving to eastern Washington, due to a combination of economics and stricter environmental regulations here. This tends to make locally-produced milk more expensive.

    There has been a push by well-meaning local government and environmental activists to reverse this trend and promote “locally grown” food, in large part because “as everyone knows” it reduces transportation fuel resources. What this shallow perspective doesn’t realize is that it costs much more fuel to move (heavy) hay over the Cascades than to move (light) milk! So the higher costs of locally produced milk actually represent not only total life-cycle realities, but also corresponding environmental disadvantages.

    So, another confirmation that total (life cycle) product costs are an importand indicator of efficient use of resources. An enlightening book I’d recommend is “Eco Fads” (subtitle “How the rise of trendy environmentalism is harming the environment”) by Todd Myers. He gives many intriguing examples of similar situations and how they are affected by economics, politics and media coverage.

    • That is a good point. Very often, what is cheapest is in some sense what is “best,” because the cheap cost indicates that the total direct and indirect energy inputs are low. What is claimed to be greenest just has costs that are hidden farther away in the chain, so they are harder to measure.

      The whole trendy environmentalism business seems to be based on the assumption that using a little less is helpful. It doesn’t work for a variety of reasons. One is that people tend to spend their salaries. If they conserve in one area, they are more likely to spend in other areas, and all of the areas use energy.

      The other issue is what kind of problem are we running into. The standard explanation has been that there would be high oil prices, and we would have to use less. This story is right for a while, but in the long run, it isn’t, even if the peak oil community has been backing this story.

      The real story is that oil companies find that they cannot make profits selling energy products because the cheap to extract oil has already been extracted, and what is left is too expensive to get out at prices can afford to pay. Low interest rates and lots of borrowing can hide this for a while, but eventually problems surface (higher interest rates, or defaults, or government shutdown), so they reduce their drilling. We get back to recession and collapse. We end up with many more people without jobs. They can’t buy goods, even if products made with energy are available. We get to many debt defaults, and a failing financial system. The government finds it can’t collect enough taxes from its people. The issue we need really would like to avoid is collapse, but reducing energy use is not helpful for solving this problem. We really need more cheap energy use, creating more jobs, to get away from collapse. But unless we are willing to go with cheap coal (or something pretty much equivalent), it is difficult to solve our problem.

      • Jan Steinman says:

        “The whole trendy environmentalism business seems to be based on the assumption that using a little less is helpful.”

        “At best, it [conservation] means we will run out of energy a little more slowly,” said that paragon of environmental values, Ronald Reagan!

        “… people tend to spend their salaries. If they conserve in one area, they are more likely to spend in other areas, and all of the areas use energy.”


        “Trendy environmentalists” are fond of citing “voluntary simplicity,” which is a watered-down version of what Henry David Thoreau advocated: voluntary poverty.

        While perhaps not the only way, the surest way of reducing your impact is to make way less money. That’s a bitter pill for most to swallow. But I also think it is the best way of developing coping strategies; if you can learn to live cheaply now, when you don’t need to, you’ll have those skills when you need them.

        I started reducing my income in 1993. I’m now living quite comfortably on under 2% of my peak income. It has required radically changing the structure of my life. (Living in a country with free health care helps, too, but who knows how long that will last.)

        ” we… really would like to avoid… collapse, but reducing energy use is not helpful for solving this problem.”

        Personally, I think the problem is the solution! Don’t avoid collapse; embrace it!

        There are certain things people will always need: food, clothing, shelter, alcohol. Figure out how to supply those things to people, and you’ll have a job as long as there are people.

        But if you’re a middle-manager, advertising agency executive, or (forgive me, Gail!) an actuary, those kinds of work may be slipping away quickly, with things like engineering, law, most government, and probably even most medicine probably close behind.

        • Unless you plan on living in a box under a bridge I cant see how the system even allows you to live on such little an income here in Norway at least. Surely there is a big country with lots of forest and places where one could settle down, but the problem is as always: someone owns the land! So you need to buy a piece of land and that requires money. Then there is food. If you live closer to the coast and have access to a boat you might catch fish for “free”, but inland you need a permit for fishing in rivers and certainly to capture and eat any animal. Some of these permits are very expensive due to the market price of the meat here. Heating and you need to chop down trees and burn or install a solar panel/windmill (expensive), or be able to build passivhaus with expensive materials.

          So its generally a problem that housing is also extremely expensive, so basically even a humble small 50 square meter apartment will cost you 1,5 million+ NOK ($200.000) and generally require you to have a decently paid job and pay down the loans for 20 to 25 years. So you are immediately caught in the system of generating capital even if you choose to live sparingly and consume as little as possible (you still need energy for cooking and heating even if you choose to have no light). I am sure it would be possible to live on a very tight budget, but the fact that you need a roof over your head really commits yourself to capitalism and its emissions right off the bat.

          Been considering what my family and I can do for “voluntarily poverty”, surely it would be possible to relocate to another place further away from the city and possibly even pay the full price for the house with market price increase of the home we are paying on now (still a lot of loans but around 40% of the value). But then there is the kids, uprooting them from their place and friends, don’t particularly like that so most likely I will have to wait until they have moved out at least which is a long time to, and ofc we want to have them close too if we can. We have held on to our old car for a long time now (15 years old now), but its close to illegal to drive now due to misc faults which will cost me a lot to fix (and I have no skills in fixing cars). So we are planning on getting an EV as electricity is so cheap here in Norway and coming from hydro power its also very low emissions from “filling up the tank”. Even though I know EV’s is probably a blind alley in all of this, since its basically a product of carrying on business as usual but with a “greener profile”. And there will still be insurance and maintenance costs to handle. At least I have changed to electric public transit now to and from work so surely I have had a rather big drop in CO2 emissions from what I used to have. If we move out of town then I would have to find new work or some other income as the trek to and from work would be a killer (perhaps a home office would be doable). Wife and kids walk to and from school (where she also work), but the car is still used a bit since one of my kids is part of a gymnastics group training 3 days a week and the place is just too far away for us to use public transit without committing an hour just to get to and from the place each day as well. Wouldn’t have minded that if I could cut e.g. work hours down to 75% to get the rat-race to work out. I guess this is fairly typical for many people caught in the “way of living” in industrial civilization.

          We have been trying to cut down electricity and warming and so far that has been a slow one even though its going down by a few percent compared to last year. But nowhere near what I had hoped to be able to do. Stuff like fridge, dishwasher and washing machine is basically using most of the electricity. Our heating comes from warm water from a central incineration plant but the past 3 cold winters have more or less cancelled any saving we have had from being more careful. Also I have noticed that the plumbing and system for controlling seems to be of terrible quality, requiring expensive maintenance every 4-5 years. Not what I had in mind when we chose this kind of heating (which generally is much more efficient than electric heating).

          And then there is flying… the main polluter for the majority of westerners. My wife is from another country, and her family is of course still living there so we generally have one long vacation to visit her family which generally means flying once a year. Fortunately I don’t have a job that includes a lot of travelling, besides some social arrangements. But our work generally likes to travel once a year to some other country (last time it was London so not so far away). Still its yet another CO2 source for my lifestyle… and I guess I could just choose to not take part of these social arrangements even if they are by far the most interesting ones… Hard call… and ofc not sustainable and part of the problem. I have noticed that talking about limiting travelling by plane is not a very popular discussion theme, and the fact that a lot of CO2 emissions from each person comes from this habit, often makes people feel that climate change isnt “that serious” – at least not serious enough for them to cancel their holiday… Struggling with getting the message across, and struggling with getting myself to accept this – and maintain some kind of peace with family and friends. Its not easy being a rebel. 🙂

          But I guess some sort of rebellion is the only way forward if we are to see any change to our planet wrecking habits…

          • Jan Steinman says:

            “Unless you plan on living in a box under a bridge I cant see how the system even allows you to live on such little an income…”

            As I mentioned, I had to restructure my life.

            When one says that, one imagines cutting back on driving, living in a smaller house, etc. But I really re-structured my life!

            I put all my savings into purchasing a portion of a shared property, in the form of co-op shares. I am a full-time volunteer for the co-op, which covers my food and lodging. My Internet connection, land-line, and a few other perks are covered by the co-op. When this computer dies, the co-op will replace it. I donated my vehicles to the co-op, and pay the co-op a per-km charge to use them, as others can do.

            I’m convinced cooperative situations are the future of free people. The alternative will be serfdom — or if you’re very lucky, smart, and greedy, perhaps you can be a lord over the serfs.

            I’m planning for property rights to be maintained by the rich, keeping a small profile, and hiding under that umbrella. To the outside world, it will look like another fiefdom. Internally it will be egalitarian. Wish me luck! Or come and help!

            • That’s a very nice EcoVillage you are part of! And you have put a lot of work into documenting all your harvests as well – must take a bit of accounting to keep those numbers. I see the goat(s) have been productive! You know here in Norway brown goat-cheese is fairly popular, and I personally prefer a mix of goat+cow for the sweet brown cheeses.

              I am impressed by your system and I really hope we can have more of these started as I wouldn’t mind to be part of one myself some day. The sharing of tools and such seems to become more and more popular here too, and even sharing of a car pool. Been thinking of perhaps starting something like that in our small housing community, even if only to enable others to use my tools whenever I don’t use them myself. Its pretty silly today as each garage is packed with the same stuff in every house.

              No doubt you prove that its possible to live on much less and even if you don’t make enough on your own land, a small part time job for a few in the community is probably enough to make ends meet. As a computer engineer, I have always enjoyed optimizing code for maximum speed, and you are basically doing this with the least amount of consumption and planet abuse.

              What do you do about housing? Do you have houses built on your 43 acres of farmland? Or are people living in other places near to the farm area?

            • Good luck!

          • In today’s economy, especially in a country like Norway with an affluent lifestyle, there are certainly a lot of costs.

            When I visited India, I was surprised at how little it took to live. With warm temperatures outside, there was no need for a sturdy home. In fact, we saw people sleeping out in public, or sitting on the ground. A piece of blue tarp seemed to almost provide a “home”.

            It was not too many years ago that people did not “own” land–land was divided up, without payment, if I understand the situation. Some rural homes are very simple–low cost to put together with local materials. Walking seemed to be a standard method of transportation.

          • Jan Steinman says:

            John Christian Lønningdal says: “What do you do about housing? Do you have houses built on your 43 acres of farmland? Or are people living in other places near to the farm area?”

            First off, thank you for your kind encouragement. I am convinced this is the best path forward for most ordinary people. But there are significant hurdles.

            For example, well-meaning laws intended to protect farmland actually make it difficult to house people on farmland.

            Where we are in British Columbia, Canada, a single tax lot in the Agricultural Land Reserve can only have two houses — no matter how big the property. The basic idea is that farmland should not be used for non-farm housing, but this is a terrible way to implement such protection!

            And yet, the Agricultural Land Reserve Act says that habitation of farmland shall be limited to the labour needs of the land. We did a formal study, and found that our land needs thirteen full-time workers, and thus we are going to propose re-zoning to allow us to have thirteen dwellings, clustered tightly so as to disrupt a minimal amount of farmland. All housing will be owned by the co-op — not “free market” housing — and habitants must formally agree to take part in agricultural activities as a condition of living here.

            But the bureaucrats say, “What happens when you sell?” So we’re in the process of getting a affordable housing Charity (Canada’s term for a tax-advantaged non-profit, similar to a 501c3 in the US) as co-owner on title, hoping that will assuage the bureaucrats.

            We currently have two houses and a number of what are classified as “temporary dwellings,” which includes anything on wheels. But trailers and caravans are not year-round housing in this climate; the eventual goal is a cluster of duplexes connected by solaria, meeting passivhaus standards.

            We can house farmers on farmland for about half the market price, but there are other hurdles. For example, you cannot get a mortgage on co-op shares, and the co-op isn’t about to risk it’s equity on someone’s ability to make payments. So financing must be private. (I actually consider this to be a feature, not a bug, but it means we need a few “deep pockets” so that others of more modest means can take part.)

            Things are moving slowly. People are not yet so desperate that they see any need for cooperative living.

            • Can your land really supply 13 workers, plus dwellings, and their families? This is a question I would look at closely. It is much better to err on the too low side, than on the too high side.

              It is not just food for this group that the people need to be produced–it also needs to produce enough to pay for taxes, and to either make the buildings directly, or to sell to buy the materials to make the buildings, and to make such things as wells. Without soil amendments, land may need to be left idle, to restore fertility. Quite a large share of crops will need to go to animals and insects living in the area. The amount needs to be sufficient in lean years as well as good years.

              The number of people land can support has skyrocketed with the use of fossil fuels. It is hard to back this down enough to consider the situation without fossil fuels.

        • poorboy says:

          Congratulations on the ability to live on a much reduced income. Hope that works our for you!

          One fact of interest is that the countries with the highest current standards of living also have the best environments. This is because, in the absence of a dire hand-to-mouth existence, thay value and can support a cleaner environment. When you are almost starving, you are not too concerned with air or water quality. (China is just beginning to make the transition).

          I also believe that the world’s biggest problem is not “inequality” (as many are currently advocating) but “poverty.” If we had always been most concerned about inequality, when Bill Gates had made his first billion we would have taken it away and given it to starving third-world populations (and perhaps chained him in the cornfield to produce more crops). As things have developed his technology advancements have contributed much to overall world betterment (including our ability to easily have this on-line conversation). Gates is now expending his billions to promote education and fight disease in those third-world countries.

        • I agree that people will want food, clothing, shelter, and alcohol as long it is available. The problem may be for them to find a way to pay for it/have something to trade in return.

          • Jan Steinman says:

            “people will want food, clothing, shelter, and alcohol as long it is available. The problem may be for them to find a way to pay for it/have something to trade in return.”

            It may well be labour — the last resort! “Will work for food” may well be the theme for the future.

            • As long as the labor of would-be workers can produce enough, we are in good shape. In prior collapses, diminishing returns meant that the productivity of individuals dropped too low (too many people relative to arable land as well as declining quality of arable land due to erosion, salination). This loss of productivity led to low wages and need for excessively high tax rates in comparison.

  9. cal48koho says:

    Gail,your statement:”The economy eventually more or less recovered, but men’s wages stagnated, and women found a need to join the workforce to maintain the standards of living of their families. ”
    I question the term recovered. In terms of GDP, it did recover after a few decades but what really happened was an economy that underwent morphologic change from a productive making things economy into a financialized ,trading paper, military industrial complex, services economy. We stopped adding wealth increasing GDP by using resources and instead added wealth by virtue of leveraged bets using debt. My contention is that the economy didn’t really recover except in a GDP sense. Growth really ended in about the 1970’s. As you state, wages stopped growing for all but a few elites. I find it curious that cheap energy persisted for 30 years after the 70’s allowing machines to engage in one last infrastructure buildout orgasm but even this buildout did not raise average incomes or living standards. You know we are assembling at our muster stations on the deck of the Titanic when we hear our clueless politicos promising to bring back jobs and restoring growth! Thank you for another well written piece.

    • Your description of the economy never really recovering is right. I have talked about the economy hitting the “stagflation” stage in the early 1970s. A large part of the “growth” is indeed debt-related. After stagflation, the next step down in collapse, I am afraid.

    • Chris Johnson says:

      @cal48koho & Gail:
      Obviously I agree wholeheartedly with your analyses. I would like to offer a few minor corrections, however. First, growth continued in the 80s, 90s and 2000 first decade in the form of electronic technology. Computers, the web and fiber optics was more than mere banking slight of hand. Those technologies added up to improved productivity — or at least they are hyped thereby.
      Regarding energy costs, the real driver was OPEC, and their rebellion in 1973 was due to Milhouse shedding the gold standard, which depreciated their oil earnings. All they wanted was to get as much for their black gold as they were getting yesterday. It’s still the driving force. The only problem is accelerated dollar depreciation. We shout, but if you were Saudi, how would you feel?
      Elizabeth Warren gives a good analysis of the ‘housing boom’: for all the money spent, comparing 1960 house with 2004 house got you one extra bedroom or one extra bathroom, not both. Hmmm, how did those prices climb so high….The problem was that the market and government favored splurging on the burbs. Ds and Rs both chased it for the votes and patronage. Detroit and Big Oil loved it for their obvious reasons.
      The ‘big infrastructure splurge’ is just a politician’s sales pitch. Granted we do need them, but more roads just means more congestion now and later…
      Here’s a link to a Bloomberg story about how the Chinese are building suburbs 40 miles away from the city. The trouble is that there are no stores in the suburb, which limited to housing / bedrooms only. So they have to drive and drive and drive everywhere several times a day… Ain’t life wonderful though…
      Cheers, Chris

  10. SomeoneInAsia says:

    Dear Gail,

    Greetings. (And greetings to everyone here as well by the way.) I have been reading with great interest some of the articles in your blog. Certainly I find them most convincing in stating the case for a finite world. (Actually the fact that our world is finite should seem common sense, but I guess what we call common sense actually isn’t that common after all…)

    I have a question if you don’t mind. (Maybe you’ve already addressed this question elsewhere but I missed it.) The question is: do you know of any other energy sources in existence — besides oil, obviously — for tapping into which (1) we can construct (and maintain) the required hardware using JUST THE ENERGY ITSELF? I’m talking about using solar power itself to make solar panels, or nuclear energy itself to make nuclear reactors — to indulge a fancy for now. Or is it the case that (2) all known sources of energy ultimately still need fossil fuels to build and maintain the hardware required for tapping into them? I’m very interested in this because if (1) is the case, then perhaps our energy predicament might not be that bleak after all; if the oil really gets depleted, we’ll still be able to build and maintain some energy sources indefinitely into the future, albeit on a small scale.


    • Hubbert- of the Hubbert curve for peak oil envisioned the nuclear power revolution to take off in the 70s when the US hit peak oil- and allowing 30 years of transition to an electric economy. Technically it would be possible to switch to an electric economy- build high speed rail like France to replace long distance road freight and travel and short haul flight. If the EV of the 90s had been allowed to developed rather than crushed then the business would be maturing now. Construction, agricultural and mining vehicles would still have access to fossil fuel oil- but at reduced consumption. Iron smelters would still have access to high grade coal [which is not used for power generation]. Hydrogen can be made with electricity from water and recombined with CO2 to make natural gas. Roads can be technically made from sand and bacteria- and with reduced freight, local traffic- they would last longer.
      The world’s largest vehicle – a mining machine is electric and hooked straight into the power station with possibly the world’s largest extension lead http://en.wikipedia.org/wiki/Bagger_288

      So technically the electric economy, with hydrogen and reduced oil inputs and coal and gas being used for fertilizer manufacture as raw materials and furnace coal for smelting could be achieved.

      It would take 25 or more years for all the cars and trucks to be naturally replaced from oil to electric [or freight]. the military would need to stick with oil although they are looking into replacements. Our lives would also be modified with the loss of the private car- although cities would be cleaner.

      And it would cost a fortune. Even $110 barrel of oil is way cheaper than solar or wind. EV batteries are $10,000 + before you hook them up to a car- Nuclear- that was supposedly to cheap to meter in the 1950s is one of the few technologies that gets more expensive [and long term waste and decommisioning has still to be sorted].

      Politically no one seems to want to admit that energy prices are rising and growth of the past is gone forever- so it is unlikely anyone would vote for a party that pledged a doubling in energy costs.

      Economically we are now running out spare resources- if the transition had occurred 25 years ago then there would have been 20years of oil peaking to have paid for it. instead we blew the wealth on tax cuts, flat screen tvs, mobile networks, super fighter air craft and broadband [and several $trillions on a couple of wars]

      So technically.

      • Chris Johnson says:


        Good essay, Jules. The Economist had a good spread on EVs last April that argued strongly in favor of EV’s, noting that the cost are dropping steadily, and should be approaching parity of ICE in a few years. However, with the Chinese grabbing a corner on Lithium and other REEs, we may be in for the first ‘resource war’ of the century.
        One factor that requires addressal by a trained economist is determining the fractional impact that incremental growth of EVs will have on fuel prices. For example, in a few years, if/when EV’s compose 5% of new vehicle sales, what would be the impact? How about 10%? If EV owners are ‘filling up’ at a cost of fifty cents per gallon (equivalent), then that would appear to put some strong pressure on the oil companies, no?

        • The optimist in me would love to see the transition to that clean sci-fi future I was promised as a kid- At the age of eight I saw the moon landings on tv and 2001 in the cinema. However I think Gail’s posts demonstrate the limitations on an economy built on $30 barrel oil- there is huge resistance to transition and the ludicrous denial of peak oil by politicians and business who point to every new find as proof peak is not going to happen. The Brazilian deepwater field is technically difficult with 12 billion barrels- 24 weeks of world oil consumption!

          The lack of oil, the lack of wealth which has been replaced by recession, debt, QE and low interest rates does not make the economic future particularly stable. I think [and I am really just guessing] is the problem is a political problem or rather the politics of growth born from the economy of abundance is ill equipped to deal with the challenges.

          If the EV, highspeed electric train and non fossil fuel energy were cheaper I would be more optimistic. Perhaps the decline in oil and its increased costs will be gradual and alternatives may reduce in cost to take over. We should have done 20 years ago but when has forethought even been a human driver?

  11. mf says:

    the world population increased explosively because of sudden drop in the mortality of the young, not increased use of energy. As cultures adjusts, population growth abates. Stop this catastrophism

    • Jan Steinman says:

      “the world population increased explosively because of sudden drop in the mortality of the young, not increased use of energy.”

      And what caused the mortality drop? Could it be more doctors, more hospitals? Are not those things a direct result of increased access to energy?

      “As cultures adjusts, population growth abates.”

      Paul Erlich came up with “I = P * A * T” where “I” is ecological Impact, “P” is Population, “A” is Affluence, and “T” is Technology. But I think the “A” factor should actually be “Access to energy.”

      You keep hearing how educating women reduced birth rates, and as soon as all the women in the world are educated, population will stabilize, somewhere around mid-century at 9 billion, they tell me.

      Hogwash! What reduces birthrates as women get educated is that they have more access to more energy. They no longer have to breed a labour force or old-age-care force, since they are now able to access energy in order to pay others to do these things. Or at a more basic level, when the village gets a well with an electric pump, they no longer need to breed a slave to walk five miles for water.

      The “adjustment” that culture makes to abate population growth is to use more energy.

      So what happens if more energy is not available? They go back to breeding a slave labour force. They go back to breeding their old-age care.

      But don’t take my word for it. The show is about to begin.

  12. Scott says:

    Hello, It does look like a steady decline over time to me unless something happens. I know Gail see a financial crisis and so do I so that could bring in trouble early, but for now we are limping along it seems

    Keeping an eye on interest rates and inflation for now and of course resource availability.


  13. Don Stewart says:

    Dear Xabier and Others
    You commented earlier that you would like to ban cosmetics. Based on the evidence, I would say that history is against you. I am reading Jared Diamond’s new book The World Until Yesterday, which explores the simple societies in which our ancestors lived until recent times.

    He begins a discussion of Trade on page 59 of the paperback book.
    ‘2000 years ago specialist traders from Asia were bringing bird-of-paradise plumes from New Guinea to China, and the plumes were thence traded as far as Persia and Turkey’
    ‘Cro-Magnons … traded obsidian spear points necessary for hunting meat; shells and amber useful purely for decoration; and beautiful finely finished spear points of translucent quartz. The Cro-Magnons presumably no more dreamed of using their quartz spear points in hunting and thereby risk breaking them than we would use our best Gucci tote bag to carry home our fish purchase.’
    He quotes the economist Frank Knight: ‘Of all the fallacious and absurd misconceptions which so largely vitiate economic and social discussion, perhaps the very worst is the notion that an interpretation of utility, or usefulness, in biological or physical survival terms has any considerable significance at the human level.’

    The comments are included in a pretty extensive discussion of trade relationships in New Guinea and other places. I know that when Lewis and Clark reached the mouth of the Columbia, they found shells from Patagonia used as decoration by the natives.

    Separately, some people have doubted that stone age economies could support large numbers of people. When Europeans discovered that the highlands of New Guinea were actually populated around 1933, there were a million stone age peoples living there in densities similar to those in Holland. The valleys had been largely deforested and used for irrigated agriculture.

    Don Stewart

    • xabier says:


      As the Afghan saying has it: ‘A merchant was drowning in the Oxus river, and all he could cry was: ‘My turban, my beautiful turban!’

  14. bob jones says:

    thank you for great post, i wanted add a few energy links

    (biomass gasification)

    (thorium from india and china)

    i totally agree about polictions only focusing on the short term and i agree that the free market cannot solve the problems but i do think energy research will solve the problems if science community is given more help like the space race. i hope we have an energy race,

    • Chris Johnson says:

      @ Bob Jones:
      The reason politicians focus only on the short term is actually the same reason very few citizens or members of this blog pay much attention to gasifiers, thorium and other tech whizbang: because it’s not ready now and won’t impact the situation for several years. Ditto with electric vehicles, algae and lots more.
      We already have an ‘energy race’. Uncle Sugar and other governments dumped hundreds of Billions of USDs into the coffers of science, wind and solar ‘entrepreneurs’ and ‘grid modernization’. With very little to show for it, in case you’re wondering. Solar panels wear out just as fast, maybe faster (abrasion cuts efficiency by 50%+ over time- and that hasn’t changed in two decades…), and abrasion also affects wind blade efficiency. ooops.
      Now you want the government to waste a bunch more increasingly scarce tax revenues to reward all those jerks who are pushing the same technologies as 20 years ago, or maybe some new ones that can make the sucking sound even louder. Do you enjoy throwing good money after bad? Why?

  15. Don Stewart says:

    Dear Gail and Others
    Charles Hugh Smith has an interesting article today about the shape of collapse:

    System Reset 2014-2015

    ‘John Michael Greer has described the process of descending stair-step resets (my description, not his) as catabolic collapse. The system resets at a lower level and maintains the new equilibrium for some time before the next crisis/system failure triggers another reset.

    There is much systems-analysis intelligence in Greer’s concept: systems without interactive feedbacks may collapse suddenly in a heap, but more complex systems tend to stair-step down in a series of resets to lower levels of consumption and complexity–for example, the Roman Empire, which reset many times before reaching the near-collapse level of phantom legions, full-strength on official documents, defending phantom borders.

    In the present, we can expect the overly costly, complex, inefficient, fraud-riddled U.S. sickcare (i.e. “healthcare”) system to reset as providers (i.e. doctors and physicians’ groups) opt out of ObamaCare, Medicare and Medicaid; like the phantom armies defending phantom borders of the crumbling Empire, the vast, centralized empire of sickcare will remain officially at full strength, but few will be able to find caregivers willing to provide care within the systems.

    Just as much of the collateral supporting the stock, bond and housing bubbles is phantom, many other centralized systems will reset to phantom status.’

    Now to my comments. I think that if you ask most advocates of ‘collapse’ whether civilization can survive the death of the healthcare system and the stock, bond, and housing financial systems, they will say ‘NO’. Collapse will start and sweep everything before it and supply chains will collapse and governments will collapse and people will starve in the dark.

    Others will look at the real economy and say that nothing has changed. The hospitals and doctors and nurses are still around and still skilled. The houses are still habitable. It’s true that trillions of dollars of paper wealth have disappeared, but ‘So What?’. Paper wealth never was physical wealth which produced anything useful.

    I sincerely hope that the physical economy can continue even as large chunks of financial fol-de-rol fall by the wayside. But, according to Charles, that requires feedbacks. What kind of feedback do I think can do the job. I center my attention on the bankruptcy courts. As Detroit is unable to pay its bills, the unsecured creditors appear destined to get about 16 cents on the dollar. But Detroit will continue to collect the trash and provide water and sewer service. In most major bankruptcies, the physical side of the business is reorganized and continues to function, even as the owners of stocks and bonds lose a high percentage of their investment. In some cases, there is no way to reorganize the company as a going concern, and it simply goes out of business–which indicates that it had outlived its usefulness.

    If we had a bankruptcy court for countries, then the US would default on some bonds, would enter the bankruptcy process, the government would be dissolved, a new government formed, and debts largely written off. There would be a huge loss of paper wealth, but essential functions would continue. It is doubtful that promises to pay large sums in the future would survive (such as Social Security and federal retirement benefits). Debts might be written down to pennies on the dollar, as happened in Detroit. The military might be cut in half, and still be the largest in the world.

    I will freely admit that there are serious obstacles to sovereign bankruptcy. Countries have armies with guns and are usually ruled by people who are not very nice. If, as Henry Kissinger said, ‘power is the ultimate aphrodisiac’, then loss of power threatens their sex life. And the ultra-rich who control the governments seriously don’t want to have government debt obligations written down to pennies on the dollar. And will do what it takes to preserve their prerogatives.

    Still, I can imagine that in a real collapse, there are enough powerful people who can understand what is happening and seek to disconnect the financial system from the physical system. A number of people have said that the US made a strategic error in 2008 when it bailed out the bank owners and senior managers. It should have let the banks fail, fired the senior management, nationalized operations, written down assets to market value (mark to market) and sold what was left to private investors. This would have wiped out the stockholders and perhaps many debtholders, but it would have ‘reset the system’, as Charles puts it.

    I hope that the bankruptcy process is the way we go down, rather than a complete collapse. Stepping down allows individuals and companies to adjust to a ‘new normal’. In a sudden and complete collapse, the ‘new normal’ is so primitive that few people know where to even begin. Only survivalists will survive. If you think that total collapse is in store, but are still looking for hope, the shipwrecked man who was the inspiration for Robinson Crusoe and a French-Canadian woman and her lover and her eventual son who were shipwrecked off Canada both survived in very primitive conditions. Humans can be a pretty weedy species.

    Don Stewart

    • I would agree in the slow and bumpy decline over decades, the Roman analogy is a good one- the empire split into two, the west was abandoned and contraction actually lasted for centuries with a Constantinople ‘Empire’ complete with legions from another era lasting till the 13th century. There is a part of me that expects something bad in the coming 2 or 3 years- but as a repeat of 2008 without the bail outs but the system looks like it will survive.

      the trend is for more inequality- with the top 1% of Americans controlling 20% of the wealth and pretty well all the political system controlled by big donations I see the divide growing.

      In real terms peak oil has been and gone- and private oil companies are seeing declines well beyond the manageable 2% declines and closer to 5%. The big nationals don’t appear to be very honest either so decline could be greater- easily hidden in domestic consumption figures. Yet, the system seems to muddle along.

      The frog in the water being slowly brought to boil.

  16. Andrew Gray says:

    Gail, It seems to me that we have entered an era that is going to be a “generational game of musical chairs”. SOME generation, sometime, will have to stop the exponential growth game and be faced with decline in their human enterprise (get the chair pulled out from under them). ALL ponzi scheme pension and healthcare programs will collapse. All debts will deflate instead of inflating, etc. It also seems to me that NO GENERATION in their right mind would WANT to be that generation that gets that “generational chair pulled out from under them”. So it seems logical to me that each generation will try like crazy to NOT be that generation and try like crazy to kick the can down the road towards the next generation. Seems like “logical” irrational human behavior to me! So that means that nothing will be done until there is a Great Collapse. Since you are enlightened, have you thought about this? Will we be growing our own food and using assault weapons to defend our family fields? Will we see city-states again, guarded by men with rifles at the city limits? Religious fervor and de-evolution of enlightenment? What do you see after the Great Collapse? A. Gray

    • violence is the natural human reaction to the denial of collapse

      • Chris Johnson says:

        @EOM and Andrew Gray
        Since 2007 Europe and the USA have had no growth; nor has Japan, while growth of other Tigers has dropped. China’s goverment continuously shovelled cash into the boiler, but even that’s flattened. Middle East? not much. Africa? some ‘oil booms’ and Chinese cutting down forests, but otherwise flat. South Asia? flat. South America? flat or worse. Oz? flat (the Chinese aren’t buying because their customers aren’t buying and nobody else wants all those raw resources right now…)
        If the above is an accurate description of the current situation, the question is really not ‘when will hockeystick growth cease?’, but ‘how can we make the best out of pretty flat economics and no growth?’ Because that looks like all we’re going to get for the next few years in most of the world.
        Or if you think I’m wrong, please let us know why.
        Cheers, Chris

        • xabier says:


          Don’t say such things, or our World Leaders will be taking a contract out on you. Can’t you see the shoots pushing up in Garden of Thousand Green shoots? Our Leaders have spoken, it must be true, or are you Defeatist Saboteur? President Maduro’s Minister of Perpetual Happiness in Bolivia will be having a word with you, too.

        • a no growth economy is like freewheeling in a bike. you will coast along on existing momentum, but if you don’t/can’t/ won’t start pedalling again, you will fall off.
          right now we are coasting on the final impetus of momentum from the latter half of the 20th century.

          • xabier says:

            I suspect the wheels have actualy stopped turning, and we enjoy only the illusion of movement due to a projected background – MSM propaganda. Like those early film shots of actors in ‘moving’ cars!

        • Andrew Gray says:

          So Chris, you think we will have a perpetual “no growth” economy and not a “Great Collapse”? For the U.S., what about the impending $66 TRILLION Medicare collapse? Elder Boomers freezing in their own homes with diabetic shock? What about $10.00/gal diesel after the frackers are through? What about no cheap asphalt to repave the 160,000 miles of U.S. roadways? What about a 10 to 1 ratio for food production: 10-calories-of-petrol-burned-per-1-calorie-of-food? You really see a perpetual “no growth” future? A.Gray

          • Chris Johnson says:

            Good Comments, Andrew. I certainly cannot argue persuasively that everything’s going to be ‘a-okay’ in the coming 5, 10 or 20 years. We will continue in much the form and manner of the last 10 or 20 years. Goodness gracious, we are incomparably unperceptive sometimes. Have you seen that chart of the rise in the price of real estate from, say 1950 to 2010? In the last decade the price more than doubled — something that hadn’t happened before. But how did all the economists and reporters and politicias and bankers miss the rising bubble? It didn’t take a Krugman, but where was Krugman?
            We tend to keep going down the road because we don’t really know any better, there aren’t any bells and klaxons banging. We’re so used to hearing discouragement on the news that we’re largely innured. But I think you know all this.
            BTW, for asphalt, are the Canadian Tar Sands useable? Did you know the total volume is equivalent to Saudi oil? I didn’t — just saw that yesterday, but still would rather avoid the pollution associated with refining that poison. Maybe making asphalt out of it might work…
            For other energy development, perhaps we will find the cost of EV’s declining as their performance improves. Fill up at 9:00 AM for the equivalent of $0.65 per gallon. That could seriously boost our economic potentials: we’d expect growth to climb.
            But lacking a stimulus that will reduce the current tension caused by $100 oil, it looks as if human resilliency will enable societies to ‘hang in there’ but not really improve their conditions.
            Cordially, Chris

          • Andrew Gray says:

            Chris, I still have to wonder how dependent our capitalistic “democracy” is on “growth” (both economic and population). If we continue on this “growth path”, we know it will collapse within say three decades. However, if one desires or gets “economic contraction” and population contraction in a controlled and sustained way, then I see “lowering tides, lowering all boats”. Standards of living MUST come down, the way I see it (would this be such a bad thing?). We might see “poor folk” that may have to learn how to grow healthy food again BY THEMSELVES. Either that, or get-toxic-hunger-fat by eating junk food McDonalds carbs. Would “poor folk” have to go back to farming/gardening again in order to eat healthily? Perhaps (but perhaps they would not be so statistically phat!). I hope they wise up. Are we going to get mandatory sterilization if poor folk want to go on the government dole? Personally, I hope so. I do not think that subsidizing the human enterprise to annihilate the remaining resources of Earth with our Carbon Frenzy is the way to go. Are we going to see a Dark Future like we see in BladeRunner? Maybe. Or are we going to turn things around? The only thing I have confidence in right now is American Greed. With that said, I think we should prepare ourselves for a BladeRunner Dark Age prior to a human “Great Collapse”. Perhaps after that, a second Renaissance will be forthcoming. I hope I make it to see it. I’ll probably be over 100. But Chris, you dodged my question. What DO YOU SEE after your “5,10,or 20” years? What DO YOU SEE?
            Andrew Gray

      • xabier says:

        Violence, yes. Or getting blind drunk – see the former Soviet Union. I know someone who’s a senior functionary of the WHO and has been to some rough places, and she told me that in Moldava it was hard to find someone who wasn’t drunk in the morning – young girls staggering down the street, drunks passed out by the road. This was in the wake of their main industry collapsing (I think apples, I stand open to correction on that) as Soviet centralization broke down. It made a deep impression on her.

        I’ll be happy if most people drink themselves to the grave, otherwise I’d be worried about tree-space to hang myself……

      • ‘violence is the natural human reaction to the denial of collapse’
        during the ‘intermediate’ periods of Egyptian history there were cases of cannibalism, and during Ramsis III reign where refugees invaded there was a lot of denial with lots of building projects and great dedications to Ramsis . The Mynoans were busy sacrificing children when the proverbial hit. The Romans moved their capital. The British tried to be civil about the whole thing- despite being shot at by both sides. and Christians revelled in the plagues of collapsing Roman cities- and instead of dying out lie the Mithra followers survived despite looking after the sick and ended up ruling the world.

        When the Americans pulled their loan from the Germans they bought into a special brand of nationalism.

        The enemy is ignorance and hubris- the best place during a collapse is where the community has a social cohesion [and not many guns]

  17. Danny says:

    Thank you for putting things in perspective. I spend a lot of time worrying why I have not put money in my 401k, I have 25 years before I can use it. But in reading your post I should not be putting any money in the market…What will inflation do to the oil industry? Help it hurt it…? And will oil follow inflation? Could the US inflate its way out of debt? This generation thinks it is so much smarter thant

  18. Don Stewart says:

    Dear Gail and All
    Recommended 10 minute video:

    Darren Doherty from Australia visits Joel Salatin in Virginia and likes what he sees.

    Few comments from me:
    1. Watch Darren examine the soil. This is where it all begins. The perennials sequester lots of carbon and the soil holds water. The land is naturally fertile.
    2. Note the use of animals and plants to do what they want to do and use the result to benefit humans….cows eat grass and make manure, chickens pick worms out of manure, turkeys clean up pasture. (Dung beetles and other critters do their thing on the manure).
    3. Joel believes in mobile infrastructure whenever possible. So the fences are lightweight electric which can be easily moved. The fences follow contours so the cattle make terraces over a period of years. The poultry houses are all on wheels. Joel doesn’t build impressive barns.
    4. At about 7 minutes, notice the little girl eating the tomato. The Food and Drug Administration is not amused. Most likely, the NSA is readying a drone attack. Joel has a law firm which has represented him in response to the many government attacks.
    5. Joel thinks farmer’s markets are not efficient. So he has a buying club which delivers to distributed locations. You will hear how successful the buying club has proven to be.
    6. Lots of attention to the health consequences. That is a key selling point to the urban population.

    What you see here is NOT independent of modern equipment or technology. It is a partnership between biological farming and equipment and technology combined with excellent design and smart marketing. Could it migrate to independence from equipment and technology? Perhaps, but it would HAVE to be in response to the collapse of the current system, because completely abandoning equipment and technology today would lead to bankruptcy tomorrow.

    Don Stewart

    • xabier says:

      Thanks Don.

      That chap’s father promised not to sell the land. Let’s hope a floundering government doesn’t tax him off it…..

      The propaganda line here in the UK is: ‘Small-scale farming stops us from fulfilling our moral responsibility to feed the world, it’s not efficient and has to go.’ This in a country which imports half its food.

      I’m heading for an asylum, its probably safer there and the people more reasonable.

      • Chris Johnson says:

        ‘One Flew Over the Cuckooo’s Nest’ appears to be pertinent.’
        I recently saw a BBC program about ‘pioneers’, consisting of two couples and a pair of 8-10 year old children, in Wales who bought a small farm — about 1 acre — and determined to work it in the manner of a 17th Century family farm. It appears they actually were able to hitch the plow to the cow and plant wheat and learn to bake bread (maybe we can get a BBC grant to Jody…). The result that struck me was that 1 acre was able to produce enough food to feed 7 people. Now maybe I got some of this wrong, and I’d be delighted if Don Stewart would correct any gross errors, but it also indicates the possibility of survival after urban collapse.
        Cheers, Chris

        • Don Stewart says:

          Dear Chris
          I recommend this article which is currently appearing at Resilience.org

          A quotation:
          ‘So no new technology is needed, nor is new technology possible, to improve the efficiency with which we can produce food. That is, the arguments made by those in the first camp — those who argue we must increase yields through new techniques in industrial agriculture — are bunk, as techniques have already been developed to deliver the maximal yield possible given the sunshine falling on the Earth. Literally the only way out of this (energetically), I think, is to build nuclear fusion plants and then use the energy from that to produce food somehow — that’s the only possible renewable non-solar source of energy — but this remains firmly in the realm of science fiction.
          However, when we look at the amount of farmland under cultivation today, we see that it’s far more than is required to feed all of humanity ten times over if such intensive cultivation were used — perhaps 500 billion people (as my friend John pointed out).’

          If you follow the arguments and counter-arguments (which are pretty well laid out in the article), you are likely to conclude that ‘predictions are very hard, especially about the future’. But let’s take just a couple of points and see where they lead us. We already have rigorous demonstrations that all the baloney about engineering food to make it better is bunk. All the engineering gives us is food that our immune system may reject as ‘foreign’ and generate inflammation to try to combat it and thus foster even more chronic disease. So…we already know what to do, why don’t we do it?

          For one thing, who wants to work as hard as John Jeavons? Permaculture people don’t want to do all that double digging that John does, so they come up with things such as perennial gardening and food forests and rotational grazing which are vastly less work. But a great majority of the modern Americans don’t want to get any dirt under their fingernails, and delude themselves that moving stuff around a computer screen actually produces something useful and have infinite faith that all of us can make a living with said screens. And so our political policies favor ever bigger farms with ever fewer people which can’t produce a fraction of what Jeavons produces or even what the Permaculture solutions produce.

          For another thing, we delude ourselves into believing that money is real. Bill Clinton talked about this point at Omega. Bill said that the richest billion people in the world have enough money to divert all the cropland in the world to growing biofuels to power their vehicles when the oil runs out…leaving the remaining billions to starve. We literally have no way to resolve this issue politically. Can you imagine the US Congress even considering it?

          For a third thing, we now see food as something that comes in the form of a ‘food product’ instead of being something that you would recognize as a crop or animal which has been harvested. Most of the fossil fuel energy that goes into our food is not used on the farm, but is used on the agricultural products which leave the farm and enter the industrial system. I see this system pretty much the way I see the sick-care system…it’s terribly wasteful but it provides bales of ‘jobs’ and thus is impossible to root out in terms of politics. Both phenomenon result from the application of consumer sovereignty in the marketplace. Both will bring down our society as fossil fuels get scarce.

          Finally, agriculture, or gardening, are very local when they are efficient. For example, Darren Doherty from Australia recently led a workshop on a California ranch. He observed that both his area in Australia and California have winter rains with summer droughts, so they have similarities. What makes sense in Iowa with summer rains doesn’t necessarily make sense in California with winter rains, and vice versa. So adopting some arbitrary method just because it worked somewhere else may be a big mistake. He used as an example the construction of swales versus keyline plowing. The objective is to get the water into the soil, rather than runoff. A swale may be very good in a place with summer rains, but keyline plowing works really well with winter rains and perennial grasses and costs a tiny fraction as much money. Then he showed pictures of the topsoil in a pasture in Australia which is many feet deep, as compared to the immediately adjacent land with topsoil just a couple of inches deep. The rich topsoil has been grown over the last dozen years with excellent management. The deep topsoil permits the storage of lots of water, which doubles the growing season for the grass. Now consider the question about ‘reaching the limits of photosynthesis’. Has the well managed pasture ‘exceeded’ the photosynthetic limit, or is the poorly managed pasture falling way short? These sorts of definitional issues bedevil ‘scientific’ studies because good farmers and gardeners learn how to do things better. For example, Masonobu Fukuoka in Japan was in the top 5 percent in terms of his rice yields, BUT he also didn’t use any fertilizers or herbicides or pesticides AND he grew a crop of winter barley when his neighbors had bare ground. It is common to hear claims about yields per acre, but few studies look at the holistic results, because most studies are aimed at selling some commercial product or other.

          Hope this helps…Don Stewart
          PS the 500 billion number would run into ‘limits to growth’ problems in other areas.

          • Chris Johnson says:

            @Don Stewart.
            Nothin’ but a delighted ‘thank you’, Don. I’ll read those references — hope they’re as good as that one about the farm in Shenandoah Valley. I think you would enjoy a long vacation cross-country, all the way to the wine country in California. My mother retired in Sonoma in the 80s and summer visits always included touring the farms — not just wine tasting but all the fruit. Unfortunately, wine got so popular that most farmers replaced their orchards with vineyards. The Pacific fog rolls in every afternoon in summer to provide just a little moisture to the fruit, and burns off the following day by mid-morning. The old-time Italian farmers used few additives, but the yuppie ‘get rich’ group that took over generally tried to add lots of chemical fertilizers, which necessitated irrigation since summers are so dry. Additional costs, lower quality, but making as many bucks as they can! Anyway, our yuppie generation managed to screw up lots of farmland in their drive to enrichment. Maybe that cycle has given way to something less vexing, like pot…
            Cheers, Chris

      • “The propaganda line here in the UK is: ‘Small-scale farming stops us from fulfilling our moral responsibility to feed the world, it’s not efficient and has to go.’ ”

        Never heard of such propaganda- in half a century of being born on a British farm- I stay in contact with my farming roots and there are plenty of reasons to criticise the farming system, and the community sometimes but with so many giving up on running small farmer and seeing the land sold off to neighbours [a farm down the road sold 2 lots of 200 acres each for around a cool £3/4 million] the locals are always happy to see small holders and a chance to keep the local shop, pub, school open.

  19. Stan says:

    And some good news for gasoline addicts. As reported in http://www.natureworldnews.com/articles/4237/20130930/e-coli-bacteria-used-create-gasoline.htm according to professor Sang-yup Lee at the Korea Advanced Institute of Science and Technology, is that scientists have bioengineered a workaround to transform the oils produced by the E. coli bacteria directly into gasoline.

    The dream is that we can pour a handful of these ecoli into that stagnant pond out back, wait a few days, then pump the results into a car.

    I would be very interested in what it would take for the gifted “DoItYourself” tinkerer to actually have something like this working in their garage. (neighborhood firemen might be a bit nervous with the thought of ever garage being a potential 5-alarm fire)


    • Chris Johnson says:

      Wonderful. Do you think he might needs bullet proof vest and other such accoutrements?

  20. Stan says:

    A bit about growth. To some growth needs to be a fundamental component of our economic system. And there is the undeniable wisdom that finite resources means an end to growth at some point. Ergo, growth is the problem, and that less growth is the solution. However, in un-developed (by capitalism’s standards) countries the prevailing idea is only sustained growth will give the populace a chance to have a life-style like the developed countries – so limiting growth cannot be the answer for the former.

    How do we re-construct the growth model (if that is possible) in order to lessen the impact of increased levels of economic activity on resources and the environment? Or do we tell those countries “You’re too late…too bad!”


    • Chris Johnson says:

      To Stan:
      In the 1970s I lived in East Asia and traveled a lot. Taiwan was growing at 7-8% per year, Japan was already ‘first world’, and several others were beginning to boom. The prime moves and motivations were not dreams of western educated econocrats so much as the aspirations of the citizens. Everybody wants a car. Second choice is a motorcycle, third a bicycle. There’s no capitalist plot.
      The cost of fuel in Europe and Japan and other states is higher than in the USA, and they tend to have better public transport as well as tighter population densities that can better support public transport. In many ways, the US approach to people-moving is as idiotic and wasteful as its health care system. But these things just evolved that way. There was nobody at the Brookings Institution writing papers for congressmen about these things; the big oil and car companies just dominated the scene, and every taxpayer got his own 31/2 bedroom house with an acre of parkland. What could possibly be better?
      Cheers, Chris

      • the USA economy grew at around 7%pa for the first half of the 2oth c, this correlates exactly with oil input to the system. It is now on track for bust
        Other economies growing at the same rate are equally deluded about infinity, but will be driven to the same end.

        • Chris Johnson says:

          @EOM: Well stated, sir. The correlation actually appears to be causation. The point I was trying to make to Stan et al is that the desire to have a set of wheels is global. Some people on this blog treat it as ‘the enemy’ supported by those evil car companies and energy peddlers. No, the demand is overwhelming, all over the world.
          Now how are we going to transition to a ‘no growth’ global economy even as the world is getting richer and the number and percentage of poor are declining?
          Cordially, Chris

          • Jan Steinman says:

            “the world is getting richer and the number and percentage of poor are declining…”

            It depends on whose figures you believe.

            International aid organizations have a vested interest in showing that they are improving things, and indeed, there has been “improvement” by economic measures.

            But does that tell the real story?

            “Poverty-stricken” subsistence farmers have generally had fulfilling, happy lives. But in comes a missionary school, the kids learn the minimum skills they need to go to work in a multinational corporate factory, and they go to the city to live in slums while working there. Their income has “gone up,” but their quality of life has, in fact, gone down. (See Schooling the World: The White Man’s Last Burden.)

            Nation Master notes that the rapid increase of China and India pulls the average up, while sub-sahara Africa continues to decline. Is it fair to say “the world is getting richer,” when it is only a few populous countries? Does a “declining percentage of poor” tell us much when the vast majority of them come from just two countries?

            Alternative measures, such as the Gini Index (income inequality) and happiness measures, seem to be inconclusive about “things getting better.” Indeed, the Gini Index has been steadily getting worse for the US.

            • Chris Johnson says:

              To Jan Steinman: Thanks, Jan. You touched on some good points. Perhaps I was overly influenced by The Economist (you know how the Brits love to manipulate Yanks for the last 200 years), which earlier in the year focused on this issue, happily proclaiming that global poverty has declined a great deal and could even be eliminated within a decade or two.. The authors contrasted those optimistic views with the despair of a few decades earlier. And in fact there have been some real success stories, such as Angola, to counterbalance the continuing grim reports from Somalia and Nigeria, and much of the Muslim world.
              I don’t claim to know much more than the next fellow about these things, but it appears that undesirable emigration of unskilled, illiterate and non-numerate people from ‘the south’ will continue weighing down richer societies until those people’s living standards and personal capabilities to earn a decent life are enhanced. Africa is on track to double its population to two Billion within 40 years. There’s much to be done.
              Cordially, Chris

  21. Stan says:

    Some comments on EROI from http://blogs.cfr.org/levi/2013/02/07/thinking-carefully-about-tight-oil/
    “The Slate essay also manages to bring in one of my favorite bugaboos: energy return on investment (EROI). It is taking ever more energy, Pierrehumbert points out, to produce a barrel of oil. This is supposed to herald the disastrous coming of a day when we need to put more energy in than we get out. But not all energy is the same, and it can make very good sense to put in large amounts of energy in a relatively low-value form (e.g. gas) to get a smaller amount of high-value energy (e.g. oil) out.” Would this reasoning apply to tar sands? Can anyone touting EROI figures be trusted?


    • I personally stay away from EROI, partly because it gives misleading comparisons among different energy sources and partly because it does not really differentiate between high and low quality energy, as you note. It is most useful at looking at changes in a single fuel over time.

  22. Stan says:

    I’ve been doing some research. Some findings: “…Saudi Arabia, as LeVine and Bayroff continue, “is the sole country able to add meaningful daily volumes to global production in a pinch‘. To put it simply, Saudi Arabia is widely considered as the “central bank of oil‘ because it has the means to bring, to a certain extent, stability to the oil markets.”
    (from http://www.abo.net/oilportal/topic/view.do?contentId=2000557)

    If the world’s “central bank of oil‘ should suddenly go off-line, what would be the implications for peak oil? Gail, has anyone asked this question yet? Would such an event seem at all likely in the near future?


    • Saudi Arabia has some wells that it needs to “rest” part of the time. So it can turn these on and off. This gives the illusion that it has a huge bank, but total production doesn’t really rise. There are articles I have seen recently (but would have to look for) in which Saudi Arabia admits that supplies are getting tighter. The article you linked to makes good points.

      We are expecting more of Saudi Arabia than it really can do right now, and the amount it can do is likely to become less over time. So indeed, there is a chance that Saudi oil problems could contribute to our other problems.

      • One of the scarier aspects of Saudi oil is the rising proportion that it needs to use for home consumption, and the fact that they practically give the stuff away to their own people like some infinite bounty. As they stand right now, Young Saudi men are less and less inclined to work in any meaningful sense because oil does all their work, or enables them to pay ‘menials’ to do it. It also allows them to buy all their food, which has allowed the population to be 30 times what it should be. The Saudis have convinced themselves that theirs is a viable nation irrespective of oil. Like Israel, it is under the protection of a mythical being as well as a deluded superpower.
        oil is going to run out, that is certain, when it does, their American protectors will walk away because they will be of no use to them. By that time the USA will be too weak to offer much support anyway to Saudi or Israel or Egypt for that matter. The entire region is a house of cards stuck together with oil. Those millions of Saudis are going to have no means of support or any way of maintaining their nation. What you see in Syria now, will seem like a schoolyard fight when Saudi collapses. When a weak nation collapses, stronger nations take bites out of it, all similarly deluded that their nation is ‘eternal under god’. (haven’t I heard that somewhere before?)
        With the USA out of the equation in the middle east, the area will revert to conflict between desert tribes, who might just have a few nuclear weapons hidden in the sand dunes, in contrast to waving rifles and swords around on the backs of camels as they did 100 years ago.
        if you really want the ultimate in self delusion, try the notion that Saudi expects to be an oil importer by 2030. So by then the world’s biggest oil producer will be out of the game.
        There isn’t just a chance that Saudi will contribute to our problems, it’s a certainty.

        • xabier says:

          From what I’ve seen in Mayfair in London, Saudi men are very good at propping up bars, drinking cocktails and ‘chatting’ to hookers. But maybe I’m doing them an injustice……

          • no you dont, you describe hypocrisy very well. its why they sink cash into london real estate, deluded that when oil output crashes, mayfair mansions will retain their value, and they can carry on their lifestyles here.
            another big oops moment there i think

          • xabier says:

            E of M

            I agree, the super-rich Saudis will abandon their beloved holy homeland in a trice, if things get sticky over there. Even if the value falls, London super-prime property is a comfortable hang-out.

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