What’s Ahead? Lower Oil Prices, Despite Higher Extraction Costs

Nearly everyone believes that oil prices will trend higher and higher, allowing increasing amounts of oil to be extracted. This belief is based on the observation that the cost of extraction is trending higher and higher. If we are to continue to have oil, we will need to pay the ever-higher cost of extraction. Either that, or we will have to pay the high cost of some type of substitute, if one can be found. Perhaps such a substitute will be a bit less expensive than oil, but costs are still likely to be high, since substitutes to date are higher-priced than oil.

Even though this is conventional reasoning based on experience with many substances, it doesn’t work with oil. Part of the reasoning is right, though. It is indeed true that the cost of extracting oil is trending upward. We extracted the easy to extract oil, and thus “cheap” to extract oil, first and have been forced to move on to extracting oil that is much more expensive to extract. For example, extracting oil using fracking is expensive. So is extracting Brazil’s off-shore oil from under the salt layer.

There are also rising indirect costs of production. Middle Eastern oil exporting nations need high tax revenue in order to keep their populations pacified with programs that provide desalinated water, food, housing and other benefits. This can be done only through high taxes on oil exports. The need for these high taxes acts to increase the sales prices required by these countries–often over $100 barrel (Arab Petroleum Investment House 2013).

Even though the cost of extracting oil is increasing, the feedback loops that occur when oil prices actually do rise are such that oil prices tend to quickly fall back, if they actually do rise. We know this intuitively–in oil importing nations, deep recessions have been associated with big oil price spikes, such as occurred in the 1970s and in 2008. Economist James Hamilton has shown that 10 out of 11 US recessions since World War II were associated with oil price spikes (Hamilton 2011). Hamilton also showed that the effects of the oil price spike were sufficient to cause the recession of that began in late 2007 (Hamilton 2009).

In this post, I will explore the reasons for these adverse feedback loops. I have discussed many of these issues previously in an academic paper I wrote that was published in the journal Energy, called “Oil Supply Limits and the Continuing Financial Crisis” (available here or here).

If I am indeed right about the path of oil prices being down, rather than up, the long-term direction of the economy is quite different from what most are imagining. Oil companies will find new production increasingly unprofitable, and will distribute funds back to shareholders, rather than invest them in unprofitable operations. In fact, some oil companies are already reporting lower profits (Straus and Reed 2013).  Some oil companies will go bankrupt. As an example, the number two oil company in Brazil, OGX, recently filed for bankruptcy, because it could not profitably find and extract Brazil’s off-shore oil (Lorenzi and Blout 2013).

Oil companies will increasingly find that the huge amount of debt that they must amass in the hope of producing profits sometime in the future is not really sustainable. The Houston Chronicle reports that an E&Y survey of Oil and Gas Companies indicates that the percentage of companies that expect to decrease debt to capital ratios jumped to 48% in October 2013 from 31% a year ago (Eaton 2013). If companies with huge debt loads cut back production to the amount that their cash flow will sustain, oil extraction can be expected to fall–just as it can be expected to fall if oil and gas companies go bankrupt or give back investment funds to shareholders.

The downward path in oil production is likely to be steep, if oil prices do indeed drop. The economy depends on oil for many major functions, including most transportation, agriculture, and construction. Increasingly expensive to extract oil is a sign of diminishing returns. As we utilize more resources for extracting oil (oil, steel, water, human labor, capital, etc.), there will be fewer resources to invest in the rest of the economy, reducing its ability to grow. This lack of economic growth feeds back as low demand, bringing down the prices of commodities, including oil. It is because of this feedback loop that I believe that the path of oil prices is generally lower. This path is the opposite of what a naive reading of “supply and demand” curves from economics textbooks would suggest, and the opposite of what we need if the economy is to continue on its current path. 

Adverse Feedback 1: Wages stagnate as oil prices rise, tending to slow economic growth.

Suppose we calculate average US wages over time, by dividing “Total Wages” by “Total Population,” (everyone, not just those working) and bring this amount to the current cost level using the CPI-Urban inflation adjustment. On this basis, US wages flattened as oil prices rose, both in the 1970s and in the 2000s. The average inflation-adjusted wage is 2% lower in 2012 ($22,040) than it was in 2004 ($22,475), even though labor productivity rose by an average of 1.7% per year during 2005-2012, according to the US Bureau of Labor Statistics. Between 1973 and 1982, average inflation-adjusted wages decreased from $17,294 to $16,265 (or 6%), even though productivity reportedly grew by an average of 1.1% per year during this period.

Figure 1. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP's 2013 Statistical Review of World Energy.

Figure 1. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP’s 2013 Statistical Review of World Energy.

To see one reason why wages might flatten, consider the situation of a manufacturer or other company shipping goods. The cost of goods, with shipping, would rise simply because of the cost of oil used in transport. Companies using oil more extensively in producing their products would need to raise prices even more, if their profits are to remain unchanged. If these companies simply pass the higher cost of oil on to consumers, they likely will sell fewer of their products, since some consumers will not be able to afford the products at the new higher price. To “fix” the problem of selling fewer goods, companies would likely lay off workers, to reflect the smaller quantity of goods sold–one reason for the drop in wages paid to workers shown on Figure 1. (Note that Figure 1 will reflect reduced wages, whether it results from fewer people working or lower wages of those working.)

Another approach businesses might use to deal with the problem of rising costs due to higher oil prices would be to reduce costs other than oil, to try to keep the total cost of the product from rising. Wages are a big piece of a business’s total costs, so finding a way to keep wages down would be helpful. One such approach would be a wage freeze, or a cut in wages. Another would be to outsource production to a lower cost country. A third way would be to use increased automation. Any of these approaches would reduce wages paid in the United States. The latter two approaches would tend to have the greatest impact on the lowest paid workers. Thus, we would expect increasing wage disparity, together with the flattening or falling wages, as companies try to hold the cost of goods and services down, despite rising oil prices.

The revenue received by businesses and governments ultimately comes from consumers. If the wages of lower-paid consumers flattens, these lower wages can be expected to reduce economic growth, because with lower wages, these workers will have less income to buy discretionary goods and services. The higher-paid workers may have more income, but this won’t necessarily feed back into the economy well–it may inflate stock market prices, but not feed back as spending on goods and services, necessary for growth.

There is even a feedback with respect to debt. The portion of the population with falling inflation-adjusted wages will find it harder to borrow, making it more difficult to buy big-ticket items such as cars and houses.

Adverse Feedback 2: Consumers cut back on discretionary spending because of the higher cost of food and oil, leading to more layoffs and recession.

Clearly, based on Figure 1, consumers cannot expect wage increases to match oil price increases. Even workers who work in the oil industry cannot expect wage increases equal to the increase in the price of oil, because part of the increase in cost comes from the need for more workers per barrel of oil. For example, it is more labor-intensive to extract oil from a large number of small wells, each of which require fracking, than it is to extract oil from a few larger wells, none of which require fracking.

One cost that tends to increase with the cost of oil is the cost of food (Figure 2). The cost of food and the cost of commuting are necessities for most workers. They will cut down on discretionary expenditures, if necessary, to make certain these costs are covered.

Figure 2. FAO Food Price Index versus Brent spot oil price, based on US Energy Information Agency.

Figure 2. FAO Food Price Index versus Brent spot oil price, based on US Energy Information Agency. *2013 is partial year.

If wages are inadequate, workers will cut back in such area as restaurant meals, vacation travel, and charitable contributions, leading to even more problems with a lack of jobs in these and other discretionary sectors.

It might be noted that even countries that export oil can encounter difficulties as oil prices rise. These countries need a way to get the extra revenue from selling high-priced oil over to the many residents who must buy higher-priced food, but do not benefit from the wages paid to oil workers. It is not a coincidence that the Arab Spring uprisings took place in several oil exporting nations in early 2011, when food prices peaked on Figure 2.

Adverse Feedback 3: Higher oil and food prices together with stagnating wages lead to cutbacks in spending for new cars and new homes, falling prices for new homes, defaults on home and car loans, and banks in need of bailouts.

Purchasing more-expensive homes and new cars are types of discretionary spending. If consumers find their incomes are squeezed by high oil prices, they will cut back on  expenditures such as these as well, leading to layoffs in the home construction and auto manufacturing industries.  Such cutbacks can also result in bankruptcies of auto and home builders.

If people buy fewer move-up homes, the price of resale homes will tend to fall. This in turn makes defaults on mortgages more likely. Layoffs will also tend to make defaults on mortgages more likely, as well as missed payments on auto loans.

Figure 3. S&P Case-Shiller 20-City Home Price Index, using seasonally adjusted three month average data. April 2006 is the peak month.

Figure 3. S&P Case-Shiller 20-City Home Price Index, using seasonally adjusted three month average data. April 2006 is the peak month. Data is latest shown on website as of November 2013.

Most people do not associate the drop in US home prices with the rise in oil prices, but the latest rise in oil prices began as early as 2003 and 2004 (see Figure 2), and the drop in home prices began in 2006. Some of the earliest drops in home prices occurred in the most distant suburbs, where oil prices played the biggest role.

Banks increasingly found themselves in financial trouble, as defaults on mortgages and other loans grew. These defaults are often blamed on bad underwriting. While bad underwriting may have played a role (and may also have helped prevent the US from falling into recession even earlier, when oil prices began rising), the falling prices of homes created part of the default problem, as did job layoffs associated with higher oil prices.

All of these feedbacks led to a need for more government involvement–lower interest rates to try to hold the economy together, get spending back up, and raise home prices.

Adverse Feedback 4: Cutbacks in consumer debt combined with flat wages appear to have led to the decline in spending that precipitated the July 2008 drop in oil prices. Consumer debt still remains depressed.

Oil prices started falling in July 2008, and did not hit bottom until the winter of 2008 (Figure 4).

Figure 4. West Texas Intermediate Monthly Average Spot Price, based on us Energy Information Administration data.

Figure 4. West Texas Intermediate Monthly Average Spot Price, based on us Energy Information Administration data.

What could have precipitated such a fall? Many people consider the bankruptcy of Lehman Brothers on September 15, 2008 to be pivotal in the financial crisis of 2008, but the drop in oil prices started months earlier. What could have precipitated such a steep drop in oil prices?

It seems to me that the real underlying cause was a mismatch between what goods cost (such as high food and oil prices) and the amount consumers had available for spending. There are two basic sources of consumer spending–wages and increases in debt. If consumer debt suddenly starts decreasing, rather than increasing, consumer spending can be expected to fall (especially if wages are not rising).

In fact, consumer debt did start falling at precisely the time that oil prices crashed. Mortgage debt started falling in the third quarter of 2008, reflecting a combination of falling home prices and mortgage defaults. As noted previously, both of these were indirectly related to high oil prices.

Figure 5. Us Home Mortgage Debt, based on Federal Reserve Z.1 data.

Figure 5. US Home Mortgage Debt, based on Federal Reserve Z.1 data.

Other consumer debt fell at the same time. Revolving credit (primarily credit card debt) hit a peak in July 2008, and began to fall (Figure 6).

Figure 6. US Revolving Credit outstanding (primarily credit card debt), based on Federal Reserve G.19 Report.

Figure 6. US Revolving Credit outstanding (primarily credit card debt), based on Federal Reserve G.19 Report.

Adverse Feedback 5: Even after high oil prices have been in place for several years, many governments find themselves trapped by the need for deficit spending and ultra-low interest rates to cover up problems with stagnant wages and inadequate demand for homes and cars at “normal” interest rates. 

With the slack in consumer debt, US government debt soared (Figure 7). Governments in Europe and Japan found themselves in a similar bind.

Figure 7. US government publicly held debt, based on Federal Reserve Z.1 data.

Figure 7. US government publicly held debt, based on Federal Reserve Z.1 data.

Even as US Federal Government debt soared, it was not enough to fully make up for the cutback in debt elsewhere in the economy (Figure 8).

Figure 8. US Debt based on Federal Reserve Z.1 data.

Figure 8. US Debt based on Federal Reserve Z.1 data.

How do governments get themselves caught in such a bind? Businesses can to a significant extent overcome their problems with high oil prices by laying off workers and finding lower cost methods of production. Individuals, however, find that the wage problems persist as long as oil prices remain high and businesses have the option of replacing their services with lower cost workers elsewhere. Globalization definitely makes this problem worse.

When workers have job problems, governments find themselves in the unfortunate position of trying to fix the situation by providing more unemployment benefits, food stamps, and disability benefits. Governments also find themselves with lagging tax revenue, because businesses increasingly are located in offshore tax havens, and workers’ incomes are lagging.

Adverse Feedback 6: Rising prices of oil have contributed to long term inflation. If oil prices start falling, this tends to create the opposite problem–deflation. Once oil price deflation starts, it may lead to a self-reinforcing debt default cycle.

Not all inflation is related to higher energy prices, but some of it is. This is one reason the US government sometimes gives an inflation estimate “excluding volatile food and energy prices.” Inflation over the years appears to be one way that a small amount of diminishing returns has fed into the economy.

The concern a person has is that deflation will tend to lead to debt defaults. Clearly lower oil and gas prices mean that oil and gas businesses will become less profitable, and loans in this area will tend to default. But loans related to other types of commodities may tend to default as well. There will also tend to be layoffs in these industries, and in surrounding communities.

Also, with deflation, the low interest rate policies of governments no longer have the stimulating impact that they would have without deflation. So governments will have to concoct negative interest rate plans, and see if they can make these work, to take the place of current plans.

One question is how effective today’s Quantitative Easing and ultra-low interest rate programs have been. We know that they have tended to blow bubbles in asset prices, such as stock market prices. But are ultra-low interest rates part of what allowed oil prices to re-inflate after the July 2008 drop? Certainly, they have helped hold up auto and home sales, and have supported oil drilling operations that rely heavily on debt.

To some extent, the current system appears to be held together with duct tape. It looks like it could fall apart on its own, or it could fall apart as governments try to reduce their deficits by higher taxes and lower spending (See Figure 7). Adding deflation to the combination would seem to be another way of making the current approach for covering up our problems even more vulnerable to collapse.

The frightening thing is that there is already some evidence that oil prices (and commodity prices in general) are starting to trend downward. The chart I showed in Figure 4 showed West Texas Intermediate (WTI) oil prices–a price that is often quoted in the US. On Figure 9, I show WTI oil prices alongside Brent, another oil benchmark. Brent reflects world oil prices to a greater extent than WTI price does. It seems to be showing a recent downward trend in world oil prices. To the extent that this downward trend in prices feeds back into inflation rates and makes Quantitative Easing work less well, this downward trend becomes a potential problem. Its effect would tend to offset the stimulating effect on economies that lower oil prices would normally have.

Figure 9. Brent oil price compared to West Texas Intermediate oil price, based on EIA monthly average spot prices.

Figure 9. Brent oil price compared to West Texas Intermediate oil price, based on EIA monthly average spot prices.

Conclusion

Oil and other fossil fuels are unusual materials. Historically, their value to society has been far higher than their cost of extraction. It is the difference between the value to society and their cost of extraction that has helped economies around the world grow. Now, as the cost of oil extraction rises, we see this difference shrinking. As this difference shrinks, the ability of economies to grow is eroding, especially for those countries that depend most heavily on oil–Japan, Europe, and the United States. It should not be surprising if the growth of these countries slows as oil prices rise. The trend toward globalization can only make this trend worse, because it gives businesses an opportunity to lower wage costs by outsourcing part of their production to lower-cost countries (that use less oil!). When costs are reduced in this manner, businesses are also able get the “benefit” of more lax pollution laws overseas.

We saw in Figure 9 that global oil prices seem already to be trending downward, as growth in countries such as China, Brazil, and India is faltering. At the same time, oil from easy to extract locations is depleting, and oil companies have no choice but move on locations where more resources of all kinds are required, leading to diminishing returns and ever-higher cost of extraction. The way I view our predicament is shown in Figure 10.

Figure 10. Our Oil Price Predicament. Over time, the amount affordable by consumers at a given price falls, while the price required by producers to earn a profit rises.

Figure 10. Our Oil Price Predicament. Over time, if we want to maintain constant oil consumption, the price consumers can afford tends to fall, while the price required by oil producers in order to earn a profit tends to rise.

Over time, in order to maintain constant oil production, the price consumers can afford tends to fall, because governments need to “take back” the huge deficit spending they are using now to prop up the system. At the same time, prices required by producers tend to rise, as the mix of oil production moves to more difficult locations.

While in theory oil prices could spike again because of rising demand of the less developed countries, it is hard to see how this price spike could be sustained. We would likely run into the same problems we had before, with more layoffs and plus credit contraction leading to a cutback in demand in the US, the European Union, and Japan. These users represent a big enough share of the total that their drop in demand would tend to bring world prices back down.

The problem this time, though, is that governments seem to be getting close to being “out of ammunition,” in trying to fight what is really diminishing returns of one of the major drivers of our economy. I don’t know exactly how things might play out, but experience with prior civilizations suggests that “collapse” might be a reasonable description of the outcome.

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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428 Responses to What’s Ahead? Lower Oil Prices, Despite Higher Extraction Costs

  1. Hello All,
    Over population, food and water insecurity is much worse in some regions of the world than others. It is destabilizing many countries and will likely get much worse over the next decade. It is a highly complex issue and will not be solved with one size fits all solutions. I recommend anyone interested should read “Countdown”. I found it to be a very balanced and well written book.

    When I wrote “we need to consume less resources” I was referring to all resources not just food. Learning to live on less means we spend less money, incur less debt, and are better prepared for a future when we enter into scarcity of food, water, and energy. If we take this endeavor seriously we really start to think about the things we use, where they come from, how we get them, the energy embedded in them, and what if anything will be available to replace them. It forces us to look closely at our lifestyle and make conscious decisions about the things we “need” versus the things we “want”. Wants we can live without.

    If we do this long enough, with the understanding that much of the things currently available are going to go away anyway, maybe abruptly, we are better prepared to live on less. One of the unexpected benefits of doing this is that I have learned to simplify my life and reduce stress I never realized I had. I feel satisfaction and happiness in ways I never expected. I have also found it interesting how many other people in my community are doing the similar things as me. We may come from different social, political, religious, and economic viewpoints, but there are many people who are already struggling to make ends meet, or who believe that something is going wrong in the world, or worry about our future. The Great Recession is still taking it’s toll on us. We are all going to have to adjust our lifestyle eventually.

    I don’t believe we can fix the dilemma we are in. The most important thing we can do is to uncouple our lives from the global economy, and that mainly means consuming less of anything that requires oil. We need to prepare for a future in which we are dependent on our own efforts and connected to the resources of our local community. Whether we agree with each others view points or not, I think we need to accept the fact that we won’t survive without helping each other. A community is made up of many different kinds of people with many different talents and abilities.

    regards,
    Jody

  2. sheilach2 says:

    Isn’t it a crime that our actions are like that of yeast in a petri dish? We have named ourselves Homo sapiens sapiens but we certainly don’t act like it do we. Way back in the 1960’s I thought we had too many people then so I made sure I didn’t get pregnant, why add to the problem?

    Unfortunately, it’s the uneducated & stupid who have the most children or those poor folks who still live in a theocracy who are denied birth control & abortions.There are still stupid fundies here who are doing their best to turn this country into a theocracy without birth control or abortions but who also refuse to pay for child care for those poor women who were forced to have children against their will.
    They only care about those “children” from conception to birth, after that, tough luck kid.
    We are YEAST! We are also toast.

    • Scott says:

      Hello, Yes, that reminds me of some of the songs in the 1960’s and 1970’s when I was growing up songs saying that there are far too many of us even back in those days, there have been so many changes that I have since then. My first trip to Asia was an eye opener on how crowded the world is outside our US borders, but I mostly grew up in rural Californian and now we are in Oregon, there are still some places with lots of land in some countries but not in most of Asia.

      The subject of birth control is a tough one, many think that two should be the limit, that would replace mom and dad but perhaps since there are too many of us on the planet one child may be appropriate if we want to decrease the population, but the problem with that is soon there will be far too many old people and not enough young folks to make an economy work to pay old folks pensions and care. A difficult subject and many have their opinions based upon their beliefs.

      Well nature will prevail either way, I am still hoping for the Star Trek type “star ships” to take about 80 percent of us to the new beautiful bountiful garden planets…. For my family we would prefer to remain here in our home planet after many leave, just a dream? but time will tell.

      Scott

      • Scott says:

        Hello, One thing I posted about being too many old people, and – if we were to somehow cut down the birthrate, it would help, — but in thinking about that it would only last about a generation and it would re balance it self due to die offs of the older generation and fewer children being born. So we would have a hard time for perhaps 20 years with the older generation needing care from a shrinking younger generation…

        It would be the most natural and less warlike way, not like End of More describes in our nuclear end days with the big bombs. I really do not think so, at least really hope not, as I think that there are those that would not allow those bombs to be launched.

        Perhaps things are already under way to this, seems to be lots of sick people these days. I think it is from what we eat mostly. So some could argue that we are killing our selves off by eating all of these processed and fast foods.

        If you eat the foods that you see mostly at the stores and fast etc. you may get sick as it is not a healthy diet.

        I do see so many more sick people now than when I was a kid in the 1960-1970 period, lots more people suffering ailments and in little electric wheel chairs, some are veterans and many more I fear ate the the junk foods that line the shelves.

        My point is even to buy fresh meat these days often there are additives, for many there are I think too many additives in our foods now compared to 30 years ago. Shop carefully and read labels if you are worried about this.

        So many basic items in our food stores contain processed foods even things like a fresh turkey is pumped full of wheat and broths that some can get sick from.

        We will be healthier for it, it is very expensive to shop at some stores for specialty goods and we will pay twice the price for everyday items like chicken or produce. But there are some good stores out there that provide things like organic chicken and cage free eggs and organic veggies and these are worthwhile to support. The food does taste better too I found. It is harder and takes more time and expense to make food at home for a working person and if you grow your own even more time will be needed but you will likely be healthier.

        Scott

      • sheilach2 says:

        Travel to another star with earth like planets is out. The nearest star is several light years away & is a white dwarf, the burned out core of a dead star. Other stars with planets are much to far away for any hope for us to escape to & they are uninhabitable, too hot or too big.

        I wouldn’t do like china did & limit people to just one child. That unfortunately resulted in the abortion of female fetuses & the birth of too many males, but I do approve of limiting us to just 2 healthy children then sterilize the women & man to prevent any more being born.
        Of course this won’t happen, there would be too much protest & resistance for it to work. So I fear our numbers will continue to climb until it’s stopped by war, disease & starvation just like the other “dumb” animals.
        I also hope we won’t be so stupid as to use the nuclear option, that would be ghastly!
        We are being ruled by those who don’t plan beyond the next quarter & who’s superstitions won’t allow them to think rationally. They seem to believe that we are exempt from the limits imposed by nature.
        Oil allowed us to delude ourselves that we were capable of over coming limits to resources & energy but nature will soon prove us very wrong.

  3. Don Stewart says:

    Dear Gail
    This is from the article on Megafauna in Wikipedia. You will note that fluctuations in the population of megafauna can contribute to climate change. When megafauna ruled the world, temperatures were 10 degrees C warmer than the present. I think most people would say that humans couldn’t survive a 10 degree C increase in temperature. When humans slaughtered more recent megafauna, the reduction contributed to cooling.

    ‘Large populations of megaherbivores have the potential to contribute greatly to the atmospheric concentration of methane, which is an important greenhouse gas. Modern ruminant herbivores produce methane as a byproduct of foregut fermentation in digestion, and release it through belching. Today, around 20% of annual methane emissions come from livestock methane release. In the Mesozoic, it has been estimated that sauropods could have emitted 520 million tons of methane to the atmosphere annually,[44] contributing to the warmer climate of the time (up to 10 C warmer than at present).[44][45] This large emission follows from the enormous estimated biomass of sauropods, and because methane production of individual herbivores is believed to be almost proportional to their mass.[44]
    Recent studies have indicated that the extinction of megafaunal herbivores may have caused a reduction in atmospheric methane. This hypothesis is relatively new.[46] One study examined the methane emissions from the bison that occupied the Great Plains of North America before contact with European settlers. The study estimated that the removal of the bison caused a decrease of as much as 2.2 million tons per year.[47] Another study examined the change in the methane concentration in the atmosphere at the end of the Pleistocene epoch after the extinction of megafauna in the Americas. After early humans migrated to the Americas about 13,000 BP, their hunting and other associated ecological impacts led to the extinction of many megafaunal species there. Calculations suggest that this extinction decreased methane production by about 9.6 million tons per year. This suggests that the absence of megafaunal methane emissions may have contributed to the abrupt climatic cooling at the onset of the Younger Dryas.[46] The decrease in atmospheric methane that occurred at that time, as recorded in ice cores, was 2-4 times more rapid than any other decrease in the last half million years, suggesting that an unusual mechanism was at work.[4’

    Today, there is concern that the enormous number of cows is contributing to methane emissions in sufficient quantity to result in dangerous warming. According to a couple of other Wikipedia articles, there were once 60 million bison in North America. There are now 90 million cows in the US. Doing a detailed analysis of the impact of replacing bison with cows is beyond my capacity, but they are genetically close together and the numbers of ruminants today seems to be roughly what it was back in the olden days. We have replaced wild with domesticated and eliminated the huge ones. Bison are more likely to injure visitors to Yellowstone than bears are likely to injure visitors. A natural bison also had very little fat (modern bison have been cross bred with cows to give them more fat while retaining some of the romance of the frontier). Cows could be manipulated to have more fat or less fat, and were far more tame. You can understand why ranchers preferred the cows. If wooly mammoths had a distinctively different ecological niche than cows, I don’t know what the distinction is…but I don’t claim expertise in the area.

    Don Stewart

    PS Albert Bates, in The Biochar Solution, states that reducing cows to what can be grass fed and using the grain to feed humans could support 11 billion or more.

    • Don,
      I don’t believe the earth can support 11 billion people even if we converted to a vegetarian diet. There are two very important limitations. One is fresh water, the other is temperature. During hotter summers crop yields have decreased significantly. Higher temperatures and climate change are shifting rain fall patterns, run off, and soil moisture content, limiting total crop production. We are seeing more severe and longer droughts resulting in the loss of arable crop land. Farmers have been exploiting aquifers for irrigating food crops and as temperatures rise and droughts occur they are taking too much water causing rapid decline in groundwater reserves. Fracking also uses a large amount of water and is polluting ground water thus reducing water availability. Ethanol will consume 40% of the 2013 U.S. corn crop so now we are feeding our cars ‘corn’ as well as confined animals. Combine all these factors and I don’t believe the earth will come close to feeding 11 billion people, even if you could convince them to become vegetarian. And being mostly vegetarian myself, I can also add another limitation. Few people know how to cook vegetarian meals!

      regards,
      Jody

      • Don Stewart says:

        Dear Jody
        Part of the problem is my lack of precision. Another, equally important part, is that we are facing a sort of ‘limits to growth’ scenario. That is, change in one factor has consequences for other factors.

        I think Albert was simply taking the current harvest of grains and adding into the human diet all the grains fed to animals or to biofuels plants. The numbers come out somewhere around 11 billion.

        Such a calculation ignores lots of other stuff such as the effects of climate change, depletion of aquifers, maldistribution of farmland, debt levels, and all the other evils which afflict us. If you were having a discussion over a beer with Albert, I am sure you would find that he is painfully aware of all those things.

        Don Stewart

        • Don,
          I’m sure that he is. But when someone says the world can feed 11 billion people there are too many people that think “No problem. We have plenty of time.” Just like peak oil “half the oil is still in the ground…No worry. I still have plenty of time.” People don’t read the fine print!

          One of the main reasons I stopped eating meat regularly was to reduce our family’s consumption of resources. But try to tell people to change their behavior and you hear “I wouldn’t be able to do that.” “I don’t want to drive less, eat less, waste less, garden, or cook….” Americans want to waste their time doing all the endless things we do to entertain ourselves. The list is endless.

          How can Americans make any effective change in our consumption of resources if we aren’t willing to consume less? The only thing that slow our consumption is a great recession, chronic under or unemployment, and rising prices. Eventually the choice is taken away, and people can’t afford to over consume. Unfortunately, now it’s China’s turn. Meat consumption is expanding as rapidly in China as auto sales.

          regards,
          Jody

          • Don Stewart says:

            Dear Jody
            I am afraid that the issue of ruminants is quite complex, and solving it requires more than just ‘consume less’. Albert covers this in a chapter titled The Role of Ruminants.

            First, he covers the usual facts that confinement animals consume insane amounts of water, fossil fuels, and grains which might feed humans.

            But, second, he covers the facts as laid out by Alan Savory that grasslands cannot thrive in the absence of ruminant grazing. Grass has no way to get rid of dead material in the absence of grazing. In fact, it is designed for grazing because its meristem is right down at ground level. So a cow is taking care of the excess material in a way that doesn’t hurt the grass at all. In addition, the cow is depositing manure which keeps the soil food web which supports the grass very happy. The cow is heavy, so its hooves push surplus grass into the soil, creating just the right amount of disturbance and composting the surplus right in place. Albert states that traditional grasslands such as the Great Plains, Outback Australia, and the Ural mountain foothills once had 20 percent carbon in the soil. I don’t know the source of his information, but if his numbers are correct then the Aborigines were doing a pretty good job in the Outback.

            And third, rotational grazing is a marvellous way to restore topsoil. The Australians, especially Geoff Lawton and Darren Doherty, are very strong advocates of rotational grazing to grow topsoi rapidly. Here in the Southeast US, I haven’t heard any results from other methods which come close.

            Joel Salatin, in one of his videos with Joe Mercola, says that all cows should be one hundred percent grass fed. Mercola demures that a lot of beef is labeled ‘grass fed’, but is actually finished on grain, and what is a city dweller to do? Salatin says that the city dweller should make a trip to visit the farmer, look him in the eye, and ask about ‘grain finishing’. A cow finished on grain is a sick cow.

            I do not wish to get embroiled in arguments about sick cows and whether eating beef is deadly. If we just accept the fact that grasslands are designed to be grazed, and that rotational grazing is the fastest demonstrated method to restore topsoil, then we are likely to be very cautious in laying down hard and fast rules.

            In his chapters on reforestation and afforestation, Albert gives some examples of very harsh landscapes which are now growing trees. Perhaps we can grow trees in places where grass was growing 400 years ago–or maybe only cactus. See Geoff Lawton’s update from last week on his Greening the Desert project in Jordan:
            http://permaculturenews.org/2013/11/19/rough-ready-real-november-2013-update-dead-sea-valley-permaculture-project-aka-greening-desert-sequel-site/

            I draw these conclusions:
            1. There are things we can do to sequester a lot of carbon.
            2. We also need to rapidly ramp down fossil fuel consumption.
            3. Fossil fuels are very valuable, in terms of human survival, to produce products such as biochar and to establish forests and to green the desert. Fossil fuels should not be squandered in Iowa cornfields which are just about consumption and nothing about capital accumulation.
            4. We will have to live differently. This is the conclusion that Art Berman comes to in his talk to the Houston Geological Society:
            http://www.youtube.com/watch?v=DHkKa4Zj_94

            For those people who have not read Albert’s Biochar book, I recommend it highly. I am rereading it in anticipation of Albert’s visit to our neighborhood in early February. I am impressed with his ability to communicate the nature of the knife edge humanity will need to walk in order to survive. We should be feeling urgency and humility at our ignorance and impatience with our procrastination.

            Don Stewart

          • sheilach2 says:

            Eating less will only make it possible to feed more people so they can have even more children!
            I still eat a little meat and I’ll be dammed if I’m going to go vegan just so more people can breed even more poorly fed children. We cannot solve the problem of too many people by eating less, that will only result in more hungry people.
            We are in a trap of our own making, The number of people that we will be able to feed will decline & there is no way we can prevent this.
            The best we can do now is to get as many farmers as possible to cut their use of fossil fuels, have crops rotated with legumes, then other crops before putting that land back into pasture to recover.
            I drive as little as possible, I have a small gas frugal auto, I cook my own meals but like it or not, I still have to do some driving thanks to the way we overdeveloped the land and sprawled everyone away from the shops. Our only local market is scheduled to close to I am being forced to drive even further to do my grocery shopping. They have made living in towns & cities too expensive so that forces people to commute many miles from their homes/apartments to work.

            We must stop trying to feed more & more people by using chemical extenders, sawdust, & other non food extenders & just produce real organic food. I think that would also improve the health of the survivors as well as the land. There is way too much crap in our “food”.

            The plow has lost the race with the breeders, we must recognize that we cannot feed a constantly growing population & it’s foolish to keep trying.

            • Jan Steinman says:

              Might seem like a “chicken and egg” sort of issue, but among ecologists, it’s quite clear that excess food creates more people, not the other way around.

              So the coming fossil-sunlight food crunch will solve the “population problem.”

              If there ever is a time of plenty, this very fact will automatically lead to an increase in the population until the natural state of starvation and misery is restored. — Richard Dawkins

          • Eating less doesn’t necessarily mean there is more food for others when food supplies are diminishing. And just because we eat less meat doesn’t mean others will eat more meat. It really depends on the price of meat for most families.

  4. Chris Johnson says:

    @Gail:
    Hi Gail:
    I know you’re really from Missouri and won’t believe it till you see it and taste it, etc., but I really wish you’d accept the possibility — only the possibility, not yet the reality — that electric vehicles are gradually carving out market share that will only increase. Here are some references:
    12% of Norway’s 2013 auto purchases were electric vehicles. http://www.electric-vehiclenews.com/2013/12/norweigian-electric-car-sales-hit-12.html
    0.1% of US were plug-in EV’s, but 3+% were hybrid electric. And the numbers are climbing.
    Berkeley Labs has completed development of Lithium-Sulfur batteries, which provide 100% longer range than Lithium-ion. This will raise ranges to 300 – 400 miles, possibly more. http://www.electric-vehiclenews.com/search/label/Battery%20News
    The big issue is still price. But the life cycle cost is cheaper because the fuel is cheaper (although Big Electricity may have learned how to gouge from Big Oil…) Still, the cost difference of $0.65 versus $3.00 per gallon equivalent is immense for a vehicle that gets say 30 miles per gallon, drives 500 miles per month for 5 years. The fuel cost differential (above costs) is $12,000 less $2700, or an 80% reduction of cost.
    The roads maintenance issue is a canard, IMHO, since plenty of oil will still be pumped and refined into asphalt. Currently, only a small percentage of every BBL is turned into asphalt. Also, concrete is also used and its use as pavement could be expanded.
    The one thing that you’re right about, Gail, is that it hasn’t all happened yet. But these things are beginning to happen. I know, I think you would have felt the same way about the Wright Brothers, whose first flight occurred about a hundred and ten years ago.
    Cheers, Chris

  5. HughK says:

    Correction: I meant “demand outpacing supply dynamic” up above. Sorry.

  6. HughK says:

    Dear Ms. Tverberg,
    Thanks for your fascinating article on the possibility of oil prices falling. I noticed it on your blog a few weeks ago, but just now had time to read it.

    The main question I have is whether:

    a.) your analysis is correct because the deflationary feedbacks of higher energy costs will, ceteris paribus, bring down oil prices significantly in the next few years, as you eloquently argue
    or b.) oil prices will fall temporarily in the aftermath of an oil shock similar to the 2008 oil spike but will remain relatively high in real terms by historical standards.
    or c.) your analysis is incorrect because oil prices will still rise in real terms as a more basic supply outpacing demand dynamic would predict

    Your arguments for lower prices are very compelling. One thing I struggle with in terms of lower oil prices is the fact that a barrel of oil costs about $100 now but it contains the energy equivalent of 25,000 hours of human work. Since, even in the world’s poorest countries, it costs much more than $100 to feed a human enough for him/her to supply 25,000 hours of work, it seems that the value of oil is still far beyond $100 per barrel. So, even if the dollar cost went up significantly more, there may still be a demand for oil.

    I realize that net energy, or declining EROI, is key to whether or not some oil reserve is profitable to exploit…

    Also, it may be that consumption in the developed world will fall, as we seem to be at the edge of limits in fiscal and monetary policy, as you have demonstrated, and consumers in North America, W. Europe, and Japan can reduce their marginal consumption of oil and still survive. But, in the developing world, maybe a small per capita marginal increase in oil consumption is probable because many developing nations are currently in a better fiscal situation and there is a lot of gain for a small increase in oil consumption. (e.g. a family in Philippines or Thailand using a tricycle (i.e. motorcycle with sidecar) more frequently.

    I’m still scratching my head regarding all of this, but your article has brought up many issues which I had not really considered, so thanks very much! I am a high school teacher and I have shared your post with my students.

    Kind Regards,
    Hugh Kelly

  7. JB says:

    A key element that needs to be taken in consideration in the 2013 International Energy Agency (IEA) World Energy Outlook (WEO) is the key statement that the oil industry capital expenditure has risen by nearly 180% since 2000 but with the global oil supply (adjusted for energy content) rising only by 14%.

    This is the clear sign of a rapidly declining Energy Return Over Energy Invested (EROEI)…

    In other words oil economics have become completely dislocated from historic norms since 2000 (and especially since 2005) and the industry is now desperately investing at exponentially higher rates to gain increasingly smaller new amounts of net energy. One should recognize that this is a situation clearly unsustainable over a long period of time…

    What is the impact of this situation on future economic growth, which most politicians are still expecting will save the day by reducing the relative size of the current high debt (in particular sovereign debt) with respect to GDP:

    1) If the oil industry is now sucking from the available capital pool 180% more funds to produce only slightly more net energy than in 2000, the amount of capital available to fund other projects is considerably reduced;

    2) If we have today only 14% more net energy available than in 2000 to power the world economy, there is no doubt that global growth is now hitting the “energy wall” because there is now only a very limited supply of available energy to power any potential new material economic activity… No wonder that most of the reported economic growth since 2000 was related to financial sector “paper” gains mostly derived from speculative activities, in particular on the OTC derivatives market (the largest casino on Earth)… With the currently high depletion rates needing to be constantly offset, there was simply almost no additional net energy available to power any potential new material project ! One wonders what will happen with the even higher tight oil & shale gas depletion rates when that unconventional production represents a significant part of the overall oil & gas production mix…

    Of course this macroeconomic picture varies on a country by country basis and even on a region by region basis depending on the local net energy availability situation and on the local marginal cost of that energy.

    Charles Hall’s important work – as described in his seminal “Energy and the Wealth of Nations” – concludes that EROEI mathematics will make it very difficult for a complex high-tech society to survive when its average EROEI falls below 11/1…

    Hence, given that the future survivability of a growing number of states is now at stake, tensions are therefore likely to rise rapidly. For example:

    1) Scotland preparing to hold a referendum on independence in September 2014 and, if it wins, thereafter taking a very significant part of the North Sea oil & gas reserves with it…

    2) China flexing its military muscle to attempt to bring the Senkaku islands and its potential oil & gas reserves within its exclusive jurisdiction…

    3) China and Russia siding with Iran and forcing the US to “abdicate” a military option against Iran that would give the US exclusive control over the remaining Persian Gulf oil & gas reserves…

    P.S: Drawing an EROEI & net energy map of our emerging “brave new world” would be an interesting exercise…

    • I think the problem is partly about declining EROI, but more than declining EROI and net energy.

      Our economy is like a machine. It cannot operate on a different fuel mix than what it has been built to operate on. Talking about substitutability when we are essentially out of time is an exercise in silliness. The issue is that the machine stops running, and we need to build a new machine that operates on a different fuel mix. If we can do this at all, it must be local small-scale economies, it seem to me. Current EROIs are irrelevant.

      • we only know the functioning of one type of machine, basically the one that runs on wheels using explosive power. Essentially this is a form of leverage.
        There just may be something different out there, but so far, nothing seems likely to be available in the near or even distant future. Doing work efficiently means overcoming friction, the wheel seems to be the best way of doing that. Wheels are levers, levers need energy input to move them. We either use wheels or carry/drag stuff with muscle.
        All machines are levers, Fossil fuels simply allowed us to have bigger and better levers.
        We use levers to gain mechanical advantage, and by doing so, improve and sustain humankind
        At our current rate of demand I cannot conceive of any kind of ‘alternative’ machine that will maintain that advantage, or even come close to maintaining it.
        Maybe there a people cleverer than me who can, but it all comes down to mechanical advantage in one way or another. We move our levers in 2 ways, either by muscle power, or by heat application.
        Remove the heat, and we only have muscle, either our own or that of animals.
        I dont think there is an ‘alternative’ machine, no matter what the scale. As long as we think in ‘machines’ we are never going to grasp how big the problem is.

        • Earl Mardle says:

          Agreed some more. The vast majority of us wont grasp how big the problem is until it has, almost literally, GRASPED us, by the throat. For those of us who got it a decade ago it took a couple of years to get p[ast the existential paralysis that ensued.

          Now consider entire populations trying to do that at the same time as trying to figure out how to feed their kids and deal with all the modern illnesses, without medication.

        • adding to my comment–I have discounted wind and water power as being too insignificant to affect our problem very much

          • Jan Steinman says:

            “I have discounted wind and water power as being too insignificant to affect our problem very much…”

            As Gail points out, wind turbines run on a steady stream of replacement parts!

            But if you look to the past, there may be some wiggle room for both technologies, but probably for direct mechanical motion, rather than for producing high-quality electricity.

            The Dutch are famous for windmills, which can be used for grinding grain or pumping water. Likewise, primitive water power.

          • Jan, when thinking about the Dutch and windmills, it’s important to consider numbers. in 1800 there were around 2.5 m people, now there’s 16m, 20% of the land is below sea level. It would be impossible to sustain that using wind power. Like everybody else, the Dutch have switched to diesel and electricity to stay above water

            • Jan Steinman says:

              I think it is clear there is no “silver bullet,” that we have seriously overshot carrying capacity, that many people will have to “go away” — hopefully, with as little pain and stress as possible. If I manage to live into my 80’s, I’ll still be part of that solution before 2040. Natural attrition of baby-boomers — perhaps sped along by lack of heroic life end-of-life support — should help.

              But don’t you see “appropriate technology” uses for wind and water for those who will try to carry on? Or do you think it’s useless to even try?

          • no—I think we should and will try and go on trying.
            That isn’t the danger. The danger lies in the vast majority refusing to accept that there is any kind of problem.
            They will continue to demand the status quo–or better.
            That is clear right now, where there is a certainty that ‘prosperity’ in the context that we think of as normal, is purely a matter of political will or religious dogma. Vote for me and I will return gas to $2 gallon. (Bachmann) millions voted for her–there are many others of similar ilk. I think Obama has done his best (speaking as an outside observer), but ultimately he is faced with the same problem. He knows the facts, that endless borrowing doesn’t get rid of debt, the economy can only be sustained on cheap oil, and there isn’t any.
            I really believe that the emperor knows he’s got no clothes on, but he daren’t mention it either. Right or wrong–he ain’t stupid.
            He’s just sitting at the front of the same rollercoaster as the rest of us.
            When his system doesn’t work, you can be certain that a preacher/president will be voted in, because there will be literally nothing else on offer. Several lined up last time round.
            It won’t work of course, but then there will be no alternative to violent revolution. Desperate measures. Equally pointless, but nevertheless violence is certain. Syria right now is a resource war, under the guise of religion. The youth of oil producing nations are going to have a very nasty shock when they realise that their food supply depends on oil sales. They too will revolt, probably blaming someone else’s god. We in the oil dependent west face the same difficulty and denial. (and god obsession)
            But large scale conventional warfare cannot be sustained, (as WW2) so what alternative is there?
            Asymmetric wars are going on right now, as things get even more desperate, it will go nuclear.

      • Earl Mardle says:

        Exactly. We USED to have a problem that looked like trying to change the tyre on a bike while you were rising it at full speed down a hill. Now, we are out of time even to do that, we are at full speed and at the bottom of the hill there is a cliff. Or a wall. The ONLY option for a few of us is to jump off the bike and accept the inevitable broken bones, grazes and other injuries rather than hit the wall or go over the cliff.

        Or grow wings.

        In the end, all the stuff about renewable electricity, biofuels and hydrogen is no more than a tech spin on magical rescue thinking. The future belongs to some, only some, among those who are growing stuff, including fuel trees, harvesting and holding water – LOTS of water – and being fanatical about nutrient flows. If you aren’t already in that group, you aren’t even on the manifest for the onward journey of spaceship earth.

        And if you ARE on the list, you have about a 10% chance.

      • sheilach2 says:

        As usual, your so right Gail, we insist in shifting the chairs on this sinking “Titanic”, air powered cars, electric cars, cars fueled with alcohol etc cannot “fuel” our future. They just don’t get it, they ALL require OIL to be built & maintained.
        It’s too late to avoid the horrendous tragedy of billions of people starving, waring or dying of once preventable or curable diseases.
        We have to stop trying to keep what worked yesterday going in the face of declining, essential resources. We need to start making small towns sustainable & not waste our time & resources trying to keep the big cities “sustainable” because they are huge energy sinks & when those resources can no longer flow in the amount needed to support them, then those big cities will be unlivable & hordes of desperate people will be flooding out of them seeking relief.

        Looking at how governments have behaved in the past, I would not be surprised to see governments murdering their own people to maintain control. They could cut the electricity in the winter, remove powered snow shovels & the lack of electricity will also stop the water pumps, sewage treatment & close hospitals.
        In the warmer areas, they could spay militarized diseases over the big cities to kill the millions that exist in them. Of course the “important” people would be warned ahead of time so they could flee to their vacation homes away from those targeted cities.

        The problems I see with making small towns sustainable is that the “leaders” & citizens still don’t get it.
        Here they are planning for another golf course on the chilly, windy coast! How stupid!!

        I wonder what it will take to wake people up to the fact that it’s not the 1950’s any more, we are not energy independent, we are not food secure, we have lost our manufacturing to slave worker countries, we have lost the skills our ancestors had to be sustainable without electricity, diesel plows & farm equipment, chemical fertilizers,pesticides, herbicides, diesel trucks to haul their products off to the processors or cities.
        We will undergo drastic changes in the future thanks to climate change & loss of cheap energy.
        There will be no “recovery”.
        But TPTB keep trying to bring back yesterday & that cannot happen.
        Because of all this, we will have a collapse.

  8. xabier says:

    Don

    The tragedy of South America is that the Spanish didn’t even bring ‘civilization’. What a disaster it all was.

    I was (blackly) amused when a banker said to me, in a discussion on this, ‘But look at how their GDP rose under the Spanish! What was it pre-Columbus? Nothing!’

    Thinking of that kind really is ‘advanced stupidity.’

    • Earl Mardle says:

      The zinger is that, in stealing all the silver “because it was MONEY” and all they needed to have ‘MONEY’ was to have silver, they created massive inflation in Spain that essentially ruined the economy of the colonial power.

      Those who believe that gold or silver IS inherently, Money, appear not to have learned that lesson.

      • rather like the fantasy of finding asteroids made of some precious metal or other—it’s ‘valuable’!
        The entire world stock of gold (as an example) is about 130000 tons
        if you extend the fantasy, and found a solid gold asteroid and somehow brought it back to earth, the ‘economy’ that paid for the expedition would be destroyed by the glut of millions of tons of additional gold
        this is essentially what happened to Spain, yet the greatest minds in the world of economics refuse to grasp this.
        Gold and silver has no inherent value

        • sheilach2 says:

          People have valued gold & silver for thousands of years & I’m sure that in the future it will continue to be valued.
          Not everyone has products to trade with and hauling a carcase or wood to market would be rather awkward if trade was all we had.
          Silver & gold will be used as money as it’s far more portable than a bunch of eggs or milk & can be exchanged for other items or even for your labor.

          The native americans used certain processed sea shells as money, other people used carved stones, gems, pelts, copper etc as valuable trade items.

          Some form of “money” will continue to be of value in trade.

          Our green pieces of paper will only be good as kindling. ;^)

      • xabier says:

        Earl

        Yes, it wrecked Spain for the whole 17th century, and much of the 18th. One could say that it never recovered. The depopulation was dramatic,

  9. xabier says:

    A book worth reading is ‘A Way of Life’ by Alec Rainey: describes his encounter in the 1960’s with Aborigines when he went to learn to be a stockman in Australia. He was interested in their lives and ways and they responded to some degree: as an archaeologist and anthropologist by training he made a good observer.

  10. Scott says:

    We have enjoyed the times of the “HARVEST YEARS”

    Hello Everyone, I have been looking at some of the interesting replies from many of you about our remaining options as the oil and gas slowly runs out.

    Well we got lots of coal but we know it will further poison the air and water and Earth.

    Many of us have some hope for a new source of Clean Energy like the Hyper Drive or the more realistic Thorium Power Plants that can produce lots of electric power.

    As I have written before I believe we are very able to produce ample electric power, but the main problem how to transfer this power cheaply to run things like cars, trucks and farm tractors that now use diesel as diesel looks to be soon in short supply.

    We have discussed the shortfalls in batteries and also the only real option may be the Hydrogen Fuel Cells.

    But all of this comes at a time when finance is not supportive of moving ahead as all of those Trillions of Dollars have to be refinanced. More over, the Acid levels (CO2 in the Sea) has moved above 400 parts per million and is climbing like a staircase. The die off in the seas are catastrophic and will cause world wide hunger as so many of us eat fish and shell fish from the sea for dinner.

    I do not see a world that is going to die tomorrow, but I see each generation experiencing harder times, less food and less choices. Just getting harder and harder from here on…

    We surely saw the best of times for the “Harvest Years”

    Scott

    • I’m not a scientist, but it seems to me ( and I’ve struggled to think of exceptions to this) that to make stuff, we must use heat in one way or another. This applies to making horsehoes on an anvil, or running a nuclear power station. We’ve become very good at using heat to multiply ourselves, this in turn is affecting the global thermostat.
      Problem seems to be that the majority of people regard electricity and ‘stuff’ as the same thing, as though they are somehow interchangeable. Another problem is that money and physical energy are seen as interchangeable, that somehow power (and thus everything else) can be produced if we throw enough cash at the problem. If we dont have enough energy (think closing factories), we print some more money to keep them running…easy. (Think quantitative easing).
      There is a disregard for the problem of transforming electricity into food on a plate, which is essentially what we have to do to survive. (diesel shortage is an intermediary factor) Again, that problem of interchangeability, that one form of energy must transform itself into another, if for no other reason than we say so. That disregards the inconvenient laws of physics

      • Don Stewart says:

        Dear End of More
        It seems to me that, in the practical world, there are gradations of heat needed, which has profound implications. For example, bacteria can fix nitrogen, or the Haber-Bosch process can be used to fix nitrogen. Bacteria are extraordinarily efficient in their use of energy, while industrial nitrogen plants are energy hogs.

        As another example, one can long for a beach and fly off in a jumbo jet to the South Seas. Or one can take a radio up to the roof in Brooklyn, set up one’s beach chair and cool drink, and enjoy the sunshine. The two experiences are similar, but the energy cost is quite different.

        It can be argued that the bacteria and the sunny day in Brooklyn wouldn’t exist except for the most colossal heat engine in our part of the multiverse…but that is of doubtful importance in the practical world.

        The Aborigines ‘gardened’ the continent of Australia simply by setting fires very judiciously and by building dams to store water. The immediate energy cost of starting a fire is very small. The dams costs a little more energy because they involve more exertion of the human body. But human bodies are extraordinarily efficient in converting calories into work–which makes it hard to exercise enough to lose weight. Again, one could say that fires and Australian flammable foliage and humans and human brains all depend on our colossal heat engine in the sky, plus eons of energy consumption by Mother Nature as she used Evolution to craft plants and humans. But, again, that is of doubtful importance as a practical matter.

        I think that a shorthand answer is that industrial processes are heavily dependent on heat engines, while biological processes are far less dependent on heat…because biological processes both use the (practically) inexhaustible energy from the Sun and because biological processes use heat extraordinarily efficiently in terms of proximate causes.

        Don Stewart

        • Don
          While I must agree with you in broad terms, it’s important to remember that aborigines didn’t consume ‘stuff’ nor did they expect to.
          Thus their food intake and energy output had no sidetracks. As with any other animal species they ate and slept and reproduced themselves for 000s of years without regression or advancement. However skilful their ‘gardening’ might have been, it didn’t produce enough surplus to grow cities, Australia was simply in the wrong climate zone
          we all did that until we learned how to harness heat for other purposes other than direct food intake. Thus we built cities and complex civilisations

          • Don Stewart says:

            Dear End of More
            The aborigines obviously did advance. They mastered the use of fire and they learned how to store water effectively. Life was good with an abundance of natural resources and they didn’t work very hard.

            I think it is a mistake to think that Victorian London was an ‘advance’ on the life that the aborigines were living.

            If you look at Albert Bates’ The Biochar Solution, you will find that the Amazon had a high civilization before European contact. It was fundamentally based on biology, including biochar. The Amazonians cultivated or managed at least 138 of the 257 plant species cultivated in the
            Western Hemisphere.

            However, contact with Europeans was quite deadly. Native Americans have a very narrow ability to deal with pathogens, as explained by Albert…much narrower than Africans. European diseases plus the succeeding repression by the conquerors may have killed more than 99 percent of the Amazonians. The die off also resulted in a regression in their level of civilization. Just a few years later, they were cultivating only a tiny subset of the plants they had been cultivating at European contact. The cities disappeared and the jungle grew. The growth of the jungle may be a contributing factor to Europe’s Little Ice Age, as much carbon was stored in woody plants.

            In short, a lot of very useful work can be accomplished by biology using freely available resources, especially when augmented by strategic materials such as biochar which is produced in a kiln but which acts biologically.

            Don Stewart

            • One question is how much of the biological diversity was killed off as aborigines did their gardening and trained the water to flow in the ways they wanted it to flow. The changes no doubt increased the carrying capacity for humans in Australia, but at the cost of reducing the carrying capacity for some other species. Arguably, the total amount of organic matter might be increased, if the climate was favorably impacted. The same questions applies for Amazonians.

            • Don Stewart says:

              Dear Gail
              Your response leads me to believe that you think that if something is good for humans, it must be bad for other creatures…a zero sum game. That is not true in the world of biology. Beaver, for example, build dams which conserve water high up in the landscape–as opposed to having the water rush to lower elevations as rapidly as possible by the most direct route possible. The work of the beaver increases the biological capacity of the environment.

              Similarly, when a Permaculturist or an Aborigine builds a dam, mimicking a beaver, they increase the biological capacity of the environment. Elaine Ingham says that ‘life promotes life’. In the absence of beaver and permaculturists and aborigines, we get erosion and gullies and less biological productivity. See Toby Hemenway’s essay on ‘the wisdom of the beaver’.

              By using fire and water, the Aborigines created a ‘savannah like’ gardened continent. A savannah is the most biologically productive system in the natural world. The absence of Aboriginal style management in modern Australia is responsible for the current dominance of brush and the regular occurrence of destructive brush fires. (I’m not an expert on Australia…I’m just trying to repeat the story that I think Gammage is telling.)

              Don Stewart

            • I see the whole world as in balance. If there is more of one species, it generally reduces the opportunities for other species. There is competition for food and water, and the greater density of the species that has larger numbers leads to more disease transmission (within the species, and to similar species). My expectation for humans is that they will number no more than a few million world-wide, if they truly follow the pattern of species such as chimps and gorillas.

              The March 23, 2012 issue of Science has a Perspective article called “The Hunters Did It” by Matt McGlone, which discusses the loss of 55 large mammal species in Australia many years ago, among other things. The same issue also has a technical article called “The Aftermath of Megafaunal Extinction: Ecosystem Transformation in Pleistocene Australia” by Susan Rule et al.

              The perspective article says,

              The Australasian megafaunal extinction story now seems clear. Shortly after their arrival, small bands of hunters had a devastating effect on large animals, whether it as ~41,000 years ago in Australia or ~750 years ago in New Zealand. Any climate change at those times was modest and highly unlikely to affect the outcome. Fire and massive biome disruption followed human arrival in regions where there had previously been little or no fire, such as wet tropical Queensland and eastern New Zealand. But large animals were eliminated just as efficiently from regions with dense untouched rain forests, such as New Guinea and western Tasmania. Human hunting was a new, more intense form of predation that was particularly dangerous for large, slow-breeding animals. Human-lit fire, deliberately targeted in time and an order of magnitude more frequent that natural lightening ignitions, had a devastation effect on plants hitherto protected by climate and location.

              The same article later says,

              The central question now shifts to the ecosystem effects of eliminating large herbivores while increasing targeted, more frequent fire. Large animals are more efficient than fire at recycling nutrients. They encourage some fast-growing or well-defended plants and disadvantage others. They disperse seeds and spores. To what extent were these functions picked up by other, smaller herbivores? Do global ecosystems function differently now that megaherbivores are gone and human fires are common? New results strongly suggest that they do. Human-lit fires removed drought-adapted Australian woodlands and grasslands, replacing them with fire-adapted chenopod/desert scrub and grassland. . . More responds are needed from South America, Asia, and Europe to elucidate the effects of megaherbivore declines in different settings and at different times.

              If what this article says is correct, early settlers set in motion changes which led to serious loss of species and degradation of the climate. The later Aborigines no doubt did what they could to “fix” the situation, but I would expect that their “fixes” had unintended consequences as well. It is easy to look at results from the perspective of humans, and say that the results were beneficial. I agree that what the later Aborigines did seems to be generally beneficial, relative to the bad situation that they had been given to work with thanks to the actions of their ancestors. But from the perspective of other species, we don’t really know. We know that when we install buildings and stores and roads in our own economy, it has a disruptive effect on ecosystems. We weren’t there to run the experiment two ways–with and without humans and their fires and dams–to know how ecosystems would have fared without the actions of the later Aborigines.

            • Don Stewart says:

              Dear Gail
              I guess I have to buy Gammage’s book and study it.

              I do know that humans CAN design in such a way that biological activity is increased. My sister in LA did some permaculture landscaping, at my urging, and is amazed and delighted at the increase in plant and animal and bird life on her small lot. Now one might say that, perhaps back in the very olden days before humans, that lot had even more biological activity. I don’t know about that. I do think that human intervention can store, spread, and sink water more effectively than simple gravity flow. Water is frequently a limiting factor. So things like dams and swales and keyline plowing increase biological activity in the dry areas to which the water is directed.

              Darren Doherty from Australia was in California recently. After looking at the dry ravines from erosion, he recommended the planting of trees in the ravines. The trees would slow down the water, let the silt drop, and increase the bird and animal life as well as life in the soil. Whether the ravines were originally created by human activity, or are just the result of winter rains running down hill, I don’t know. But Darren’s advice would be likely to make things a lot better than they are today.

              As for the big herbivores. Their descendents are our domesticated cattle. Grasslands require ruminant grazing in order to be healthy. There are more cattle than we can graze on existing grasslands, which causes me to suspect that we have more tonnage of domesticated big herbivores than tonnage of wild herbivores before humans evolved. So we have probably replaced some wild herbivores with even more domesticated herbivores. We have also used terribly damaging damaging practices with the domesticated herbivores, which people like Alan Savory are trying to fix with rotational grazing.

              Don Stewart

              Don Stewart

            • sheilach2 says:

              Trappers almost wiped out the Beaver for their fur which was used in beaver hats.
              The Aboriginals of Australia use of fire & their hunting of the megafauna caused their extinction as did the native americans hunting of our megafauna & fire caused their extinction.

              That’s why we no longer have mammoths, mastodons, giant sloths, ground sloths, glyptodonts, camels, horses, saber toothed cats, lions, elk-moose etc & Australia no longer has it’s giant kangaroos, carnivorous kolas, marsupial wolves, giant wombats etc.

              Everywhere humans went, the large animals were wiped out as they had no fear of humans & along with the natural changes in climates that these animals had survived before, the could not survive the addition of human hunters, their fire setting & their dogs.
              Those changes caused by humans happened too quickly for the wildlife to adjust.

              Humans, especially the males, are the most dangerous predator to have ever evolved. If T-rex still existed, we would have hunted them to extinction as well.

              The great extinctions now being caused by human activity continues & is accelerating.
              We are scheduled to cause the extinction of all big cats, all rhinos, all elephants, larger primates & fish & countless other species that cannot tolerate the destruction of their environment or our excessive hunting.

              We are man & we are DEATH!

              After we collapse, the survivors will include some humans, rats, mice, cockroaches, ticks, our parasites, & if we don’t eat them all, some domesticated animals.

              The earth will be left in ruins & it will take millions of years for it to fully recover from our fossil fueled presence.

        • The victorians were not able to free themselves of disease and make real progress untill they could make bricks by the million and use them to build sewers (Bazalgette et al)
          Australian aborigines by and large lived in deserts. Deserts, whether hot or cold, do not produce sufficient resources to sustain great cities and civilisations.
          Latitude has a great deal to do with how civilisations grew

          • Don Stewart says:

            Dear End of More
            I suggest you look at the Amazon ad for:

            The Biggest Estate on Earth: How Aborigines Made Australia
            by Bill Gammage

            Gammage also has a YouTube video lasting about 15 minutes where he discusses his findings. Australia under management by the aborigines resembled a gentleman’s ‘estate’.

            Don Stewart

  11. xabier says:

    tim l2k11

    In many ways, Hitler was just an ordinary man who got his hands on the State killing-machine. I’ve met so many people from all walks of life, rich and poor, Left and Right, who privately say ‘If only we could get rid of…… this or that group of people.’ One of the diseases of over-crowded societies perhaps. He simply got to put his fantasies into practice. Quite a lot of people joined in: what was he without them?

    I’m paying a lot of attention to the Nazi dictatorship at the moment, in diaries especially rather than the big academic histories which miss a lot about how these things work out. Also, the lives of people during the Russian Revolution: poverty,disease, the desperate search for food and the crazy politics and ideologies. Not that I’m expecting a re-run of the 1930’s, so many factors are different, but…….

  12. Don Stewart says:

    Dear All
    Since the internet is a miserable device for conveying the nuances of human expression, try to imagine a rather dizzy elderly gentleman who is basically a happy guy (perhaps because he just doesn’t understand how desperate things are) but who gets easily befuddled when he tries to comprehend the utterances of his betters. Then take a quick glance at this link:

    http://www.bloomberg.com/news/2013-11-27/fed-reveals-new-concerns-about-long-term-u-s-slowdown.html

    Don’t any of these people ‘get it’? Then, at least today, you will find a video link in the upper right hand corner of the page where you can get a video tour of a 60 million dollar Manahattan penthouse. Amazingly, I once lived in New York when it was a real city doing real work…not an international destination for conspicuous consumption.

    Xabier, I do not know if frying pans are included for the glitzy kitchen appliances. I suspect only the hired cooks will ever know.

    Don Stewart

    • Cities (or any conurbation) have never been anything other than consumption sinks.
      In order to survive, the city has to suck in resources from its surrounding area, somehow rework those resources into a profitable venture of some kind and resell it. It has to keep on doing this ad infinitum. As profitability increases, then the city size increases to accommodate its own enterprises. If a city stops its infinite consumption, then it dies.
      Thus the majority think of the city as a wealth creator, when in fact it is a wealth consumer.
      The difference in modern times is perhaps that wealth consumption has become more conspicuous

  13. There might be something else to worry us as oil becomes more expensive – feral dogs.
    When times get tough, the first thing to go are pets & too often, they are simply turned loose. Dogs being pack animals, will join up into packs to hunt & smaller dogs & easy prey. They could also be a danger to small children & people alone & vulnerable. They would also steal your food & fowl the water.
    Dogs can also be of value in protecting your home & garden. Even if small, their bark can alert us to pests or worse. Feeding those dogs could be a problem, so how would we feed our guard dogs while protecting their food from others?

    • a couple of winters ago, i noticed prints in the snow under my bedroom window (in semi-rural UK) which were obviously made by a cat
      They measured 4′ 6″ from front foot to back foot, and each print was as big as my fist.
      That is going to make an interesting future too

    • I would add, “How do we walk around safely, with all of these feral dogs around?”

      • We will have to go about armed to the teeth & I hear that dogs make good eating thus solving that problem. Cats, the other white meat.
        We will be eating anything that can’t out run us or avoid our traps. You can’t afford to be too picky when your really HUNGRY. If your hungry enough, even roaches could look like food.

        There are many ways to get a dog for food, snares, traps, bow & arrows, spears or a rifle if you still have ammo.
        As the economy fails, there will be many more dogs & cats running loose & when the catchable ones run out, use the smart survivors to help find other animals for food.
        As a last resort, there will always be “long pig”, I hear that tastes like pork.

  14. Scott says:

    Hello Gail and All, We have talked much about the seas and how the fishing is in decline, an important thing as many of us eat fish daily or weekly.

    This article here makes it clear that modern farming fertilizer run offs are polluting our seas and causing corral die offs,

    After reading this, the question I had that came to mind was why no mention of the C02 passing 400 PPM? The oceans have been the huge carbon sponge for years and it is getting to point that shell fish like Oysters cannot even grow in vast areas of the North West US Coast.

    I do agree modern agriculture is mostly responsible, but one cannot ignore the C02 which this article makes no mention of unless I missed something.

    http://lebanon-express.com/news/headlines/study-shows-pollution-impact-on-coral-reefs—and/article_1d41737d-3769-598d-8880-538dece9bfc2.html

    Any thoughts on this anyone?

    Regards,

    Scott

  15. Don Stewart says:

    Dear All

    Here is another little exercise in putting together the theories and research represented in the books I recommended. In Joshua Greene’s book Moral Tribes, he gives us quite a good discussion of the difference between a sin of commission and a sin of omission. On page 242 he states ‘the fact that action representations are more basic can be seen in infants’ (action as opposed to failure to act). He then describes the clever experiments with 6 month olds which show that they understand consistent actions (always picks the blue ball) but fail to understand the negative…always avoids picking the blue ball. Greene gives a pretty detailed theory with supporting evidence about how the dual mind (part unconscious and part rational) has an instinctive moral overseer monitoring actions but must rely on the much slower rational system to work through indirect effects such as failing to take action. Today, if you kill a person, you will receive widespread condemnation. But if you fail to send money to a ‘Phillipine Relief Fund’, nobody will criticize you. Much less if you go out and drive your car and put more carbond dioxide in the air, making things worse for the next victims of hurricanes and typhoons.

    Now let’s loop back around to the Scarcity theories. Scarcity tends to narrow our vision, reduce our IQ, and drive us in the direction of instinctual behavior and reduce our ability to reason. Think back to the Americans With Disabilities Act (ADA). It was passed by a vocal group of advocates at a time when our material standard of living had been rising for decades. I remember a builder friend warning me that the US was committing itself to spend lots and lots of money for little return. I hadn’t thought much about it one way or the other. I wasn’t handicapped myself, so had no personal interest in the law. Neither was I excessively concerned about the cost. The rising tide would float all the boats, wouldn’t it? The Stern Report on climate change in Britain similarly minimized the climate change problem by assuming that the tide of real wealth per capita would continue to rise exponentially and so spending money to ameliorate climate change only required diverting an insignificant amount of the increasing wealth to dealing with climate change.

    I am sure you can think of lots of things that we are spending money on today to ameliorate conditions THAT WE DID NOT DIRECTLY CAUSE WITH OUR OWN ACTIONS. But, as we see from the infant studies, and other evidence, it is not the most natural thing in the world for humans to think about indirect consequences. Greene gives a very neat solution involving the dual brain to all the various forms of the Trolley problem that have been studied experimentally…you’ll have to read his conclusions, because they exceed anything I want to try to summarize here.

    My point is simply this. In a world of Scarcity, we will be less inclined to pass things like the ADA, less inclined to send money to the Phillipines, and probably less inclined to invest anything in climate change amelioration. Let me give you a concrete example. The City of Chapel Hill located its garbage dump in a black community. The dump operated for 30 years, and has now been moved. The City, during a time of prosperity, promised to make amends for the 30 years of abuse by extending sewers to the community. Now they find out that the bill is more than five million dollars, and the waffling and sidewinding and hiding under rocks and blaming it on predecessors starts. After all, none of the present city commissioners was involved in the siting of the dump 30 years ago. This is exactly the nature of the discussion in United Nations discussions on climate change between the rich countries and the poor countries.

    I believe that, on the way down, scarcity will be felt more intensely by more people, and will thus lead to the narrowing of vision, the loss of IQ, and the failure to take action based on reason. In short, the dynamics on the way down will lead us to a worse outcome than we would have had at the same level on the way up. This is, again, Seneca Cliff like.

    Don Stewart

    • Jan Steinman says:

      “Scarcity tends to narrow our vision, reduce our IQ, and drive us in the direction of instinctual behavior and reduce our ability to reason.”

      Don, you’ve said this in various forms several times, but I seem to have missed the attribution.

      Forgive me if you’ve explained already, but how do you come to this conclusion?

      My thoughts are nearly the opposite, that excess energy (abundance) leads to specialization (which leads to narrow vision), and favours extrinsic knowledge, which leads to reduced IQ.

      Perhaps “IQ” is a poor term. A brain surgeon probably has a very high IQ, but probably could not survive a month in the wilderness, whereas an indigenous native, living off the land, is “at home” in the wilderness, but you probably wouldn’t want him holding a scalpel over your head! Perhaps we need a better term, such as “RQ,” for “resiliency quotient.”

      Or perhaps you’ve generalized the situational. Sudden loss of product on supermarket shelves would be a form of scarcity, and I agree that such an event would tend to make people brutal, rather than rational. But is that not because our “RQ” has fallen, and we no longer know how to obtain food except in exchange for coloured bits of paper?

      I think the sort of scarcity that is coming will favour those who are adaptable and resilient, which is not necessarily the brain surgeons, rocket scientists, and others generally regarded as having “high IQ.”

      Or perhaps I completely miss what you’re saying. But it seems that “rising IQ” means we’ve learned more and more about less and less until we’ve learned absolutely all there is to know about absolutely nothing.

      • Don Stewart says:

        Jan
        The words are a quick summary of the book Scarcity, by Sendhil Mullainathan and Eldar Shafir. One at Harvard, the other at Princeton. Sendhil is a MacArthur recipient.

        Daniel Kahneman: The authors are stars in their respective disciplines, and the combination is greater than the sum of its parts. Together, they manage to merge scientific rigor and a wry view of the human predicament.

        Richard Thaler: What does a single mom trying to make partner at a major law firm have in common with a peasant who spends half her income on interest payments? Read this book to learn the surprising ways in which scarcity affects us all.

        Daniel Gilbert: Scarcity is the book you can’t get enough of. It is essential reading for those who don’t have the time for essential reading.

        Does this help?
        Don Stewart

        • Jan Steinman says:

          Oh gawd, another book to read… 🙂

          Sounds like one that needs reading, though. Too bad our annual charity book sale was last weekend — I’ve used up my budget for the year. (Three free books for every shift volunteered, which earned me a boxful for all the time I put in!)

          Is the “Daniel Gilbert” the Harvard social psychologist with the TED talk on “synthetic happiness?” If so, I’m a big fan!

          • Don Stewart says:

            Dear Jan
            Yes…that Daniel Gilbert. And the book is newly published, so I doubt it would be in a book sale. Sorry about that…Don Stewart

      • Don Stewart says:

        Dear All
        In addition, there are many cross connect points between this essay:
        http://www.resilience.org/stories/2013-11-25/desert-of-the-real

        by John Thackara and all the books I recommended. I particularly call your attention to the experimental results in Greene that just thinking about harming someone or watching someone get harmed on a video screen is not at all like hitting them with a blunt instrument. Our physiological response is quite different. How do we know? It is possible to simulate physical violence in the lab, with careful controls, and monitor the physiological response. Seeing starving people in the Phillipines is not like living in close contact with a starving person.

        So Thackara’s plea for returning reality to our education and daily experiences strongly cross connects with Greene’s book.

        Don Stewart

      • Jan and Don,
        I agree with your thinking on specialization, Jan. I’ve seen it first hand. I believe that what the authors are talking about when they say that IQ decreases as people experience scarcity might be what happens when people become desperate due to pressing needs not being meet. They don’t have the luxury of sitting back and “thinking” about it. Thus, their responses are more instinctive not rational.

        Instinctive reactions tend to get short shrift from academic types. I liked your comparison of the brain surgeon and the indigenous native. I think this is exactly why IQ will become almost irrelevant when we move into times of scarcity.

        There is a true story about a certain Noble Laureate winner at my local university who periodically would go walking while he was thinking. Several hours later students in his lab would receive a call for help. “Please come and get me. I’m lost!” “Where are you?” “I don’t know, I’m lost.” “What street are you on?” “Street?” Hmmm….
        JT

        • Jan Steinman says:

          “There is a true story about a certain Noble Laureate winner at my local university who periodically would go walking while he was thinking…”

          Then there’s the counter example of Richard Feynman, a truly “curious fellow” who didn’t let thinking get in the way of problem-solving! He seems to be proof that IQ and “RQ” aren’t necessarily inverse-correlated.

          Too bad he died so young. Feynman would be on my short list for someone to recruit for a collapse team.

        • xabier says:

          Jody
          When I had an apartment in London near a university campus, I used to say: ‘How do you know you’re in a University district? Everyone’s walking into the lamp-posts!’ I saw it so many times…….

    • Don,
      I agree that scarcity will be felt by more people. I agree that more people will react based on instinct rather than reason. But I tend to believe that instinct can be just as valid as reason. I think the survivors will be the ones that use their knowledge, experience, and instinct to attain wisdom, which is not the same thing as IQ. I don’t feel confident that rational thinking is always our greatest survival tool. Sometimes it gets us into trouble!

      “That oil should be useful for something.”
      JT

      • Don Stewart says:

        Dear Jody
        No offense, but it isn’t worthwhile arguing with someone who hasn’t read the books. Starting with Kahneman’s Thinking Fast and Thinking Slow, it is very clear that humans have a dual approach to problem solving. There are evolutionary reasons why the dual approach is good for our survival prospects. The trick is in being able to switch between them. Instincts 99 percent of the time, but reasoning things out when that is advantageous. Doing ONLY what our instincts tell us to do gets us into all sorts of terrible binds because the world we live in now is not the same as the world those instincts evolved in.

        I do agree that we can develop instinctual behavior patterns which are not imprinted on our genes. For example, when I was a child, we were deeply taught to help old ladies and blind people cross streets. I cannot stand beside a blind person or old lady, to this day, who is trying to cross the street with no assistance. But our evolutionary history clearly did not involve automobiles and the dangers they bring. But it is also true that simply following our instincts has brought us to the brink of extinction.

        Don Stewart

        • Don,
          No offense taken, I am sure the books are worth reading but I haven’t finished the stack of books I am already reading. Sorry if my comments were off target. I wasn’t arguing with you, just expressing my views based on your summaries.

          Jody

          • Don Stewart says:

            Jody
            There is a pile of research supporting the dual mind theory. In order for us to have any productive discussion, it would have to start with the experimental results and go from there. And if you became an expert on the experimental results, and conducted some of your own experiments, you would likely not want to waste your time talking to me!

            My point is that these theories have a lot of experimental support. They are not just introspective ideas that people have. So the two of us talking about our differing introspective theories isn’t very productive.

            You don’t have to read the books unless you find the ideas so intriguing that you really want to know more.

            Don

        • xabier says:

          Don

          Good example: ancient and primitive cultures show many instances of mockery and cruelty to the old, lame, sick, mad and blind. Classical Greece and Rome included.

          Those who condemn Christianity/Islam, etc, without thinking should bear that in mind.

          Kindness to those who suffer, as to other animals, is not natural or instinctive: quite the reverse in fact.

    • xabier says:

      Don

      Part of the narrowing of vision will be the simplistic and self-serving explanations of the causes of scarcity and suffering offered to the masses by self-serving and ambitious politicians – from the old parties struggling to maintain their hold on power, or revolutionary upstarts of the Hitler/Stalin/Mao type.

      ie. ‘You are suffering because that group there did it to you! Let’s eliminate them, expropriate them! ‘

      I suspect many will buy that.

      The history of Europe before WW2 shows that even if people don’t believe the ideology offered, they will sign up if they see personal survival advantage (even before the regime starts killing). Many ardent Nazis were previously ardent Communists…..

      As soon as the chanting people in uniforms and badges appear, time to get measured for one.

      • Hitler was a practising catholic until 1929

        • timl2k11 says:

          He felt compelled to get married just before his death, (though not by a priest), so perhaps he thought himself a catholic until the very end.

          • xabier says:

            I believe the Catholic theologians would say that not even Hitler would certainly go to Hell.

            He controlled the levers that enabled him to kill millions, but how many of us have wished people dead and not been able to do anything about it? And without willing helpers he would have been powerless….. like Stalin. The little people make the dictators.

          • timl2k11 says:

            xabier, you are very insightful. In the Hitler biography “Wounded Monster” by Theo L. Dorpat, you see the transformation of a perfectly innocent child into a monster. Hitler did not choose to be mercilessly beaten by his father with his mother standing by and doing nothing to stop it. He did not choose, after suffering terrible battle trauma after WWI, to have a psychiatrist brainwash out whatever ounce of humanity he had left in him, and so on. Who, having the humanity beat out of them and brought into circumstances Hitler found himself in, would not do the very same things he did? We are all in so many ways helpless products of the environment we are brought into, unwittingly thinking we’ve been in control all along.
            Cheers.

        • xabier says:

          End

          No, not at all. Just the superficialities of the Faith: like saying he was a ‘painter’! Like Stalin at the seminary.

          Good try though! Next you’ll be saying that Hitler wasn’t a Left-wing revolutionary……

          Now how about this:

          ‘Until Mosque and Minaret have crumbled;
          This Holy Work of ours will not be done:

          ‘Until ‘Faith’ becomes Rejection;
          And Rejection becomes Belief;
          There will be no True Believer.’

          Omar Khayyam.

    • timl2k11 says:

      A recurring theme that often comes to my mind is that the people that screwed us over will be long dead before we can “exact justice”, or that they would otherwise suffer any consequences for their actions. I think one fact of life is for most people to simply not care about what happens in the world after their dead (it surely won’t affect them!), so we get a terrible lack of long term planning. So what if sea levels are 3-6 feet higher in 2100, I’ll be long dead!, etc.

      • xabier says:

        I saw a lovely quote attributed to one of Bush’s circle: ‘What does it all matter? (ie the mess we are in) Jesus is coming back soon!’ It’s a gem. Between materialist atheists and fundamentalists we are a bit stuck for rational attitudes!

        The short-term thinking of people in finance is certainly shocking.

        The generation in power in c 1900 were also blamed for being short-termists: ‘If it lasts me out, I don’t care what happens after’ was a popular phrase.

  16. Pingback: futures, real and imagined- part 5 | Brain Noise

  17. Don,
    I came across this quote from John Ruskin. I used to have it hanging on the wall of my office and every time I read it I thought of men who labored with their hands cutting, shaping, and laying stone on stone to build some of our worlds breathing structures. I used to think of this when the university was trying to “slap up” a building in 18 months or less. It gave me a respect for the art of stone masonry. Do you think someday when all the dust has settled and we are forced to build by hand once again, that men will remember and practice such respect for the art of their work?

    “When we build … let it not be for present delights nor for present use alone. Let it be such work as our descendants will thank us for, and let us think … that a time is to come when these stones will be held sacred because our hands have touched them, and that men will say as they look upon the labor, and the wrought substance of them, See! This our fathers did for us!” —- John Ruskin

    Xabier,
    I don’t know why but this quote made me think you might enjoy it.

    “Life without industry is guilt, industry without art is brutality.” —- John Ruskin

    regards,
    Jody

    • typo…breathtaking not breathing.. 🙂 Give new meaning to living structures!

    • xabier says:

      Jody

      Ruskin saw very clearly the horrors which would result from the industrialized civilization which was being built in his day. Another quote I greatly like is:

      ‘If only the paintings of Turner didn’t fade, and every child could have a full stomach and not go hungry to his bed.’ (From memory so not an exact quote).

      How few of the rich – and he was very wealthy – would subscribe to those sentiments even today: a love of art and beauty, and a desire to see one’s fellow men healthy and happy and both feelings inseparable………

      • we cannot ‘consume less goods’ in the sense of it being an act of free will
        we are riding the economy like a bicycle, we put energy in via the pedals, to get forward motion out via the wheels.
        we do not have any other means of propulsion. if we stop pedalling for any length of time (we call it recession) our bicycle begins to wobble. If we dont start pedalling again (we call that energy shortage) we fall into a ditch.
        If the energy shortage is prolonged, as it eventually must be, (when we can no longer afford it) then we stay in the ditch in a literal sense
        Like it or not, we live and function in a wheeled society, everything depends on the maintenance of rotary motion. Your job, my job, the support of the young and old who do no work, depend on the employment we gain (our pedalling) from the ‘forward drive’ of our ‘economy’.
        Everybody expects employment to go on into infinity, along with payrises and an infinitely increasing standard of living. In other words, always staying out of the ditch no matter how long the road is. To do that we must continue to consume, we cannot stop.
        We convert energy into work and sustenance; to fantasise about being able to obtain anything close to our current level of sustenance is making a leap from fantasy into dangerous delusion….particularly the healthy part. If nothing else, our health is directly and specifically linked to our industrialised way of life.
        the delusion of that future of bucolic peasantry that Ruskin fantasised about is in effect near starvation and unemployment. Living for the vast majority was literally hand to mouth, with draconian laws to make sure things stayed that way. Man enslaved his fellow man for profit. Don’t imagine that in a post oil society our habits of millenia are going to change. Like Ruskin we can perhaps indulge in wish-economics, but it won’t make it happen

        • xabier says:

          End.

          Right, I’m going to top that for pessimism. Spanish proverb:

          ‘Your conception was a Sin. Your birth was the cause of Agony. Your life will be lived in Anxiety and Fear. And Death and Judgement are inevitable!’

          We Spanish have been there, done that, hundreds of years ago. Probably said the same things in 2013BC. You English are just amateurs at gloom. Maybe if you drank strong wine – or Xabier’s magical home-brew Patxaran – you’d do better, instead of that weak, warm beer…….

          (Only joking, I love ale).

          • Xabier,
            You are right, the Spanish quote above takes dark to a new level!
            JT

          • xabier says:

            Jody

            ‘Out of Darkness cometh Light’ !

            I have a wonderful old book of ancient Dutch/German/Spanish/Italian/Danish proverbs. Probably easy to find a copy in the States second-hand for nothing.
            Many are more or less the same in all cultures, but I’d say the Spanish take the prize for bleak cynicism (with a pithy and gracious wit which is untranslatable).

            Quite a few of those come from the Arabic, and so, who knows, from Egypt and Babylon…….? Our ancestors had it all worked out long ago. If I were a God, humans would make me yawn and create another world, there’s nothing very much that’s new! 🙂

        • EOM,
          One doesn’t have to be an idealist to enjoy Ruskin’s views. My enjoyment of the quote had to do with craftsmanship. In our world of rapid industrial production, craftsmanship has become a lost art. Art, music, cooking, working with wood, metal, or stone, to mention just a few, are things we can take up as a hobby that gives us personal satisfaction, as well as objects of beauty and function. I have a braided rag rug made by my grandmother that is very precious to me simply because she made it with her hands. These thoughts and feelings are why I enjoy his words.

          “we cannot ‘consume less goods’ in the sense of it being an act of free will..”
          Why can’t I consume less goods produced by the industrial society? I agree that we will always have to consume something. We need to eat, we need clothing, we need shelter, etc. But fossil fuels are going away, and without them it will be impossible to continue “pedaling” our bikes. Our industrial economy will cease to exist. So what do you propose to do?

          We certainly can’t replace the industrial economy and support the 7 billion people on this planet with the same level of goods and services. But we must transition to a lower energy economy. What would that lower energy world look like? What might we need to survive? I like some of the degrowth strategies and I think it gives us some ideas. If we can grow food, maintain some form of community that can help each other, eventually a new economy will form. What joys can life hold that don’t require a car to get to it, or electronics to hear it, etc.?

          I think it is very possible for Americans to consume less! We already are, and yes, it is resulting in a world wide recession. What else can be expected? Our nation was consuming 20 or 25% of the world’s goods. If we stop consuming then the economy shrinks. And as expected there are less jobs. So if people have no job, why can’t they find ways to grow food, why can’t they cook from scratch? If you are homeless then maybe that is a problem. So maybe one should start learning to cook before they become homeless. Maybe one should start thinking about who owns a small farm and needs some labor in exchange for food. Maybe people should start working at something that will provide a means of surviving the end of more!

          Some of us are already surviving consuming fewer industrial products. My family has significantly decoupled from the industrial agricultural system just by our food choices. I buy very little processed food. I produce food at home and I know who produces it nearby. I maintain a deep pantry of dry goods in storage. I cook from scratch and preserve food for the winter. My family isn’t the only one doing this. Just look at all the urban farmer magazines and websites on line. When I needed to have my goat bred the informal network of word-of-mouth got it done very easily. There are many, many people who think they can consume less, produce more, and are doing just that!

          If you believe that there is nothing you can do, and you do nothing, then you have already given up. I believe in trying because it may just soften the landing enough for some of humanity to retain some of the knowledge, science, and art of our current civilization.

          regards,
          Jody

          • as individuals we can elect to consume less—that was so obvious I took it as read.
            My point was made in a collective sense. pretty much any comment I make is a collective one because we are a herd species.
            Collectively we will go on until we are physically prevented from doing so by the limits of nature, because we do not have the ‘collective intelligence’ to do otherwise. I try not to think in ‘maybes’ but in realities. becoming homeless can be very sudden, if you become homeless from a 5th floor apt, where do you suggest learning to grow food beforehand? Evening classes? That is the reality I deal in.
            I can maybe survive a year on the food I have. Ive tried to drop gentle hints to intelligent friends on the subject, but i dont offer anything more than a hint —theres just no point. I get the same blank out reserved for jehovahs witnesses.
            This doesn’t stop me from feeling deep emotion when I see a Shakespeare play, or listen to Mozart, or look at my beloved England, but as an individual I can only prepare for a collective catastrophe and hope I survive it. Again, mankind is collectively unpleasant when driven by forces beyond his control, almost always in the pursuit of someone elses resources. This is what we are engaged in right now

          • EOM,
            “pretty much any comment I make is a collective one because we are a herd species.”
            Probably a good idea to stop thinking like a herd when the herd is going over a cliff!

            Ok, if I understand you, I believe what you are saying is that people don’t live on a deserted island. We live in a very highly connected society and the choices others make affect us all. Even if I decide to change my life, the masses of other people who continue to live ‘business as usual’ will be the driving force that decides our collective future. Assuming I have summarized your position correctly, I will admit you are probably right.

            Although I do realize that we humans are social creatures, I don’t particularly like the image of ‘Herd mentality’. It gives too much power to group think. Personally, I’ve never liked being in a crowd. I’ve never wanted to visit New York City or live in a city larger than 100,000. Maybe some of the ‘herd’ don’t have herd mentality! 🙂
            JT

          • Jody
            Hermits don’t have a herd mentality either, but there’s never been enough hermits to affect the outcome of mankind’s actions
            I don’t like the herd mentality , we can deny it, but I think we’re stuck with it.
            If I have responsibility for a young family and live in a city apt, then my ‘herd reaction’ is going to be different than if I live alone in a forest somewhere. I cannot avoid that, because I am programmed to protect my offspring in a different way than i would just protect myself.
            Not saying what those reactions would be, only that they would be very different, because driving forces would be different between circumstances.
            I would suggest a city or town of any size might be dangerous.
            I think that most people would deny being part of a herd, but we are

  18. Dave says:

    As long as the price of crude is above the marginal cost of production then everything should be ok for oil companies. Currently this seems to be the case as the latest estimate I have seen of the non-Opec marginal cost of production is $104.5 a barrel (May 2013 – Sanford C. Bernstein, a Wall Street research company) and the price of Brent crude is $111 (Nov 22nd). Recent decreases in the price of oil seem to be bringing the price of oil closer to the marginal cost which what one would expect. The last time the price of oil dropped below the marginal cost was during a “global recession”. Any forecast that this will happen again is predicting a recession.

    • When you calculate the marginal cost of production, you need to consider the tax needs of oil exporters in this calculation as well as the direct cost of production. We are already reaching the point where oil exporters (including Venezuela and Russia) are not getting enough taxes to keep up their growth.

      If interest rates were not so low, we would already be well below the marginal cost of production in the tight oil formations (like Bakken and Eagle Forde). There have been recent comments from Statoil in Norway about challenges of oil extraction and a need for more focus on return on employed capital.

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