Reasons for our Energy Predicament – An Overview

Quiz: What will cause world oil supply to fall?

  1. Too little oil in the ground
  2. Oil prices are too low for oil producers
  3. Oil prices are too high for oil consumers leading to recession, debt defaults, and ultimately a cut back in credit availability and very low oil prices
  4. Oil exporters are subject to civil unrest and overthrow of governments, due to low prices and/or depleting reserves
  5. Lack of money (and physical resources that might be purchased with this money) to pull oil out of the ground.
  6. Pollution related issues–too much smog in China; too many problems with fracking; too many problems with CO2.
  7. The financial current system fails, and can only be replaced by one that allows much less debt. Oil prices remain too low under such a system. 

In my view, any answer other that the first one is likely to be at least partially right. Ultimately, the issue is that to extract oil or any fossil fuel, we have to keep the financial and political systems together. These systems can be expected to fail, far before we run out of oil in the ground. Most oil in the ground (as well as most other fossil fuels in the ground) will be left in the ground, in my view.

Basing estimates of future oil production on oil reserves is likely to give far too high an indication with respect to actual future production. Even more absurd numbers come from using “resource” numbers (which are higher than reserve numbers) to make estimates of future oil production. Coal and natural gas production is likely to fall at exactly the same time as oil, because the problems are likely to be financial and political ones, not “resources in the ground” problems.

Direct Application of M. King Hubbert Theory is Incorrect

M. King Hubbert is known for his estimates of future oil production  (195619621976) based on reserve amounts. There are two things of importance to notice about his estimates:

(a) The oil reserve estimates used are of free flowing oil reserves of the type that geologists currently were looking at. Thus, they were restricted to “cheap to extract” reserves, and

(b) When Hubbert showed graphs of world oil production following a generally symmetric curve (so downslope looks like a mirror image of upslope), Hubbert showed some other source of energy supply (nuclear in his early papers, solar in later ones) rising to high levels, before world oil production ever dropped. He even talked about making liquid fuels using a huge amount of energy plus carbon dioxide and water–in other words, reversing combustion (1962). In order to ramp nuclear or solar up to these very high levels, they would need to be  extremely cheap.

The assumptions that M. King Hubbert makes are effectively ones that would allow the economy to continue to grow and the financial system to “hang together.” If a person looks at today’s situation, it is quite different. We do not have an alternate fuel supply that will  allow the economy to continue to grow, regardless of fossil fuel consumption. The published reserves include large amounts of oil in the ground that are not of the very cheap to extract type. Extracting such oil will be impossible if oil prices are very low, or if credit availability is lacking. It is tempting for observers to look at oil reserves and assume that all is well, but this is definitely not the case.

Basic issue: Future oil extraction and future substitution is uncertain 

One basic issue is the “iffiness” of the reported reserve and resource amounts:

There is lots of oil in the ground, if we can actually get it out. Getting it out requires a combination of a financial system that allows us to do this (high enough prices for producers, adequate credit availability for producers, equity investment available if credit is not available, buyers who can afford the products) and political system that allows this to happen (citizens in countries with oil extraction not rioting for lack of food; banks open in countries trying to import oil; adequate trade connections among countries).

Likewise, substitution is possible among energy products, if it is possible to overcome the many hurdles involved in doing this. There are two cost hurdles: the higher ongoing cost of the substitute and the transition cost. The transition cost gets to be very high if there are a lot of “sunk costs” that are lost–for example, if citizens  are forced to quickly change from gasoline powered cars to electric cars, so that the resale value of their gasoline powered cars drops precipitously. There is also a technology hurdle: we need to have the technology to enable using the different energy source.

If the cost of the substitute is higher than the cost of the original energy source, a change to the substitute will tend to make the economy shrink, because wages will “go less far”. If citizens need to pay a whole lot more for new cars, or if electricity is more expensive, citizens will cut back on discretionary expenditures. This cut-back on expenditures will lead to layoffs in discretionary sectors, and will make it more difficult for the government to collect enough tax revenue.

Another basic issue: Wages don’t rise as oil (or energy) prices rise

Economists would like us to believe that we just pay each other’s wages. Wages can rise arbitrarily high independently of actually creating goods and services using energy products.

Unfortunately, this doesn’t seem to be true in practice. Based on my research, in the US high oil prices are associated with flat wages, in inflation-adjusted terms. Wages do not rise as fast as oil prices. Instead, wages tend to rise when oil prices are low, making goods and services affordable.

Part of the problem with rising oil prices is that they radiate through the economy in many ways: in higher food prices, because oil is used to produce and transport food; in higher metal prices, because oil used in metal production; and in higher finished products, such as automobiles and new homes, because they use oil in their production. With wages not rising sufficiently, as oil prices rise, workers find they need to cutback on discretionary goods. The result is recession and job layoffs. I document this issue in the article Oil Supply Limits and the Continuing Financial Crisis, published in journal Energy in 2012.

The flip side of this issue is that without wages rising as fast as the cost of oil extraction, it is hard for the selling price of oil to rise high enough to provide an adequate profit margin for oil producers. It is inadequate oil prices for oil producers that seem to be the current problem. I talk about this issue in two recent posts: What’s Ahead? Lower Oil Prices, Despite Higher Extraction Costs and Beginning of the End? Oil Companies Cut Back on Spending.

Economists don’t think that prices can remain too low for oil producers. It can happen, because their model of supply and demand is not correct in a world with energy limits. Even if prices temporarily rise again, recession hits again, and we are back to low prices again.

Another basic issue: Diminishing returns

Diminishing returns occurs when it takes more and more energy or other resources to produce the same amount of goods. In the case of oil supply, we reach diminishing returns because companies extract the easy-to-extract oil first. Thus, the price of oil rises because the oil that can be produced cheaply is mostly gone. If we want to obtain more oil, we need to extract the more expensive to extract oil.

One way to see what diminishing returns does is to think about an economy producing two kinds of goods and services:

  1. The goods and services the consumer really wants–such as food, fresh water, transportation that takes the consumer from door to door, electronic goods, and housing that meets the person’s needs.
  2. All of the intermediate “stuff” that goes into making the end products in (1).

What happens with diminishing returns is more and more of society’s physical labor and its resources go into intermediate products, leaving less and less to produce end products, and less to actually “grow” the economy. In some sense, it is as if we are becoming less and less efficient at producing final goods and services. In my view, this is a major reason why wages stop rising as oil prices rise, and as other energy prices rise.

Another basic issue: The rate of growth in energy supply is closely tied to the rate of GDP growth

We use energy to make goods and services, so it stands to reason that using more energy would lead to more GDP growth. Economists don’t necessarily agree. They are sometimes of the view that the connection has only to do with “Demand”–in other words, when the economy is growing rapidly it needs more oil and energy products to support it its growth. I discuss Steve Kopits’ talk on this subject in Beginning of the End? Oil Companies Cut Back on Spending.

Something that is perhaps not obvious is the fact that cheap energy supply tends to easier to ramp up than expensive energy supply. Cheap energy supply requires relatively less investment. Goods created using cheap energy supply tend to be inexpensive, making them easier to sell to consumers and more competitive in the world market. I talk about these issues in Oil Limits Reduce GDP Growth; Unwinding QE a Problem.  

Another basic issue: The role of debt

Long term debt plays an extremely important role in the economy, because it allows consumers to buy expensive goods like houses and automobiles that they could not otherwise afford, and because it allows businesses to invest in projects before they have saved up sufficient profits from past projects to fund the new projects. It also allows governments to spend more money than they have in tax dollars. All of this purchasing power tends to prop up the price of commodities such as oil and metals, making it feasible to extract them.

We had a chance to see how important a role debt plays in 2008, during the debt crisis in the second half of the year. During that period, the price of oil dropped from briefly hitting $147 barrel to the low $30s range. Major banks needed to be bailed out, and the insurance company AIG was taken over by the US government because of problems with derivatives.

Figure 1. Average weekly West Texas Intermediate "spot" oil price, based on EIA data.

Figure 1. Average weekly West Texas Intermediate “spot” oil price, based on EIA data.

The big drop in oil price in 2008 was due to a drop in oil demand because of lack of credit availability. I wrote an article in 2008  about the huge impact this decrease in credit availability had on energy prices of all kinds, even uranium.

A related concern relates to the fact that “borrowing from the future” — which is what we do with long-term debt, is a great deal more feasible in a growing economy than it is in a shrinking economy. There are a lot more defaults in the latter case, because people keep losing their jobs and businesses keep closing.

Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

The concern I have is that as economic growth slows, we will reach a point where long term debt becomes very hard to obtain. The lack of credit in 2008 has not been fully fixed. It was only with the help of Quantitative Easing (QE), which added more demand to the marketplace because of very low interest rates, that oil prices have been able to rise again after the drop in 2008. With the very slow economic growth we have been experiencing recently, it has been necessary to use QE to keep interest rates low enough that people can still afford to buy homes and cars.

If the economy shifts from adding debt to subtracting debt, we are likely to see a huge drop in oil prices, perhaps similar to the drop in oil prices in 2008 to the low $30’s range. If this should happen again, it is not clear that the Federal Reserve would be able to find a way to make the price rise again because is already using a huge amount of stimulus, and thus has fewer options left.

If oil prices drop to a low level and stay down, a large share of oil production will be discontinued. Very little new drilling will be done. Similar effects are likely to happen for other fossil fuels and for mining for metals as well. Such a drop in oil production is likely to be steep–at least as steep as when the Former Soviet Union collapsed. Oil production dropped by about 10% per year, and other energy use dropped rapidly as well. Customers such as the Ukraine and North Korea saw even steeper declines in their oil imports.

Another basic issue: Government funding

Governments are only possible because of the surpluses of an economy. Greater surpluses allow more government employees and more services. Mario Giampietro (2009) is one researcher who writes specifically about this issue. Furthermore, as an economy grows, rising tax revenue makes it is easy to add more programs and services.

As an economy reaches diminishing returns, studies of past economies show that inadequate government funding is one of the major bottlenecks. This occurs because falling resources per capita leads to increasing disparity of wages, with new workers finding it difficult to find good-paying jobs. Governments are called on to provide more programs at precisely the time when their ability to raise sufficient funds to pay for these programs is lacking. A major factor leading to collapse is the inability of governments to collect sufficient taxes from increasingly impoverished citizens.

The Two Way Escalator Problem

As I see it, the economy as it is currently constructed only gives us two options: up and down. The markers of the “up escalator” are

  1. Cheap energy
  2. Growing energy supply 
  3. GDP growth 
  4. Wage growth
  5.  Debt growth 
  6. Growing government programs 

The markers of the “down escalator” are

  1.  Expensive to produce energy supply
  2. Energy supply grows slowly
  3. GDP Growth lags or declines
  4. Wages lag
  5. Outstanding debt tends to shrink
  6. Increasing inability to fund government programs

The two deal-killers with respect to these two escalators are

  • Moving from debt supply growth to debt supply shrinkage. This is like moving from Keynesian economics to the opposite. Or from getting a credit card with a large available balance, to having to pay back old credit card debt without adding new debt.
  • Increasing inability to fund government programs

The above two reasons are why I expect financial and governmental problems to lead to the end of our current system. Diminishing returns is already leading to higher oil prices, and thus moving us from the up escalator to the down escalator.

I am doubtful we can reestablish very widespread use of long-term debt after a collapse because by that time, the economy will clearly be shrinking. A person often hears people talk about getting rid of the fractional reserve banking system because it requires growth to maintain, but in fact, having such a system has been very helpful in enabling extraction of fossil fuels and allowing the economy to use metals and concrete in quantity. The availability of bonds for financing has been helpful as well.

One essential part of today’s economy is very long supply lines. These allow very complex products to be made, using supplies from all over the world. What we found in the 2008 credit crisis is that many businesses (both large and small) in these supply chains were hit hard by lack of credit availability. I see this issue as being very difficult to solve. If it cannot be solved, we will be faced with making goods locally using smaller companies and very much shorter supply lines. It would be a different system than we have today, and would likely support a smaller world population.

A lot of “peak oilers” would like to think that somehow it is possible to “get off at the mezzanine,” and have a viable economy similar to today’s with a small amount of expensive renewables, plus a continuing supply of fossil fuels. I have a hard time seeing this actually happen. One problem is the likelihood that fossil fuel supply will decline quickly because of low price. Another potential problem is a major cutback in credit availability making transactions difficult; a third issue is governmental problems, as taxes fall short of what is needed to fund programs.

We could in theory get back on the up escalator if we find alternative fuels that meet all of the required specifications–very cheap; available in huge quantity, expanding year by year; can be transformed to a liquid fuel similar to oil; and non-polluting. This seems unlikely right now.

Otherwise, what we do have is all the “stuff” we have today, for as long as it lasts. The economy won’t stop on a dime. We also have the ability to recycle things that we can no longer use, that might be more helpful in another place. Solar panels that people currently own will continue to function for a while (especially off-grid), and the grid will probably continue for a while. We know that many people lived in local economies, before we had fossil fuels, and it is likely to be possible again. We certainly live in interesting times.

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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434 Responses to Reasons for our Energy Predicament – An Overview

  1. Pingback: Fossil Free Penn State – Updates | State College Energy Sovereignty Task Force

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  3. Gail, Paul and all,

    Some additional new refs on global economic/energy factors:

    1. Regarding what is happening to the petroleum/fossil energy cost structures in competition with alternative energy: (

    2. Regarding the awareness of relatively near term potential global food shortages – albeit a very mixed bag related to the content value (IMO) of some of the contributions – it’s a comprehensive/one-stop read overview on the subject: (

    • Paul says:

      I was reading a post yesterday with a link on this forum to some research that indicated the energy return on solar is 0.875 to 1… i.e. it is negative. i.e. solar cannot happen without oil inputs therefore solar is a very expensive and pointless ‘toy’ I can see the point of buying solar panels to use after the SHTF but let’s not fool ourselves – solar will go the way of the dodo when the oil stops.

      The best article on renewable energy is of course here

      As for feeding people a couple of billion more in 2050 that’s not going to happen – there will not be 2 billion more people in 2050 — because there is going to be a multi-billion person die off that will initiate when the oil and gas gets shut off when the global economy collapses… and industrial farming will end meaning most of the world starves.

    • Regarding the solar energy being sold at 5 cents per kilowatt hour for the next 25 years, I presume this is taking advantage of subsidies of different kinds. These tend not to last. Check out Spain, Germany, Greece, etc. On the other hand, the whole system may not be working, so it may not matter.

  4. Pingback: getting local | Brain Noise

  5. Don, Paul, Gail and all, Don’s (above 3/12 comment has no option to reply) seems to think there is a lot of choice in food production methodologies currently, which current global agriculture and I disagree. In a stable current world, perhaps a larger portion of world food production could be produced through permaculture techniques than it is. However, as long as our population continues to grow the possibilities of permaculture become less possible, not more so as food production volume efficiency becomes ever more critical. Given current trends and as most people here seem to agree relative stability is about to end and ultimately it seems that food shortages will be part of the end of our way of current way life – suddenly or gradually. Gradual collapses are to varied to predict with any degree of accuracy beyond great and long term misery of the masses.

    There is no doubt that any major collapse survivors will revert to permaculture to feed themselves in the case at some point after a collapse. Unfortunately, there is likely a long, violent, and almost unimaginably difficult period between a sudden collapse and stabilization sufficient to allow dependable local food production – of any kind.

    A number of people/groups have modeled sudden collapses (the longer the collapse period the less predictable) and depending on there actual cause(s) they can be quite variable. Even so, it is believed sudden collapses will go through more or less predictable phases and time lines at least early on – again dependent on the limitations causing the collapse. Primary determining factors are the speed of the collapse – which is determined by how quickly and completely food/water delivery services are interrupted, and how quickly civil order is lost (how soon police and or national guard cease to operate effectively as they move to protect their own families). The sudden collapse phase modeling I’ve seen are approximated in brief as follows

    Phase I. Limitation – Interruption of food supplies by either inadequate fuel, passable roads or insufficient number of healthy truck drivers (pandemic – which may also include the breakdown of public utilities electric, water, police and telecommunications including the internet) , or insufficient number of trucks and other vehicles (EMP event). The average American has less than a week of food stored for their family. Today most grocery stores are dependent on rapid turnaround/constant inventory delivery from distant central supply hubs. Local grocery stores when supply chains are broken will be looted by the end of Phase I. Essentially, by the second or third week of Phase I the majority are out of food and entering Phase II.

    Phase II. Foraging for food. Foraging begins with individuals or small groups of neighbors breaking into and entering apparently empty/unoccupied homes in their neighborhoods looking for stored foods. Local food banks may be looted and emptied quickly. Depending on the number of second homes in your neighborhood that might also contain useable foods – determines the length of this relatively benign forage phase. By the end of Phase II maybe three to six weeks from the beginning of food delivery breakdown, the majority of available food caches will have been exhausted and hungry (and probably sick) people desperate to feed and find medicines for themselves and their families will become more aggressive entering Phase III. Areas of high population density will likely be the most aggressive and dangerous.

    Phase III. Fighting for food and medicine. In Phase III food and medicine become the central focus of daily life. Depending on past local neighborhood culture, neighbors may form alliances with each other and essentially what are hunting parties formed. Local game and pets will be harvested for food if available, and depending on the depth of hunger and desperation, proximate neighborhoods and or farms of relative strangers will be raided and their supplies taken by armed force. In the US armed conflict will decimate the population during this period increasing the probability common, but lethal disease outbreaks including cholera and various wound related infections – previously contained with basic medical treatment. In some areas ancient scourges like Yellow Fever and or malaria may return surprisingly fast. However, decimation of the population will cause food demand to be reduced as well.

    Phase IV. Surviving. Some people are more resourceful than others both physically, mentally, personality wise and due to their surroundings. This period will select rapidly for them. Survivors will either be lone or small groups of roving predators, or in-place organized groups. Rural areas where people traditionally maintain gardens or small farms will be organized into essentially feudal villages/states each with it’s own operating terms and who will defend against the aforementioned roving predators.

    Phase V. Stabilization. Eventually the groups of roving predators will be eliminated for group survival reasons. As outside threats are eliminated the small more self-sufficient villages will become more organized as their food supplies become more dependable. Because the populations at this point will have shrunk dramatically – housing and building materials will be abundant. Repurposing unused materials will become one of the first trade/business efforts. At this point regional relationships will begin to form to sort out what is left of the previous civilization.

    As I said exact causes and timelines determine the predictability of the outcomes, so the above is only food for thought and in no way any kind of prediction. Having said this, a slow collapse, a long degenerative collapse could be far more damaging to civilization as it has in other critical points in human civilization. Additionally, a long slow collapse increases the probability of armed conflicts between nations for treasure/resources. All just food for thought.

    • Don Stewart says:

      Dear Durwood
      I was in the waiting room at the dentist this morning, and I used the time to look over Sepp Holzer’s book on permaculture and how he turned his mountain farm in Austria into a showcase.

      Gene Logsden, the Contrary Farmer from Ohio, contributed this blurb:
      Sepp Holzer is a Superstar Farmer who turns out a remakable volume and variety of food products without one smidgen of chemical fertilizer, and on land in Austria that most would pronounce too marginal for agriculture.

      Whether Sepp originally ‘remineralized’ I don’t know. But it is clear that one can farm for decades without adding annual phosphates or nitrogen or other commercial fertilizers. One positive example proves that something CAN be done.

      Sepp thinks we can feed 16 billion people…the highest number I have heard anyone use. Based on his example, I assume that he is taking account of all the marginal land which can be made highly productive with the correct methods.

      I should also note that Sepp is the king of ‘big earthworks’. He uses meticulous control of water and the creation of microclimates to grow crops which should not be growing in Austrian Alps. He even created a spring near his house to collect and purify drinking water. But throughout this process, he was using fossil fuels and earth moving machinery. He sees the earthworks as investments which will pay off over centuries. Contrast his attitude with that of a corn farmer using fossil fuels this year to produce high fructose corn syrup which will poison the human epigenome for centuries.

      But if Gail is correct and we are on the verge of unavailability of fossil fuels and earthmoving machinery, then the time left to accomplish these investments may be very short. We also have a shortage of people who know how to do the work.

      Don Stewart

      • Paul says:

        Don – what Seth has done is admirable but I wonder if the scale of what is required is just to massive. We don’t have anywhere near enough experienced people available to implement a plan similar to Seth’s.

        Also – if governments were suddenly to announce massive organic initiatives including training and incentives, I suspect that would spook the world and accelerate collapse – the stock and bond markets would take fright probably overnight.

        Perhaps if we had done this gradually over time it might have worked – but of course Monsanto and their lobbyists would have opposed such initiatives with all their might.

  6. Interguru says:

    < a href="; Summers, Lomborg, Tabarrok, and Cowen on climate change . The comments take political reality in account, which can make them dispiriting.

  7. Danny says:

    It is strange when I look back at past post I notice that the people area all different. Maybe it is too depressing to come here anymore for them…I guess I keep coming here hoping for some glimmer of hope…so far it feels like further and further into depression and zaps any positive energy I have…..

    • Paul says:

      Danny – although I am no Pollyanna and have been aware for some time that a very bad result was baked in — I have tried to take positive steps to adapt to the new abnormal that is imminent – including intensively farming our land in Bali and buying a small remote piece of land in Canada as a fall back.

      But the more I go down this rabbit hole unfortunately I am inclining to conclude that anything I do will ultimately prove futile.

      I had another epiphany in the past week which I have posted earlier – to summarize – why are governments and central banks pouring more fuel on a blazing inferno knowing that such actions will ultimately be suicidal – what do they know? Why would they do this?

      7.2 billion people — no means to feed them when the oil and gas is shut off.

      When confronted with that reality it is difficult to remain positive.

      In the meantime I continue to build the farm spending hours each morning on the shovel and a couple of days a week with a permaculture instructor. It’s great exercise.

      If I buy wine I don’t hesitate to choose the more expensive bottle if I think it might be better.

      I continue to enjoy time with family and friends – continue to travel and learn.

      Life goes on while it goes on. You could be hit by a car tomorrow — or you could come down with a terminal disease. We all gotta die somehow.

      At least in this case the odds are everybody you know will go at roughly the same time so you won’t feel like you’re missing out on anything.

      And if you gotta go now better to do down fighting at an epic moment in history (right up there with end of the dinosaurs) – better than rotting away in a chronic care ward jammed full of tubes.

      Hope for the best – plan for the worst. And enjoy each day while you can.

      That’s really all anyone can do.

      • edpell says:

        I like your point about it being an epic moment in history. and “Hope for the best – plan for the worst. And enjoy each day while you can.”

        With children of whatever age it is always the story of Moses. You never get to the promised land but you fight for it so your kids get there.

  8. SlowRider says:

    I wasn’t able to follow all comments – maybe the link has already been posted:
    Richard Heinberg: The Oil ‘Revolution’ Story Is Dead Wrong.
    He says it all.

  9. Lizzy says:

    I think I’ve posted this before, but that current about cedar trees before reminded me of this video.

  10. Paul says:

    And here we have another example what happens when the price of energy is beyond the reach of what people are able to pay.

    The populist answer? State subsidies — as if that were a solution.

    Effectively robbing Peter to pay Paul.

    Blackout Risk Increases With Surging Populism: Corporate India

    The government’s solution was a $31 billion bailout of utilities, whose debts were so big and cash flow so small that they can’t provide a steady flow of electricity to homes and businesses. Now that bailout is in jeopardy.

    A populist movement sparked by an anti-corruption crusader is forcing utilities to slash the price they charge consumers. Because most of these power retailers already lose money, this development is pushing them further into debt. They were supposed to boost rates, not cut them, under the bailout plan.

    “The situation is as grim as ever,” Arup Roy Choudhury, chairman of NTPC Ltd. (NTPC), India’s largest generator of power. said in an interview. NTPC threatened to stop supplying unprofitable retailers that are behind on payments. That, in turn, could interrupt service to thousands or millions of end-users.

    India already holds the world record for blackouts. In 2012, an estimated 600 million Indians went without power in the north and east for three days after a grid collapsed because some states drew more than their quota.

    With Kejriwal out of power, his plan to provide cheaper electricity in Delhi through state subsidies is set to end March 31. Yet the other two provinces, Haryana and Maharashtra, both ruled by the Congress party, will go ahead with state-funded cheaper power.

    India’s pickle stems from trying to provide power to consumers below cost. It’s a policy goal seen in other nations, such as Indonesia and Spain. Basically, retailers, including Tamil Nadu Electricity Generation & Distribution Co. and Punjab State Power Corp., sell power at a loss, after having bought it from generators using ever increasing debt. It’s a debt spiral that Spain has failed to extinguish for more than a decade, while in India, it seems ever further from resolution.


    • While politicians in India are undoubtedly corrupt, as they are in many other places, it doesn’t really alter the main problem, that the population is around 1.2 billion, and at the current rate of increase, will double in 50 years.

      That won’t happen of course, but it remains that there are still too many people, and there will always be too many making more demands than the country can supply, whether that’s food, energy–whatever. India is just a world picture, just too many of us demanding more that the earth can deliver. Yet we go on demanding more as some kind of infinite right of consumption. Like the Indians, we are about to be disillusioned.

  11. Paul says:

    Re: the issue of feeding 7.2 billion people when oil and gas inputs are no longer available for fertilizers and pesticides.

    I posted comments from a permaculture expert the other day that the problem goes beyond the fact that the soil on industrial farms is dead and would require 3+ years of intensive organic inputs to grow a crop – where would all the organic matter come from to convert millions of acres into arable land?

    I have first hand experience of how this will play out as of this morning.

    We have a cow and have been composting for some time – we have some of the best soil in the world here in Bali due to volcanic activity over the years yet of course it still needs care – we have just put another 1/2 acre under cultivation – yet our compost is nowhere near enough to get the soil up to a solid standard.

    We are having to truck in a tonne of compost from another organic farm this week because otherwise it would take months to make enough compost for this relatively small patch of garden.

    Now if I were in Alberta trying to convert 10,000 acres to organic I would have a massive problem – first where would I get all the compost from – and second – how would I get it to my land?

    That puts things into a rather confronting perspective.

    Of course even if one could find the hundreds of thousands of tonnes of compost required for a large farm – and truck it there – one would still be left with the issue of waiting 3 years for the first crop.

    Green Revolution refers to a series of research, development, and technology transfer initiatives, occurring between the 1940s and the late 1960s, that increased agriculture production worldwide, particularly in the developing world, beginning most markedly in the late 1960s.[1] The initiatives, led by Norman Borlaug, the “Father of the Green Revolution” credited with saving over a billion people from starvation, involved the development of high-yielding varieties of cereal grains, expansion of irrigation infrastructure, modernization of management techniques, distribution of hybridized seeds, synthetic fertilizers, and pesticides to farmers.

    Norman Borlaug — this needs to be amended to reflect that he will responsible for the die-off of literally billions of people — he may even be the ‘Father of the Extinction’ when all is said and done.

    • Don Stewart says:

      Dear Paul and Others
      At the Organic Growers School in Asheville, NC, USA, the tracks are separated between gardeners and commercial growers. A gardener managing a 4 by 8 plot can and will do a lot of things that a farmer in North Dakota managing hundreds of acres will not do, and vice versa. Lets look at the soil organic matter issue, very briefly.

      Soil organic matter can be made in two ways. First, living things in the soil die and decay. The living things in the soil include about 6 billion critters per tablespoon of soil, and the roots of plants. Some plants, such as alfalfa, have roots that go 20 feet into the soil. When an alfalfa plant dies on the surface, organic matter becomes available 20 feet down in the soil. When the 6 billion critters eat each other, their bodies become available mostly in the top 6 or 8 inches.

      The second way to make soil organic matter is when living things above ground die and fall to the ground, such as tree leaves and branches and surface dwelling animals and their manures. Some of this organic matter remains on the surface, as in forest duff, and some is taken below ground by the critters that live in the soil.

      Humans who buy compost to add to their land are mostly buying an industrial product which is made by harvesting industrial and urban waste material and subjecting it to oxidative and non-oxidative processes to reduce it to humus. Gardeners can frequently afford to buy compost in plastic bags, but a farmer buying compost that way for hundreds of acres will soon be bankrupt. Therefore, at the Organic Growers School the classes on soil organic matter for farmers emphasize two methods. The first is cover crops, such as alfalfa, which deposit organic matter deep into the soil. The second is rotational grazing, which uses a combination of heavy herbivores and grasses. The grasses have deep roots, and when the herbivore grazes the plant on top of the soil, the plant sheds root mass below ground to compensate. In both cases, it is mostly the dead roots which are adding organic matter. Both methods can rapidly build organic matter.

      However, plowing destroys organic matter. So if the farmer tills, then the organic matter will be lost pretty quickly. Around here, farmers who plow typically have one or two percent organic matter, even doing pretty good practices with cover crops and rotational grazing. In short, they are on a treadmill and are operating a farm which simply won’t accumulate organic matter. Some of these farmers are ‘certified organic’.

      One of the partial solutions to climate change is to farm such that carbon accumulates in the soil, and organic matter moves steadily upward to perhaps 15 percent (opinions vary, and the tropics aren’t like the cold plains of the Dakotas). Such ‘carbon farming’ is a complex topic that I won’t try to detail here, but it involves eliminating or drastically reducing plowing, stopping the synthetic fertilizers and pesticides and herbicides so that the critters in the soil can flourish, and managing water such that water sinks into the soil to support multiples of organic life.

      A gardener can put almost all of the nutrients (except nitrogen) that go into the plants back into the soil. The best way to do that, I think, is with mulch. Check out Emilia Hazelip’s YouTube video to see how that works. Emilia never used annual fertilizer and she never tilled after she had made her beds. She died a decade or so ago. Urine is a rich source of nitrogen, and should never be flushed down a toilet…pee in your garden. Gardeners need to keep the soil covered constantly to avoid erosion and compaction, and nitrogen fixing cover crops are excellent methods of doing that.

      A farmer sells his products which are taken off his land and into a city. Therefore, the closed nutrient loop which gardeners can achieve is not really possible without more elaborate methods of returning nutrients from the city to the farmland. In New York City around the turn of the 20th century, farmers came into the city to collect horse manure and take it back to their farms. In Asia, farmers came into the cities and emptied latrines and took the waste back to their farms. Nowadays, most commercial composters collect waste in cities and manipulate it with machines to make compost which they sell in bags or by the truckload. There is currently quite a bit of permaculture thinking going into increasing the efficiency of this urban recycling. Of course, an urban gardener should be recycling on his own property, mostly.

      So where does compost really fit in if cover crops and mulches and rotational grazing are the main ways to increase soil organic matter? Remember that we need to not till. That means that we will be relying mostly on perennial plants and starts which are plugged into untilled soil. Compost is an excellent growing medium for starts. Compost is not really a fertilizer…but starts come from seeds which are designed by Nature to be pretty self sufficient in early life…they don’t need much fertilizer.

      How long does it take to grow good, carbon rich topsoil? I don’t think anyone has a global average, but I have seen rotational grazing grow an inch a year, and I have a friend who followed a very simple mulching system in his garden for 20 years and grew about 10 inches of topsoil.

      So the time to grow topsoil is today. The time to stop plowing was yesterday. All else is detail.

      I’ll mention one other thing. Many permaculture experts recommend some pretty heavy work with the soil right at the beginning. Right from the beginning the permaculture people in Australia have been emphasizing the need to store water in the soil…which is accomplished both by increasing soil organic matter but also by slowing water down so that it has time to sink. Earthworks of various kinds are therefore frequently built to slow the water. A second area of concern is compaction. Many soils are now compacted from decades to centuries of industrial farming practices. There is currently a boomlet in using excavators to build garden beds which are deeply dug (think John Jeavons double digging on steroids). A broadacre farm, of course, needs to rely on plant roots to more gradually reduce the compaction, as digging up hundreds of acres with an excavator would cost way too much money.

      Finally, as I said in a separate post, the issues around phosphorus are unclear to me. But stopping the tilling and erosion and returning all waste to the soil will slow the loss of phosphorus to a crawl instead of a gallop.

      Don Stewart

    • Paul, We may not agree on the transparency and or motivations of the oil industry or when oil demand will collapse, but you are spot on regarding food production and the inadequacy of permaculture to substitute for NPK based factory ag. Beyond the logistical/energy impossibilities – permaculture is essentially nutrient recycling and like all recycling it is far less than 100% efficient – an asymptotic process. Each cycle losing nutrients that have to be replaced – lost both to product, runoff and soil chemical binding of the major nutrients. Without replacement and the logistics to accomplish that replacement high-yield agriculture isn’t possible.

      • Christian says:

        “Replacement of high-yeld agriculture isn’t possible”. What are high yields? It is surely not my field, but I guess yields at the French Revolution can be achieved. Lost a lot of traditional knowledge but have a better scientific understanding now.

        • Mass balance analysis pretty much tells it all, whether you are talking about chemistry, physics or economics. Essentially it is the determination of all inputs and the resulting out puts – mass, energy, and byproducts. Businesses (including farming) could learn a thing a two from paying more attention to mass balance analyses or even it’s less precise, but more social – life cycle analysis. For example it would have saved billions of dollars in biofuel investments in biofuel investments. From a mass balance and life cycle analysis standpoint it has always been apparent that biofuels were petroleum/NPK dependent at scale for the necessary inputs. It’s really tough to replace something that requires that something to replace it.

          The assumption is that food wise, that the planet can support per-industrial revolution (without oil) and pre-green revolution (without NPK) population levels of between 1 and 2 billion people – because that’s the only demonstrated and non-projected model that we have. Of course that depends on the severity of the collapse process. As someone pointed out herein – that severity depends on all the worlds nuclear resources – power plants, their wastes, and nuclear weapons being safely put to bed permanently – and not becoming a negative part of the collapse equation. I’m estimating that a collapse will go far below 1-2 billion people and we will be lucky if we can come back to those population levels.

          • B9K9 says:

            Mass balance analysis? LOL. How about simply referencing the 2nd and be done with it? Lots of talk, which is fine to fill available space, but if anyone wants to cut to the chase and know the **absolute** truth, then a cursory review of the three elemental laws of physics will put a quick end to all questions, debates, etc.


            The bottom line is all life forms are energy sinks, and therefore, condemned to an endless cycle of search & consumption. This process inevitably always ends in population overshoot, resource exhaustion and die off. It is what it is; trying to sell “solutions”, green or otherwise, is just another form of huckerism.

            Not that I personally have a problem with it; after all, it’s competition of the fittest, and if one can gain an advantage other another via clever gimmickry, then who am I to judge?

      • Don Stewart says:

        Dear Durwood
        One can, of course, do biological farming badly. But Nature recycles nutrients with extraordinary efficiency. If Nature didn’t recycle efficiently, there would be no nutrients left today. Therefore, if a gardener is following the best practices, there is little lost in the way of nutrients. If you look at the Emilia Hazelip YouTube video, you will see what I mean. The natural weathering was adding more nutrients than she was losing.

        As I said in my earlier response, it is harder for a farmer because the food (and nutrients) are going to town and maybe overseas. Which is one of the reasons why I imagine people such as Geoff Lawton and David Holmgren and Toby Hemenway emphasize urban gardening. Urban gardens can be just as efficient at recycling as a country garden.

        So long as we have the industrial means to compost urban waste, then urban gardens are also the logical place to deposit that compost. Most suburbs generate far more waste than they can efficiently compost.

        Your concern about the efficiency loss with each cycle of reuse applies to human designs, but not to designs in Nature, and not very much to human designs which rely mostly on Nature, such as good biological gardening systems. As I said earlier, people are working and need to work on the farming angle. Simon Fairlie, who did the best study I know of ‘can Britain feed itself?’ concluded that the British would have to put more people close to the food. It is obvious that a village surrounded by farms can recycle waste more easily than a city like London trying to send waste back to Argentina where it was grown.

        Don Stewart

        • timl2k11 says:

          Following your line if thinking Don to its logical conclusion, anything humans do is going to deviate from nature, and the best course of action is to let nature do its thing and return to a hunter-gatherer society. All humans seem to be able to do is mess up the natural processes. Only nature can do what nature does best. Humans can, at best, poorly imitate it.

          • Daddio7 says:

            It almost seems that man is not part of nature. We can see that we are so much above the other animals we believe that there beings above us.

            • Don Stewart says:

              Deal All
              For those who want to spend a little more time with phosphorus, here are a couple of links.

              First, the TED talk and the fungi solution:


              Second, a review of the importance of phosphorus and fungi, going back to Bill Mollison’s Permaculture Designer’s Manual 25 years ago.


              Please note that tillage and synthetic fertilizers are really bad news for fungi. Those who claim that we MUST use industrial agriculture, which wastes phosphorus and kills fungi, have no solution to Peak Phosphorus. Those who practice biological farming with best practices to retain phosphorus are, in my opinion, on the side of the angels. Whether biological farming can feed some arbitrarily large number of humans with just the diet those humans want, is a different issue. We are pretty sure that industrial agriculture will feed even fewer when the phosphorus runs out.

              Don Stewart

          • Don Stewart says:

            Dear timl2k11
            Humans can do things that Nature has never figured out how to do. For example, I believe that evolution has never made a doughnut hole (at least a Duke professor said so). Similarly and more germane to biological farming, Nature pretty much lets gravity control the flow of water. Gravity plus water produces lots of erosion, as is obvious if you fly over the US west of Kansas City. But humans have learned how to use earthworks to slow water down and let it percolate into the soil. The difference in crop yield between plain dryland and ‘water designed’ farmland can be enormous. That is one of the reasons you will see Geoff Lawton demonstrating an excavator in his latest video. The goal is to shape the land so that water is used for maximum productivity…and you don’t have to do much of anything to it for hundreds of years. In short, an investment now in some fossil fuels and the available industrial technology can make it very much easier to survive without fossil fuels and industrial technology in the future.

            Consider something as simple as peeing on your garden. About 90 percent of the nutrients you eat in food (excluding calories) are in your urine. Directing your urine to your garden is a very efficient way of recycling those nutrients. Think about it. If you are an adult, you are not adding body mass (you hope) so you don’t need lots and lots of nutrients to build muscle and tissue. Many of the nutrients are used to catalyze chemical reactions and then put into your urine for expulsion.

            You can see the advantage of the garden over the distant farm. I can’t very well return my urine to a farm in China. These sorts of issues may become quite important to us again, as things get tighter.

            Don Stewart

            • “If struvite were to be recovered from wastewater treatment plants worldwide, 0.63 million tons of phosphorus (as P2O5) could be harvested annually, reducing phosphate rock mining by 1.6%.”
              ( That’s the gap we have between recycling phosphorus and our use of rock phosphates for NPK. We’re short only 98.4%.

            • Don Stewart says:

              Dear Durwood
              When you quote statistics on the immenent brick wall of phosphorus shortage, it seems to me that you are simply saying that industrial agriculture is doomed. If we continue down that path, practically everyone will starve. The alternative, biological agriculture, holds out two opportunities. First, as in the TED talk, perhaps we can use less phosphorus and stretch the supplies by substituting biology for phosphate rock firepower. Second, if we are going to have to make do without phosphate rock and oil, then perhaps biological farming will support 500 million to 2 billion humans on Earth (Toby Hemenway’s numbers). Which do you choose?

              My thinking is that the large culture will never choose biological agriculture. But subcultures can so choose. For example, one of the lectures at the Organic Growers School covered the topic of decompacting the soil and remineralizing (including rock phosphate) with the use of excavators. I doubt that the lecturer thinks that the dominant culture is going to rush out and start doing it. (He began his talk with the observation that the Earth is abused and abandoned.) His demonstration was with a garden plot. He said, in answer to a question, ‘remineralizing your soil gives one of the best paybacks you can get’.

              This sounds like a subculture trying to do the rational thing.

              Don Stewart

        • Don, Like most permaculturist and organic, you need to read up on the natural phosphorus cycle, understand dilution and chemical binding of phosphorus and you will understand the limits of your suggestions and why they won’t work for 7 billion or 10 billion people.

          • Don Stewart says:

            Dear Durwood Dugger
            I do read up on phosphorus. For example, there was a recent TED talk by a guy saying ‘don’t worry about phosphorus’. His reasoning was that fungi can bring mineralized phosphorus to most all plants (excluding the brassica, apparently). So if we just stop poisoning the fungi and if we adopt best practices in terms of keeping the phosphorus in the soil, we will be fine.

            We do know that grasslands and forests have been productive for a very long time without anyone adding crushed phosphate rock to them. Biological farming aims at the same ability to do without mined or synthetic fertilizer.

            What seems to me unconscionable is to continue to pour phosphorus on corn fields when 90 percent of it just washes away. To make ethanol? Or high fructose corn syrup? Are we insane?

            Don Stewart

            • Don, We all agree that wasting phosphorus is – imprudent and a bad thing – especially burning food as biofuels. However, we can’t stop using it now that two thirds of the world’s population would die without it the cheap food production to which they have become accustomed and dependent upon.

              It isn’t that permaculture doesn’t work, or that bacteria and fungus don’t release some phosphorus over time from chemically bound soil phosphorus compounds – the problem is that the average time is many years and the production levels and cost efficiencies of current required food production levels demand more phosphorus than can be released naturally within food crop cycles are only possible through current NPK food production technologies. That’s why the current world production of organic foods is less than two percent of the total global food production. Organic foods are typically far more expensive than NPK based agriculture.

              Oh, another heads up – fungi require phosphorus just like all other living organisms, they aren’t killed by phosphorus in well managed farming – NPK or other sources. And they don’t release their phosphorus until they die. Of course the soluble phosphorus that rain leaches and that isn’t taken up by the immediate crop – goes into the ground water, subsequent runoff diluted to points beyond economic recovery, or is rebound by other soil chemicals unavailable to plants. The end result is you can feed about one to two billion people on the planet through the natural phosphorus cycle. Beyond that it is totally undemonstrated and highly questioned by resource science experts.

              “Phosphates move quickly through plants and animals; however, the processes that move them through the soil or ocean are very slow, making the phosphorus cycle overall one of the slowest biogeochemical cycles.” (

              If natural phosphorus and other critical nutrient supplies were more economically efficient or available enough – we wouldn’t be using NPK. World wide organic farming contributes less than 2% of the global food production and utilized on less than 1% of global farmed acreage.

              “In spite of the considerably lower pesticide input the quality of organic products was hardly discernible from conventional analytically and even came off better in food preference trials and picture creating methods.”

              And organic is not as safe as proponents would have you believe. Manuring carries its own set of bacterial and viral risks. “The Centers for Disease Control repudiated a claim by Dennis Avery of the Hudson Institute, that the risk of E. coli infection was eight times higher when eating organic food. (Avery had cited CDC as a source.) Avery had included problems stemming from non-organic unpasteurized juice in his calculations.[199][200][201] Epidemiologists traced the 2011 E. coli O104:H4 outbreak – which caused over 3,900 cases and 52 deaths – to an organic farm in Bienenbüttel in Germany.[202][203] (

              Organic foods cost anywhere from 10% to 300%+ more than conventional foods and by all evidence is a luxury niche market, not a practical global food production technology. “As of 2012, the scientific consensus is that while “consumers may choose to buy organic fruit, vegetables and meat because they believe them to be more nutritious than other food…. the balance of current scientific evidence does not support this view.” (”).

              The message here is clear to me – if organic production techniques were so beneficent and economical, you would have more than 1% of food production acreage producing it and by now it would account for more than 2% of global food – which it doesn’t. Furthermore trying to turn around world food production from NPK to organic farming in a year or two, or even in decades would be utterly impossible – especially if there are energy shortages as well. Now that we are dependent on NPK to reach current food production goals – there will be no sudden turning back without serious food shortage repercussions. Maybe after the collapse we can go back to the natural phosphorus cycle – at least those of us that survive it.

            • Paul says:

              “2% of the global food production and utilized on less than 1% of global farmed acreage.”

              Thanks for that stat – I was not aware that things were so dire.

              Let’s work out what this means:

              1. When the SHTF and oil and gas inputs are no longer available to carry on industrial farming 7.2 billion people will need to be fed using organic farming methods.

              2. It takes 3+ yrs to revive the dead industrial farmed soil using intensive organic methods (assuming organic matter is available in the massive amounts necessary to revive millions of hectares of dead soil)

              3. So 7.2 billion people will need to be fed for 3 years using 1% of the world’s global arable land.

              4. But hang on, some might say, there is other land that has not been farmed at all (e.g. people’s backyards) and that could be planted with crops. Right – but the time from planting to harvesting a crop is measured in months – what does one do in the meantime – the grocery stores will be emptied out in a matter of days as things descend into chaos.

              I think we have our answer as to why governments are doing nothing – there is nothing they can do – 7.2 billion people cannot be fed on 1% of the earth’s arable land.

              What will 7.2 billion starving people do? Will they weaken and die quickly – or will they kill and eat anything that moves (including each other) – will they rip out everything that grows and eat it (North Koreans eat grass when faced with starvation) – will they hack down every tree in sight to keep warm/cook?

              While I am intrigued to see how this actually plays out – my gut says it will be far worse than anything I can imagine — so any action that holds off the day of reckoning is worth pursuing.

              Keep on printing – keep on lying – keep on telling us recovery is at hand – because the moment too many stop ‘believing’ the S will HTF. And we will see what 7.2 billion people without food do.

              A series of rather unpalatable thoughts contrasting with a lovely morning here in Bali.

            • Daddio7 says:

              No matter who wrote the Bible this problem has been addressed. Joseph had the Pharaoh store up the harvest from seven fat years to feed the people during the seven lean years. It would take a charismatic person with a one world government to do that and what happens then has also been addressed.

              On a more serious note oil will be available in limited amounts. The countries with the most military might also happen to be the ones able to continue NPK farming, at least for a limited time. The third world will be starving but lack an unified force to go get food from one of the powers.

            • Paul says:

              I am not so sure oil will be available at all – the days of building a rickety rig out of wood and knocking a straw into the ground are long gone – oil extract is ultra-high-tech — and ultra- high expensive.

              Perhaps there is some sort of economy I cannot envision but without a functioning market economy i.e. where there are consumers who can pay for this expensive oil — then the oil stays in the ground.

              Likewise with all resources — when the SHTF life as we know it stops — universities stop so there will be no engineers or technicians to support mining — there will be no drilling rigs — there will be no monster trucks to haul ore from the mines — no harvesters in the fields.

              I cannot see how all of what we take for granted remains.

              After all the problem we are facing now is the end of cheap oil. How does a collapse solve that problem? If anything the situation gets worse as there will be no capital available to extract and transport oil.

            • Daddio7 says:

              I forgot you are in one of those third world countries, sorry dude. While we have a small population of people who might get unruly, most are rational thinkers. Supposedly there are more firearms than people in the US. We will be able to defend our fields, as an old but still feisty farmer I will do my part.

            • Paul says:

              Daddio – here’s my dilemma – we have a 20 acre property in BC Canada – and I have a 4 acre property in Bali where we spend most of our time.

              I have struggled with the decision of where to attempt to ride this out and I have determined this ‘third world place’ is by far the better option.

              When it comes to rational thinking I think the people in my village are far more rational than those in the first world countries.

              They have an extremely strong community spirit with extensive cooperative obligations under their Hindu religion. For instance in a couple of weeks we have Nyepi – a day of silence and reflection (try convincing anyone in the west to participate in such a day)

              In my village everyone knows everyone – we even have our own security force or Pecalang – as does every other village – it is very difficult for an outsider to enter the village without being noticed and stopped. Crime in the village is unheard of.

              We have an amazing lady who helps at our home and I asked her recently ‘if the shops closed for some reason and people had to fend for themselves for food what would happen?’ She said ‘most people would be self-sufficient if need be — they have chickens and gardens and they would share as a community’ (keep in mind the climate allows for continuous farming year round here)

              We have made extensive efforts to become part of this community employing locals to help on our farm and initiating a share policy on crops – most days I get onto the land and do the hardest jobs to demonstrate we are in this together.

              We have developed a great relationship with our workers and (I think) they very much enjoy working here. We are teaching them English and will soon introduce a health care plan for them. We appreciate them and value them – and hopefully this relationship continues after the SHTF.

              The most important thing will be food — if our village is not starving I think we will be in a good position here – we have one of the biggest plots of land and we will be able to contribute to food to the community. We are also sharing permaculture knowledge so that everyone can produce more food.

              On the other hand our property in BC is remote – the nearest town is 5km away with about 1000 people. There are a few small farms in the area but for the most part people work for the govt or in logging and tourism. I don’t know of anyone who is making preparations for what is coming – I am sure none have more than maybe a week’s supply of food – I know most do not have even a vegetable garden – when the grocery store empties they will be screwed.

              So even if I were to choose BC and put a plan in place — what happens when the SHTF? 1000 people will likely be knocking wanting to be fed. Most have hunting rifles and although they might be rational thinking now —- all bets are off when the pot is empty.

              Add to this the fact that winters are long and cold and the growing season short and we have determined Bali is where we make our stand.

              We are still going ahead with building a one bedroom shack in BC with a secure basement which will be filled with enough food to last a year (while we try to get the land producing) as a Plan B — but Bali is definitely Plan A — and we are implementing the plan as if the collapse could come tomorrow

            • Daddio7 says:

              In your isolated area the people you are with are closer to nature, sounds like you have the better plan. I live in north Florida and though I live on a farm there are several million people less than fifty miles from me. I can hardly afford to get out of town, much less the country so whatever happens I will ride it out here.

            • You at least you know what you are dealing with in Bali. In BC, you have a whole new set of obstacles to overcome, including not knowing anyone. I agree with your plan.

        • Christian says:

          Good point. We’re exporting the most vital stuff

    • Chgebauer says:

      Lovely towns in Slovakia, as well. It seems you got problems with the euro, may be you entered just in the hit.

      Yes Paul, we miss the words to tell the thing. May be TPTB are hiding an ace. A friend showed me at youtube some cars working on water, electrolysis and hydrogen on board. Suppose they got some kind of secret like this to jump next year and meanwhile they just go plundering the rest, protected by the false excuse of the lack of oil. It would be an impressive tour de force.

      Argentina has always been an immigration oriented country, and until now foreigners welcome is among a few of the constitutional principles being daily observed by very much of the habitants. Racism can be hard in certain places, but nationality itself is rather not a problem. Private property is still here as sacred as ever. To give an example there is an 8 ha farm, with a house and a couple of extra buildings, as some pigs installations, on sale for 200 KUSD. 220V, currently pumping the water well. Leasing the land by the year to insistent soy production for export could give a rent of barely 5 KUSD a year. It’s a very small plot under current crop standards, so it’s not surprising it is far away of supporting a middle class family (starting 2500 USD monthly).

      On the other end, we have in the fifties each ha in that zone supplied almost a ton of crop (a fourth or a fifth of today’s), under a mixed agro-herding regime. Tractor can go horse, fertilizers loss would catch a bit and perhaps we have this ha can feed two people, god blessing if it happens to be my duty. House, chickens, bunnies, fibers, gardening and trees are likely to get some place and/or pull resources. So, perhaps the property may hold 8-10 people and a horse, could add a couple of goats. It’s enough folks to do the job, I suppose. Extra 70 sq meters average house does 60 KUSD. May be must add a wider water well accepting a bucket, no so much hurry.

      Current system gets very bigger yields, but at least half goes export tax. The tax on the land itself is not a burden, especially in my province, yet. Don, Jan, what do you think of that, the most I got in my life was a pumpkin? You are all invited, we can arrange a village. My sister is skilled in Spanish as a foreign language, in case. Exceeding ton of organic wheat does in the 6/700 USD.

      3 years to living soil? Buy a couple of tons of fossil grain to go by and wait.

  12. Danny says:

    I was talking with another tradesman today and he was working on a house that was 31,000 square ft for a billionaire….I shook my head and said it must cost a fortune to heat it and he said no it is all off the grid…..I think someone was misinformed…another carcass left for the future…but I forget, someone here said that it is more efficient for the money to be in the hands of the 1 percent….

    • edpell says:

      I expect the rich to be investing in insurance. Off grid electric, heat pumps, green houses, farm land, farm hands, farm manager, estate manager, security force, on site housing for the loyal retainers. You should see some of the massive private PV array we have here 100 miles north of Manhattan.

  13. Pingback: Another Week of Anthropocene Antics, March 9, 2014 [A Few Things Ill Considered] | Gaia Gazette

  14. B9K9 says:

    Paul, the ancient Athenians & Lebanese denuded their respective forests thousands of years ago. (Ever wonder why the Lebanese flag features a cedar tree?) Resources have always been the limiting factor; it’s what drove H Sapiens out of Africa, and why the agricultural revolution occurred.

    Romans enjoyed relatively luxuriously lifestyles because they consumed the available (excess) resources resulting from conquest, all the while impoverishing and enslaving those who had been vanquished.

    When the fossil fuel era began 200 years ago, anyone with any even a slight pathway to (future) public service, and who had been taught history, philosophy, politics, economy, etc, knew full well that fossil fuels were yet another salve. Malthus was always right, it was simply a function of when the free ride would end.

    Fast forward to today, and anyone with even a half-clue, in/out of government knows this is it. It’s why hundreds of years of established laws & jurisprudence with respect to civil, criminal, contract law, etc, are/have being completely discarded. Nothing is being preserved for future generations because there isn’t going to be organized civilization in a manner by which these foundations will provide any basis for conduct.

    I’ve said it before and I’ll say it again: while smart, intelligent people are routed into the professions, the “deep state” actors simply bypass all that “ant work” and go directly to governance. And the one constant in governance is (a) knowing the truth; and (b) lying to a gullible public. And if lies don’t work, there’s always thugs with guns to make sure sheep stay in line.

  15. Don Stewart says:

    Dear Gail
    I would like to pose a related question, and then suggest some tentative ways to think about the answers to the question.

    The question: Why don’t humans make more effective use of oil?

    I will distinguish between mere efficiency, which measures how well we accomplish some given task, with effectiveness, which measures whether the task we set out to accomplish is really important to us. The distinction is reminiscent of Peter Drucker’s classic management text, The Effective Executive. An efficient executive is not necessarily an effective executive.

    It would take a book to adequately explore the question. I’ll restrain myself to just suggesting a couple of things to do or to think about. First, I recommend reading Frans de Waal’s new book The Bonobo and The Atheist. De Waal is a primatologist at Emory University in Atlanta, but was born in the Netherlands and has contacts with primatologists all over the world. A lapsed Catholic, one of his interests is religion, and he rather frequently attends discussions concerning the relationship between science and religion.

    The book explores in detail how emotions, which we share with other apes, drive our behavior. The limits of our emotional capacity are closely related to the limits of our ability to function as social creatures to jointly survive in an indifferent world. Neither humans, nor chimpanzees, nor bonobos are designed to live solitary lives. One of de Waal’s conclusions is that we tend to overestimate the human ability to co-operate with strangers, while underestimating our ability to co-operate with friends.

    The globalized capitalist system has little to no use for friends. Everything is about money. To the extent that we can substitute money relationships for social relationships, GDP goes up and everyone cheers. The problem, of course, comes when we try to co-operate with strangers that we have no friendship with. Is it any wonder that we get nowhere with limiting CO2, we start wars over oil, and we will doubtless start wars over other resources such as water and land and phosphate rock?

    It’s relatively easy to sit in a chair with a nice cup of tea and think about all the ways we could use our limited resources more effectively. For example, a recent article pointed out that Cuba spends only 5 percent as much as the US on healthcare, but has equally good results. Could we cut our oil consumption by a factor of 20 and achieve the same level of human flourishing? Before you answer ‘No’, think about all the negatives that go along with oil consumption. What we all long for is Mayberry, not the Persian Gulf cities.

    There are probably several reasons we can’t co-operatively get back to Mayberry. The first is that the world has become way too populous for small towns based on friendship. The second is the powerful mirage of endless stimulation offered by global capitalism. There are probably other reasons you can think of.

    I was in the Organic Growers School in Asheville, NC over the weekend. What a wonderful time I had. So many bright young people doing amazing work, so many people focused on identifying practices which make a real difference. Yet I had some disconcerting discussions. For eample, consider phosphorus. Phosphorus bonds in the chemical ATP provide the energy which powers virtually all the cells on Earth. (Deep sea vent creatures may be different, I am not sure). The energetic basis for ATP is provided by photosynthesis, and then our cells break the phosphorus bonds when they need energy. So…without adequate phosphorus, there is no cellular energy. And yet many people think we have only a few decades of phosphorus left to mine. I had a number of confusing discussions about new soil tests, the difference between total phosphorus in the soil which might be liberated by biological activity and the soluble phosphorus which tends to be measured by most soil tests, how effectively we can actually recycle phosphorus (Nature does it very effectively), whether the southeastern US is deficient in phosphorus or, alternatively, worms (worm casting are very high in phosphorus), and whether gardening is the solution to all our food problems or whether the ‘urban agriculture’ movement is a sideshow.

    You would have been able to find someone at the School who was pursuing each of these threads, but perhaps no-one who had a ‘systems view’ of the whole thing. (I have a systems view, but it is confused and disoriented and gets shaky in terms of details in many areas.)

    Why don’t television or radio programs or popular blogs feature systems discussions? I think it gets to one of the conclusions that de Waal states. We think first as emotional creatures. Science does not come naturally to us. Furthermore, science is value free (even if scientists are heavily laden with values). When I returned home, I found a new discussion between Paul Wheaton and Geoff Lawton. If you are interested in what I consider to be dysfunction, follow this link and listen from minute 8:30 to minute 26:

    I’ll be unfair to both men and say that this is a discussion between one man who is a homesteader and another who believes that urban agriculture is an answer to our problems. Paul Wheaton, as he frequently does, obscures things by trying to get Geoff Lawton to agree with his agenda that urban agriculture involves hauling lots of animal manures to the city…watch for how Geoff responds to that a few minutes later with references to chickens, ducks, rabbits, and pigeons…all urban friendly animals. Geoff is making some bold claims. I’m not saying he is wrong. But if we buy into his program, then we need to be doing quite a lot of things differently. And we need to keep in mind the nature of the human ape as described by de Waal. What we really need is a systems view of The Lawton Solution, from the mechanics to the skills required to the emotional terrain needed.

    Just some thoughts…Don Stewart

    • edpell says:

      We have no permanent allies,
      we have no permanent enemies,
      we only have permanent interests.
      –attributed to Henry John Temple Viscount Lord Palmerston 1784-1865, Foreign Secretary and two-time Prime Minister under Queen Victoria.

  16. Pingback: Comment on Reasons for our Energy Predicament – An Overview by Danny » HON 2000

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  18. Gail

    here is the French translation of your post. I will propagate it on french blogs. It’s open for our cousin of Quebec too 🙂

  19. Paul says:

    If you thought the US housing debacle was something – you have to watch this BBC video – China is the US on steroids, crack, heroin, speed, acid, HGH, meth and more.

    I ask again – why would China do this?

    How China Fooled The World

    Robert Peston travels to China to investigate how this mighty economic giant could actually be in serious trouble. China is now the second largest economy in the world and for the last 30 years China’s economy has been growing at an astonishing rate. While Britain has been in the grip of the worst recession in a generation, China’s economic miracle has wowed the world.

    • Thanks! Interesting video! It fits in with what I know. Government overall growth goals are allocated out to lower levels of the economy, and bonuses based on meeting those goals. Local officials often overshoot those goals, using whatever means are at their disposal. They can and do enrich themselves in the process.

      The one big thing the video misses is energy, particularly coal, and its role in this whole process.

      Thanks again.

    • Danny says:

      This is old news and the BBC is just now covering it? I have known about this for 6 months….Wow….So much for economic miracle…Gail what does a massive decrease in FF consumption of India and China do for your projections?

      • Paul says:

        Yes 60 MInutes did a story on this last year – Zero Hedge has been covering this since soon after it began.

        But what was not covered was the financial aspect – it is only in recent months that it was disclosed that China has dwarfed US money printing efforts.

        Not only does this video delve into that – it also explains why china launched this program of building thousands of ‘bridges to nowhere’

        I have been saying since 2008 that growth in China makes no sense – theirs is an export economy – and the rest of the world is not buying.

        So what happened in 2009 – did they suddenly flick a switch and the economy rocketed to the moon? Did they suddenly see a need to build millions of apartments, malls, etc????

        This exemplifies how over-rated bankers are – I passed that video to a mate yesterday and he responded with: ‘One of my buddies at Morgan Stanley (China Real Estate) swore up and down that a bubble was not possible and that the need for housing stock in China was tremendous.’

        How could he not know? There are photos of massive ghost towns in China – there is the 60 Minutes video – it’s there for anyone to see in any part of China.

        Add China to the list of dominoes that could tip the whole thing over.

    • MG says:

      The story of construction bonanza is mainly about coal, iron ore and limestone. The same story is in North Korea (it has large deposits of hard coal, and also the deposits of iron ore and limestone) – building of modern Potemkin villages is easy when you have the ingredients… When you need the oil for operation costs, the problem begins…

  20. Paul says:

    More food for thought to add to the above — this is like taking a thousand pounds of TNT – sitting on top of it – and lighting the fuse.

    Why would China’s govt and the PBOC do this?

    What do they fear that has lead them to conclude that the following is the best course of action?

    Prem Watsa’s 9 Observations Why There Is A “Monstrous Real Estate Bubble In China Which Could Burst Anytime”

    There is a monstrous real estate and construction bubble in China, which could burst anytime. It almost did in 2011 but China increased its credit growth significantly since then.

    In the last few years we have discussed the huge real estate bubble in China. In case you continue to be a skeptic, here are a few observations from Anne Stevenson Yang, an American who has been in China for over 20 years and is the founder of JCapital Research in Beijing:

    1. China added 5.9 billion square metres of commercial buildings between 2008 and 2012 – the equivalent of more than 50 Manhattans – in just five years!

    2. In 2012, China completed about 2 billion square metres of residential floor space – approximately 20 million units. For perspective, the U.S. at its peak built 2 million homes in a year.

    3. At the end of 2013, China had about 6.6 billion square metres of new residential space under construction, around 60 million units.

    4. Yinchuan, a city of 1.2 million people including the suburbs, has 30 million square metres of available apartments – roughly 300,000 units that could house 900,000 people. This is in addition to the delivered but unoccupied units. The city of Guiyang, capital of Guizhou Province, has roughly 5.5 million extra units for a city of 5 million.

    5. In almost every city Anne has visited, pretty much the whole existing housing stock has been replicated and is empty.

    6. Home ownership rates in China are estimated to be over 100% versus 65% in the U.S. Many cities report ownership over 200%. Tangshan, near Beijing, is one.

    7. This real estate boom could only be financed through unrestrained credit growth. Since 2009, the Chinese banks have grown by the equivalent of the entire U.S. banking system or 15% of world GDP.

    8. The real estate bubble has resulted in companies extensively borrowing and investing in real estate or lending on real estate in the shadow banking system. This is exactly what happened in Japan in the late 1980s.

    9. And one observation of our own: Since 2009, the easing by the Federal Reserve combined with the explosive growth in China, backed by higher interest rates, has resulted in huge inflows (‘‘hot money’’) into China. The near unanimous view that the renminbi would strengthen has resulted in a massive carry trade where speculators have borrowed at low rates across the world and invested in China, almost always backed by real estate. The shadow banking system in China – i.e., assets not on the books of the major Chinese banks – is estimated by Bank of America Merrill Lynch to be approximately $4.7 trillion or 51% of Chinese GDP. Oddly enough, prior to the credit crisis, the U.S. had $4.5 trillion in asset-backed securities outstanding or approximately 31% of U.S. GDP. You know what happened then. When the flows reverse in China, watch out!

    • xabier says:

      And given the poor quality of this hasty construction, how long will these empty units last – 10, 20 years? Unoccupied housing deteriorates at a very rapid rate.

      It’s quite staggering to contemplate waste and stupidity on this scale. It makes the Spanish over-construction look modest and unambitious.

      • The buildings I saw were mostly built out of concrete. They were sold without any interior furnishings, even flooring, doors, and things we would consider as basic. Nearly all of the air conditioning I saw operated through individual through the wall units, even in a lot of commercial buildings. If the units are mostly concrete shells, I don’t think the deterioration would be all that bad, compared to what we would expect in the US and Europe. Perhaps windows would break. That is the one breakable part of the structures that seemed apparent.

        Many of the apartment buildings aimed at workers were something like 11 or 12 story walk up units. The units that seemed to be unoccupied in these were the upper floors.

        • edpell says:

          Gail, I think you over estimate the quality of the concrete. My son works in China. Roads that were built four years ago have to be significantly repaired because they are falling apart.

          • xabier says:

            Same in Spain. An ‘Eco-suburb’ (ie EU subsidy-magnet) where my brother bought an apartment is already falling apart, just a few years after completion. Shoddy construction.

        • edpell says:

          also plumbing freezes and bursts unless someone is paying the heat bill for the whole block. Electric wire is a target for theft. Elevator motors fail without maintenance and repair. Basements flood and weaken the foundation. If the foundation were not build to last they shift and you are out of luck or need expensive correction.

    • Good points!

  21. Paul says:

    What do global leaders know that we are not being told?

    As we are aware at least since 2001 (when oil started to spike towards $40) we have seen some seemingly insane policies:

    – Liar loans, bribery of ratings agencies, huge mortgages for those on minimal incomes, gigantic housing bubble

    – Printing of trillions, bailouts, zero interest rates, extreme moral hazard, public pensions buying the bonds of insolvent governments

    – Japan engaging in totally insane levels of money printing

    – China printing over 15 trillion dollars – loans to insolvent entities to allow them to pay interest on earlier bad loans

    – Epic levels of corruption the finance community ignored

    – Endless lies re: economic data

    – Student loans used for consumption/rent – tolerated

    – Millions of healthy people going onto the disability rolls – tolerated

    – Money laundering rules waived – anyone can buy a house in the US cash – no questions

    – Insane investments into fracking where every 1.50 in gets you 1.00 out.

    – More subprime auto loans

    – UK – pumping up another housing bubble using taxpayer funded subsidies

    – And on — and on – and on —- and on

    Let’s face it – these are without a doubt suicidal policies. If you were to have told any economist in 1995 that within a decade we would initiate the above series of policies, they would have laughed you out of the room and said ‘NOT POSSIBLE – that would destroy the world’

    Our leaders most definitely know what the nature of the problem is we are facing

    So why, instead of subtly introducing policies that might soften the landing a little (without spooking the masses) are they heaving buckets of jet fuel onto an inferno?

    Could it be that they are doing this because they know that after the SHTF the outcome is going to make Mad Max look appealing?

    Remember when Bernanke gave his farewell he said “I know a lot of people are pissed off at me – but when they realize at some point why I did what I did – they will understand”

    Translate: “We are screwed- there is nothing that we can do to fix or soft land this – so we do ANYTHING – I repeat ANYTHING – that keeps the system running for another year – another month – another day – another – minute – another second – because when this blows most if not all of us DIE’

    Without a doubt the Pentagon has had think tanks on this – and they have 100% presented likely outcomes to the leaders of the global decision makers.

    What might they have determined that has lead them to engage in policies that previously nobody would have ever dreamed of?

    – Perhaps they see 7.2 billion starving people killing every single thing that moves or grows (including others humans) for food.

    – Perhaps they see 7.2 billion people cutting down remaining forests to keep warm and/or cook

    – Perhaps they see many thousands of spent nuclear fuel rod cooling tanks exploding when we are unable to maintain them

    Perhaps they have determined that we are ALREADY DEAD?

    Food for thought….

    • xabier says:

      What are they keeping from us? The question might be: What are they missing that we can see?

      Somehow I think it is easier to take a broad view on these issues if one is actually outside the structures of government and finance.

      If I think back to the office life which I escaped, most of the day was dominated by established routines, pointless meetings, in-fighting and politics, and hardly any time at all to considering the direction things were taking or what might be done differently.

      Of course governments have think-tanks, but they themselves are part of the political structure, have masters to please and enemies to counter, and can be wildly off in their estimates of what might be the trend.

      And all information, however accurate, gets passed through the power networks of the bureaucracy, and the filter of party politics and dogma.

      I think it quite likely that we are governed by governments that are blundering into territory they only partly comprehend,and that comprehension is probably less than the sum of accurate information available to them.

      During my academic days, I read so much hogwash in official documents at the highest level from 100 years ago, I doubt much has changed since then. We also tend to draw the wrong conclusions,and comforting ones: governments are not exempt from that human failing.

      It’s possibly the case that the more complex and sophisticated a government is, the more accurate and ample the information it has at its disposal, the less able it is to either to act or comprehend rapidly changing situations. Have society and economics ever been so complex?

      So much of government now is concerned with the projection of propaganda about itself: in itself, this is hugely time and energy consuming and an enormous distraction.

      It’s the half-blind leading the sighted into a ditch, with a firm grip on our wrists!

    • Danny says:

      holy sh** Paul do you have a job? Or do anything else in your life…..this thing could take 3 or 4 years to hit, you are going to burn out before then.

      • Paul says:

        Heh heh… I am a skilled delegator (i.e. I am good at doing as little as possible and letting the capable people handle the tough stuff) which leaves me a great deal of time to go down various rabbit holes for quite a few hours during the day…. this site is one of many.

        My main job these days is farming – just finished digging a 10m banana pit and waiting for a truckload of compost so we can get the seedlings down in the new beds.

        Also keep in mind I am posting from Indonesia so my morning is your night.

        • Danny says:

          “Also keep in mind I am posting from Indonesia so my morning is your night”. Oh I know…heard a story on NPR the other day and wondered if it was you..about some expat working from Indonesia…..Glad to see you still have a sense of humor, I thought my comment might pi** you off….gotta keep a sense of humor these days…even if it is the end times. Danny

          • Paul says:

            Not me – we live in a fairly remote part of the island in a village in the mountains – and other than a bit of farming I don’t do any work here beyond dealing with emails from Hong Kong/Shanghai.

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