The Absurdity of US Natural Gas Exports


1. How much natural gas is the United States currently extracting?

(a) Barely enough to meet its own needs
(b) Enough to allow lots of exports
(c) Enough to allow a bit of exports
(d) The United States is a natural gas importer

Answer: (d) The United States is a natural gas importer, and has been for many years. The EIA is forecasting that by 2017, we will finally be able to meet our own natural gas needs.

Figure 1. US Natural Gas recent history and forecast, based on EIA's Annual Energy Outlook 2014 Early Release Overview

Figure 1. US Natural Gas recent history and forecast, based on EIA’s Annual Energy Outlook 2014 Early Release Overview

In fact, this last year, with a cold winter, we have had a problem with excessively drawing down amounts in storage.

Figure 2. US EIA's chart showing natural gas in storage, compared to the five year average, from Weekly Natural Gas Storage Report.

Figure 2. US EIA’s chart showing natural gas in storage, compared to the five year average, from Weekly Natural Gas Storage Report.

There is even discussion that at the low level in storage and current rates of production, it may not be possible to fully replace the natural gas in storage before next fall.

2. How much natural gas is the United States talking about exporting?

(a) A tiny amount, less than 5% of what it is currently producing.
(b) About 20% of what it is currently producing.
(c) About 40% of what it is currently producing.
(d) Over 60% of what it is currently producing.

The correct answer is (d) Over 60% what it is currently producing. If we look at the applications for natural gas exports found on the Energy.Gov website, we find that applications for exports total 42 billion cubic feet a day, most of which has already been approved.* This compares to US 2013 natural gas production of 67 billion cubic feet a day. In fact, if companies applying for exports build the facilities in, say, 3 years, and little additional natural gas production is ramped up, we could be left with less than half of current natural gas production for our own use.

*This is my calculation of the sum, equal to 38.51 billion cubic feet a day for Free Trade Association applications (and combined applications), and 3.25 for Non-Free Trade applications.

3. How much are the United States’ own natural gas needs projected to grow by 2030?

a. No growth
b. 12%
c. 50%
d. 150%

If we believe the US Energy Information Administration, US natural gas needs are expected to grow by only 12% between 2013 and 2030 (answer (b)). By 2040, natural gas consumption is expected to be 23% higher than in 2013. This is a little surprising for several reasons. For one, we are talking about scaling back coal use for making electricity, and we use almost as much coal as natural gas. Natural gas is an alternative to coal for this purpose.

Furthermore, the EIA expects US oil production to start dropping by 2020 (Figure 3, below), so logically we might want to use natural gas as a transportation fuel too.

Figure 3. US Annual Energy Outlook 2014 Early Release Oil Forecast for the United States.

Figure 3. US Annual Energy Outlook 2014 Early Release Oil Forecast for the United States.

We currently use more oil than natural gas, so this change could in theory lead to a 100% or more increase in natural gas use.

Many nuclear plants we now have in service will need to be replaced in the next 20 years. If we substitute natural gas in this area as well, it would further send US natural gas usage up. So the EIA’s forecast of US natural gas needs definitely seem on the “light” side.

4. How does natural gas’s production growth fit in with the growth of other US fuels according to the EIA?

(a) Natural gas is the only fuel showing much growth
(b) Renewables grow by a lot more than natural gas
(c) All fuels are growing

The answer is (a). Natural gas is the only fuel showing much growth in production between now and 2040.

Figure 4 below shows the EIA’s figure from its Annual Energy Outlook 2014 Early Release showing expected production of all types of fuels.

Figure 4. Forecast US Energy Production by source, from US EIA's Annual Energy Outlook 2014 Early Release.

Figure 4. Forecast US Energy Production by source, from US EIA’s Annual Energy Outlook 2014 Early Release.

Natural gas is pretty much the only growth area, growing from 31% of total energy production in 2012 to 38% of total US energy production in 2040. Renewables are expected to grow from 11% to 12% of total US energy production (probably because the majority is hydroelectric, and this doesn’t grow much). All of the others fuels, including oil, are expected to shrink as percentages of total energy production between 2012 and 2040.

5. What is the projected path of natural gas prices:

(a) Growing slowly
(b) Ramping up quickly
(c) It depends on who you ask

It depends on who you ask: Answer (c). According to the EIA, natural gas prices are expected to remain quite low. The EIA provides a forecast of natural gas prices for electricity producers, from which we can estimate expected wellhead prices (Figure 5).

Figure 5. EIA Forecast of Natural Gas prices for electricity use from AEO 2014 Advance Release, together with my forecast of corresponding wellhead prices. (2011 and 2012 are actual amounts, not forecasts.)

Figure 5. EIA Forecast of Natural Gas prices for electricity use from AEO 2014 Advance Release, together with my forecast of corresponding wellhead prices. (2011 and 2012 are actual amounts, not forecasts.)

In this forecast, wellhead prices remain below $5.00 until 2028. Electricity companies look at these low price forecasts and assume that they should plan on ramping up electricity production from natural gas.

The catch–and the reason for all of the natural gas exports–is that most shale gas producers cannot produce natural gas at recent price levels. They need much higher price levels in order to make money on natural gas. We see one article after another on this subject: From Oil and Gas Journal; from Bloomberg; from the Financial Times. The Wall Street Journal quoted Exxon’s Rex Tillerson as saying, “We are all losing our shirts today. We’re making no money. It’s all in the red.”

Why all of the natural gas exports, if we don’t have very much natural gas, and the shale gas portion (which is the only portion with much potential for growth) is so unprofitable? The reason for all of the exports is too pump up the prices shale gas producers can get for their gas. This comes partly by engineering higher US prices (by shipping an excessive portion overseas) and partly by trying to take advantage of higher prices in Europe and Japan.

Figure 6. Comparison of natural gas prices based on World Bank "Pink Sheet" data. Also includes Pink Sheet world oil price on similar basis.

Figure 6. Comparison of natural gas prices based on World Bank “Pink Sheet” data. Also includes Pink Sheet world oil price on similar basis.

There are several catches in all of this. Dumping huge amounts of natural gas on world export markets is likely to sink the selling price of natural gas overseas, just as dumping shale gas on US markets sank US natural gas prices here (and misled some people, by making it look as if shale gas production is cheap). The amount of natural gas export capacity that is in the approval process is huge: 42 billion cubic feet per day. The European Union imports only about 30 billion cubic feet a day from all sources. This amount hasn’t increased since 2005, even though EU natural gas production has dropped. Japan’s imports amounted to 12 billion cubic feet of natural gas a day in 2012; China’s amounted to about 4 billion cubic feet. So in theory, if we try hard enough, there might be a place for the 42 billion cubic feet per day of natural gas to go–but it would take a huge amount of effort.

There are other issues involved, as well. The countries that are importing huge amounts of high-priced natural gas are not doing well financially. They aren’t going to be able to afford to import a whole lot more high-priced natural gas. In fact, a big part of the reason that they are not doing well financially is because they are paying so much for imported natural gas (and oil).

If the US has to pay these high prices for natural gas (even if we produce it ourselves), we won’t be doing very well financially either. In particular, companies who manufacture goods with electricity from high-priced natural gas will find that the goods they make are not competitive with goods made with cheaper fuels (coal, nuclear, or hydroelectric) in the world marketplace. This is a problem, whether the country produces the high-priced natural gas itself or imports it. So the issue is not an imported fuel problem; it is a high-priced fuel problem.

Another issue is that with shale gas, we are the high cost producer. There is a lot of natural gas production around the world, particularly in the Middle East, that is cheaper. If we add our high cost of shale gas to the high cost of shipping LNG long-distance across the Atlantic or Pacific, we will most definitely be the high cost producer. Other producers with lower costs (even local shale gas producers) can undercut our prices. So at best those shipping LNG overseas are likely to make mediocre profits.

And there would seem to be great temptation to stir up trouble, to encourage Europe to buy our natural gas exports, rather than Russia’s. Of course, our ability to provide this natural gas is not entirely clear. It makes a good story, with lots of “ifs” involved: “If we can really extract this natural gas. If the price can really go up and stay up. If you can wait long enough.” The story makes the US look more rich and powerful than it really is. We can even pretend to offer help to the Ukraine.

Perhaps the best outcome would be if virtually none of this natural gas export capacity ever gets built–approval or no approval. If it is really possible to get the natural gas out, we need it here instead. Or leave it in the ground.

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.
This entry was posted in Alternatives to Oil, Financial Implications and tagged , , . Bookmark the permalink.

581 Responses to The Absurdity of US Natural Gas Exports

  1. Paul says:

    Essays and Papers from David Korowitz – downloading is free – lots of good stuff….

    On the Cusp of Collapse – good explanation of how oil and gas will almost certainly shut down on a dime….

    If production falls significantly, companies lose the economies of scale they
    have been getting from their infrastructure. For example, once the revenue
    from natural gas sales becomes less than the fixed operating costs of
    production platforms and pipelines, then continuing to deliver gas becomes
    no longer viable. That means that loss of economies of scale can lead to an
    abrupt supply collapse and the withdrawal of supply, leading to a further
    reduction in production capability, and thus in economic production. This is
    yet another positive feedback loop.

    • timl2k11 says:

      Thanks for the link Paul. Excellent author. I recommend “Tipping Point”.

      Those who appreciate Gail’s work will likewise appreciate David’s. Same no-nonsense, concise, well-informed analytical approach.

      • I agree. David Korowicz’s analysis is good. I have even met him in person once.

      • Paul says:

        Thanks – am reading that paper now — the introduction indicates:

        There is growing concern, as expressed by Macquarie Bank, Goldman Sachs, consultants McKinsey, the International Energy Agency and the Saudi Oil minister Ali Naimi amongst others, that as the global economy begins to recover we will experience another rise in oil prices which will choke off further growth or in the words of Ali Naimi, constrained or declining oil production will “take the wheels of an already derailed global economy”1,2. These warnings chime with a recent survey report by the UK Energy Research Council (UKERC) which warned of a “significant risk” of a peak and subsequent decline in global oil production before 20203. A growing number of analysts have been arguing that we have already passed the peak and that continuous declines are imminent4. Former head of exploration & production at Saudi Aramco, Sadad al-Huseini has said that we have already reached maximum sustainable production5. What are important are flows of oil, not the promises of fields or other substitutes yet to be developed; no more than the promise of water a thousand miles away is relevant to a man dying of thirst. While we will focus here on oil, we are probably close to peak natural gas, and peak energy in general6,7. Though as we shall see, peak oil is likely to force a peak on other concentrated energy carriers.

        If there was any doubt that government and business leaders are unaware of the problem that should put it to rest…

  2. Hartley Schultz says:

    Hello once again Gail,
    The recent tragedy of Malaysia Airlines flight MH370, and the ongoing search here off the coast of WA brought home to everyone .the problems of aircraft relying on ageing ground infrastructure.

    As you know there have been many moves to enable Satellite space-based tracking of planes. As I understand it, satellite-based navigation and communication systems implementation have largely stalled due to cost blowouts. In many places, overhaul of current systems would be too costly.
    This article outlines proposals for new airspace systems in the United States and European Union. It also recognises that “The US aerospace industry has been pressing for years for a $US40 billion overhaul of air traffic control systems, but the cost and complexity of the undertaking have slowed the effort and Congress has cut funding repeatedly”.

    Do you think that the global systems proposed here are every likely ‘to get off the ground’?. Will they “create 328,000 jobs and cut flight times by 10 per cent”?. Given myriad current global economic and political crises, do you see the airline industry creating all these new jobs, when many of them are in dire financial straits?

    Kind regards

    • You are right. It is hard to see the airline industry adding a fancy new satellite space-based system for tracking airlines.

      In fact, a while back I remember hearing about problems funding Geographic Information System satellites–or am I confusing this with something else?

  3. Hartley Schultz says:

    Hello once again Gail,
    I have just read Glenn Stephens solution to the global problem of little economic growth. Here in Australia, Mr Stephens is head of the reserve bank and occupies a similar position to Janet Yellen, as I understand it.

    He stated that “the path to stronger global economic growth was not via central bank money printing, nor spending or austerity by governments.This goal is not to be achieved by clever programs of cheap money devised by central banks,” “Nor is it to be the result of fiscal adventurism.” As if any of our banks would engage in those sort of practices!!!!!!!
    As you know in Australia, our tax base is falling, government commitment to funding social programs are increasing, more people are entering retirement or on the dole and fewer people are joining the workforce. Just like most other places.

    Mr Stevens says stronger economic growth will boost the economy and save our bacon. Our problems will fade away through “moves to boost competition; remove trade barriers; reform the governance, financing and pricing of infrastructure; putting retirement incomes on a sustainable footing; realigning incentives; encourage labour participation and mobility; building workforce skills; and minimise distortions caused by tax”.
    Well what do you think of that? According to him Australia’s problems and the worlds can be solved in 1 go “by encouraging people to keep working until later in life – and to boost productivity amongst those in the labour force”.
    Well how long before the good times are rolled out again?
    Kind regards

    • Paul says:

      He surely knows that the end of cheap oil is the disease – it is common knowledge that increases in the price of oil kill growth – oil price spikes are highly correlated to recessions – anyone with an undergrad in econ would know this.

      Perhaps he believes that these policies will help keep the Australian version of the Titanic afloat a little longer but if he thinks they will lead to happy days arriving again — he is delusional – or lying.

      Senior politicians the world over know what the problem is — you don’t print tens of trillions of dollars and keep interest rates at zero (suicidal policies) unless you know you are already dead.

      • Hartley Schultz says:

        Hello Paul,
        Thanks for your previous replies to me. I didn’t get a chance to reply when I was sick. I am not sure if Mr Stephens is aware of the limits to growth or not. People tend to get tied up in their own rhetoric. I can’t imagine too many Canberra bankers being able to think outside the box, when everything appears normal.

        In any case, I don’t think that things are as bad as all that. At least not yet.
        I say this because I started working at the end of 1931, right at the height of the depression. These days remind me of those days. Anyway within a short space of time, the Sydney Harbour Bridge opened with a lot of fanfare, Hitler came to power in Germany, and the army was rioting in Washington because they were not being paid or something.

        There was civil unrest here in NSW with people living in tent town or under bridges, as they the sussos were forced to move on from town to town to get any food. I remember that following, Jack Lang’s resignation, people were marching up and down the road chanting Lyons is a traitor, Stephens is a skite and Lang is right. Things got very ugly and violent. These were all politicians of the time. Lang was premier and didn’t want to use taxpayer money to bail out the British banks as I recall. Does any of this sound familiar to today?

        Now before you say, not another one of these old codgers telling me about the depression, all I can say is that the world won’t end just because the economy collapses. Nothing is going to happen that hasn’t happened before. I will soon be 95, so I take the long view.

        Kind regards

        • dashui says:

          I salute you Mr. Shultz!
          Instead of wasting money in casinos and such you are still trying to figure out the human situation.
          I believe that this is whyt your mind has been kept lucid.

        • dashui says:

          it is the “Bonus Army” you are thinking of in DC

      • VPK says:

        Good point regarding printing trillions of dollars and keep interest rates at zero.
        I feel these chaps are surprised themselves that it has lasted this long.

    • I don’t think working longer is going to help very much, especially if the goal is growth. You need cheap energy for growth. Perhaps working longer will be necessary, but I expect there will still be contraction. What he is asking for is basically more of what we have currently. It is not our system that is causing the problem, that I can see.

      • xabier says:

        Telling the masses to work longer is a politician’s gambit: it sounds positive, it sounds moral, it’s hard to argue against without sounding like a slacker, and it’s a tool of social control.

        Above all, it’s a policy without substance.

        • thestarl says:

          Not only do they want us to work longer,they want us to do it for less of course they themselves are comfortably renumerated.

  4. The European Union has had an official policy to lessen dependence on Russian natural gas since 2005 when Russia first shut off the gas flow to Ukraine for unpaid bills. The EU’s dependance on Russian gas has essentially remained unchanged since then. It doesn’t seem likely that’s going to change in the future no matter what happens in Crimea.

    A Russian invasion of the rest of Ukraine could change things but that seems very unlikely to happen.

    • Interguru says:

      The only way Gail could get attention to this blog is by predicting that the Kardashians’ poodle could be killed in the ensuing civil unrest.

      • Jan Steinman says:

        “The only way Gail could get attention to this blog is by predicting that the Kardashians’ poodle could be killed in the ensuing civil unrest.”

        What are “Kardashians?” Do they look sorta like Romulans? I think I saw them on Star Trek once…

        Your pop-culture expert

        • Paul says:

          I think they are a family of prostitutes/hard core porn stars.

          I believe their mother was a famous porn star in the 70’s and she always wanted to have porn star daughters to follow in her footsteps so from an early age home schooled them having them watch porn night and day. She cut out centrefolds form Hustler and pasted them on the girls walls and had told them ‘some day you can be a porn star/prostitute too!’

          And lo and behold porn star/prostitute is a highly respected, highly paid profession in the United States of America.

  5. Hartley Schultz says:

    Hello Gail
    Thanks once again for answering my previous question about natural gas sufficiency in the US. I have another question which I suppose is not really related to the article, but it is important to me. Given this new strain of Ebola, which local doctors are calling an “unprecedented epidemic” do you think that our financial system is likely to crash before the health system does? Or are the 2 both part of the same system?
    I am thinking back to the depression when I first started work in 1931. The little bit of healthcare that you got was what you could pay for out of your own pocket. In those days I just stayed focused on being fit and healthy. I was lucky because disease wiped out a lot of people that I knew then. A lot of people died from flu, but here in Australia, we had quarantine and isolation,and doctors who were used to serious outbreaks.
    I know that the WHO is telling us not to worry about this Ebola outbreak and that with advanced technology everything is under control. It all sounds lovely. I suppose the authorities don’t want panic to spread, if things are as serious as the local doctors are saying
    So how closely related are the spread of epidemics and all these resource limits that you discuss? I would be interested in your thoughts on the matter.
    Kind regards

    • Epidemics come in all different sizes. They follow the same size distribution as populations of cities and sizes of avalanches. There are lots of little cities, and there are lots of little epidemics. At this point, I would not be overly worried about epidemics. I would be more worried about the financial situation.

  6. Duck Wood says:

    the reason the natural gas is in such low supply is that the main natural gas line[ transmission line] is being used to transport oil sands oil from alberta to texas,in the late fall and early winter once all the storage well where full and no need to keep them full of natural gas, the Canadian oil companies decided on using the natural gas line to transport its oil down to texas refineries. since the oil pipeline was stopped at the border,the oil compaies took this just think the old natural gas line under your feet is now transporting oil and very flammable oil at that.the only problem here is that the oil compaies did not know we where in for such a cold winter,probably due to climate change,and from the oil industry.

    • You can’t transport oil in natural gas lines. This doesn’t work. Natural gas lines are much bigger circumference, and I am sure that there are different mechanisms operating them. With some work, it is possible to reverse the direction of oil lines. You certainly can’t switch back and forth a single pipeline in a given year. You are imagining things!

  7. Gail,
    Thank you for this impressive work that explains to me that some of our leaders are telling us something else than the whole truth.
    I have a question concerning Figure 4:
    On the left side, the units are in Btu. On the right side (after 2012) the numbers are in %. Is this a way to hide an absolute decline in fossil fuels ?
    Kind Regards,

    • Figure 4 is a government (EIA) figure, not mine. I downloaded the numbers underlying the figure as well, because sometimes it is hard to tell from these stacked diagrams what exactly is going on.

      If we believe the EIA numbers, between 2013 and 2040, nuclear production is going to grow by 7% by 2040. With the large number of aging plants, it is hard to see how this will happen. Coal production is going to grow by 9%. Doesn’t sound like we are really scaling back here. Crude oil (including natural gas plant liquids) production is going to rise 1%. The high year will be 2019, and it will slowly taper after that.

      Renewables will increase by 41%, but from a small base. The amount of renewables is sufficiently high that it must include ethanol and other biofuels as well as hydroelectric. I imagine if I looked around I could find the detail underlying the projection.

      The big increase is natural gas, growing by 55%–but not nearly enough to send all of the exports that we are talking about giving away.

      So there really isn’t an absolute decline anywhere.

  8. Calista says:

    I live in a municipality that heats with natural gas. I would say 95% or more of the homes around here are heated with natural gas. The local rental license rules require that the landlord keep all spaces within the home at 70 degrees or higher between something like October and April. So you see college kids in older homes that don’t have zoned heat opening their windows because the downstairs is 70 degrees and the upstairs is 90 degrees. There are so many cultural, ingrained barriers to change.

    • I know that combined heat and power, as Russia used widely, can often have this effect as well. Excess heat that is generated, as with electricity production, is piped to apartment buildings. This approach is theoretically more efficient, because it uses heat that would otherwise be lost. But with the mass approach, top floors are often too hot, if bottom ones are right. So the top floor ends up opening the windows to regulate the heat.

    • Paul says:

      Now imagine what happens when the oil and gas is not available to pump that water to the surface — or to manufacture pesticides and fertilizers?

    • Thanks! It sounds like the water in California is increasingly coming from underground aquifers that eventually will deplete. So the drought is having relatively little impact on the produce we buy in the store. Extracting water from aquifers is not subject to state regulation.

      • Paul says:

        The snow pack is something like 12% of normal — and the melt off is what normally feeds water to crops in the summer.

        So the pumping will continue — one wonders at what point the deep water sources run dry…

        This is one thing the Fed cannot bail out.

  9. Pingback: Links 4/2/14 | naked capitalism

    • Thanks! I see that it has had a little over 22,000 views there so far.

    • yt75 says:

      Many of the comments at Zerohedge reveal how “warped up” people with “economics” background or something can be regarding raw material/fossil fuels, and knowledge of the situation, for instance :

      “If the country should not let energy be exported, why is the export of food allowed? Want to have lower cost airfare, prevent the export of Boeing planes. All nonsense of course. As would be a restriction on gas exports. Coal has been exported for many years.

      The gas being exported essentially results from development of privately owned mineral rights. The ownership of the minerals goes with ownership of the land, except that someone can seperate that ownership. The government has ample and vast energy resources that it will not allow to be developed. We would have an employment and manufacturing boom if the government would allow it. If it is the government’s gas, hence the “people’s” gas, being developed,, shouldn’t it be sold for the best price? Sales are not restriced to any limited few. I am able to buy it in adequate quantities at fair prices.”

  10. Jesper says:

    Thanks Gail for a great article!

    Maybe the terminals are really intended for imports! And the export story is just a cover up? The US is really in a great position with all commodities being traded in USD, which we can create lots of… But how and when our ability to defend this position will stop is going to be one of the biggest stories ever.
    I suspect that’s why we have the military complex. To try to fend this off for as long as possible. But it’s not cheap to run and you have to take into account the $500B cost. Of course someone is making money in all of this. They also likely run the country. The President is just a spokesperson!

    To me one of the most facinating aspects is that no one dares to speak the truth about the population issues facing us. Kunstler even suggests that population increase is used as a cover up for the decline!

    And I’m not so sure that all countries will be as transparent as for example Norway in telling us about the coming oil decline. But we can always count tankers, and someone will be counting the true unemployment, so it’s going to be harder and harder to lie to the population about the times that await us. I don’t envy the President’s task in giving the state of the union speech. Will he ever come out and say “The state of the union is not so strong…”.

    Here is Albert A Bartlett talking about growth again:

    • I am afraid the LNG terminals are not two way terminals. Gas to LNG is quite different from LNG to Gas.

      I am sure that you have heard that Albert Bartlett passed away in September 2013 at the age of 90. His talking about the exponential has been a great service. I met him once at a conference.

  11. Christian says:

    Don, do you say before planting a couple no tilling no chemical hectares of wheat or corn we bring the herd to clean up? How is this operation performed? Better to starve somewhat the creatures before?

  12. Christian says:

    Congratulations to Gail and commentators. You are right, Callista; in South America agrochemical marginal returns are diminishing again since the last jump, the “technoagricultural revolution” of the 90’s. GMO farming is likely to remain the ultimate economic boom for most of the continent, although it is starting to fade.

    I’ve been recently checking (Argentinean) agricultural returns in some depth and they are likely to peak pretty soon if commodity prices fail to level up. Expansion of the farming border is slowing, because of shipping costs. This trend is also fuelling ownership and production concentration, as for many activities (money activities come first, ‘f course).

    Farmer’s best approach is to try to foresee how and when to replace BAU’s stuff by low tech, local recycling and customizing, and muscle. Agrochemical and diesel (here) prices are climbing…

    And what to say about wood burning? Masonry heaters, planting trees and some Plato’s on permaculture (in Critias), talking about his own country:

    “The land was the best in the world, and was therefore able in those days to support a vast army, raised from the surrounding people. Even the remnant of Attica which now exists may compare with any region in the world for the variety and excellence of its fruits and the suitableness of its pastures to every sort of animal, which proves what I am saying; but in those days the country was fair as now and yielded far more abundant produce.

    “How shall I establish my words? and what part of it can be truly called a remnant of the land that then was? The whole country is only a long promontory extending far into the sea away from the rest of the continent, while the surrounding basin of the sea is everywhere deep in the neighbourhood of the shore. Many great deluges have taken place during the nine thousand years, for that is the number of years which have elapsed since the time of which I am speaking; and during all this time and through so many changes, there has never been any considerable accumulation of the soil coming down from the mountains, as in other places, but the earth has fallen away all round and sunk out of sight. The consequence is, that in comparison of what then was, there are remaining only the bones of the wasted body, as they may be called, as in the case of small islands, all the richer and softer parts of the soil having fallen away, and the mere skeleton of the land being left.

    “But in the primitive state of the country, its mountains were high hills covered with soil, and the plains, as they are termed by us, of Phelleus were full of rich earth, and there was abundance of wood in the mountains. Of this last the traces still remain, for although some of the mountains now only afford sustenance to bees, not so very long ago there were still to be seen roofs of timber cut from trees growing there, which were of a size sufficient to cover the largest houses; and there were many other high trees, cultivated by man and bearing abundance of food for cattle.

    “Moreover, the land reaped the benefit of the annual rainfall, not as now losing the water which flows off the bare earth into the sea, but, having an abundant supply in all places, and receiving it into herself and treasuring it up in the close clay soil, it let off into the hollows the streams which it absorbed from the heights, providing everywhere abundant fountains and rivers, of which there may still be observed sacred memorials in places where fountains once existed; and this proves the truth of what I am saying”.

    • Thanks! This seems to be a source for download of Plato’s Critias.

    • yt75 says:

      Thanks a lot for the pointer, do you know of other classics describing change of habitat/deforestation by humans ?
      By the way forgot to answer you in a previous thread about Olivier Rech, he was at the same seminar and same table as Gaël Giraud, so they clearly know each other.
      I knew he left the IEA but didn’t know he was fired, the case ? (in fact I find the iea speech getting more “Orwellian” over time if anything, or for sure not putting hard info in key messages and keeping it deep in the reports …)

      • Quitollis says:

        Hesiod/ Stasinos (580 BCE) apparently remarked on overpopulation and the degradation of the environment in The Cyrpia. He proposed that war is one of Nature’s ways of reducing the human burden on the environment — lots of people die, less eco stress. There will probably be resource wars once cheap fosil fuels prove scarce but I doubt that they will worsen the population collapse that is in any case inevitable. Maybe that is what Zeus/ Nature wants.


        “There was a time when the countless tribes of men, though wide-dispersed, oppressed the surface of the deep-bosomed earth, and Zeus saw it and had pity and in his wise heart resolved to relieve the all-nurturing earth of men by causing the great struggle of the Ilian war, that the load of death might empty the world. And so the heroes were slain in Troy, and the plan of Zeus came to pass,”,_The_Homeric_Hymns,_and_Homerica.djvu/551

        Aristole discusses overpopulation but in terms of social rather than enviromental harm.

        Plato and Aristotle on state population control

        • Paul says:

          While on the topic of books – I have just finished this – the relevance to the end of cheap oil is the descriptions of how people react to living in situations without much food – no jobs – and little opportunity – the types of leadership that emerge…. parallels for what is coming worldwide?

          Kapuscinski is a brilliant author – I’ve read 3 other books from him in the past month – all outstanding

        • Quitollis says:

          Sorry I meant Homer not Hesiod. (red faced)

        • yt75 says:

          Thanks a lot for the pointers, much more recent, Rimbaud (especially in “one season in hell” and “the illuminations”) has quite a few passages describing the situation, like for instance :

          ‘The flag goes with the foul landscape,
          and our jargon muffles the drum.’
          In the great centers we’ll nurture
          the most cynical prostitution.
          We’ll massacre logical revolts.

          In spicy and drenched lands!–
          at the service of the most monstrous
          exploitations, industrial or military.
          ‘Farewell here, no matter where.

          Conscripts of good will,
          ours will be a ferocious philosophy;
          ignorant as to science, rabid for comfort;
          and let the rest of the world croak.
          This is the real advance. Marching orders, let’s go!’

        • Nothing that we are talking about is new. The anciens have written about it for a long time. We humain are too lazy and arrogant to assimilate and accepts these ancient wisdows. Human are not that bright and the human specie does not deserve a second chance.

          Regarding the purpose of life and society, I will let Arthur Schopenhauer talk because my english is really average compare to yours. At the end of the video, AS mentionne the futlity of life and he talks about pain. AS propse his own solution. You are propably already aware of this, but just in case.

          • Ellen Anderson says:

            Whatever remain to us of human existance will be far better when men (especially teutonic men) have to busy themselves with farming, at which they are tolerably good, leaving sensible thinking to women. All people have too much time on their hands and should get to work planting something.

            • Jan Steinman says:

              “All people have too much time on their hands and should get to work planting something.”

              Thanks for the reminder to get off this damn computer and go out in the greenhouse… 🙂

            • So it is true. The life of a man has no value to a women. A man is just a tool that a women uses. Man are just work horse for women.

              I am always happy to get a confirmation from a women that man is just a work horse and love is something invented by women to manipulate man. Maybe young man dont marry anymore because they finally get the truth about women and life.

            • I hope it is not quite that bad!

            • Im could not reply to you direct to your comment I hopt it is not that bad. So I will reply here.

              The subject of young man not involving them self in society has always intrigued me. Young man rejecting marriage is equivalent to young man rejecting the actually society. It is basically a form of protest from young man. How are we going to build something after the collapse if young man don’t cooperate to it. I finally got some answer when I found something on youtube called MGTOW. I am not sure of the size of this new trends. The first 5 minutes of this video are really telling about what some young man think of this society. Will young man cooperate after the collapse to rebuild something. Pay attention on what is on the screen. during the first 6 min. Oil might be the cause of the collapse, oil could also be the cause of the broken contract between young man and women. Just some observation.

      • Christian says:

        IEA, very Orwellian… I’m not sure Reich was fired, it’s something Auzanneau suggested once. Did you met him? I would give away my shirt to have a talk with him. He worked many years at IEA and got high in the rank. I believe he was at some period in charge of oil division, by the way.

        Actual IEA head, Birol, worked all his life at OPEC headquarters in Vienna. May we say OPEC is now somewhat driving IEA?

        Gail, good for the upgrade in enthropic analysis.

  13. Paul says:

    More outstanding analysis from Grant Williams

    Russia China positioning to end the USD’s status?

    Far right gains traction in France — an ominous whiff of things to come as the global economy worsens due to the lack of cheap oil?

    • justeunperdant says:

      People are scared, they are voting for politician that promises them easily solution. This should be seen as some early warning by the enlighten people. Oil has brought order into human life and society, lack of oil will bring back chaos and anarchy.

      • Christian says:

        Oil, but particularly atomic bombs. I still believe international conflict will continue to go smooth, because big guns have a big tank, plain and simple. The global hitting capacity is flat to low. In South America, Brasil is the only real military force while the other countries are totally unable to invade each other, lack of military entity. Venezuela is the only real fossil carrier, and it just happens to be a militarized state. Europe is losing very much of its hitting capacity.

        Politicians and MSM will flirt with martial impetus, but this is not going to happen. The cases of Sirya, Afghanistan and Iraq teach us there is no direct confrontation between nation states, and so will be the case for a while. “Violence, as local as possible” says an unwritten rule of geopolitics 70 years lasting.

        And, about Russia, I can hardly understand somebody may ever imagine the PTB taking a person like this Vladimir out of his siege. He has everything: no scrupules, big friends, lot of oil, weapons and soldiers, people reelect him everytime. This guy just don’t have problems of any kind, he is not even indebted. MSM do their job, but things are changing.

        We can also see a fall in the low cost hitting capacity, the ability of producing a coup d’état, “regime change” upon CIA terminology. The US seems to have lost his overwhelming ability to drive the change, in Ukraine and Venezuela for instance. I suppose this is also because they don’t really mean it, it’s like a habit but the benefits concerned entered in a mist and it don’t really matters after all. Would say they’re affected by diminishing returns but still go for the show. Just as digital big brother.

        • ordinaryjoe says:

          Threat of force on a unimaginable scale- this is humans great legacy that is preferable to natural law? Evaluate the response that your programming brings forth to the following word; { chaos}. Not that I am not programmed also, it is the human condition.

        • “Violence, as local as possible” says an unwritten rule of geopolitics 70 years lasting.

          That is a good point. Also, most countries don’t have much military capacity now.

      • Christian says:

        Domestic situations are to be quite different, and actual conflicts are rather framed under this label. In my province, Córdoba, 10 people were killed four months ago during a police strike. We must go up thirty years to find such an amount of coincident murdering. Nobody feels this is just the beginning, and I agree for some while things could go fine. But here we have an obviously right oriented government that has incorporated so many police officers (last year: 2700 new cops against 800 new health and teaching staff) in the last 11 years that now they just can’t pay them…

      • “Oil has brought order into human life and society, lack of oil will bring back chaos and anarchy.”

        This seems to go with what I have been reading about the physics of the situation. It takes energy to build up societies. The order we see takes energy as well. Lack of energy to keep the society together as a tendency to lead to collapse.

        • timl2k11 says:

          I’m not sure I would call what oil has brought “order”. Maybe the illusion of order or a sort of (oxymoron alert) “controlled chaos”, but not order. Is not modern “society” (suburbia, materialism, consumerism) the very definition of “dystopia”?
          Well no, it is, has been, and always will be all about perspective and one’s lot in life. That will never change. Collapse or no. The chips always fall where they must. FF, the industrial revolution have not overcome fate.

          • It is more the order of a complex adaptive system. An economy is built up of businesses, each feeding on one another. Governments are part of the this complex adaptive system adding regulations and purchasing goods from businesses. Consumers make choices based on their incomes and products availability. It is the availability of energy, and in fact inexpensive energy, that allows such a complex adaptive system to grow.

            At some point, we need to add increased complexity just to maintain existing production of oil as well as to maintain other functions (water extraction, metals extraction, protection from disease transmission, elimination of pollution). Then production per unit of energy input starts to drop, and the ability to maintain the whole system starts to degrade. Eventually the whole system is subject to failure.

          • Quitollis says:

            “Order” would seem to imply some way of organisation that allows us to accomplish some “purpose”. If the purpose of modern industrial society is to breed as a huge a population as possible and to allow for relatively high living standards in historical terms, then modern industrial society has been very orderly. But if the purpose of society is to allow sustainability then it is a mess.

            We are supposed to use our “reason” to decide what we are trying to achieve, why, and how best to achieve it. Modern “liberalism” (UN etc.) has decided on universal human values and economic globalism which is of course the height of folly, self-delusion and is totally unsustainable. It has accelerated the speed toward the collapse of civilization.

            It raises questions like what is the purpose of society? Do humans have any purpose? Do we inherit any purpose from Nature? Does Nature present principles or laws that would guide us toward our purpose? As Aristotle would say, all organisms naturally tend toward the full development of their faculties, which for humans means good growth and development, good health, high intelligence, wisdom, virtue, beauty, education, manners, art, accomplishment etc. We are naturally “political animals” and we are supposed to use our reason and to plan. Eugenics then sits nicely with social purpose so that we might biologically optimise our human capacity.

            FN urges us, with the “death of god”, to find some new purpose rooted in nature or “this world” as he calls it. He feared that we would end up as the “last men”, mediocre, content bourgeois, boring. Or else we would be the ebb of the “great tide” of evolution and would rather “go back to the beasts” than do what we would have to, create new values, in order to go forward. (Zarathustra’s Prologue) The “storm” that he hoped would bring down the “rotting apples” from the trees and take out the mediocre masses (On Voluntary Death) seems to be something that is just going to happen anyway, ironically precisely because we refused to revise “liberal” and egalitarian values.

            Re: the far right in Switzerland, France, Ukraine, Russia, Greece, Norway, Denmark, Holland, etc and the EU elections next month, it seems natural, even instinctive that countries will take in the “welcome” mat in times of stagnation, austerity, falling living standards etc. Britain still takes in 400,000 a year, which as we know on here is not sustainable. It is inevitable that we will need new demographic policies as industrialism collapses and the human population with it, and it is not realistic or particularly helpful to any longer view demographic policies in terms of the old “liberal” assumptions and values. We will either work toward a sustainable demographic order or we will be forced into one. It does not seem obvious that it would be “better” to be forced into it by our own failure to think, plan and act but that does seem to have some probability.

            • In a finite world, we live in a world of changing conditions. There really is not any “sustainable” past, present or future–at least for the very long term. Instead, many systems seem to be made so that they can be discarded and started over again. Just as humans are born and die, economies are born and die. Of course, if conditions are different (oil wells depleted, mines depleted of minerals, soils eroded, more toxic pollution scattered), the new economy may be quite different from the previous one. Of if humans turn out to be one of the species that evolution discards, then there may never be a replacement economy of the type we know today.

              I have been corresponding with a French astrophysicist named François Roddier. He tells me that in recent years, quite a bit of work has been done studying dissipative structures, formed in the presence of a flow of material and energy. Classical thermodynamics relates to a closed system, but we do not live in a closed system–we live in an open system in which the sun is adding energy every day. The idea of such structures was introduced by Ilya Prigogine, a Russian researcher who received a Nobel Prize in Chemistry in 1977 for his work on these structures.

              In an open system, entropy can decrease and organized structures can spontaneously appear and set themselves in motion. This is due to a property of non-linear dynamic systems called sensitivity to initial condition. An example of such a structure with greater structure than its predecessor is a snow-flake, formed during phase transition. During crystallization, order spontaneously appears. The internal entropy of the system decreases, as part of it is discarded in the form of heat.

              Although out-of-equilibrium, a dissipative structure remains stationary (at least for some time). Examples of dissipative structures include a living organism (including human beings), hurricanes, tornadoes, and the human economy. These structures all self-organize according to a process known as phase transition. They grow up to a critical point beyond which they start to decay and collapse. They are then replaced by similar new structures. This process of replacement allows adaptation to changing conditions.

              From this point of view, collapse (or something very similar) of an economy is inevitable, just as the death of a human being is inevitable, and the end of a hurricane is inevitable. We certainly know of many economies that have collapsed, and it certainly appears that the appearance of diminishing returns as easy to obtain resources are used up (or population grows too much for fixed resources) would set economies on the road to collapse.

              There seems to be a third law of thermodynamics similar to what Alfred Lotka discovered–“Natural selection tends to make the energy flux through the system a maximum so far as compatible with the constraints of the system.” Natural selection favors the organisms that dissipate the most energy. A society of individuals self-organizes to maximize the amount of energy it dissipates, as it tries to maximize the well-being of its members.

              Roddier has a new book in French called, “Thermodynamique de l’évolution.” He has not yet published in English, so it is somewhat of a problem to link to his work.

            • Interguru says:

              “There seems to be a third law of thermodynamics similar to what Alfred Lotka discovered”

              I think you must mean a forth law. The third law already exists.

              A simpler formulation of the Nernst-Simon statement [ of the third law] might be:
              It is impossible for any process, no matter how idealized, to reduce the entropy of a system to its absolute-zero value in a finite number of operations.
              Physically, the Nernst-Simon statement implies that it is impossible for any procedure to bring a system to the absolute zero of temperature in a finite number of steps

            • Could be. I was going by what Francois Roddier said.

            • Jan Steinman says:

              This “dissipative structure” theory sounds quite a bit like Panarchy Theory, which is built into the notion of Permaculture, which does not seek a steady-state, but rather an influence over state transitions — steering, if you will, energy dissipation into the form best utilized by humans.

            • I ran into panarchy theory a few years ago, had forgotten about the idea. There are some similarities with dissipative structures, I agree. When we get to the economy as a whole, I expect the situation is outside what those thinking about Panarchy were thinking about.

            • ordinaryjoe says:

              Gail , I find your presentation of the concept of dissipative structures fascinating, Thank You

      • “Oil has brought order into human life and society, lack of oil will bring back chaos and anarchy.”

        This seems to go with what I have been reading about the physics of the situation. It takes energy to build up societies. The order we see takes energy as well. Lack of energy to keep the society together as a tendency to lead to collapse.

        • xabier says:

          One could say that it has brought order over a very wide geographical area, far wider than ever seen historically: for instance the USA, as the constituent states all have access to ample oil/gas energy and do not need to go to war with one another – for now – to acquire these.

          This creates an illusion of peace and stability – conflict only manifesting at an international, geo-strategic level, beyond national state boundaries.

          This can be contrasted with the old feudal lords of Europe, who went to war to gain a few square miles of territory from their neighbours if they contained the resources and manpower they wanted, and of course with the neolithic clans who, it seems, would run over to the next settlement and kill everyone and take their children and lands when they needed more resources.

          Reading the local history here, village life before the coal age was characterised by land-owners perpetually trying to take useful land from their neighbours in small encroachments – sneaking in to chop down woods, moving boundaries. Or starting law suits to bankrupt their neighbours and purchase their lands cheap that way.

          In other words, a perpetual, low-level, ‘energy war.’

          • Interguru says:

            Rome, China, the Mongol and Ottoman empires brought order over large areas. Check this out for a great overview.

            • xabier says:

              Yes, it was certainly possible pre-fossil fuels. But one could argue that the Romans, Ottomans, etc, largely financed themselves through profitable expansion, when that stopped, when they acquired provinces that weren’t worth the effort – Trouble. With oil and gas, territorial expansion simply isn’t required: look at Britain, Holland, France and Spain today, their empires long gone but still functioning while not declining into the feudalism which came before empire.

          • timl2k11 says:

            “This creates an illusion of peace and stability – conflict only manifesting at an international, geo-strategic level, beyond national state boundaries.”
            But also manifesting very much on a covert psychological level. Overt oppression has virtually disappeared (or is obfuscated, see US prison rate) in the so called first world countries, but psychological oppression (warfare) is very much alive. You can see it in consumerism and other social mores (e.g. the prevalence of bullying and class warfare, mostly the higher classes trying to dominate the lower ones).

            • xabier says:

              I agree totally: although we should add that the wealthier classes are just as much prisoners of the paradigm themselves. It’s a mad house.

              We are not to be allowed mental peace in the consumer society, any more than Soviet or Maoist workers were not permitted to relax in ‘The Great Struggle’……

      • ordinaryjoe says:

        The order of the natural world existed prior to the “order” created by humans in the past 10000 years. The “order” created by humans in the last 1000 years is contrary to natural law, one of the greatest example shown in population growth greater than resources. Our “order” will not stand, natural law and order will return, if in in our cleverness humans do not destroy the natural world.

      • timl2k11 says:

        Look carefully, be very observant and you will see anarchy all around you. It’s always been there, just quite well disguised.
        Social stratification and inequity and the “problem of man” (as cultural anthropologists say) did not die with the rise of crude oil. Egalitarianism is DOA in modern times, on scales large and small. The Hunter-Gatherers had that at least, apples and oranges I know. I guess I’m an anarcho-primitivist? Which is rich I suppose since I would not be alive were it not for modern medicine (I assume… Thyroiditis)

        • Quitollis says:

          I am not sure that we have any archaeological evidence that HGs acted more like grazing sheep than like Arnold Schwarzenegger in survival films. Even efficient HGing implies stratification, planning, organisation and inequality.

          • ordinaryjoe says:

            Thank you for your posts.
            Perhaps the past and its model of the HGs is the best we have to look forward but consider the quality we know as compassion, the understanding of another creature or humans situation. Anyone who has spent much time in nature knows that nature can be cruel- when human notions are applied. Is that judgment of “cruel” appropriate for that is the source of our seperation? The vast majority of us would not stand for a childs suffering, we would put ourselves at risk without thought of consequences to end the circumstances causing that suffering . Why do we not feel the planets suffering? It seems obvious to me that what is lacking in the human condition is a connectedness to the planet. The only thing enabling our species behavior in regard to the planet is our lack of connectedness to it. Some humans have some of that sense of connectedness. That connectedness as seen within the current framework of industrial civilization is not developed and in fact may be viewed as a flaw. The ability, that I am referring to as connectedness and compassion may be much more than the meaning contained in those words. I hold hope that that ability may be suddenly manifested in our species as function of evolution. That is why I consider myself an optimist. That is why I feel we as a species might have a brighter future than our understanding of the hunter gatherers of the past. The end of industrial civilization does not neccesarily mean we all regress to clan of the cave bear. In many ways dualism thought applied in this matter may hinder us in our evolution. Language- thought- music- philosophy-culture of all kinds existed prior to industrial civilization and it may evolve into better forms after industrial civilization is over. Our future will certainly will be different, whether it is dismal or even horrific, or bright depends on our capability to evolve in a manner that we currently do not understand.

            • Quitollis says:

              I suspect that you are right that there may be some exaggerated “dualisms” in play, like between God/ Nature, man/ nature, self/ other. I suspect that the dualism between compassion and cruelty needs clarification and that the “opposites” have their “synthesis” in rational social planning. Sometimes we “have to be cruel to be kind.” Like, no one wants to isolate kids with the plague, or families but sometimes we have to for the common good. Likewise no ones wants to discourage low IQ persons from breeding but again it may be for the common good. “Cruelty” should always be with a view to a “kindness” toward the common good — because in the long run things work out much better that way. I must emphasise that I am not arguing that everyone should be a selfish this and that but that we should learn to focus anew on the common good and to take on board that there may be sacrifices involved. We will need to find a new balance between kindness and cruelty, clearly the old one did not work, judging by overpopulation, loss of species, climate uncertainty etc. Thank you for your optimism toward the future, I agree that the future can be better than the present. It will be one hell of an adventure as it all unfolds and likely we will in the end preserve all of the best human qualities. (But who knows?)

              One can see pheasants evolve in the Shires. Those who did not think to look both ways got splattered long ago and now most of them cross the lanes more sensibly. That is natural selection in action. I guess that all human misfortune is ultimately natural selection. I know, it sounds funny, “oh good another one got splattered, the future will be better!” but man is not really separate from Nature, we are another of its expressions and we are subject to all its same laws. Cheers.

            • Paul says:

              Duck Wood – you should be removed from further participation for those comments. Zero Hedge is most welcoming to trolls so perhaps you could shift there?

            • He won’t be back, unless I approve his comment first.

            • Lizzy says:

              Have you ever read “The Selfish Gene”? It might give a new view on ” The vast majority of us would not stand for a child’s suffering, we would put ourselves at risk without thought of consequences to end the circumstances causing that suffering.”

    • Grant Williams posts numbers showing that 17% of world’s trade was in Yuan in 2013. That is more than in Euros. By subtraction, it would look like the percentage of the world’s trade in dollars is slipping badly. Dollars are likely still a majority. Cutting out the big users of oil and natural gas would definitely seem like a good strategy for the rest of the world, especially when the US is making stupid statements about having more available than it really does. The USD’s reserve currency status would seem to be at risk.

      • Stilgar Wilcox says:

        I wonder what will happen not just to the US but to the rest of the world economy if the USD loses it’s reserve currency status? The point being the USD may turn out to be the keystone in the world economic archway. It falls and with it the US economy to a much lower level, then how can the rest of the world’s economies also not descend? It may be a case in which these other super powers should careful what you wish for.

        • Paul says:

          Tough to say – the world survived the end of the GBP as reserve currency – but then things are a whole lot different right now – cheap energy is gone – busting a key ‘hub’ now could topple the house of cards.

          Perhaps Russia and China feel that the USD is going to topple soon anyway and are trying to position to soften the landing?

        • The thought has occurred to me that part of what holds our collective indebtedness up is the fact that the US has reserve currency status. This seems to be gradually eroding. As this switches away, it may allow the debt unwind that seems to be ahead.

  14. Calista says:

    This is probably tangential to the discussion this week but I’m not sure where else to note this. This article here indicates the same dynamic as we’re seeing with oil and gas. More investment does not equal more growth. Probably just one more scary thought in the process of diminishing returns. What is more interesting to me, and maybe just me, is that this pattern repeats and repeats for so much of everything in our society these days. Now that I look around I see Gail’s instruction on how those diminishing returns could impact us and what that dynamic looks like and I see it in so many things.

    • The new technologies that has been added to new cars is another example of diminishing return. Just look at what happen to GM and the ignition switch. Humans are not capable of managing all this complexity. Car mechanic now have to deal with more electronic devices.Few car mechanic can follow the peace of changes. IT is gettting more and more difficult for the home hobbyist to fix his own because specialize tools are now needed and cannot by bought easily

    • You are right. While we made huge gains in food production before, it is becoming much less clear that those gains are available in the future. One of the limits is water. Agriculture currently accounts for 70% of world water use, according to Dutch Bank Robobank. To increase food production, among other things, much more efficient use of water will be needed. This will add costs, I expect, with the benefit being only that crops use less water.

      • Don Stewart says:

        Dear Gail and Others
        For those worried about food, I suggest reading Gaia’s Body by Tyler Volk. On pages 158-165, he discusses The Energy Cascade from Sun to Plant. Briefly, the Sun bathes the earth with 340 watts per square meter (averaged for day and night, tropics and poles. Taking out some things we can’t reasonably control such as reflection and clouds, we get down to 170 watts per meter. Discarding 57 percent of the solar energy because it is out of the spectrum which drives photosynthesis, and some other considerations, about 60 watts enter the photosynthetic reactions centers. The process of photosynthesis is not entirely efficient, which gets us down to 18 watts. But photosynthesis also has some overhead costs (things like enzymes) which gets us down to 14 watts. And then about half the sugars created are burned by the plant, which gets us down to 7 watts. ‘It is the maximum embodiment rate that can be achieved in today’s world with today’s plants’.

        But when we examine the actual results, we find that plants are actually producing 0.7 watts per meter. While this is a very long way from 340 watts, it still dwarfs the energy we get by burning fossil fuels.

        Now let’s look at some of the reasons why we only get 0.7 instead of 7. From page 164: ‘The first filter, representing water stress, cuts the light back to 50 percent. The next filter in line, seasonal dormancy, lets through only 80 percent of what it receives. The flux after both of these filters is thus 40 percent, of the initial amount, or 2.8 watts. Thus the final filter, all nutrient limitations, must let pass through only 30 percent. This is the value that will reduce the cumulated flux, after all four filters, to a final amount of 10 percent, or 0.7 watts per square meter, the number we computed earlier to be the actual embodiment rate of photosynthesis.’

        Now if you have been paying attention to the biological farming and gardening arguments, you know that humans CAN do something about all these filters. For example, the whole business of earthworks in permaculture and natural farming and the rotational grazing practices of Alan Savory and others and the subsoil plowing on contour of P.A. Yeomans (whose great champion is now Darren Doherty) all tackle the water problem head-on. They do so, not with irrigation, but by managing rainfall better. The better management of rainfall has multiple other benefits besides storing water in the soil…for example, it avoids soil compaction and erosion.

        The seasonal dormancy issue is dealt with by growing more perennials and fewer annuals, as emplified by the Regenerative Agriculture movement. Perennials are ready to put out leaves when annuals are just trying to establish roots. Thus, the perennials are more closely aligned with the peak of solar energy.

        The nutrient issue is dealt with by the broad group of practices we call ‘organic’. I suggest you read the section titled Little Enzymes That Run the World, on page 144 and following. As an example, see the discussion of phosphorus on page 151: ‘Consider that phosphorus is often in short supply in soils. Most of it is bound into organic materials. Plants need phosphorus in dissolved form, however. When stressed by phosphorus deficiency, many plants secrete the enzyme known as acid phosphatase. Acid phosphatase can attack organic matter and liberate phosphorus into dissolved forms the plant can use. Acid phosphatase is an ectoenzyme; its activity occurs in the soil, outside the plant. It is also an adaptive enzyme, which means the plant controls its release, contingent on the availability of dissolved phosphorus. Similar enzymes are made by many bacteria and fungi, and some of these fungi are attached to roots, again for mutual benefit of symbiont and plant.’

        As an example of the ways that conventional agriculture screws up Nature’s processes, please see:

        So let’s make some gigantic assumptions and consider the possibility that humans might redesign agriculture with the express purpose of moving from 0.7 on the scale to, let’s say, 1.4. In a nutshell, that is the goal of Permaculture and other biological systems. To make more efficient use of sunlight so that both humans and other living things benefit. Can we do it? There are lots of examples which give us hope. Unfortunately, they are seldom the way to make the most money the qucikest.

        Instead of plotting and planning to sell more gas more quickly all over the world and shunting the profits into Wall Street, perhaps we should take a leaf from the Norwegian plan of banking some of our gains. If there does actually turn out to be some sort of gas windfall, perhaps we could establish a ‘soil bank’ which would build up carbon and nutrients and water holding capacity and maintain it for future generations with excellent farming practices.

        Do we all have to starve? I think the answer is ‘only if we continue to be stupid’.

        Don Stewart

        • xabier says:

          It seems to me (open to correction!) that Western civilization turned its back on excellence in farming as a priority in the late 19th century, and decisively so with the advent of manufactured fertilisers, farm mechanisation and the elimination of farm horses and oxen in the mid-20th.

          Today, I doubt one could find more than a handful of politicians or bureaucrats in the advanced economies who even understand the issues.

          ‘Excellence in farming’, or any kind of foresight in these matters, doesn’t seem to them to contribute much to the aim of ever-growing GDP nor to their own privileges and benefits which derive from the industrial system and the trading of goods from China.

          It’s seen as a marginal industry, and electorally insignificant.

          • Don Stewart says:

            Dear Xabier
            I pretty much agree with you. I have heard two people who work in Washington quite a bit talk on the subject. Michael Pollan says that the Obama administration is simply not going to do anything about food policy, other than continue doing what they are doing.

            Tuesday evening I went to a talk at the Ag college by a guy from the Union of Concerned Scientists. The Scientist was promoting the growing and eating of more local, organic fruits and vegetables. His big headline was that the US could save 11 trillion dollars in terms of bad health outcomes…primarily cardiovascular problems. (Delving into that number would require some space I won’t take.) He said that Obama understands the issues, but doesn’t see any groundswell of support for doing something. Obama will get in front of a parade, but won’t try to create one.

            Meanwhile, the Scientist told us that Cornell, which is also an Ag school, is working on using 3 D printing technology to build a ‘food assembler’ which takes goop and turns it into a packaged product which can be sold. This is, of course, the way industrial food is produced today. Cornell is just upping the ante in terms of technology.

            One rather stunning set of statistics came out of his talk. The average US person consumes almost 5,000 dollars per year of food. That number has not changed since 1940. But incomes have increased enormously since 1940, so the ratio of income spent on food has fallen below 10 percent. The Industrial Food industry likes to quote the ‘percent of income’ statistic to show ‘how cheap food has become’. But that is simply not true. If Gail is correct and incomes fall, then food is either going to get more expensive or perhaps stay the same as poorer people curtail waste. In either event, the percent of income spent on food will increase.

            Interestingly, the UK spends about 2000 dollars, France 3400 dollars, while India is 220 dollars and Kenya is 240 dollars. What this tells us about India and Kenya is that much of the food system is still outside the money economy. You simply can’t buy industrial food for 220 dollars a year. In order to bring India to the point where they can afford to spent, say, 2000 dollars on food, you have to greatly multiply their personal income. I would think you can only greatly multiply their personal income by increasing the percapita consumption of fossil fuels.

            Don Stewart

            • dashui says:

              I think instead of saying” industrial food” we should instead say “industrial simulation of food”. Corn byproducts are not food, I saw through hair analylsis Americans today eat more corn than the ancient Maya.

            • xabier says:

              Food quality – let alone food security – will never, ever swing an election. Nor will air or water quality. Soil fertility?

              But real estate values, oh yes!

              In the old-style elections in England, (c 1800) the electors would stand in front of the hustings and jangle coins in their pockets, until the prospective legislator told them how much he would pay them in a direct bribe.

              Has it changed?

              This is a system that can’t take us where we want to go to.

            • Sylvia says:

              We do grow most of our food, except dairy and meat – organically of course. The lessons so far:
              1. What you can grow and how much depends a LOT on the climate you live in. Growing and eating seasonal for most means difficult times in winter in spring.
              2. You can’t grow and live from plants alone, instead you need a complex system of living beings (e.g. manure ist just as important as water) and all need to feed each other
              3. That needs space, the right kind of space
              4. I doubt about scalability of our approach. Perhaps in the US there is just enough space to feed it’s 400 million or so people, but it will be difficult in Europe already, not even thinking about even denser populated areas on our planet.
              5. Policies can’t force those needed changes, instead our societies, complex, dynamic and adaptable systems they are, will “organically adjust, if there is enough time. Policies will come out of that pressure. But not the other way round. People always want to control things and hope governments will do”something”…that seems nonsensical to me.
              6. People will never know what”hit” them-or that things are different, our minds don’t work that way for most. Like now only few see the connection of the 2008 crisis to increasing energy cost

          • Don Stewart says:

            Dear Xabier
            One more little tidbit. I recently read something by a British permaculturist who blamed all the problems on ‘ideas imported from Europe’.

            Don Stewart

            • xabier says:

              Dear Don

              Was it meant to be Romans or Iberians who did the importing? Golden Age myths never die…….

    • Norman Borlaug – excerpt from the New York Times obit. — The Green Revolution eventually came under attack from environmental and social critics who said it had created more difficulties than it had solved. Dr. Borlaug responded that the real problem was not his agricultural techniques, but the runaway population growth that had made them necessary.

      “If the world population continues to increase at the same rate, we will destroy the species,” he declared.

      • sheilach2 says:

        It’s not only population growth that the green revolution made possible but “leaders” keep pushing for more agricultural output without addressing the problem of overpopulation.
        By ignoring the overpopulation problem, we have guaranteed mass starvation when oil & natural gas become too expensive for farmers dependent on them.

        In the advanced countries, modern medicine has made it possible for those with genetic defects to not only survive but reproduce increasing the genetic load of defective genes in their populations.

        In poor countries, those with life threatening genetic defects often don’t live long enough to pass on their defective genes so their population is tougher & more resilient to disease.
        I expect then the future die off will effect the advanced countries far more than the 3rd world & because they are still using sustainable farming techniques, they will be able to feed their populations better than the so called advanced countries that have become dependent upon oil & gas fueled agriculture & who don’t have enough land or farm animals to make the switch to more sustainable farming & we don’t have enough farmers who know how to farm using organics & work animals.

        Fracking may have bought us more time just as the green revolution bought us more time to stop population growth but instead, we just keep trying to feed an endlessly growing population ignoring the fact that we live on a finite planet.

  15. Pingback: Tverberg: L’Assurdità dell’Export di Gas Naturale USA

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  17. Paul says:

    Peak phosphorus will be a shortage we can’t stomach

    This ties in with my biggest concern — that the end of cheap oil and gas = the end of the majority of food production because we are hooked on oil and gas based pesticides and fertilizers.. without them the soil we have farmed with them is dead and takes 3+ years to revive with organic methods.

    But the problem is even more complex — how do you transport food to where it is needed without cheap oil for trucks and ships (keeping in mind the breadbaskets of the US, Canada, Ukraine etc export much of their crops to the world) — how do you till the soil and harvest crops without cheap oil for those massive machines…

    And of course how to you mine the phosphorous that is poured onto the soil without cheap energy inputs

    Multiple huge problems here.

    One thing I disagree with in the article is that there are no substitutes for oil and gas (at least nothing even close to feasible at the moment) just as there are no substitutes for mined phosphorous – except slow farming with manure

    • Peter S says:

      Most people I mention “peak oil” or “the limits of growth” to say the same thing, that there are always alternatives, and there are/will be alternatives to oil.

      But putting aside for the moment that there is nothing as flexible, energy-dense, easily transported, as oil – you also must remember that oil isn’t dropping to a new low level, it’s dropping constantly and permanently. Each year, less oil. So each year, oil must play less a role in our society.

      I still haven’t seen any one thing, or combination of things, that can replace that. And more importantly, can replace it more and more each year (plus keep the system of eternal growth going), as fossil fuels decline.

    • Aldous Huxley on phosphorus 1928 and later. If memory serves, during the 50’s the McGill Professor of Biology, N.J. Berrill was interested in the availability of phosphorus as a possible limit to the volume of life on earth. Berrill was a friend of Julian Huxley, the brother of Aldous.

  18. Tim Olsen says:

    The absurdity or the brilliance? It depends on your perspective. Super-cheap US natural gas does not accurately reflect the inherent VALUE and COSTS of the resource, and thus causes warped market behavior like abandoning renewable energy and efficiency. The sooner we jack up that price the sooner the world gets a little smarter.

  19. Pingback: Guest Post: The Absurdity Of US Natural Gas Exports

  20. Fred ohr says:

    Dear Gail,
    No need to be alarmed over US nat gas exports. As u stated, market price is too low to sustain current production levels. Price in US will rise, with or without exports. But, let the marketplace work. If exports help balance S/D, let ’em rip. Nat gas prices are very cyclical. Market clearing price is where US wealth is maximized. If some exports end up in the equation, fine. If a bunch of export terminals are built and the world price croaks, well, that’s a risk the market will deal with. I say the country is better off at the market clearing price with or without exports. I just wish I knew what that price was. (I think it is about 30% above current levels).

    • The price of coal provides a partial cap for oil prices, under normal circumstances. In fact, electricity production from natural gas is already down in the US because coal is currently cheaper than natural gas-based electricity for many utilities. Europe and Japan don’t have coal acting as a built-in cap to the same extent.

      Prices of gas are very volatile because pipelines and storage caverns give very little flexibility for quantities. If it is a cold winter, prices temporarily spike. If producers add a little too much natural gas to the system, prices “tank.” The situation is very different from producing oil, coal, wood, copper, or iron, where unused amounts can be stored quite easily. Natural gas prices tend to be far more volatile, because of the inflexibility of the situation. I don’t think gas stays at one price very long, unless long-term contracts are used (a good idea in my opinion).

  21. anon says:

    I believe you have a typo in your great article… Shoulbe (b)?

    a. No growth
    b. 12%
    c. 50%
    d. 150%

    If we believe the US Energy Information Administration, US natural gas needs are expected to grow by only 12% between 2013 and 2030 (answer (a)).

  22. Pingback: Guest Post: The Absurdity Of US Natural Gas Exports - UNCLE - UNCLE

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  24. tmsr says:

    Gail, thanks for this article. It is very helpful to see all this information in one place.

    Here in New York State we are shutting down coal and the five nuclear electric plants as fast as possible to be replaced with natural gas. The states energy plan is ever increasing use of natural gas out to 2030 (the planning horizon).

    There is a move to re-fire coal plants with natural gas. Unfortunately, they will not be upgrading the turbines in the process so we will have low efficiency natural gas plants. Which suits the need of those who see electric generators as consumers of fuel as opposed to producers of electricity.

    In New York it is all about the financial structuring that allows a quick profit for insiders like the Blackstone Group of Manhattan.

    • Thanks for your observation regarding what is going on in New York.

      There is an outfit that sends me e-mail ads more or less daily for a conference called Natural Gas Power Generation USA | 2014. The leader at the top says, “Successfully Plan, Construct, Upgrade and Operate a Utility-Scale Gas fired Generation Facility.” I sent them an e-mail with a link to my article and an offer to speak at their conference. I don’t think I provide the message they want to get across.

  25. Gail, this is a wonderfully clear article. I love the multiple choice question-and-answer style. It really engages the reader. The article will help destroy false complacency with natural gas. Try to get a (shorter) version published more widely.

  26. B9K9 says:

    It may also be instructive to consider what is meant by my statement “the reward for intelligence is the booby prize”. For example, Gail analyzes available data and comes to the conclusion that, guess what, we’re still net importers. Therefore, any talk of building LPG facilities and shipping finished product to Europe is pure, unadulterated fantasy.

    Ah, but wait, that type of (fact based) opinion is all fine & dandy in an open society still operating under some semblance of constitutional rights. But what happens when the US continues to pursue the logical end-game of global resource war? That is, I think most are under some kind of impression that the current brouhaha in Ukraine will eventually blow over and resolve itself.

    But what if it doesn’t just “go away”? What if, it’s the actual start to a real, honest-to-goodness, low intensity war operating under traditional domestic censorship rules? Sort of like this one:

    Under those kinds of guidelines, nice, honest people like Gail, and all the other bloggers and posters (myself included) discussing these issues would not be viewed with particular kindness. After all, anyone pointing out the ludicrous fantasy of exporting LPG could be immediately categorized as conducting “a broad(er) range of offenses, notably speech and the expression of opinion that cast the government or the war effort in a negative light or interfered with the sale of government bonds.”

    So, yeah, smarty pants, the reward for being intelligent is a big, fat booby prize. But wait, it actually gets better than that, because while back in 1918 you could still be prosecuted via normal channels, today is so very much more interesting:
    “There was no law at the time that permitted the government, because of my work as a reporter, to order the military to seize and detain me. Now there is. This law (NDAA), if it is not struck down, will essentially replace our civilian judiciary with a military one. Those targeted under this law will not be warned beforehand that they will be arrested. They will not have a chance to get a lawyer. They will not see the inside of a courtroom. They will simply vanish.”

    Get it? It’s all fun right now to discuss with other like-minded individuals about what’s coming down the pike, but don’t underestimate the seriousness by which the state will conduct its affairs. This isn’t some f*cking game.

    • yt75 says:

      “But what happens when the US continues to pursue the logical end-game of global resource war? That is, I think most are under some kind of impression that the current brouhaha in Ukraine will eventually blow over and resolve itself.”

      Yes, could be the case indeed, even if in a mode “let’s topple Putin, put a comprehensive guy in Russia and a few Nato bases, and open the gates for Exxon Chevron or others”(even if in fact there is already plenty of joint ventures with western majors operating in Russia), but for sure Baku oil was a major hitler objective, and not the other way around … (sorry for the godwin point)
      And the propaganda against Russia/Putin these days is getting really kind of amazing, for instance today a bunch of articles about Russia raising the price of gas for Ukraine, in the sense “look at that atrocious monster”, when this is just more or less aligning the price on the one for Poland or Germany …

      • People don’t realize that when natural gas prices were very low, the Ukraine’s natural gas imports were very high–nearly up with Germany’s in 2005. With the high price of putting in pipeline and the long distance natural gas is now being shipped, it is not clear to me that Russia can afford to give Ukraine big discounts any longer. Their imports are now less than half of what they were in 2005–about the level of Spain’s imports.

    • xabier says:

      B9 K9

      Yes, the bit about the Emperor’s New Clothes where the kid gets beheaded is usually left off for some reason……..

    • Steve Rodriguez says:

      The role of Information in warfare is often under appreciated. Intelligence they call it. How good is your information? It is an important if not the only weapon used to win wars and for survival. ALL of humanity’s problem could be attributed to poor communication, a reluctance to share Information, and the inability to misinterpret the information that is freely available.

    • dolph says:

      You make some interesting points.

      More broadly speaking, what is celebrated by America and now the globe as the open, democratic, capitalist society is perhaps itself only viable with energy surplus, and new frontiers to conquer, and new markets to open.

      The last people to come to this game in size were the Chinese. Now that they have, there is nowhere else for the system to go. The rest of the third world is too fractured and exploited to fully participate, as the system is dependent on keeping the price of the commodities that they produce low.

      So we approach the end game as the system does everything it can to preserve itself. We approach a more closed and poorer world. The good times will be forgotten.

      I think most people who stay out of the way will be alright. In other words, don’t act directly against the system, and you won’t be considered a threat. Keep one foot in and one foot out.

    • Paul says:

      I was very perplexed and saddened when Hedges lost his battle against the Obama administration on this issue — he is correct — the mechanisms for all encompassing totalitarian rule are now in place — all that is left is for things to reach a point where the beast (which currently remains hidden behind the curtain) to show its true self — to bear its fangs — and by then it will be too late to do anything.

      The NSA has the goods on EVERYONE.

      Let’s say Gail is informed by the FBI that this blog is a threat to the American economy and she is told to stop publishing.

      Gail refuses.

      All the FBI would need to do is ask the NSA to review Gail’s communication history — ah what do we have here —- Gail said something nasty about a client …. about her boss… oh look here she’s said something not so nice about a daughter in law — etc etc…

      No Gail has not committed a crime — but like all of us she has communicated things that she absolutely wants to remain private — that would be damaging if they were released.

      The FBI knows this – the NSA knows this — and most importantly, the Deep State — which runs the show knows this.

      They know how to control Gail — they could quickly put Obama in line if he opposed them — they could take anyone down if they felt a reason that they had to.

      Make no mistake about it – every single one of us is compromised and owned by the NSA and their evil overlords.

      Get just a little out of line and you’d quickly find that out – when the beast is unleashed journalists like Hedges, Jeremy Scahill, and Glenn Greenwald will be at the top of the hit list… anyone protesting things like pipelines, fracking, monsanto etc… – they are likely to be silenced using these very powerful methods.

      Recall that J Edgar hoover had a file on many politicians – and used that info to control them … so to believe the NSA is not already doing the same is naive.

      I always wondered why Colin Powell gave that ridiculous speech prior to the Iraq invasion….

      • xabier says:

        Having lots of dirty info on people was one of Berlusconi’s tools in Italian politics – beware of politicians inviting you to parties……. I suspect that given the psychological profile of most who go into national politics, they are more likely than most to provide the means of blackmail to their enemies.

        Freedom of speech, and hence of association, is dead in the West.

        If we had our insurance numbers and internet passwords tattooed on our arms more of us might realise that fact, although a significant % undoubtedly wouldn’t care at all. Numbered, tagged and monitored.

        • Paul says:

          Speaking of Berlusconi — recall how easily he was forced out of office a few years ago when he went against the wishes of the central bankers?

          Basically overnight he was gone. This guy is a billionaire mafia king — and he stepped down without a whimper….

          Hmmmm…. someone would have to have a hell of a lot of power to do that…. I smell NSA….

      • Jan Steinman says:

        I think you’re a little paranoid, Paul.

        TPTB are not interested in Gail. They control the mainstream media; why should they care about some blog? They can hire or promote hundreds of rebuttal blogs!

        I don’t think information suppression is really necessary for large, capitalist countries. They can swamp it with re-runs and Superbowls and Olympics and what-have-you. Why suppress when you can overwhelm?

        At some point, information suppression may come back into vogue, but not until the Internet dies.

        • Paul says:

          Actually I was just using Gail as an example of how the NSA has the power to control every single person on the planet (other than those living ‘off the grid’).

          They can get to anyone — just a matter of giving them a reason. I don’t think this blog gets onto their radar as it is not a threat to the Deep State.

        • InAlaska says:

          I think that Paul was just using Gail as an example, not actually suggesting that this blog is a possible target.

  27. B9K9 says:

    I become somewhat bored with discussions of technical feasibility studies and expected outcome projections. Not because of the nature of the subject matter – after all, I’m an analyst – but it appears to miss the real game being played.

    Paul is spot on when he simply states “where’s the beef?” That is, why aren’t $trillions of freshly printed QE being spent on alternative energy projects? And the answer of course, to quote Gertrude Stein, is because there is “no there, there”.

    Ok, so let’s step back and review this observation with my initial comment regarding the futility of detailed analysis without recognizing the contextual environment in which it’s being performed. Or, where **IS** QE being spent and why ie to what purpose?

    Within this context, I think we can generally categorize QE into two primary sectors, with each being further comprised of two more detailed ares of focus, but noting that all are devoted to maintaining the status quo for as long as it can be reasonably sustained:
    A. Illusion
    1. Bread – social services, public works projects, etc
    2. Circus (entertainment) – (goosed) financial markets, FB, etc
    B. Maintenance
    1. Military – global security of sea lanes, pipelines & ground transport routes
    2. Exploration, development & delivery – core production, whether conventional or advanced tech

    Using the framework above, I think we could generally trace out any volume of QE as being 1/2 devoted towards placating & entertaining the masses, with the other 1/2 spent on maintaining the core underlying system.

    This model is also useful in understanding the fundamental fact that no investments, virtual or real, are being directed towards anything remotely approaching a sustainable arrangement for earth’s inhabitants. Rather, it positively shouts that traditional economic cost-benefit has no place when the return period (time itself, not $) is no longer guaranteed.

    To conclude, this why there are numerous large freeway infrastructure projects underway in SoCal. The money is essentially free (in that it will never be repaid), so why not keep people busy? It’s also why $trillions can (and most likely, will) be spent on all manner of FF extraction, processing and shipping (LPG, etc) facilities, with absolutely no measure of economic benefit.

    In fact, they can be humungous failures by any economic measure, and it will still be double-plus good. To wit, it simply does not matter if it’s a “good idea” in the traditional sense. Every extra day that the world operates as usual is in itself a “win”. And that’s the point I believe Paul is making – the absence of, and those actually performed, actions being undertaken are essentially shouting all anyone needs to know if they are possess even 1/2 a clue.

    • Thanks for your interesting analysis. I think you are probably right–the main goal is keeping BAU for a bit longer. Traditional cost/benefit analyses don’t make any sense, especially when you may never have to pay back borrowed money.

    • edpell says:

      I agree BAU analysis no longer makes sense. This is the point I have tried to make about Germany’s investment in solar. From a BAU analysis it is over priced and a waste of money. From a nationalistic analysis when the day comes that all of Europe is sitting in the cold and dark while Germany has some level of power and industry, Germany will rule Europe. Whether a solar economy will be able to replace the PV that was produced by oil remains to be seen but at least for 20 years Germany will be in charge in Europe.

      As I have said before the US military continues it push into solar for its own use.

      The KSA is building 16 nuclear power plants at a cost of 112 billion dollars. It will not save the mass of residence but it will keep the lights and air conditioning on for the ruling class for some years to come.

      • Steve Rodriguez says:

        It will keep the military at an interim state of readiness to maintain order. Who do yo think will be driving the combines on the seized midwestern farms, distributing the grain to LA and NY refugee camps? that is the only plan B that I can imagine…

      • I am not convinced that the solar will allow Germany to continue to rule Europe. Germany, like the rest of Europe, will need a much cheaper government. If it is going to keep electricity going, it will need a way to maintain the electric power lines. This depends on oil today. They will also need replacement parts for many parts of the system–inverters, natural gas and coal back up, wind, etc. The electric output of solar panels by itself doesn’t give much of an advantage, if they only operate as part of the grid, and the grid doesn’t work.

    • Theadore the great says:

      Aren’t you being a bit Naive? Do you think any of the money prior to WW2 was ever paid back? Do you think Japan “paid back” or Germany “paid back” ….You are trying to conceptualize a system that you have no idea how it works. If your theory or idea was correct we would have already had our collapse. This could go on for another 10 years or more and you will be left with sitting on the edge of your seat for a very, very long time. But hey who am I to tell you how to “waste your precious time” you may be dead tomorrow! I come to blogs to find ideas and new ways of thinking….not hand wringing are crying about the future….. Yes, Yes we all know that BAU is not going to continue…tell us something we don’t already know….

  28. Tweet from Nick Grealy ‏@ShaleGasExpert 43m
    #peakoil isn’t dead. Still occasionally wakes up and screams as a stalwart from the dead Oil Drum proves

  29. yt75 says:

    Nice one ! 🙂

    And you shouldn’t stop there. According to Condoleeza Rice (who for sure knows a thing or two about the subject), you will also flood the world with oil!
    “Soon, North America’s bounty of oil and gas will swamp Moscow’s capacity.
    Authorizing the Keystone XL pipeline and championing natural gas exports
    would signal that we intend to do precisely that. ”

    Ok, North America and not America, but still …

    • yt75 says:

      Byt the way about gas, and according to Laherrère latest projections, natural gas will never provide the energy currently provided by oil (so even less compared to oil+gas today..)
      Note : would have to check if shale gas outside the US is included in this one, forgot, but US shale is I think.

      • Of course, it is necessary to keep the financial system and government systems together, so Laherrere’s projections provide a “best case” projection. Today, worldwide, oil is first, coal is virtually tied with oil, and natural gas is third.

        • yt75 says:

          Yes for sure the “best case” only, and the way down might be very different (if not already started yet), but on the way up, important with respect to all the declarations “we will transition to gas” (same thing considered on the US perimeter as shown in your post in fact).

    • There are lots of amazing stories out there!

    • timl2k11 says:

      From the article (Rice’s words): “knowledge based economy”. What the f is that?
      Sounds like an economy based on B.S. That seems to be what we have, or all Rice and her ilk has… B.S.
      I wish I had been warned (perhaps I should have known) article contained such horseshit terminology.

      • yt75 says:

        On this I think she is kind of right : Intellectual property plays a major role in today’s economy, through patents, copyrights on books or other contents, and all that. It is also what made the “technology boom” since the industrial revolution possible for a major part.
        But now also taken to the extreme in different ways :
        – patents on almost “stupid” things : shape of a phone or buttons, or Amazon having patented the “one click buying” concept for instance. (with the army of lawyers needed to enforce them).
        – Monsanto pushing licence based seeds, so that farmers are obliged to buy them every year (even if seeds from previous year are “working”)
        – All the derived products from movies and all that becoming more important in revenues that the movie itself.

        But on the other end, I think that the dogma “everything free and ad based for revenues” for web contents for instance, results in shutting off a lot of contents that could exist.
        And also lead to the “fierce profiling activity” of web giants, as the business model is basically “the customers are the announcers(ad buyers), the product the ability to push the right ad on the right individual/brain though the profiling achieved”
        Besides, it re-enforces the mindset that only “material” things have values. (and also makes the whole web sites and stuff more energy hungry for all the ads pushing and all that)

        But then one could also have preferred that the industrial revolution never had happened, sometimes (or often) …

      • It sounds like it was written as a propaganda piece–US good; Russia bad, etc.

        • ordinaryjoe says:

          Nasty klingons always trying to get all the dilithium crystals, luckily the vulcan leader merkel is supporting the federation in its efforts to ensure peace, prosperity, and free trade.

      • Paul says:

        knowledge based economy = encouraging the best and brightest to pursue jobs in the casino — ahem — financial world — where they use their smarts to create new casino games — ahem — financial products —- that have no purpose other than to generate commissions for the banks and bonuses for the employees.

        As opposed to an economy where the best and the brightest actually did something productive.

        In any event, all moot because the industrial economy has been a passing fad that was predicated on cheap oil

        • ordinaryjoe says:

          Good analysis. I am sympathetic to your sentiments however as the oil ends many “productive” careers are worthless. Compare a engineer and a psychologist. Engineer; As oil ends the materials that required oil are no longer available nor is the apparatus to create them in the fashion of his/her design. Psychologist; No change, other than the economic changes that may very well render his/her training of much less value. “Productive” in most instances is growth . “Productive” in most cases is a large consumption of resources. We are programmed that growth is good, that to consume in the name of creativity, and ingenuity is a different sort of consumption than hedonistic consumption. Some kneel before the altar of hedonistic consumption, others kneel before the alter of productive consumption. They are both coming to a end.

          • Jan Steinman says:

            “as the oil ends many “productive” careers are worthless.”

            Personally, I limit the use of the word “productive” to the biological sense, meaning those who increase primary productivity — food.

            The survivors will be living much lower on Maslow’s hierarchy.

        • As an actuary, I can’t complain. Actuaries have been beneficiaries of this system. I know when the first ranking of best jobs came out years ago, Actuaries came out # 1. Even now, the actuarial profession advertises that its jobs usually rank very well.

          It is even possible to retire early and do this instead of working for a consulting firm or insurance company.

      • Peter S says:

        I’ve talked with economics students who use vocabulary like that, and have little or no idea how money or economies work. They completely miss how vital energy is.

  30. Pingback: The Absurdity of US Natural Gas Exports | Our Finite World | Olduvaiblog

  31. “…Perhaps the best outcome would be if virtually none of this natural gas export capacity ever gets built–approval or no approval. If it is really possible to get the natural gas out, we need it here instead. Or leave it in the ground.”
    I couldn’t agree more and it is what I have been saying with regard to Canadian bitumen as well. We (or is it really the multinational corporations and their political lackeys?) seem intent on expediting the exploitation of our final reserves, removing the ‘options’ from future generations. Lemmings following the herd over the cliff…

    • Texas Engineer says:

      But that would go against the basic energy policy of the business media which is “Drain America First!”.

      • Interguru says:

        Even if Canadian production is declining, they can build LNG terminals and import from the US if needed. The real question, unanswerable right now, is whether LNG terminal makes economic sense.

      • edpell says:

        We see the shift from the American nationalism of the 50s and 60s to pure capitalism with no ties to people or place. The only value America has to the owning class is how can it be used to fill my Swiss bank account. At least it will all be gone in my life time and I can see what America as a self supporting nation looks like again. Except maybe for Alaska coal.

  32. Leo Smith says:

    I wish I had run a spell checker over that first…

  33. Leo Smith says:

    Of course teher is another factor in play oin world gas markets, or wto things.

    ‘rebneable energy’ depned son gas. Itds the only technology apart frm hydro, which is effectibeve in balancing te massive output swings from it to ensurte a mire or less steday (if massively overpriced) energy supply,

    And the ‘Fukushima effect’; that as seen the gas players playing the ‘disaster’ card massively to shut down nuclear power world wide, has also pushed gas prices up as demand grows.

    Especially in Japan and Germany.

    read this and weep

    You may choose to believe it or not, but gas and renewables lead the charge against coal and nuclear power, for resins totally unconnected with climate change. Renewable energy they dont mind because they already know it depends utterly on gas anyway, and wont dent their margins, Indeed by pushing energy prices up, it allows them to look cheap by comparison…

  34. Leo Smith says:

    Too simplistic Gail.

    You cannot make sense of this by simply considering the United States as a monolithic bloc within which free supplies of gas are uniformly and infinitely available.

    All nations import and export the same goods to some extent. In transport terms for example, the cost of sending a coal carrying cargo ship from Australia to California is probably less than sending a train full of coal wagons from the east coast to the west.

    The gas disjunct is massively emphasised by comparing European and US gas prices: they are simply not the same because the US lacks any export facilities as yet.

    I may buy a billion cubic feet of gas in Louisiana at rock bottom prices, but I cant deliver it to customers in Germany at all. Its a waste of time.

    Low value high bulk goods are critically dependent on cost of transportation .

    • Admittedly I did not get into the details in this article that I might have.

      I have seen estimates on the details of shipping costs, but did not have time to research these much. For example, this article from 2008 gives some cost estimates, and this research article from 2003 is quite extensive, but out of date. The cost of transport is probably somewhere in the $4 per mcf range. Because of natural gas burning off, I would expect the cost to be higher with longer distance.

      I know back a few years ago that there was discussion about drilling Alaskan natural gas and piping it down to the US 48 states, the discussion then was that the cost of piping it down to the US was at that time $2 per mcf. At a cost of extraction of $2+ per mcf of extraction, it was hard to make such natural gas competitive with lower 48 states natural gas that was selling for $4 per mcf.

  35. Very nice Q&A format!

    In Australia, massive exports of coal seam gas via LNG terminals will even lead to local shortages on the East coast due to lack of policy to secure local gas supplies. Gas prices are set to go up towards higher export price levels.

    Queensland plans to export more than 10 times the gas NSW needs (part 3)

    NSW gas as transport fuel. Where are the plans?

    More than 2 years later and nothing has been done on a transition to gas as transport fuel, thanks to US shale oil.

    In Western Australia:

    • Thanks for the links. After seeing discussions regarding the natural as export situation in Australia, I thought maybe I should add up the US proposed natural gas export amounts shown on the website for myself.

  36. VPK says:

    Thank you again, Gail, for clearly stating the real deal.
    I’m beginning to feel a chill in the room.
    The funny thing is the mainstream media and industry “infocommercials”, have the public think otherwise.

    • I was thinking as I was putting the numbers together that the arithmetic is not all that difficult. A person needs to simply take numbers from one report and convert them to the basis used in other reports, and line them up side-by-side. I was teaching my daughter to do that in eighth grade.

      Natural gas is a little more difficult than oil, because there are more losses along the way. Even without making natural gas into LNG, a little over 8% of US natural gas is used up in processing and getting it to customers. Making it into LNG, traveling across the ocean (while some burns off), and re-gasifying it will use up even more of the natural gas.

  37. Jan Steinman says:

    “we are the high cost producer. There is a lot of natural gas production around the world, particularly in the Middle East, that is cheaper.”

    Is the high price in certain markets then because Middle Eastern suppliers are not exporting? If so, why will they suddenly start exporting if the US does?

    It would seem that with their lax labour and environmental controls — and with lots of capital to invest — the Middle Eastern producers should be exporting like mad.

    Gail points out that, largely due to transport issues, natgas is not fungible, and so results in “stranded asset pricing.” So I don’t understand how that will change if the US begins exporting.

    • Jonathan Madden says:

      Do bear in mind that counties receiving LNG need degasification infrastructure; also those with sea ports are better able to take shipments than by onward forwarding on truck or rail. Much of Europe (not so much the UK) relies on piped NG.

    • Pipelines are one big problem area. Even if natural gas seems to be available, if there are not enough pipelines (or LNG capacity), exporting the gas will not actually happen. Iran is a country with big natural gas capabilities. Needless to say, the US hasn’t been going out of its way to help them out. Several of the big oil producing countries have tended to use natural gas for their own electricity production, rather than export it. It is less valuable than oil, especially when one factors in the high transport costs.

      There have been a number of recent announcements from the Middle East about recent natural gas finds. I know Israel is talking about some gas offshore. Cyprus is talking about natural gas resources as well. I don’t know quantities or timing, but a reasonable guess is that the timing might be similar to that of early US natural gas exports.

      I agree though that natural gas is very often a stranded asset. For a long time, pipelines were the only transport approach. They locked in relationships, until the gas supply began to fail. Now LNG is at least temporarily the new preferred method of distribution. This sort of works, when there is very cheap supply (as in Qatar) traveling not too far, as in to the UK, and prices are quite high. But the farther natural gas goes, the more that burns off along the way (adding to climate change gasses), and the more it costs.

  38. Stilgar Wilcox says:

    I can see it now: Our government in a desperate effort to reduce perception of Russian power via their FF, will offer the EU a cut rate price on exported US NG by subsidizing it with US tax money. That way the American taxpayer will get swindled thricely; 1. from higher priced NG, 2. tax money going for EU NG and 3. reduced long term domestic NG energy supplies. Meanwhile Russia will pipeline their NG East to China, increasing bonds between those two superpowers.

    Right now NG from fracking is like money in a kid’s pocket at a candy store. There just isn’t enough ways to spend it fast enough, and after all that chocolate is gobbled up, all there will be are empty wrappers. Why is human nature predisposed to do things so fast! We can’t even slow ourselves down from burning FF when we know we are in an overall net energy decline and it causes AGW.

    • xabier says:

      Not just humans: ever seen a dog leave half the biscuits in the bowl and hold them over for another time?

      Or say (as it were!) ‘No thanks, not just now I’m not hungry’?

    • I think the answer to why we can’t slow ourselves down in “Power, and the appearance of power.” With energy comes power, and the ability to win in the world arena. No one can admit how bad things really are, so we make up stories.

      • edpell says:

        This never occurred to me but you are right. As an engineer I think in terms of solving the problem. Politicians are sales people they think in terms of image.

      • xabier says:

        Well, we still live in a world of power blocs jostling for advantage, as the Ukraine crisis has amply illustrated in a text book fashion.

      • icarus62 says:

        I’ve been reading about resource limits for a few years, and increasingly thinking about how to ‘power down’ and be more resilient, more self-sufficient. It’s an attractive idea but the problem is precisely what you state above – “With energy comes power, and the ability to win…”. We can imagine transitioning to some kind of idyllic, low energy, low impact sustainable existence, leaving remaining fossil fuels in the ground etc., but that then makes us vulnerable to being walked all over by someone else who’s happy to keep chewing through the Earth’s finite resources as fast as they can. In an argument between ‘primitive’ tribes living a sustainable existence and people with guns who want their land / timber / oil / whatever, it’s generally the latter who win.

        • You are right. Even using high priced energy, when others use low priced (often polluting) energy puts us at a disadvantage in the world economy.

  39. Pingback: The Absurdity of US Natural Gas Exports | Picto...

  40. According to our Energy Industry Fracking Shill on the Diner MKing, the FSoA is rolling in NG for the next 20-30 years, and not only that will be producing Liquid Fuels from said NG in copious quantities so Energy Deficit is a big Myth. Needless to say, nobody on the Diner buys this propaganda.

    I dropped on today a report from the WSJ showing that in fact most of the companies doing the fracking are in debt up to their eyeballs and liquidity is drying up.

    Fracker Credit Card Running Dry
    Also, I just dropped on my latest Frostbite Falls Daily Rant, GOLD BITCHEZ!, examining the likelihood of retruning to a PM based monetary system to replace the failing Fiat one.
    WARNING: Gold Bugs will NOT like this rant.

    • dolph says:

      That was a good rant. But gold is a bit funny. I wouldn’t write it off just yet.

      Apart from very limited applications, gold’s value as a store of wealth is either zero or high…very high. This comes from gold’s unique properties which make it an ideal store of wealth, particularly its high stock to flow ratio. Gold simply accumulates and accumulates and changes hands every now and then.

      Therefore the value of gold is not in the moment of collapse anymore than having a rare diamond or painting will help you. The value comes in the period to follow, when the central banks come together to rework the system out of sheer necessity. So you may actually have to hold your gold for some time.

      Gold does work for international trade settlement. It’s function is simply to move out of deficit zones and into surplus zones. There is nothing particularly mysterious about this.

      It also doesn’t have to be fair. Right now, in the world today, a super rich person will gladly spend 100 million dollars for a rare piece of art at an auction, even as the vast, vast majority of working people in this world, many who are quite well off, would never dream of even accumulating that amount. There is nothing fair about this, it’s just the way our system works.

      It will be the same on the other end. It may not be fair for the gold people to have a small lottery, but that very well may happen.

      • Thanks D
        I don’t write off Gold COMPLETELY, much depends on the nature of the collapse, speed, geopolitics etc. There is a decent chance Gold could be a player for part of the time in some locations. if you have surplus to load up on some and are otherwise well prepped, go for it!

        Here’s a good one for you though as Canary in the Coal Mine. The Greeks are basically cutoff from Euro Credit, are Gold or even Silver coins of any sort starting to circulate in their economy? Insofar as I know, no, not even on the Black Market.

        For PMs to start circulating as alternative money, enough people have to have possession of them. VERY few people do in just about all economies. I’d bet on the Dollar in the near to medium term here, CASH as King.


        • Jonathan Madden says:

          Central banks can demonetise and withdraw currencies. A crisis might very well provoke this – take all your cash to the bank before next month, and receive 1 for 10 ‘New Dollars’ in return. And, btw, you may only withdraw x amount in cash…

          PMs on the other hand cannot be spirited up from nowhere by the bank. A Gold coin has the double advantage of its high density (only Tungsten and Rhenium amongst the non-noble, non-radioactive, metals are denser) and its struck impression, making it almost impossible to fake.

          US Gold Dollars do not devalue with age.

          • Bah. Metal Coinage is very easy to both counterfeit and debase. Just look at the Roman Empire for this. Much harder actually to counterfeit an FRN, what with the special paper, special ink etc. Of course, MOST dollars in existence have no Paper representation, they are digibits and VERY easy to Counterfeit. Yellin Janet can do it anytime from her Laptop.


        • xabier says:

          In crashed economies, the usual procedure is to exchange small quantities of gold (chopped up jewellery, etc) for cash to convert immediately into drugs, food, etc.

          Not to pay with gold coins. They have no function on a day to day basis as far as I know.

          As a store through crisis times, maybe, but I wouldn’t put my shirt on it. In fact, I’d rather have a stock of good shirts.

          In crashed economies, cash or barter are king. Changing up gold coins could be very dangerous indeed to the individual.

          • Harry says:

            Yup, bars of soap, lighters, socks – these are the currency of the future.

          • VPK says:

            One story I will NEVER forget about a nice man I use to visit in his coin shop. He and his family were from Poland and as a small child, Germany invaded his country. Well, I need not tell you what happened next, for he was Jewish. So, they made there way out and the ONLY thing that saved them was their GOLD. People helped them when they saw the Gold.
            Be as it may, that is how the world works. I’m not saying tuna cans will not work, but it would be wish to have a stash of gold and silver, just in case.

      • If you use the WSJ link, you will need to buy a subscription to read it. You can read it free on the Diner link I provided. 🙂 I of course provide the original link on the Diner plus full attribution to the WSJ.

        The other way to get in for free is via Google. If you Google the title then click the referral link from Google, you can bypass the subscription on WSJ.


  41. Pingback: The Absurdity of US Natural Gas Exports | Susta...

  42. MG says:

    Shipping of the USA liquified shale gas to Europe is one of our current fairy tales. If there are problems with the natural gas from Russia, the building of Nabucco pipeline from the Caspian area would be the solution which is on hold now. The natural gas producers from the Middle East would be happy to have a new market in Europe.

    Anyway, Russia is highly dependent on the revenues from its natural gas exports and has vast proven reserves, so I see no big change in this area on the world market.

    Furthemore, e.g. people in my country, Slovakia, return to use of wood for heating instead of natural gas (although about 90 % of the population has access to gas networks). The similar situation with rising use of wood for heating is in the USA. My explanation is that there is ever larger group of people with low incomes who need to economize…

    That way the natural gas prices are in fact dependent on the wood prices, as regards the heating.

    • Ert says:


      And air-quality issues are on the rise due to the burning of wood – even in Germany. The times of heavy inner-city pollution as of coal and wood burning are almost forgotten, due to the wonders of electricity, oil and gas. We will see, how healthy it will be to live nearby the city-centers and how people will cope with payments for their heating-bill in coming times of economic stress.

      As of the fairy-tale thinking – I’m currently really confused. The only reason I can think of regarding the US LNG export-terminals is to bid the price of the gas up – the export terminals are only an unproductive shell game! Burg resources for digits in a computer…

      Regarding the ‘Crimea crisis’ in Europe? A strange power play, but probably more induced by the US then the EU. At least China will be very glad concerning the developments – all that is not flowing to Europe/EU will flow to China!

      • xabier says:

        In Greece friends tell me that the big health issue is the burning of green wood -much more smoke, and of building waste – treated woods, painted woods, etc – that are seriously harmful to health. And of course open fireplace burning, which is much less efficient than modern stoves.

          • Yes, with today’s high population, we can use up wood supplies very quickly.

          • ordinaryjoe says:

            Where I live in the rural USA most people heat with wood and many could not afford it any other way. The better off economically insulate, the poorer burn more wood. One family I know thinks nothing of burning plywood or other laminates containing glue of some sort. Any foray into town is accompanied by scavenging any wood available laminate or not. Any suggestions I have made about the alternative of better insulation for the body or a main living room are met with derision and hostility. For that matter any topic of finite resources is met with derision and hostility. Consumption=status=ego. We will reap what we sow. Any philosophy that involves conservation is regarded with deep suspicion if not outright aggression. The entitlement to burn wood is a very very strong belief here. I have heard more radical statements about this entitlement than all others combined. When the fossil fuels end the wood consumption will too as its cutting, splitting , and transportation is largely dependent on fossil fuels. Try falling a tree, cutting it into pieces, transporting it miles to your home, and splitting it without gasoline, body insulation starts to become more attractive. The end of the practice of burning wood is a long way off however as the economy grinds to a halt the price of gasoline will lower and burning wood will become more not less prevalent, just as the trend is now.

            • Calista says:

              I too see that sense of entitlement. Also that sense of consumption being tied to status. I find it very interesting as the people I know who are from the projects and got out spend enormous amounts of money at the dollar store etc. to be able to constantly give gifts. Even though the gifts are useless broken within a week etc. It makes me sad to watch. I recommend masonry heaters as the more efficient method of burning less wood to cook and heat a main area of an insulated home. Significantly less stack level pollution and will meet the new EPA woodburning stove standards unlike many woodstoves currently on the market that are only using filters or what could effectively be called a catalytic converter at the end of the burn cycle.

      • Europe is more likely to cooperate with Russia, because it needs its natural gas and oil exports. The US can spin fairy tales.

        • xabier says:

          Germany and Russia understand one another very well, I suspect: France, Italy, Spain and Britain are peripheral states once more. The map says it all.

          • Ikonoclast says:

            I agree about Britain. I am thoroughly sick of Britain’s arrogance. They think they are still important. They are kidding themselves. Britain is in rapid decline. It is well over its sustainability footprint. The end of North Sea oil is the end of Britain. And whilst for the time being London is still the financial capital of the world, there is no inherent reason for that other than as an historical hangover. The SCO (Shanghai Cooperation Organisation) will see that a new centre, maybe like Shanghai, will supersede London. Then Britain will have nothing and be nothing. Britain will end up about equivalent to Spain or even maybe less important.

            The USA is different. Though still facing massive problems it still has a relatively rich continent to support it if one includes Canada. Canada will never be allowed to conduct trades too much to the detriment of the USA. So Britain will shrink to total insignificance. USA will shrink and collapse but might well shrink and collapse slower than China for example. In the world of the future, collapsing slower makes you relatively more powerful. The USA’s relative power could hold up and even improve because of this phenomenon.

    • Lizzy says:

      If I may be contentious: the realistic alternatives seem to be gas from Russia or gas from Qatar. (Why were the Qataris so keen to overthrow Bashar in Syria? Makes sense to me, from what I’ve read).
      Which would we prefer? To be under the thumb of Russia or Qatar? I know which one I’d choose…

    • Yes, wood prices will put a lid on the amount of natural gas sold. People’s incomes don’t go up just because energy prices do. Too many people lose sight of this.

      In the US, coal prices tend to put a lid on the amount of natural gas sold, because we have electric power plants that can produce electricity with coal quite cheaply. In fact, recent natural gas used for electricity production is down in the US, because prices for natural gas are not up a little. The amount by which gas prices have gone up is enough to induce switching to coal, but not enough to make very much shale gas profitable.

    • Paul says:

      If 7.2 billion people turn to wood to cook and keep warm – the world will be one big Haiti in perhaps a year

      • Bruce the Moose says:

        And an Easter island shortly thereafter

        • MG says:

          It is interesting how the Ukraine, with its 15.6 percent of the total land area covered by forests ( tries to get the Russian natural gas from Europe for a lower price:

          The only thing that can prevent deforestation and keep the prices of natural gas down are in fact the strict laws regarding the forest management. On the other hand, the same laws can bring the end of using the natural gas for heating, as the prices would be too high to cover the costs of extraction, transport etc. Anyway, it seems, that we may soon hit the peak natural gas, caused also by the climate warming and consequent warm winters.

          • MG says:

            It means, that the natural gas will be used for other purposes (e.g. production of fertilizers, plastics etc.). But will people be able to buy such products when their wages do not rise? Maybe some smaller group of the rich. The rest will be poor and will not be able to afford such “luxury”. Their only “luxury” will be the food based on the fertilizers. That is what is happening: oil, natural gas, coal will not be for everybody. They will become rare products.

            Then, will it make any sense to convert US shale gas into LNG? I do not think so. The process of converting shale gas into LNG and vice versa will prevent achieving any significant export amounts. The target group of consumers, who will be able to afford it, will be small, anyway.

            The era of natural gas production is just the end of the story of hydrocarbons production: 1. coal, 2. oil, 3. natural gas. The story of “solid”, “liquid” and “gaseous” consistences. When 1. and 2. will be mising, there will be no natural gas production. Decoupling of natural gas price from the price of oil is the sign of one thing:

            1. oil prices rise
            2. natural gas is loosing its attractivity (due to oil and coal based costs connected with it). You need extra facilities and devices (produced using coal and oil) to use natural gas. Safety in using natural gas is also a big issue.

            • Yes, the whole system is tightly hooked together. It is hard to see how we could use natural gas without coal and oil. In fact, failure of the financial system might be enough to bring the whole system down.

  43. Jonathan Madden says:

    Thank you , Gail, for this very relevant article on US natural gas production and proposed export.
    I would imagine that bulk export facilites will not be constructed and ready to ship for another two or three years minimum – a long time compared to the rapidly evolving changes around Russia’s borders.
    In the UK, our government is doing its best to push fracking for gas. Progress is slow, with only a handful of test wells anticipated before year end. There is widespread public opposition, citing heavy traffic on small roads, pollution of all sorts: noise, light, flow-back water disposal, gas leakage, etc., etc., as well as possible detrimental effects on agriculture. This will probably delay things and likely engender some hostility toward both local and national government.
    I find it hard to believe that in the UK will ever see significant fracking gas production, if only for the reason that we are a densely populated country that would see too much disruption to people’s lives over too great an area. Remember too that here (hydrocarbon) leases are owned and granted by central government, not by overlying land owners, thereby tending to further distance decision making from local people.
    I am not knowledgeable on fracking economics, except that it is expensive in comparison to conventional extraction. The owner of the Ineos refinery in Grangemouth recently stated a commitment to build a NG decompression and storage plant to accept US gas – again, a project of several years’ duration.
    All this makes me wonder which of these seemingly competing supplies of gas will be viable. Surely a flood of cheap(er) gas entering the export market will depress prices and make UK fracking uneconomic? US fracking rig-count, 2000 odd, seems to sway between oil and gas, with fungible oil presently taking the lions share with some 1600 rigs. (From Euan Mearns.) But oil wells produce associated gas and it is this surplus gas that I presume is both depressing US NG price and also helping to drive proposed exports.
    The UK is willing pay a relatively high price for imported gas, but will not subsidise, except for some tax breaks, fracking operations. We may need a plentiful supply of NG here over the coming years, owing to EU emissions requirements forcing closure of coal electricity plants. Base and peaking load is likely to be gas generated until long term alternatives such as nuclear come online in the early ’20’s.
    So we seem to be facing uncertainty both right now, with question marks over Russian gas price and supply to Western Europe, and then medium term with diminishing NS production and an unknown fracking supply, Your article is timely, and I will await updates in due course.

    • Thanks for your observations on the UK situation. Three reasons shale gas has been feasible in the US: (1) Landowners get a cut of the revenue stream, so are happy to vote for it, (2) Pipelines are mostly in place, so there has not been as much need for additional infrastructure at high cost and interference with existing population, (3) Creative accounting, that allowed smaller businesses that have typically engaged in shale gas drilling to record cash flow losses every year, with claimed profitability sometime in the future, assuming that the natural gas wells drilled continue to produce enough gas for long enough. Meanwhile, they need to real in more investors and borrow more each year. Big companies have bought some shale gas producers out, and discovered the profitability is what it was claimed to be. It is difficult earning an adequate profit being the highest cost natural gas producer. Also, if producers in the aggregate slightly overproduce, storage capacity is limited, so prices drop precariously.

  44. Tom schülke says:

    Thanks alot.. theese are nice informations and thoughts, especialy here in germany, where tere are lots of uninformed discussions about alternatives to russian gas exports that, in the shadow of the ukraine crisis, make up about 30 pecent in germany. Ion the official discussion theres still a total ignorance of energy and the linked economy issues. Well i, ve put a link in my usercomments at an article on the german website one of the rare lights in the darkness of ignorance. Here in germany..

    Many readers of this website often visit your blog.. thanks for your work

    • Bill Hulston says:

      Herr Schulke I have been closely watching Germany since discovering that soon many coal fired power station will soon be burning lignite coal (very dirty coal) whilst we in the UK are closeing our power station that burn less dirty coal,and I realy wonder what on earth is realy going on in our world?.Tante Angela and our very own boy child prime minister D Cameron seem to be to me in cahoots with a plan to debase our energy companys of leverage and threats knowing that it may well end not so good when we wish to turn on the lights.Whats your feelingsabout this in Germany?

  45. What a fun quiz!

  46. gerryhiles says:

    A kinda parable.
    Once upon a time there were far less people and all, until about 7,000 years ago, lived in tribes with cultures adapted to their environments and in equilibrium all around the world and still in some remote places.

    But then some bright spark invented agriculture in the Indus Valley, around the Euphrates, Nile and wherever. So people no longer had to move around, because there was surplus production of food and eventually everything else, so more and more people came to live in fixed settlements called towns and cities where there was no chance of leading any sort of natural life.
    Civilization had been born (which has NOTHING to do with being nice to each other; instead it’s solely to do with empire building and resource-grabs to provide for ever-increasing populations which had stripped their environments of forests.

    Skip ahead to the ongoing rape of the Americas.

    When the first European settlers arrived there were pristine forests to chop down for heating, etc. in the Northern climes in small settlements, but as these settlements grew into cities, if oil and gas had not been discovered, no city would have been viable.

    Now that peak easy oil and gas are exhausted, civilization (living in cities) is no longer tenable.

    We rode the wave of the Industrial Revolution for 300 years; but it is over, bar the shouting which might unleash nuclear WW3.

    • Declining Canadian production was part of the impetus for the US trying to extract shale gas.

      • J2P2 says:

        The WSJ article refers to Canadian decline in conventional gas only. The picture of total recoverable gas in the US compared to Canada as follows:
        -Canada 2,310 Trillion Cubic Ft (CAPP)
        -USA 4,040 Trillion Cubic Ft (EIA)
        At 1/10 the population I don’t see Canada having to import US gas in significant volumes any time in the foreseeable future…..

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