Eight Energy Myths Explained

Republicans, Democrats, and environmentalists all have favorite energy myths. Even Peak Oil believers have favorite energy myths. The following are a few common mis-beliefs,  coming from a variety of energy perspectives. I will start with a recent myth, and then discuss some longer-standing ones.

Myth 1. The fact that oil producers are talking about wanting to export crude oil means that the US has more than enough crude oil for its own needs.

The real story is that producers want to sell their crude oil at as high a price as possible. If they have a choice of refineries A, B, and C in this country to sell their crude oil to, the maximum amount they can receive for their oil is limited by the price these refineries are paying, less the cost of shipping the oil to these refineries.

If it suddenly becomes possible to sell crude oil to refineries elsewhere, the possibility arises that a higher price will be available in another country. Refineries are optimized for a particular type of crude. If, for example, refineries in Europe are short of light, sweet crude because such oil from Libya is mostly still unavailable, a European refinery might be willing to pay a higher price for crude oil from the Bakken (which also produces light sweet, crude) than a refinery in this country. Even with shipping costs, an oil producer might be able to make a bigger profit on its oil sold outside of the US than sold within the US.

The US consumed 18.9 million barrels a day of petroleum products during 2013. In order to meet its oil needs, the US imported 6.2 million barrels of oil a day in 2013 (netting exported oil products against imported crude oil). Thus, the US is, and will likely continue to be, a major oil crude oil importer.

If production and consumption remain at a constant level, adding crude oil exports would require adding crude oil imports as well. These crude oil imports might be of a different kind of oil than that that is exported–quite possibly sour, heavy crude instead of sweet, light crude. Or perhaps US refineries specializing in light, sweet crude will be forced to raise their purchase prices, to match world crude oil prices for that type of product.

The reason exports of crude oil make sense from an oil producer’s point of view is that they stand to make more money by exporting their crude to overseas refineries that will pay more. How this will work out in the end is unclear. If US refiners of light, sweet crude are forced to raise the prices they pay for oil, and the selling price of US oil products doesn’t rise to compensate, then more US refiners of light, sweet crude will go out of business, fixing a likely world oversupply of such refiners. Or perhaps prices of US finished products will rise, reflecting the fact that the US has to some extent in the past received a bargain (related to the gap between European Brent and US WTI oil prices), relative to world prices. In this case US consumers will end up paying more.

The one thing that is very clear is that the desire to ship crude oil abroad does not reflect too much total crude oil being produced in the United States. At most, what it means is an overabundance of refineries, worldwide, adapted to light, sweet crude. This happens because over the years, the world’s oil mix has been generally changing to heavier, sourer types of oil. Perhaps if there is more oil from shale formations, the mix will start to change back again. This is a very big “if,” however. The media tend to overplay the possibilities of such extraction as well.

Myth 2. The economy doesn’t really need very much energy.

We humans need food of the right type, to provide us with the energy we need to carry out our activities. The economy is very similar: it needs energy of the right types to carry out its activities.

One essential activity of the economy is growing and processing food. In developing countries in warm parts of the world, food production, storage, transport, and preparation accounts for the vast majority of economic activity (Pimental and Pimental, 2007). In traditional societies, much of the energy comes from human and animal labor and burning biomass.

If a developing country substitutes modern fuels for traditional energy sources in food production and preparation, the whole nature of the economy changes. We can see this starting to happen on a world-wide basis in the early 1800s, as energy other than biomass use ramped up.

Figure 1. World Energy Consumption by Source, Based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 1965 and subsequent

Figure 1. World Energy Consumption by Source, Based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 1965 and subsequent

The Industrial Revolution began in the late 1700s in Britain. It was enabled by coal usage, which made it possible to make metals, glass, and cement in much greater quantities than in the past. Without coal, deforestation had become a problem, especially near cold urban areas, such as London. With coal, it became possible to use industrial processes that required heat without the problem of deforestation. Processes using high levels of heat also became cheaper, because it was no longer necessary to cut down trees, make charcoal from the wood, and transport the charcoal long distances (because nearby wood had already been depleted).

The availability of coal allowed the use of new technology to be ramped up. For example, according to Wikipedia, the first steam engine was patented in 1608, and the first commercial steam engine was patented in 1712. In 1781, James Watt invented an improved version of the steam engine. But to actually implement the steam engine widely using metal trains running on metal tracks, coal was needed to make relatively inexpensive metal in quantity.

Concrete and metal could be used to make modern hydroelectric power plants, allowing electricity to be made in quantity. Devices such as light bulbs (using glass and metal) could be made in quantity, as well as wires used for transmitting electricity, allowing a longer work-day.

The use of coal also led to agriculture changes as well, cutting back on the need for farmers and ranchers. New devices such as steel plows and reapers and hay rakes were manufactured, which could be pulled by horses, transferring work from humans to animals. Barbed-wire fence allowed the western part of the US to become cropland, instead one large unfenced range. With fewer people needed in agriculture, more people became available to work in cities in factories.

Our economy is now very different from what it was back about 1820, because of increased energy use. We have large cities, with food and raw materials transported from a distance to population centers. Water and sewer treatments greatly reduce the risk of disease transmission of people living in such close proximity. Vehicles powered by oil or electricity eliminate the mess of animal-powered transport. Many more roads can be paved.

If we were to try to leave today’s high-energy system and go back to a system that uses biofuels (or only biofuels plus some additional devices that can be made with biofuels), it would require huge changes.

Myth 3. We can easily transition to renewables.

On Figure 1, above, the only renewables are hydroelectric and biofuels. While energy supply has risen rapidly, population has risen rapidly as well.

Figure 2. World Population, based on Angus Maddison estimates, interpolated where necessary.

Figure 2. World Population, based on Angus Maddison estimates, interpolated where necessary.

When we look at energy use on a per capita basis, the result is as shown in Figure 3, below.

Figure 3. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

Figure 3. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

The energy consumption level in 1820 would be at a basic level–only enough to grow and process food, heat homes, make clothing, and provide for some very basic industries. Based on Figure 3, even this required a little over 20 gigajoules of energy per capita. If we add together per capita biofuels and hydroelectric on Figure 3, they would come out to only about 11 gigajoules of energy per capita. To get to the 1820  level of per capita energy consumption, we would either need to add something else, such as coal, or wait a very, very long time until (perhaps) renewables including hydroelectric could be ramped up enough.

If we want to talk about renewables that can be made without fossil fuels, the amount would be smaller yet. As noted previously, modern hydroelectric power is enabled by coal, so we would need to exclude this. We would also need to exclude modern biofuels, such as ethanol made from corn and biodiesel made from rape seed, because they are greatly enabled by today’s farming and transportation equipment and indirectly by our ability to make metal in quantity.

I have included wind and solar in the “Biofuels” category for convenience. They are so small in quantity that they wouldn’t be visible as a separate categories, wind amounting to only 1.0% of world energy supply in 2012, and solar amounting to 0.2%, according to BP data. We would need to exclude them as well, because they too require fossil fuels to be produced and transported.

In total, the biofuels category without all of these modern additions might be close to the amount available in 1820. Population now is roughly seven times as large, suggesting only one-seventh as much energy per capita. Of course, in 1820 the amount of wood used led  to significant deforestation, so even this level of biofuel use was not ideal. And there would be the additional detail of transporting wood to markets. Back in 1820, we had horses for transport, but we would not have enough horses for this purpose today.

Myth 4. Population isn’t related to energy availability.

If we compare Figures 2 and 3, we see that the surge in population that took place immediately after World War II coincided with the period that per-capita energy use was ramping up rapidly. The increased affluence of the 1950s (fueled by low oil prices and increased ability to buy goods using oil) allowed parents to have more children. Better sanitation and innovations such as antibiotics (made possible by fossil fuels) also allowed more of these children to live to maturity.

Furthermore, the Green Revolution which took place during this time period is credited with saving over a billion people from starvation. It ramped up the use of irrigation, synthetic fertilizers and pesticides, hybrid seed, and the development of high yield grains. All of these techniques were enabled by availability of oil. Greater use of agricultural equipment, allowing seeds to be sowed closer together, also helped raise production. By this time, electricity reached farming communities, allowing use of equipment such as milking machines.

If we take a longer view of the situation, we find that a “bend” in the world population occurred about the time of Industrial Revolution, and the ramp up of coal use (Figure 4). Increased farming equipment made with metals increased food output, allowing greater world population.

Figure 4. World population based on data from "Atlas of World History," McEvedy and Jones, Penguin Reference Books, 1978  and Wikipedia-World Population.

Figure 4. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978
and Wikipedia-World Population.

Furthermore, when we look at countries that have seen large drops in energy consumption, we tend to see population declines. For example, following the collapse of the Soviet Union, there were drops in energy consumption in a number of countries whose energy was affected (Figure 5).

Figure 6. Population as percent of 1985 population, for selected countries, based on EIA data.

Figure 6. Population as percent of 1985 population, for selected countries, based on EIA data.

Myth 5. It is easy to substitute one type of energy for another.

Any changeover from one type of energy to another is likely to be slow and expensive, if it can be accomplished at all.

One major issue is the fact that different types of energy have very different uses. When oil production was ramped up, during and following World War II, it added new capabilities, compared to coal. With only coal (and hydroelectric, enabled by coal), we could have battery-powered cars, with limited range. Or ethanol-powered cars, but ethanol required a huge amount of land to grow the necessary crops. We could have trains, but these didn’t go from door to door. With the availability of oil, we were able to have personal transportation vehicles that went from door to door, and trucks that delivered goods from where they were produced to the consumer, or to any other desired location.

We were also able to build airplanes. With airplanes, we were able to win World War II. Airplanes also made international business feasible on much greater scale, because it became possible for managers to visit operations abroad in a relatively short time-frame, and because it was possible to bring workers from one country to another for training, if needed. Without air transport, it is doubtful that the current number of internationally integrated businesses could be maintained.

The passage of time does not change the inherent differences between different types of fuels. Oil is still the fuel of preference for long-distance travel, because (a) it is energy dense so it fits in a relatively small tank, (b) it is a liquid, so it is easy to dispense at refueling stations, and (c) we are now set up for liquid fuel use, with a huge number of cars and trucks on the road which use oil and refueling stations to serve these vehicles. Also, oil works much better than electricity for air transport.

Changing to electricity for transportation is likely to be a slow and expensive process. One important point is that the cost of electric vehicles needs to be brought down to where they are affordable for buyers, if we do not want the changeover to have a hugely adverse effect on the economy. This is the case because salaries are not going to rise to pay for high-priced cars, and the government cannot afford large subsidies for everyone. Another issue is that the range of electric vehicles needs to be increased, if vehicle owners are to be able to continue to use their vehicles for long-distance driving.

No matter what type of changeover is made, the changeover needs to implemented slowly, over a period of 25 years or more, so that buyers do not lose the trade in value of their oil-powered vehicles. If the changeover is done too quickly, citizens will lose their trade in value of their oil-powered cars, and because of this, will not be able to afford the new vehicles.

If a changeover to electric transportation vehicles is to be made, many vehicles other than cars will need to be made electric, as well. These would include long haul trucks, busses, airplanes, construction equipment, and agricultural equipment, all of which would need to be made electric. Costs would need to be brought down, and necessary refueling equipment would need to be installed, further adding to the slowness of the changeover process.

Another issue is that even apart from energy uses, oil is used in many applications as a raw material. For example, it is used in making herbicides and pesticides, asphalt roads and asphalt shingles for roofs, medicines, cosmetics, building materials, dyes, and flavoring. There is no possibility that electricity could be adapted to these uses. Coal could perhaps be adapted for these uses, because it is also a fossil fuel.

Myth 6. Oil will “run out” because it is limited in supply and non-renewable.

This myth is actually closer to the truth than the other myths. The situation is a little different from “running out,” however. The real situation is that oil limits are likely to disrupt the economy in various ways. This economic disruption is likely to be what leads to an  abrupt drop in oil supply. One likely possibility is that a lack of debt availability and low wages will keep oil prices from rising to the level that oil producers need for extraction. Under this scenario, oil producers will see little point in investing in new production. There is evidence that this scenario is already starting to happen.

There is another version of this myth that is even more incorrect. According to this myth, the situation with oil supply (and other types of fossil fuel supply) is as follows:

Myth 7. Oil supply (and the supply of other fossil fuels) will start depleting when the supply is 50% exhausted. We can therefore expect a long, slow decline in fossil fuel use.

This myth is a favorite of peak oil believers. Indirectly, similar beliefs underly climate change models as well. It is based on what I believe is an incorrect reading of the writings of M. King Hubbert. Hubbert is a geologist and physicist who foretold a decline of US oil production, and eventually world production, in various documents, including Nuclear Energy and the Fossil Fuels, published in 1956. Hubbert observed that under certain circumstances, the production of various fossil fuels tends to follow a rather symmetric curve.

Figure 7. M. King Hubbert's 1956 image of expected world crude oil production, assuming ultimate recoverable oil of 1,250 billion barrels.

Figure 7. M. King Hubbert’s 1956 image of expected world crude oil production, assuming ultimate recoverable oil of 1,250 billion barrels.

A major reason that this type of forecast is wrong is because it is based on a scenario in which some other type of energy supply was able to be ramped up, before oil supply started to decline.

Figure 8. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

Figure 8. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

With this ramp up in energy supply, the economy can continue as in the past without a major financial problem arising relating to the reduced oil supply. Without a ramp up in energy supply of some other type, there would be a problem with too high a population in relationship to the declining energy supply. Per-capita energy supply would drop rapidly, making it increasingly difficult to produce enough goods and services. In particular, maintaining government services is likely to become a problem. Needed taxes are likely to rise too high relative to what citizens can afford, leading to major problems, even collapse, based on the research of Turchin and Nefedov (2009).

Myth 8. Renewable energy is available in essentially unlimited supply.

The issue with all types of energy supply, from fossil fuels, to nuclear (based on uranium), to geothermal, to hydroelectric, to wind and solar, is diminishing returns. At some point, the cost of producing energy becomes less efficient, and because of this, the cost of production begins to rise. It is the fact wages do not rise to compensate for these higher costs and that cheaper substitutes do not become available that causes financial problems for the economic system.

In the case of oil, rising cost of extraction comes because the cheap-to-extract oil is extracted first, leaving only the expensive-to-extract oil. This is the problem we recently have been experiencing. Similar problems arise with natural gas and coal, but the sharp upturn in costs may come later because they are available in somewhat greater supply relative to demand.

Uranium and other metals experience the same problem with diminishing returns, as the cheapest to extract portions of these minerals is extracted first, and we must eventually move on to lower-grade ores.

Part of the problem with so-called renewables is that they are made of minerals, and these minerals are subject to the same depletion issues as other minerals. This may not be a problem if the minerals are very abundant, such as iron or aluminum. But if minerals are lesser supply, such as rare earth minerals and lithium, depletion may lead to rising costs of extraction, and ultimately higher costs of devices using the minerals.

Another issue is choice of sites. When hydroelectric plants are installed, the best locations tend to be chosen first. Gradually, less desirable locations are added. The same holds for wind turbines. Offshore wind turbines tend to be more expensive than onshore turbines. If abundant onshore locations, close to population centers, had been available for recent European construction, it seems likely that these would have been used instead of offshore turbines.

When it comes to wood, overuse and deforestation has been a constant problem throughout the ages. As population rises, and other energy resources become less available, the situation is likely to become even worse.

Finally, renewables, even if they use less oil, still tend to be dependent on oil. Oil is  important for operating mining equipment and for transporting devices from the location where they are made to the location where they are to be put in service. Helicopters (requiring oil) are used in maintenance of wind turbines, especially off shore, and in maintenance of electric transmission lines. Even if repairs can be made with trucks, operation of these trucks still generally requires oil. Maintenance of roads also requires oil. Even transporting wood to market requires oil.

If there is a true shortage of oil, there will be a huge drop-off in the production of renewables, and maintenance of existing renewables will become more difficult. Solar panels that are used apart from the electric grid may be long-lasting, but batteries, inverters, long distance electric transmission lines, and many other things we now take for granted are likely to disappear.

Thus, renewables are not available in unlimited supply. If oil supply is severely constrained, we may even discover that many existing renewables are not even very long lasting.

 

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, Energy policy and tagged , , , , , . Bookmark the permalink.

561 Responses to Eight Energy Myths Explained

  1. Paul says:

    Selling Hydraulic Fracking: The Myth Of Energy Independence Used To Hoodwink The American People

    ”Average well quality (as measured by initial productivity) has fallen nearly 20 percent in the Haynesville, which is the most productive shale gas play in the U.S., and is falling or flat in eight of the top ten plays. Overall well quality is declining for 36 percent of U.S. shale gas production and is flat for 34 percent.”

    http://www.globalresearch.ca/selling-hydraulic-fracking-the-myth-of-energy-independence-used-to-hoodwink-the-american-people/5379709

    Peak shale — 2016?

  2. Stefeun says:

    The Golden Jackass Hat Trick Letter, Apr.04, 2014
    “Emerging Dynamics of Petro-Yuan Standard”

    “The shocks will be many as the USDollar struggles and falls off the global financial stage in full view. The desperate maneuvers like in Syria and Ukraine should be seen as last ditch efforts to save a dying system. For two decades the USDollar has been defended by military means.
    (…)
    The entire world must create a more workable system, an equitable system. The banking structures and trading systems require it. No longer can the Anglo-American free credit card be tolerated.
    (…)
    The Paradigm Shift is far along, no more an infant project. The Western leading nations have transformed into the Axis of Fascism. The Eastern leading nations have emerged as seeking viable fair solutions, essentially a return to the Gold Standard. The physical gold migration from London and Switzerland proves the shift in power underway. The swing nations of Germany, Saudi Arabia, Turkey, India, and Iran will play pivotal roles in shaping the future. The year 2014 will not end with any remote resemblance to its start.”
    Read more:
    http://news.goldseek.com/GoldenJackass/1396638120.php

  3. ravinathan says:

    After thousands of lives lost and expenditures of hundreds of billions, the US may have succeeded in creating yet another dictator. At least the oil is flowing!

    http://www.newyorker.com/reporting/2014/04/28/140428fa_fact_filkins?currentPage=all

    • MJ says:

      Well, detailed account of Iraq and the divisions the nation has to overcome and the fragile peace that is holding up. The oil may be flowing, but for how long until a civil war stops the oil going to market? Gail is correct, we do have a very fragile system.

  4. edpell says:

    There seems to be a consensus that there are too many people to survive. One discussion we have not had is can we influence which people live and die? Can we minimize the deaths in country X versus the rest of the world (ROW)? I would be far happier to live in a country that tries to maximize the survival of its citizens. If you find such a country please let me know. Thanks.

    • Stefeun says:

      Edpell,
      you should try Buthan.
      Maybe northern parts of Scandinavia, too, although I doubt that their heavy governmental structures can survive much longer than others.

  5. Interguru says:

    Tom Murphy in his blog Do The Math has lately not been posting much. He explains it in his postProlonged Absence..

    How many times can I calculate total tidal power available? I’ve expressed views on our precarious trajectory with respect to finite resources, touched on the psychology of major change and sacrifice, and shared personal explorations in reducing energy/resource footprints at home. While some of this continues (look for a post on nickel-iron batteries soon), for the most part it’s already all there. –

    I wonder if we are falling into the same hole. Gail has done a great job laying out her take on our situation. What more can she say? Many comments, mostly intelligent, have filled in the blanks. Yet how many times can we cover the same ground? Except for links to new articles and blogs, I feel that we are in circle, repeating ourselves over and over.

    • Don Stewart says:

      Dear Interguru
      I have had the same thoughts about covering the same ground over and over. A few thoughts on that subject:

      1. New people show up, have never read what went before, and so things need to be explained all over again. It’s not like a scholarly article where the author is expected to have thoroughly reviewed the literature. So the question a blogger has to answer is whether they want to continue teaching nursery school.

      2. The basic problem doesn’t change much. If someone discovers perpetual motion, then I suppose Murphy and Tverberg need to do some new writing. The sizable ‘nuclear’ lobby on this forum has been quite voluble expressing their view that the ‘finite world’ meme is just wrong. And, if someone is into adaptations, then those proceed an inch or a foot at a time. For example, someone figures out a better way to cook food with the rays from the sun providing the energy. Gail pretty much steers clear of offering solutions. Those of us who are into solutions tend to discover things and want to write about them.

      3. There are issues which I consider to be unresolved…fast collapse vs. slow collapse is one that I think is still up in the air. Gail, of course, is very much a fast collapse girl. There is room for thinking outside the box on some issues, I suspect.

      Don Stewart

      • Don Stewart says:

        Dear Interguru
        One more topic I think needs more discussion. I believe it is related to the Economics 101 concept of marginal cost versus fully distributed cost. Art Berman recently performed an analysis of New York State Marcellus shale gas prospects. He concluded that no gas will be produced at 4 dollars, some at 6 dollars, and more at 8 dollars, but the total amounts are likely to be disappointing. As I understand what he did, he considered corporate overheads as costs…that is, fully distributed costs as opposed to marginal costs.

        Let me give a couple of examples. Steve Jobs made a short video where he talked about human tool use. He showed a chart showing that the condor is the most energy efficient animal in terms of moving mass over distance. Humans are down in the pack somewhere…completely unremarkable. But, Jobs says, if you let the human have a bicycle, it becomes more efficient than the condor.

        I believe Jobs is taking the ‘marginal cost’ approach. That is, assume that the roads on which to pedal the bicycle already exist, that the global manufacturing and distribution system already exists, etc. Just add the bicycle and, magically, human output per calorie consumed increases enormously. Should Jobs have used the Berman approach and added in some overheads? If so, how much?

        Another example is the use of electric fencing to keep livestock in. These fences are very cheap compared to steel or wood and wire fences, and they can be easily moved to wherever the farmer wants them to be. The little solar panel which keeps them charged costs in the neighborhood of a hundred dollars. But, like Berman, one could argue that the hundred dollars just represents the marginal cost of producing the solar panel, but that the cost of the infrastructure required to produce the panels is enormous.

        These are very tough questions to answer when one is talking about declining energy availability and shrinking industrial production. It’s relatively easy to think of an existing solar panel industry with the appropriate resource collection network and the appropriate distribution network already in place, and then to add in the very small additional effort needed to produce the little solar panels which keep animal fences charged. But if the energy and industrial production decline takes out the base capabilities, then the marginal cost of producing something as exotic as even small solar panels would be very much higher than a hundred dollars.

        Jobs was right, I think, that ‘man is a tool creator’. Therefore, the appropriate unit to consider is ‘man plus tool’. But once you get beyond very simple tools, you run into all those problems related to marginal versus fully distributed costs.

        One way to get at the problem would be to construct a toy model of a society that had, say, half the fossil fuels energy that we have today. I don’t know any other way to even think about the issues.

        To my knowledge, neither Gail nor Tom has done such an exercise.

        Don Stewart

        • Stefeun says:

          Exactly, Don.
          Your example with the bicycle is good;
          focusing on a particular task gives a wrong idea of the energy used.

          It’s all about consumed energy to achieve the task Vs total primary energy involved.
          When you add the costs for building up the infrastructure and maintenance, for manufacturing the “tool”, and then consider that the improvement will lead to more intensive use (Jevons’ paradox), then you come out with a much much bigger amount of energy involved.

          In comments of previous article I made an attempt of such estimation for so-called Digital World; I couldn’t figure it out with precise numbers, but the result is likely to be much higher energy consumption (global), although we feel like an e-mail, for example, costs nothing.
          Most of the improvements in efficiency (lower micro-Joues per Byte) have been made, and the traffic is likely to rocket (x10 times between 2013 and 2020).

        • VPK says:

          Long ago I had a book title “Country Woodcraft” ( http://www.amazon.com/Country-Woodcraft-Drew-Langsner/dp/0878572007/ref=sr_1_1?ie=UTF8&qid=1315953860&sr=8-1&tag=vglnkc3700-20 ) and the opening credit was a quote that stated the backwoods homesteader would be amazed at the cost, effort and energy to supply him with a section of modern plastic pcv water pipe. As you all explained, the homesteader would simple fell a small diameter log on his land and with a drill bore or use hot char to make a hole. Remarkable, these old wooden pipes are still in service today in old cities today! The plastic pipe, we all know what would be need to manufacture and bring to market that item.

        • Coast Watcher says:

          I’m not an economist, nor do I play one on TV, but another way to look Jobs’ bicycle example or the cost of drilling Marcellus shale is the concept of sunk costs. The road already exists; the corporate infrastructure supporting shale drilling is already in place. The legacy expense of creating them has already been paid by past users (through fuel taxes) or past income sources. All that is required is maintenance costs, or continuing expenses. Adding the past cost of creating a highway to the current cost of building and using a bicycle doesn’t seem logical.

          • Don Stewart says:

            Dear Coast Watcher
            What you are saying is the traditional way economists and business people look at things. That is, they are focused on the margin. For example, given that we have a grocery store, can we make more money by selling some additional particular item, perhaps dropping some other particular item to make room for it. The total cost of operating the grocery store and the entire supply chain and the cost of generating consumers who have the money needed are never considered. The grocery store itself needs to pay for its total cost. When he added in overhead costs in his shale gas calculations, Art Berman was making the realistic assumption that a shale gas company needs to cover its total costs, not just the marginal cost of drilling a single well.

            So long as the trajectory was up, marginal thinking worked OK. If the trajectory turns down because fossil fuels simply become scarcer, then things may become very different.

            Taking the example of the bicycle. It is clear that we have way more pavement and bridges than are needed for any conceivable number of bicycles. Gail frequently mentions the cost of maintaining roads. If fossil fuels become scarce, will we be able to maintain the gigantic infrastructure designed for heavy vehicles traveling at 70 miles per hour? A ‘built from scratch’ bicycle networks would probably look more like a ‘rails to trails’ such as the Katy trail which almost crosses Missouri. It is perhaps 6 feet wide and has a crushed rock surface. The bridges are the original railroad bridges. The crushed rock still needs maintenance, and someday the bridges will need to be replaced….but nothing like maintaining the Los Angeles freeways. So…on the way down, these sorts of considerations become far more important.

            Don Stewart

          • The cost of maintaining the roads is going up. It is likely we won’t be able to maintain all of them, or perhaps many of them. The issue becomes keeping the overall system together. Unfortunately, we still need trucks and railroads for many purposes, and roads and tracks need maintenance.

            • Coast Watcher says:

              Nor do I argue that the costs of maintaining those roads and tracks shouldn’t be included in the continuing cost of doing business. The past expenses to build them in the first place, though, have already been amortized to zero. I see no logical reason to include them in figuring the price of constructing the bicycle. The cost to keep an existing roadway, trail, or track up to bicycle standards should be included or, in the case of a well, the continuing overhead expense of sustaining the corporate structure.

            • dashui says:

              I saw where Obama is giving states the ability to put tolls in interstates.

        • interguru says:

          In a perfect Adam Smith world, all the costs, sunk and marginal, would be reflected in the price. Unfortunately, our dollar prices do not reflect external costs, such as environmental damage, resource depletion, and lowering of public health.

          • Prices don’t even reflect costs of extraction. They reflect the maximum amount buyers can afford, given all of their other commitments. People without jobs, or with low-paying jobs, can’t afford very much.

            • Stilgar Wilcox says:

              “Prices don’t even reflect costs of extraction.” As evidenced by the reduction in majors capex due to too low a price for oil.

  6. VPK says:

    Rats plague today, human plague tomorrow

    1993 Rat infestation in Australia
    Warning…the cure was deadly

  7. jeremy890 says:

    Saw this regarding Fukushima nuclear power plant and [lan to build an underground
    ice wall” for the tune of $320 million (funded by the taxpayers).

    http://news.yahoo.com/experts-ice-wall-japan-nuclear-plant-083729462.html

    The experts and Japanese nuclear regulatory officials said during a meeting in Tokyo that they weren’t convinced the project can resolve a serious contaminated water problem at the Fukushima Dai-ichi plant, which suffered multiple meltdowns following the 2011 earthquake and tsunami.

    The frozen wall is a 32 billion yen ($320 million) government-funded project to surround the plant’s four crippled reactors and their turbine buildings with an underground ice wall to block groundwater from flowing into the buildings’ basements and mixing with highly radioactive water leaks from the melted cores.

  8. Don Stewart says:

    Dear Gail and All

    Expanding a little more on my previous notes about marginal costs versus fully distributed costs.

    Consider the work of ecologists who try to quantify the value of the natural world…the world that we humans seem intent on destroying to earn paper money. If you read Lenton and Watson, you will be utterly convinced that humans simply wouldn’t be here if it were not for the ‘ecological services’ provided by both living and non-living entities (excluding humans). In some sense, it makes no sense to try to put a dollar value on those services. If humans cease to exist, will the Universe (or Multiverse) mourn?

    What we have is a ‘tip of the iceberg’ phenomena. All of the human centered iceberg tip is held above the icy waters only because there is a vast amount of ice floating just below the surface. Destroy the subsurface ice, and the human enterprise will surely disappear as melt-water.

    Second, consider Dmitry Orlov’s work in Stages of Collapse. Each Stage is a social infrastructure which permits certain types of human activity to flourish. Destroy another layer of that infrastructure and the types of human activity which will be possible become more restricted. With the final layer of destruction, it is hard to call what remains ‘human’. We might draw a parallel to the iceberg analogy. The more ice floating beneath the surface, the bigger can be the tip that is raised above the icy waters. And a stable human society can support far more productive human activity than an unstable human society. John Michael Greer’s current post contrasting Beowulf and The Hobbit is an exercise along these lines.

    Third, consider two talks given at the recent Permaculture gathering in southern California. These are behind a paywall, so you will have to trust me. Nadia Lawton (Geoff’s wife) talked about her efforts, mostly in the Middle East. Nadia’s family were refugees from Palestine in 1948 and settled in the Dead Sea Valley. She met Geoff when he went to this area for his ‘greening the desert’ work. Nadia’s father is an herbalist, taught his daughter about plants, and Nadia took to Permaculture very naturally. In her talk, she recounts teaching villagers how to do simple things which increase their agricultural productivity. One point I draw from this is that the last century has destroyed a lot of indigenous knowledge. The indigenous knowledge may be seen as the submerged ice which supports the tip of agricultural productivity.

    The second talk is by Peter Ash, who describes himself as a ‘farmer’, but who knows an awful lot about compost. He has worked in New Orleans after Katrina, in Madagascar, and most recently in India. What he describes are desperately poor people who are failing to use the resources they have. Things are thrown ‘away’ which should be composted to restore soil fertility. In India, he tackles a terrible dump of medical waste. Heavy metals and toxic chemicals melt away. I imagine that traditional Indian farmers, as well as the people in Louisiana and Madagascar, knew something about compost. Where has that knowledge gone to? Just as with Nadia’s talk, I think we have to assume that the Financial Capitalism of the 20th century destroyed it. When disaster strikes and people need to rely on that traditional knowledge to keep themselves afloat…it isn’t there anymore.

    As I think about it, I see several large infrastructures floating just below the surface which enable we humans to engage in the human comedy:
    1. The Natural World without which we simply won’t exist.
    2. The Fossil Fuel Powered world which provides a platform on top of which we can erect new technologies such as communications and computation.
    3. Indigenous knowledge plus science which permit us to shift both the Natural World and the Fossil Fueled World in directions which favor us.
    4. Social organizations which allow us to cooperate with each other…as opposed to pervasive violence.

    I submit that we can sense the cracks in all of those infrastructures. We can’t see most of the cracks, especially if we aren’t attentive, but they are surely eating away the foundation of our little floating island. Whether our iceberg does a 180 and we disappear with a giant splash, or whether our little tip just disintegrates in pieces, I am not sure.

    Don Stewart

    • Don Stewart says:

      Dear Gail and All

      How could I forget about George Mobus? George’s current post explores, among lots of other things, the resource that we have to watch our own thoughts. Suppose that most humans sat in front of a TV watching a commercial, and watched their own thought processes being hijacked by a Giant Corporation that doesn’t truly love them, just wants their money, and will do anything to get it…would we have a very different world?

      So George builds up brick by brick to this tantalizing resource that most of us fail to use. Is it possible it might save us?

      Don Stewart

      ‘Once thoughts are in consciousness humans take things one step further, aside from expressing thoughts in language. Humans can also be conscious of being conscious of thoughts.

      Ordinary humans have just not quite got a handle on it like we do on conscious thinking with language. But who knows what evolution might yet produce. Is it also possible that this “experience of experience” is strengthened by various meditative practices? That might be an interesting topic!’

      http://questioneverything.typepad.com/question_everything/2014/04/talking-to-myself-who-is-listening.html

  9. Stefeun says:

    To those interested in the “Land Grabbing Race”.
    Private and state companies are purchasing arable lands in foreign countries and are not always taking care of the impact on populations and environment.

    Landmatrix is a database with multiple entries and filters about all(?) contracts:
    “The Online Public Database on Land Deals
    The Land Matrix is a global and independent land monitoring initiative that promotes transparency and accountability in decisions over land and investment.
    This website is our Global Observatory – an open tool for collecting and visualising information about large-scale land acquisitions. ”
    http://www.landmatrix.org/en/

    One example of a “target country”: Tanzania:
    http://media.oaklandinstitute.org/land-deals-africa/tanzania

    Before digging into this topic, I imagined that most of the problem was China purchasing everything they could in Africa, to grow crops; the reality is very different. Check by yourself.

  10. Stefeun says:

    Just wanted to share my 2 favourite versions of “Little Boxes”
    also like Pete Seeger’s one, but here’s the original, and a more contrasted one:

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