The Connection Between Oil Prices, Debt Levels, and Interest Rates

If oil is “just another commodity,” then there shouldn’t be any connection between oil prices, debt levels, interest rates, and total rates of return. But there clearly is a connection.

On one hand, spikes in oil prices are connected with recessions. According to economist James Hamilton, ten out of eleven post-World War II recessions have been associated with spikes in oil prices. There also is a logical reason for oil prices spikes to be associated with recession: oil is used in making and transporting food, and in commuting to work. These are necessities for most people. If these costs rise, there is a need to cut back on non-essential goods, leading to layoffs in discretionary sectors, and thus recession.

On the other hand, the manipulation of interest rates and the addition of governmental debt (by spending more than is collected in tax dollars) are the primary ways of “fixing” recession. According to Keynesian economics, output is strongly influenced by aggregate demand–in other words, total spending in the economy. Any approach that can increase total spending–either more debt, or more affordable debt will increase economic output.

What is the Direct Connection Between Increased Debt and Oil Prices?

The economy doesn’t just grow by itself (contrary to the belief of many economists). It grows because affordable energy products allow raw materials to be transformed into finished products. Increased debt helps energy products become more affordable.

Figure 1.

Figure 1.

Without debt, not a very large share of the total population could afford a car or a new home. In fact, most businesses could not afford new factories, without debt. The price of commodities of all sorts would drop off dramatically without the availability of debt, because there would be less demand for the commodities that are used to make goods.

With commodities, such as oil or copper, there is a two way pull:

  1. The amount it costs to extract the oil or copper (including taxes, shipping costs, and other indirect costs), and
  2. The selling price for the commodity. The selling price reflects the customers’ ability to pay for the product, based on wages and debt availability. It also reflects other issues, such as the availability of cheaper substitutes.

The availability of increased cheap debt tends to pull oil (and copper and other commodity) prices high enough that businesses find it profitable to extract these commodities. This is why Keynesian economics tends to work–at least historically. When oil prices dropped to the low $30s barrel in 2008, the issue was very much a “decrease in debt outstanding” problem–taking place even before the Lehman bankruptcy–as I will show in later charts.

Figure 2. Oil price based on EIA data with oval pointing out the drop in oil prices, with a drop in credit outstanding.

Figure 2. Oil price based on EIA data with oval pointing out the drop in oil prices, with a drop in credit outstanding.

The peak in oil prices took place in July 2008. When we look at US mortgage amounts outstanding, we find that home mortgage debt hit a peak on March 31, 2008, and very slightly declined by June 30, 2008. The bankruptcy of Lehman Brothers did not take place until September 15, 2008. A further decline in the amount of home mortgages outstanding occurred from that point on, partly because of declining sales prices and partly because commercial organizations bought homes to rent them out.

Figure 3. US home mortgage debt, based on Federal Reserve Z.1 data

Figure 3. US home mortgage debt, based on Federal Reserve Z.1 data

When we look at consumer credit outstanding, we find that consumer credit outstanding hit a maximum on July 31, 2008, and began declining by August 31, 2008. (Consumer credit is available monthly, while mortgage debt is available only quarterly. Some definitional change regarding consumer credit must have taken place as of December 31, 2010, to cause the jump in amounts in the graph.)

FIgure 4. Consumer Credit Outstanding based on Federal Reserve Data. Student Loan data was available only for 12/31/2008 and subsequent. Prior amounts were estimated.

FIgure 4. Consumer Credit Outstanding based on Federal Reserve Data. Student Loan data was available only for 12/31/2008 and subsequent. Prior amounts were estimated.

When student loans are excluded, consumer credit outstanding (including such items as credit card debt and auto loans) is still not back up to the July 31, 2008 level today (Figure 4).

I have not shown commercial and financial debt, but they decreased as well, with somewhat later peak dates, coinciding more with the Leyman collapse. In my view, the spending of individual citizens is primary. When their spending falls, it quickly ripples through to business and government accounts. We see this affect slightly later.

The Federal Government quickly stepped in with more spending (funded by debt), as shown in Figure 5, below.

Figure 5. U S publicly held federal government debt, based on Federal Reserve data.

Figure 5. U S publicly held federal government debt, based on Federal Reserve data.

If we combine all United States debt (Figure 6, below), including both government and non-government, it becomes clear that the rate of increase in debt slowed markedly in 2008 and subsequent years.

Figure 6. US debt, excluding  debt which is owed to governmental agencies such as the Social Security Administration. Amounts based on Federal Reserve Z.1 data.

Figure 6. US debt, excluding debt which is owed to governmental agencies such as the Social Security Administration. Amounts based on Federal Reserve Z.1 data.

Without this increasing debt, oil prices dropped to less than one-fourth of their maximum values (Figure 2). Prices of other energy products–even uranium–dropped as well. Somehow the high prices of oil that occurred in early 2008 had turned off the “pump” of ever-increasing debt that had previously held up commodity prices.

Oil Prices and Interest Rates–the Two Big Factors Affecting Discretionary Income

If oil prices spike, clearly discretionary income falls, for reasons described above. If interest rates spike, suddenly goods that are bought with credit (such as automobiles, homes, and new factories) become more expensive. Thus, a spike in interest rates will tend to adversely affect discretionary income as well. If the Federal Reserve wants to counter high oil prices (which continue to affect discretionary income adversely for the long term), it needs to keep interest rates low. Hence, the attempts to keep interest rates low for the long term.

The primary approach to keeping interest rates low has been Quantitative Easing (QE).US QE was begun in late 2008 and has been kept in place since. Other major countries are also using QE to keep interest rates down. The hope is that with very low interest rates the economies can somehow recover.

QE Doesn’t Really Work, Because it Doesn’t Fix Wages, Which are the Underlying Problem

When oil prices are high, wages tend to stagnate (Figure 7, below).

Figure 7. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP’s 2013 Statistical Review of World Energy.

Figure 7. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP’s 2013 Statistical Review of World Energy.

The reason why wages tend to stagnate when oil prices are high has to do with the adverse impact high oil prices have on the economy. Consumers cut back on discretionary spending. This leads to a loss of jobs in discretionary sectors. Also, labor is one of the biggest costs most businesses have. If profits are squeezed by high oil prices, the logical response if to try to reduce wages in response. One way is to outsource production to a lower-wage country. Another is to mechanize the process more, thereby slightly increasing fuel usage but significantly decreasing wage costs.

Instead of going to individuals as wages, the money from QE seems to go to speculators, who use it to bid up stock prices and land prices. The money from QE also tends to hold home prices up, because some homes are purchase by speculators. The money from QE also helps encourage investment in marginal enterprises, such as in shale gas drilling. As a recent Bloomberg, described the situation, Shale Drillers Feast on Junk Debt to Stay on Treadmill.

What Really Pumps Up the Economy is a Rising Supply of Cheap Oil

One piece of evidence supporting the view that a rising supply of cheap oil pumps up the economy is the rising average wages seen in Figure 7 (above) during periods when oil prices are low. Another piece of evidence that this is the case is the close correlation between oil consumption (and energy consumption in general) and inflation-adjusted GDP (Figure 8, below).

Figure 8. Growth in world GDP, compared to growth in world of oil consumption and energy consumption, based on 3 year averages. Data from BP 2013 Statistical Review of World Energy and USDA compilation of World Real GDP.

Figure 8. Growth in world GDP, compared to growth in world of oil consumption and energy consumption, based on 3 year averages. Data from BP 2013 Statistical Review of World Energy and USDA compilation of World Real GDP.

When there is an inadequate supply of oil, it affects GDP growth. This happens because there is no inexpensive, quick way of switching away from oil. We need oil for very many uses, including transport, agriculture, and construction. In the late 70s and early 80s, we tried to switch away from oil as much as possible. Now the low-hanging fruit for making such a switch are mostly gone.

The spike in oil prices signaled that something had changed dramatically. We could no longer count on a rising supply of cheap oil to pump up the economy. People’s job opportunities were dropping. They found it necessary to cut back on debt. Either that, or creditors cut off credit availability. One way or another, citizens started using less debt.

World Oil Supply

World oil supply is growing only very slowly, as illustrated in Figure 9. While we hear much about the growth in oil from shale formations in the US, this is mostly acting to offset falling production elsewhere.

7. Growth in world oil supply, with fitted trend lines, based on BP 2013 Statistical Review of World Energy.

Figure 9. Growth in world oil supply, with fitted trend lines, based on BP 2013 Statistical Review of World Energy.

It is this lack of growth in oil supply together with the high price of oil that is holding back world economic growth. As stated previously, very low interest rates are needed to even maintain the level of economic growth we have now.

The Difference Between and Growing and Shrinking World Economy for Repaying Debt

In a growing economy, it is possible to repay debt with interest. But once an economy flattens, it is much harder to repay debt.

Figure 10. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

Figure 10. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

It is likely that it is this problem that underlies the difficulty economies have in increasing their indebtedness. Very low interest rates can help, but ultimately, if the economy is not expanding, debt doesn’t work well. Wages are not growing in inflation-adjusted terms, and because of this, it is not possible for citizens to take on much more debt. Increased student debt gets in the way of buying homes using mortgages later.

The Unfortunate Oil Price Problem We Have Now

The problem we have now is that a rising supply of cheap oil is no longer possible. Most of the cheap-to-extract oil is already gone.

Instead, the cost of extraction keeps rising, but wages are not going up enough for people to afford the high cost of extracting oil (even with super-low interest rates). The unfortunate outcome is that oil prices are now too low for many producers. I described this in my post, Beginning of the End? Oil Companies Cut Back on Spending.

Because oil prices are too low for companies doing the extraction, we really need higher oil prices. But if oil prices are higher, they will put the country (and the world) back into recession. Interest rates are already very low–it is not possible to lower them further to offset higher oil costs. We are reaching the edge of how much central banks can do to hold economies together.

The Effect of Rising Interest Rates on the Economy

If it takes very low interest rates to offset the impact of high oil prices, it should be clear that rising interest rates, if they ever should occur, will have a disastrous effect on the economy. If interest rates should rise, they could be expected to have a number of adverse effects, pretty much simultaneously.

  • They make the monthly payments for a new home or new car higher, reducing the sales of both
  • They reduce the sales price of existing bonds (carried on the books of banks, pension funds, and insurance companies)
  • They likely will reduce stock market prices, because bonds will look like they will yield better in comparison.
  • Also, the country will be shifted into recession, and lower stock prices will result based on the apparently worse prospects of most companies.
  • The resale value of homes will likely drop, because fewer people will be in the market for  a move-up home.
  • The US government will need to pay higher interest on its debt, necessitating a rise in taxes, further pushing the country toward recession.
  • With higher taxes and more layoffs, there will be more defaults on debts of all kinds. Banks, insurance companies, and pension plans will be especially affected. Many will need to be bailed out, but it will be increasingly difficult to do so.

The Federal Reserve has said that it is in the process of scaling back the amount of debt it buys under QE. The expected effect of scaling back QE is that interest rates will rise, especially at with respect to longer-term debt. For a while, US interest rates did rise, and home sales dropped off.  But more recently in 2014 year to date, interest rates seem to be falling rather than rising. This is strange, since this is the period when the scaling back of QE is supposedly actually taking place, rather than just planned. It is possible that overseas transactions are distorting what is really happening.

Getting Out of this Mess

The substitution of debt for additional salary isn’t necessarily a very good one, even with very low interest rates. For example, the maximum length of new car loans has increased from five years to six years to seven years, allowing people to afford more expensive cars. The catch is that loans are “underwater” longer, and it becomes harder to buy a replacement car. So ultimately, buyers tend to keep their cars longer, reducing the demand for new cars. The problem isn’t entirely solved; to some extent it is just delayed.

It is hard to see a way out of our current predicament. The ability of consumers to pay higher prices for goods and services under normal circumstances requires higher wages. But if higher wages are not available, higher debt plus very low interest rates can “sort of” substitute. This cannot be a permanent solution, because there are too many things that will disturb this equilibrium.

As we have seen, rising interest rates will bring an end to our current equilibrium, by raising costs in many ways, without raising salaries. It will also reduce equity values and bond prices. A rise in the cost of extraction of oil, if it isn’t accompanied by high oil prices, will also put an end to our equilibrium, because oil producers will stop drilling the number of wells needed to keep production up.  If oil prices rise (regardless of reason), this will tend to put the economy into recession, leading to job loss and debt defaults.

The only way to keep things going a bit longer might be negative interest rates. But even this seems “iffy.” We truly live in interesting times.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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586 Responses to The Connection Between Oil Prices, Debt Levels, and Interest Rates

  1. Few months ago I summarized and developped on Tullett Prebon Tim Morgan Energy, finance and the end of growth the presentation starting from traditiona energetics anding to some possible solutions, including trains and H2
    it might add some insights,

    • Thanks for the link! Interesting! The thing I would point out is that H2 requires our whole system, in order to make and use the H2. It is hard to see it as a solution.

      Rails could theoretically be a step back solution, but people aren’t willing to step back to a very simple version of train that might be (sort of) sustainable with local materials. Instead, they expect a bullet train, using parts imported from around the world.

  2. Tengen says:


    I would be interested in your response to this article by Andrew McKillop:

    He criticizes Steven Kopits’ supply-constrained projections of the oil market. McKillop is a good analyst whom I’ve read for some time, but his criticisms don’t seem very well-argued.


    • I find Andrew McKillop’s articles difficult to read. There are some things he says that I would probably agree with (people can’t afford high priced fuels) and some things that might be right, depending which period is used to calculate values (percent rise or fall of oil demand for a 1% rise or fall of economic growth is .55 rather than .75). But most of it is hard to figure out and follow–it is more in the name-calling arena. I would ignore it. To me, Kopits’ presentation made sense.

      McKillop obviously doesn’t know that Steve Kopits no longer works for Douglass-Westwood. In fact, the New York office, which he was in charge of, was closed.

  3. Pingback: Crucial conflicts: not-so-natural disasters, food justice, and the end of the carbon economy | Uneven Earth

  4. Don Stewart says:

    Dear Gail and All

    On numerous occasions I have sounded optimistic about our technical ability to feed the world while sequestering carbon. The overwhelming response has been to cite historical cases where humans behaved badly…through ignorance or greed. Greed may always be with us, but the dominoes are falling on the ignorance defense. Here is a new post by Courtney White which prints the foreword by Michael Pollan to his new book which outlines what pioneering farmers and ranchers and town gardeners are daily demonstrating.

    The point I would make is that, with the fossil fuels we currently have available, it is not necessary that we use so many oil calories to produce food that a statement that ‘food is just oil’ seems self-evident. A rational animal would back itself out of the rat-hole it has got itself into. Of course there are problems…the biggest being that giant corporations control everything related to most food production, including the political process. If we tolerate that as citizens, I guess we have to blame ourselves for the consequences. The second largest problem, in my opinion, is that most people prefer delusion to reality. So I still expect a die-off…but it will be a tragedy rather than a necessity.

    Don Stewart

    PS The rapid return of the Stone Age would mean that we don’t have the resources to make changes, and all bets are off.

    • Arthur says:

      I have always been a gamblin man…..still holding my cards wondering if I need to improve my gun skills….though…

  5. Interguru says:

    An example of the complexity/fragility of the internet infrastructure.

  6. Paul says:

    We were discussing riding the wave of hyped investments… May I present…. the brilliant Grant Williams (if you have to stick your email in there to read further not to worry – the only result will be you get the next one of these outstanding newsletters – no Viagra spam!)

    • timl2k11 says:

      Very good article. It led me to read up a little about Amazon on Wikipedia. A very interesting detail stuck out at me. Among Amazon’s targets of lobbying is the Federal Reserve. I did not know the Federal Reserve gets lobbied. I’ve always figured financial institutions can sway fed policy and that they get feedback from businesses, but I did not know that the fed allowed itself to dictate policy based on the financially-backed lobbying efforts of huge corporations. What does Amazon want from the Federal Reserve? My guess is whatever policies will increase their profits.

      • interguru says:

        The question is not whether they get lobbied but whether they respond. This is sort of an empty question, since the Fed was set up to work at the behest of Wall Street and big business.

        • Hickory says:

          I believe you have making a common misperception.
          The Fed is set up by congress to 1) attempt to keep employment as high as feasible (given the policies of the government), and 2) try to keep inflation from running away.
          Rather, It is the rest of government that is setup to serve big business and wall street.

          • Paul says:

            Yes of course the US government allowed the Fed to come into existence — but as you may be aware there was historically huge opposition to the establishment of a central bank in America

            But make no mistake – the Fed is not the US govt – it is a private entity – owned by the big banks – with determine monetary policy:

            I will leave you to ponder this:

            Nathan Rothschild, who controlled the Bank of England after 1820, notoriously declared:

            “I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.”

            1920 – 2014…. same same?

  7. Paul says:

    Familiarizing myself with the earlier mentioned Seneca Cliff … came across this:

    Conclusion: a banquet of consequences

    Very often, we fail to understand the delayed effects of our actions. John Sterman reminds us of this point in a talk on global warming quoting Robert Louis Stevenson as saying, “Everybody, sooner or later, sits down to a banquet of consequences.” The models shown here tell us that the Seneca cliff is the result of delayed consequences.

    As always, the future is something that we build with our actions and the models can only tell us what kind of actions will lead us, eventually, to a certain outcome. Used in this way, models can be extremely useful and can even be applied to systems which are much more modest than an entire civilization, for instance to a single company or to our personal relationships with other people. In all cases, the Seneca effect will be the result of trying hard to keep things running as usual. In that way, we may run out faster of the resource that keeps the system running: be it a physical resource or a reserve of goodwill. The way to avoid this outcome may be to let the system run the way it wants, without attempting to force it to go the way we want it to go. In other words we need to take things in life with some stoicism, as Seneca himself would probably have said.

    Thinking of the worldwide situation and of the problems involved, global warming and resource depletion, what the models tell us is that the Seneca cliff may be the inevitable result of putting too much strain on already badly depleted natural resources. We should try, instead, to develop alternative stocks of resources such as renewable (or nuclear) energy. At the same time, we should avoid to exploit highly polluting and expensive resources such as tar sands, oil shales, deepwater oil, and, in general, applying the “drill, baby, drill” philosophy. All those strategies are recipes for doom. Unfortunately, these are also examples of exactly what we are doing.

    I don’t know what Seneca would say if he could see this planet-wide effort we are making in order to put into practice the idea that he expressed in his letter to his friend, Lucilius. I can only imagine that he would take it with some stoicism. Or, maybe, he would comment with what he said in his “De Providentia” “Let Nature deal with matter, which is her own, as she pleases; let us be cheerful and brave in the face of everything, reflecting that it is nothing of our own that perishes.”

    As we are aware, renewable energy is not feasible – nor is nuclear — even if they were they do not replace oil — and the world runs on oil – nothing else….

    So it looks like the Seneca Cliff beckons…. as there is no other choice…

  8. timl2k11 says:

    President Obama pronounced today “We don’t face an existential crisis.”
    Who said we did? That which is must be vehemently denied! via NPR:

    As a side note, the Great Depression was an epic existential crisis, yet it occurred during a time of abundant cheap energy. I wonder what happens when civilization has an existential crisis in an age of scarce resources? We got a sneak peak during the 2008 financial crisis. BAU must continue at full force and at all costs, until it can’t.

  9. Quitollis says:

    Pure Bollywood

  10. timl2k11 says:

    Here is something I have noticed about collective psychology, at least with regards to those who are in fields that deal with technology. In investigating various technologies I will occasionally see a graph that projects the exponential progress of a particular technology based on past performance. (LED luminous efficacy being the most recent example I came across, fusion also comes to mind). It seems a majority of folks researching potential technological advancements are completely divorced from the reality of what allows those advancements to take place. We all know the answer, technological advancements ride on the back of vast increases in the supply of cheap energy. Many researchers seem to be oblivious to the constraints of natural resources and the relationship of that to technological advancement.
    This creates what would seem to be a glaring paradox in the area of fossil fuel extraction. Increases in technologically (EIA says “technically”) recoverable reserves require advancements in technology. But advancements in technology are dependent on the availability of cheap energy.
    So we have an output that is also itself an input to the equation. If there is less cheap energy available to society, this creates a constraint on the potential technological advancement vis-a-vis FF extraction. This leads to a positive feedback loop whereby increasing fuel costs leads to reduced technological advancement which leads to reduced technologically/technically feasible reserves.
    So as the surplus energy available to society and available to technological advancement decreases so will decrease the magnitude of technically feasible reserves.
    I think this is in agreement with Gail as far as the financial aspects as I invoke the “cheapness” (price) of oil extraction. The increases in the expense of (or energy required to extract) FF creates a “Seneca Cliff”.
    On a very slightly related note, I was amused today when I noticed that two streets I pass by several times a week on the way to my house, slightly offset, are Seneca Dr, then Cliff St. 🙂 It’s a sign! (two actually)

  11. Hartley says:

    Hello once again Gail,
    I know that you have touched on this issue in the past. Could you please explain for my benefit? Since we are facing all these resource limitations in a globalised market place are robots likely to replace half the workforce in the next few years as discussed in this article? I understand the concerns the article raises about increasing social inequality. Would replacing half the workforce with machines hasten the collapse of the financial system or extends it life for a while? I don’t know about the situation overseas but here in Australia robots certainly seem to be replacing workers at a fast pace.
    Kind regards

    • Replacing workers with robots would require energy as well, so this is one issue.

      Another issue is that replacing workers with robots might be less expensive for the employer, but it would destabilize the system further. Each individual (or family group) needs a way of buying their share of energy products. As more people are cut off from employment, the role of government rises, so taxes must rise. Unless somehow tax revenue can rise to compensate for the lack of employment opportunities, the whole scheme falls apart. It is the ability of the system to continue to work that is important.

      • edpell says:

        There are many places in the world that provide nothing for the unemployed. If a company located there they can go 100% robot and sell to whatever market still exists. Yes, in the long run 100% robot will mean only politicians and lawyers will still have jobs.

        • xabier says:


          Only lawyers and politicians, dreadful thought! As the Soviet Union showed us, a very small number of elite people can extract a very comfortable life from the productivity of the masses and machines even in an impoverished economy: in Europe today, as the middle class segment is eroded (down at least 30% in Spain) and the young can’t find decent work, the Brussels elite and the professional politicians are completely untouched by the economic decline, more secure than the Grand Dukes of the past (at least they met with their 1917).

      • Stan says:

        Gail wrote: “Replacing workers with robots would require energy as well…As more people are cut off from employment, the role of government rises, so taxes must rise. Unless somehow tax revenue can rise to compensate for the lack of employment opportunities, the whole scheme falls apart.”

        Gail – you almost got it! If only you had given it just a bit more thought, because the answer is obvious. We must start taxing the “virtual income” that robots make on the assembly line. The taxes on the virtual income will replace taxes lost due to workers laid off (after being replaced with robots). The IQ (i.e cpu megaflops processor capacity) of each robot, along with it’s dexterity (i.e. how many servo motors) and it’s ability to learn (# of sensor inputs) will determine its virtual pay rate. The employer will calculate hours of work per day times pay rate and then send tax with-holdings to the IRS. Of course, robots need periodic maintenance, so employers can get a tax credit for robotic health care. Perhaps even a universal health care system (i.e. single provider) can be instituted to keep robotic health care costs down industry-wide. Here’s another opportunity for America to lead the world.

        • Paul says:

          I reckon we just build robots – have them do everything for us — they can even pay taxes for us — and we just relax by the pool living large.

          What’s that? We still need cheap oil if we want civilization?

          Ah shucks — it sounded so good I believed it for a moment.

          Oh btw – if it did work I think the Germans would lead the world – and the Japanese — they are the ones making the robots. America makes things like credit default swaps – that blow up in your face 🙂

  12. Paul says:

    London has a dirty secret

    We, the smart animals, are asphyxiating on our success!

    • xabier says:

      Yep, Kensington and Chelsea where the global super-rich live (or at least buy) are among the most polluted areas of Britain.

    • Europe’s decision to “push” diesel has meant that gasoline prices have stayed lower for US buyers. This is one of the things that has helped the US stay afloat. We can thank Europe for their willingness to take on diesel pollution.

      • xabier says:

        As I’m suffering from diesel-induced asthma, may I get one of those Purple Hearts -wounded in service of the USA? (No disrespect intended to those who have been wounded in service, of course).

    • Quitollis says:

      airpolcalypse, good one. I guess earthpocalypse works too.

    • Quitollis says:

      If you are going to live in England then live somewhere high and west of any nearest industrial conglomerate. The air is good and the cr@p all tends to get blown east. The good areas tend to be built there. Just don’t tell everyone or they will have out their altimeters and prices will go even higher!

      • xabier says:


        From the UK pollution maps, the North and West look alright, and almost the whole of Scotland. Living in the ‘economic hub’ zones is a certain way to shorten one’s existence -unfortunately, that is where the work is at present.

  13. Paul says:

    Financial Storm Chasing With Blinders On: How The Fed Is Driving The Next Bust

    Come on David — ask the question — the Fed can see the wall ahead — they are not blind or stupid — so why are they stepping on the gas?

    What are they running from that is so scary they are prepared to crash into the wall at 1000km per hour?

    • I notice Stockman says that the default rate on student loans that are in repayment status is in excess of 30%. I wonder if that includes those on slower repayment plans because their incomes are so low. It is a high figure, regardless. Not to mention the impact on family formation and on the buying of new homes.

  14. edpell says:

    Kunstler, says the electric grid needs to be rebuilt. Why? If FF are on the way out and PV and wind are not going to cut it then why bother building new transmission towers? It seems to be the fad of the day. NYS just started REV (reforming the energy vision). Why is this fad showing itself now?

    • Stilgar Wilcox says:

      Because even the one’s we thought would never drink the koolaid are beginning to take sips.

    • People need to believe that something will save us. The theory has been that the electric grid, powered by PV and wind will save us. That story is ridiculous for many reasons–partly because we cannot maintain the grid for long, much less upgrade it as much as would be needed with intermittent renewables. Also, the cost would be far beyond what we can afford. Intermittent renewables are scaling up terribly slowly now.

      • Paul says:

        Looks like they are scaling down….

        Solar – After Trillions of Subsidies and R&D and this is what we get?

        The German Solar Disaster: 21 Billion Euros Burned

        Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

        So — we’ve got the slaves digging coal out of the ground using shovels that were scavenged from Walmart…. buckets as well…. they haul coal to the coal plant:

        Let’s have a look at the components of the grid

        There must be thousands if not tens of thousands of high tech parts involved in the plant and grid… most of them no doubt crucial to the production and distribution of power…

        Probably none manufactured locally — likely very limited replacement parts in stock (just in time supply chain means very little in the way of back up) — so what do you do?

        No problem – call Germany – call Japan – call China…. oh right — no phones … because the electricity is offline – because one of the parts is busted of course…

        But let’s assume you can call the supplier – the supplier is not making these parts — because to make them they need sophisticated machinery – which also breaks – they need computers which need power — but the power is probably down there too — because if you break one key component down goes the grid…

        I could go on and on — how do the people get to work? — where will they get food from? — how do universities that are needed to provide engineers to maintain high tech systems continue to function?

        But I won’t go on and on – because the brilliant Mister Korowitz has done a comprehensive job of explaining what happens when a complex system breaks down – how things can quickly cascade through the system … see p 56 onwards

        Cheap oil is the key to the complex civilizations that we have built. Nothing can replace it.

        Therefore I am afraid that this civilization is over. The only question is – what comes next. What does post industrial ‘civilization’ look like?

        • B9K9 says:

          “I am afraid that this civilization is over. The only question is – what comes next. What does post industrial ‘civilization’ look like?”

          Come on, Paul, you’re a smart guy; use your imagination. Actually, all one has to do is glance @ a few charts that plot historical population and FF production/consumption to know where this all leads.

          So, global population drops back to the 500m range – only this time around, the survivors will have adapted to radiation poisoning spewing from 500+ reactors that have gone critical. Still, life goes on … perhaps.

          As to what will humanity do during the time lag between the end of petro-chemical farming & the first crop yields resulting from traditional manual labor, well, that’s why it might be best to live by the coast. You see, with vast salt making capability, there are trillions upon trillions of pounds of well fed meat the will be able to be salted and preserved for future use.

          Add to that the availability of untold amounts of fuel locked into the trillions of structures, and it becomes evident that survivors will become quiet adept at smoking and preserving all kinds of delicious salted, flavored and nutritious jerky.

          Future mythology will regale listeners with fantastic stories of a people who wore clothes, who could conjure water from the thin air (simply by holding their palms upright), and of magical sleds propelling them through fields, forests and the air above them.

          It’s the inability to accept this as humanity’s future condition that has global “leaders” frantically fighting for survival. Sort of reminds of terminal cancer patients searching madly for a solution, until they finally accept their fate and go about how to best meet the end.

          • Paul says:

            Yes of course — a very horrible outcome is certain — it’s the specifics of what things look like that are less certain – is this an extinction event? I’ve not seen any studies that determine specifically what thousands of exploding nuclear fuel rods will do to the planet…

            “Sort of reminds of terminal cancer patients searching madly for a solution, until they finally accept their fate and go about how to best meet the end.”


            • jeremy890 says:

              I remember way back in the 1970’s with “Mother Earth News” and “The Whole earth Catalog” among many others that envisioned a wonderful lifestyle that would live in harmony with the environment.
              The front covers of MEN are still a joy to view at a time when there was still hope the future would turn out differently. We humans, by our very nature, took what seemed the easier way out that was more “advanced”.

              Ed Abbey:
              “A true civilization, for me, embraces tolerance as one of its cardinal virtues: tolerance for free speech and differences of opinion among humans, and tolerance for other forms of life… bugs and plants and crocodiles and gorillas and coyotes and grizzly bears and eagles, and all of the other voiceless, defenseless things everywhere that are in our charge. Any true civilization must provide for those other life forms. And the only way to do that is to set aside extensive areas of the Earth where humans don’t interfere, where humans rarely even set foot.”
              It’s good for us to live on a planet of great diversity and variety. I think that a completely industrialized planet, a completely humanized planet would be intolerable. It would be a diminished life, as if the whole world were one great city. We’d lose the small-town way of life, the agrarian way of life, the farms, ranches, open spaces, forests, deserts, mountains and seashores. All of them would be completely taken over, devoured. That seems to be the direction in which we’re moving right now. And if we succeed with this mad project of trying to dominate the whole planet and reduce everything to an industrial culture, we’ll then turn on each other and start devouring one another even more vigorously and ferociously than we already are.


              Perhaps maybe a bit of untouched wildness will remain after the fall!
              We can only wish

            • Paul says:

              That is a pleasant thought!

        • CTG says:

          Just a minor addendum, it need not be “electric grid” being down that causes supply chain to fail. Just a minor “no credit available” or any financial collapse will do that trick. A down electric grid (be it from solar flares, etc) is 1000% extinction level event (ELE) for human civilization.

          I just need 2 small explosive to have an ELE. First put one on a large super tanker and declare that one group of terrorist doing it and will continue to do so in future. Lloyds may not insure shippers anymore or put a very high premium which will make it very expensive to ship oil. With limited oil, financial world will go into tailspin and there goes the global trade. Your critical parts will not arrive by FedEx.

          So, the navy will escort a tanker? There are so many tankers and so many countries. You think Japan/China will not hijack the other tankers?

          If the first one does not work, put in another explosive on another tanker and that will guarantee the ELE.

          I am very much inclined to believe that just a small percentage loss of oil will cause many countries to “do what it takes” to scramble and secure their oil, of course at the expense of global trade and supply chain collapse.

          Our world has degenerated into this situation. I can confirm that if this happens in 1950s or 1970s, it will not be a problem (less globalization and less dependency on oil)

      • Quitollis says:

        “People need to believe that something will save us. … That story is ridiculous for many reasons”

        I love some of the statements on this blog even if I do tend to place my own … in what the people come out with.

  15. interguru says:

    Ho Hum ……….

    Shakeout Threatens Shale Patch as Frackers Go for Broke

    The U.S. shale patch is facing a shakeout as drillers struggle to keep pace with the relentless spending needed to get oil and gas out of the ground.

    Shale debt has almost doubled over the last four years while revenue has gained just 5.6 percent, according to a Bloomberg News analysis of 61 shale drillers. A dozen of those wildcatters are spending at least 10 percent of their sales on interest compared with Exxon Mobil Corp.’s 0.1 percent.

    “The list of companies that are financially stressed is considerable,” said Benjamin Dell, managing partner of Kimmeridge Energy, a New York-based alternative asset manager focused on energy. “Not everyone is going to survive. We’ve seen it before.”

    • Christian says:

      OM and shale players are indebted in dollars, while in the event of a devaluation of the dollar things could go very different. Shale industry would go down (cause they sell in USD within US market, and pay higher interests) although OM could do better (cause they may sell outside US and even in another currency if needed). Could such a devaluation even be seen as profitable to OM?

    • Paul says:

      Anatomy of a bubble / ponzi scheme (or ponze as I like to refer to that)

      Irrational exuberance (otherwise known as mindless greed) causes people to pile into a ‘can’t miss’ investment opportunity

      This drives prices higher (even though there is no money being made — from what I understand the money being made in shale is from flipping the properties) creating even more excitement (kinda like 6 yr olds on a theme park ride – the higher it goes the more they scream yipeee!!!)

      At some point the facts get in the way of the fable — as in for every buck fifty in – you get a buck out…

      Some who were drinking the spiked kool aid start to think hmmm… that doesn’t make a lot of sense—- but hey — shares are going up — I’ll ignore that canary….and shovel more coal…

      Then another fact emerges — that one of the ‘big’ fields is not so big after all— as in 96% not bigger….

      Hmmmm…. you say — that doesn’t sound like 100 years of oil — and didn’t I read somewhere that recoverable reserves were being vastly exaggerated? but hey — shares are going up still…

      We all know how that ends — the early big money is cashing out on the little guys because the early money is run by guys who have been here before — they knew from day one this was a scam – and they are riding the wave…

    • Stilgar Wilcox says:

      “The U.S. shale patch is facing a shakeout as drillers struggle to keep pace with the relentless spending needed to get oil and gas out of the ground.”

      You mean the red queen syndrome runs into problems?! /sarc

    • Interguru says:

      Read the comments on the article I posted above ( They all sound as if they had just read Gail’s blog. I was surprised not to find any familiar handles in the thread.

      • CTG says:

        Interguru, Paul, et al, Have you noticed lately that comments are really getting very “interesting”, “truthful”, “make sense” or even looked like many jumped out of The Matrix.

        Paul – the comments in Zerohedge is getting more sensible and reasonable as compared to 1 year ago where trolling is very frequent.

        Just can’t help feeling that the story is going to blow over to many sheeple and waking them up.

        As far as I am concern, the next financial crisis that can happen anytime will be an extinction level event. What we have done wrong in 2008 is now worse off and for some areas, it is orders of magnitude worse (especially credit related matters).

        • Paul says:

          I am on a fair number of finance sites most days… and yes I am seeing more commentary indicating oil is the issue… and few are disputing this.

          I suppose that was to be expected…. we have been fed the green shoots line for years (in different forms) but when people see their is no recovery happening they begin to look for other reasons for this situation.

          Expensive oil has a viable story — the money tap opens in 2002 as oil spikes… the economy blows up just after 147 oil…. everyone knows expensive oil punishes growth — 100 buck oil is surely a problem (the problem)

          For the most part Zero Hedge continues to pound the drum of ‘stupid Fed — corrupt bankers – idiot leaders’

          They do run Gail’s stuff sometimes – and it is well-received — but there is a deluge of other stuff that tamps down the message.

          I see this as a good thing — if everyone starts to understand the problem — then the cart might get tipped (and people panic)

          I don’t think we are anywhere near that situation yet though — a few of the more thinking people are starting to question things — but the masses remain in their usual state of torpor — facebooking…. watching dancing with stars…

          The only way I see this changing is if the MSM were to post this stuff on their front pages — and Gail were to be invited to do the rounds of the big talk shows… I don’t think there is much chance of that…

          The masses will realize that the problem is bigger than they ever expected – but only when the symptoms of the disease manifest in the form of a massive economic collapse.

          And when that happens — unless there is a govt announcement that ‘this is permanent — and it is because of the end of cheap oil’ — most people will continue to believe that the bankers, politicians, etc… brought this upon them.

          They will go to their graves not understanding why this has happened.

          Doesn’t matter much – does it?

          A really smart guy I know (head of mensa in one country) mentioned the other day that he was watching a science program that indicated all the matter in the universe has been in circulation since the beginning of the universe — the matter in our bodies has been around since the beginning of time….

          So he took that further — when we die…. the minerals in our bodies will end up in the soil — absorbed by plants – eaten by animals including people … in essence we will be completely recycled…

          Is this reincarnation?

          Someone is thinking very deep thoughts!!!

          • xabier says:

            Politicians and newspapers persist in telling their audience that this can all be cured by the right policies – Left, Right, capitalist, anti-capitalist, anarchist, redistributionist, progressive, Green, you name it – and ignore the essence of the fix we are in.

            So most people will indeed never get at all, in so far as their minds are formed by this media circus.

            And I suppose one couldn’t actually run this story every day on the front page, as it’s not suitable material for the mass media of ‘communication’ (and trivial entertainment and prejudice-reinforcement) that constitute ‘the news’. It’s far too big a story.

            After all, once stated clearly, what is there to say? – it crushes everything else into comparative insignificance!

          • we are a form of energy, and energy cannot be created or destroyed only changed from one form to another.

          • dashui says:

            And many of us already smell like compost heaps!

          • Interguru says:

            Many decades ago I discovered that the financial press and the business sections of the MSM were best place to find out what was really happening. Their readers are ‘important people’ who want to make investment decisions, and are less tolerant of bs. Of course we know it is far from perfect, but it is better than following the front pages.

            • Paul says:

              I think that may have been the case — but in more recent times I think finance is as rife with propaganda as all other news sources.

              There’s a book called ‘Do you want to be right – or make money’ – I have never read it – but I suspect I know what it says….

              I think these days the way to make money is to get on a wave and ride it — ignore that the wave is certain to crash into the rocks — just make sure you get off before it does

              For instance – take the fracking wave — if you were to look into that — and I did — you would have from day one realized this was a joke.

              But a lot of money has been made out of this joke… by those who got in early — doesn’t matter if they believed the stories or not — as long as ENOUGH people believed…. that is how a bubble builds – that is how momentum increases…. (I will be right – but I did not ride the wave – so as the book says — I have made no money…)

              Look at the press — regurgitating this nonsense about the new Saudi Arabia — barely a peep about the fact that shale was not feasible – or at least likely a very short-lived phenomenon.

              So what you need to do as an investor is identify the next wave – get on it — and get off it in time.

              The difference between a good investor and a bad investor has is all about understanding that these waves (dotcom, housing 1 &2, bonds, fracking, etc…) are not fundamentally sound plays — they are artificial – they are pump and dump schemes….

              The good investor doesn’t believe the MSM – but understands the power of the MSM — the PR companies use the MSM on behalf of clients to pump — so if you can see that then why not get on a wave as it you see it building?

              The bad investor believes the MSM spin — they buy into the Saudi Arabia story — and they ride the wave every higher — and they never get off — of course they ultimately end up pounded into the rocks.

              There are those who disparage sites like Zero Hedge (sites that expose the spin – the lies) claiming ‘I never made a cent reading ZH’

              Of course if they only read ZH then they would not identify the waves — because the MSM has that role….

              But ZH is useful as an investor — because it can tell you when something is a wave — or when something is more along the lines of a fundamentally sound investment opportunity — and if you decide to ride a wave ZH a) can alert you to rocks ahead and b) knowing you are on a wave it can make you more vigilant in looking for canaries in the MSM…. see the recent Bloomberg articles on fracking for instance…

              ZH won’t make you money — but it sure as hell can assist you in not losing all the money you have made riding one of the endless waves that we have experienced in recent years.

          • Quitollis says:

            “So he took that further — when we die…. the minerals in our bodies will end up in the soil — absorbed by plants – eaten by animals including people … in essence we will be completely recycled… Is this reincarnation? Someone is thinking very deep thoughts!!!”

            Hegel discusses this with his pantheistic monism. Being reveals itself as an Organism made up of all things. The opposites being/ becoming, one/ many, finite/ infinite, self/ other, eternal/ ephemeral, matter/ form and all the others are reconciled in the organic, changing Cosmos. There is one eternal substance to which we are a passing form but we are also the eternal matter. The matter (us) then takes on another form — yes it is like reincarnation but not all forms are living. Anyway we are all eternal (and ephemeral) because we are the one (living) substance.

      • When I talk to people I meet in public places, quite a few are aware of our problems, even if the news media is not saying much.

        • Interguru says:

          Gail – a side question where you have expertise. When insurance companies set premiums for policies they take expected investment earnings into account. Now that we are at near zero interest rates it cuts their earnings. Is this threatening their existence?

          • Lower investment income means that premiums have to be higher.

            If there are defaults on bonds, that is what affects their existence. It may be that with very low returns, fewer people want to buy annuities, as well.

  16. Paul says:

    The Monterrey Shale Debacle – What Happened?

  17. VPK says:

    New estimate of California shale oil….60% less than before that is recoverable:

    ast week the LA Times ran a story saying that the U.S. Energy Information Administration (EIA) is about to reduce “its” estimate of the amount of shale oil that can be recovered from the Monterrey Shale under California by 96 percent. This reduction cuts the estimate of producible shale oil in the U.S. by 60 percent.

  18. Paul says:

    I have long suspected the Fed is buying the stock market — but of course they cannot be seen to be directly involved in that i.e. secretly buying shares….

    Consider this:

    Another purpose of QE ZIRP >>> pump out cash at low interest to indirectly drive the stock market?

    Seems that is one reason stocks keep hitting records — companies are going into debt to buy back stocks with the cheap money

    If the easy money was not available — the companies wouldn’t likely be doing this —- so surely would the market crash

    Talk about massive manipulation of EVERYTHING. Another indication of the absolute desperation of the central banks — nothing is off the table – they will do anything to keep the hamster running.

    This is also an indicating that they know that when the hamster stops — civilization as we know it stops.

  19. Rick Larson says:

    “We are reaching the edge of how much central banks can do to hold economies together.”

    The central banks and easy credit have created the problem to begin with. Without this money expansion credit, the oil-related infrastructure would not have scaled up to this capacity in such a short period of time. In turn, it was the power in the oil that allowed for this unprecedented currency expansion through productivity gains. These two elements worked hand in hand to create a monstrous world-wide economic credit bubble and the accompanying unrealistic expectations.

    • Hickory says:

      Rick- Very well put. You just explained in a few sentences what people have been trying to say for so many years well, but no one I’ve heard has said it so simply.
      The central bankers know they are in a big bind better than anyone. They know the cure is a big (monster big) roll back on risk and credit across the globe, but they also know that to shut the valve would result be the darkest episode of chaos that humanity has ever seen.
      Seems like their only chance of threading the needle is to tighten down credit ever so slowly. So slow its hard to notice month by month. And prey that we can default on our debt in the most painless way for all- slowly grow inflation so that our debt service payments comes in the form of less valuable dollars. In order to make that work- the economy must be growing, and that is the quandary. How do you grow in the face of rising energy costs, diminishing returns on stimulus, and a massive hoard of people relying on the government for jobs and support (that money spent is a massive anchor on the ship trying to move forward).
      Most European countries are in far worse shape in this regard than the USA, but we are not too far off.
      I also think it more the politicians, than the bankers, who are driving this train off the bridge. Both parties here, and all in Europe.

    • Christian says:

      I suppose in case IMF-BIS are going to relieve the Fed, thy would be able to leverage currencies until all central banks would be on QE. That’s the limit

      • Stefeun says:

        BCE is likely to start QE next week (just after the poll…)

        “Mario Draghi hints at ECB rate cut to avoid deflation
        European Central Bank may launch ‘pre-emptive action’ against deflation, and quantitative easing remains an option”
        The Guardian, May 26, 2014

        • Christian says:

          QE as our last move to infinity

          • Paul says:

            It would seem there is a game plan here — as the crisis goes through stages worsening — various measures are deployed each time a collapse threatens… for instance at the end of 2012 the EU banking system was on the precipice — the Fed stepped in LTRO (around 1.5 trillion dollars!)… When things get really desperate in the EU (as they are) then QE comes onto the table… as it must.

            Every option on the menu of madness will exercised. And why not?

  20. justeunperdant says:

    Finally some people in this world are showing some common sense. Some intelligent population control that makes sense for once.

    As I get older, I really think that make sense.

    Swiss group to allow assisted dying for elderly who are not terminally ill

    A Swiss organisation that helps people take their own lives has voted to extend its services to elderly people who are not terminally ill.

    Exit added “suicide due to old age” to their statutes at an annual general meeting held over the weekend, allowing people suffering from psychological or physical problems associated with old age the choice to end their life.

    Assisted dying is legal in Switzerland and technically even a healthy young person could use such services. However, organisations involved in this work set their own internal requirements, which differ from group to group.

    The move has been criticised by the Swiss Medical Association amid fears it will encourage suicide among the elderly. “We do not support the change of statutes by Exit. It gives us cause for concern because it cannot be ruled out that elderly healthy people could come under pressure of taking their own life,” said the association’s president, Dr Jürg Schlup.

    But Exit said that most people who would choose this option were already members of the organisation and had been looking into assisted dying for years.

    “Our members told us to get active on this subject. It was ripe for a decision,” Exit’s vice-president, Bernhard Sutter, said.

    “Assisted suicide is a lengthy process. Doctors must take tests and talk to patients for hours asking them to justify their motivations. Old patients feel they do not have the energy for all of this and it is also not so dignified.”

    The organisation confirmed that elderly people seeking their services would still have to go through comprehensive checks – but that medical tests would be less stringent than those required for younger people.

    Despite some backlash, Sutter said the medical profession was becoming more understanding.

    “Prescriptions for the [life-ending] medicine come most often from the family doctors,” he said. “That shows that the medical profession is more understanding now of what it means to go on like this.”

    The news follows a legal battle between Swiss prosecutors and a doctor who provided deadly medicine to a patient without examining him first. The doctor was acquitted by an appeal court in April for giving drugs to an 89-year-old patient with a serious bowel illness who wanted to end his life but refused to be examined.

    “It has to be OK for elderly people like him not to be put through the same tests again,” said Sutter. “This is what we mean – he shouldn’t have had to go through it all again.”

  21. Paul says:

    A reminder to the hard core nationalists in the crowd… from the great Smedley Darlington Butler (what a name!)


    War Is A Racket

    WAR is a racket. It always has been.

    It is possibly the oldest, easily the most profitable, surely the
    most vicious. It is the only one international in scope. It is the
    only one in which the profits are reckoned in dollars and the
    losses in lives.

    A racket is best described, I believe, as something that is not
    what it seems to the majority of the people. Only a small “inside”
    group knows what it is about. It is conducted for the benefit of
    the very few, at the expense of the very many. Out of war a few
    people make huge fortunes.

    In the World War [I] a mere handful garnered the profits of the
    conflict. At least 21,000 new millionaires and billionaires were
    made in the United States during the World War. That many admitted
    their huge blood gains in their income tax returns. How many other
    war millionaires falsified their tax returns no one knows.

    How many of these war millionaires shouldered a rifle? How many of
    them dug a trench? How many of them knew what it meant to go
    hungry in a rat-infested dug-out? How many of them spent
    sleepless, frightened nights, ducking shells and shrapnel and
    machine gun bullets? How many of them parried a bayonet thrust of
    an enemy? How many of them were wounded or killed in battle?

    Out of war nations acquire additional territory, if they are
    victorious. They just take it. This newly acquired territory
    promptly is exploited by the few — the selfsame few who wrung
    dollars out of blood in the war. The general public shoulders the

    And what is this bill?

    Read the rest here:

    • jeremy890 says:

      A nice followup to your piece, Paul, is Scott Nearing’s, “The Great Madness”.
      Dr/ Nearing was arrested, put on trial, and took the stand in his defense to explain the reason for the Great Wa, . profits for the few.
      He was released by the jury, but the publishing house was fined for mailing his piece..
      “The Great Madness” is still valid today,
      read it here:

      Published, 1917: The entrance of the United States into the world war on April 6, 1917, was the greatest victory that the American plutocracy has won over the American democracy since the declaration of war with Spain in 1898. The American plutocracy urged the war; shouted for it; demanded it; insisted upon it, and finally got it.

      The plutocracy welcomed the war not because it was a war, but because it meant a chance to get a stronger grip on the United States.

      [The plutocrats believe there are some things worse than war]: the confiscation of special privileges; the abolition of unearned income; the overthrow of the economic parasitism; the establishment of industrial democracy. The plutocrats would welcome a war that promised salvation from any such calamities; they would also welcome a war that promised greater foreign markets, the destruction of foreign competition, more security for property rights and a longer lease on life for plutocratic despotism.

      The plutocrats, or wealth lords, … were for the war from the beginning. They urged preparedness; they demanded national defense; they cried aloud for reprisals upon Germany because … it gave them a chance to deliver a knock-out blow to the American democracy.

      • Paul says:

        This raises various philosophical issues that came up at a weekend discussion.

        Why bother to stand for what ‘what is right’ — for ‘truth’ — for ‘fairness’

        Most people if the tables were turned would be the oppressor – they would seek weakness and themselves oppress.

        See the Jews and Palestine… see freed American slaves who were sent to Liberia and immediately enslaved the people there. etc etc etc….

        So why bother trying to show the way and help — why take a stand when even victory is futile … do you put your life on the line – risk the gulag – to what end?

        On the other hand we have a relatively just society because some people did fight and die for rule of law etc…

        But perhaps that was all futile too — a short-lived era — because we seem to be drifting back to the default position which is one of tyranny….

        Perhaps that is just the way we are — like Conrad said …. civilization is a thin veneer…. we are vile wicked beasts…EVERY last one of us… given the right set of circumstances we are all capable of becoming Kurtz …

        Case in point – often when people who knew mass murders are asked what the person was like — they often say — he was so normal — we are shocked…. we never expected this….

        Does that mean our default is the beast – and we have learned to cover that up?

        Is the only difference between us and those in the Deep States of the world the circumstances we were exposed to – the opportunities they had that we didn’t? Are we very much capable of murdering half a million babies and not feeling even a twinge of guilt?

        If so why bother to fight it — there is no winning… are we are only fooling ourselves?

        I am not sure of the answer.

        • Christian says:

          Why to fight it? Because now we are rather in a position to be shoot, not to shoot at… Thus said, we are mostly humanists here, an ideology without much future, I’m afraid

        • xabier says:

          The Bushmen or San tribes seem to have trouble with the idea of killing other human beings – which is why everyone whether colonialists or ‘fellow’ Africans has had no trouble at all in pushing them around.

          • Paul says:

            And the oppressed do not always become the oppressors….

            Is it we are, as Conrad says evil beasts, — or is our behaviour a product of our ability to control food supplies — which results in too many of us — which then results in conflict over resources?

            A complicated issue — I don’t think there is any single correct answer.

          • Christian says:

            Don’t know the San, but Bushmen were (still are?) HG with almost no material goods (always moving), and it was not allowed to an individual to even hold a knife for a week: you share or you are out. HG were the only kind of society without chiefs nor social strata.

        • jeremy890 says:

          The philosopher, speaker, Krishnamurti, was once ask
          Why bother to stand for what ‘what is right’ — for ‘truth’ — for ‘fairness’
          and his reply was
          “Why does a flower bloom?”
          His discussion on truth

    • In previous times, war carried the same degree of profitability, but its scope was limited because physical support for it was limited. Although wars might be said to last for years, actual battles were in fact set pieces lasting maybe a day or two before mutual exhaustion set in. Munitions, food and materiel delivered to the front line by horse and cart couldn’t keep up with slaughter, no matter how much generals wanted it to.
      Just like everything else, the steam engine and the internal combustion engine changed all that, both in the factories producing wartoys, and at the front line. The generals in WW1 found that they could lay narrow gauge railway lines immediately behind the front lines, in effect providing a conveyor belt of death which exactly matched the conveyor belts in the factories. In effect human exhaustion was alleviated by the power of oil and coal while generals and munitions producers were overjoyed that war could be endless—thus justifying their existence.
      So since the end of WW2 munitions factories have been kept busy on the pretext of ‘defence, and the odd notion that defence workers have ‘productive jobs’. They don’t. Defence factories merely consume resources endlessly, the sole purpose of any output can only be the junkheap or an explosion in someone else’s backyard. Defence workers or soldiers are on government handouts, no different to anyone on foodstamps. Defence contractors on the other hand cream billions off the top of this taxpayer largesse.
      This is part of the theme of my book, making the point that war is an industry, and must burn hydrocarbon fuels just like any other kind of industry.
      The problem facing humanity now is that the science of warfare has moved on, so that a bunch of ideological bandits can drain the lifeblood of a nation, while generals insist that endless supplies of sophisticated weaponry can defeat them. Thus the weapons continue to be delivered because workers must be kept ’employed’ and contractors must be made rich

    • xabier says:

      It’s an old, old story. Look how rich people like Julius Caesar grew from the profits of war in slaves and gold.

      In the 18th century one of the greatest private palaces in England -enormous – was built by a supplier to the army from money creamed off contracts. In those days, about 30% of soldiers died from disease alone when on campaign.

      It was disgust with the newly wealthy war contractors that led many ex-soldiers from WW1 to leave England for the colonies. I’ve noticed that none of this is discussed much in everything written on the centenary of that war.

      • oh i agree—wealth invariably came from warfare, and warfare itself was sustained by the consumption of energy that would otherwise gone into peaceful uses—whether that was straightforward food consumption or making iron farm implements and so on. A tank is essentially an armoured tractor. WW1 started with a few dozen vehicles and ended with about 47000, making the manufacturers very rich indeed.
        All empires follow the same pattern creaming off the profits of conquest, until the whole thing runs out of forward energy.

      • xabier says:

        Once banking got going in the Middle Ages in Europe, and weapons were less scarce, the bankers bought in armour and weapons cheap from the disbanded soldiers, and sold them back again to them or their employers when the next war started. They also indulged in speculation in arms and armour. Just good business.

    • dashui says:

      In the Korean War, that’s what chi-coms would tell american POWs, “it’s not your fault you are here, you were sent here by Wall Street , how many rich people in your unit?” It worked too, maybe 80% collaboration rate, plus several dozen who defected to North Korea . After the war that’s when the famous mkultra CIA mind control experiments began.
      Brainwashing didn’t work on the Turks, though, not one Turk died in pow camps.

  22. Paul says:

    The drum beats faster…

    Oil and gas well costs surge

    As ExxonMobil and partners Santos and Oil Search yesterday celebrated the sailing of a maiden cargo from their $US19 billion ($20.6 billion) PNG LNG plant in the Pacific, Australia’s peak oil and gas lobby has revealed a five-fold increase in the cost of locally drilled offshore wells.

    Based on industry data, the average cost of a well spudded off Australia is more than $130 million.

    The huge rise in well costs has coincided with a more than two-thirds fall in activity levels since 2003, according to an analysis by the Australian Petroleum Production & Exploration Association.

    APPEA has used the analysis to warn about Australia’s fast-diminishing competitiveness at a time when oil and gas majors are finding massive gas finds elsewhere in the world where construction and operating costs are much lower, including in PNG, east Africa and North America.

    “Australia is already at the top of the cost curve for bringing gas to market,” APPEA Western Region chief operating officer Stedman Ellis said.

    “The low-hanging fruit has been picked. Greenfield projects in this country can be almost double the cost of new LNG competitors (elsewhere).”

    I am wondering — what is the peak oil and gas lobby? — what might their agenda be? I’ll assume they want more of this:

    Solar – After Trillions of Subsidies and R&D and this is what we get?

    The German Solar Disaster: 21 Billion Euros Burned

    Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

    • The Australian gas situation is likely problematic. One of the posters here has complained that their local natural gas is disappearing. Now the expensive LNG that they are selling to Japan is disappearing. It will be much more difficult (more ships, more gas lost in transit) to ship gas to Japan/China from the Middle East. If Australian natural gas exports are lost, there will be more of a need for gas exports to ramp up quickly elsewhere. Even so, I expect many Australians will need to use coal rather than gas.

  23. Paul says:





    Reminds me of that piece by George Carlin ‘there’s a guy in the sky who has these 10 rules – if you break the rules you will burn in a fire pit forever — but he loves you!!! he loves you!!!! and he needs money!!!”

    This has to be in the running of article of the year to date

    Weaponized Agriculture

    Tom Mysiewicz is a biotechnologist. In this article he shares with us his conclusions about the dangers of GMO crops.


    By Tom Mysiewicz

    Recently, an NGO (non-governmental organization) in Russia—the National Association for Genetic Safety–began working closely with the Russian Duma to enact a set of laws criminalizing the introduction of harmful genetically-modified crops (GM or GMO crops) as well as withholding information on harmful effects of such crops. Russian President Vladimir Putin has indicated he will sign such legislation, saying Russia can grow enough food for itself without genetic engineering it.

    “If Americans like to eat such foods, they can eat them,” Putin is reported to have said. But with GMO companies in the U.S. massively campaigning to hide GMO content—do Americans really know what they are eating?

    I believe Russia and, increasingly, countries elsewhere, are on the right track in this regard. And I base this belief on my first-hand observations from the inception of GMO crops—and the original promises made and assurances given for this technology—to the much different reality I see today.

    As founder and editor of the weekly biotechnology newsletter–BioEngineering News–I covered GMOs and ag-biotech from 1980 through 1993 and was the first journalist allowed (under a secrecy agreement) to cover a Gordon Research Conference. This groundbreaking conference, on Plant Genetic Engineering, was at U.C. Davis in the early 1980s. I have also had hands-on research experience, including lab courses on plant tissue culture in which I cloned a variety of plants from jojoba to redwood.

    The original promise of genetic engineering was that crops could be grown without fertilizer or pesticides, in salt water if fresh water was scarce, and that the nutritional content could be altered at will by the addition of genes for amino acids (the building blocks of protein) such as L-lysine and genes coding for vitamins, such as vitamin A. In this “brave new world” hunger and malnutrition would be eliminated by massively higher crop yields. And there would be no down side: We were assured that there would be no actual or consequential harmful effects from such alterations.

    Many Americans are not aware that the system of clinical trials and double-blind studies for new drugs means that it can cost $30- to $60-million to get a single new drug through FDA-mandated clinical trials. And, still, how many horror stories have we heard of dangerous drug side effects? Imagine if NO clinical trials were required for new drugs and only some rudimentary safety testing was necessary? Would you feel safe taking a new drug?

    Well, that is the situation with GMO crops.

    In the early 1980s—at about the time of the abovementioned Gordon Conference at U.C. Davis—the USDA and FDA (apparently at the behest of large agribusiness interests) determined that GMO crops were GRAS (Generally Regarded as Safe) meaning they were substantially equivalent to existing crops and were, therefore, “grandfathered in” and exempt from rigorous testing under existing food, drug and cosmetic laws.

    Exempted from costly safety testing, a virtual “gold rush” of ag biotech companies and investors ensued to commercialize the first GMO crops.

    Jump to the present. Many (if not most) GMO crops have cloned resistance genes for Monsanto’s Roundup® herbicide (Glyphosate (N-(phosphonomethyl)glycine))—whose effects on weeds are similar to Agent Orange. Previously, this herbicide (an estrogen mimic active in mammals in the part-per-trillion range, some say) could not be used on many of these crops. Now it can be—and vastly more Roundup can be used on GMO crops that previously tolerated it– and some estimates of increased glyphosate usage are sobering:

    “Herbicide-resistant crop technology has led to a 239 million kilogram (527 million pounds) increase in herbicide use in the United States between 1996 and 2011.” ( Impacts of genetically engineered crops on pesticide use in the U.S. — the first sixteen years. Charles M Benbrook, Centre for Sustaining Agriculture and Natural Resources, Washington State University, Hulbert 421, PO Box 646242, Pullman, WA, 99164-6242, USA, Environmental Sciences Europe 2012, 24:24 doi:10.1186/2190-4715-24-24. The electronic version of this article is the complete one and can be found online at: )

    This means Americans are now ingesting much higher levels of the herbicide and have much higher blood-serum levels of glyphosate—this without adequate knowledge of the cumulative effects of such exposure. My belief is that some of the adverse human and animal effects attributed to GMOs may, in fact, be due to “glyphosate intoxication” indirectly resulting from genetic modification of crops to allow large amounts of this herbicide to be sprayed on fields. Also, most corn and soy is GMO now and this is fed to a variety of meat animals destined for human consumption.

    While little has been done to reduce the need for fertilizers or to incorporate salt-tolerance genes into crops, a certain percentage of GMO crops incorporate genes for production of BT toxin, a natural insecticide derived from the pest-killing microbe BT or Bacillus thuringiensis. The gene coding for BT-toxin is “spliced” to various delivery vehicles or vectors designed to get them into the plant cells.

    The problem here is that, whereas the BT microbe is sprayed onto crops and can be washed off by the consumer, the gene coding for the BT toxin is cloned into a food plant the consumer eats. Just because the toxin is “natural” (like the deadly ricin) does not mean it is not a poison—as evidenced by the fact that it kills bugs.

    Have comprehensive clinical trials been done on the effects of BT toxin? I think not and anecdotal evidence is surfacing of a number of potential ill health effects. In addition, there is also increasing evidence that some of the vehicles (vectors) used to introduce genes into plant cells may also be infecting mammalian cells exposed to them. If these genes were to be expressed in the tissues of consumers ingesting such foods, the levels of BT could rise substantially. Once again, there is no adequate research into the long-term effects.

    Then there is the issue of incorporating genes coding for different amino acids to “improve protein quality” in food crops. For instance, it was theorized that a “meatato” could be produced that would have an amino-acid compliment making it nutritionally equivalent to meat. And various genes have been incorporated to raise levels of specific amino acids, as previously mentioned, such as L-lysine.

    There is a slight problem with such efforts. Some of the amino acids and proteins produced may not have the proper shape even if they have the same chemical formula. In the body, enzymes are necessary to metabolize proteins and amino acids. Some have likened the process to a lock and key. If the “lock” (protein/amino acid) is the wrong shape the “key” (enzyme) will not fit. And metabolism will be disrupted. This could account for some of the ill effects associated with GMOs.

    In the early days of genetic engineering nobody worried about such considerations. But they are important. For instance, a microbial-GMO produced L-tryptophan amino-acid supplement by Japan’s Showa Denko—possibly a mixture containing isomers having the wrong “shape”—is believed to have resulted in 30+deaths and over 1000 injuries. According to Physicians and Scientists for Responsible Application of Science and Technology (PSRAST) in a report originally issued 6 Jan. 2007 and updated 9 June 2013:

    The commonly held “filtration hypothesis” – that the accident was caused by insufficient purification of the product – has been definitely disproven.

    Two abnormal substances “IMT” and “EBT”, closely similar to tryptophan, were found in the product.

    The only tenable scientific explanation for their appearance is a disturbance of tryptophan metabolism caused by the introduction of four foreign genes all designed to influence synthesis of tryptophan.

    It is of minor importance whether these two substances were the specific cause of the deaths, or not. The important thing is that genetic engineering evidently generated at least two unexpected poisonous substances very difficult to detect. In any case, it is established beyond reasonable doubt that some product from disturbed metabolism due to genetic engineering was the ultimate cause of the deadly disease.

    The PSRAST website is useful as well as it contains a comprehensive listing of anecdotal side effects of human and animal consumption of GMO foods:

    Biospheric Threat?

    We now know it’s possible for genetic-engineering vectors in plants to infect mammalian cells. And, since recombinant genes are expressed in pollen, it is certainly possible for GMO crops to infect the same crops and even unrelated plants and weeds.

    On an immediate level, the contamination by GMO pollen of non-GM fields can lead to economic ruin if the farmers are competing for non-GMO markets. And GMO agribusiness companies frequently and successfully sue these victims of contamination for patent infringement!

    Since GMO crops containing herbicide-resistance genes are so common, it is also well within the realm of possibility that resistance may eventually spread to weeds–ultimately disrupting agriculture and leading to food shortages.

    By their nature, GMO plants will also reduce diversity in targeted crops, leaving them susceptible to unforeseen natural diseases and blights—much like the use of a single potato cultivar was a cause of the infamous “Irish potato famine.”

    Finally, to prevent seed saving by poor farmers and ensure high profits—ag-biotech companies have developed so-called “suicide genes” that allow only one crop to be grown from purchased seeds. Imagine the global catastrophe that could ensue if such genes were to jump to non-GMO fields, were to infect other food crops and even infect wild plants?

    We could be quickly facing a national or international crisis of monumental proportions.

    Along these lines, in closing, I’d like to share my opinion that GMO crops are a form of “weaponized agriculture”. Making foreign countries dependent on externally-supplied GMO seeds leaves them open to the worst sort of extortion and could lead to wars and global instability. Further, having established production and distribution facilities for GMO seed could allow rapid targeting of the agricultural sector of an “enemy” country. Simply having this capacity could create a climate of suspicion and lead to retaliatory measures that could substantially reduce the human population.

    • Arthur says:

      Why do you care so much? In one breath you say we have less than 10 years left and then you are so concerned about GMO foods…if collapse is going to happen then it does not matter! It will take care of itself. There seems to be a disconnect on here what collapse really means! You want to complain about the caviar on a sinking ship? As explained many times on here “things are baked in the cake” we should have been doing things 40 years ago to divert this disaster…I eat well and grow a lot of my own food but when I eat at someone elses house I don’t ask if the food is GMO free?! You gota die of something sometime!!

      • Paul says:

        Of course GMO food is moot. People may as well start eating ice cream for every meal…

        A few reasons I posted that:

        1. Because I am tired of hearing about how America (the west) is democratic and righteous and Putin is the monster dictator.

        2. Because this demonstrates just how diseased and sick human nature can be — companies like Monsanto knowing full well GMO is poison – yet because they want to own food production – to enslave the world.

        3. Because when a local organization tried to protest against GMO and industrial farming — government thugs (kind of like the ones who pepper spray peaceful protestors in the US…) quickly showed up and put an end to that – wonder who ordered that? And when others cannot switch to permaculture that means my small farm will be an island — in the middle of a sea of hunger.

        4. Because companies like Monsanto with their ‘green revolution’ are what has completely screwed us. If we would not have started to farm with chemicals then we would not have 7.2B people on the planet – natural limits to food production would have been imposed – and although industrial society would still have collapsed – we could have returned to some sort of sustainable situation.

        5. And last but definitely not least — I am looking for someone to blame – Monsanto is an easy target 🙂

  24. Don Stewart says:

    Dear All
    (This is meant to be light humor over the long holiday in the US).

    I have infinite faith in Google and Amazon to dredge up data on me and then use smart algorithms to sell me stuff. And, we know that whatever Google and Amazon know about me, the NSA knows about me. We also know that the Federal law enforcement people regularly use entrapment. So…I dare not use the C word for fear my comment will end up in WordPress Purgatory. But, it being a slow day, you might like to conjure up some C word scenarios which explain why Amazon thinks I am a good prospect for these two books.

    Biographical data: elderly gardener living in North Carolina. I do read Dmitry Orlov’s blog regularly. Don’t speak any Russian beyond ‘nyet’. Don’t know any Russians or Russian emigres. Never been to Russia. Do Read Gail Tverberg’s blog, where she mentions her travels to Russia. Do sometimes look at Russia Television when someone calls my attention to something. Generally not a very reverent person when speaking about governments.

    Is someone sending me a message?. Should I be accumulating warm clothing for the Siberian camp?. Will I starve unless I get better at gardening in a cold climate?. Is this a test to see if I will buy something from our deadly enemy and violate our Fearless Leader’s sanctions?…Don Stewart

    PS I assume ‘dachnikov’ has something to do with a dacha garden and ‘sibiri’ is something about Siberia.

    Praktika vedeniya dachnogo khozyaystva: Sovety dlya dachnikov
    by Elena Gol’nikova

    Sadim ogorod: Dnevnik ogorodnika-lyubitelya iz Sibiri
    by Marina Krotova

    • xabier says:

      Careful with the metadata they are compiling on you Don! ‘Drone strike on Carolina Gardener’ is not a headline we would care to see.

  25. jeremy890 says:

    Seems going after that low quality bottom of the barrel fossil fuel sources is causing emissions to soar;

    • Stilgar Wilcox says:

      Pretty funny or sad, depending on how one looks at it, that as we pass 400, 350ppm is still being heralded as the wall. Now we don’t hear as much about 350 but instead hear about 2C as the new wall. When we get 2C, I’m sure some industrialist will come up with another supposed wall that provides us kid’s another allowance to add yet even more GHG’s.

      • jeremy890 says:

        History of Science professor Naomi Oreskes has studied that phenomenon. In a 2012 peer-reviewed paper,“Climate change prediction: Erring on the side of least drama?” (pdf), she and her colleagues put to the test the claim of climate deniers that “climate scientists are alarmists.” When they tested that conclusion by looking at actual data — climate projections and how they compare to climate outcomes — they discovered something very interesting. In fact, the opposite is true. Climate scientists tend to underplay their results.

        and the video Professor Oreskes explains the evidence:

    • Globalization has resulted in a huge increase in CO2 emissions. China and India brought with them much greater use of coal. Individual countries (mostly facing declining availability of fossil fuel energy) tried to reduce their own fossil fuel emissions, and in the process raised them for the world. This graph has not been updated recently, but a person gets the idea. The straight line is fitted to the years preceding the 1997 Kyoto Protocol. China joined the WTO in 2001.

      CO2 emissions with fitted line before the Kyoto Protocol agreement in 1997.

      • jeremy890 says:

        Yes it has, and a “Call to Arms” by 350 founder, Bill McKibben, to march in New York City on September 20th and 21st, when the nations meet to discuss climate change:
        My guess is people will come by the tens of thousands, and it will be the largest demonstration yet of human resolve in the face of climate change. Sure, some of it will be exciting – who doesn’t like the chance to march and sing and carry a clever sign through the canyons of Manhattan? But this is dead-serious business, a signal moment in the gathering fight of human beings to do something about global warming before it’s too late to do anything but watch. You’ll tell your grandchildren, assuming we win. So circle September 20th and 21st on your calendar, and then I’ll explain.

  26. Stefeun says:

    May 14, 2014 by Matthew Auzanneau
    Rethinking the economy from the universal energy concept?

    I don’t want to make quotes, as the article is worth reading entirely (hope the auto-translation works and is understandable).
    One idea, however, seems to be very interesting: the JOULE-STANDARD, as universal currency backed by energy; promoted by Brian McConnell.
    Maybe it was already discussed here, but I didn’t find any mention in Gail’s articles (and didn’t dig very deep into the comment sections, which tend to get bigger and bigger…).

    I’ve tried to wrap my mind around this concept, but wasn’t able to answer the many arisen questions, such as “what about the interests, the profits?, how to consider the Human labour? the waste?, what risks of confusion with physics? what laws should apply? etc.
    We know that the prices are the result of power struggle between buyer and seller; prices reflecting the amount of energy used, i.e. not negotiable, would lead to huge changes in respective values of stuff, services, etc.., as well as a revolution in the financial world.
    Is that realistic? desirable?

    Of course it’s likely too late to think about implementing the Joule-standard in our reality, but considering that global GDP is highly correlated to the energy consumed, and on the other hand our current money is no longer backed by anything else than “faith in it”, this idea seems to make full sense to me.

    A few links about the Joule-standard:
    The link no longer works; here’s the correct address of the website:

    • Stefeun says:

      Reg. this Joule-standard, I was troubled because energy alone is not sufficient; it depends a lot on its level, i.e. the temperature at which it can be used.
      Energy is conserved; what we can get is only the delta from high level to low level states; during this transfer, entropy is produced. Entropy is given in J/K (energy per degree).

      F.Roddier already talked about that in his post 49 – The Temperature of the Economy.
      “… I suggest that the economy cash flow measures, at opposite sign, the entropy flux. In this case, the above formula defines a temperature in economy. In his textbook statistical mechanics (2) James P. Sethna actually uses the economy to illustrate the definition of temperature (section 3.3, what is temperature?). I translate his text directly: “The inverse temperature is the cost associated with the purchase of energy in the world […] The entropy is the currency.” He noted that she is counted negatively as a credit rather than a debit. To buy energy, one perceives entropy. This cost is much lower when the temperature is higher. The lower the temperature, the higher the entropy received, thus energy is more expensive.”
      (beware: last Roddier’s sentence is -strangely- mistranslated by Google)

      The original text quoted by Roddier is:
      “The inverse of the temperature is the cost of buying energy from the rest of the world. The lower the temperature, the more strongly the energy is pushed downward. Entropy is the currency being paid. For each unit of energy δE bought, we pay δE/T = δE (dS/dE) = δS in reduced entropy of the outside world. Inverse temperature is the cost in entropy to buy a unit of energy.38
      note 38: More correctly, one pays in negative entropy; one must accept entropy δE/T when buying energy δE from the heat bath.”
      From this (very scientific) document: Statistical Mechanics
      Entropy, Order Parameters, and Complexity – James P. Sethna – 2006

      However, this is the thermodynamical point of view on macro-economic flows; it doesn’t mean that we couldn’t use the Joule alone as currency. After all, we’re already buying kWh of electricity, for example (1 kWh = 3,6 MegaJoules), and we know how much energy we can get from one liter or gallon of gasoline.
      The -increase of- entropy is what you get when you use/degrade this energy, so maybe it doesn’t have to be taken into account in our trading operations.
      I’m still confused…

      • Energy takes on many different forms: Energy from the sun shining diffusely on a field; human energy; energy of a horse; heat energy that a person gets from burning coal. I don’t have at hand the references you gave for ever-increasing intensity with which energy is used. (One of them was in Roddier’s PDF, I remember.) Human civilization represents the highest concentration of energy, followed by humans. It doesn’t make sense to just look at the amount of energy; a person must also understand the form the energy is in.

    • I am afraid Google Translate loses something in the translation of this article.

      I have problems with the joule standard for the same reason I have trouble with EROEI. There are many different kinds of energy. They really are not very interchangeable. Human energy is part of the energy chain as well, and must be considered. The cost of transforming from one kind to another is huge, if it can be done at all.

      • Stefeun says:

        Thanks for your comments, Gail.
        I agree that the form of energy is important for the use made with it; but here it would be about the amount of primary energy consumed (given in barrels oil equivalent, for example), which is already on the market (we purchase kWh, gallons of oil, etc..), and which fits almost perfectly with the global GDP (linear curve).

        So my naive wonder is: if GDP is a constant factor of energy consumed, then why are we using money?
        If the prices depend on the energy involved (i.e. physical value instead of today’s fiat value), it may have a virtuous influence; I mean the people would aim to reduce amounts of energy used, instead of making more money.
        I’m probably missing some important parameter, but I haven’t found which one yet; I keep on searching.

        • We need to use a mix of energy types, each for its own purpose. Money helps us negotiate the differences in energy types and availability. There are also changes over time in availability. Money helps allocate resources for extraction. I don’t think a new method would work as well for this purpose.

  27. Paul says:

    European Voters Are Revolting; France Warns “Situation Is Grave For Europe”

    I suspect that if an anti-EU party takes power in any of these countries and actually attempts to change course — that this will not be allowed to happen — that extreme force will be used if grave threats to that leader are not heeded.

    Recall how when Papandreou suggested a referendum on this issue he disappeared from the scene very quickly…

    Likewise Berlusconi – a rather powerful man (king of the Italian mafia even?) – was put in his place…

    This short clips explains how it would go down if any of these upstarts started to mess around:

    There is too much at stake.

    And if the people take to the streets in mass protests — see Egypt as how to deal with that.

    Nothing will be allowed to derail the train — we will never be told the real reason why of course — because if everyone knew that would derail the train.

    The train must stay on the track right until it hits the brick wall. Knocking it off early will be just as catastrophic because the train is running on a bridge over a very deep chasm.

    • Stefeun says:

      I agree, Paul,
      nothing will happen.
      IMHO this vote to far-right parties was essentially a way to protest against European institutions that are geared to favor the financial interests at the expense of the peoples.
      Note that in Greece Siryza got much more than Golden Dawn.
      For the rest I think it’ll be as you describe: they will try to put down any attempt to change course. Our polls are only opinion polls, democracy was dead long time ago…

      • Quitollis says:

        “Note that in Greece Siryza got much more than Golden Dawn.”


        Syria are anti-austerity. They basically want the EU to give them more money and with fewer strings attached. It is the politics of free hand outs on an interstate level. The anti-austerity left totally failed in Spain despite 1/3 unemployment.

        The Greek establishment tried to shut down the GD, many of their leaders have sat in jail for months, they tried to ban GD, who got the go ahead to stand in the elections only a few days ago. And yet they still took 10%.

        Anyway, we already know who the establishment will side with every single time when push actually comes to shove.

        • Stefeun says:

          I only meant that it seems to be much more a vote against the EU-system than a vote pro far-right.
          The fact that you isolate my sentence to pour out your hatred towards “the left” is inappropriated.
          BTW, reg. spain, if you’re talking of Zapatero govt you’re making another mistake: Syriza is NOT socio-democrat; but I don’t wan’t to start a political discussion here, it’s off-topic.

      • Christian says:

        As long as contemporary democracy was framed as an indirect system, it has just never existed at all…

        • Stefeun says:

          I agree; even in case of direct suffrage, we’re asked to vote for some (professional) one from this aristocratic class. Independant or alternative representants can attend, as long as they have no chance to be elected.
          We’re living in plutocracies, as Jeremy underlines in his comment below.

          But a real democracy is impossible to implement in our complex and technical societies; for any decision we need professional expertise and professional organisations to apply it, and others to control it; this is open doors to abuses and corruption, even if the people are supposed to know what’s going on, I’m afraid.
          It’s very difficult to maintain a balanced system of opposition forces. Especially in difficult times, so no hope that we take this direction in near future; my comment is vain.

          • Stefeun says:

            Janet Yellen also seems to agree!!

            “When Asked if the U.S. is a Capitalist Democracy or Oligarchy, Janet Yellen Can’t Answer…

            Libertyblitzkrieg, May 8, 2014
            During yesterday’s Senate hearings, Janet Yellen was asked by Senator Bernie Sanders if the U.S. was a capitalist democracy or has morphed into an oligarchy. While readers of this site already know the answer to this question, which was recently proved empirically by a Princeton and Northwestern academic study, it was still stunning to note her unwillingness to answer the question.”

          • Christian says:

            I always was a democrat (philosophically speaking) and wanted for more of this stuff. Now, it looks like in our days, and more in those coming, Revolution and some dictatorship will likely to be a better answer. Mme. Lagarde spoke today against the banks resistance to be regulated, which she did as a consequence of last europeans elections, I’m afraid. She nevertheless highlighted one point: “too big to fail institutions”. Which means her bosses. And ours.

    • Dave Ranning says:

      In Portugal, if this video is a indicator, things are really getting interesting:

      • edpell says:

        The bankers have a monopoly on the use of violence and the workers are allowed to make all the Youtube videos they want. By self identifying it saves effort to round them up.

        • Paul says:

          I wonder if Mylie Cyrus will pick that up and cover it in English — it’s quite a bouncy little pop tune — I wonder how that would look at the next music awards.

  28. Stilgar Wilcox says:
    First half of the Kaiser report at that link is about US shale oil. Other than a few minor mistakes, it is quite good.

  29. Paul says:

    Questions for Gail that came up as our Sunday breakfast crew discussed this article:

    1. When did you realize that expensive oil was the problem
    2. How did you reach that conclusion
    3. Were there any key people whose research helped you to this conclusion or did you primarily figure this out yourself
    4. Have you always thought that there was ‘no way out’ or did you think there might be solutions at some point
    5. How has your thinking on this issue evolved

    • 1. When did you realize that expensive oil was the problem

      When I first started writing about the issue on Our Finite World back in 2007, I was saying something not too different from today. I said,

      We can’t know for sure what will happen, but these are some hypotheses:

      1. Initially, higher prices for energy and food items and a major recession.

      If the supply of oil lags behind demand, we can expect rising prices for oil and gasoline and possibly other types of energy. Prices for food may also rise, because oil is used in the production and transportation of food. Recession is likely to follow, because people will cut down on their purchases of discretionary items, so as to be able to afford the necessities. Layoffs will follow. People laid off will find it difficult to pay mortgages and other debt, so banks and other creditors will find themselves in increasing financial difficulty.

      I pretty much say that high oil prices would cause recession. I wrote something related to this for an actuarial magazine, in very early 2007–before anyone was talking about recession. But I am not sure I started saying that high oil prices were the problem, per se, until later.

      2. How did you reach that conclusion?

      I guess I did it by just working through what would likely happen.

      3. Were there any key people whose research helped you to this conclusion or did you primarily figure this out yourself

      Jeremy Leggett mentioned a financial connection in his book, The Empty Tank, which I read in late 2005. That may have gotten me started in thinking about the issue. I don’t really remember now what he had to say about the subject, except that he is in the solar panel business, so he clearly doesn’t understand the connection between high cost and financial problems.

      4. Have you always thought that there was ‘no way out’ or did you think there might be solutions at some point

      I probably was softer in what I said, but I didn’t ever see a solution.

      5. How has your thinking on this issue evolved

      Now I understand more of the pieces (exactly what the problems are with each fuel, what EROEI purports to say, etc.), but I am always surprised when I go back and look, to see how little my views have changed.

      • Paul says:


        For me – tough to choose a point but I think this was the beginning — — that lead me to reconsider the industrial revolution since that is when exponential population growth started…

        I knew something was very wrong in 2008 — but I thought it was related to corruption and greed in finance…I didn’t think things were fixed (I wanted to convince myself of that but my gut said — the worst is to come) – but I thought at some point we would get a reset and recovery (sort of like the Depression of the 30’s)

        However as I saw that the same policies were being tripled down on I suspected I was missing something… I wondered why are they doing these things again?

        I started to touch on energy issues – I read Heinberg’s The End of Growth — and Kuntsler’s The Long Emergency… then I started to realize fracking was a lie.

        I concluded energy was as I suspected, the disease … and started to look to see if there was ‘another way’ — my research into steady state economies lead me to Finite World…

        And now everything is crystal clear. I can see that barring a miracle — the industrial age will end soon.

        Other than one slightly stressful late evening (I suppose more of a Eureka moment) — when I recognized the immense implications of this situation (make no mistake – this will dwarf fire, the wheel, cars, flight, computers, the internet – and every major event — in history) — I have not had any mentally difficult moments (maybe my little farm is my coping mechanism — it makes me feel that I will still be around when the SHTF — shoveling manure — and reading my books — maybe for others it is thinking that their solar panels will make for a survivable, decent future…)

        Would be interesting to have others relate their journeys.

        • CTG says:

          Mine started in 2006 when I read Simmons book Twilight in the Desert. It was just another book with no big after thoughts. In 2008, when the financial crisis struck, I realized that it was debt that caused it to happen and I still had some hope that TPTB will resolve the financial issue and it will be just a reset, albeit with much pain.

          2011 onwards, I realized that TPTB was not very interested in resolving the issue and more and more political/social issues started to crop up in many countries, I wondered how the oil issue is going to be resolved via renewables and how fast it would take. My guess was that it will be very difficult to reach the year 2020 if we do not do anything fast.

          At about the same time as David Korowicz’s supply chain paper come out, the eureka moment came out that the key to human civilization is out complex supply chain. Without it, it is gone. To me, it is similar to “What were the guys thinking when they cleared Easter Island’s last forest?” What were we thinking when we have to buy rice from Vietnam which depends on machines that comes from Japan and parts from China, expertise from UK, bearings from Korea and oil from Saudi.

          Soon after Fukushima, the final nail to the coffin was driven down when I know that there are more than 400+ spent fuel pools that needs active cooling…….

          • Paul says:

            “To me, it is similar to “What were the guys thinking when they cleared Easter Island’s last forest?” What were we thinking when we have to buy rice from Vietnam which depends on machines that comes from Japan and parts from China, expertise from UK, bearings from Korea and oil from Saudi.

            A most excellent insight!

          • xabier says:


            Beautifully stated, may I say. What are we thinking?

          • Lizzy says:

            CTG, very good points. Another thing I see is how specialised things have become and non-interchangeable. For example the scores of different so-called engineering professions needed to build an oil platform. As well as what you’d expect — structural, process, welding etc, there are ‘documentation engineers’, the ‘inventory management engineers’, ‘recruitment engineers (??)’, ‘disposals engineers’ : highly specialised people who just seem to me to complicate things, while making themselves completely indespensible, and usually mandated by government. Life really did use to be simpler.
            In the late 80’s in NZ, I went to buy an apple from an Auckland supermarket in January, out of season. They had none. Grapes used to be an annual treat that we’d look forward to, and very slowly enjoy — no more. You can buy anything from everywhere, all the time, even if it’s not as good.

            • xabier says:

              When under the Romans I suspect you could whistle up an architect and he’d say: ‘What’s it to be, fortress, aquaduct, sewers, siege engines, or a nice little villa and I can design the gardens too?’

            • interguru says:

              Skilled craftsmen may have been in short supply, just as skilled oil roustabouts are now in short supply.

            • CTG says:

              You are right. Specialization (or too complicated a machine) will be one of the killers of human civilization. I cannot repair a modern car but an old car that has no electronics, many can repair….. The same logic applies to solar panels, hydroelectric and other “renewable energy sources”. When the SHTF, just one person (photovoltaic engineer??) gone, the solar panel cannot be repaired or made (or it is not easy to replicate that skill anymore)…

  30. Hickory says:

    Can anyone tell me about any one country reacting to the global population overshoot in a rational manner? Sure I suppose one rational response would be to grab the biggest share of oil and good farmland that you can. Or to build the biggest military you can sustain so that you can grab what you need. Or to make strategic alliances/ co-dependence with other countries who can supply you with vital resources that you lack.
    But who is seeing the big picture and implementing a downsizing protocol? Purposeful population downsizing, emphasizing a lean and mean economy, enacting progressive limits on government support of the weak, going on a war footing to deploy renewable/sustainable energy production, among many other measures one may imagine.
    Can any government survive its voters, or its military sector, if it promotes a policy of downsizing?
    I think not.
    I think each country is in effect programmed to grow until it hits the brick wall (of food scarcity, bankruptcy related to escalating energy bills or by promising too much government support to its increasing population of elderly or unemployed). What is now unique is that the brick wall looms so close at hand for so many countries in such a short time-frame. And in fact could occur just about everywhere at once, one sunny day.
    In essence, we are in a state of global denial.

    • edpell says:


    • ordinaryjoe says:

      I am most interested what new forms of denial will manifest after the wall is hit. Ideas like “economy” are common nowadays, in essence believing the government can magically create levels of consumption. These ideas of entitlements to consume are defended by very strong emotionally reinforced beliefs. The fact that we have 6.5 billion people on the planet that can not be fed without fossil fuels let alone sold I-phones is not addressed. I do not think it will be addressed after we hit the wall either and I think the possibility that whatever consumption paradigm forms after the wall is hit being quite creative in its delusion to be probable. While the belief that the USA is the “exceptional” country is quite prevalent the belief that humans are the exceptional species is omost universal although for different reasons, the religious beliefs of the right vs the humanist beliefs of the left. These paradigms considered oppositional by most seem identical to me in that they are both models for unsustainable consumption. Whatever delusion arises after the wall is hit will have to be very creative indeed if it is to encompass the tattered remnants of these consumption models.

      • xabier says:

        Very good point: we can see that the popular protest vote (which is what it is, not a ‘swing to the Right’) in Europe just recently has at its core the belief that if only the right policies can be implemented, the wine and honey will flow once more in the manner of the 1960’s, or the early 2000’s.

        The analogy is with an engine that just needs the right mechanic to come along (rather like those old stories of Uncle Joe Stalin turning up to fix a car that breaks down just when needed).

        No-one wants to contemplate the possibility that the downward slide is the new norm. One looks in vain for consideration of demographics, resource constraints, globalised trade, automisation, etc, in discussions of the fundamentals of what is happening in Europe now.

        • D Bruce says:

          Interesting that a billionaire is elected in Ukraine. Might one think that doing so in the minds of people is hanging onto the ‘dream’ that becoming ‘rich’ (consuming lots) can be accomplished by having someone like that heading up the nation, even a bankrupt one like Ukraine, or here?!

    • Christian says:

      Buthan, to some extent

  31. Quitollis says:

    EU elections, Le pen comes first in France with 26% up 20%, UKIP first in GB with about 30%. UKIP close second in Wales 28%, 10% in Scotland. Anti-EU parties generally surge

  32. jeremy890 says:

    Just took in the documentary movie about the Food Industry and the manner it is poisoning our young in “Fed Up” with Katie Couric and Michael Pollin, among others that expose the intentional spiking of processed foods with “sugars”. We need not worry about the collapse of the Financial system or Industrial global corporate state. Our children are in dire straits healthwise and that will surely undermine our society.

    Sorry, but it really looks bad on all fronts. We are toast as a country.

  33. Don Stewart says:

    Dear Gail and All

    This will be an observation on some of the ‘soft’ sides of collapse. Let’s suppose the internet and electronic music in general disappear. What would be the impact of that on the emotional health of the surviving population?

    Today, about 1.5 million new songs are copywrited every year. That is about .002 songs per person, at 7.2 billion people. The overwhelming majority of those songs never reach much of an audience. Even all the joggers listening to music can’t digest that much new music every year.

    I don’t know how innovations such as the radio and the internet have affected the number of songs copywrited each year (this would exclude songs you make up in the shower, most of which disappear immediately). But my guess is that there has been a great increase.

    One factor is the broadening of horizons that are brought by electronic delivery. When J.S. Bach wanted to hear Buxtehude perform, he walked 150 miles. If you lived in the mountains of North Carolina in the good old days, you might hear yourself and your immediate neighbors play music, but mostly you probably heard music once a year when the Methodist preacher came around for the annual camp meeting. The music you heard was very much in a rut, and real innovation would have been rare. Elizabethan music was preserved in the North Carolina mountains long after it had virtually disappeared in Britain.

    We should not assume that people in the olden days were ignorant. When Handel’s Water Music was performed before hundreds of thousands of illiterate people in Britain, they applauded particularly clever key changes. It’s hard to imagine an audience being that smart today.

    There were some native innovations in the US leading up to WWII. For example, ragtime in the 1880s, and the blues in the 20th century which led to things like rock and roll. These innovations flowered in urban situations such as Sedalia, Missouri (terminus of a rail line and home to many bordellos) and the cities along the Mississippi such as New Orleans, St. Louis, Chicago, and St. Paul. And of course, in Harlem. But calypso had arrived in Harlem shortly after WWII, and the radio brought us reggae and the Beetles and Latin American music. Now, the internet brings us this deluge of music from all over the world and from all kinds of brains, and a few insanely popular You Tube music videos appear every year.

    I think that young people believe that the internet has opened the door for them to create and communicate with music…and maybe make some money while they are at it. As we can see from the statistics, the chances of any given person writing a hit song which makes lots of money is pretty remote. Best to work part time at fast food…if you are so dull as to be perfectly rational.

    So what will happen if the internet and the radio disappear as a result of economic collapse? My guess is that people won’t spend nearly as much time writing music, and the only potential audience is basically within walking distance. If Harlem survives, then the Apollo theater may still give innovators a platform to perform. But most of the people will be living and making music in constrained circumstances more like the North Carolina mountains preserving Elizabethan music. The same folk melodies will be played over and over. If collapse happens rapidly, then people will still remember the ‘good old days’, and some of the joy will be gone out of their lives. If collapse happens over a couple of hundred years, a little at a time, then people will probably rationalize their situation as ‘our way is best and foreign ways are suspect and probably sinful’.

    Don Stewart
    *The 1.5 million songs per year is from Richard Powers book Orfeo.

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  36. Quitollis says:

    Late night session on OFW. A Decent use of oil. I never really got how a grooved blob of wax and a meatle (sp?) needle does that. The almighty, immortal, Johnny Osborne.

  37. mg says:

    As regards the figure 4 of this article concerning student loans:

    To make the university degree more affordable, the governments of Slovakia started to increase the number of the university students and the number of the universities in the 90s in Slovakia, after the decline of the heavy industry. The aim of this was mainly to allow the young people to get the university education, as they otherwise would be unemployed, because Slovakia and its political regime of the then prime minister Vladimir Meciar was a sort of isolated at that time.

    Definitely, making the university degree more affordable (even to the people who are not enough intelectually endowed – which was and is the situation in Slovakia), is the way how to mask the truth that the new jobs are mostly for highly qualified people and that the automation and mechanization destroys the jobs for the workers with low qualification).

    The actual situation in Slovakia is, that we experience “the peak of universities”. In my opinion, this has got three main reasons:

    1. The generation born in the hard times of the 90s is entering the university studies, that was born when sharp decline in the natality started.

    2. There are not enough jobs for so many people with the university degree.

    3. Many people with the university degree are simply not enough intelectually endowed to be able to perform the job for which they received their university degree.

    • xabier says:


      This is a problem one can see in other parts of Europe as well: the need to keep young people off the streets (and unemployment statistics) and the generally held idea that a university degree is a ‘democratic right’ – whatever one’s grades at school level – has led to a great reduction in standards and the creation of many very inferior provincial universities. I imagine it will all crumble as funding becomes impossible on so generous a scale and graduates default on their debts.

      • MG says:


        one can see it already crumbling here in Slovakia. The fights between the rector of the Catholic University in Ruzomberok in Slovakia and the faculties of this university over the money received for the students from the state and from the students led to the lawsuits and the abdication of the rector. (They started to use the selfdestructive method of suing one another.). This is one of the universities that has not got a very good reputiation due to high numbers of the low quality students, as the universities in Slovakia are funded by the state based on the numbers of the students. Now, when the “peak universities” is reached, such demolishing processes will not be unusual.

        • xabier says:


          It’s good to get your news from Central Europe, as reporting on your region is more or less non-existent; although in any case the standard of reporting on the countries that are covered more regularly – the so-called ‘core’ and ‘peripheral’ (Greece, Portugal, Spain) EU states, is quite poor – no distinction being made between trivial stories and serious matters.

    • edpell says:

      Automation. Kurt Vonnegut wrote “Player Piano” in 1952 in which he predicted 98% unemployment due to automation.

    • We are having some of the same problem in the US with too many with university degrees, and some of the people who are going to school (often on borrowed money) are not really qualified to graduate. So they end up as college dropouts, with lots of debt, and low-paying jobs.

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  39. Don Stewart says:

    Dear Gail and All

    Here is an example of the fallacy of blaming the Baby Boomers for everything. Excerpts from a conversation between Tim DeChristopher and Sarah van Gelder:

    ‘DeChristopher: I’ve met very few baby boomer liberals who understand what it means to be a young person facing the reality of climate change. It means that we’re never going to have the opportunities that our parents and our grandparents generations had, and that we’ve got this massive burden weight on on our future…. Certainly a lot of the blame falls on fossil fuel executives and politicians, but a lot of it falls on comfortable liberals who changed their light bulbs, bought organic, and sat back and patted themselves on the back. Young people don’t have the luxury of feeling like that’s enough–like they can go to their graves content that they drove a Prius and voted Democrat, so they don’t have to feel guilty about this catastrophe.

    van Gelder: That may be objectively true, but if you look at most young people, they’re doing as little as the boomers did.

    DeChristopher: If you look at the masses in the middle that’s true. But the masses are never who change things. I think you have to look at the people who are engaged and paying attention to the world, which is a minority.’

    Back to me. So…if it’s important to look at the minority, why not focus on the minority of people who care about climate change (or peak oil or income inequality) instead of drawing cartoons based on massive oversimplifications such as the Baby Boomers? Could it be that human nature might be involved? Could it be that there are universal principles involved which apply to both humans and water flowing down hill? (E.g., dissipation of energy).

    I not only think that DeChristopher, and others who turn it into a generational battle, are wrong, I think they are dangerous. Conjuring up ‘the enemy’, whether it be:
    the Huns
    the Jews
    the religious people
    the non-believers
    and etc. just distracts us from the real issues.

    Don Stewart

    • xabier says:


      I agree: if we are going to pick bones, it’s with aspects of human -and animal – nature and the wrong-turnings our civilization has taken (perhaps inevitably), not with a whole generation. Mostly it’s about bankrupt governments and think-tanks creating a popular a scapegoat for the cuts which are being made or planned.

    • Lizzy says:


      I completely agree. And also, if we knew then what we now know, things might have been different. Or might not. “…universal principles involved which apply to both humans and water flowing down hill?” We’re not above it. And, again in the words of W Shakespeare, who said everything better: Golden lads and girls all must,
      As chimney-sweepers, come to dust.

    • It is easy to pick on an “out group.” On the other hand, Dmitry Orlov pointed out at the Age of Limits conference that groups that stick together and help each other out are generally ones that are persecuted to some extent.

      We have seen the world get as globalized as it is going to get. We may see it fragmenting again.

      • Don Stewart says:

        Dear Gail
        I hope this is a rational response, but am not sure.

        I was speaking with someone today who is trying to save the world by building resilient local production systems. Now, many people here will think that that is a no brainer. Yet this person tells me that the closer she gets to to large cities, the harder it gets to engage people. It’s relatively easy in rural areas, because rural people see the destruction every day if they are observant. Her observation reminds me of Albert Bates talking about Transition Hohenwald (Tennessee)…the red state/ blue state distinction fades because everyone in the room sees the issues right in front of their eyes.

        My hypothesis is that co-operative groups emerge when there is mild to moderate repression from the Powers That Be, plus daily reminders of what they need to urgently be doing. So…let Washington, DC tell them to be patiently dependent on handouts and ridicule their concerns, while they see the world falling apart all around them. And maybe you will get a cohesive group.

        Don Stewart

        • Maybe that is the way to get a cohesive group.

          A group of close relatives fighting with other groups, also formed of close relatives, over scarce resources seems to work as well.

      • edpell says:

        Any group that serves itself at the expense of others will be viewed as a harm by the non-group members because it is.

        • Lizzy says:

          edpell, that’s what human beings have always done. We like to think we’re nicer and more inclusive, these days. I hope that’s right.

    • bill says:

      you are naive my friend, what do you think will happen when people starve? Of course there will be a scape goat…..I for one have a great distaste for the baby boomers too. But I really hate the rich more than anything……….sorry..just being honest…..

  40. Rodster says:

    Anyone care to comment on these numbers? A 50 year supply does not sound like a whole lot of time in the grand scheme of things.


    Russia has more than the estimated 3 trillion cubic metres in natural gas reserves in its gasfields, enough to last for 50 years, Russia’s President has said commenting on the 30-year $400 billion gas deal with China.

    “This deal is for 30 years, while I think there’s enough supply for 50 years. They are underestimated. Extractable reserves at the two deposits that we would introduce – Kovykta and Chayanda – are 1.5 trillion cubic metres of natural gas reserves each. Which means in total there’s 3 trillion. In reality, I repeat, there’s more,” said President Vladimir Putin talking to the representatives of global businesses at the 18th International Economic Forum in St Petersburg.

    Commenting on the historic gas deal with China, Putin said Russia has abundant gas resources to supply not only China, but also the Russian provinces.

    “It’s very important for us. This project is multi-dimensional, because it gives us the opportunity… to develop the eastern provinces, to construct a branch gas supply system there,” Putin said.

    • Christian says:

      I would rather say 50 years are a lot of time, if compared with actual circumstances in the rest of the world

      • But the limiting factor is not the amount of gas in the ground. It is how long the system can be held together. This will depend on the financial system, which may in turn depend on the amount of oil exports.

    • The issue is whether the system as a whole can be kept together for 50 years or 30 years. If it can’t, the natural gas will be left in the ground.

      Both Kovykta and Chayanda are near China. What Russia is lacking is easy-to-tap fields near Europe. Yamal is closer to Russia, but is in a very cold area and is being used for LNG. It sounds like it may be going to China as well.

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