Update on US natural gas, coal, nuclear, and renewables

On August 6, I wrote a post called Making Sense of the US Oil Story, in which I looked at US oil. In this post, I would like to look at other sources of US energy. Of course, the energy source we hear most about is natural gas. We continue to be a net natural gas importer, even as our own production rises.

Figure 1. US natural gas production and consumption, based on EIA data.

Figure 1. US natural gas production and consumption, based on EIA data.

US natural gas production leveled off in 2013, because of the low level of US natural gas prices. In 2013, there was growth in gas production in Pennsylvania in the Marcellus, but many other states, including Texas, saw decreases in production. In early 2014, natural gas prices have been higher, so natural gas production is rising again, roughly at a 4% annual rate.

The US-Canada-Mexican natural gas system is more or less a closed system (at least until LNG exports come online in the next few years) so whatever natural gas is produced, is used. Because of this, natural gas prices rise or fall so that demand matches supply. Natural gas producers have found this pricing situation objectionable because natural gas prices tend to settle at a low level, relative to the cost of production. This is the reason for the big push for natural gas exports. The hope, from producers’ point of view, is that exports will push US natural gas prices higher, making more natural gas production economic.

The Coal / Natural Gas Switch

If natural gas is cheap and plentiful, it tends to switch with coal for electricity production. We can see this in electricity consumption–natural gas was particularly cheap in 2012:

Figure 2. Selected Fuels Share of US Electricity - Coal, Natural Gas, and the sum of Coal plus Natural Gas

Figure 2. Selected Fuels Share of US Electricity Production – Coal, Natural Gas, and the sum of Coal plus Natural Gas, based on EIA data.

Coal use increased further in early 2014, because of the cold winter and higher natural gas prices. In Figure 2, there is a slight downward trend in the sum of coal and natural gas’s share of electricity, as renewables add their (rather small) effect.

If we look at total consumption of coal and natural gas (Figure 3), we find it also tends to be quite stable. Increases in natural gas consumption more or less correspond to decreases in coal consumption. New natural gas power plants should be more efficient than old coal power plants in producing electricity, putting downward pressure on total coal plus natural gas consumption. Also, we are using more efficient lighting, refrigerators, and monitors for computers, holding down electricity usage, and thus both coal and gas usage. Better insulation is also helpful in reducing home heating needs (whether by electricity or natural gas).

Figure 3. Layered US consumption of coal and natural gas, based on EIA data.

Figure 3. Layered US consumption of coal and natural gas, based on EIA data.

Another factor in the lower electricity usage (and thus lower coal and natural gas usage) is fewer household formations since 2007. Young people who continue to live with their parents don’t add as much electricity usage as ones who set up their own households do. Low household formations are related to a lack of good-paying jobs.

Coal Production / Consumption

US coal production hit its maximum level in 1998, with production tending to decline since then. US coal consumption has been dropping faster than production, so that exports (difference between production and consumption) have been rising (Figure 4).

Figure 4. US coal production and consumption based on EIA data.

Figure 4. US coal production and consumption based on EIA data.

In 2012, about 16% of coal produced was exported. This percentage dropped to about 10% in 2013, with greater US coal usage.

Coal tends to cause pollution of several types, including higher carbon dioxide levels. It also tends to be less expensive that most other fuels, so world demand remains high. Worldwide, coal use continues to grow.

Nuclear and Hydroelectric

Hydroelectric is the original extender of fossil fuels. Hydroelectricity using concrete and metals became feasible in the 1800s, when we began using coal to provide the heat necessary to make metals and concrete in quantity. The first hydroelectric power plants were put in place in the US in the 1880s.  As recently as 1940, hydroelectric provided 40% of the United States’ electrical generation.

Nuclear electric power was the next major extender of fossil fuels. The first nuclear power was added to the US energy mix in 1957, according to EIA data. The big ramp up in nuclear began in the 1970s and 1980s. Similar to hydroelectricity, nuclear requires fossil fuels to build and maintain its plants making electricity.

If we look at the US distribution of fuels, we see that in recent years, nuclear has been a much bigger source of energy than hydroelectricity.

Figure 5. US Energy Consumption, showing the various fossil fuel extenders separately from fossil fuels, based on BP data.

Figure 5. US Energy Consumption, showing the various fossil fuel extenders separately from fossil fuels, based on BP data.

The above comparison includes all types of energy, not just electricity. The grouping GeoBiomass is a BP grouping including geothermal and various forms of wood and other biomass energy, including sources such as landfill gas and other energy from waste. Note that GeoBiomass, Biofuels, and Solar+Wind are hard to see on Figure 5, because of their small quantities.

If we look at hydro and nuclear separately for recent years (Figure 6, below), we see that nuclear has tended to grow, while hydro has tended to fall, although both now seem to be  on close to a plateau. Hydro tends to be more variable than nuclear because it depends on rainfall and snow pack, things that vary from year to year and month to month.

Figure 6. Comparison of US nuclear and hydroelectric consumption, based on EIA data.

Figure 6. Comparison of US nuclear and hydroelectric consumption, based on EIA data.

The reason why hydro has tended to decrease in quantity over time is that it takes maintenance (using fossil fuels) to keep the aging power plants in operation and silt removed from near the dams. Most of the good locations for dams are already taken, so not much new capacity has been added.

Nuclear power plant electricity production has grown even since the 1986 Chernobyl accident because the United States has continued to expand the capacity of existing nuclear facilities. I do not expect this trend to continue, for a variety of reasons. Not all such capacity expansions have worked out well. The capacity expansion of the San Onofre plant in California in 2010 experienced premature wear and is now being decommissioned. Many of the nuclear plants built in the 1970s are reaching  the ends of their useful lives. Unless we add a large number of new nuclear plants in the next few years, it seems likely that US generation of nuclear electricity will be falling over the next 20 years.

Other Energy Types

It is easier to see other energy types if we look at them as a percentage of US total energy consumption. The following is a graph of “renewables” as a percentage of US energy consumption, using EIA data:

Figure 7. Renewables are percentage of US energy consumption, using EIA data (but groupings used by BP).

Figure 7. Renewables are percentage of US energy consumption, using EIA data (but groupings used by BP).

A person can see that over the long haul, hydroelectric has tended to shrink as a percentage of energy consumption, as energy needs grew and hydroelectric failed to keep up.

The GeoBiomass category is BP’s catch-all category, mentioned above.1 It (theoretically) includes everything from the wood we burn in our fireplaces to the charcoal briquettes we use to cook food outdoors, to home heating with wood or briquettes to the burning of sawdust or wood pieces in power plants. It also includes geothermal, which is about 6% as large as hydroelectric, and is increasing gradually over time. Based on EIA data, biomass isn’t growing either in absolute amount or as a percentage of total energy consumed.

Biofuels are liquid fuels made from biomass used to extend oil consumption. In the US, the major biofuel is ethanol, made from corn. It is used to extend gasoline, generally up to 10%.  A chart of production and consumption shows that US biofuel production “topped out,” once it hit the 10% of gasoline “blendwall”.

Figure 8. US biofuel production and consumption, based on EIA data.

Figure 8. US biofuel production and consumption, based on EIA data.

Biofuels now amount to 5.7% of US petroleum (crude oil plus natural gas liquids) consumption. In recent years, the US is a slight exporter of biofuels.

Corn ethanol currently takes about 40% of US corn production, according to the USDA (Figure 9). Greater corn plantings would put pressure on land usage for other crops.

USDA corn use, from USDA site.

Figure 9. USDA corn use, from USDA site.

If someone figures out how to make cellulosic ethanol cheaply (perhaps from wood), it presumably will cut into the market for corn ethanol, unless the blend wall is raised to 15%. Without additional ethanol coming from a source such as cellulosic ethanol, such an increase in the maximum blending percentage would likely be problematic.

Wind and Solar PV

Wind and Solar PV are sources of US electricity, so really need to be compared in that context. If we compare nuclear, hydroelectric, and all renewable electricity other than hydro (including electricity from wood, sawdust, and waste, and from geothermal, in addition to wind and solar) we see that in total, all other renewables are approximately equal to hydro electricity in quantity:

Figure 10:  Hydroelectric, other renewables, and nuclear as a percentage of US electricity supply, based on EIA data.

Figure 10: Hydroelectric, other renewables, and nuclear as a percentage of US electricity supply, based on EIA data.

If we look at the pieces of other renewables separately, we see the following:

Figure 11. Wind, solar/PV and other renewables as a percentage of US electricity, based on EIA data.

Figure 11. Wind, solar/PV and other renewables as a percentage of US electricity, based on EIA data.

Wind energy has indeed grown in quantity. Solar/PV is growing, but from a very small base. The remainder, which includes geothermal, wood and various waste products, is growing a bit.

A major issue with wind and solar is that we badly need a “solution” to our energy problem, so these are “pushed,” whether they are really helpful or not. Some issues involved:

(a) Cost effectiveness. Studies (such as by Brookings Institution, Weissbach et al., Graham Palmer) show that wind and solar PV are not cost-effective for reducing carbon emissions. If we want to reduce carbon emissions, conservation or switching from coal to natural gas would be more cost effective.

(b) Peak supply or peak affordability (demand in economists’ language)? The peak oil “story” often seems to be that because of inadequate supply, oil and other fossil fuel prices will rise, and substitutes will suddenly become competitive. This story is used to support a switch to wind and solar PV and high priced biofuels, since the expected high prices of fossil fuels will supposedly support the high cost of renewables.

Unfortunately, the story is wrong. High prices of any fuel tend to lead to recession because wages don’t rise to match the high prices. Also, a country using the high-priced fuel tends to become less competitive compared to countries that don’t use the high-priced fuel. The net effect is that prices don’t rise very much. Instead, manufacturing moves to countries that use less-expensive fuels. Oil prices may fall so low (relative to the cost of oil production) that oil producers sell their land and increase dividends to shareholders instead; in fact, this seems to be happening already.

(c) Hoped for long-term life. If fossil fuels have problems, can “renewables” have long life-spans in spite of those problems? Not that I can see. It takes fossil fuels to maintain the electric grid and to produce any modern renewable, such as wind, or solar PV or wave energy. Wind turbines need frequent replacement of parts, and solar PV needs new “inverters.” Wood and biomass will have long lives, if not overused, but these won’t keep the electric grid operating.

(d) Apples to oranges cost comparisons. There are a few situations where wind and solar PV are used to substitute for oil–for example, on islands, where oil is used to operate electricity generation. In these cases, wind and solar PV are likely already competitive, without subsidies. In these situations, per capita use of electricity can be expected to be very low, because exports made with such high-priced electricity will be non-competitive in the world market-place.

The confusion comes elsewhere, where substitution is for natural gas, coal, or nuclear energy. Here, the savings to an electric company is primarily a savings in fuel cost, that is, the cost of the natural gas, or coal or uranium. The plant’s manpower needs and its cost of electric grid maintenance will be the same (or higher). There may be costs associated with monitoring the new sources of electricity added to the grid or additional balancing costs, and these need to be considered as well.

If we want to maintain the electric grid so we can continue to have electricity for a variety of purposes, the “correct” credit for intermittent renewables is the savings to the power companies–which is likely to be close to the savings in fuel costs, or about 3 cents per kWh on the mainland United States. This is far less than the “net metering” benefit (offering a benefit equal to the retail cost of electricity) that is often used for grid-tied solar PV. It is also generally less than the “wholesale time of day” cost of electricity, often used for wind.

Germany is known for its encouragement of wind and solar PV, using liberal funding for the renewables. This approach has adverse ramifications, including high electricity costs, less grid stability, closure of some traditional natural gas power plants, and rising carbon dioxide emissions. A recent article called Germany’s Electricity Market Out of Balance by the Institute for Energy Research summarizes these issues.

Summary

It would be great if we had a solution for our non-oil energy issues, but we really don’t. The closest we can perhaps come is scaling up natural gas consumption some, and reducing coal’s current portion of the electricity mix. We currently have a large amount of coal consumption relative to natural gas consumption (Figure 3), so we ourselves have good use for rising natural gas production, if it should actually take place.

The “catch” in scaling up natural gas consumption is a price “catch.” If the price of natural gas price rises too high relative to coal, then electricity production starts switching back to coal. If, on the other hand, natural gas prices don’t rise very much, not much of an increase in production is likely to be available. Producers would like to export (a lot of) natural gas to Europe, as a way of jacking-up US natural gas prices. This seems like a pipe dream. See my article The Absurdity of US Natural Gas Exports.

Nuclear is a big question mark. If the United States starts taking much nuclear off line, it will leave a big hole in electricity generation, especially in the Eastern part of the US. Germany and recently Belgium are starting to experience the effect of taking nuclear off line. It is hard to see how wind and solar PV can play a very big role in offsetting the nuclear loss.

Politicians need to have a “solution” they can call an energy savior, but it is hard to see that renewables will play more than a small role. Biofuels seem to have “topped out” for now. Wind and solar PV are still growing, but it is hard to justify subsidies for them, as part of the electric grid system. Solar PV does have uses off grid, if citizens want their own source of electricity, with their own inverters and back-up batteries. There are also business uses of this type–for example, to operate equipment in a remote location.

I have not tried to cover all of the various smaller items. There may also be growth possibilities for items that I have not discussed, such as solar thermal for heating hot water, particularly in warm parts of the United States.

Note:

[1] I have used BP’s GeoBiomass grouping for convenience, but I am adding together EIA data amounts. What is included in the “biomass” portion of GeoBiomass seems to vary from agency to agency (BP, EIA, IEA), because of different definitions of what is included. For example, is animal dung burned as fuel included? Is fuel that is gathered by a family, rather than purchased, included? I am using EIA data for US renewables in Figure 7, since its long-term data series is probably as good as any for the US.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
This entry was posted in Alternatives to Oil and tagged , , , , , , , . Bookmark the permalink.

984 Responses to Update on US natural gas, coal, nuclear, and renewables

  1. wadosy says:

    i need some help, here… i’m stumped

    say i i’ve been a very successful looter, stacked up $20 billion, but it’s tied up now mostly in stuff that’s not gonna be worth a plugged nickel once TSHTF… or so it seems to me…

    my goal is: i want to preserve my precious genes, which means i got to have acess to women who will make kids and i have to have a plance where those kids can live and have their own kids, and so on and on forever

    what do i do with my loot?

    pre-SHTF, can i buy land and hire protection and labor, establish an enclave? … or will there be places of relative calm where i can buy refuge? …but most of all, how do i preserve the wealth that will make … whatever… possible?

    did i joing the wrong clubs? …is there some global setup in place that will handle these problems, but i wasnt invited to tha party?

    please help me think this out

    • Paul says:

      You could do this http://www.forbes.com/sites/lauriewerner/2014/01/06/paradise-2-0/

      The only problem is that you will need security — if I was your chief of security — I might conclude that I have the might — and I might make you the pool boy… and take all your caviar and champagne for me and my guys with the guns….

      You would want to choose your security team carefully — very loyal, very stupid men… you might want to run psychological profiles on them to make sure none have streaks of independence….

      • wadosy says:

        paul, did you know that steve forbes is a PNAC signatory?

        …whaich probably is why forbes’ website denies peak oil…

        • Paul says:

          He can deny as he likes — he can rant and jump up and down and scream ‘I inherited daddy’s empire and I was born with a silver spoon in my mouth and I have never known what it is like to run out of money before the end of the month and there is no way that peak oil can exist because it means I eat dog food with the rabble under the bridge!!!’

          He can even dedicate half his magazine to peak oil denial stories….

          But he won’t be able to change the reality.

        • wadosy says:

          do you spose that’s a requirement to get in the club? …you got to deny peak oil and global warming to get included in whatever plan these people have to preserve their wealth and survive?

          • InAlaska says:

            wadosy,
            I suggest that your mythical fellow stop trying to buy his way into everything. Instead of getting into the club, he ought to find a decent woman, have a big family, learn to do things for himself and teach his kids to do the same. If he and his family can handle firearms and grow there own food, then he can tell the club to go to hell.

    • wadosy says:

      air america pilots were notroriously bad with money… they made quite a bit… at least compared to the average wroking stiff

      but they’d invest in the godawfullest schemes, play the commodities markets where they routinely lost heir shirts because they werent in on the joke.. grand development schemes, mini-suburbs on unheard of islands… anything that was too good to be true

      the worst was those gold bracelets… heavy gold bracelets… supposedly, if you got shot down and survived the wreck, you could break off a link at a time and buy your way back to civilization…

      those bracelets impressed the stewardesses at least… which was probably what it was all about

      …tales of kinky threesomes in hong kong with northwest stews… i wonder if any of it was true

    • There is this misconception that everything is and will be lost in the great reset.
      Which is obviously not very history matching narrative, at least for shallow type of societal and governmental reshuffles. To your question, the strategy? Simply the smart or the generational wealth properly instructed, simply have it and prep for it all, and cover “all bases”. So, they own secluded properties and compounds in various climate zones from the high plateau jungle to tempered forrests, in various forms (like chateux and hunting lodge complexes or hidden private bunkers). They own some industries, some banks, some politicians and lobbyists, some media..

      In essence, they on purpose increase, but not guarantee chances of starting right away within the new cycle with noticable advantage. So far it worked like a charm during past centuries. However as we are most likely entering reset of longer cycle, say at least 250-500yrs wide, that might derail that trend and increase changes for completely new breed of elites taking over. Perhaps some weird combination of handson permaculturists with martial arts pedigree and or military experience.

      • edpell says:

        “permaculturists with martial arts pedigree” that just leads to such comic images LOL.

        Maybe more like specialization premaculturists and martial arts experts. Maybe throw in a good managers (yes there are a few good managers), a carpenter, a stonewright, a skilled cook, a weaver eventually, ….

        • Paul says:

          Rambo XX11…. a roided up Sly Stallone drags a plow around a field while firing an AK47 from the hip at marauding hordes ripping carrots out of the ground…

          Exciting!

          • Jarle B says:

            Paul wrote:
            “Rambo XX11…. a roided up Sly Stallone drags a plow around a field while firing an AK47 from the hip at marauding hordes ripping carrots out of the ground… Exciting!”

            Rambo XX111: Norris and Schwarzenegger is hired as field workers/gunslingers, and the show goes on.

            • Paul says:

              Bringing us to the final installment of Rambo — Rambo The End — in which Sly is starving and eating hunks of grass — his body is riddled with tumors caused by radiation from exploding nuclear fuel ponds — he crawls to a cave entrance where he is found by the last remaining humans who live under ground — but he is too far gone and soon dies of total organ failure.

      • dolph09 says:

        Yeah this time we are clearly hitting various limits. There is no more “wealthy, unappreciated son from England moves to America and takes over steel industry” or “we’ll take your oil and give you weapons and bonds” anymore. All the countries of the world are full up, all of them have their elites. We are running out of resources and time, and therefore running out of games to play.

        If the elites don’t provide for their own population in some way or another (even with bread and circuses) it’s over for them as well. As can already be seen in parts of Europe and the Middle East.

        The American elites have lots of cards and tricks to play. They own North America and most of the world, so they’ll go on for a bit.

        • InAlaska says:

          Unfortunately, I think you might be right. One thing we know from history is that the elites seldom lose the game. They buy their way into the next set of good circumstances and keep transforming themselves into the future.

    • edpell says:

      Start with 60,000 acres in Paraguay and work from there….

  2. yoananda says:

    Sorry to bother again with my “pic oil is dead” question again.
    What about this one that said : worldwide oil spending in % of GDP is very low, compared to the 80’s : http://oilprice.com/Energy/Oil-Prices/How-cheap-is-cheap-oil.html
    Especially : https://oilprice.com/images/tinymce/Staff1/rand4.png

    • A lot of things have changed since the 80s. Wages as a percentage of GDP are also lower now. Debt is higher now. We clearly weren’t doing well when oil prices were high before either, but at least we had available solutions then–something we don’t have now.

      One part of our problem is that US, Europe, and Japan use relatively more oil than the rest of the world. The rest of the world has grown in competitiveness now. The rest of the world can “eat our lunch” now when oil prices are high. We are at a competitive disadvantage with countries relying on coal, something that was not a big problem in the 1980a.

    • edpell says:

      I think this is misleading. The global GDP is way up due to economies fueled by coal.

  3. Rodster says:

    “China Has Lost 55% Of Its Most Valuable Resource…WATER”
    http://www.zerohedge.com/news/2014-08-26/china-has-lost-55-its-most-valuable-resource

    roughly 60% of California right now is suffering “extreme drought” conditions. 30% of the state is in “severe drought”. And 10% of the state is only under “drought”. In other words, roughly the entire state – the 8th largest economy in the world – is facing a severe shortage of water.

    But if you think that’s bad, China is about to take over the spotlight yet again.

    A study by China’s Ministry of Water Resources found that approximately 55% of China’s 50,000 rivers that existed in the 1990s have disappeared. Moreover, China is over-exploiting its groundwater by 22 billion cubic meters per year; yet its per-capita water consumption is less than one third of the global average. This is astounding data. More than 400 major cities in China are short of water, with some 110 facing “serious scarcity”.

    • edpell says:

      I have seen people do calculations about what fraction of the food grown on the land people use. I guess we need to do the same calculation for what fraction of the rain fall in a nation is needed for human use (including industry and farming).

      • Don Stewart says:

        Dear edpell
        Water is more complex in that nature can recycle it many times. Indeed, even when it reaches the ocean it is recycled as rainwater back on land. Permaculturists sometimes talk about how many times a molecule of water is used before it is lost to evaporation or runoff. Clever designs can keep the molecule circulating in a field for quite a while.

        So it is true that the amount of water that can be withdrawn from the Colorado River or the Ogallala formation is limited. The ability to use that volume of water to produce crops is not a simple function…it depends on the design of the agricultural system.

        To take a very simple example, a gallon of the water may be directed to drinking water, which is reused as gray water, which grows a plant which transpires the water which condenses on an over story leaf, which falls to the ground and is taken up by roots, which is transpired again, which is again condensed, and so forth.

        Don Stewart

      • edpell,

        Check the post below. I think you will find it interesting.

        Walter Haugen Says:

        Check out Joseph Tainter’s “The Collapse of Complex Societies” or my book “The Laws of Physics Are On My Side.” Tainter introduces marginal returns as the basis of his argument and it is relevant to your own. If the marginal returns fall below 1:1, it doesn’t matter if you have a high throughput (American empire today) or a relatively low throughput (Rome circa 100 AD). It is still relative to your input/output.

        Per my book, what we are doing now is replacing cultural behavior with massive doses of fossil fuel energy. Once we run short of cheap oil energy (either by price or supply) we have to constrict our energy use. If we don’t we get dieoff.

        Your solar business is still dependent on cheap oil, whether in the embedded energy of the infrastructure or just getting the workers to the jobsite and factory. My farming is also slightly dependent on fossil fuel energy, as I use 10 gallons of gasoline and my labor to grow 10,000 pounds of food per year. However, in my case I am 25-35 times more efficient than industrial agriculture, measured by input/output analysis.

        I am no fan of Greer, as I find him arrogant and wordy. However, he did hit on a winner with catabolic collapse. As for Diamond, he is the only one I have heard who understands the role of the 1st and 2nd derivative in plotting the inflection point where marginal returns change sign.

        Tainter alludes to this but doesn’t even use the term “inflection point” in his analysis. As for Kunstler, he has looked at the problem in depth and his “World Made by Hand” books look at the sociological effects – and are a good read too.

        http://blog.p2pfoundation.net/when-ephemeralization-is-hard-to-tell-from-catabolic-collapse/2013/09/19

    • Paul says:

      Why not just print fresh water? 🙂

      • MJx says:

        It might buy us six more years! LOL

      • edpell says:

        InAlaska, there must be big rivers in Alaska that drain into the sea. The U.S. government can sell that water to the Chinese for taking more fed debt product. Federal budget balanced.

        • InAlaska says:

          edpell,
          yes, indeed, that is a brilliant idea. I live by the shore of one particularly massive river, fed by an enormous glacier that will still be here in 500 years come hell or global warming. I may have to go into water business. Perhaps a trans-Pacific water pipeline….

    • edpell says:

      I would add the Integral Fast Reactor.
      http://www.ne.anl.gov/About/reactors/integral-fast-reactor.shtml
      “[Research] continues at a low level in studies and programs of the US Department of Energy and in programs around the world today, due to its ability to provide a truly inexhaustible energy technology for entire nations.”

      • InAlaska says:

        Where do I buy the stock?

        • Dan says:

          I lived in the Alaskan Bush for quite awhile. I can tell you as you probably well know it is a hard life (and fun) but one that I can only fathom in my nightmares without fuel (gas, diesel, oil, stove oil, and coal). That 500 lbs of moose meat doesn’t carry itself.

          • InAlaska says:

            Hello Dan. No, you’re right that life in bush Alaska without machines can be a challenge, but one year we used our dog team to pull the quarters out on our dogsled. It works just fine over tundra. Another year we back-packed one out. Once I shot a moose and it died next to the house. If you don’t have an ATV or can’t afford the gas, you better have a bunch of strong boys to help you carry the load. I have two chainsaws, but I also have a 2-man crosscut saw. I have a fuel oil stove, but also have two wood burners. When we lived above the arctic, I once took the boys skiing up on the north slope. I had them ski toward a small herd of caribou and they spooked over to where I was lying down in the snow, and we had a perfect ambush. Then we loaded up our sleds and skiied it all back to the road. We still use a lot of gas, though.

  4. tagio says:

    @wadowski, I assume you are being facetious in wondering how a billionaire is prepping to insure the survival of his entitled offspring for the next Feudal Age. I don’t know about billionaires, but none of the millionaires I work with as a corporate attorney in the NYC metro area give any sign of ever considering the possibility of TEOTWAWKI based on resource constraints, financial collapse and supply chain contagion, or 400+ possible Fukushimas. They’ll talk about climate change because that is comfortably distant, but I’ve never heard them speak of the things that are talked about on Gail’s site. Since the 2008 crisis, they’ve essentially doubled down, working/trying even harder to make more money and making their kids work harder at climbing ladder of success. “Reality” for these people, IN GENERAL, is far more driven by, and related to, the social reality of the class to which they aspire than what we in the lower orders might call actual reality, which still has some connection with the physical world. They need to eat at the right restaurants, own the right cars, travel to the right vacation spots, send their kids to the right schools, etc., think the same thoughts, as signaled primarily by the NYT and other establishment mouthpieces, etc., so as to evince to others their proper place in the social order – or more accurately, the place that in that order that they aspire to. They are less prepared emotionally for the possibility of TEOTWAWKI than the television-addled members of the former middle class, who are at least are doing some meager form of mental preparation for complete societal breakdown by watching shows like The Walking Dead, and thinking about getting one of those cool crossbows like Daryl has.

    • xabier says:

      Tagio

      Spot on! Less prepared in their materialism for profound change, in fact, than the late Roman aristocrats – more powerful than your clients in their direct power over others – at least those who took seriously the Christian themes of the world as a Vale of Tears, Apocalypse, renunciation of wealth, etc.

      • Paul says:

        Interesting comments….

        From my experience the wealthier highly educated people I know tend to be far less receptive to the end of BAU discussion than many of the intelligent — though not so educated nor wealthy people I know.

        I was having a conversation with a log cabin builder and one of his comments was — no sense in saving since this is all going to be over soon — pursuing this further I inquired why he thought this way — as he said we are like a bacteria consuming the earth — we have used up the easy oil and other resources etc etc ….

        I suppose the reasons for this are a) the highly educated tend to be part of a BAU cult — BAU solves everything according to their mantra and b) when you are worth tens or hundreds of millions of dollars you cannot envision every being poor — the thought is so abhorrent to people who spend their weekends strolling about the Hamptons with sweaters tied around their necks and feeling oh so pleased with themselves… that they must dismiss it.

        Meanwhile the log cabin craftsman lives pretty close to the ground hunting and fishing and chopping wood for heat… and making a few extra bucks working on small construction projects during the summer…. the fall would not be so far literally

        And perhaps more importantly — psychologically….

        A friend’s daughter teaches in a high end private school that caters to the banker god crowd… when Lehamn busted their game wide open her daughter was telling her how many students were coming in traumatized and in tears in the following days — because their parents were traumatized and in tears because they thought they would no longer be able to stroll with their sweaters around their necks through the Hamptons any longer…. I suppose they also envisioned having to do the dishes for themselves — oh heaven forbid….

        Now if that gets then reaching for the triple strength Xanax… what would happen if they found themselves in a situation where they had to claw at the ground to try to grow their own food…

        I can imagine they’d choose to down the entire family sized jar of Xanax hoping to put an end to things then and there…

        • InAlaska says:

          Paul, I think you are spot on with this assessment. The elite, some of whom I am related to, have no desire to look this beast in the eye. The cognitive dissonance is to severe and what they have to lose is too great. The log cabin builder, on the other hand, sees on a daily basis how the world is put together and intuitively knows how wrong the whole system is.

    • edpell says:

      Tagio, you should see the beautiful backup farms your clients have in Northern Dutchess County and Columbia County. Not to mention providing their table in Manhattan with clean safe meat right now.

    • Sorry to burst your bubble, but that niveau you are describing just consist of relative paupers.. Those are the hired midrange service elite at best, few notches down from the true systemic ownership elite, which is definately diversified among economic sectors and continents and is preping.

      • MJx says:

        As the Godfather pointed it, this class of millionaires are “buffers” the for the super class. Basically act as high priests in ancient Egypt, that what lawyers role today in society really is now a days.

    • dolph09 says:

      Tagio, if that’s the case, they are not part of the super elite.

      A friend of mine I grew up with was valedictorian of our very large high school class, one of the smartest guys I know, worked for Microsoft for awhile, got a double masters from Harvard, and now works at a hedge fund in NYC.

      And he’s nowhere near the elite. They have to commute from a suburb because they find Manhattan too expensive and unlivable.

      But if you have a billion dollars and a corporate empire, you can bet alot of those guys are prepping in their own ways. Buying farmland, islands, resource companies, fine art, gold, anything real they can get their hands on. I bet you many of them know the score.

      The upper middle class is clueless.

      • InAlaska says:

        dolph09, I think you are right. Just because they are super rich elites doesn’t mean all of them are stupid. In fact, many of them are extremely intelligent and they know the score and are preparing for it just as much as some of us lumpen proletariate are doing. Their biggest disadvantage is that they don’t know how to do much for themselves.

    • tagio
      Not sure if you’re into podcasts but JMG gives a really interesting talk on the c-realm about our current level of denial.
      http://c-realm.com/podcasts/crealm/426-the-myth-of-progress/
      I know some don’t like him, but I find him very articulate on the subject.

      And if you want some interesting comments by a Nobel Prize winner there’s Daniel Daniel Kahneman at the Long Now. He’s very pessimistic about our ability to recognise and change and this is a comment built on decades of research.
      http://longnow.org/seminars/02013/aug/13/thinking-fast-and-slow/
      The comment comes towards the end of the talk in the Q and A.

  5. tagio says:

    Sorry, @wadosy, about the name error. Just call me Tagoee or something.

    • wadosy says:

      i’m probably too stringy and gristly to eat… you know, if it comes to that

      but instead of a crossbow, i’ll go for a guitar…

      your reference to daryl and his crossbow… that’s a coincidence… lately i’ve been hung up on those youtube videos of “daryl’s house… i dont have a TV, so it’s been hours of discovering new talent on that show…

      and i’ve been thinking that for a while now…. if you play and sing good enough, they wont eat you

      lol

    • wadosy says:

      The arrow hit him squarely between the eyes.

      “Eat! Eat! Eat!” the Pope’s child cried.
      .
      .
      crippled as a kid by “A Canticle For Leibowitz”

  6. theedrich says:

    To confirm (source:  Tom Whipple) yet once again what Gail has been repeatedly pointing out:

    “A more recent development having serious long-term implications for the oil industry is the growing disparity between the cost of producing a new barrel of oil from the Canadian oil sands or deep below the ocean and the selling price of that oil.  A recent study points out that many planned oil production projects are simply not economical at today’s oil prices, which have been relatively stable for the past five years as costs continued to soar.  Oil companies are already cutting back on new drilling projects which will have little impact on current production, but will be very significant five years or so from now.”

    Notice the words “serious” and “growing.”  In other words, quite independently of actual extraction or political upheavals in MENA, the financial squeeze on the oil companies will require government support (if not takeover) by 2020.  We are coming down to the wire, which means that America’s wars will no longer be optional.

  7. edpell says:

    Gail, wonderful post. On two point I would focus on the economic argument. 1) Islands already have expensive electric so they can switch to expensive renewables. They have no energy intensive industry now because of the high price and they will continue to have no energy intensive industry because of the high price. 2) It is expensive (due to capital equipment and losses in the process) to convert energy into different forms. Most energy can substitute for another in theory it is just a question of the cost. That is, tell an engineer it is not possible you will get an argument. Tell an engineer it will cost too much and they will happily agree.

    • You are right. All of these issues are cost issues. Cost issues get hidden, when a person starts talking amount of oil that is technically recoverable and other non-financial concepts.

      The idea of substitution needs to always consider cost of substitution–both capital cost, and ongoing cost.

  8. Paul says:

    I would agree — this is not much different than flinging cash out of helicopters to the masses in order to stimulate more consumption….

    See – the Fed is not out of ammo – yet! But they are getting increasingly more desperate:

    http://www.zerohedge.com/news/2014-08-26/it-begins-council-foreign-relations-proposes-central-banks-should-hand-consumers-cas

    • Rodster says:

      Gail, i’ve been meaning to ask you since you are asked to speak on the subject of fuel and the economy in different parts of the world. Do Nations see the writing on the wall wrt a “collapse scenario”?

      • No, Nations don’t see the writing on the wall with respect to collapse scenarios. There are a few readers of this blog who are concerned about the issue (and invite me). But most audience members do not see the writing on the wall. And of course, audience members are not representative of the general population. They tend to be more academic, working in something related to energy to begin with. The group in India a couple of years ago were especially focused on how they could increase energy use (substitute fossil fuels for burning sticks and dung) for their population. They had no clue that this might not be possible, long term.

        • Harry says:

          This is at once amazing and unsurprising. Less than three years ago I was just Joe Blow with a passing interest in peak oil. Now I am convinced that a couple of decades hence, the vast bulk of humanity will have succumbed to starvation, violence and disease and the world will be one big nuclear exlusion-zone. No sane person would take such an assertion at face value. To reach and accept this conclusion has for me been a highly time-consuming and emotionally harrowing journey with ‘truth’ the only reward. I can well understand why few would wish to embark on such a journey and even fewer would complete it.

          • Jarle B says:

            Harry,

            likewise. I used to be a prisoner of the common thought regime, and had a blind faith in techmology (as a known western comedian calls it). The awakening has been long and hard, and it would not have happened if I hadn’t wanted it to happen. From my current standpoint I have no problem understanding that a typical person finds my way of seeing things as far out.

          • Paul says:

            Likewise… it has been a journey that started with a video about the problems with exponential growth — which lead to me questioning the narrative that progress is a good thing — that the industrial revolution was a good thing — which lead me to this blog which connected all the dots.

            If one is logical it is impossible not to reach the conclusion that you have — the current system cannot continue — even if as the green brigade suggest… we were to find an new energy source — that only makes other problems worse — even stopping population growth is no solution as it only collapses the global economy…

            There is no if — there is only when…

            I am not so sure we have decades of this left — I think the next bomb that hits the economy sets off an unstoppable crash — that is why the central banks are doing absolutely everything in their power to fight a deflationary spiral…

            Then of course there is something that they cannot control — which is peak oil — conventional is peaked — shale etc countering that … for now … when shale peaks (2 yrs max?) — unless there is another stop gap solution — then I think we are done.

            • Harry says:

              Paul, to be honest I only talk in terms of decades to cover myself, making concrete predictions about the timing of future events being such a fool’s errand. There are plenty of indicators out there, not least of all the burgeoning mismatch between oil costs and prices about which Gail writes so brilliantly, which suggest to me a very short time-frame indeed.

              Jarle, I got the Ali G reference! 🙂

        • Jarle B says:

          Gail wrote:
          “No, Nations don’t see the writing on the wall with respect to collapse scenarios.”

          This is so true. In spite of all the signs, politicians and businessmen in Norway are not worried, and say that in a few years everything will be fine.

          • I am wondering where Norway’s revenue will be coming from in a few years. The many investments Norway has made are likely to be much less productive than hoped for, as well.

Comments are closed.