Oil and other commodity prices have recently been dropping. Is this good news, or bad?
I would argue that falling commodity prices are bad news. It likely means that the debt bubble which has been holding up the world economy for a very long time–since World War II, at least–is failing to expand sufficiently. If the debt bubble collapses, we will be in huge difficulty.
Many people have the impression that falling oil prices mean that the cost of production is falling, and thus that the feared “peak oil” is far in the distance. This is not the correct interpretation, especially when many types of commodities are decreasing in price at the same time. When prices are set in a world market, the big issue is affordability. Even if food, oil and coal are close to necessities, consumers can’t pay more than they can afford.
A person can tell from Figure 1 that since the first part of 2011, the prices of Brent oil, Australian coal, and food have been trending downward. This drop in prices continues into September. For example, as I write this, Brent oil price is $97.70, while the average price for the latest month shown (August) is $105.27. It is this steeper, recent drop, which many are concerned about.
We are dealing with several confusing issues. Let me try to explain some of them.
Issue #1: Over the short term, commodity prices don’t reflect the cost of extraction; they reflect what buyers can afford.
Oil prices are set on a worldwide basis. The cost of extraction varies around the world. So it is clear that oil prices will not match the cost of extraction, or the cost of extraction plus a reasonable profit, for any particular producer.
If oil prices drop, there is a temptation to believe that this is because the cost of production has dropped. Over a long enough period, a drop in the cost of production might be expected to lead to lower oil prices. But we know that many oil producers are finding current oil prices too low. For example, the Wall Street Journal recently reported, “Royal Dutch Shell CEO: Can’t deny returns are too low. Ben van Beurden prepared to shrink company in order to boost returns, profitability.” I wrote about this issue in my post, Beginning of the End? Oil Companies Cut Back on Spending.
In the short term, low prices are likely to signal that less of the commodity can be sold on the world market. Commodities such as oil and food are very desirable products. Why would less be needed? The issue, unfortunately, is affordability. Affordability depends largely on (1) wages and (2) debt. Wages tend to be fairly stable. The likely culprit, if affordability is leading to lower demand for desirable products like oil and food, is less growth in debt.
Issue #2: Economic growth tends to produce a debt bubble.
Many economists believe that technological innovation is the key to economic growth. In my view, economies need a combination of the following to have economic growth of the type experienced in the last 100 years:1
(Increase in debt) + (cheap-to-extract fossil fuels) + (cheap-to-use non-fossil fuel resources) + (technological innovation)
In such a case, debt keeps increasing as an economy grows. Unfortunately, this economic growth is only temporary, because resources tend to become more expensive to use over time, making the “cheap” resources required for economic growth disappear.
The problem underlying the rising cost of resources (both for fossil fuels and others) is that we tend to use the cheapest-to-extract resources first. Technological innovation continues to occur, but as diminishing returns hit both fossil fuels and other resources, there are larger and larger demands on technology to keep costs in line with what workers can afford. Eventually, the cost of resources (net of technological improvements) rises too much, and economic growth is cut off. By this time, a huge mountain of debt has been built up.
Let me explain further how this happens. Without fossil fuels, the world is pretty much stuck with the goods that can be made with wood, or from other basic resources such as animal skins, cotton, flax, or clay. A small quantity of metal and glass goods can be made, but deforestation quickly becomes a problem if an attempt is made to “scale up” the quantity of goods that require heat in their production.2
Once inexpensive coal became available, its availability opened the door to technological innovation, because it provided heat in quantity that had not been available previously. While ideas such as the steam engine had been around for a long time, the availability of inexpensive coal made the production of metals needed for the steam engine, plus train tracks and railroad cars, available at reasonable cost.
With the ability to make steel and concrete in quantity (both requiring heat) came the ability to make hydroelectric dams and electrical transmission lines, thus enabling electricity for public consumption. Oil, as a liquid fuel, paved the way for widespread use of additional innovations, such as private passenger automobiles, mechanized farm equipment, and airplanes. Between coal and oil, many workers could leave farming and begin jobs in other sectors of the economy.
The transformation that took place was huge: from wooden tools and human or animal labor to a modern industrial society. How could such a big change take place? Before the change, the ability to generate a profit that might be used for future capital investment was very limited. Also, the would-be purchasers of products made in an industrial economy were very poor. I would argue that the only way of bridging this gap was debt. See my earlier posts, Why Malthus Got His Forecast Wrong and The United States’ 65-Year Debt Bubble.
The use of debt has several advantages:
- It allows the consumer to buy the end product made with the new resources, assuming the end product isn’t too expensive relative to the consumer’s earnings.
- It gives resource-extracting businesses the money they need to buy equipment and to hire workers, prior to the time they have earned profits from resource extraction.
- It gives the companies the ability to build factories, before they have accumulated profits to pay for the factories.
- It allows governments to fund needed infrastructure, such as roads and bridges, before having the tax revenue available to pay for such infrastructure.
- Most importantly, the “demand” generated by (1), (2), (3) and (4) raises the price of resources sufficiently that it makes it profitable for companies in the business to extract those resources.
Because of these issues, debt and cheap fossil fuels have a symbiotic relationship.
(1) The combination of debt, inexpensive fossil fuels, and inexpensive resources of other kinds allows the production of affordable goods that raise the standard of living of those using them. The result is what we think of as “economic growth.”
(2) The economic growth provides the additional income needed to pay back the debt with interest. The way this happens is indirectly, through what is sometimes described as “greater productivity of workers.” This greater productivity is really human productivity enhanced with devices made possible by fossil fuels, such as sewing machines, electric milking machines, and computers that allow workers to become more productive. Indirectly, the higher productivity of workers benefits both businesses and governments, through higher sales of goods to consumers and through higher taxes. In this way, businesses and governments can also repay debt with interest.
Higher-priced resources are a problem. Higher-priced resources of any kind tend to “gum up the works” of this payback cycle. Higher-priced oil in particular is a problem. In the United States, when oil prices rise above about $40 or $50 barrel, growth in wages stops.
With higher oil prices, the rise in the standard of living stops for most workers, and good-paying jobs become difficult to find. There are a couple of reasons we would expect wages to stagnate with higher oil prices:
(1) Competition with cheaper energy sources. When oil prices rose, countries using a very high percentage of oil in their energy mix (such as the PIIGS in Europe, Japan, and United States) became less competitive in the world economy. They tended to fall behind China and India, countries that use much more coal (which is cheaper) in their energy mix.
(2) Need to keep the price of goods flat. Businesses need to keep the total price of their products close to “flat” despite rising oil prices, if they are to continue to sell as much of their product after the oil price increase as previously. Oil is one major cost of production; wages are another. An obvious way to offset rising oil prices is to reduce wages. This can be done in several ways: outsourcing work to a lower cost country, greater automation, or caps on wages. Any of these approaches will tend to produce the flattening in wages observed in Figure 2.
Based on Figure 2, an oil price above $40 or $50 per barrel seems to put a cap on wages, and indirectly leads to much less economic growth. Even if we didn’t hit this oil price limit–for example, if we had discovered a liquid fuel that could be produced in quantity for less than $40 barrel–we would eventually hit some kind of growth limit. For example, the limit might be climate change or too much population for food production capability. Even too much debt can be a limit, if citizens’ incomes don’t rise in a corresponding manner. At some point, it becomes impossible even to make interest payments if the debt level is too high. Indirectly, citizens wages even support business and government debt, because business revenues and tax revenues depend indirectly on wages.
Issue #3: Repaying debt is very difficult in a flat or declining economy.
Once growth stops (or slows down too much), the debt bubble tends to crash, because it is much more difficult to repay debt with interest in a shrinking economy than in a growing one.
The government can hide this issue for a very long time by rolling over old debt with new debt and by reducing interest rates to practically zero. At some point, however, the system seems certain to fail.
Not all debt is equivalent. Debt that simply blows bubbles in stock market prices has little impact on commodity prices. In order to keep commodity prices high enough for producers to want to continue to produce them, the debt really has to get back into the hands of the potential buyers of the commodities.
Also, any changes that tend to reduce world trade push the world economy toward contraction, and make it harder to repay debt with interest. Thus, sanctions against Russia, and Russia’s sanctions against the US and Europe, tend to push the world toward debt collapse more quickly.
Issue #4: Rising oil and other commodity prices are a problem, especially for countries that are importers of those commodities.
Most of us are already aware of this issue. If oil prices rise, or if food prices rise, our salaries do not rise by a corresponding amount. We end up cutting back on discretionary purchases. This cutback in discretionary purchases leads to layoffs in these sectors. We end up with the scenario we had in the 2007-2009 recession: falling home prices (since higher-priced homes are discretionary purchases), failing banks, and many without jobs. See my article Oil Supply Limits and the Continuing Financial Crisis.
The reason that low oil and other commodity prices are welcomed by many people now is because the opposite–high oil and other commodity prices–are so terrible.
Issue #5: Falling oil and other commodity prices are a problem, if the cost of production is not dropping correspondingly.
If commodity prices drop for any reason–even if it is because a debt bubble is popping–it is going to affect how much companies are willing to produce. There is going to be a tendency to cut back in new production. If prices drop too far, it is even possible that some companies will leave the market altogether.
Even if it doesn’t look like a country “needs” the current high oil price, there may still be a problem. Oil exporters depend on the high taxes that they are able to obtain when oil prices are high. If they cannot collect these taxes, they may need to cut back on programs such as food subsidies and new desalination plants. Without these programs, civil disorder may lead to cutbacks in oil production.
Issue #6: The growth in oil sales to China and to other emerging markets has been fueled by debt growth. This debt growth now seems to be stalling.
Growth in oil consumption has mostly been outside of the United States, the European Union, and Japan, in the recent past. China and other emerging market countries kept demand for oil high.
Ambrose Evans-Pritchard reports, China’s terrifying debt ratios poised to breeze past US levels. He shows the following chart of China’s growth in debt from all sources, including shadow banking:
This rise in debt now seems to be slowing, based on a Wall Street Journal report. A person wonders whether this stalling debt growth is affecting world oil and other commodity prices.
Other emerging markets also seem to be experiencing cutbacks. Since 2008, the United States, Europe, and Japan have had very easy money policies. Some of the money available at low interest rates was invested in emerging markets. Now the WSJ reports, Fed Dims Emerging Markets’ Allure. According to the article investors, investors are taking a more cautious stance on new investment because of fear of rising US interest rates.
Of course, other issues affect debt and world commodity demand as well. If interest rates rise, they many have a tendency to shrink new lending, in general, because loans become less affordable. Sanctions of one country against another, such as the US against Russia, and vice versa, also tend to reduce demand.
Issue #7: Debt bubbles have been a problem in past collapses.
According to Jesse Colombo, the Depression was to a significant result the result of debt bubbles that built up during the roaring twenties. Another, longer-term cause would seem to be the loss of farm jobs that occurred when coal allowed tasks that were previously done by farm workers to be done by either electricity or by horses pulling metal plows. The combination of a debt bubble and loss of jobs seems to have parallels to our current situation.
Many believe the subprime housing bubble crash contributed to the Great Recession. The oil price spike of 2007 and 2008 played a major role as well.
Issue #8: If we are facing the collapse of a debt bubble, it is quite possible that prices of many commodities will fall. This could possibly lead to a collapse in the supply of many types of energy products, more or less simultaneously.
Figure 8, shown below, is a very rough estimate of the kind of decline in energy use we could be facing if a debt collapse leads to very low prices of many types of fuels simultaneously. Prices of many commodities crashed in 2008, and it was only with massive intervention that prices were propped up to 2011 levels. After the beginning of 2011, prices began sinking again, as shown in Figure 1.
Clearly governments will try to prevent another sharp crash in commodity prices. The question is whether they will be successful in propping up commodity prices, and for how long they will be successful. In a finite world, fossil fuel energy production eventually must decline, but we don’t know very precisely what timeframe.
Issue #9: My steep decline contrasts with the “best case” forecast of future oil consumption given by M. King Hubbert.
M. King Hubbert wrote about a scenario where another type of fuel completely takes over, before oil and other fossil fuels are phased out. He even discusses the possibility of making liquid fuels using very cheap nuclear energy. The way he represents the situation is the following:
In such a scenario, it is possible that oil supply will begin to decline when approximately 50% of resources are exhausted, and the down slope of the curve will follow a symmetric “Hubbert curve.” This situation seems to represent a best possible case; it doesn’t seem to represent the case we are facing today. If a debt collapse occurs, much of the remaining fuel is likely to stay in the ground.
Issue #10: Our economy is a networked system. Increasing debt is what keeps the economy inflated. If wages fail to keep pace with debt growth, the system seems likely to eventually crash.
In previous posts, I have represented the economy as a self-organized networked system, consisting of businesses, consumers, governments (with laws, regulations, and taxes), financial system, and international trade.
One reason the economy is represented as hollow is because the economy loses its capability to make goods that are no longer needed–such as buggy whips and rotary dial phones. Another reason why it might be represented as hollow is because debt is used to “puff it up” to its current size. Once the amount of debt starts shrinking, it makes it very difficult for the economy to maintain its stability.
Many “peak oilers” believe that if we have a problem with the financial system, all we have to do is start over with a new one–perhaps without debt. Everything I can see says that debt is an essential part of the current system. We could not extract fossil fuels in any significant quantity, without an ever-rising quantity of debt. The problem we are encountering now is that once resource costs get too high, the debt-based system no longer works. A new debt-based financial system likely won’t work any better than the old one.
If we try to build a new system without fossil fuels, we will be really starting over, because even today’s “renewables” are part of the fossil fuel system.3 We will have to go back to things that can be made directly from wood and other natural products without large amounts of heat, to have truly renewable resources.
 This is really a simplification of the real issues. As world population grows, it is necessary to obtain an increasing amount of food from the same arable land. Thus, it is necessary to find new processes to increase food production, at the same time that soil is quite possibly degrading. Soil is in a sense a “resource other than fossil fuels,” but I have not mentioned this issue specifically.
Growing pollution problems are in some sense an indirect cost of extracting fossil fuels and other resources. These represent another growing cost that I have not specifically identified. Furthermore, there are indirect expenses that do not fit neatly into any category, such as required desalination plants to handle growing populations in areas where water is scarce. We may need to consider mitigation expenses of all types as part of the “cost of resource extraction.”
My point is that it becomes increasingly difficult to offset these many cost increases with technological innovations. Furthermore, if no changes are made, a larger and larger share of both the workforce and resources are required for maintaining the status quo, leaving fewer workers and a smaller quantity of resources to “grow” the economy.
 Wind and water are additional sources of energy, but they are sources of mechanical energy, not heat energy, so are not helpful unless they can be converted first to electricity, and then to heat. In quantity, they never were very large in pre-fossil fuel days.
 Of course, any existing “renewable” will continue to work until it needs repairs that are unavailable. Other parts of the system (such as electric transmission lines, batteries, inverters, and attached devices such as pumps) may fail more quickly than the renewables themselves.
in response to Paul:
This time is different…. They still had billions of joules of energy available … we have burned all of that … what will be left will remain in the ground … because we will have no way to get it out… We are headed for a very primitive situation …
The people in the Iron Age had no way to get the energy either.
I am tired of listening to slogan parading as analysis.
Don – of course they did not pull oil and gas out of the ground and create an industrial revolution — BECAUSE THEY DID NOT KNOW HOW TO
Just as the generation after us will not pull oil out of the ground BECAUSE THEY WILL NOT KNOW HOW TO (keeping in mind the high tech gear required to do so now that we have pulled out the easy to extract)
Therefore the generation that comes after us (assuming anyone lives) will – as I have stated how many times now — be living VERY primitive lives…
Sure they may scavenge through the detritus of a dead civilization so they won’t live cavemen (there will be plenty of buildings left standing for them to live in instead of caves) — but without energy (other than trees and maybe some coal in a few areas) the next generation will resemble a fusion of primitive man with Mad Max.
Thanks for your post supporting my analysis.
Reblogged this on Strategic Time.
S&P 500 Companies Spend 95% of Profits on Buybacks, Payouts
I’d like to add that to support my comments that we hit the wall within 2 years…
No wonder earnings per share are improving. The number of shares is rapidly approaching zero. (Not to mention ultra low interest.) How sustainable is this?
I ran that one by a trader yesterday and the response was — not a big deal – they are acting in shareholders interests….
Uh … ya … shareholders will be loving this — who wouldn’t love this ramping of shares…
Of course the big picture is that the record stock market is all about share buy backs — using both profits and taking on record levels of debt…
All good — until it is not.
Don’t fight the Fed.
MSM touches peak-oil issue. Change is coming.
Usual “technology will save us” propaganda. The interesting part is they confirm that this is technological and economical problem and there are many arguments for “better, faster, more efficient production”. The part with affordability stays unanswered though. Connecting the dots seems the hardest task.
“More broadly, peak-oil naysayers argue, the theory looks at the problem in the wrong way—focusing on the physical supply instead of our ingenuity in being able to reach it. “There has to be a finite limit” of oil and gas in buried reserves, says George King, a global technology consultant for Apache Corp. But the constraint on how much oil can be produced isn’t geological, he believes: “We face technical and economic limits more than anything else.””
Due to sanctions Russia will not export any wheat this year. It needs the wheat to feed food animals for local consumption. So, EU sanctions will starve people in Egypt, Pakistan, and Africa. Unexpected consequences.
What did they feed the animals with last year? Unless the russian people are eating more, it should have no net effect on the world food markets.
The phenomenon of disappearing beaches is not unique to Cape Verde. With demand for sand greater than ever, it can be seen in most parts of the world, including Kenya, New Zealand, Jamaica and Morocco. In short, our beaches are disappearing. “It’s the craziest thing I’ve seen in the past 25 years,” says Robert Young, a coastal researcher at Western Carolina University. “We’re talking about ugly, miles-long moonscapes where nothing can live anymore.”
The sand on our ocean shores, once a symbol of inexhaustibility, has suddenly become scarce. So scarce that stealing it has become attractive.
Never before has Earth been graced with the prosperity we are seeing today, with countries like China, India and Brazil booming. But that also means that demand for sand has never been so great. It is used in the production of computer chips, plates and mobile phones. More than anything, though, it is used to make cement. You can find it in the skyscrapers in Shanghai, the artificial islands of Dubai and in Germany’s autobahns.
In 2012, Germany alone mined 235 million tons of sand and gravel, with 95 percent of it going to the construction industry. The United Nations Environment Program (UNEP) estimates global consumption at an average of 40 billion tons per year, with close to 30 billion tons of that used in concrete. That would be enough to build a 27-meter by 27-meter (88.5 feet) wall circling the globe. Sands are “now being extracted at a rate far greater than their renewal,” a March 2014 UNEP report found. “Sand is rarer than one thinks,” it reads.
At times, the paucity of sand has even forced workers to put down their tools at construction sites in India and China. It has also halted fracking-related drilling in the United States because the process requires that sand be mixed in with the water pumped into the ground in order to keep open the fissures from which gas is extracted.
“Sand is like oil,” explains Klaus Schwarzer, a geoscientist at Germany’s University of Kiel. “It is finite.” Western Carolina University’s Young adds, “If we’re not careful, we’ll run out of sand.”
Peak Sand…. it all seemed so infinite… not so long ago…. exponential population and economic growth depletes resources exponentially…
One thing we won’t run out of is BS
For me, this video raises the question. Is Gail, most of her bloggers and Republicans the biggest problem on earth ?
Great Analysis of China
i think the same could be said for most countries… everyone is hanging on to the cliff with their finger nails… the dominoes are ready to tumble..
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I can’t find it again but Paul’s post on the way to maintain high employment is to kill the unemployed is peak Paul.
I agree with Gail that the system depends on an economy of scale. That it would not be as high tech with fewer people. But I feel there are two economies the working economy and the working for the government or on government support. That second economy could go away completely and result in no loose of economy of scale.
Did I need to add a sarc tag to that …. that said, after reading Paul Farrel’s piece earlier… the PTB have identified population as the key problem facing them – duh no kidding — so surely they must be thinking of how to cull the herd of feeders that are ‘hunting in the kings forests’
Can’t have that…
“That it would not be as high tech with fewer people. But I feel there are two economies the working economy and the working for the government or on government support. That second economy could go away completely and result in no loose of economy of scale.”
Are you suggesting that the post-collapse world will resemble the BAU – but without the jobs that are deemed superfluous?
Dear Gail and All
This is really about healthcare, which was the previous post. Since all of us want to be healthy, I will ask forgiveness for posting off-topic.
Dr. Alan Christianson draws a parallel between the current obesity epidemic (projected to cost the world 50 trillion dollars in a few years) and previous health problems such as tuberculosis, leprosy, and small pox. Not having a really good answer to the question ‘Why?’, doctors invented lots of different reasons why it was the faulty behavior of the patients that had caused the disease.
Christianson thinks that we do not have crisp answers on the obesity issue. For example he quotes the statistic that 58 species of animals are currently gaining weight…some wild, some pets, some laboratory animals in controlled environments, and, of course, humans. Laboratory chimps have gained 32 percent body weight in each of the last two decades, slightly more weight than humans have gained. Here is a link to a separate article on the subject:
One would have to conclude that it is likely something that happened to the general environment since WWII that is a root cause of the weight gains across such diverse species and such different environments (e.g., free ranging rats vs. laboratory chimps fed a specific ration of chow). Is it the endocrine disrupting chemicals? Is it the increase in radiation exposure? Is it water pollution? Christianson doesn’t think anyone knows for sure. I suggest that whatever is causing the problem was likely enabled by the abundance of fossil fuels.
Christianson lets this unknown factor influence his dietary and lifestyle recommendations by erring on the side of conservatism…exclude anything which looks suspicious. Thus, he is a big fan of getting one’s circadian rhythms in sync…which is anathema to the 24/7 mentality of many modern Americans. If you are interested, you can check out his programs.
Dear Gail and All
The tongue in cheek part: Are you concerned about economic collapse? Are you someone who makes their living playing 3 Card Monte with depositors’ money, and can’t imagine how you will make a living after Peak Finance? Tough times are always good for Witch Doctors. So Listen Up!
The serious part: PTSD (post traumatic stress disorder) has become fashionable, particularly for soldiers returning from the various wars. However, it affects most people in one way or another at some time in their life. One might expect that there will be more PTSD in the future than in the past. Knowing something about it may improve the odds for an individual and their immediate family. Knowing how to ameliorate it might be a useful skill to have in terms of getting an economic return post-collapse.
One way to combat PTSD is through a heavily frontal lobe regimen of mindfulness. Kelly McGonigal talks about this in her DVD titled The Neuroscience of Change, especially Session 6. But this comment will be about a separate program, or more properly programs, which are about to be discussed in some detail by Ruth Buczinsky and a host of people being interviewed by her. Go to:
Click on the ‘learn more about PTSD’ button on the right and you will get access to some free stuff and shortly receive an invitation to listen to the detailed interviews, which will cost some, but not an exorbitant, amount of money.
I’ll tell you what I think I know:
A. Some people are genetically predisposed to PTSD because they have certain variations in specific genes.
B. Many people develop or inherit epigenetic markers on certain genes which make them more susceptible to stress. If you develop these epigenetic markers, you may pass them to your children. Epigenetic markers can be reversed.
C. Traumatic stress heavily influences the more primitive parts of the brain. It’s not just about the frontal cortex. If you have been traumatized in the past, I may try to reason with you about why you have nothing to fear right at this moment, but your body has not forgotten and may still exhibit what the frontal cortex would agree is irrational behavior.
So an aspiring Witch Doctor might want to pay attention to specific suggestions for how to deal with epigenetically enhanced susceptibility to stress, and with both cerebral and body based therapies.
People under great stress generally make poorer decisions and are less innovative in crafting solutions to problems. They may be hyper or hypo, but have trouble hitting the Goldilocks Zone in the middle.
Now a few mechanical details. I find that referring other people to Ruth Bucyzinky’s messages is technically difficult. I can’t just forward you some messages. You need to sign up with your own name and email address. There isn’t any charge for getting the teaser emails. You will be clearly involved with anything which is going to cost money. She will continually refer to ‘your clients’. I haven’t found anyone willing to pay me even Lucy’s ‘Psychiatric Help…5 Cents’, so I don’t think there is any vetting process to make sure you have clients. I, of course, don’t guarantee that the people she interviews will have everything just exactly right.
“an aspiring Witch Doctor might want to pay attention to specific suggestions for how to deal with epigenetically enhanced susceptibility to stress, and with both cerebral and body based therapies.”
I prefer the tulsi tincture that I make from the buds and flowers of water-stressed plants.
A personal testimonial at the Saturday Market is worth a thousand Faceplant “likes.” It goes for $20 for 50 ml on the Internet; I sell it for $14 for 60 ml.
Receptionist: Which doctor did you come to see today?
Patient: I came to see a real doctor; I ain’t seein’ no “witch doctor!”
Gail: This has been an exceptional post including the reader comments
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Great article explaining why we’re stuffed…”we’re programmed” that way
Thanks – excellent article.
Here’s page 1 http://www.marketwatch.com/story/10-self-destructive-reasons-americans-ignore-climate-change-2014-09-30
Fortunately (?) the global economy will collapse well before we hit the wall with global warming… so we get to die of starvation and disease rather than boiling in the pot of climate change
It does seem that way. Now we know why Elon Musk is hell bent on the whole Mars colonization strategy, he knows we’re in serious trouble. He sees it as our and I quote “civilizational insurance policy”. Given he’s predominantly an engineer with a gigantic brain juggling 3 seperate successful billion $$$ companies simultaneously that he founded, we would be wise to perhaps “book a ticket” I think for the price of $500k you can move.
I’m seriously considering it. How cool to say you died on Mars or the journey there?
‘Now we know why Elon Musk is hell bent on the whole Mars colonization strategy,”
Call me thick … but I am not clear on how it would be possible to colonize Mars — even with the full force of BAU operating on earth…
Where would the air come from? The food? The spare parts to operate such a system? The list goes on and on and on and on and on….
I think Musk is taking the piss of us to grab the spotlight and draw attention to Tesla so he can drive the share price (and sales…)
“How cool to say you died on Mars or the journey there?”
Unless you’re saying that to ghosts or spirits or God, it would be very cool indeed to tell a living person that you died — by any means! 🙂
Good point! 🙂
How cool to be born on Mars!
I reckon post collapse looks like this — only much worse:
Dear Gail and All
Here is the link to a very good interview about sustainable food:
The interviewer is Paul Wheaton, a well-known Permaculture advocate who thinks that ‘permaculture can feed the world’. The interviewee is Helen Atthowe, who has been a student of Masonobu Fukuoka in Japan, a master gardener, a county extension agent, a self-sufficient homesteader, and currently manages a 2000 acre certified organic farm in Colorado.
Helen thinks that sustainable agriculture cannot feed the current world population. Paul tries every which way to move her off that position, but she keeps coming back to the biology. The things that we know will make us more sustainable (perennial plants, trees, etc.) involve plants putting more investment into infrastructure (roots, stems, trunks, etc) which leaves less energy and other resources to put into the edible bits for humans. Therefore, an extractive system will always have an advantage over a sustainable system. (There are parallels to John Michael Greer’s notion of ‘catabolic collapse’)
Of course, we know that the extractive system is now leading us to disaster, and will continue to degrade soils and biodiversity until the whole thing crashes. So we really have no choice but to develop the best sustainable practices we can, and reduce population accordingly.
Now a few comments from me. As a gardener, I see this demonstrated in my own practice. I raid the neighbors’ garbage for nutrient rich organic matter which they are sending to the landfill, and divert it to my garden. But I know that their ability to discard the organic material is dependent on a fossil fuel powered civilization which gives them the cardboard box which held the wine bottles which came from France in a container on a refrigerated ship and was transported to the local wine shop in a refrigerated truck. They drove there in a car, and expected a trash hauling truck to take the refuse away. Fortunately, the neighborhood pack-rat (me) got to it before the truck.
My garden is not strictly sustainable so long as I need cardboard and newspaper and plant residue from the neighbors. But as I build up my soil, I get closer to the goal of ‘sustainability’.
Similarly, I plant my garden so that I have a lot of plants which attract beneficial insects. Most commercial ‘organic’ farms use plenty of approved insecticides such as BT, with little space ‘wasted’ on plants to attract beneficials. I think this is consistent with what Helen repeatedly says about the realities of biology. Fossil fuel powered civilization lets us bypass biological limits in many, almost invisible, ways. During the podcast, Helen says something like ‘we have become so disconnected that we don’t even recognize that what we are doing is not sustainable.’ I agree wholeheartedly.
Toby Hemenway, a well-known permaculturist, has speculated that Earth can support perhaps 500 million to 2 billion humans if we adopt the best ‘suitability’ practices. So Toby and Helen are in the same ball park.
You will find an abundance of other opinions, with some people thinking we can feed 16 billion with good techniques.
I agree with Helen that we need to perfect biological systems as best we can and then we will find out how many people they can feed. Starting with a dumb statement like ‘we have to feed 10 billion’ might be good politics, but it has little to do with biology and a sustainable system.
“The interviewer is Paul Wheaton, a well-known Permaculture advocate who thinks that ‘permaculture can feed the world’…. Helen thinks that sustainable agriculture cannot feed the current world population. Paul tries every which way to move her off that position, but she keeps coming back to the biology.”
I’m no fan of Wheaton. He rules his website (I won’t promote it by providing a link) with an iron fist, deleting or even editing comments he disagrees with.
He went so far as to remove the word “not” from one of my comments, completely changing the meaning of my posting. Since I had evidence that the veracity of my comments were in doubt, I deleted every one of a hundred or more comments I made, and then deleted my account.
Take anything Wheaton says with a ton of salt. Take anything anyone else says on his site as possibly edited to conform to his world view.
I don’t particularly like Paul Wheaton, either. I do like what Helen Atthowe is saying in the interview, and the way she stands up to Paul’s badgering.
If people listen carefully to what she says, and truly understand what it means to be biologically sustainable, then I think it is time well spent. If your ethics permit listening to Helen, I would appreciate your reaction to what she says.
The renaissance of oil and gas production in the United States has largely been the result of applying the technique of hydraulic fracturing (fracking), which releases vast quantities of hydrocarbons trapped in tight shale formations. The bubble theorists make much of the fact that production tends to drop more rapidly in fracked wells than in conventional ones, forcing the frackers to drill more holes just to keep up. They overlook the fact that drillers are working ever faster and cheaper and that newer wells tend to be more productive than earlier wells. How do we know this? Because the number of drill rigs has not increased in most shale fields, yet production continues to go up.
Production in the Bakken region of North Dakota grew 8 percent; the Eagle Ford, Permian, and Haynesville regions in Texas increased 15, 7, and 97 percent, respectively; the Niobrara region in Wyoming and Colorado rose by 29 percent; and the Utica and Marcellus regions in Ohio, Pennsylvania, and West Virginia surged 142 and 47 percent. “We’ve been tracking this for 10 years, and recovery rates have gone up dramatically,” says EIA forecaster Philip Budzik.
“the number of drill rigs has not increased in most shale fields, yet production continues to go up.”
Do you have some data to support this assertion?
Because the figures I’ve seen indicate the opposite: any increase in production of tight oil is pretty much proportional to the number of recent holes in the ground. Shale oil production is driven by continuous drilling, which is driven by cheap credit, which is driven by Quantitative Easing, which is driven by…. POOOF! There goes the bubble!
“We’ve been tracking this for 10 years, and recovery rates have gone up dramatically,” says EIA forecaster Philip Budzik.
Ah, so says the EIA, which predicted in that oil would be trading on an “undulating plateau” of between $30 and $50 from 2009 through 2030 or so.
I think you need to do better than that.
This ratcheting up and down explains why drilling for gas in the US trebled from 2000 to 2009, while the quantity of gas recovered remained virtually constant. Drilling for oil in the US in 2012 was at the rate of 25,000 new wells per year, just to keep output at the same level as it was in the year 2000, when only 5,000 wells were drilled.
Paul, MSM wants you to BELIEVE!
Keep the FAITH!
It is after all a CONfidence game, one we all HAVE to play for it to continue…….
I so want to drink the kool aid and believe what the MSM tells me — that all will be well…
Instead I am meeting with a water ram vendor tomorrow to discuss how to overcome water issues… I suppose if I was a believer I would just install an electric pump like everyone else 🙂
Water rams seems to work fine, don’t know about price and according relyability. And Paul, rember that horse powered half car picture? Perhaps a solar compressor would end up making the very difference beteen civilization and not, because existing tires would do fine at 5 mph and we know in the end wheels are our most very real marker [don’t know how to add smileys, imagine there is one here]
Can cut a lot of vehicules. Some multipurpose solar electricity provider would be very useful to speed up some urgency tasks, of which of course there will be a lot. Perhaps automatized solar could be used on nuclear abandonment to keep cooling and venting for a while [must find a better word than abandonment to market the idea, can make the last dollars to be made with that]
Of course horses would not likely to be a mainstream traction power source, humans are a better candidate to do the job. It will be more human friendly and tires would do even better at 2 mph. And in case solar nuclear ¿dismissal? is not a success, I understand big mamifers are not to perform as today. If birds do better, geese could happen to be a better choice than dogs to achieve guard service. Of course in the end you have humans for this task as well, in case such a need happens to exist.
This is completely crazy. Forget the international degrowing currency proposed some months ago; still believe it’s a good one, but it requires too much gov participation. We can rather start fundrising to provide 2000 nuke greenwashing sets and get some extra years, perhaps decades. This period could be critical, upon my understanding. What do you think about it? There was someone a couple of months ago who talked about a group trying to get this point, can’t remember the name.
Of course someone can steal the sets once installed and almost everything bad can still happen. How much can we do about it? The good one, if any, is that Japan is cooling down. Gail, have you readers from Japan?
It’s crazy we can’t use residual heat to cool steadily. Which can happen to be the difference between provided heat and mechanical needs?
To be human powered as well?
Can use biodiesel as well. Jan, it was you on that business?
“Can use biodiesel as well.”
Yea, I make biodiesel.
But I think converting an engine to use ordinary vegoil is a better choice in most cases, particularly in warm climates.
Paul, I am an old timer and a “ram pump” was featured in an old Mother Earth News article, run without electric…should be available on their website.
I was watching a video of one of these in action last night … pretty cool!
INDEPENDENT US OIL PRODUCERS SPEND $1.50 DRILLING FOR EVERY $1.00 THEY GET BACK
SHALE DRILLERS FEAST ON JUNKE DEBT TO STAY ON TREADMILL
SHAKEOUT THREATENS SHALE PATCH AS FRACKERS GO FOR BROKE
DREAM OF US OIL INDEPENDENCE SLAMS AGAINST SHALE COSTS
THE FRACKING PONZI SCHEME
WHY AMERICA’S SHALE BOOM COULD END SOONER THAN YOU THINK
SCIENTISTS WARY OF SHALE OIL AND GAS AND U.S. ENERGY SALVATION
U.S. SHALE OIL BOOM MAY NOT LAST AS FRACKING WELLS LACK STAYING POWER
Paul — anything more recent?
Haven’t seen much on this of recent — but with oil well off it’s recent highs the situation described in some of those articles has to be approaching critical… if 110 per barrel did not work 90 most definitely wont…
MSM is rather quiet on this