WSJ Gets it Wrong on “Why Peak Oil Predictions Haven’t Come True”

On Monday, September 29, the Wall Street Journal (WSJ) published a story called “Why Peak Oil Predictions Haven’t Come True.” The story is written as if there are only two possible outcomes:

  1. The Peak Oil version of what to expect from oil limits is correct, or
  2. Diminishing Returns can and are being put off by technological progress–the view of the WSJ.

It seems to me, though, that a third outcome is not only possible, but is what is actually happening.

3. Diminishing returns from oil limits are already beginning to hit, but the impacts and the expected shape of the down slope are quite different from those forecast by most Peak Oilers.

Area of Confusion

In many people’s way of thinking, the economy is separate from resources and the extraction of those resources. If we believe economists, the economy can grow indefinitely, with or without the use of resources. Clearly, with this view, the price of these resources doesn’t matter very much. If one kind of resource becomes more expensive, we can substitute other resources, once the scarce resource becomes sufficiently high-priced that the alternative makes financial sense. Incomes can rise arbitrarily high–all it takes is for each of us to pay the other higher wages. And we can fix any problem with the financial system with more money printing and more debt.

This wrong version of how our economy works has been handed down through the academic world, through our system of peer review, with each academic researcher following in the tracks of previous academic researchers. As long as new researchers follow the same wrong thinking as previous researchers, their articles will be published. Economists were especially involved in putting together this wrong world-view, but politicians helped as well. They liked the outcomes of the models the economists produced, since it made it look like the politicians, with the help of economists, were all-powerful. All the politicians needed to do was tweak the financial system, and the world economy would grow forever. There was not even a need for resources!

Peak Oilers’ Involvement 

The Peak Oilers walked into a situation with this wrong world view, and started trying to fix pieces of it. One piece that was clearly wrong as the relationship between resources and the economy.  Resources, especially energy resources, are needed to make any of the goods and services we buy. If those resources started reaching diminishing returns, it would be harder for the economy to grow. The economy might even shrink. Dr. Charles Hall, recently retired professor from SUNY-ESF, came up with one measure of diminishing returns–falling Energy Returned on Energy Invested (EROEI).

How would shrinkage occur? For this, Peak Oilers turned to the work of M. King Hubbert, who worked in an area of geology. He wrote about how supply of a resource might be expected to decline with diminishing returns.

Hubbert was not concerned about what effect diminishing returns would have on the economy–presumably because that was not his area of specialization. He avoided the issue by only modeling the special case where no economic impact could be expected–the special case where a perfect substitute could be found and be put in place, in advance of the decline caused by diminishing returns.

Figure 1. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

Figure 1. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

In the example shown above, Hubbert assumes cheap nuclear would take over, before the decline in fossil fuels started. Hubbert even talked about making cheap liquid fuels using the very abundant nuclear resources, so that the system could continue as before.

In this special case, Hubbert suggested that the decline in resources might follow a symmetric curve, slowly declining in a pattern similar to its original rise in consumption, since this is the pattern that often occurs in extracting a resource in nature. Many Peak Oilers seem to believe that this pattern will happen in the more general case, where no perfect substitute is available, as well. A perfect substitute would need to be cheap, abundant, and involve essentially no cost of transition.

In the special case Hubbert modeled, Hubbert indicated that production would start to decline when approximately 50% of reserves had been exhausted. Peak Oilers often used this approach or variations on it (so called “Hubbert Linearization“), to forecast future production, and to determine dates when oil production would “peak.” Of course, as technology improved, additional oil became accessible, raising reserves. Also, as prices rose, resources that had never been economically extractible became extractible. Production continued beyond forecast peak dates, again and again.

Peak Oilers got at least part of the story right–the fact that we are in fact reaching diminishing returns with respect to oil. For this they should be commended. What they didn’t figure out is, however, is (1) how the energy-economy system really works, and (2) which pieces of the system can be expected to break first. This issue is not really the Peak Oilers fault–it is the result of starting with a very bad model of the economy and not understanding which pieces of that model needed to be fixed.

How the Economic System Really Works 

We are dealing with a networked economy, one that is self-organized over time. I would represent it as a hollow network, built up of businesses, consumers, and governments.

Figure 2. Dome constructed using Leonardo Sticks

Figure 2. Dome constructed using Leonardo Sticks

This economic system uses energy of various kinds plus resources of many kinds to make goods and services. There are many parts to the system, including laws, taxes, and international trade. The system gradually changes and expands, with new laws replacing old ones, new customers replacing old ones, and new products replacing old ones. Growth in the number of consumers tends to lead to a need for more goods and services of all kinds.

An important part of the economy is the financial system. It connects one part of the system with another and almost magically signals when shortages are occurring, so that more of a missing product can be made, or substitutes can be developed.

Debt is part of the system as well. With increasing debt, it is possible to make use of profits that will be earned in the future, or income that will be earned in the future, to fund current investments (such as factories) and current purchases (such as cars, homes, and advanced education). This approach works fine if an economy is growing sufficiently. The additional demand created through the use of debt tends to raise the prices of commodities like oil, metals, and water, giving an economic incentive for companies to extract these items and use them in products they make.

The economy really can’t shrink to any significant extent, for several reasons:

  1. With rising population, there is a need for more goods and services. There is also a need for more jobs. A growing networked economy provides increasing numbers of both jobs and goods and services. A shrinking economy leads to lay-offs and fewer goods and services produced. It looks like recession.
  2. The networked economy automatically deletes obsolete products and re-optimizes to produce the goods needed now. For example, buggy whip manufacturers are pretty rare today. Thus, we can’t quickly go back to using horse and buggy, even if should we want to, if oil becomes scarce. There aren’t enough horses and buggies, and there aren’t enough services for cleaning up horse manure.
  3. The use of debt for financing depends on ever-rising future output. If the economy does shrink, or even stops growing as quickly as in the past, there tends to be a problem with debt defaults.
  4. If debt does start shrinking, prices of commodities like oil, gold, and even food tend to drop (similar to the situation we are seeing now). These lower prices discourage  investment in creating these commodities. Ultimately, they lead to lower production and job layoffs. If deflation occurs, debt can become very difficult to repay.

Under what conditions can the economy grow? Clearly adding more people to the economy adds to growth. This can be done by adding more babies who live to maturity. It can also be done by globalization–adding groups of people who had previously only made goods and services for each other in limited quantity. As these groups get connected to the wider economy, their older, simpler ways of doing things tend to be replaced by more productive activities (involving more technology and more use of energy) and greater international trade. Of course, at some point, the number of new people who can be connected to the global economy gets to be pretty small. Growth in the world economy lessens, simply because of lessened ability to add “underdeveloped” countries to the networked economy.

Besides adding more people, it is also possible to make individual citizens “better off” by making workers more efficient at producing goods and services. Most people think of greater productivity as happening through technological changes, but to me, it really represents a combination of technological changes, plus a combination of inexpensive resources of various kinds. This combination often includes low-cost fossil fuels; abundant, cheap water supply; fertile soil; and easy to extract metal ores. Having these available makes possible the development of new tools (like new agricultural equipment, sewing machines, and vehicles), so that workers can become more productive.

Diminishing returns are what tend to “mess up” this per capita growth. With diminishing returns, fossil fuels become more expensive to extract. Water often needs to be obtained by desalination, or by much deeper wells. Soil needs more amendments, to be as fertile as in the past. Metal ores contain less and less ore, so more extraneous material needs to be extracted with the metal, and separated out. If population grows as well, there is a need for more agricultural output per acre, leading to a need for more technologically advanced techniques. Working around diminishing returns tends to make many kinds of goods and services more expensive, relative to wages.

Rising commodity prices would not be a problem, if wages would rise at the same time as the price of goods and services. The problem, though, is that in some sense diminishing returns makes workers less efficient. This happens because of the need to work around problems (such as digging deeper wells and removing more extraneous material from ores). For many years, technological changes may offset the effects of diminishing returns, but at some point, technological gains can no longer keep up. When this happens, instead of wages rising, they tend to stagnate, or even decline. Figure 3 shows that per capita wages have tended to grow in the United States when oil was below about $40 or $50 barrel, but have tended to stagnate when prices are above that level.

Figure 3. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Figure 3. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

What Effects Should We Be Expecting from Diminishing Returns With Respect to Oil Supply?

There are several expected effects of diminishing returns:

  1. Rising cost of extraction for oil and for other commodities subject to diminishing returns.
  2. Stagnating or falling wages of all except the most elite workers.
  3. Ultra low interest rates to try to make goods more affordable for workers stressed by stagnating wages and high prices.
  4. Rising governmental debt, in an attempt to stimulate the economy and in order to provide programs for the many workers without good-paying jobs.
  5. Increasing concern about debt defaults, as the amount of debt outstanding becomes increasingly absurd relative to wages of workers, and as all of the stimulus debt runs its course, in countries such as China.
  6. A two-way problem with the price of oil. On one side is recession, when oil prices rise to unaffordable levels. Economist James Hamilton has shown that 10 out of 11 post-World War II recessions were associated with oil price spikes. He has also shown that there is good reason to expect that the Great Recession was related to the run-up in oil prices prior to 2007. I have written a related paper–Oil Supply Limits and the Continuing Financial Crisis.
  7. The second problem with the price of oil is the reverse–price of oil too low relative to the cost of extraction, because wages are not high enough to permit workers to afford the full cost of goods made with high-priced oil. This is really a problem with inadequate affordability (called inadequate demand by economists).
  8. Eventual collapse of whole system.

There have been many studies of collapses of past economies. These collapses tended to occur when the economies hit diminishing returns after a long period of growth. The problems were often similar to ones we are seeing today: stagnating wages of common workers and growing debt. There were more and more demands on governments to fix the problems of workers, but governments found it increasingly difficult to collect enough taxes for all the needed programs.

Eventually, the economic systems have tended to collapse, over a period of years. The shape of resource use in collapses was definitely not symmetric. Figure 4 shows my view of the typical shape of the collapses in non-fossil fuel economies, based on the work of Peter Turchin and Surgey Nefedof.

Figure 4. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov in Secular Cycles.

Figure 4. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.

In my view, the date of the drop in oil supply will be determined by what appear to on-lookers to be financial problems. One possible cause is that the oil price will be too low for producers (a condition that is occurring now). Governments will find it unpopular to raise oil prices, but at the same time, will be powerless to stop the adverse impacts the fall in price has on world oil supply.

Falling oil prices have especially adverse effects on oil exporters, because they depend on revenues from oil to fund their programs. We are already seeing this now, with the increased warfare in the Middle East, Russia’s increased belligerence, and the problems of Venezuela. These issues will tend to reduce globalization, leading to less world growth, and a greater tendency for the world economy to shrink.

Unfortunately, there are no obvious ways of fixing our problems. High-priced substitutes for oil (that is, substitutes costing more than $40 or $50 barrel) are likely to have as adverse an impact on the economy as high-priced oil. The idea that energy prices can rise and the economy can adapt to them is based on wishful thinking.

Our networked economy cannot shrink; it tends to break instead. Even well-intentioned attempts to reduce oil usage are likely to backfire because they tend to reduce oil prices and have other unintended effects. Furthermore, a use of oil that one person would consider frivolous (such as a vacation in Greece) represents a needed job to another person.

Should Peak Oilers Be Blamed for Missing the “Real” Oil Limits Story?

No! Peak oilers have made an important contribution, in calling the general problem of diminishing returns in oil supply to our attention. One of their big difficulties was that they started out working with a story of the economy that was very distorted. They understood how to fix parts of the story, but fixing the whole story was beyond their ability. The following chart shows a summary of some ways their views and my views differ:

Figure 5. Author's summary of some differences in views.

Figure 5. Author’s summary of some differences in views.

One of the areas that Peak Oilers tended to miss was the fact that an oil substitute needs to be a perfect substitute–that is, be available in huge quantity, cheaply, without major substitution costs–in order not to adversely affect the economy and in order to permit the slow decline rate suggested by Hubbert’s models. Otherwise, the problems with diminishing returns remain, leading to declining wages and rising costs of making goods and services.

One temptation for Peak Oilers has been to jump on the academic bandwagon, looking for substitutes for oil. As long as Peak Oilers don’t make too many demands on substitutes–only EROEI comparisons–wind and solar PV look like they have promise. But once a person realizes that our true need is to keep a networked economy growing, it becomes clear that such “solutions” are woefully inadequate. We need a way of overcoming diminishing returns to keep the whole system operating. In other words, we need a way to make wages rise and the price of finished goods fall relative to wages; there is no chance that wind and solar PV are going to do this for us. We have a much more basic problem than “new renewables” can solve. If we can’t figure out a solution, our economy is likely to reach what looks like financial collapse in the near term. Of course, the real reason is diminishing returns from oil, and from other resources as well.

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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1,114 Responses to WSJ Gets it Wrong on “Why Peak Oil Predictions Haven’t Come True”

  1. Christian says:

    I have come to know that de Margerie, Total’s boss that was proposing petroeuro, died in an “accident” when a car crossed the way when his plane was landing. What do you think, don’t fight the Fed?

  2. Stefeun says:

    That was 3 1/2 months ago:

    UPDATE 1-Total CEO calls for bigger euro role in oil payments
    Sat Jul 5, 2014 7:12am EDT
    (Reuters) – Oil major Total’s chief executive said on Saturday the euro should have a bigger role in international trade although it was not possible to do without the U.S. dollar.

    Christophe de Margerie was responding to questions about calls by French policymakers to find ways at EU level to bolster the use of the euro in international business following a record U.S. fine for BNP.
    ”Doing without the (U.S.) dollar, that wouldn’t be realistic, but it would be good if the euro was used more,” he told reporters.
    “There is no reason to pay for oil in dollars,” he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.
    French Finance Minister Michel Sapin said on Thursday that euro zone finance ministers would discuss ways of boosting use of the euro in international trade in their next monthly meeting on Monday.
    “It would be a way to protect businesses when, outside of U.S. territory, they carry out transactions that are perfectly legal in the country they belong to,” he said.
    http://www.reuters.com/article/2014/07/05/idUSL6N0PG0E720140705

    And then yesterday:
    Total CEO de Margerie killed in Moscow as jet hits snow plow
    http://www.reuters.com/article/2014/10/21/us-russia-total-ceo-idUSKCN0I92HF20141021

    “De Margerie was a staunch defender of Russia and its energy policies, as the conflict in Ukraine has raised tensions with the West to levels not seen since the Cold War, and triggered economic sanctions against Moscow.
    … “Are we going to build a new Berlin Wall?” he said. “Russia is a partner and we shouldn’t waste time protecting ourselves from a neighbor … What we are looking to do is not to be too dependent on any country, no matter which. Not from Russia, which has saved us on numerous occasions.”
    … De Margerie also worked to ensure that Total would be in pole position to return to Iran if Western economic sanctions there were lifted.”

    Bad luck.

  3. VPK says:

    Fukushima’s work site is just another accident waiting to happen!

    http://www.chicagotribune.com/sns-wp-yomiuri–bc-japan-nuclear21-20141021-story.html

    ” A man from Hokkaido, who said it was the first time he had worked at a nuclear power plant, said: “In Hokkaido, it’s difficult to find a job. Recently, many people have tried to find a job either in Fukushima at the nuclear power plant or in Tokyo, where the Olympics will be held in 2020.”

    Some people are concerned about the deteriorating work quality as the number of staff unfamiliar with working at such an environment increases. A local worker in charge of electrical work on the premises said: “As there aren’t enough workers, there was no choice but to entrust a person who had the experience of working at another nuclear power plant for just a few months to lead a group of workers. It wouldn’t be surprising if an accident occurred at any time.”

    According to TEPCO, 25 workers experienced some work-related difficulties, such as injury or heat stroke, in fiscal 2012, but that figure increased to 32 in fiscal 2013. In March this year, a 55-year-old man died after he was buried in soil while excavating it. The accident was the first fatality since decommissioning work started.

    Akihiro Yoshikawa, 34, former TEPCO employee now supporting workers at the No. 1 nuclear power plant, explained that manpower shortages have occurred because veteran workers left Fukushima unsatisfied with short-term contracts and an unstable existence. “TEPCO and the government should improve the work environment while taking into account the long-term decommissioning processes, and also make efforts to educate workers to improve their techniques,” he said.

    • Christian says:

      Robert, that’s a call for you!

      • Behind a paywall but I registered. Unemployment problems are no surprise. It does sound like a difficult job. I sometimes encountered the same sweat problem upon donning a mask, gloves and protective clothing to enter a TB ward or isolation room at the non air-conditioned Houston Jeff Davis Hospital. I note that one worker death was described, but it was not from radiation.

  4. not fazed says:

    99.9 percent of species are already extinct. And this is already the Mass Extinction Event that happens once every few hundred million years. Odds are that our species wont survive. It is not like we are about to change otherwise we would not be here in this situation in the first place. We have been totally out of touch with Nature for far too long – if we ever were in touch with it, which seems doubtful. The attitudes and feelings of the masses are totally irrelevant to our well-being. 101 (BBC take note!) Survival is much harder than that. I wish that I could say that the sooner we learn that the better but the whole drift is that we are not going to learn anything of import. “What do we want? Four more planets! When do we want it? NOW!”

    Nearly everyone is about to die, get over it! Man is just another species &c.

    http://en.wikipedia.org/wiki/Extinction

    • Paul says:

      We all die sooner or later of course — the silver lining in this situation is that we call get to die at the same time — so it’s not as if anyone is going to miss you… nor are you going to miss out on anything (except more disease, starvation and suffering)….

      And for those who believe in heaven — this is an outstanding outcome — no need to wait for all your friends and family — the reunion happens immediately!

  5. VPK says:

    Money, Morals, Population, and Profit – All Heading For Collapse
    by Tomas DiFiore
    https://www.indybay.org/newsitems/2014/10/18/18762968.php
    Agricultural energy consumption includes energy needed to grow and harvest crops and energy needed to grow livestock. Crop operations consume much more energy than livestock operations, and energy expenditures for crops account for a higher percentage of farm operating costs. Nitrogenous (ammonia-based) fertilizers require large amounts of natural gas as a feedstock and provide heat and power for processing. The U.S. nitrogenous fertilizer industry consumed more than 200 trillion Btu of natural gas as feedstock in 2010 and another 152 trillion Btu for heat and power.” Don’t Panic, Grow Organic!

    • Don Stewart says:

      Dear VPK
      It all depends on how you count. The vast majority of corn and beans are fed to livestock, or else used for ethanol. Very little is used to feed humans. Do they count the calories used to grow corn and beans as ‘livestock’ or as ‘crops’? It’s really ‘livestock’. Plus the water pumped to irrigate the corn and beans, the fertilizers and pesticides required by the corn which feeds the livestock, etc.

      Most people who look at it conclude that it is a sort of U shaped curve. A lot of energy is required to grow and ship fresh lettuce from California to New York City, and a lot of energy is required to turn sunlight and rainwater into beef or chicken in the grocery store. The least energy is required to turn North Carolina sweet potatoes into sweet potatoes in a North Carolina grocery store. Which leads directly to the notions of replacing California or Mexican fresh vegetables with kitchen garden fresh vegetables and replacing animal products with more field grown calorie crops which are low in water content.

      Don Stewart

      • VPK says:

        Don look at the chart in the article link

        • Don Stewart says:

          Dear VPK
          I see by the chart that operating costs per acre are very high for rice, peanuts, and cotton. Remember that I am not a farmer…just a gardener who knows a little bit about farming. I am not surprised at the cotton figures. I don’t know much about rice. I am surprised by the figures on peanuts…we grew them without much expenditure or bother at the small farm I worked at. We did harvest them manually, which I suppose might add up for a big farm. I don’t know about mechanized harvesting for peanuts.

          Corn yields have multiplied by 6 times since 1931. Soybeans have also seen very large increases in yields. Therefore, a cost per pound (or dollar value) might show you something different than a comparison per acre planted, as other crops may not have experienced the same increases in yield.

          I don’t see anything to change my statement about the comparison of crops and livestock. If corn and beans are basically being grown to feed livestock and produce ethanol, then comparing them to something like sweet potatoes is misleading. The sweet potatoes are eaten directly, not in the form of meat and not as fuel for a vehicle. The statement on the chart doesn’t tell me how they did the calculations.

          I will amend my earlier statement about a U curve. By far the highest fuel cost is incurred for tropical products with high water content which are air-freighted to the US. For example, Chilean grapes in April. Bananas once came on banana boats and ripened on the boat. Now, I think even they are air-freighted…but I might be wrong about the bananas.

          It is also true that purely grass fed animals are pretty inexpensive in terms of water and fuel costs. The water and fuel costs that you see in connection with meat reflect the corn and soy feed as well as the irrigation water.

          Don Stewart

          • VPK says:

            Thanks Don, I once saw a program on sugar beets and the process of harvesting and converting them to a marketable product. It was eye opening! I suppose the same can be said for many other items of the same nature. Very energy intensive and automated.

            • Daddio7 says:

              For 24 years I did the mechanized potato farming thing. Planting potatoes is like going to war. We owned 8 tractors, three of them with 140 hp and 5 with 75 hp. We also had 8 2 ton trucks with bulk bodies on them. One day when planting I had to drive at one time or the other all eight of the trucks and 6 of the tractors. One tractor bedding up the rows, one pulling the four row planter, one carrying a nine row cross furrow opener, one carrying a water furrow plow, one with the seed loading conveyer mounted on it, and two pulling carts loaded seed. I also drove each of the trucks loaded with seed pieces.

              Harvesting potatoes is a pitched battle. On my three hundred acre farm we hired 12 workers, five of them drivers to ferry trucks to and from the field and seven people to work unloading and grading the potatoes. A larger farm with a wash plant bagging table potatoes will have fifty or more workers.

              Root crops are difficult to harvest. To do it by hand you need a strong back to pry them out of the ground. If we want end unemployment just get rid of herbicides and big tractors. The field in front of my house is bedded up with a 225 hp tractor pulling a 54 ft wide 16 row bedder. 60 years ago you would need 8 30 hp tractors with 2 row bedders.

            • Don Stewart says:

              Dear Daddio7
              Idaho potatoes were one of the poster children that Michael Pollan held up as demonstrating the dead end that industrial agriculture had gotten itself into.

              Don Stewart

            • 1) You have described an extremely high carbon footprint. Even though you are getting 20 ton to the acre, you are still a net energy loser. On the other hand, a small-scale farmer may only get 10 ton to the acre, but he/she is a net energy winner because of the lower carbon footprint.
              2) One of the reasons your soil is compacted and more difficult to dig is because of the heavy equipment. A self-fulfilling prophecy as it were. Another reason your soil is difficult to dig is lack of organic matter. My neighbors down the road have a big operation spread all over Whatcom County, Washington and sell seed potatoes around the world. When it rains in the winter, their fields have standing water. My field doesn’t. The reason is because higher organic matter in the soil acts as a sponge and holds more moisture. I also have to irrigate less because the soil doesn’t dry out so fast in the summer.
              3) In the brave new world to come, you won’t be able to run your big machinery because of tight diesel supplies and lack of spare parts and infrastructure. Your solution will be to put your current rogueing crews of Mexicans to work full-time in all aspects of production. Of course you will have to pay them more and the consumer will have to pay more. [Gee sounds like a progressive social program doesn’t it?]

            • Daddio7 says:

              I’m on the other side of the country near Hastings, Fl. We grow winter potatoes in sandy soil. It doesn’t compact and a 2 inch rainfall disappears in hours. I lost my farm 20 years ago. I’m on SS and just watch the guy who bought it grow bumper crops on one of the fields I helped clear and still using some of my old equipment. Me, bitter? No, well, a little.

            • Paul says:

              “Your solution will be to put your current rogueing crews of Mexicans to work full-time in all aspects of production.”

              Why would you need Mexicans? There will be millions of Americans willing to do anything for a piece of bread when this hits….

              Heck even Jamie Dimon might show up with his family to help out when BAU is done

            • The Mexicans I used to work with have a leg up because they know how to work. Same for the rogueing crews, raspberry pickers, dairy cow milkers, etc. that do the major work here in Whatcom County. Did I mention that I think quite locally? I don’t really give a rip how the cherry season goes in Lodi next year, for example.

            • Paul says:

              “To do it by hand you need a strong back to pry them out of the ground. If we want end unemployment just get rid of herbicides and big tractors.”

              I wonder how the Facebook generation will react to that… I can imagine most would prefer to perish before it came to that…. as would most of my generation….

              Ever observed someone who had a great amount of wealth – and then lost it? I’ve seen it once — and it is not a pretty site…. it would appear difficult to go from the pedestal back to the mundane world of a salaried worker…

              There are parallels here.

              I do not think many people would adapt well to subsistence farming and the brutal life that this involves.

            • The most important thing you can do for your children or grandchildren is to teach them how to use a shovel. That means YOU have an obligation. Standing back bitching and whining doesn’t do much good.

            • Daddio7 says:

              Use a shovel!? I tried to get my high school aged son to drive an air conditioned cab tractor for a few hours and he bailed out. He had better things to do. Twenty years later I live in a double wide and he has a four bed room home in a gated community so I guess he made the right choice. I should have went to law school like he did.

            • VPK says:

              Thanks Daddio,
              I can not picture a hoard of field workers replacing machinery. The same could be said for just about ALL cash crops gown and sold here in the United States. Even “organic” grower “Earthbound” has the same operation in California. They like to grow “baby” veggies…it is much easier to maintain organic methods that way.
              I find it difficult to envision our society transitioning to “garden farming” as written by author Peter Bane and others. Don Stewart, thank you for also promoting this idea.
              Many are called, few are chosen.

          • Steven Rodriguez says:

            Time for me to chime in with my full disclosure. Did the whole organic farming thing in California in the ’80’s ad early ’90s. farmed til the money was gone. Miss it in many respects, but gawd was it hard work for this farm animal…That said, it is still fun in moderation on my quarter acre garden.

            • Don Stewart says:

              Dear Steven Rodriguez

              I was at a Local Food event this evening. One of my points was that, working at minimum wage, a person can work for 15 minutes and earn enough to buy the calories and protein one needs for the day. Local food CANNOT be about saving money. It CAN be about food security in case of a collapse, or it can be about health, or it can be about aesthetics, or it can be about community and relationships, or it can be about ecology…but not about money.

              Don Stewart

  6. Paul says:

    Barack Obama and the Federal Reserve are lying to you. The “economic recovery” that we all keep hearing about is mostly just a mirage. The percentage of Americans that are employed has barely budged since the depths of the last recession, the labor force participation rate is at a 36 year low, the overall rate of homeownership is the lowest that it has been in nearly 20 years and approximately 49 percent of all Americans are financially dependent on the government at this point. In a recent article, I shared 12 charts that clearly demonstrate the permanent damage that has been done to our economy over the last decade. The response to that article was very strong. Many people were quite upset to learn that they were not being told the truth by our politicians and by the mainstream media. Sadly, the vast majority of Americans still have absolutely no idea what is being done to our economy. For those out there that still believe that we are doing “just fine”, here are 19 more facts about the messed up state of the U.S. economy…

    #1 After accounting for inflation, median household income in the United States is 8 percent lower than it was when the last recession started in 2007.

    #2 The number of part-time workers in America has increased by 54 percent since the last recession began in December 2007. Meanwhile, the number of full-time jobs has dropped by more than a million over that same time period.

    #3 More than 7 million Americans that are currently working part-time jobs would actually like to have full-time jobs.

    #4 The jobs gained during this “recovery” pay an average of 23 percent less than the jobs that were lost during the last recession.

    #5 The number of unemployed workers that have completely given up looking for work is twice as high now as it was when the last recession began in December 2007.

    #6 When the last recession began, about 17 percent of all unemployed workers had been out of work for six months or longer. Today, that number sits at just above 34 percent.

    #7 Due to a lack of decent jobs, half of all college graduates are still relying on their parents financially when they are two years out of school.

    #8 According to a new method of calculating poverty devised by the U.S. Census Bureau, the state of California currently has a poverty rate of 23.4 percent.

    #9 According to the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago.

    #10 In 2007, the average household in the top 5 percent had 16.5 times as much wealth as the average household overall. But now the average household in the top 5 percent has 24 times as much wealth as the average household overall.

    #11 In an absolutely stunning development, the rate of small business ownership in the United States has plunged to an all-time low.

    #12 Subprime loans now make up 31 percent of all auto loans in America. Didn’t that end up really badly when the housing industry tried the same thing?

    #13 The average cost of producing a barrel of shale oil in the United States is approximately 85 dollars. Now that the price of oil is starting to slip under that number, the “shale boom” in America could turn into a bust very rapidly.

    #14 On a purchasing power basis, China now actually has a larger economy than the United States does.

    #15 It is hard to believe, but there are 49 million people that are dealing with food insecurity in America today.

    #16 There are six banks in the United States that pretty much everyone agrees fit into the “too big to fail” category. Five of them have more than 40 trillion dollars of exposure to derivatives.

    #17 The 113 top earning employees at the Federal Reserve headquarters in Washington D.C. make an average of $246,506 a year. It turns out that ruining the U.S. economy is a very lucrative profession.

    #18 We are told that the federal deficit is under control, but the truth is that the U.S. national debt increased by more than a trillion dollars during fiscal year 2014.

    #19 An astounding 40 million dollars has been spent just on vacations for Barack Obama and his family. Perhaps he figures that if we are going down as a nation anyway, he might as well enjoy the ride.

    http://www.zerohedge.com/news/2014-10-21/19-surprising-facts-about-messed-state-us-economy

    • ordinaryjoe says:

      “#17 The 113 top earning employees at the Federal Reserve headquarters in Washington D.C. make an average of $246,506 a year. It turns out that ruining the U.S. economy is a very lucrative profession.”

      Thats it? Thats chicken feed. they must bring some home in their lunchbox 🙂

  7. not fazed says:

    Russia continues to favour the far left even though absolutely _everyone_ hates them to the _utmost_. East and West, pussies all…

  8. Don Stewart says:

    Dear Gail and All
    For a visual demonstration of the difference cover crops can make:

    When Fred Kirschenmann talked about the high rainwater infiltration rates in fields with cover crops, this is the sort of thing he had in mind. The high glomalin field can obviously deal much better with a North Dakota cloudburst than the dead soil on the left.

    Vera Bradova’s piece today on Resilence.org is a good piece of writing and will tell you a lot. I also recommend that you click through on the prairie restoration link and read the differences in specific actions which are required by different locations. Nature tends not to abide by our slogans.

    What works for my garden is no till as practiced by Ruth Stout and Emilia Hazelip…which is about relatively small and shallow disturbance as annual plants are harvested and planted, with continuous cover with mulch. I pat myself on the back and tell myself that I am mimicking Nature, which uses the big herbivores that Vera points to and the disturbance their hooves create. I am, of course, gardening. Farming a couple of thousand acres is going to require something different from what I do. There are beautiful pastures near my house with grass fed cattle performing the role which was previously played by the big, wild, herbivores. Optimal disturbance, lots of glomalin.

    Glomalin, by the way, is a relatively recent discovery by science. Nature invented the partnership between big herbivores, plants, soils, and the soil food web long before humans ever appeared.

    Don Stewart

  9. Don Stewart says:

    Dear Gail and All

    Few more notes on glomalin, cover crops, erosion, and such topics for those who are not hopeless doomers. All quotes from Eat Your Greens.

    pg 72: As they (soil food web critters) chew their way through their food supply of the recently dead plants and animals, soil organisms release organic acids that speed the breakdown of rock particles. They also produce glomalin: a sticky gelatinous substance that clumps soil particles together and makes pores. (The pores provide space for air and water in the soil. The dead plant material is frequently roots from plants which have been harvested or killed above ground.)

    pg 72 Cover crops are plants grown primarily to improve the soil rather than to provide food (although some do both). They are especially important anywhere the gardener doesn’t have access to enough organic matter to make sufficient compost. All cover crops capture carbon from the air and convert it to organic matter. Leguminous cover crops also capture nitrogen from the air. This nitrogen allows more proteins to be formed, which increases the biomass and ultimately the soil organic matter. (Which feeds the microbes which make the glomalin. No large farm has access to ‘enough organic matter to make compost’, and hence farms use cover crops. Which can work very well indeed, as you can see from the previous video with Gabe Brown.)

    pg 80 In regions with long dry seasons, as is the case in much of the tropics, perennials will outperform annuals. Perennial plants have deep roots that are more able to reach an underground water source during the dry season. (One size does not fit all. Beware of slogans.)

    pg 83 (List of edible weeds. We sold many of these weeds at the farm I worked at.)

    pg 90 (Controlling pests) Handpick insects. Early morning is when the insects are the slowest and easiest to pick. (And the MD will advise you that you should be out in the sunshine for at least 30 minutes early in the morning…so you kill two birds with one stone.)

    pg 94 Relatively simple practices such as keeping the ground covered, planting diverse species, recycling wastes into the soil, and growing cover crops, increases soil organic matter and fertility. The richer soil provides stronger plant cover that photosynthesizes better, turning more carbon from the air into living tissue. Rain is absorbed faster and held longer by the improved soil fostering greater life underfoot. If employed over a large enough area, these practices would reverse the damage to global climate systems caused by burning fossil fuels. (See Courtney White’s recent article at Resilience.org.)

    My comment relative to no-till. I think that the evidence shows that repeated plowing is generally destructive of soil. But soils need some disturbance. There are a variety of methods for supplying the optimum disturbance. The methods which are useful for a home gardener tend not to be helpful for a broad-acre farmer, and vice versa. The same observation can be made about many other specific actions…what works on 2000 acres isn’t necessarily appropriate for a 200 square foot garden, and vice versa.

    Don Stewart
    PS Hot off the presses. New research shows that seeds being sown for cover crops benefit from a quasi-religious ritual done with incense and candlelight. The humans should sing to the seeds which are about to sacrifice themselves for the common good. The song ‘Kumbaya’ seems to be particularly efficacious.

  10. oirdinaryjoe says:

    Walter;
    Dont get caught up in too much BS unless you choose too. Remember whats important
    That
    beautiful
    beautiful
    tulip
    dirt

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