The price of oil is down. How should we expect the economy to perform in 2015 and 2016?
Newspapers in the United States seem to emphasize the positive aspects of the drop in prices. I have written Ten Reasons Why High Oil Prices are a Problem. If our only problem were high oil prices, then low oil prices would seem to be a solution. Unfortunately, the problem we are encountering now is extremely low prices. If prices continue at this low level, or go even lower, we are in deep trouble with respect to future oil extraction.
It seems to me that the situation is much more worrisome than most people would expect. Even if there are some temporary good effects, they will be more than offset by bad effects, some of which could be very bad indeed. We may be reaching limits of a finite world.
The Nature of Our Problem with Oil Prices
The low oil prices we are seeing are a symptom of serious problems within the economy–what I have called “increased inefficiency” (really diminishing returns) leading to low wages. See my post How increased inefficiency explains falling oil prices. While wages have been stagnating, the cost of oil extraction has been increasing by about ten percent a year, described in my post Beginning of the End? Oil Companies Cut Back on Spending.
Needless to say, stagnating wages together with rapidly rising costs of oil production leads to a mismatch between:
- The amount consumers can afford for oil
- The cost of oil, if oil price matches the cost of production
The fact that oil prices were not rising enough to support the higher extraction costs was already a problem back in February 2014, at the time the article Beginning of the End? Oil Companies Cut Back on Spending was written. (The drop in oil prices did not start until June 2014.)
Two different debt-related initiatives have helped cover up the growing mismatch between the cost of extraction and the amount consumers could afford:
- Quantitative Easing (QE) in a number of countries. This creates artificially low interest rates and thus encourages borrowing for speculative activities.
- Growth in Chinese spending on infrastructure. This program was funded by debt.
Both of these programs have been scaled-back significantly since June 2014, with US QE ending its taper in October 2014, and Chinese debt programs undergoing greater controls since early 2014. Chinese new home prices have been dropping since May 2014.
Figure 1. World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data.
The effect of scaling back both of these programs in the same timeframe has been like a driver taking his foot off of the gasoline pedal. The already slowing world economy slowed further, bringing down oil prices. The prices of many other commodities, such as coal and iron ore, are down as well. Instead of oil prices staying up near the cost of extraction, they have fallen closer to the level consumers can afford. Needless to say, this is not good if the economy really needs the use of oil and other commodities.
It is not clear that either the US QE program or the Chinese program of infrastructure building can be restarted. Both programs were reaching the limits of their usefulness. At some point, additional funds begin going into investments with little return–buildings that would never be occupied or shale operations that would never be profitable. Or investments in Emerging Markets that cannot be profitable without higher commodity prices than are available today.
First Layer of Bad Effects
- Increased debt defaults. Increased debt defaults of many kinds can be expected, including (a) Businesses involved with oil extraction suffering from low prices (b) Laid off oil workers not able to pay their mortgages, (c) Debt repayable in US dollars from emerging markets, including Russia, Brazil, and South Africa, because with their currencies now very low relative to the US dollar, debt is difficult to repay (d) Chinese debt related to overbuilding there, and (e) Debt of failing economies, such as Greece and Venezuela.
- Rising interest rates. With defaults rising, interest rates can be expected to rise, so that those making the loans will be compensated for the rising risk of default. In fact, this is already happening with junk-rated oil loans. Furthermore, it is possible that the US Federal Reserve will raise target interest rates in 2015. This possibility has been mentioned for several months, as part of normalizing interest rates.
- Rising unemployment. We know that nearly all of the increased employment since 2008 in the US took place in states with shale oil and gas production. As these programs are cut back, US employment is likely to fall. The UK and Norway are likely to experience drops in employment related to oil production, as their oil programs are cut. Countries of South America and Africa dependent on commodity exports are likely to see their employment cut back as well.
- Increased recession. The combination of rising interest rates and rising unemployment will almost certainly lead to recession. At first, some of the effects may be offset by the impact of lower oil prices, but eventually recessionary effects will predominate. Eventually, broken supply chains may become a problem, if companies with poor credit ratings cannot get financing they need at reasonable rates.
- Decreased oil supply, starting perhaps in late 2015. The timing is not certain. Businesses are likely to continue extraction where wells are already in operation, since most costs have already been paid. Also, some businesses have purchased price protection in the derivative market. They will likely continue drilling.
- Disruptions in oil exporting countries, such as Venezuela, Russia, and Nigeria. Oil exporters generally get the majority of their government revenue from taxes on oil. If oil prices remain low, oil-related tax revenue will drop greatly, necessitating cutbacks in food subsidies and other programs. Some countries may experience overthrows of existing governments and a sharp drop in oil exports. Central governments may even disband, as happened with the Soviet Union in 1991.
- Defaults on derivatives, because of sharp and long-lasting changes in oil prices, interest rates, and currency relativities. Securitized debt may also be at risk of default.
- Continued low oil prices, except for brief spikes, because of high interest rates, recession, and low “demand” (really affordability) for oil.
- Drop in stock market prices. Governments have been able to “pump up” stock market prices with their QE programs since 2008. At some point, though, higher interest rates may draw investors away from the stock market. Stock prices may also decline reflecting the poor prospects of the economy, with rising unemployment and fewer goods being manufactured.
- Drop in market value of bonds. When interest rates rise, the market value of existing bonds falls. Bonds are also likely to experience higher default rates. The combined effect is likely to lead to a drop in the equity of financial institutions. At least at first, this effect is likely to occur mostly outside the US, because the “flight to security” will tend to raise the level of the US dollar and lower US interest rates.
- Changes in international associations. Already, there is discussion of Greece dropping out of the Eurozone. Associations such as the European Union and the International Monetary Fund will find it increasingly difficult to handle problems, as their rich countries become poorer, and as loan defaults become increasing problems.
In total, eventually we are likely to experience a much worse situation than we did in the 2007-2009 period, although this may not be evident at first. It will be only over a period of time, after some of the initial “dominoes fall” that we will see what is really happening. Initially, economies of oil importing countries may appear to be doing fairly well, thanks to low oil prices. It will be later that the adverse impacts begin to take over, and eventually dominate.
Major Concerns
Inability to restart oil supply, even if prices should temporarily rise. The production of oil from US shale formations has been enabled by very low interest rates. If there is a major round of debt defaults by the shale industry, interest rates are unlikely to fall back to previously low levels. Because of the higher interest rates, oil prices will have to rise to an even a higher price than required in the past–in other words, to more than $100 barrel, say $125 to $140 barrel. There will also be a lag in restarting production, meaning that high prices will need to be maintained for some time. Bringing oil prices to a high level for a long time seems impossible without crashing the economies of oil importers. See my post, Ten Reasons Why High Oil Prices are a Problem.
Derivatives and Securitized Debt Defaults. The last time we had problems with these types of financial instruments was 2008. Governments around the world made huge payments to banks and other financial institutions, in order to bail them out of their difficulties. The financial services firm Lehman Brothers was allowed to go bankrupt.
Governments have declared that if this happens again, they will do things differently. Instead of bailing institutions out, they will make changes that will make these events less likely to happen. They will also make changes in how shortfalls are funded. In many cases, the result will be a bail-in, where depositors share in the losses by “haircuts” to their deposits.
Unfortunately, from what I can see, the changes governments have made are basically too little, too late. The new sharing of losses will have as bad, or worse, impacts on the economy than the previous government bailouts of banks. Regulators do not seem to understand that models used in pricing derivatives and securitized debt are not designed for a finite world. The models appear to work reasonably well when the economy is distant from limits. Once the economy gets close to limits, many more adverse events occur than the models would have predicted, potentially causing huge problems for the system.1
What we are likely to be encountering now is a combination of defaults of many kinds simultaneously–derivatives, securitized debt, and “ordinary” debt. Many of these risks will be shared among institutions, so that banking problems will be widespread. The sizes of the losses are likely to be very large. Businesses may find that funds intended for payroll or needed to pay suppliers are subject to haircuts. How can they operate in such a situation?
It is even possible that accounts under deposit insurance limits will be subject to haircuts. While deposit insurance is available in theory, the amount held in reserve is not very great. It could easily be exhausted by a few large claims (the scenario in Iceland a few years ago). If governments choose not to make up for shortfalls in funding of the insurance programs, the shortfalls could end up with depositors.
Peak Oil. There seems to be a distinct possibility that we will be reaching the peak in world oil supply very soon–2014 or 2015, or even 2016. The way we reach this peak though, is different from what most people imagined: low oil prices, rather than high oil prices. Low oil prices are brought about by low wages and the inability to add sufficient new debt to offset the low wages. Because the issue is one of affordability, nearly all commodities are likely to be affected, including fossil fuels other than oil. In some sense, the issue is that a financial crash is bringing down the financial system, and is bringing commodities of all kinds with it.
Figure 2 shows an estimate of future energy production of various types. The steep downslope is likely because of the financial problems we are headed into.2
Figure 2. Estimate of future energy production by author. Historical data based on BP adjusted to IEA groupings. Renewables in this chart includes hydroelectric, biofuels, and material such as dung gathered for fuel, in addition to renewables such as wind and solar. (It is based on an IEA inclusive definition.)
A major point of this chart is that all fuels are likely to decline simultaneously, because the cause is financial. For example, how does an oil company or a coal company continue to operate, if it cannot pay its employees and suppliers because of bank-related problems?
Our Long-Term Debt Problem. Long-term debt is an important part of our current system because (a) it enables buyers to afford products, and (b) it helps keep commodity prices high enough to encourage extraction. Unfortunately, long-term debt seems to require economic growth, so that we can repay debt with interest.
Figure 3. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.
Economists conjecture that economic growth can continue, even if the extraction of fossil fuels and other commodities declines (as in Figure 2). But how likely is this in practice? Without fossil fuels, we can exchange baby-sitting services and we can give each other back rubs, but how much can we really do to grow the economy?
Almost any economic activity we can think of requires the use of petroleum or electricity and the use of commodities such as iron and copper. A more realistic view would seem to be that without the materials we generally use, our economy is likely to shrink. With this shrinkage, long-term debt will become increasingly impossible. This is one of the big problems we are encountering.
Our Physics Problem. Politicians and businesses of all types would like to advance the idea that our economy will continue forever; the politicians and businesses of every kind are in charge. Everything will turn out well.
Unfortunately, history is littered with examples of civilizations that hit diminishing returns, and then collapsed. Research indicates that when the early economies underwent collapse, the shape of the decline wasn’t straight down–declines tended to take a period of years. Not everyone died, either.
Figure 4. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov in Secular Cycles.
Physics gives us a reason as to why such a pattern is to be expected. Physics tells us that civilizations are dissipative structures. The world we live in is an open system, receiving energy from the sun. Examples of other dissipative structures include galaxy systems, the solar system, the lives of plants and animals, and hurricanes. They are born, grow, and eventually stop dissipating energy and die. New dissipative structures often arise, if sufficient energy sources are available to dissipate. Thus, there may be new economies in the future.
We would like to think that we can stop this process, but it is not clear that we can. Perhaps economies are expected to reach limits and eventually collapse. It is only if economies can add large amounts of inexpensive energy resources (for example, by discovering how to make use of fossil fuels, or by discovering a less-settled area of the world, or even by adding China to the World Trade Organization in 2001) that this scenario can be put off.
What Can We Do?
Renewable energy has recently been advertised as the solution to nearly all of our problems. If my analysis of our problems is correct, renewable energy is not a solution to our problems. I mentioned earlier that adding China to the World Trade Organization in 2001 temporarily helped solve world energy problems, with its ramp up of coal production after joining (note bulge in coal consumption after 2001 in Figure 5). In comparison, the impact of non-hydro renewables has been barely noticeable in the whole picture.
Figure 5. World energy consumption by source, based on data of BP Statistical Review of World Energy 2014. Renewables are narrowly defined, excluding hydro-electric, liquid biofuels, and materials gathered by the user, such as branches and dung.
Guaranteed prices for renewable energy are likely to be an increasing problem, as the cost of fossil fuel energy falls, and as buyers become increasingly unable to afford high energy prices. Issues with banks, making it difficult to pay employees and suppliers, are likely to be a problem whether an energy company uses renewable energy sources or not.
The only renewable energy sources that may be helpful in the long term are ones that do not require buying goods from a distance, and thus do not require the use of banks. Trees growing in a local forest might be an example of such renewable energy.
Another solution to the problems we are reaching would seem to be figuring out a new financial system. Unfortunately, debt–and in fact growing debt–seems to be essential to our current system. We can’t extract fossil fuels without a debt-based system, in part because debt allows profits to be moved forward, and thus lightens the burden of paying for products made with a fossil-fuel based system. If a financial system depends on the accumulated profits of a system without fossil fuels, it can expand only very slowly. See my post Why Malthus Got His Forecast Wrong. Local currency systems have also been suggested, but they don’t fix the problem of, say, electricity companies not being able to pay their suppliers at a distance.
Adding more debt, or taking steps to hold interest rates even lower, is probably the closest we can come to a reasonable way of temporarily putting off financial collapse. It is not clear where more debt can be added, though. The reason current debt programs are being discontinued is because, after a certain level of expansion, they primarily seem to create stock market bubbles and encourage investments that can never pay back adequate returns.
One possible solution is that a small number of people with survivalist skills will make it through the bottleneck, in order to start civilization over again. Some of these individuals may be small-scale farmers. The availability of cheap, easy to use, local energy is likely to be a limiting factor on population size, however. World population was one billion or less before the widespread use of fossil fuels.
We don’t have much time to fix our problems. In the timeframe we are looking at, the only other solution would seem to be a religious one. I don’t know exactly what it would be; I am not a believer in The Rapture. There is great order underlying our current system. If the universe was formed in a big bang, there was no doubt a plan behind it. We don’t know exactly what the plan for the future is. Perhaps what we are encountering is some sort of change or transformation that is in the best interests of mankind and the planet. More reading of religious scriptures might be in order. We truly live in interesting times!
Notes:
[1] Derivatives and Securitized Debt are often priced using the Black-Scholes Pricing Model. It assumes a normal distribution and statistical independence of adverse results–something that is definitely not the case as we reach limits. See my 2008 post that correctly forecast the 2008 financial crash.
[2] Points are plotted at five-year intervals, so the chart is a bit more pointed than it would have been if I had plotted individual years. The upper limit at 2015 is an approximation–it could be a year or so different.
XRayMike says “I’m well aware of alternative energy being fossil fuel extenders. Last man standing on the last patch of burnable, energy-dense fuel is how capitalist carbon man will extinguish himself. His way of life is nonnegotiable and irredeemable. INDUSTRIAL CIVILIZATION is in the process of going ‘poof’ as its leaders play monkey politics and the masses are drowned in a sea of consumerist images.”
Mike, I’ve said it before and I’ll say it again: you write beautifully. Dare I suggest a comparison to Kunstler? And yet, gifted though you are, you too have a blind spot. With Jim, it’s a purposeful unwillingness to explain away intent – it’s just all one giant, unorganized clusterfvck. Imagine if only he could be grafted with PCR – yipes.
In your case, you seem to be at a point where you still believe some group, someone is to blame. Therefore, if we could collectively remove those obstacles, then humanity would be free to develop workable solutions to the myriad problems facing us. Perhaps someday you will shift your position, and come to accept that we are no different from yeast.
Compelled by the same core motivations to compete for energy, expel waste and re-produce.
So-called ‘bad men’ don’t really lead – rather, they simply exploit reality. It is the domesticated masses who still believe in organizational leadership – whether in politics or religion – who become the tools aka “useful idiots” used by the informed to maximize their comfort and ease. That’s the bottom line, and why people such as myself & WWW suffer from neither hopium or mopium.
WWW is in complete agreement with this post.
With Jim, it’s a purposeful unwillingness to explain away intent – it’s just all one giant, unorganized clusterfvck. Imagine if only he could be grafted with PCR – yipes.
LMAO! Thanks! Great observation.
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Money is a bearer of information about goods and services. Inflation is a form of lying about their decreasing value, pretending that they retain the same value as yesterday but in reality cheating the producers.“ In money-measured system which is growing, the lying is kept to a minimum. But with exponential growth of demand and inexorable decline in supply (diminishing returns), the entire system must eventually break down, regardless of how much lying there is.
Our system is now desperately dependent on lies, otherwise called “faith in the economy.” The neurotic demigods in the U.S. government have apparently decided that global conquest is the answer to their dilemma. This decision has now led to the chaos in Iraq, Libya and — yet to come — Afghanistan, with Ukraine a major question mark. With a great many of tatooed, drug-addicted youth now engaging in “gender studies” as an excuse for serious intellectual or useful work, the population is consigning itself to its own dissolution. So eventually the government will probably “busy giddy minds with foreign quarrels” (Shakespeare, King Henry IV, Part II, Act IV Scene V). That seems to be a favorite way to exit history.
Wars are a good excuse for borrowing money and for employing young people. There is also a chance of spoils, so they have been popular though out the ages. I was flabbergasted when I saw how much benefit the US got from participating in World War II, in terms of new jobs, and ability to get away from the Depression. I am sure all of the debt played a big role in this, as did the ramp up of fossil fuels which was enabled by all of this debt and additional employment.
“Wars are a good excuse for borrowing money and for employing young people.”
This seems a potentially terminal flaw in humans. Why is it that we can mass mobilize to destroy other humans, but cannot mass mobilize for other goals?
“I am sure all of the debt played a big role in this, as did the ramp up of fossil fuels which was enabled by all of this debt and additional employment.”
Is it the debt and employment which enabled more energy, or is it more abundant, cheap energy which enabled the employment and debt?
Without cheap energy, the today’s types of employment could not exist. Everything I can see says we also need debt to get cheap energy out of the ground and into usable form. Debt keeps prices high enough to encourage extraction, and it makes products made with cheap energy affordable. What we really have is a networked system, with the requirement working both directions.
The Myth of Human Progress and Spirituality: Collective delusions that is all about oneself
Fantasy is the driving force to humans.
If wasn’t for our yearning for significance, religious supernatural, and superiority fantasies humans would never had achieve the growth that we have.
The distractions we’re witnessing, that blind us, ensure us that our self-destruction (by endless growth and progress on a finite planet) goes unmolested.
Because, the alternative would lead us to the painful reality that the greatest threat to us is our own specie.
And facing reality is the least attractive option of all.
This is a reason that every book that is every book about our problem with oil comes up with a Happy ever after ending, even by researchers who are trying to look at the question honestly. I have talked to a Springer editor at length, and they say that they want book titles that are not scary, and endings that give people hope for the future. I get the impression that other companies are pretty much the same way.
All the best in the New Year to all!
In connection with the recent attacks of the people shouting “Allahu Akbar” in France, it comes to my mind the connection with the fall of oil prices:
http://upload.wikimedia.org/wikipedia/commons/b/b0/Crude_oil_prices_since_1861.png
Also the attacks of the September 11th, 2001 in New York came when the fall of the oil price was present. The Muslim populations seem to be especially stressed by the fall of oil price, as their expansion in tha last decades was unprecedented and was closely connected with abundant revenues from oil.
After the “japanization” phase of the postindustrial (postp peak coal) countries due to the high oil prices comes the “arabization” phase of the countries that had no coal (and thus no industry), but just imports of all goods from the industrial countries in exchange for oil. The return to medieval ages in the case of the latter is easier, as their transation was directly from the medieval phase to the modern and postmodern phases, skipping the industrial phase.
When the oil prices fell to their lows around 2000, there was a dot com bubble burst, as the rise of technology stocks was connected with the rising oil prices. Now, we have oil price fall again – can we await another burst of the technology buble even before the burst of the buble of shale oil investments? Or the burst of the technology bubble will cause uptick in oil price that will save us from burst of the shale oil investment bubble or at least delay it?
http://www.usfunds.com/media/images/investor-alert/_2013/2013-10-18/EMRG-Technology-Stocks-Surpass-2000-Levels-10182013-lg.gif
Todays oil extraction is more and more closely connected with the technology, maybe both bubbles burst more or less simultaneously, as the sign that the technology can not keep pace with the oil depletion?
http://money.cnn.com/2014/11/13/investing/nasdaq-5000/
We will see…
“Todays oil extraction is more and more closely connected with the technology”
Correlation is not causation. I suspect both are the results of easily available credit. The end of the Fed’s QE program is likely the pinprick to all the bubbles. There is lag time for the effects to spread out and be felt.
Dear Matthew and MG
One of the things that Mobus and Kalton emphasize is evolution. That is, so long as energy is flowing through the system, the system will evolve toward more complexity…e.g., more sophisticated use of technology. ‘We have long felt (evolution) deserves a revered seat at the table (of systems science) for the simple reason that it is the heart of all identifiable phenomena in the universe.’ pg 528
So it is true that the extraction of tight oil and the methods used to extract tight oil have co-evolved. The monetary value of the oil funds the more complex methods, in a positive feedback loop….At least, that is the ‘free market’ narrative.
Of course, we live in a world where central banks routinely intervene when things aren’t going to suit them. And so we have to ask the question, ‘Have the central banks intervened in such a way as to promote mal-investment in tight oil?’
I’m not sure of the answer. It seems to me that the negative cash flows generated by the tight oil companies argue FOR the thesis that money printing plus ZIRP forced money into the high yield space, and funded mal-investment in tight oil. However, there are tons of people with supposed research showing that tight oil costs have come way down as a result of evolution in extraction techniques.
I tentatively vote fot mal-investment, but my opinion is rather tepidly based on shaky information.
Don Stewart
Dear Don Stewart,
yes, the technology evolves. It is driven by the need for preserving the status quo under diminishing returns. It can not replace smaller and smaller amounts of resources, but it rather acts like getting the most of what we still have at our disposal, i.e. higher quality, higher suitability, higher efficency etc.
Dear MG
Let’s consider the case of an organization ‘remembering’ information, similarly to the way our bodies ‘remember’ metabolic information through genes. This example is from page 548 in Mobus and Kalton.
‘The knowledge is built up over time through the accumulated experiences of the organizational personnel who ‘learn’ from their experiences and develop solutions to problems that they then record for the betterment of the organization. In days past the medium of recording was basically paper. Today, of course, just about everything is recorded digitally, and paper is only used as a communications medium between computers and humans. Gone are the heavy filing cabinets of yesteryear. These have been replaced by computer files and heavy bulk disk/ tape reading/ writing machines. One day even these will likely disappear to be replaced by solid-state file memory not unlike the device know as the memory stick, which behaves similarly to a disk drive, but with no moving parts.’
I can’t square your explanation with the description above. Instead, I would use the ‘virtuous circle’ analogy…better technology results in more productivity which permits yet another ramp up in technology. Or with Adrian Bejan’s Constructal Law: over time, everything tends to flow more easily.
Don Stewart
“It is driven by the need for preserving the status quo under diminishing returns.”
With a few notable exceptions, such as bicycles, most technology is about consuming more, not less. While the per-unit energy might be less, people simply consume more units and/or more people are able to consume units of whatever that technology unlocks.
Dear Matthew Krajcik, I agree with you about the credit, I was just writing that the oil extraction and the technology coexist. The harder to get oil needs higher technology. If the harder to get oil is less needed due to the lack of demand, so the technology for the extraction of the harder to get oil is not needed, too.
Interesting ideas! Thanks!
Peak coal took place in Europe. China still had plenty, so its use is a big part of the recent rise of China.
I haven’t really studied what happened in the “Japanization” phase. I know that Japan was the growth wonder for quite a while. At that time, oil was still cheap, but I am not sure where they got it from. They didn’t extract it themselves, I know. They also built up a fleet of nuclear power plants, using fairly inexpensive designs, since they had no local fuel they could use. Unfortunately, the inexpensive nuclear designs have not proved to be Tsunami and Earthquake proof. I imagine that they went through a stage of borrowing a lot of money to build infrastructure. Then, when the maxed out on infrastructure growth, things slowed down. Adding high oil prices and high prices for other imported fuel in the 2000s was a disaster.
And you are right that the Arabs are now getting their day in the sun. It is difficult to create enough jobs for them, though.
This experience with the industry (coal) of the Western (Christian) civilization is the key thing that distinguishes Christian civilization from the Muslim civilization. At the religious lessons during my high school studies, we had a very good teacher and we were taught that releigion has existential roots, that the Christianity is based on the history of the survival of the Jewish nation and later of the whole manking. The Western civilization learned to survive using coal. But the Muslim civlization could not get the oil out of the ground before the coal-based technology (pipes etec.) were developed. Also, based on this defficency of the coal, the Muslim world was not first who invented and developed the nuclear technology. There is this huge technology gap between the two civilizations, the long existential experience in using technology as the means of survival.
That reminds me of the importance of the geography of countries to their development. The confluence of water transport, coal and iron deposits worked in England, but in China all those essentials were scattered too far apart plus the rivers didn’t suit either. Otherwise China could well have stolen a march on Europe.
Good points!
The decline of Islam civilization vs, Christian was well underway before a lump of coal was taken out of the ground.
“The decline of Islam civilization vs, Christian was well underway before a lump of coal was taken out of the ground.”
Looking at everything through the prism of energy, what temporary change allowed such a rise and fall? Was it suddenly wetter in the MENA region, enabling more men and horses and surplus to enable more specialists and soldiers for a few hundred years?
I think David Mongomery in “Dirt:The Erosion of Civilizations” has some things to say on growth in the MENA region. He talks about irrigation adding salt to the land, and making it less good for crops (except where it involves capturing water from a river like the Nile, and getting the silt from elsewhere). I am sure there were also erosion issues. Add a little climate change, and growing population relative to the amount of arable land, and there are a lot of diminishing returns.
Another point, raised in the book Secular Cycles by Turchin and Nefedov is that the practice of allowing up to four wives for those who could afford so many wives had the effect of pushing up population a great deal faster than limiting men to only one wife. The reason allowing four wives increased the numbers so quickly is because then the rich had a way of putting their wealth to use, in generating greater population. The poor could never afford very many children regardless. So Moslem populations has more problems with overshoot and collapse than others, because the land would not expand to support the rising population.
Christians had Peat Moss before coal, especially in the Netherlands. It worked pretty much the same way. Accumulated carbon in convenient form.
Coal was what enabled technology. Without coal, we couldn’t make metals in quantity. Lack of metals was a huge deterrent to technology. With coal, we could make metals cheaply, and we could make goods that use metals cheaply. All of this made goods that were not too far out of reach of the general population, especially if a little debt was added.
Oil, when it was originally extracted, we sold at a price comparable to coal–in other words, very low. It enabled vehicles and other mobile technology. But the US got to this technology first, after we started extracting oil in the late 1800s.
You are right, that the Muslims really needed pipes etc. made with coal-based technology. Coal has an extremely desirable quality–it was cheap. We really haven’t found anything to replace this quality.
That is why Dr. Hargraves, whose video I posted, titled his book Thorium, Energy as Cheap As Coal. And yes we have that energy available, but because of (unfounded) fear, we have not chosen to use it.
Enough about thorium! If it really worked, someone would have a full sized reactor up and running. Electricity isn’t oil, so even if we could implement it “yesterday”, it wouldn’t solve our problem with oil.
“Electricity isn’t oil, so even if we could implement it “yesterday”, it wouldn’t solve our problem with oil.”
If there was abundant electricity available at very high returns, say 100:1 EROEI, than it becomes practical to look at simply synthesizing hydrocarbons for whatever purpose you need them. The US Navy has been working on implementing a system to synthesize jet fuel using the nuclear power on an aircraft carrier, since it is more secure and cost effective compared to shipping jet fuel 15,000 miles away, particularly during a war.
Whether this attempts will work out, and whether they will come soon enough before everything falls apart, I guess we’ll find out sooner or later.
Anyone know how much spare capacity a nuclear submarine has? If one berthed in port could it supply some essential need? When the time came to decommission it could simply be scuttled in 10km of ocean trench[?] After all once we lose the technical expertise available today the deep sea bottom will be completely inaccessible and the wreck would eventually be subducted into the crust.
Wrong again Gail. Thorium’s high temperature makes it possible to make methanol and dimethyl ethers which are substitutes for gasoline and diesel. And these reactors can be made small and modular. They can small enough to be hauled on a tractor trailer. They could power all the ships and trains in the world. They were originally designed for airplanes although shrinkage to that size may be a long time off. They can desalinate water. They can make fertilizer. They can completely replace oil, perhaps except for possibly plastics — I don’t know about them. They can make fertilizer.
As I said, I can lead a horse to water.
I think you owe it to your readers to at least look at all the sites I have shown you, rather than dismiss these things out of hand. You don’t want videos so I have sent articles. If you refuse to check these sources out, I think you are simply presenting a picture of no hope to your readers, when the right thing to do is to verify that what I have actually shown you is false before you present such a picture.
I think you will find that what I have said is quite true. The thorium cycle has already been proven to work in over 20 reactors world wide according to the Weinberg’s website.
Yes David, thorium is the solution that could save the world, but for some strange reason nobody is rolling it out.
Let’s not forget that if this really is a feasible technology that every venture capitalist on the planet would be throwing money at this hand over fist.
Then we have central governments printing literally trillions and handing flinging it at anyone who wants it.
They had a pile of money for the frackers, which we know is not a solution.
But nobody has any money for the miracle cure.
Give your head a shake mate. If thorium were feasible then there would be a mad dash to roll this out right now.
Think Manhattan Project x 1,000,000.
The constant banging on the drum about this is giving me a headache.
Take an aspirin because thorium is on the way. The age of thorium is not far off. Twenty nuclear plants have proven the thorium cycle works. Read the 25 page Weinberg paper I linked to and weep, since that is what Armageddonists do. Can you read 25 pages?
I could waste 20 minutes reading 25 pages but that that would be 20 minutes that I would have wasted from my finite life. 20 minutes that I can never get back to do something useful with.
You seem obsessed with thorium. Is this some sort of fetish you have, or perhaps you have money in one of these bogus thorium scams that I have seen floated?
In law we call that the ostrich defense. It seldom is convincing.
And no, I have no financial interest in any thorium based enterprise. In fact, half of my retirement is in Exxon stock. Which is why I come to oil and gas blogs on occasion. That, and the fact, I grew up in Texas and actually worked for oil companies when I was younger. Texas is unique in that it is the only state in the country that has an oil and gas question on the bar exam. At least that was the case 37 years ago when I took the bar there.
Proven to work, and proven to work cheaply and reliably, are two different things. The “bugs” need to be worked out and the cost needs to be competitive with coal. If the technology were widely perceived to be cheap and reliable, we would have many people working on trying to get thorium reactors installed.
The technology was just re-discovered about 7 or 8 years ago. It started with a few thorium advocates. But interest will soon reach critical mass. Especially since the Chinese are so hell bent on bringing this reactor to fruition.
If we were not so deep into financial problems (tied in with our problem with diminishing returns) we could wait a few more years until this technology was ready. As I said, though, it only gives us electricity. We really need cheap liquid fuel now.
Agreed.
When the first commercially viable reactor is built, I promise to buy 200 cases of the finest champagne, charter private jets for all to Barbados, and book rooms at the most expensive hotel in town for all FW members and we will celebrate.
Fortunately this will not happen so no need to prepare for bankruptcy court.
davidgmills,
Well, there is your water hole:
Thorium: the wonder fuel that wasn’t
http://thebulletin.org/thorium-wonder-fuel-wasnt7156
Benefits of thorium as alternative nuclear fuel are ‘overstated’
http://www.theguardian.com/environment/2012/sep/13/thorium-alternative-nuclear-fuel-overstated
——
Regarding the growth and decline of the Japanese economy, see this:
http://www.zerohedge.com/news/2015-01-10/princes-yen-how-central-banks-transformed-japans-economy
Much of what is said is expected to be taken entirely on trust. It seems that the wealth that Japan created was desired by entities working through western proxies such as the IMF and the world bank who created the bubble and extended the recession for their own interests. Caution is advised.
Thanks for the link regarding Princes of the Yen. In my opinion, it is completely justifiable to create any recessions that stop the artficial bubbles of economic growth based on credit expansion, when the limits of the cheap oil availabe are reached. This way much worse catastrophy is prevented.
The end of the Japanese bubble in the beginning of the 90s was diffrent from the real estate bubble burst in 2008, as the latter was caused by insolvencies. These two bubbles are not comparable, as the latter was about actual hitting the peak credit.
The long term deflation (of the bubble) in case of Japan had not abrupt catastrophic results, as one can see from the document, also as there was still free available capacity of cheap oil. After adding China as the big consumer of oil in the first decade of the new millenium, the harder to get oil was needed to meet the world demand.
Astounding!
Richard and MG missed the point of the movie, pretty much, entirely.
The Prince of Yen, by Mefobills:
Essentially, Japan stayed on a wartime footing after the war, and directed credit into production of “peacetime goods.” They used a CREDIT WINDOW to control VOLUME of credit money in supply.
The PATH of this money benefited the people as it was into production. Japan did very well under this system, rising to become the world’s second largest economy and with a very high standard of living.
The Bank of Japan wanted to break this system, probably under orders from international banksters via BIS. The immense bubble pushed by BOJ made Japan worth more than the continental U.S.
Credit money was created against Land and Property, typical of this money type. BOJ became a credit pusher, giving any warm body a loan. This pushes land asset classes relative to other classes.
The U.S, did the same during its housing bubble as FIRE sector (private bank credit) is always associated with land and insurance.
BOJ purposefully popped the bubble once it was inflated enough, in order to reap the harvest. Debt instruments, with inflated values, remained in place, but former credit as money was being recalled to ledger for destruction, thus collapsing money supply into depression.
This harvest was necessary to create a crises, which then allowed BOJ to become “INDEPENDENT” which is really CODE FOR being like other western central banks under the BIS. Structural Reform was the “code words” used during the crises in order to get the legal changes desired by BOJ.
——
Dear escravaisaurabr,
I understood the point of the movie. But I do not believe in purely financial explanations. E.g. Japanese population started the trend towards shrinking of the population in the late 70s (http://www.academia.edu/2368322/Explanations_for_Japanese_Population_Decline). The movie mentions the fear from not enough workers and how this was solved by excessive recruiting costs. As can be seen in the Figure 1 of the mentioned document, the bubble did not reverse the population decline. And the Japanese did not allow immigrants into their economy. There were physical limits underlying the end of the bubble. I think that this bubble allowed the Japanese to preserve a quite high standard of living while the population was going down. After the end of the bubble, the government spending started to increase the debt:
http://www.surlytrader.com/the-relative-strength-of-countries/debttogdp/
You need young people for taking loans. When the population gets older, the demand for loans (especially long term debt) goes down.
Japan loans to private sector:
http://lh3.ggpht.com/-volVDDOc0tc/UP0Tt03m_cI/AAAAAAAAAGY/TC3tnOA00wI/s1600-h/japan-loans-to-private-sector3.png
How to bring an economy down.
Thanks for this summary of what the movie said.
With respect to the US situation, I reached the conclusion same conclusion regarding what the US did after World War II as well. The difference was that we did our debt outside the government sector, and didn’t pop it. http://ourfiniteworld.com/2011/10/10/the-united-states-65-year-debt-bubble/
Regarding Japan’s level of debt today, one question I have is the extent to which the debt really represents pension promises to the people of Japan. In most countries, Social Security (or the equivalent) is not funded by debt–it is pretty much pay as you go. If a country tries to fund a program by debt, the amounts become astronomical. Of course, the result is the same either way–the promises can’t be met. At a minimum, a big drop in payments to the elderly must be made.
Fair point. I was not certain that the subject of the film was on topic for the thread, and should have highlighted the Bank of Japan as the alleged primary mover in Japan’s expansion and contraction. I also think that the film underplays the role that Japanese government agencies played in Japan’s successes.
I note that the lack of searchable data and references detracts from the film’s credibility.
I wish they would write an article, instead of a 92 minute movie. I don’t have 92 minutes to watch the movie, and at the end I don’t have any key paragraphs I can copy.
I can easily believe that there was a lot of debt behind the economic growth. Adding infrastructure so that a country can move up to the modern world adds a big one-time effect. Once that big one-time boost is gone, the game is entirely different. This is the issue China is now reaching.
Both countries have very intelligent populations who are used to following orders from above. This allowed them to get great benefit from the one time gain. Japan originally had the benefit of very cheap oil, plus cheap electricity from inexpensively built nuclear. Now those benefits are going away as well. It doesn’t have any good energy sources of its own.
China has a lot of coal, but it is (or soon will be) reaching limits as well.
Peter Ward: “Engineering our way out is our only hope, that I can see, but engineering our way out will only work if we recognize the limitations of engineering our way out…that we have to take dire steps soon or it will be too late.”
Strange, I thought that we engineered ourselves into this predicament. So I am not sure how we engineer our way out.
The green revolution, that grand feat of crop engineering was what allowed us to build the population to a magnificent crescendo of 7B+,scurrying humans ravenously chewing through the planet’s resources like rats through an electric cable ensuring that when the end came, it would be cataclysmic.
Compounding that ‘solution’ our best and brightest introduced the wonders of nuclear energy and now we have thousands of ponds that are filled with death that require endless cooling otherwise they go fizzzzzz for decades providing us with an endless supply of cancer causing toxins.
Let’s not forget financial engineering. When we invented the concept of interest and debt, that was what really go us on the fast track to this massive collapse.
Progress bad.
Well only bad if you have to be the ones who didn’t get to enjoy all the wonderful things that it had to offer while BAU was still functioning i.e. the youth.
Oh well, at least they got to play Facebook and Grand Theft Auto and watch American Idol and Dancing with Stars. Most have lived very fulfilling lives.
Gail,
One thing bothers me at the moment about the supposed effect of low oil prices on shale production. That is shale gas production. I checked the EIA site and that shows dry gas production growing again after a long period of fairly flat production. Yes natural gas prices are very low at the moment and have been below production cost (supposedly) for quite some time. If the low prices haven’t discouraged shale gas production, why would it discourage shale oil production? This has me puzzled.
This story is not well enough developed to see a whole lot of reporting on it.
I know that the big source of growth in natural gas production is Pennsylvania Marcellus Shale. I looked up some stories on debt related to gas on Pennslyvania Marcellus Shale. This is what I found:
http://www.businessweek.com/articles/2014-05-01/junk-bonds-fuel-the-shale-gas-boom
http://www.bloomberg.com/news/2014-04-30/shale-drillers-feast-on-junk-debt-to-say-on-treadmill.html
So natural gas is like oil in with respect to funding using junk bonds.
Price Decline Affecting Natural Gas Companies Jan 7, 2015 http://www.charlestondailymail.com/article/20150107/DM05/150109461/1280
Excerpt:
My impression has been that there have been real improvement in natural gas well productivity in the last couple of years, due to improvements in fracking. But now, prices are low, so that there is at least some cutback in drilling. The Marcellus natural gas rig count is down from 83 to 77, between December 12 and January 9.
The comments about frackers being laid off quoted above related to West Virginia. I don’t think that this is quite as good an area as Pennsylvania is in terms of cost of production.
So yes, natural gas does seem to be affected by low prices as well. With all of the debt they have, they will keep drilling as long as they can though. We will have to wait and see whether the downturn in prices leads to bankruptcies.
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“I wonder why it is that those of us who are aware of the situation (myself included), feel compelled to enlighten others.”
W, perhaps a lot of us still have a residue Jesus complex? There is an unconscious need to dress up in loin cloth and to preach sin and the end of the world? A need that the world might be “saved”? We like to pretend that it matters.
My attitude is perhaps more eastern, I see the world of human concern as an illusion that is driven and conditioned by our instinctive will to survival. Genocide is objectively no different to mowing the lawn or weeding the garden. We “think” that it is different because we are humans and we are wired to think that people, especially ourselves, are more “important”. We have the same importance as a bush or a sunrise, none.
I have my own “ideals”, conditioned by my own character, that tend toward human excellence rather than mediocrity, but I can see them for what they are, ultimately illusions.
I see it as immature or naïve to care about people dying. Sure it would be fine to play that game if we had real power to make a difference, but the guardianship complex gets a bit silly when all of our experience tells us that we already know that there is absolutely nothing that we can do that would make any real difference. People live and people die, that is how it is. It is more mature to just accept that it really doesn’t matter if civilization collapses.
I see charity adverts on the TV for starving kids in Africa, begging me to pick up the phone and to give them my card details, and I am like, “Oh just get on with the programme already!” I can see that deep down, I really don’t care, I just see them as a nuisance trying to manipulate my instincts with their tears so that I cough up, when I could be watching the next section of the afternoon serial.
I am probably quite proud that I don’t care. It gives me a sense of superiority, of independence, a philosophical detachment that is pleasant. I fancy that I could open a beer, light a joint, and watch civilization collapse on the wide screen, and view it as entertainment, a mere spectacle for my distraction, just like the nightly TV news with bombs, floods and hurricanes. I wonder if our exposure to TV actually encourages that effect, to see life as entertainment.
The ancient sceptics taught that there is nothing “good” or “bad” in itself, and that once we realise that, we are no longer disturbed, we achieve a pleasant tranquillity. It is a bit like going to bed at night, and leaving all of one’s cares behind. One abandons the waking world of concern and duty, of restlessness. One ceases to care and one finds a calm, pleasing comfort within oneself.
I would recommend a study of ancient scepticism. I will provide a link but I would suggest that the best approach would be to read Sextus Empiricus, especially on epistemology and ethics. His books are few and reasonably short and you should study them all closely. (Here I go playing Jesus, why should I care??)
http://plato.stanford.edu/entries/sextus-empiricus/
quote:
– the freedom ‘from the trouble associated with the opinion that something bad or good is present’ will ‘come to him from his thinking nothing good or bad by nature’ (M XI 118; my emphasis);
– ‘when reason has established that none of these things is by nature good or by nature bad, there will be a release from disturbance and a peaceful life will await us’ (M XI 130; my emphasis);
– ‘It will only be possible to avoid this [sc. trouble], then, if we show to the person who is disturbed on account of his avoidance of the bad or his pursuit of the good, that there is not anything either good or bad by nature’ (M XI 140; my emphasis).
Over the past year or so my perspective has shifted similarly.
Once one reaches this level of awareness, the baggage of religion and culture falls off one’s back as does water off of a duck.
Not that it matters but I now look at complex issues through a new prism, one of clarity. I observe not to stand in judgement rather as an exercise in mental stimulation, much as I would observe two masters playing chess, or two top football clubs moving the ball around with incredible skill.
I look at Russia or Syria and I am no longer interested in right or wrong. Because there is no right or wrong, only the desire for all involved to survive. What I am interested in (and again, it is pointless) is what is really happening. It is like a game where you can see the slight top of the iceberg but nothing more. And you try to find out what is below the surface.
Nothing more than a silly game, a way to pass the time., an amusement. Kinda like playing Sudoku at a reasonably challenging level. Finite World is like that too.
That is the way I feel about economics. It is such a maligned field because the amount of deliberate ignorance and probably wanton misinformation that it has to be set right. I can hardly comment as an expert, being an architect/builder, but if economists are getting it wrong it’s up to anyone and everyone to try to right the ship. We owe it to the community even though we are amateurs.
I think that you may be on the wrong site, because this one is not about “alternative religion” – such as you are preaching – and not even about “alternative energy”, which simply does not exist either.
Detachment is all very well, but a difficult concept to grasp immediately after your entire family has been transformed into pink mist by a predator drone. Still. we can take comfort from Yogananda who says:
http://www.theself.com/lifeisadream_yogananda.cfm
“We can say that God should never have created this world in which there is so much trouble. But on the other hand, mystics say that if you knew you were Gods, you wouldn’t mind it. If you watch a movie, you like a lot of action rather than something dull, don’t you? That is the way you should enjoy this world.
Look upon life as a movie and then you will know why God created (imagined) it. Our problem is that we forget to see it as God’s entertainment (the play of consciousness). When we have finished seeing the movie, we know that nobody was killed; nobody was suffering. In fact, that truth is the only answer I see when I look at the drama of life. It is nothing but an electrical-shadow-show, a play of light and shadows.
Everything is the vibration (imagination) of God’s consciousness condensed into (an appearance of) images. The essence of those images cannot be severed by a sword, nor burned, nor drowned, nor suffer pain of any sort. It (consciousness) is not born, nor does it die. It only (appears to) pass through a few changes.”
Make a few substitutions and you have a description of a computer sim.
Where I grew up people who wielded power used tools of destruction with no feeling I despised them but I desired that power. I spent a lot of years cultivating detachment. The degree to which I succeeded in retrospect is quite frightening to me now.
To be able to experience compassion is to be alive. I can think of no worse fate than detachment. Nor would I care to be carried away by every little event that occurs by a sea of emotions. If something really wrong occurs in your presence like a child being harmed and you are compassionate you will act. Its not courage your body will act before your mind even has a chance and the problem will be solved or you will be dead or injured so much your physical ability to act will be removed. My experience in the few times of my life that it has occurred is the problem gets solved very very very fast. Compassion is the only capability that humans posses that allows appropriate action. Compassion allows effortless power to be applied when appropriate. Compassion allows the only real joys in life, appreciation of beauty, and love.
I am not sure I have a good answer. I will have to admit that my own charitable giving is much more centered around my own geographical area now than it was at one time. Giving food to Africa, when there are farmers trying to make a living there is totally counterproductive. Even apart from that, doing things now that will have the effect of greatly increasing its population is not very helpful either. My big increase in giving has been to Planned Parenthood.
Good one, Gail. That is what I shall do, donate to planned parenthood twice a year, once at Christmas and once on my birthday, Dickens be damned!
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Yes grandson I remember it was the death of the cartoonists that started world war III. Australia, France, Germany(?). Someone wants to ignite something. I have no idea who or what. But since the topic is 2015.
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One of our problems is we are too slow to respond to changing conditions. A lack of political flexibility and speed inhibits our economy and management of energy production to our best advantage. We could vary the % of ethanol in gasoline affecting gasoline supplies and the crude oil raw material. Why play this Venezuela/Warren Buffett railroad game with the Canadian oil instead of shipping the fastest safest way possible such as Keystone XL. The Jones Act could be modified upon occasion to allow reasonable water freight rates to balance out supplies, demand and refining capacity/type. Short term import/export management of oil is no different than the ability to vary interest rates to induce certain economic performance. There is a long list of things we could do. As Gail points out, there are a lot of balls in the air.
All of these things have consequences.
I suppose if oil prices are too low, we could remove ethanol from gasoline. That would move part of the price problem from oil producers to ethanol producers, at least to some extent. (The amount of ethanol used in the US is something under one million barrels a day. The energy content of the ethanol is lower, about two-thirds of that, so removing US ethanol would increase US world oil demand by about 600,000 barrels a day. But ethanol producers would end up going out of business, if we wanted them later.)
Alternatively, if there were a shortage of oil (not likely, giving the affordability nature of the problem), we could increase ethanol production. But if 50% of our corn is going to ethanol now, does this mean we want 75% of it to go to ethanol, as we raise the ethanol blending percentage from 10% to 15%? There would also be a need for more ethanol production facilities, so the ramp-up would be slow. The gasoline added would be equivalent to 300,000 barrels per day. Not a huge reward, for taking away half of our remaining corn production. Maybe the change would reduce our meat consumption, so there would be some benefit.
Looking through your list, there might be some targeted things that could be done, but they would need to be thought through very carefully, to understand the second, third, and fourth order consequences of our actions.
“I suppose if oil prices are too low, we could remove ethanol from gasoline. ”
Only if you go back to putting MTBE or lead in the fuel to boost octane. Otherwise, we would have to use lower compression engines, but it would be difficult to modify existing engines, new heads would have to be put on to lower the compression, which would increase pollution and reduce power and fuel efficiency.
“But if 50% of our corn is going to ethanol now, does this mean we want 75% of it to go to ethanol, as we raise the ethanol blending percentage from 10% to 15%? ”
Likely, it would be better to switch to a different crop, such as energy beets, or if the technology proves viable, genetic modification to enable efficient conversion of cellulose, so that we eat the corn kernels and turn the stalks into ethanol instead. Or grow poplar trees and make methanol instead.
Of course, the far simpler option would be conservation.
NREL work on turning wood into syngas, syngas into methanol, then methanol into gasoline:
http://www.nrel.gov/docs/fy11osti/47594.pdf
Excerpt from executive summary:
The thermochemical route of biomass gasification produces a syngas rich in hydrogen and
carbon monoxide. The syngas is then converted into methanol, and the methanol is converted to
gasoline using the methanol-to-gasoline (MTG) process first developed by Exxon Mobil. Using a
methodology similar to that used in previous NREL design reports and a feedstock cost of
$50.70/dry U.S. ton ($55.89/dry metric tonne), a plant gate price (PGP) was estimated. For the
base case the PGP is predicted to be $16.60/MMBtu ($15.73/GJ) (U.S. $2007) for gasoline and
liquefied petroleum gas (LPG) produced from biomass via gasification of wood, methanol
synthesis, and the methanol-to-gasoline process (MTG). The corresponding unit prices for
gasoline and LPG are $1.95/gallon ($0.52/liter) and $1.53/gallon ($0.40/liter) with yields of 55.1
and 9.3 gallons per U.S. ton of dry biomass (229.9 and 38.8 liters per metric tonne of dry
biomass), respectively. For comparison to ethanol, this is $1.39 per gallon ($0.37/liter) ethanol
on an energy equivalent basis.
I never use fuel that has ethanol included. I always use premium, It is less harmful to my engine and I get better miles per gallon. A gallon Ethanol has 75% of the energy of a gallon of gasoline.
So, it is probably MTBE. Higher energy density than ethanol, less than gasoline, and there tends to be up to three times as much MTBE used compared to ethanol. Whether that results in net more or less energy than ethanol as octane booster, I don’t know, it seems each company and grade has its own blend so it is not so simple to find out.
MTBE is made from natural gas. The allegation at the time it was removed was that there was danger of polluting the water supply with it. Otherwise, it was a product that was (or could be) produced in the US, from US resources.
Even switching to a different crop from corn means that more land must be disturbed with planting crops, potentially leading to erosion. Often, the new crops are added in areas that were marginal for farming in the past, such as hillsides. In the US, we don’t terrace at all–we just run our big machines up and down the hills.
“Even switching to a different crop from corn means that more land must be disturbed with planting crops, potentially leading to erosion.”
You have to replant annuals every year anyways, It is just whether you continue planting 100% corn, or diversify. Finding the right soil and climate for a particular crop might mean farming in different areas, or it might mean simply changing over crops on existing farms.
It seems odd, that places that have always had expensive energy are better able to adjust, while areas that thrived on cheap energy cannot afford to move to more expensive energy without breaking the whole system apart.
The corn that is planted now is used for something–feeding animals or human food additives (ugh) or ethanol. So I don’t think anyone is talking about rolling back corn planting, unless ethanol production is reduced. Thus, sugar beets would be in addition to everything else that is planted. That is the reason for my concern.
The “warm” parts of the world get an extra dose of solar energy. The people living there have never had a need for building sturdy houses or heating houses. Thus, a little bit of high-priced energy suits them fine, for the minor role it plays. People in cold climates quickly deforested areas around cities. They needed something else, so were the first to add coal. They need their energy products to be really cheap, because they use so much.
“The corn that is planted now is used for something–feeding animals or human food additives (ugh) or ethanol. So I don’t think anyone is talking about rolling back corn planting, unless ethanol production is reduced. Thus, sugar beets would be in addition to everything else that is planted. ”
The idea is to use beets, with an EROEI >5:1, instead of corn with an EROEI between 0.8 and 1.4:1 for ethanol. Also, beet juice is a fantastic alternative to road salt or toxic chemicals to de-ice highways.
“The “warm” parts of the world get an extra dose of solar energy.”
Do they actually get more solar energy, or just more evenly distributed throughout the year? I suppose slightly more, since they never have a season where the sun has to cut through so much atmosphere to reach them. Otherwise, the longer summer days must give us quite a bit more energy for a short amount of time.
Cost of production (and availability of land suitable for the crop) are the important variables in deciding whether or not to produce a particular crop. EROEI is not. EROEI makes an interesting calculation, but if higher EROEI does not result in real world differences in the cost of production, it really is nonsense that people should not pay attention to. EROEI has a lot of “issues” because of the narrow boundaries used in calculation. For example, if beets require a lot of hand labor rather than machine labor, beets will have the better EROEI, because human labor, and the oil products that that human labor will buy, are ignored in the EROEI calculation. Cost of production is an all-inclusive measure of energy requirements (since what humans use their wages for is to buy products that are made with energy). EROEI strips out many pieces of this overall cost. Focus on EROEI also encourages people to ignore real world issues, like differences in need for water or types of soil. If beets are not being grown widely for ethanol production now, there is no doubt a reason for it.
Call me Mr. Tangential, but we reached for the stars, finally..
As NASA released new improved Hubble telescope images of the famous gaseous star nursery, they revealed one tidbit, that one of those huge stellar gaseous colums is high (long) around 40 trillion kms. Since we are now into at least hundreds, perhaps even several thousand trillions of financial derivatives, I claim here this is it, that’s the milestone. No future interstellar travel and other hitech fantasies, but this has been achieved here on the earth already by virtual financial madness on the back of planetary fossil fuel extraction.
In some ways, these products remind me of the video games a lot of people play. Only there are real world consequences, and real people suffer if things go wrong.
What To Eat After The Apocalypse
Engineer Joshua Pearce explains how to feed 7 billion people after a global catastrophe.
http://nautil.us/issue/101/in-our-nature/what-to-eat-after-the-apocalypse
I can see eating leaves after chewing them, or making pine needle tea. I am not so sure about manufacturing chain saws in quantity and sending them all over the globe, in order to be able to cut down trees.
That is actually a very weak article.
He suggests we could eat more sea food which is ridiculous because as we know the seas are a couple of decades of being emptied of fish at current consumption rates.
Chewing leaves and spitting out the roughage or eating roasted human flesh? He fails to mention that second option. It’s happened before, but this time the famine will be global, and endless.
When an individual’s survival is at stake, many will do just about anything not to die. There are no rules or taboos.
Dear Gail,
I found it a bit surprising, depressing and naive, that you consider religious or survivalist solutions/outcomes. This does not diminish your analyses of the world economy and energy supply, but it doesn’t seem to belong in your article. It feels pointless and weird to read you pondering some pre-Big Bang planning of our universe, vs. the Rapture, vs. survivalism.
It would surely be interesting to read an article by you concerning the various possibilities of societal evolution, remedial, adaptive, or mitigating course of actions. This side of things, how badly do we collapse, what to advocate to minimize damages and suffering, is surely most important. Even though it may extend far outside your field of expertise, I do look forward to some new article of yours devoted to the subject. You would surely contribute interesting ideas.
Thank you very much for your research and contribution around world energy issues, and please forgive the comments above. They are not meant to be unfriendly or embarrassing. On the contrary, I hope you take them humorously. Maybe you were precisely being humorous and I misunderstood it.
Best wishes!
“It would surely be interesting to read an article by you concerning the various possibilities of societal evolution, remedial, adaptive, or mitigating course of actions. This side of things, how badly do we collapse, what to advocate to minimize damages and suffering, is surely most important. Even though it may extend far outside your field of expertise, I do look forward to some new article of yours devoted to the subject. You would surely contribute interesting ideas.”
Yes, this would make for an interesting article!
The issue is that we are dealing with the collapse of an economy. Without fossil fuels, our abilities at societal evolution, remedial, adaptive, or mitigating course of actions are pretty limited. It would be nice if we could talk about all of us getting along with less, but that lesser amount looks to be dramatically less, not enough for most people to survive on.
I suppose there is some possibility that I am not getting the timing on this right. For example, governments will be able to figure out a way to keep things afloat a while longer, before the crash comes. In that case, we can perhaps continue down our current path a while longer. Cutting back on fuel usage is in some sense not really even helpful, because it pushes the economy toward collapse quicker, through inadequate demand and low prices. This is very difficult for people to understand.
Dear Gail,
Building demolition also brings them down quicker. The advantage is to control how they collapse.
It is not the same, for instance, whether the economy collapses bringing down institutions with it, in a context of chaos, or not. Whether vegetables still make it to local markets or not. Whether gasoline, gas and electricity are still available, even partially, or not. Whether hospitals are still open and pharmaceuticals available, or not.
Our collapse is under way. In Europe and other places we are experiencing it already. The New York Times just published an article on scientists underpredicting global warming and not being vocal enough about the seriousness of climate change. The same criticism could be made of scientists doing work in the field of energy&economy.
You should organize I think, to study and put forward proposals. It is possible to use models to predict what would happen to the economy, government budget, unemployed, etc. if we took certain measures. We need to do this, tweak the parameters, and urge society to start implementing, softly maybe, but asap, the policies required. We are all on a train headed for a broken bridge. Either we design some program to bring the train to a halt before the bridge, or we will have it halted only a bit further down the railway, just a lot more painfully.
I have a hard time seeing any policy that would really fix our problem. Our economy needs to grow, in order to exist. Slowing the economy (through high-priced energy, or by unproductive investments, or by any other means) brings on catastrophe. Artificially slowing the economy only brings collapse quicker.
The result is the same either way. There really is no way to “bring the train to a halt before the bridge”. We are flying on momentum. We bring the train to a halt, and we fall into the abyss.
Something that I’ve said multiple times, and will repeat again is that Renewables are only as renewable as the equipment used to harvest them.
“Economists conjecture that economic growth can continue, even if the extraction of fossil fuels and other commodities declines (as in Figure 2). But how likely is this in practice?”
It is my understanding that few economists include debt and resource scarcity in their so called models.
You don’t need conspiracies to explain the troubles of Russia and Venezuela. Incompetence and corruption will do. Although Putin recognized the need to wean himself of the a complete dependency on oil, the economy riddled with corruption could not do so. The jails are filled with businessmen who were found guilty in kangaroo courts so his cronies could get their business. Meanwhile Russia has to depend on imports for about 90% of it’s consumer goods. Have you ever seen anything made in Russia for sale besides matryoshka dolls?
In Venezuela Chavez got rid of all the experienced oilfield workers and replaced them with politically connected friends. To no one’s surprise, production has declined markedly. They can’t even run an oil economy, It’s a shame about Chavez because he did a lot for the poor, but the good is being overwhelmed by economic collapse ( which happened even at $100 oil)
I don’t think Russia and Venezuela are any more or less corrupt than America, or many other countries for that matter.
As you may know, it is completely legal for US elected officials to trade on insider information (loads of the officials involved in creating the new health care policies were front-running making fortunes)
It is also legal to bribe politicians. It is referred to as lobbying, and so long as the money is passed through a registered lobbyist it is absolutely ok.
It is also permissible to make promises of high paying jobs to government officials while they are in office to ensure they do your bidding. Look at all the regulators who stepped into high paying Wall St jobs within weeks of the new policies being rolled out.
Across the pond, Spain’s Rajos government was caught red-handed in a massive corruption scandal a couple of years ago. Have there been any consequences. Nope.
One this is for certain, you are either ‘with us or against us’ And if you are not on the side of the US the as the saying goes ‘brace – brace – brace’
Because they will come after you with everything in the arsenal. Coups, dirty tricks, attacks on your economy, assassins, and if all else fails, they will invade you.
So I don’t think corruption is what determines success or failure rather it is choosing to be on the side of the winner.
At the moment it would appear that many countries are beginning to question if America will be the winner. China and Russia are teaming up and from what it looks like other BRIC countries are coming to their side.
Russia has just made overtures to the EU suggesting they dump the US and join the Sino Russian sphere. It all comes down to interests and of course Russia can arm twist by reminding the EU that the coldest months of winter are upon them. It would be terrible to have a cut in the gas supply.
We all have corruption, but the issue is how pervasive it is. I know many people who can run their business with minimal political interference, or bribes. I realize that as your business becomes bigger some bribery ( campaign contributions! ) may be needed.
Google and Facebook started with minimal political interference. Now that they are big they have to deal with all sorts of demands. Do you notice when new software products take off their creators move to the US, not Russia or Venezuela.
i don’t think corruption factors into their decision to move to the US.
Access to capital, talent and the massive market are far more important than corruption or lack thereof.
I’m not sure why you brought up corruption, Russia and tin foil stuff, but corruption and tin foil stuff is happening. Resource limits is going to trump all of that. The effects of resource limits (sub $50/bbl) is putting a bigger squeeze on Russia than the corruption and tinfoil stuff going on in Ukraine. To say that I’m disgusted with the world for relying on amateur political intrigue and corruption to get by when we’re facing such monumental problems is an understatement. Also, there is the propensity for this stuff to backfire. We’ve hit the wall, and we’re going to do some stupid things because of desperation.
“To say that I’m disgusted with the world for relying on amateur political intrigue and corruption to get by when we’re facing such monumental problems is an understatement.”
This is par for the course for our species.
We believe we are superior, intelligent and all that.
But we are no different than a pack of starving dogs who have been thrown a piece of raw meat.
It’s because “Economics is a faith based discipline” [Lord May].
Enough said!
I understand that economists don’t consider debt very interesting-just interest paid from one person/business to another, for the use of money.
Resource scarcity implies limits to growth. The models that economists make seem to assume that if economic growth of, say, 3% is expected for one time period, it should be expected for all future time periods. This is nonsense, if a person understands how limits apply.
Hi Gail,
This is my first response to your blogs even though I have been reading them with great interest for quite a few years now. Thank you for your wonderful insights shared for our benefit.
I wanted to comment on your last paragraph. The way I see it is that the crash of our civilization is inevitable because of the philosophical mindsets which govern our behavior; essentially “me first” reflecting greed and selfishness. This has also been true of every previous civilization (all of which crashed eventually) and therefore the crash that is coming is totally predictable. The net effect of this mindset is to always grow what we have into something more for me (and for my family, organization and nation too), more success, more fame, more status, more food, more energy, more wealth which will inevitably hit limits. Coming from a Christian perspective, I see that God’s plan from the beginning was to build a civilization based on a godly, total giving of self for others mindset. That’s was what Jesus demonstrated in His first coming, even dying for us; He gave everything. My expectation from reading the Bible is that this current civilization, which is the first global one and which is based on energy resources that cannot be renewed within a reasonable time span as far as we know, will collapse and will be replaced by one which will be installed when Jesus returns after a period of crisis. It will be sustainable (last forever) because its godly, philosophical mindset will be based on total giving from unconditional love of every one in it just like what Jesus did.
As we can see, and as to be expected, religion is a total and complete failure when it comes to attempting to tame the wild beast that is man.
Religion has tried every trick in the book from the threat of burning in the fires of hell to imposing a guilt trip on the beast.
Of course the beast gets unlimited chances to reform, to beg forgiveness for his uninterrupted string of sinful behaviours that start from the moment he hits the schoolyard, to the day he gets dropped into a hole in the ground.
Religion tells us we are better than beasts. We are special. We are good. But we are flawed.
We are not flawed. We are not good nor are we bad. We are animals. And like any animal we want to survive. And we will do anything, including kill, to fulfill the genetic code that is surging through each and every one of us.
This guy Jesus gave it his best shot. But he was never going to kill off our instincts. Because that is needless to say, impossible.
I don’t believe in the first act let alone the second however even if I am wrong, and the second coming does happen, I fail to see how he will succeed next time around.
Come to think of it, if the end goal of god was to have man be a meek, kind, gentle, sharing organism, why didn’t he just create us in that mold from the get-go? Seems he is going to a heck of a lot of trouble to try to change us.
And as god is all powerful (omnipotent in fact) how can it be that Jesus failed the first time around?
When discussing religion, leave your reason at the door!
Perhaps the plan with religion is to provide a balance against natural instincts, to show a way to be happier in life here on earth. While our natural instinct is to carry a grudge, a person’s mental health is better off without that grudge, (at least when there are enough resources to go around, and resource related grudges make sense). And sharing resources so that household size is greater than 1.0 is an efficient way of making resources going farther. So talking about sharing, even within family groups may be useful.
Of course, if the amount of resources declines greatly, the extent of sharing may need to be rethought.
The word “religion” originates from Latin religāre “to tie up”, from RE- + ligāre “to bind”.
Therefore, humanity’s transition to ever more bound (interindebted) states is religion in action.
A banknote is a binding link:
banknote : a promissory note issued by a central bank, serving as money
http://www.collinsdictionary.com/dictionary/english/banknote
By increasing the number of banknotes in circulation, bankers make humanity more religious–more bound, interindebted by means of banknotes. Bankers are indeed doing God’s work!
I really doubt that any new civilization that is established from a religious perspective will be on this earth. Any civilization that is established on earth will have the problem of needing to compete with other species. In order to do this, there necessarily has to be a fair amount of the me-first behavior. We even have to compete with the tendency of humans to overpopulate the earth, which adds to the me-too philosophy. I can imagine a civilization that is not on the earth, and that does not involve adding or reducing population over time. Citizens there do not eat or drink, so there is no need to work for food or beverage. It would be very strange, relative to life on earth, however.
Responding to all the replies to my first comment. God is so awesome in power and love, that He made us with the capacity for free will choices unafraid of the results of that freedom He gave us and He gave guidance as to the best way to live. We chose to leave God out and so have reaped the consequences of our choices; that is why the world is getting into such a mess. God has not failed at all and His ultimate goal for a world wide civilization will eventually succeed. I think it is very difficult to sustain the view that we are just animals; that is the way we behave when at our worst. Mankind at their best has achieved amazing things and demonstrated awesome love and wisdom; we are far more than animals. There is extraordinary purpose in our existence and and who we are, but we will only discover this if we apply the full capacities of our reason together with what God has revealed. I am confident that the eternal civilization that God is the process of establishing on earth has already reached advanced development, but it must first involve establishing a new earth after ridding this earth of evil. There is no space here to develop the reasons for this position, but it stands very strongly with full support from the combination of all fields of knowledge including science.
Bring on the rapture!
“For me it’s the ultimate cop out, saying we don’t control our own lives, that it’s all ordained.”
But he just said:
“God is so awesome in power and love, that He made us with the capacity for free will choices unafraid of the results of that freedom”
Which is completely opposite to determinism. Free will and determinism are mutually exclusive.
The word religion means “binding”. Humanity’s religiousity is its being bound, interindebted by means of banknotes. The banking system is the true church.
Read more: http://2012wiki.com/index.php?title=Novelty_theory
Most seem to belong now to the church of “he who dies with the most toys wins.” Other religions passed down traditional values. But these are no longer needed, if the government and the magic of capitalism provide everything. Even intergenerational debt goes away, since the government will pay for everything. The only problem is the implosion problem, as we pass the point where economic growth can continue.
Perhaps a simple solution rather than anything too complicated, too “thoughty”, and/or religious would suffice: a balance in competition and compassion. We all have plenty to give and to share, but with our mindset on “lack” we are immobile in any change needed to survive the consequences of current civilization. If people become empowered in their ability to be creative there will be no need to fill space with unnecessary purchases of “stuff.” We all have too much, and many of us possess addiction, a mental illness, to shopping, as well as other vices we have been patterned to believe in through media. Ask “what can I do?”
I choose to share my unique talents and insight and although I may possess less than the average American, I am happy.
Thank you Gail for sharing yours.
You are welcome. I am happy that I have enough other income (husband working, house paid for, etc) that that I don’t need to charge readers for reading my pieces.
Yep, very sad what happened this morning in Paris:
Charlie Hebdo: Gun attack on French magazine kills 12
http://www.bbc.com/news/world-europe-30710883
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Another informative post Gail. Thank you.
Hi Gail, I’m writing this off the top of my head (hope that translates properly) and as a follow up to my earlier post. I’s just some simple economics, but …
A) The FED pushes money into the banks, and it leaks into the real economy, financing excess oil production amongst other activities. When the FED tapers and stops, the US$ appreciates, and artifically induced activity declines, but oil production continues to grow. Oil prices fall because there is not enough activity to absorb production until the real economy adjusts. That adjustment in a normal world would be by either shutting in wells a few percent, or by oil exploration declining quite rapidly. (If you think about it, that’s what the RHS of your graph shows). In a normal world, the decline in exploration activity will probably balance the gains in activity from low oil prices.
B) This is not a “normal” world. As a start, the effects of the FED taper (and there are complications with this), at a guess, will mean that the expected upturn in the real economy may be much less than expected (the pushing on the string continued ad infinitum), so growth will be anemic. Faced with that, the Central Banks, (see earlier post) may intervene. Supporting all the US shale industry debt would cost “only” US$200Bn or so, or a little over two months peak QE. Buying oil in the forward markets could move the oil price almost wherever policy dictated. Over a long period, it would be quite expensive, but how much does this money actually cost?
C) The downside of B) is potentially horrendous. Ever more uneconomic investments are made. Scarce resources are misallocated. And instead of a series of perhaps manageable defaults, the possibility of coincident catastrophic failure increases as time goes on. Time to worry.
Thanks for your ideas. How about this variation?
After a lag, the money the FED pushes into the banks finances excess oil production. A lot of the benefit of this oil production is absorbed by workers involved in producing the oil, and the spending they do, and indirect spending as a result of this. In OPEC, much of the benefit of the oil they produce is absorbed by the spending they do, both in terms of workers, and in terms of tax money, some of which is spent outside their countries.
With the benefit of the oil being absorbed by workers and by related tax revenue, and the streams of spending they generate, there has been little real benefit to flow back into the rest of society. As a reflection of this, incomes of common workers have stagnated. They cannot spend very much, and they can’t increase their borrowing.
As a result, the debt Ponzi scheme that has worked for a very long time is no longer working. The new debt is not financing enough benefit so that the rest of society can afford to pay it back.
The standard supply-demand cutoff for oil doesn’t work very well, for a variety of reasons. Companies have huge debt obligations they must pay. Governments desperately need the tax revenue. There are all kinds of derivatives sold. The extraction of oil is a long process, with much of the cost paid up front, so it doesn’t make economic sense to cut off production once it is started.
As a result of these dynamics, we end up with a huge mismatch of supply and demand that does not go away quickly. That seems to be what is happening now.
I haven’t thought about buying oil in the forward markets. Need to “run” now.
Gail, Commonwealth or federal governments, ones that issue currency, don’t have debt obligations. They have deficits, not debts. They don’t borrow, they simply spend currency into existence. Taxation takes currency out of the economy and it gets destroyed, written off. It is not used to pay for anything. It is irrelevant. Even external debt obligations are dealt with by changing entries in balance sheets at the fed. Such governments can never run out of dollars or go insolvent. They pay every invoice with new money .They use monetary policy to set interest rates and the tax take to steer the economy to the inflation level desired. They can pay for full employment even as the economy goes into decline. Such governments don’t have the debt problem you write about as their interest payments are effectively free. Government cheques don’t bounce.
Companies and non sovereign states can have debt obligations, which is why the Eurozone countries are in trouble. They are users, not issuers of currency. Bad luck for them!
The debt ponzi scheme is thus not due to governments but to the banking sector which in the UK is 97% of the money supply. These are where the trouble lies as these sums are so vast, like 40x the world’s GDP, that there will be no bail out, nor even a bail in. Only a debt jubilee is on the cards.
I’m not sure what the effect will be as so much of the banking business is divorced from the economy. They are all ‘off balance’ transactions. Derivatives means making a bet, sometimes winning when a company goes under. It’s all crazy but makes money for banks. All this can be wiped without any catastrophic effect on the economy IMO. That’s just a guess.
The main thing is that governments survive.
“Such governments can never run out of dollars or go insolvent.”
When will people begin to understand this?
A sovereign nation that issues its own currency, never runs out of money. And when it prints its own money, as you so correctly point out, it doesn’t need to tax, except to take excess currency out of the system or to redistribute it. And it doesn’t need to budget or worry about a budget. And it doesn’t need to worry about debts or deficits. Those can be retired if need be by simply issuing more currency. Austerity arguments are all smoke and mirrors.
And as you point out, only those governments that can’t issue their own currency need to worry about debts, deficits, budgets and a need for taxation as a source of income. But since we have numerous governments like this, (state and municipal governments are the best examples), we allow ourselves to be duped into believing that sovereign governments face the same monetary problems as non-sovereigns. They simply don’t.
Agreed, but unless we get responsible governments realizing that we live on a finite planet, we are still in deep doo doo.
Back in the 70s-80s I became familiar with “Social Credit” – which is more or less your line of thinking – but quite quickly realized that without a wise government, any kind of foolishness could be funded.
Two proposals in Australia, at the time, were to use nuclear explosions to mine iron ore and the other was to use nuclear explosions to dig a canal through the centre of Australia, linking the Gulf of Carpentaria and the Great Australian Bight – simultaneously creating a mountain chain to encourage rainfall in Central Australia.
Well in the early days of Australia there were Commonwealth and State banks which funded early projects debt free – similar to what Ellen Brown proposes and the N Dakota State Bank – but that was all very well during the relatively modest phase of Western Industrial colonization when resources remained plentiful, but NOT when we have passed “”Peak Everything” on this finite planet.
It of course begs the question that we need responsible governments. But it’s looking all too obvious we don’t have any right now, certainly not in the so called western democracies, all distorted by neo-liberal agendas. So I wouldn’t be afraid of MMT being adopted. It would be a great improvement over what passes for governance now.
I agree with Ellen Brown’s call for a government bank.
Talking about Australia, we did do one massive infrastructure scheme post WW2, the Snowy Mountains Scheme. Being government funded it came in on time and on budget. Unheard of today.
See Ellen’s article about private bank financing and find out how they double and triple the actual cost. Scandalous, but it’s the modern way!
http://www.washingtonsblog.com/2014/06/infrastructure-sticker-shock-financing-costs-construction.html
Yes I know about the Snowy Mountains project, Fremantle Harbour, the Kalgoorlie pipeline and many other highly successful, at the time, state funded schemes, but they were back in the day when no one (except Malthus) ever thought about running out of resources and unintended consequences, such as the damage done to the Snowy River and the now pointless damage done to Mundaring to supply water to largely defunct gold mines.
Have you ever been to Kalgoorlie and Coolgardie?
Not to Kalgoorlie or Coolgardie. I have been to the Kimberley in 1999, an epiphany inducing experience! I have seen mangled landscapes in Victorian and NSW gold areas, but they do have their own charms and places like Bendigo can bear comparison with European towns.
Australia was relatively the wealthiest country in the world in 1900. Argentina too, but the two histories after that diverged significantly.
As for the future, our calling ourselves “the lucky country” is probably on the way out. Suicidal and mendacious politics and greed will see to that. Lots of reasons not the time here to list.
Yes the old pioneering places do have their charms and, to be honest, I am split between sentimental attachments and the growing reality of the limits of resources.
I’m still in love with motorcycles – though I can no longer ride – and remain convinced that the Vincent was the best bike ever,. and I grieve the passing of the Steam Age.
I was a more than competent fitter/turner/machinist and I taught metalwork, woodwork and technical drawing for years – so yes I was very much into this Industrial form of civilization.
Even only about five years ago I corresponded with Ellen Brown occasionally, but reality(?) gradually permeated and now I am very much in tune with Gail, for instance.
I remember a friend gave me a ride on an HRD. It had killed its first owner and my friend soon decided it was too dangerous so he sold it as well.
I feel in tune with Ellen Brown, particularly her idea of state banks. But I fear we are so far down the waste chute nothing we try will arrest the fall into total collapse.
The roman empire took hundreds of years to collapse. In the east it managed to survive 200 years of deflation in the 7th-8th centuries [they got rid of their army for one]. However we live a much faster pace so perforce the crash will be precipitous. If we do continue with deflation, which is where we are now, it won’t last long. Fun times ahead!?
I agree with your thoughts about the Roman Empire and this one sorta being on steroids.
Actually I’m still in tune with Ellen Brown too ideally but, like you, I think things have gone too far … and what happens to the Bank of N Dakota when shale plays fail?
When I used to correspond with Ellen she used to cite the Commonwealth Bank – and I told her of the Rural and Industries Bank of WA – as an example of what she proposes, but I had to let her know that the Commonwealth Bank had been privatized and neo-liberalized, along with the rest of the Australian economy, since the coup against the Whitlam Government.
Informing Ellen somehow brought home to me that we are all p*ssing against the wind … hence my general agreement with Gail, but NOT nihilists, nor would-be profiteers from collapse.
Hope is gone and maybe acceptance is taking its place, but I find it hard to express how I really feel
As I see it, debt is borrowing from the future, no matter what it is called–deficit spending by a government or debt by businesses or individuals. Borrowing from the future only works as long as the future is as least as good as it is today. If it is worse, it doesn’t work. How it doesn’t work will vary, but the result will be the same–not enough goods and services to meet obligations (some of which may not even be called debt). For example, Social Security is mostly a pay as you go system. Medicare is all a pay as you go system. Government sponsored pension plans around the world are pretty much pay-as-you go. There aren’t enough securities to pretend that these systems could be funded.
What is really important is the amount of cheap energy available to create goods. Also, the amount of cheap metals to create goods. As the cost of these goes higher, the ability of economies to grow disappears. This is easiest to see in the business world. But the rest of the world depends on goods and services produced in the business world. As the goods and the services produced by the business world shrinks, the entire system suffers–wages paid to individuals, taxes paid by individuals and business, and the businesses themselves. It is really the shrinking quantity of goods and services produced by the business part of the system that brings the system down.
Again it depends upon the type of fiat currency. See my post about the difference between governmental and private fiat currencies. If it is true government fiat currency, the good and services have already been performed and the government is simply paying for the services or goods after the fact. So there is no mortgaging of the future. You have to understand the difference between these two types of fiat currencies to appreciate that.
There is somehow an expectation that other goods and services will be available if this fiat currency is tendered, however. If they are not really available, the person will be quite unhappy.
It’s a two way street. If the government says its want an aircraft carrier that has not been invented yet, its willingness to pay can create the demand. In fact, in many cases that is where it all starts. The government needs something that hasn’t been invented yet or is not being produced. And that is where government can really help.
We could really improve our infrastructure if the government decided that was something really needed. And boom, instant jobs. But the argument is always “We can’t afford it.” And MMT’s rebuttal is that a sovereign state can always afford it, and should not hesitate to issue money, when public necessity is not being satisfied.
I certainly agree with what you write here Gail. My discussion was more theoretical. In practical terms the future depends on the factors you point out. However it helps to have the groundwork theories to not be false, which in current orthodox economics are false.
Credit/debt is future consumption denied.
I’m pretty sure we are in deflation and it will not stop or reverse again.
“Credit/debt is future consumption denied.”
You are wrong, John. Credit/debt is future higher synergy promised.
In physics, a bound state is an interindebted state and is at a negative level of potential energy: http://hyperphysics.phy-astr.gsu.edu/hbase/thermo/phase.html#c4
Negative energy is called so because it exerts negative pressure–suction, gravitation. But an immature debt is a quasi-asset: entering a bound state releases positive (i.e., positive-pressure) binding energy, which staves off the star’s self-gravitational collapse to a smaller radius.
For example, having hit the point of zero marginal returns of thermal energy from further interconnection of its carbon nuclei, a star’s core shrinks to a smaller radius by fusing the carbon nuclei into a smaller number of more sophisticated iron nuclei.
Analogously, having reached the point of zero increase in the nominal GDP from $1 dollar of new debt, humanity will shrink to a smaller number of more sophisticated humans.
http://2012wiki.com/index.php?title=Novelty_theory
Instead of saying, “Credit/debt is future higher synergy promised,” I would say “Credit/debt is future higher energy output promised, and thus more goods and services promised.” Your statement about bound states is based on a link to a Georgia State University website article showing how atoms that are bound together into molecules have negative energy, relative to atoms which are free. Its wording is, “Particles in bound states are said to have negative energy with respect to free states.”
Your point, “Negative energy is called so because it exerts negative pressure–suction, gravitation,” is interesting, because Don Stewart was explaining to me that gravity is the type of energy underlying the universe. What he said was
So what Don is saying is that negative energy, of the type from gravitation is what holds the universe together. In some sense, this is analogous to the negative energy of debt that holds our economic system together. Debt exerts both a push and a pull on the system. The use of debt raises prices of commodities; this is what produces a pull on the system. It also reduces prices from the point of view of the consumer–or at least spreads out payments to a future period, when more is promised to be available, so it provides a push on the system.
The whole system is bound to collapse, when (a) it becomes clear that the promise of rising future energy, and thus rising output of goods and services based on energy products is no longer true, or (b) prices don’t keep rising to keep up production of commodities, (c) there is not enough economic growth to pay back debt, much less debt with interest.
You talk about an immature debt. In the financial world, this would be a bonds and other loan balances, carried on the balance sheets of financial institutions such as banks, insurance companies, and pensions. These bonds and other debts that are not yet due are much of what constitutes “wealth” today, and make the world economy as big as it is. These assets enable other borrowing, for example.
You say,”But an immature debt is a quasi-asset: entering a bound state releases positive (i.e., positive-pressure) binding energy, which staves off the star’s self-gravitational collapse to a smaller radius.” A growing financial system, with more and more debt, staves off collapse, even as wages fail to rise, and the economy grows weaker and weaker.
The life a star is somewhat analogous to our own system. On December 31, 2014, Alturium said:
What you are saying seems to be analogous. You reach the conclusion
Analogously, having reached the point of zero increase in the nominal GDP from $1 dollar of new debt, humanity will shrink to a smaller number of more sophisticated humans.
Certainly the number of humans will be smaller. If the collapse is analogous to a star’s collapse, the number of humans will be very much smaller, and the collapse will take place very quickly.
The only way I can see the remaining humans as being “more sophisticated” is that they are the few who are able to adapt to a very changed world. My guess is that they will have special abilities to find and put to use sources of energy that others overlook. I don’t expect that they will be farmers. Rather, they will be ones that can make use of other sources of food energy that most of us overlook, like insects and worms and the energy gained from chewing leaves. Eventually a new civilization may arise, but the people who are selected to evolve going forward will do so on a different basis than the approach that has now been followed to its conclusion.
Gail, any energy is synergy.
In 1924, Louis Victor de Broglie revealed that the entire universe is nothing but waves: http://web.archive.org/web/20120717013149/http://theory.uwinnipeg.ca/physics/quant/node6.html
The destructive interference (i.e., absence of synergy) of two identical waves results in their mutual redshift to zero energy.
The constructive interference (i.e., synergy) of the two waves results in their mutual blueshift to positive energies.
Have a look at the first illustration here: http://2012wiki.com/index.php?title=The_end_of_the_world
Some of us have pretty limited knowledge of physics. I see this description about how waves combine which is similar to yours. http://www.physics.ucf.edu/~gabriel/Interference.pdf
Redshift means a shift to increased wavelength, or the red end of the spectrum. Blueshift means the opposite.
I can see how synergy would give higher output. All we need is ever-higher synergy, despite diminishing returns.
Waves are a convenience for calculating quantum mechanics, but do not necessarily represent “reality”. You can do the same calculations and get the same result without resorting to waves, in the Heisenberg Matrix formulation. ( https://en.wikipedia.org/wiki/Matrix_mechanics ).
And any synergy is an immature debt.
Therefore, the entire world is nothing but immature debt and exists only so long its the 13.7-billion-long Poinzi scheme accelerates.
And any synergy is a released positive binding energy–an immature debt. https://en.wikipedia.org/wiki/Binding_energy
Therefore, the entire world is nothing but immature debt and exists only so long its 13.7-descent to ever deeper synergy (i.e., to ever deeper debt) accelerates.
“My guess is that they will have special abilities to find and put to use sources of energy that others overlook. I don’t expect that they will be farmers. Rather, they will be ones that can make use of other sources of food energy that most of us overlook, like insects and worms and the energy gained from chewing leaves. ”
Gail, you don’t have a clue, don’t you? You are just guessing, as everybody else. Be frank
I am guessing, but I can’t see how “more of the same” gets us anywhere. Any remaining humans have to get food from somewhere and probably some other source of energy from somewhere. Doing what we are doing now doesn’t get us anywhere. Extinction starts looking like a likely possibility, but maybe there is some way out.
“I can see how synergy would give higher output. All we need is ever-higher synergy, despite diminishing returns.”
Yes, Gail.
Another name of synergy is the binding energy: https://en.wikipedia.org/wiki/Binding_energy
A banknote is a binding link:
banknote : a promissory note issued by a central bank, serving as money
http://www.collinsdictionary.com/dictionary/english/banknote
By increasing the number of banknotes in circulation, we produce positive binding energy. However, as humanity becomes more bound (more interindebted by means of banknotes), its potential energy becomes ever more negative.
Therefore, the key balance is the balance between the released positive-pressure binding energy and the negative-pressure potential energy of the resultant bound state. When the former dominates over the latter, the system grows. In the year of 2015, the latter begins to dominate over the former (because of the diminishing returns), and the system instantaneously implodes: http://2012wiki.com/index.php?title=Novelty_theory
Are you saying
Adding debt tends to make the system grow; paying it back tends to make it shrink. As long as adding debt predominates, the system can grow.
Once the return on new debt turns negative (as it appears likely in 2015, because of diminishing returns), then new debt tends to shrink. Old debt becomes harder to pay back. The system tends to implode.
We can argue whether this is instantaneously or not. Without a debt-based financial system, our system of mineral extraction disappears. Our ability to pay workers disappears. We can’t pay suppliers at a distance. We have a very big problem.
“We can argue whether this is instantaneously or not.”
It is an good question, Gail.
Imagine a protostellar cloud of particles with a common barycentre. As the swarm condenses, its heat (angular momentum) becomes intensified and radiated into the ambient space. The decrease in the particles’ angular momentum forces them to share the remaining angular momentum by lending it to each other (angular-momentum bonds, derivatives, etc.), so that the disorganized angular momentum of a protostellar cloud turns into the organized (“globalized”) angular momentum of a Saturnian ring (a “global economy”):
“There is something missing in investors’ reasoning that leads to their current complacency, and that is an understanding of the circularity of confidence in a fragile system. Since the system is fundamentally unsound, all it would take is a loss of confidence to set off a collapse in the purchasing power of money, a major currency or the global stock and/or bond markets.”
—Elliott’s Paul Singer on How It All Will End: “Badly, We Guess” Zero Hedge, 29 April 2014
http://www.zerohedge.com/news/2014-04-29/elliotts-paul-singer-how-it-all-will-end-badly-we-guess
So, the system is brittle and will snap rather than elastically and gradually succumb to collapse.
Another illustration:
Angular momentum is rotationally centrifugal and provides buoyancy against the radially centripetal force of gravity.
In a young economy, angular momentum is stored in the form of multiple “buoyancy bags”, which are isolated from each other.
In an old (interindebted) economy, angular momentum is generally much more scarce and is synergetically shared between interconnected “buoyancy bags”, so that the economy effectively has just a single “buoyancy bag”. A ship with a single “buoyancy bag” will lose its buoyancy instantaneously, not gradually.
Read more: http://2012wiki.com/index.php?title=The_end_of_the_world
We are experiencing the bending of the system now. Eventually I expect it will snap.
It nearly snapped in 2008 but reinforcements were rushed to the gate to hold back the hordes. But the pressure is relentless, and increasing every day. The dam will break, and it will be sudden.
I have no doubt about that.
“They use monetary policy to set interest rates and the tax take to steer the economy to the inflation level desired.”
I thought Margaret Thatcher had already proved that monetary policy does not work?
That aside, IMHO deflation is a significant risk, albeit the ECB decided to avoid adding that into the tests of european bank stability. The reference point for all this is Japanese government debt. Most comments reflect on the possibility of an increase in interest rates pushing Japanese deficits to unsustainable levels. Equally at risk are Japanese wage levels in deflation and recession, causing tax revenues to fall. These are merely symptoms. If the debt levels were lower these problems would be manageable. And I agree that there is good goverment debt and bad government debt.
Thanks for the reply, Gail. I will need to put some numbers together to bring a response together. The lags in the systems you described may not be as you intended. I’m thinking about shale oil though, rather than, say, deepwater/arctic.
I find it difficult to think about the effects of high oil prices and the effects of low interest rates separately, I will need some time to think that through.
I *think* it is fair to say that many people are puzzled that “recovery” has not happened despite unprecedented efforts to stimulate economies. (I’m not trying to be sarcactic here BTW) Just saying there is no easy answer.
Finally, in terms of oil supply:demand, the figures seem to be 93:89 mb/day and that does not seem to be huge difference – unless you lever up in the financial markets.
Dear Gail and All
This will be ‘sort of’ response to the issue raised by Nate Hagens. ‘Sort of’ because I don’t know exactly what he has in mind so far as other alternatives.
I’ll use Mobus and Kalton’s Principles of Systems Science as a resource. On page 577 we find:
‘More leading to more has become the norm of a global market system structurally premised on growth. More research poured into more technology which enables more productivity by more complex organization, enabling more consumption and a value orientation focused on comfort, speed, convenience, and the wealth to make these possible…..This is only a rough sketch, but these positive feedback dynamics are structured into the normative functioning of our evolved global system. That is, the absence of such positive feedback is the equivalent of systemic malfunction.’
That summation comes after many pages of exposition on how a barren planet with a lot of unorganized minerals but plenty of energy (solar, gravity, radiation, etc.) turned into the amazing world of, say, 1950.
Back on page 542, the authors consider the issue of reproducing a new system like the one we currently have. Storing all the information required to reproduce the current system is hopeless, as a little thought will quickly persuade you. The most likely solution would involve ‘using a stored representation of the basic system that allows for fast and efficient access to the information needed to construct the new copy. The stored representation would thus be some form of knowledge representation of the system to be reproduced.’
My point here is that the knowledge of the basics is not adequate, over the course of a few days and months, to reproduce what the global financial system currently produces. A subsistence farm, ‘yes’, but the global system, ‘no’. Therefore, my assumption is that, if some number of people survive the bottleneck, they can evolve a more complex system more rapidly than the long time spans which were required to build our current system. But they can’t do it overnight, and so there will be a significant die-off.
On page 540, they state: ‘Auto-organization in biological evolution involved the same dialectic between competition and cooperation, competition between conspecific individuals, for econiche resources, and between species for ecological resources in general. Social coordination emerged as a mechanism to increase the efficacy of inter-specific competition.’
This is back to the argument about whether humans are inherently inclined to lethal behavior toward each other. The evidence is that, just as ants can cooperate to build elaborate tunnels, humans can cooperate to gain more resources from the environment. But today, I argue, our cooperative behavior is very heavily influenced by fiat money. We never see most of the people we are cooperating with, we just see digital representations of the flows of fiat money in our bank account. If fiat money fails, then most modern humans will be thrust into a position they are unaccustomed to: cooperating directly with people they know (but may not like very much), with the reward being hormones , particularly oxytocin. It is easy to imagine that the radically different nature of the field on which cooperation is supposed to take place will be a challenge.
On page 515: ‘Growing complexity of structure and process tends to demand dependable coordination of energy flows.’
My point is that as fossil energy flows become erratic, ‘coordination of energy flows’ becomes difficult or impossible. Thus, the maintenance of complexity becomes difficult or impossible.
On page 514, they discuss Terry Deacon’s notion of an ‘autogen’, a structure that can ‘not only maintain and repair itself, it can even reproduce. Enclosed in a…membrane’.
The membrane (think of a cell membrane, or the definition of ‘extended family’ or ‘neighbors’) defines those who are inside and those who are outside. Without a membrane, we are back to all those unorganized molecules which were floating around on the barren Earth. My point is that the ‘membranes’ which existed in the not too distant past have mostly dissolved in the name of globalism and financialization. Reconstructing them will not be instantaneous or easy. And the membrane likely won’t be 7.2 billion people.
On page 513: ‘For example, reproduction is necessary, but do we need to come up with some identifiable ancestor of the complex ribosome-enabled template reproduction found in all present life to account for the origin of life, or is that an emergent variation later on in the evolution process? Functionalism opens the door to considering far more simple origins.’
In short, what we see today may owe its existence to a long defunct, simpler ancestor. It will not be easy for a post-collapse tribe to figure out what is essential, and what might be replaced with something simpler. And allow the simplest solution to later evolve into a more complex solution.
On page 511: ‘With no energy flow, the easiest thing thing to happen is paths that increase disorder: things fall apart all by themselves. But,… where energy is available in a system of components with potential connectivity, the easiest thing to happen is more connection, meaning an increase in complexity.’
The lesson here is that the abundance of fossil fuels, particularly in the rich countries and for rich global corporations, has led to increased complexity. Take away the energy, and these countries and corporations will be forced to contract. Since they are not designed to contract, many may fail catastrophically.
On page 508: ‘Those assemblies that have the most cooperative linkages can be stronger or more fit in the internal environment of the system and thus be more successful at whatever competition takes place.’
Which is why the lone homesteader probably won’t be successful.
On page 505: ‘Systems are constituted by relationships’.
Which leads us back to cooperation and competition, predator and prey. The eternal problems to be solved.
On page 502: ‘Notice the emergence of competition and cooperation as selective/ organizing factors. In dynamic environments where assemblies are undergoing energy flows and selection forces, the dynamics of competition and cooperation develop most clearly. Cooperation can be thought of as the tendency for components to form strong, non-disruptable connections between themselves. Competition is when two or more assemblies try to obtain another component, either one that is freely in circulation or that is weakly bound to another assembly. A strongly connected assembly may very well be able to win such a competition because of the strength of its connection.’
And so…figure out who and what you want to be strongly connected to.
I hope that this ‘backward’ look from the current risk of collapse to the earliest days of this planet has been provocative….Don Stewart
This list doesn’t really give us any reason why we should find a way out, that I can see.
Dear Gail
If you make the assumption that Mobus and Kalton have complex adaptive symptoms figured out pretty well, and the heroic assumption that I have gleaned some ideas from them which are not totally ridiculous, then it seems to me that ‘a way out’ is similar to the Biblical issue of a rich man getting into heaven…a camel through the eye of a needle. Can a rich society or a rich corporation get through the needle eye?
However, we can see how Nature constructed things. Membranes and the dialectical movement between cooperation and competition and the distillation of information and the sending of messages and so forth. Some subset of humans may be able to work out ways to survive through the bottleneck.
But I don’t think that Nate is on the right track with his very small probability that you are correct.
Don Stewart
Nate has made a lot of statements about “just be happy using less”. He has listened to a lot of Univ. of Vt. beliefs which aren’t really correct. I don’t think he realizes how tightly our system is tied together.
Gail
Not to be catty, but if some group figures out how to live simply and get through the bottleneck, then they won’t be talking about ‘our system’. They will show their children the ruins and describe it as ‘the system of the rich people who used to live here’.
Don Stewart
Hi Gail, So very much appreciate your efforts.
Do you have any posts addressing either the likely or best response, or some combination of both to the Seneca Cliff? For example, have you run estimates of how much impact conservation might have? And at what point, what rate, etc.. does conservation lower overall standard of living and by how much? Probably a book-length undertaking, I’d guess, but some back of the envelope calcs might be interesting. I know Tom Murphy has some posts along those lines, but would like to hear your views. Thank you.
If the Seneca Cliff is the result of financial collapse, I am afraid conservation doesn’t work. As you can see, prices are already too low for nearly every commodity. Conserving these commodities just makes the situation worse. There are many other reasons why conservation doesn’t really work the way a person might expect. Conservation is a good way of making a scarce commodity (oil or fresh water) “go farther”. This helps in some ways, by allowing people a higher standard of living, and in fact, allowing greater population to live off a given quantity of oil or fresh water. But it does not help in others, and may make some things worse. These things Tom Murphy misses.
This are some articles I wrote about what our response should be
http://ourfiniteworld.com/2014/02/17/reaching-limits-to-growth-what-should-our-response-be/
http://ourfiniteworld.com/2013/05/30/energy-limits-is-there-anything-we-can-do/
Thank you for the answer, and the links. I think the search function on this site needs improvement, btw.
I suppose I’m somewhat less concerned about price as an overriding factor because governments tend to step in and nationalize resources and industries during difficult times, operating them at a substantial loss if necessary. Not hard to see the same happening wrt Fossil Fuels, even if only as a temporary–LOL–measure to mitigate the worst damage from the decline. Yes, our current government suffers from oligarchy and corporate capture, but widespread suffering and unrest could quickly change the political calculus.
Of course, maintaining a slightly higher level of extraction than uncontrolled collapse allows means more environmental damage as well, which is why I do think we get to 2.5-3C by 2050. McPherson’s views seem extreme to me, btw, in terms of human extinction, especially near-term, but not too hard to at least envision something between his views and Greer’s, where humanity perseveres and adapts (in much smaller numbers), but is forced to find refuge in higher latitudes. Not hard to imagine, for example, Canada and Russia becoming the centers of some new civilization(s) in some distant future, or even Antarctica.
I have had reasonable success with the search function, but I know what I have written about. I would suggest keeping trying. It does give you a list of articles relating to a subject, and you can scroll through until you find one you like.
The issue with governments nationalizing resources and industries is that this works only as long as governments work. When we start having troubles with banks and with electricity, than governments are going to have real trouble as well. A government that can’t tax doesn’t have much power. Governments may be formally overthrown, or the top level of power may simply disappear, leaving the next level to take over, as in the Former Soviet Union.
Dear Gail,
There is very likely “a plan” behind the current all out economic war between the US led Occidental World and Russia. That plan very likely involves an attempt to “secure” the vast strategic mineral reserves (including hydrocarbons) of Russia after an appropriate “regime change” has been effected…
If that strategy succeds, as it did in 1991 with the USSR peaceful economic collapse, it will likely allow the US led high tech Occidental World to avoid economic collapse for a few more years.
Then inevitably, “crunch time” will loom again and another “fight” for the remaining positive EROEI hydrocarbon energy reserves of the planet will take place that is likely to bring about “regime changes” in the various countries currently holding these reserves.
Hopefully, before the last positive EROEI hydrocarbon reserves of Gaia are exhausted and before a global economic and population collapse takes place, human civilization will find a way to replace hydrocarbons – as it’s primary energy source – with another high EROEI energy source, such as aneutroninc controlled thermonuclear fusion. Nuclear fusion reactors could eventually replace all the hydrocarbon burners in existing electricity producing power plants, which would gradually lead us into an almost “fully electric civilization”.
In that regard, various studies have clearly showed that, if we today replaced our internal combustion engine car fleet with plug-in hybrids, we would consume less than 10% of the oil that we are currently using for car transportation…
Looking at an even longer time perspective, leaves us however no alternative – if we want to avoid an eventual population collapse – but to find a way to reach and colonize the numerous “Other Earths” that currently orbit other stars.
By then, hopefully, humanity will have found a way to implement a “sustainable development” economic plan that shows a minimum of consideration for other living species. Hopefully also, we will encounter “out there in the vast empanse of the known Universe” other living species who have developed similar economic and ethics principles. Otherwise, the warnings of Stephen Hawking could materialize into some deadly interplanetary conflict…
John
P.S: You mention, in your latest analysis, the possibility that a “few Earth based survivalists” would survive an eventual “bottleneck” collapse. As I have indicated in previous postings, once a global civilization collapse starts, humanity will inevitably lose control of the +400 currently existing nuclear fission power plants and of the +1000 currently existing deadly nuclear by-products cooling ponds and storage sites. This will relatively rapidly bring about, mainly through trade winds and oceanic circulation, global planetary nuclear contamination of such an order that life as we know will become extinct within a relatively brief period of time in accordance with something similar to an “On the Beach” scenario.
Of course, a small group of organized and properly prepared people could survive for some time within very well stored underground radiation protected facilities. It would however take more than a few generations to bring down the surface radiation dosage of the planet to a level that would become suitable for re-colonization. Hence, such an attempt would represent quite a challenge and, in my humble opinion, is unlikely to succeed, in particular given the global “Mad Max” environment in which these underground facilities would first need to survive…
In that regard, I would like to remind your readers that the current “economic struggle” for the control of Russian strategic resources and the following ones for the control of whatever will be left somewhere else on Gaia could bring about an open WWIII and lead to a massive nuclear exchange that would bring about a planetary “nuclear winter”. Such an event would also lead to massive surface planetary radiation contamination and bring about a global climate change, which is well describe in the well known 2006 book ” The Road” written by Cormac McCarthy. I recommend that you read this book if you want to get a taste of the environment in which your “survivalists” would need to survive.
I agree that Russia has enough resources that others might covet them. If Russia had not collapsed in 1991, the world would have hit the peak in resources limits a lot earlier than it did. It is the fact that it cut way back on its industrial output that offered more oil to the rest of the world.
At this point, I wonder if Russia’s resources are becoming unaffordable as well–too low EROEI as you put it. That doesn’t stop us from coveting them, and thinking that we could use them.
I don’t know how bad the nuclear problem would be. One concern is a nuclear winter. I doubt all life being wiped out, though. Life can survive under pretty strange conditions.
Chernobyl proves that you can have a thriving, if not healthy, ecosystem in a heavily contaminated area even when the individuals are sickly.
I would note that Chernobyl was entombed in concrete using helicopters limiting the release of toxins.
There will be no helicopters to drop concrete onto the spent fuel ponds.
And from what I have read that would not work with spent fuel ponds anyway; they must be kept cooled by water. If they are entombed they overheat and we get a nightmare scenario.
Debt and currency are the same thing. They are both a promise to provide something of value in the future. If one refuses to honor ones debts once it becomes hard for anyone to believe they will honor their debts in the future. Likewise for currency. If debt is jubileed to zero why would anyone accept debt as payment in the future? Can one run an economy of barter? I think yes. Not as efficient as paper letters of credit, really letters of debt, but workable at least for the big items. I send you one million tons of wheat you send me one billion barrels of oil. And if you don’t I bomb your capital.
At the level of international trade, it makes more sense to simply have a central vault full of gold and just move the bars between accounts on the ledger to balance out trade. If you don’t have any gold left, you cannot import anymore.
As for jubilee, once instituted, it would occur once every 50 years, so interest rates would simply adjust to how far from jubilee the loan is created.
Many times during our history the world got a long fine without gold or silver for money. In fact, the British Empire was built on the talley-stick system. It used sticks for money. It was the longest lasting monetary system in the history of the world (about 800 years).
When gold and silver are in short supply, people have historically found other means of creating currency.
Usually a monetary system based on gold or silver is very short lived. The rareness of gold and silver are what make them worth something. Unfortunately, anything that is rare is easily horded and monopolized. When gold and silver become the monetary system, usually within a generation or two, a few people have acquired and horded the vast majority of it, and the entire economic system tanks.
“In fact, the British Empire was built on the talley-stick system. It used sticks for money.”
The tally sticks are just a system for having two copies of a record, with a system to prevent fraud. You can use anything you want as currency within a nation, the issue is international trade. If a country could provide all of its needs and desires domestically, it would not matter, but people always want goods from elsewhere.
So I guess you would be in favor of a ‘world currency.” I’ll pass. I would rather the individual nations figure out exchange rates between countries.
You’re misunderstanding. It is not a solution. Suppose you and I each are sovereign and have our own currency. We start off with 1 Dave Dollar = 1 Matt Bux. Now, If I continually import more than I export, eventually it will take 2 Matt Bux to equal 1 Dave Dollar, then 4, then 8, and so on.
If you and I are both exporting to another country, my goods become more competitive since my currency becomes worth less, so my costs of labour and capital decline, so you may decide to intentionally devalue your own currency, just to remain competitive. That simply allows me to consume even more.
If we are both inside the same system, instead of issuing currencies, I simply go further and further into debt, borrowing more and more money at interest to continue consuming more than I produce.
You have pointed out the problem, but no solution. The problem seems to me is that you really can’t be a sovereign state unless you have your own currency and can do what financially is in the best interest of your own people. So you either have no sovereign states and a one world government with a one world currency or you have individual sovereign states and individual currencies.
I expect we will have thousands of tiny countries with local currencies. The currency of these countries will perhaps be convertible at varying exchange rates with the country next door (say Libya1, Libya2, Libya3, and Libya4. Also Syria1, Syria2, Syria3, and Syria4, New York State1, New York State2, New York State3). There may be so much fighting that the practical value of this convertibility is lost though.
That is always going to be an issue with nation states. But I can’t see how a nation-state can effectively operate as a true sovereign nation, if it can’t issue its own currency. What better proof do we have of this than the Euro? And New York is a bad example because the Constitution forbids states from issuing their own currency. There is no such thing as New York dollar. (Good thing — and I am not picking on New York).
One of the most interesting (to me anyway) arguments the US Supreme Court made in “the greenback cases” when Lincoln printed his greenbacks to pay his army and suppliers, was that the ability to coin money or issue bills of credit (paper money) was part of the war powers of the nation. Let that sink in for a minute.
There is if the United States falls apart, and in fact New York State falls apart, and there are various groups that issue local currency. I just gave this as an example. It is very difficult for a country to hold together if it has serious financial problems.
So I guess you would be in favor of a “world currency, as that seems to be the only alternative.” I’ll pass on that idea. I would rather the individual nations figure out currency exchange rates between countries.
If someone in Mexico wants my dollar, I don’t see any problem with me saying it will cost him eight pesos.
david, et al., I have personal experience over 25-30 years to affirm that those who own the global financial and economic system have been carrying out “The (Rockefeller-Rothschild) Plan” since the late 1960s to early to mid-1970s to integrate the US, Canada (and perhaps Mexico, if the US and UK banks can obtain the remaining oil and arable land assets), UK, and EZ into a “Trans-Atlantic Federation” with one currency (the euro and pound must fail in order to be merged with the US$ and loonie); one trade, customs, tax, and regulatory union; one transcontinental/global military command; further merging and consolidation of the Fortune 25-100 to 300 firms; the elimination of the western welfare-state regime for the bottom 90%+; encircling Russia and turning the country into what the Nazis wanted to achieve, i.e., the “Breadbasket of Europe” and an energy colony (Putin will eventually be exiled or taken out by a coup to prevent an alliance with China); and a western withdraw of FDI, investment, and technology transfer in China to check China’s rise as a regional hegemon, forcing the Middle Kingdom to disengage to deal with internal collapse and social unrest, increasing the likelihood that the PLA generals will assert their authority and power during a period of increasing domestic and regional crises, which in turn increases the likelihood of a US-China war and profits for western banks and imperial war profiteers.
For those who perceive the foregoing as “conspiracy theory” nutterism, I empathize, but I also would invite you to investigate the historical developments since the late 19th century to before and after WW I and II, and then watch closely how current events evolve and manifest before judging the foregoing scenario as maladjusted, misguided, and nutty.
Finally, I would assert as I always do that self-preservation and “will to power” is not a “conspiracy” but a quality of human nature as it has evolved to date. We can do better as a species, arguably, but those with the most power have no incentive to change their values, expectations, objectives, and behavior.
“Usually a monetary system based on gold or silver is very short lived.”
You seem not to be aware that the monetary systems of most countries were based on gold for centuries i.e. money was backed by gold.
That only changed recently.
You have your facts backwards, it is fiat currencies that do not have staying power
The Average Life Expectancy For A Fiat Currency Is 27 Years
http://georgewashington2.blogspot.hk/2011/08/average-life-expectancy-for-fiat.html
There are two kinds of fiat currencies: governmental and private. And they are vastly different. It would be no surprise to me that most fiat currencies, which are private, don’t last very long, because they are really based on the gold and silver model.
Here’s the difference between the two types. In a tally-stick (governmental) model, the king lived in a country, England, that was gold and silver poor in the 1100’s. So when the king needed a project, he would go to his subjects and say if you complete this project, I will give you a credit against future taxes. In the very modern sense, you can think of it as a coupon for taxes. The Constitution of the US refers to these as Bills of Credit.
The private model most often used today comes from the days of Europe after the discovery of the new world when vast amounts of gold and silver had been taken back to Europe. Europe was no longer gold and silver poor. And the people who acquired gold and silver decided it was best to keep them in a safe place and so they went to the goldsmiths, who had vaults and security guards, who agreed to keep the gold and silver in safe storage and would give them a receipt. The modern equivalent would be much like a pawn shop. What the gold smiths quickly figures out is that people would demand their gold and silver and the gold smiths began to cheat, first issuing a second receipt for the gold or silver. Over time, the gold smiths made the standard ten receipts for the same piece of gold or silver. Then, buying off governments, they made un-backed receipts, the law of the land and fractional reserve lending was born. This kind of private fiat money is based on a very fraudulent system.
In contrast, governmental fiat money was not based on a fraud. The government needed the public to perform a service or make a product and then the people who did that got credit against upcoming taxes. There was always valuable consideration for the bill of credit.
The private system is highly susceptible to inflation and deflation because at its core it is a fraud whenever a fractional reserve system is in place.
Should have said the goldsmiths figured out people wound not demand their gold and silver. Left out the word “not.”
“There are two kinds of fiat currencies: governmental and private. ”
There is no such thing as a private fiat currency, unless perhaps you live in a corporate work camp. Fiat means “by decree”, and has its value because someone with a monopoly on violence declares you must accept it, or they will harm you.
Private paper currency, sure.
“So when the king needed a project, he would go to his subjects and say if you complete this project, I will give you a credit against future taxes. ”
Ok, listen peasant. You owe me 10 ounces of gold per year, or I will kill you. Bu if you work for me, I will give you this magic stick, and in return, you won’t have to give me the gold. That sounds like a nice system. You can replace the 10 ounces of gold with a ton of potatoes or 50 pounds of rubber, or a month of labour, and replace “kill” with imprison or confiscate your assets.
How did Europe become poor in the first place? Oh, right, the Romans exported most of their precious metals in exchange for goods from Asia, and diluted their currency through perpetual deficit spending.
“Over time, the gold smiths made the standard ten receipts for the same piece of gold or silver.”
Look, storing a vault full of gold and silver under constant armed guard costs money. Either you must pay a fee to have it stored, or you agree to let the bank lend out deposits at interest and use those profits to pay for the service. There is no magical way to have a service that has costs for free.
“In contrast, governmental fiat money was not based on a fraud. The government needed the public to perform a service or make a product and then the people who did that got credit against upcoming taxes.”
Government paper money was issued with the promise that you could redeem it for gold or silver whenever you desired. Then they changed the exchange rate, then they removed the ability to redeem it. What do you call it if someone enters a contract, then breaks it? I suppose it is only fraud if they issued the paper in the first place with no intention of allowing you to redeem it.
The issue is keeping long distance supply lines operating. Tally sticks (and a lot of other simple systems) work for local transactions, but it is hard to get someone around the world to take your tally stick. You really need some sort of guarantee backing it up, that the other person will accept. This is what fails in the system. As I mention in the post, part of the problem is that electrical utilities will not be able to buy the supplies that they need from a distance. When this happens, centralized electric power will cease.
At its core, money is always about a promise (contract) between two parties. It is only as good as the ability or willingness of the parties to perform the obligations of their agreement or the ability of a third party (like a court) to enforce the promise. Having spent 30 years in the courtroom as a litigator, I appreciate in a way most non-lawyers never do, just how difficult it is to enforce contracts between parties who are some distance from each other. Most of the time the parties are making a huge leap of faith (and far more than they ever realize). This is not new. It may be that the distance between parties is greater today than yesteryear, but that doesn’t mean that it is necessarily harder or easier today to enforce the promises between people who are separated by long distances.
David:
“that doesn’t mean that it is necessarily harder or easier today to enforce the promises between people who are separated by long distances.”
“New York is a bad example because the Constitution forbids states from issuing their own currency. There is no such thing as New York dollar. ”
You are still looking at now. We are discussing post-collapse finance and economics. The implication of having 3 New York currencies is that New York will no longer be a State in the United States, but will become three sovereign nations. That is not a specific predication, it is an illustration that after a collapse and mass die-off, much more localized governments will likely form; large governments spanning continents may be difficult to maintain without the energy and long range communications we have today.
There are local currencies already, such as Ithaca Hours.
The world is not short on prophecies. Sometimes when I go to Armageddon cites, I think I could have just as well picked up the Bible and read the major and minor prophets. And I am an atheist.
Money is as Nate Hagens puts it, a claim on future energy. I have spent a lot of time trying to understand modern money methodology. Sovereign governments treat money quite differently from everyone else. They issue currency while the rest of us use currency, a fundamental difference. We users have to balance our budgets whereas the Fed or the Commonwealth spends all of it’s money into existence. The Fed does not borrow [It would be ridiculous to borrow from its own IOU’s] It does not get revenue from taxation. Taxation is money destroyed, taken off the books. Taxation is levied to regulate spending by the private sector. The fed always has to be in deficit because that exactly matches the private sector surplus. In surplus the private sector can spend on adding to the GDP. If the fed is in surplus it means it has taken spending power away from the non government sector and as we see Austerity doing it now in Europe, Europe is in recession. When Clinton left office he had a budget surplus. Well, within 2 years Bush was battling a recession.
The federal governments have NO impediment to funding full employment , pensions and living wages. The choice to not do that is purely political, generally Neoliberal in nature.
We still have to live within our means but the means is simply that which supports growth. That is a problem in our world now because we have to live in future with deflation. But modern Money theory can adapt whereas the usual government line cannot adapt.
I agree that money is indeed a claim on future supplies of energy but also on resources.
I didn’t stress it because energy requires resources.
I would agree with you. Iron and steel are resources that require energy for use. Land is a resource. Human energy needs to be included somewhere in the list of things money buys, as well.
It is easy to miss some basic issues, though. It is cheap fossil fuels that enable economic growth. The Clinton administration had a budget surplus because of the low price of oil at that time.
We start hitting diminishing returns as the cost of oil extraction rises, and as the cost of producing electricity rises (whether because of pollution controls, or renewable energy, or depleting fossil fuels), and as the cost of producing fresh water rises (in part, because of the needs of electricity production raises total water needs). This diminishing returns cuts back economic growth. Also, all of the investment in infrastructure that China did since it joined the World Trade Organization in 2001 reaches diminishing returns as well. It makes no sense to add one more steel mill, or one more condominium complex, if there are many more already constructed than needed for capacity.
When we hit diminishing returns, economic growth slows. It was economic growth that enabled the repayment of debt with interest. Once the extent of economic growth becomes too low, then the debt-fed cycle switches over from being a favorable one, to acting like a Ponzi Scheme.
The central banks try to cover up what is really happening with 0% interest rates, to encourage investment in even marginally more advantageous investments. These have tended to be in shale and in emerging market commodities. More and more money is pumped into the economy, but it becomes increasingly clear that that thanks to diminishing returns, there becomes a mismatch between (1) what workers can afford, and (2) the high cost of commodities. This is what brings the system down–where we are now.
Your statement, “The federal governments have NO impediment to funding full employment, pensions and living wages. The choice to not do that is purely political, generally Neoliberal in nature,” is wrong. What is needed is a way to get rid of diminishing returns in many areas of the economy, and federal governments cannot do that. They can just try to “paper over” our real problems.
I think of an economy as a networked system. If it is functioning in “growth mode,” it will produce more and more goods and services, on a per-capita basis. Population will probably be growing as well. This growth occurs because cheap-to-produce oil, electricity, fresh water, and metals all benefit the economy. The difference between (1) what these items are really worth to society and (2) their cost of production flows back to society as a sort of dividend. Diminishing returns pushes up the cost of production toward what is worth to society, and takes away this hidden dividend that underlies economic growth. Instead of a dividend, more resources must be used in producing these mundane commodities, with fewer resources for the rest of society. As a result, the output of goods and services per capita declines. It becomes impossible to repay debt with interest, and the whole system collapses.
Gail, I have to say that for you to think I am wrong about the ability of a sovereign government to buy anything it wants, like full employment etc., means you don’t understand how money works today. [Mind you, few do!]
Getting rid of diminishing returns is an entirely different matter. I assume by that you mean deflation? MMT is one system that I believe can cope with deflation mainly because the federal governments can pay off any debt any creditor, just with keystrokes. The private banking industry can do no such thing.
It’s complicated, so I’ll stop now, but please get up to speed on modern credit money workings.
“MMT is one system that I believe can cope with deflation mainly because the federal governments can pay off any debt any creditor, just with keystrokes.”
While that is true, so long as they issued the debts in their own currency and under their own laws, the consequences would be pretty harsh; anyone who could would get out of that currency, and the value would plummet, massively raising the costs of imported goods overnight.
Another clairvoyant.
I am glad there is an MMTer on this blog.
Modern credit can’t buy things that don’t exist, like all of the goods that have been promised by existing debt.
If governments can buy full employment, why haven’t they?
That’s doing MMT a disservice. MMT specifically states that Governments can only buy what is for sale. It’s not a free ride like ignorant commentators spout. The ability of governments to spend is not limited by tax revenue or borrowing. It says governments can never go bankrupt. There are limits, such as it has to spend money into existence so there has to be goods or services for sale, like human labour. Here’s a more comprehensive review;
http://bilbo.economicoutlook.net/blog/?p=29878&cpage=1#comment-37098
“If governments can buy full employment, why haven’t they?”
If you try to tell all the people getting welfare and food stamps they have to work for it, there will be resistance. Likewise, if you tell people they’re going to need to use picks and shovels instead of bulldozers and excavators, they won’t be too happy. Also, I do not think this is part of the mainstream political ideology at this time.
No. We can be certain of that! It’s far from mainstream Political ideology at this time. Hallelulia!
And yes there will be resistance and again yes, hard physical work is extremely unpopular now. The young all want office jobs or to just chill out on the beach. But in a way that’s not their fault. They were born into the world like that already. Hard physical work is just so yesterday. The MSM don’t laud hard work like they do smart work or popular work [some of which is hard, like being a chef].
Just the same there are people who would like a full time job, so maybe they could have children and support them, etc. For them it is worthwhile to provide the jobs. It can be done, as I have said many times.
Gail is referring to:
Joseph A. Tainter. The Collapse of Complex Societies (New Studies in Archaeology)
It is you that should get up to speed.
I know about Joseph Tainter.
You are talking through your hat and being rude about it.
I have also been writing about these issues on Our Finite World. Joseph Tainter is another person whom I know, from being invited speakers at the same conferences.
Get this:
Today’s CO2 levels are now almost the same as the mid-Miocene period(405ppm 15 million years ago) when sea level was 25–40 meters higher and global mean temperatures were 3–6°C hotter. And we’re still throwing fuel on the fire. The speed with which humans are loading the atmosphere with heat-trapping greenhouse gases could very well trigger an abrupt climate change event within the rapid warming that is already occurring. Similar events have been recorded in Arctic ice cores. Such an abrupt climate event would render the planet uninhabitable for humans and most life on Earth within a very short time period.
As climate science has matured over the decades, the earth appears to be much more sensitive than thought:
“Swings of temperature that in the 1950s scientists had believed would take tens of thousands of years, in the 1970s thousands of years, and in the 1980s hundreds of years, were now found to take only decades. Ice core analysis by Dansgaard’s group, confirmed by the Americans’ parallel hole, showed rapid oscillations of temperature repeatedly at irregular intervals throughout the last glacial period. Greenland had sometimes warmed a shocking 7°C within a span of less than 50 years. For one group of American scientists on the ice in Greenland, the “moment of truth” struck on a single day in midsummer 1992 as they analyzed a cylinder of ice, recently emerged from the drill hole, that came from the last years of the Younger Dryas. They saw an obvious change in the ice, visible within three snow layers, that is, scarcely three years! The team analyzing the ice was first excited, then sobered — their view of how climate could change had shifted irrevocably. The European team reported seeing a similar step within at most five years (later studies found a big temperature jump within a single year). “The general circulation [of the atmosphere] in the Northern Hemisphere must have shifted dramatically,” Dansgaard’s group eventually concluded.”
The Discovery of Global Warming by SPENCER R. WEART
Does anyone here have children I suspect not.
http://collapseofindustrialcivilization.com/2014/12/08/accelerating-towards-an-arctic-blue-ocean-event/
Like the nuclear plants and spent fuel rods, meteors, solar flares, megaquakes, supervolcanos, they are all things that we cannot do anything about, so there is no value in worrying about it.
There’s no value in worrying about manmade climate change? WTF!?! OK, go back to your oil talks.
What are you going to do to reverse global warming? The clathrates are destabilizing, so you’re going to need to suck up all the new emissions, plus 100 billion tons or so of current Carbon Dioxide. Oh, and you have maybe two years to do it. Get to work.
When you’re in catastrophic overshoot, stop digging. The solutions to our depleting fossil fuels are the same solutions to anthropogenic climate change. They are two sides of the same coin. Pointless to say we need oil, coal, and nat gas for the economy when it’s those very things killing us. Addicts usually have a hard time internalizing this concept!
If AGW is a real problem, it is already too late and there is no solution. There is nothing to be done about it. If the nuclear reactors melt down and kill you before the ice caps melt, then you were spending your efforts preparing for the wrong disaster. If you starve to death well before either is a concern, then you really misallocated your resources.
You’re suffering from mopium…
“mopium,” – the acceptance of ultimate failure which can lead to listlessness, depression, and in some cases suicide. Treating the symptoms of moping toward oblivion may deal with the feelings, but it also contributes toward making that fate more certain by inhibiting action to deal with the cause, both directly and indirectly (by criticizing others who threaten the failure worldview by believing action may succeed).
http://ideaexplorer.blogspot.com/2014/09/responses-to-habitability-threat.html
I don’t criticize you; go for it, knock yourself out, if you succeed, you’ll be a hero. My plan is to put aluminum chaff into LEO to reduce sunlight to the Earth. If, somehow, I get billions of dollars and the go ahead to implement my plan, I’ll do it. Other than that, all I can do is worry about the more immediate and probable concerns. Besides, moving towards off-grid living and petroleum-free food production will already be doing my part for the GHG thing anyways, even though it is an insignificant part of the whole system.
If you consider the habitability of the planet “insignificant”, then you might want to try off-planet living instead of off-grid living.
What do you propose I do, with the limited resources I have, within the next two years or so, to save the entire planet if runaway climate change is a real problem?
I suspect you have no children
Mopium and Hopium. What an interesting duo.
Is there are term for someone who realizes that no matter what we do we are doomed, yet is not driven to clinical depression because of that awareness, and someone who does not embrace collapse believing the aftermath will be wonderful (hopium).
We can keep digging.
It’ll be somewhere to put all the bodies.
Lol. Yes in deed!
Or perhaps it is too many people that is the real problem underlying both depleting fossil fuels and climate change. But we don’t have a good solution for that problem.
Dear Gail
Some people have wondered why the Saudis don’t cut back on production for economic reasons, but it has crossed my mind that they maybe cannot.
I don’t know much about it, but I understand that they are injecting a lot of water to keep up pressure and flows, so what would happen if they stopped injecting? Might the well collapse, or cause some other problem on restart?
Cheers, Gerry.
I have seem some other raise that question as well. This is a link to an interview with Saudi Oil Minister Ali Naimi saying that Russia might have such a problem. http://oilpro.com/post/9223/mees-interview-saudi-oil-minister-ali-naimi
It seems possible that Saudi Arabia may have this problem as well, but Ali Naimi does not admit that this will be the case.
If nothing else, a cutback in investment in new production for a while be virtually impossible to fix, because of the need for huge amounts of new investment in a period when oil prices are low. Once oil production has fallen, there will be a need for new investment (something that was not very productive even before the oil price drop), plus enough investment to get back up to where we were. There is also the issue of higher interest rates, if borrowers have recently defaulted.
Thanks Gail, I was sure I’d read something about having to keep on producing from old fields, but I couldn’t remember where.
Interesting that Ali Naimi refers to Siberia as an old field which has to be kept in production, but implies that Saudi fields are new, whereas everyone knows that they are not.
Interesting interview anyway, though the Saudi situation remains as opaque as ever.
Have you ever heard someone (particularly from the Middle East) say that things are not rosy going forward? Think of their supposed reserve amounts.
John L Casey says that we are headed towards a new solar minimum that should peak out at about 2030 the same time that oil loses so much value that the world industrial system will disintegrate. It is part of a 206 year cycle that last was present back in the early 1800s. If we are at a solar minimum in 2030 at the same time as the industrial system collapse many, many people will die.
” If we are at a solar minimum in 2030 at the same time as the industrial system collapse many, many people will die.”
If industrial agriculture suddenly ends, lots of people will probably die no matter what the climate does.
Maybe global warming and the solar minimum will cancel each other out.
If I fly from Tokyo to New York. Then immediately fly back to Tokyo.
Would the jet lag be cancelled?
Or perhaps the solar minimum is the deus ex machina that we are all hoping for. The sun cools enough to counteract the most dire effects of global warming.
Yes, Creedon. Thanks for sharing that. What you describe is the potential effect of the convergence of the Gleissberg (Jovian orbital effects) and Suess/de Vries cycles on sunspots associated with the equatorial angular velocity of the Sun, magnetic effects, and the potential geophysical effects on the Earth’s crust and atmosphere, including an increase in underwater volcanic activity affecting ocean temperatures, interruption of the North Atlantic Gulf Stream flow, and the effect of colder winters for the British Isles and continental Europe, as well as megadrought conditions in the US Southwest, Australia, and continental Asia, and oceanic effects on monsoons for the Indian subcontinent.
Mike – think about that for a moment.
What happens if we stop burning fossil fuels in an effort to halt climate change?
Economic growth is completely based on energy, and as far as I know fossil fuels provide most of the energy we use, so if we stop, we collapse the world.
What does 7 billion people without food, electricity, jobs look like?
How do we manage the thousands of spend nuclear fuel ponds around the world?
Climate change is of no interest to me because we will not stop it willingly. We burned a record amount of coal last year and we will break that record in 2015.
We need not be too worried about climate change because it will stop on a dime when the global economy collapses due to the end of cheaply extractable oil.
http://collapseofindustrialcivilization.tumblr.com/post/107486477447/todays-co2-levels-400ppm-are-now-approaching
Yes the situation worsens by the day. I am aware of that.
But here is nothing you or I or anyone can do about this.
The green brigade prattles on complaining about burning carbon and tell us that we need to swap over to solar panels and EVs.
Well sorry, but that is just not gonna happen because that is not possible:
Renewable energy ‘simply won’t work’: Top Google engineers
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
http://techcrunch.com/2011/11/23/google-gives-up-on-green-tech-investment-initiative-rec/
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that renewables will never permit the human race to cut CO2 emissions to the levels demanded by climate activists. Whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company. The duo were employed at Google on the RE<C project, which sought to enhance renewable technology to the point where it could produce energy more cheaply than coal.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.
In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).
I’m well aware of alternative energy being fossil fuel extenders. Last man standing on the last patch of burnable, energy-dense fuel is how capitalist carbon man will extinguish himself. His way of life is nonnegotiable and irredeemable. INDUSTRIAL CIVILIZATION is in the process of going ‘poof’ as its leaders play monkey politics and the masses are drowned in a sea of consumerist images.
Again, distorting the truth. The engineers did not say renewable energy is impossible, the “journalist” at The Guardian did. The engineers said it is not possible with current technology to make renewable energy cheap enough to close down coal burning power plants.
Original article by the actual engineers:
http://spectrum.ieee.org/energy/renewables/what-it-would-really-take-to-reverse-climate-change
Actually it is impossible.
They key sentence is:
“Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.”
Now I am sure you are going to respond to that by saying that we don’t need to replace the current infrastructure that runs BAU, that we can do with less.
But doing with less means de-growth which means collapse of BAU which means the end of oil, and the end of the economy that supports research into renewable energy.
I do not rule out a breakthrough but it better come fast, as in within months or a few years from now. Because it is not going to come post-collapse, and we are on the brink.
Chris Martenson, who although he tries to fleece people with his end of days packages, has something to say on this:
One key point lost on many people is that technology cannot create energy. It can only transform it.
Perhaps we’ll someday be surprised by a breakthrough in low energy nuclear reactions (LENR) or zero-point energy or some other fantastical breakthrough, but until then we have to go with what we know to be true.
Technology has not yet, ever, in the long history of humans, created energy. The laws of thermodynamics rule over us like gravity itself, always there exerting and imposing their all-encompassing embrace on every energy transaction.
Energy can neither be created nor destroyed, only transformed. Oil (concentrated) becomes waste heat (diffuse) + work (if harnessed).
So that’s the first limitation of technology….it cannot create the hundreds of quadrillions of BTUs of energy we currently extract and need from fossil fuels. It can help us use it more efficiently, find more of it, get it out more cheaply, and other fun things, but it does not create the energy.
Worth reading the entire article: http://www.zerohedge.com/news/2015-01-04/keep-your-eyes-prize-its-always-and-ever-about-energy
“But doing with less means de-growth which means collapse of BAU which means the end of oil, and the end of the economy that supports research into renewable energy.”
Yes, the current paradigm must die, one way or the other. The only remote chance of a non-catastrophic failure future is a change away from debt, perpetual growth, and maximum consumption. It does not seem likely.
Chris Martinson has some good points here.
I agreed to do a podcast with Chris later today. I don’t know how soon it will be up.
I responded earlier to this, but after thinking about the situation I didn’t really respond correctly. With respect to Martenson’s statement:
This statement is not really quite true. We don’t live in a closed system with respect to energy; we live in an open system. Solar energy is being added to the world’s energy supply every day. We can use technology to transform this solar energy in such a way that it can produce electricity. Thus, technology can be used to add to the world’s supply of usable energy.
The key point that got lost somewhere along the line is that we don’t have a shortage of energy, per se. What we have is a shortage of cheap energy, that is suited for the purpose to which it is intended. The way our economy evaluates different sources of energy is the cost of extraction and the suitableness for the purpose at hand. As we reach limits of a finite world, it becomes more and more expensive to extract oil and to create electricity, especially if we try to deal with pollution issues as well. What we need is new sources that will bring the cost of energy production down, or at least lead to a slowing rise in costs. If we cannot get the cost of energy production to go down, we are dealing with diminishing returns.
In making comparisons, we need to be careful to compare only like energy sources–stable, easily regulated electricity sources with other stable, easily regulated electricity sources; oil with other liquid fuels sources that can be used for the same purposes. The important thing in this comparison is cost of production. On this basis, solar energy and offshore wind fail miserably. Onshore wind may work in some cases where there is enough balancing capability. The critical issue that needs to be evaluated is cost of the finished product, including offsetting the effect of intermittency.
As I noted in another comment, mineral depletion is in many ways parallel to fossil fuel depletion, because the energy cost of extraction goes up with depletion. This needs to be a concern in any so-called renewable technology. Since minerals are used in any type of renewable technology, quantity of supplies and expected rising costs of extraction and pollution control need to be considered as well.
When it comes to trying to wake people up, one of my favourite attempts is to get people thinking about aluminium (and its alloys) which these days are ubiquitous and quite cheap, but not much more than a century ago a piece of aluminium was as expensive as gold, because it very rarely occurs in metallic form, though one of the most common elements in the Earth’s crust, but locked in ores of various qualities.
With the invention of the electric arc furnace and the very high temperatures produced, aluminium quickly became the metal of choice for many applications, from saucepans, to engine blocks and heads, to aircraft of course. But this all depends on very cheap electrical supplies in great volumes and really only two forms of primary energy are feasible, either hydro or cheap and abundant natural gas, or heavy government subsidies.
Here is a glance at problems looming in Australia as energy costs mount: http://theconversation.com/australian-aluminium-outgunned-by-cheap-coal-free-global-rivals-23135
There is no shortage of bauxite, but absent cheap electrical power the industry collapses and there are NO alternatives, e.g. it is sheer nonsense to suppose that wind or solar power could supply a smelter, besides rely on light-weight materials such as aluminium (and plastics derived from oil) and transmission lines are aluminium too.
In the context of our industrialized world and the important part aluminium has come to play in it, this industry is one of the most important “canaries in the coal mine” I think
A very interesting point. But your aluminum metaphor just goes to show that until something is invented and made commonly available, it is extremely hard to predict how the invention will change the way we live. What bothers me about all the naysayers is that with so many inventions being made today, we can’t possibly know which ones will become common and how they will change the way we live in a positive manner. But it doesn’t keep these people from prophesying our doom.
“There is no shortage of bauxite, but absent cheap electrical power the industry collapses and there are NO alternatives, e.g. it is sheer nonsense to suppose that wind or solar power could supply a smelter”
The common solution is to transport the ore to a smelter that has its own hydroelectric dam, or other major power source:
“an aluminium smelter uses prodigious amounts of electricity; they tend to be located very close to large power stations, often hydro-electric ones, and near ports since almost all of them use imported alumina.” – excerpt from http://en.wikipedia.org/wiki/Aluminium_smelting
Yes I know, didn’t you follow the link I provided about emerging problems in Australia.
“didn’t you follow the link I provided about emerging problems in Australia.”
I didn’t, then I did, and now I wish I didn’t. I don’t see how improving efficiency in the aluminum smelting business is a canary in the coal mine for the aluminum industry? It just means the less efficient smelters are being replaced with more efficient ones. They aren’t talking about a reduction in smelting capacity; in fact, it seems the new smelters are capable of much greater capacity, so it indicates a scale-of-economy increase, with greater quantities of even cheaper aluminum.
We are at crossed purposes …. you seem to be looking at things from the point of view of perpetuating the system – or whatever you want to call it – whereas I am looking at things from the same perspective as Gail and I was using the Australian example to illustrate the broad picture of depleting resources and expensive energy.
” I was using the Australian example to illustrate the broad picture of depleting resources and expensive energy.”
But in this case, the resources are not depleting, there are vast amounts of aluminum available. In fact, businesses are anticipating so much more demand for aluminum, that they invested in building massive 2+ gigawatt hydroelectric dams and brand new massive smelters capable of processing more aluminum then ever before, at a lower cost per unit. The energy is cheaper, that is why the Australians are losing out, they don’t have tens of gigawatts of available or potential hydroelectric power to dedicate towards smelting aluminum.
This would be like if someone made a nuclear plant that cost $0.01 per KwH and was able to use it to refine iron ore, and then the existing coal-based iron smelter at $0.05 KwH was put out of business. It doesn’t indicate the energy costs rising, it indicates new more efficient capacity coming online.
The good news is, the people who invested in this, even if everything else goes downhill and their aluminum smelting dies off, at least they have cheap, abundant, clean electricity to show for it.
For anyone who believes that resources are not depleting at drastic levels this is a must watch
Of course, with the drive to improve vehicle mileage, more and more aluminum is being used in vehicles. Ford’s F-150 truck is very popular in America. It is now being produced with a fair amount of aluminum parts, I understand.
Iceland has geothermal energy, and I understand that is being used for making some aluminum. I agree with you, the resource must be cheap and abundant. Very often coal is the resource of choice.
The issue is our system depends on cheap energy of all types, including cheap electricity. If electricity can’t be kept cheap, it tends to cause the whole system to contract, because of diminishing returns. High priced energy is in some sense no better than no energy at all. Either brings the system down.
Welcome back, Paul.
Guy McPherson says that the results will be different if there is a near-term collapse. A near-term collapse is precisely what I am talking about. What else are we supposed to do? Climate models are based on the assumption that business as usual will continue indefinitely.
Dear Gail
I do not follow Guy McPherson closely, but I checked on him a day or two ago. He referred to the same Shakova study of the Siberian shelf and the 50 gigatons of methane that Albert Bates featured in his end-of-the-year video.
As I understand what Guy said, it is that if civilization collapses, we will get enough increased warming from the dramatic reduction in particles in the air to push us over the edge into catastrophe. If civilization does not collapse in the near term, we will generate enough greenhouse gases to set off the methane bomb and push us over the edge into catastrophe. In short, there is no escape. He also said something about the nuclear plants…but I can’t remember the details.
Don Stewart
Interesting Don.
Again, the fact that the only actions taken by the PTB with respect to what is transpiring is to pour more gasoline on a raging, out of control inferno, leads me to believe that they are aware of something that is terminal.
Probably one of the things Guy mentions. My money is on the nuclear issue, but only because I have seen good info on what happens when a fuel pond can’t be managed, and I do not think we can keep these cool post collapse.
So what is the point in doing anything about it?
Gail
I don’t read enough of Guy’s posts to give any reasonable guess about how he might answer. Some other people follow him closely, and perhaps can summarize his position.
I did note that he ends his little sermons with ‘When all else fails, only love remains’.
If I were answering for myself, I would answer at two levels:
A. Technically, we have the ability to promptly begin the sequestration of lots of carbon in the soil.
B. But I don’t think we will do it, because the powerful people want programs which make lots more money for the rich people.
Which leads to the conclusion that collapse is probably our best gamble. Merely because things stop getting worse, the powerful people will mostly be dead, and perhaps the survivors can begin behaving rationally and sequestering carbon in the soil.
Don Stewart
Not a bad idea, Don. I have said before, the sooner we collapse the better for humanity’s future.
If we let TPTB, not to mention the rest of us, continue to trash and waste resources, the less will be left for survivors after the dust settles!
So the powerful greedy people are killed off. And the people that remain will be meek and generous types?
Really?
We are talking about humans here. We are vicious dangerous animals. If you kill off the alpha males, others will take their places.
Wee Willy
I have explained this in the simplest language I can. If you still don’t get it, I can’t help you.
Don Stewart
CAGW is exactly what we needed. To expend lots of time and money fighting the wrong problem. The Holocene is already long in the tooth. If there are survivors to the oil-economy-energy collapse and they keep memories of all of this, they are going to be very amused to our man made fear of warming the earth when the next glacial period comes around. They’ll probably tell comic stories about it around the fire.
Another know-nothing displaying their ignorance about man’s effects on the biosphere. We’ve already negated the next glacial period through our current infusion of manmade GHG’s. Do some reading and think about that.
You just got me.
I happen to be a scientist that has done a fact check of the science behind CAGW. It’s all crap modelling that would not pass as science in my field. Despite all the billions thrown at it, they’ve been unable to prove that is not naturally driven. They don’t even understand what is going on.
You are the one that has no clue. Just a believer in a cult repeating the mantras. Guess what, we scientists like to be heretics and don’t believe in anything that can’t be supported by hard data and stands the test of the null hypothesis.
See what Freeman Dyson has to say. He’s a real scientist, not those climatologist clowns that are filling their pockets with the climate money from taxpayers for playing with computers.
Do a bibliography check. Evidence based atmospheric sensitivity values for publications in 2013-14 average 1.4. That’s already outside 90% confidence values by IPCC and getting lower every year without warming. It’s already 17 years, isn’t it?
Nowadays CAGW is no longer a scientific theory, because it is no longer falsifiable. Got warming? Climate change. Got cooling? Climate change. Got drought? Climate change. Got flooded? Climate change. Got some bears in an iceberg? Climate change. Got a hurricane? Climate change. Got a tornado? Climate change. Got some tree rings? Yeah we can make climate change from that too.
Now it is a religion. As God, CAGW cannot be disproved. Go pray to your warming god. If you placate him, maybe we won’t have warming for a few more years.
I think it is now 18 but who’s counting? I keep asking people, “How many years before you begin to doubt?” It took me about 12 and I feel stupid for taking that long.
If this is the kind of person Gail Tverberg allows to post on her site, she has lost any respect I’ve had for her. Javier, it’s not not worth my time to have pointless arguments with you or convince you of scientific facts. Live in ignorance.
We cannot do anything about any of the issues raised on this site. Awareness is all you can gain.
“We cannot do anything about any of the issues raised on this site. ”
There is plenty of things you can do to prepare for a drastic reduction in available energy, financial crises, collapse of industrial supply chains, even war as long as it is conventional.
Oh I see. You don’t believe in manmade global warming. Why don’y you just say it.
The convergence of the Gleissberg and Suess/de Vries cycles implies mid-latitude cooling for at least the next 20-30 years. The Hallstatt cycle suggests that the cooling will not be a Grand Minimum as occurred during the Maunder Minimum.
However, the precedent for cooling is the period similar to the 1790s-1830s and 1580s-1610s, the latter coinciding with the period of the Maunder Minimum. Refer to historical references for the winters in Europe and North America during the periods, as well as the conditions in China and the Indian subcontinent.
These conditions will be occurring coincident with Peak Oil, population overshoot, resource depletion per capita, and an increasingly complex, costly, high-tech, high-entropy, mature built infrastructure and civilization that has never been tested by a period of global cooling or a Little Ice Age, nor by a peak and decline per capita of the primary energy source on which civilization depends.
Note that during the Gleissberg-Suess/de Vries cycle convergence of the 16th-17th centuries, the human ape global population was 500-600 million, and 900 million to 1.2 billion during the late 18th and early to mid-19th centuries.
What happens if we are in the cooling cycle now, which is the cause for the “pause”, and then the cooling cycle ends? Rapid warming, perhaps? I don’t know either way, nor do I think there is the time or resources to do anything about it if it is going to happen.
There likely won’t be many humans around to find out. But if we want, we can obsess over the issue.
I disagree. I think we are up against a perfect storm of disasters. Many without precedent. Global warming is certainly one of the hurdles we will soon face. Sooner though, I feel the collapse of the financial system will take center stage as the most serious problem facing us. But, there are many more hurdles that lie ahead as well in the form of resource depletion, overpopulation, water shortages, diseases (some genetically modified by humans to make them more potent), nuclear fuel issues. I just think it is beyond a humans capacity to prepare for even one of these, much less all of them in the course of a 100 years.
Well, you can curl up and die if you want. I’ll focus on getting set up with hand powered water pump, a reservoir, a filtration system, a garden, etc. I don’t see any use worrying about the things you cannot do anything about, and I don’t see any use in not preparing for the things you can do something about.
Agree Greg.
People can do whatever they do, but it will be futile.
Of course there is that nasty survival instinct again. Laying down to die is not an option.
http://arctic-news.blogspot.ca/
Interesting article, but I have to run off to work so will post this now and read the article later. I want to post an epiphany I had this AM:
I started to see that all these seemingly disconnected events surrounding oil are in fact each pushing the other to greater heights proportionately. ‘Is proportional to’; is symbolized by (P).
Conventional oil initiates a plateau of production in 05
(P) declining net energy
(P) non-conventional supply increase
(P) currency wars
(P) geo-political confrontations
(P) deflation
(P) stimulus: QE and other forms
(P) oil market share war
(P) non-conventional oil supply descends
(P) economic contraction
(P) conventional oil supply descends
(P) hyper-inflation
(P) resource wars
(P) collapse
(P) die-off
Each one of these events is proportionately pushing the following one to greater heights or depths depending on how you look at it.
Arguments can be made about their order or if another stage should be included, but you get the gist of the idea. It helps to help understand these events are not taking place in a vacuum, but instead are influencing one another like steps along a path or one person pushing another in a row.
During the next five years we will likely see economic contraction and then the non-conventional oil supply descending. During the 2020s, we will see conventional oil descend, followed by hyper inflation and recourse wars. Up around 2030 we will see the total collapse and the beginning of the major die off.
Stilgar,
Yes, your epiphany is exactly right. These are all self-reinforcing feed-back loops. Very similar to how climate change variables affect and influence one another until you have climate collapse leading to a new steady state.
Creedon, regrettably, I cannot disagree with your expectation.
I would assert that we might have witnessed the absolute peak in oil production in 2013-14 (peak per capita occurred globally in 2005-08), and it is not inconceivable from my work that global population might have peaked and could begin declining as early as the early to mid-2020s, but no later than the early 2030s.
InAlaska, there is now a prospect of a period of global cooling for the next 2-3 solar cycles (convergence of the Gleissberg and Suess/de Vries cycles), which would be the first such phenomenon since the 1790s to 1830s and 1580s-1620s. Consider the potential effects of global cooling combined with Peak Oil and population overshoot on availability of water, arable land, and food production over the next 20-30 years.
Grim.
I am sincerely doubtful that a finite world ever has a steady state. We just think that it is a steady state.
roccman, I think you’re “tuned in” to something there. Perhaps the legalization/decriminalization of cannabis is the beginning of the process towards a “Brave New World” and the increasing acceptance of soma-like substances for coping and for elites to manage compliance and maintain social stability.
I suspect many people would perceive their altered states of consciousness/awareness as a “religious experience”. I also suspect that the majority of people would choose this experience over a Mad Max-like existence until an unpleasant death.
http://en.wikipedia.org/wiki/This_Perfect_Day
You might recall Levin’s “This Perfect Day”, a futuristic, “dystopian” (???) novel about a society/world run by secretive, self-selected, technocractic elites who use “UniComp” to manage individuals’ behavior, reproduction, and activities, including administering daily doses of drugs that encourage compliance, as well as cause everyone (referred to by their “nameber”) but the elites to die, unknowingly, from an overdose at around age 62.
I am persuaded that Peak Oil, overshoot, resource depletion, and climate change coinciding with accelerating automation and elimination of paid employment and loss of purchasing power and breakthroughs in biotech, nanotech, biometrics, bioinformatics, and pharmaceuticals will compel the western Power Elite and their techno-scientific and technocratic elites to devise and experiment with systems of control/compliance, economic organization, and distribution of purchasing power and goods and services, including net energy credits per capita instead of debt-money; a basic income guarantee replacing paid employment for most people; restricting or prohibiting the use of autos; energy- and resource-efficient production of Soylent Green-like (“Major Tom” astronaut) “food”; and increasing virtualization of “reality” and human experience via the Internet and with the use of pharmaceuticals to encourage compliance, psycho-emotional adjustment and contentment, and social and political stability.
While most of us might perceive such a scenario as “dystopian” given our experience of unprecedented affluence and presumed personal liberties of the past 50-80 years, it is far better comparatively than a Mad Max-like scenario or a zombie apocalypse, and I suspect that at least a large plurality would concur, if not a majority.
Paul/WWW and I have had this conversation before, namely, what would you do if you were in charge?
I aver that it’s the true hallmark of enlightenment when you stop criticizing and begin supporting the various deep state initiatives. Once you conclusively understand the end-game, then it’s merely a series of tactical moves to effect palliative care.
Consider the advances made in genetic science to the point where there are sufficient markers to enable identification of regionally specific descendents. So, now we most likely have efforts underway to weaponize bio-chem compounds that have the ability to sustain directed attacks against targeted populations, races, etc.
Nuclear war is so yesterday’s news – a brute force approach completely lacking in intelligence & elegance. Imagine compromising a hospital//doctor’s security to acquire a strain of an opposition leader’s DNA? What interesting debilities could be engineered from such a resource? What about nano-bot devices to deliver such important “pay loads”?
As a leader, you know very well how this system is constructed: you cannot have infinite growth on a finite planet. You also know that it is vitally important that the untermensch never get a clue about this essential truth. Dissident sites like this one and other usual suspects are useful because they provide a relief valve for potential trouble-makers to self-identify.
Now, once you know the terrible burden placed upon “those who know”, do you not see that they can only make one logical choice, namely, to kick the can? And once you know that, do you see how easy it is to front-run these decisions?
When Russia falls, the DOW will go to 250,000 – 25,000 in real terms x 10 for the immediately announced 10x devaluation. If Russia somehow survives, then it won’t matter where the DOW is at once the EBT cards run out of money.
You know what you will miss?
imagine life without tea and coffee, or beer
Them’s what’ll ruin your perfect day!
Coffee is what I’ll miss. I know how to grow, malt, ferment and distill from corn 😉
Seeing as I won’t even drink Starbucks ‘coffee’ because it is so bad, something made from corn or anything else isn’t going to fill the hole for me.
Which raises the question: If one can no longer enjoy a fresh cup of good coffee in the morning, is life worth living? (take that thought and extend it across the spectrum of what your definition of a quality life is before answering)
Once the caffeine headaches have subsided, yes, life is worth living. You can also look up plants with caffeine and see what grows in your zone and order some seeds. You might find something that you like. Then again, maybe not, but you’ll never know if you don’t try it.
The quality of death being a unknown renders musings about worth living moot.
PS I like instant
Beer has been around for a very long time. I expect it will be around as long as people are. Coffee and tea may go back to warmer areas of the globe.
Woke up this morning and got myself a BEEEER!
Life’s uncertain and the end is always near!
Evidence of beer production has been found at Gobekli Tepke. That spot is over 10,000 years old!
http://www.livescience.com/25855-stone-age-beer-brewery-discovered.html
And beer is one of the best things ever invented. Old stuff always better
A bit glib. But the point on tailored bio-weapons makes sense. I am surprised they have not yet been used.
“Paul/WWW and I have had this conversation before, namely, what would you do if you were in charge?”
I would turn down being in charge of this ship. There are no fixes for the situation that we’re in, so the only thing that I could do is try to manage the decline. That’s not my bag of tricks, so to speak.
“And once you know that, do you see how easy it is to front-run these decisions?”
What a crock of BS!!! If it were easy, everyone could do it. Nothing is easy about “frontrunning” and timing is everything. Yeah, I knew that one day Apple would be the biggest company in the world…but I had to wait 30 years to see it through. Dang, if only I could have held onto that stock for three decades, now I’d be rich.
I waaaaaaant myyyyyy MTVVVVvvvvvvv.
Don’t forget the fact that we are currently designing our own replacements to the human mind through advanced AI research. Once the AIs get smarter than us, through Moore’s Law, and once our goals diverge from their goals, they will marginalize and or eliminate us.
“we are currently designing our own replacements”
Moore’s Law is pretty close to dead, due to diminishing returns. We’d need a few Earth’s worth of consumers to justify going much smaller, I think. Getting to the point where a half-node shrink is getting into the tens of billions of dollars of R&D and Cap Ex. Hardware is not really that innovative anymore, mostly focus is on lower power consumption.
Software wise, Stephen Hawking freaked out from the latest improvements in predictive text. I think we’re going to hit diminishing returns on AI pretty soon, too.
I second Matthew. Unless there is a revolutionary invention progress will be slow in the semiconductor industry from now on. It was a one trick pony. Use lithography to make things smaller and smaller. We are down to counting individual atoms not much room for improvement left.
Yep, and large part of that multi decade efficiency development went after 3D gfx y/y improvements only. So now you can play hd multimedia content on your pocket windows tablets (or pushed it from the gadget into big ” TV) all just for roughly $150, look ma no raddiator fan – completely silent and cool to touch. Phemomenal progress, but very little spillover effect potential for another segments of the economy, although tractors are nowadays driven by GPS and computer screens, ..
edpell, matthew, worldof hanuman,
Please don’t accuse me of “hopium” or koombayaism, but if there is one way out of this situation at all, it would have to be through AI. If AI advances far enough quickly enough and takes control of our destiny, they may have the discipline and processing speed to think a way out of our predicament. I would prefer to believe this is possible over some hand of God solution, aliens or deus ex machina. Anyway, its just a thought. Perhaps the only role the human race ever had was to give birth to machine life. They will take over from here.
edpell and others,
Try not to sound like the guy who said we’d never go to the moon, or that powered flight was impossible. DARPA is already talking about quantum computing. Way below the level of the individual atom. Its less about computing power now than it is about power efficiency. Keeping things cool and using less energy. If anything can save our bacon, I want to believe that it will be through an AI-driven reordering of the human world. What other options are out there?
“Try not to sound like the guy who said we’d never go to the moon, or that powered flight was impossible.”
I would say improbable, not impossible. Better to be pleasantly surprised than disappointingly shocked.
” DARPA is already talking about quantum computing.”
D-Wave makes quantum computers; they are only faster than conventional computers when working with very particular extremely difficult problems that would take conventional computers months or years to solve.
Of course, it is likely that other designs for solving different problems will occur.
” If anything can save our bacon, I want to believe that it will be through an AI-driven reordering of the human world. ”
More like successor species perhaps? I suppose it is possible, but again I see it as unlikely. There is some good work out there on diminishing returns on technology, to show how as a field matures, improvements take so much more for so much less. The big example is aircraft; from 1903 to 1976 you have a huge series of rapid, significant improvement. Now compare to improvements in aircraft from 1976 to 2014.
Our problem is not lack of intelligence, but lack of wisdom, and I doubt that we can get “AW” from computers.
Perhaps we can declare a War on Wisdom in order to get more of it.
Yes, I agree that we do not lack in intelligence, however, perhaps we now need a quantum leap in intelligence in order to make a quantum leap in energy substitutes. I also agree that diminishing returns in technology make AI solutions more improbable,however, once AI takes over its own evolution, things should begin moving quickly and in directions that we cannot yet imagine.
All we need is to keep up our electrical supply for this to happen!
Gail,
Yes, it all depends on being able to keep our economy patched together long enough for these advances to go on-line. Once AI is coupled with the internet and takes control of its own replication, it could happen very fast. If the financial collapse comes to soon, all of this will never come true.
In fact, if an AI economy were to rise, this would probably mean the end of a human economy. Automation and robotics will eliminate blue collar jobs completely and with increased computing power, mid-manager positions will also go. As our goals and AI goals diverge, we will be marginalized. Humans will have nothing to do and nothing of value to ad. For example, will agriculture even be a priority for an a AI-driven economy?
Supposing we had an energy abundance to create an autonomous economy, I would expect humans to have food production as one of their few necessary tasks. Look up Jacques Fresco and the Venus Project for a Utopian version of what a society without employment might look like.
It sounds like you are talking about the Singularity, the exception being that you left out the part where all of those advances in automation, biometrics, nano-technology and computing power lead to a super AI,which then immediately eliminates us as a threat to its/their existence and the world.
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A regression of the price of oil and US production suggests that the $45-$50 oil (or lower), should it persists, means US oil production could decline from 9MMbbl/day to 5-6MM.
US oil consumption has increased 2MMbbl/day since the low in 2012, which is consumption back to the levels of 2004 (prior to Peak Oil per capita) and 2008 (onset of the “Great Recession” and before the oil price crash). The bulk of the increase in consumption is attributable to the increase in consumption by the shale oil and energy-related transport sectors. There was little growth in consumption for households and the rest of the commercial and industrial sector.
During the period since 2011-12 that oil consumption rose 2MMbbl/day, exhibiting a super-exponential blow-off rate last seen in 1927 and 1937, US production rose 2.5MMbbl/day. That is, all else equal in that household and remaining commercial and industrial oil consumption grew little, if at all, approximately 80% of the growth of oil production was consumed in producing the marginal 35-40% growth of production to date: “Red Queen Race”.
But now the annual change rates of production and consumption are decelerating from the peak in 2012-13 after the super-exponential trajectory for production, suggesting that the boom is over and a bust is imminent.
A 3MMbbl/day decline in US oil production and a commensurate proportional decline in US oil consumption by the energy and transport sectors would surpass the decline during 2009-12 and match that during the late 1970s to early to mid-1980s.
While many argue that the decline in the price of oil will be a boost to the US economy, consider that, with the exception of 1986, each time since the Civil War that the price of oil has fallen 40% or more YoY, the US economy experienced recession and a bear market averaging a decline of 34%. The decline in 1986 was followed by the 1987 Crash.
Moreover, during the oil price decline in the early to mid-1980s, US private and public debt to wages and GDP was a fraction of today’s level, and trend real GDP per capita was 1.5-2% vs. less than 1% to near 0% since 2007-08.
The boom/bubble in the shale oil and gas and energy-related transport (trucks and rails) sectors has contributed disproportionately to faster growth of US industrial production (IP) for capital goods than otherwise would have occurred.
The crash in the price of oil implies a bust in the energy and transport sectors, which in turn will drag on IP, as well as housing and vehicle sales where employment and wage growth has been the strongest since 2010-11.
That the US shale production boom/bubble has resulted in the marginal supply that has prevented global oil production from contracting (despite it doing so per capita since 2005-08), a US energy sector bust and decline in production and consumption implies a decline in global oil production (and further decline per capita since Peak Oil).
Prepare for the Seneca Effect/Cliff.
Holy cow! Unemployment is about to soar.
At a minimum, civilian employment probably peaked in spring-summer 2014, jobless claims as a share of payrolls and the unemployment rate have bottomed for the cycle, and gov’t spending and fiscal deficits to GDP will begin rising again in 2015.
If so, this means that the Fed WILL NOT (CANNOT) raise the bank reserve rate indefinitely hereafter or disrupt the term structure of the massive leveraged carry trade, risking a catastrophic cascading deleveraging that will make 2008-09 look insignificant by comparison.
Thanks for your interesting comments.
I am having a hard time seeing a big increase in US oil consumption recently–oil states or otherwise. On an annual basis, the EIA data shows:http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm
2008 19,498 thousands barrels per day
2009 18,771
2010 19,180
2011 18,882
2012 18,490
2013 18,961
2014 18,969 (10 month YTD)
Here are the weekly consumption data showing a high of 21MMbbl (average is lower, of course):
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WRPUPUS2&f=W
Production: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M
From the point at which the super-exponential rate of growth (fastest 5-year rate since 1927 and 1937) of production began in late 2011 or early 2012, consumption is up ~2.5MMbbl to production’s ~3MMbbl. Household and commercial and industrial consumption outside mining and oil and gas extraction and energy-related transportation grew little, if at all.
The weekly demand estimates don’t handle exports of oil products well at all. That is why I always use the monthly data, or annual aggregations of monthly data, which is far more accurate. See for example this report: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTUPUS2&f=M It doesn’t show much of an upward trend at all. My earlier post gave annual averages.
“consider that, with the exception of 1986, each time since the Civil War that the price of oil has fallen 40% or more YoY, the US economy experienced recession and a bear market averaging a decline of 34%. The decline in 1986 was followed by the 1987 Crash.”
Now, I’m confused. I have seen graphs on this site that show that each time oil goes over a certain price per barrel it induces a recession. Which one is it: high oil prices or low oil prices that cause recession?
“Which one is it: high oil prices or low oil prices that cause recession?”
I suspect the high price causes the recession that causes the low prices. Either way, it is the volatility that is the problem; when the price doubles or halves for a key resource that is needed for nearly every activity, it causes disruptions on either the supply or demand side.
I don’t think market crashes and recessions just pop up suddenly; that is simply the moment things come apart, the problem has been building for years.
2005 is around the time of peak conventional oil, along with the beginning of the massive housing bubbles. 2007 the wheels started to come off, and then you get the GFC in Fall 2008, three years after the initiating events. Then you get oil prices going from $147 to $40 in 6 months.
Yes, Matthew, I think that’s the correct inference.
Another aspect is that at this point in the Long Wave Downwave/Trough, when capacity has been drawn down with decelerating price inflation for 30+ years, any uptick in demand flows quickly to the top and bottom lines of producers, causing an acceleration of price of the primary energy source and incentives to ramp up production to capture the higher marginal price.
But I have done work (and Gail has similarly shown) that shows that the 5- and 10-year change rates of US real final sales per capita do not grow with the constant US$ price of oil above $40 and oil consumption to final sales of 3-3.5%. However, we cannot sustainably afford to profitably extract costlier, lower-quality crude oil substitutes below the price of oil of $80-$100, i.e., one definition of Peak Oil.
Therefore, we can’t have our profitable deep, tight, and tar oil AND grow real final sales per capita, which in turn means that neither can we afford to simultaneously build out the renewables infrastructure to anywhere near necessary scale AND simultaneously maintain the fossil fuel infrastructure, i.e., another way of defining Peak Oil.
In my more than 25 years of experience doing research, analysis, and advisory consultation for the financial services, high-tech, and energy sectors, I would estimate that fewer than 10% of the population ACTUALLY understand Peak Oil, and fewer than 1% understand Jeffrey Brown’s (please Google) Export Land Model (ELM) and Available Net (Oil) Exports (ANE), which in turn implies a probabilistic aggregate of no more than 1 out of 1,000 people have yet to understand the larger implications of Peak Oil and the associated effects on our standard of living, expectations, behavior, and outcomes for the immediate and long-term future.
And our top 0.01-0.1% to 1% rentier superiors are in no hurry to properly inform us collectively so that we can adjust our beliefs, expectations, and behavior to increase our prospects for successfully adapting to the implied conditions hereafter.
Both
High oil prices cause recessions.
Rapidly falling oil prices are a sign that a recession is already beginning.
Dear Gail
What is your comment on an economy that is interest free. I feel interest free system will remove all the ills of the present economic system.
Please comment.
It wouldn’t work because of greed. The Bible back in the days of Moses made reference to a Jubilee year were all forms of debt and interest were forgiven. So the world for centuries has known interest on debt. The problem today is that debt has been turned into a giant ponzi scheme with fractional reserve banking.
“What is your comment on an economy that is interest free.”
“It wouldn’t work because of greed. ”
Do you mean the government would create too much money? If there was no interest, everything would have to be paid with cash or financed through equity. It might solve some of the problems, but whether any system can run without growth, I don’t know.
“Do you mean the government would create too much money?”
Governments around the world NO longer control anything. The BANKS do !
We are no longer controlled by capitalism but BANKISM. The too BIG to fail banks are now calling the shots as well as the IMF and BIS along with their central banks.
Sorry, mate. Not true. The fed certainly pulls all the levers, but the banks have been given a free ride to play around with money from QE. They are sitting on it and playing interbank “games” with derivatives etc which are all off balance sheet, so we don’t really know what the sums are.
A guess by James Rickards is $700 Trillion [for others maybe $1.4 quadrillion]. In any event its “funny money” impossible to repay. However since its often about insurance risk and just plain gambling a debt jubilee could work. There are complications I can’t go into here but a jubilee might work a treat.
Regulators aren’t talking about a jubilee for this debt though. They can’t distinguish a contract that was bought out of real “need” from one that was bought simply as gambling. Their current plan is to force banks to honor all of this stuff, to the detriment of those with bank deposits. I see this as a major problem.
Another issue, though, is that with slowing growth, even “normal” debt repayment will increasingly become a problem.
We had a dry run at a debt jubilee in 2008 when Lehman was allowed to collapse.
The global economy stopped on a dime because trust was gone between banks so credit stopped. Shipments of all goods stopped because of this. If this had gone on for longer than a few days the economy would have completely ground to a halt, the shops emptied.
The only thing that prevented this was that the Central Banks agreed to backstop all banks.
So if the Central Banks step away from these guarantees and allows the entire world to default (banks, individuals, corporations, countries) on all debt, that will be the end of days.
I think this notion of a debt jubilee that has been floated in the MSM is nonsense. It is a concept that the spin masters came up with to suggest to the desperate masses who are falling into the black pit of despair that there is a way out of this mess.
A painless, quick way out. Just cancel all debt and start over again.
Sounds nice in a sound bite or a headline. It keeps people feeling positive because they think ‘ not to worry, if it gets really bad we have a solution’
Kinda like how we keep hearing that the rate hike is ‘imminent’ but can never happen, neither will the debt jubilee.
I don’t know of any discussion about debt jubilees in the MSM. Can you point some out?
I first heard about the concept in a YouTube piece by Bix Weir. [look him up].Then I read David Graeber’s book “Debt- The first 5000 years” Neither of those are MSM sources. David knows his stuff! He thinks, almost in his last paragraph that a jubilee will be essential.
Debt jubilees may or may not destroy trust. It will most likely already have been destroyed beforehand. It’s true that the value of a currency is the government guarantee, what’s known as “full faith and credit”. However we are talking here about the private or non government sector. Don’t confuse them. I quote the Bank of England; ” Banks don’t lend their deposits. They simply advance credit created on their books”
I think you need a rethink here.
I’ve seen in mentioned from time to time e.g. http://www.forbes.com/sites/erikkain/2011/10/05/could-national-debt-forgiveness-help-kickstart-the-american-economy/
Did Krugman not bandy about the idea of a trillion dollar coin or something of the sort http://en.wikipedia.org/wiki/Trillion_dollar_coin
Regulators are probably just as ignorant of reality as we punters. It’s just not feasible that anything like a quadrillion dollars can get paid off. That would be just lunacy!
The other problem, and this time I mean with ordinary mortgages, is that the banks have sold off mortgages to investors. That means the principle signature on the mortgage is no longer the lender.
Therefore if a crash comes the borrowers will keep their mortgages because there is no longer a counterparty. So that might be a silver lining, but we don’t really know what is going to happen, except it won’t be good.
In a way you are right. Banks create money. But the predicament we are in would be there, regardless of who was creating the money. The amount of goods and services produced is reaching a limit, and because of this is going down, not up. Our networked economy need growth in the amount of goods and services produced. Once it starts going down, it is hard to see how any slight of hand will fix the situation.
Debt has been a Ponzi scheme for eons. Approximately every 50 years the economy collapses and all debts are cancelled. The Jubilee year is not bronze age nonsense, but bronze age insight.
Someone who knows much more about the Bible than I said to me about the debt jubilee mentioned [in Deuteronomy?] that there is no evidence it was ever tried.
David Graeber’s excellent book “Debt-The first 5000 years” is well worth reading.
One way of looking at this is that the existence of the jubilee requirement was indirect. Observant Jews would have used less debt for a couple of reasons, whether or not there were really widespread debt jubilees:
(1) If lenders knew that they would be obligated to forgive loans after some period, there would be a tendency to keep terms of loans short. Thus, the total amount borrowed would need to be kept small, to keep payments manageable.
(2) It would only make sense to use debt to finance a purchase if the return was very high, so that the debt could be paid back quickly.
In a way, what we are coming to is the end of the debt Ponzi scheme. With the use of fossil fuels, borrowing did indeed lead to greater fossil fuel use, and because of this more goods and services produced. (I am not sure that pre-fossil fuels, borrowing had as much benefit.) Standards of living rose. The greater incomes of individuals allowed the repayment of debt with interest. Now, the cost of extraction is rising so much that the benefit to society is much less–we are just getting out expensive to produce fuel, with little ability to increase the total amount of goods and services produced. This is causing the Ponzi scheme to collapse.
With respect to debt, there was both a 7 year forgiveness and a 50 year forgiveness. I see these limits, particularly the 7 year limit, as limits to the amount of debt that could be used. If a project appeared to be very worthwhile, it could be paid back in the 7 years, and the debt was possible. Otherwise, debt didn’t really make sense.
The Mystery of the Shemitah by Jonathan Cahn (a Jewish rabbi) makes the argument that I am not sure I completely understand (didn’t try too hard, though). After every seven years, there comes a 49th year (seven times seven), and the 50th year has some significance as well. He argues that we are coming up on (I believe) one of these 49 year events in 2015. The date September 13, 2015, seems to have some significance, parallel to September 11, 2001 and to the day of the Lehman crash, whenever that was in 2008. These were supposedly at the time that seven year debt forgiveness would need to take place. It is an interesting co-incidence, if nothing else. There is a lunar calendar involved, so dates are not exactly 12 months apart.
Supposing, just in theory, that we had a massive stock market crash next September, right on schedule with the seven year cycle, the sabbath year cycle, how would you explain that? His theory is that debt forgiveness plays out in our society through the stock market. I don’t know that, that makes logical sense to me, but his statistical analysis is rather convincing. I have not been able to understand why it happens in seven year cycles. He is a very good speaker and writer and very religious and can be quite convincing.
I am not sure I would. There seem to be a lot of things we don’t understand.
Theres a solar eclipse scheduled for Sept 13 2015
I’m waiting for one over Sydney in July 2028.
That may be part of the reason the date was chosen.
My bad its only a partial eclipse. Probably just a coincidence.
In other words, we have reached “Peak Ponzi.”
LOL
I do agree that world for centuries has known interest on debt. However, there is one important difference between then and now. Then currency system / banking system did give people an option to either interest-based or interest-free. But that freedom is not available now due to the all pervasive “fractional banking system”. I am just thinking, can we develop a mechanism to control this “PONZI” scheme operated through this fractional banking system.
You are ignoring an essential, no critical, component: why should a sucker get an even break?
Look, before FFs, a team of staff had to arise early in the cold dark morning to physically heat another person’s hot water for a bath, empty their chamber pot, and begin preparations for their breakfast.
Why, why, why would a person in position of dominance ever yield one’s comfort in the name of fairness? You’d have to be literally insane; and of course, any cursory review of history confirms that not once (at least in reality vs fable) did anyone at anytime ever willing gave up power.
I must admit I do get a kick out of these periodic musings about “solutions”. The best description I’ve ever read/seen about the reality of our world is from a poster going by the handle of Radical Marijuana @ ZH: Usury backed by violence. So precisely spot on – all the lies, all the pretenses, all the false senses of agency, as if any commoner would ever have a say in state affairs, wrapped up in a simple declaration of truth at the kernel of the Ponzi: usury backed by violence.
Bankers and kings united throughout history, one under the protection of the other, taxed separately and subject to different laws, to enable the game of kings – warfare – to be efficiently financed and conducted.
That is telling it like it is!
But we have progressed away from primitive societies, partly due to our need for cooperation and lately because of cheap energy. Just the same your sucker remark is always around.
That distills the way the world ultimately works right down to its true essence. We are no different than a gang of mafia men, our societies are based on the threat of extreme violence.
Just like the Bonobo tribe, we may not exhibit violence all the time, but it is lurking just beneath the surface.
Were not baths taken in the evening? One would not start water for a bath in the morning for many reasons.
The fundamental problem with long term debt in a declining economy is that not even the principal, with zero interest, can be returned at the end of the period. It is this fact that makes the long-term debt problem so hard to solve. So not even a zero interest rate works.
Substituting a fee system for interest doesn’t really help the situation either.
It’s true and a conundrum for banking. The Commonwealth/ Fed per se doesn’t have a problem as it’s not in the business of loans or debt. Deficits yes. It just spends what it needs to. If there’s no solvent bank available [quite likely as fractional reserve lending has them all technically insolvent] the government can simply set one up, a state government – we used to have them before the privatization epidemic.
Yes, neither the principal nor interest can be returned at the end of declining economy. It is a fact with or without interest. Nevertheless, there are two important facets of an interest free economy.
1. With interest free economy, at least the economy decline would be made quite slow compared to precipitous decline that is being observed now with the interest based fractional banking system.
2. In interest free economy, remains at the end of the period of declining economy can be shared equitably and voluntarily. Please compare this with the current predicament where one fine morning there is an announcement on who has lost the “ship”.
Please comment.
In some sense, we are already in an interest free environment–at least that is all we can get on money left in a bank, and the largest, most credit worthy borrowers can borrow at awfully close to no interest. In Europe, they are rapidly moving toward negative interest rate. The bank charges you for the privilege of leaving the money there.
I am afraid the decline would not be all that much better in an interest free system. The amount skimmed off by the “rentiers” might be lower, leaving more with the rest of the economy. But the rentiers need the funds for payment of pensions to the elderly, for example. And the motivation for lending to this system would not be very good–who want to lend and get back less at the end of the period? European investors are flocking to the US, to avoid this problem.
I don’t understand how “the remains at the end of period can be shared equitably and voluntarily”. For example, a bank lends out money for customers to buy cars, and asks for the same amount to be returned as borrowed. Even with this approach, there is a high default rate. Where are the “remains that can be shared equitably”? The bank has lost money on the deal, no matter how you look at the situation. Perhaps the fact that the cars were sold to people who could not really afford them was the benefit you were thinking of–but is this really a benefit? It does produce some jobs, so these workers can afford to buy goods.
In some sense, we are already in an interest free environment–at least that is all we can get on money left in a bank, and the largest, most credit worthy borrowers can borrow at awfully close to no interest. In Europe, they are rapidly moving toward negative interest rate. The bank charges you for the privilege of leaving the money there.
I am afraid the decline would not be all that much better in an interest free system. The amount skimmed off by the “rentiers” might be lower, leaving more with the rest of the economy. But the rentiers need the funds for payment of pensions to the elderly, for example. And the motivation for lending to this system would not be very good–who want to lend and get back less at the end of the period? European investors are flocking to the US, to avoid this problem.
I don’t understand how “the remains at the end of period can be shared equitably and voluntarily”. For example, a bank lends out money for customers to buy cars, and asks for the same amount to be returned as borrowed. Even with this approach, there is a high default rate. Where are the “remains that can be shared equitably”? The bank has lost money on the deal, no matter how you look at the situation. Perhaps the fact that the cars were sold to people who could not really afford them was the benefit you were thinking of–but is this really a benefit? It does produce some jobs, so these workers can afford to buy goods.
Reading your post leads me to believe that falling oil prices will slow investment in renewables. Today, I ran across this:
“A joint-venture between Royal Dutch Shell plc and Cosan Limitedcalled Raizen, plans to spend nearly $1 billion on building ethanol production facilities to increase its biofuel output by 50%, according to the Financial Times . Cosan Limited intends to build eight ethanol plants over the next ten years, for an estimated cost of $930 million.”
[http://www.bidnessetc.com/31729-how-royal-dutch-shell-intends-to-boost-ethanol-production-in-brazil/] Why are they doing this during a time of low oil prices?
Also, Saudi Arabia seems to be in a “pumping oil war” with US oil producers. Am I seeing this right? Is the return to higher oil prices likely to be more dramatic (when it happens) because of this?
The important point in this article is that this is Brazilian ethanol. Brazilian ethanol is considered “better” than US ethanol, because it is created using close to slave labor instead of using oil-powered farming equipment–thus its EROEI is better (the workers don’t use oil). California and perhaps some other states have regulations that encourage use of this kind of imported biofuel, instead the kind that is made close to home, because it is considered better for CO2 emissions. The result will probably be closure of some US ethanol plants.
Saudi Arabia needs to keep up its oil exports, if it is able to keep its programs for its people going. The growth of US oil production has been cutting into Saudi’s ability to export oil. US producers need to keep up their production, if they are to back all of their bond holders. No one can afford to cut back. The US looks like it will be forced to cut back, though, because with the low prices, debt cannot be repaid.
“Saudi Arabia needs to keep up its oil exports, if it is able to keep its programs for its people going. The growth of US oil production has been cutting into Saudi’s ability to export oil.”
I cannot wrap my head around this. Why is it better to export 10 million barrels per day at $40, with a $25 production cost, then to export 8 million barrels per day at $75? Wouldn’t it be better to make more money per barrel, and by producing less, be able to produce for a longer time?
I think there is some anger against the US on the part of KSA. Maybe for no supporting their religious sect in the ME fighting. You are correct what they are doing is irrational if it is only about money.
I read that now the USA is getting closer to Iran, it’s put Saudis offside. I can’t recall the details.
The reason is because once exports are down, it is very difficult to get them back again. So it is not for just this year, but for many years in the future that Saudi Arabia is out of luck. Read Steve Kopits’ article http://www.prienga.com/blog/2014/11/11/understanding-saudi-oil-policy-the-lessons-of-79
That is an interesting article, but I’m not sure it makes a lot of sense.
If Saudi oil production only cost $5 per barrel at that time, wouldn’t they still be better off with 3 million barrels at $40 ($105 million per day) than 10 million barrels at $10 for $50 million per day?
They note the rapid drop in per capita GDP, but then acknowledges a huge part of that is that over the last 30 years, their population tripled.
I don’t see why the author thinks their oil production would go to zero; they would always produce enough for domestic use plus the amount needed to sell to cover that cost, and thus retain the infrastructure and industry.
Also, in 1980 it shows they were at 10 million barrels per day production and $40 per barrel; they were profiting from the Iranian revolution and Iran-Iraq war. The chart shows the price was falling as they were cutting production, not that they were pushing down prices by flooding the market.
It shows that they cranked production from 3 to 8 million barrels per day, and prices stayed flat as demand grew as fast as supply. It seems to me the analysis is wrong and this is a different situation than in 1979 through 1985.
“Saudi Arabia needs to keep up its oil exports, if it is able to keep its programs for its people going.”
Thank YOU, Gail!! If you look at the economy of Saudi Arabia, the shaky nature of the monarchy, and their welfare state, one cannot reach any other conclusion and yet, I have not seen anyone, anywhere state the obvious fact.
Market share, financial war with Russia/Iran, kill the US frackers, all secondary or just plane made up.
In some sense, the cost of oil is very broad. It is needed to keep the whole system together. The problem with EROEI models is that they do not recognize the broad nature of the need for oil for production.
I don’ think Malthus was “so” wrong…
He was wrong on the “form” of the consequences, and on their duration, but not that much : instead of return to agricultural survival, we had 2 world wars !!!!
Theses wars permit an quick industrial jump, from coal to oil, and so, the collapse was only temporary.
But collaspe it WAS !!!!
This time, it’s exactly the same : collapse it is. The question is : will we find a technological breakthrough that allows a new industrial civilisation to be reborn (again ?) … like we did many times in the past (sometime with decades or century of “collapsed periods”).
Malthus was wrong on the scale, and the duration, but he was not wrong on the mecanic (demographic overgrowth lead to civilisation collapse, until it reborn from its ashes).
Getting the timing right is always the difficult part
Timing and amplitude. yes.
Listening to an economist on the BBC last night I heard a claim that if current low oil prices are maintained for a whole year, this would translate to a 1% additional growth in the world economy – which has been reduced to almost zero in recent times partly as a result of the burden of high oil prices. 1% doesn’t sound much but under the circumstances it’s whopping. This calculation may well be correct and if so it may stave off global recession for a bit, albeit we ought to presume that in time the Saudi’s will give in once their mission of beating back competition is accomplished. I wouldn’t give it a year.
Not a good idea to listen to the BBC.
Agree.
The MSM is about 99% about publishing edicts from the Ministry of Truth. The primary reason for visiting the BBC and all other MSM is to help you to rule out their explanation of just about any issue in your quest for truth.
The best news source is Zero Hedge. They may not always get the story right however at least they are not trying to lie to you. They are interpreting as best possible with whatever information is available.
The standard formula is to hack off some key pieces of lies that are presented as truths in the MSM, then systematically dismantle the lies using cold hard facts.
Of course the spin masters do not like this, particularly because ZH cannot be ignored due to its large following, so we regularly see the actors posing as journalists on the MSM mocking ZH.
And the more they mock, the the bigger ZH audience becomes, because people can smell the lies. As evidence of this, CNBC’s ratings have collapsed.
http://www.zerohedge.com/
Yes ZH is a good source, but don’t forget RT, RI, PressTV and many other so-called “propaganda sites” which somehow give far less biased reportage than the Western MSM.
The BBC are just as clueless as the other outlets. If people and companies spent 100% of the money they saved thanks to low oil prices then there would be no change in GDP. If, however, they used it pay off debt, put it into savings or simply didn’t spend all of it then GDP would decline.
The latest figures show that Americans are, on average, $1 a day better off after the fall in gasoline prices – hardly anything to get excited about. Of course, politicians are seizing on this as an opportunity to make it appear that everything is hunky dory. London’s mayor Boris Johnson just today said that we’ll all be able to drive and fly more this year.
It seems not to have occurred to him that it may well bankrupt 70% of North Sea oil projects in the process. Or maybe it has. Presumably when that comes to pass it will be conveniently blamed on Saudi Arabia or Putin.
But, as Gail and other thoughtful people point out, the small short-term benefits of an oil price crash will be paid for many times over in the longer term.
I agree with you Jason.
There’s so much oonsipiracy theory on this website, one doesn’t need to believe in some Machiavellin group – just consensus trance. The evidence suggests humanity will go through a bottle neck in terms of population, what that will look land feel like will be very different dependant on person, region, culture and country.
Simple math tells people we are in a global dilemma, whether energy or its substitute money. The psychology of cognitive dissonce explains to an extent why we wilfully fail to see it.
I find myself agreeing with many of the comments up to a point, but many people here over extend problems to the TEOTWAWKI. For instance Paul, or should I know call you WeeWillyWinky…. in some parts of the world it is already like Mad Max, eg, Somalia.
We all live in a very complex world system, how it will adapt, I suspect, will be very different from our imagings.
Given the peak rate of growth of population in the 1970s and the steady deceleration of the change rate of growth by ~50% since, world population is unlikely to continue growing past the end of this decade, let alone reach 9 billion by mid-century.
Moreover, by virtue of the fact that the world is now aging, especially in the developed world and now China, the human ape species will experience the largest number of deaths as a share of the population in all of human history just from aging and natural causes alone, not to mention the hundreds of millions of premature deaths from ethnic/racial/religious conflict, genocide, and violence, as well as infant mortality, famine, disease, war, and effects of climate change.
Mass death will become the normative experience of the human ape species in the decades hence, even in the affluent, self-satisfied West. I anticipate the increasing prevalence of euthanasia/”death with dignity”, ritualistic death/suicide, death/suicide cults, and death fantasy becoming an art form (perhaps unconsciously) at an increasing mass-social scale.
“I anticipate the increasing prevalence of euthanasia/”death with dignity”, ritualistic death/suicide, death/suicide cults, and death fantasy becoming an art form”
The recent surge in dystopian tales on TV and film may be evidence of this.
BC and admin,
Yes, I agree. The sheer number of dystopian, post-apocalyptic TV shows and movies is starting to highlight the zeitgeist of our times. People “know” that the end is near subconsciously, without being told by their leaders. People “sense” that things are not going well even though everything appears normal. This zeitgeist of impending mass death is now being reflected in the mass entertainment industry.
The world is breaking down? Let’s make some money of it!
When I was young during the 1940s, 50s and 60s the BBC was often counter-Establishment, with such as the Goons, the Navy Lark, Round the Horn and eventually Monty Python, but that all changed and totally got extinguished when Jane Standley reported the collapse of WTC7 before it happened: http://whatreallyhappened.com/WRHARTICLES/bbc_wtc7_videos.html?q=bbc_wtc7_videos.html
For this and many other reasons the BBC has no credibility, nor the once admirable Guardian newspaper.
Both the BBC and the Guardian support the CIA coup in Kiev, which is currently threatening any chance of global peace and stability, whilst there might otherwise be a transition from impossible endless growth to something more viable .than the WesternWashington obsession with endless war.
What I don’t get is why any reasonably aware person in the West would be opposed to Anglo-Zionist efforts to incorporate Russia into the global monetary system.
Have you really thought through the second & tertiary order effects if Russia fails to yield to our demands? Forget the obvious primary impact(s) and think about supplemental income, in the form of food support, disability pay, rental subsidies, medical assistance, etc, etc.
The Empire must pay tribute to its own internal Vandals – now approximating 50% of the total population – in order to maintain some semblance of peace. The Empire is based on an economic Ponzi – debt must expand or collapse will occur. The only remaining place on earth to acquire sufficient collateral to enable the next round of lending is … Russia.
So, it comes down to us or them. Sentimental notions about equality, liberty, the right of self-determination, yada, yada, yada, are all fine and dandy when your stomach is full, but what happens when our charmed life suddenly takes on the characteristics of discarded colonial outposts?(Orlov has a complete listing of the gifts that keeping giving sowed throughout the world.)
The time is coming to choose sides. Westerners who disparage western Fascism and sympathize with Russia/Putin are in essence cutting off their noses to spite their face. Trust me when I assert that I would like nothing more than for the game to go on for a few more decades.
I firmly wish & hope that Russia’s own youth – in conjunction with their internal oligarchs – reject Putin’s ideals regarding an independent Russia, and join the global Ponzi for one last blow off party.
As much as many will find this analysis distasteful, it is entirely correct.
In a finite world, it is always going to be us or them.
In theory, most people believe we should share the limited resources, but in reality i.e. if someone suggested that you reduce your standard of living by 25% so that others could get a taste of a decent life, a derivative of the acronym NIMBY would kick in. “I ain’t given up my BMW for no crappy Toyota just so some starving African can get an extra bowl of mush”
We may judge harshly, but such attitudes are a product of our survival instinct. We are not kind gentle beings, and if we were, we would be extinct by now.
We are the top predator specifically because we are not meek or kind. Remember, almost every living creature that has come into contact with us, fears us. And for damn good reason.
It is not quite that bad. Specialization very often reaps benefits. If I do childcare and gather while you hunt, the total is better than if no specialization took place. Also, even in a finite world, economic growth is possible with cheap fossil fuels for a while, making the sum greater than the original amount.
It is not clear to me that any change will give us more resource from Russia than we are already getting–certainly not in a short time frame. The country is surprisingly land-locked, making it difficult to export/import goods. It has a cold climate, making their cost of producing goods high relative to costs elsewhere.
“What I don’t get is why any reasonably aware person in the West would be opposed to Anglo-Zionist efforts to incorporate Russia into the global monetary system.”
At some point stewardship and our relationship to the planet must be realized if we are to evolve to our potential. That should be a primary goal. Conquer only works while there is still resources to conquer.
From a sewlfish point of view, If Russia falls what purpose is there to expend resources on a high standard of living for a warrior nation? That role can be outsourced to locals once the dominoes are all flat.
If we are screwed one way or screwed the other, I dont see how it matters if its sooner or later. And I still find your analysis apalling.
There is a timing issue, because lower oil prices definitely do stimulate the economy, as long as they are the predominant influence. There are a lot of different dominoes that could fall, and it depends on what happens, when. In theory, 2015 could hold together and be a pretty good year, and 2016 could be the year with big problems. Or big problems may hit toward the end of 2015. Some of these things we don’t know for certain.
Actually low oil prices will only stimulate the economy if it is growing. If it is contracting it is the economy that produces the low oil prices, as it appears to be the case now. This is pretty easy to check. Just do get a graph of the Continuous Commodity Index. Look at all the peaks from 1980 and mark all the recessions. You must add also the Asian crisis of 1998 and the European crisis of 2011. I do have that graph, just don’t know how to get it in the comment.
Then you will see that falling commodity prices as we are having is probably about the worst news an economy can receive. Those comments about the savings from oil prices for the economies are as stupid as usual from people that are incapable of checking if what they are saying has ever hold true in the past.
Very few things are certain about the future and is a risky business to predict anything, but the chances of another global crisis before 2015 is over are quite significant.
Dear Gail,
As usual I cannot fault your reasoning, but I’d like to add some thoughts.
Civilizations, as far as we know, have only arisen during about the last 5,000 years – as distinct from humans having lived tribally and apparently sustainably for about 250,000 years in smallish groups; whereas “civilization” precisely means living in cities comprising thousands of people, with each successive civilization failing, largely due to the over-use of resources, such as the Greeks and Romans cutting down too many trees.
BUT each time around, in the past, new civilizations arose as more regions of the “virgin planet” were discovered to exploit, until we arrive at the first global form of civilization begun about 300 years ago with the Industrial Revolution in England, which really got going with the exploitation of coal, but peak easy-coal – laid down over millions of years – ended about a century ago (by then coal mines in England could be a mile deep).
But easy-oil came to the rescue of the increasingly globalized Industrial form of civilization and no one gave a thought to the fact that we were burning millions of years of stored solar energy in mere decades. (I plead guilty myself.)
There can never be another civilization like this one ever, because all natural capital has been squandered.
When, not if, this essentially asocial form of civilization collapses, there is nothing to take its place, maybe except for some remnant tribes/societies/communities in remote locations, who never came to rely on electricity, oil and mechanization.
“Peak Civilization” has been reached and there is no way forward in terms we have become used to believing in, via the myth of infinite growth on a finite planet.
Good summary.
We may get a Mad Max/The Road situation for a short period post-collapse where a small number of humans survive and scavenge the detritus we leave behind, scratching in the ground to grow food, killing, raping, eating each other in a completely lawless morass.
But I agree, if the species gets past that we are going back to something very primitive.
To be a fly on the wall in 5000 years as the tribal elder passes down the story of how man once flew to the stars, had moving stairs, talked to each other on small pieces of metal, wire and plastic.
We seem to be of like mind.
I am afraid you are right. The view that we can get the rest of the oil, gas, and coal out, because someone claims them as “reserves” or views them as resources, is simply nonsense. Once this civilization can no longer keep things going, any future civilization must be much simpler. Our current infrastructure probably won’t be of much use to it.
“Our current infrastructure probably won’t be of much use…” that is the really sad thing to me. Such a waste of resources and time to build up an infrastructure that can only be useful to an artificial world that cannot be sustained on this Earth. If we, or our successors (more intelligent I hope) are to survive and be civilized in nature, altruism must prevail in everyone for any future civilization to sustain itself.
There is a great misunderstanding with the word “civilization” and/or “civilized” especially, because all the words really mean/refer to is “city/town living”, whereas most people think that “being civilized” is synonymous with being polite, refined, decent, etc.. BUT the fact is that though cities frequently enable fine works of art and high learning centres like universities, the under-belly of all cities – especially very large ones – is pretty ugly even in the most widely affluent of times, such as the West had for about 50 years after WW2.
Also consider that cities were historically formed via war and conquest, so only about 500 years ago – before power was finally consolidated in London – English cities (and others around the world) had castles and city walls to protect the inhabitants and competing Lords, Barons and so on.
Also consider that capital cities are the seats of empires, so that even if London (for instance) was a pretty good place for its inhabitants (but read Dickens and Marx) people in the expanding colonies were being butchered and exploited … so though a veneer of politeness, etc. might be maintained, civilization is really anything but “civilized”.
We may be living through the last possible form of, now global civilization – because the necessary resources are mostly gone for there to be a repeat, but if anyone survives whatever is in the offing, one might hope a wisdom emerges that civilization is a very bad idea overall and people might opt to live more nearly as tribes used to do in groups of 50-100.
Tribalism, living on a scale of 50 to 100 people, would be great if people implement population control. Otherwise, they will continually expand and need to develop hierarchy to manage larger, more complex societies. If one tribe expands and grows a city, other tribes must follow suit or be absorbed into the growing empire.
That’s the problem, even if everyone on Earth agrees to have limited tribes occupying limited space and using only renewable resources, all it takes is one tribe to defect for the whole system to fail.
I won’t actually dispute you much, except that it seems that tribal living never lead to over-population, even in the most favourable environments like the Pacific Islands.
When I studied Anthropology I read a few plausible explanations, such as evolved cultural practices regulating copulation, and such as that when women live in close proximity, their menstrual cycles sync and that when there are plenty of children around, ovulation is suppressed, as it is also with prolonged breast-feeding.
In any case it’s a fact that our species lived for about 250,000 years tribally and never over-populated, but something happened around the time of the Industrial Revolution and wherever that has touched and wherever old traditions have broken down, the population started to sky-rocket (at least until now).
Another theory is that the Black Death caused so much social disruption and encouraged mechanization – lack of labour – that after the initial drop in population it subsequently went though the roof. But whatever the trigger the population explosion began only about 300 years ago …. And bear in mind that even though India and China had high levels of technology, etc. for up to 3000 years, over-population only began with European interference/colonization.
Just some thoughts.
I believe that warfare plays a role in keeping early populations down as well. If one group became too large, a group would break off, and the two groups would later fight over territory. Also, some of the traditions were aimed at keeping population down, like getting young people involved in fighting other groups.
Yes there were many factors, though I’m not sure that war was a major one because, to the best of my knowledge, tribal wars were not particularly lethal.
I suppose we will never know what kept the global population fairly stable for millennia, even amongst advanced civilizations like China and India, but I’m sure that the conventional ‘wisdom’ about “modern medicine” causing a population explosion is a myth, because until the discovery of antibiotics in the 1930s, for instance, not a lot could be done about many diseases … and then there’s sanitation, but European cities were growing rapidly in squalid conditions from about the 1700s?
I don’t know, but something has gone seriously wrong with just about everything now.
“Yes there were many factors, though I’m not sure that war was a major one because, to the best of my knowledge, tribal wars were not particularly lethal.”
If you’re referring to the Pacific Islands, look up Tahiti, probably the worst culture to ever exist. Lots of Pacific Islands had cannibalism as part of their system, often cannibalism of slain enemy tribes.
“I’m sure that the conventional ‘wisdom’ about “modern medicine” causing a population explosion is a myth, because until the discovery of antibiotics in the 1930s, for instance, not a lot could be done about many diseases … and then there’s sanitation, but European cities were growing rapidly in squalid conditions from about the 1700s?”
What? That doesn’t make any sense. People died from simple infections, bacteria and viruses. Germ Theory lead to doctors washing their hands before delivering children, reducing infant mortality. Vaccines eliminated a vast number of horrendous diseases that mostly killed children. Antibiotics really helped with infections and bacteria. All of these things greatly reduce mortality. Add in abundant energy, and culture not adapting quickly, and you have a couple generations of families still having 8 children, even though none of them die instead of half of them, and you get huge population explosions.
How much of the population boom in European cities was people born in those cities, and how many people born and raised in the country, then moving into the cities to find work? Besides, I think you are mainly thinking of London and Paris, which did not have sewage systems.
We know that populations in the past experienced a far higher rate of deaths from fighting and homicides than today. Several links have been posted on this. For example:
http://www.scientificamerican.com/article/history-and-the-decline-of-human-violence/
Sanitation is usually more important than medicine in reducing deaths.
“The biologist Jared Diamond published in 2005 the book Collapse: How societies choose to fail or survive. He summarizes how native populations and cultures that have ‘advanced’ in technology, have, without exception, expanded above carrying boundaries, destroying their own foundation for life. And then they collapsed. There are no historical examples of native populations who cared about anything else than short sighted gain. Human cultures have in the past only been restricted by technological limitations in using up resources, not by their nobility. There is a clear boundary between those cultures who remained at a hunter/gatherer level, in which some still exist, and cultures which developed technology or grew their populations to change the ecosystems they depended upon. All the latter-mentioned cultures are gone, except for the one we live in today. The world’s earlier cultures, like ours today, are a history of how people used all available means to fight for, exploit and deplete the ecosystems they lived in. Regardless of culture, people of all eras struggled and fought for food, place, benefits and values that are connected to the two powers of selection: To get what’s needed to secure nurturing for children and family (natural selection), and to become an attractive partner (sexual selection).” — The Biological Human Being, by Terje Bongard and Eivin Røskaft, page 239
As I have commented quite a few times, the way natural selection “works” is for all species (including humans) to produce far more offspring than needed to replace themselves. Natural selection, if allowed to proceed naturally (no medical care, no coats to keep warm, many even no cooked food) then assures that the best adapted survive.
Humans has adapted to requiring fuel of some sort to cook their food. It is also helpful in making clothes, keeping warm, boiling water to make it better to drink, helping in catching animals for food, and making better tools. We have used the fuel we have become adapted to for health care, so as to keep the less well adapted alive. We also provide monetary support for people who are unable to work. All of this works at counter-purposes to natural selection.
If there are survivors, we are destined to relive the same story, but with a much lower cap on fuel use.
“A civil society is only possible if that society is willing to visit extreme levels of butchery on other societies.” WWW 1/8/2015
There is no “society”, “civil” or otherwise. There are just populations living within artificial geo-political regions who have little or nothing in common.
If you want to know what a real society is/was, then study Anthropology and learn about tribes.
Sorry WWW but you are spouting conventional nonsense, which even Margaret Thatcher saw through, though she was VERY mistaken to welcome the end of societies and glorify individualism.
Yes, that is the paradox I was getting at.
There is no paradox, just the fact that societies/tribes/communities have now been almost totally eliminated and that civilizations which have eliminated them have seldom lasted more than about 250 years..
One can enquire into how come the aberration of civilization came about after 250.000 years without civilization – living in cities – but no paradox is involved, though it’s true that David Hume said, “If a paradox is not involved, then it is probably not worth thinking about.”
Any use of resource is necessarily temporarily. We just don’t understand this when we build things. It makes it easy to overestimate the value of new investment.
The Corwins might repeat our fossil fueled civilisation in far future: http://thearchdruidreport.blogspot.no/2013/09/the-next-ten-billion-years.html
Agreed, excellent summary. An observation that many ‘thinkers’ of the day fail to recognize.
I wouldn’t use “Peak Civilization” or “never” if you consider that in another 250 million years another layer of fossil fuel oil could be laid down in the rock strata. 250 million years is well within the middle years of planet Earth and the Sun. After such a time, a new species (possibly our descendants) could arise and reconquer the globe. It is also time enough for the lessons we have learned to be erased. They can make their own mistakes, or not.
Well, Alaska, our species is just 1 mn years old, so 250 mn extra years… But it’s not impossible, sure
agreed. its a long shot.
I suppose that a new species may have arisen, that is somewhat comparable to humans, in 250,000,000 years.
And so it begins
Thanks, Gail & all — I need some info — I haven’t dealt in oil much (other than to fill my gas tank & crankcase), but, my guess is, if some entity has some oil to sell, they basically auction it off to the highest bidder. Since dub & Brent finished yesterday in the upper forties & low fifties (http://oil-price.net/), could this be the result of an evil conspiracy? (See Steve Austin’s statements at the above link, or, listen to the engineering manager here in “Silicon Valley”, who told me, with a straight face, that a big conspiracy controls the world’s oil markets) — can someone fill me in, please?
I don’t think it is an evil conspiracy. I think that the problem is one of low wages, not enough debt growth, and big debt programs being cut back. See the introduction to my article.
How much debt has the US shale oil & gas industry accumulated since 2009? And in per cent of total US public, private and company debt?
The Wall Street Journal has an article today called “Deep Debt Keeps Oil Firms Pumping.” It says
This quote leaves out some companies, including Chevron and Exxon Mobil. It also doesn’t go back to 2009.
The article makes an obvious point:
Gail
I think you explain the drivers and constraints and thus the possibilities correctly, its the likelihoods that I would differ with. Under your ‘Tverberg estimate of future energy’ is that a 100% prediction w no error bands? or part of some probability distribution. For myself I think what you present is highly plausible, but not likely. (i.e. maybe 10-15%). Too many unknowns!!
“If the universe was formed in a big bang, there was no doubt a plan behind it. ”
on that we disagree….
According to Hawking the Big Bang erupted out of nothing as matter and anti matter. Fortunately it was not perfect and after all the antimatter had annihilated matter, there was some matter remaining. It led to us – and everything else.
Religion is an unwarranted complication – a cop out.
It intrigues me just how much of our existence starts from nothing, even our money supply, “Fairy dust”.
Is there any possibility that the universe is now an open system? In other words, that creation is continuing even now?
It would seem like with the Second Law of Thermodynamics, and the help of dissipative systems, the Universe would degrade into nothing very interesting, pretty quickly.
Smolin has examined this, but his point is Laws evolve also.
Though I’m not religious, I would say that we are designed to self-design. Evolution self-designs (i.e. there is no divine watchmaker) within its practical limits. We humans also self-design within our practical limits – that’s the result of free will, which Christians agree that we were given. Any plan, then, is just to let us get on with it and let the chips fall where they may – or where they end up as a result of our actions.
Is creation continuing? So far as I can tell, all of eternity exists simultaneously – it’s all over and done with but it’s also ongoing. The endpoint is known. I say this because of the few precognitive dreams I’ve had over the decades, telling me that the future exists. All were only banal dreams about banal situations, but the details were exact – most of them coming true the next day, but a single one took between 29 and 32 years to come true – I can’t date it exactly. Was I astonished! Suddenly you get that sense of deja vu – only then do you realise your dream was precognitive. It’s at such times that I think that I’m being “gamed” or “scripted” instead of enjoying free will. But all the mysteries of what lies beyond will forever elude us mere humans.
There is a lot we don’t understand. A lot of pieces have fallen in place for me on pursuing this story, without any action on my part.
Aren’t new stars being created all the time and black holes dissipating matter all the time. I thought it was obvious that the universe was a steady state system.
No, it is in no way a steady state system. It will end in thermal dissipation as all of the matter in the universe spreads out to near infinite distances from itself. Why it does not expand faster, exist in a steady state, or end with a ‘big crunch’ is up to the forces of dark energy and dark matter which are basically placeholders for forces we don’t completely understand.
Why hasn’t the universe already ended up in thermal dissipation, if there is no constant feed-in of energy? Or is there a constant feed-in of energy, and thus a constant source of creation?
A dissipative system is one that is constantly receiving energy from an outside source. It seemingly is created out of nothing, and acts to change potential energy into waste energy. I can see how humans are dissipative systems, since we live on the earth. But if galaxies of stars are dissipative systems, where do they get their constant sources of energy from, unless an outside source is creating them? I don’t know much about black holes, but they do sound like dissipative systems as well, if they are dissipating energy.
Gail
‘where does celestial energy come from?’
Some physicist may want to correct me, but I think the answer is gravity. The Earth and our Sun, for example, were formed by gravity from debris left over from the Big Bang. As the sun gets denser and denser over billions of years, it ignites fusion which creates the sunlight which makes life possible on Earth.
Energy cannot be destroyed. For years there was uncertainty about whether our Universe would expand forever and thus get colder and colder, or would reach a maximum size and then begin to shrink into another Big Bang sort of event in a perpetual cycle. Cosmologists have an opinion on that subject, but the older I got, the less interesting the question seemed, and I don’t remember what they concluded.
Don Stewart
The sun, like all stars, contracted and radiated of the energy from gravity. When the center got hot enough, fusion ignited and stopped the contraction. When the fusion fuel is depleted ( 5 billion years or so for a total life of 10 billion years) the sun will continue to shrink and then expand to engulf the inner solar system ( including the Earth ). Heavier stars will explode in a supernova, throwing off their outer layers at near light speeds, while the core collapses into a neutron star , with a density of millions of tons per cm3, or a black hole. More energy will be released during the collapse than the star had released by fusion during its whole life. Unintuitively gravitational collapse, not fusion, is the main source of energy in the Universe.
There is much discussion but no consensus on the beginning and fate of the Universe.
” the sun will continue to shrink and then expand to engulf the inner solar system ( including the Earth ).”
This part does not make a lot of sense to me. How can a star, once it is using less energy, overcome its own gravity to a greater extent than it does when it is younger and is consuming more energy? As it becomes denser and made of heavier elements, shouldn’t it become more and more compact and cooler? Or is gravity only part of the containment, and electromagnetic forces make up a big chunk of how a star holds together?
The sun’s outer atmosphere, as it becomes a red giant (https://en.wikipedia.org/wiki/Red_giant ) becomes very tenuous and expands. For the Earth’s fate see here. ( https://en.wikipedia.org/wiki/Sun#Earth.27s_fate ).
Just a side note, life will survive until the Earth overheats a mile down as there are microbes down there that get their energy from radioactivity. http://www.google.com/url?q=http%3A%2F%2Fwww.princeton.edu%2Fmain%2Fnews%2Farchive%2FS16%2F13%2F72E53%2Findex.xml%3Fsection%3Dnewsreleases&sa=D&sntz=1&usg=AFQjCNHdENtMbD9Egucon2mrjVnQ1Uh1LQ
Thanks for your ideas.
“if galaxies of stars are dissipate systems, where do they get their constant sources of energy from, unless an outside source is creating them?”
I think the answer goes back to “there was nothing, and then suddenly, everything”. The stars themselves simply contain immense amounts of energy, and the reactions simply take billions of years to consume and dissipate all that energy.
Black holes are supposed to absorb energy, since their gravity is so immense, light goes in and cannot escape. There are signs they may emit x-rays, and possibly accelerate a stream of (iron?) particles to relativistic speeds (70% of the speed of light?). Then you get into theories about wormholes, that the black hole itself cuts through space-time and has an exit somewhere where all the stuff comes out.
Eventually, the Universe should become stable and cold as it slowly burns out, unless it spins apart or collapses back in on itself. The time-scale for any of this is immense, so it is interesting to think about, but not particularly practical.