Role of Wages of the Common Worker in Oil Prices, Collapse

In their book Secular Cycles, Peter Turchin and Surgey Nefedov point out the important role falling wages of the common workers played in early collapses. I got to thinking that this might be an issue with our current situation as well, including the low level of oil prices.

I explain this in two presentations. The first one is called “Overview of a Networked Economy“. The second one is called, “Economic Growth and Diminishing Returns.”

A couple of (amateurish) slides that need explanation are the following ones:

Standard definition of economic growth

The cloud above my representation of the economy is supposed to represent the cloud of goods and services that the economy makes. Many people would like us to believe that as long as this cloud is growing, everything is fine.

What Peter Turchin discovered is that there is a smaller cloud that really needs to be growing, as well.

This cloud is the after-tax income of the common worker. If this isn’t growing, then it is hard to collect enough taxes. The ultimate downfall comes from government downfall, because of the problems of the common worker.

Wages of Common Worker

The above slide is an attempt to show the after-tax income of common workers as a subset within the GDP cloud. (It probably should be much smaller.)

Common workers are ones who will tend to buy mostly goods and not too many services. In fact, the goods that they buy are not necessarily even high tech goods. If these workers cut back on goods that use a lot of commodities in their production, this cutback could contribute to all of the other pressures we are now seeing toward lower commodity prices, and make it much harder for oil prices to rise again.

If we want common workers to do better, it looks to me like we need an increasing supply of cheap-to-extract oil (low priced would help as well).

To see the full story, you will need to click on the links above.

I will be leaving on March 13 to spend four weeks lecturing and traveling in China. (My family will not be coming along, so I won’t be leaving an empty house here.) Hopefully I will have a chance to write a “regular” post between now and then–the two presentations are from this series. I don’t expect to be able to write posts while I am in China because China does not allow access to the WordPress site where I write my posts.

About Gail Tverberg

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

  1. Stefeun says:

    Air pollution in China

    “China’s ‘Inconvenient Truth’ Yields Environment Billionaires
    (…)China’s annual meeting of the National People’s Congress, which begins March 5 in the capital, is expected to set government policies for the year on issues such as pollution. “Under the Dome,” a Chinese film investigating the fallout of the country’s poor air quality, drew millions of viewers over the weekend, putting a renewed spotlight on the issue ahead of the gathering of lawmakers.”

    The full length version of “Under the Dome” is available on Youtube (1:43:56 sort of long TED-talk), but English subtitles don’t seem to be finished yet. However, several parts with subtitles can be played as separate videos. As an example, here are subtitled parts noted as 1, 2, 3 (resp.5:57+16:40+2:26 minutes):

  2. edpell says:

    I read an article that says the US is producing and importing one million barrels per day more than it consumes. That it is running out of storage. That when storage is full it will drive the price down to $20/barrel. Any comments?

    • I expect prices will go down, to $20 a barrel or lower. Current prices are unsustainable.

      Not all oil is substitutable for other oil. The very light oil from shale formations doesn’t substitute for heavier oil used in most Gulf of Mexico refineries. We had more refineries for very light oil, but some of them have closed because refined products made from heavier oil were cheaper (because the heavier oil sells at a discount to light oil). Also, the very light oil from shale formations doesn’t provide a range of oil products–it mostly provides gasoline and even lighter products than gasoline. For gasoline, we already have biofuels acting as an extender. I haven’t looked into how this all works out, but I am not surprised that we are importing heavy oil, when we have a surplus of very light oil.

      • richard says:

        I’m thinking that $20bbl oil could be a close run thing. The MSM is selling growth in India while the crazies in the west are busy rattling sabres and raising risk and decreasing investment. It still looks like US production will not fall fast enough to allow growth to outrun the limited physical storage capacity. In a sane world, people would sit around a table and agree production limits. That’s just common sense.

  3. jeremy890 says:

    Crisis, What Crisis?
    I’m just a “Poor Boy” and “Some Win and I Lose”….
    Yep, hoping BAU lasts, and lasts and lasts

  4. Don Stewart says:

    Dear Gail and All
    A nice article explaining how oil companies calculate their value for the SEC filings, and some ideas about how the decline in prices will reflect first quarter filings.

    Don Stewart

    • richard says:
      North Dakota may be hitting the headlines, but Nigeria is in a world of pain.

    • richard says:

      Potholes further down the road …
      “And Wells Fargo’s subprime cap of 10% of loan volume is setting the tone for the rest of the industry, where the national average has been 27.4%.”
      “Megabanks like Wells Fargo might see their earnings get dented, but the amounts aren’t big enough to topple them. Smaller lenders that have specialized in subprime might not be so lucky. But the auto loan subprime bubble, when it implodes, won’t sink the US financial system as a whole; it’s just not big enough.”
      “Subprime lending funded about 8 million new and used vehicle sales in 2014, in a universe of 16.4 million new and 42 million used vehicle sales. It has been a powerful force. It has driven auto sales to levels that have made the industry drool. But when that force buckles, it will impact automakers, their suppliers, dealers, railroads, trucking companies, and other sectors. It will ripple through finance companies and insurers. It will hit employment. And it will show up in retail sales.”

      • I wonder whether other banks will really cut back on their sub-prime auto loans. It is probably a sizable share of some banks’ revenue.

    • richard says:

      Looks like potholes further down the road …
      “And Wells Fargo’s subprime cap of 10% of loan volume is setting the tone for the rest of the industry, where the national average has been 27.4%.”
      “Megabanks like Wells Fargo might see their earnings get dented, but the amounts aren’t big enough to topple them. Smaller lenders that have specialized in subprime might not be so lucky. But the auto loan subprime bubble, when it implodes, won’t sink the US financial system as a whole; it’s just not big enough.”
      “Subprime lending funded about 8 million new and used vehicle sales in 2014, in a universe of 16.4 million new and 42 million used vehicle sales. It has been a powerful force. It has driven auto sales to levels that have made the industry drool. But when that force buckles, it will impact automakers, their suppliers, dealers, railroads, trucking companies, and other sectors. It will ripple through finance companies and insurers. It will hit employment. And it will show up in retail sales.”
      That could hit consumption just as the shale oil peaks later this year.

  5. Don Stewart says:

    Dear Gail and All
    See this post and shortonoil’s comment.

    Scores of trillions of dollars of stranded assets as oil dies. It is not clear to me whether shortonoil foresees stranded assets because wind and solar become cheaper, or whether he sees stranded assets because oil becomes too expensive. He says that depletion is the problem, so I suspect the latter. In either event, I find his numbers on the stranded assets to be interesting.

    Most of us today make a living because we are able to manipulate the infrastructure which shortonoil thinks will become a stranded asset. And most of our wealth is tied up in what the market is willing to pay for promises to pay with production from the stranded assets, or direct ownership of the stranded assets. Should the markets become convinced that shortonoil is not a lunatic, then financial values will collapse.

    Don Stewart

    • Practically everything becomes stranded assets, as we go through this bottle neck. Various oil companies already are writing down the value of land that they carried on their books, with the idea of developing. Many sites that looked like they had potential, no longer do. Some oil companies are more aggressive than other in this write down.

      But it is not just oil that becomes stranded assets. A 20th floor condominium in the city becomes a stranded asset, if there are no jobs, no food, no water, and probably no electricity in the city. Many types of mines become stranded assets, if there is no longer demand for lithium for car batteries for example. Virtually every commodity has stranded assets. Electric cars that no longer have electricity to run them become stranded assets. So do gasoline-powered cars that have no gasoline to run them.

      The issue with oil is that the cost of extraction becomes too high. This is quite different from the sales price becomes too high. What happens is the sales price becomes too low to justify extraction, because wages don’t go up at the same time. In fact, more and more workers are used in increasingly inefficient sectors, like oil extraction, coal extraction, and making desalination plants for water. This leaves fewer workers for other sectors.

      The real issue is wages that do not keep up with rising cost of extraction oil and creating other commodities. Prices have to drop, regardless of the rising cost of extraction.

      Wind and solar are non-solutions. They have nothing to do with this, except to push us toward collapse more quickly. They will be among the stranded assets–certainly anything permanently connected to the electric grid will become a stranded asset.

      • Don Stewart says:

        I should have said ‘too expensive to extract and use’. BW Hill has always made that very clear. It just wasn’t clear in my note.

        Don Stewart

      • Kulm says:

        The really rich do have retreats in out of reach places, manned by locals whose livelihoods depend upon the rich.

        They will have enough fuel for the one-way trip to their retreat farms where they can manor over their serfs for a very long time.

      • richard says:

        “Wind and solar are non-solutions.”
        I tend to disagree. It depends on your definition of the problem. My best guess id that city centres will have electricity 24/7 for some time to come. Solar pv would likely be cost-effective for daytime peaks. Similarly, wind power was in use before electricity arrived. As for 20th floor accomodation, there was none before the electric lift, but I’d have to look at maintnence costs to see if these would still be viable. Some probably would, some probably would not.

        • I have no problem with the wind power that was in use before solar was used. It was made very simply, often pumped water, and was certainly off grid.

          The idea of adding huge wind turbines to the electric grid doesn’t work, though. It certainly doesn’t make the grid last any longer. It is only if a person believes that our problem is “running out” of natural gas that it allows electricity to last longer by allowing the system to burn a little less natural gas. Our problem is affordability. The question is whether the wind reduces the overall cost of the system.

          • richard says:

            I’ll agree that electricity and oil are solutions to different problems, but there is some overlap, particularly if costs can be reduced. Even so the viewpoints in the following link seem optimistic in places (I added a precis)
            “In South Africa in 2008, for example, power cuts caused some of the country’s biggest gold and platinum mines to close, leading to a rise in global commodity prices, not to mention huge disruption to the lives of millions. Such unreliable power grids also hamper foreign investment.”
            “Top 10 countries by energy storage capacity”
            “According to Julia Hertin at the German Advisory Council on the Environment, cost is still a barrier. “At the moment, this is more of an emotional decision than an economic one – people like the idea of being energy self-sufficient,” she says. “There could be a point when [storage] becomes a game changer, but we’re not there yet.” But costs will come down. As Ben Warren at consultancy EY points out, solar panels cost 80% less than they did just five years ago. “The storage market looks and smells just like the solar PV market did [then],” he says. “Over the next three to five years, energy storage will become very affordable, very quickly.” Indeed forecasts suggest the market could be worth anything between $30bn and $400bn in the next five to seven years. The Spanish island of El Hierro is using hydro energy storage to become self-sufficient in renewable energy”
            “This raises important questions about who will pay for grid maintenance – initially at least only the more wealthy will be able to afford renewables and storage, leaving those who can’t afford them to pick up the bill.”
            “But it’s the utilities that will be hit hardest by a fundamental shift away from centralised energy production. As Andrew Jones at S&C Electric says: “You can’t compete with someone who has no fuel costs.””
            “Demand for central power generation and distribution will fall with the take-up of energy storage, experts say. As a result, the bank downgraded its credit rating on all US electricity utilities. The threat is so grave, in fact, Citibank has estimated that “in their current form” utilities in developed economies could see the size of their market shrink by more than 50%.”

            • We can’t run our economy without the electric grid. Everything collapses–your bank can’t operate without electricity.

              The solar PV ideas are just plain crazy. Who wants to live on a local island of PV, when everything else around them is collapsing? The island will soon collapse as well, without any jobs, any water to your home, any food availability (other than what you grow and defend). There won’t be replacement parts for much of anything, so it won’t be long before your inverter fails, or your batteries. I don’t see this as any kind of long-term solution.

  6. Don Stewart says:

    Dear Gail and All
    This will relate to several topics which have been discussed here recently:

    Note that fire has a number of positive outcomes: more productivity from the vegetation and animals; more carbon sequestration which makes the land more resilient in the face of drought, and the creation of a park like landscape which is easily navigated. (If you have been in a cane-break, you can appreciate the value of ‘easy navigation’.)

    Note that while the early Australians definitely did kill many of the big herbivores, they also used practices which promoted the abundance of many other animals and plants. That is somewhat similar to modern gardeners who plant pollinator strips and provide amphibian houses, but kill deer.

    Note that the aboriginal people in Australia once set the fires on foot. Now the officials feel compelled to use helicopters. This is a function of the very high value we now place on human labor…which is a function of cheap fossil fuels. If the fossil fuels go away, we should still set the fires, but just revert back to setting them on foot. Everyone will be poorer and won’t be able to afford the helicopters, but there will be food to eat. And we won’t need gym memberships.

    Note the desertification of former rangelands in Africa. I don’t know whether the fire management methods which were historically used are better, worse, or just different than those used by Alan Savory. It may be that fire works better in some places while holistic grazing works better in others. What we do know is that industrial grazing does not work.

    Don Stewart

    • garand555 says:


      If you haven’t noticed, I like to hunt. I get to places that most locals don’t even know exist, and that means that I get to see how ranchers graze their cattle. I went with a friend on an Oryx hunt (they were imported in the 1960s or thereabouts,) on the West side (off range) of the White Sands Missile Range. You can look down the fence line and see the difference between where cattle are and where cattle aren’t. The difference was there a couple of years before during my hunt, but the cattle were in a different area. On my friend’s hunt, I got to see how they grazed. Due to the plethora of cattle tracks everywhere, we started calling the cows “stampy mother*******” due to the fact that you could not find oryx tracks amongst the cattle tracks. They were spread out all over the place. This fits with what I’ve seen elsewhere. It seems that we’re just now figuring out that bunching grazing animals up, letting them heavily graze an area for a short period of time, then moving them on works a lot better. It’s kind of like how herd animals graze in nature without human intervention.

      We’re not as smart as we think we are.

      • Jan Steinman says:

        “It’s kind of like how herd animals graze in nature without human intervention.”

        But only when a top predator keeps them moving!

        In Yellowstone National Park, stream health improved significantly with the re-introduction of the wolf, because ungulates were no longer standing in one place on the stream bank, chewing vegetation right to the ground, causing silty run-off.

        Having extirpated the top predators, it is our duty to fill that ecological niche. See also Alan Savory, although he’s been pilloried by the militant vegans.

        Or better yet, bring back the top predators! Unfortunately, some were driven by us to extinction some 14,000 years ago.

        • garand555 says:

          Of course. Part of modern cattle ranching is killing predators. That’s part of the human intervention. That’s not working too well with the coyotes, but other predators have been hammered. Another case of reintroducing predators that hasn’t gone so well is down in Catron County, NM, with the Lobos. The problem isn’t that they reintroduced them, the problem is that when they did, they went in and told the residents how the residents were going to do things. If you know anything about the people down there, you convince them, you don’t order them, else they’ll make opportunities to get in your way. They’ve been getting in the way alright.

  7. Don Stewart says:

    Dear Gail and All
    The failure of the bank in Austria, with the subsequent ‘bail in’ required of the bond-holders, should ring some bells among the historically minded crowd.

    From Wikipedia: ‘Creditanstalt had to declare bankruptcy on 11 May 1931. This event resulted in a global financial crisis and ultimately the bank failures of the Great Depression.[2]:2–3 [3][4] ‘

    Will history rhyme this time around?

    Don Stewart

  8. Don Stewart says:

    Dear Gail and All
    Tagging on to my note about Exxon/ Mobil’s leases in the Russian Arctic. Chris Martenson writes today:

    ‘Within a year, possibly a little longer but not much, I think the price of oil is going to double from its current per barrel price of $50 US/$60 Brent.

    The main reason is that it costs $80-$100 per barrel to get oil out of the ground. Oil cannot stay below its marginal cost of production for long. We’re already seeing a massive loss of drilling rigs in the US and my prediction is that, by July, we’ll see US production fall off as a consequence. Why will it take that long? Because of the number of already-drilled wells that are awaiting completion coupled to the fact that oil companies drill holes in the ground (that’s what they do) and many of them are simply carrying on despite losing money.

    The longer term reason is that 2014 turned out to be a gigantic bust in terms of global oil discoveries. Don’t forget, for pretty much all of 2013 (when 2014’s capital budgets were being set inside the oil companies’ boardrooms) and much of 2014 oil was priced over $100 on the world stage, so oil companies had plenty of incentives to try and find it.

    They just didn’t.’

    We can, first, note that Chris and Exxon are not in the Tverberg/ Hill’s Group camp which says that people can’t afford 125 dollar oil. Chris and Exxon think that we will pay what we have to, because there is no alternative.

    The Exxon article does note the fact that Exxon’s capital expenditures have not been returning anything in the form of increased oil production. Chris applies that notion to the entire industry…with a footnote for US shale. So there are reasons why Exxon is going to the Russian Arctic (as they did in 2013/4 with their partner Rosneft) and why Shell is going back to the Alaskan Arctic this summer. Both companies desperately need very large finds. Exxon and Rosneft made a very large find last summer, but production costs will be high. The president of Rosneft said that he wasn’t worried, that the price of oil was headed toward 200 dollars over the next few years. From the articles I read after the Exxon/ Rosneft find, there is probably a lot of oil in the Russian Arctic, but it is going to be expensive. For example, the well had a fleet of ice-breakers assigned to it.

    Don Stewart

    • Chris and Exxon have listened to economists too much, and not thought through how this has to work. If Russia is recession, someone has to make up for its oil demand. Similarly for all of the other oil exporters. Some oil was invested in new production (in the US and Canada, as well as the rest of the world), and this oil too is disappearing from demand. The wages associated with this investment are disappearing as well.

      I wonder whether Chris and Exxon have thought through whether rising prices are going to happen to all commodities, or just to oil. It is not just oil that is having a problem. It is metals of many kinds, and other energy products, even food. The price of ethanol is down as well. I imagine farmers will cut down on acres plowed, and those mining metals will cut back on mining activity. Somehow, this lost activity needs to be made up for in demand as well.

      I am wondering whether they have thought about falling median wages and falling percentages of the population working. I am wondering if they are looking at debt saturation levels of governments, and needed increases in taxes to keep up with baby boomers retiring. All of these things hold down spending.

      How is the amount of debt going to go up, to make all this increased demand “happen”?

    • Reg says:

      The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth.

      Sanford C. Bernstein, the Wall Street research company, calls the rapid increase in production costs “the dark side of the golden age of shale”. In a recent analysis, it estimates that non-Opec marginal cost of production rose last year to $104.5 a barrel, up more than 13 per cent from $92.3 a barrel in 2011.

      Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said

  9. Stefeun says:

    A few more thoughts about DEBT, all 4 coming from Olivier Berruyer’s Review of Intl Press of 01 March (

    – FINANCIALIZATION OF THE ECONOMY by the Big Banks. – “What that means is that they are converting the entirety of the economic surplus to paying interest on debt. They are draining the economy of all vitality! There is nothing left for the expansion of consumer demand, business investment and old age pensions. It expropriates the economic surplus that is created beyond the maintenance of the current living standard into interest on debt.”
    Paul Craig Roberts as Gordon T.Long’s guest:

    – “This Is The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300%”. Interesting charts with breakdown per country.
    Tyler Durden / Zero Hedge:

    – “Most Americans spend their lives working for others, paying off debts to others and performing tasks that others tell them that they “must” do. These days, we don’t like to think of ourselves as “servants” or “slaves”, but that is what the vast majority of us are. It is just that the mechanisms of our enslavement have become much more sophisticated over time. It has been said that the borrower is the servant of the lender, and most of us start going into debt very early into our adult years. In fact, those that go to college to “get an education” are likely to enter the “real world” with a staggering amount of debt. And of course that is just the beginning of the debt accumulation.”
    Michael Snyder:

    – “And then, finally, clearly, demand has run smack up against peak debt — I think that’s the right word for it. We had a tremendous study come out in the last week or so from McKinsey, who do a pretty good job of trying to calculate, track and total up the amount of credit outstanding, public and private, in the world. We’re now at the $200 Trillion threshold. That’s up from only about $140 Trillion at the time of the crisis. So we’ve had a $60 Trillion expansion worldwide of debt just since 2008. During that same period, though, the GDP of the world saw a little more than $15 trillion.(…)
    {in 2008 China} had $5 Trillion worth of GDP. It’s now $10. So they’ve gained $5 Trillion of GDP. Their debt at the time of the crisis was $7 Trillion, now it’s $28. So the debt is up more than $20 Trillion while the GDP is up just $5 Trillion. These are extreme unsustainable deformations ”
    David Stockman as Chris Martenson’s guest:

  10. Don Stewart says:

    Dear Gail and All
    You may find this article about Exxon-Mobil being quite aggressive with Arctic leases in the Russian zone.

    I have to assume that Exxon thinks that the price of oil may hit 125 dollars or more, that the world will not collapse as a result, that the shale boom will soon fade, that legacy fields will continue to decline, that the Middle East will not get fixed and unleash a flood of cheap oil, that the politicians will bluster but, at the end of the day, everyone needs oil and it might as well come from Exxon operating in Russia.

    I read the new European Energy Strategy yesterday and I must admit I continue to find the European strategy very strange. They talk about building pipelines everywhere except to Turkey, where they are going to have to take delivery of the Gazprom gas that currently transits through Ukraine. It seems that they are unwilling to admit that they have created a disaster and are going to have to live with the consequences. Not surprising for politicians…but the time is getting short. (Maybe some Europeans can show me how all this makes sense).

    I find the Bloomberg comments about European dedication to the sanctity of national borders to be also strange. As near as I can tell, the Europeans have got themselves into very deep holes in terms of sovereign debt, and the breakup of the sovereigns would destroy the value of the notes. I will agree that the politicians are always willing to sacrifice the will of the people (Crimea, East Ukraine, etc.) to preserve paper wealth, but I rather doubt that their strategy will succeed. We are a long way from the United Nations charter which guaranteed the right of people to choose their government. Now, we believe that you must continue to serve out your indenture.

    Finally, I find it rather strange that most of the people in the Peak Oil blogosphere continue to refer to oil from the Arctic in Russia, or off Alaska, as ‘Russian’ or ‘American’ oil. It is actually Exxon’s oil or Shell’s oil. It’s like saying that the Eagle Ford oil somehow belongs to Texas, and the Bakken oil belongs to North Dakota. Those states get some benefits and some costs from the production of the oil, but it certainly doesn’t belong to the states. Saudi Aramco oil, on the other hand, does belong to the King of Saudi Arabia.

    Don Stewart

    • garand555 says:

      Don, there have always been people predicting that the world will end. What is new is people showing up saying, “Here is the data that shows why we’re screwed.” A normalcy bias is going to kick in and people will, at best, scramble towards faux-fixes. Often they’ll call you crazy and ignore you. Some of them will get fabulously wealthy with their faux-fixes in the meantime while calling you crazy.

  11. The psychopathic threats from should be reported to the FBI.

    • Quitollis says:

      “The psychopathic threats from should be reported to the FBI.”

      Unfortunately, that IP address comes from British Telecom:

      inetnum: -
      remarks:        *******************************************************************
      remarks:        * Report abuse via:,3024 *
      remarks:        *******************************************************************
      netname:        BT-CENTRAL-PLUS
      descr:          IP pools
      country:        GB
      admin-c:        BTCP1-RIPE
      tech-c:         BTCP1-RIPE
      status:         ASSIGNED PA
      remarks:        Report abuse via:,3024
      mnt-by:         BTNET-MNT
      mnt-lower:      BTNET-MNT
      mnt-routes:     BTNET-MNT
      source:         RIPE # Filtered
      remarks:        *******************************************************************
      remarks:        * Report abuse via:,3024 *
      remarks:        *******************************************************************
      address:        BT
      address:        Wholesale
      address:        UK
      admin-c:        PC487-RIPE
      tech-c:         SR401-RIPE
      nic-hdl:        BTCP1-RIPE
      mnt-by:         BTNET-MNT
      source:         RIPE # Filtered
      % Information related to ''
      descr:          BT Public Internet Service
      origin:         AS2856
      mnt-by:         BTNET-INFRA-MNT
      source:         RIPE # Filtered
  12. Quitollis says:

    This “Quitollis” is a hijacked name. it is coming from IP address Please write to and ask them to shut them down because he is making death threats.

    I am writing using the spammer’s name for security reasons. The “real” Quitollis’s email address no longer works, and he would never post such mindless ignorant drivel. — Moderator

    • I have blocked the IP address. If the problem pops back up with another IP address, I will block it as well.

      I don’t know how to stop the problem of people using names that aren’t theirs. One person whom I blocked a while back wrote a post under the name Ron Patterson, but wasn’t the real Ron Patterson. I had someone try to post things under a name similar to mine as well (May have been the same person). On other sites, people have selected names such as Adolf Hitler. I don’t like to point out this issue because making people aware of this problem may increase its incidence. I can write to WordPress about it.

      • Jan Steinman says:

        “I don’t know how to stop the problem of people using names that aren’t theirs.”

        I see two things, both with disadvantages: 1) moderate all postings, an incredible time-sink, or 2) require email-verified sign-up and log-in, which discourages casual commenting.

      • Daniel Hood says:

        You can tell who the trolls are, don’t hesitate, remove their comments and kick them off if found to be suspect. Period

  13. kulm says:

    What do you think about dark enlightenment and the energy shortage? it does not take too much energy to feed these ultra smart people, and even if their wealths decline they will still be wealthier than most of the rest. I do think they will get their wish even if oil production falls into 1/10 of now.

    • garand555 says:

      20% of the US’s energy goes towards food. It is highly inefficient. How are those smart, ultra rich people going to get food if the system breaks down? Most of them have far, far less knowledge regarding non-industrialized food production that most people on here, and I don’t care if you’re a billionaire or a bum, you have to eat, drink, deficate, and bullets to the face are still bad.

      • Jan Steinman says:

        “How are those smart, ultra rich people going to get food if the system breaks down?”

        If they control the land, they might be able to easily assemble hoards of starving people to work the land for them — them taking the lord’s share, of course.

        • garand555 says:

          That might be a dicey situation in the US with no fossil fuels. First, the ultra wealthy would have to send people hundreds or thousands of miles away from their homes to manage that land. It takes energy to do that, and second, there an awful lot of guns here. In a post fossil fuel world, the idea of a global mogul gets a little different.

  14. edpell says:

    I have read the follow nations will not exist in ten years
    Israel Henry Kissinger
    Russia Starfor Corporation
    U.S. Russian think tank (hey turn about is fair play)
    Yemen OFW
    various other states in middle east without resources OFW

    This is getting interesting and they are likely all correct. For pretty much the same reason..

  15. Don Stewart says:

    Jan Steinman
    As far as the choices Mike and Kathy have made…

    I try to keep any critical thoughts to myself if small farmers meet two criteria:
    1. The mortgage is paid off
    2. They are nice guys.

    Mike and Kathy meet both criteria. I have learned a lot from them.

    Don Stewart

    • xabier says:


      The lack of debt is of course important, indeed crucial. You are right to place great emphasis on it.

      But the lesson of history is, surely, that failing complex power structures will screw the small farmers with taxes and theft on their property and produce for as long as the system retains coercive force: this was true of Rome, of the Persians, of the Ottoman Turks, the Mughals, etc.

      One might be free of debt to a money-lender, but totally crushing taxes can be thought up in the blink of an eye by the central controllers – and even by the petty rulers of a devolved region. And raiders and bandits will come stealing where governments have no power.

      This is of course not an argument for doing nothing, but it is important to understand how things always work out. This is not to mention the hidden taxes of over-regulation which you have yourself written about as making life impossible for practical people.

      Maybe the future lies with nomads? It was interesting to read recently that when the Mongols settled down to tax and exploit the societies they had conquered, one of the few communities to escape domination was that of the Turkmen, who were good enough fighters – and fast enough movers – to evade them. Very interesting people,the Turkmen. The horse and the sword beat the plough any day.

      The peasant is just a donkey tied up and waiting to be beaten, I’m afraid. Sorry Jan, I do admire what you are doing very much, but…. This is why most peasants, when given the chance, have fled the land for something safer and better.

      I’ve been associating a lot with educated Turks, Russians and Iranians, recently at the University here and this has generated lots of interesting historical and cultural discussions, much more so than people in the too-comfortable West can manage. A history of war, defeat, slavery and tyranny does sharpen the mind!

      The truth is that this is a beautiful but harsh and dangerous planet, and human beings very cruel. There are no solutions, only a slim chance to alter the odds of survival of some very few of us marginally in our favour.

      • Debt to governments and debt to money lenders are not a whole lot different. The governmental debt can be imposed at will.

        It seems to me that both systems tend to fail at the same time. The problem in collapse was a lack of government to prevent attacks by roaming bandits. One comment by Turchin was that people would tend to settle in easy to defend areas (tops of hills) rather than good farming areas, for this reason.

        • garand555 says:

          I’ve toured several hilltop ruins. El Morro is one that comes to mine. The ruins near Cabezon are another. Some of these were permanent living areas, and others were purely defensive positions. I suppose they probably stored food up in those places back in the day, but it should be noted that permanent or purely defensive, if they had to use it, they still had to send somebody down on a pretty good hike for water. One thing that struck me with El Morro’s water supply was that it didn’t flow. I’m sure that dysentery was a major problem if they didn’t boil their water. There is also Acoma, which is still inhabited, but you can look and see what the Juan de Onate did to the Acoma Pueblo several hundred years ago to see that living up on a Mesa with only one route up does not always keep one safe.

          And there are some key differences between government debt and debt from money lenders, and they all stem from one simple fact: If there is going to be real enforcement of that debt, it is the government that will become involved at some point. (Barring illegal loan sharks, of course.) Compare government backed debt to non-government backed debt when it comes to bankruptcy. Student loans are not dischargable for most. Also, with some debts, such as property taxes, you aren’t entering into an agreement with the state, you are paying for the privileged of owning land. Governments can create debts that you owe against your will. It is their power to enforce debts that allows this.

          • I agree–government debt, if the government is still in power, is a big problem. Even its ability to tax is a problem. Not having a government becomes a problem as well.

        • Jan Steinman says:

          “One comment by Turchin was that people would tend to settle in easy to defend areas (tops of hills) rather than good farming areas, for this reason.”

          And Christopher Alexander says to build on your worst land, rather than you best land!

          As long as it’s a painless commute by foot, I don’t have a problem with this. A Permaculture design would tend to build at the “key line,” the point at which the shape of the slope changes from convex to concave. This way, you’re out of the “cold sink” valley bottom and out of the windy cold of the top, and convection fires aren’t so bad as they are further up.

          So I think I’d find me a cliff part-way up the hill. Military strategy is to move quickly through easily manouvered valley bottoms; military tactics is to gain the high ground. Perhaps in-between is not a bad place to be?

          • garand555 says:

            “As long as it’s a painless commute by foot,”

            See my post above, specifically the part about “a pretty good hike for water.” The ruins that I toured were on mesas with steep cliffs on most sides. The Cabezone ruins were probably the shortest hike down to the bottom, at about 1/4 mile or a little more, but that was a steep hike. Also, at the bottom, there is no water. They would have gone further (I can’t say exactly how much further,) to the Rio Puerco to get water, and the Rio Puerco does not flow year round, which means digging.

            El Morro was a much more permanent settlement than Cabezone. Cabezone had a few kivas. El Morro had significantly more in terms of structures. I don’t know where they did their farming or what kind of farming they did (i.e. dry vs irrigation,) but I do know where their water was. It was somewhere between 3/4 of a mile and 1 1/2 miles from the pueblo. This was a bigger mesa, and it is possible that they did some agriculture up on top, though it’s been long enough and I didn’t pay attention to the soil situation up there for me to say for sure.

            Acoma is also a long hike up, and I don’t know where they got their water, but it is still inhabited and it is known that it was originally picked for its defensive location. The other two almost certainly were picked for their ability to be defended too. El Morro is not quite painless by foot when the most that you’re carrying is a 5lb backpack, but if you have to carry your water every day, carry crops, carry firewood, etc… then it is non-trivial. Often non-trivial and defensible go hand in hand.

            Dang it, now you have me wanting to go to El Morro again;) (I should have been an anthropologist.)

            • Jan Steinman says:

              “I should have been an anthropologist.”

              You forgot the words “independently wealthy” in there.

              One of our members is a newly-minted anthropology PhD… looking for work.

            • garand555 says:

              LOL, it’s like a non-petrolium geologist. Both are fascinating subjects.

      • Jan Steinman says:

        “Maybe the future lies with nomads?”

        I’ve long thought that a reasonable energy-niche for humans between industrial civilization and hunter-gatherers might be pastoralism.

        It would essentially require the decimation of population and real property. Or perhaps laws favouring pastoralism over absentee ownership. which could happen if these nomads became a majority and did not need a permanent address in order to vote. (Yea, right.)

        “The peasant is just a donkey tied up and waiting to be beaten, I’m afraid. Sorry Jan, I do admire what you are doing very much, but…. This is why most peasants, when given the chance, have fled the land for something safer and better.”

        I don’t know why I’m associated with this part of your comment. Landed peasants could conceivably enjoy the rights and privileges of landed nobility, no? I mean, as much as anybody can. In case of war, and the government building with all the property records gets blown up, it’s going to be the ones with the guns who get the land, no?

        I do agree that landless peasants have no reason not to “flee the land,” but if it comes to that, what is going to be “safer and better?” A post-carbon industrial ghetto, mining landfills for bits of copper so rich people can continue to enjoy electricity? No thanks. I’ll take the soil, any day.

        • garand555 says:

          “In case of war, and the government building with all the property records gets blown up, it’s going to be the ones with the guns who get the land, no?”

          I know that I won’t respect the property rights of out-of-state property owners in that kind of situation. An out of state cattle company that holds land 30 miles from me? Guess what, that’s a resource that I might need. In a total collapse where they have no fossil fuels, most of those cases are cases where they would never be able to get to those resources anyway.

      • Kulm says:

        The Turkomens then conquered Egypt and stopped the Mongols at northern Israel. They called themselves Mamelukes.

        However they would be eliminated , 5 centuries later, by an Albanian named Mehmet Ali (originally called Muhammad Ali but now referred this way to avoid confusion with Cassius Clay Jr).

      • Don Stewart says:

        Dear Xabier
        Consider the absurdity of the current soap opera in Europe. Greece needs a few billion to live to to fight another day. But BW Hill and Gail both think that the write-offs will be 88 trillion or thereabouts. I think your chances of selling the story in Berlin that a few write-offs to save humanity will get you points in heaven, and won’t cost you very much on earth, are pretty slim. And notice how the ‘socialist’ countries in Europe are all absolutely insistent that Greece pay its debts…otherwise, they have to bail out their banks themselves. So the even marginally solvent will gang up on the insolvent.

        I pretty much buy the story that it is impossible to predict the distant future of any complex adaptive system. But in the near and medium term, I am fairly confident that having no debt is preferable to being in debt up to your eyeballs.

        In the long term, if we are lucky, we end up somewhere like Edo Japan. Yes, the aristocracy imposed a tax, but they also perceived that, unless the farmers prospered, they would not prosper. And so they made rules that fostered the prosperity of everyone.

        Don Stewart

        • John Doyle says:

          Don, there is not a dollar in existence that doesn’t have interest attached. Debt precedes dollars.
          No debt, no economy. Simple and direct as that. Fact not theory.

          • Don Stewart says:

            John Doyle
            Steve Keen makes the point somewhere that the gold standard is really a barter system; If we had barrels of oil as the backing for paper money, it would be a barter system. The gold or the silver or the oil or the stones from the island of Yap all facilitate barter. A fiat money system with fractional reserve banking is quite a different beast.

            Don Stewart

  16. Don Stewart says:

    Dear Gail and All

    I have described Permaculture in particular and the broader field of Biological Farming as disciplines which utilize industrial products to make natural systems which are dependent on sunshine, rain, gravity, biology, and other factors more productive. Some of you who are not familiar with small farms may want to see more about how that operates. Here are two items you may want to look at.

    The first is a virtual tour of a 4 acre farm very close to where I live. The pictures were taken by the county extension agent:

    The second thing you may want to look at is this description by the same farmer of how she starts her seeds for transplanting. Her explanation is in response to a question posted on our listserv. So, first of all, we have a rather primitive version of the internet (a listserv with no commercials) and then you will see a description of exactly how some selected industrial products are used to get good germination and initial growth during the cold winter months when seeds cannot yet be successful in the cold soil.

    Don Stewart

    We have been very happy with our “home-made” germination mat for years- we simply attached a heat cable to a sheet of construction insulation (the type of foam that has shiny side)- depending on what size you want/need your mat to be (ours is 6′ x 2′), you can find the heat cable in various lengths from Growers Supply or FarmTek. Look for a Gro-Quick cable, and use the chart to find the right length (we buy the 48′ cable)- it is now about $45 SEE BELOW
    We then cover the mat with a piece of aluminum “window” screening and top off the whole thing with a rubber “rug runner” mat to “waterproof” it- the beauty of this system is you can fit a lot of trays on it; and we even stack the trays on top of each other (plastic sheeting in between) and get great germination because “heat rises”!

    I have attached a couple of pictures of the setup- good luck, Cathy Jones

    ———————- NOTE: As of today 3.1.2015, Gro-Quick cables also available on Amazon, $36.95

    Attachments area
    Preview attachment Gro Quick germination mat.pptx

    Gro Quick germination mat.pptx

    Click here to Reply, Reply to all, or Forward

    • Don Stewart says:

      Dear All
      One more comment, which may help you put small farms, biology, and industrial products into perspective.

      You will notice that Kathy Jones uses a commercial potting mix as part of her ‘secret seed starting mix’. The small farm I worked at used deciduous leaves plus horse manure. We got the leaves from the city, which collects them in the fall, and we got horse manure from a stable, which gives it away free if you shovel it out yourself. The leaves are left in a big pile for two years to compost. The horse manure is left for about a year. Manure and leaves are mixed by hand and sifted by hand and make a wonderful planting mix.

      You can see that the farm I worked at was investing more work and time in making the planting mix. If you look at all the different things which are going on simultaneously on Mike and Kathy’s farm, you may appreciate that there are limits as to how many balls an individual farmer, or family, or even family plus hired hands, can keep in the air simultaneously. So every farmer has to make decisions about what to make and what to buy.

      These farmers are NOT trying to farm using stone age methods. That would have to be done in a museum farm which was heavily subsidized. While I have no doubt that, in the event of collapse, Kathy and Mike would have no trouble feeding themselves and their workers, they could not be commercially competitive in 2015 using stone age methods. In their favor is that they paid off the mortgage on the farm several years ago. So far as I know, they have no debts at all.

      Don Stewart

      • MG says:

        Dear Don Stewart,

        the farm yard manure is a good fertilizer:

        The problem is that it needs machines (or animals) for transportation. Nowadays, it is more economical just to spread artificial fertiliziers. But the soil degrades, lacks organic matter. It is sure, that the structure of the soil is completely different, when you use manure or compost, even ploughing with the tractor is easier.

        • Don Stewart says:

          Dear MG
          One of the things I have been trying to communicate to people is that a commercial farm simply can’t restrict itself to stone age methods because, someday in the future, that may be all that is available. So being ‘holier than thou’ when you see a small farmer driving a battered pickup truck to get some horse manure just demonstrates lack of comprehension.

          In a collapse, both the leaves and the horse manure would not be available. The city will stop picking up leaves, and nobody will be able to keep horses as a hobby. But for right now, both inputs are very cheap. Driving the pickup about 2 miles to get the manure costs a couple of dollars, even counting the depreciation on the battered pickup.

          Carol Deppe, a PhD, recalls that when she was a kid growing up in Japan in 1958, vegetables were never eaten raw because raw manure and night-soil were used as fertilizers. In a collapse, manure of all kinds would suddenly become very valuable again, and would be transported in carts and buckets and such. Today, if a small farmer tried to farm that way, the US Government would jail them.

          Kathy and Mike make good use of their poultry manure, but they are careful to compost it according to Organic standards…although they are not certified organic. They do not use night soil.

          One of the things I try to communicate is that having SOME industrial products, such as the plastic hoop houses and plastic drip tapes, survive the crash of Wall Street would be very important in terms of our ability to feed ourselves.

          Don Stewart

          • Don Stewart says:

            Dear All
            One more thought. When Dallas Federal Reserve President Richard Fisher was asked about the impact of the crash in oil prices, he said ‘it’s not a problem, we are a consumption economy, and lower prices help consumption’.

            You might compare Fisher’s attitude with the attitude of small farmers actually trying to produce something.

            Don Stewart

          • xabier says:


            By coincidence I have just been reading about the meeting between the famous diarist James Boswell and an agricultural experimenter in 18thc Holland.

            The Dutch scientist was trying to produce handy blocks of concentrated manure.

            Boswell observes that this would be wonderful, as the transport of manure to the fields by cart was one of the heaviest expenses of a farming estate in his day,and the distribution a very slow business.

          • Jan Steinman says:

            Small farmers need to be self-sufficient, to the greatest extent possible.

            Our 28 goats supply almost all our manure needs.

            • garand555 says:

              If I’m ever out you way, I will hit you up for some free goat’s milk;) That’s some good stuff. People are going to have to get over their yuck factor with it.

          • MG says:

            The problem of todays reality is that the price of food is more and more distorted by the subsidies. That is why having a cow at home (which was normal 50 years ago in Slovakia) is no longer truth: today, there is no cow at home in my village, only a few goats or sheep, some chickens and rabbits, pigs.

            Before, the houses were made of adobe brick. Today, many of the former fields were turned into plots on which terribly big brick and concrete houses were built.

            And majority of the brainwashed young people of today have no idea about the life in the past. Their perception of the reality is completely distorted.

            One can see the difference using this map, where the reality of 1950 can be compared with the reality of 2010 (2nd button on the upper right corner bar allows comparing both aerial maps using the slider in the middle of the screen):


            The comming low energy reality will be like losing ground under one’s feet for many of the people living on the surface of the bubbles that pop and let the people hit the bare ground…

          • garand555 says:


            You make a good point when it comes to surviving today vs surviving tomorrow. I have tons of free manure available to me without using any fossil fuel myself. However, much of that will go away when others lose use of fossil fuels.

            As for night soil, I have thought long and hard about that. I know that you must put back into the soil what you take for long term sustainability, but I also understand germ theory and what it implies with human waste. The two easy ideas that I have regarding that are composting that lasts a year or two and moving an outhouse around the fallow sections of a farm where you bury the stuff several inches deep.

            We think of human waste as nasty vile stuff for a good reason. We know what is in it. Yet we will need it more and more as fossil fuels go away. We had better figure out a way to use it while minimizing the spread of disease that is associated with handling it.

            • Jan Steinman says:

              “As for night soil…”

              Google for The Humanure Handbook, by Joe Jenkins. There’s an older edition that is freely downloadable.

              “Night soil” is un-processed, fresh human faeces. No one should be doing this.

              “Humanure” is properly composted human faeces. It is perfectly safe. Most people should be doing this.

              Urine is sterile, except in a few exceptional forms of illness. Simply mix it 9:1 with water and put on your plants. Everyone should be doing this.

              Like you said about goat milk, the “yuk factor” is immense, but it’s all in the head.

            • garand555 says:

              But what about the idea of burying your waste throughout a fallow field and letting it sit for a full season? Shouldn’t that be the equivalent of composting it?

              Either way, raw human poo is something that you want to minimize contact with.

          • Steven Rodriguez says:

            Pyrolizing night soil might be one way to get that organic matter back to work. Of course once it is bio charr it needs to be aged with active compost so that you don’t have a nitrogen lock up when applying it. But given the amount of ‘biosolid’ we produce and then landfill, night soil is a huge cache of nutrients we have yet to (and someday must) tap into. Any one care to guess how long it takes us in California to “go dry”? – by that I mean stop wasting water by mixing it with shiznit?

            • Jan Steinman says:

              “Pyrolizing night soil…”

              Would use lots of energy, and strip the night soil of all nitrogen, enzymes, and beneficial bacteria.

              Just compost it properly! Low-tech, low-energy, best end product!

      • Jan Steinman says:

        “You will notice that Kathy Jones uses a commercial potting mix as part of her ‘secret seed starting mix’. The small farm I worked at used deciduous leaves plus horse manure.”

        We use commercial “container mix” for one reason only: we sell starts. People don’t appreciate paying for other people’s weeds, and horse manure, even composted, is notorious for containing viable seed.

        Ruminant or fowl manure is much “cleaner,” seed-wise, than horse manure. Very little viable seed gets through a goat or chicken.

        • Don Stewart says:

          The question on potting soil drew about 50 or 60 responsesl Everyone has a system, and everyone has at least one opinion. Questions like these are what keep the reception discussions interesting at farmer meetings.

          The farmer I worked for used manure only from the finest pet horses. He was convinced that the owners fed them better, which led to better potting soil, which led to healthier starts. To each his own.

          Don Stewart

        • garand555 says:

          I’ve found that, while a lot of work, hot composting helps a lot with the weed issue on horse manure. Now then, if I could just stop the elm seeds from blowing in like a blanket of snow…

          • Jan Steinman says:

            “while a lot of work”

            Yea. I find “lazy composting” works better for me.

            Hot composting is one of those “would be a good idea” things that tend to get swamped out by the “must do” things. At least for me.

            • garand555 says:

              You can combine lazy composting with hot composting. Turn it enough times to ensure that enough has been in the hot zone to kill any seeds or pathogens, then ignore it for a year. I throw any compostable materials in an area that doesn’t get enough sun to make it worth growing anything, then compost once per year. This year, I’ll probably do it twice due to all of the stuff that wound up on my property from the neighbors’ properties. I’m greedy with organic material like that. It is a lot of work that can be done in short bursts during late fall/winter/early spring. I’ve still got a yard or two left, and I have a pile that is several yards cooking right now.

    • Jan Steinman says:

      Woa, those seed heating mats are expensive! They seem to be priced for the employed kitchen gardener, but will send you running to the bank if you want to grow food in any quantity.

      If you’re handy with electrical stuff, you can easily make seedbed heaters for free! (If you aren’t handy with electrical stuff, you need to learn now!)

      We put an ad on our local electronic bulletin board for baseboard heaters and thermostats, and got a whack of them for the hauling. (We “gifted” some canned tomatoes in each case.) We stripped the heating element out of the baseboard heaters, put them underneath our greenhouse tables, and wired them to the thermostats. That made for a “hot spot” in the middle, so we got hold of some aluminum sheeting from the dump, out of the metal recycling bin. That spreads the heat out nicely. We drape the whole thing with poly to keep the heat and humidity in. (Yea, I know. I hate using plastic!)

      Now we have ten metres (33 feet) of heated planting table space, for less than the cost of one 16″x20″ heated mat!

      Not that everyone needs ten metres of heated seeding beds. You could do the same thing with one 24″ baseboard heater, though.

      Those who have more money than time will soon be short of either.

      • MG says:

        I always say that there is/will be a lot of remnants of the industrial civilization that can be reused: my composting place (where some chickens are fed) is made of old railway platform concrete blocks as seen here:

  17. kulm says:

    The only real job is to be in a field where million dollar incomes are possible and real savings can be made. except for the lucky very few who had the background to afford the education to make this possible, the rest of the world will be in a very horrible state.

  18. Don Stewart says:

    Dear Gail
    Incomes across all education levels are falling in the US

    Link supplied by Charles Hugh Smith

    Don Stewart

    • edpell says:

      Oddly enough the cellphone industry to hot to automate medicine. So, even doctors are going down.

    • Rodster says:

      No surprise there. When you factor in the cost of the education and the debts associated with it and having to pay it back that itself can be viewed as a wage reducer. Secondly there is more supply than demand for most well paid jobs even more so than for low wage workers.

    • Thanks! Very interesting.

  19. WorldisMorphing says:

    Hi Gail. I would like to reiterate that your work is immensely helpful and enlightening, and I thank you again. I never miss a post …and probably never will. It appears we have some friends in China who feel your input could be valuable at this juncture. Valuable enough to keep you for 4 weeks anyway… 😉
    Can’t say I blame them, but I must ask this, the curiosity is gnawing my inside right now;
    I’ve read in a comment reply that you already had been there before.

    [” I will be lecturing for two weeks at Petroleum University in Beijing (some to students, some to faculty). Afterward, I will be seeing some aspects of the Chinese economy–perhaps leaving Beijing, with someone from the university.”]

    – “…some to faculty” – Interesting…
    -Who’s the individual responsible for inviting you and how did he approach you ? What is the overall objective. Can you give us details ?

    • Read the post about my previous trip to China.

      There is a group of people who are working on some of the same kinds of things–oil and coal depletion, and how this will work out. Quite a few of us know each other from speaking at the same conferences. One place we have met is at Professor Charles Hall’s Biophysical Economics conferences.

      Back in 2010, when I was speaking at an Association for the Study of Peak Oil USA meeting, I happened to mention that my husband and I would be visiting China in the summer of 2011. A graduate student of Professor Lianyong Feng heard that I would be visiting China, and wrote back to Professor Feng about it. Professor Feng (whom I already knew) wrote to me, asking me if I could please extend my trip, and visit Petroleum University for a few days before our vacation trip. I could meet with him and his graduate students for two days, and then I could speak at a meeting he would host and invite several important officials to. He would pay for the extension to my vacation trip.

      Since then, I have co-authored two academic papers with Prof. Feng and with his graduate student (now Ph. D.) Jianliang Wang. Wang is now teaching at the university as well. The two papers are “China’s unconventional oil: A review of its resources and outlook for long-term production” which is just now being published in the journal Energy, and An analysis of China’s coal supply and its impact on China’s future economic growth, published in “Energy Policy”. The coal paper has been cited several times already in other academic articles.

      Profesor Feng has hosted a series of invited professors for four week visits of the type I am doing. I know Mikael Hook (another co-author on the new paper) who is a professor at Uppsala University went on such a visit to China in late October 2014. Mikael and I were both speakers in October in Spain, so I was talking with him about his upcoming China trip. A few months ago, Prof. Feng wrote to me, asking if I could come on a similar four week visit. He would pay my way and offer a stipend.

      So I know these folks fairly well, and the program is a well-established one.

      • WorldisMorphing says:

        Thanks a lot Gail. As much as I would very much like to be a fly on the wall during your sessions, I will settle for wishing you a fruitful and wonderful trip. Hope you come back to us with a nice bagful of noteworthy experiences and juicy anecdotes…

  20. kulm says:

    I think it will end up like the middle ages, where the landowners have slaughtered most of the landless people and made the rest into serfs.

    • MG says:

      I do not agree. The end will be like an eschatologic punishment of the greedy man: the lack of energy and a lot of useless things will mark the end of the fossil fuels civilization. It was the abundance of cheap energy that allowed rhe rise of the human species and it will be the lack of it that will make the weak human beings the prey of other species in the nature.

      • Rodster says:

        “Dawn of the Planet of the Apes” 🙂

      • edpell says:

        Let’s not get carried away. Human have not been significant prey animals since Homo erectus about 2 million years ago. Travel in groups, carry spears, have good visibility due to bipedal walking, warn each other with language of some sort even if just warning cries.

        • MG says:

          Dear edpell, the energy makes the difference: we live in a depleted world. The majority of the people are not prepared to believe that the collapse is unavoidable and are wasting energy looking for solution that simply does no exist. Accepting the low energy world is not possible for them as they are high-energy species.

          It is like inventing a totally new low energy human species that could occupy the depleted world. Who will not waste his/her energy trying to save the dying high-energy civilization and is not be required to do so.

      • kulm says:

        There were landowners before fossil fuels.

        some rich people know the end is coming and they have bought lots of land and forest in hard to reach areas. they will fly to their land, kill whoever coming near to their holdings, and will ride out the crisis to lord over their area till the end of time.

        • MG says:

          All will become poor without the energy of fossil fuels. There is no escape.

          • xabier says:


            I suspect you are correct: earlier power-structures had natural resources easy of access by slave labour: we are now using the most powerful machines to get hold of metal ore, etc, with very high pollution costs and using lots of energy, and that just won’t be viable quite soon. Prof. Bardi is very good on this. It’s going to be back to raw hides, sticks and stones, but even in the prehistoric period flint shortages occurred it seems, due to over- exploitation. Our civilisation is evidently doomed, but even the Stone Age might well be beyond most regions.

  21. edpell says:

    “Even the United States, which fought a revolutionary war against the British Empire, remains under the Crown/Rothschild thumb via the Federal Reserve, Pilgrim Society and Virginia Corporation. The US is used by the Crown/Rothschilds as a Hessianized mercenary force to protect their vast financial empire.” on the murder of Nemtsov

    • Artleads says:

      GREAT article, edpel! A very wise cousin of mine living in London has been telling me this over the past twenty years. But this article makes it very clear that the British Empire never went away. It was just too damn subtle and clever for anyone else to notice.

  22. Don Stewart says:

    Dear Gail and All
    I previously mentioned Alain de Botton’s new book The News. I’m not sure exactly what the following thoughts have to do with survival in tough times, but I offer them for what they are worth. First, see the new way to make millions of dollars in TV and movies

    So, in our poverty stricken world, people have spent near half a billion dollars to see a movie they know they are not going to like, so they can tweet their friends while the movie is showing, indicating how superior they themselves are to the garbage on the screen. The only question is if the movies can figure out how to do ‘movie hate watching’ as well as television does ‘series hate watching’.

    de Botton devotes a chapter to Tragedy. He begins with a look at Greek tragedy. For one week each year, the theaters in Athens were devoted to new tragedies written by the playwrights. Everybody understood what was expected. We would see, for example, a man much like ourselves, Oedipus, brought low by his own innate characteristics and the workings of fate. What people were expected to take away was the vivid perception that they need to control themselves, walking the fine line required to stay out of deep trouble.

    I suppose the messages one might absorb from 50 Shades are:
    One, indulge in kinky sex and marry a billionaire, while achieving deep sexual satisfaction.
    Two, life’s greatest joy is to spend one’s money watching trash, but which viewing gives one the privilege of showing how superior one is using Twitter.

    de Botton analyzes each kind of tragedy we are likely to see in the news, and shows how they may help us maintain homeostasis. He says ‘Tragedies shouldn’t only help us be good, they should also prompt us to be kind’.

    That statement is about as far as I think one can get from a theater dedicating a special room for those who want to send nasty twitter tweets.

    Now, if you are of a certain frame of mind, I suggest you sip your tea and think gleefully about how, when the Collapse comes, all these foolish virgins, having failed to keep oil in their lamps, will be left out in the cold. Darwin may have the last laugh…but I admit that Hollywood is having more success at the moment.

    Don Stewart

  23. Don Stewart says:

    Dear Gail and All
    Someone here has said that QE benefits the average citizen by boosting pension funds.

    See this chart article and scroll down to the chart which shows the sources of money flowing into the stock market:

    Corporations buying their own stock with the easy money supplied by the Central Banks is the largest inflow of money. Pension funds and individuals have been negative sources of funds now for several years.

    Don Stewart

  24. john c green jr says:

    The URL you gave is based on Census Bureau
    data. The two URLs I gave are both based on
    Bureau of Labor Statistics data. I suspect one
    of two things is going on 1) The left hand doesn’t
    know what the right hand is doing 2) there are
    lies, damned lies, and statistics. Perhaps both.

    The introduction to the article you quoted says:

    > Why does truck driving dominate the map? It’s
    > partially because of how the Census Bureau
    > categorizes its data. First, Planet Money
    > excluded two categories from the map because
    > they are incredibly broad and vague – “managers
    > not elsewhere classified” and “salespersons not
    > elsewhere classified.” So it’s possible that
    > the U.S. is actually a nation of vaguely defined
    > salespeople.

    Perhaps if they weren’t excluded we’d be a nation
    of Amway and other MLM salespersons. 🙂

    Although I listen to a lot on NPR and watch a lot
    of PBS Planet Money is something I hadn’t paid
    attention to. Just spent an hour on its Facebook
    page and will check out Planet Money podcasts
    going forwards. Thanks!

  25. john c green jr says:

    Didn’t read all 118 comments so this might have been commented on before.
    On slide 31 of 3. Economic Growth & Diminishing Returns you state:
    “Most common job in America is “truck driver”. Doesn’t make sense to me.
    This list puts “Heavy and tractor-trailer truck drivers” in 15th place at
    1.446 million vs. #1 retail salespersons at 4.155 million:

    Doubt there are an additional 2.709 million small truck drivers.

    This list doesn’t include truck driver in the top ten:

    This list doesn’t include truck driver in the top ten:

    What am I missing?

    • VPK says:

      If that is your “issue” with the topic, maybe you are missing “something”. Perhaps you should backtrack and start from the beginning. I think you missed the whole point of her message.

    • VPK says:

      Did a minute google search and found this for you, John;
      Why America is now a nation of truck drivers
      Quoctrung Bui of NPR’s Planet Money has mapped the most common job in each state based on U.S. Census Bureau data. The results might surprise you: Beyond a few farmers, secretaries, customer service people and computer analysts, America basically looks like a nation of truck drivers….
      In addition, the way the government counts truck drivers makes them a relatively large category. All truck drivers and delivery people are counted together, whereas primary school teachers and secondary school teachers are split into separate groups, for example.
      But beyond methodology, the dominance of the truck driver reveals a few interesting things about the American economy. First, truck driving is more immune to the pressures that have affected American jobs in past decades, since driving can’t be outsourced or automated (at least not yet).
      Hope this help in clearing the matter and enjoy the ride

    • I am taking this from the 2014 numbers in this link

      I am sure they combined together a lot of different kinds together (short distance, long distance, local) into a single category.

  26. Director of Russian center for strategic analysis-prognosis predicts US internal implosion and ending of its global hegemony by 2020-25, are they reading too much Orlov-Kunstler or what? Very good overall analysis by the way.

  27. edpell says:

    Gail, hope you have an enjoyable trip. I look forward to hearing what young people in China think of the future.

    • xabier says:

      But would they dare say what they think?

      A situation which is, of course, fast developing in the West, with total surveillance and ever-wider definitions of ‘terrorism’ and ‘insults to the State’.

  28. VPK says:

    This post is dedicated to our self imposed in exile “Paul”, and I know what his reply would be,
    Desperate acts done to continue BAU officials in Kern County discovered that oil producers have been dumping chemical-laden wastewater into hundreds of unlined pits that are operating without proper permits.

    Inspections completed this week by the Central Valley Regional Water Quality Control Board revealed the existence of more than 300 previously unidentified waste sites. The water board’s review found that more than one-third of the region’s active disposal pits are operating without permission.

    The pits raise new water quality concerns in a region where agricultural fields sit side by side with oil fields and where California’s ongoing drought has made protecting groundwater supplies paramount.

  29. Don Stewart says:

    Dear Gail and All
    Charles Hugh Smith has an interesting post today on China. It’s not about energy supplies. It is, instead, a Marxian critique of the financialization in China and overcapacity with the consequent bankruptcies. The result is falling wages for all those who are not directly protected by the State/Cartel power structure. Similar to Turchin, but different.

    Don Stewart

    • Thanks! Interesting.

      • Don Stewart says:

        Don’t know if you agree with this, but there are parallels between US tight oil and the China boom. In both cases, there was plenty of easy money and lots of speculation. In both cases, production is outrunning demand and prices are falling. Why isn’t demand keeping up with production? Charles proposes the Marxian explanation. In the US, we know that the bottom 90 percent have suffered a loss of real income. One might try to tie that to Net Energy in one way or the other, or perhaps a sort of Marxian explanation, as, for example, Picketty. Or a combination of the two.

        China is a little more complicated because their strategy was built on exports. If Europe and the US are experiencing ‘peak demand’, for whatever reason, then overcapacity with the resultant damage to both capital and wages will follow. Even if energy wasn’t a problem in China (e.g., plenty of cheap coal), they would have had trouble because of the trouble in Europe and the US.

        Don Stewart

        • Yes. I think though that there is a thermodynamic reason for the shift in wage distribution, although I am not sure I can describe it correctly. There now isn’t enough to go around if goods and services are distributed fairly equally. This is hidden, if the wealthy get a disproportionate share, because they don’t “spend” most of their share. This problem seems to be the case whenever there is a shortfall. China is facing a lack of customers from the US and Europe because of income disparities, whether or not it has income disparities of its own.

          • Don Stewart says:

            Let me suggest a thought to you. In a perfectly flexible Complex Adaptive System the system ramps up if more energy becomes available, and ramps down if less energy becomes available. The mainstream economists at the time of the Great Depression thought that unemployment was impossible, because the system would adjust to whatever happened. In the face of the evidence, they came up with the rationalization that there was ‘stickiness’ in the system, and it did not adjust rapidly enough. For example, wages did not fall as quickly as they should, so that the price of labor remained ‘too high’ and there was unemployment. Keynes thought that the government expenditures could be used to break the economy out of its lethargy.

            If we believed that Society could come up with a perfectly flexible Complex Adaptive Economic System in response to reduced fossil fuel energy flows, then our problems would be manageable. There still might be people starving, but the overall system would be OK. As you point out, one of the analogs to the sticky wages from the 1930s is the legal obligations associated with debt. Debt doesn’t go away, unless the government inflates it away or the government falls and simply disappears. Debt makes the suffering much worse, since it prevents society from moving rapidly to a lower energy Complex Adaptive Economic System.

            Think of Dickens’ story A Christmas Carol. The employees visualize a Complex Adaptive System which equitably shares the resources for the benefit of everyone in the firm. Scrooge visualizes a very rigid system which gives him what he thinks he has earned. At the present time, Greece has tried to convince Germany that an equitable Complex Adaptive Economic System requires that Germany forgive some of the debts that Greece is legally obligated for. Germany wants to see the letter of the law enforced, regardless of the human consequences. When the bailout of Greece was enacted, the real result was that Germany handed some money to Greece, which handed it on to German banks. In reality, Germany bailed out its own banks. Greece was told by the Troika that if it cut its expenditures, growth would return and it could pay its debts. Growth has not returned and Greece cannot pay its debts. If we viewed the bailout as a contract… Greece cuts spending and the Troika guarantees growth…then the Troika has failed to uphold its end of the bargain, and the bargain is null and void.

            What actually needs to happen is for Greece and the rest of Europe and the whole world, for that matter, to adjust to lower throughput of fossil fuel energy. But the Powers That Be are blind to the necessity, and are determined to keep the debt system cosmetically intact. Keeping the debt system cosmetically intact, in a world without enough cheap fossil fuels, is guaranteed to lower wages. Which leads to the woes that Marx described. Which leads to more desperate attempts to shore up the debt system. Which leads to collapse.

            Don Stewart

            • James says:

              What actually needs to happen is for Greece and the rest of Europe and the whole world, for that matter, to adjust to lower throughput of fossil fuel energy.

              Well, you certainly don’t ask for much do you? The problem is, the international debt payment system is woven into the basic fabric of our lives now. Adjusting all those debts simultaneously (as they would need to be) and equitably would be an enormous(!!!) undertaking, to say the least. [I’d liken it to coming up with an enormously large and complex workbook of spreadsheets of interlocking complex and confusing formulas, many of which are opaque to anyone but the person who wrote them, applying a one time adjustment figure (Copy>Paste Special>Multiply or Divide), and then hoping it all worked out. But of course it wouldn’t even be nearly that easy in the real world in which we live!] And that’s assuming you could get everyone (anyone?) on board with it in the first place. As we’ve seen already and you’ve illustrated above, the rich and the powerful are hardly inclined to be so benevolent. That’s how they got to be rich and powerful in the first place!

              Which leads to more desperate attempts to shore up the debt system. Which leads to collapse.

              Like it or not, that’s our very near term outcome I’m afraid. Won’t be the first time, but it might be the last.

  30. In Australia, the Federal budget problem is not caused by a lack of income tax, but by lower company tax after the GFC

    Australian budget hit by global financial crisis and high oil prices (part 1)

    Australian GDP per capita growth slowed while oil prices went up (part 2 of budget 2014 series)

    Even if oil prices are (temporarily) lower now, the damage of higher oil prices in the last years has irreversibly been done.

    • John Doyle says:

      There is no budget crisis in Australia. That was all a political smokescreen by incompetent government policies. As I have said before, Taxation pays for nothing in the way of funding a government’s budget. The central bank provides all the money the government spends.
      We need politicians who understand money and we don’t have any!

    • Interesting! I liked the graph showing the drop in tax revenue after 2008.

  31. Why do you continue saying we can’t go back, while Greer keeps on saying the only way forward is going backward?

    • Greer is looking at agricultural societies. The farmers there could just pick up and join another agricultural society if their society collapsed, even if the existing society collapsed.

      I don’t see a way we could build up enough of a network of knowledgeable people to build an agricultural society. We would need to do it without electricity, oil or other fuel sources. We don’t know how to go back that far any more. We would need to figure out how to do everything with local materials, everywhere. We would need to build local defenses of cities–moats? All of the attempts at working with wind and solar PV are a waste of time, in this regard. We would after a while even have to do without metal tools–they are just too demanding of wood.

      • xabier says:

        I bumped into a young Greek named Dionysius while walking my dog – he’d decided to explore the English countryside while touring Britain. and ended up on our muddy hill asking for directions to interesting places!

        He proved to be smart and well-educated, and like all Greeks ready to talk.

        A very interesting conversation ensued on the state of Greece, and unprompted he made just your point, Gail:

        ‘We were just small farmers, fishermen and traders: talk about everyone going back to the land now is nonsense, as none of us know what to do anymore, we’ve forgotten what our grandparents knew! Our parents saw some things, but have never really done it and they can’t teach us. 60% of our population now live in Athens, we’ve been urbanised, we are useless, just service sector workers.’

        Note, he wasn’t too proud to go back to the land, but readily admitted his cluelessness and lack of physical familiarity with the peasant life. It’s tough.

        He feared civil war and a military/oligarch take-over. Golden Dawn, the neo-Nazi party has gone quiet, but he feels they could come back very strongly, and have interesting links to the police and security services, and I was able to confirm this for him from anecdotes Greek friends had told me indicating direct police-Nazi co-operation. (Just like the police in Spain who display Franco badges and flags quite openly.) There is big money behind the extreme Right-wing European parties. Whose?

        On the whole his views were reasoned and his expectations modest: ‘If things get even a tiny bit better, we will be relieved and grateful.’ This will be most of us in the coming years.

        • Don Stewart says:

          Dear xavier
          I think that the dilemma that Greece finds itself in is related to what the Greek told you on the muddy hill. Russia or the BRICS group would probably be glad to trade with Greece after a default, but Greece has to have something to trade. A bunch of bureaucrats don’t produce much that can be traded.

          What does Washington, DC, produce that could be traded? And yet Washington is now one of the richest cities in the United States. In a collapse, would Washington fare any better than Athens?

          The US solution is always to offer credit, usually only good for buying stuff made in the US. Take Cuba. What do you think the conversation is like?
          US…we will extend billions in credit, to purchase US goods
          Cuba…and then how do we repay the debts?
          US…we will make the debt a balloon payment due in 25 years (like California school districts)
          Cuba…but what about our children paying off the balloon note?
          US…We will have incinerated the world in a nuclear war long before then

          Don Stewart

        • Thanks! It many ways, it would be better if I were wrong.

      • I think Greer’s hopes are linked to his “catabolic collapse”, which is a slow collapse. Then there would be hopes for adapting. Unfortunately you say he’s wrong, and that the time-frame of collapse is too short for adapting.

        I hope you are wrong and that Greer is right!

        • Artleads says:

          Maybe both of them are a little bit right. There’s an awful lot of innovation going on beneath the surface. Maybe some parts of the mainstream will morph with some of these alternatives. But the innovations mostly seem to take continuing fossil fuel use for granted.

          Neither Greer’s nor this blog does that.

          Greer is talking about the 50’s, but the global environment was healthy then, and global population was one-third of what it is now.

          So where are we? People need to maintain body temperature, as well as eat and drink. Most people live in cities. Some say food can’t grow in cities, while I see overwhelming evidence that it can. A relatively few people will learn to grow their own food there. There will be an explosion of the increasing armies of new sophisticated, highly scientific farmers. They’ll find a way to grow for millions using the solar, geothermal and wind they have now. It seems impossible without fossil fuels, but they’ll figure something out. Besides which, I don’t think we should be concerned with any but the immediate future. Can we get through for the next five years? Twenty or thirty years into the future is way too long to consider at this juncture. The next generations must figure it out for themselves.

          How long before fossil fuels go away? I can’t imagine it will be within the next five years. But I’ve been grossly mistaken about similar things before.

          • garand555 says:

            Monumental changes often sneak up on people, then happen all of a sudden. The signs were there that change was coming, but everybody ignored them until they would no longer be ignored.

            • Artleads says:

              Hmm. I’ve been wondering how best to predict what comes next. So far, it seems best to see what’s happening now just below the people’s radar but clear to see if you look for just a moment. Extremely clear trends for me concern the NSA, whistleblowers, militarism, propaganda, Monsanto… Actually, the list is rather long of almost unbelievable things that the average person manages to ignore, or doesn’t know about. But I don’t get the impression that cars, department stores or utility companies will go away that soon. I can see them cranking up prices and fees, but I take Gail’s point that life must be affordable for the masses, else risking ever more immediate collapse. And that wouldn’t suit TPTB.

      • xabier says:


        Historically very accurate. I am almost certainly partly descended from peasants who walked/took a boat, down from the mountains of Eastern France to Northern Spain in the 11th or 12th centuries, probably via Toulouse in S. France:how do I know? they took the name of the home village with them.

        After the Roman collapse, and in the periods when the barbarian monarchies lost control at the death of a ruler, etc, raiders would kidnap simple peasants, and artisans to trade them. Trained soldiers also had value and could end up working in the strangest of places. Children, too.

        Europeans ended up as slaves -mostly captured at sea – in North Africa into the Modern period, ie early 19th century.

      • Artleads says:

        If society could get by on salvage for, say, 100 years, wood to smelt metal could perhaps grow back by that time.

    • Artleads says:

      Enjoyed the Greer article. It’s a good try, and one can hardly ask for much more in such a complex crisis. A lot of what his direction entails is mighty cultural innovation–i.e., a large educational initiative aimed at changing the “cultural entrancement” that Greer describes, to entrancement of a less dysfunctional nature. We don’t talk about culture and imagination enough. Those don’t require oil or other forms of material stuff.

  32. Siobhan says:

    Hi Gail,
    There is a typo in the paragraph that begins, “Common workers are…” in the last sentence, “hater” should be “harder”.

  33. Don Stewart says:

    Dear Gail
    You frequently say something to the effect that ‘if we all stopped consuming stuff we don’t need, then the economy would collapse and people would starve’. But, on the other hand, you say that ‘we can’t keep producing all this stuff because we are at the limits to growth, both physical and finance’.

    I do have a suggestion for you. Take a look at Alain de Botton’s new book The News: A User’s Manual. The book is full of observations and suggestions about why the news as we usually consume it is so unsatisfying. But I will limit my comments to two sections.

    First, let’s look at the chapter on Dining, Travel, and Technology:

    ‘The chopped liver on crostini had a wintery smokiness to it, as did a fold of flat bread, scorched on a griddle to black in places, then layered with slices of garlicky wild mushrooms. Best was a fritto misto of squid, anchovies and prawns in batter…As the chef here used to cook at nearby Bocca di Lupo, it was not a surprise that the crumbly, coarse Cotechino sausage with braised cabbage and mustard was outstanding.’ From The Observer.

    de Botton observes that a certain segment of the population loathes this kind of consumption and the news reports about it, holding that with all the serious problems in the world, such nonsense is ‘futile, greedy, and materialistic’. He might also have used all the fabulous women’s outfits in People magazine, or any of hundreds of other examples.

    ‘These are surely important matters, yet to restrict consumer news to such practical investigations is to overlook a key feature of why we are motivated to buy certain things in the first place. The kinds of purchases surveyed in the news generally sit well beyond necessity. In acquiring them, what we are after is rarely solely or even chiefly just material satisfaction; we are also guided by a deeper, often unconscious desire for some form of psychological transformation. We don’t only want to OWN things; we want to be CHANGED through our ownership of them. Once we examine consumer behavior with sufficient attention and generosity, it becomes clear that we aren’t indelibly materialistic at all. What makes our age distinctive is our ambition to try to accomplish a variety of complex psychological goals via the acquisition of material good. ‘ [My note: similar to the Nate Hagens’ argument that we turn energy into products trying to produce neurotransmitters and hormones which I have recently referenced]

    ‘Our ostensible reason for wanting to travel to the new restaurant in the centre of town is that we feel like having a bite to eat. But a substantial, perhaps even decisive part of our desire has a less mundane, more subtly psychological basis: we want to absorb the values of the restaurant itself. We want (in some vague sense) TO BECOME LIKE IT: Relaxed, Dignified, Convivial, Content with Simplicity, In Touch with Nature, At Eas with Others.’

    deBotton concludes that the News should not focus on the categories Dining, Travel, Technology, and Fashion. Instead the News should focus on opportunities for Conviviality, Calm, Resilience, and Rationality. There are ways that poor people use to achieve all the underlying goals…which may well work as well as the methods used by billionaires (see Nate Hagens). If we, as a society or individuals, can keep the underlying goals in mind, and not become obsessed with the glittery exteriors we are being sold, then there may be hope for the future.

    Second, let’s look at de Botton’s treatment of the connection between religion and the news (the introduction and first chapter).

    ‘Societies become modern, the philosopher Hegel suggested, when news replaces religion as our central source of guidance and our touchstone of authority…the news now occupies a position of power at least equal to that formerly enjoyed by the faiths. Dispatches track the canonical hours with uncanny precision: matins have been transubstantiated into the breakfast bulletin, vespers into the evening report…Here too, we hope to receive revelations, learn who is good and bad, fathom suffering and understand the unfolding logic of existence. And, here, too, if we refuse to take part in the rituals, there could be imputations of heresy.’

    ‘The News knows how to render its own mechanics almost invisible and therefore hard to question. It speaks to us in a natural unaccented voice, without reference to its own assumption-laden perspective. It fails to disclose that it does not merely report on the world, but is instead constantly at work crafting a new planet in our minds in line with its own often highly distinctive priorities.’

    ‘Hegel’s argument that the news now occupies the same prestigious position in society as religion once did misses out an important difference between the two fields of knowledge: religions have traditionally been particularly sensitive to how bad we are at focusing on anything. Exactly like the news, religions want to tell us important things every day. But unlike the news, they know that if they tell us too much, in one go, and only once, then we will remember—and do— nothing. They therefore take care to serve up only a little of their fare each day, taking us patiently through a few issues and then returning to them again and again. Repetition and rehearsal are key to the pedagogical methods of the major faiths….They sit us down in a solemn place, quieten our minds and then speak to us with dignified urgency rather than panic, understanding that we will have to return to their ideas over days and weeks if we are to have any chance of being influenced in how we think and behave.’

    I suggest that some of de Botton’s thoughts are appropriate for those who are looking at ways to bridge the gap between the financial channels on television and the world of energy decline.

    Don Stewart

    • People have come to trust the news a whole lot more than they should.

    • rikkitikkitavi says:

      The media teaches proper range of emotional response. I suppose that is a religion.
      BWAAAAK polly wants a cracker
      BWAAAAK USA energy independent by 2025

    • xabier says:

      The irony in de Botton’s restaurant example is that the food at Bocca di Luppo in London is basically Italian country food, not sophisticated at all. One would have to be very jaded with London life to reject that as unacceptable indulgence…..

      • Don Stewart says:

        Dear Xabier
        What de Botton is pointing out is that a considerable part of the reason why people go there is to have some of that ‘simple Italian life’ rub off on them. One of my daughters is going to Barcelona for some of the ‘continuing ed’ that her license requires each year. Her plan is to spend a week indulging in sunshine and tapas bars. It’s not about ingesting calories or even getting your antioxidants, it’s about those neurotransmitters and hormones.

        Are there other ways to trigger the neurotransmitters and hormones? Well…you could try being a peasant.

        Don Stewart

        • xabier says:

          Let’s hope it doesn’t prove too hormonally exciting! One of the best cities in the world to eat in, certainly.

  34. edpell says:

    Funny funny description of Greek issue.

  35. bwhill says:

    Coilin MacLochlainn says:

    For this idea of yours to have any standing, you would need a guarantee that the financial system will collapse. Can you guarantee that it will?

    What can be guaranteed is that the world’s petroleum production system is undergoing entropic decay. If it isn’t the Second Law is defunct, and we can all go back to banging the rocks together. In 2012 petroleum powered 38% of the world’s economy; that included 83% of the world’s transportation systems which are essential for trade. Our determination is that by 2030 the “average barrel” of oil will have reached the dead state. After that most of the world’s petroleum supply will not be powering much of anything.

    Guaranteeing anything in engineering, or science is not possible. No one can be 100% certain, but when the probabilities are high enough you become very assured. Betting that things will continue along present lines for very long has about the same probability of success as betting every thing one has on the last horse in the last race, every day for a month. Its not likely to turn out well!

    Matthew Krajcik asked:

    Do the batteries plus solar PV system combined have the ability to produce as much energy as is embedded in them, or are you simply storing coal energy at home?

    By our calculations it takes 225 million BTU to produce a $40,000 EV. 38% of that comes from petroleum, which is 14.6 barrels. Since 83% of that petroleum was used for transportation purposes, it is going to be very difficult to replace. 225 million BTU equals 73.25 thousand KWhrs of power. The same numbers can be applied to a $40,000 PV system. It would take 73.5 thousand KWhrs to pay for building and installing it. 83% of that is fossil fuels, and 38% is petroleum. Whether, or not it will ever brake even would depend on where you are.

    We use the BTU/$ approach for problems of this nature. It is accurate to within the error margin of the study, which is ±4.5%. This applies only to large dollar evaluations. For something like a candy bar its result is probably dubious.

    The function can be found here:

    For 2015 its value is 5,631 BTU/$.

    • Thanks! People don’t realize that these so-called renewables move forward coal and natural gas use (so more is extracted and burned), and take oil use that might be used for other purposes. EROEI calculation using standard EROEI factors don’t come anywhere close to showing how much energy really goes into making and transporting them and their backup devices. People think that there is “net energy,” when really there isn’t. The way subsidies work is they tax the poor to make solar panels and electric cars available to the rich. The system makes people think there is a solution, when there isn’t.

      • edpell says:

        The greens here in New York believe Germany makes 70% of its energy from PV. When in fact Germany makes only 2% of its energy from PV. They go to public comment meeting and tell the state government to do what Germany did. They believe it is easy to get all energy from PV.

        Of course the real statement is that on a rare cloudless day across all of Germany, during the six hours of peak sun, Germany is able to produce 70% of the minority energy used by the electric system. Of course 12 hours later it s producing 0%, it is night. The PV produces none of the transport, heating, or industrial use.

      • garand555 says:

        I view solar panels, wind turbines, etc… as an insurance policy. They will insure that your freezer and refrigeration units might be able to stay functioning long enough for you to adjust should the power go out. Most people would starve to death if they had to figure out how to preserve food without refrigeration.

      • GreenHick says:

        As is often the case here at Our Finite World, we see thoughtful discussions ever beginning anew that seem to be guided to the same dead ends.

        Even granting the conclusions that a fiendishly difficult full-EROEI accounting most plausibly entails–then to it adding a fuller ecological cost accounting of the respective subsidies of (of a fossil-fueled military industrial global police state, for instance, versus some less unaccountable alternative) and damages to the sustaining ecosphere–the conclusions seem ever to bang on an already ruptured drum: virtually every commenter here (over the years) has already granted that BAU cannot continue, whether we would like it to or not.

        If that’s the point of all this, then for us at least, the point’s been made. But virtually every alternative path forward–other than retire to a bunker–is foreclosed on here on the basis that it cannot rescue us from a foregone conclusion–that “all this” can’t continue. Yup, we get it. It’s the present set of capitalist arrangements or nothing (ergo nothing) notwithstanding 100,000 years of human striving (thriving and suffering) that unfolded without them.

        Even if what’s next is collapse, are there forms thereof (catabolic vs. catastrophic, for example) that particular communities in particular circumstances might prefer, and work towards, perhaps with the hope that certain outcomes that we work toward together may be preferable to those pursued in a brutal contest of all against all for what’s left?

        Gail’s phrase above–“take oil use that might be used for other purposes”–begs a question persistently turned away from here. What purposes should we wish to pursue other than perpetuating our current uses until we plunge over the cliff of ecological bottleneck?

        Perceptive commenters here have invited us to ask–since we cannot pursue our current rhythm of consumption, and that a sharp fall off in economic activity is inescapable, then might certain forms of transitional consumption be preferable to others? How to spend the last dregs of a fossilized energy trust fund never again to be seen in human reckoning? Are there technologies and cultural arrangements that point toward less brutal ends, less brutal forms of descent towards post-fossil-energy levels?

        The last line of Gail’s post–how long would that take to unpack?

        “The way subsidies work is they tax the poor to make solar panels and electric cars available to the rich. The system makes people think there is a solution, when there isn’t.”

        Really, is that the way subsidies “work”? Could they not also or *instead* progressively tax the rich–how far down the road of neoliberalism have we come that Gail’s assertion might pass without comment–or might we tax the returns of the emphatically non-renewable in favour of reinvesting those energy returns in the partially renewable, and acceleratingly moreso? (The 2nd Law of Thermodynamics would seem to argue that nothing is fully renewable.)

        Rather than the the neo-darwinist zero sum of Gail’s presumption of a governmental role of taking from the poor to give to the rich, how about that perhaps antiquated notion of pooling our resources (according to our means) in “other uses” like energy efficiency upgrades to the dwellings of the poor, or even in public goods of benefit to the commons–solar-powered factories of solar trains, solar panels, household battery back ups.

        Or shall we simply assume that a system here already clearly diagnosed as leading to insane, terracidal and self-contradictory outcomes should continue to drive our decision-making (on a neo-utilitarian basis, no less) to the bitter end?

        • Ellen Anderson says:

          I think that a major point of this blog is public education. We have to keep explaining why industrial scale solar/wind (as opposed to what you are suggesting) will be counter-productive. For example, Bill McKibben’s 350 group is still pushing Cape Wind. In my state they and the government are supporting a big financial solar energy scam through which acres and acres of trees and fields are being covered with solar panels. Many of my friends are on the local energy committees and they are totally on board with this outrage. We have to keep beating the drum.
          When I unsubscribed from and they asked me why, I suggested that they come over and read Gail Tverberg.
          So if you or anyone has a political path to small scale improvements that will help people stay a bit comfortable while they engage in massive conservation why not make those suggestions? What would they be? Our governments will only support industrial scale corporate measures. And, of course, even roof top solar requires a whole industrial system to produce.
          My positive suggestion would be to figure out how to stop supporting this system – stop driving, stop buying, stop borrowing and live differently.
          If that does not appeal to you then just go on and enjoy every day as it comes.
          But my hat is off to anyone who dares to question the mantra “replace fossil fuels with clean renewable energy.” All of your nice well meaning friends are really going to dislike you.

          • Thanks for the compliment. The idea of the world existing on high tech renewables, while everything else disappears, is so absurd that a person wonders how anyone could think it could come to pass. I need to write more on this issue.

            • Caelan MacIntyre says:

              “I need to write more on this issue.” ~ Gail Tverberg

              That would be cool…
              We were talking about it this past week in the comments on Ron Patterson’s Peak Oil Barrel blog… Although we talk about it often.
              I also quoted you then, here.
              Coincidentally, in the same thread in another comment some minutes ago, I also mention a reciprocal roof: Reciprocal design is essentially your Leonardo sticks. Maybe you say so somewhere. I’ve done a few, if more simpler ones. In a simple circular one at least, take one beam/stick out and they all fall.
              We might do well if there was more cross-pollination between blogs… I recognize a few names here though. One even from Permaculture Research Institute’s blog… Hi Øyvind! …So this is where you’ve been hiding? ^u^

          • Jan Steinman says:

            “my hat is off to anyone who dares to question the mantra “replace fossil fuels with clean renewable energy.” All of your nice well meaning friends are really going to dislike you.”

            Been there, done that, got the boot tracks up my back!

            I think people of such a mind-set need to work together. Your efforts dissipate like a shot of whiskey in a water barrel. We’re trying to do something similar, but we could use some help!

        • Jan Steinman says:

          “virtually every alternative path forward–other than retire to a bunker–is foreclosed on here on the basis that it cannot rescue us from a foregone conclusion–that “all this” can’t continue.”

          Good thing you said “virtually.” Because a few of us have proposed alternatives.

          “Even if what’s next is collapse, are there forms thereof (catabolic vs. catastrophic, for example) that particular communities in particular circumstances might prefer, and work towards, perhaps with the hope that certain outcomes that we work toward together may be preferable to those pursued in a brutal contest of all against all for what’s left?”

          Don Stewart (et. al.) has spoken for Permaculture as a way forward. Others have talked about the Transition Town movement. I’ve talked about collective farmland ownership and production (and I “walk the talk”).

          Perhaps these voices in the wilderness are lost amid the noise of “OMG! We’re all gonna die!” but it is unfair to say these voices simply don’t exist.

          “Gail’s phrase above–“take oil use that might be used for other purposes”–begs a question persistently turned away from here. What purposes should we wish to pursue other than perpetuating our current uses until we plunge over the cliff of ecological bottleneck?”

          I think we need to be looking at appropriate technology — meaning tech that is at least 20 years old. We can run our farm equipment off of farm products, for the most part, because they are all older machines that don’t require very much infrastructure support then if we always insist of having the latest and greatest “iThis” or “eThat.”

          If we focus our remaining fossil sunlight toward supporting legacy systems and equipment, I think we can have a smoother transition to a low-energy civilization.

          “how about that perhaps antiquated notion of pooling our resources (according to our means) in “other uses” like energy efficiency upgrades to the dwellings of the poor, or even in public goods of benefit to the commons–solar-powered factories of solar trains, solar panels, household battery back ups.”

          I think you’re about 20 years too advanced.

          I think the thing to “pool our resources” over is photosynthesis, rather than high-tech solar.

          We’re going to end up there someday; might as well get some practice and practical experience.

          • xabier says:

            Old tech is wonderful: I regularly use tools and equipment of cast iron and wood which are 1 to 200 years old. We are painting ourselves into a corner with fragile innovation.

          • Artleads says:

            There’s lots of talk about the physical challenges to survive the near future. Like this:

            ” In the last 500 years humans grew 677 excals of food.
            In the next 40 years, we need 770 excals of food.”

            What I would suggest remembering is that feeding an even larger population than now (combined with the historic mass distinction of species) would have to be done in concert with being much gentler on the planet than hunter gatherers. Can anybody dig it?

            There’s mighty inertia in the system toward obsolescence of past machinery. Wonderful engine-less hulks lie here and there, rusting away. Not enough of it left to benefit mass society, I’m sure. But part of the problem could be mass society itself–the notion that survival means must be centralized. The reasons for this go deep, touching on matters of control, nationalism, domination–too numerous and complex for me to master.

            To what degree can village-scale groups self organize, even in the cities on neighborhood and block levels, to meet their survival needs? Such pods could trade among themselves. No need for infrastructure change. The neighborhoods and blocks, rooftops and backyards are there already.

            It is also said that food can’t be grown successfully in cities. An odd, and inaccurate assumption. It’s done all the time, and being done increasingly. No water source? Not if you consider that everything in the outdoors, urban or rural, is a watershed of sorts.

          • Artleads says:

            “historic mass distinction of species”

            mass extinction

          • garand555 says:

            “If we focus our remaining fossil sunlight toward supporting legacy systems and equipment, I think we can have a smoother transition to a low-energy civilization.”

            Not going to happen. I agree, that’s what we should be doing, but that won’t get politicians reelected. They get reelected by telling everybody that everything is great and will get better in the future. I think that we need to be thinking about 18th century methods of tools and combining it with modern scientific knowledge for farming. When the slide downwards really picks up steam, it will get fast. The ability to transition from a neighbor’s manure to night soil might make all the difference in the world, but that implies that you don’t need supplies that are unreliable at best.

            • Artleads says:

              I was warned not to plant food in our leach field. But that’s at the bottom of our grade, and gets all the runoff. Nowhere else on the lot is the soil so rich. I dug up an earthworm there yesterday. Hadn’t thought there were any around.

      • James says:

        The way subsidies work is they tax the poor to make solar panels and electric cars available to the rich. The system makes people think there is a solution, when there isn’t.

        I like the distinctions you made with that statement.

    • richard says:

      “In 2012 petroleum powered 38% of the world’s economy; that included 83% of the world’s transportation systems which are essential for trade. Our determination is that by 2030 the “average barrel” of oil will have reached the dead state.”
      I do not doubt the truth of your statement, but I have to say I have some difficulty reconciling it with the world around me.

  36. dashui says:

    Obviously GTA thinks we r all a bunch of lowlifes… she made sure to tell us that her house won’t b empty so don’t think about going to Atlanta and helping yourself.. I was hoping to snatch those Leonardo sticks for my collection..

  37. Below, is the text of an email I sent recently:

    What we really need is the cheap oil for the operation of already existing man-made ecosystems.

    Gail Tverberg says:
    February 22, 2015 at 8:12 pm
    Right. And we need to be able to produce the oil cheaply, not just sell “expensive to produce” oil at below production costs.
    Expand the graphs at out to 5 years – isn’t it clear we’re into “something different”, now? (

    • That is a good point–the “something different” that we are already into is very low oil prices. This is the prelude to collapse, because we cannot actually pull the oil out at these prices.

      You are also right about existing man-made ecosystems needing oil–namely farms and farm substitutes, and the whole transportation system for getting the things distributed to us. There are many parts to it, including processing and distribution. Solar panels don’t fix this problem.

      • MG says:

        People often think that the biofuels are the alternative for the agriculture. But the problem of the biofuels is that their production is terribly inefficient, more than it seems at first sight.

        From the point of view of the low energy system, the cow is the most efficient “machine”: it runs on biomass, provides food (milk, meat), the stuff for making shoes and textiles (cowhide) etc. and the fertilizer. There is no such machine that could provide all of this in the environment that lacks cheap energy.

        This way, not just biofuel production is inefficent, but the machines themselves are more and more inefficent system elements with the rising price of the energy.

  38. Daniel Hood says:

    Hi Gail, safe journey to China. It’s booming over there! Where you heading specifically and what are you lecturing on?


    • I will be lecturing for two weeks at Petroleum University in Beijing (some to students, some to faculty). Afterward, I will be seeing some aspects of the Chinese economy–perhaps leaving Beijing, with someone from the university.

      What I have posted is two of the student lectures. The title of the short course for students is “Energy Economics and Analysis Modeling.” There are no prerequisites, so I cannot count on much background. I also have questions regarding what ability in English the students will really have. A fair amount of time may need to be spent in translation. After my first lecture to students, I may make adjustments to the talks depending on what the real level of the group is. I have quite a bit more material, but was afraid I would go badly over the head of the students, so I removed material I had put together. For example, it is not just wages that drops, but return on investment that drops, as we hit diminishing returns. I perhaps should put that back in, if only as additional slides I can show if the class is up to it.

      • Daniel Hood says:

        I think they’d understand better than those students in the West. They’re a smart, pragmatic people and the students are taught well.

        Safe travels and maybe take some pics, upload if you can.

  39. John Doyle says:

    According to Rodger Malcolm Mitchell, The aim of the 1% is to widen the gap between the haves and the have nots. Here is just one of his blogs;
    This Neo-Liberal aim necessarily involves falling real wages for the workers, so it’s important to understand what the consequences might well be. The consequences are mentioned here.

    Using taxation however as a description of what the economy will suffer is not really relevant.
    Federal tax money goes into a black hole when transferred to the Treasury. It pays for naught, nada, nothing. Taxation is never spent, never pays for budget expenses. All tax does is regulate spending within the economy, so called aggregate demand.

    The central banks spend money into existence and are not constrained by tax revenue. They can pay any and all bills submitted by creditors. Even interest payments are free for CB’s. This means there is no non political motivation behind cuts to welfare, medicine, education etc.
    The government can and should do it.

    • Governments can only pay any and all bills, as long as the system “hangs together”. Once interest rates go up a bit, there is a big problem. Once a huge number of banks start defaulting and need big bailouts, there is a big problem.

      I am afraid I don’t share your confidence in “spending money into existence”. QE has not gotten money into the hands of the common worker. All it has done is pumped up asset prices–stock markets, prices of homes and businesses, and the price of farmland. It is the common worker who is still suffering.

      • John Doyle says:

        Your confidence is not a material concern because all money is spent into existence. It’s got nothing to do with liking it or not. It’s just how it is.
        As far as QE goes, the banks pulled a fast one on the Fed and treated it like a TARP extender. The remedy is to confine how the banks operate, on pain of losing their licences.
        Richard Werner suggested the QE should be reserved for infrastructure and the like and proscribed against consumption and speculation.
        On the other hand if the government doesn’t have any plans for infrastructure or productive work, there’s no point in creating money as it just fuels inflation, as the banks won’t have projects to pay for.
        So, when eventually there are no resources around at an affordable price work will dry up and all that’s left will be consumption and speculation, which means those will be the last dominoes to fall.

        • James says:

          QE’s only purpose was to effectively recapitalize banks by maintaining previously overvalued asset (homes and home mortgages and all the financial non-sense that follows from them) prices.

      • Reg says:

        QE has put a large amount of money into the hands of the ordinary person because it has buoyed the stock market.

        Remember, pension funds are heavily invested in the markets and QE has keep the markets hitting new highs. If no QE then no pension.

        And if the stock market were to crash because of no QE then we would not have an economy to speak of.

        There would be no jobs.

        QE has benefited everyone. Not just the rich.

        • There are different layers. The people who have pension accounts are among the more wealthy in the country–above the median wage, on average, I would be willing to bet.

          Most workers of the lower-paid workers have only Social Security and Medicare to count on. These are basically pay as you go programs. It is the higher paid individuals who have access to pension plans and 401K plans.

          Most of the pension plans have changed to “defined contribution” from “defined benefit,” because of the difficulty in getting the funding correct for defined benefit. (There are still quite a few around though, especially City and State programs.) The 401K plans are in some ways like the defined contribution plans. These plans tend to be invested in stocks, bonds, ETFs, and a variety of other things. As I understand it, they comprise a fairly large share of stock market investments. I remember a 50% ratio, but I am not sure exactly what that related to –US, World, certain kinds of investments, etc.

          Workers can’t really get at these funds too easily. They can get them out for certain specified purposes (downpayment on a house is one), but lose 10% of the amount doing so, IIRC.

        • Jan Steinman says:

          “QE has benefited everyone. Not just the rich.”

          I don’t have a pension, and I have no stocks. QE has not benefitted me. (At least not directly. One might assume that I benefit from other people’s benefitting from it, if one were a supply-sider “rising tide floats all boats” type.)

  40. Interguru says:

    Gail, I look forward to hearing about your trip.

  41. Pingback: Role of Wages of the Common Worker in Oil Prices, Collapse | Basic Rules of Life

  42. yt75 says:

    Isn’t there an issue with the pictures and links ?

  43. Pingback: » Role of Wages of the Common Worker in Oil Prices, Collapse

  44. Lidia17 says:

    What I mean to say is, it is not only limits on workers’ wages that circumscribe our economy. The circumscription is based in something much more concrete and less political.

    Wage inequality at this point is something of a red herring, as billionaires can have no end of money and bid up things they desire, like food, but when the last bluefin is gone, no amount of money will bring it back. What will be the fun of having billions when there is no potable water in California or New York or Portofino… no caviar or even hamburger in the non-existent restaurants?

    The Billions of nominal dollars that the rich “hold” are just (as Nicole Foss terms them) “excess claims on underlying real wealth” which simply won’t be there.

    • Harry Gibbs says:

      The burgeoning inequality of wealth distribution is interesting though. Complex systems will tend to tilt towards extremes as they approach terminal tipping points. Paul Chefurka made this very interesting observation, which I hope he won’t mind my reproducing here:

      “If the economic gradient between rich and poor is in some sense analogous to a temperature gradient in thermodynamics, and acts in much the same way – the steeper the gradient, the grater the energy flow along it, and the more active the system. A society with perfect socio-economic justice would therefore be in equilibrium, and like a thermodynamic system in that state would exhibit little or no activity.”

      • The advantage of tipping most of the wealth toward the very rich is that they tend to spend very little of it. If it all were taxed away, and distributed to the poor, they would try to actually spend the wealth. The catch is that this wouldn’t actually result in the huge amount of goods needed to fill the needs of the less wealthy. There isn’t enough oil being extracted to build all of the cars and houses that the new-found wealth would buy (plus pay the wages of all of the people needed to build these things).

        I am not a student of thermodynamics, but intuitively what you say this makes sense to me. These presentations are at this point are still in draft form, and the “Overview of the Networked Economy” in particular is short, so could be added to. The thermodynamics behind this change in wealth distribution would be an interesting addition.

        • Lidia17 says:

          Oh Gail, thermodynamics is everything!

          • I keep learning as I go on a lot of subjects. I have corresponded with a lot of folks over the years on thermodynamics-related subjects. I suppose I would do better if I picked up a textbook to round out my knowledge level.

        • garand555 says:

          There are two things everybody should know about thermodynamics: Given enough molecules, the entire system will behave like the mean behavior of those molecules and TANSTAAFL.

        • louploup2 says:

          Lidia17 is right–thermodynamics is everything! Please read:

          You might also like this piece by Ivan Illich I just came across:

          • I really like the article by Yadvinder Mahlhi. Is it part of a book that has been/ will be published? The J. H. Brown mentioned in that book is someone I know quite well–Jim Brown who retired not too long ago from the University of New Mexico. He invited me down there for a couple of days a few years ago. I am familiar with some of his articles on this topic and have read about humans’ high use of NPP before.

          • Stefeun says:

            Thanks Louploup2,
            Yadvinder Malhi’s description of socio-metabolism as an addition to bio-metabolism, using same units, as well as the Gross/Net Primary Production metric, are very interesting.

            Made a quick search and found he’s an ecosytem ecologist and Professor of Ecosystem Science at Oxford University. He’s holding a blog and seems to be working on quite a lot of projects (with students), somewhat related to the GEM-project (Global Ecosystem Monitoring Network):

            As for “Metabolism”, I also found this presentation and 1h15 video of a lecture he made last January (didn’t watch it yet, and couldn’t find about the book):

            • Mario Giampietro and Kozo Mayumi are other people I know who write on a related topic (plus on other ones). For example

            • Stefeun says:

              Thank you Gail,
              from what I’ve seen in the preview, there seems to be a tremendous amount of interesting insights in this book; maybe even too many. As they say in the preface: “this book was easy to write, but we’ve been told it wasn’t so easy to read”, I tend to agree and think they perhaps should have spent a little bit more time to make it clearer (NB: my impression only, and after reading a few pages only).
              The described method (MuSIASEM*) looks highly valuable, but unfortunately not for the purpose they state (“adjustments that may avoid the total collapse”). I’m afraid we’d need more than fine tuning.
              *: Multi-Scale Integrated Analysis of Societal and Ecosystem Metabolism

            • I haven’t read this particular book myself. The book of theirs I read was “The Biofuel Delusion.” In it, he mentions that the size of government can’t be bigger than the amount that farmers have as extra, over and above meeting their own needs.

              Mario Giampietro was the one who invited me to give a major talk at an energy conference in Spain several years ago (along with Joe Tainter and Charlie Hall). A paper related to my talk was later published as “Oil Supply Limits and the Continuing Financial Crisis” in the journal Energy. Mario was instrumental in getting me through this process. I hadn’t thought of writing a journal article.

        • AA says:

          You’re absolutely right. The naive and misinformed opinion “out there” is that redistributing the financial wealth of the 1% to everyone else would result in the material prosperity of half a century ago. What it will really do is drive up the prices of basic commodities as too much paper chases a finite amount of goods.

        • Daddio7 says:

          Imagine the energy needed for 7 billion people to live like Americans! Most of the wealth of the very rich is actually bits in a computer and there is little to redistribute.

        • MG says:

          “The advantage of tipping most of the wealth toward the very rich is that they tend to spend very little of it.” – that is what was the reality before the fossil fuels use. As the huge amounts of the cheap energy started to be at the disposal of the poor people, they started to behave like the rich: build big houses, buy luxurious goods etc.

          Now, when the flows of the cheap energy become constrained, the amounts of the rich shrink. Many houses become abandoned, as the population shrinks and the people move to more energy saving lifestyles:

          The result of the lack of cheap energy will be a lot of empty and desolate large real estates and many abandoned houses in the areas lacking enough food and wood.

          • Thanks for the link. I agree that there will be a lot of abandoned houses. As we get poorer, we can afford fewer homes. Also, some homes are poorly located, or badly in need of upgraded insulation, heating, electricity, etc.

          • richard says:

            Many of these failings are not accidents, but the result of preverse incentives such as the UK’s VAT on refurbishment while new housing is subsidised via the provision of infrastructure free at the point of supply. There are attempts to change this, but these initiatives are usually ineffective.
            Ideally, the oldest 25 percent housing should be demolished and replaced with modern equivalents, but that brings its own problems. One thing is for sure, and that is that today’s new house will be consuming energy for a very long time.

      • Lidia17 says:

        Harry, thanks for forwarding that. Paul has been exploring these ideas in a very fruitful fashion. We are only alive thanks to energy gradients, so to some degree they are a necessity. The problem is confusing the nominal money system with the real material economy.

        We have been brainwashed to think that “jobs” are “productive”; in most cases they are not. With sharply-reduced future energy and resources, our strategy should be one of immediate degrowth and a conscientious reduction in superfluous activity. This is actually happening, as Gail mentioned above, with the loss of “jobs” and people being given food stamps and disability to sit home and encouraged to spend their time and money on the latest boondoggle of online colleges.. it’s just that people are bombarded with propaganda messaging and the agonizing disconnect that “the economy is recovering” and that all you need is to go back to school for STEM training to get a good job. But it’s not happening in other areas, for example the military. Has anyone noticed an extreme and increasing fetishization of all things military in their town lately? I tend not to watch the news but am aware of an increased level of warmongering.

    • I agree. The vast majority of the wealth of the billionaires will simply be lost. They can only eat a certain number of calories–about the same number as the rest of us. They can only sleep in one bed a night. The pixels in their bank account statements may say that they have a lot of money to spend in the future. When the time comes when they think they can spend it, it likely won’t be there.

      • The Gates Foundation has been a prominent supporter of Planned Parenthood among other things

      • garand555 says:

        Even the physical wealth of billionaires will not be theirs. There are some out of state people who have a lot of land here. In the event that there is no federal government, do you think that I will respect their private property rights? Nope. Are there a lot of other people who will take that view when left to their own devices? Yup.

        • I am afraid you are right. Of course, location is everything. If the location is where there is no water and no access to food, owners may choose to leave.

          • garand555 says:

            Well, I’m primarily thinking of Ted Turner here, who’s land butts up against Elephant Butte lake and has Gemsbock Oryx on it. Oryx are mighty tasty creatures.

    • richard says:

      Please give some thought to the curse of oil resource-rich economies. This is something we all feel. The income from selling oil has to be recycled – it cannot be stored – and in many cases if the flow of government support to local economies falters, there are riots. Hence is these countries “wages” is somewhat subjective. Where the income is invested, can also cause economic stress as we currently see from the effects of lower oil prices.

      • Right. All this money keeps getting handed on again and again. If it is not there, it is a problem. At one time, quite a bit of the oil money was being used on US debt, but more recently it seems to have been reinvested in the countries. There are a lot of countries doing very badly, including Venezuela and Brazil. Russia isn’t doing very well either. If there is a lack of flow of money through the workers, that becomes a problem.

  45. Lidia17 says:

    Gail, what seems to you like a conundrum is pretty simple, actually: the vast majority of GDP is actually useless waste.

    Increases in GDP is not anything a sensible country or society should actually want. Steve Ludlum (“stevefromvirginia”) is very good on this point.

    On a finite planet, we should want neither increases in GDP, nor should we want increases in worker wages that allow them to buy more [cars, sneakers, iPhones, what-have-you]. We are in a less-than-zero-sum game at the moment, and for all time, really.

    Things like wages “need to grow” only in an abstract mathematical and rigged political hegemony/fantasyland detached from reality.

    • This is one way of trying to address the issue of a whole lot of GDP being useless waste–for example, lots of marketing people flying around from meeting to meeting. The problem, of course, is that the useless waste is what provides jobs. Without the essentially wasteful jobs, we have an even larger number of people unemployed. It becomes even harder to repay debt with interest. The government tries to fix this, but in the end, it is the government/financial system that fails.

    • Stefeun says:

      increases in wages and GDP are necessary to hold the system together and keep on with BAU. We all know it isn’t sustainable anyhow, but flat GDP and decreasing wages are telling us that global collapse is much closer than most are expecting.

      Thanks for mentioning “waste”, as I think that waste and pollution are becoming a major issue, an exponentially growing burden, especially for China.
      Someone already linked to this article: “China’s Waste and the Largest Wealth Transfer in History” (see the map of air-pollution)

      Another example is the plastic:
      “Vast floating islands of plastic are just a drop in the ocean compared with what’s lurking deeper down. Between 5 and 13 million tonnes of plastic debris entered the marine environment in 2010 – and most of it is under water. What’s more, without improvements in the way we manage waste, it could be 10 times as much each year by 2025.
      (…) This means the amount of plastic that has entered the ocean down the years might be 1000 times more than the mass of floating plastic that scientific surveys have measured. (…) China tops the list with an estimate of up to 3.53 million tonnes of plastic marine debris a year”

      We could cite similar stories about many other subjects (rare earths, fresh-water, …), the point is that our waste is really starting to reduce our possibilities, to say it gently, and we don’t know how to deal with it, other than to stop our activities, which is not an option but will have to happen anyway (“Like it or not” as Nicole Foss says).
      It would really be interesting to know about Chinese people’s point of view about that. Gail I wish you a nice trip there and hope everything will go as planned.

      • I have heard that people in China are really upset about the air pollution problem. This may be behind the cutback in coal consumption that is reported for 2014. This is one graph that has been posted of an estimate of China’s 2014 coal consumption.

        Chart by Lauri Myllyvirta showing a preliminary estimate of 2014 coal consumption in China. My expectation is that the economy is really growing by less than 7.5%.

        • A few years back Maria Bartiroma, Fox Business News reporter, made her first trip to China, expecting to report business news. When she returned all she could talk about was the pollution. I had earlier traveled through China with a group of bridge players. The tour included a cruise on the Yangtze River through the Three Gorges Dam (the world’s largest power plant) to the interior city Chongqing. The dam flooded many older homes but they were largely replaced with modern apartments. We arrived in Chongqing in the morning. The rising sun resembled a full moon. Greater Chongqing has a population close to 30 million. It is the center of the Chinese auto industry. Many 40+ story apartments had window air conditioning units. Visiting Xian, a smaller city. we saw many locals wearing surgical masks. Some of the pollution was said to be from the illegal burning of crop residual following harvest. We were lucky to hit the East Coast during relatively benign period.

          • When I visited China before, pollution varied greatly from day to day and place to place. Xian was terrible I remember. Beijing had a dust storm one day I was there, but otherwise was pretty clear. Beijing is in a “bowl,” so it is like Los Angeles, with the pollution level varying with wind conditions.

            When I was in Mumbai, India, for something like five days, the pollution was terrible. I am told that major cities in India are as bad or worse than in China for pollution.

            • rikkitikkitavi says:

              The greatest pollution source in India? Your sitting on it. By far untreated sewage. Soon to be the worlds largest population, and all that poop going straight into the rivers. The fascinating thing about open sewage is its not really open. A layered crust forms in various shades and composition much like a parfait. This crust will not support the weight of a human however. That will teach you to pay attention to where you place your feet. Ah romantic India. Fond memories of the raj. Turds floating down New Delhi streets in the monsoon.

        • richard says:

          I *think* they expect to increase electricity production from coal by some 4.2% YoY, hence to keep pace with demand, nuclear and renewables (including hydro) have to increase by 15~16 percent.

  46. VPK says:

    Thanks Gail,
    Enjoy your trip

    Enjoy the trip, because you never know when it ends

    • As they say, it is not the destination–whether we live to be 100–that counts, but what we do in the time we have.

      I have been to China before, and in fact to the Petroleum University in Beijing before. This is a blog post I wrote about my trip four years ago.

      • VPK says:

        Scott Hearings favorite line was this ‘To travel hopefully is better to arrive and the the true reward is to labor’, from Robert Louis Stvenson , I believe.
        Heard on NPR today about the battle going on about immigration reform and the President’s executive order. Seems one sector of the economy is benefitting from the status quo, industrial agriculture. Keeps illegals trapped in migrant farm labor with substandard living conditions with low wages. Owners are concerned these folks will seek city employment to escape such conditions.
        Also, President Obama is very concerned regarding the low Pay increases of the working class. The stock market has soared, but the average wage has not and real inflation has soared. The Fed has ‘determined’ not to raise interest rates…they don’t DARE!

  47. When you lecture in China, are you going to let them know they are ,b>TOAST?,/b> Will you let them know they got in a Day Late and a Yuan short and their economic model of Industrialization can’t possibly work in a world of depleting resources and energy? Are you going to inform them that their pollution, lack of potable water and population overshoot are setting them up for a massive Die Off in the next couple of decades at the outside? Or will you sugar coat it for them?


    • Falling Wages is an artifact of Credit Starvation to various economies.  It results in DEMAND DESTRUCTION across these economies, subject of the latest Frostbite Falls Daily Rant.

      • If we pretend we have more goods and services in the future, this allows more credit. The greater credit tends to pump up demand for commodities, and thus prices.

        How this gets back to the common worker in wages is a mystery to me. Higher commodity prices = lower wages of common workers, in inflation adjusted terms.

        • How it gets to the common worker is EZ.

          Facepalm does an IPO for $100B. The TBTF Banks borrow $100B from Da Fed to buy the stock. Now Facepalm has $100B in capital with which to pay their geeks and techies. They don’t even need any advertising revenue for quite some time. Even after a few years of no profits, they can simply float up a bond issue and run on more debt, rinse and repeat until the debt service is too high, at which point they finally go belly up and the debts are shifted onto the balance sheet of the taxpayer. That is how Capitalism has worked since the days of the Railroads through the Automotive & Airline industries and up to the Tech era.


    • I am going to let them figure it out for themselves.

  48. Stilgar Wilcox says:

    A fascinating thing happened today. I needed to drive in early commute in the SF bay area’s East Bay. The traffic was moving quite well then suddenly transitioned into slow and go mode in the exact same part of the freeway at the exact same time that it would always occur 25 years ago.
    A quarter century has passed and more than a deja vu, it was a an indication that as much as we know from depletion of oil there should be consequential contraction or even collapse, it still has not shown itself in the façade of everyday life. At least not from what I can see here in the Bay Area. The economy is bustling, people are commuting to work and life is much the same.

    Yet simultaneously I know like many on here there must be consequences at some threshold of oil depletion. I’m just wondering when that might occur. It seems like the longer this process goes on the more people on peak oil blogs are certain it must be eminent, i.e. 2015 or 2016. But the façade does not change, so I’m wondering how long will it take? I’m now wondering if what we think is a coming collapse will turn out to be much farther into the future. I use to think it would occur by about this time, but now I’m wondering if things could continue not much different than they are into the mid 2020’s or later. I don’t know and am not making any predictions, but just knowing the façade changes little if any, makes me wonder how long it will take.

    • I can’t speak directly for the Bay area but my job takes me to many places in flyover land at least. From Colorado to Ohio, Minnesota to Louisiana and I can tell you if you want to see how this slow collapse is manifesting itself get away from those places that have a direct tap and flow line to government money. College towns, Capital cities, those with some industry that fill government contracts are all doing rather well. Those places without that pipeline are dying, drying up and looking pretty run down with many closed businesses and abandoned buildings.

      Tainter I think mentioned the complexity as the collapse continues falls away from the edges and works it’s way inward which is what I have been observing.

      • Stilgar Wilcox says:

        Thanks for your reply, Pioneer. I really only have the Bay Area with which to form an opinion so it is good to get a bigger picture from your experience.

      • Pioneer,
        You got it. I live in DC and I deal with small business. It’s over.

        “When you’re born you get a ticket to the freak show. When you’re born in America, you get a front row seat” — George Carlin

        Quick three observations

        First: In the end stages of a failing system those connected to the credit-boosted sectors will be living well, while those on the outside will suffer what they must.

        Second: In how critical overseas trade is to sustain the dollar and America lifestyle.

        Third: 500 hundred years of Anglo-Saxon pillage and looting (labeled capitalism to the masses while exploiting them) is coming to an ugly and brutal end; and very soon, leaving war and popular protest to plunder whatever is left.

        So, enjoy from now all the superficiality and shallowness, offered as solutions.

        Gail, forget about us in March. Try to absorb as much as you can in China. Then, break it down to us when you come back.

        Have a nice trip. China sounds very interesting.

      • There are a lot of folks who have dropped out of the work force because the pay (often for part-time jobs) just isn’t good enough to justify the expenses involved. Teachers with children at home and commuting expenses find that it doesn’t make financial sense to commute. People who might possibly qualify for disability coverage have obtained coverage from that, rather than work, if it is hard to find good-paying work. People who have elderly relatives to take care of have also been known to drop out of the work force. Some have taken early (reduced benefit level) Social Security benefits, at age 62.

        The other big problem area is with young people finding jobs. Too many of them are spending years in school, hoping that there will be a job at the end of the long time of study. When one approach doesn’t work out, they try a different approach, if they can find funding for it.

        There are also a lot of people back in school because they found difficulty finding work previously. These folks are running up government loans. Quite a few of them are going to have difficulty finding jobs that pay enough money to pay back the loans.

        The other issue that people have not focused on is the real need to raise tax levels, as more Baby Boomers retire. The funding for the program is essentially pay as you go (even if it looks like there is a Social Security Trust Fund). Part of what kills the economy is rapidly rising tax rates.

        Even slowly rising interest rates will also tend to bring the economy down–another problem.

        • rikkitikkitavi says:

          I know lots of people who have gotten layed off and gone on disability. Its easy just get a lawyer. The lawyer will tell you whats wrong with you I mean the basis of the claim. Just look at the lawyer fees as a investment. After all you payed in. Lots taking benefits at 62 too. Get it while it lasts blue light special. After all you payed in to the Ponzi. Its only fair. Its those despicable oligarchs keeping everyone from a fair and equal society where we all dance all day in togas. Its those despicable oligarchs keeping everyone from a hard working individual from paying his bills. Which flavor appeals? Oh the one that gets you the most. What a coincidence

          • Rodster says:

            I have a neighbor in my Apt building who’s in her 40’s and has been on disability for years and diagnosed as mentally challenged. If you talk to her or see her on the street or driving a car she comes across as normal as anyone else you run into.

            My friend, OTOH who shouldn’t be working because he suffered a heart attack and two strokes doesn’t qualify for disability.

            • rikkitikkitavi says:

              “My friend, OTOH who shouldn’t be working because he suffered a heart attack and two strokes doesn’t qualify for disability.”

              He qualifies. He hasnt ponied up for the Lawyer. Forget about the strokes and heart attack. You act like there is some rhyme and reason here. The lawyer advises what the claim is. Whatevers hot. Chronic restless ear lobe disease.

              Your friend has the same problem I have. The need to earn ones place in the world. Its a real hindrance. I blame my parents.

    • Rodster says:

      Where I Live (SW Florida) things appear somewhat normal as well. People go to work businesses are running etc. It’s not until you pull pack and see the overall picture because we humans tend to be so shortsighted because we view things in the now and only live for a brief time.

      As you read the instability in the world such as the financial state of the world that you get a better understanding of what is really hold things together. Who would have thought a Country like Greece would declare they were bankrupt and announce it to the world? Then what followed was even more surprising that they got an extension and according to Zero Hedge, their bailout agreement was written by the Germans? The world’s financial system is being held togehter with duct tape and glue. There was talk of a contagion taken place if there was a GreXit because it would expose everyone as bankrupt. Now it has been extended for another 4 months.

      Ask yourself, who saw the crash of 1987, 2000, 2007 coming other than a select few? Isn’t it concerning that collapses and crashes are occurring and accelerating in pace? I say forget about the oil picture for now and look at the BIG PICTURE to get a feel for what’s building up in the future for potential problems. I’m reminded of one simple passage in the Bible that basically says “no one knows the day nor the hour of when things will come, only God”.

      “Live your life as best as you can and enjoy it. This so called collapse may or may not happen in our lifetime. But it’s pretty much a lock someone will be dealing with it in the future”.

      • I did foresee the 2008 crash. This is my Oil Drum post about the problem.

        As they say, “It is always darkest before dawn.” And stock market analysts are always most bullish, before the crash. We know that something will break at some point, but there are so many candidates, that it is not clear exactly how the process will unfold. Raising US interest rates would seem like it would be a big push toward collapse, for example.

        • garand555 says:

          Gail, we now have a candidate with which we can start saying “If this, then that.” Shale oil and oil prices. Many of those companies that have been fracking are highly leveraged, and started taking this leverage on when oil was much more expensive. Storage is filling up because they are pumping as much as they can will cutting costs as fast as they can. What happens to oil prices when storage is full or too expensive? Oil companies either cut production or drop prices. How are those leveraged frackers going to pay their debts? Government bailouts are the only way that I see, but if the government is too slow, it will result in a lot of defaults in the junk bond market. Does this spread to the broader bond market? Time will tell, but this has the potential to turn into a broader financial crisis. A bond crisis would be full throated serious.

    • It is a financial and government collapse that we are looking for. It won’t look like a shortage of oil–too many people are looking for the wrong thing. I expect that the collapse will come through low oil prices. My expectation is that the low oil prices will eventually bring the system down, but big cracks won’t start to show up until later in 2015. Things look good enough now that I am hoping the next month and a half stays together pretty well.

      • Rodster says:

        Will this be on a global level?

        • The financial and government collapse will start in some places and spread to others. For example, Greece seems to be on the leading edge. So do Egypt and Syria. Venezuela is not far behind–it cannot live on current oil prices. Petrobas in Brazil just had its debt rating downgraded to “junk,” so Brazil may be headed in the same direction. I expect the Eurozone will fray, and then fall apart. Russia isn’t doing well now either, nor is Japan. The list is very long.

          I thought it was interesting that the Brazil article I read (Downgrade of Brazil Oil Giant Stirs Wider Concerns) said,

          The cost to buy insurance against a Petrobras default has more than doubled since September, to around six percentage points from 2½, said Pablo Spyer, an analyst at São Paulo-based Mirae Asset Securities. He added that the costs of credit-default swaps are also rising for Brazil’s sovereign debt and other Brazilian corporations because of Petrobras.

          This means anyone who wants to can gamble on Petros’ financial condition in the derivatives market. If banks get into trouble, it looks like depositors will probably be on the hook to clean up the financial mess–they will lose part (or all) of their deposits. This is happening because governments are in such bad shape in terms of debt that they can’t afford more bank bailouts.

          • Rodster says:

            Greece has the potential for being the canary in the coalmine. I read that their bailout agreement was written up by the Germans and the Greeks signed off on it. All of this on the heels of the new Greek Syriza Party playing hardball. Something smells fishy here because at first they played hardball and threatened to leave the EU and take Italy, Spain and Portugal with them. Then suddenly did a 180 and became compliant.

            As you’ve pointed out with your Leonardo sticks that the world for the first time is now so interconnected that a minor player like “Greece sneezes and the rest of the world catches a cold”.

            Instability, chaos and turmoil have become the new norm.

            • The Greeks are pitching complete BS, in JC Juncker-style “When it gets serious, you have to LIE” style. They agreed to basically “whatever”, and now go back to Greece and don’t do any of it, or do the opposite. LOL. Meanwhile, hopefully the IMF keeps coughing up liquidity, because there aren’t going to be any actual deposits in Greek Banks for much longer.


            • Reg says:

              maybe someone explained to the syriza party what the real stakes were i.e. that we are facing the end of civilization and that if they walk on the EU the end games happens sooner rather than later

          • Jan Steinman says:

            “If banks get into trouble, it looks like depositors will probably be on the hook to clean up the financial mess–they will lose part (or all) of their deposits.”

            It seems like a good idea to have some cash in an envelope somewhere. (Wish I had some to put in an envelope!)

            I still think the best insurance policy is being a primary producer. If the entire financial system collapses, we’ll still be able to feed ourselves — as well as barter the excess to neighbours. And it’s harder (though not impossible) to take that away from you than it is to take your envelope of cash away. For one thing, if you’re feeding your neighbours, they’re going to help defend you.

            • garand555 says:

              It may be harder to seize crops than an envelope full of cash, but it is easy to burn crops. If somebody takes a strong dislike to you, and this can happen even when your intentions are pure, never forget that. Potatoes caught on in Europe for a reason.

          • garand555 says:


            Depositors are already slated for the slaughter:


            Another thing to point out is that governments are going to take a very Willie Sutton view of the world. He supposedly robbed banks because that is where the money was. Where is the money now?

            • James says:

              When the depositors are slaughtered this time around the governments will soon find out that the money system was pretty much the only thing holding the illusion of national sovereignty in place. Even the mighty US military, which will watch their savings vanish too, won’t be able to keep a lid on the shit storm that will follow.

            • Thanks! With as many countries as there are around wanting to sell oil-related assets, it seems like the prices will be pretty low. The number of buyers starts getting small as well. China, Saudi Arabia? Why would buyers want something that is so hard to extract? I suppose if a buyer is convinced that the oil price will go back up again.

            • rikkitikkitavi says:

              “Petrobras hires JPMorgan for $3 billion in asset sales –”

              Maybe JPM can repackage it and sell it to some pension funds. This could be big for GDP. I doubt even JPM can save PBR now. Deep water drilling through a salt layer is akin to asteroid mining.

          • rikkitikkitavi says:

            “This means anyone who wants to can gamble on Petros’ financial condition in the derivatives market. ”

            Except that the bets only pay off if theres a default. Guess who decides? The guys who pay out if the bet wins. 10 cents on the dollar was not a default when Greece did it. Why? Negotiaed settlement not a default. Heres the negotiation. Ten cents or nothing.

    • richard says:

      I’d suggest that before there is a decline in oil consumption there has to be a plateau. We are or were in a world where infinite exponential growth is promoted as “stability”, hence the changes you need to look for are changes in the flow of capital, attempts by governments and others to bolt stabilisers onto the systems by regulations and restrictions, and so on, just to keep the illusion of business as usual. That then gets a response such as cheating, friction, competition for resources and inefficiencies.

      • I don’t think that there has to be a plateau in oil consumption. There can be two directions: up and down. Oil consumption needs to go up to keep the system going. Your bank closes, and your oil consumption goes down, whether or not it reached a plateau earlier.

    • artZazzle says:

      Yes I know exactly what you mean, I feel the same, here in Europe.
      Perhaps Ugo Bardi has some explanation for it, in:
      “But arriving to the conclusion that there are no problems in Italy would mean to make the same mistake that our former prime minister made a few years ago, when he said that Italy had no economic problems because “restaurants are full”. Restaurants are not the economy and city streets at rush hour are not the country’s transportation system. And there is no doubt that transportation is in trouble if we measure it in terms of km traveled. Here are the data (courtesy of Massimo de Carlo at “Mondo Elettrico”). The blue curve is for light vehicles, mainly cars, violet is for trucks, and red is all vehicles. Data from AISCAT, updated to 2012.”

  49. Oji says:

    Thanks, Gail!
    Will digest these and probably have something about which to pester you.

    Enjoy East Asia. Will you get a chance to stay in Japan at all?

  50. Rodster says:

    Gail, the second example of after-tax income is key. That’s one of the problem in this current globalized economy. That income continues to drop and as such the economy contracts because it has a domino effect. As people buy less, factories, shipping etc declines. The DBI continues to contract to levels last seen in the mid 80’s as shipping goods around the world has slowed massively.

    The central banks are now facing deflation because the common worker has been turned into a turnip and we know how that saying goes. So the central banks are faced with creating inflation to counter deflation.

    When that happens the common worker takes a further hit until the whole house of cards collapses. Need I remind everyone that this is a global problem. When the CB finally lose control of the sitiuation whenever that day arrives all hell will break loose around the world. It won’t be just one economy taking the hit, it will be everyone.

    • Exactly! The competition for China is India, Bangladesh, Pakistan, and Philippines (my guesses–not based on any deep analysis). These are warmer countries. People can live in flimsier houses. Their costs are even lower than China’s especially if China’s wages are rising to try to let the workers pay for their new expensive condominiums. It is the combination of the wages and energy use that determine overall costs. From the point of view of competition, it also includes taxes levels and other things rolled into gross costs. The country with the worst healthcare, the least pollution control, and the least care of elders wins. It also helps to have cheap fuels.

      • richard says:

        Gail, I know I state the obvious here, but for completeness I will mention that worker’s wages are quickly spent, on average within two weeks. It is less obvious that this determines the size of a significant amount of cash within the banking system. With the growth of credit cards, the numbers change, and I believe that change is ongoing in China.

        • That could be. I will see more of the real-life of Chinese citizens (faculty and graduate students) on this trip.

          • richard says:

            I know you prefer the written word, but this brief video links the subprime lending to the 2008 crash and via credit contraction, to purchases of stoves and furniture.
            When he starts talking about the wider world, that brought to mind the thought that each country has its own concept of an oil price that it can afford. Even Saudi Arabia, in the long run, has its limits. Some price limits are high, some are low, and oil reached $147 per barrel in 2008, just before the crash.

          • kulm says:

            They happen to be among the richer class of china, especially those who are likely to speak English.

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