Putting the Real Story of Energy and the Economy Together

What is the real story of energy and the economy? We hear two predominant energy stories. One is the story economists tell: The economy can grow forever; energy shortages will have no impact on the economy. We can simply substitute other forms of energy, or do without.

Another version of the energy and the economy story is the view of many who believe in the “Peak Oil” theory. According to this view, oil supply can decrease with only a minor impact on the economy. The economy will continue along as before, except with higher prices. These higher prices encourage the production of alternatives, such wind and solar. At this point, it is not just peak oilers who endorse this view, but many others as well.

In my view, the real story of energy and the economy is much less favorable than either of these views. It is a story of oil limits that will make themselves known as financial limits, quite possibly in the near term—perhaps in as little time as a few months or years. Our underlying problem is diminishing returns—it takes more and more effort (hours of workers’ time and quantities of resources), to produce essentially the same goods and services.

We don’t measure our investment results with respect to the quantity of end product produced (barrels of oil produced, liters of fresh water produced, kilos of copper produced, or number of workers provided with sufficient education to work in high tech industries), so we don’t realize that we are becoming increasingly inefficient at producing desired end products. See my post “How increased inefficiency explains falling oil prices.”

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

Figure 1. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

Wages, viewed in terms of the product produced–oil in this case–can be expected to decrease as well. This change isn’t evident in usual efficiency statistics, because some of the workers are providing new kinds of services, such as fracking services, that weren’t required before.

Figure 3. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 2.

Figure 2. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 1.

Even investment is becoming increasingly inefficient. It takes more and more investment to extract a given quantity of oil or other energy product. This investment needs to stay in place longer as well. The ultra-low interest rates we have been experiencing reflect the poor returns investments are now making.

The myth exists that prices of all of the scarce goods and services will rise high and higher, as the economy encounters scarcity. The real story, though, is that the inflation-adjusted purchasing power of common workers is falling lower and lower, especially in the United States, Europe, and Japan. Not only can these workers afford to buy less, but they can also afford to borrow less. This means that their ability to purchase expensive goods created from commodities is falling.

At some point, this lack of purchasing power can be expected to affect the financial markets, and the prices of many commodities can be expected to fall. In fact, this already seems to be happening.

The likely impact of such a fall in commodity prices is not good. If low oil prices cannot be “turned around,” they will lead to debt defaults, and these debt defaults are likely to lead to failing financial institutions. Failing financial institutions have the potential to bring down the system, because it becomes very difficult for businesses to continue if they are not supported by a banking system that allows a company to pay its employees. Workers also need the banking system to pay for goods and to save for a “rainy day.”

A big part of what has allowed the economy to grow to the size it is today is increasing debt levels. These rising debt levels play many roles:

  • They make high-priced goods more affordable to consumers.
  • They create greater demand for goods, allowing more end-product goods to be produced.
  • They create more demand for commodities required to make end-product goods, allowing the price of these commodities to rise, so that more businesses have more incentive to create/extract these commodities.

At some point, debt levels stop rising as fast as they have in the past (because of a lack of growth in purchasing power because of diminishing returns in investment), and the whole system tends to fall toward collapse. We seem to have reached this point in the middle of 2014. China was raising its total debt level rapidly up until the early part of 2014, then suddenly moderated its growth in debt level in mid 2014. At about the same time, the US scaled back and eliminated it program of quantitative easing (QE). Oil prices dropped starting in mid-2014, at the time debt levels started moderating. Other commodity prices started falling as early as 2011, indicating likely affordability problems.

We are now in the period when many people still believe everything is going well. Oil prices and other commodity prices are low—what is “not to like”? The answer is that the system in not at all sustainable—profits of oil companies and other commodity businesses are down, just as wages of common workers in developed countries are down in inflation-adjusted terms. Companies are cutting back in investment in oil production. Soon oil production will drop. With lower oil supply, the economy will face huge challenges.

Many people believe that oil prices can bounce back up again, but this really isn’t the case, because of growing inefficiency related to limits we are reaching–the need to use more advanced techniques to produce oil; the need for desalination for water in some places; the need for more pollution control equipment that doesn’t really increase the finished goods and services we are producing but instead makes goods more expensive to produce.

Each worker is, on average, producing less and less of the finished goods we really need. Whether we like it or not, standards of living will have to fall. The amount of debt workers can afford decreases rather than increases. This new reality can be expected to manifest itself in debt defaults and increasing financial system problems.

Even if oil prices bounce back up again, it is doubtful that shale oil drillers will be able to again borrow at a sufficiently high rate to increase their production again—what lender will believe that oil prices will remain high indefinitely?

The China Connection

I have been trying to put the real story of energy and the economy together over a period of years. Prof. Lianyong Feng of Petroleum University of China, Beijing, hired me to put together a short course (eight sessions, each lasting about 1.5 hours) on the nature of our current problems for students majoring in “Energy Economics and Management.” The course would be open to everyone choosing this major, including freshman, so I needed to assume a fairly low level of background knowledge. Actual attendees included a number of graduate students and faculty, attending the course without credit.

I put together a series of lectures, which I gave during the second half of March 2015. PDFs of my lectures are also now available on my Presentations/Podcasts page.

These lectures were videotaped by Prof. Feng’s staff, and I am in the process of making You Tube Videos from them, in addition to the original MP4 format. (YouTube videos cannot be seen in China.) My current plan is to give a brief discussion of these lectures, in future posts.

Following the lecture series, I visited several places in China, to see how the economic slowdown is playing out in China. This included visits to Northwest China (Hohhot and Hardin), Northeast China (Daqing and Harbin), and Southeast China (Wenzhou area). In Wenzhou, I visited three different companies attempting to sell electrical equipment on the world market.

From these visits, we could see how the world economic slowdown is affecting China, and how China’s own slowdown in debt growth is adding to the world slowdown. We could also see that the slowdown has not yet run its course China–growth in housing continues, even as the need for it seems to be slowing. College students are finding it difficult to find high-paying jobs in oil and other commodity sectors. The lack of growth in high-paying jobs will provide downward pressure on housing prices as well.

I plan to write a post about this situation as well.

About Gail Tverberg

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

  1. Brunswickian says:

    This is why the Ukranian situation is so dangerous as related by director of “Russian Institute of Strategic Research” , the retired lieutenant-general Leonid RESHETNIKOV
    http://cassad-eng.livejournal.com/

    – And what does this notorious “world government” need?
    – It is easier to say what they don’t need: they don’t need a federal Ukraine, such a territory will be hard to control. It will be impossible to deploy their military bases, a new ABM echelon there. And there are such plans. From Lugansk and Kharkov tactical cruise missiles can reach behind the Urals, where our main nuclear deterrence forces are located. And they can hit silo-based and road-mobile ballistic missiles on the ascent trajectory with a 100% probability. Currently this area is not reachable by them neither from Poland nor from Turkey nor from the South-East Asia. This is the main goal. So the US will fight for Donbass to the last Ukrainian.

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  3. Don Stewart says:

    Dear Gail and Finite Worlders

    A few thoughts triggered by Stanley Hazen and his work on red meat and eggs, the gut bacteria, TMAO, and cardiovascular disease…and Harari’s book Sapience and his speculations about humans becoming super-human.

    I’ll start with Hazen’s third talk in this series, ‘Potential Implications on Biomedical Science’, which you can find here:
    http://www.nhlbi.nih.gov/about/directorscorner/messages/behind-bench-dr-stanley-hazen-cleveland-clinic-and-lerner-research

    I call your attention to these particular points in the talk:

    At about 2:30
    TMAO is mechanistically linked to cardiovascular disease
    At about 3:25
    Therapeutic use of antibiotics to prevent cardiovascular disease
    At 4:20
    The targeted antibiotics had wiped out the TMAO by killing selected gut microbes. However, the ‘darn microbes had become resistant and multiplied back to normal’
    At 4:50
    The microbes have number on their side…It’s just not practical to dose chronically with antibiotics
    At 5:00
    But, you asked where I see this going… the microbiome is a druggable target. Statins are now a human enzyme….whole medicine cabinet of drugs in the future which will block specific enzymes
    At 6:20
    Becoming vegan or vegetarian is clearly shifting the gut biome, but ‘it isn’t any fun for most of us’. We all want to take a pill instead.

    I want to suggest that what Hazen suggests at 6:20 is a form of the super-human that Harari speculates about. We will be able to eat things our body is not designed to eat, and which cause us harm, but we can take a pill and not suffer the harms. Somehow, we will outwit the brainless microbes….despite their numerical and evolutionary advantage.

    At a different scale, all the geo-engineering being proposed to solve the climate change problems is another example of ‘super-humanism’. We can burn dangerous fossil fuels and not suffer the consequences

    Both Hazen’s proposed solution and the geo-engineering solutions share a couple of common assumptions:

    First, humans simply can’t overcome the biology of hormonal control over our actions. If red meat and burning fossil fuels activate the right neurotransmitters and hormones, we will mindlessly go where our hormones lead us. Our frontal lobes are useless appendages.

    Second, while both therapeutic drugs and geo-engineering require energy, we will somehow find the energy we need to accomplish them. Harari considers the question of finite supplies of energy, but basically just concludes that there is an unbelievable amount of energy around, and we will probably find a way to use what we need. Hazen probably assumes that there will be enough money and energy to fund both the environmentally costly production of grain fed red meat and also the pills which give us immunity to the health consequences.

    What do you think?

    Don Stewart
    PS I still don’t want to argue the science with the Paleo or Weston Price or the Climate Fraud true believers. I’m just interested in the question of ‘super-human’

    • Actually, this video has transcript pieces with it. If you want to avoid phosphatidylcholine,this article talks about quantities in some foods
      http://www.livestrong.com/article/348926-food-sources-of-phosphatidylcholine/

      • Don Stewart says:

        Dear Gail
        I will practice a little medicine without a license. The article assumes that eating quite a bit of choline is a good thing. ..liver is a ‘good’ source of choline. But the new research indicates that dietary choline promotes cardiovascular disease.

        ‘Although humans can produce the mineral choline in small amounts, they must also consume some in the diet to maintain good health’

        There are quite a few chemicals which the body needs, but the amounts need to be pretty strictly controlled, as excess is dangerous. Salt is one example. Iron is another. Growth hormone is another. Choline, I think, is yet another example. If the body is making choline, then it will likely make just enough at just the right time. This is similar to soil microbes making just enough nutrients at just the right time to feed plants in response to the plants issuance of exudates which signal to the microbes.

        The research also seems to indicate that dietary choline may be in a threshold type relationship to cardiovascular disease. There definitely is choline in plants, but the vegetarians and the vegans do not have TMAO circulating in their blood. But when the concentrated sources of choline are consumed (e.g., liver and eggs) then the level of TMAO rises and the damage starts. OR, it might be that the gut bacteria process plant choline differently than red meat and egg choline. OR, it might be that low dietary levels of choline simply do not support an abundance of the types of gut bacteria which make TMAO from choline. Low dietary choline may be inimical to the evolutionary success of the TMAO producing gut bacteria.

        I think the researcher favors the last hypothesis.

        Don Stewart

        • I was’t suggesting that I endorsed what the article said–just that it gave some choline amounts. My diet is pretty low on choline. Also, iron from animal sources.

    • Jarvis says:

      “I’m just interested in the question of super human” Me too. Every winter I manage a few weeks on one of the Hawaiian islands and the pre contact people of these islands fit anyone’s description of super human. I’m 6 feet tall and when I see their displays of hand tools in the museums it’s clear to me that these tools are designed for people stronger and far larger than me. It turns out that being 7 feet tall and exceptionally strong was not unusual for pre- contact Hawaiians. Many locals remember grandfathers who were exceptionally tall. A couple of years ago a friend finished medical school in Honolulu and before she left the islands one of her patients was 24 year old Hawaiian who weighed almost 600 pounds. Can there be any doubt that the standard American diet is a disaster for these people? Sadly it is the tourists who have separated these people from their traditional diet – last visit I paid $17 a pound for fresh fish and most locals can only afford the cheap carbohydrates that insures they have the highest rates of diabetes in the US.

      • Jan Steinman says:

        It turns out that being 7 feet tall and exceptionally strong was not unusual for pre- contact Hawaiians.

        Interesting… I’ve studied island geography considerably, and the opposite is generally true.

        James Lovelock (founder of the “Gaia” theory) notes that there is a mathematical relationship between number of species, physical size, and contiguous area. The “Lovelock Islands Theory” has been put to the test in the Amazon, where bisecting a wild area with a road (for example) reduces the number of species and relative sizes of creatures on either side of the road. As I recall, it has an inverse-square term in it somewhere.

        So I wonder what it was about Hawaii that made human size doubly unusual there.

        • Jarvis says:

          That intrigued me as well, plus the idea they only lived 30 years. Way back in 1980 I had a windfall in my business and bought a set of Captain Cook’s journals published in the 1780’s He made many first contacts and I couldn’t believe his reports at first but they have since been verified. How about 7 feet tall and a preference for going about naked in an Alaskan type climate? Check out the people of Terra del-Fuego. King Kamehameha was 7 feet tall ( they have his cloak) and his granddaughter Queen Liliokulani was 6 feet 10 inches (they have her house ,clothes and furniture) I re read Cook’s first contact and these Hawaiians really freaked out his crewmen by their size and brute strength. 1 Hawaiian was shot dead during this tense first encounter. I have also visited their ancestors the Mauri on Rarotonga, again all tall and powerful people. I’m sure a low carb high fat and fish diet had a lot to do with it. Cook even noted his men’s health improved when they exhausted their supplies and became hunter gatherers.

        • Bisecting an area with a road involves changing the ability of the local population to cover a larger area to get food of their choice.

          On an island, food comes from the ocean. If boats are transportation, small area is no obstacle. I don’t think the two are comparable.

          • Jan Steinman says:

            On an island, food comes from the ocean. If boats are transportation, small area is no obstacle. I don’t think the two are comparable.

            Might that be a bit anthropocentric?

            Lovelock’s Islands Theory seems to hold true for populations that become isolated. A bird (for example) would not see a road through the Amazon Rain Forest as an isolating barrier, just as a modern human would not see a body of water as terribly isolating.

            On our island of some 180 square kilometres (70 sq mi), deer are noticeably smaller than deer from the mainland or even from Vancouver Island (about 175 times bigger), even though they are seen swimming back and forth between this island and Vancouver Island.

            So I suspect that, even though 19th century Hawaiians had boats, the barrier is high enough to cause a certain amount of differential speciation and sub-speciation.

            • I suspect a lot of the Hawaii’s food was fish, however, and this came from the nearby ocean. That might have made a difference. Deer don’t eat fish, I don’t believe. I am sure that islands have different collections of species.

      • We know that in general hunter-gatherers were taller and stronger than the farmers that followed them. They also had less tooth decay. See the book Pandora’s Seed by Spencer Wells. He talks about a 6 inch decrease in height, IIRC.

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  7. Tolstoy's Degenerate Grandson says:

    It just occurred to me – did we in the past few months hit the moment known as peak oil?

    Did we drill as many holes as possible into the shale plays while oil while oil was at 100 bucks. The Saudis are pumping like mad bastards.

    Was this the final plan, let rip in one last gasp of black goop?

    Is this the last hurrah?

    • tagio says:

      TDG,
      I can’t find the exact post but Ron Patterson over at Peak Oil Barrel has called peak C&C (crude and condensate) I believe as circa middle of 2014 to middle of 2015. Here’s a post where he indicates that, from November 30 2014: http://peakoilbarrel.com/peak-oil-2014/

      It also depends on what you mean by “peak oil.” Steve Ludlum over at Economic Undertow called the peak, in terms of the financial return one could gain on a barrel of oil, as having occurred in 1998. Diminishing financial returns ever after: http://www.economic-undertow.com/2009/07/01/the-peak-oil-discussion-is-over/
      :

      • I agree with Steve Ludlum–the real peak comes when prices are low. Economic growth slows as oil prices and other energy prices rise. It is the lack of economic growth that tends to bring the system down, because wages can’t rise high enough and debt can’t be paid back with interest. Someplace along the line, oil consumption drops because we can no longer afford high-priced oil.

        • gerryhiles says:

          A paradox hard to accept, but what you say is true Gail.

          I just cannot agree with you that “pre-Western” people did not live sustainable lives

          Before the arrival of Europeans the Americas and Australia, for example, were in a pristine condition and ripe for resource exploitation.

          Even India and China, after millennia of their forms of civilisation and empire remained sustainable until the arrival of Western Imperialism, e.g. the Opium Wars.

          I do not know how you fail to see the broad historical context Gail.

          • “I do not know how you fail to see the broad historical context Gail.”

            It really depends on what someone defines as “sustainable”. If you mean the exact same population level and resources for eternity, that’s simply not possible within the physical universe; the sun will eventually burn out.

            Minerals wash into the sea, and erosion releases new minerals into the system. Tectonic movement and volcanic activity eventually bring the minerals back to the surface again. Populations go up. populations go down, species appear and vanish. Ice ages and global hothouse eras come and go.

          • kesar0 says:

            When by sustainable you mean regulating the human population in usual historical malthusian style (wars, hunger, empidemics, revolutions, etc.) you are right. It all happened in areas you mention. The only difference was the cultural pre-programming allowing one society achieve higher demographic density by pacifist ideologies (mostly religions, like buddhism, taoism, etc.). The other societies regulated the population by conflicts. It’s a simple explanation of the myth of ‘ancient sustainability’.

          • Jan Steinman says:

            Before the arrival of Europeans the Americas and Australia, for example, were in a pristine condition and ripe for resource exploitation.

            Was that before, or after the “Bering Bridge” people extirpated all the megafauna, some 15,000 years ago?

          • Our view of the Americas and Australia being in a pristine condition and ripe for resource exploitation is distorted. Early arrivers killed off megafauna and changed growth of trees to their liking. India and China may have done better than average, but their practices still led to erosion. In Dirt: The Erosion of Civilizations , researcher David Montgomery does not give a huge “pass” to Eastern civilizations.

      • But similar importance should be also focused on how the remaining resources from now on (or say from mid 2000s) will be shared/utilized globally. It seems to be clear as of now that the global elite/TPTB are pretty much following their pre-announced plans, simply crashing-diverting “living standards allowance” of the west towards Asia/Gulfies ME and skimming some cream of that process for their own benefit as they are jet set globally and couldn’t care less about their origins.

        Sadly, this was a huge factor which has not been discussed at all or very shallowly by the 2000s generation of PO/finite world authors, therefore for instance large part of mine and most of others preparations have been ill informed and badly timed as a result of it. Don’t get me wrong, I’m not blaiming the awarness authors, it’s mine fault only, just realizing now bitterly how “the smarter pirate” always wins in resources grab and evolution competition.
        This will be a long painfull descent.

        There is tons of evidence and sources now, how the TPTB planned and executed this last round (final?) of expansion/redistribution.
        One of many: https://www.youtube.com/watch?v=6a0zhc1y_Ns&app=desktop

      • Tolstoy's Degenerate Grandson says:

        When I refer to Peak Oil I mean that the absolute total peak production has been reached in terms of total barrels per day.

        Since a large number of producers are insolvent with oil under $100 and the economy cannot tolerate 100 oil I suspect we are now on the precipice of collapse.

        I believe that the mad dash into fracking was our last gasp. Oil prices were manipulated to ensure that we could ram as many holes into the reservoirs as quickly as possible.

        Once that mission was accomplished oil was allowed to drop in price, otherwise the economy would have imploded, and we now limp along with whatever reserves have been tapped.

        We have a temporary glut. But once we reduce this oversupply, the game will end.

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  13. edpell says:

    What is Humble Hillary’s energy plan?

  14. Stilgar Wilcox says:

    Gail, earlier in the thread you wrote about oil storage filling up and the effect on oil price that will have once full, so I found this article which actually has some fill percentages of different storage areas. If those tanks fill up, the oil price drop will be huge!

    http://www.bloomberg.com/news/articles/2015-03-12/oil-storage-squeeze-may-lead-to-another-price-crash

    ‘The U.S. Has Too Much Oil and Nowhere to Put It’

    As quickly as it emptied out, Cushing has filled back up again. Since October, the amount of oil stored there has almost tripled, to more than 51 million barrels. As oil prices have crashed, from more than $100 a barrel last summer to below $50 now, big trading companies are storing their crude in hopes of selling it for higher prices down the road. With U.S. production continuing to expand, that’s led to the fastest increase in U.S. oil inventories on record. For most of this year, the U.S. has added almost 1 million barrels a day to its stash of crude supplies. As of March 11, nationwide stocks were at 449 million barrels, by far the most ever.

    Not only are the tanks at Cushing filling up, so are those across much of the U.S. Facilities in the Midwest are about 70 percent full, while the East Coast is at about 85 percent capacity. This has some analysts beginning to wonder if the U.S. has enough room to store all its oil. Ed Morse, the global head of commodities research at Citigroup, raised that concern on Feb. 23 at an oil symposium hosted by the Council on Foreign Relations in New York. “The fact of the matter is, we’re running out of storage capacity in the U.S.,” he said.

    • Thanks! That is a good article. I know that the calculation of available storage space is somewhat difficult, so it is hard to know precisely when storage will get full. At some point, though, storage will get full, and prices will drop further. The article suggests that tame will be before May 31.

      • Creedon says:

        Wall street is betting that oil prices will go up due to a decrease in production from shale oil, at least if you read between the lines. There is a possibility that they will be wrong and that the economy is to weak support rising oil prices. I think many people are making their bets and predictions and only time will tell who is right.

  15. Daniel Hood says:

    Shale Boom Hits First Bust Since Oil Price Collapse
    http://www.manufacturing.net/news/2015/04/shale-boom-hits-first-bust-since-oil-price-collapse

    So it begins

    One of the big reasons of course, was the drawdown and eventual discontintinuation of QE3, which is only now manifesting as massive debt deleveraging. We also witnessed slow downs in both China and outright depression in parts of the EU which seems to be getting worse. The Saudis will simply maintain production, if not try to increase it if they can to maintain market share irrespective of what’s happening in other parts of the world.

    We all know post 2008 financial collapse of the Western world, the system was propped up by ZIRP, (NIRP EU), QE1,2,3, Junk Bonds financing fracking which has kept the US economy on lifesupport. It’s logical to assume shortly after QE3 being switched off, you’ll see money/debt being wiped out leading to deleveraging then deflation again. The process takes a while to shift through the system, but of course now we see that with the decline of unconventional oil production. Bear in mind the US economy needs circa 18 million barrels per day, every day and only has strategic reserves lasting a few months.

    Therefore makes sense now that QE3 has ended, we see the eventual threat of debt then energy deflation on the horizon. Prediction is QE4 sometime Q3/Q4 2015, maybe early 2016 but under the guise of some other name so as to hide the fact the West is facing accelerating diminishing returns.

    Basically two things are needed for Western civilization to maintain standards of living: Ever more debt which is now facing diminshing returns as the average citizen’s wages are declining and ever more production of energy. Innovations and efficiency savings can only go so far.

    Economic “growth” IS more debt/energy production. Money which we know is really debt could also be classed as indirect “energy” encouraging work.

    Post 2008, non of the problems have been solved, the can was kicked down the road and now in 2015 they’re worse, with even larger debt loads. Question remains, how long can this continue before something eventually gives and how and where will that “giving” manifest?

    We live in interesting times and kudos Gail on the call.

    #californiagroundzero

    • garand555 says:

      IMO, if they can save the system this time around as multiple bubbles deflate, it will be the last time. I’m highly skeptical that they can, but if they do, probably sometime around 2021 or 2022 would be as far as they could push things out. That’s assuming that they can figure out how to start “DRILL BABY DRILL!” back up and keep it going until shale production peaks. From what I’ve read, that’s the optimistic view of when shale production would peak, given the ability to drill like mad.

      IMO, when the bubbles from all of the QE and bailouts pop this time around, the decline is going to accelerate and not be pretty. I don’t think that they’re going to fire “DRILL BABY DRILL!” back up and I think that we’re going to have a true currency crisis. This time, there is a good chance that the 30 year bond bubble is going to pop. The only way to “fix” that is to inflate our way out of it, and history is pretty clear on what happens to currencies when governments take that route.

      There are just too many problems converging at once. Debt, oil below its break even cost, the drought in California, corruption, pollution, etc… We might be able to deal with one or two at a time, but if they all hit at once, forget about it. Stick a fork in us, because we’re done.

      • kesar says:

        When Mohamed El-Erian, long time head of the biggest bond trading fund Pimco says he’s assets are purely in cash, we should know the bust is around the corner. I still wonder how they will keep it going for another 5-7 years round and can’t figure it out. Central banks – indebted to the ceiling, the same businesses and consumers. Resetting the financial system this time will be very rough, I guess. There are many narratives about who will be drowning and who will be the last man standing. Interesting times.

        • Tolstoy's Degenerate Grandson says:

          Going to a cash position assumes that there will be some sort of recovery.

          If I were banking on a recovery I would most definitely be going to gold and silver. Perhaps that is what he is doing but not saying

          Unfortunately there is going to be no recovery so PM will likely be useless. Maybe one could line the walls of one’s doomsday fortress with gold to insulate against the nuclear storm that will be unleashed when the spent fuel ponds go sky high

    • You have pretty much “nailed the story.” The 2008 problems are still with us, and we haven’t solved them. The oil keeps becoming more expensive to extract, thanks to diminishing returns. There are all kinds of stories around regarding how wonderful low oil prices are, and how well the economy is doing, but they are not really correct.

      • Daniel Hood says:

        It’s all super crystal clear now.

        Reminds me of Newton’s 3rd Law: “For every action there is an equal and opposite re-action.”

        I have an analogy in my mind, the faith in the forces of “Innovation & Efficiency” over the hugely more powerful gravitational forces of lack of “Debt & Energy Production” are akin to using electricity to propel a rocket the (economy) attempting to leave earth’s gravitational pull, woefully, horribly inadequate. The rocket must have an equally powerful fuel source capable of propelling that rocket to a mighty speed of 11km per second to escape earth’s powerful gravity known as “escape velocity”.

        There is no way around N3L, period! Either the Fed’s QE4 (or equivalent) bailing out the sub-prime frackers & banks, or our rocket will not reach anywhere near the escape velocity needed, it wont even get off the ground.

        This is why I love physics, science is easier to follow than ideology, belief, delusions, wishful thinking, whims, prayers, wishes, subversion, lies and spin.

        Captain (USGovt): Scotty (Fed/Frackers/US military) we need more power!

        • Jan Steinman says:

          Captain (USGovt): Scotty (Fed/Frackers/US military) we need more power!

          “Scotty, beam me up — there is no intelligent life on this planet.”

          • Daniel Hood says:

            That would be Musk’s SpaceX 😉 civilization on Mars vision. He knows what’s coming down the pipeline and wants to get off the ship.

            In his words “civilizational insurance policy”

  16. Pingback: Putting The Real Story Of Energy And The Economy Together - Gail Tverberg - Progressive Radio Network

  17. Don Stewart says:

    Dear Gail and All
    I have two suggested reading materials for Finite Worlders and one movie to watch …doesn’t Finite Worlders sound better than Doomers?

    The first reading is a short essay by a guy who went into the woods to see what the woods could teach him:
    http://www.resilience.org/stories/2015-04-17/looking-for-some-answers

    The second reading is a new book Sapiens: A Brief History of Humankind. The author is Yuval Noah Harari. I would describe Harari as a scientifically inclined person of Jewish origins who isn’t religious in any conventional sense of the word.

    The movie is La Sapienza, currently playing in an art house near you. It’s about a beaten down architect who has lost his soul, who finds his soul again in Italy while looking at some magnificent architecture with an 18 year old companion who is not yet cynical. ‘Build a place where people can find the light’.

    There are so many cross connections between the article, the book, and the movie that I would have to write a book to explore all of them. Fortunately for you, I won’t attempt that here.

    Just a few tidbits from the Harari book. He makes the point that a Cognitive Revolution occurred some tens of thousands of years ago, which gave Homo Sapiens the ability to cooperate in large groups by giving them the ability to believe in abstractions. The maximum size of a group which can be maintained in a coherent state with simple individual to individual bonding is measured in scores. Perhaps a hundred to a hundred and fifty. But once Homo Sapiens developed the ability to believe in abstractions such as ‘our king, our country, our tribe, etc.’, hundreds and thousands of people could act with common goals. So the Neanderthals, with bigger brains than Homo Sapiens but no Cognitive Revolution, were easily defeated in battle by the sheer force of numbers that Homo Sapiens could bring to the battlefield and organize around a common goal.

    Harari tells us that, so far as science can tell, there is no purpose to it all. (Douglas Adams knew the purpose was 42, but couldn’t remember the question.) But Homo Sapiens needs and concocts stories giving purpose to our endeavors.

    Harari gives us an incisive look at religions. Our current religion is Humanism [which includes consumerism and progress]:
    ‘All humanists worship humanity, but they do not agree on its definition. Humanism has split into three rival sects that fight over the exact definition of ‘humanity’, just as rival Christian sects fought over the exact definition of God. Today, the most important humanist sect is liberal humanism, which believes that ‘humanity’ is a quality of individual humans, and that the liberty of the individual is therefore sacrosanct. According to liberals, the sacred nature of humanity resides within each and every individual Homo Sapiens. The inner core of individual humans gives meaning to the world, and is the source for all ethical and political authority. If we encounter an ethical or political dilemma, we should look inside and listen to our inner voice—the voice of humanity. The chief commandments of liberal humanism are meant to protect the liberty of this inner voice against intrusion or harm. These commandments are collectively known as ‘human rights’….

    Without recourse to eternal souls and a Creator God, it becomes embarrassingly difficult for liberals to explain what is so special about individual Sapiens. ..

    Another important sect is socialist humanism. Socialists believe that ‘humanity’ is collective rather than individualistic….According to socialists, inequality is the worst blasphemy against the sanctity of humanity, because it privileges peripheral qualities of humans over their universal essence….Like liberal humanists, socialist humanism is built on monotheistic foundations….’

    The third sect is Evolutionary Humanism. ‘Humanity is a mutable species. Humans might degenerate into subhumans or evolve into super humans. The supreme commandment is to protect humankind from degenerating into subhumans, and to encourage its evolution into super humans.’

    Harari has a good analysis of the way that Buddhism has been transformed in the West. Traditional Asian Buddhism (according to Harari):
    ‘According to Buddhism, the root of suffering is neither the feeling of pain nor of sadness nor even of meaninglessness. Rather, the real root of suffering is this never-ending and pointless pursuit of ephemeral feelings, which causes us to be in a constant state of tension, restlessness, and dissatisfaction.’

    Buddhism in the West has, of course, come to be about clever ways to make the good feelings of the Yoga Retreat last through the boring and frustrating week at work.

    Of particular interest to Finite Worlders will be his science based ruminations on happiness, particularly beginning at page 380. He takes apart the statistical studies which show, for example, that married people are happier than unmarried people. BUT, that doesn’t prove that an unhappy, unmarried person will become happier IF they marry. They may just be miserable as a couple and promptly divorce.

    On diabetes: ‘People who are diagnosed with …diabetes are usually depressed for a while, but if the illness does not get worse they adjust to their new condition and rate their happiness as highly as healthy people do.’ [My note: and so…offering a radical diet and exercise regime to diabetics who have adjusted to their state in order to cure the disease that no longer bothers them is probably a waste of time and money? Parallels with the resistance to climate science and the science of red meat, carnitine, gut bacteria, and cardiovascular disease?]

    Suppose we take a baseline measurement of happiness, for Lucy and for Jack. Lucy is hit by a bus and suffers multiple injuries and never recovers the natural use of her limbs. Jack wins a million dollars in the lottery the same day. Two years after the fateful day, we retest their happiness quotient…it is likely to be what it was before the fateful accident and the winning of the lottery.

    Modern Americans shower and change clothes every day. But medieval peasants wore the same, unwashed clothing for very long periods of time. The peasants don’t seem to have minded…they were content.

    I have frequently commented (sometimes stealing from Nate Hagens) on the importance of neurotransmitters and hormones. Here is Harari:
    ‘Our subjective well-being is not determined by external parameters such as salary, social relations or political rights. Rather, it is determined by a complex system of nerves, neurons, synapses and various biochemical substances such as serotonin, dopamine, and oxytocin….Unfortunately for all hopes of creating heaven on earth, our internal biochemical system seems to be programmed to keep happiness levels relatively constant.’ [Essay for extra points: relate the story of Lucy and Jack and the biological view of happiness to Peak Everything]

    You will also find some thought about finite resources, such as fossil fuels, and the possibility that humans may evolve into super-humans.

    There is much more in the book than I can hint at here. I highly recommend it.

    Don Stewart

    • Thanks for your thoughts. I think these versions of Humanism have spread almost world wide. Somehow, we can all save ourselves. Or progress will save us. We can read this in newspapers every day. It is the new world religion.

      At the same time, I saw a fair amount of religion in China, both Buddhism and Christianity. Beijing strongly discourages religion, but outlying areas seem to be more lax regarding religion. Religion seems to be tolerated if it is peaceful.

      In China, I saw most people wearing clothes for many days at a time. When people go on a trip, they therefore don’t need to take much of anything along. Food landing on clothing is only a minor problem–some wear the clothes a few more days, food stains and all.

      • Jan Steinman says:

        In China, I saw most people wearing clothes for many days at a time.

        Washing clothes also wears them out quicker. Detergents actually contain abrasives!

        I change clothes once or twice a week. I have a set of “work clothes” that I wear most of the time, and a set of “town clothes” that I put on for “tradin’ and visitin’.”

        When I can’t stand the work clothes any more, I clean them and start working in my previous town clothes, and then get out a fresh clean set for tradin’ and visitin’.

        One thing I learned from living in Switzerland is the power of fresh air. The Swiss hang their not-quite-dirty clothes out on the balcon, where they air out and smell fairly fresh. Many Swiss alternate outfits that way, wearing one one day while the other is airing out.

        • garand555 says:

          If I’m not going out in public, I generally don’t change clothes every day either, unless I get them filthy. As you say, washing them wears them out faster.

        • Yep, good and proven tip for cotton and wool, but it doesn’t work with cheap sport/workout PES fabrics, which stink utmost horribly even before you finish activities, the best solution there is to immediately wash off the sweat (human salts and agressive bacterial colonies) from fabrics briefly in cold water (could be even lake on your way back etc.) and then hang to dry on the balcony/frontyard, machine wash after few more cycles. Another solution is to buy non smelly yet very expensive multilayered modern sports fabrics, which I don’t endorse lolz.

          • Jan Steinman says:

            Yep, good and proven tip for cotton and wool, but it doesn’t work with cheap sport/workout PES fabrics, which stink utmost horribly

            Woa, do people still buy that crap?

            I haven’t bought any synthetic fabric clothing in decades!

    • edpell says:

      Don, I believe that happiness like the sense of vision is not linear but logarithmic in response. So people stay in a near optimum operating condition regardless of how good or bad things get. This makes sense to me you do not want to be overly blissed-out and miss attending to a danger nor so depressed you are not functioning. A little up and little down as a signalling mechanism is of value but not more.

      • Don Stewart says:

        Dear edpell
        Another aspect is that we very rapidly acclimate to whatever our situation is.

        The first bite of apple pie is wonderful, the second good, the 50th boring. Part of the art of industrial food is activating the addiction response to try to keep people eating.

        No shower is as good as the one you take after a week in the woods. And it may be from a suspended bucket with holes cut in the bottom.

        Don Stewart

        • Don Stewart says:

          edpell
          Also with regard to acclimation, our senses work on change. We are wired to notice changes, and a static scene quickly fades. A psychologist trained people in nursing homes (where nothing much changes) to pay attention to minute changes in their environment. The results were quite positive. The difficulty is always ‘reversion to the norm’. People gradually forget to pay attention.

          Don Stewart

          • garand555 says:

            I wonder if that comes from our hunter and gatherer days. It is amazing at how many people can stare right at a deer in the woods and not see it until it moves. That movement is a form of change. If you’re really good, you notice a minute difference in the color of something on the deer vs the surrounding woods and see it before it moves.

        • garand555 says:

          The best shower I took was up in the woods. A branch had hit me in the eye, causing a painful but not serious minor scratch on my eye. All of the accumulated dust and grime irritated it that much more. Ya wet yourself, shut the water off, soap down, then rinse off. My eye felt much better that night.

          • edpell says:

            Garand555, things that do not move are less likely to eat us. Things that move mmay run over and eat us. This dates back to the development of eyes, see the book “In the blink of an eye”.

  18. “Imagine living in a country where having the freedom to cultivate your own land, tax-free and without government interference, is not only common but also encouraged for the purpose of promoting individual sovereignty and strong, healthy communities. Now imagine that in this same country, nearly all of your neighbors also cultivate their own land as part of a vast network of decentralized, self-sustaining, independent “eco-villages” that produce more than enough food to feed the entire country.

    You might be thinking it sounds like some kind of utopian interpretation of historical America, but the country actually being described here is modern-day Russia. It turns out that Russia’s current agricultural model is one that thrives as a result of the millions of small-scale, family-owned and -operated, organically-cultivated farms that together produce the vast majority of the food consumed throughout the country.

    Do Russians have more food freedom and independence than Americans?

    The answer can be seen in the unsustainable, chemical-dependent, industrialized agriculture system that dominates the American landscape today, and in Russia’s agricultural system, which is not technically a system at all, but is run by the people and for the people. Thanks to government policies that actually encourage autonomous family farming, rather than cater to the greed of chemical and biotechnology companies like they do in the United States, the vast majority of Russians are able and willing to grow their own food on privately-owned family plots known as “dachas.”

    The Bovine, Russia’s Private Garden Plot Act, which was signed into law back in 2003,entitles every Russian citizen to a private plot of land, free of charge, ranging in size from 2.2 acres to 6.8 acres. Each plot can be used for growing food, or for simply vacationing or relaxing, and the government has agreed not to tax this land. And the result of this effort has been phenomenal, as Russian families collectively grow practically all the food they need.

    “Essentially, what Russian gardeners do is demonstrate that gardeners can feed the world, and you do not need any GMOs, industrial farms, or any other technological gimmicks to guarantee everybody’s got enough food to eat,” writes Leonid Sharashkin, editor of the English version of the The Ringing Cedars series, a book collection that explains the history behind this effort to reconnect people with the earth and nature.

    Most food in Russia comes from backyard gardens.

    Back in 1999, it was estimated that 35 million small family plots throughout Russia, operated by 105 million people, or 71 percent of the Russian population, were producing about 50 percent of the nation’s milk supply, 60 percent of its meat supply, 87 percent of its berry and fruit supply, 77 percent of its vegetable supply, and an astounding 92 percent of its potato supply. The average Russian citizen, in other words, is fully empowered under this model to grow his or her own food, and meet the needs of their family and local community.

    “Bear in mind that Russia only has 110 days of growing season per year – so in the U.S., for example, gardeners’ output could be substantially greater. Today; however, the area taken up by lawns in the U.S. is two times greater than that of Russia’s gardens – and it produces nothing but a multi-billion-dollar lawn care industry.”

    The backyard gardening model is so effective throughout Russia that total output represents more than 50 percent of the nation’s entire agricultural output. Based on 2004 figures, the collective value of all the backyard produce grown in Russia is $14 billion, or 2.3 percent of Russia’s gross domestic product (GDP) – and this number will only continue to increase as more and more Russians join the eco-village movement.”

    http://russia-insider.com/en/russias-small-scale-organic-agriculture-model-may-hold-key-feeding-world/5669

    • This post deserves a bit of clarification, most of those garden dacha plots are basically out of the city small gardening/weekend cottage designated areas, usually near railway/tram link. Perhaps it was inspired by similar yet smaller thing across southern Scandinavia/Baltics. This is no way comparable to U.S. front/backyard lawns potential in terms of possbile output given the different scale of acreage and access (no public transport).

      Also there is huge industrial agribiz in grains, but what Russia needs are veggies, milk products and meat, that was all largely imported from France/DE and the EU before the sanctions, now going from even larger distance from S. America. It’s true the potential for agriculture in Russia is beyond gargantuan given the acreages and water supply, permaculture can deal also with colder climates. The problem imho is insufficient number of people for the size of the country, because as long as the overall industrial model holds, mother Russia simply needs every pair of hands and brains to work on fossil energy infrastructure, military industries etc. Should there be reversal and or saturation point in this trend (peak industrial madness), there will be suddenly more hands available for agriculture. In the same vein, now it’s great time to relocate to Russia on these very grounds, e.g. as permaculture instructor, perhaps your grand/kids will make it into new small scale country nobility, much better prospects than slowly decay in the post PO islamic slums of Paris and London.

    • Thanks! I saw some of these gardens when I visited Russia in 2012. They are indeed everywhere. They use manure to fertilize the gardens, from I saw.

      The fact that they have public transport for people to get to these gardens helps as well.

    • Rodster says:

      “Most food in Russia comes from backyard gardens.”

      That was one solution Michael Ruppert offered in his movie ‘Collapse’. The Cuban Govt did the same thing according to him where citizens were encouraged to grow their own food and to be less dependent on the Govt. It used to be the same way here in the US many decades ago but farming has been gobbled up by behemoth Agri-Corporations who get their seeds from players like Monsanto.

    • Jan Steinman says:

      Thanks for posting that. I saw another presentation that showed that just 18% of the land was producing 54% of the food in Russia — from the “dacha gardens.”

  19. David Gower says:

    Welcome back from China Gail. Your observations are greatly appreciated.

    One thing I have observed is that there is a lot of “interference” or “noise” in most “markets” that is confusing many supply/demand/debt economic relationships. Cali is still dumping some fresh water in the ocean for noble causes. Cali has huge energy resources but due to “popular opinion” by voters goes untouched. Desalinization takes a lot of energy. Two years ago the drought also included much of the midwest yet water was pumped to grow ethanol grain. Some grain was diverted from cattle due to cost and massive decrease in herds resulted. It takes more than a “growing season” to build up the harvest of beef. The Baker Institute here in Houston blames the U.S. ethanol grain mandate for driving up costs word wide as a partial cause of the Arab Spring conflicts. The average age of automobiles in the U.S. is 12 years not because we like driving old inefficient cars but because many people can’t afford new cars. Many people can’t afford them because their wages have been reduced or are non-existent due to the latest financial wreck. They can’t afford them because increasing mileage requirements cause for more expensive costs to produce cars. We talk about this country’s oil or energy or that country’s oil but a sovereign’s oil is a lot different (market wise) than Exxon’s oil or Texas’s oil or “Shell’s” oil in Alaska or Kentucky’s coal. And who was it that built Hoover Dam and who get’s the water and who gets the electricity and is there a revenue stream to the constructor since the “debt” must surely be paid off by now? I would like Gail to address sometime and let us discuss how some interference or noise in the markets is affecting our ability to maximize our use of finite resources and the debt.

    • I agree that mandates of various kinds interfere with how “markets” would work. These are often based on models of what an investment of such and such in whatever favored investment will help in some desirable way. Of course, the models are put together without real world experience of how things work, and favor the outcome of those putting together the models.

      Another factor indirectly affecting markets is debt obligations and requirements of lenders. Those extracting oil will continue pumping, if by doing so they can add at all to cash flow. There now are derivatives as well that isolate the seller of a product from today’s market price.

      Thanks for the suggestion.

  20. Kulm says:

    I am sorry that I am raining in the parade, but I find this statement hard to refute.

    >reading the same doom and gloom crap about how the fed has ‘painted itself into a corner’…and yet the fed always finds a way to defy the doomsayers, and stocks and bonds keep going up. If you bet against the smart policy makers, the US consumer, high-IQ, technology, and web 2.0, you will fail. That’s a guarantee. (snip) you bet against the best and the brightest, and you failed – predictably so. You bet against America and you lost, again.

    Although the scarcity is a problem, I do think that the current system will probably extricate itself.

    • garand555 says:

      Yet, every time you ask somebody HOW it will extricate itself, you get non-workable answers. We are in the midst of a collapse and have been for 15 years. You think that the (Western) Roman Empire went away overnight? No, it didn’t. You think that when the collapse began, Romans knew the Empire was in the stages of collapse? No, most of the didn’t, else their behavior would have been different. This is a process, not an event. It is a process that will be punctuated by events.

      No, what we’re going to get is the Fed and the government defying gravity for as long as they can – longer than most think that they can – then, the Wile E Coyote moment where he looks down and realizes “Oh Shit! I’m not on solid ground.”

      • Plus also consider attempted reforms, which delayed the collapse a bit and obviously secured nice lifestyles of elites for the moment, think about emperor Diocletian and da boyz.

        Given the current advanced situation this seems rather impossible now in the US, so watch for other phenomenon like allies jumping the ship, e.g. UK joined as founding member the Chinese new financial club and pushed other Europeans to follow suit.

        Looking around one should came to the similar observational conclusion, the world is evidently returning into truely multilateral, more chaotic setting, several distinct blocks of industrial, economic and military power reshuffling all the stability and dogmas of past several hundred years.

        This fluent situation could nicely obfuscate the realities of near collapse situation for say next 2-3 decades, so 2030-2050 will be a different world.

      • Rodster says:

        Good summation of the collapse process. When the experts chime in the usual response is….”well I thought it would have collapsed by now. I had no idea they could keep it together this long”. As part of keep this whole system together functioning for another day, Zero Hedge posted an article yesterday where a top Banking official is once again calling for the elimination of “cash transactions” above $5. They want to control the money while charging you to park it in the bank while making sure you spend it as fast as possible to keep consumption up.

        Eventually the whole thing will blow but i’ve got to at least give them credit for their creativity in keep this whole thing afloat.

        • garand555 says:

          Eliminating cash would likely be violently problematic. It would hasten the decline.

          • It depends. I doubt it now.
            Sooner or later your average tyrrant and TPTBer will reach to his trusty toolbox and grab a nice “capital controls” hammer. Think it through properly, ant people don’t need cash anymore, everything especially larger transactions such as houses, cars, larger appliances are on digital credit. During past decades soft version of gradualist removal of cash from the system has taken place globally. Nowadays there are some nasty outlier examples like France, which bans cash transactions in mere thousands of EUR, sooner or later other EURzone members would follow suit. There is virtually no valid oposition to these schemes, and why even schould be, people are poor to bother or heavily invested in the digital system and diversified. So the effect is more towards delaying the moment of crash outburst, but hastening the event of crash itself as it occurs at some point in the future.

            • garand555 says:

              Poor people who cannot get bank accounts and people in black markets would be the most affected. Think about what it would do to the drug trade on the street level. Large movements of drugs could be handled as many of the banks are more than willing to launder money for a fee, but it will have an effect on the bottom of the pyramid of the distribution network. I know, you can say “drugs are bad,” but the fact is, it is a part of our unofficial economy. A large part. It would begin by agitating a bunch of poor people, junkies and drug dealers. These are people who will take action. Probably not rational and targeted action, but they will cause problems none the less.

            • sirlansolot says:

              Oh yes they would love to do it. Would have done it long ago except for one little problem. Being the hardest imaginary fiat around many trillions of dollars under mattresses around the world from Bangladesh to Brazil. If they ban cash those dollars come flooding home into the US thats a problem. Cash will be continue to be allowed because and only because of this but with other controls to limit its use.

    • QE and very low interest rates are a great help to stock markets. When debt doesn’t cost much, and bonds are yielding practically nothing, why not borrow money and invest in the stock market? This situation has especially benefitted producers of oil from shale. Stock markets around the world are up in recent years.

  21. Miguel says:

    Greetings

    Just an observation, oil prices seem to be rising again or it has been like this for the las 15 days and I have the feeling that they will stabilize at somewhere between $60 and $70 per barrel that is
    WTI and Brent oil.
    My belif is that a group is pushing the prices up in an attempt to recover a price that doesn´t hurt to much the oil industry… Although I do not believe they will be able to keep this for long before it goes down or up again.

    Excelent post as always

    Mrs.Tverberg

    • I expect that the effect of slowing US oil production and layoffs related to low oil and other commodity prices are going to take a while to work their way through the system. We will probably see ups and downs, but I don’t think that the “up” portion will be very close to $100 barrel or last very long.

  22. Don Stewart says:

    Dear Gail and All
    After claiming that I don’t wish to argue about the value of the vitamins and minerals in red meat, I began to feel a little guilty because I do know something which may interest some of you.

    http://www.nhlbi.nih.gov/about/directorscorner/messages/behind-bench-dr-stanley-hazen-cleveland-clinic-and-lerner-research

    This series of studies is, I think, the smoking gun connecting red meat and cardiovascular disease.

    Don Stewart
    PS I still don’t want to argue about it. You can examine the evidence for yourself.

    • Tolstoy's Degenerate Grandson says:

      I find this ‘I want to live forever’ meme amusing.

      Don’t eat this don’t eat that take this pill take that super food blah blah blah.

      Why not just keep it simple. Eat meat in moderation, eat fruit and vegetables in moderation, eat nuts and drink milk in moderation. Exercise.

      And remember, you will not live forever no matter what you do.

      • Rodster says:

        Moderation and balance is the key to everything. My friends mom went fiendish on vitamins so she could live healthier and prolong her life. She went so overboard she died of anorexia. The grim reaper eventually catches up with us all and the way this world is headed that MAY NOT be such a bad thing.

    • Jarvis says:

      I have my own copy of “Eat Your Greens” and I’m growing lots of them BUT if this study is correct cardiovascular disease must have been rampant in our first nations people especially buffalo hunters wouldn’t you think? The fact is those who ate massive amount of wild meat didn’t know what a heart attack was. A Doctor who spent 25 years among the Inuit people never saw one incident of cardiovascular disease (don’t know how to post links) I’m sure you must have heard of Dr. Weston Price? If not it is available for free at the Weston Price foundation. In the 1920’s Dr. Price travelled to every continent to examine the remaining hunter / gatherers before they resorted to a western diet and his findings are having a nutritional science today.

  23. Don Stewart says:

    Jan Steinman
    Also, just for the record, neither do I think that shipping fresh lettuce from Salinas, CA to NYC is rational. It makes no sense now, and will probably be complete nonsense in the near future.

    Leafy greens should be grown in a kitchen garden to maximize freshness, or at least bought from a nearby small farmer.

    Don Stewart

  24. Kulm says:

    This is how the world really works.

    http://greyenlightenment.com/the-fed-may-never-raise-interest-rates-again/

    Does not matter if the energy crisis hits – the population will contract and those who have something will not miss them.

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  28. Brunswickian says:

    It appears the immediate threat is global thermonuclear war as NATO is preparing to go into the Ukraine. Apparently, the situation is so dire that war with Russia is viewed as an acceptable risk if not the desired outcome.

    • InAlaska says:

      Matt McFarland of the Washington Post rates global thermonuclear war as having a .005% chance of occurring: http://www.washingtonpost.com/blogs/innovations/wp/2015/02/20/the-12-threats-to-human-civilization-ranked/

      • sirlansolot says:

        “a .005% chance of occurring” Is that .005% per every minute or every hour?

        • Tolstoy's Degenerate Grandson says:

          I wonder what formula he used to calculate this. Probably similar to one of those economists use to prove that infinite growth is possible on a finite world

    • I hoped nuclear war could have been avoided with a collapse. Unfortunately, if Tolstoy’s Degenerate Grandson is right, we will have the same result with a collapse. A kind of unintended “nuclear war”.

      So it seems we’re now getting both a collapse and a nuclear war whatever we do. If Tolstoy’s Degenerate Grandson is right, there cannot be any survivors however well trained we are in survival skills. Even you know every edible plant and every stone age technology, you will die anyway.

      There is really no escape. Nowhere to hide. Nowhere to run.

      • SymbolikGirl says:

        A friend of mine was part of this project:

        http://www.westinghousenuclear.com/Portals/0/operating%20plant%20services/outage%20services/refueling%20services/NS-FS-0133%20Emergency%20Spent%20Fuel%20Cooling.pdf

        which is basically a passive fuel pond system that uses the heat generated by the cooling fuel to circulate the water. This is not a ‘silver bullet’ in preventing a fuel pool fire epidemic in the event of a fast-crash of all society as it is only currently installed at a few sites in North America and it also requires ‘topping-up’ of the makeup water as well as supervision and maintenance. If the world manages to hold on for another decade there may be systems that could be put into place that could prevent SFP fires in the event of a mass-grid-down situation but this is all speculation. The good news of the SFP dilemma is that only a small minority of the fuel rods in SFP pools would begin to burn (well the Zinc cladding anyways) from their own waste heat, the bad news is that this would most likely spread as many sfp’s are packed pretty full. I will point to one bright spot in all of this in that I know and work with a lot of engineers in the nuclear industry (I work in Automation and we work in Oil, gas and nuclear systems) and SFP’s since Fukashima are on a lot of people’s minds in the nuclear industry and the hopeful girl in me wants to think that this could lead to SFP solutions in the future, if we have enough time which is always the kicker.

  29. The side effects from nuclear waste awaiting us with the ongoing collapse:

    “The problem is if the spent fuel gets too close, they will produce a fission reaction and explode with a force much larger than any fission bomb given the total amount of fuel on the site. All the fuel in all the reactors and all the storage pools at this site (1760 tons of Uranium per slide #4) would be consumed in such a mega-explosion.

    In comparison, Fat Man and Little Boy weapons dropped on Hiroshima and Nagasaki contained less than a hundred pounds each of fissile material – See more at: http://www.dcbureau.org/20110314781/natural-resources-news-service/fission-criticality-in-cooling-ponds-threaten-explosion-at-fukushima.html

    A typical 1 GWe PWR core contains about 80 t fuels. Each year about one third of the core fuel is discharged into the pool. A pool with 15 year storage capacity will hold about 400 t spent fuel.

    To estimate the Cs-137 inventory in the pool, for example, we assume the Cs137 inventory at shutdown is about 0.1 MCi/tU with a burn-up of 50,000 MWt-day/tU, thus the pool with 400 t of ten year old SNF would hold about 33 MCi Cs-137. [7]

    Assuming a 50-100% Cs137 release during a spent fuel fire, [8] the consequence of the Cs-137 exceed those of the Chernobyl accident 8-17 times (2MCi release from Chernobyl). Based on the wedge model, the contaminated land areas can be estimated. [9] For example, for a scenario of a 50% Cs-137 release from a 400 t SNF pool, about 95,000 km² (as far as 1,350 km) would be contaminated above 15 Ci/km² (as compared to 10,000 km² contaminated area above 15 Ci/km² at Chernobyl).

    http://belfercenter.hks.harvard.edu/publication/364/radiological_terrorism.html

    We have thousands of these ponds around the world. It really does not matter if we had 1 or 100,000 more spent fuel rods to the ponds.

    Because when the existing storage systems fail when we collapse back to a primitive state, we are all dead.

    Now you have you answers at to a) why the PTB are doing everything possible to kick the can and b) the PTB are doing absolutely nothing to prepare for economic collapse.”

    http://ourfiniteworld.com/2015/04/03/gail-in-china-report-3/#comment-55815

    • Tolstoy's Degenerate Grandson says:

      That article really is the last word in terms of the finite world discussion.

      There is absolutely no way we will be able to manage these monstrosities post collapse.

      Perhaps that is a good thing because we will be put out of the horrific misery that will spread across the world within days of the collapse.

    • Jan Steinman says:

      I do not at all wish to come across as someone in favour of nuclear power — quite the contrary!

      But a large nuclear explosion at a waste storage facility is simply not possible. If some of the fuel could form a critical mass, at worst, you’d have a “fizzle yield” of perhaps a few tens of kilos of dynamite.

      Not that this wouldn’t be a disaster on its own! It would disperse radioactive contamination over a large area!

      As proof of this, consider the “corium” that has burned its way through the containment at Fukushima #1. This non-spent fuel did not form a critical mass and did not explode, and yet it is much more concentrated than the spent fuel rods in cooling ponds.

      Again, I don’t mean to minimize the risk we suffer from nuclear power in a world with an unstable grid, but the risk is not from “mega-explosions.” Too bad, because if that were a credible risk, people would do something. Check out the Dan Gilbert talk I posted above: people are more concerned about a few thousands of deaths from the immediate effects of a “mega-explosion” than they are over the million cancer deaths predicted of Chernobyl.

      • Tolstoy's Degenerate Grandson says:

        Here’s the contact info of the author of that paper. Feel free to get in touch him to inform him that he is wrong.

        Hui Zhang

        Senior Research Associate, Project on Managing the Atom

        Contact:
        Telephone: 617-495-5710
        Fax: 617-496-0606
        Email: Hui_Zhang@harvard.edu

        Experience

        Hui Zhang is a Senior Research Associate at the Project on Managing the Atom in the Belfer Center for Science and International Affairs at Harvard University’s John F. Kennedy School of Government. Hui Zhang is leading a research initiative on China’s nuclear policies for the Project on Managing the Atom in the Kennedy School of Government. His researches include verification techniques of nuclear arms control, the control of fissile material, nuclear terrorism, China’s nuclear policy, nuclear safeguards and non-proliferation, policy of nuclear fuel cycle and reprocessing.

        Before coming to the Kennedy School in September 1999, he was a post-doctoral fellow at the Center for Energy and Environmental Studies, Princeton University from 1997-1999, and in 1998-1999, he received a post-doctoral fellowship from the Social Science Research Council, a MacArthur Foundation program on International Peace and Security. From 2002-2003, he received a grant for Research and Writing from the John D. and Catherine T. MacArthur Foundation. Hui Zhang received his Ph.D. in nuclear physics in Beijing in 1996.

        Dr. Zhang is the author of several technical reports and book chapters, and dozens of articles in academic journals and the print media including Science and Global Security, Arms Control Today, Bulletin of Atomic Scientist, Disarmament Diplomacy, Disarmament Forum, the Non-proliferation Review, Washington Quarterly, Journal of Nuclear Materials Management , INESAP, and China Security. Dr. Zhang gives many oral presentations and talks in international conferences and organizations.

        • Eivind Berge says: http://eivindberge.blogspot.no/2015/03/peak-oil-also-means-peak-renewables.html?showComment=1429174849814#c1848658842651452402

          “Greer has also addressed this and he doesn’t believe nuclear waste or abandoned power plants pose anything like an extinction-level risk. People will suffer and die from nuclear disasters, but these problems will be fairly localized. I am not particularly worried about them here in Norway, at least. What I am worried about is the proverbial dome of Leonardo sticks collapsing, which will distribute collapse to the entire planet with no safe havens.”

          • Tolstoy's Degenerate Grandson says:

            I feel so much better now that ‘Greer’ said this is not a problem.

            I will just ignore the findings of the supposed expert on nuclear energy who was asked by the US government to advise what the dangers of an attack on a spent fuel facility posed. And he determined that if this were to happen the result would be thousands of times greater than that of the Hiroshima bomb because the amount of fissionable materials involved is exponentially greater.

            I really don’t care that Greer is not an expert. That he has not a clue. That he has probably never seen this research. That he has just decided for some reason that these ponds are not a problem.

            Because it makes me feel better to dismiss the Harvard study and go with Greer.

            I heard the Charlie Brown and Elmer Fudd and Mr Magoo also said this is not a problem so the numbers are on my side.

        • Kulm says:

          He has the right credentials. It doesn’t really matter whether he is right or wrong. Everyone will listen to someone from Kennedy school.

          • Tolstoy's Degenerate Grandson says:

            I would question his conclusions if:

            1. Someone could demonstrate that he has an agenda that biased his findings.
            2. Someone could provide a dissenting research paper from someone with similar expertise in this field.

            I will not question his conclusions because someone on a blog states they disagree with his conclusions.

            As we are all aware, the Fukushima situation is far from over. Day after day, month after month, year after year, the pumps blast tonnes of water onto the melted cores of those reactors.

            If they are not a problem then why not just leave them to lie there in the ground and do their thing?

            Very obviously that is not an option because the water stops being poured on them something surely very nightmarish will result.

    • “Because when the existing storage systems fail when we collapse back to a primitive state, we are all dead.”

      It would only take ~10 years to decomission reactors, cycle fuel into spent fuel ponds, and dry cask all the waste. The good news is, we’ll probably get to find out what happens soon enough.

      • Tolstoy's Degenerate Grandson says:

        If that is true then why don’t we just dry cask spend nuclear fuel the moment it comes out of the reactor?

        Here we another example of cognitive dissonance. When an outcome is unthinkable all logic and common sense goes out the window.

        Just waiting for someone to suggest heaving the fuel rods into the ocean. Or perhaps we can just jettison them into outer space.

        • “If that is true then why don’t we just dry cask spend nuclear fuel the moment it comes out of the reactor?”

          Because it is too hot (both heat and radiation) and needs 3, 5 or 10 years to cool down, depending on who you ask.

          The only problem that arises from the fuel rods is when there are too many, too close together. When you do not have a long term storage plan, that becomes inevitable. Originally, the spent fuel ponds were passively cooled; at today’s densities, they need constant circulation.

          If you took a single rack of rods, and put it into its own pool of water, it would be quite safe. I wouldn’t mind having one, as an abundant heat source. Run some greenhouses in winter for a few decades without needing to burn natural gas.

          • Tolstoy's Degenerate Grandson says:

            This is a joke, right?

            “If you took a single rack of rods, and put it into its own pool of water, it would be quite safe. I wouldn’t mind having one, as an abundant heat source. Run some greenhouses in winter for a few decades without needing to burn natural gas.”

        • InAlaska says:

          Paul,
          They don’t dry cask as soon as the fuel comes out of the reactor because its super expensive and the utilities that run the reactors don’t want to pay for it, NOT because it doesn’t work.

          • Tolstoy's Degenerate Grandson says:

            Unfortunately that is not correct – you cannot shift spent fuel directly to dry casks. (It would be useful to support an opinion with facts when posting)
            :
            Spent Fuel Storage in Pools and Dry Casks Key Points and Questions & Answers

            All U.S. nuclear power plants store spent nuclear fuel in “spent fuel pools.” These pools are robust constructions made of reinforced concrete several feet thick, with steel liners. The water is typically about 40 feet deep, and serves both to shield the radiation and cool the rods.

            As the pools near capacity, utilities move some of the older spent fuel into “dry cask” storage. Fuel is typically cooled at least 5 years in the pool before transfer to cask.

            http://www.nrc.gov/waste/spent-fuel-storage/faqs.html

      • richard says:

        I viewed some of the presentations by Indian Engineers, and while they are proposing 300MW of power from – I think – a thorium-uranium-plutonium reactor in 2016, there was a lack of caution that I found worrying.
        As you will see from this link other hats are in the ring, so to speak, promising infinite growth at zero cost …
        http://www.itheo.org/articles/copenhagen-atomics-thorium-molten-salt-reactor

  30. Tolstoy's Degenerate Grandson 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. http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/

    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 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

    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. http://www.ft.com/intl/cms/s/0/ec3bb622-c794-11e2-9c52-00144feab7de.html#axzz3T4sTXDB5

    Except for the conventional producers, the entire industry is insolvent.

    The fat lady is warming up

    • It is amazing how much of this story the main stream media is overlooking.

    • bwhill says:

      Tolstoy’s Degenerate Grandson said:

      “Except for the conventional producers, the entire industry is insolvent.”

      Our analysis, which uses an entirely different methodology than what the quotes above employed, put the “average” production cost in 2012 at $106/barrel. With the present price structure in place, the only producers that will be a able to continue production very far into the future will be some of the very old, and depleted Giants. We believe that the coming bankruptcy of much of the oil industry over the next five years will precipitate the next world financial crisis. The production portion of petroleum presently accounts for 19% of world GDP. The loss of a third of it would most likely collapse the present monetary/ financial system.

      http://www.thehillsgroup.org/depletion2_022.htm

      Petroleum is a long term price decline phase as a result its ongoing depletion. This is a natural process that is experienced by all extractive resources. Because the upcoming crisis will result from an interruption in energy flows, manipulation of monetary policy will be completely ineffective for alleviating it.

      http://www.thehillsgroup.org

      • Tolstoy's Degenerate Grandson says:

        I assume that based on this you would agree, the moment of peak oil production was recently reached?

        Actually I understand that the real peak was reached in 2005 when conventional old peaked. What’s come since then has really been financial gimmicks to revive the industry.

        But for arguments sake, do we call 2015 the year absolute peak oil hit?

        • Don Stewart says:

          Dear TDG and BW Hill
          If I understand the graphs correctly. Click through to the charts and look at the one labeled The Price of Petroleum. Look at the cost curve down at the bottom, rapidly ascending as time goes on. The look at the green dotted curve, which is the value to the end user of the oil. The ‘surplus’ to society from using oil is the difference between the green curve and the cost curve. That appears to have peaked around 2000. We have now passed the point at which petroleum is worth what it costs to produce.

          So, while my usage is unconventional, I would say that petroleum peaked around 2000, 15 years ago. (According to BW Hill’s graphs.) Another way to get at the phenomenon would be to try to look at Net Energy. I understand Colin Campbell has made an estimate of Net Energy…but I haven’t seen it or heard anyone refer to it.

          Don Stewart

  31. kulm says:

    I think human population will adjust (read: decrease) to meet the scarcity.

  32. Tolstoy's Degenerate Grandson says:

    China’s True Economic Growth Rate: 1.6%

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/20150311_china5_0.jpg

    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/04/20150414_china4_0.jpg

    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/04/20150414_china3_0.jpg

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/20150311_china6_0.jpg

    More http://www.zerohedge.com/news/2015-04-15/chinas-true-economic-growth-rate-16

    China’s exports unexpectedly slumped in March, eroding the outlook for one of the economy’s better performing areas in recent months.

    Overseas shipments fell 14.6 percent last month from a year earlier in yuan value, the customs administration said in Beijing on Monday. That compared with the median estimate for an 8.2 percent rise in a Bloomberg News survey of analysts. Imports slid 12.3 percent, leaving a trade surplus of 18.16 billion yuan ($3 billion).

    “Consumption is weak, investment is decelerating, and now exports have come in as weaker-than-expected,” said Liu Xuezhi, an economist with Bank of Communications Co. in Shanghai. “Downward pressure on economic growth is increasing, making it more urgent for the government to start rolling out more pro-growth policies.”

    http://www.bloomberg.com/news/articles/2015-04-13/china-s-export-engine-loses-steam-adding-to-slowdown-pressures

    I sense we are beginning to push on a string now. And it won’t matter how much money the central banks ram against the string, it will not move.

    • gerryhiles says:

      Agreed and I agree with you in many contexts, but you and I have little chance of influencing the die-hard deniers like Jan, who believes that having a few goats will save her/the planet.

      It is somewhat amazing that some who comment on this blog fail to realize that we live on a finite planet and that there is no alternative to easy oil …well goats FFS.

      Jan may be lucky to have a few acres on which to run a few goats, but I knew someone like her back in the 1970s and it was a disaster, because she failed to realize how dependent she was on “the system as a whole”, which is now failing much more than during the 1970s.

      • There are two possibilities: either the world will end and everyone will die, regardless of preparation, or not.

        If you believe one of those two choices, and you are correct, good for you. But what if you’re wrong?

        If you bet the world is going to end, and you are wrong, then you will not be prepared. If you prepare, but the world does end, what do you really lose?

        • Jarvis says:

          great response Matthew, either you’re dead or you’re not. In case I’m not I’ll need a few quality hand tools to help me carry on. I’ve got the solar system that might last a decade or so that help me and my family transition to a simpler life. I have infinite water, fuel and a remote enough location what’s the harm in trying? I’ll trade Jan some firewood for a goat!

        • Tolstoy's Degenerate Grandson says:

          If it doesn’t end and you survive, you will likely wish you hadn’t

      • Glenn Stehle says:

        gerryhiles said: “…she failed to realize how dependent she was on ‘the system as a whole’, which is now failing much more than during the 1970s.”

        I believe there do exist people who are not very dependent on “the system as a whole.” They live in remote areas of “developing” countries like Brazil, India, or Mexico.

        These people, in my opinion, are the most likely to survive collapse. That said, however, I have no desire to live the way they do. I very much enjoy all the luxuries and indulgencies which modern industrial society provides.

        I do agree with you, however, that Jan is probably not one of them. She is more of a romantic, cut from the same cloth as folks like Emerson, Thoreau and Whitman. Self-reliant primitivism is the intended message, but not the truth of her escape. I doubt Jan would enjoy living a truly primitive lifestyle, any more than I would.

        And on top of this, in almost every corner of the world — Brazil, India, Mexico — there is an ongoing effort to drive these people from their land, and if they don’t leave “peacefully” to exterminate them. This is what we call “development” or “progress.” Probably no one has written more passionately about this than Aruhdhati Roy:

        “DEMOCRACY’S FAILING LIGHT”
        http://www.literaturfestival.com/intern/reden/arundhati_roy_engl

      • Jan Steinman says:

        you and I have little chance of influencing the die-hard deniers like Jan, who believes that having a few goats will save her/the planet.

        Please stop making stuff up about me. You can’t even get the most basic fact straight. You know nothing of me. Stop making stuff up.

      • Tolstoy's Degenerate Grandson says:

        Unless someone figures out to manage nuclear fuel ponds in a collapsed world that will not be able to supply spare parts or energy to the complicated processes required to control these installations, you can have all the goats and tools and fruit trees you want.

        You will be eating and drinking radioactive particles. And you are going to die from poisoning or some from of cancer.

        Of course there are also the issues of starvation, violence and epidemics of disease that you will need to deal with. There will be at best rudimentary medical care, no medicines, no police protection.

        It may sound romantic to return to Walden. It will be more like The Road.

        • “Unless someone figures out to manage nuclear fuel ponds in a collapsed world that will not be able to supply spare parts or energy to the complicated processes required to control these installations, you can have all the goats and tools and fruit trees you want.”

          That’s probably not going to happen. Either the fuel is spread out into more ponds, or dry casked, or they probably go up.

          “It may sound romantic to return to Walden. It will be more like The Road.”

          Maybe for a couple years, but some form of warlords or fuedalism will probably arise pretty quickly once the mass die-off happens.

    • I agree–things are not going well in China. Growth is most likely far under 7.0% per year.

      • Tolstoy's Degenerate Grandson says:

        There are other dots to connect that support this including the fact that iron and copper prices have collapsed.

        China was the main driver of those commodities which they were using to build ghost towns and other infrastructure that sits wasting across the country.

        There is an epic insolvency problem in China as there are is no ROI on most of these projects.

        You can only build so many ghost towns before you blow the entire system up so that has mostly stopped.

        We are told China will shift to a consumer based economy and that will pick up the slack. But where will the jobs come from to drive this when the ghost town projects have stopped and the manufacturing sector appears to be collapsing quickly.

        Does the wizard have any more tricks up his sleeve?

        My instincts tell me that the fat lady is about to go on a starvation diet

        • xabier says:

          Also the collapse in imports of milk, meat and timber from New Zealand – not an indication that the Chinese are about to become rampant consumers.

          After all, they import that milk because their own is so poisoned by their ‘economic miracle’. And the meat because they were feeling wealthier.

  33. dolph9 says:

    Welcome back from China Gail.

    Any thoughts on what we should be preparing for? The way I see it, most of us should be preparing for basically the end of our financial system as we know it. Not an easy thing, of course, because there are so many variables.

    What should one hold? This is not a trivial question. This literally has to do with the preservation of a lifetime of work, and the ability to continue to live.

    Cash, bank accounts, gold? Farmland, real estate? Everything seems to be expensive.

    • “Cash, bank accounts, gold? Farmland, real estate? Everything seems to be expensive.”

      If you are trying to buy a farm that is already established, with machinery and everything, sure it is quite expensive. There is lots of land that can be cleared or upgraded for pretty cheap, if you are willing to move away from the most desirable areas.

      Without a group of people and some means of securing the land, it may not be that useful though.

    • Jan Steinman says:

      What should one hold?… Cash, bank accounts, gold? Farmland, real estate? Everything seems to be expensive.

      I’d say don’t pick anything based upon some assumed rate of return. But rather, pick something that can provide you with sustenance. Farmland if you have the desire to grow food, tools if you want to pursue a (hopefully simple) trade, non-farm real estate only if you think you can make it work for you. But think lower energy, lower complexity, more general, supplying basic needs.

      At least, that’s what I’m trying to do.

    • The problem is how to gauge the current moment in time vs. the future..
      Are we near “the phase shift event” or is it going to evolve more like a series of multidecade long crises? I’ve looked everywhere for answers and plausible scenarios and in the end it’s only up to you to decide. There is no correct answer from the vantage point of us mortal little ant humans.

      In general the only valid recommendation seems to be under the banner of “collapse now avoid the rush” but again only you have to bet on the details/timing and be more or less happy with this decision till the rest of your days. Run into woods if it’s your liking, or start a homestead, perhaps just in advance cut all the expendable stuff/services in your city flat as it gives you a little of breathing space for a reaction time.

      • InAlaska says:

        World,
        Your question is tantalizing but with an unknowable answer. Our family struggles with this question daily. How much to invest in time, money, resources now for some undetermined future? Take precautions, make some educated bets, buy some things you think you can’t do without. I agree with your sentiment to cut the expendables now and begin your own simple, personalized “collapse.” This gives you the flexibility to reverse course, speed up or slow down your collapse as the the crisis unfolds.

    • (a) Get as much benefit of what you have now, as you can. Take a trip, or donate to charity, or buy things you really need.
      (b) Diversify your investments. If things don’t collapse all at once, diversification protects you somewhat.
      (c) Farmland or real estate might be helpful in some circumstances–knowing how to farm would be a requirement. You would also need luck with others (governments, those with more weapons) not taking the land, or the food you grow on the land, away from you.
      (d) Silver coins might possibly work for trading for goods. I wouldn’t count on gold being worthwhile for trading for goods. The supposed value of gold is too high relative to most goods a person might want to trade for–what you will need is loaves of bread and clothing to wear. Gold is too high valued relative to these goods.

        • Jan Steinman says:

          Small gold coins…

          … are so tasty when you’re starving!

          Seriously, gold is a pretty good proxy for value, but it is still just a proxy for basic needs.

        • I am inclined to believe that trade will be barter facilitated by local markets where everything is converted to a common unit, such as “Former US Dollars”. Gold won’t have much real value in the new situation, so won’t be worth a lot. For that matter silver may not be all that useful either. The things of value will be food, clean drinking water, clothing, and a few other basics.

          • Jan Steinman says:

            things of value will be food, clean drinking water, clothing, and a few other basics.

            Colour me cynical, but I think alcohol will be high on the list. It is not a “necessity,” but it may well seem like it when your world is falling apart.

            Witness Russia. I believe Dmitry Orlov claims alcohol is the biggest killer of middle-aged people.

            • I probably should have included alcohol as well. Let’s all set up our own stills.

            • Jan Steinman says:

              Let’s all set up our own stills.

              Ssshhh!!! The “revenuers” are listening!

              Besides, our still is for making essential oils and hydrosols from medicinal plants. Really! I would never slip a little pear cider in there… unless it was for running the chain saw, and one should never drink while running a chain saw… 🙂

  34. Rodster says:

    “China’s True Economic Growth Rate: 1.6%”
    http://www.zerohedge.com/news/2015-04-15/chinas-true-economic-growth-rate-16

    • The English language paper China Daily kept talking about whether the announced growth rate on April 15 would be lower than 7%, because of the considerable evidence that things were not going as well as in the past. I was somewhat surprised that the growth rate was again announced at 7%–the 1.6% growth rate sounds closer to the truth.

      • Rodster says:

        There was an Asian economist (I posted a link to him in the past) who has been saying for at least the last 4 years that China’s growth rate the last 8-10 years has been in the 2-4% range and not 7-12% which China has been putting forth. The problem is the MSM has been repeating what China says because if the truth were revealed that the worlds #1 economy was growing between 1-4% then we would have people jumping out of windows.

        • xabier says:

          Only the people one wouldn’t miss at all jump out of windows at bad investment news……

  35. Jan Steinman says:

    The lack of growth in high-paying jobs will provide downward pressure on housing prices as well.

    And yet, housing is fairly low on Maslow’s Hierarchy. Everyone needs it. Short of “attrition,” what do you see people doing that will effectively put “downward pressure on housing prices?” Are people in China moving back in with family, as they are in Greece and Spain? Are unrelated people sharing big houses?

    Over half our income comes from rent, and our mortgage actually went up last year. So I’m seeing a crunch coming up ahead, unless rental prices can keep up with increases in mortgage, insurance, and property taxes.

    • “Short of “attrition,” what do you see people doing that will effectively put “downward pressure on housing prices?””

      If credit becomes unavailable for new loans, downward pressure on houses will probably happen. Starting to hear rumours of banks with expectations of tens of thousands of defaults coming in Calgary, Alberta, Canada.

      • Jan Steinman says:

        In a truly declining housing markets, I can’t see existing mortgages being called.

        More likely, they’ll be “re-negotiated” in a way that further indentures the servant.

        A parasite that kills its host is an ecological dead-end.

        • “In a truly declining housing markets, I can’t see existing mortgages being called.”

          If no new loans are qualified at the current prices, the prices will have to fall to find buyers.

          What does a bank do, if the borrower cannot service the loan? What happens when it is time to renew?

          I guess we’ll see just how well funded CHMC really is.

          • Jan Steinman says:

            What does a bank do, if the borrower cannot service the loan? What happens when it is time to renew?

            “How much income do you have? Okay, give us half of it. We’ll add the rest to your principal.” Perpetual servitude.

          • Don Stewart says:

            Dear Matthew and Jan
            I think the decision a bank makes is based on the comparison of the payments they can get out of the delinquent mortgage compared to the cash they can get by turning the house into rental property. During the last crash, an awful lot of housing was converted from mortgaged to rental.

            Don Stewart

        • edpell says:

          H*ll no banks love trapped interest payers. It is only if they will not pay the interest that they will get called, no need to pay principle we love debtors.

    • What are being built in China are high-rise apartment (condominium) buildings. It is my understanding that indeed, unrelated people are sharing these apartments. I don’t to what extent this is happening though. One woman who is getting a master’s degree told me that her new employer will provide housing, as part of her job. This housing will be a portion of a shared apartment.

      In another instance, I told someone that my daughter (in Boston) shares an apartment with several people she didn’t know, before she moved into the apartment. Those living in the apartment sign up for use of the living room on a chalk board, if they want to invite others in. I was told that similar arrangements are quite common in China.

  36. Gail, thanks for the article.
    What is your view about the global JIT system as we are closing in the breaking point?
    In broader historical perspective it holds, the longer the foreign trade the more luxurius segment it must serve. So, is the JIT system going to fall apart uniformly and more or less in unisono time fashion or is it going to diverge into huge class disparity wealth structure, i.e. lower income segment being almost completely abandoned (cheap consumer toys and public infrustructure) canibalized for the very top luxurious market. My take on it is simply observing human nature, pockets of at least attempted autarkies “should emerge” soon after, therefore also a global market for some top luxury items and hence some need for managers, employees, infrustructure, partial-specific product chain restarted/kept in place. And I don’t mean silly industries like diamonds/watches biz, but more along the lines of extending life/replacement parts for some of the core infrustructure in the hands of the new feudals etc.

    • edpell says:

      World, I agree the remnants of industrial society will gather around the rich. But even the rich will be impacted by declining economy of scale. A rule of thumb is the cost of a product goes down by 20% for each doubling in volume. If the economy declines to 1/8 (hey it makes the math easy) then the cost of products will double. Some produces require extremely large scale like semiconductors for computers and smart phones they will just go out of business but 1990 level tech should still be possible just more expensive then we have become accustomed to.

      • Yep, I didn’t stress it enough in my post, but it was implied stagnation and step by step regression on lower level, calm plateaus for a while… The time and regional factor is the major unknown for me though (lol), debt default en masse like Gail is predicting might offset couple of decades from Seneca Cliff scenarios, simply the demand destruction and new priorities would curb the appetitie for mad frivolous consumerism. I know for some this is sky in the pie rosy scenario, but single human time perspective is so tiny against these multi century-milenia trends, that I see widespread poverty and emergence of different values but not “civilization crash” in the true sense before 2030-50.

      • Tolstoy's Degenerate Grandson says:

        Post collapse the basis for wealth – energy – will be mostly gone. We will get small amounts from burning wood or dung.

        I am doubtful the remnants will gather around the right because the rich will be in the gutter (or dead) along with everyone else.

        • “Collapse, collapse, collapse!”
          Sorry, but this is way over used broad brush painting prevalent around here.
          Please either frame it more precisely in time or otherwise it’s a debate deadend.

          There is so much systemic inertia in coal, hydro, natgas and uranium, that some sort of system is likely to function and be around for at least couple of next decades. Virtually no consumer economy as we know of today, no pensions, little healthcare, nationalized resources and key industries, wars, epidemics, .. all very likely “soon” but still at the base something derived of this current civilization is going to soldier on for some time more.

          • It really depends on how well the banking and other financial system holds up. If the banks cannot be saved, we probably have only a short time until complete collapse.

    • My view is that the luxury segment can’t hold on any longer than the rest. Nearly everything created today requires the use of computers, and computers require the use of nearly every element in the periodic table. Thus, we have to have extensive international trade to maintain the production of computers and thus luxury goods as well as other goods.

      About the only thing that might work is trying to eliminate some parts of the system that are not supporting themselves. For example, if Europe is only a taker, and not really adding to the system, the system could rework itself without Europe. On a smaller scale, the world economy could rework itself, leaving out Greece and slightly improve the overall outcome. But even this approach has limits.

      • edpell says:

        Gail, you have a rare ability to talk about the unmentionable. Wow, “if Europe is only a taker, and not really adding to the system, the system could rework itself without Europe”. True but forbidden.

        On the other hand the 1% here like to drive Audi’s and New York City has a long and under appreciated friendship with Paris.

        BAE is a major war department supplier but they could be brought on broad, relocated to the U.S..

  37. Doug W. says:

    Good to have you back. What is catching my attention right now is the ironic likelihood that thousands and thousands of acres of vegetable production in California will be idled not by high oil prices or scarce supply, but by drought and lack of water. This could truly be a black swan event for which, despite all the talk about local food, most of the country, including large swaths of rural American are woefully unprepared. It bears watching.

    • Daniel Hood says:

      All eyes should be on Cali right now, couldn’t agree more. NASA triggered the countdown clock, T minus 12 months and counting and the level of complacency is simply astounding. 40 million people water running out.

      • Greg Machala says:

        Here is my take on how the situation is rationalized in minds of people facing this crisis and why they is such complacency: “I was born into this world with abundant clean water. Therefore, there always was and always will be abundant clean water.” The same normalcy bias can be applied to anything. Just replace clean water with any physical process or resource you prefer. “I was born into this world with computers. Therefore, there always was and always will be computers. It is this kind of thinking that gets us humans into trouble.

      • Tolstoy's Degenerate Grandson says:

        I read that 80% of Cal water is used for ag. So even if everyone stopped watering their lawns that would have very little impact.

        Perhaps we should take our eyes off Greece, Japan etc… and be watching California.

        Water cannot be printed.

    • Once we have drought and lack of water, we have a lot of follow on problems–drop in real estate values, people wanting to move from the state with no-where to go, lower jobs availability, and debt defaults. Anyone for California as the first state to leave/get thrown out of the Union?

      • edpell says:

        In New York construction workers on new building fly the U.S. flag. In California construction workers fly the California state flag! This could be very interesting.

      • Jarvis says:

        As Canadian I find it strange that the only organization that is preparing for mass evacuations from California is the United Nations. I doubt neighbouring states will willingly take in millions of potential drought refugees. Canada has around 34 million people and California alone has 38 million. Any idea how many people abandoning their homes and state would it take to collapse the banking system?

        • Daddio7 says:

          As a former farmer in Florida I understand the pain of losing your farm. However the nation needs California’s cities and their populations more than it needs the farmers and their produce. Most of what they grow can be grown in the South where we have abundant water. NAFTA and environmentalist killed farming around Lake Okeechobee and the Everglades, not lack of water. Many of these farmers are descendants of the Okies fleeing the Dust Bowl. I guess it’s time to pack up and go back East.

      • InAlaska says:

        The Washington Post put out this article: “The 12 threats to human civilization, ranked.” Nowhere does it mention resource scarcity or global financial collapse, and gives what I think are incredibly optimistic odds of each one not happening. Check it out: http://www.washingtonpost.com/blogs/innovations/wp/2015/02/20/the-12-threats-to-human-civilization-ranked/

      • Daniel Hood says:

        I’ve heard Cali can only sustain a population of 10 million not the 40 million ravishers currently sucking up resources. Then we have big Ag sucking up vast quantities of above and ancient below ground waters with no one keeping tabs on the drawdown with respect to those holes in the ground. Basically it’s a black hole and worse, in some parts of Cali the ground is actually dropping by a whopping 1ft per year, they’re sucking so fast, how long can that continue?

        You also have other state governors saying “get lost if you think we’re diverting our water resources to you” I remember reading an article where a politician was quoted, blasting Cali. So we’re already starting to see inter-state tensions and “beggar thy neighbor” attitudes. We’re also seeing inner-state tensions, big Ag fighting with the cities and vice versa, then we have the blame game. We should also be noticing the huge Silicon Valley tech companies that needs vast quantities of water to cool their servers keeping quiet.

        My opinion, Cali is “ground zero” and the countdown clock triggered by NASA has started. Forget the rest of the world, we should all be monitoring how Cali copes with enforced reductions by as much as 75% next year if things get worse.

        I think in the end Cali will end up under some kind of emergency disaster mandate at Federal level. When this happens, the world will know how bad things are in the US. You’re going to see some of the 1st climate change water refugees in an advanced economy.

        Think about the interdependencies, tensions, trade-offs between food, energy, water, economic security and in the wider context of environmental change.

        • Tolstoy's Degenerate Grandson says:

          Actually California indirectly supports a lot more than 40M people if you consider the amount of ag products it supplies to other states and countries.

          This really is a catastrophic event in the making. But then we are not for want of events that will trigger a horrific global calamity.

          • Daniel Hood says:

            Agreed, this crisis is man-made incompetence on a massive scale. California is now ground zero as far as I’m concerned, a microcosm of what’s in store. I keep hearing the following strategy being mentioned “pray for rain”. Are you serious?

            Google “pray for rain california” and see what garbage comes up.

        • richard says:

          “When this happens, the world will know how bad things are in the US.”
          I’ll mention that this part of the rest of the world got the memo after Katrina hit New Orleans. The collapse of the administration because parking fines were not paid was a shock to me at least. BTW – Americans are some of the best people in the world – apart from a tendency to overwork 😉

        • InAlaska says:

          Because California all by itself is the 8th largest economy in the world and the country’s most populous state, the US will never be able to let California circle the drain. It will be an all out federal effort (albeit futile) to subsidize it and supply it with all the water and desalinization plants it needs. If the California economy goes under, there goes the US economy.

      • Creedon says:

        The is a group in the southern Oregon, northern California region who are seriously working to form their own state. They feel that they have sufficient water and resources
        and are not being represented in Sacramento.

  38. Daniel Hood says:

    Welcome back Gail!

    This is commonly known in the business as the great debt/carbon deleveraging. The bursting of the 250+ year debt/carbon bubble as Jeremy Grantham puts it. We’ve leveraged civilization off the back of the cheap easy access debt and cheap easy access energy and now reality is calling in the good times. I still think we’ll see the decoupling of economies/markets from others as governments scramble to jetison the doomed. I still believe we’ll see QE4 in the not too distant future or down she goes. Something has to retract drastically otherwise.

    Also what about California? NASA warned the sunshine state and their 1,000+ lush green golf courses in the desert, they have 1yrs supply of ground water left before it all goes tits up. You should study the issues their for your next post given they’re facing the mother of immediately converging challenges, quite literally running out of water, the type needed to sustain civilization.

    Yep scarcity everywhere we look.

    I tried to summarise the overarching problem question for which you need a stiff drink after!

    “How do we collaborate intensively, to sustainably produce more food in the next 30 years than the previous 10,000 against growing populations, declining resources, bursting debt bubbles, diminishing returns, climate change, rising instabilities, declining yields, soil infertility, water scarcity, ageing farmers, in fact, ageing everyone! distribution issues and extraordinarily complex times?

    Yep I hear ya.

    I’m moving to Mars when SpaceX puts up the first tenders for space faring civilization, they seem to be doing well advancing the cause on the front. Oh then there’s AI rapidly gaining traction with the threat of superintelligence complete with recursive self-improvement algorithms. Elon Musk is warning the world loud and clear.

    Next post you should cover California, it has to be up there on the alert red warning radar now? Maybe this is why all the miltary activity was being conducted in the region citizens were complaining about!

    Pause for thought.

  39. edpell says:

    Gail, a completely enjoyable article.

    Less natural wealth for the taking leads to less human wealth leads to a contracting economy leads to lower standard of living. Also, possible fast, big, step down in standard of living if/when the system seizes up.

  40. Stefeun says:

    Thanks Gail for putting so much material online.
    No doubt that “neoclassical economics seems to inhabit a parallel universe where wealth can be created at will, money is irrelevant, yet debts are a tangible reality!”

    It’s a quote from a very good article about Frederick Soddy (http://www.golemxiv.co.uk/2013/08/illogical-economics-guest-post-by-hawkeye/#comment-522087), the links in the footnotes are worthwhile too.

    While reading the article I had an a-ha moment, suddenly understanding why the “haves” prefer to invest in debt rather than real business, and why the financial sector has become such disproportionately big compared to, and by the way disconnected from, the real economy.
    This was crystal-clearly stated almost one century ago by F.Soddy:

    “Real wealth rots and rusts, whilst debts multiply by the laws of compound interest”.

    What a choice! decaying reality Vs unlimited enichment (which keeps the attributes of reality until eventually proven purely virtual). This is enough -for me!- to explain why our economic system cannot last forever: there’s a systemic flaw in how our economy finances itself.

    Now, we have another problem: because of the diminishing returns, and the necessity to grow faster than the competitors, the debt has “invaded” all compartments of the real economy (beyond the pension and health systems), which makes it impossible to just repudiate it.

    So we find ourselves needing to feed an increasing debt, but with decreasing means. Maybe there’s a politico-technical solution (Revolution!) around this particular issue, but I don’t think it would change much of our predicament, as we’d still be faaar above the “solar budget”.

    • That is a good point: “Real wealth rots and rusts, whilst debts multiply by the laws of compound interest”. Having worked in insurance, I am very much aware of this.

      I know that years ago I sat down and figured out how much in funds I would have for retirement, if the growth rates being assumed by financial planners and pension plans were really true. Somehow, the whole story didn’t make any sense to me–there wasn’t enough “stuff” to fund all of these promises. The story being told was just too good to be true.

      • Stefeun says:

        Thank you Gail,
        amazing to see that a huge majority still believes in this fairy tale, despite the fact it is “logically absurd, counter to experience and in contravention of the laws of physics” (in quotes is from the linked article).

        • Tolstoy's Degenerate Grandson says:

          The majority wants to believe because to not believe brings despair.

          You can shove facts in front of their faces that show unemployment is more like 20% that 5.5% in the US and they will insist that things are getting better and that the 20% claim is absurd.

          That is the power of the MSM and that is why the MSM will continue to publish lies.

          As they should.

          Because if the true story were revealed, people would stop spending and we would be plunged into an epic economic collapse that would bring down civilization.

          • Stefeun says:

            TDG,
            you’re probably right, maybe we can’t live with “the truth”.

            Suppose that the consciousness is an evolutionary faculty aiming to put our sensations and memories together in a consistent way, AFTER the event has happened or our action is accomplished, in order to help us build up our own abstract representation of the reality, and hopefully have a better reaction next time.

            Then we would have a built-in feature that recounts us the story we want to hear (to some extent), and is able to deny some aspects of what we perceived when they don’t fit.
            It also prevents us from investigating and take the risk to find new elements that would question the whole story. We prefer a nice story, be it knowingly fake, to a potentially disturbing reality. Of course, it must have a happy end (although in reality, the end is death).

            • Tolstoy's Degenerate Grandson says:

              I think the defense mechanism known as cognitive dissonance also keeps individuals from ending up in the looney bin – or from leaping off tall buildings.

      • Don Stewart says:

        Dear Gail
        I believe it was an article by Steve Keen which drove home to me the assumptions that governments and, I suppose, insurance companies and pension plans make. Keen flatly stated that the promises will never be kept. But, so long as the Central Banks can manipulate inflation rates, they can over the decades simply devalue the currency until it more or less matches the available goods. When governments also took control over the reported rate of inflation, used for indexing things such as social security, they also got the ability to massage the numbers to make the payments match, more or less, the available tax revenue.

        The panic in the Eccles Building happens when it appears that the Federal Reserve cannot, in fact, create inflation. Several clever people have looked at the situation (zero or negative interest rates) and decided that this is the time to spend a lot of free money on infrastructure. David Stockman, for example, thinks that the world is awash in productive capacity, and inflation simply can’t happen. Chris Martenson has suggested that now is a wonderful time for government infrastructure spending. I tend to look at the real economy rather than the monetary illusions. What I see is declining supplies of energy we can afford to produce plus environmental degradation (such as soil erosion and water pollution) plus health degradation in response to modern living and conclude that it would require a massive redirection of our efforts to engage in large infrastructure projects.

        We MIGHT be in a 1930s situation. Massive numbers of men and boys and a few girls were engaged in projects such as water management infrastructure. You can still see their work, still functioning well, in the desert in Arizona. But if you watch the surviving movie clips, you cannot imagine Americans in 2015 doing such work with picks and shovels and wheelbarrows. The US would also probably choose to build the sorts of stranded assets that China has become famous for.

        Don Stewart

        • edpell says:

          Expletive, expletive, expletive, the politicians of both the left and right want to build more roads for more cars for more oil consumption! These people really do not know what is happening.

          A water project to bring northwest Canadian water to the U.S. southwest would actually add value to the future. Assuming the indigenous owners of the water are willing to sell. I would demand an annual fee that is high and rises with inflation and need if I were the owners.

          • InAlaska says:

            edpell,

            Yes and if the US government would spend as much $ building solar panels, inverters and spare parts each year as it spends on defense, enough of them would probably survive into the future to help pump that Canadian water. Things like this can still be done, but we’re running out of time.

          • Tolstoy's Degenerate Grandson says:

            They do what they do to the Saudis re: oil. Namely, the US pays for the resource but the vendor is forced to invest most of the profits into US debt which they are not allowed to sell – ever.

            And another chunk of the profits goes towards buying US manufactured military hardware.

        • Glenn Stehle says:

          “We MIGHT be in a 1930s situation”?

          But then on the other hand, we MIGHT not be.

          In his absolutely outstanding book recounting the history of the oil industry of the 1930s, “Bless the Pure & the Humble,” Nichoas George Malavis recounts how

          “Spectacular new oil discoverines in Texas, Oklahoma, California, and New Mexico between 1920 and 1930 transformed the probem of petroleum from one of scarcity to abundance. Prolific production led to a chronic imbalance between supply and demand. As stocks increased, the price of crude oil declined from a per-barrel high of $3.50 in 1920 to $1.25 in 1930.”

          But the problems of over-production were only beginning. As Malavis goes on to explain:

          “The situation had been further aggravated by the surge of drilling and production activity that followed in the wake of Columbus M. ‘Dad’ Joiner’s discovery of oil on the Bradford farm near Kilgore, in East Texas, on October 3, 1930. Joiner had unwittingly opened a Pandora’s box. East Texas’ yellow pine forests were instantaneously transformed into thickets of wooden oil derricks towering above a 140,000-acre oil reservoic that stretched 45 miles north to south and 12 miles east to west.”

          Crude oil selling for $1.10 a barrel in October, 1930, plummeted to 25 cents in early 1931. By the summer of 1931, crude oil prices plummeted to 10 cents a barrel.

          What to do with such a huge surplus of over-production of crude and lack of aggregate demand? The United States was litterally floating on a sea of oil.

          Malavis’ book recounts the story of how the major oil producers, such as the Pure and Humble Oil Companies, prevailed upon the Texas and the United States governments to implement production allowables so as to curtail the supply of oil.

          “Oil reguation reached a turning point in 1934,” Malavis explains.

          “We have emerged from a conditon of chaos,” Humble president Robert Lee Blaffer proclaimed, “….toward orderly production and termination of the wasteful and ruinous practices of the past.”

          Combined national-state regulation had drastically decreased oil production, “improving the price of Mid-Continent crude oil from a low of ten cents a barrel to a high of $1.12 per barrel by the end of the year….and nearly every oil company enjoyed a fair profit in the final quarter of the year.”

          This regulatory regime, putting a floor under oil prices, would remain essentially unchanged until the early 1970s, when the United States reached peak crude oil production.

          • Don Stewart says:

            Dear Glenn Stehle
            I have a book written in the early 1930’s by A Texas Oilman. The subject is ‘Nature Appreciation’. He had the misfortune to be a geologist when oil hit a dime a barrel, and wrote his book while unemployed.

            When I said ‘like the 1930s’, I wasn’t thinking about oil in particular. I was thinking more generally about lots of excess industrial and human capacity. Our industrial capacity is now scattered all over the globe, and so is not amenable to interventions such as the National Recovery Act. Our human resources would not take kindly to pick and shovel work…and accomplishing everything with highly automated machines defeats the purpose.

            In short, I rather doubt the scenario one might cobble together from listening to David Stockman and Chris Martenson.

            Don Stewart

            • Glenn Stehle says:

              @ Don Stewart

              What I hear from you is a morality tale. Here’s how Daniel Yankelovich describes it in “Coming to Public Judgment”:

              ***beginning of quote***
              The public, on the other hand, sees the economy not in terms of new technology, productivity, and a more technically skilled work force but mainly in terms of consumption and “moral fiber.” …. [T]here is almost no sense that the economy is driven by production….

              The public…analyzes the…issue in moral rather than in technical terms. Both the cause and the cure to America’s economic sluggishness are seen to be the same. An increasing number of Americans believe that the country has lost its moral fiber…. [T]he public sees human strivings and moral virtues (hard work, discipline, concern for quality), or the lack thereof, as central in importance.
              ***end of quote***

              “Massive numbers of men and boys and a few girls were engaged in projects such as water management infrastructure” in the 1930s you tell us. “You can still see their work, still functioning well, in the desert in Arizona. But if you watch the surviving movie clips, you cannot imagine Americans in 2015 doing such work with picks and shovels and wheelbarrows.”

              But the reality is that this water management infrastructure is not still functioning well.

              http://www.catastrophemap.org/watermap/lake-mead-drought-2014.gif

              http://img1-azcdn.newser.com/square-image/18902-20110401021928/lake-mead-may-vanish-by-2021.jpeg

            • Don Stewart says:

              Dear Glenn Stehle
              I was not referring to Hoover Dam, but instead to things such as swales and check dams. Check dams were constructed by the Anasazi, and there are still sites in the Arizona desert where they have preserved plant life for a thousand years or so. The CCC built swales with picks and shovels and wheelbarrows which still create oases in the desert. The CCC also built check dams which still store rainwater in the sand behind them. These were all constructed by human labor using low tech tools. Virtually everything was ‘made in America’.

              I’m not familiar enough with Hoover Dam to speak about how much manual labor was involved. If it were built today, it would be built by massive machines. The parts for the machines would be sourced globally, as would the energy to drive them.

              In northern Oklahoma where I grew up, a great deal of labor during the Depression went into creating contours to control water erosion and planting hedgerows to act as windbreaks to control wind erosion. Those were still around and valuable during my childhood.

              Don Stewart

            • Glenn Stehle says:

              If you’re interested in reliving some of the past moments of US greatness, you probably couldn’t do much better than these two PBS specials:

              Hoover Dam : 1 hr
              During the Great Depression, Americans built the Hoover Dam, one of the greatest engineering works in history.

              The Civilian Conservation Corps : 1 hr
              The New Deal program CCC put three million young men to work in camps across America.

              http://www.pbs.org/wgbh/americanexperience/films/2/

            • edpell says:

              On Hoover dam. “But, Hoover Dam’s construction had its ugly aspects. “Racial and ethnic discrimination, profiteering at the company store, and the flouting of health and safety regulations” all existed. Blacks workers were segregated while Asian labor was banned. Poor safety standards led to appalling deaths from heat stroke, badly executed detonations, and carbon monoxide poisoning among others.

              The response from Crowe and his underbosses was merciless. Strikes were crushed, the exhausting pace of work continued, and injury compensation was denied. Indeed, fraud was not uncommon. The medical staff, at management’s behest, sometimes intentionally misdiagnosed men suffering from carbon monoxide poisoning (contracted from truck exhaust while blasting out tunnels) with illnesses. As Hiltzik notes, diseases such as tuberculosis or pneumonia were “all conditions for which the men were ineligible to claim injury compensation.””
              from
              http://www.forbes.com/sites/realspin/2013/07/17/a-devils-bargain-in-the-desert-hoover-dam-and-the-coming-of-the-leviathan-state/

            • edpell says:

              Workers’ strike (August 1931) – triggered by deaths of many of the workers’ wives and children due to extreme heat and lack of sanitation in the campsite area
              from web.augsburg.edu/~schwalbe/hoover_dam.ppt

          • Interesting! I had heard parts of the story before, but not the whole story. Thank you.

    • richard says:

      “While reading the article I had an a-ha moment,”
      Once you recognise that, there is no going back, though I suspect some of the interrelationships are beyond human comprehension. It does not help that finance is not part of the Engineering curriculum, though the USA seems to be more savvy in that area. I’d guess that may be because Engineers would ask too many questions.

  41. Rodster says:

    It’s amazing when you step back and look at graphs on the price of energy graphs vs graphs on wages. They’re going in opposite directions right around the same time. It’s a real eye opener.

  42. Glenn Stehle says:

    Gail Tverberg said:

    ***beginning of quote***
    “The real story, though, is that the inflation-adjusted purchasing power of common workers is falling lower and lower, especially in the United States, Europe, and Japan. Not only can these workers afford to buy less, but they can also afford to borrow less. This means that their ability to purchase expensive goods created from commodities is falling.”
    ***end of quote***

    I certainly agree with this observation, with the caveat that I’m not so sure that the fall in workers’ wages is most acute in the United States, Europe, and Japan.

    The fall in workers’ wages in the U.S., for instance, began in earnest only after the Great Financial Crisis began in 2007-08. And (this off the top of my head, but I think I could put my finger on the exact figure) the real purchasing power of the average U.S. worker has fallen less than 10% during this period.

    Compare this to Mexico. In the 28 years between 1982 and 2010, the purchasing power of the average Mexican worker fell by 50%. The purchasing power of the minimum wage fell by 71.3%.

    And in the four years since 2010, there has been no reversal of this trend. Between the first quarter of 2010 and the second quarter of 2014, the real purchasing power of the average Mexican worker’s wage fell by 13.6%. And if we look at only the basic survival “food basket” to calculate the effects of inflation, workers have lost even more ground. Relative to the cost of the basic survival food basket, the average Mexican worker lost 26.6% of his purchasing power between Q1-2010 and Q2-2014.

    However, there are other possibe explanations for this phenomenon besides oil and gas depletion. For instance, a run-of-the-mill crisis of capitalism, like we’ve seen so many times before in history, could also explain this phenomenon.

    And Gail, if you do not explain why this is not just another run-of-the-mill crisis of capitalism — explain why this time is different — then you are guilty of a logical fallacy. The garbled cause and effect is what is known as “Affirming the Consequent”: assuming there’s only one explanation for the observation you’re making.

    Don’t get me wrong. I’m not arguing that your theory is without merit, only that you need to clean up your logic and explain why what we are seeing is not just one more run-of-the-mill crisis of capitalism.

  43. Glenn Stehle says:

    Gail Tverberg said:

    ***beginning of quote***
    “The real story, though, is that the inflation-adjusted purchasing power of common workers is falling lower and lower, especially in the United States, Europe, and Japan. Not only can these workers afford to buy less, but they can also afford to borrow less. This means that their ability to purchase expensive goods created from commodities is falling.”
    ***end of quote***

    I certainly agree with this observation, with the caveat that I’m not so sure that the fall in workers’ wages is most acute in the United States, Europe, and Japan.

    The fall in workers’ wages in the U.S., for instance, began in earnest only after the Great Financial Crisis began in 2007-08. And (this off the top of my head, but I think I could put my finger on the exact figure) the real purchasing power of the average U.S. worker has fallen less than 10% during this period.

    Compare this to Mexico. In the 28 years between 1982 and 2010, the purchasing power of the average Mexican worker fell by 50%. The purchasing power of the minimum wage fell by 71.3%.
    http://www.jornada.unam.mx/2011/07/17/economia/024n1eco

    And in the four years since 2010, there has been no reversal of this trend. Between the first quarter of 2010 and the second quarter of 2014, the real purchasing power of the average Mexican worker’s wage fell by 13.6%. And if we look at only the basic survival “food basket” to calculate the effects of inflation, workers have lost even more ground. Relative to the cost of the basic survival food basket, the average Mexican worker lost 26.6% of his purchasing power between Q1-2010 and Q2-2014.
    http://www.jornada.unam.mx/2014/08/26/opinion/028o1eco

    However, there are other possibe explanations for this phenomenon besides oil and gas depletion. For instance, a run-of-the-mill crisis of capitalism, like we’ve seen so many times before in history, could also explain this phenomenon.

    And Gail, if you do not explain why this is not just another run-of-the-mill crisis of capitalism — explain why this time is different — then you are guilty of a logical fallacy. The garbled cause and effect is what is known as “Affirming the Consequent”: assuming there’s only one explanation for the observation you’re making.

    Don’t get me wrong. I’m not arguing that your theory is without merit, only that you need to clean up your logic and explain why what we are seeing is not just one more run-of-the-mill crisis of capitalism.

    • Rodster says:

      “The fall in workers’ wages in the U.S., for instance, began in earnest only after the Great Financial Crisis began in 2007-08. And (this off the top of my head, but I think I could put my finger on the exact figure) the real purchasing power of the average U.S. worker has fallen less than 10% during this period.”

      Actually that trend has been going on since the mid 70’s.
      http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/

      http://www.pewresearch.org/files/2014/10/Wage_stagnation.png

    • We as a group can only buy the finished goods workers (in the aggregate) create. If workers as a group are creating fewer finished goods, someone, somewhere, will only be forced to settle for fewer goods and services.

      I don’t know how precisely this divides up over the world. The US, Europe and Japan seem to be countries that are shortchanged on what common workers can buy. This is not to say that Mexico might not come out badly as well. I haven’t looked into the details there. Mexico is an oil exporter whose oil production is declining. Unless oil prices keep rising, Mexico’s government has difficulty collecting enough revenue. So it should not be surprising that Mexico is not doing well now.

      This time is different, because the economy is being stretched to the limit by debt. High oil prices (that is, greater than $20 barrel oil) can only be balanced out by increasing debt, and we are approaching limits on debt. Interest rates are approaching zero, or are even negative in some cases. Adding debt can cover up the limits we are reaching for a while, but at some point, it becomes difficult to add more debt. We were reaching the end of the line in 2008, and have “bought time” with QE. It looks like we are reaching limits on QE as well.

      • Glenn Stehle says:

        I suppose I see the problem a little bit differently than you do. For me, the growth in debt is no problem as long as there is a commensurate growth in production of real goods and services. Or to put this in other words, it is “the rise of unproductive debt,” and not of mere debt, that is the problem.

        I perceive the capitalist sequence as follows:

        increase money supply → increase production → increase money supply → increase production

        In this sequence, the increased money supply is the egg, and increased production is the chicken. The increased money supply comes first, and the increased production is the result.

        But sometimes this sequence breaks down. The increase in money supply fails to produce the desired increase in production. The eggs don’t hatch. This results in the rise of unproductive debt, Here’s how David Stockman explains it:

        ***beginning of quote***
        Q: Why are you so down on the U.S. economy?

        A: It’s become super-saturated with debt.

        Typically the private and public sectors would borrow $1.50 or $1.60 each year for every $1 of GDP growth. That was the golden constant. It had been at that ratio for 100 years save for some minor squiggles during the bottom of the Depression. By the time we got to the mid-’90s, we were borrowing $3 for every $1 of GDP growth. And by the time we got to the peak in 2006 or 2007, we were actually taking on $6 of new debt to grind out $1 of new GDP.
        Read more: http://www.businessinsider.com/david-stockman-youd-be-a-fool-to-hold-anything-but-cash-now-2012-3#ixzz3XOj3yGcp
        ***end of quote***

        So I believe the chore is to explain why this sequence has broken down, and why the increase in money supply — which is overwhelmingly private debt in modern economies — does not cause an increase in production.

        Otherwise, you are going to get graphs like the one below thrown at you by Marxist and Keynesian thinkers, along with the argument that all that is needed to solve the current crisis is for the government to increase the quantity and/or velocity of money:

        http://i.imgur.com/XAPo2nl.gif

        • It is the existence of cheap energy supply that makes the growth sequence work. This cheap energy leverages human energy to produce the desired economic growth.

          Once the cost of energy extraction is high, this benefit is gone. What happens is that the value of oil is the benefit it provides to the economy. The value of oil to the economy is different from the cost of extraction. When the cost of oil extraction is low, this gap is high. The difference provides a big economic growth boost. When the cost of extraction is high, this difference goes away. That is why we have been experiencing so many growth problems recently.

  44. Harry Gibbs says:

    Terrific stuff, as always, Gail – thank you for continuing to churn these articles out. A question:

    What do you think has been holding oil prices in the high 40’s and 50’s, albeit with a lot of volatility, this year, given that supply has been so excessive? Do you see the EU’s Quantitative Easing programme as having a role in preventing prices from collapsing completely?

  45. gerryhiles says:

    Welcome back Gail and I am glad that your visit to China went well, but I wonder how well it went down that we live on a finite planet and that the past 300 years of exponential growth (in the West) cannot be replicated ever again, because all of the bases for (let’s say) a Capitalistic and finally Financialistic economy have been ‘peaked’, one way or another.

    Here, in Australia, we had the “resources boom” and still live in a fantasy world of iron ore fetching $200 per ton and the housing bubble therefore continues, though the mining industry has collapsed (delayed feed-back).

    In my view we have been “living off the future” ever since borrowing money at compound interest began, at about the same time that the Industrial Revolution began in England c. 1700.

    Before then everything was in some kind of balance.

    Empires came and went. China, India and Russia had millennia of relative social stability before the Empire of Chaos (Washington) came along. so I hope that the collective wisdom of Old World countries prevail.

    BTW I regard Vladimir Putin as one of the greatest men who has ever lived.

    People commonly defer to such as Alexander the Great, but. like George Washington and SO many, he was a war-monger and imperialist .

    What a shame that both China and Japan were FORCED to accept Washington/London hegemony since the 1800s.

    If you do not know history, then you cannot understand the present

    • Glenn Stehle says:

      gerryhiles said:

      ***beginning of quote***
      “In my view we have been ‘living off the future’ ever since borrowing money at compound interest began, at about the same time that the Industrial Revolution began in England c. 1700.

      Before then everything was in some kind of balance.”
      ***end of quote***

      I disagree that “before then [c. 1700] everything was in some kind of balance.”

      Spain, for instance, was an economic basket case by the late 16th century. Spain’s money supply had grown enormously during the 16th century due to the massive amounts of gold and silver which flooded into Spain from the New World. The productive (real) economy did not respond in kind, and the massive increase in the quantity of money caused runaway inflation.

      In the year 1600 Martín González de Cellorigo wrote “Money is not true wealth” in “Memorial de la política necesaria y útil restauración a la república de España y Estados de ella, y del desempeño universal de estos Reinos.”

      As J.H. Elliot expains in “Imperial Spain: 1469-1716,” González de Cellorigo’s “concern was to increase the national wealth by increasing the nation’s productive capacity rather than its stock of precious metals.”

      “…This could only be achieved by investing more money in agricutural and industrial development. At present, surplus wealth was being unproductively invested — ‘dissipated in thin air — on papers, contracts, censos, and letters of exchange, on cash, and silver, and gold — instead of being expended on things that yield profits and attract riches from outside to augment the riches within. And thus there is no money, gold, or silver in Spain because there is so much; and it is not rich, because of all its riches….’ “

      • Wealth (unfortunately) comes from extracting natural resources and using these natural resources to enhance food production or to create other goods and services. These natural resources are in limited supply; even topsoil is lost as farming is done. Renewable resources like trees and animals cannot be used faster than they naturally reproduce.

        I agree that things were not in balance prior to 1700. We were killing off the megafauna as hunter gatherers. We have never been in balance with nature. Governments had large debt early on. I am not so certain about debt levels of others.

        • Daddio7 says:

          We migrants have never been in balance. Our cousins who stayed in their ancestral African homeland have. Slave taking, recourse poaching, and proxy wars have ravaged the continent but we returning migrants brought all the problems. We have out smarted ourselves and doomed most life on the entire planet.

          • I am afraid you are right. People who stayed in Africa have come closest to being in balance with nature. They didn’t kill off the big animals, for example, or try to conquer the rest of the world.

        • I think it was only outside of Africa that we killed of the megafauna as HG, not inside Africa, where the megafauna co evolved with humans.

          • “I think it was only outside of Africa that we killed of the megafauna as HG, not inside Africa, where the megafauna co evolved with humans.”

            Until we gave Africans guns.

      • xabier says:

        Spain in the 16th century is very interesting: we must remember that it was thought dishonourable among the upper classes to do anything with one’s hands – a gentleman never got his hands dirty, but would ‘condescend to hold a sword or lance.’ (This was still the rule in the British Army in 1914, an officer (by definition a gentleman) was permitted to handle only a weapon, or in public every day a ‘swagger stick’, which marked his rank. He could never hold even a parcel of books, if he read any….)

        Now, everyone in Spanish society aspired to that status, even if they couldn’t become noble, and longed to move out of the class of those who actually did things. Work on the land was done by those who had been peasants forever and by Muslim slaves – the latter were expelled en masse in the early 17th century after too many rebellions.) Artisan work , if advanced, was mostly in the hands of foreigners, or bought in from the rest of Europe with all that South American silver. Agriculture was, of course, beneath notice, as was industry. One might speculate in trade, however.

        Possibly never has a whole society been devoted to a false ideal of unproductive existence so much as Spain at that time. Until………

      • gerryhiles says:

        I cannot dispute you, ‘things’ go back a very long way in actuality methinks to whenever civilisations began. 10,000 years?

        “Civilisation” precisely means “living in cities”, that is dense populations producing little or nothing essential to existence, whilst consuming far more than can be provided in the long term.

        Why pick on Spain? Why not Ancient Greece?

        The point is that this is the first and last time that civilisation has “gone global”.

    • Students have an amazing ability to believe that whatever dire things are forecast won’t happen to them–for example, it is the developed countries that will encounter problems, or the downturn will take a long time to arrive. The stories of China’s growth have filled their entire lifetimes. They have a difficult time believing that the situation could change.

      • edpell says:

        A bias for the norm, all humans have it. What is will continue to be, change is unlikely.

        Often true, but when it is false it takes us by surprise.

        • InAlaska says:

          Yes, just because bad things have never happened to you doesn’t mean that bad things will never happen to you. Normalcy bias.

      • richard says:

        Hi Gail, welcome back, it’s good to see you posting again. Your comment on the young …
        I seem to remember a quote – nothing destroys rational thought so quickly as the sight of your neighbour getting rich …

    • garand555 says:

      True balance is rare. Just ask the people who lived on Easter Island.

      • Depends on which version of that story you read. By some accounts, they were doing fine, living in balance, until European sailors brought rats and diseases, and the (Peruvian?) slavers came along and sent the survivors all off to the silver mines.

    • I like your line about “old world countries” wisdom.
      The undeniable fact is that the way top dog empires affect, twist and braindamage thinking of their elites and upper system-management class over time. The europeans have been through more cycles over the centuries, on the other hand the US was able to suck human talent from these and prolong its rocket fast ascent into postion of global hegemon, however if we soberly look around this already peaked in the generation of post WWII emigrants like Kissinger, and there seems to be no replacement. Multilateral and regionalized future will be pretty painfull at first for current Nort American people nad their habbits, but long term it coud stabilize around 50-100M pop in pseudo re-agrarian fashion, much more promising than say situation in Indian, Pakistan, China etc.

    • xabier says:

      I know an Iranian who was indignant at having to call Alexander ‘The Great’ in a student essay; Iranians call him ‘Alexander the Devil’ to this day. But then, he beat them…..

      • gerryhiles says:

        I have thought of him as Alexander the Ungreat/Psychopath who presaged the pattern for all Western empires to follow, e.g. genocide and destruction.

        And now we have the Empire of Chaos centred in Washington DC doing worse Alexander did globally.

        • InAlaska says:

          Yes, but you think Putin is “one of the greatest men who has ever lived,” so your opinion must be taken with a mountain of salt.

          • gerryhiles says:

            Oh really, shows how little you know about Putin and his team, without whom we would certainly be in the midst of WW3.

            He defused the situation in Syria and avoided the temptation to invade the Ukraine.

            Go learn something, unlike Alexander Putin is a peace-monger without parallel.

            • InAlaska says:

              I don’t really care about Alexander. He’s been dead for 2000 years, but Putin is an dictatorial oligarch who runs an oil-kleptocracy and who remains in power decade after decade How? By ruthless suppression and assassination of dissidents. The only reason he “avoided the temptation to invade Ukraine” is because Russia’ economy tanked with the collapse of oil prices, while simultaneously the Western Alliance made it clear to him that he would pay a heavy price for such a “temptation” with economic sanctions and military assistance to Kiev. I think you should avoid the temptation of being a naive pollyanna.

            • Tolstoy's Degenerate Grandson says:

              I am not clear as to how the US is any different than Russia.

              The US is a fascist state run by the banks and large corporations.

              The US violently cleared the peaceful protestors on Occupy Wall St. Imagine what would happen if they actually marched down Wall St.

              How many people do the cops kill in American every year? Hundreds.

              How many innocent people does the US kill in illegal wars every year?

              I am not standing in judgement because I am a nihilist. But if you asked me to tally up who is worse – the Russian deep state or the American, America wins hands down.

              And that is why America has been the top dog for nearly a century. The smartest brute always rules the roost.

            • Stilgar Wilcox says:

              “The smartest brute always rules the roost.”

              So true. The most aggressive, energy and resource consuming species ever, period. The most sociopathic, aggressive humans do the best, because they aren’t concerned with workers rights or what’s best for the environment, they just want more money, stuff, wives, kids, cars, mansions, jewels, islands, jets, etc.

            • Yes, oneway directional empires sucking everything in like a drain work just fabulously, untill they don’t. And we are likey fast approaching the event threshold as other “systemic” countries and factions of the global elite are switching into another playground, different financial arrangement, whereby you consume only the amount what you barter or pay in relatively sound value of agreed upon tokens to the other party, no more living on overleveraged credit. I guess on the ground this will be called a deflationary/stagflationary new normal, actually several hired actors of the elite like heads of IMF/BIS already even announced this in massmedia we should expect slowdown for ever.

            • edpell says:

              Degenerate more than 1000 killed by police annually. It is a breeding program for the human stock to make them more docile.

            • ktos says:

              You forgot that Russia occupied many european countries for decades after the second world war.

            • yt75 says:

              Did you know Russians were not necessarily the majority at all in USSR government and communist party chiefs ?

            • There seems a little bit of problem with history.. on your part.

              After Napoleon coalition invaded, czarist russians eventually chased them across the continent back to Paris. A century later nazis invaded and soviet russians pushed them back to Berlin with the pricetag of 20+ million dead, therefore creating a future buffer/bumper zone a sphere of influence over satelite states across central and eastern europe, and this global parcelation deal has been agreed upon by the west at Jalta conference towards the end of the WWII.

              There was also the attempt in the 1990s to strip them of the oil and gas.

              I’d not be one bit surprised if next time their tanks park in Brussels.

            • Kulm says:

              Have you ever heard about Antony Sutton?

              Most of the “Soviet” tech came from the Anglo-American sphere for whatever reasons which I am not going to delve further.

              Czarist Russians were helped by the Bank of England and other financiers. On WWI the Brits could not help the Russians thanks to Kemal at Galipoli, and the Czar and his princesses faced the firing squad at Yekaterinburg.

            • edpell says:

              Some faction in the “west” is really pushing for war. Hopefully the combined wisdom of Russia, China, Kissinger, and India can out smart the uneducated, dangerous, Satanists/ideologues who want war.

            • Kulm says:

              I am instead of seeing the Finns recovering Viipuri and St Petersburg, the Germans retaking Moscow thru their baltic proxies and establishing a “Republic of Muscovy” sans nukes, and – China capturing most of Siberia.

              In fact, that might be why Putin is still kept alive since China claiming Siberia would be a bigger disaster than whatever Putin can do now.

            • edpell says:

              Yes, why the “west” has not given Putin cancer yet is a mystery to me.

            • edpell says:

              Hummm, I wondered why Russia and China did not stop the murder of Libya in the U.N.. Perhaps from from a geopolitical point of view destroying EU oil supplier Libya benefited them and the U.S. all three. EU in land war with Russia and only China and U.S. are left.

              China can drive tanks from its east coast to Iran the U.S. must first cross an ocean, humm, who wins?

            • Kulm says:

              General Electric built China’s famed Tibet Railway.

              The road to Persia from China is full of mountains and chokepoints.
              A few well-placed shots can disable the road very easily.

            • InAlaska says:

              Yep, you’re right, and he looks great shirtless on a horse, too. Do you have his pin-up poster on your bedroom wall?

            • Glenn Stehle says:

              gerryhiles says: “The Russian economy is doing quite well.”

              There is no doubt that Putin has done great things for rank and file Russians. This recent article enumerates some of them:

              “Why do Russians still support Vladimir Putin?”
              http://www.newstatesman.com/politics/2015/03/why-do-russians-support-still-support-vladimir-putin

              And whereas Putin has managed to keep Russia’s inequality in check:

              http://darussophile.com/wp-content/uploads/2013/01/russia-gini.jpg

              In the United States it has shot into the blue empyrean:

              http://blogs.lclark.edu/hart-landsberg/files/2011/09/inequality-2.jpg

            • gerryhiles says:

              Thanks for the extra info.

              When, not if, the US imperium collapses like the USSR did, Usans had better pray for a leader like Putin, but they will probably vote for Hitlery Clinton, or mostly just not bother to vote at all.

              It is no accident that Putin has an 80%+ approval rating in Russia,and is “Time Man of the Year” and highly respected around the World.

              I took the trouble to follow the collapse of both the USSR and the USA.\

              The USA will never produce a “Putin”/

              There is something seriously wrong when 90% of a population knows all about Lady Gaga and NOTHING about the wars their politicians foment.

              The USA has been at continuous war since 1776.

              The Founding Fathers were not democrats … they were land and slave owning oligarchs who set up a REPUBIC to preserve their own elite status.

              Nothing has changed, despite a few scant improvements during the 69s and 70s.

              Both JFK and MLK were killed because they dissented, but who cares?

              Both Saddam and Qadafi got murdered for resisting “Amway”.

            • Glenn Stehle says:

              Tolstoy’s Degenerate Grandson says: “I am not clear as to how the US is any different than Russia.”

              If we look beyond the MSM-Wall Street-Washington sound machine, Russia is quite different from the US.

              In the United States, the transnational oligarchs are above the state. In Russia, the state is above the transnational oligarchs.

              It wasn’t supposed to be this way. As the following documentary reveals, it was the oligarchs who put Putin in power. However, when Putin got in power he immediately betrayed the oligarchs, and put the Russian people’s interests above theirs.

              Putin is a nationalist, populist cauldillo (Spanish for strong man) in the same mold as Lázaro Cárdenas del Río. Cárdenas was the Mexican general — authoritarian with little use for democratic processes — who came to power after the Mexican Revolution of 1910. He kicked the transnational oil companies out of Mexico and brought the bacon home to the Mexican people. He was wildly popular with the Mexican people, just like Putin is with the Russian people.

              “The Rise of Putin and the Fall of the Oligarchs”

              https://www.youtube.com/watch?v=Q2Cl8lSv9Is

            • gerryhiles says:

              You know the real narrative. Thanks for providing more details for my assertion about Putin, who entirely lacks hubris.

              I have watched/listened to his many interviews and he is completely unlike any other world leader that I know of, but I do not expect to convince watchers of CNN, etc..

            • Tolstoy's Degenerate Grandson says:

              Democracy is a wonderful system.. Because whenever you expose a vile act you can call that act an anomaly and move on to another slate of leaders and forget about the past.

              Because you have new leaders you can even point to the past and say hey look at how awesome we are, we can even make a movie about an ancient event and nobody even bats and eye.

              Take for instance Kill the Messenger https://www.youtube.com/watch?v=VW4XO-52ubE

              This guy was shut down for exposing something that democracy could not tolerate, and he killed himself.

              Is anyone calling for heads over this? Nope. Never.

              Did Obama call for heads over the beastly illegal acts against Iraq, the torture chambers. Nope.

              To reiterate, the US and Russian and Chinese deep states are driven by the same agendas, power, wealth, control. There are no good guys. You are either a villain or you are under a boot, or kissing a ring

            • Glenn Stehle says:

              And as Emir Sader explains here, the Occidental left, because it is such a prisoner of its parochialism and its own narrow dogmas, just can’t get its head around someone like Putin or Cárdenas:

              “El neocolonialismo intelectual”
              http://www.jornada.unam.mx/2015/04/12/opinion/018a1mun

            • Glenn Stehle says:

              @ Tolstoy’s Degenerate Grandson

              Thanks for the link to the movie ‘Kill the Messenger.’ I was aware of Gary Webb’s story, but not this movie. So I will make sure and take the time to view it.

              The true nature of the U.S. deep state, however, is undoubtedly far more sinister than anything ‘Kill the Messenger’ reveals.

              Late last year Jesús Esquivel published his book ‘La CIA, Camarena y Caro Quintero. La historia secreta’ (The CIA, Camarena and Caro Quintero, The Secret History). Esquivel was granted interviews with the US agent, now retired, who was assigned to investigtate the murder of DEA agent Kike Camarena.

              Camarena had been killed in Mexico by the Guadalajara drug cartel in 1985. It appears the retired agent had experienced an epiphany and did not want to carry the truth about what had happened to Camarena to his grave. He thus told Esquivel the true story of how Camarena had been killed, and why, and not the ficticious account invented by the US government.

              What the retired US agent told Esquivel is that the Mexican drug capo Caro Quintero had indeed killed Camarena, but that he was acting on orders from his protector and overlord, the CIA. Camarena had discovered the CIA was in partnership with the Guadalajara drug cartel smuggling cocaine into the United States, and apparently was going to blow the whilstle.

              The CIA has a litany of reasons for partnering with organized crime, in this case the most obvious being to make money to finance its illegal operations throughout the world — illegal activities it cannot go to the US Congress and ask for the money to pay for.

              Here’s an interview Esquivel did with an alternate TV channel in Mexico, where his findings are explained:

              https://www.youtube.com/watch?v=XuVUBc-9c7Q

              One of the things I find most intriguing is how pervasive pro-US propaganda is within Mexico. US national mythology is, interestingly enough, perhaps more widely believed in Mexico than it is in the United States.

              The above true story about Caro Quintero and his close working relationship with the US deep state is little known by most Mexicans. Instead, the only thing most Mexicans hear are the accounts which issue from the mainstream media news outlets, or the equally ficticious Mexican telenovelas (soap operas) like ‘El Señor de los Cielos’ or ‘La Reina del Sur.’

              According to the narratives spun by both the news outlets and the soap operas, the United States government is always on the side of the angels, doing God’s work in the good fight in the Manichean battle against evil, evil being the drug cartels.

            • Tolstoy's Degenerate Grandson says:

              Agree. Far more sinister than even the most cynical would believe.

              I am almost certain that they took down the Malaysian airliner in Ukraine. And I am 100% certain that they unleashed the gas attacks on women and children in Syria – I know this because Seymour Hersh proved this and his story was killed by the MSM. This is a Pulitzer Prize winning journalist with a massive story and it gets killed?

              That said, the Chinese and Russians are no different. Kindness is weakness and you will be trod on by a fat boot if you demonstrate weakness.

            • richard says:

              “Go learn something” … (note for the Putin fanbase – Urban Dictionary – “Gayrope”)
              or, for example, who was head of the CIA when the “War on Drugs began?”
              but I digress … Drugs have absolutely nothing to do with Energy or the Economy …

  46. Don Stewart says:

    Dear Gail
    Welcome back. I like your post, but do quarrel a little with one aspect of it. You say:

    ‘Wages, viewed in terms of the product produced–oil in this case–can be expected to decrease as well.’

    My quarrel is that no one really wants a barrel of crude oil…they want the things that the barrel of oil will help produce. Just as no one really wants a piece of green paper labeled as the currency of the United States…they want the things that the piece of paper allows them to buy.

    This may sound like a distinction without a difference…but I think it is crucial if we want to think about our alternatives in a world of decreasing energy.

    For example, it is a commonplace that the world gets its calories from grain. And about 80 percent of the grain (at least in the US) is fed to animals or converted to biofuels at a dubious EROEI. The animals convert only about 10 percent of the calories in the grain into calories for humans. Therefore, if what we really want are the calories, we need to first understand the gross inefficiency of the current system. Can we think of more efficient systems? Our survival may depend on it.

    But I think the first step is understanding that it isn’t the oil or the beef that we need, but the calories. Parsing statistics about the current agricultural system can only help us delineate the problem. It will take imagination to get from where we are to where we need to be.

    Another, rather crude, attempt at using current statistics to assess the magnitude of our peril can be found here:

    http://www.zerohedge.com/news/2015-04-14/“we-have-met-enemy-and-he-us”
    Index of Economic Atrophy
    United States, .84; Israel, .53; Canada, .53; Japan, .49; Germany, .37; Australia, .35; Russia, .34; Brazil, .33; India, .32; France, .27; and United Kingdom, .25. [World Bank did not have infrastructure data for China or Iran, but index for both nations, given their other percentages, is unlikely to be, in the worst case scenario, higher than .40.

    While one can quarrel with the methodology used to develop the Atrophy Index, it is very clear why the US has to keep invading other countries to try to keep itself afloat. If the .87 index is anywhere close to being right, it is also clear that, like Imperial Rome, something unpleasant is about to happen.

    It is difficult for most of us to look through the gross statistics to the underlying real objectives, to clearly identify the problems, and think about alternatives. Perhaps impossible for our civilization to reform itself as a totality. But I do believe it is necessary to get about the effort.

    Don Stewart

    • It is pretty hard to change courses, no matter how ridiculous the current course. Health care provides a lot of jobs in the US–in fact, quite a lot of high paying jobs. Feeding the population a better diet and giving them more exercise would have a much better impact on health care than these big expenditures–but who looks at that detail?

      • “Feeding the population a better diet” etc. might allow us to live longer and eventually suffer as many or even more medical incidents prior to dying. (I just returned from the gym. Has a low salt lunch. Will probably have my second knee replacement next week -age 84.4 compliments of medicare.

      • John Day MD says:

        Hear, Hear!
        Grow a real kitchen garden. Eat from it. Be healthier in body and soul.

    • garand555 says:

      “My quarrel is that no one really wants a barrel of crude oil…they want the things that the barrel of oil will help produce. Just as no one really wants a piece of green paper labeled as the currency of the United States…they want the things that the piece of paper allows them to buy.”

      But some people do want those little green pieces of paper. It allows them to behave like a peacock.

    • Joy says:

      “Therefore, if what we really want are the calories,”: this is wrong; we may think that what we want are calories, but what we really need is nutrition. One can get calories from junk food, but one cannot live very long or very well from eating it. Ditto grains: grains are relatively poor in real nutrients, animal products are much higher (compare the vitamins and minerals available from grains vs. meat and you will see). That is why as wealth increases, people instinctively want to eat more meat.

      • Don Stewart says:

        Dear Joy
        With a couple of exceptions, meat is a very poor source of vitamins and minerals as compared to leafy greens from the garden. Leafy greens, however, have very few calories. Therefore, the best way to think about diet is garden veggies for the vitamins and minerals and antioxidants and detoxifying components… and for grains (and grain like crops) and tubers and meat and milk for the calories. In terms of efficient calories, potatoes are hard to beat. But grains have advantages such as storage. Meat has the advantage that, when integrated into a traditional farming system, the animals can play important ecological roles. Grain fed cows are a total waste.

        Don Stewart

        • Jarvis says:

          “Meat is a poor source of vitamins and minerals”? Leafy greens do have minerals and vitamins but the bio-availability is not as good as meat. Google nutrient comparison for liver vs. various fruits and vegetables. Some vitamins are over 100 times more concentrated in meat ( especially organ meat) than leafy greens. For a lot of people grains are problematic. The best thing that can happen to the vast fields of corn and wheat is for natural prairie grasses take over with grazing animals. I would bet a diet of grass fed meat and organic vegetables would cut health care costs in half as that would eliminate most of the auto immune diseases that plague us today.

        • Joy says:

          Yours is a commonly held misconception. Of course, if you eat only muscles meats, you will get less nutrition, but still more than a vegan diet. However, if you eat organ meats and bone broths, there is simply no comparison. Ditto when it comes to the important “fat-soluble vitamins”, (that would be vitamin D3, Vitamin A in it’s most easily absorbable form–many people cannot convert carotenes–, vitamin E, and vitamin K) available primarily through animal fats, such as butter, cream, lard, etc. here are a few essential nutrient available ONLY in animal products (or in some cases only in meaningful quantities and absorbabily): Vitamin B12, Carnosine, Vitamin D3, Vitamin A (see above). I could go on, but don’t want to here. See these few examples as well:
          Calcium
          APPLE (100 g) 3.0 mg
          CARROTS (100 g) 3.3 mg
          RED MEAT (100 g) 11.0 mg
          BEEF LIVER (100 g) 11.0 mg

          Phosphorus
          APPLE (100 g) 6.0 mg
          CARROTS (100 g) 31.0 mg
          RED MEAT (100 g) 140.0 mg
          BEEF LIVER (100 g) 476.0 mg

          Magnesium
          APPLE (100 g) 4.8 mg
          CARROTS (100 g) 6.2 mg
          RED MEAT (100 g) 15.0 mg
          BEEF LIVER (100 g) 18.0 mg

          Potassium
          APPLE (100 g) 139.0 mg
          CARROTS (100 g) 222.0 mg
          RED MEAT (100 g) 370.0 mg
          BEEF LIVER (100 g) 380.0 mg

          Iron
          APPLE (100 g) .1 mg
          CARROTS (100 g) .6 mg
          RED MEAT (100 g) 3.3 mg
          BEEF LIVER (100 g) 8.8 mg

          Zinc
          APPLE (100 g) .05 mg
          CARROTS (100 g) .3 mg
          RED MEAT (100 g) 4.4 mg
          BEEF LIVER (100 g) 4.0 mg

          Copper
          APPLE (100 g) .04 mg
          CARROTS (100 g) .08 mg
          RED MEAT (100 g) .18 mg
          BEEF LIVER (100 g) 12.0 mg

          Vitamin A
          APPLE (100 g) None
          CARROTS (100 g) None
          RED MEAT (100 g) 40 IU
          BEEF LIVER (100 g) 53,400 IU

          Vitamin D
          APPLE (100 g) None
          CARROTS (100 g) None
          RED MEAT (100 g) Trace
          BEEF LIVER (100 g) 19 IU

          Vitamin E
          APPLE (100 g) .37 mg
          CARROTS (100 g) .11 mg
          RED MEAT (100 g) 1.7 mg
          BEEF LIVER (100 g) .63 mg

          Vitamin C
          APPLE (100 g) 7.0 mg
          CARROTS (100 g) 6.0 mg
          RED MEAT (100 g) None
          BEEF LIVER (100 g) 27.0 mg

          Thiamin
          APPLE (100 g) .03 mg
          CARROTS (100 g) .05 mg
          RED MEAT (100 g) .05 mg
          BEEF LIVER (100 g) .26 mg

          Riboflavin
          APPLE (100 g) .02 mg
          CARROTS (100 g) .05 mg
          RED MEAT (100 g) .20 mg
          BEEF LIVER (100 g) 4.19 mg

          Niacin
          APPLE (100 g) .10 mg
          CARROTS (100 g) .60 mg
          RED MEAT (100 g) 4.0 mg
          BEEF LIVER (100 g) 16.5 mg

          Pantothenic Acid
          APPLE (100 g) .11 mg
          CARROTS (100 g) .19 mg
          RED MEAT (100 g) .42 mg
          BEEF LIVER (100 g) 8.8 mg

          Vitamin B6
          APPLE (100 g) .03 mg
          CARROTS (100 g) .10 mg
          RED MEAT (100 g) .07 mg
          BEEF LIVER (100 g) .73 mg

          Folic Acid
          APPLE (100 g) 8.0 mcg
          CARROTS (100 g) 24.0 mcg
          RED MEAT (100 g) 4.0 mcg
          BEEF LIVER (100 g) 145.0 mcg

          Biotin
          APPLE (100 g) None
          CARROTS (100 g) .42 mcg
          RED MEAT (100 g) 2.08 mcg
          BEEF LIVER (100 g) 96.0 mcg

          Vitamin B12
          APPLE (100 g) None
          CARROTS (100 g) None
          RED MEAT (100 g) 1.84 mcg
          BEEF LIVER (100 g) 111.3 mcg

          • Don Stewart says:

            Joy
            let’s agree to disagree. I don’t want to engage in a long and detailed examination. Eat the liver if you want to.

            Don Stewart

            • Jarvis says:

              Don, pretty hard to disagree with Joy when she lays those facts out. We need to live differently and we need to eat differently if we have any hope of surviving what’s coming. Here’s a bonus – talk to your local butcher as I do and get my beef liver for free because nobody wants it! Go ahead and try some real super food for dinner!

            • Don Stewart says:

              Jarvis
              As I said to Joy, I don’t have much interest in engaging in a long argument with people who have bought into the ‘anti nutrient’ theory. Eat your liver if you want to. But I would not advise you to substitute it for leafy greens.

              Don Stewart

            • Jan Steinman says:

              Vegetarianism is an artifact and luxury of a high-energy world.

              Yea, I indulge in it, too. While I can.

            • Don Stewart says:

              Jan
              Two points. First, I’m not promoting vegetarianism. Just promoting eating a lot of leafy greens for their multiple health benefits.

              Second, green leaves are as close as we can get to harvesting sunlight. Everything downstream (beans, tomatoes, grains, grazing animals, milk) are LESS efficient in terms of harvesting the calories created by photosynthesis. I’m not arguing in favor of eating ONLY green leaves…we aren’t gorillas and don’t have the gut to eat green leaves 12 hours a day. But green leaves are the most efficient food we can eat, and they have plenty of defensive compounds thanks to the combination of being exposed to solar radiation and predation and disease.

              Don Stewart

            • Jan Steinman says:

              green leaves are as close as we can get to harvesting sunlight. Everything downstream (beans, tomatoes, grains, grazing animals, milk) are LESS efficient in terms of harvesting the calories created by photosynthesis.

              Ah, “efficiency.” Such a tricky word.

              I submit that, lacking fossil sunlight, it is more “efficient” to consume an animal that has gathered and concentrated nutrients for you, rather than burn your own dearly gained calories picking green leaves.

              In fact, I would even say with fossil sunlight, the animal can be more “efficient,” if you count all the calories supplied by fossil sunlight, and if the animal is grazed, rather than fed fossil-sunlight-soaked grain.

              There is a reason why there is a food chain. There is a reason why creatures higher up the trophic pyramid find it advantageous to consume animals further down the chain. Many paleoanthropologists believe that humans could never have developed a large brain, had they not had access to 1) fire, with which to cook food and thus release nutrients from cellulose and lignin, and 2) meat, which is a highly concentrated trophic source.

              Odum goes into this in great detail in A Prosperous Way Down.

              But this is a rather pedantic argument, no?

      • If people want to live very long, though, they will figure out that they should emphasize fruits and vegetables in their diets, not animal products, in their diets. What happens instinctively (more over processed foods, more animal products), leads to a very overweight population with many health problems.

        • Joy says:

          After being a vegetarian for about 10 years, i switched to a very pure (i.e., grass-fed, local), more meat based diet (which includes the whole animal–meat, organs and bones), and have been eating that way for 15 years. I eat a LOT of butter, cream, eggs and cheese. Of course, I do et some vegetables, but they are secondary for me. I lost 40 pounds when I initiated this change, effortlessly. My health, energy, and mood improved enormously. I eat no processed food. My hypoglycemic issues went away. My parents and grandparents ate that way, and all lived into their late 80s and 90s.

          • xabier says:

            I tend to agree. My English great-grandmother ate the Victorian diet, traditionally British: lots of red meat, liver, kidney, (ah! steak and kidney suet pudding!) potatoes, suet and lard, (chicken was far too expensive to be a weekly item), butter, cream, full-fat milk, and really not much at all by way of greens. Salad? simply unknown. Beetroot I think. Not much sugar. Really it was an 18th century diet, to judge by old cookery books.

            She survived a life of great hardship and tragedy to reach a hale old age. Cause of death in her 90’s: shouting at some children who had kicked a ball against her window led to a heart attack. Mentally very tough, no self-pity, strong belief in God, and physically very active (as I say, a life of hardship): no car, no fast-food. Motto: ‘If I’m not happy, it’s my fault.’

            Eat the best diet in the world and don’t exercise, and you are done for. Substitute junk-food for real food, don’t walk, and we have the ‘obesity epidemic’ nonsense.

            • Jarvis says:

              Gail, When you apply that amazing mind of yours to matter nutritional you’ll find it’s the high carbohydrate diet that’s at the root of most of our modern day maladies. Fruit and vegetables are high carb. For 99.9% of our existence we gathered what we could and most of our nutrition came from hunting which gave us a life free of auto-immune disease, obesity and many cancers and brain destroying disorders. We can live without consuming carbohydrates as our ancestors proved time and time again. Our foray into a high carb life style a generation ago has turned us into the sickest society ever! Pick a disease any disease and check it’s rate of increase over the last 30 years.

            • I agree that a diet high in refined carbohydrates is a disaster. Our current venture into grain fed animals has made fats from these animals a problem. We end up with few good options. I know I eat a lot of nuts–also fish, avocados, cheese that is imported from other countries (so is more likely to be from pasture raised cows).

            • Joy says:

              Thanks for your reply, xavier! It’s very interesting because one of my grandmothers was English, and you have described her exactly! Like yours, she ate a fairly traditional English diet (although probably not quite as traditional as yours), but I remember with great fondness her roasted leg of lamb at Easter, her mouth-watering roast beef, her sardines-on-toast. Like yours, I would describe her as mentally very tough, physically active, no self-pity, and a happy person. She lived to be 87, and was active up to a couple of days before death. Like all my grandparents, and my parents, rarely sick, no degenerative disease like we see today.

        • Jan Steinman says:

          I think it’s much more complicated than that.

          Look at the Inuit and various northern people. For thousands of years, they did very well indeed in a punishing climate, based on an almost-exclusively animal diet. Then they got “civilized,” and started eating grains, and now it’s hard to find one that isn’t obese.

          I’m not saying an exclusive-meat diet is a good choice for everyone. I wouldn’t even say it was good for anyone, given the difficulty of obtaining whale blubber these days. But the fact that it was demonstrably good for someone seems to indicate that things are much more complicated than the FDA or this-or-that self-appointed food expert says.

          • Don Stewart says:

            Dear Jan
            You should take a look at a book called The Queen of Fats, published about 15 years ago. It recounts the story of two Danish medical researchers studying Inuits before there was significant industrial food available in the Far North. They found that the Inuit had a multitude of things wrong with them, but they didn’t have heart attacks. The did have frequent nosebleeds. They collected some blood samples and couldn’t make sense of them. A researcher at the Hormel Institute in Minnesota had identified what we now call the Omega 3 fats, and helped them. The nose bleeds come from the fact that a diet deficient in Omega 6 (which is a dominant fat in industrial food and grains) but with lots of Omega 3 from seafood will make the blood very thin. Thus, heart attacks will be rare, but nosebleeds and bleeding from wounds will be common.

            It is also true that the people in the Far North had learned to open the intestines of their prey to gather the partially digested green material which gave them scarce nutrients which were not available in fish or blubber.

            There is now plenty of industrial food available in the North, and the difference between the peoples there and the people in the temperate zone had faded.

            Don Stewart

    • Jan Steinman says:

      Grain is a problem, not a solution. It doesn’t matter whether you eat it, feed it to animals you eat, or feed it to cars — as conventionally grown, it still requires about 90% of its energy content in fossil sunlight input!

      Until we obtain a large portion of our nutritional needs from perennial crops, we are doomed. Although I’m currently basking in the high-energy luxury of vegetarianism, sending critters out to gather stored sunlight, often grown in areas where grains cannot be grown, seems like a smart thing to do.

      Our goats gather and deliver to us about 5,000 calories per day per animal (two litres of milk), while consuming about 500 calories of grain (about 125 grams) — the amount they can gobble down while on the milking stand. That’s a 10:1 ERoEI on grain!

      • InAlaska says:

        So Jan, what does an average breakfast, lunch and dinner look like around your table?

        • Jan Steinman says:

          Without getting too far into details, I’m guessing we supply about 5/9ths of our calories directly, since we’ve focused on fat and protein (9 calories per gram) versus carbohydrates (5 calories per gram).

          For example, for breakfast, I often have about equal portions of our own yogurt and oatmeal.

          • InAlaska says:

            So, I’m making an assumption that you raise animals and leafy green vegetables and stay away from grains? This sounds like the of diet of pastoral herdsmen that humans were eating just before domestication of wheat.

            • Jan Steinman says:

              you raise animals and leafy green vegetables and stay away from grains?

              I wish! That is a goal I strive for, but fall short.

              Pastoralism is often overlooked as a sustainable life-style. Probably because it’s less compatible with private property than agriculture, and not well suited to over-population. (What sustainable life-style is?)

              But we have a thousand acres of wild public parkland behind us. If governments are unable to enforce property rights, it would make wonderful goat habitat. 🙂

              Yea, I would take up the pastoral life in a minute if it were available.

      • “Grain is a problem, not a solution. It doesn’t matter whether you eat it, feed it to animals you eat, or feed it to cars — as conventionally grown, it still requires about 90% of its energy content in fossil sunlight input!”

        The advantage is, you cannot eat sunlight or oil, and grain stores well in winter. If all I had were pickles and sauerkraut all winter, I don’t know how well that’d go … although it may be possible to grow kale and a few other greens in winter.

        Also, you say you only get 10 percent of the sunlight energy from the grain, but the milk is likely the same or worse – probably the plant only transfers 10 percent to the goat, and the goat 10 percent to you. So, it probably takes 500,000 calories of sunlight to give you your 5000 calories of milk.

        • Jan Steinman says:

          it probably takes 500,000 calories of sunlight to give you your 5000 calories of milk.

          Who cares, if our four-legged friends do all the work of gathering those 500,000 calories!

          Think about how much fossil-sunlight-free effort would go into harvesting those calories otherwise. I’m betting that humans would be less efficient than goats at doing so.

          • “Who cares, if our four-legged friends do all the work of gathering those 500,000 calories!”

            Yes, but for an apples-to-apples comparison, we don’t care how much sunlight goes into wheat, we only care how many calories we must burn to harvest the wheat.

            • Jan Steinman says:

              we only care how many calories we must burn to harvest the wheat.

              But wheat is an annual crop. You don’t even get to the point of harvesting unless you’ve tilled and planted, first.

              Goats are a perennial crop. And they create new goat factories every year, unless you go to considerable trouble to keep them from doing so. 🙂

            • “But wheat is an annual crop. You don’t even get to the point of harvesting unless you’ve tilled and planted, first.”

              For hay, you can harvest for something like 7 years, or 6 and leave fallow seventh year, and sustain decent production; there are probably grain crops that behave similarly. You can harvest without plowing and replanting for decades, but yields drop to less than half.

              Most of these crops (corn, wheat, etc) are supposed to multiply on their own by wind, if you only harvest most instead of all of them and let some go to seed in the field. I think it is all part of getting away from the petro-industrial monoculture maximum production mindset, towards balance, diversity, and sustainability.

            • Don Stewart says:

              Dear Matthew
              Two points:

              First, hay can be grown indefinitely with the hay harvested and moved off the plot. Wes Jackson at The Land Institute in Salina, Kansas, has located two fields which have been continuously hayed for more than a hundred years with no fertilization or irrigation. If you are interested, check out Elaine Ingham’s many talks where she says that soil fertility is created by microbes and plant exudates in the absence of disturbance such as plowing.

              Second, annual crops are basically weeds, which thrive in disturbed soil. However, they do not compete well with perennials in the absence of disturbance. The plowing is required to repress the perennial weedy grasses and then shrubs and trees. If you just leave a wheat field in eastern Kansas to reseed itself year after year, you will pretty quickly have a shrubby field and then a forest. If you are in far western Kansas or eastern Colorado, you will have a short grass prairie without any significant amount of annual wheat.

              You might have quite a bit of intermediate wheatgrass, which is a perennial. Intermediate wheatgrass is what Wes Jackson is using to breed a ‘perennial wheat’. If you want to fool around with some intermediate wheatgrass, you can order some from Arbico Organics. It is generally considered ‘too high in fiber for humans’, since we have become creatures with delicate guts over the last few hundred million years.

              Don Stewart

            • garand555 says:

              “But wheat is an annual crop. You don’t even get to the point of harvesting unless you’ve tilled and planted, first.”

              Yes, you have to plant it every year, and if you saved enough seed, you can replant if something goes awry. There are many a year where my fruit trees have produced nothing due to either it being warm early, then reverting to normal and freezing, or just a straight late freeze. In those instances, perennial crops were inferior.

      • Don Stewart says:

        Jan
        I’m not trying to promote any particular approach to a survival garden. My only message is that making calculations which begin with a dysfunctional system as the base condition isn’t likely to be helpful…other than to point out the problems.

        Marjorie Wildcraft uses her own gardening experience to promote a Produce Half Your Calories in Your Back Yard with less than a hour per day. Her system involves chickens for eggs, rabbits for meat, and a 200 square foot garden. Carol Deppe has written about her experiments with gardens for tough times. One of her key elements is corn. There are lots of other people with good ideas, and I suggest people simply take a look and try to figure out what works…and get started.

        Marjorie ran a webinar very recently which drew over 30,000 viewers. So some people are interested.

        Don Stewart

        • jeninorton says:

          Carol Deppe’s book, The Resilient Gardener, is excellent. Corn, beans, potatoes, ducks (for eggs and meat) and squash. Support her by buying the book if you can afford it, else try google.
          Of course every region (climate/soil type combination) will have its own set of ideal staples that could take some time to figure out. Start soon–these skills will be useful to us all.

          My own preference is for perennials–nuts, fruits and vegetables wherever possible. With animals doing most of the work and providing meat, milk etc. Permaculture in other words.

          • garand555 says:

            Whenever you read a book like that, start doing the comparison of the author’s environment vs yours, and start thinking about what the energy inputs are. I have ducks, and I’m in the southwest, and believe me, that would be very stupid and impractical in most places around here without fossil fuels. I could make it work right where I am, but I also have access to water year round, drought or no. You need to ask yourself: If electricity or water became either prohibitively expensive or if you had to provide it yourself, how would you care for those ducks?

            Pay attention to how your local ecosystem works and go with it. Ducks may be great for Deppe. I could make them work. But I see people using raised beds around here because somebody who is a successful gardener in some place like Oregon or Maine uses them, and it doesn’t make nearly as much sense. Here, planting in places that catch the water is better. Besides, it takes energy to make a raised bed.

  47. Daddio7 says:

    It seems fracking saved us from oil speculators and cartels. The end consumers of crude oil were finally able to negotiate prices on their terms. Pipeline attacks and oil platform fires no longer create price spikes. We now have speculators shorting oil.

    • I agree–end consumers have finally been able to negotiate prices on their terms. Unfortunately, these prices are not high enough for producers.

  48. Reblogged this on Stephen Hinton Consulting and commented:
    No-one lays it on the line better about how economy and energy are linked than Gail.

  49. bobski2014 says:

    Hello Gail,
    Would it be reasonable to surmise that pro-tem the diminishing marginal returns issue – ultimately unavoidable – is being sequestered by “globalisation” which is for a while anyway going to counter its effects by substituting very low cost labour in place of high cost Western labour ?

    That in itself of course has severe Western Economy implications because it puts Western workers out of decently paid jobs. As China’s economy slips, would be it likely that the first effects will be to reduce Chinese labour costs rather than return jobs to the West?

    The never ending question as ever being “When will the effects be felt?” That they will be seems inevitable, and that when they are it’s likely to be sudden, but how on earth could we tell WHEN.

    One more question that occurred to me this morning is – if global oil production is in excess of demand, as suggested by the oil price perhaps, then surely somewhere it’s being stored. How long can that go on? Or am I naively misunderstand the situation which is perhaps not a physical production one, but rather a future-contracts one.

    • I think globalization is a big part of what has allowed growth to continue since 2000. The availability of oil from Russia, thanks to the 1991 collapse of the Former Soviet Union helped as well.

      As China slips, I expect that jobs will move to even lower-cost areas, such as India, Bangladesh, and Philippines. Otherwise, they will disappear altogether.

      As I understand it, the US is the primary place where excess oil is being stored. Once US storage gets filled up, oil prices are likely to drop much lower. In the meantime, ETF demand for oil keeps the prices of futures up.

      No one knows about timing for sure, but it seems like we are vulnerable to problems in the next few months, as layoffs in the oil industry take place, and storage fills up.

    • richard says:

      When?
      A couple of thoughts … If you take the view that the present dip in oil prices was facilitated by the FED’s tapering March-Oct 2014, then it seems probable that a rate hike, however modest, in June this year will ensure that demand and oil prices will remain depressed. I’m assuming that you have already factored in a judgement on the timing to overflowing oil storage capacity, and whether Saudi Arabia will be the first to blink.
      Alternatively, if the FED keeps rates low, then insurance and pensions industries can only survive so long before creating another Lehman event … ISTR Deutche Bank suggests 2018 as a possibility there.

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