Why EIA, IEA, and BP Oil Forecasts are Too High

When forecasting how much oil will be available in future years, a standard approach seems to be the following:

  1. Figure out how much GDP growth the researcher hopes to have in the future.
  2. “Work backward” to see how much oil is needed, based on how much oil was used for a given level of GDP in the past. Adjust this amount for hoped-for efficiency gains and transfers to other fuel uses.
  3. Verify that there is actually enough oil available to support this level of growth in oil consumption.

In fact, this seems to be the approach used by most forecasting agencies, including EIA, IEA and BP. It seems to me that this approach has a fundamental flaw. It doesn’t consider the possibility of continued low oil prices and the impact that these low oil prices are likely to have on future oil production. Hoped-for future GDP growth may not be possible if oil prices, as well as other commodity prices, remain low.

Future Oil Resources Seem to Be More Than Adequate

It is easy to get the idea that we have a great deal of oil resources in the ground. For example, if we start with BP Statistical Review of World Energy, we see that reported oil reserves at the end of 2013 were 1,687.9 billion barrels. This corresponds to 53.3 years of oil production at 2013 production levels.

If we look at the United States Geological Services 2012 report for one big grouping–undiscovered conventional oil resources for the world excluding the United States–we get a “mean” estimate of 565 billion barrels. This corresponds to another 17.8 years of production at the 2013 level of oil production. Combining these two estimates gets us to a total of 71.1 years of future production. Furthermore, we haven’t even begun to consider oil that may be available by fracking that is not considered in current reserves. We also haven’t considered oil that might be available from very heavy oil deposits that is not in current reserves. These would theoretically add additional large amounts.

Given these large amounts of theoretically available oil, it is not surprising that forecasters use the approach they do. There appears to be no need to cut back forecasts to reflect inadequate future oil supply, as long as we can really extract oil that seems to be available.

Why We Can’t Count on Oil Prices Rising Indefinitely

There is clearly a huge amount of oil available with current technology, if high cost is no problem. Without cost constraints, fracking can be used in many more areas of the world than it is used today. If more water is needed for fracking than is available, and price is no object, we can desalinate seawater, or pump water uphill for hundreds of miles.

If high cost is no problem, we can extract very heavy oil in many deposits around the world using energy intensive heating approaches similar to those used in the Canadian oil sands. We can also create gasoline using a coal-to-liquids approach. Here again, we may need to work around water shortages using very high cost methods.

The amount of available future oil is likely to be much lower if real-world price constraints are considered. There are at least two reasons why oil prices can’t rise indefinitely:

  1. Any time oil prices rise, economies that use a high proportion of oil in their energy mix experience financial problems. For example, countries that get a lot of their revenue from tourism seem to be vulnerable to high oil prices, because high oil prices raise the cost of airline travel. Also, if any oil is used for making electricity, its high cost makes it expensive to manufacture goods for export.
  2. When oil prices rise, workers find that the cost of food tends to rise, as does the cost of commuting. To offset these rising expenses, workers cut back on discretionary spending, such as going to restaurants, going on long-distance vacations, and buying more expensive homes. These spending cutbacks adversely affect the economy.

The combination of these two effects tends to lead to recession, and recession tends to bring commodity prices in general down. The result is oil prices that cannot rise indefinitely. The oil extraction limit becomes a price limit related to recessionary impacts.

The cost of oil is currently in the $60 per barrel range. It is not even clear that oil prices can rise back to the $100 per barrel level without causing recession in many counties. In fact, the demand for many things is low, including labor and capital. Why should the price of oil rise, if the overall economy is not generating enough demand for goods of all kinds, including oil?

Oil Companies Can Report a Wide Range of Oil Prices Needed for Profitability

The discussion of required oil prices is confusing because there are many different ways to compute oil prices needed for profitability. Companies make use of this fact in choosing information to report to the press. They want to make their situations look as favorable as possible, because they do not want to frighten bondholders and prospective stock buyers. This usually means reporting as low a needed price for profitability as possible.

Oil prices can be computed on any of the following bases (arranged roughly from lowest to highest):

  • (a) The “going forward” cost of extracting oil from wells that are already in place, excluding fixed expenses that the company would incur anyhow. This cost is likely to be very low, likely less than $30 barrel.
  • (b) The cost of drilling new “infill” wells in existing fields, excluding the overhead expenses the company would incur anyhow.
  • (c) The cost of opening up a new oil field and drilling new wells, excluding the overhead expenses the company would incur anyhow.
  • (d) Add to (c), overhead expenses (but not including taxes paid to governments, dividends to policyholders, and interest on borrowed funds).
  • (e) Add to (d) amounts paid to government, dividends to policyholders, and interest on borrowed funds.
  • (f) The price required so that the oil company has sufficient cash flow so that it doesn’t need to keep taking on more debt. Instead, it can earn a reasonable profit (and from this pay dividends), and still have sufficient funds left for “Exploration & Development” of new fields to offset declines in production in existing fields. It can also pay governments the high taxes they require, and pay other ongoing expenses. Thus, the system can continue to operate, without assistance from other sources.

I would argue that if we actually want to extract a large share of technically recoverable oil, we need oil prices up at this top level–a level at which companies are making a reasonable profit on a cash flow basis, so that they don’t have to go further and further into debt. If they are getting less than they really need, they will send drilling rigs home. They will use available funds to buy back their own shares, rather than spending as much money as is required to develop new fields to offset declines in existing fields.

Required Oil Prices

Many people believe that low prices started in late-2014, when oil prices dropped below the $100 barrel level. If we look back, we find that there was a problem as early as 2013, when oil prices were over $100 per barrel. Oil companies were then complaining about not making a profit on a cash flow basis–in other words, the highest price basis listed above.

My February 2014 post called Beginning of the End? Oil Companies Cut Back on Spending (relating to a presentation by Steve Kopits) talks about oil companies already doing poorly on a cash flow basis. Many needed to borrow money in order to have sufficient funds to pay both dividends and “Exploration & Production” expenses related to potential new fields. Figure 1 is a slide by Kopits showing prices required for selected individual companies to be cash flow neutral:

Figure 1.

Figure 1.See this link for larger view of image.

The problem back in 2013 was that $100 per barrel was not sufficient for most companies to be profitable on a cash flow basis. At that time, Figure 1 indicates that a price of over $130 per barrel was needed for many US companies to be profitable on that basis. Russian companies needed prices in the $100 to $125 range, while the Chinese companies PetroChina and Sinopec needed prices in the $115 to $130 per barrel range. The Brazilian company Petrobas needed a price over $150 per barrel to be cash flow neutral.

Kopits doesn’t show required prices for OPEC countries to be cash flow neutral, but similar price estimates (required funding including budgeted tax amounts) are available from Arab Petroleum Investments Corporation (Figure 2, below).

Figure 2. Estimate of OPEC break-even oil prices, including tax requirements by parent countries, from Arab Petroleum Investments Corporation.

Figure 2. Estimate of OPEC break-even oil prices, including tax requirements by parent countries, from Arab Petroleum Investments Corporation.

Based on this exhibit, OPEC costs are generally over $100 per barrel. In other words, OPEC costs are not too different from non-OPEC costs, when all types of expenses, including taxes, are included.

As more oil is extracted, the tendency is for costs to rise. Figure 3, also from the Kopits’ presentation, shows a rapid escalation in some types of costs after 1999. This is what we would expect when we reach the end of readily available “cheap to extract” oil and move to more expensive-to-extract unconventional types of oil.

Figure 3. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel.

Figure 3. Figure by Steve Kopits of Douglas Westwood showing trends in world oil exploration and production costs per barrel. CAGR is “Compound Annual Growth Rate”.

What prices do we need on a going-forward basis, to keep the oil extraction system operating on a long-term basis? I would argue that we need a price of at least $130 now in 2015. In the future, this price needs to rise to higher and higher levels, perhaps moving up quite quickly as we move to more-expensive-to-extract resources.

Is it really necessary to include tax revenues in these calculations? I would argue that the inclusion of taxes is especially important for oil exporting nations. Most of these countries depend heavily on oil taxes to provide funds to operate programs providing food and jobs. As the quantity of oil that they can extract depletes, and as the population of these countries rises, the per-barrel amount of revenue required to fund these government programs is likely to increase. If we want to have a reasonable chance of stability within these countries (so that exports can continue), then we need to expect that the tax loads of companies in oil exporting nations will increase in the future.

Also, if there is any plan to subsidize “renewables,” funds to make this possible need to come from somewhere. Indirectly, these funds are available because of surpluses made possible by the fossil fuel industry. Thus taxes from the fossil fuel industry might be considered a way of subsidizing renewables.

Why Production Doesn’t Quickly Reset to Match Prices

Do we really have a problem with oil prices, if oil production hasn’t dropped quickly in response to low prices? I think we do still have a problem.

One reason why oil production doesn’t quickly reset to match prices is related to many different ways of reporting oil extraction costs, mentioned above. A company may not be making money when all costs are included, but it is making money on a cash flow basis if “sunk costs” are ignored.

Another reason why oil production doesn’t quickly reset to match prices is the fact that oil is the lifeblood of companies that produce it. “Cutting back” means laying off trained workers. If these workers are laid off, companies will find it nearly impossible to rehire the same workers later. The workers have families to support; they will need to find work, even if it is in other industries. Companies will need to train new workers from scratch. Thus, companies will do almost anything to keep employees, no matter how low prices drop on a temporary basis.

A similar issue applies to equipment used in oil operations. Drilling equipment that is not used will deteriorate over time and may not be usable in the future. A USA Today article talks about auctions of equipment used in the oil industry. This equipment is likely to be permanently lost to the oil industry, making it hard to ramp back up again.

If a company is a government owned company in an oil-exporting nation, there is an even greater interest in keeping the company operating. Very often, oil is the backbone of the entire country’s economy; most tax revenue comes from oil and gas companies. There is no real option of substantially cutting back operations, because tax funds and jobs are badly needed by the economy. Civil unrest could be a problem without tax revenue. In the short run, some countries, including Saudi Arabia, have reserve funds set aside to cover a rainy day. But these run out, so it is important to maintain market share.

There are additional reasons why oil production stays high in the short term:

  • Some companies have contracts in the futures market that cushion price fluctuations, so they may not directly “feel” the impact of low prices. Because of this, they may not react quickly.
  • Oil companies will very often have debt obligations that they need to meet, and need cash flow to keep meet them. Any cash flow, even if the price covers only a bit more in the direct cost of extraction, is helpful.
  • Large amounts of equity funding have been available, even for companies issuing “junk bonds.” Companies that would otherwise be reaching debt limits have been able to issue large amounts of stock instead. Bloomberg reports that in the first quarter, $8 billion in stock was issued, which is a record.

All of these considerations have allowed production to continue temporarily, but are unlikely to be long-term solutions. In the long run, we know that we are likely to see problems such as defaults on junk rated bonds of oil companies. Futures contracts guaranteeing high prices eventually run out. Also, if prices remain low, government programs of oil exporting countries may need to be cut back, leading to unrest by citizens.

Regardless of what is happening in the short-term, it is clear that eventually production will drop, quite possibly permanently, unless oil prices rise substantially.

Why are Oil Prices so Low?

I see two reasons for low oil prices:

  1. Debt is now not rising fast enough, because debt levels are reaching limits. Increases in debt levels tend to hold up commodity prices because increasing amounts of debt allow consumers to buy additional cars, homes, factories and other goods, thus creating “demand” for oil and other commodities. At some point, debt limits are reached. This can happen because a growth spurt is slowing, as in China, or because governments are reaching limits on the ratio of debt to GDP that they can carry. When debt levels stop rising rapidly, the debt “pump” that has been holding up prices in the past disappears, and commodity prices tend to stay at a lower level.
  2. The wages of ordinary workers are lagging behind. If a young person cannot find a good paying job (or owes too much on college loans), he most likely will live with his parents longer, delaying the purchase of a house and car. If a family discovers that the cost of day care for children plus the cost of commuting is more than the wages of the lower-earning parent, the lower-earning parent may choose not to work. A household with only one employed worker is less likely to buy a house or a second car than a two-worker household. These kinds of responses to low wages tend to hold down “demand” for goods made with commodities. Thus, affordability issues (or low demand related to affordability) tends to hold down the prices of commodities.

The problem of lagging wages of ordinary workers is a very old one. The problem occurs whenever there are issues with diminishing returns. For example, when population reaches a level where there are too many farmers for available land, the average size of plot for each farmer tends to decrease. Each farmer tends to produce less, because of the smaller size of plot available. If each farmer is paid for what he produces, his wages will drop.

We are reaching the same problem today with oil. We continue to produce increasing amounts of oil, but doing so requires increasing numbers of workers and increasing amounts of resources of other types (including fresh water, steel, sand for fracking, and energy products). Workers are on average producing less oil per hour worked. In theory, they should be paid less, because the value of oil is determined by what the oil can do (how far it can move a vehicle), not how much labor was required to produce the oil.

The same problem is occurring in other areas of the economy, including natural gas production, coal production, electricity production, medicine, and higher education. At some point, we find the economy as a whole becoming less efficient, rather than more efficient, because of diminishing returns.

We know from Peter Turchin and Surgey Nefedov’s book, Secular Cycles, that low wages of common workers were frequently a major contributing factor to collapses in pre-fossil fuel days. With lower wages, workers were not able to buy adequate food, allowing epidemics to take hold. Also, governments could not collect adequate taxes from the large number of low-earning workers, leading to governmental financial problems. A person wonders whether today’s economy is reaching a similar situation. Will low wage growth of common workers hold down future GDP growth, or even lead to collapse?

Are the Projections of EIA, IEA, BP, and all the Others Right?

Perhaps these projections would be reasonable, if oil prices could immediately bounce to  $130 per barrel and could continue to inflate in the years ahead.

If, on the other hand, low oil prices are really being caused by lagging wages of ordinary workers and the failure of debt levels to keep rising, then I don’t think we can expect oil prices to reach these lofty levels. Instead, we can expect oil production to fall because of low prices.

The amount of oil available at $60 per barrel seems to be quite low. Perhaps a little low-priced oil would be available from Kuwait and Qatar at that price, but not much else. Some additional oil might be obtained, if governments of non-oil exporters (such as the USA and China) choose to cut back their tax levels on oil companies. Even with the additional oil made possible by lower taxes, total oil supply would still be far less than needed to run today’s world economy.

The world economy would need to contract greatly in order to shrink down to the oil available. Such shrinkage might be accomplished by a cutback in trade and loss of jobs. Debt defaults would likely be another feature of the new smaller economy. Such a scenario would explain how future oil production may deviate significantly from the forecasts of EIA, IEA, and BP.

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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904 Responses to Why EIA, IEA, and BP Oil Forecasts are Too High

  1. GreenHick says:

    Couldn’t find much to disagree with here. Might be interesting to hear more about what major adjustments might occur. What price lows would it take for companies to shut in existing supplies in high cost operations? Given that a fraction of hydrocarbon supplies are non-catastrophically burnable from an ecological perspective, is it possible that companies get out of exploration–due to decline of financing, subsidies–and instead seek to maximize returns as they wind down operations? Might we see a wave of nationalizations as private companies begin to sell off unprofitable plays, and countries (or militaries) step in to keep the spigots open at a loss? Might we see a concerted shift from non-essential consumption toward essentials–food, water, shelter, decarbonization of economic activity…?

  2. richard says:

    “Eurofuel’s apparent concern follows Denmark’s decision to effectively outlaw oil heating in 2012. Since January 2013, the installation of oil and gas fired heating systems in new buildings has been banned. Next year, as Danes seek to reduce their fossil fuel consumption by 33% over the next 7 years – the installation of oil fired boilers into existing buildings where district heating or natural gas is available will be prohibited.”

  3. richard says:

    Politics in action: Westminster praised the renewables industry prior to the Independence vote. Now, if the SNP is for it, Westminster is against it:
    “Mr Ewing said repeated the wind farm companies’ claims the move could cost consumers £3 billion, adding: “We have warned the UK Government that the decision, which appears irrational, may well be the subject of a judicial review.” But Murdo Fraser, Scottish Tory energy spokesman, said: “This is a Conservative Government standing up for communities that the central belt SNP couldn’t care less about.” He added: “The latest figures show that, with all the wind projects already constructed, those under construction or given consent, we have already met the SNPs 100 per cent target for renewable electricity.”“

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  5. Artleads says:

    Thanks Jan,

    I know. Just used the wrong term to cut things short. Will inquire locally if anybody can advise re: controller/electronic package.

  6. Don Stewart says:

    Dear Gail and Finite Worlders
    Here is an interesting interview with Dennis Meadows. Among other things, he explains that Climate Change is now under the control of feedback loops. Agreeing to cut fossil fuel use in the future, as the G7 agreed to do, is largely irrelevant. Also see his analysis of unconventional oil, which doesn’t have the energy return on investment needed to fuel economic growth.

    Don Stewart

    • Jan Steinman says:

      Here is an interesting interview with Dennis Meadows.

      For those who don’t recognize him, Dennis (along with his wife Dana and Jørgen Randers) was one of the co-authors of the ground-breaking 1970 book, Limits to Growth, which was the first wide-scale application of computers to resource modelling, and which has recently been vindicated as being “on track” in its predictions.

    • Stefeun says:

      Thanks Don,
      especially liked “The dominant drivers of the system are not people sitting around trying to reach a consensus about which of several different possible outcomes they most prefer.”
      (even more with uncomplete inputs and wrong model!)

      On this same website you can find an essay by Herman Daly, Economics for a Full World (http://www.greattransition.org/publication/economics-for-a-full-world). I mention it because I very much agree with the analysis in its first part (albeit lacking important factors such as Max.Power principle and MEP), but wasn’t able to read until the end, as the proposed solutions sounded to me like irrealistic wishful thinking, and let me puzzled. Maybe it’s only because I consider the concept of “Ultimate End” as a nonsense…

  7. Fast Eddy says:

    The net effect of all that will be the disappearance of nominal wealth — it crosses an event horizon into a black hole never to be seen again. The continent discovers it is a lot poorer than it thought. Fifty years of financial engineering comes to the grief it deserves for promoting the idea that it’s possible to get something for nothing.

    The same thing more or less awaits the USA, China, and Japan. For the USA in particular the signs of bankruptcy have been starkly visible for a long time outside the bubble regions of New York, Washington, and San Francisco. You see it in the amazing decrepitude of the built environment — the cities and towns left for dead, the struggling suburban strip malls tenanted if at all by wig shops and check-cashing operations, the rusted bridges, pot-holed highways, the Third World style train service. Most sickeningly you see it in a population of formerly earnest, hard-working, basically-educated people with hopes and dreams transformed into a hopeless moiling underclass of tattooed savages dressed in baby clothes devoting their leisure hours (i.e. all their time) to drug-seeking and the erasure of sexual boundaries.

    More http://kunstler.com/clusterfuck-nation/history-in-free-verse/

  8. Fast Eddy says:

    When the bankers do this in the open… surely this is a sign that the Apocalypse is Near http://www.zerohedge.com/news/2015-06-22/let-them-snort-coke-subway

  9. Don Stewart says:

    Response to Stefeun and Edpell and perhaps others

    The question of what happens when growth goes negative and the repercussions on the financial system, plus the question of how many humans are really needed, needs, in my opinion, a nuanced answer. Here is either an obscure answer or a nuanced answer, according to your lights.

    Humans exist because of a very long string of contingencies. For example, the eukaryotic cells which make up humans came to pass through the fusion of a prokaryote with another microorganism in a kind of physical cooperation initially, which eventually gave rise to a new form of life (an emergent property) that could reproduce more efficiently. Likewise, the chloroplasts in modern plants are the descendants of ancient symbiotic cyanobacteria, which installed themselves in plant cells about a billion years ago. In addition, the higher animals formed symbiotic relationships with the gut bacteria.

    We also exist because humans evolved the ability to form cooperative groups as opposed to free individuals, because the groups give more security and enhance the probability of survival.

    If we look specifically at ‘modern Western man’, we find numerous ways that MWM has evolved to take advantage of the generally increasing amount of work that energy has made available to him. The energy can be seen as originating basically from the sun (some of it through photosynthesis in plants), from fossil fuels, and from nuclear. Increases in plant photosynthetic output helped our distant ancestors to multiply. Learning to use heat from the sun also helped us multiply and occupy new niches. An explosive boost was delivered by fossil fuels. Nuclear is unclear, but may have delivered no net work at all, but rather served as an energy carrier.

    With each increase in the work which could be done with the increase in energy, new adaptations in terms of infrastructure and social behavior became possible. Thus, we began to build permanent houses in settled villages, and later we began to let money be the grease for trading goods and services globally. At the present time, we have an enormous built infrastructure (including domesticated animals) and debt-money is the grease for the global economy.

    Suppose the debt-money system fails, for whatever reason. And we can think of a number of reasons why it might. But let’s assume that, along with whatever purely financial instigations cause the failure, we are also looking at a reversal in the long upward trajectory of work which can be accomplished with the energy we can control.

    Let’s assume that we have a financial Deux ex Machina, and the BRICS bank manages to survive the financial catastrophe, and the settlement process worked out by the Russians also survives. So, purely in financial terms, we have a way to finance global trade. Any debt would be strictly short term. Lot’s of previously rich people would lose their paper assets, but, in principle, the real production system could operate.

    What sort of problems might we expect to encounter, as we review how humans have evolved and how they might need to evolve to adapt to the much more challenging environment of reduced work from energy?

    First, we make the simple observation that the symbiosis with the gut microbes is currently under attack with antibiotics all across the West. We would expect that poor health will kill many people, as a result. In addition, we have formed the habit of growing and processing foods which our gut bacteria are not adapted to. We would expect that we cannot spin our agriculture on a dime, and that more people will die as a result.

    Second, when we look at the built infrastructure and think about it from an evolutionary perspective, we see a lack of symmetry. When we gained more work from energy we controlled, we could continue on with the less work-intensive methods while new methods replaced them. Cars did not replace buggies and walking overnight. But if we lose cars on Black Friday, we cannot all immediately revert back to buggies and walking. A chip factory is of no value if there is no electricity. And so forth. Because much of the infrastructure would be useless, we can expect yet more people to die due to lack of production.

    Third, when we look at the social skills which we have evolved to live in a high work from abundant energy world, we see that they are ill-adapted to a low work from scarce energy world. For example, we now count on doing business with people we will never know or see…all mediated by fiat money. While the BRICS bank might keep us alive for a short while, it is very likely that we will be forced to adapt to a much lower work from energy world. Exactly how much lower and exactly what the resulting arrangements might look like are speculative. We can get some ideas by looking at societies which have lived with much lower fossil fuel budgets, or societies which lived with no fossil fuels at all. But it seems to me that the population is going to have to shrink.

    But what percentage of the population is REQUIRED to survive? There, I suspect the answer is ‘very few’. The basic social mechanism is the band of perhaps 150 humans. So, each of us who plans to survive really needs 149 other people with whom we can form cooperative units. There can be multiple bands, but humans have gone through very narrow bottleneck events in the past, and survived.

    Fourth, similar to social skills and infrastructure, the question of knowledge and manual skills exhibits a similar problem if we try to reverse it. The Plains Indians and the Australian Aborigines both found abundant food, but neither farmed or worked very hard as we understand those terms. They had an astonishing amount of knowledge, much of which has been lost, and they had manual skills that let them catch or gather and eat a huge variety of foodstuffs, and survive in hard climates. Western Man has mostly destroyed the environment that hosted the Plains Indians and the Aborigines, so even if we had the knowledge and skills, it wouldn’t give us the same return. Expect more deaths.

    Don Stewart

    • Jan Steinman says:

      humans have gone through very narrow bottleneck events in the past, and survived.

      As few as 1,000 breeding pairs, some 100,000 years ago. (Wikipedia)

      That would rule me out. How many of us have been “snipped” and voluntarily removed ourselves from the gene pool? I’ll have to find some other use than as half a “breeding pair.”

    • Artleads says:

      “A chip factory is of no value if there is no electricity. And so forth. Because much of the infrastructure would be useless, we can expect yet more people to die due to lack of production.”

      I’m not aware of any infrastructure that can’t “produce work.” For instance, glass windows can magnify heat. Plants can grow up the walls of tall buildings. Food can be grown on roofs. Water can be heated on roofs. Forests can be planted on highways. Every piece of infrastructure I know of can be repurposed or recycled. And lets say we needed to plant wood forest throughout a million miles of interstate highway. Would that not require a huge labor force? How do we know that we don’t need more people rather than fewer to make the future work?

      • Don Stewart says:

        Good points. In a hot sunny climate, the north side of a building is useful for growing plants in the summer. In the winter, the south wall reflecting heat is similarly useful.

        I just wasn’t thinking broadly enough.

        Don Stewart

        • Artleads says:

          Thanks, Don. I can always count on you to present something interesting/thoughtful that stimulates response. 🙂

      • sheilach2 says:

        Before OIL, glass was a very rare item, only the rich could afford glass ware.
        Without oil or natural gas, we won’t be able to make such glass. Early glass was thick & formed around a core. Sheet glass was difficult to make.
        Sure you can grow food on top of your roof, but you would also have to haul water up to your roof in a bucket, groan!
        Without those black plastic pipes, how can you heat water on your roof?
        I guess after the collapse, there will be far fewer people so the survivors could recycle the black plastic piping from their now dead neighbors.

        We will need to relearn how our ancestors lived without electricity or fossil fuels & there are books that show many of the crafts & skills they needed to produce everything they needed. Young people need to learn these skills now, while there is time while we still have the books & teachers to show them how it was done. Hunting, trapping skills without modern weaponry would also be of value.
        Those that survive the approaching bottleneck, will find there will be plenty of work that needs to be done, there will be few idle hands.

        What I fear is that during the turmoil of collapse much knowledge will be lost, libraries could be burned, museums destroyed etc.
        We can’t allow this to happen, books must be saved that have the knowledge we will need afterwards, we must save as much non fiction works as possible.
        The future will not be a rerun of the past, the environment is very different, the rich ores, soils, abundant wildlife & fish are gone.
        It will be an impoverished future with no hope of advancing much beyond what the Romans had accomplished, if we are lucky & don’t go extinct.

        • Jan Steinman says:

          during the turmoil of collapse much knowledge will be lost, libraries could be burned, museums destroyed etc.
          We can’t allow this to happen, books must be saved that have the knowledge we will need afterwards, we must save as much non fiction works as possible.

          Yea, I have a searchable collection of over 1,200 paper books, and a lot more on Kindles, which I think is the most likely technical artifact to survive (low power drain, no-power static display).

          I highly recommend the Foxfire series of six books, if you get nothing else. In the 70s, anthropologist Eliot Wigginton and his students interviewed dozens of Appalachian people, living in primitive conditions in the mountains. None of them had electricity nor running water back then — amazing to the Doombaya crowd, but true!

        • Artleads says:

          sheilach2 says:

          “We will need to relearn how our ancestors lived without electricity or fossil fuels & there are books that show many of the crafts & skills they needed to produce everything they needed. Young people need to learn these skills now, while there is time while we still have the books & teachers to show them how it was done. Hunting, trapping skills without modern weaponry would also be of value.”

          I agree entirely. Any teacher, school or school district that isn’t *trying* to do some of these things NOW is irresponsible and/or misguided. But all these educational entities have more problems than Job…

          “Those that survive the approaching bottleneck, will find there will be plenty of work that needs to be done, there will be few idle hands.”

          Herein lies the argument for a larger rather than smaller population. BTW, I’ll take Fast Eddy’s clarification on one thing: I’m only talking in the context of some form of BAU continuing. I also value Gail’s point that we need to know where the resources used come from.

          What I see as a bottleneck is oil and gas going away. So no more industrial society run on fossil fuels. So I’d propose instead a kind of information society, using all those books and libraries mentioned, and much more. Inventorying what materials are here now, toward repurposing and rationing their use. Since there would be no work to be had from fossil fuels, work would have to be devised by the remnants of earlier civilization. And we’d have to behave and organized ourselves very differently.

          Of course, we could refuse to refashion our behavior, and that will speed up our extinction considerable. It’s up to everybody out there to decide whether they want to be stupid and self indulgent, and die unpleasantly and swiftly, OR whether they want to be stoic and cooperative so as to live to fight another day.

    • Stefeun says:

      sorry for the delay of this reaction.
      No doubt that Gaïa will find its way out of this mess, life also, very likely, but for the human race it’s less clear, although not impossible. Our species has unsuspected survival abilities, and very few individuals are sufficient, so who knows?

      In the scenarios you describe, you seem to consider that some parts of our current system can survive, at least for a while. That’s where we differ; my opinion -which maybe will be proved wrong- is that our obese human organisation is in so big overshoot at all levels, that it’ll have to crash as soon as some key parameters turn negative due to lack of net energy (shrinking is not an option), and moreover today all our sub-systems are so interconnected, interdependant, that we’re in a kind of All-or-Nothing situation.
      The big old rigid structures have to die in order to give way to new smaller flexible ones that will thrive (or not) in the new environment.

      IMHO the next crash will have very damaging consequences, spreading far beyond strucures directly plugged into BAU, and reducing even more the already very depleted carrying capacity of the environment, littered with our wastes (some of which are radioactive…).

      Again, this is my own conclusion, and I don’t want to convince anybody. I’m unable to see beyond that point, and am more interested in investigating the present situation and search if I missed something that coud change the outcome, than trying to imagine a possible future, which will inevitably differ a lot from all speculations, even if basic survival skills are likely to be useful, in case survival is possible. That’s not doomerism, just cold evaluation (well, as cold as I can…).

      • Don Stewart says:

        Dear Stefeun
        Taking my walk this morning, it occurred to me that we are faced with:
        *Declining exergy available to us
        *Loss of natural capital (in the sense of Herman Daly)
        *Pollution which must be dealt with

        So, at the time when we need exergy to deal with numbers 2 and 3, it is declining pretty rapidly. Sort of a Limits to Growth scenario.

        Don Stewart

        • Stefeun says:

          Let me disagree on this.
          It’s the very fact of dissipating energy that produces waste (pollution and waste heat, besides what we call Capital). And we’re using net energy to transform raw material (natural capital?) into things that are useful to us.

          So in my view, using more exergy can only lead to deplete natural capital AND increase pollution levels. And even more along with decreasing EROI, ie when more primary energy is needed to get a given amount of usable exergy.

          Which means that in order to preserve the natural capital and reduce pollution, we should drastically reduce the total amount of primary energy we’re using. This is of course totally impossible in our current system. It will happen anyway, but not because we -allegedly Sapiens- will have worked on it consciously, rather because we’ll have pushed the Maximum Power Principle towards its last limits.

          • Don Stewart says:

            Dear Stefeun
            (I wrote this before I saw your second response.)

            Taking things one at a time. Some of the simplest structures in nature are liposomes. Capra and Luisi talk about them on page 233 with the section titled On the Origin of Cellular Metabolism.

            ‘The procedure is to start from an aqueous solution containing the biomolecules as solute, and then to produce the vesicles in situ—that is, in the same solution—so that during their formation and closure, they entrap part of the solution and hence part of the solute In this way, the entire biochemical apparatus for expressing a protein is entrapped inside the liposomes. The protein chosen in the first experiments is the green fluorescence protein. When the protein is produced, a characteristic green color appears, and the corresponding vesicles turn green.

            As beautiful as these experiments are, there is something very odd in them. According to common-sense statistics, they should not work.’

            Now, in my words. If the solute appeared in the vesicles as random particles, then a Poisson distribution should describe the appearance of particular particles inside the vesicle. The Poisson distribution, however, predicts that it is virtually impossible for all the needed particles to actually appear in the tiny vesicles. Studies show that the distribution of particles is binary…some vesicles have nothing, while other vesicles have plenty. Which means that the distribution is not one of independent particles. The actual distribution inside vesicles with particles is actually a power law. ‘The overcrowded vesicles have a concentration that is more than one order of magnitude higher than that of the bulk solution.’ Isn’t this as puzzling as the force of gravity between two very distant heavenly bodies?

            Also, the vesicles have the ability to ‘capture’ new solutes as they are added. They create entropy along with structure.

            It seems that the formation of order and the consequent entropy is a very deep principle for the way nature works. Humans are a peculiar example of the principle, but we are still exemplifiers of it. Pointing out that humans are dissipative structures just puts us in the same class as everything from non-living liposomes in a solution to whales in the ocean to water going down a drain to a branching river.

            I don’t think humans are inherently more destructive than a weasel in a chicken coop. What makes us different is the scale of the destruction we can make, and our ability to leave pollution which can take nature a very long time to recycle. Weasels and chickens are recycled very rapidly. Carbon in the atmosphere very slowly.

            Second, ‘using more exergy can only lead to deplete natural capital AND increase pollution levels’. One of the things I had in mind is doing Agroecology. (which is related to all other biological farming methods) We set out to restore the fertility of the soil, and to make topsoil very rapidly. It’s easier to do that if one has access to some industrial equipment (such as subsoil plows and PV electric fences for cattle) and some fossil fuels to power the equipment. In a sense, we would be using fossil fuels to undo the damage done by fossil fuels…breaking up compaction layers and restoring the natural cycle of grasses and large herbivores. Once the compaction layer is broken up, it is never created again by running heavy equipment over it. The natural cycle of grass and grazing animals will build very deep topsoil for a very long time.

            Third, ‘And even more along with decreasing EROI, ie when more primary energy is needed to get a given amount of usable energy.’ Herman Daly in his latest essay:

            refers to rebuilding natural capital with practices such as Agroecology. Yes, it does require sapience. Many despair. George Mobus, in his previous post, lamented the decline of teaching and learning and announced his plan to retire in about one year. I asked him if, in the environment he describes, it will be possible for ‘broad focus courses such as Systems Science’ to survive’? He answer, ‘In a word, No.’ He then explains that one of the reasons he wrote his book is to preserve knowledge for a future with a whole lot fewer humans. His current post describes a series of books he hopes to write, offering a foundation for rebuilding after the collapse.

            So I guess everyone has to make some decisions. Do they try to grow some topsoil and build a water system now in anticipation of hard times? Do they essentially give up on humanity and aim at leaving some legacy for a very different future?

            This was one of Francisco Varela’s favorite poems (the Chilean neuroscientist):
            Wanderer, your footsteps are
            the road, and nothing more;
            wanderer, there is no road,
            the road is made by walking.

            Don Stewart

            • Artleads says:

              “So I guess everyone has to make some decisions. Do they try to grow some topsoil and build a water system now in anticipation of hard times? Do they essentially give up on humanity and aim at leaving some legacy for a very different future?”

              I don’t know…although I don’t quite understand the question–like who is “we.” My community is fairly small. There is one public water well. The level of the well is so low, that the water board oldtimers say that they are “mining” the remaining water. I ask about collecting floodwater in ponds to replenish the aquifer, and they roll their eyes and say that this would require geologic time to replenish that way.

              OTOH, I’m personally trying for a low-effort, no till way to garden that offers no prospect of food self-sufficiency. By layering the soil with different types of organic material, water seems to stay in the ground, which is also amenable to drip irrigation. I also try to slow water run off from floods. Many residents are doing something similar, and a few are way more productive in growing food.

              Then there is the larger county, and the budding metropolis fueled by the city’s sprawl. Then there are any number of water-related organizations, some of them statewide or even federal. “We” comprises all these levels. Cutting through the complexity would be nice. Something like ‘keep the water where it is.’ Don’t transfer it between watersheds, which should live within their water budgets. But things are WAAAAAAAAY more convoluted than that here. I can sort of get my head around my community water issues. Beyond that, things are murky.

            • Don Stewart says:

              Dear Artleads
              Water laws in the West are byzantine.

              One thing about compaction layers and water. If you have a compaction layer (e.g., a plow pan), then roots hit the compaction layer and go sideways. Roots of ordinary annual veggies can go several feet into the ground, which obviously makes them more resilient to water shortages. Trees can put roots down many dozens of feet, IF there are no compaction layers.

              When Albert Bates set out to restore a pasture at The Farm in Tennessee, he used a subsoil plow to create an on-contour pattern with inoculated biochar going down into the soil with the plow. So the water holding capacity of the land should have multiplied several times, and if he grazes it using holistic methods, it will just get better with time.

              But New Mexico is obviously not Tennessee, and your mileage may vary.

              Don Stewart

            • Jan Steinman says:

              When Albert Bates set out to restore a pasture at The Farm in Tennessee, he used a subsoil plow to create an on-contour pattern with inoculated biochar going down into the soil with the plow.

              This is also called a “Yeoman plough” or “keyline plough,” and is part of the keyline system for water management.

            • Stefeun says:

              “the road is made by walking”
              Excellent! surprisingly we seem to have rediscovered this basic principle only very recently. (also, it reminds me of Nancy Sinatra’s song “These boots are made for walking”)

              Two words about your response: I think useful to precise the space and time frames of our mutual statements. I’m talking of the whole humanity (whose metabolism is currently much bigger than that we can get from “fresh” photosynthesis) and events in the relatively close future.
              In your first example, you describe a result of the biological evolution, i.e. a general feature that took very long time to stabilize (btw I notice that Capra and Luisi seem enthusiastic about MEP-principle, order inside / entropy outside),
              and your second example (Agroecology) is about initiatives at human size (individual), both in time and space. These initiatives, although highly laudable, are not scalable in our current system (to say the least, think Monsanto and Syngenta merging together…), and are potentially to be wiped off in the collapse, whose damages might imho very well be global and overwhelming (and happen mostly in quite short time-frame).

              On the other hand, one can argue that the seeds have to be sowed if we want to give them a chance to thrive one day. Perhaps, and perhaps the thriving ones will not be the ones we sowed, given the many possibilities Mother Nature has developed along time. The big dinosaurs couldn’t imagine (admitting they could imagine something) that the mammals could take the upper hand after them. There also, the collapse phase was short, and the recovery (of biodiversity) took a very long time, and was shaped by both the set of genetic possibilities and the environmental conditions.

              What I mean is that both of us can be right or wrong, saying the same thing or something totally opposite, depending on the context of our statements,
              and secondly, that prediction is very difficult, especially if it’s about the future (Niels Bohr), and especially in troubled times (D.Meadows’ river-rapids).

            • xabier says:

              From the poem by the great Antonio Machado, who died an exile from the Spanish Civil War: ‘Caminante no hay camino…’ Adn which ends: ‘And when you look back, you see the path which cannot be trodden again.’

            • Artleads says:

              John Jeavons’ bio-intensive minifarm methods (with which I’m familiar) depends on a system called ‘double digging’–shovel-depth and another shovel-depth. It is a very productive method. A heck of a lot of digging though…

              But I find it easier and more intuitive to do no-till, (using worm castings too inconsistently) hoping that roots and worms over time will change the soil at depth. It works well for primitive (end of hose) drip watering. You can plant anywhere in bed–no rows–and the drip water spreads out peripherally. Problem so far: I can’t get seed to germinate in the ground, and seedlings (which can MOL work) costs are much higher.

      • Fast Eddy says:

        Everything points to this sort of outcome

        See: Trade-Off
        Financial System Supply-Chain Cross-Contagion:
        a study in global systemic collapse.
        David Korowicz

        Or see Gail’s stick diagram… you pull one key component out and it all falls…

        When the oil stops the grid goes and we will have no electricity — try making a list of what we lose when that happens:

        – sewage and water system pumps stop — cities immediately become uninhabitable – cholera dysentery and other diseases overwhelm populations
        – irrigation pumps on agricultural land stop — crops die
        – in cold regions people freeze
        – no lighting which leads to security issues
        – all manufacturing stops
        – there would be 100% job losses as a deflationary spiral would tear through the world in days (people are laid off and buy nothing causing an unstoppable cascade in layoffs)

        I can see no way that the crash — once the central banks lose control — can be anything but lightening fast. At some point the system breaks — and the masses recognize that the can cannot be kicked any further — and the soothing words of the MSM can not hold them back — the panic will begin when the lights go out.

  10. Rodster says:

    “UK Government Study Finds: If Nothing Is Done, Expect Civilizations’ Collapse By 2040”


    • edpell says:

      I would love to see the results of those models.

    • doomphd says:

      Can you provide a link to that study? Thanks.

      BTW, for those thinking of hoarding gold or silver, I read that archeologists studying remote Roman farm sites in Great Britain always find a ceramic pot or metal container with gold and silver coins of the period buried just below the burned remains of the estate, usually in some corner.

      • Kulm says:

        Click at the picture.

      • Fast Eddy says:

        New scientific models supported by the British government’s Foreign Office show that if we don’t change course, in less than three decades industrial civilisation will essentially collapse due to catastrophic food shortages, triggered by a combination of climate change, water scarcity, energy crisis, and political instability.

        More http://www.zerohedge.com/news/2015-06-21/uk-government-study-finds-if-nothing-done-expect-civilizations-collapse-2040

        In less than 3 decades? How about in less than 3 years… or even 3 months…. Perhaps that’s what they really mean — but can’t say it otherwise the sheeple panic…

        • Fast Eddy says:

          Last year, Dr. Graham Turner updated his CSIRO research at the University of Melbourne, concluding that:

          “… the general onset of collapse first appears at about 2015 when per capita industrial output begins a sharp decline. Given this imminent timing, a further issue this paper raises is whether the current economic difficulties of the global financial crisis are potentially related to mechanisms of breakdown in the Limits to Growth BAU [business-as-usual] scenario.”


          • As I understand the paper, what he is saying is (1) current experience tracks the original “base model” with respect to Limits to Growth, and (2) the original base model would suggest that the general onset of collapse first appears at about 2015 when per capita industrial output begins a sharp decline. Thus, what he is saying is true–it is simply an outcome of the model “seeming to be right” so far.

            The thing the model does not take into account is the details of the economy. How does the economy repay debt with interest per capita industrial output begins a sharp decline? How do governments collect enough taxes, if industrial output begins a sharp decline? How do banks continue to function? What do all of the laid-off workers do, when they no longer have jobs? Beyond 2015, the model is not “robust enough” to really forecast what would happen, IMO.

            • Fast Eddy says:

              The author needs to review the articles on FW to get a better understanding of the situation (as do all other researchers and journalists who are attempting to fully understand the energy and financial convulsions we are experiencing)

      • xabier says:

        Even more illuminating and suggestive as to the dangers and chaos of that time are the hoards of ‘hacked silver’: that is, someone looted the silver plates, goblets, etc, chopped it up for trade or distribution among their hairy followers, and then didn’t collect……..

        Roman saying: ‘Put as much fine old wine in your cellar as you like, but most likely someone else will be drinking it…’

    • Stefeun says:

      Thanks a lot for this new article by Nafeez Ahmed. Very good quality as usual.
      However, I went through the various links he provides, to insurance reports and older articles, and was surprised to find very few mention -if any- to the threat Number One (in my opinion), namely the fact that our economy is now globalized and financialized.

      Global finance is the glue that holds everything together, it has invaded nearly all of our wants and needs and thus became necessary to the very existence for most of us. Because of its mandatory growth on the one hand, and the declining resources and other various diminishing returns on the other hand, this glue is less and less efficient and we have to put more and more of it, for a result that keeps getting worst (maybe because at same time we have to generate waste at an exponentially increasing rate).

      This addiction is what I think will kill us (at least, BAU, but who can cope without?), because we won’t be able to add sky-rocketing amounts of debt forever (see for example: We Might As Well Face It – America Is Addicted To Debt, by Michael Snyder, June 15th, 2015 http://theeconomiccollapseblog.com/archives/we-might-as-well-face-it-america-is-addicted-to-debt, and the linked USA-Today charts at http://americasmarkets.usatoday.com/2015/06/11/5-8t-companies-up-to-their-ears-in-debt/).

      We’ve seen in 2008 that a financial disruption can happen anytime, when there are tensions somewhere in the system, and today we have many more -and increasing- tensions than before the GFC, as stated in the various reports above mentioned. Next time, the global interdependance and tight-coupling (hence brittleness) of all parts of the economy will insure a widespread undampened shock that may very well put it down entirely, in quite short timeframe.

      So, imho the evoked 25 years before collapse is the best case, i.e. if there isn’t any major disruption, financial or other, in the meantime. We all know the next 25 years will be anything but smooth…

      By the way, thanks also to Fast Eddy for reminding the excellent LTG update by G.Turner, whose conclusion was also promising a further paper about financial risk, not published yet, afaik.

  11. Fast Eddy says:

    Jan – can you show me where the electricity has been off for a week at a time where you are?


    • Jan Steinman says:

      When your only tool is a hammer, all the world looks like a nail.

      When your only tool is Google, nothing outside of Google is possible.

      I’m done with this thread. It’s sorta fun and interesting to play with the doombots, much as it is playing with a trapped insect: making it run a maze to get the food of attention it craves, poking it with a stick to make it move in a different direction, shining the light to make it scurry for the comforting darkness. But this has grown tiring, and I really do have better things to do with my time, like caring for 23 new baby chicks and nine new baby goats and thousands of greenhouse starts. That’s next year’s food, even if the electricity and the fuel stops tonight.

      The real prisoners of BAU are those who have no ability nor willingness to do anything more than to take cheap pot-shots from their keyboard.

      Those who say it cannot be done should not interfere with those who are doing it.

      I’m still willing to engage those who are interested in coping strategies. But I’m just deleting postings from the doombots without even looking at them.

      • doomphd says:

        Jan, I think Fast Eddy is preparing a farm in New Zealand that can provide much as you are doing in Canada. His many posts point out the simple fact that most if not all trying to live a more sustainable lifestyle are still benefitting from the status quo system known as BAU. Anyone commenting here is by definition plugged into BAU.

        Once the grid is permanently gone, it’s going to get interesting in a lot of places. IF one can survive through the “interesting period” of unknown but perhaps reasonably short period, then, with a much lower population, there can be a reset, but to a much simpler social system. Students of history like Prof. Tainter have described the process. What comes after is always different, but not necessarily better. I think the only big differences from pervious cycles will be the scale and the climatic aftermath from burning so much fossil fuel. Pollution, especially from poorly to unattended nuclear fission plants, could also be a factor restricting any attempts at a reset of BAU, even at a lower level of complexity, in the Northern hemisphere.

        Note that Fast Eddie has chosen the Southern hemisphere to relocate his farm, a wise move.

        • Fast Eddy says:

          The South Island of New Zealand surely surely ranks highly in terms of survival — low population — strong, generally small communities — can-do people, mostly farmers where I live — and a climate that allows one to grow food right through the winter.

          But even so — I am not optimistic — if radiation from fuel ponds is somehow contained — and we are able to raise enough food to live — I am under absolutely no illusion — I will NOT be living a life anywhere near as cushy as the Nearings.

          I will have no pick up truck — no electricity…

          I really have no desire to live in ‘1880’ (and anyone who thinks that would be wonderful … well… they have not thought this through very carefully) … but there will be no choice…

          • Michael Jones says:

            I am CERTAIN you won’t be living another like the Nearings because you like their true grit and fortified to tell TPTB to take their BAU and stick it where the sun don’t shine.
            What excuse will you use when you hightail out of NZ I wonder?
            Like me guess, you are allergic to SHEEP! Pack it in Highway Eddy and fly back to Hong Kong and order take out.

            • Fast Eddy says:

              Michael — I picture you typing this post — foam is running from your mouth… nostrils flared like a Seville bull….. eyes wide like Charlie Sheen on a coke/crack bender… your wife is calling you to dinner and you scream “f%$# off – can’t you see i am BUSY!!!!’

              If I can find a way to keep my truck going … and the electricity on .. and the concrete pouring… I suspect I could emulate your hero Mr Nearing… having those 3 things would most definitely go a long ways towards living ‘The Good Life’

              Speaking of true grit — let’s remember another American mythical hero ….


          • Michael Jones says:

            Easy enough to shot your trap here, Highway. East enough to throw dirt without them to defend themselves. See how long you last with partial BAU and no Bennie Bernanke Free Cash to throw around.

      • Rodster says:

        “I’m still willing to engage those who are interested in coping strategies. But I’m just deleting postings from the doombots without even looking at them.”

        Gotta love censorship ! 🙂

        • Jan Steinman says:

          “I’m just deleting postings” from my email in-box, not from the blog. The rest of you can read all you want.

          Unwillingness to spend my time on ossified thinking is not censorship.

        • Fast Eddy says:

          Otherwise known as Cognitive Dissonance.

          Better just to hit the delete button if something someone posts threatens to interrupt the sweet sweet sounds of Koombaya.

          Kinda like sticking fingers into ears and shouting ‘I can’t hear you – I can’t hear you – I can’t hear you’

          Kinda like refusing to trying unplugging from BAU for a few days because one fears that the reality of that would drive home how difficult post collapse survival will be

          Of course turning off BAU now as a trial does not really convey the true essence of what is coming — because everyone else would still be plugged in — they still be buying food at Wally’s World instead of raiding your garden and putting bullets in the heads of your animals then roasting them over a fire

          • RohGah says:

            “nstead of raiding your garden and putting bullets in the heads of your animals then roasting them over a fire”
            Getting personal now FE? But you are the champ. Why would the champ have to resort to getting personal?

            • Fast Eddy says:

              Are here we have a series of excellent examples of what happens when one destroys the false gods of the Koombaya Krowd.

              When the weaknesses of their positions are exposed by an endless stream of cold hard facts they become hysterical… angry… insulting…. flustered…. even crazed…..

              Well too bad

              If you want a sugar coated collapse discussion there are plenty of places to get it … Doomsday Diner… Peak Prosperity… even most people on Zero Hedge would disagree with my take on this

              Because most people like to take their doom with a little hopium on the side….

              Don’t worry — I don’t follow the first two … and I do not participate on Zero Hedge… so no need to worry about Fast snatching away the hopium pipe …. you are on safe ground on those sites.

            • RohGah says:

              “Are here we have a series of excellent examples of what happens when one destroys the false gods of the Koombaya Krowd. ”

              Oh I see. Anyone who calls you on your BS is a drum beater. You know Fast if the shoe was on the other foot and someone was making references to “bullets in the head” to somone or something close to you id be calling them on their BS too.
              A champion has style. A champion has grace, A champion has respect for his art.
              Then theres the guy who stabs you while your asleep. He gets the job done but hes very far from a champ.
              Things were pretty boring around here when you took your time out. I respect you for your intellect and tenacity. lately those qualities have been replaced with foam at your mouth.

        • Each of us has to choose what to read. There is a lot that comes through our inboxes.

      • Fast Eddy says:

        Google is your friend — or it’s your enemy….

        So I guess you actually don’t regularly lose your electricity for a week at a time?

        I kinda assume that claim would not hold up to scrutiny … BC Canada surely has one of the most reliable electricity supplies on the planet given it’s a huge producer of hydro power…

        I lived in a village in the 3rd world for many years — and the power never went off for more than half a day or so in all the time I was there….

        It’s all fine and dandy to claim that you are ready to roll once the grid goes down.

        So what are you afraid of — why not step out back and throw the switch — then come back in a few days and tell us how you can’t wait for BAU to collapse.

        I think I know exactly why — because the Koombaya dream would be shattered into a million pieces.

        You’d get a faint whiff of the true nature of what you will be facing post collapse — and you’d be in the same position as most of the rest of us — dreading the end of BAU — fearing what happens when billions of people have no means of survival — and show up at the farm gates demanding to be fed…

  12. Fast Eddy says:

    The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress.

    Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock.

    “Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money.

    The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts. But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager.

    His concern is that global debt – particularly mortgage debt – has been pumped up to record levels, made possible by exceptionally low interest rates that could soon end, and he is unsure how well banks could cope with the shocks that may await.

    More http://www.telegraph.co.uk/finance/personalfinance/investing/11686199/Its-time-to-hold-physical-cash-says-one-of-Britains-most-senior-fund-managers.html

  13. Don Stewart says:

    Dear Gail and Finite Worlders
    Here is a link to a Q and A on BW Hills ETP model. I will note some things which jumped out at me, and offer a few comments.


    Excerpt #1
    In 2015 the maximum affordable price is $77/barrel. If the Euro dropped by 10% against the dollar the maximum price in Euros would increase by 10%. Currency may change, energy does not. How long Graph# 12 will remain valid is the question? We check the EIA , and World Bank data to see if the new yearly data point has drifted from the curve. Interestingly, in spite of all the CB printing, it does not appear to have done so. My “guess” would be that not much of the newly printed currency is making it into the general economy. That is, its velocity is 1. Any other opinions would be interesting.

    My comment: From the data, it appears that money printing is having no impact on the value of a barrel of oil in terms of supporting GDP. Which implies, to me, that we are dealing with a thermodynamic issue rather than a monetary issue. IF printing more money were enabling a barrel of oil to support more GDP, then we might perceive that we have a monetary problem which can be solved by the central banks.

    Excerpt #2
    The Etp Model indicates that after the energy half point has been reached that the consumer will never again be able to acquire all of the petroleum that is produced. This will be an up, and down event as producers shut in production from low prices. Generally, we can expect to see continuing inventory builds with occasional periods of slow, or no growth.

    My comment. This is a bold prediction. I think what it indicates is that the ability of a barrel of oil to support GDP is declining more rapidly than physical depletion of existing reservoirs. Since it is the ability of oil to support GDP that determines the affordable price, that means that the companies in the industry will keep pumping in order to get as much cash flow as possible, even though the price does not give them a GAAP profit.

    If you examine the model closely, you see that oil is on its last legs as a net energy source for the economy. However, it may be an energy carrier, being produced by other energy sources which are still net energy producing. So, for example, we might keep airplanes flying using petroleum produced by coal and natural gas (assuming those are still positive energy producers). Same would apply perhaps to plastics…which are particularly flexible materials. But we would have to reconfigure the economy, perhaps drastically. This is in line with my statements from Capra and Luisi’s book talking about reorganization and newly emergent properties as energy flows change. And instead of adjusting to increased flows, we would be adjusting to decreased flows. See my recent notes identifying some economic sectors which might be ripe for greatly reduced energy flows.

    Excerpt #3
    The big question at the present is what will happen to the shale industry. It is obviously a cash sink, and apparently someone with very deep pockets is financing it. That could be the refinery industry, or the military for national security reasons. The Banks also have a vested interest in its short term success. The spread between what the world economy can afford, and what its industry can provide is now growing by 2.3 mb/d per year. Production declines will eventually have to match that number. Over the next year it would be a pretty safe bet to assume that world inventories will continue to grow.

    My comment: Hill has elsewhere belittled the energy content of light tight oil. It is not a significant contributor to supporting GDP, although the barrels look impressive.

    Excerpt #4
    Obviously, the significance of the graph is that as the affordability of oil declines reserves that are now considered proved, will be lost. The price will not be high enough for an ever increasing amount of reserves for it to cover their cost of production. It is simply stating that reserves are over stated, and that is in accord with the Model.

    My comment: If the oil companies were forced to revalue their reserves with the assumption that the Hills Group model accurately predicts the maximum price, all hell would break loose.

    Excerpt #5
    Exploiting available credulity is the present name of the game, and that makes presenting the ETP Model especially difficult. The Model is not esoteric by any definition of applied engineering methodologies. It applies a common approach to solving intractable problems; entropy analysis. We have merely applied this hundred old year technique to an area where it had not previously been applied. It is the concept of entropy itself that brings about a problem. Entropy is a property of matter, like mass or volume, but it is a rather abstract concept which has no accompanying physical picture to explain it. Entropy is evaluated in terms of a particular integral; the Clausius inequality.

    To gain a “feel” for the effects of entropy production it is necessary to work with it. This excludes most who look at the Model. It is only through its application, and performance that most can appreciate it. For instance we projected the recent price decline last May, and put up this page last September, the date is on the second graph:


    My comment: Expect more attacks and confusion mongering.

    Excerpt #6
    It appears to me that while the entropy balance analysis utilizing appropriately defined control volumes is a standard applied method in chemical/process engineering, it may not be widely understood or appreciated in non engineering fields. Even I as a (retired) chemical engineer had to revisit my undergraduate text (Process Heat Transfer by Kern) to refresh my understanding.
    My view is your study is the next logical step beyond the ERoEI analysis which, even though it is not trivial to complete, has not delivered the insight of the Etp Model.

    I guess I am curious as to your next step in getting this very useful model more exposure beyond discussion on this forum. Could it be submitted for publishing (in a Biophysical Economics journal or similar)? Could it be presented at a conference (ASPO)? I know this involves a lot of work. but it seems to me this work is too important not to get broader exposure.

    My comment: Some professionals are clearly intrigued. I think a number of them see this as a big advance over EROEI studies, but they would like to see it properly published and peer critiqued.

    Don Stewart

    • ktos says:

      “Dear Gail and Finite Worlders”
      It’s good that you say this. Otherwise people could think that your posts are directed towards Peakoilbarrel readers.

      • Don Stewart says:

        Dear ktos
        This site, at least as I understand it, addresses ALL of the issues around a finite world. The Peak Oil Barrel site is mostly concerned about only one aspect.

        There are so many ‘finite’ issues that it would be hard to discuss all of them. I, myself, tend to ignore all the molten salt reactor issues and fuel rod issues and thermonuclear war issues. The issues around Peak Oil used to get a lot of discussion, but are getting somewhat less recently. I refer to Skip Laitner and BW Hill because both are focused on work rather than barrels, a perspective that is relatively rare. If the ability of oil to do work is rapidly diminishing, then the results will be profound, and reverberate through many other issues.
        Don Stewart

        • There are a lot of kinds of diminishing returns. One of them is “oil is less able to do work”. But there are many other kinds of diminishing returns as well. For example, one age-old problem is that population continues to increase and while the amount of arable farmland is close to fixed, so we need to constantly be using more energy work-arounds to improve per-acre yields. We also have pollution problems of many types, and need to work around pollution problems, leading to ever-higher cost of producing electricity. As population gets more dense, we need to expend more energy trying to find ways to kill off viruses and bacteria that might lead to our demise, and which are rapidly evolving to avoid our previous solutions. I can think of many others–declining ore quality, eroding soil, fewer fish and other wildlife to hunt, etc.

          Somehow, we need a balance between the view (1) “Oil is less able to do work,” and will bring down the economy, and (2) A combination of limits, which include increased oil needed for extraction and processing, is likely to pull down the economy even more quickly than oil limits on their own would. Many economies that never used oil or fossil fuels have collapsed, without ever encountering the problem of it taking more energy to extract oil.

          BWHill says that limit (1) is not very far off. Limit (2) has to come before limit (1), as I see the situation. Perhaps from some people’s point of view, if limit (1) is not very far off, this is a “good enough” estimate, if we are dealing with limits that are not far away.

          One way of thinking about the situation is that we are talking about two different thermodynamic limits. One has to do with the extraction of oil, and diminishing returns with respect to oil extraction and transport. The other thermodynamic limit has to need with the need of the networked economy to continue to dissipate energy at a fast enough rate, or it will collapse, because it is a dissipative system. The combination of limits is impeding the growth of the networked economy, not just the oil problem on its own.

          The two issues are related, but they are not quite the same. Confusion about this issue is one of the reasons we have a lot of people believing that the EROEI of a proposed new fuel is the thing of utmost importance. In my view, it is not–this is a fallacy. The important thing is how the proposed new fuel affects the economy as a whole, when all costs are included, both direct and indirect (including energy needed for offsetting intermittency, energy related to paying wages to workers, necessary contributions for taxes so all fuels can at least pay their own way, and energy related to interest paid on debt).

          • Don Stewart says:

            Respectfully, I think that if you look at how Hill’s model works, you find that the ‘cost of production’ became so high as to become irrelevant around 2012. The controlling factor is now the declining ability of oil to support GDP…an affordability issue. I can’t see that he is saying anything you are not saying. Don’t try to limit his work to an EROI analysis.

            True, he doesn’t get into soil erosion and social disintegration and other topics. Not because he doesn’t understand them, but because his particular skill is thermodynamic models (in this case). IF we have a thermodynamic problem, then we will have lots of problems which will manifest in various ways.

            Don Stewart

    • I am skeptical that it is really possible to create a complete enough model of world averages of this and that to really produce a very accurate model of how the implications of falling oil EROEI really play out. For one thing, US data is not representative of the world. I agree, however, that some of the selected numbers look reasonable, for the situation to date.

      There is also the big issue that oil EROEI isn’t the only kind of diminishing returns the economy is facing. Even the 1972 Limits to Growth model had many more variables included. At most, the model (it is correct) will give an “outside box’ limiting the latest date at which a collapse scenario must take place.

    • richard says:

      Comments on the Hills Report.

      Graph 4 shows Cumulative Oil Production Vs Time, beginning in 1900AD until 2100AD
      It suggests that only some 2285 GigaBarrels of crude oil will be extracted, using
      a best-fit to available data. It is more usual to present the data as a flow
      of MB/day plotted against time, often adding other unconventional oil flows
      to provide total hydrocarbon liquid flows against time.

      The figure sugggested for 2030AD is 1760GB, and a reasonable guess at 2015AD
      is 1500GB. I will look at the world’s current proven reserves separately to
      see how these compare.

      The Hills Group then argues that whereas extraction and production costs in
      energy terms are negligible in 1900, progressively less energy is available
      to the end user. My reading of their presentation suggests that when an
      ERoEI of ~7 is reached, so much energy is used in production and distribution,
      and in the inefficiency of the extraction process itself, that no other useful
      energy is available to the wider economy.

      This is an empirical study forecasting trends, focussed on conventional
      crude oil production, and presents a somewhat radical view. Real-time
      pressures will alter the process somewhat. Graph 16 shows ERoEI vs $/Bl
      and suggests that from historical trends, an oil price in excess of 100$/Bl
      will push ERoEI to 7 or below. In practice, ERoEI has remained around 10,
      perhaps for reasons explained below. The Hills Group suggests that this
      point of nil available energy will occur just before 2030AD. Prior to that date,
      a point will occur where the energy available to the wider economy will
      exactly equal the energy used for extraction and production. That date,
      according to the Hills group was initially 2001AD (see graph dated 10/17/12),
      currently 2012AD. There is progressively greater statistical uncertainty
      in the data, due to price fluctuations, efficiency gains, and competition
      from other fluids to add considerable variation to that date. It would be
      wrong to focus only on the date – to do so would miss the change in dynamics
      from push to pull. Also, while the Hills Group suggests an abrupt change,
      it is unlikley that investment plans and production can adapt to quickly to the
      suggested rates of change, even if they understood the thesis.

      Put bluntly, after 2012AD, we have to find a way of paying less for our oil
      and using less oil.

    • richard says:

      Comments on the Hills Report.

      Graph 4 shows Cumulative Oil Production Vs Time, beginning in 1900AD until 2100AD
      It suggests that only some 2285 GigaBarrels of crude oil will be extracted, using
      a best-fit to available data. It is more usual to present the data as a flow
      of MB/day plotted against time, often adding other unconventional oil flows
      to provide total hydrocarbon liquid flows against time.

      The figure sugggested for 2030AD is 1760GB, and a reasonable guess at 2015AD
      is 1500GB. I will look at the world’s current proven reserves separately to
      see how these compare.

      The Hills Group then argues that whereas extraction and production costs in
      energy terms are negligible in 1900, progressively less energy is available
      to the end user. My reading of their presentation suggests that when an
      ERoEI of ~7 is reached, so much energy is used in production and distribution,
      and in the inefficiency of the extraction process itself, that no other useful
      energy is available to the wider economy.

      This is an empirical study forecasting trends, focussed on conventional
      crude oil production, and presents a somewhat radical view. Real-time
      pressures will alter the process somewhat. Graph 16 shows ERoEI vs $/Bl
      and suggests that from historical trends, an oil price in excess of 100$/Bl
      will push ERoEI to 7 or below. In practice, ERoEI has remained around 10,
      perhaps for reasons explained below. The Hills Group suggests that this
      point of nil available energy will occur just before 2030AD. Prior to that date,
      a point will occur where the energy available to the wider economy will
      exactly equal the energy used for extraction and production. That date,
      according to the Hills group was initially 2001AD (see graph dated 10/17/12),
      currently 2012AD. There is progressively greater statistical uncertainty
      in the data, due to price fluctuations, efficiency gains, and competition
      from other fluids to add considerable variation to that date. It would be
      wrong to focus only on the date – to do so would miss the change in dynamics
      from push to pull. Also, while the Hills Group suggests an abrupt change,
      it is unlikley that investment plans and production can adapt to quickly to the
      suggested rates of change, even if they understood the thesis.

      Put bluntly, after 2012AD, we have to find a way of paying less for our oil
      and using less oil.

      I will put together a more reasoned response to the Hills Report, however,
      in the end, we use expected returns on investment to drive our economy,
      or we used to, before the Central Banks got involved.

      • Don Stewart says:

        Relative to proven reserves. BW Hill thinks that the ‘affordability cap’ on prices renders the ‘proven reserves’ numbers untenable. He thinks the ‘affordability cap’ this year is 77 dollars a barrel, and lower in each successive year. If reserves had to be re-evaluated with continually falling prices, they would be a whole lot lower.

        I agree with you that focusing on specific dates, such as 2030, is not helpful. You describe it as ‘from push to pull’, and I previously described 2012 as a ‘sea change’. I think it is more important to look at the dynamics of the process outlined in the model.

        I have said in other comments that we only have the exergy we actually have to spend doing work. My speculation is that we can make marginal improvements to things like efficiency, but in the final analysis we will have to adopt simpler production and consumption models in the non-energy producing economy.

        Thanks for the comments…Don Stewart

        • richard says:

          @Don, I had a look for “impairments” – BP has a market cap of $80Bn or so and their 2014 Report included $4774M impairment for the North Sea, including “oil price” changes. They also dropped $544M on US Utica shale – not all of this is due to low oil prices. If prices stay low, I expect to see more.
          Back to the Hills report. I’m not sure how they come up with the figure that 80 percent of the energy initially available in crude in the ground is gone by the time it becomes useful energy. And even if that is true today, was it true yesterday, and will it be true tomorrow?
          Next up, even if the 80 percent cannot be established directly for crude, it may be valid if costs for other resource extraction are included – steel structures, rubber seals, hoses, and tyres, copper cables and machines – these all have embedded energy. Energy is also needed to extract and transport thousands of tonnes of sand and water for fracking. While correlation may not prove a causal relationship, the Hills Group’s calculations may offer a result that is good enough to give a view of what is to come.
          Looking at the graphs, I suspect that something changed in 2008, with an improvement in the trends. That may be because projects with low EroEI (less than 10) did not proceed, or it may be that at oil prices in excess of $100 per barrel face competition from other fuels or alternative technologies.
          Finally, other major assumption by the Hills Group is that the extraction of crude oil from the ground takes place exclusively by the use of petroleum products. I’m not close enough to the industry to comment on that.

          • Don Stewart says:

            I initially thought that BW Hill was assuming that oil was produced exclusively with exergy from oil. Then I decided that I was wrong. I think what he is pointing out is that when it takes the energy in a barrel of oil to produce a barrel of oil, oil is no longer an energy source. Now the ‘energy in a barrel of oil’ can come from, for example, coal and take the form of electricity. But the conclusion that oil is no longer a primary source of energy still holds true. I addressed this topic in a previous comment. If we take oil, coal, and natural gas as being the primary sources of concentrated energy (with nuclear about a wash), and oil goes away as a primary source, then that is a pretty profound statement.

            The second conclusion is that when it takes the energy in half a barrel of oil to produce a barrel of oil, the production of exergy has to level off. We can’t increase it. We had a long, confusing discussion of this a few weeks ago. In fact, I think one could quibble with it. In theory, we could quadruple the production of coal, using coal as the primary energy to produce the coal, and divert some of the coal to producing, let’s say, ten percent growth in oil output. But, for government work, I suspect Hill’s statement is about right.

            It would be nice if we had an ‘integrated thermodynamic model of fossil fuels’.

            Don Stewart

            • richard says:

              @Don – I had a look at the 2007 UK energy flows. The relevant figures seem to be 88.5 MTOE of Crude Oil and 58.3 MTOE of refined products. I’d guess that the “Crude Oil” is degassed, desanded, dewatered and pumped onshore, or FOB.
              Now things get complicated. Hills Group suggests a figure close to 20 percent efficiency for the end-to-end process. I’d accept 20 percent for light vehicle transport, but that will not apply to an oil rig. HFO marine diesels approach 50 percent efficiency, LFO diesels maybe 40 percent, and if the rig uses gas turbines to burn gas that would otherwise be flared, the losses are effectively approaching zero.
              So, I’d view the 20 percent figure with deep suspicion. It may have been true at one time, but a figure of 35 percent or greater for end-to-end efficiency, not counting sunk costs, seems viable.
              I doubt this is the whole story. I *think* the figures used by the Hills Group include sunk costs.

            • Don Stewart says:

              Are you looking at the study he sells? I haven’t bought it. What I have seen that he says is scattered in a bunch of Q and A’s, plus what he publishes for free on his web site.

              The 20 percent factor is where he gets the 5X multiple. For example, if we are using 1 barrel of oil to produce 5 barrels of oil, but we suddenly have to lift more water, and now it takes 2 barrels of oil to produce 5 barrels of oil, the end user has 5 barrels of oil less to burn….because the extra barrel could have produced 5 barrels under the old conditions.

              Or maybe I am comparing apples and oranges.

              Don Stewart

            • Don Stewart says:

              A couple of quotes from BW Hill on the article on Peak Oil about Saudi Arabia:

              Our Model has been projecting a long term decline in price for over a year:
              If the Saudis agree with us (and apparently they do) they will pump every barrel as fast as possible before the price declines further. The Saudis realize that they not only have to deal with the depletion of their own fields, but also with the depletion of every other field in the world. It now all boils down to the last man standing!

              Ali al-Naimi is correct, sacrificing low cost producers to support higher cost producers will only result in shortages. Economics 101 is no longer the prevailing hypothesis. The thermodynamics of petroleum production are now in control.

              About half of Saudi production comes from one field, Ghawar. The water cut as reported by Aramco reservoir engineers is now around 50%. It is simple math to calculate how much of Ghawar’s 350 foot oil seams remains. Ghawar is undoubtedly over 90% depleted. Without Ghawar’s production there is no way that the House of Saudi will be able to placate its teaming 28 million people. If Saudi Arabia goes to pieces it can be expected that so also will the entire Middle East. The world is now buying minutes from a dying Super Giant!

              Back to me. What does he mean by ‘the thermodynamics of petroleum production are now in control’? Here is what I think he means:

              Oil is a very fundamental part of producing GDP. There is really no substitute for oil. As oil declines, GDP and incomes decline along with the oil production. If the cost of producing oil is increasing, then the declines in income will be even faster, since more of whatever income people have is sucked up by the oil industry. (His 5X multiplier at work). With a field that is 90 percent depleted, the cost could increase very rapidly. As incomes fall, the Economics 101 theories that shortages will make the price increase go out the window. Nobody has any money to bid up the price.

              I suppose the Central Banks could print money and fling it out of helicopters to get the price up, but that wouldn’t change the fact that we just don’t have the exergy we need to produce real goods and services.

              At least that is what I think he means…Don Stewart

            • richard says:

              @Don – “Are you looking at the study he sells? ”
              I haven’t bought yet.
              I *think* their starting point is 1 boe invested for 1 boe return, and that they worked back from there. For now, I’m just trying to get a feel for how this works.

            • richard says:

              Yes, thanks for the link. I’m reading it again, but this time I am trying to crunch some numbers to add colour and texture to the words.
              An early reference is to 50 percent – The figures I quoted earlier suggested a 33 percent loss in production for the UK in 2007. If you start with an ERoEI of 5 and add some losses getting to the refinery, you may be at ~75 percent, less 33 percent brings that to 50 percent, so not that far away, but there are still lots of assumptions.

            • richard says:

              I’m finding that a lot of the published figures for the efficiency of oil refineries are not reliable. Presently I am looking at a 2004 paper that references a well-to-pump WTP energy loss of around 180,000 J/MJ for gasoline and diesel. The stated average efficiency of US refineries is 87.8% (2001). As far as I can tell, 1.0Kg of crude oil goes into the refinery and 1.01Kg is recorded as output. The losses are the Electricity and Steam consumed, so there is some uncertainty there.
              This does not seem to line up with the Hills Report very well.

            • Don Stewart says:

              Hills talks about the necessity to heat the crude in order to refine it. Now the heat might be supplied from natural gas or some other source. As I said, when I first read it, I assumed that Hills was talking about using crude to produce crude. But he is not. He addresses the issue in one of the Q and As. He says something like ‘I have arrows from other energy sources coming into the process’. What he is looking at, I believe, is the question of whether oil can be an energy source, after subtracting the energy which is coming from other sources. For example, suppose oil is yielding 100 units of usable energy. But it requires 50 units of input from coal or natural gas to get the 100 units. Then the ‘net’ energy is only 50 units.

              I believe his focus is on whether oil can continue to be a net source of energy. He plainly states that oil can continue to be an energy carrier for some time in the future. For example, energy in the form of oil is more useful than energy in the form of gas (and it commands a higher price). So natural gas and some of the fractions of the liquids which come out of an oil well may well be burned in the production of oil because they are trying to preserve the most valuable fractions to sell in the market. This is oil as a carrier of the energy which was in the less valuable fractions.

              Don Stewart

            • I think we can assume that not very much of the energy used to produce oil is really from oil. Those generating electricity aren’t stupid–they will never use oil to generate electricity at current prices. They will use coal, natural gas, or whatever is cheapest, and readily available. Some may be from hydroelectric or nuclear.

              There is a lot of natural gas used when heavy oil is “cracked” to produce shorter-chain molecules. We do a lot of this in the US, because natural gas is so cheap here. In fact, we import heavy oil from other countries and crack it. As I understand it, this natural gas is used directly, not burned. I never looked at the Hill report sufficiently to tell what they were doing with all of this natural gas. Is it being “grossed up” when it shouldn’t be? Is it being compared to US oil extracted, or to a broader base, perhaps US oil consumed?

            • Don Stewart says:

              Description of the catalytic cracking process:

              The reactor and regenerator are considered to be the heart of the fluid catalytic cracking unit. The schematic flow diagram of a typical modern FCC unit in Figure 1 below is based upon the “side-by-side” configuration. The preheated high-boiling petroleum feedstock (at about 315 to 430 °C) consisting of long-chain hydrocarbon molecules is combined with recycle slurry oil from the bottom of the distillation column and injected into the catalyst riser where it is vaporized and cracked into smaller molecules of vapor by contact and mixing with the very hot powdered catalyst from the regenerator. All of the cracking reactions take place in the catalyst riser within a period of 2–4 seconds. The hydrocarbon vapors “fluidize” the powdered catalyst and the mixture of hydrocarbon vapors and catalyst flows upward to enter the reactor at a temperature of about 535 °C and a pressure of about 1.72 barg.

              Back to me. As Hill has clearly stated, the oil has to be heated to a high temperature. If you haven’t looked at Hill’s model, then you don’t have much basis to criticize it.

              Don Stewart

            • richard says:

              Wang, Lee, and Molburg – “Allocation of energy use in petroleum refineries to petroleum products.
              I’d guess table 1 where energy is allocaed to the mass of the final product is the most relevant for the individual products. Overall energy inputs per Kg total are electricity 100.7Kj, steam 649.4Kj, fuel used 2197.8Kj, total 2497.9Kj. The example refinery efficiency is stated as 93.1 percent. (For info 2498/(1-0.931)= 36203Kj).
              There are some uncertanties here, as additional allowances must be made for the costs of electricity and steam generation. Further, if a value of 45229Kj/Kg is a fair value for the latent energy of the crude oil feed, 6.9 percent losses are 3120Kj.
              There may be some losses in catalytic conversion that are not evident in the above figures.
              At this point I just do not see the figures as published by the Hills Group coming together to support their views on oil prices and production declines. More back to the drawing board than totally wrong though, in my opinion.

  14. Don Stewart says:

    A Note About the Nearings

    As Scott explains, in The Search For The Good Life, the Nearings made some pretty detailed deliberations before deciding to move to Vermont from New York City in 1932. It is good to remember that Scott was a communist at heart.

    ‘Under these conditions, we decided that we could not remain in the West and live a good life unless we were able to find an alternative to western civilization and its outmoded culture patterns.’ [which he has identified as ‘a social order activated by greed and functioning through exploitation, acquisition and accumulation’]

    Was there an alternative? ‘We looked in three directions for an answer’. They considered living abroad and they considered staying in the urban culture but picked a third alternative. They were not seeking to escape, but ‘to help, improve and rebuild’. They also considered living in an urban intentional community. ‘Finally, we decided on the third alternative, a self-sufficient household economy, in the country, and in the United States, which we would try to make solvent, efficient and satisfying. Having made this decision, our next task was to define our purposes and adjust them to the possibilities of our situation.’

    ‘We were seeking an affirmation—a way of conducting ourselves, of looking at the world and taking part in its activities that would provide at least a minimum of those values which we considered essential to the good life. As we saw it, such values must include: simplicity, freedom from anxiety or tension, an opportunity to be useful and to live harmoniously. Simplicity, serenity, utility and harmony are not the only values in life, but they are among the important ideals, objectives and concepts which a seeker after the good life might reasonably expect to develop in a satisfactory natural and social environment. As things stand today, it is not this combination of values, but rather their opposite (that is, complexity, anxiety, waste, ugliness and uproar) which men associate with the urban centers of western civilization.’

    ‘Our second purpose was to make a living under conditions that would preserve and enlarge joy in workmanship, would give a sense of achievement, thereby promoting integrity and self-respect; would assure a large measure of self-sufficiency and thus make it more difficult for civilization to impose restrictive and coercive economic pressures, and make it easier to guarantee the solvency of the enterprise.’

    ‘Our third aim was leisure during a considerable portion of each day, month or year, which might be devoted to avocational pursuits free from the exacting demands of bread labor, to satisfying and fruitful association with one’s fellows, and to individual and group efforts directed toward social improvement.’

    Now I will make a few observations. Nowhere here do you find that they wished to ‘disconnect’ themselves. They sought a more genuine connection, both to their fellow men and to their innermost needs as humans. Their goals are very much like those we find in Thoreau.

    They explain why they chose New England as a combination of practical economics, as offering a sense of connection to the Old World, and for its bracing climate. There is no evidence here of any hair shirt…they wanted to live ‘The Good Life’. But a mansion on Fifth Avenue was not ‘the good life’ if they had to sacrifice their purposes. It is curious in this respect to observe the steady stream of suicides among the bankers.

    You will find, throughout the book, a keen sense of economics. For example, the extensive discussion about why stone buildings are a much better choice than wood for building in New England, because of the much lower maintenance. The fact that cement was useful in the making of stone buildings never bothered Scott at all. He talks about driving the truck to town and picking up loads of cement.

    Given what you have read above, why would you think that Scott was determined to use the construction methods of, say, the Edo period in Japan…where building was of wood, and joinery did not use significant amounts of metals? Or to copy the Iroquois building methods? Or those of the Pilgrims?

    Why would you think that traveling on lecture tours in the winter, with the farm shut down, was something the Nearings would not consider to be part of the good life? On the contrary, the lecture tours were part of the efforts at ‘social improvement’.

    Nor was there any desire to do things the hard way. The Nearings were frustrated in Vermont when their efforts to assemble group efforts for community projects failed because of the ‘rugged individualism’ of their neighbors. Eventually, they moved to Maine, but I am not aware that the communalism idea succeeded any better there.

    What all efforts at ‘the good life’ boil down to are a few major points which have to be balanced:
    *solvency of the enterprise
    *connection with the neighbors and nature
    *a large measure of self-sufficiency (or self-reliance)
    *opportunity to pursue one’s personal goals

    Balancing the goals involves something very much like Economics 101. That is, one has to work toward balancing the marginal utilities. ANY strategy can be pursued until it no longer pays. Likewise, the first few units of something are likely to give the most utility. Thus, earning some money by making maple sugar so that some cement could be purchased to make buildings with stone paid large dividends. Working in a Manhattan office building to make money for a one week vacation each year was a negative in Scott’s estimation.

    What the Nearings did at the household level is very similar to what Gail is doing with this blog…searching for the points where the returns are now negative, such as debt. The Nearings were convinced that they had found an escape from the negative returns of New York City in 1932. It might not be the right choice for everyone, but it worked for them. They had a secure land base from which they could interact with the world.

    If you want to know how to build a building without fossil fuels, you need to study the building methods which were used before fossil fuels were available. I’ve suggested taking a look at Azby Brown’s book on Edo. He explains how the Japanese of that time built buildings in considerable detail.

    You could study the log cabins in Smoky Mountain National Park, but you would be looking at very resource intensive methods, using whole logs. Forests don’t last very long if one uses whole logs.

    You could study Williamsburg, VA, but then you are mostly looking at buildings built by slaves.

    There may be places in the US where you could study the houses built by slaves or homesteaders, before fossil fuels. If I remember correctly, Hancock Shaker Village in Massachusetts and Shakertown in Kentucky were both built without fossil fuels, and mostly with wood to wood joinery. With the Shakers you are looking at a communal style of living.

    One advantage of looking at Edo is that the culture was pretty advanced. They had moved considerably in terms of balancing the same objectives that the Nearings were balancing. So, for example, a farmhouse defined itself with both indoors and outdoors seamlessly integrated. I can show you tiny houses near my home that do the same thing…but they all use fossil fuels and metal joinery one way or the other. I’m not criticizing these tiny houses…they are not yet required to live without fossil fuels and metal joinery. If you want a peek at what that sort of changes such a requirement would impose, you need to look for some examples. If you refuse to look at Edo, find some other example to look at.

    Don Stewart

    • Fast Eddy says:

      To each their own — some consider ‘the good life’ as being a power broker in London, or Hong Kong or New York… they thrive on being a ‘player’ and would hate living as the Nearings do as much as the Nearings would hate living as they do.

      At the end of the day the Nearings are not much different than the ‘player’ — neither live sustainably … both are reliant on BAU …

      Yet the Nearings are pointed to as somehow superior to the ‘player’

      They wanted to move away from ‘outdated culture patterns’ as if there was something superior about growing food while tapping into the exact same things that lead us to the precipice – i.e. all the conveniences offered by BAU.

      As for outdated cultural patterns — that is purely subjective — I understand that there are places in the US that are modeled on the 1950’s — where you can buy a house and pretend that time did not march forward….

      The question arises — which period is the one which we can identify as the one where we did live sustainably — a period that we might attempt to emulate? I think we’d all agree that if we were to identify a civilization as such — it would also have to enjoy freedom and democracy (Edo offered neither – it was a brutal dictatorship)

      The only period where we would be on reasonably safe ground in identifying as sustainable would be when humans were living as hunter gatherers… a period when our populations were controlled by the natural limits such as the amount of food in a given territory … diseases… attacks on us by other predators and other humans

      The Nearings were no doubt happy living as they did — probably happy because they believed they were not pillaging the planet — but they WERE pillaging the planet — they were not living a sustainable life — they should not be put forward as being superior…. they are not superior (

      If they would have stripped off their clothes and disappeared into the forest living like animals then they get the sustainable living award….

      If a peasant living in Edo were to see how the Nearings were living he’d perceive them in the same vein as the Nearings probably view the likes of Jamie Dimon ….

      They’d look at his truck and his concrete and his other modern conveniences and think ‘damn that guy is living large!’

      • Don Stewart says:

        Fast Eddy
        If everyone lived at the level of the Nearings, we wouldn’t be facing the problems we are on multiple fronts. Sunday music fests for entertainment are simply not a threat to the planet. If using some cement in your buildings is your worst offense, then I imagine St Peter will wave you right on in.

        Don Stewart

      • Artleads says:

        “If they would have stripped off their clothes and disappeared into the forest living like animals then they get the sustainable living award….”

        I don’t see how this would solve anything. If 7 billion or even 7 million people tried to do this, they’d just be stripping away the last few habitats for the non human species that humans in turn depend on. So what is called BAU is proposed as the only honest alternative to that. But what is BAU exactly? Does it require Exxon Valdes and BP gulf spills? Is it mandatory to pipe shit into the sea? And does it require doing those and millions of others of similar ilk in order for “the economy” to grow (or otherwise maintain needed dynamic)?

        • Fast Eddy says:

          I did not suggest it would solve anything.

          The Nearings are put forward as an example of living sustainably.

          And I am calling that total bullshit.

          They are either hypocrites — or more likely they are like the rest of the Koombaya Crowd — delusional in that they believed that they could utilize BAU as they pleased — but so long as they grew organic food they were the model we need to follow to save the planet.

          If they wanted to make a point (for the sake of making a point — because it would change absolutely nothing) they should have gone into the forest and lived sustainably as hunter gatherers.

          Heck — they couldn’t even live without a vehicle or electricity!!!

          And the Koombaya Krowd put them forward as their heroes? Give me a break….

    • Michael Jones says:

      Thank you Donald for taking the time and effort in your post. I’m afraid Highway Eddy will turn a blind eye and only see things his way.
      The Nearings are a fascinating study and we can expound many a comment exchange on their lives, which can be looked at in many seperate chapters.
      I hope Highway Eddy will take some time to explore more their beautiful life.

    • xabier says:

      Seems to me that what the Nearings did was the modern equivalent of the Roman Stoic or Epicurean seeking to live their conception of the Good Life in a complex and corrupt society: this necessarily involved some degree of personal restraint and relative austerity, and was also meant to result in a better relation to one’s fellow human beings and to the Universe, as conceived of then.

      But the bedrock of that ‘simple’ philosophical life, out of sight, was Empire and a complex exploitative system.

      It is a strictly personal strategy, and clearly does not offer a societal solution.

      So both Don and Fast Eddy are quite correct: there are lessons to be learned from the Nearings, and they also do not offer a model for all of us.

      One thing that advocates of the self-sufficient rural life seem to neglect to consider is that it has always been subject to the brutal discipline of adverse climate leading to crop failure, livestock disease, and epidemics.

      This is why humans have, in more complex societies which gave them the option, always headed to towns for an easier, and in many ways more certain, life, with more secure food hand-outs in hard times. As a modern stone-age tribesman said, he moved to town ‘Because there is more food, and no mosquitos!’

      And why in the past, and until very recently, the brothels of the towns were full of the destitute daughters and ( in the Ancient World) sons, of farmers who had been driven off their land not by war or landlords, but by Nature itself, that had destroyed their crops and livestock or left a village without enough hands to do the work. The scenes in England when foot-and-mouth disease hit a few years ago were horrifying, and psychologically shocking to the farmers. Life on the land is brutal, in its own way.

      • Don Stewart says:

        Dear Xabier
        Yes, there is a rich tradition of people who choose to partially disconnect from what they see as a dysfunctional society, and choose to live more simply. From the Stoics to Thoreau to the current crop of Tiny House people. Or even just people who choose to save money and pay cash, as opposed to going into debt.

        One of the last large groups which led a pretty sophisticated life and was entirely independent of fossil fuels and used very few metals were the farmers in Edo. And we are fortunate to have good descriptions of how they lived and we can visit (in Japan) preserved homesteads and museums and read scholarly articles about them. THAT is the reason I suggest people take a look. Yes, they had to cope with a burdensome government, and they had to engage in some practices we find distasteful such as infanticide and a pretty rigid system of inheritance. But they give us a picture of what COULD be done in a world without fossil fuels and very scarce metals.

        So my suggestion is that ‘it is all good’. I love the tiny house people, I appreciate the use of paint to create urban spaces that appeal to our senses and sociability, I admire people who avoid debt, and I also want to keep an eye on how to make do without fossil fuels.

        Don Stewart

      • Jan Steinman says:

        the brutal discipline of adverse climate leading to crop failure, livestock disease, and epidemics.

        This is largely due to the human proclivity to all do the same thing. If you’re growing the same crops your neighbour does, then the lack of diversity indeed makes you prone to such things.

        Wendell Berry said, “The aim of a healthy farm will be to produce as many kinds of plants and animals as it sensibly can.” Ignoring that results in such conundrums as the Irish Potato Famine, when many died while others managed to export food to England.

        I reject absolutist arguments. It’s a game of odds. Keep doing things to make your odds better.

  15. Fast Eddy says:

    Brazil’s downturn worsens as job losses mount and inflation climbs

    Brazil lost jobs in May at an unprecedented pace for the month as economic activity tumbled and inflation soared beyond forecasts, government data showed on Friday, in further evidence of Latin America’s largest economy’s steep downturn.

    Brazil’s economy shed a net 115,599 payroll jobs in May, the labor ministry said, the worst result for the month since the current data series began in 1992.


    = Deflation…. which is the stake through the heart of BAU….

  16. Fast Eddy says:

    Let’s try this again:

    Ok…. let’s take the gloves off.

    Pick up trucks… concrete… modern tools…. wood and door and window frames and pulleys made by the factories of BAU…. hospitals … doctors… they even used electricity! (of course that probably came later because most rural places did not have electricity until late in the game for this couple)

    And then they installed mains power when Helen built the new place. Overall, they lived frugally, mostly. That’s a fine thing to emulate. But don’t buy into the hero worship.”


    • Fast Eddy says:


      Do you use any power tools (rototiller, etc.) in your farming or gardening? And did you prepare your soil extensively?

      The only “power tool” we have ever used is a pickup truck.

      Our garden was plowed once the first year we came to :Maine, some 25 years ago, and never since. The area where we put our blueberry bushes was never plowed. Instead the land was heavily mulched, well fertilized, and subsequently kept as weedless as possible.

      In what way do you move very large rocks during your stone construction projects?

      We use iron bars, chains, planks, and stoneboats.

      The heaviest boulders — which usually go into the foundations — are moved on a stoneboat that we pull behind our pickup truck.

      When building with stone, how does one go about carrying the stonework up into the peak of a building?

      Erect a scaffold and pull pails of rock and concrete up with a stout rope and pulley. Lately we’ve been building with stone only to the second floor plates of a building, which largely does away with the problem. It is best to keep the stone portions of a structure low . . . a story and a half at most.

      The ideal would be to not lift any concrete or rocks more than five feet.

      We vary the position of our door and window frames in different buildings. Some frames are flush with the outside, some with the inside, and some are centered. When your wall has reached the sill level the forms are placed in positions on top of the wall making the necessary joist with the wall.

      Set your forms up to the frame and extend them out from there. Thus, they will fit any type frame.

      Don’t make your concrete too moist! Keep it dry, firm, and sticky . . . about the consistency of a brickmason’s mortar, and you’ll have little trouble making it stay where you want it.


      • Fast Eddy says:

        “We rarely if ever used doctors, pills, or hospitals”. http://www.context.org/iclib/ic26/nearing/ (Nearing also had injections of B12)

        So they used BAU medicine (I have been to a doctor maybe 3 times in the last 10 years so does that qualify me for sainthood too?)

        From reading this is sounds like he was a pissed off communist who dumped out on society and went to live in the bush https://en.wikipedia.org/?title=Scott_Nearing.

        During his 1919 trial for allegedly obstructing American military recruitment during World War I, at which he testified in his own defense, the prosecution asked Nearing whether he was a “pacifist socialist.” Nearing’s reply was illuminating—he replied that he was a “pacifist” and left it at that. Prosecutor Earl B. Barnes was taken aback and asked for clarification

        Now this is ultimate Koombaya …. he seems to not understand that in a world that is inherently violent — pacifists get the yoke….

        • Fast Eddy says:

          Amusing how in my research I find constant references to the ‘simple – sustainable life’ What a load of hogwash. These people were fully plugged into BAU as the rest of us…. there is no half way here — you are either out of BAU completely — or you are in —- they were as reliant on BAU as every single one of us

          They sold books and products to make a living off of BAU — they used electricity and motorized vehicles — and factory made tools etc etc etc…

          But they grew their own food and worked on the land— wipptee doo… I have neighbours who eat virtually nothing that did not come off their land….

          And here’s the knock-out punch:

          ‘the only power tool we ever used was a pick up truck”

          So you cut a tree with an axe (instead of a chain saw) but you haul the wood around in the back of the Ford and you put yourself forward as the King of Green.


          And the winner by knockout… Fasttttttt…….. Eeeeeeeee — deeeeeeee!

        • Michael Jones says:

          I believe YOUR problem is you CANNOT and WILL NOT accept the FACT that there are those among us that shun BAU. The reason is obvious, because you yourself can not survive it, and will perish even with all you preperations.
          Hey, Highway Eddy pick up a copy of “The Man who Quit Money” by Mark Sundeen.
          PS, The Nearing did just fine without much BAU and would have done OK without any of it.

          • kesar0 says:

            I believe Daniel Suelo can live without money quite good. But this can only happen under certain conditions. First he must forget about procreating. Children are very heavy energy/money “hungry” – all these medicines, clothes, education, food, etc. would be unbearable burden. Second he must have a lot of health and strenght. At some point in life they will be weakened and require substitutes or cures. Quite costly as well. This is fascinating story, but nonetheless not an example for many people.

            • Michael Jones says:

              The point of his path is he has the BALLS to do IT! Never mind your details of this and that is why he is able..sounds a lot like Highway Eddy. The man lives life on a high wire,. I really don’t believe you got the message of the book. Odd he found that those who had the LEAST were willing to give the MOST, and those with so-called riches and abundant material assets were the selfish and stingy. He stated that our society makes its crime to practice the teachings of Jesus and other such religious practices.
              A great read and many lessons to are told.
              That is one reason I agree with highway Eddy, we are toast because we don’t have it in us to share.
              NPR had a program on the radio about money and banking. I do not have the time to go into call what was spoken. One thing is the central banks main mission is to procets the banks. That is obvious and one person said if the public knew the truth there would be a revolution. Also one man set up a sharing community where everyone has a common place for tools, bulk foods, transport and this enables people NOT to have work full time rat race jobs and saves resources.
              So there, there are other alternatives out there, not just what Highway Eddy chants that the system must go one. Sorry the system must FAIL

            • Fast Eddy says:

              “The point of his path is he has the BALLS to do IT! ”

              Do what exactly?

              Did they take their book royalties and donate the cash to the poor? Nope. They used it to take vacations in Florida apparently…

              Typical good socialist/communists… no different than capitalists (when the tables are turned and they have the goods) … as you point out — human nature… the Nearings are no different

              (as an aside as a capitalist pig I’ve raised and donated well into 6 figures to various small charities over the past 10 years…)

              “Also one man set up a sharing community where everyone has a common place for tools, bulk foods, transport and this enables people NOT to have work full time rat race jobs and saves resources.”

              What you don’t seem to understand is that without growth none of these things would be available to share because they would not be manufactured because the factories would be bankrupted.

              If we reduce consumption what happens is we get a deflationary death spiral — if people decided to share everything from cars to hammers — or if they just decided to buy less of everything — then we would get massive layoffs at the factories that produce these things — we get layoffs all the way up and down the supply chain …

              And as people are laid off they consume even less… leading to more layoffs… governments collect less taxes so can offer fewer services… etc etc etc… until the global financial system collapses and BAU is no more — no BAU no cars, no tools, little or no food (because BAU industrial farming killed the soil), no economy….

              I appreciate your frustration with the current situation — I feel your pain —- but there is nothing we can do

              I used to think the Nearings and people like Joel Salatin had it right …..but then I realized they are really no different than the rest of us — completely plugged in (Joel Salatin has found a sweet spot selling his premium products to the 1% — who will pay anything for the best of the best….)

              There is no way out. We cannot simply say let’s make do with less. Because that will mean making do with nothing.

              We either grow — or we wither and die. There are no half measures.

            • kesar0 says:

              I’m not denying he’s a fascinating person with lot of charisma and vision. I’m just stating the fact, that this is the model for certain individuals. If everyone would do what he does, we are straight back to XVI century with collapsing demographics. None of this would be helpful in keeping the civilization/society on any livable level. With such overshoot as we have right now it would end civilization much faster. Just thoughts. I’m not criticizing anybody.

            • Fast Eddy says:

              Dead on the money.

              If we all lived like that that would quickly be the end of our steel shovels… pickup trucks…. and electricity.

              I doubt the Nearings understood that. Certainly most people advocating that lifestyle do not.

            • Michael Jones says:

              Highway Eddy, I was talking about Daniel Suelo of the book The Man who Quit Money

            • Fast Eddy says:

              A latter-day prophet or an irredeemable hobo – what would you call a man who has lived without money since the turn of the century? That’s the debate that’s going on around Daniel Suelo, an American man who claims not to have touched a dime in almost nine years.

              Suelo, who was recently profiled in the US magazine Details – presumably between glossy ads for expensive watches and shirts, lives in a cave in Utah and gets by eating food he has found either wild or in rubbish bins around town. He doesn’t have a pension or health insurance, and doesn’t claim benefits but he hasn’t opted out of human society completely – as well as scavenging unwanted food he keeps a blog. On it he explains the reasons for his lifestyle: “When I lived with money, I was always lacking. Money represents lack. Money represents things in the past (debt) and things in the future (credit), but money never represents what is present.”

              But is Suelo really living without money, or is he only able to get by because other people are spending? Some of the commenters on the Huffington Post are not convinced. Frelnc, for example, says Suelo has “just found a way to get others to pay the bill” and that he lives near a town popular with tourists who are willing to help him out.

              He adds: “He’s just a smart man who figured out how to live on the leavings of society. A post-consumer scavenger. Nothing more.”

              More http://www.theguardian.com/money/blog/2009/jul/23/daniel-suelo-caveman

              If this fellow is your role model then feel free to emulate him….

              Anyone who says money cannot buy happiness is full of crap… it does not guarantee happiness but it increases the odds…

              The problem that often arises with money is that most people — no matter how much they have — feel the need to demonstrate their wealth by living beyond their means — a Toyota is not good enough — they need to go into hock for a BMW… a 2000sf home is not big enough — they need 6000…

              And that’s where the unhappiness comes from — the stress of feeding the bank…

              A large percentage of marriages break down because of arguments over money…

              Live below your means and understand that you should have gotten over trying to be cool in grade 9…. and you will be a whole lot happier than dumpster diving for your next meal (even if it’s the dumpster out back of Park Avenue…)

            • I agree with living below your means, if you are among the people who can do this. (Those living on minimum wage, or already stuck with a lot of student loans, can’t really live below their means.) It is much less stressful than trying to show off with a big house and fancy car that you can’t really afford. My children used to ask, “Why don’t we live in a big house like my friend ______? You two have jobs that no doubt pay more than her parents do.” I would tell them, “This house is fine for our needs. We didn’t see a need for a house like that.” We didn’t aim for the fanciest cars or the most expensive college degrees for our children either. It certainly saved a lot of stress. I could work part time, without ever worrying about a problem.

          • Fast Eddy says:

            Is there are list of products and services that I must shun in order to be in the anti-BAU club?

            Can I use a bicycle but not a car? The metal for bicycles is made using massive machinery, computers, coal fired electricity and shipped around the world in giant container ships — is it still ok to ride a bike?

            Can I use a hand drill but not a lithium battery drill? The hand drill like the bike was a product of BAU in its entirety — is it still ok to use that?

            Can I use a steel shovel and not an excavator? Shovel … factory… China… coal… electricity… still ok?

            I guess I can still go to the hospital if I am unwell — and I can go to the hardware to buy sacks of concrete — and I suppose I can have electricity —- because Scott Nearing did have all — and it seems that he is the arbitrator on what is acceptable and what is not.

            Or am I only allowed to use electricity an hour per day — and only for essential things like lights? Can I use a washing machine or must I wash by hand? What about a fridge? Is that allowed?

            What about shoes? Do I have to go barefoot? And clothes — homespun only?

            Can I shuttle around in a Lear Jet — or is that a no no …. only pick up trucks are on the list right?

            I need more direction here… what is allowed and what is not allowed?

            Yours truly,

            Fast Eddy (Koombaya Smasher)

            • Michael Jones says:

              Highway Eddy, you are judging the Nearings based on your dark position of the State of the World today. Helen and Scott are of a different time period and faced certainly a set of different concerns and challenges. Please give them due credit for what they achieved and gave to many others in what they found to be a better approach to our human condition.
              Good luck to you

            • Fast Eddy says:

              What exactly have they achieved?

              There are tens of thousands of people living trendy faux sustainable lifestyles like them… (plugged directly into BAU)

              From what I see their main accomplishment is that they have attained cult status in the Koombaya Kommunity by selling books about what they have done…

              If you want idolize someone for living something close to a sustainable lifestyle here you go:


              Not so trendy eh…. the Nearings lived in a completely different world than that — with concrete and doctors and trucks and electricity…. completely unsustainable …. they are — like all of us — PART OF THE PROBLEM.

            • Michael Jones says:

              Part of the problem? You are just blowing smoke. Scott Nearing lost two teaching positions because he was part of the problem? What are you insane or just a jerk, perhaps both. Against child labor and the War machine that wasted lives and resources.
              Blacklisted afterwards and could not get gainful employment in his vocation of University professor in Economics. Faced DEFLATION in the Great Depression (in another words collapse you like throw in your mix). When they started out in Vermont they were totally without BAU and did just fine. They had no stone buildings, no resources and made due or did without. Mostly did without.
              So continue shooting your mouth here like some upstart know it all.
              You KNOW NOTHING and I do not care what part of the planet you visits.
              Seems a waste on you.

            • Fast Eddy says:

              Like I was saying…. crazed…

              I think I might need a rabies shot after that!!!!

              Time to calm everything down here…

            • Kumbaya Lord translates to “Come by Here, Lord.” It was popular in summer camps in the 1950s and 1960s. I remember singing it at summer camps.

  17. Don Stewart says:

    Dear Gail and Finite Worlders
    Make the time to watch this whole one hour video if Finite World considerations have you worried or anxious or scared. If you don’t have time to watch it all, skip to 42 minutes to understand the damage done to the male brain by testosterone, and figure out how many of the doomers are male. Fall back 10 yards, and reboot.

    In the latter half of the talk, he talks about imagery as a way to deal with mental problems. I will share with you two images that have worked for me.

    The first image I developed about 40 years ago, when I had a particularly annoying commute in a car. Quite a few drivers would cut in front of me on the crowded highway, leaving me inadequate distance to the car in front of me and the car behind me. Mostly, the people who cut in were males. The image I developed was: His girlfriend has just called. She explains that her husband is going to play golf with his buddies, and won’t be back for two hours. But he has to hurry over right now…..so obviously he is going to cut in front of me….and I wish him well.

    The second image has to do with loss of material comfort. And here I highly recommend that you get the movie Hester Street, which I have referred to before. Suppose you are a male who has been bathed with the testosterone, which has severely pruned your brain synapses. You are Yankel in the film, and Mamie invites you to accompany her home. When you get to the boarding house, would you have sex with Mamie while people are stepping over you as you bed down on the pallets in the hallway?

    If you would have sex with Mamie, what in the world are you worried about?

    Don Stewart
    PS Since most of my brain synapses were destroyed, I have no useful advice for females. But my limited experience with females is that most of them have no time for doomerism anyway.
    PPS Not to belittle the solving of real problems.

  18. Don Stewart says:

    Yet another major chunk of the economy which is ripe for a big move down the thermodynamic scale is healthcare, especially in the US. I think this link will work:

    If they want you to sign up, you can do so for free. Mark Hyman, who testified in 2009 during the Health Care hearings and was ignored, is now at least being heard as part of his partnership with the Cleveland Clinic. The conversation identifies Big Pharma and ‘lumbering hospitals’ as big obstacles. Hyman is thinking optimistically. Cynics are entitled to look at the Big Pharma friendly Trans Pacific Partnership and be cynical.

    It’s worth remembering that, a couple of years ago, I reported on the Omega Institute conference where Bill Clinton was one of the speakers. At that time, he said ‘we are just at the beginning of the reforms that need to happen in health care’. Of course, he was an ex-President, and so didn’t need to lie in order to please some constituency.

    But if thermodynamic limits become more painful than the pain of double-crossing Big Pharma, then we might take a huge step down the thermodynamic ladder.

    Don Stewart

  19. Don Stewart says:

    Besides the issue of conventional American vs. Amish agriculture in a world at the thermodynamic limit for present patterns of production and consumption, consider the question of sleeping.

    We might consider the ‘standard’ way of sleeping in the US today as a ‘bedroom for everyone’, with the bedroom being furnished and decorated in a fairly lavish style. As another alternative, we might consider the ‘standard 1950s suburban house’ as having a master bedroom for the parents and probably one or maybe two bedrooms for the children, furnished with bunk beds for the children. A more spartan alternative is exemplified by Edo Japan, where there were no dedicated bedrooms. Futons were rolled out at night in tiny rooms which were used for other purposes during the day. Typically, two people in each of 3 tiny rooms with no furnishings. Husband and wife, two children, mother and brother. If you want to get even more frugal, you can look at Joan Micklin Silver’s wonderful movie Hester Street about the Jewish experience in New York City. A woman who has been in New York for a while takes a fancy to a new emigrant, and decides to take him ‘home’. ‘Home’ is a pallet in the crowded hallway of a boarding house. They have sex anyway, and form a relationship. (Definitely wouldn’t meet fire code).

    If thermodynamic constraints force us to change how we think and behave about sleeping, then GDP falls rather dramatically, the need for additional construction of housing evaporates, debts are not repaid, builders go bankrupt. There might be quite a bit of work for carpenters doing modest remodeling. Laws restricting boarding will have to be rescinded or ignored.

    Don Stewart

    • The fun part is that perhaps in some parts of the world (most?), those who never saved and lived (partly) from various handouts and even not in their own property (instalments paid to a bank), might sort of continue to live like that for few more decades, albeit stripped of any other today’s luxuries on top of that like fuel, frivolous trinket consumption, pensions – vacations – healthcare etc. While the “informed” doomers will be over taxed, robbed, kicked out but various ad hoc “emergency laws” and so on.. What a sick paradox, but pretty likely at least in vast parts of western Europe.

      • xabier says:


        That had occurred to me too: after all, the classic ‘doomstead’ is a more or less extensive rural property, and in times of crisis such property will be very vulnerable to expropriation or unbearable taxes and regulations, and the better the land the more attention will it attract. For so long as effective regional or national government exists, that is. And when that ceases, we have mafias.

        I met a girl Eastern Europe who was working unhappily as an accountant in England, having been pushed off her small farm at home by a combination of taxes and licence fees imposed by an indifferent central government, and corrupt local officials and mafias who wanted the land and who could use the regulations to dispossess her, while not following the rules themselves.

        Driving neighbouring farmers into bankruptcy through litigation so as to get their land cheap was historically also a very common feature of rural life, in Europe at least, (and I think there was a proverb in the US about never living among German-descended farmers , as they were the worst for that sort of thing?!)

        Greed is as easily excited by dirt as by gold, we tend to forget that in idealisation of rural life. When land is the major asset in a society, it attracts crooks like flies to honey.

        ‘Out of the crooked timber of humanity, you will never make anything straight’.

    • I believe that in some cultures, children sleep with the parents.

      The home I visited in rural India had a kitchen and one all purpose room for everything else. The all purpose room had a TV, for when electricity was available, a treadle sewing machine, and some stacks of rice the farmer had grown. I don’t remember any other furniture. We sat on the dirt floor and ate lunch around a table cloth that was laid out.

    • xabier says:

      Bedrooms of the young have, in the spoiled West, become almost miniature, semi-independent apartments within houses. It seems to be an accelerating trend.

      I’ve noticed that the offspring of middle-class parents now insist on being driven up to university here with the full contents of their rooms at home, which they cannot bear to be parted from and which their foolish parents seem to feel obliged to indulge them in. At the end of term back it all goes, and so on…

      I don’t think they are doing much for the characters of their offspring: if one can’t stand even a little taste of ‘spartan’ institutional living -in fact very comfortable as it is an elite university and the rooms are generally large with nice beds and desks, shelves and sofas – at 19, then what hope is there? Luxury stunts moral and spiritual development. They will be ill-equipped to face, or even conceive of, a harder world.

      • Stefeun says:

        Yes Xabier,
        Comfort is a trap, in that it makes us dependant of external structures.
        We’ve been facing this problem since the moment we started using fire, but I agree that nowadays it seems to be accelerating and reaching dramatically high levels. Our self-domestication ((into fossil-fueled artificial world) is almost complete, at least in so-called developed countries.

      • Each dorm bedroom now seems to be private, and young people expect their own bathroom. They often have a shared living room and kitchen as well. All of this is air conditioned (and heated). No wonder it is expensive.

  20. Don Stewart says:

    Dear Artleads
    A little more explanation on why I suggest starting from where we are, and thinking about where we need to go, rather than starting from Doomsday and trying to work back. Most of this inspired by Capra and Luisi.

    On page 202 and following, the authors take apart the ‘selfish gene’ meme and show why it is not a useful meme. The idea that natural selection works at the level of individual genes is simply wrong, as a general rule. Instead, we see lots of evidence that selection has worked to find cooperative and synergistic combinations. All the cells in our bodies (with the exception of cancerous cells) ‘understand’ that they need to cooperate in order to survive. And the microbes in our gut represent an elegant synergistic solution to many of the problems associated with metabolism.

    When scientists study the origins of life, the problems tend to become ‘why did Nature do it this way, rather than that way?’ On page 223, the authors discuss lysozyme, a particular enzyme essential to life. ‘the enzyme lysozyme has 129 amino-acid residues. In order to be active, these enzymes must possess their specific sequence and so it is with each of the very many proteins of our cells. In order to understand how remarkable the existence of a specific linear sequence is,…ask the question: in how many ways can a chain of 129 amino-acid residues exist, considering that we have 20 different amino-acids for each position of the chain? The answer is 10 to the 168th power… Lysozyme is just one of those!’

    and: ‘Lysozyme is not with us because it is the most stable of all those isomers. And the same can be said of all the other biologically functional macromolecules: the enzymes, all RNAs, and all DNAs in life’s metabolism Clearly, each of these active biopolymer forms was not formed spontaneously as the most stable form, as in the case of Stanley Miller’s flask amino acids. Rather, they are the products of a long series of contingency events, each possibly corresponding to a segmental growth of the chain, whereby each step is determined by the contingent set of parameters affecting the reaction at that particular moment.’

    On page 247 the authors explore Wrangham and Peterson’s rejection of ‘the notion that there are on our planet peaceful, idyllic places without violence’.

    [Don’t expect some magical elixir which is going to fix all the problems]

    ‘A tragic consequence of this form is violence is the fact that we are the only species on Earth who destroys its own habitat, threatening countless other species with extinction in the process. To this determinant of aggressiveness we also need to attribute negative emotions such as anger, hate, and jealousy….Fortunately, killing and aggression are not the only determinant of our being human. There is also the opposite trait of love and altruism, to which we now turn.’

    And on page 251, they briefly consider Beauty: ‘The idea is that contemplative appreciation is also instinctive, which permits the author to link high artistic values to our biology.’

    Now for a little excursion into a TED talk:


    The traffic official in New York City started by making low-cost, incremental improvements. If the improvements actually worked, then paint could be replaced by durable structures. When I think of NYC driving, I think of uncontrolled aggressive situations. The pictures I see in the TED talk are showing us a different world…on the same street which was always there.

    Parenthetically, I wonder if NYC got the paint idea from Portland, OR? Some neighbors in Portland painted an intersection, illegally, and had a street carnival. The bureaucrats were going to jail them, when the Mayor saw it, liked it, and changed Portland for the better. (The story will doubtless be retold in Toby Hemenway’s forthcoming book. It’s been in many of his talks over the last decade.)

    Also, please notice that in the case of Portland and NYC, the changes happen very rapidly and spontaneously. Change the infrastructure just a little bit, and human behavior moves into a new orbit. You don’t have to preach.

    I hope this explains more clearly my admonition to start where you are, but be just slightly ahead of the curve.

    Don Stewart

    • Artleads says:

      Hi Don,

      I’m a science illiterate, so the first section was obscure. But I vaguely “understood” some of this:

      “…they are the products of a long series of contingency events, each possibly corresponding to a segmental growth of the chain, whereby each step is determined by the contingent set of parameters affecting the reaction at that particular moment.’”

      Change happens through small adaptations to segments of a larger system. You don’t change the system all at once.

      I loved the TED talk on NYC streets. (I lived for years in or near NYC.) The 15 min presentation was a little short on the how and the what. I want to distribute it in my county, but will need more details of EXACTLY (maps, design diagrams) what was done, I believe.

      The ironic thing about such transformation is that it is at once highly dependent on fossil fuels, while prefiguring a world with decreasing supplies thereof. It is an excellent transition to a more thriving and resilient mainstream economy IN THE SHORT RUN. But it may set in motion notions of beauty, community and design that go far toward elegant solutions for extreme diminishing of FFs.

      I’d welcome an analysis of where those transition-oriented materials come from. More soon.

      • Don Stewart says:

        You might also check out Toby’s book, which will be published July 1 or thereabouts.

        I think a great deal of the change comes from feeling (moving neurotransmitters and hormones). Look at those people sitting in the beach chairs…how do you think they are feeling?

        Don Stewart

  21. Fast Eddy says:

    The economic cycle has now clearly turned as authorities step up stimulus, clearly worried that efforts to clamp down on the shadow banking system and rein in excess debt may have gone too far for comfort.


    Seems we are not yet at the pushing on a string stage yet….

    • Fast Eddy says:

      China’s housing market is roaring back to life in the biggest cities while local governments are issuing bonds at a blistering pace, the latest signs that the world’s second largest economy is finally pulling out of a deep downturn.

      Output is picking up on almost every front as the effects of credit easing begin to feed through, with the ‘expectations’ component of consumer confidence soaring to the highest level since the glory days of 2007.

      Rail freight, electricity use, and even sales of diggers and earthmovers are all recovering at last from recessionary levels.

  22. Fast Eddy says:

    The debt that fueled the U.S. shale boom now threatens to be its undoing.

    Drillers are devoting more revenue than ever to interest payments. In one example, Continental Resources Inc., the company credited with making North Dakota’s Bakken Shale one of the biggest oil-producing regions in the world, spent almost as much as Exxon Mobil Corp., a company 20 times its size.

    The burden is becoming heavier after oil prices fell 43 percent in the past year. Interest payments are eating up more than 10 percent of revenue for 27 of the 62 drillers in the Bloomberg Intelligence North America Independent Exploration and Production Index, up from a dozen a year ago. Drillers’ debt ballooned to $235 billion at the end of the first quarter, a 16 percent increase in the past year, even as revenue shrank.

    “The question is, how long do they have that they can get away with this,” said Thomas Watters, an oil and gas credit analyst at Standard & Poor’s in New York. The companies with the lowest credit ratings “are in survival mode,” he said.

    The problem for shale drillers is that they’ve consistently spent money faster than they’ve made it, even when oil was $100 a barrel. The companies in the Bloomberg index spent $4.15 for every dollar earned selling oil and gas in the first quarter, up from $2.25 a year earlier, while pushing U.S. oil production to the highest in more than 30 years.

    “There’s a liquidity issue, and you start looking at the cash burn,” Watters said.

    More http://www.bloomberg.com/news/articles/2015-06-18/next-threat-to-u-s-shale-rising-interest-payments

  23. Don Stewart says:

    Dear Gail and Finite Worlders

    I recently wrote about three possible explanations for the current economic malaise. One of them is that we are running on thermodynamic fumes. I state that, if that is true, we will have to have a time of turbulence followed by some new emergent patterns of production and consumption. (Please note that I don’t say we have to have a total collapse.)

    Gene Logsdon’s article on the disposable income of a typical Amish farm and a typical ‘American’ farm gives us some insights into what the ‘new emergent patterns of production and consumption’ might look like in terms of farming. Please note that the Amish are not ‘garden farming’, but the Amish family does have a kitchen garden.


    The argument is that the Amish have more disposable income, which equates to real wealth, despite having only one sixth the gross income. And the Amish do not take the hefty government subsidies.

    How can the Amish come out ahead? First, they conserve on the cost of production. Second, they conserve on their expenditures. But Logsdon, from his visits to Amish friends and his own recollections of his childhood, thinks they come out ahead in what I have called the ‘moving neurotransmitters and hormones’ department.

    IF thermodynamic issues force all farmers to begin to behave like the Amish, then GDP from the farm sector will decline to one sixth its current value. Debts won’t be paid. Many jobs making all the stuff that support the 300k farm will vanish. New jobs would appear which will look like the current jobs supporting the Amish farms.

    I am confident that we would also need many more farmers.

    Please note also that the Amish are not using very much oil. It’s not zero, but it’s not a lot. If we did make the adjustment, would it be possible that farmers could buy products produced with 200 dollar oil? Probably so, since their use value is very high.

    The scale of the adjustment is why I stated that adjusting to a thermodynamic challenge is fundamentally different from adjusting to debt and income disparity challenges. None of the above can be done with legislation…although legislation can make it harder to do what we need to do.

    Don Stewart

    • Thanks, very good post.
      Recently noticed two modern sat guided tractors haying local and quite tiny “EU set aside permanent grassland/pasture” in dozens of minutes. The equipment was likely on credit and in total with implements perhaps not far from .5M EUR purchasing price. This is beyond crazy, shortly after WWII this same place was worked by a horse and implement for like 1/100? (1/1000 ?) of the capital but for longer hours. Obviously the tractors have the “effectivity” to work other fields nearby and there are not enough farmers and craftsmen to build up all the old tools necessary soon enough, but you can catch my drift.

  24. Fast Eddy says:

    A little more from that article…

    Note how people desperate for work have been attracted to the Bakken — it would appear that a great many of them are shall we say…..not the types you would bring to a dinner party…

    And the violent parasites of organized crime have followed.

    I wonder what such people will do when they see ‘life-boats’ — post collapse.

    There will be no Justice Department or strike forces then…

    I’ve a friend who is perhaps the wisest man I know — we’ve had this collapse discussion — and his suggestion is basically this: ‘when it is apparent that the lights are about to go off — the best option is to book into a nice hotel room — order up a room full of food and drink — sit yourself in front of the TV to watch things unfold — then when the electricity shuts down — swallow a bottle of pills’

    I can see his point – why suffer — does anyone really think they are ready to deal with the type of people described below — and what about the hordes that will be clamoring to get on your life boat?

    A joint effort by the federal government and the state of North Dakota is seeking to crack down on crime in the Bakken. The U.S. Justice Department, in conjunction with North Dakota’s Attorney General, announced the creation of a “strike force” on June 3 that would target organized crime in the oil producing state. The Justice Department stated that the strike force would be targeted at “identifying, targeting and dismantling organized crime in the Bakken, including human trafficking, drug and weapons trafficking, as well as white collar crimes.”

    The effort is a direct response to the rise in crime in North Dakota and Montana, which has been fueled by “dramatic influxes in the population as well as serious crimes, including the importation of pure methamphetamine from Mexico and multi-million dollar fraud and environmental crimes.”

    • edpell says:

      Without cars even the super thug has a limited range of operation. I just have to deal with the local thugs. That will be basically the cops, state cops, and wackjob vets.

      • Fast Eddy says:

        Team A: violent desperate men trained in combat and armed to the teeth

        Team B: organic farmers who have spent their lives readying up on how to grow the perfect tomato and how wonderful Edo was…

        Um… call me silly …. but my money goes on Team A…

        What about all the thousands of locals who will be at your farm gate looking for food? What will you do about them?

        • Jan Steinman says:

          violent desperate men trained in combat and armed to the teeth

          Am I the only one suffering cognitive dissonance from people who claim that the cars will stop running and the lights will go out and the nukes will melt, but somehow, through all that, ammunition will still be available?

          If that’s so, I think we should figger out how to power our economy via ammunition! The way some folks talk, it’s an infinitely renewable resource!

          (Myself, I’ve got a block of lead, some black powder, and a flintlock muzzle-loader. Wonder how many “violent desperate men” will stand up to that once they’ve fired their last cartridge.)

          • Brunswickian says:

            I am not convinced TPTB have no plan. MIke Ruppert said years ago that there were plans to defend certain key facilities and there would be lockdown to prevent people fleeing the cities. I guess there would be the mother of all traffic jams anyway.

            The US police are militarized now and have a massive stockpile of ammo. Dieoff would be quite rapid.

            I have heard different stories regarding the threat spent fuel pools present, from not so bad to ELE. Does anyone know an agenda-free assessment?

            i find Catherine Austin Fitts intriguing. She says there is a Breakaway Civilisation funded by US$ trillions garnered from war and the drug trade. It all sounds a bit woo-woo for a start but I have watched several of her videos and she doesn’t appear to be a loon to me.

            • Fast Eddy says:

              No doubt there is a post collapse plan – some sort of martial law — but that will only only as long as petroleum reserves and food stores hold out … then the armies become private armies… and they take what they need — by force

              Life boat communities will be very high on the target list. The farmers get to be enslaved by the militias — thanks for all the hard work getting things prepped!

            • kesar0 says:

              Catherine Austin Fitts sounds very convincing. Thank you for the hint.

            • kesar0 says:

              And I have to admit, that what she is saying sounds very true. She’s saying about top-transnational cosmpolitan ‘new world order’ elite steering the whole thing with a plan to depopulate the planet and govern it through technology, quite similar to what Kulm is saying. I guess I have to rething my position on this one.

            • Brunswickian says:

              The ponzi dynamics of our financial system have been known for a long time. The notion that only a few wily surfers on the net frontier have figured it all out is absurd. That TPTB have been blindsided is ridiculous. But then, why have they let it get to this point of environmental destruction? One might think an earlier intervention of depopulation would have been consistent.

              It is a fact that people have been herded into cities all over the world in recent decades. Just system dynamics or planned?

              It all depends how far down the rabbithole you want to go.

            • kesar0 says:

              I want to dig deeper. Can you point me to the right sources?

            • Brunswickian says:

              You could try Fitts’s interviews with Dark Journalist. Richard Dolan and the Breakaway Civilisation.

            • Fast Eddy says:

              This is excellent

              Utopia Season 1 Complete 720p HDTV x264

              Plot Summary:

              Utopia will follow a group of people who find themselves in possession of a manuscript of a cult graphic novel. The tome is rumoured to have predicted the worst disasters of the last century and the group soon find themselves targeted by a shadowy organisation known only as The Network.



          • Fast Eddy says:

            Plenty of these sorts have plenty of ammunition stockpiled… see some of the doomer blogs for more info — there are loads of people just like you who can’t wait for ‘the adventure’

            Slight difference — they are armed to the teeth and can’t wait to be let off the leash.

  25. Fast Eddy says:

    The Dark Side Of The Shale Bust

    The fallout of the collapse in oil prices has a lot of side effects apart from the decline of rig counts and oil flows.

    Oil production in North Dakota has exploded over the last five years, from negligible levels before 2010 to well over a million barrels per day, making North Dakota the second largest oil producing state in the country.

    But the bust is leaving towns like Williston, North Dakota stretched extremely thin as it tries to deal with the aftermath. Williston is coping with $300 million in debt after having leveraged itself to buildup infrastructure to deal with the swelling of people and equipment heading for the oil patch. Roads, schools, housing, water-treatment plants and more all cost the city a lot of money, expected to be paid off with revenues from oil production that are suddenly not flowing into local and state coffers the way they once were.

    Related: A Bit Of Perspective On Gasoline Prices

    Williams County Commissioner Dan Kalil says that a lot of unemployed people who flocked to North Dakota are left in the wake of the bust, something that the local government has to sort out. “We attracted everyone who had failed in Sacramento, everyone who failed in Phoenix, everyone who failed in Las Vegas, everybody who had failed in Houston, everyone who failed in Florida,” Kalil said in a June 3 interview with WHQR.org. “And they all came here with unrealistic expectations. And it’s really frustrating for those of us left to clean up the mess.”

    Output is still only slightly off its all-time high of 1.2 million barrels per day, which it hit in December 2014. But more declines are expected with drillers pulling their rigs and crews from the field. Rig counts in North Dakota have fallen to just 76, as of June 12, far below the 130 or so that state officials believe is needed to keep production flat.

    More http://oilprice.com/Energy/Oil-Prices/The-Dark-Side-Of-The-Shale-Bust.html

    NOTE: shale oil production on a field falls off rapidly once it peaks….

  26. Fast Eddy says:

    Gleaning information from MSM sources is often difficult because they mix facts and lies together so you have to work out which are which…

    Stripping away the chaff from this http://www.csmonitor.com/Environment/Energy-Voices/2015/0618/Why-US-oil-train-traffic-is-falling I get:

    Furthermore, oil production is starting to level off, putting less pressure on the existing pipelines. North Dakota saw its output peak in December 2014, and it has ticked down since then. With production slowing, there is less of a need for rail. (Related: Oil Markets Could Be In For A Shock From China Soon)

    Overall, oil moving from Canada to the U.S. by rail fell by 28 percent in the first quarter of this year. That is bad news for U.S. rail shipper BNSF, which hopes to see a recovery in shipments after they dropped from a record high of 17,074 carloads in December down to just 13,000 in March.

    Which supports the position that we have peaked on overall oil production. We rammed as many holes in the ground as possible in the run up …. to allow us to gaze from the plateau for as long as possible — before tumbling over the cliff.

    Are we in the eye of the storm right now?

  27. Don Stewart says:

    Dear Gail
    With respect to the declining industrial production and other ailments for the economy.

    I can think of several plausible explanations for what is happening:

    First, see Charles Hugh Smith’s blog post a couple of days ago where he develops the numbers that about 60 percent of the labor force are employed in jobs that can supply a minimum standard of living. Which leaves 40 percent who are underemployed or unemployed and cannot live comfortably in the US. So, Explanation #1 is that Marx was right. Or that automation is killing labor. Or that the 1 percent are to blame. Or it is all Obama’s fault.


    Second, we have the thermodynamic explanation offered by BW Hill. The economy of the world is running on thermodynamic fumes. We can’t generate positive cash flows for new projects. The best we can do is use cash flows from existing infrastructure for as long as it lasts (e.g., shale oil and gas). Which implies that bonds will be defaulted for highly leveraged companies. Making matters worse has been the long stretch of zero interest rates which have resulted in massive amounts of investment which we can now perceive as stranded.

    Third, we simply have too much debt. Only government agencies want to loan money to the 40 percent who are unemployed or underemployed, so consumption is dragging its anchor. As soon as Wall Street grasps the situation, values will sink rapidly.

    These three explanations are not mutually exclusive. In the worst of all possible worlds, all of them are right. But I would argue that the thermodynamic explanation is the most fundamental. We can fantasize about how some sort of public policy change (maybe with the Pope’s encouragement) will more equitably distribute the money and write off unpayable debts, but thermodynamics is a lot harder to fix. We need to have a period of turmoil, out of which emerges a new structure (according to Capra and Luisi).

    Don Stewart

    • Jan Steinman says:

      We can’t generate positive cash flows for new projects. The best we can do is use cash flows from existing infrastructure for as long as it lasts (e.g., shale oil and gas).

      Thus Joseph Tainter’s tenet that civilizations collapse when all their effort goes into maintaining their complexity, leaving nothing for growth nor even basic social services. We are there.

    • edpell says:

      Don, I would ask what percentage of the economy is needed by “the core”? That is by the military, military suppliers, and the 1%? As contraction progresses we will get government priority allocation of resources. The 80% (wild guess) that is not needed will collapse first. Only later will “the core” 20% collapse.

      To those who say the 80% will wreck everything if left to die I say we are far more like Edo Japan then we care to admit. Look at the levels of starvation in 1880s, and 1930s U.S. with zero push back on the ruling class.

      • Kulm says:

        I am not Don, but right now 2% of the world owns about 95% of the world’s total wealth.

        Other than that 2%, plus maybe 4% more to kill the invaders, run their farms, count their beans, etc, about 94- 95% do not need to apply.

    • Stefeun says:

      Another view on US employment:

      “The “Illegal Immigrant” Recovery?
      The Real Stunner In The Jobs Report
      Submitted by Tyler Durden on 06/06/2015″

      Let me start with the disclaimer:
      “Note: this article is not meant to side on either side of the illegal immigration debate: the upcoming presidential elections will do enough of that. It merely seeks to fill a gaping hole in economist models which are unable to explain or rationalize why America’s seemingly “booming” jobs recovery, which is “firing on all fours” according to the BLS, is not manifesting itself in either inflationary pressures, or broad economic productivity.”

      Then quotes:
      “… since the start of the Second Great Depression, the US has added 2.3 million “foreign-born” workers, offset by just 727K “native-born”.”


      “In other words, the “foreign-born” catogory includes both legal and illegal immigrants unfortunately, the BLS is unable, or unwilling, to distinguish between the two.

      As a result, it may well be, that the surprise answer why America’s labor productivity (which recently posted its worst 6 month stretch in 22 years) has plummeted in recent years and certainly months, confounding economists who are unable to explain why “solid” labor growth does not translate into just as solid GDP growth…

      … and why wage growth has gone precisely nowhere, is because the vast majority of all jobs since December 2007, or 75% to be specific, have gone to foreign-born workers, a verifiable fact. What is unknown is how many of these millions of “foreign-born” jobs have gone to illegal immigrant who are perfectly willing to work hard, and yet whose wage bargaining power is absolutely nil (after all they are happy just to have a job) thereby leading to depressed wages for native-born workers in comparable jobs, resulting in wage growth which over the past 8 years has been non-existant.
      In other words, how many illegal workers cross the US border, may be the biggest variable shaping US monetary polic at the moment! And, in thought-experiment land, the more porous US immigration policy the longer the Fed will be allowed to maintain its ZIRP/QE experiment, and the higher the S&P will rise.

      Could it be that illegal immigration is the best friend of that 0.1% of the US population which has benefited exclusively from the Fed’s relentless injection of liquidity into risk assets via either ZIRP of QE?”


    • I would argue that there is a different thermodynamic issue–the economy needs to grow or it collapses–that is really fundamental. (BW Hill’s issue is the thermodynamic problem associated with declining net energy in extracting fuel. They have added to this adjustments so it is the declining net energy in fuel we actually use.)

      We don’t have a reverse gear on the economy, or even a “stall” gear. What we are on is like a bicycle; it needs forward notion. This is related to all of the above, but not exactly any of them. It includes the problem of repaying debt with interest, but is more inclusive. Without growth, we don’t have resources to offset diminishing returns of any kind. Without growth, the market for new houses, new homes, and new factories drops, and with it, the number of jobs drops. The economy collapses early on from these effects.

      • Don Stewart says:

        Suspend your disbelief and suspicion for just a second; assume that BW Hill has actually proven that our current methods of production and consumption are running on thermodynamic fumes.

        The ALL the politicians and central bankers in the world CANNOT succeed in ‘restarting growth’. THAT is the fundamental issue. Lots of other issues follow from that: loss of faith in governments; implosions of debt; starvation as population grows, inability to deal with pollution, and so on and so forth.

        As I indicated with the note on Amish agriculture, we can address SOME of the issues by changing our methods of production and consumption. But certainly not all of them. Debt would implode no matter what we do. The question is whether we have a political/ legal system which is flexible enough to survive a debt implosion, and the political wisdom to accept the implosion and move on and do the best we can with new production and consumption methods. The new methods will be subject to what Capra and Luisi call thermodynamic constraints and kinetic constrains (which I described separately).

        Don Stewart

      • Agreed with the overview of situation.
        However, look around, visit a garden or go to park, what have you..
        This has been, currently is and clearly will remain a planet of busy doers. The next human arrangement might be very different from this western/northern 300+yrs peaking bubble of oppulence, but the void will be filled eventually pretty soon. If not by a different and likely way smaller human society/culture then by other living thriving organisms.

        Now, what to do for the short term/mid term of our lives inside this phase shift change is the bonus question we continue to struggle with.

        • xabier says:


          What to do in the short/mid-term? That is the only question worth addressing.

          It’s quite possible that we will, in even the short term, be submerged under an environmental and civilisational crisis that would defeat any preparations.

          But if not, the appropriate response should be informed by what history and logic tell us about the way in which severely stressed complex societies behave:

          1/ Violent racial and class struggles, very nasty politics.

          2/ Authoritarian responses, whether ‘left’ or ‘right’ irrelevant.

          3/High taxes and onerous regulations, above all on property, imposed to meet short-term needs without any consideration of social and personal effects. Also, punitive, politically-motivated taxes.

          4/ High levels of corruption, above all in local politics and police.

          5/ Property secuestration, above all high-value urban plots and productive rural land.

          6/ Shortages of basic goods, foodstuffs and energy.

          7/ Very high crime, rural and urban. Kidnapping in urban areas for ransom and sex-trade. Tradespeople and servants (ie nannies, cooks) become the spies of criminal gangs.

          In this context, personal security is impossible to guarantee, but one can take actions which limit the impact of the above:

          1/ If you own property, and are not powerful and connected, make it the smallest possible, in the lowest of any conceivable tax band of the kind affordable by the lowest middle class.

          2/ But live where, if you have to sell up or borrow against it to survive, it will be likely to be an attractive proposition. And which has room for lodgers, who can help pay taxes.

          3/ Live away from possible riot-prone districts and from ethnic flash-points, so you won’t get killed for your skin colour or accent, or see the house go up in flames (insurance companies might not be paying out then).

          4/ Build a local network of decent people: they always get to know one another given time. Get to know the local crooks so as to avoid them.

          5/ Have a property of sufficient size to store very large quantities of food, water, fuel (multiple options), etc, as well as growing high-value nutritional supplements. But not so large or smart-looking so as to attract crooks.

          4/ Get general local reputation for being pretty hard-up, and live well below your income, so as to avoid local envy and spite.

          5/ Live in an area which is likely to be seen by government and corporations as strategically important and which will be maintained with food and power supplies when other regions are left to help themselves and where communication networks will be maintained as well as possible. A place that can be supplied by rail or water. This is likely to be an easy place to find work today, although probably expensive to buy in.

          6/ Easy access to rural areas where, in extremis, one can steal crops, livestock and firewood in periods of emergency, or gather fruits and wood from common areas.

          7/ A region that you find beautiful and restorative to the spirit, and a property with room for growing not only food, but flowers to delight.

          8/And of course and area that seems likely to deal well with a steady deterioration in the climate: no regular and direct threat of wildfires, floods, water shortages in at least the next decade or so. Beyond that, who can tell?

          • Artleads says:

            A wise list.

          • kesar0 says:

            Great list of conclusions. Fully agree. That’s the plan.

          • sheilach2 says:

            Right on! I look a lot poorer than I am, I drive a OLD car that gets over 30mpg, I rarely go out, I combine my trips, the lights are off most of the time, when on I have compact fluorescents, my water heater is on only for a couple of hours on sunday when I finally take a bath.
            I have a lot of hand tools including two scythes for cutting grass, weeds & small trees.
            I wear my cloths until they fall off me, I wear flip flops all year, if it gets cold enough, I’ll wear shoes & socks. It didn’t get that cold this “winter”.
            I have no outstanding debt, I pay cash for what I want, (pay pal or debit.) I own my own home, we have reliable water here even if now, thanks to global warming & sea level rise, it gets a little salty in late summer, there are few people here, we are far from large cities but of course no area can be completely independent from the outside & these dam fools here won’t stop developing land that should NOT be developed like flood plains on the river!
            As usual, it’s all about the MONEY! I guess they haven’t figured out by now that more people just means we have to pay HIGHER TAXES because more services will be needed especially LAW ENFORCEMENT, a service they refuse to pay for!

            The last 6 times we had a vote to raise PROPERTY TAXES the people voted NO!
            So we have already lost two deputies we couldn’t afford to lose & I expect more folks here are buying guns, cheaper I suppose than paying more taxes.

            You bet I have guns and their LOADED!

      • Creedon says:

        Is Greece currently growing or shrinking. Is Greece in a state of collapse. Is the printing of huge amounts of bonds out of thin air, growth or collapse.

  28. Don Stewart says:

    Dear Gail and Finite Worlders
    Just FYI. I previously mentioned the Go Sun solar cooker which can cook at night. The kickstarted was successful, and the product can now be ordered for future delivery…Don Stewart

    With your help, we make our dreams come true!

    Our Kickstarter Campaign by the numbers:
    $563,285 – Total Raised

    1,311 – Backers

    3/3 – Stretch Goals Unlocked

    1st – Commercialy Available Solar Oven To Cook At Night

    #1 – Most Funded Solar Kickstarter In History

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