Why oil under $30 per barrel is a major problem

A person often reads that low oil prices–for example, $30 per barrel oil prices–will stimulate the economy, and the economy will soon bounce back. What is wrong with this story? A lot of things, as I see it:

1. Oil producers can’t really produce oil for $30 per barrel.

A few countries can get oil out of the ground for $30 per barrel. Figure 1 gives an approximation to technical extraction costs for various countries. Even on this basis, there aren’t many countries extracting oil for under $30 per barrel–only Saudi Arabia, Iran, and Iraq. We wouldn’t have much crude oil if only these countries produced oil.

Figure 1. Global Breakeven prices (considering only technical extraction costs) versus production. Source:Alliance Bernstein, October 2014

Figure 1. Global breakeven prices (considering only technical extraction costs) versus production. Source: Alliance Bernstein, October 2014

2. Oil producers really need prices that are higher than the technical extraction costs shown in Figure 1, making the situation even worse.

Oil can only be extracted within a broader system. Companies need to pay taxes. These can be very high. Including these costs has historically brought total costs for many OPEC countries to over $100 per barrel.

Independent oil companies in non-OPEC countries also have costs other than technical extraction costs, including taxes and dividends to stockholders. Also, if companies are to avoid borrowing a huge amount of money, they need to have higher prices than simply the technical extraction costs. If they need to borrow, interest costs need to be considered as well.

3. When oil prices drop very low, producers generally don’t stop producing.

There are built-in delays in the oil production system. It takes several years to put a new oil extraction project in place. If companies have been working on a project, they generally won’t stop just because prices happen to be low. One reason for continuing on a project is the existence of debt that must be repaid with interest, whether or not the project continues.

Also, once an oil well is drilled, it can continue to produce for several years. Ongoing costs after the initial drilling are generally very low. These previously drilled wells will generally be kept operating, regardless of the current selling price for oil. In theory, these wells can be stopped and restarted, but the costs involved tend to deter this action.

Oil exporters will continue to drill new wells because their governments badly need tax revenue from oil sales to fund government programs. These countries tend to have low extraction costs; nearly the entire difference between the market price of oil and the price required to operate the oil company ends up being paid in taxes. Thus, there is an incentive to raise production to help generate additional tax revenue, if prices drop. This is the issue for Saudi Arabia and many other OPEC nations.

Very often, oil companies will purchase derivative contracts that protect themselves from the impact of a drop in market prices for a specified time period (typically a year or two). These companies will tend to ignore price drops for as long as these contracts are in place.

There is also the issue of employee retention. In a sense, a company’s greatest assets are its employees. Once these employees are lost, it will be hard to hire and retrain new employees. So employees are kept on as long as possible.

The US keeps raising its biofuel mandate, regardless of the price of oil. No one stops to realize that in the current over-supplied situation, the mandate adds to low price pressures.

One brake on the system should be the financial pain induced by low oil prices, but this braking effect doesn’t necessarily happen quickly. Oil exporters often have sovereign wealth funds that they can tap to offset low tax revenue. Because of the availability of these funds, some exporters can continue to finance governmental services for two or more years, even with very low oil prices.

Defaults on loans to oil companies should also act as a brake on the system. We know that during the Great Recession, regulators allowed commercial real estate loans to be extended, even when property valuations fell, thus keeping the problem hidden. There is a temptation for regulators to allow similar leniency regarding oil company loans. If this happens, the “braking effect” on the system is reduced, allowing the default problem to grow until it becomes very large and can no longer be hidden.

4. Oil demand doesn’t increase very rapidly after prices drop from a high level.

People often think that going from a low price to a high price is the opposite of going from a high price to a low price, in terms of the effect on the economy. This is not really the case.

4a. When oil prices rise from a low price to a high price, this generally means that production has been inadequate, with only the production that could be obtained at the prior lower price. The price must rise to a higher level in order to encourage additional production.

The reason that the cost of oil production tends to rise is because the cheapest-to-extract oil is removed first. Oil producers must thus keep adding production that is ever-more expensive for one reason or another: harder to reach location, more advanced technology, or needing additional steps that require additional human labor and more physical resources. Growing efficiencies can somewhat offset this trend, but the overall trend in the cost of oil production has been sharply upward since about 1999.

The rising price of oil has an adverse impact on affordability. The usual pattern is that after a rise in the price of oil, economies of oil importing nations go into recession. This happens because workers’ wages do not rise at the same time as oil prices. As a result, workers find that they cannot buy as many discretionary items and must cut back. These cutbacks in purchases create problems for businesses, because businesses generally have high fixed costs including mortgages and other debt payments. If these businesses are to continue to operate, they are forced to cut costs in one way or another. Cost reduction occurs in many ways, including reducing wages for workers, layoffs, automation, and outsourcing of manufacturing to cheaper locations.

For both employers and employees, the impact of these rapid changes often feels like a rug has been pulled out from under foot. It is very unpleasant and disconcerting.

4b. When prices fall, the situation that occurs is not the opposite of 4a. Employers find that thanks to lower oil prices, their costs are a little lower. Very often, they will try to keep some of these savings as higher profits. Governments may choose to raise tax rates on oil products when oil prices fall, because consumers will be less sensitive to such a change than otherwise would be the case. Businesses have no motivation to give up cost-saving techniques they have adopted, such as automation or outsourcing to a cheaper location.

Few businesses will construct new factories with the expectation that low oil prices will be available for a long time, because they realize that low prices are only temporary. They know that if oil prices don’t go back up in a fairly short period of time (months or a few years), the quantity of oil available is likely to drop precipitously. If sufficient oil is to be available in the future, oil prices will need to be high enough to cover the true cost of production. Thus, current low prices are at most a temporary benefit–something like the eye of a hurricane.

Since the impact of low prices is only temporary, businesses will want to adopt only changes that can take place quickly and can be easily reversed. A restaurant or bar might add more waiters and waitresses. A car sales business might add a few more salesmen because car sales might be better. A factory making cars might schedule more shifts of workers, so as to keep the number of cars produced very high. Airlines might add more flights, if they can do so without purchasing additional planes.

Because of these issues, the jobs that are added to the economy are likely to be mostly in the service sector. The shift toward outsourcing to lower-cost countries and automation can be expected to continue. Citizens will get some benefit from the lower oil prices, but not as much as if governments and businesses weren’t first in line to get their share of the savings. The benefit to citizens will be much less than if all of the people who were laid off in the last recession got their jobs back.

5. The sharp drop in oil prices in the last 18 months has little to do with the cost of production. 

Instead, recent oil prices represent an attempt by the market to find a balance between supply and demand. Since supply doesn’t come down quickly in response to lower prices, and demand doesn’t rise quickly in response to lower prices, prices can drop very low–far below the cost of production.

As noted in Section 4, high oil prices tend to be recessionary. The primary way of offsetting recessionary forces is by directly or indirectly adding debt at low interest rates. With this increased debt, more homes and factories can be built, and more cars can be purchased. The economy can be forced to act in a more “normal” manner because the low interest rates and the additional debt in some sense counteract the adverse impact of high oil prices.

Figure 2. World oil supply and prices based on EIA data.

Figure 2. World oil supply and prices based on EIA data.

Oil prices dropped very low in 2008, as a result of the recessionary influences that take place when oil prices are high. It was only with the benefit of considerable debt-based stimulation that oil prices were gradually pumped back up to the $100+ per barrel level. This stimulation included US deficit spending, Quantitative Easing (QE) starting in December 2008, and a considerable increase in debt by the Chinese.

Commodity prices tend to be very volatile because we use such large quantities of them and because storage is quite limited. Supply and demand have to balance almost exactly, or prices spike higher or lower. We are now back to an “out of balance” situation, similar to where we were in late 2008. Our options for fixing the situation are more limited this time. Interest rates are already very low, and governments generally feel that they have as much debt as they can safely handle.

6. One contributing factor to today’s low oil prices is a drop-off in the stimulus efforts of 2008.

As noted in Section 4, high oil prices tend to be recessionary. As noted in Section 5, this recessionary impact can, at least to some extent, be offset by stimulus in the form of increased debt and lower interest rates. Unfortunately, this stimulus has tended to have adverse consequences. It encouraged overbuilding of both homes and factories in China. It encouraged a speculative rise in asset prices. It encouraged investments in enterprises of questionable profitability, including many investments in oil from US shale formations.

In response to these problems, the amount of stimulus is being reduced. The US discontinued its QE program and cut back its deficit spending. It even began raising interest rates in December 2015. China is also cutting back on the quantity of new debt it is adding.

Unfortunately, without the high level of past stimulus, it is difficult for the world economy to grow rapidly enough to keep the prices of all commodities, including oil, high. This is a major contributing factor to current low prices.

7. The danger with very low oil prices is that we will lose the energy products upon which our economy depends.

There are a number of different ways that oil production can be lost if low oil prices continue for an extended period.

In oil exporting countries, there can be revolutions and political unrest leading to a loss of oil production.

In almost any country, there can be a sharp reduction in production because oil companies cannot obtain debt financing to pay for more services. In some cases, companies may go bankrupt, and the new owners may choose not to extract oil at low prices.

There can also be systemwide financial problems that indirectly lead to much lower oil production. For example, if banks cannot be depended upon for payroll services, or to guarantee payment for international shipments, such problems would affect all oil companies, not just ones in financial difficulty.

Oil is not unique in its problems. Coal and natural gas are also experiencing low prices. They could experience disruptions indirectly because of continued low prices.

8. The economy cannot get along without an adequate supply of oil and other fossil fuel products. 

We often read articles in the press that seem to suggest that the economy could get along without fossil fuels. For example, the impression is given that renewables are “just around the corner,” and their existence will eliminate the need for fossil fuels. Unfortunately, at this point in time, we are nowhere near being able to get along without fossil fuels.

Food is grown and transported using oil products. Roads are made and maintained using oil and other energy products. Oil is our single largest energy product.

Experience over a very long period shows a close tie between energy use and GDP growth (Figure 3). Nearly all technology is made using fossil fuel products, so even energy growth ascribed to technology improvements could be considered to be available to a significant extent because of fossil fuels.

Figure 3. World GDP growth compared to world energy consumption growth for selected time periods since 1820. World real GDP trends for 1975 to present are based on USDA real GDP data in 2010$ for 1975 and subsequent. (Estimated by author for 2015.) GDP estimates for prior to 1975 are based on Maddison project updates as of 2013. Growth in the use of energy products is based on a combination of data from Appendix A data from Vaclav Smil's Energy Transitions: History, Requirements and Prospects together with BP Statistical Review of World Energy 2015 for 1965 and subsequent.

Figure 3. World GDP growth compared to world energy consumption growth for selected time periods since 1820. World real GDP trends from 1975 to present are based on USDA real GDP data in 2010$ for 1975 and subsequent. (Estimated by the author for 2015.) GDP estimates for prior to 1975 are based on Maddison project updates as of 2013. Growth in the use of energy products is based on a combination of data from Appendix A data from Vaclav Smil’s Energy Transitions: History, Requirements and Prospects together with BP Statistical Review of World Energy 2015 for 1965 and subsequent.

While renewables are being added, they still represent only a tiny share of the world’s energy consumption.

Figure 4. World energy consumption by part of the world, based on BP Statistical Review of World Energy 2015.

Figure 4. World energy consumption by part of the world, based on BP Statistical Review of World Energy 2015.

Thus, we are nowhere near a point where the world economy could continue to function without an adequate supply of oil, coal and natural gas.

9. Many people believe that oil prices will bounce back up again, and everything will be fine. This seems unlikely. 

The growing cost of oil extraction that we have been encountering in the last 15 years represents one form of diminishing returns. Once the cost of making energy products becomes high, an economy is permanently handicapped. Prices higher than those maintained in the 2011-2014 period are really needed if extraction is to continue and grow. Unfortunately, such high prices tend to be recessionary. As a result, high prices tend to push demand down. When demand falls too low, prices tend to fall very low.

There are several ways to improve demand for commodities, and thus raise prices again. These include (a) increasing wages of non-elite workers (b) increasing the proportion of the population with jobs, and (c) increasing the amount of debt. None of these are moving in the “right” direction.

Joseph Tainter in The Collapse of Complex Societies points out that once diminishing returns set in, the response is more “complexity” to solve these problems. Government programs become more important, and taxes are often higher. Education of elite workers becomes more important. Businesses become larger. This increased complexity leads to more of the output of the economy being funneled to sectors of the economy other than the wages of non-elite workers. Because there are so many of these non-elite workers, their lack of buying power adversely affects demand for goods that use commodities, such as homes, cars, and motorcycles.1

Another force tending to hold down demand is a smaller proportion of the population in the labor force. There are many factors contributing to this: Young people are in school longer. The bulge of workers born after World War II is now reaching retirement age. Lagging wages make it increasingly difficult for young parents to afford childcare so that both can work.

As noted in Section 5, debt growth is no longer rising as rapidly as in the past. In fact, we are seeing the beginning of interest rate increases.

When we add to these problems the slowdown in growth in the Chinese economy and the new oil that Iran will be adding to the world oil supply, it is hard to see how the oil imbalance will be fixed in any reasonable time period. Instead, the imbalance seems likely to remain at a high level, or even get worse. With limited storage available, prices will tend to continue to fall.

10. The rapid run up in US oil production after 2008 has been a significant contributor to the mismatch between oil supply and demand that has taken place since mid-2014.  

Without US production, world oil production (broadly defined, including biofuels and natural gas liquids) is close to flat.

Figure 5. Total liquids oil production for the world as a whole and for the world excluding the US, based on EIA International Petroleum Monthly data.

Figure 5. Total liquids oil production for the world as a whole and for the world excluding the US, based on EIA International Petroleum Monthly data.

Viewed separately, US oil production has risen very rapidly. Total production rose by about six million barrels per day between 2008 and 2015.

Figure 6. US Liquids production, based on EIA data (International Petroleum Monthly, through June 2015; supplemented by December Monthly Energy Review for most recent data.

Figure 6. US Liquids production, based on EIA data (International Petroleum Monthly, through June 2015; supplemented by December Monthly Energy Review for most recent data).

US oil supply was able to rise very rapidly partly because QE led to the availability of debt at very low interest rates. In addition, investors found yields on debt so low that they purchased almost any equity investment that appeared to have a chance of long-term value. The combination of these factors, plus the belief that oil prices would always increase because extraction costs tend to rise over time, funneled large amounts of investment funds into the liquid fuels sector.

As a result, US oil production (broadly defined), increased rapidly, increasing nearly 1.0 million barrels per day in 2012, 1.2 million barrels per day in 2013, 1.7 million barrels per day in 2014. The final numbers are not in, but it looks like US oil production will still increase by another 700,000 barrels a day in 2015. The 700,000 extra barrels of oil added by the US in 2015 is likely greater than the amount added by either Saudi Arabia or Iraq.

World oil consumption does not increase rapidly when oil prices are high. World oil consumption increased by 871,000 barrels a day in 2012, 1,397,000 barrels a day in 2013, and 843,000 barrels a day in 2014, according to BP. Thus, in 2014, the US by itself added approximately twice as much oil production as the increase in world oil demand. This mismatch likely contributed to collapsing oil prices in 2014.

Given the apparent role of the US in creating the mismatch between oil supply and demand, it shouldn’t be too surprising that Saudi Arabia is unwilling to try to fix the problem.


Things aren’t working out the way we had hoped. We can’t seem to get oil supply and demand in balance. If prices are high, oil companies can extract a lot of oil, but consumers can’t afford the products that use it, such as homes and cars; if oil prices are low, oil companies try to continue to extract oil, but soon develop financial problems.

Complicating the problem is the economy’s continued need for stimulus in order to keep the prices of oil and other commodities high enough to encourage production. Stimulus seems to takes the form of ever-rising debt at ever-lower interest rates. Such a program isn’t sustainable, partly because it leads to mal-investment and partly because it leads to a debt bubble that is subject to collapse.

Stimulus seems to be needed because of today’s high extraction cost for oil. If the cost of extraction were still very low, this stimulus wouldn’t be needed because products made using oil would be more affordable.

Decision makers thought that peak oil could be fixed simply by producing more oil and more oil substitutes. It is becoming increasingly clear that the problem is more complicated than this. We need to find a way to make the whole system operate correctly. We need to produce exactly the correct amount of oil that buyers can afford. Prices need to be high enough for oil producers, but not too high for purchasers of goods using oil. The amount of debt should not spiral out of control. There doesn’t seem to be a way to produce the desired outcome, now that oil extraction costs are high.

Rigidities built into the oil price-supply system (as described in Sections 3 and 4) tend to hide problems, letting them grow bigger and bigger. This is why we could suddenly find ourselves with a major financial problem that few have anticipated.

Unfortunately, what we are facing now is a predicament, rather than a problem. There is quite likely no good solution. This is a worry.


[1] For example, more dividend and interest payments are paid, tending to benefit the financial industry and the elite classes. More of the output of the economy goes to workers in supervisory positions or having advanced education. Other workers–those with more “ordinary” responsibilities–find their wages falling behind the general rise in the cost of living. As a result, they find it increasingly difficult to buy cars, homes, motorcycles, and other goods that use commodities.

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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2,298 Responses to Why oil under $30 per barrel is a major problem

  1. Stan says:

    More debt problems in energy sector.
    (from debtwire.com and bloomberg.com)
    “Chesapeake Energy Corp. plunged 36 percent amid concern the U.S. natural gas driller’s financial options are narrowing. ”
    “Burdened with a debt load eight times larger than its market value, Chesapeake has been canceling drilling projects, trimming its workforce and closing offices to slow the rate at which it burns through cash.”

    2nd only to Exxon Mobil, Chesapeake pumps more U.S. gas than other drillers.
    Standard & Poor’s said that the company’s debt leverage is “unsustainable”.

    And in blogs.barrons.com/incomeinvesting/2016/02/08/with-9-downgrades-baird-axing-expectations-for-mlps/
    Baird’s Ethan Bellamy issued a report Monday headlined ‘Axing Expectations’ and said they were bearish on the sector until oil and high yield bottom.
    We expect E&P bankruptcies, deteriorating collateral value, chronic commodity weakness
    (driven both by fundamentals and USD strength), fund outflows, headline risk, and lukewarm
    -at-best global economic conditions to continue to pressure the (E&P) group.”

  2. Stilgar Wilcox says:


    After WTI oil went up last week it’s back down to 29.97 a barrel.

    After the Dow shot back up above 16000 it’s back down into the 15000’s.

    The glass is half full – no, it’s half empty. Rinse and repeat.

  3. Fast Eddy says:

    A drop in oil production and consumption = a drop in global GDP = collapse

  4. Tasha Zhang says:

    CHK is the epitomy of a walking dead energy company, the poster child. Should have been chapter 11 in 2008 but plunge protection saved them. If the poster child is indeed allowed to go C11 it would speak strongly to Gails premise that there free markets still do exist and solvency does matter. If that is true we will need a serious distraction and that distraction will likely be the proxy war in Syria becoming de-proxied.


  5. Fast Eddy says:

    Attention those who think deflation is not possible….

    The Magic Formula That Powered Japanese Stocks Is Falling Apart

    For Japanese investors, it must have seemed the equivalent of turning lead into gold.

    Unlike in the Middle Ages, the alchemy now relied on mixing central bank stimulus with a weakening yen to create rising profits and a stock market that soared to an eight-year high. But that was back in August, and the formula has since lost its potency.

    By one measure, earnings in the world’s third-largest stock market are poised to retreat more than 20 percent this quarter, and for the first time since 2012 more Japanese companies are missing forecasts than beating them. Meanwhile, the yen just staged its biggest weekly rally since 2009 even though the Bank of Japan surprised the world by cutting interest rates to below zero.


    “Whether it be quantitative easing or the weaker yen, the effect is getting smaller and smaller,” Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which manages $453 billion. “The problem is that we’re not seeing excitement domestically. The fact that the global economy isn’t good is impacting Japanese earnings, too.”

    In many ways, Japan isn’t alone. Evidence is mounting that central banks’ easy money policies are having less ability to give their economies — and asset prices — a boost. In the U.S., Standard & Poor’s 500 Index companies are about to report the third consecutive quarter of declining income. Bank stocks in Europe are near a 3 1/2 year low as measures of risk in credit markets reach the highest since 2013.

    “We’ve entered a period of stagnation,” said Shinobu Yonezawa, a quantitative analyst at Mizuho Securities Research & Consulting Co. in Tokyo. “China has become an issue and oil prices tumbled at the end of last year, changing the landscape for corporate earnings.”

    Moar: http://www.bloomberg.com/news/articles/2016-02-08/the-magic-formula-that-powered-japanese-stocks-is-falling-apart

    • Fast Eddy says:

      What’s the lingo for this….. I think it’s OMG…. definitely not LOL…..

      For corporate profits, the consequences look bleak. Companies will post a 21 percent slide in net income in the three months through March, the biggest decline since the summer of 2012, according to figures compiled by Mizuho Securities on the nation’s largest firms excluding banks. The estimates are derived by comparing companies’ nine-month performances with full-year forecasts. Mizuho’s earnings-revision index, a measure of downgrades versus upgrades, dropped to minus 10.5 in January, the lowest since November 2011, Yonezawa said.

  6. Stilgar Wilcox says:

    Wow, 2276 posts – that must be a record! I bet if we keep this same article on here until March we can pass 5,000 posts.

  7. kesar0 says:

    I recommend to you all the book, I am reading:
    Joe Stork – Middle East oil and the energy crisis.
    This book explaines very deeply from historical perspective the US policy on Middle East.

    A few quotes:
    “their position [US oil corporations] was that global monopoly control of oil reserves was necessary to achieve “rational” productions schedules that would eliminate competitive pressure to lower prices. The process of close cooperation between government and industry described earolier was further advanced with the creation in 1924 of the Federal Oil Conservation Board (made up of the secretaries of Interior, War, Navy, and Commerce). It saw its conseration role in the “avoidance of economic waste” – the restriction of supply to maintain profitable crude oil prices… the American Petroleum Intitute pushed for the exemption of oil operators from antitrust restriction. The Oil Conservation Board supported this viewpoint in its first report, which called for legislation to allo producers to “coordinate” production […]in order to avoid the pressure of competitive struggle.”

    This would conclude the “anti-monopoly free enterprise” ideology.

    “The postwar strategy received a broad but preliminary outline in a [US] State Department memorandum of April 1944 that was simply entitled “Foreign Petroleum Policy of the United States.” The “specific policy objectives” were noted as follows:
    1. To influence the flow of world trade in petroleum products in such manner as to substitute Middle Eastern oil for Western Hemisphere oil in Eastern Hemisphere markets,”
    specifically Europe, Africa, and South asia. This “may come about in consequence of natural economic forces once Middle Eastern production has been adeqately stimulated.”

    This strategy was further elaborated in a memorandum from Navy Secretary Forrestal to the Secretary of State:
    It is distincly in the strategic interest of the United States to encourage industry to promote the orderly development of petroleum reserves in the more remote areas such as the Persian Gulf, therby supplementing the Western Hemisphere sources and protecting against their early exhastion…

    Under these circumstances it is patently in the Navy’s interest that no part of the national wealth, as represented by the present holdings of foreign oil reserves by American nationals, be lost at this time. Indeed, the active expansion of such holdings is very much to be desired.”

    • Tasha Zhang says:

      Does the book adress what the middle east was prior to WW1? How many new countries “evolved” in the ME post WW1 to now? How did they come about so quickly? In the rest of the world border and nations are pretty static but in this one part of the world new nations “spontaneously” erupt and border change in a relativly short period of time. Any book that doesnt address the questions raised by those events is lacking in my opinion.

  8. Rodster says:

    “For me the morale of this, is to take all opinions as they are opinions. At the end of the day the “facts” become truly clear after the events rather than before.”

    I agree with that. On this board you’ll find extreme views on both sides including moderate views. If you take just the financial aspects alone, you would have thought the global eCONomy would have collapsed a couple of years ago. But it keeps chugging on because those pulling the strings are manipulating things much to the dismay of the so-called financial experts.

    We can all speculate, theorize and play armchair quarterback. In the end no one “precisely” knows how things will really unravel and play out. We can only guess. It doesn’t look to be pretty or end well BUT that’s my guess. 😉

  9. http://www.mauldineconomics.com/frontlinethoughts/100-trillion-up-in-smoke?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+johnmauldin%2Fnewsletters+Mauldin+Newsletters#When:15:07:00Z
    The above link, gives some food for thought.
    “Quick math: The full Morocco project will cost $9 billion and will generate 580 megawatts. The Solar Energy Industries Association (SEIA) says one megawatt can power 164 homes on average. So 164 homes x 580 MW = 95,120 homes. Divide by $9 billion, and the cost per home is $94,617. Amortized over 20 years, the cost is $394 per home, per month. A tad high, but you also have no carbon emissions and no exposure to oil prices.
    Now throw in inflation over the 20 years, and $394 a month for the final 10 of those years will probably not be nearly as high a real cost as it is today. I’ve thought for some time that solar will beat fossil fuels strictly on cost at some point. Current research data says that even without subsidies solar could be cost-effective in many locations in 10 to 15 years. This article suggests we are getting much closer. That’s bad news for conventional energy companies and OPEC. ”

    For me the morale of this, is to take all opinions as they are opinions. At the end of the day the “facts” become truly clear after the events rather than before. Thus how can one make a judgment on something and go “all in”.

    • Ed says:

      That is about $0.50/kwhr at US consumption rates maybe $1.00/kwhr at Moroccan consumption rates. This is about what Gail has been saying RE costs. The cost of storage or night time backup are not included in this price. So maybe $2.00/kwhr with storage? How many in Morocco can afford to pay this? How many in New York State can afford to pay this?

    • “The Solar Energy Industries Association (SEIA) says one megawatt can power 164 homes on average.”

      At first glance, I was thinking that ~$400 per month for electricity would be a pretty immense burden for people with an average income of ~$500 USD per month per household. Then I realized those consumption numbers are for American households.

      From the article that the other article is based on:

      They expect the 580 MW project to power 1 million homes, so let’s say $80 per household per month. It also seems their long term goal is to export electricity to Europe.

      • Make that $40 per household per month.

        • bandits101 says:

          I didn’t read the article but if you did, can you let me know what powers the homes at night, what cleans the panels and maintains the system and who owns and maintains the grid. If inflation reduces the cost over time like was stated above, does that mean everything else is not subject to inflation. What emissions were created during construction.

  10. Fast Eddy says:

    The End of the World…. Survival Options

    Now here’s a place where nobody would be likely to bother you post BAU…. Whanganui Inlet….



    I took the long drive to the inlet in the truck today — it’s a national park — loads of fish — deer — pigs — shellfish etc….

    And virtually nobody there — a handful of summer cottages in the area — a decent dirt road that will wash out once the rains hit and it is not maintained….

    • doomphd says:

      Careful FE, have you read this book: “Into the Wild” is a 1996 non-fiction book written by Jon Krakauer.

      Of course, Krakauer chonicles the boy’s vital mistakes. Who will write about ours?

      • “Careful FE, have you read this book: “Into the Wild” is a 1996 non-fiction book written by Jon Krakauer.”

        Into the Wild is a perfect example of not taking the Fast Eddy Challenge. He could have gotten a job at a slaughterhouse, practised hunting and cleaning a rabbit while in society, basically done anything. He could have gone slightly less into the wild. Nope, just packed up and hiked into the middle of nowhere Alaska with just a couple books on identifying plants and butchering animals.

        • Ed says:

          He was schizophrenic. The lesson is, if you are mentally ill, do not go walk into the middle of nowhere. He was portrayed as romantic. It was not romantic it was just a sad case of diminished capacity.

  11. regards says:

    I’m not sure oil is cheap. It’s still as expensive as it used to be. The only difference is that before we were paying the price at the pump; while now it’s those who have invested their savings in fracking who are paying the price.

  12. dolphexplainsprices says:

    Chlorodyne is correct. By definition you cannot have deflation in fiat currency vis-a-vis the world of goods and services. Fiat currency cannot appreciate forever relative to any physical good. If this were the case, you are basically arguing for a barrel of oil (and everything else, incidentally) to cost 1 cent.

    Nor can the price of anything go to infinity in any currency. What usually happens is a period of very high inflation followed by a reset, with stronger currencies or barter being used for transactions in the black market during the interim.

    Oil is a valuable and finite substance which is about to undergo permanent decline in available production. Fiat currency is infinite and can be produced at no cost.

    You just can’t make an argument for permanently low oil prices (anymore than you can make an argument for say, permanently high housing prices). At some point, we are going to have a system reset, probably with price controls.

    • bandits101 says:

      “By definition you cannot have deflation in fiat currency vis-a-vis the world of goods and services.”The Dolt strikes again. The next smart comment you make will be the first.

    • Fast Eddy says:


      End of story.

      • Chlorodyne says:

        Fast Eddy,

        You need to understand the difference between monetary inflation (increase in currency supply), consumer price inflation (increase in general prices) and asset price inflation.

        It is possible to have massive monetary inflation with little consumer price inflation (for a while) if the velocity of money drops to compensate for its increased quantity. Current monetary velocity is at an all time low; the currency is being saved as opposed to circulating and competing for goods and services. When confidence in the currency is lost, its velocity increases, and consumer price inflation makes up for lost time with a vengeance. No further increase in the quantity of currency is required for runaway inflation. This feedback loop is described by the quantity theory of money:


        Japan had ~25 years of asset price deflation (or more correctly disinflation). Consumer prices did not fall significantly over these 25 years. Here is the analysis that proves it; it also explains the Great Inflation that the USG magicked up during the Great Depression.


        Ultimately, if you believe that there is no cost or limit to printing money (in terms of inflation or hyperinflation) then you also believe that a government can fund itself indefinitely via the printing press. Why levy taxes in that case? None of us would have to work ever again.

        Perpetual deflation just does not make sense, and has no credible historical precedent..

        • “then you also believe that a government can fund itself indefinitely via the printing press. Why levy taxes in that case? None of us would have to work ever again.”

          Taxes require that you earn money in dollars. The purpose is to create demand for dollars. If the government could create a supply of dollars at will, with no means to also create demand, what would happen?

        • “Perpetual deflation just does not make sense, and has no credible historical precedent..”

          Do you see any signs anywhere on any of Gail’s posts that she expects that situation to continue forever? I see lots of signs she is calling for an eminent collapse of the current system, rather than thousands of years of deflation.

        • bandits101 says:

          You base the velocity of money by how much money is being saved? Maybe you think it’s how fast a pay check gets cashed then deposited. Please enlighten me with some figures. In the meantime watch Chris Martensen’s “CrashCourse”, take particular note of how how money is destroyed or removed from circulation. For a Dolt’s kindergarten finance examination question…..$3 a gallon for fuel on Monday and $2 a gallon on the following Wednesday, is that an example of inflation or deflation, I’m pretty sure you and The Dolt wouldn’t have a clue.

  13. Ed says:

    There is a TV show “Continuum” in which the world is rued by the corporate congress. The congress allows the corporations to coexist in peace without competition. Since individuals and nation states seem unable to preserve the world maybe this will be required. About 30 years ago Esquire magazine had an article that in the future corporations would be like medieval walled cities. If the world as a whole can not be preserved maybe the corporation can be?

  14. Stilgar Wilcox says:


    Iran says no to US Dollars, insists on Euros for oil.

    • Ed says:

      They are asking for democracy. Democracy delivered by the U.S. military starting with aerial bombardment of all national infrastructure. Sewage treatment, fresh water plants, electric generation, communications, major bridges, airports, military command and control. Interesting Russia is installing S-300 air protection. But 500 cruise missiles would overwhelm the few S-300.

      • Stilgar Wilcox says:

        That’s certainly what they did to Iraq, Ed, which is your point. But that of course that won’t happen while O is in office, but who knows with a successor. The Republican debate had many candidates talking about pre-emptive strikes on NK and who knows what they will do about Iran. Depends on how hawkish the elected R (if that should happen) decides to actually get. Right now the media darling is Trump which they give endless billions of free publicity to so he can help them spin stories. They have their tabloid candidate and they want that news info. once he’s prez. It’s worked so far, so we’ll see if it works all the way to the oval office.

        The other thing they harped on was the military has been gutted. It has? I must have missed that one with all these 700 billion dollar annual defense budgets. Probably more likely we destroyed, wore out, lost or was stolen of about a trillion in military equipment in Iraq. That kind of gutting I could believe.

  15. Don Stewart says:

    Dear Finite Worlders
    Adding fuel to the fire, please read Steve from Virginia’s post here. Scroll down until you see it.
    Don Stewart

    • MJX says:

      Don, thank you for this article link….most alarming and physics and numbers don’t lie.
      When the breaking point comes, it should encompasses the network system.

    • Stilgar Wilcox says:

      Good link, Don. Steve from Virginia is a savvy guy and has been posting on peak oil blogs at least since I got on them in 05 (TOD). Here’s Steve’s summary from the article:

      “What the above chart tells me is that it now costs a lot more to produce a barrel than it once did. And… unless crude oil hits at least $60 a barrel soon a lot more projects will have to be cancelled. But… all that being said, I think it is now obvious that oil production will drop, rather dramatically, beginning sometime in 2016. And that drop will lead to a rise in the price of oil, at least to $60 a barrel and likely higher.

      That is unless some black swan event happens. That could be a collapse in several economies of the world… or a collapse of the economy in one country, China. In other words, it is a given that production is going to decline. So if demand stays constant, or rises, then the price of oil will definitely rise. We know what is going to happen to supply. We have no idea what is going to happen to demand. But if BAU continues as normal, the price of oil is going up.”

      That fits with the prediction I made just before Thanksgiving, i.e. oil price sometime in the 2nd half of 2016 will exceed $60 a barrel. My range is 60-80 dollars. What is fascinating is global projections for 2016 demand are flat, after consumption rose in the US in 2015.

    • el mar says:

      John Mauldin believes, renewables will take over!


      • Don Stewart says:

        el mar
        Several people now think that. MIT just put out a report saying that wind and solar and work with very little storage.

        I don’t have any informed opinion on the subject.

        Don Stewart

        • Rick Grimes says:

          For wind and solar to “work” in the US – with “very little storage” – would require a complete revamp of exsting infrastructure including replacing AC with DC as well as the installation of smart meters everywhere.

          I posted the article that made the claim here but can’t remember where. It’s perfectly feasible in a never ending BAU world where enough solar and wind plants are contructed in all the right locations across the US plus the infrastructure upgrade required for it all to flow seamlessly.

          Not that it would make much difference, but does anyone know if the above method compensates for not needing to rely as much on a universal storage system?

          Solar + wind + storage vs solar + wind + smart grid?

          You still need to build out sufficient solar + wind in the second option so which would have the greater cost – the universal storage solution or the smart grid?

          And of course everything would begin to deteriorate after twenty years or so as well as the ageing batteries in the global fleet of electric vehicles… you know, the ones that require three times as much copper as the cars we have now.

  16. Don Stewart says:

    Dear Finite Worlders
    Expanding a little on Gail’s post about cheap oil not being in anyone’s best interest. Here is a statement and response from Gail’s least favorite thermodynamic modeler…Don Stewart
    PS By reserves being ‘wiped out’, he means no longer financially feasible using SEC regulations for calculating ‘reserves’. If you read AGW posts about how little of the proven reserves can be burned, remember this ratio.

    Statement: I dont know about the rest of the majority…but for me and mine this has been a gift. My paycheck stays the same if gas is at 5 a gal or 1.30 a gal.

    Response: At $30, 90% of the industry is no longer covering its full life cycle production cost. When the industry can no longer make money producing oil, they stop. That will be when you don’t have any paycheck at all. Oil is what powers the world. The oil age is rapidly coming to its conclusion; 70% of the world’s remaining reserves were wiped out in one year. The price of gas should be the least of anyone’s worries.

  17. chlorodyne says:

    Van Kent wrote:

    “Automobile fuel availability and delivery will dwindle, leading to sky-rocketing prices and long lines at the gas pumps.”

    Didn’t you get the memo on Gail’s deflationary collapse thesis? No matter how scarce food, water or fuel become, their price in USD will continue to FALL because Joe Sixpack will be broke, and won’t be able to “afford” higher prices.

    No matter that the USG can magic up any number of dollars with a keystroke, export these ever appreciating dollars for an unlimited supply of the world’s resources, and provide for an unlimited number of Joe Sixpacks by proxy. The rest of the world will be competing fiercely to export their precious resources to the US in exchange for magic dollars. The most valuable commodity in this peri-collapse world will not be food, oil or water: it will be the purely arbitrary currency of a fiscally incontinent government. Deflationists implicitly believe in the financial perpetual motion machine of perpetual trade and budget deficits without penalty.

    If the USD perpetually increases in purchasing power, and any number of USD’s can be printed up by the USG, then the dependents of the USG (in extremis all Americans) have absolutely nothing to fear in a deflationary collapse. The USG is the spender, borrower and printer of last resort. American’s can live happily ever after on the back of a printing press.

    For the reasons above, I think it is absolute nonsense to forecast that crude oil priced in USD will continue to fall after the peak in world oil production. In real terms: maybe. In terms of USD: no.

    • Van Kent says:

      chlorodyne, got the memo, thanks, that was on page 17 of Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse.

      Or day 1 etc. of Post-BAU

      • Fast Eddy says:

        I believe I read in 2008 that cities in the US have less than 3 weeks supply of the chemicals that are used to purify water supplies….. if they run out due to a bust up of the supply chain….. water becomes unsafe to drink without boiling it….

        A bigger problem obviously … is that the pumps that push water to homes will no longer have a power supply …. so I wouldn’t be too worried about boiling water….

        There won’t be any water

        • “A bigger problem obviously … is that the pumps that push water to homes will no longer have a power supply …. so I wouldn’t be too worried about boiling water….

          There won’t be any water”

          This will vary greatly by region, and age of the city. As far as I understand, New York City is mostly gravity fed directly, with no water processing plant and no electric pumping needed. Part of the reason New Yorkers are extremely against fracking anywhere near their water supply. The apartments, etc often have their own little water reservoir on the roof to provide pressure.

          In areas built in the last couple housing booms, for sure, since they are in the “Sun Belt” AKA the desert, and probably well above the water level in a lot of cases, or the water has to be pushed through a mountain range.

        • Fast Eddy says:

          Ok … so nobody wants to try the chop and split tree option in the Fast Eddy Challenge…. I guess everyone assumes the trees will just fall over and split into fire size logs on their own post BAU…

          Here’s a far easier challenge that everyone can do right in the comfort of their own home…

          Starting at midnight Sunday Feb 8 … everyone who wants to play … should stop flushing their toilet’s for exactly 7 days.

          This challenge is meant to mimic the post BAU situation whereby the giant pumps that provide flush water stop – forever — and the pumps that push sewage along stop working – forever.

          If you are in a rural area on a septic system — you may take a bucket and fill it with water from a stream or ditch or lake and use that to flush your toilet.

          If you are in a city you may take a shovel and dig a hole and do your job there…. while you are squatting over that hole — I ask you to imagine how many holes would be required per day in your city when everyone is doing the same….

          Then imagine what would happen to the water table when the first big rain hits….

          You might want to print this out to read while squatting over your hole in the ground…. https://en.wikipedia.org/wiki/Cholera_outbreaks_and_pandemics

          • If you dig a big hole, you can put an outhouse over it; this can last years, rather than digging a new hole each time. Toss some ashes in to keep the smell down, add a ventilation chimney if you feel fancy. For sure, if your water source is near your excrement location, you will get fecal coliforms in the water. Unfortunately, most municipalities and regional governments have ordinances against this, so you cannot prepare in advance legally.

            You will need to use rainwater, or some means of filtering or sterilizing your water, such as boiling it, or try making your own charcoal filter. I assume there is likely no easy way to produce chlorine at home post BAU.

            The most important thing to know, is it all flows downhill. Source uphill, waste downhill.

        • Don B says:

          Water supplies are already unfit to drink in some US communities. Take Flint MI for example. Some residents don’t have the choice between leaded or unleaded.

          • Rick Grimes says:

            “Would you like some lead with your vegetables, sir?”

            I’ve seen patients in mental asylums that were fed lead contaminated vegetables from their own garden when they were kids…

            They were classified as “biters”…

            I’ll leave you to figure out why…

    • Fast Eddy says:

      If I own a petrol station – or a Wally’s World — or a grocery store — when collapse hits — I am aware that I can never replenish my stock of goods for sale…

      Assuming there is some form of control maintained for at least a period of time — martial law … then I will continue to sell what I have left on the shelves …. but I will be demanding gold and silver and a whole lot of it …

      And I will get whatever price I ask…. because the demand will be enormous — and supply extremely limited

      • “Assuming there is some form of control maintained for at least a period of time — martial law … then I will continue to sell what I have left on the shelves …. but I will be demanding gold and silver and a whole lot of it …

        And I will get whatever price I ask…. because the demand will be enormous — and supply extremely limited”

        Not in America, you wouldn’t. The soldiers providing the martial law would probably imprison or execute you. During Hurricane Sandy, gas stations were forbidden to engage in “price gouging”, i.e. they were not able to raise their prices, and were forced to institute rationing – only allowed to sell a gallon or five gallon can per customer, something like that.

        As a result, people spent hours standing in line to buy gas, and then reselling it on the blackmarket at much higher prices.

        • Fast Eddy says:

          One could find infinite numbers of examples during periods of extreme unrest and war where the prices of a can of beans was hundreds of times higher than it was during more stable times….

          It is all completely moot — it doesn’t matter if the price is 1000x higher or not — there very quickly will be nothing to purchase …. at any price

    • “Didn’t you get the memo on Gail’s deflationary collapse thesis? ”

      I’m guessing you did not bother to read the paper that Van Kent is quoting, and so your comment is completely irrelevant.

      The section quoted is in regards to what would happen if all the trucks in America suddenly stopped running overnight – like, a nationwide strike of all truck drivers, everywhere all at once, and the strike was not resolved and the government did not intervene.

      It is an extreme case, however it is not without precedent as the 2000 UK strike was pretty similar – I guess they have one big powerful trucker union there that has their whole country by the balls, just as the coal miners union did in the 70s.

      • Fast Eddy says:

        Gail’s theory applies while BAU is functioning….. when it collapses and all hell breaks lose…. one can imagine a case of beans being traded for a one ounce gold coin…..

        • Don B says:

          Fast Eddy,

          If things get as bad as that, no amount of gold will be worth those last cans of beans.

          • Fast Eddy says:

            Agreed – but initially people will not understand what is happening — they will still see value in gold — and believe that they will be able to take advantage of desperate people —- then when things recover they will have sacks full of gold …

            Unfortunately there will be no recovery…. they will understand that they should have kept their cans of beans because they are priceless

        • bandits101 says:

          ……..and if it’s that bad, he will shoot you and take back the gold and have both.

      • Chlorodyne says:

        Hi Matthew,

        I just used Van Kent’s post to illustrate to intellectual gymnastics deflationists have to go through to justify a prediction of Crude oil FALLING in currency terms after a peak in world oil production. Just imagine the most precious commodity on earth depreciating ever faster against an exponentially increasing currency supply which can be produced at no cost.

        I think Gail has is ass backwards: being able to borrow money cheaply in the junk bond market has allowed marginal producers (shale operators) to flood the market with with low priced oil produced at a LOSS (for awhile). If not for the ZIRP bubble, only companies mostly producing oil at a profit ABOVE production cost would be able to survive. If not for the debt bubble (specifically the shale oil junk bond bubble), oil supply would be lower, and prices higher now.

        Current low oil prices are a symptom of the debt bubble, and will resolve to the upside once the debt bubble pops, and the shale drillers go bankrupt. Once they do, the marginal supply of shale oil will disappear, oil companies will no longer be able to borrow (cheaply), and the market price will have to be above production cost (>$100/barrel, and ever increasing, in keeping with declining EROEI).

        In the short term, the frackers have to keep pumping at a loss to fund debt payments, increasing supply and lowering prices right up to the point they go bust. Expect lower prices in the short term, and higher prices after the bust.

        I stand by my point of

        Belief in dollar deflation : belief in perpetual ” free lunch” for the US courtesy of the printing press.

        It just not make any sense.

        • Van Kent says:

          Chlorodyne, when this debt bubble pops its SHTF. The structure of our global financial system is thus, that when the fat lady sings there will be no economic recovery, ever again.

          • Chlorodyne says:

            Hi Van Kent,

            I believe I have a solution to the problem:

            According to Gail’s deflationary thesis, US dollars have magical properties which will cause them to appreciate in purchasing power leading up to, and after the crisis.

            Luckily, there is an entity known as the US government which can produce unlimited quantities of US dollars at no cost, and according to Gail, no adverse effect on its purchasing power.

            All we need to do after the debt bubble pops is to convince the USG to fund world oil (and other resource) production, and to share some of the oil (and other goodies) with the rest of the world.

            Voila: no need for further “borrowing”, and everyone lives happily ever after.

            See where deflationist thinking leads you?


            • Van Kent says:

              Chlorodyne, when I read Gail I don´t see her having U.S. focused glasses on. Her diagnosis of our predicament is universal and global.

              To honour our hostess, it would be great to have your sarcasm of deflationist thesis rewritten in universal and global terms.

              But concerning the structure of the global financial system and the rentier class and such, I believe Gail is writing that “chapter” currently, if her broken wrist allows it.

        • Chlorodyne says:

          PS: I have read the Feasta paper, and agree with its contents.

        • “Just imagine the most precious commodity on earth depreciating ever faster against an exponentially increasing currency supply which can be produced at no cost.”

          How will people afford it? If they start giving everyone million dollar bills, sure the oil can increase nominally in USD. I don’t see how people in Asia, Africa, even much of America, can afford to buy more, the same, or even a declining amount of oil.

          As long as demand collapses faster than supply, the price can fall.

          “Once they do, the marginal supply of shale oil will disappear, oil companies will no longer be able to borrow (cheaply), and the market price will have to be above production cost (>$100/barrel, and ever increasing, in keeping with declining EROEI).”

          What about Iran, increasing production in Iraq, Saudi Arabia producing millions more barrels offshore? What if the Chinese start producing millions of barrels per day from the South China Sea, at costs below that of North Sea oil?

          Of course, it depends on if you define “cost of production” as meeting governments’ ever-increasing needs for ever more tax revenue, or you just mean actual production cost to the oil company.

          A part of the puzzle you may be missing is that countries like those in OPEC need those US Dollars to buy food from America, to feed their ever-increasing masses, or they collapse into civil unrest / war / mass migration. It seems to me most Arab nations increased their populations around ten-fold since World War 2, and they certainly have not increased their domestic food production enough to be self-sufficient.

        • Fast Eddy says:

          You do understand that Japan is printing obscene amounts of Yen….. yet they are constantly flirting with deflation …

          You do understand that in spite of colossal amounts of QE floating around the planet — we still have this


          Sure you understand that the reason that the foot comes off the QE accelerator is because if central banks hit it to hard the engine blows into a million pieces….

          If the banks pump out too much confetti we don’t get inflation or hyperinflation or deflation — we get a collapse in CONfidence and the entire system snaps….

    • ejhr2015 says:

      I think you have plausible scenario here. Gold and silver will be useless in the short term, but fiat currency will last as long as the grid lasts. I feel we will have this situation as one of a number of possibilities. Apart from keeping banks open to issue dollars to the public, the government will have to take control of the economy, maybe under martial law. It will have to have a plan, however, and there’s little sign of one. So I wouldn’t be betting on any given outcome in the short to medium term.
      I think once the seriousness of the collapse gets through people will pull together to make the most of the situation. You won’t be able to run away far as the whole world will be turning upside down.

  18. Don Stewart says:

    Dear Finite Worlders

    This will be an exploration of two questions:
    *How does complexity emerge from simplicity?
    *Is it possible for simplicity to survive the collapse of complexity?
    Please note that I will be using ‘simple’ and ‘complex’ in rather broad, vague terms. A single celled creature is extraordinarily complex. Much more complex than Goldman-Sachs could ever dream of being. But as I will use the words, they imply that going from Goldman-Sachs to a multi celled organism swimming around in the ocean or walking around on the land, to a single celled bacteria is a ‘regression’ in complexity.

    The original explanation of complexity in the Abrahamic religions was that God made it all in 7 days, and there was a perfection in God’s creation because everything functioned in a Garden. Darwin replaced the Abrahamic religion (for educated people) with the notion that random mutations in genes led to the very slow emergence of more complex creatures (although Darwin understood genes through very foggy glasses). Some renegade biologists maintained that Darwin was not the complete explanation, but it was Lynn Margulis in the latter half of the 20th century who provided an alternative explanation, which most educated people accept today. Lynn proposed that multicelled creatures are actually symbiotic combinations of single celled creatures. Most notably, the energy producing parts of animals and plants are mitochondria and chloroplasts, respectively. There is strong evidence that the mitochondria and chloroplasts were once free living creatures, which, somehow, formed a symbiotic relationship with the animal and plant cells. So we might oversimplify this line of science by asserting that ‘if the rewards of symbiosis are strong enough, then in some cases a symbiotic relationship will be formed and new horizons will open up for the combination’.

    The Scottish economist Adam Smith was one of the first to look at complexity in human economic organizations. His demonstration that the production of pins could be hugely speeded up with specialization of labor and tools is a classic. It is important to note that this demonstration predated the use of fossil fuels. In fact, the English Industrial Revolution was mostly powered by wind and water and wood and sunshine. For example, steamships only came to dominate British shipyards rather late in the 19th century. Globalization was mostly enabled by sailing ships, not by steamships. Globalization is an extension of the specialization demonstrated in the pin factory.

    Especially after WWII, the use of fossil fuels exploded and amplified human abilities to produce finished goods from raw materials enormously. The growth of electronic communications and control devices (e.g., computers) enabled more sophisticated means of production and the general atomization of functions. The specialization in the pin factory was taken to new heights, and very abstract economic products (such as Twitter) which had no immediate ‘real’ value proliferated.

    Is it possible for a world awash with Tweeters to revert back to a world where energy that is not supplied by mitochondria and chloroplasts is in very short supply? Or could we revert back to 19th century England where power is supplied not only by mitochondria and chloroplasts, but also by wind and water and wood and sunshine?

    The article by Ulanowicz
    indicates that a sort of triage will prevail as energy shrinks. But what will be the units of triage?

    Countries (what Nicole Foss usually talks about)? Socioeconomic classes (what Marxists and their relatives talk about)? Lifestyle and cultural classes (what Hillary Clinton would like to talk about)? The group of 150 vs. the unorganized mass (what Dmitry Orlov would talk about)? The Makers or the Takers (what Daniel Quinn would talk about)?

    Let’s look at some examples.

    First, we can look at the Mayan ‘collapse’. We know from the research for the book The Maya Forest: 8 Millennia of Sustainable Cultivation of the Tropical Woodlands, that it was the Takers who collapsed. The Makers out in the ‘jungle’ survived, and probably did better after the Takers disappeared.

    A hidden-in-plain-sight way through our present crises, July 30, 2015

    If you read Albert’s review, you get the idea that he may think that the surviving Mayan forest gardeners today would be better off without the dead weight of the Takers to support. Which would lead you to the conclusion that it may be possible to revert to a simpler way of life, albeit with the disappearance of The Takers.

    Second, can a complex multicelled creature evolve back into one without mitochondria or chloroplasts? I am not a professional biologist, so the short answer is that I don’t know. But I doubt it. The chloroplasts have lost some genetic material since they formed their symbiotic relationship with plants, so a straightforward transition is likely not possible. We are stuck with being humans.

    Third, can an investment bank survive if fossil energy is steadily declining or precipitously declines? And I think the answer there is that Goldman Sachs is vitally dependent on a steady increase in the supply of fossil fuels so that promises to pay in the future can, indeed, be kept. If faith that the promises can be kept fails, then Goldman Sach fails.

    Fourth, could a classic 1950s style bank, or an 1820s style bank, or a Renaissance style bank, survive if fossil energy is steadily declining or precipitously declines? I think they could, but money would have to revert to being notes from Makers, not Takers. You can find accounts of how this worked in markets. For example, you went to market and sold a couple of ducks you had raised to the baker who gave you a note for some loaves of bread. You took the note and bought something, let’s say an axe, from another vendor, and gave him the note from the baker. The axe maker then cashed the note for some bread and took the bread home to feed his family. This was a sophisticated form of barter. There is no reason a ‘banker’ could not emerge to take the notes and slice and dice them into money. I periodically read that forms of barter are re-emerging in Greece.

    Fifth, can a largely self-sufficient group of 150 people survive with not much interaction with their neighbors? This is the thesis of the new book published by Dmitry Orlov, and described in his current post:
    I can’t see any reason such groups cannot exist, provided the group members agree to settle for a very much lower physical standard of living. They probably also need to rid themselves of the dead weight of the Takers, as the Mayan forest people rid themselves of their Takers.

    Let’s ask another fundamental question. How complex a society could the hypothetical group of 150 actually build? Let’s begin by considering a cow or a wild buffalo. The cow or buffalo live in grasslands. But a biologist, after careful examination of the cow or buffalo, would likely advise you that the animals could not survive on the grassland because they cannot digest grass. But Lynn Margulis would look for some creatures with which the animals might form a symbiotic relationship. And it would turn out that cows and buffalo DO have a symbiotic and also food chain relationship with microbes. If you want the whole story, you need to see The Hidden Half of Nature, by Bikle and Montgomery. But, in short, the microbes digest the grass and feed the cows short chain fatty acids. Then the animals eat some of the microbes and get a lot of protein. The vast herds of buffalo which roamed the North American prairies and the cows which populate the grasslands today would have made no sense at all to Darwin. But, thanks to science, we can now explain just how they came to be. A group of 150, or a collection of groups of 150, may achieve symbiotic relationships that we cannot presently anticipate.

    I think that a reasonable assumption is that a group of 150 is going to start with a low physical standard of living, and gradually discover symbiotic relationships which enable an increase in their physical standard of living.

    It is also worth nothing that, if collapse is fast and the group can get rid of the dead weight of The Takers, then the 150 can use capital which was accumulated while they still had fossil fuels.

    It is for that last reason that I suggest that every day, each of us should try to accumulate some capital for a much different future.

    Don Stewart

  19. Van Kent says:

    Usually I can make some kind of prediction on the coming growing season. But now I find myself clueless.

    When the winter is long and harsh, the summer is hot and long. But what about a winter where it doesn´t start, then when it finally starts its record cold. But then it ends a month early.

    Usually a El Niño results in too many rains during the summer, too wet. But what about a record El Niño? And after that it should reverse to a record La Niña. Maybe?

    And then we have a breaking golf stream. Paul Beckwith shows how cold water from the melting ice from Greenland breaks the golf stream and forces the warm currents both north and south. https://www.youtube.com/watch?v=cP8ODxhuMfs

    Now, try to make a prediction with these variables in play.

    • doomphd says:

      It’s referred to as Gulf Stream, as it originates in the Gulf of Mexico. Since it brings warm water to the North Atlantic, if diverted, places like Britain may get a lot colder.

      • Van Kent says:

        doomphd, the gulf stream will keep on running. But if massive amounts of cold water from Greenland keeps on interrupting it, it would translate as a approx. 7C drop in Britain. Most of the warmth will be diverted both north and south of Britain. That´s how I interpret what Paul is showing about the ocean current temperatures on the video..

        Meanwhile across the pond, if the ocean currents can´t tranfer the heat away, then ocean levels rise and the east coast will be warm and flooded.

        • Van Kent says:

          doomphd, yup, gulf. Sorry, sometimes swedish (golf), finnish (golf) german (golf) and spanish (golfo) spelling make these quickly written comments unintelligible in English. Sorry about that. But our hostess said she would rather have a large international community writing sometimes unintelligible comments, then worrying too much about correct spelling and everybody just lurking.

    • Kanghi says:

      Last year would have counted as a hunger year in Finland without fossil fuels and grain/food imports. Funny how the small new`s story in National News Channel – YLE did not rise any discussion in our country. Last govement did us also Assads, they decided in 2013 to sell half years worth of granaries, so we will after this year have only half an year amouth of grains in store for the bad days to save money. I would not be suprised that if those imbesils would do do full Assads and sell them all before the crisis hits full.
      I would suggest that you plant a variety of crops and start to grow also perennial vegetables and shrubs. Different nut tree speacies would be a good addition as nuts are energy dense food. Look for Vakka Taimi, they have one of the best selections in Finland, Juglans Nigra etc.

  20. Van Kent says:

    The first 24 hours
    • Delivery of medical supplies to affected areas will cease.
    • Hospitals will run out of basic supplies such as syringes and catheters within hours. Radiopharmaceuticals will deteriorate and become unusable.
    • Service stations will begin to run out of fuel.
    • Manufacturers using JIT manufacturing will develop component shortages.
    • US mail and other package delivery will cease.

    Within one day
    • Food shortages will begin to develop.
    • Automobile fuel availability and delivery will dwindle, leading to sky-rocketing prices and long lines at the gas pumps.
    • Without manufacturing components and trucks for product delivery, assembly lines will shut down putting thousands out of work.

    Within two to three days
    • Food shortages will escalate, especially in the face of hoarding and consumer panic.
    • Supplies of essentials such as bottled water, powdered milk, and canned meat at major retailers will disappear.
    • ATMs will run out of cash and banks will be unable to process transactions.
    • Service stations will completely run out of fuel for autos and trucks.
    • Garbage will start piling up in urban and suburban areas.
    • Container ships will sit idle in ports and rail transport will be disrupted eventually coming to a standstill.

    Within a week
    • Automobile travel will cease due to lack of fuel. Without autos and busses, many people will not be able to get to work, shop for groceries, or access medical care.
    • Hospitals will begin to exhaust oxygen supplies.

    Within two weeks
    • The nation’s clean water will begin to run dry.

    Within 4 weeks
    • The nation will exhaust its clean water supply and water will be safe only after boiling. As a result
    gastrointestinal illness will increase, further taxing an already weakened health care system.

    Page 17 http://www.feasta.org/wp-content/uploads/2012/06/Trade-Off1.pdf

    • Fast Eddy says:

      Yesterday I was up the hill and noticed that our 2 x 30,000 litre tanks were nearly empty of water….

      Our solar powered rig remains offline as we try to work out what is wrong with it…. and the spring fed system for some reason had not been filling the tanks….

      We’ve had no rain for nearly 3 weeks and I was planning to get some water on 80 fruit trees…. the veg garden was also in need of a good soak…

      We were close to running out of house water.

      It is a long weekend so if the problem were major there was nobody we could call to assist.

      Fortunately we were able to work out that someone down the line had been running the water full blast and it had air-locked us out…. so we were able to shut the system down and restart it so our line got a share of the water….

      An incident like this puts the precarious nature of our existence perspective….

      Most people’s water supply — in cities and in rural locations — is 100% reliant on electric pumps…. when the power goes down the water stops… one day it works — the next it does not.

      When that happens there will be no calling a trucking company to haul in a tanker of water — there will be no phones — there will be no trucking companies operating any longer.

      If you have a creek or a lake nearby you could fill pails with water and haul them on your back to your home…..

      If you have a garden and that needs watering you’d spend your entire day hauling water on your back….

      Of course you would be unable to purchase food because the grocery stores will be emptied very quickly by panicking people….

      If you live in a cold climate and you heat your home with fossil fuel generated energy …. you will spend your days huddled under blankets in misery … opening the last cans of beans from the pantry…..


      • Van Kent says:

        Last week when I was visiting Helsinkis two coal power plants, the other developed a mustard gas leakage as I was there. It was in the news as a “fire”. Now don´t ask me what they did to have mustard gas building up. But thats just to give some hint how difficult it is to keep these facilities going BAU still intact and everything.

        I tried to give them some solutions because they have calcium oxide or burnt lime everywhere where it shouldn´t be. Burnt lime is a bit difficult because it reacts with water. So bit of a problem for them.

        And these sort of things are happening now, BAU intact, all sort of resources at our disposal. What about two or three years from now? Wouldn´t want to be inside one those mustard gas facilities then..

      • xabier says:

        Start making a properly shaped yoke for water carrying: that Chinese kid’s going to suffer hellishly as the piece of wood isn’t even shaped.

  21. MG says:

    The Czech and Slovak enterpreneurs argue about the economics of coal production on the Czech-Poland border:


    The main point is: The economically recoverable resources were overstated, the projected future coal production of the New World Resources Plc. (NWR) is not realistic, the investors on the stock exchange were cheated.

    • MG says:

      The key problem of the current coal production, as stated in the first of the abovementioned articles:

      “The paradox here is that in 2000, Poles quit the Debiensko mine at the depth of 700 meters simply because they deemed further mining operations as non feasible. And then out of the blue NWR decided, based on its own interpretation of the industry’s best practices and their own internal feasibility studies, that it would be feasible to mine to the depth of up to 1400 meters. Even then their decision made no sense to some industry experts. The analysis was worked up by John T. Boyd, a renowned US coal-mining consulting firm. Their study was based on the JORC standards. However, they relied on supporting data provided by NWR that in turn had been based on norms set in the former Soviet Union.”

      • Fast Eddy says:


        It’s only 8 – 40km to bust through the crust to get to the mantle….. or otherwise known as the Geothermal Jack Pot….

        The Poles are nearly 1km deep already — they should just keep on blasting away until they smash through into the unlimited source of energy…..

        How do you say Jules Verne Project in Polish?

        • Rick Grimes says:

          Not as crazy as you’re making it sound.


          >>>Upper estimates of geothermal resources assume enhanced geothermal wells as deep as 10 kilometres (6 mi), whereas existing geothermal wells are rarely more than 3 kilometres (2 mi) deep.[7] Wells of this depth are now common in the petroleum industry. The deepest research well in the world, the Kola superdeep borehole, is 12 kilometres (7 mi) deep

          >>>Worldwide, 11,700 megawatts (MW) of geothermal power is online in 2013

          >>>Geothermal power is cost effective, reliable, sustainable, and environmentally friendly

          >>>Recent technological advances have dramatically expanded the range and size of viable resources, especially for applications such as home heating, opening a potential for widespread exploitation

          >>>The Earth’s geothermal resources are theoretically more than adequate to supply humanity’s energy needs

          >>>Geothermal power is highly scalable: from a rural village to an entire city

          But… there’s always a but…

          >>>only a very small fraction may be profitably exploited. Drilling and exploration for deep resources is very expensive. Forecasts for the future of geothermal power depend on assumptions about technology, energy prices, subsidies, and interest rates

    • interguru says:

      In 1974 I my wife and I visited a Czech friend in Liberez near the Polish border . We walked up to a restaurant, Yestched [sp?] , on the top of a mountain, The mountain was covered with the kind middle European forest where you expect to find elves dancing around mushrooms.
      In 1985 we, with our kids, 10 and 5 at the time, revisited. This time the forest was totally dead. My friend said it was from burning lignite, a low grade coal, in Poland. The pointed out chimneys in the distance pouring out smoke. I looked the other way and saw Czech chimneys doing the same but was too polite to mention it.

  22. Don B says:

    Fast Eddy, “Money makes the world go round…”

    Prof. Nate Hagens argues that it is energy that makes the world go round, not money. He views money as a marker on future energy. As future cheap energy becomes ever more unavailable, and I think we might be there now, we may see that the perceived ‘wealth’ effect of money will decline and disappear. Real wealth will be in your health and in your home and ultimately that which you can defend.


    Don B

    • Don B says:

      Here is a link to Nate Hagens’ most recent lecture/disussion. In the words of the late Rod Serling, this is “submitted for your approval”.


      • Van Kent says:

        The first half is approved. There were a lot of familiar concepts, like Nate was a regular at FW. Even some slides from Gail.

        Towards the end his focus seemed to falter and the clear points he was making became blurred. Not approved.

  23. el mar says:


    We are about to be confronted with an economic catastrophe that will likely shock and awe just about everyone. The amount of fatal debt piled on top of the global economy will have the effect of throwing thermate into a napalm fire.

  24. Stilgar Wilcox says:

    I found the following post over at Ron Patterson’s website. It’s obviously a take off from the movie A Few Good Men, in which Nickolson has a lot to say on the stand during a trial, but has been modified. Anyway, it’s not a serious post, just intended to be humorous:

    We live in a world that survives on energy and that energy is provided by men who produce fossil fuels. The world needs these men. Who else is gonna do it? You? You, Jimmy? The fossil fuels must flow in order to keep the country and the world moving and functioning and that process is probably a greater responsibility than you could possibly fathom. You weep for the environment and you curse the oil companies that provide the fuel that keeps you safe and comfy inside your custom-made mcmansion complete with solar-powered jacuzzi. You have that luxury. You also have the luxury of knowing you are not long for this earth. And the rise in carbon dioxide, while endlessly tragic to you, saves lives. And the existence of oil companies, while grotesque and incomprehensible to you, provides the energy all of us live on. And this is where you fail at life. You refuse to accept the truth because deep down in places you don’t talk about at parties, you want that oil to flow, you need that oil to flow. Which makes you a hypocrite, and I have neither the time nor the inclination to explain this to a man who rises and sleeps under the blanket of oil dependence and yet scorns the manner in which it is provided. Either way, I don’t give a damn what you think you are entitled to.
    So go ahead and order the Code Red.

    • Fast Eddy says:

      Stilgar…. outstanding…

    • Don B says:

      Great find, Stilgar! Too close to the truth to be funny.

    • Rick Grimes says:

      Was talking to someone the other day about these issues…

      They said that I was worrying too much, that everything is just fine. Then they quickly moved the conversation on to cookery programs.

      I wish I could have had this speech already memorised and been able to deliver it as sublimely as Mr Nicholson!

  25. Stefeun says:

    Sure, we will still be able to breathe, when we are shoulder to shoulder.

  26. Vince the Prince says:

    Some comic Finite World humour. There are those that believe our world is NOT finite….because…
    On today’s edition of “The Download,” the team shoots down the misguided notion of overpopulation
    Good news/bad news…good news is God is the Creator of Heaven and earth and of all things…also good news is that mankind could never overpopulate since God is the Creator and mankind is creation…the bad news is that mankind advances and makes all kinds of stuff that may not be biodegradable or that may pollute more than the actual good of having something.

    Most of the “overpopulation” “problem” is directly related to people loving money and power. There is plenty of food, water, clothing, and shelter, for everyone. It is not a problem now and will not be any time soon
    Back in 1968, Ehrlich could not dream of having many more than the 3.5 billion already populating the earth. He grossly underestimated the world’s carrying capacity, which led to his doom-and-gloom predictions (which never came true) and his proposals of coercive population control measures. We are now at 8 billion, yet we have more than enough resources to feed the world almost twice over. He was wrong, just as population control advocates are wrong today

    Just placed this here as a point there are others that have opposite notions and will uphold these in the most vigorous manner

    • Jeremy says:

      Back in the late 1980s, I remember reading a similar cornucopian piece in The Economist. It said that more people meant more brains to solve our problems, therefore more people meant greater efficiency. And furthermore, it maintained, the world was most definitely NOT overpopulated. Did we not know that the whole of the world’s population could fit onto the land surface of the little Isle of Wight (England) ? Point proven. 🙂 My own epiphany as regards Malthusian pressures did not come until 2004, but already I scoffed at the ridiculous arguments and logic of that article.

      • Rick Grimes says:

        The brains thing is interesting.

        While it certainly is appealing to have the largest pool possible from which to harvest not only the best brains, but the most diverse selection of brains to feed all of civilisations needs, it is plainly apparent that genius level brains required for major breakthroughs are few and far between.

        Depending on future needs, a culture may attempt to second guess where those genius level brains typically emerge so as to guarantee the best possible outcome. There may exist assumptions that genetics are an influence – does genius run in the family? Or there may be other pointers that help narrow down the search. Can genius be cultivated?

        Does a much smaller population have the required brainpower to overcome major obstacles post BAU?

        • “Does a much smaller population have the required brainpower to overcome major obstacles post BAU?”

          I don’t think post-BAU will need people with immense IQ and a unique view of reality. The types of rare and unique intelligence are more for the immensely complex things being worked on now. People like Stephen Hawking, with a relatively unique brian configuration enabling unique insights.

          Going with genetics, offspring will tend towards the average intelligence for their group. I think the only way to have more geniuses is to have more people; however, being better at finding young geniuses and cultivating them could help.

    • There is room for us all to stand shoulder to shoulder, so clearly there must be no population problem!

      • Rick Grimes says:

        But the whole population of the earth could live comfortably if evenly spread out over the entire United States.

        The rest of the planet would become the resource base and the largest conservation project the world has ever seen.

        In this way, energy and food requirements would be organised in a more concentrated way, waste would be more easily managed, immigration problems solved…

        Crazy, I know, but bear with me.

        Let’s say that in this scenario, a steady state economy is established where all basic needs are met and humans have developed the ability to understand that we share the available resources or the system falls apart. Population is maintained at a manageable level and no winner takes all strategies are tolerated. There’s a chance something like that could work.

        But as we already know, clustering large numbers of people together in the smallest amount of space has become accepted as the most efficient way to organise human settlements. So, instead of spreading the remaining population and infrastructure evenly across the states, you would simply add the required number of extra cities to soak up the global population and forcibly move any rural stragglers into the shiny new megacities.

        All the money saved from not needing as much global infrastructure would be invested in the most appropriate energy solutuions. Global transportation would be reduced to the absolute minimum to keep things running. Resource wars would also become a thing of the past.

        There is one wee problem with the clustering argument and that’s resiliency. I read a convincing argument that spreading the human race as much as we could all over the planet is a much better way to ensure the continuation of the species than colonising another planet in the solar system. Barring the worst possible catastrophe, a sufficiently large number of humans would always remain in some part of the world.

        So… maybe that’s why we don’t all live on the Isle of Wight. Something about eggs and baskets…

        None of the above is to be taken seriously by the way. Just playng around with ideas.

        • Jeremy says:

          They are indeed interesting ideas to play around with. However, as we all know, humans are not so easily directed, otherwise we would have had a world government long since. Certain trends tend to assert themselves and attract people to them – until the next trend comes along to compete with the old ones.

  27. Kurt says:

    It really baffles me that Krugman simply refuses to do any real research in this area. Probably the most important economic issue of our time and he just quotes articles written by other people who are living in a fantasy world. Bigger question — why does he behave this way? And, in the comments people rip him apart but he will be back in a month or so with another pie in the sky piece.


    • Fast Eddy says:

      Krugman is a paid mouthpiece of the E;lders…. he is there go to guy to get the liberal brigade on board with silliness such as money printing … infinity alternative energy … green bullshit ….

      His purpose to prevent that part of the herd from panicking and stampeding…. he keeps the grass watered in Delusistan…. (which is a province of Koombayaland)

      • doomphd says:

        If Krugman has not already received one, let’s nominate him for a Nobel Prize in Economics. Even so, maybe he needs two of them.

      • Rick Grimes says:

        Knowing that his head is also on the chopping block, how does someone like the Krug keep a straight face when dishing out the mindslop to the libtards?

        Surely one of these Elder types should have cracked by now and fled for the hills leaving more than a few people wondering why.

        Or is that part of the deal too? No member of the clan is allowed to reveal the truth because it wouldn’t be fair on the other elite club card holders that wan’t BAU for another few years?

        • “Surely one of these Elder types should have cracked by now and fled for the hills leaving more than a few people wondering why.”

          Do you think that if these Elders exist, they are public figures that would be missed? If there is a shadowy group of people pulling the strings of the world, I doubt their names would be known to the general masses.

  28. pintada says:

    Dear Finite Worlders and Ms Tvergerg;

    Over the past several years, I have grown to really enjoy the blog Ms. Tverberg puts together, and the vast majority of the comments. Thank you Ms. Tverberg for all your hard work, clear thinking, and expert hosting, and thank (all but one of) you commenters for sharing your thoughts, regardless of how shallow or misinformed I characterized them at the time.

    Has to be said once in a while …


  29. Bruce says:

    Ludlum wrote an article recently that talks about an interesting concept, the First Law of Debtonomics: “the costs associated with any surplus increase along with it until at some point they exceed its worth. Very much abundance = very much larger abundance-related costs.”

    It seems to support your contentions regarding the role of expanding debt played in the recent run-up and subsequent collapse of oil prices, and this seems to be independent of whether oil is scarce or abundant, and even independent of declining EROEI. There are increasing costs related to any surplus just by nature of its surplus-ness when the surplus is generated by an expansion of debt.


    • Stilgar Wilcox says:

      “There are increasing costs related to any surplus (just by nature of its surplus-ness) when the surplus is generated by an expansion of debt.”

      Essentially oil production ran right past the 3rd base coach financial advisor that was waving his arms saying no, don’t invest in extraction like oil is always now going to be over a hundred a barrel, because the global economy cannot grow at those prices. In other words, a limit was hit and now a ceiling on affordable oil price sets the bar as to how much oil can be extracted. We are now working within a certain range, a limitation has been set.

    • I think the surplus is necessarily generated by debt. Our whole system revolves around increasing debt. As the cost of oil production goes up, the need for debt goes up, because we need the Btus of energy, regardless of how much they may cost.

  30. Kurt says:

    It really baffles me that Krugman simply refuses to do any real research in this area. Probably the most important economic issue of our time and he just quotes articles written by other people who are living in a fantasy world. Bigger question — why does he behave this way? And, in the comments people rip him apart but he will be back in a month or so with another pie in the sky piece.


    • A Real Black Person says:

      Krugman is like most socialized people, only capable of thinking in the box.
      Besides that, I think what we call BAU is a series of secular belief systems.
      I suggested the possibility that there are cost-factors or demand factors that
      led to the spike in oil prices in the mid-2000s by two military veterans
      and they called it “bullshit”. They believe that the oil companies are rolling in it and are just “greedy.”They believe what has happened in Egypt and Syria can’t happen in Saudi Arabia because the U.S. military would step in and prevent any chaos from happening.
      They believe that Saudia Arabia doesn’t have budget problems and are rolling in money.They are optimistic about the future despite realizing that there are problems ,like racism and inequality. They believe technology will help the world be a better place. They believe in BAU.

      Believing in anything otherwise than those things, I suppose, would socially alienate them. The worst thing for most people, who are extroverts, is social alienation.

  31. Vince the Prince says:

    Since we may revert back to Hunter/Gatherer existence, find out here if your genes match
    How much of a caveman are YOU? Interactive tool reveals the amount of hunter-gatherer DNA in your family tree
    Most of us have a bit of caveman in us – and now an interactive tool can reveal exactly how much.

    The tool, which only works on people of European descent, reveals ancestry based your family’s country of origin.
    The data comes from an ongoing study that has found most European are a mix of three ancient populations; hunter-gatherers, Neolithic farmers and pastoralists
    The exact mix is based on region. People whose families came from Italy and Spain, for instance, have very low amounts of hunter-gatherer DNA. Other groups, such as those in Norway or Lithuania, get half of their DNA from the steppe pastoralists, who swept across Europe on horseback 4,500 years ago
    ongside this, scientists have been sequencing DNA from volunteers living around Europe today.
    We discovered that in addition to the original European hunter-gatherers and a heavy dose of Near Eastern farmers, there was a third major population – steppe pastoralists,’ said lead authors Dr Wolfgang Haak and Dr Alan Cooper writing in The Conversation.
    These nomads appear to have ‘invaded’ central Europe in a previously unknown wave during the early Bronze Age, about 4,500 years ago.
    This event saw the introduction of two significant new technologies to Western Europe: domestic horses and the wheel.
    It also reveals the mysterious source for the Indo-European languages.
    The genetic results have answered a number of contentious and long-standing questions in European history,’ the researchers claim.
    The first big issue was whether the first farmers in Europe were hunter-gatherers who had learnt farming techniques from neighbours in southeast Europe, or whether they instead come from the Near East, where farming was invented.
    ‘The genetic results are clear: farming was introduced widely across Europe in one or two rapid waves around 8,000 years ago by populations from the Near East – effectively the very first skilled migrants.’
    According to the study, at first the original hunter-gatherer populations appear to have retreated to the fringes of Europe: to Britain, Scandinavia and Finland.

    • xabier says:

      All one needs is Basque blood: we’ve survived it all: ‘Harri eta Herri’ – ‘Our Race’ is a Rock’! Some were still living in caves in the 1960’s.

      Some unkind people say that just refers to the thickness of skull and high ratio of bone to functioning brain matter….. 🙂

      More seriously, didn’t someone assert that the cranial capacity of humans shrank significantly with the transition to agriculture?

      That the Indo-Europeans brought horses is still faintly reflected in the traditional English aversion to eating horse meat, as the horse was a sacred animal, sacrificed in religious rites, buried with aristocrats, etc, but not for consumption: ‘As holy as a horse’, old proverb.

      • Jeremy says:

        “That the Indo-Europeans brought horses is still faintly reflected in the traditional English aversion to eating horse meat”

        I tried horse meat once in France, but found it very tough to chew. I think the real reason for the English distaste is not reverence but chauvinistic nationalism. Back in the 1960s, if ever an example of haute cuisine was mentioned to my working class dad, he would reply: ” I refuse to touch that foreign MUCK!” And I knew a girl who was nearly sick when she saw “Hors d’oeuvres” written on a menu, because she thought it had horse in it. 🙂

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