Debt: The Key Factor Connecting Energy and the Economy

There are many who believe that the use of energy is critical to the growth of the economy. In fact, I am among these people. The thing that is not as apparent is that growth in energy consumption is dependent on the growth of debt. Both energy and debt have characteristics that are close to “magic” with respect to the growth of the economy. Economic growth can only take place when growing debt (or a very close substitute, such as company stock) is available to enable the use of energy products.

The reason why debt is important is because energy products enable the creation of many kinds of capital goods, and these goods are often bought with debt. Commercial examples would include metal tools, factories, refineries, pipelines, electricity generation plants, electricity transmission lines, schools, hospitals, roads, gold coins, and commercial vehicles. Consumers also benefit because energy products allow the production of houses and apartments, automobiles, busses, and passenger trains. In a sense, the creation of these capital goods is one form of “energy profit” that is obtained from the consumption of energy.

The reason debt is needed is because while energy products can indeed produce a large “energy profit,” this energy profit is spread over many years in the future. In order to actually be able to obtain the benefit of this energy profit in a timeframe where the economy can use it, the financial system needs to bring forward some or all of the energy profit to an earlier timeframe. It is only when businesses can do this, that they have money to pay workers. This time shifting also allows businesses to earn a financial profit themselves. Governments indirectly benefit as well, because they can then tax the higher wages of workers and businesses, so that governmental services can be provided, including paved roads and good schools.

Debt and Other Promises

Clearly, if the economy were producing only items for current consumption–for example, if hunters and gatherers were only finding food to eat and sticks to burn, so that they could cook this food, then there would be no need for the time shifting function of debt. But there would likely still be a need for promises, such as, “If you will hunt for food, I will gather plant food and care for the children.” With the use of promises, it is possible to have division of labor and economies of scale. Promises allow a business to pay workers at the end of the month, instead of every day.

As an economy becomes more complex, its needs change. At first, central markets can be used to facilitate the exchange of goods. If one person brings more to the market than he takes home, a record of his credit balance can be kept on a clay tablet for use another day. This approach works as long as the credit can only be used at that particular market. If the credit balance is to be used elsewhere, or if the balance is to hold its value for a period of years, a different, more flexible approach is needed.

Over the years, economies have developed a wide range of debt and debt-like products. For the purpose of this discussion, I am including all of them as debt, broadly defined. One type is what we think of as “money.” Money is really a portable promise for a share of the future output of the economy. It can provide time shifting, if this money is held for a time before it is spent.

Another type of debt is a loan with a fixed term, such as a mortgage or car loan. Such a loan provides time shifting, allowing something to be paid for over a significant share of its life. Equity funding for a company is not really a loan, but it, too, allows time shifting. Those purchasing shares of stock do so with the expectation that they will be repaid in the future through price appreciation and dividends. It thus acts much like a loan, for the purpose of this discussion. There are many other types of promises regarding future funding that are closely related–for example, government loan guarantees, derivatives, ETFs, and government pension promises. All indirectly add to the willingness of people and businesses to spend money now–someone else has somehow made promises that remove uncertainty regarding future income flows or future payment obligations.

The Magic Things Debt Does

It is not immediately obvious how important debt is. In fact, neoclassical economists have tended to ignore the role of debt. I see several, almost magic, ways that debt helps the economy.

  1. Debt brings forward the date when an individual or company can afford to purchase capital goods. Without debt, the only way to afford such a purchase would be to save up the full price in advance. Using debt, a business can add a new machine to allow it to produce more goods before the business saves up money from its prior operations. A young person can afford to buy a house or car, long before he could save up funds for such a purchase. With the help of debt, the price of capital goods can be financed over much of their working life.
  2. Adding debt raises the prices of commodities. Commodities, such as lumber, iron, copper, and oil are what we use to make cars, houses, and factories. “Demand” for these commodities rises because more people and businesses can afford to buy capital goods that use these energy products. Often these capital goods also use energy products over their lifetime (for example, gasoline to operate a car), so there is a long-term impact on the demand for energy products, in addition to the demand associated with making the capital goods. Of course, with higher prices, it becomes profitable to extract oil and other energy resources from more marginal areas of production. More companies enter the field. As long as prices remain high, they are able to earn a profit.
  3. Adding debt stimulates the economy, almost like turning the heat up on a stove. When debt is added for any purpose–even starting a war–it starts a whole chain of purchases, each of which acts to stimulate the economy. If a young person takes out a loan to buy a car, the purchase of the car leads to the salesman having more money to buy goods for his family. The company selling the cars is able to make a bigger profit, which the business can reinvest or pay to shareholders as dividends. The purchase of the car leads to more demand for metals used to make the car, and thus tends to increase the number of mining jobs. Each new worker in turn is able to buy more goods and services, starting a beneficial cycle that gradually radiates out through the economy.
  4. Adding debt tends to lead to higher asset prices. Clearly, (from Item 2), adding debt can raise the price of commodities. Adding debt can also make it possible for more people to afford real estate and investments in the stock market. For example, Japan greatly ramped up its debt level between 1965 and 1989.
    Figure 1. Annual growth in non-financial debt (in Yen), separated into private and government debt, based on Bank of International Settlements data.

    Figure 1. Annual growth in non-financial debt (in Yen), separated into private and government debt, based on Bank of International Settlements data.

    During this time, a major price bubble occurred in land prices (Figure 2).

    Figure 2. Land Prices in Japan. Figure from Of Two Minds by Charles Hugh Smith.

    Figure 2. Land Prices in Japan. Figure from Of Two Minds by Charles Hugh Smith.

    There is a reason why this bubble could occur. Because of the stimulating effect that debt had on the economy, more people had the wealth to buy real estate, especially if this too was sold on credit. Once private debt levels stopped rising rapidly, price levels crashed both for land and stock prices. TheBubbleBubble.com explains what happened: “By 1989, Japanese officials became increasingly concerned with the country’s growing asset bubbles and the Bank of Japan decided to tighten its monetary policy.” Doing so popped both the home and stock price bubbles.

  5. Adding debt adds to GDP. GDP is a measure of the goods and services produced during a period. Many of these goods and services are bought using debt, so it is not surprising that adding more debt tends to add more GDP. The amount of GDP added is less than the amount of debt added, even when inflation growth is considered as part of GDP.
    Figure 3. United States increase in debt over five year period, divided by increase in GDP (with inflation!) in that five year period. GDP from Bureau of Economic Analysis; debt is non-financial debt, from BIS compilation for all countries.

    Figure 3. United States increase in debt over five-year period, divided by increase in GDP (including inflation) in that five-year period. GDP from Bureau of Economic Analysis; debt is non-financial debt, from BIS compilation for all countries.

    The general tendency is toward the need for an increasing amount of debt per dollar of GDP added. This is especially the case when oil prices are high. In the US, the ratio of non-financial debt to GDP added was almost down to 1:1 for a time, back when oil prices were less than $20 per barrel (in today’s dollars).

  6. Adding debt tends to increase wealth disparity.  Adding debt tends to increasingly divide an economy into “haves” and “have-nots.” Many of the “haves” own the means of production, including an ever-increasing amount of capital goods, and thus can earn profits and dividends from these capital goods. Others are high-level officials in businesses and the government who earn high salaries. Interest payments also tend to transfer payments from the poor to the more wealthy. We might say that the common laborers are increasingly “frozen out” of the economy that otherwise is heating up. This shift started to take place in the United States about 1981.

    Figure 3. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis IRS data, published in Forbes.

    Figure 4. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.

  7. Adding debt is something that governments can influence, either by lowering interest rates or by borrowing the money themselves.  Actions by governments to reduce interest rates can be effective, because they lower monthly payments that borrowers need to make to take out a loan of a given amount. Thus, they tend to encourage more borrowing. In Figure 5, below, note that the decrease in interest rates in 1981 corresponds precisely with the rise in debt to GDP ratios is Figure 3 and the shift in income patterns in Figure 4.
    Figure 4. Ten year treasury interest rates, based on St. Louis Fed data.

    Figure 5. Ten year treasury interest rates, based on St. Louis Fed data.

    Figure 6 later in this post shows that changes in Quantitative Easing (QE) (which affects interest rates and the level of the US dollar relative to other currencies) also correspond to sharp changes in oil prices. Changes in the level of the dollar also affect demand for oil. See a recent post related to this issue.

What Goes Wrong as More Debt Is Added?

It is clear from the discussion so far that quite a few things go wrong. These are a few additional items:

1. There are limits to government manipulation of debt levels.  First, interest rates eventually drop so low that they become negative in some countries. Negative interest rates tend to cause bank profitability to drop and lead to hoarding by those who planned to use savings for retirement.

Second, government borrowing doesn’t work as well at stimulating the economy as investments made by the private sector. A likely reason is that private sector investments are made when the borrower believes that the return on the investment will be high enough to pay back the debt with interest, and still make a profit. Government investments often do not meet this standard. Some reports indicate that Japan’s government has used borrowed money to fund bridges to nowhere and houses with no one home. China’s centrally directed economy seems to lead to similar over-borrowing problems. Chinese businesses also borrow to cover interest on prior loans.

2. Ratios of debt to GDP tend to rise, worrying government leaders. Debt is a way of accessing the benefits of Btus of energy, in advance of the time they are really available. As the amount of easy-to-extract oil depletes, the cost of oil extraction gradually rises. Unfortunately, the amount of “work” a barrel of oil can perform–for example, how far it can make a truck travel–doesn’t rise correspondingly. As a result, the higher price simply reflects increasing inefficiency of extraction, and thus the need to use a larger share of the economy’s output to extract oil. The amount of debt needed to keep GDP rising keeps growing, in part because oil is becoming higher priced to extract, and in part because goods that use oil in their production also tend to rise in cost. As a result, the ratio of debt to GDP tends to spiral upward.

3. Rising debt allows for a temporary false valuation of the benefit of energy products. The true value of oil and other energy products comes primarily from the Btus of energy they provide, such as how far a truck can be made to travel. Thus we would expect that the true value of energy products would remain relatively constant over time. If anything, the value of energy products will tend to rise by a small amount (say, 1% per year) as technology improvements lead to growing efficiency in their use.

What we think of as the magic hand of the economy determines a price for commodities at all times, based on “supply” and “demand.” This price clearly is not very close to the future energy profit that the energy products will actually provide, because it tends to vary widely over time. We don’t know what the true value of a barrel of oil to society is. If the true value is $100 per barrel (in today’s money), then back when oil prices were $10 or $20 per barrel (in today’s money), there would have been $80 to $90 (equal to $100 minus the actual price) of “energy profit” that could be pumped back into the economy as productivity gains for workers, interest on debt, and dividends on stock, tax revenue, and money for new investment. The economy could (and did) grow quickly. There was less need for added debt, because goods made with oil were cheap. Wages for workers could rise rapidly, as they did in the 1950 to 1968 period (Figure 4).

If prices approach the true value of oil (assumed to be $100 per barrel), the extra energy profit would pretty much disappear. The economy would increasingly become “hollowed out.”  Productivity gains that lead to wage gains would mostly disappear. Businesses would find it hard to earn adequate profits, and would cut back on dividends. Some companies might need to borrow money in order to pay dividends. World economic growth would slow.

Prices can even temporarily overshoot their true value to the economy, then drop sharply back. This happens because prices are set by demand, and demand depends on a combination of wage levels and debt levels. Oil prices can be high for a while, if borrowing is temporarily high, and then fall back as it becomes clear that profitable investments are not really available if oil is at such a high price level.

4. Wages of non-elite workers tend to drop too low. Workers play a very special role in the economy: they both (a) provide the labor for the economy and (b) act as consumers for the economy. If workers aren’t earning enough, there is a problem with many of them not being able to buy the goods and services the economy produces. This is especially the case for purchases such as homes and cars, which are often bought using debt. Indirectly, this lack of ability to afford the output of the system puts a downward pressure on the price of commodities, particularly energy commodities. Prices may fall below the cost of production, or may not rise high enough.

Figure 6. World oil supply and prices based on EIA data.

Figure 6. World oil supply and prices based on EIA data.

The reason that wages of the less educated, non-managerial workers tend to lag behind is related to the issue of diminishing returns. A workaround is a more “complex” society, with bigger businesses, bigger government, more capital goods, and more debt. In some cases, manufacturing is shifted to parts of the world with lower wages. Non-elite workers increasingly find themselves with too small a share of the output of the economy. Figure 7 shows some influences that tend to lead to too low wages for non-elite workers.

Figure 7. Illustration by author of why an economy that doesn't grow leads to falling wages for workers.

Figure 7. Illustration by author of why an economy that doesn’t grow leads to falling wages for workers. All amounts are guess-timates, to show a general principle.

When wages for a large share of workers drop too low, there is a problem with workers not having enough money to buy goods like cars and houses. The economy tends to contract. This is a different form of too low Energy Return on Energy Invested (EROEI) than most people think of. In my view, low return on human labor is the most important type of EROEI. Falling wages of a large share of workers can lead to economic collapse, because there are not enough buyers for the output of the system.

5. Eventually, debt defaults become a problem. As the world becomes more divided into “haves” and “have-nots,” falling ability to repay a debt becomes more of a problem. To some extent, this happens at the individual level, with auto loans, student debt, and mortgages. If commodity prices fall or stay too low, it happens to commodity producers, including oil producers. It also happens to countries, especially to those who are dependent on commodity exports.

The rise in the cost of oil extraction is another factor. As the cost of extraction begins to exceed the benefit of oil to the economy (assumed above to be $100 per barrel), the energy profit from oil is no longer sufficient to allow the economy to grow as in the past. Without economic growth, it becomes much harder to repay debt with interest.

Figure 7. In a period of economic decline (Scenario 2), the amount a debtor has left over after repaying debt plus interest is disproportionately large, leaving the debtor with inadequate funds for paying other expenses. In a period of economic growth (Scenario 1), the overall growth in incomes tends to compensate for the need to pay back the debt with interest.

Figure 8. In a period of economic decline (Scenario 2), the amount a debtor has left over after repaying debt plus interest is disproportionately large, leaving the debtor with inadequate funds for paying other expenses. In a period of economic growth (Scenario 1), the overall growth in incomes tends to compensate for the need to pay back the debt with interest.

6. At some point, we reach peak debt. The economy acts like a pump. As long as there are sufficient energy profits coming through the system (based on $100 per barrel minus the actual oil price, in our example), wages can rise and corporate profits can rise. Asset prices can rise, and energy prices can stay high. Once these energy profits start falling back, wages stagnate and business profits decline. Businesses cut back on borrowing, because they see fewer profitable opportunities for investment. Individuals cut back on borrowing, because with their lower wages, it becomes more difficult to buy a house or car. Governments try to fight declining demand for debt, but eventually reach limits of the economy’s tolerance for negative interest rates.

Once debt begins contracting, the contraction tends to bring down commodity prices. This is a huge problem for commodity producers, because they need prices that are high enough to cover their cost of production. Ultimately, falling debt, together with falling wages, and lack of energy profit have the potential to bring down the system.

Conclusion

The situation we are facing today is one in which growing debt has been holding up oil prices and other commodity prices for a long time. We are now reaching limits on this process, as evidenced by growing wealth disparity, low commodity prices, and the frantic actions of government leaders around the world regarding slow economic growth and the need for more stimulus. These issues are becoming major ones in the upcoming US political election.

Those studying oil issues from an EROEI perspective tend to miss the connection with debt, because EROEI analysis strips out timing differences. In my view, debt is essential to oil extraction, because it brings forward an estimate of the value of the oil and other energy products, so that businesses of all kinds can make use of the “energy profit” in paying their employees and in paying their taxes. Most people don’t think of the issue this way.

In this article, I suggest a different way of thinking about the limit we are reaching–oil prices can’t rise above some price limit without adversely affecting the economy. It is the savings below this limit that aid productivity growth and government funding. Perhaps researchers should be examining this price limit approach more carefully. This is not the same approach as EROEI analysis, but has the advantage of having fewer “boundary issues.”  It also offers a check for reasonableness of EROEI indications developed through conventional analysis. If an energy product needs a government subsidy, it is doubtful that that energy product is really providing an energy profit.

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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695 Responses to Debt: The Key Factor Connecting Energy and the Economy

  1. A Real Black Person says:

    If A debt is good for the economy…
    Then why is there a mainstream consensus that higher education debt is bad?

    If the economy has been suffering from a lack of demand, student loans represent a major source of demand.

    I remember reading a few years ago that rising student loan debt, that many people took on at the height of the Great Recession, helped the economy “recover” around 2011/2012.

    When one looks at a lot of “thriving” metropolitan areas, these areas where colleges have attracted a lot of “winners” in the global economy and those winners bid up the costs of real estate and college tuition. I live near a major coastal city that is kept afloat, economically, largely, by the presence of affluent (not wealthy) foreign college students and , although it isn’t discussed much in the media, real estate purchases by wealthy foreigners.

    My question is…don’t’ profits from private student loans have a stimulating effect on the economy?
    If they don’t stimulate the economy, where does the profit go?

    If student loans refer a transfer of wealth…where is this wealth going to?

    I wonder why politicians would want to reduce student loans in the economy, now, since it would put good chunk of their constituents out of a job and would wreak havoc, in my opinion, in the economies in many “thriving” metropolitan areas. There are areas in my state without a lot of colleges…and luxury condos…they don’t have a lot of hospitals…they start to resemble Detroit in many ways, in the sense they are declining industrial towns.

    I guess, what I’m saying is that reducing any kind debt would reducing capital flows. From what have observed, any reduction in capital flows will be bad for an economic system based on capital flows.

    • DoGf00d says:

      As the helicopter drops go student loans are more effective than other instruments that stay solely in the banks realms. The students spend that credit on various sundry items. The professors spend there salaries on stuff. It is a important part of BAU and I support it 100%.

      I think the opposition to the practice comes from two things.
      1; Unlike other debts that require a look several layers debt to see the unsustainability student loans are clearly unsustainable as the income potential to pay them is not there.
      2; The same reason any helicopter drop is not popular if you are not a recipient. I get drop = fair. I not get drop =unfair.

      At this point all income whether dropped or not comes solely from the printing press the only question is how many transfers in between the drop and when you get your hands on it. Some regard more transfers in between the drop and their possession as more ethical. It has been this way for a long time.

      The entire election can be summarized as

      I get drop = fair. I not get drop =unfair.

    • DJ says:

      The education doesn’t lead to job paying enough to pay of debt.

      No profits.

      Wealth transfered to students who destroyed it on stuff they couldn’t afford.

    • Jessi Thompson says:

      Student loan debt does not provide much return these days. The college level jobs don’t exist, so there’s a fair chance you’ll never be able to pay the debt back. Students who graduate with a lot of debt and then fail to find decent jobs tend to postpone starting families, buying houses, and buy cheaper cars. Debt that can be paid off benefits the economy. Unpayable debt drags down the economy by limiting credit to future debtors. When the government steps in to help repay unplayable debt (student loan forgiveness for some people, income contingent repayment plans, etc) it acts like a tax, because it is literally tax money going to propping up bad debt.

      • I agree. The university professors have already been paid, and the buildings have already been built. Someone must pay for these sunk costs. A lot of the cost is going into all of the publishing that professors are expected to do now. As far as I can see, a large share of this has close to zero benefit to society. To many errors are just repeated going forward, in new peer reviewed literature.

      • A Real Black Person says:

        “Students who graduate with a lot of debt and then fail to find decent jobs tend to postpone starting families, buying houses, and buy cheaper cars. “” If they haven’t defaulted they are, according to you benefiting the economy. Since it is really difficult to default on student loans, and be able to participate in society, most student loans in existence are in some form of repayment and therefore are benefiting the economy

        “Debt that can be paid off benefits the economy. ”
        Debt that can never be paid off because the interest is much greater than the borrower’s income growth still benefits the economy since the borrower cannot default without having to become one of those homeless people who live under bridges.

        Lenders don’t care if the borrower of student loans can’t consume important things for the economy like cars, homes, mortgages, and population growth–I mean, economic growth. All they care is about their relative wealth/income increasing over time.

        I suspect the ROI on student loans for lenders is better than any other investment out there because student loan borrowers cannot default without having to forfeit their ability to participate in society.

  2. MG says:

    God is the embodiment of external energy. The rise of atheism is closely connected with the vanishing external energy: the implosion of the reality due to the lack of external energy destroys the concept of god.

    We can have a lot of things, but the problem of materialism is lack of the spirituality, i. e. the lack of the energy: things without the energy needed for their maintenance and operation are useless.

    That is why we can have cars, houses etc., but when we lack the secure flows of energy for their operation and maintenance, these things appear to us to be useless.

    • MG says:

      Or to put it more precisely: God is the embodiment of external energy that acts in favor of human species.

  3. hkeithhenson says:

    All of the debt economics, politics, energy and environmental concerns happen in a dynamic evolution of technology.

    One of the possibilities that recent developments offer is power satellites. They can scale large enough to pick up the entire fossil fuel in about a decade. This is starting to be recognized. A couple of weeks ago Lt. Col Peter Garrentson and Dr. Paul Jaffe were invited to the White House to talk about them. This video was part of their presentation.

    • DoGf00d says:

      My Dreams Can Kill You (2002) HD

    • Ed says:

      Well worth making 10 prototype satellites of 5GW each as soon as launch cost is $2000/kilogram to LEO. SpaceX is currently at $3000/kilogram to LEO.

    • energy has allowed the ”evolution” of technology

      technology cannot produce energy

      • hkeithhenson says:

        “technology cannot produce energy”

        Strictly speaking that’s true. The Sun causes water to evaporate from the oceans and rain on the mountains. The technology of building dams and generators makes the energy available to humans. Same thing with power satellites. They intercept sunlight that misses the earth and make it into microwave beams that deliver the energy to earth where humans use it.

        • technology allowed us to convert one form of energy into another, —strictly speaking i should have written that.

          but that conversion still hits us with the laws of diminishing return, no matter how efficient our technology becomes.

          technology also feeds into the collective belief system that ”technology” is somehow going to allow our industrial infrastructure to go on forever.

          it also veers into politics—when that belief is confirmed by politicos who assert that they know how to do it, or can ”make it happen”. It also brings on revolutions when they are found to be lying.

        • forgot to point out that so far–”power satellites”, like asteroid mining, comes under the heading of wish-science.

          • hkeithhenson says:

            “laws of diminishing return”

            Can you explain how this applies to power satellites?

            “like asteroid mining”

            There are two kinds of “wish-science,” stuff like time travel that’s just forbidden by our current understanding and things we have not done yet but are not forbidden. Power satellites fall into the second kind. In any case, do you have a less expensive way to get humanity off fossil fuels?

            • The developed industrialsed world in collective terms, expects that life is going to be BAU forever—and better than that.
              To do that we must have access to infinite energy in one form or another, but that energy must be converted into forms we can use to power our wheeled lifestyle.

              Thus, if some genie rubbed his lamp and the wish science of power satellites came true, it would still deliver only electricity.

              Now–as several billion people use “stuff” to make their lives function, it doesn’t matter how much electricity is available if you do not have sufficient “stuff” on which to use it. (check the inner workings of your computer for a start)
              Thus everyone is going to demand infinite “stuff” and that can only come from the Earth resources available to us—diminishing returns. (google say–the current extraction returns on copper ore mining compared to 100 years ago)

              OK–find a solid copper asteroid. Possble—but somewhere out beyond Mars at best. You still have to pay to bring its ore here, and you do not pay with money–you pay with energy—the one thing we’re running short of. EROEI again. And we use a lot more stuff than copper.

            • hkeithhenson says:

              “it would still deliver only electricity.”

              That’s not much of any objection. Electricity and water makes hydrogen. Hydrogen and CO2 out of the air makes hydrocarbons via Fisher-Tropsch reaction. Done on a huge scale with partially oxidized natural gas, but the same plants would take hydrogen and CO2 as feedstock. A bbl of synthetic oil made this way would take $20 of power at one cent per kWh. From existing plants, the capital cost is $10/bbl. So for 1-3 cent per kWh power, synthetic oil would cost $30-70/bbl.

              “you pay with energy—the one thing we’re running short of”

              I think you missed the point. If we build power satellites, energy is the one thing we won’t be running short of, at least not till the Sun dims out.

            • i think i’ll keep rubbing my lamp and making wishes

              as to the Fischer Tropsch process, I can only suggest you read it up here and elsewhere
              https://simple.wikipedia.org/wiki/Fischer-Tropsch_process
              It is a very messy business, needing all the nasties that got us into our fine mess in the first place.
              But make as much oil as you want. Without the means to use it, it is merely a convenient form of lighting.
              To use oil, or electricity in the sense that we know it, you must have machinery. (hence my reference to copper, as an example)

              As to energy sources, in our current situation, we need a new energy source right now.
              There my be vague scientific possibilities out there, but as yet none have been invented, let alone put into worldwide use. Fusion is a case in point. Theoretically possible–but always 20 years in the future.
              We dont have 20 years. Bear in mind the Appollo space program and 10th c Chinese fireworks used the same process—controlled explosion by chemical combustion.
              When our industrial infrastructure goes down, we will not have the means to “use” anything to any meaningful degree. (Quote from above: “huge scale”) I think not.

              Whatever energy resources we come up with, they will be useless without mechanical processes

            • hkeithhenson says:

              “Whatever energy resources we come up with, they will be useless without mechanical processes”

              Your concern seems to be one of running out of iron, aluminum and the like to make machines. With lot of cheap electric power that seems very unlikely.

              I agree with you on the short time scale needed to replace fossil fuels. That’s what the presentation that used the animation is about. Did you watch it? It’s only three minutes.

            • A Real Black Person says:

              “laws of diminishing return”

              Can you explain how this applies to power satellites?

              It seems like you’ve missed the entire point of this blog entry.
              If obtaining electricity from an energy source is very expensive it most likely not going to be used.

              Space-based solar power is still a lot more expensive than lower-cost things like conservation and adaptation. There’s a lot of evidence that points to the possible reality that we don’t have enough copper and other minerals to built larger electrical grids that would make energy from space feasible.

              The problems of industrial civilization include more things than a dependence on fossil fuels. If you don’t accept that or don’t want to accept that, due to a lack of understanding, you are engaging in “wish-thinking”.

            • hkeithhenson says:

              “If obtaining electricity from an energy source is very expensive it most likely not going to be used.”

              I have been harping on this point for many years now. If power from space can’t seriously undercut electricity from coal, then I am against it being developed.

              “Space-based solar power is still a lot more expensive . . . . ”

              That’s the case. To repeat the analysis, electric power from coal is ~4 cents a kWh. That means power satellites have to make it for 3 cents per kWh or less. There is no fuel required. If we assume power satellites take a reasonable amount of maintenance, then the maximum capital investment is around $2400/kW. Rectenna, parts and labor look like they will come to $1100/kW leaving $1300/kW for transport. After a considerable effort, a specific mass of 6.5 kg/kW looks reasonable. That sets the maximum transport cost at $200/kg. That’s a reduction of 100 to one on the current cost of lifting communication satellites to GEO. Musk and Co. will probably get the cost down to $2000/kg, which is still ten times to expensive for power satellites to make economic sense.

              It is possible to get the transport cost that low? It’s not easy, but it looks like a combination of the Reaction Engines Skylon at high flight rates and electric propulsion from low earth orbit up will get the transport cost low enough.

              “There’s a lot of evidence that points to the possible reality that we don’t have enough copper and other minerals.”

              Can you point to a paper on this “evidence”? Aluminum, for example, will substitute for copper in a lot of places. If we have plenty of energy, aluminum is one of the elements we are very unlikely to run short of, i.e., it’s one of the most common elements in the crust.

            • Fast Eddy says:

              Keith – we haven’t head from you in a few months – have you solved the problems working down there in your basement? I haven’t seen you appear on Bloomberg so I’ll assume that’s a no

            • all this rambling on about acquisition of sufficient energy misses the point.

              Until the industrial revolution, the great mass of people laboured dawn till dusk at whatever they we being paid to do—usually agriculture of some sort. Liesure did not exist, nobody travelled anywhere because they had no means to do so.
              Thus 90%+ of the people supported 10% who were essentially layabouts who owned the land.
              But it was life of a sort—and nobody knew differently.

              after 1800, things began to change, Oil coal and gas powered machines that did our work for us.
              We all had liesure and luxury (at least compared to the middle ages).
              Energy was delivered cheaply, it was almost incidental—virtually free. And it was supposed to last forever

              We are now leaving that era—but desperate not to.
              So we are frantically trying to find new ways to produce still more energy from the wackiest (desperate) ideas.
              The inevitable trend is for more and more corporate bodies/governments/individuals to devote themselves to finding fresh energy sources, and trying to build “machines” that will make our future secure in energy terms
              Thus the focus is on energy itself, and the critical nature of it, and how we must go on trying to find the holy grail of perpetual motion, not realising that the vast majority of us are going to be forced into living that fantasy that the energy we had between 1800 and 2000 or thereabouts, is going to be available forever, while faced with the growing reality that it isn’t going to be.

              Think back to the middle ages—the vast majority of people were “individual” energy producers. Unwittingly we are drifting back to that time, while remaining convinced that this mechanical wheeze, or that, will halt our decline.

            • Fast Eddy says:

              And our masters are quite happy to create this fantasy … they throw a few dollars at Elon Musk and others to make it all feel real…

              If you think about it — if we were not told that we will transition to renewables — if a few crumbs were not actually thrown at ‘renewable’ energy and the MSM did not get on board — the masses would get decidedly uncomfortable about where this is all going … even a moron understands fossil fuels are not infinite…

              So the renewable myth serves a very good purpose… it’s a type of natural Abilify.

            • hkeithhenson says:

              “So the renewable myth serves a very good purpose”

              It’s even true on some level. The sunlight hitting the planet has far more energy than we currently need. Cost is a problem, but cost can usually be reduced given enough motivation, engineers and time.

            • Time is the big thing we need, but don’t have.

            • hkeithhenson says:

              “Time is the big thing we need, but don’t have.”

              You only need time when you are doing something about the problem. We have not reached that stage yet.

              As for how long it could take, consider https://en.wikipedia.org/wiki/Manhattan_Project as an example of what motivated people can accomplish in a few years.

            • Fast Eddy says:

              Given enough time I wonder if we could grow solar panels on trees. What do you think Keith?

            • hkeithhenson says:

              “I wonder if we could grow solar panels on trees.”

              What is a leaf if not a solar panel?

            • Fast Eddy says:

              Well then – why don’t you try hooking a tree up to your solar battery pack and charging it.

            • Fast Eddy says:

              Given time do you think we could grow bananas at the north pole? Or maybe some things are just not possible

            • Fast Eddy says:

              Keith likes to ignore this… because he lives in DelusiStan… and in DelusiStan facts don’t matter… if you can imagine it … it is possible… even if it is not.

              In RealityStan we refer to this phenomenon as ‘crazy’

              The SBSP concept has a number of problems:

              The large cost of launching a satellite into space

              Inaccessibility: Maintenance of an earth-based solar panel is relatively simple, but construction and maintenance on a solar panel in space would typically be done telerobotically. In addition to cost, astronauts working in GEO orbit are exposed to unacceptably high radiation dangers and risk and cost about one thousand times more than the same task done telerobotically.

              The space environment is hostile; panels suffer about 8 times the degradation they would on Earth.[36]

              Space debris is a major hazard to large objects in space, and all large structures such as SBSP systems have been mentioned as potential sources of orbital debris.[37]

              The broadcast frequency of the microwave downlink (if used) would require isolating the SBSP systems away from other satellites. GEO space is already well used and it is considered unlikely the ITU would allow an SPS to be launched.[38]

              The large size and corresponding cost of the receiving station on the ground.[citation needed]

              The possibility of energy losses during several phases of conversion from “photon to electron to photon back to electron,” as Elon Musk has stated.[39]

              https://en.wikipedia.org/wiki/Space-based_solar_power

            • Fast Eddy says:

              power satellites will happen around the same time as bananas grow at the north pole….

        • Fast Eddy says:

          You speak as if space satellites that beam power to earth where humans use it actually exist.

          Is that what the story is in up there in Delusistan?

          Unfortunately – in Realitystan — we still get our power the from coal, nuclear and hydro…

          • hkeithhenson says:

            “You speak as if space satellites that beam power to earth where humans use it actually exist. ”

            They do. Part of the $300 B/year space business. The sunlight power turned into microwaves is in the tens of kW for communications rather than the tens of GW for power production, but they really do exist.

            • Fast Eddy says:

              Can you show me some evidence of one of these.

              It cannot involve DelusiStan because I do not officially recognize that state.

            • folks remain convinced that the energy needed to send pictures of “stuff” over thousands of miles, is exactly the same as the energy needed to send actual “stuff” from say, the farm to my dinner plate using real wheels.

              If people could eat pictures of food instead of being so damned picky and insisting on real food, this energy transmission business wouldn’t be a problem

              Beam me up Eddy!!!

            • hkeithhenson says:

              “Can you show me some evidence of one of these.”

              Perhaps. It depends on where you are. From my window I can see at least a dozen satellite antennas. It seems like a safe bet that people who paid considerable money to install them had a reason. If your area doesn’t have satellite dishes, then it would take a moderate telescope to see the transmitters in GEO.

            • Fast Eddy says:

              Right — in DelusiStan if you can imagine it you can see it. Can you touch it though?

  4. Here is a proposed solution to making radioactive waste less toxic, and producing energy. I would not hold my breath waiting for it

    Next-generation nuclear reactors that use radioactive waste materials as fuel

    Hitachi announced today that they have begun joint research with three American universities aimed at using Transuranium Elements (TRUs) as fuel, and the development of Resource-renewable Boiling Water Reactors (RBWRs) that enable the effective use of uranium resources. Through this joint research, Hitachi plans to evaluate the performance and safety of RBWRs, which is being developed by Hitachi and Hitachi GE Nuclear Energy Ltd., and to study plans for testing with a view toward practical applications with each university.
    The uranium fuel used in nuclear power plants contains TRUs, which are harmful to humans, and it is estimated that it takes about 100,000 years for the radioactive properties of these materials to decay to the level of uranium ore in its natural state. If TRUs could be effectively removed from these spent fuels, then the period of decay for the remaining radioactive waste materials could be reduced to just a few hundred years. For this reason, research and development is being conducted throughout the world targeting nuclear reactors that can achieve nuclear fission in transuranic waste.
    As one solution to this challenge, Hitachi has undertaken the development of RBWRs based on Boiling Water Reactor technologies, which already have an extensive track record of applications in commercial nuclear reactors. RBWRs could potentially use TRUs separated and refined from spent fuel as fuel along with uranium. Although RBWRs use new core fuel concepts to burn TRUs, they use the same non-core components as current Boiling Water Reactors (BWRs), including safety systems and turbines. As such, RBWRs are unique in that extensive experience accumulated through the application of BWRs can be leveraged to achieve efficient nuclear fission in TRUs.

    Read more at: http://phys.org/news/2014-08-next-generation-nuclear-reactors-radioactive-materials.html#jCp

    • Fast Eddy says:

      A perpetual motion machine – finally!

      • Ed says:

        Current nuclear reactors use about 1% of the uranium. Proposed reactors can burn 95% of the uranium. All that spent fuel is really fuel waiting to be used to power our robotic, Mars, low carbon future.

      • Ed says:

        The only reason current reactors are limited to 1% is because the transmutation builds up gas that swells the metal clad fuel pellet and if allow ed to continue could cause the rod to get stuck. The rods and pellets can be reprocessed that is re-encase the uranium in new metal cladding and burn the next 1%. But better to use liquid fuel where the noble gasses that are created can be vented off.

  5. Ed says:

    Gail, you made Rense.com Sure not main stream but for alternative it is main stream.

  6. Don Stewart says:

    Dear Finite Worlders
    Here are two videos for those with some spare time and the inclination. The first is the great speech by Charlie Chaplin in the The Great Dictator. The second is a speech a year of so ago by Toby Hemenway about how to starve the State. If you love Anarchism, you will want to listen to it….Don Stewart

    http://www.zerohedge.com/news/2016-05-08/greatest-speech-ever-more-relevant-ever

    http://www.permaculturevoices.com/liberation-permaculture-by-toby-hemenway-pvp126/

    • Artleads says:

      Loved the Toby Hemenway clip.The problem I saw with it, however, was insufficient attention to how you get the basic supplies (not the excess, capitalist driven) you need to function even minimally withing the current context.

      • Don Stewart says:

        Artleads
        In our county, one can build and live in a 12 foot by 12 foot structure which is not regulated and is taxed as an ‘agricultural outbuilding’. William Powers was in our area for a while and he had a chance to live in a 12X12 which belonged to a rabidly anti-war pediatrician. The pediatrician keeps her income below the level where she would have to pay income tax. Powers wrote a book about his experiences living in the 12X12:

        If you know where to look, there are actually quite a few people (mostly young) living ‘under the radar’. I have been in dwellings that cost less than a thousand dollars to build. Many of them use salvaged material. The people grow some of their own food and do odd jobs for other people in return for something they need. For example, one guy did the demolition work at a restaurant which was being remodeled in return for getting the windows, which he used in his dwelling. (I hesitate to call them houses, because none of them are official ‘houses’.) Many of them use rather elaborate permanent canvas to extend the basic 12X12 fixed structure…such as cooking areas which are covered with canvas.

        I think it is this spirit which is motivating Toby. As you can hear from the audience reaction, the anti-government stance is ringing a bell.

        Don Stewart

        • Artleads says:

          I totally get what you’re saying, and am a poster child for effort and resolve along those lines. The trouble I see with “starving” BAU is that the ideal, minimalist anarchist lifestyle might not be possible for many without some sort of BAU being there to ensure a degree of order and social harmony.

          I’m halfway along with building a livable structure form discarded stuff I mostly get from stores. But without BAU, that stuff would not be there for me to take. There would be incredible strife and hardship.

          I like living on nearly nothing, but it’s good to know I can get clean water from the tap, or medicine, or simple tools through BAU. With a lot of help and cooperation, many could live without BAU, but without the embedded structure BAU supplies, simple tasks would take forever. The level of hardship would be hard to endure or rationalize.

          All this is to express misgiving about starving BAU. If BAU could change instead of collapse, that would be nice. As you mention there is all that “waste heat” in the system that could be salvaged and used. That waste heat is due only to mindlessness and the complete lack of imagination.

          Maybe BAU can respond to limits. Like what happened with my McDonalds fore’ today. The cashier asked how many packs of sugar and cream I wanted for my coffee. I copied my wife and said two of each. Surprisingly, the sugar and cream were already stirred into the coffee when we got it. We both figured that McDonalds was trying to cut down on waste, which was reasonable for them to do. Much less sloppy that way…

          Hemenway poses the scenario where very few people have jobs, and most people simply had work. Very compelling image, and I do believe it will be the future. But first there must be a way to keep some orderly (if less wasteful and stupid) chain of supply going to enable those jobs. We may be talking a reduced but very evolved new type of BAU. That little McDonalds example could be pushed to the nth degree… I’m not speaking out of wishful thinking; it’s just what intuition is presenting in a rather compelling way. America does the right thing after exhausting all the wrong things first. Undoubtedly, it has more potential than we tend to believe.

          • Anarchy cannot work with any sort of large population. Humans would just pollute, over-fish, destroy, and waste even more than they do now.

            • Artleads says:

              Anarchy means no rulers.

              Large, centralized, hierarchical civilizations can’t function without cheap fuel or slaves. So we seem to be headed for a world of small bands. These would lend themselves to anarchy.

            • Fast Eddy says:

              Anarchy is fun — you get to rape and kill and pillage at will — or at least until someone more vicious does the same to you

              The downside is that there is no garbage collection

            • Artleads says:

              “Anarchy is fun — you get to rape and kill and pillage at will — or at least until someone more vicious does the same to you.”

              Anarchy means no rulers, nothing else. Please look up the term.

              “The downside is that there is no garbage collection”

              People can pick it up their bloody selves. Or better yet, don’t generate garbage in the first place. My neighbor has no packaging material to contend with, and recycles all organic waste. I generate loads of packaging material, but recycle most of it. I compost all my food scraps, paper and cardboard.

            • Fast Eddy says:

              Anarchy is an impossibility.

              There will always be the urge to dominate.

              Although in DelusiStan … perhaps the men are all castrated and high on hopium … so anything is possible

            • Tango Oscar says:

              No rules won’t work with humans at the current point of evolution we’ve hit. We don’t responsibly use anything outside of pencils and even that is debatable.

              I compost all of my food scraps as well and it’s a big hobby of mine. I usually have 3 bins going at a time and my garden loves it.

            • Artleads says:

              Anarchy does not mean the absence of rules or order.

              https://en.wikipedia.org/wiki/Anarchy

            • Artleads says:

              “Anarchy is an impossibility.”

              And so, obviously, is BAU. Or else we’d be better off than we are. Or we might assume that the world was created 6000 years ago, and there is no such thing as evolution. We were created this way, all of a piece, just like we are today. We had our male dominant run, which is simply the order of things. And now we’ve come to the end of the line, just as it was meant to be. There was never any such thing as cooperation or rationality either…at ANY point. Just what our testosterone-hyped DNA was programmed to do. And it was always meant to be that people who were white and male should end up at the top of the deathly pile. For how could an order that wan’t male and white have superior ability to survive? Couldn’t be done, I tell you! So when I, white male ruler of all the death-bound, tell you that there was never (and isn’t) an alternative path, you had best believe me! Or we might just call it racist and sexist bullshit from a cement brained hyper-rich consumer mother….er.

            • Tango Oscar says:

              You seem to be lumping several things together without going into further details. Some of what you said is also hard to separate what you’re being serious about or sarcastic.

              Creationism has been scientifically proven wrong unless you believe Satan runs around depositing million year old fossils all over the planet. Likewise there are some holes in evolution that do not make sense. I think the official story is somewhere in between but we won’t know until we die.

              I think that there are paths that could work but our white ancestors obviously chose the wrong one. The Native American culture for example seemed pretty sustainable and in harmony with nature. It worked for a variety of reasons like low population (which I pointed out) and because they did not possess western values of mindless consumption. There are other colonies of people across the planet that live similarly but you will notice that they are ALWAYS low population and living more sustainable lifestyles.

              Large populations of people living western lifestyles are 100% incompatible with anarchy because humans have not evolved enough to the point where they can responsibly use the technologies we have discovered. Freedom is an illusion when people make the choice to clear cut the rainforest and it ends up leading to their children’s demise some decades later.

            • Fast Eddy says:

              Kerry Packer, once Australia’s richest man, suffered a heart attack in 1990 and was clinically dead for six minutes before being revived.

              Packer remarked on his mortality with immortal words:

              “I’ve been to the other side and let me tell you, son, there’s f–king nothing there… There’s no one waiting there for you, there’s no one to judge you so you can do what you bloody well like.”

            • Tango Oscar says:

              So one person’s anecdotal near death experience is absolute proof of nothingness after your physical vessel dies? LOL! There are thousands that are to the contrary of that and I could go into this topic a lot more but you clearly already have your mind made up. Let’s just say your in for a big surprise.

            • Fast Eddy says:

              I guess I’ll find out shortly — because we are all about to die.

              My money is on the ‘nothing’

            • Tango Oscar says:

              Yeah, I keep hearing that. Been hearing that for over a decade now. 2008 should’ve been it, but it wasn’t. I would not be surprised if the bankers can pull another scam off and keep kicking the can for another several years. That said, I am as prepared as can be for whatever happens in this life or the next. Also your money will do you no good, so don’t bother betting. No point in extrapolating to the closed-minded but I will tell you this. Perception creates reality. Try to cheer up a little bit.

            • Fast Eddy says:

              I am extremely cheerful!!!

              1. Since I know the end of days is imminent I am bucket-listing in a big way!!!

              2. Since I know this is an extinction event for the human race it’s like having the cake and eating it too. I will be very pleased to see us go – I am what you would refer to as a human-hater. I hate humans. I despise the species. I believe we are a cancer on the planet.

            • Tango Oscar says:

              We’re quite alike actually in that regard. I also hope the end is nigh but the longer it goes on the more it hurts. Often I feel like I am trapped between a rock and a hard place with doing jobs I abhor that I know for a fact are aiding in my own demise. All of it is so ironic and tragic.

              I assume you’ve seen the Matrix? Agent Smith was absolutely correct when he referred to humans as a virus. We are indeed a plague that destroys everything. I believe though that it didn’t have to be this way, just that this is the way it turned out. Our technologies were too advanced for our morals and we used them to extract maximum comfort without a care in the world for the consequences. Only now are we beginning to wake up and see what is actually happening (on a larger scale).

              From what I’ve learned and experienced, it is quite likely that there are other Earth like planets that have evolved in much different ways than we have. After all, there are an unfathomable amount of stars/planets in the sky and we would be naive to think we’re all alone. Besides, a more “advanced” group of beings would look at us like simpleton monkeys that it has absolutely no interest in conversing with.

            • Yorchichan says:

              Since I know this is an extinction event for the human race it’s like having the cake and eating it too. I will be very pleased to see us go – I am what you would refer to as a human-hater. I hate humans. I despise the species. I believe we are a cancer on the planet.

              Oh joy to not have children.

            • Tango Oscar says:

              I understand people’s views on how would be advantageous to not have children if we indeed do all go extinct. On the other hand, my children have been one of my few sources of real joy in this lifetime. They also give me a will to fight on. Furthermore, if we continue a slow collapse for another decade or so they will be of use to me in gardening, wood cutting, hunting, and other various chores.

            • Yorchichan says:

              I have children Tango Oscar and they have been my greatest joy too. I was pointing out that Eddy can only look forward to the demise of the human race because he doesn’t have children. I wish now that I didn’t have children and knowing what I know now about life (that it’s short, always ends badly and depends on the destruction of other life) I would wish this even if I didn’t believe my children will live short lives.

              I could never be glad I had children because they would be useful to help with my chores. I exist to serve them and not the other way round.

            • Tango Oscar says:

              I can see both points of view. Humans have to be stopped lest the entire ecosystem be destroyed. It might end that way anyhow. I don’t resent having children and I don’t view this life as being a sole experience, all or nothing type of event. Things can be learned and joy can be had in all circumstances.

              I was sort of kidding with the remark about having children for physical labor however I look forward to teaching them all of the things I never learned growing up. My adolescent education was all about revised history and the standard public school cirriculum where I didn’t learn anything about sustainability or taking care of myself or my surroundings. My children are learning about things like composting, gardening, hunting, wood cutting, fixing stuff, and how to defend themselves. You know, useful stuff that might actually be helpful. Algebra on the other hand…

            • hkeithhenson says:

              “Algebra on the other hand…”

              It really depends. We who are descended from people who lived in stable societies may be a poor genetic fit to a stone age environment. http://faculty.econ.ucdavis.edu/faculty/gclark/papers/Capitalism%20Genes.pdf “The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality.” Gregory Clark makes the case that our genetics was as selected from 1200 to 1800 as much as the famous tamed Russian foxes.

              I suspect that the selection Dr. Clark observed is on top of thousands of years of selection that turned us from hunter-gatherers into farmers.

              On the other hand, if we can skate around the whole energy and carbon mess with advanced engineering, algebra may be a useful ability.

            • Tango Oscar says:

              There is nothing wrong with algebra, it’s the idea that everyone needs to learn it that’s the problem. The education system should be entirely redone to allow students the freedom to pursue what interests them. Naturally the children should all find their own little useful niche or expertise rather than producing millions of kids a year that make a poor attempt to be the jack of all trades.

              Most modern humans would appear to be very poorly evolved for hardcore living arrangements. People take such delicate care of their hands now so as to keep their fingers in good shape for iPad touching and texting rather than get callouses all over them from swinging an axe or hammer all day long.

            • daddio7 says:

              Well, at least when they are 60 they will still have full use of those hands. My left hand has basically quit doing what I tell it.

  7. Don Stewart says:

    Dear Finite Worlders
    Relevant to previous discussions about the Hill’s Group model and the difference between ‘liquids’ and ‘oil’. From Peak Oil:

    In 2013, the last year for which we have figures, the world’s oil producers discovered and bought on line 4 Gb of the 32 Gb consumed. If we use rig count as a metric the world is now bringing 1.5 GB of new oil on line to replace the 34 it is consuming. That is 4.4%. Obviously, the oil age is ending!

    —————–
    “Wood Mackenzie reported 2.9 billion oil discoveries for 2015.”
    Here is the Wood Mackenzie quote

    “just 2.9 billion barrels of liquids were discovered globally in 2015.”

    Liquids: which ones? We estimate that at least a third of shale production has an API greater than 45. API 45 and greater fluids don’t make fuels. They are feedstock material; they have a net energy return of about zero!

    We estimate that by 2030 world “oil” production will be about 20 mb/d. The world is not running out of liquid hydrocarbons, it is running short of crude that can be processed into fuels.

    Back to me. So the issue is still transport fuels. One wonders how much of the ‘oil’ in storage is really not suitable to be turned into transport fuels. Is that why oil imports into the US are increasing?

    Don Stewart

    • To expand:

      He lumped you in with any of the sheeple:

      “The problem they want solved is for all the problems to go away through some magic…”

    • hkeithhenson says:

      “So the issue is still transport fuels.”

      Thoughtful posting Don. But any oil that can flow and some that can’t can be turned into transport fuels. I used to work on tank level measurement computers here: https://en.wikipedia.org/wiki/Houston_Refining

      “The refinery has the ability to transform heavy, high-sulfur crude oil into fuels such as reformulated gasoline and low-sulfur diesel, as well as other products such as jet fuel, heating oil, lubricants, petroleum coke and aromatics.”

      It was an interesting place to work. I once got a phone call asking me to submit an invoice for walking them through reloading the OS on an IBM Series 1 computer in the middle of the night. Since I could not remember doing it, I let the invoice slide. Another time they asked for help after sinking the floating roof on a tank of hot feed stock for the cat cracker. Eventually the reason the roof sank was determined to be a slug of gasoline like material from the coker. When it hit the 700 deg feedstock, the light stuff exploded into a big bubble of vapor which did over half a million dollars damage to the floating roof.

  8. MG says:

    The price for finishing the Mochovce nuclear power plant (3rd and 4th block are to be put into operation) in Slovakia goes up and up:

    In 2010, the costs were estimated 2,8 billion EUR:
    http://www.dnes24.sk/se-uzavreli-na-dostavbu-mochoviec-zmluvy-za-2-mld-47423

    In 2013, the costs were estimated 3,6 billion EUR:
    http://spravy.pravda.sk/ekonomika/clanok/274056-cena-za-dostavbu-mochoviec-sa-vysplha-na-38-miliardy-eur/

    In 2016, the costs are estimated 5,1 billion EUR, due to the security reasons after Fukushima:
    http://dennik.hnonline.sk/ekonomika-a-firmy/659214-mochovce-sa-predrazia-v-hre-je-pol-miliardy-e

    The costs for nuclear power plants currently built in Finland (Olkiluoto) and France (Flamanville) trippled in comparison to original estimates and putting into operation is constantly delayed.

    • That’s the deal with large scale industrial projects.

      Now with weather anomaly not hard to imagine a massive blackout in the “4th Reich area” when combo of no wind over Baltic and dry winter Alps (hydro) results in German-Austrian grid collapse, which would no longer be supported by French and Czech nuclear or other inter-connectors. At that moment you would be very glad for independent island operation of your grid..
      ps such scenario has already almost played out in recent years..

  9. Fast Eddy says:

    Iron Ore in Free Fall

    Iron ore’s in free fall. Futures in Asia plummeted after port stockpiles in China expanded to the highest in more than a year following moves by local authorities to quell speculation in raw-material futures.

    The SGX AsiaClear contract for June settlement tumbled 9.1 percent to $50.50 a metric ton at 1:24 p.m. in Singapore, while futures in Dalian sank 7.1 percent, retreating alongside contracts for steel and coking coal. The benchmark Metal Bulletin Ltd. price for 62 percent content spot ore in Qingdao plunged 12 percent last week for the worst loss since 2011.

    http://www.bloomberg.com/news/articles/2016-05-09/iron-ore-futures-drop-in-asia-as-holdings-at-china-s-ports-swell

    So much for ‘green shoots’ … perhaps China should announce 5 trillion more stimulus in Q2 … to top the 1trillion in Q1!!!

    • Here’s a simpleton’s breakdown:

      We have a global system which relies on half of the world near starving, quarter of the world exporting cheap goods and the remaining quarter borrowing money to buy cheap goods.

      Take away the efficient production of cheap goods and starvation becomes the norm.

      • Self edit:

        Take away the efficient production of cheap goods AND/OR CREDIT EXPANSION and starvation becomes the norm.

        • bugout says:

          “Take away the efficient production of cheap goods AND/OR CREDIT EXPANSION and war becomes the norm.”
          fixed it for you 🙂

          Then starvation.

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