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.
- 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.
- 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.
- 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.
- 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.
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.
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.
- 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 (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).
- 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 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.
- 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 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.
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. 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 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.
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AAPL Tumbles After Report Of 70-80% Plunge In iPhone Chip Shipments
Apple share are tumbling (as are the entire complex of suppliers) following a report from Nikkei that Taiwan Seminconductor’s shipments of iPhone 6s, iPhone 7 chips for June-Dec. period will likely shrink 70%-80% vs year earlier. As one anayst noted, a decline of more than 20-30% is not in consensus estimates. As Bloomberg reports, of particular interest is that this cut to orders is about upcoming iPhone 7, not about the well-publicized iPhone 6 slowdown.
http://www.zerohedge.com/news/2016-05-12/aapl-plunges-after-report-70-80-plunge-iphone-chip-shipments
Nordstrom shares shed 17% on earnings miss, guidance
Shares of Nordstrom Inc. (JWN) tanked late Thursday after the retailer reported lower-than-expected first-quarter sales and earnings. The company said it earned $46 million, or 26 cents a share, in the first quarter, compared with $128 million, or 66 cents a share, in the first quarter of 2015.
http://www.morningstar.com/news/market-watch/TDJNMW_20160512541/nordstrom-shares-plunge-after-revenue-eps-miss.html
If the central banks are unable to reverse this with another trick that floats all boats…. things will at some point spiral out of control.
What is most disturbing about Macys and Nordstrom is that they cater to the high end of the retail market….
Wolf Richter had an article a few days ago talking about something else showing the very rich aren’t doing so well.
Another Asset Bubble Cracks: Art Sales Plunge
Let’s take a peak into everyone’s future:
Raw Venezuela: Looter Burned Alive, While “Streets Filled With People Killing Animals For Food”
http://www.zerohedge.com/news/2016-05-12/raw-venezuela-looter-burned-alive-while-streets-filled-people-killing-animals-food
Attention organic prepper farmers!!!
Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.
Through Twitter, Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger. People are also reportedly gathering vegetables from the ground and trash to eat as well.
The crisis in Venezuela is worsening everyday due in part to shortages reaching 70 percent […] six Venezuelan military officials were arrested for stealing goats to ease their hunger, as there was no food at the Fort Manaure military base.
And keep in mind – Venezuela has not yet collapsed.
Yup, I totally agree with you. There will be no happy ending for small farmers who think people will play nice and obey the law once society begins to unravel. The situation will be more like locusts invading farm crops.
And of course the Military is taking care of itself by killing goats for food. The same will be said about law enforcement. They will take care of themselves and their families first and who’s to stop them since they are armed. Rinse and repeat this sh*t show around the world when the global eCONomy collapses.
Sorry I haven’t been around much the last few days. I will be leaving on vacation May 15. I expect to still be on the Internet some while on vacation, but I wanted to finish the post before I left.
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A strong dollar doesn’t make economic sense for the U.S economy which is heading for recession. A strong dollar doesn’t make sense for the U.S corporations or for U.S oil producers, since a strong dollar is making U.S exports uncompetitive and oil production unprofitable. So it doesn’t make any sense for the Fed to start rising interest rates… but that is exactly what the Fed is doing.
A strong dollar makes sense for the European economy, since it makes the euro weaker, which helps European exports.
A strong dollar makes political sense in a war against Russia after the conflict over Ukraine. Europe was faced with a sanctions war, the loss of the Russian market, high oil prices and a strong euro at the start of the war with Russia. This might have collapsed the Eurozone.
The strong dollar turned the tables. The collapse in oil prices is now hurting Russia and helping Europe to cope with the war.
The war, the end of OPEC, the collapse in oil prices and the end of QE3, all took place in 2014.
Dear Finite Worlders
Final sentence in today’s Zero Hedge story on the bankruptcy of Linn Energy and Penn-Virginia.
‘As a result, now that two more energy companies are about to see their interest expense slashed drastically going forward, the only real impact on the company will be that their all in production costs will decline substantially, allowing both to pump more oil at even lower prices, and thus adding to the global supply imbalance, ‘
These sentences illustrate, I think, the subtleties involved in claiming that debt is the driver of decline, rather than depletion or thermodynamic failures. So long as those who hold the digital money that has been created with abandon, especially since 2007, believe the Economics 101 story that the oil price MUST rise once the pesky geopolitical issues are resolved, then they will continue to pour money into the oil companies. Their choice is constrained by the fact that seizing the assets returns only pennies on the dollar. But the net result is that the companies keep on producing.
Here is the thermodynamic failure explanation from a current post at Peak Oil by BW Hill:
‘Doing the same thing over, and over and expecting a different result is called “insanity”. The EIA has used the same algorithm for the last thirty years, and it has never worked. They estimate what the world economy will be at some point in the future, “assume” that the oil will be available to supply it, and project a price! Now what could go wrong?
Since ECON 101 seems to be all that they understand, why haven’t they asked the simple question of, “at what price does demand destruction begin forcing the price back down”. Or does the EIA take the same stance that the oil companies do, and that is that oil is a magical substance that the economy will pay anything to acquire; whether it has the money to do so, or not!
Simply put, none of these pundits have established what the value of oil is to the economy. The simple reason is that you can’t do it using ECON 101 to derive that number. Oil has a value to the economy because it can do work; it does that by providing energy. Without an energy determination there is no way to establish a price, and ECON 101 can not give an energy determination. So we did it another way:
http://www.thehillsgroup.org/depletion2_022.htm
That tells us the maximum possible price on a time line. $76 is not in the cards for 2017. ‘
Now, the thermodynamic explanation may be right or it may to faulty, but the choice between ‘debt drives the ship’ vs. ‘thermodynamics drives the ship’ is not as simple as many people believe.
Don Stewart
The petroleum industry consumes half of the global petroleum production since 2012 ?
Yoshua
We’ve been over the 2012 issue before.
If you want to read about a similar, but different, situation, see:
http://www.zerohedge.com/news/2016-05-12/peak-economy-failure-fed-policy-exposed-5-painful-pg-charts
The gist of the Zero Hedge post is that much of the economy simply cannot grow. Someone with an exceptional idea (such as the smart phone WAS an exceptional idea) may prosper, but the bread and butter economy is contracting. The writer blames it on the Fed, but Hill blames it on thermodynamic issues in the oil business….the economy can’t grow because it is no longer receiving enough potential work in the form of transportation fuels. (A little oversimplified.) The writer thinks policy changes can make outcomes different. Hill is much more pessimistic because oil necessarily depletes. In both cases, they detect underlying reasons why the economy is shrinking. In both cases, they see financial manipulation as simply obscuring the truth…good money chasing bad.
Don Stewart
One of them is looking at the engine (the economy) and the other is looking at the energy (petroleum) the engine runs on. They both see a decline in real terms (from a different advantage point). The engineer (the Fed) is manipulating the numbers to show an increase in speed.
We are living in an illusion of economic growth, while the economy is really contracting.
A Barrel, what is a Barrel ?
People counting Barrels of oil do one thing every economist woul outright laugh at:
“Selling all car models and makes at the same price”.
There exists WTI Barrels and Brent Barrels. but they all have the same price? What do you pay for: a Barrel or the Energy?
Wondering if Bloomberg one day adds a chart for BTUs
https://m.youtube.com/watch?v=m9dP4pL1rW8
A date with debt. Not much else in the article:
http://www.zerohedge.com/news/2016-05-11/central-banks-and-rise-extremism
“Failure or not, odds are that today’s central bankers will double down on their failed philosophy. If you don’t believe me, ask any German life insurer buckling under the strain of running their business. It’s no wonder regulators estimate that insurers will begin to fail after 2018 due to the impossibility of operating in a negative interest environment with over 80 percent of said insurers’ investments in fixed income.”
Let’s update that axiom … since we now are totally reliant on electricity…
A night without electricity would mean rioting and looting. 3 days means anarchy
Of course we will soon be without electricity – forever… and that means mass starvation and overheating spent fuel ponds
“I learned all of this from a cab driver in Beijing some years ago — I asked him what he thought of the communist party — he said he hated their guts — as did most people — however he said they were tolerated — because they were delivering prosperity…”
And there in lies China’s problem. As long as they can keep the gravy train rolling, they keep the Serfs at bay. When their eCONomy collapses those same Serfs will be coming after their leaders with pitchforks and torches.
Doesn’t that apply to every country?
3 meals from anarchy ….
Is the best definition of “mandate of heaven” isn’t it ?
My comment was based on the theory of the so-called financial experts that China will come out of the next financial crisis smelling like a rose and will introduce the next world’s reserve currency, the gold backed Yuan.
An arrow … into the foot of the beast…. howls of pain ….
The retailer apocalypse continues this morning with Macy’s crashing almost 10% in the pre-market after missing top-line and slashing its outlook citing the “uncertain direction of consumer spending,” which seems odd given the confidence with which The Fed, Obama, and every talking head proclaims the US consumer’s health. Comp store sales plunged 6.1% (almost double expectations) and this comes at a time when clothing inventories are at an all-time record high relative to sales.
“We are seeing continued weakness in consumer spending levels for apparel and related categories. In particular, our sales trend relative to expectations meaningfully slowed beginning in mid-March, and first quarter results are below our original outlook. Headwinds also are coming from a second consecutive year of double-digit spending reductions by international visitors in major tourist markets where Macy’s and Bloomingdale’s are key destinations, as well as a slowdown in some center core categories – further intensifying the challenges associated with growing topline sales revenue,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer.
http://www.zerohedge.com/news/2016-05-11/macys-massacred-after-slashing-outlook-uncertain-consumer-inventories-reach-record-h
Then we have http://www.wsj.com/articles/a-widespread-chill-in-art-sales-1454012388
One has to wonder what action the Fed is going to take —- as posted earlier corporate earnings continue to fall…. retail sales are in deep recession…. banks are getting hammered… commodity producers are in a world of hurt…
This cannot go on much longer without big layoffs happening (which would exacerbate the problem)… and mega bankruptcies…
How does the Fed float all boats again?
As we are seeing in China … one trillion dollars of new heroin is already wearing off… http://www.zerohedge.com/news/2016-05-11/chinas-trillion-dollar-q1-credit-surge-already-wearing
And in Japan the situation is even worse… epic shots of heroin are having almost no impact…
http://www.embracedentalhygiene.com/wp-content/uploads/2016/03/destroyed-house.jpg
America’s looking better than ever bro!
https://media.licdn.com/mpr/mpr/p/7/005/06b/2b8/00c69eb.jpg
That “Pig” is not only wearing lipstick, but a holster
http://www.zerohedge.com/news/2016-05-11/militarization-americas-police-despite-obama-promises-war-weapon-spending-soared-201
The Militarization Of America’s Police: Despite Obama Promises, War-Weapon Spending Soared In 2014/15
Tyler Durden’s pictureSubmitted by Tyler Durden on 05/11/2016 18:30 -0400
The militarization of America’s police has been a topic of concern for years (most openly since The Boston Marathon bombing in 2013) but reached a crescendo in 2014 amid Ferguson’s riots when the average joe was exposed to MRAPs up close and personal. In October 2014, President Obama began planning to increase funding for military equipment transfers to the police, but then in May 2015, he flip-flopped – proclaiming his goal to de-militarize the police. However, this was another lie. As Forbes reports, despite Obama’s pledge to demilitarize the police new federal data shows that 2014 and 2015 were peak years for shipments of surplus military gear to local police departments across America
The Great Madness continues
[The plutocrats believe there are some things worse than war]: the confiscation of special privileges; the abolition of unearned income; the overthrow of the economic parasitism; the establishment of industrial democracy. The plutocrats would welcome a war that promised salvation from any such calamities; they would also welcome a war that promised greater foreign markets, the destruction of foreign competition, more security for property rights and a longer lease on life for plutocratic despotism
…. The plutocrats won another point – a point desired by every despot. They won the right to impose restrictions upon the freedom of speech, of press and assemblage, which are the foundation of democracy. The plutocracy bought the press, subsidized the pulpit, placed their representatives in control of the schools, and by the use of the police and postal censorship they restricted individual liberty.
Beside and beyond this economic, political and social power the Plutocracy had millions of deluded people in its grip incapable of thinking because of the fearful war madness that possessed their souls
Scott Nearing from his “The Great Madness”
http://www.bigeye.com/madness.htm
He forgot to mention that the plutocracy has delivered epic prosperity to hundreds of millions of people….
It is of course not possible to raise everyone’s boat in a finite world — so those of us who have won the lottery and been favoured by the plutocrats should count our lucky stars.
As for democracy — that was never going to happen because that would never work. Democracy is a sham. The people are too stupid and too pliable to ever govern themselves — as we have seen — they will turn on anyone who tells them they have to ‘live within their means’ and they will embrace anyone who tells them that they can ‘live large’
We all know where democracy ends up — debt and bankruptcy.
We’ve had a nice 100+ year run under the guiding hand of our current masters. I don’t think many would argue that they have not been kinder and gentler than the monarchies that preceded them.
I always find it bizarre than anyone who has been on the winning side — who has enjoyed roads without potholes… medical care… food… cinemas… electricity… autos… schools…. vacations…
All the the trappings of ‘the good life’ …
Would complain about the hand they were dealt… that they would criticize their masters…
First off…. the master has been a good master … and second … attacking the master is like trying to scream into a hurricane — you’ll only lose your voice … and finally so long as the master delivers prosperity those who have the power to attack him will continue to kiss the ring because they have a deal with the master whereby a truce is maintained and they get to live very large ….if the master fails to deliver prosperity then said people will try to take their place …. and if they do you can only hope that the new master shares the wealth like the old one
I learned all of this from a cab driver in Beijing some years ago — I asked him what he thought of the communist party — he said he hated their guts — as did most people — however he said they were tolerated — because they were delivering prosperity…
There is a saying in Hong Kong — as long as people have a BMW in the driveway – or believe they have the chance to someday have one — nobody gives a flying fock about democracy …
“In 1984’s film “Ghostbusters,” there’s a comical scene in which a man is being interviewed for the role of the newest member of the “ghost busting” team, and his interviewer asks him the question, “Do you believe in UFOs, astral projections, mental telepathy, ESP, clairvoyance, spirit photography, telekinetic movement, full trance mediums, the Loch Ness monster and the theory of Atlantis?” He answers, humorously, “If there’s a steady paycheck in it, I’ll believe anything you say.”
I copied that from a book review but it sums up what we are dealing with. From global warming deniers, to peak oil, to economic collapse, to human induced ecological disaster, to extinction or to miricle technology like space solar, electric cars, solar panels and windmills. If there is a pay check in it somwhere, there will always be some bozo willing to say or do whatever is required. Even the Communists in China.
“If there is a pay check in it somwhere, there will always be some bozo willing to say or do whatever is required. Even the Communists in China.”
Exactly. There is a poster on a peak oil site whom I will not divulge his identity, but he works in the oil business. His position no matter how many articles he is presented with regarding damaged streams, land etc. from fracking (because they don’t know where the stuff is going to go with all that pressure applied) is in denial because it’s in his own best interest. How else does a species destroy the very environment we need to exist if not by bribes?
as you are saying Eddy, the industrial revolution delivered democracy
before that it did not and could not exist.
And before someone starts screaming about ancient Greece etc— Athens had 100000 citizens plus 150000 slaves (their “energy source”)–, and women were not allowed the vote
in other words the Athenians had the liesure to enjoy democracy. As our liesure time disappears, so will our democracy
Small correction, Norman:
Slaves are tools, not energy sources ; the energy source is the food they eat.
As for democracy, I fully agree. Suffice to look at what our current one relies on: servitude of 85% of the human population (and 100% of the other species and resources).
obviously food is the ultimate energy source.
i was trying to keep my comment brief rather than verbally wander though the various stages of support that a ”democratic” existence requires
He didn’t forget…he wrote “The Great Madness” in 1917, before all you spoke of…that is your job at hand as a modern Scott Nearing! Well done…
BTW…Dr Nearing did write of the offer of joining in gravy train for himself, but declined since he set a higher standard of living than the measure of riding a BMW and was wise to see it as just a tepid payoff by the TPTB for their ‘buffers’.
Oh come now… if Scott at the money to purchase a BMW and a private jet …. he’d have done so.
When he started to make money selling books he indulged in winter flights to Florida in the winter.
Sorry to disagree 100%. You forget both Scott and Helen came from well to do backgrounds. Just because you would elect to do so , does not mean everyone is in your own self centered mold, of me’ myself and I
As far as indulging winters in Florida….I personally knew Helen near the end of life…not speaking like you of make believe. She had a friendship with a couple there and they were gracious enough to share a spot for her in her (their) very advanced age. Just because you don’t think it was right, does not mean it was not so. They, in turn, shared and gave away much in their own lives. Something that is foreign to some gimmie folks.
Like to see what you would be capable of in your 80’s /90’s …
Oh, hope you’re still able to squeeze the bottle for Roundup. LOL
Interesting on the arms to the police.
Obama is rather like my former mother-in-law, whom I nicknamed ‘Mrs Ghandi’, of whom it was said ‘She was never caught knowingly telling the truth’.
Can’t wait to see how much he and his ghastly family make when out of office at last. Will they beat the Clintons?
That’s one pretty pig…. but it’s still a pig 🙂
Scott Nearing could have not expressed it any better!
11 Signs That The U.S. Economy Is Rapidly Deteriorating Even As The Stock Market Soars
#1 Total business sales have been declining for nearly two years, and they are now about 15 percent lower than they were in late 2014.
#2 The inventory to sales ratio is now back to near where it was during the depths of the last recession. This means that there is lots and lots of unsold stuff just sitting around out there, and that is a sign of a very unhealthy economy.
#3 Corporate earnings have declined for four consecutive quarters. This never happens outside of a recession.
#4 Profits for companies listed on the S&P 500 were down 7.1 percent during the first quarter of 2016 when compared to the same time period a year ago.
#5 In April, commercial bankruptcies were up 32 percent on a year over year basis, and Chapter 11 filings were up 67 percent on a year over year basis. This is exactly the kind of spike that we witnessed during the initial stages of the last major financial crisis as well.
#6 U.S. rail traffic was 11 percent lower last month than it was during the same month in 2015. Right now there are 292 Union Pacific engines sitting idle in the middle of the Arizona desert because there is literally nothing for them to do.
#7 The U.S. economy has lost an astounding 191,000 mining jobs since September 2014. For areas of the country that are heavily dependent on mining, this has been absolutely devastating.
#8 According to Challenger, Gray & Christmas, U.S. firms announced 35 percent more job cuts during April than they did in March. This indicates that our employment problems are accelerating.
#9 So far this year, job cut announcements are running 24 percent above the exact same period in 2015.
#10 U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016. This was the third time in a row that the GDP number has declined compared to the previous quarter, and let us not forget that the formula for calculating GDP was changed last year specifically to make the first quarter of each year look better. Without that “adjustment”, it is quite possible that we would have had a negative number for the first quarter.
#11 Barack Obama is poised to become the first president in U.S. history to never have a single year during his time in office when the economy grew by more than 3 percent.
http://theeconomiccollapseblog.com/archives/11-signs-that-the-u-s-economy-is-rapidly-deteriorating-even-as-the-stock-market-soars
Sorry Fast Eddy….We are good till 2020…thanks to our friends in Kuwait…
A senior Kuwait Petroleum Corp official has confirmed to media the company’s plans to increase production by 44 percent to almost 4 million barrels a day in 2020. The plan is a continuation of current attempts to pump as much crude as possible and tender new E&P projects in the Persian Gulf. In addition, Kuwait Petroleum Corp plans to ramp up local refining capacities
http://oilprice.com/Energy/Energy-General/Kuwait-Plans-To-Ramp-Up-Oil-Production-By-44-Before-2020.html
According to Al-Harami, the breakeven price for Kuwaiti crude is in the $60-$70 range. Even if the analyst is, consciously or not, painting the picture grimmer than it is, the current price level is not doing Kuwait any favors. What’s more, there is no certainty whatsoever that Brent will reach $47 by the end of the year and stay there, especially as supply grows.
And this part is real interesting……
According to OPEC data, Kuwait exports most of its oil: an average of 2 million barrels per day in 2015. This April, a quarter of this went to China, a 30 percent increase on the year. Kuwait is also eyeing energy supply projects in South Korea. At home, Kuwait Petroleum Corp. is preparing for its first offshore projects. The message seems clear: we won’t surrender market share, whatever the price.
Offshore drilling!!!…that ups their costs…ahh depletion wins again! Pagans 1, Christians 0
Sorry?
You make it sound as if I can’t wait for the collapse to hit.
That would be a very wrong assumption. If we make it to 2020 I will be weeping tears of joy.
We?! Fast Eddy you mean you and yours..the rest of us, just collateral damage😂
When there’s 7.3 billion rats scrambling into a boat that was made to hold say 100 million …. nothing wrong with smacking them with a paddle and knocking them back into the water…
Remember that when you get it good yourself
https://m.youtube.com/watch?v=Hte71512Cn4
That won’t happen because I’ve got a date with the rock cut when the futile scrambling starts.
“What’s more, there is no certainty whatsoever that Brent will reach $47 by the end of the year and stay there, especially as supply grows.”
http://www.bloomberg.com/energy
Brent price: $47.49 (current price)
Price of oil has been going up lately and is now only $12.51 away from hitting the $60-80 range in the 2nd half of 2016, a prediction I made on this site just before thanksgiving 2015 when it was about 30 a barrel.
http://peakoil.com/geology/the-massive-decline-in-crude-oil-reserves
Gail, you may like this article I found at peak oil dot com about the relationship between what oil can sell for on the market (consumer affordability) and total crude oil reserves. The higher the price – the more reserves, the lower the price – the fewer economically recoverable reserves. It’s apropos to our discussion farther up the thread.
The dollar has gone up 25 percent against emerging markets currencies since the end of QE3. The strong dollar and the collapse in emerging market currencies, deflated the global debt bubble in dollar terms, which led to a crash in oil and commodity prices.
Since the Chinese yuan is pegged to the dollar, the yuan has gone up 25 percent against emerging market currencies as well. The strong yuan and rising wages in China is hurting Chinese exports. China needs to devalue the yuan to make its exports competitive again.
But a devaluation of the yuan would deflate the global debt bubble even more, strengthen the dollar and lead to a new crash in oil and commodity prices.
Emerging markets now in recession, with $9 trillion in dollar debt that they are trying to service with collapsed revenues from oil and commodity exports, would sink further down into economic recession. Their export companies would start defaulting on their debt and their stock markets would collapse.
The world needs a weak dollar… but that would lead to a strong euro and collapse the Eurozone.
Who ever invented the euro should be led to the guillotine. 🙂
All paths lead to the briar patch. The fundamental underlying physical principles are so dire that the constructs of representation ala currencies are no longer able to function. I wonder if a honest fundamental free market currency cross has existed in my lifetime. Yes the euro is a synthetic but so are they all nowadays so why pick on it? You can guillotine all you want and your still in the briar patch.
The euro is probably one of the most flawed currencies ever created. A monetary union without a fiscal union simply doesn’t work. European nations are economically so different from each others that a monetary union without a transfer system of wealth from wealthier nations to poorer nations will in the end collapse the union… but since Europeans despise each others, a transfer system or a fiscal union will never be reality. The Eurozone crisis will never end… since there is no solution to the euro crisis.
Today when the fundamentals are deteriorating as well, a currency like the euro becomes an even greater burden for Europe.
I might of course be wrong. The European Union and the Euro might be the only thing that keeps Europe together today.
“The euro is probably one of the most flawed currencies ever created. A monetary union without a fiscal union simply doesn’t work. European nations are economically so different from each others that a monetary union without a transfer system of wealth from wealthier nations to poorer nations will in the end collapse the union”
Oh without a doubt. Currency is a representation of underlying wealth. All of the major currencies have severe flaws that are equal to the flaws in the Euro you mention. None of the representations have a valid relationship in the physical world.
You could be right. The euros representation could be more off kilter than the others and the problems might manifest there first.
What I take issue with is the argument (if you are making it) that a better representation would not lead to the briar patch. Any attempt to change to a different representation would lead to the briar patch. All paths lead to the briar patch.
No, I don’t try to make an argument that there is an optimal currency that will save us from the inevitable chaos that is coming. I just meant that the euro is the ultimate currency that will take us there on a fast track.
But I could be wrong. Despite the Eurozone crisis, the sanctions war with Russia, collapsing banks and ECB’s zirp and QE’s, the euro is still a fairly strong currency.
Southern Europe might have collapsed without the euro too and been in worse situation today with hyperinflation.
Europe has actually been strangely resilient despite all the chaos. The European Union and the Eurozone might have given Europe better tools to handle global political and economic threats, than if all European nation had been forced to deal with these problems alone.
Apologies if this has already been posted but I noticed that some european countries are now selling debt with 50 or 100 year century bonds…..not many alive will have to repay those…
http://www.zerohedge.com/news/2016-05-11/spain-sells-3x-oversubscribed-50-year-bond
It takes a long line of bigger fools to make a negative interest rate bond last for 50 years.
“Over the next few days, if the winds keep blowing, flames could kill hundreds and lay waste to several billion dollars in property.”
Driving back to the Bay Area from the Hacker’s conference at Tahoe, we had a ringside view of https://en.wikipedia.org/wiki/Oakland_firestorm_of_1991. We diverted around the north end of the Bay and down the peninsula getting a view of miles of flames. Awesome sight.
Pingback: Climate Change and Moral Disobedience – News-Views Digest | Citizens for Sustainability
Our next Alberta?
more: http://www.rollingstone.com/culture/features/will-americas-worst-wildfire-disaster-happen-in-new-jersey-20160420#ixzz48La8GPPa
http://gizmodo.com/heres-what-tomorrows-first-full-scale-test-of-the-hyper-1775857086
For those interested in the hyper loop, there’s the latest link.
Global warming milestone about to be passed and there’s no going back
Within the next couple of weeks, a remote part of north-western Tasmania is likely to grab headlines around the world as a major climate change marker is passed.
The aptly named Cape Grim monitoring site jointly run by CSIRO and the Bureau of Meteorology will witness the first baseline reading of 400 parts per million (ppm) of carbon dioxide in the atmosphere, researchers predict.
“Once it’s over [400 ppm], it won’t go back,” said Paul Fraser, dubbed by CSIRO as the Air Man of Cape Grim, and now a retired CSIRO fellow. “It could be within 10 days.”
The most recent reading on May 6 was 399.9 ppm, according to readings compiled by the CSIRO team led by Paul Krummel that strip out influences from land, including cities such as Melbourne to the north. (See chart below, with the red line showing the baseline CO2.)…snip
http://www.smh.com.au/cqstatic/goqh3j/cg3.PNG
The CO2 level varies depending on planetary location. For example 400 ppm was passed on May 6th, 2015 in Mauna Loa, Hawaii. The ppm is highest in the Arctic and drops to lower CO2 levels towards the equator. Tasmania being farther south, this makes sense that 400 ppm would first be surpassed in Hawaii, then about a year later in Tasmania.
http://www.climatecentral.org/news/co2-400-ppm-global-record-18965
What does it matter? We’re all f#cked anyway! Lol…
450 about 2050?
“450 about 2050?”
It’s possible to stop the rise of CO2 short of 450 ppm.
If you go here
https://drive.google.com/file/d/0B5iotdmmTJQsek9TNHhkeUI4UDlRQlNyVUNMclhJYkpxa3Jz/view?usp=sharing
Slide 6 “Projected CO2 ppm aggressive expansion”
Shows the output of a model where the the rise in CO2 stops well short of 450 ppm.
BTW, the Reaction Engines engineers got back to me with a proposal to double the number of flights for a Skylon from with a mid life refurb, replacing the engines and the heat shielding at 500 flights. This cuts the peak Skylon production rate from 140 a month to 70 a month. It’s possible they might last even longer.
Focusing on CO2 rather than energy doesn’t decrease the importance of holding the cost down; Gail has convinced me of that. If you want India to quit burning coal, it’s going to be a lot easier if replacement energy cost less.
Whats the total amount of CO dumped into the atmosphere to produce the materials and the launchs to create your obsession?
“Whats the total amount of CO dumped into the atmosphere to produce the materials and the launchs to create”
That’s a good question. I have not previously worked out that particular number. I have worked out how long it takes for a power satellite to repay the energy that goes into making the parts and transporting them to GEO. Turns out to be 2-3 months.
During the peak ten years of buildup to displacing fossil fuels, the cargo into space is around 15 million tons per year. That’s 1 million flights per year. Aluminum is the most energy hungry material at about 15 kWh/kg, 15 tons would be around 215 MWh. But that’s relatively small compared to the liquid hydrogen which is close to 70 kWh/kg, or 70 MWh/ton. A single launch takes about 70 tons (4900 MWh) of hydrogen including the hydrogen used as reaction mass for the LEO to GEO leg.
It’s close enough to figure twice as much mass of natural gas as hydrogen, so the per launch use is about 140 tons of NG. The carbon fraction of NG is 12/16, so the carbon per launch would be about 105 tons. To get to carbon dioxide, multiply by 44/12 or 385 tons per launch. Million launches, 385 million tons of CO2 per year for ten years or .385 billion tons per year. (It would be easy to capture, but here we assume it will just be released.) In the context of upwards of 37 billion tons per year, https://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions, it’s a bit over 1%.
To answer your question, over ten years around 3.85 B tons of CO2 or about ten percent of the current yearly output.
Of course, the proposal is to displace fossil fuels. That’s the point made in the animation. At the end of the first year of producing power sats at over 300 a year, the carbon entering the atmosphere would be down by ten percent, and in ten years, it would be reduced to zero.
Always glad to answer objections, especially where the answers are numbers.
Keith
PS I have been assuming that the hydrogen would be made from LNG shipped to the launch point and used to make hydrogen locally. Would 140 million tons of LNG per year cause problems with the LNG supply? It might. Current LNG capacity is around 300 million tons, but LNG is a small fraction of total NG and there are plans for as much as 600 million tons per year making use of low cost US gas. http://www.igu.org/sites/default/files/node-page-field_file/IGU-World%20LNG%20Report-2015%20Edition.pdf
ratmeat, probably more like 490-500 ppm. The average is getting closer to 2.5 ppm per year so not long before that’s the norm, then later it will rise to 3 ppm added each year. So the math is 34 (until 2050) x an average of 2.5 = 85ppm added to the current 407 (at Mauna Loa, Hawaii) and we’ll be at about 492 ppm. But if the average multiplier is 3 ppm added per year then it’s about 510 ppm.
If we look out to the year 2100, using an average multiplier of 4 ppm added per year (which isn’t too outlandish because of the declining ability of the biosphere to be a CO2 sink and a greater reliance on coal used as CTL, coal to liquids, as oil reserves deplete), then it hits a little over 710 ppm. That’s when we dig underground to live and grow plants down there with refracted light. Don’t fret though, because people will be able to go outside at dusk, night and dawn.
And it would seem from reliable doomster sources that methane both from feedback loop sources and the fracking might be just a little factor in addition to the CO.
“That’s when we dig underground to live and grow plants down there with refracted light. Don’t fret though, because people will be able to go outside at dusk, night and dawn.”
I suppose AK isnt such a bad choice after all Your already accumulated to snuggling up to the missus in total dark half the year whats a few more months. 🙂
When summer sun arrives, believe me its easy to forget about the long dark winter.
The world economy will have well and truly collapsed by then, perhaps emissions won’t be THAT bad after all. Still bad, just not completely f#cked up bad. Lol…
If there is nobody around to be boiled alive when the climate change apocalypse peaks …. does that mean that the apocalypse didn’t happen?
http://leadershiptraq.com/wp-content/uploads/2013/05/Slide11.jpg
The man who predicted the oil price crash has bet against Saudi Arabia
Zach Schreiber, a hedge fund CEO, correctly predicted the oil price crash in 2014, reportedly earning $1bn (£700,000) in profit for his firm.
Schreiber, who founded PointState Capital in 2010, set his sights on Saudi Arabia at a conference last week.
He predicted that the kingdom will be “structurally insolvent” within two or three years because of the pressure of keeping up with spending commitments and cheap oil.
One chart that shows which countries could run out of money in 5 years
“Saudi has two to three years of runway before it hits a wall,” Schreiber said at the 21st annual Sohn Investment Conference, according to CNN.
“No wonder they’re now issuing tons of debt.”
People listen to Schreiber because of a prediction he made in 2014 that the oil price would crash. “If you’re long, I feel sorry for you,” he said two years ago when oil was trading at over $100 a barrel. Since then it lost almost 75 per cent of its value to trade at lows of $26 a barrel in February.
Schreiber’s prediction is based at least in part on Saudi Arabia’s oil-reliant economy. The kingdom has recently set out its plan to wean itself off oil by 2030 by growing non-oil income.
“We have an addiction to oil. This is dangerous. It has delayed the development of other sectors,” Prince Mohammed said in a televised interview with al-Arabiya news channel when he announced the plans.
Saudi Arabia has already raised domestic petrol prices by up to 40 per cent and set about dismantling generous subsidies for water, electricity and petrol. The kingdom has traditionally kept prices low for residents as a social welfare measure.
The kingdom is now planning to sell shares in its state-owned oil company, Saudi Aramco, which is estimated to control 10 per cent of the world’s oil output.
Schreiber is not sure that will help. “If they sell the golden goose, how do they fund anything? It’s insane. Saudi is mortgaging away its future to buy time,” he said.
Hoo hoo…Imagine the fallout? Europe? Bend over! 😛
Death to tyrants. I am so looking forward to KSA dissolving.
Definitely will need one of those jumbo sized popcorns for that.
Would this death you are advocating also be appropriate to those who have provided KSA with sophisticated weapons systems using state of the art microprocessors?
Would that be the same people who install and support similar tyrants around the world?
Sell them billions of dollars of weapons including ones chemical in nature…. teach them how to torture and bust up anyone who dares demand democracy….
All that fun stuff!!!
I think they are called ‘Tyrants R Us’ 🙂
Be careful what you wish for. IF Saudi goes we all go.
Ran into a silverbug today. Absolutely locked into the abstract that “sound money” and ‘the end of debt” would solve all our problems. As soon as finite resource issues brought up he turned off stopped paying all attention. Its completely physically observable when a idea is presented that does not agree with a personal paradigm and a individual stops accepting information. Silverbug absolutely no different than any of the more common forms of delusion. Yup as soon s federal reserve notes go away a golden age will occur and all of the products available now will still be available and silver will be like a billion $ a ounce (although $ will be gone). I was buying a used lawnmower from him. The transaction was done using federal reserve notes which he gladly accepted.
I usually avoid posting an entire article. This is maybe worth the trouble. Noting new if you are in the business, though I’ll add there is a one in ten chance of an emergency generator failing to start. Here you go:
http://eandt.theiet.org/news/2016/may/lancashire-blackout-lessons.cfm
”
The four-day blackout in Lancashire caused by widespread flooding in December shows how vulnerable modern-day society has become due to its dependence on electricity – a situation only bound to get worse unless communities better prepare for it, a new report has concluded.
The Royal Academy of Engineering together with the IET and Lancaster University ran a workshop exploring the consequences of Storm Desmond, which disrupted power supplies to 61,000 properties between 5-8 December 2015. The conclusions of the workshop have been described in a report ‘Living without electricity – one city’s experience of coping with loss of power’, which was published today.
A few decades ago, a disruption to power supplies would mostly mean the loss of electrical lighting and the rotting of food in unpowered, thawing freezers. With the increasing reliance on electricity-powered technologies, a blackout of this size affects virtually every aspect of the community’s functions.
“This one very difficult event provided us with a unique opportunity to see just how reliant we all are on electricity and the services it supports,” said Professor Roger Kemp of Lancaster University’s Engineering Department, lead author of the report.
“In the event, engineers worked tirelessly to rescue the situation and fortunately there were no serious consequences. But it is up to us all now to learn the lessons.”
The number one lesson learned from the Storm Desmond blackout was about the vulnerability of communications technologies. The flooding of the main electricity sub-station in Lancashire cut power supplies to mobile phone base stations and transmitters in the region, resulting in a complete loss of signal and inability to make and receive calls and text messages. Mobile data services were also lost. In some cases, cable-based internet was available but the majority of people were not able to connect as their home routers required a stable electricity supply.
Old-fashioned landlines stayed operational, but only for those who hadn’t replaced their handsets with fancier cordless devices. Digital radio as well as TV broadcasting were down, leaving people with almost zero access to information about the situation.
FM radio worked, but only for those with battery-powered receivers. Even new reporters experienced serious difficulties in reporting their findings. Local radio station The Bay was praised for providing the best service, although it was only able to do so by having one reporter based outside the affected area, searching for information online and phoning it back via an old-fashioned landline.
In Lancashire, ATM machines, card payment terminals and electronic tills were all down, as well as the computer systems of retailers, hospitals and public institutions.
“Each individual action – for example, doctors replacing paper files by computer systems, a government department ceasing production of hard-copy leaflets and moving to online information systems or the banks phasing out cheque books and introducing contactless cards – sounds like a good idea at the time,” the report stated. “However, each such action moves society inexorably towards a greater dependency on the continual availability of the internet.”
Other systems such as heating were also frequently affected, despite not appearing to be so obviously vulnerable. Modern gas-fired central heating systems use electricity-powered control systems and pumps. Once electricity is down, so is the heating. Similarly, gas stations were frequently unable to serve their customers, as they rely on electrical-powered pumps.
The workshop participants discussed possible alternatives to prevent such mayhem from happening again in future. Their number one concern was for the communications services to be able to operate, at least to a limited extent.
The experts mostly rejected the idea for Ofcom to require mobile phone operators to make sure they are able to provide services in case of extensive power cuts. Most existing mobile phone base stations and transmitters require power from the electricity network. Some may be equipped with batteries that would cover them for a period of several hours. To be able to survive a blackout of several days, the stations would have to be equipped with more powerful batteries. As natural events such as the Storm Desmond flooding are rare and the precise location of such a storm’s effects cannot be reliably predicted, the cost would be too high to make such a solution sustainable.
Alternatively, the engineers proposed establishing a rapid response mobile back-up system that would provide basic communications services over the critical period.
The situation in Lancashire was further exacerbated by the difficulties to provide back-up generators in a timely manner. Fortunately, the local hospital was able to function as normal, having back-up diesel generators.”
thanks for posting that–a frightening, starkly sobering piece.
our future can be on us in an instant—so much for that long slow decline
Mayhem? power still on in the windy city
http://heyjackass.com/wp-content/uploads/2016/01/2015_monthly_shooting_trend-320×275.png
Exclusive: Say goodbye to OPEC, powerful Putin pal predicts
http://www.reuters.com/article/us-russia-opec-sechin-idUSKCN0Y1104
The war in the Middle East (in Iraq, Syria and Yemen) has pitted the Sunni Gulf States against the Shia States and Russia. As long as the war continues it will be very hard for the OPEC nations to find a settlement on cutting oil production. Saudi Arabia will most likely continue to pump oil to trash the oil price to hurt Iran and Russia, since Saudi Arabia is today surrounded by a sectarian war that is threatening its existence.
Dick Cheney said after the first Gulf War that Iraq would have split in three parts and that the war would have spread through out the Middle East if they had removed Saddam Hussein… so they knew perfectly well what they where doing.
Dear Finite Worlders
Mondays are awful, because people have had the weekend to come up with more doomsday scenarios. Tuesdays are a little lighter, the sun sometimes comes out. With tongue slightly in cheek, I submit this post by BW Hill. Don Stewart 🙂
“The greatest threat to the world is Washington’s insistence on its hegemony.”
Hill responds
A hegemony that can not be maintained without oil. It is passing away as the last few barrels that can power the world are now being pumped from the earth. This animal of terror is finding itself cornered; caught in a trap of nature’s design from which it can not escape. As it dies, its beak and talons will be buried deep into the flesh of mankind. We either kill it now, or it will take us to our end in its death throes.
Yes, the Beast must be destroyed, before it destroys what is left worth saving
https://m.youtube.com/watch?v=SoL6a37d1Rg
shortonoil also stated in a past comment, if my memory is correct; the United States cares not about were the oil comes from, but the payment ….only in petrodollars.
It was /is not oil wars, but Petrodollar wars. The vast military network is built around that premise….and the Beast will let nothing alter the status quo.
His own common(s) were more colorful, but do go the site and read them all…
Good as our own Gail!
“The greatest threat to the world is Washington’s insistence on its hegemony.”
What would replace that hegemony?
shortonoil answered that already.
A hegemony that can not be maintained without oil.
“Yes, the Beast must be destroyed, before it destroys what is left worth saving”
So, what’s the point of destroying the present hegemony?
What would replace the hegemony? Peace and quiet.
“What would replace the hegemony? Peace and quiet.”
Not likely. For the last million years, human populations expanded till the local ecological niche was filled. Then, following a weather disruption, they would go to war with neighbors. We temporarily got out of this corner by expanding our ecologic niche with fossil fuels faster than the human population grew. This will not work forever.
With starvation and pestilence all around? Horrendous as is the hegemony, it’s what keeps food in the stores. Peace and quiet would be nice, but where’s the beef?
This is an excellent post so that I can attach a message I wanted to share with you a while ago. There is a song by “godspeed you black emperor” where they use found audio footage from interviews with prisoners (or similar). I “like” this a lot :
The car is on fire
There is no driver on the seat
We are trapped in the belly of this horrible machine
And the machine is bleeding to death
It’s fascinating how Wall Street soothsayers and American industrial companies, such as automakers, hype the Chinese economy, even as Chinese government officials are getting cold feet about their economic miracle, as they’re gradually figuring out what’s going on in their construct. And now, they’re trying to prepare the world for what they see coming.
With economic growth down to the official rate of 6.7% in the first quarter, the slowest official growth rate since the Financial Crisis, soothsayers are busily pointing out that it’s still astronomical compared to the growth rates – if you can call them that – in the US, Europe, and Japan.
But now the People’s Daily, the official paper of the Communist Party and thus a government mouthpiece, published an exclusive interview with an unnamed “authoritative figure” – a description that is “usually used for high-level officials,” the paper explained. It even ran the article on its English-language site for the entire world to see.
This authoritative figure told the People’s Daily that the Chinese economy won’t see a V-shaped recovery, or a U-shaped recovery, or any recovery of economic growth, but an “L-shaped path going forward.”
So a decline followed by no recovery.
More http://wolfstreet.com/2016/05/09/chinese-government-warns-l-shaped-dive-no-recovery-economic-growth/
https://m.youtube.com/watch?v=N0VRnc3M_qk
Don Stewart, just got back from Stockton – nice to be home – phew! Anyway, didn’t get a chance to read that last post much regarding Shortonoil’s rationale. However, I did get a thought on that; at peak oil barrel (Ron Patterson’s site) there is a poster by the name of Dennis Coyne. He would be a good person to run that by. He posts regularly so shouldn’t be hard to find. Their latest thread is on declining international rig count.
To sum up shortonoil…after the conventional sweet oil is sucked dry, all we got is black goo on the bottom of the barrel.
“all we got is black goo”
Chemical engineers are really good at taking really awful stuff, like the stuff they have in Alberta, and making useful products out of it.
Ultimately, they will be making particularly clean products out of CO2 and hydrogen. That assumes that we develop a really cheap source of energy to make the hydrogen.
Here we go again…yep that black goo makes some neat stuff…..one thing it don’t do is make things move….no movement, no energy….BTW…in a nutshell it will stay for the most part black goo….if you want to understand why from an engineers stand point just read through shortonoil’s comment post and he goes into rather direct detail on the physics and chemistry on why it is so.
Interesting responses, but I was hoping Don S. would tap into D. Coyne (at Ron P’s site) and paste his response here to short’s ideas. Would be fascinating to compare the two perspectives.
http://peakoil.com/production/the-oil-supply-glut-appears-to-be-a-myth
shortonoil is indeed fun to read…in a perverse manner
In our report “Depletion: A determination for the world’s petroleum reserve” we demonstrate that it takes 28% more energy to refine Mayan API 21° than it does conventional (API 37.5°). That is why heavy crude is heavily discounted. It is also why the world will never run on heavy crude. The percentage of its energy content delivered to the economy is too small to power that economy. Only oil that lies in the 30 to 45° API range can supply a net positive amount of energy. Extraction of non conventional relies on the energy supplied by conventional to support its production. Once conventional is gone, non conventional will become unprofitable to produce. The barrels produced concept, rather than the energy supplied concept has disguised the true depletion state of the world’s reserves.
The price of oil is going down because the value of oil is going down. What remains is almost not worth extracting. As long as there are people who want to focus on barrels (as something that Nature made all equivalent) like She makes all things exactly equivalent, you will be left scratching your head as to why prices are declining. The oil age ends when the rest of the world’s 4,200 Gb of resource is not worth pumping. That is, when it is not worth as much to the economy as what it will cost the producers to produce it. It is called depletion, and seems to be an incompressible concept to most people. But, don’t worry about it; Nature could care less about what people are capable of understanding. Regardless, the world’s oil supply will continue to deplete until there is nothing left but black goo that no one will want!
“we demonstrate that it takes 28% more energy to refine Mayan API 21° than it does conventional (API 37.5°).”
I am not surprised at this number, but it’s not as meaningful as you might think. So where does the energy to refine oil come from? It’s comes out of the oil stream going through the refinery. How much is it? If you dig around, refineries are about 90.1% efficient. So if the average is ~10% the Mayan heavy would be about 13%. That’s hardly a deal breaker.
“That is why heavy crude is heavily discounted.”
It’s a relatively minor factor. There is also “refinery gain.” Most of heavy oil goes through the catalytic cracker. The light fractions (mostly gasoline) that come out are less dense, thus gain. Heavy crude takes more refinery, crackers and cokers. High sulfur also takes more refinery to get it out of the stream.
” Only oil that lies in the 30 to 45° API range can supply a net positive amount of energy. Extraction of non conventional relies on the energy supplied by conventional to support its production.”
This seems unlikely on the face of it. During apartheid, South Africa made their transport fuels from coal. Got an API for coal?
Me thinks a troll is among us, and not a very good one at that…..
hkeithhenson….why as poor old me? I made it very clear that I am NOT part of the BW Hill /or aka “shortonoil”! In addition my response was to Stilgar Wilcox, who requested of.
So, you wish to know, do ya? Fair enough, perhaps go to their paper that I was in my comment
In our report “Depletion: A determination for the world’s petroleum reserve” we demonstrate that it takes 28% more energy to refine Mayan API 21° than it does conventional (API 37.5°).
…and find out yourself! Its all there for YOU…
http://www.thehillsgroup.org
Or go here and place your comment yourself to him yourself, like I suggested if you can read that is!
BTW, here is another sample of shortonoil for ya in quotes
‘Over at Ron’s site (http://peakoilbarrel.com/) he brings up the point that Bakken LTO has declined in price by $20/barrel in the last four months. They seem to be at a loss for an explanation, as this is much more than WTI has declined. A simple explanation is that the Bakken has tapped out its market.
Very little of LTO is suitable for distillate production; it lacks the C7+ molecules needed to produce it. The great majority of it is used as a diluent for Canadian bitumen, and as a feed stock for other chemical processes. Bitumen production in Canada is not increasing, and the world only needs so much feed stock. In essence we have reached “Peak Plastic Cup”.
Perhaps all the hype about the “Miracle of the Tight Oil” will soon come to an end’
http://peakoil.com/consumption/inexpensive-oil-vanishing-at-alarming-rate
So, run along hkeithhenson a stir your brew over there and give shortonoil a play toy to bounce off on. That’s if you already have not done so, bye! Translation, I do not wish to spoon feed you by culling through all of his/their comments at that site, do it yourself if you care.
http://peakoil.com
I might well post in peak oil, but I said I didn’t doubt the 28% number you quoted. I just pointed out that it’s 28% more than the 10% normally used to refine oil or about 3% more for refining heavy oil than for average oil.
It’s not like I am a fan of burning oil to the last drop.
‘It’s not like I am a fan of burning oil to the last drop’
I am a HUGE fan of burning every last drop of oil .. ever last hunk of coal… if starting a fan club could make that happen I’d definitely be leading the charge…
Drill Baby Drill. Burn Baby Burn. For if we don’t/can’t – we starve.
First, they are NOT my numbers….for the last time!
They are from the comment section of this link post by shortonoil…BW Hill group of professionals interested in this topic. As I stated go there so you can remove your doubt!
Some more fun comments by shortonoil from the links
“Anyway, we don’t watch the shales that closely. They are a dead end street to begin with. The only reason they exist now is because there is still enough conventional production to subsidize them. Shale oil is at best a very feeble energy source. Without energy there is nothing left but black goo in a barrel.”
http://www.thehillsgroup.org/
And lastly…
Never say “Never”
The reason that oil will never see $100 again is simply because oil will never be worth $100 again. The value of a barrel of oil to the economy has fallen 73% from 1960 to 2014. Oil is getting so weak that it can barely power its own production. It is not logical to assume that it will be able to power the rest of a $73 trillion world economy for much longer.
The FED can print money until they themselves implode. The FED can not put one BTU back into a barrel of oil. The FED is now facing an opponent for which it is no match; it has no weapons to battle the Laws of Physics! Reality is coming a calling.
http://www.thehillsgroup.org/
http://peakoil.com/consumption/saudi-prince-100-a-barrel-oil-never-again
As shortonoil stated…Natures cares not if you understand or not…or if you doubt!
Bye…thanks again to Gail and BW Hill group for doing the hard work in connecting the dots…it really opens my eyes to reality!
“we haven’t head from you in a few months”
Been busy. Reaction Engines invited me to the UK back in early March. The slides for that talk (two hours to the engineers at Reaction Engines) are here:
https://drive.google.com/file/d/0B5iotdmmTJQsek9TNHhkeUI4UDlRQlNyVUNMclhJYkpxa3Jz/view?usp=sharing
The pacing element for fast deployment of power satellites is producing Skylon SSTO rocket planes. It will require close to doubling the size of the worldwide aircraft production capacity over the next ten years. There is precedent for doing this, though it dates back to WW II.
Lt. Col Peter Garretson and Dr. Paul Jaffe made a presentation at the White House a couple of weeks ago on power satellites as a solution to get humanity off fossil fuels, i.e., ending CO2 being dumped into the atmosphere. Report about the D3 project they were working on is here http://www.nrl.navy.mil/media/news-releases/2016/NRL-Space-Based-Solar-Power-Concept-Wins-Secretary-of-Defense-Innovative-Challenge
They used some of my economic analysis in the video they showed as part of their presentation.
https://www.youtube.com/watch?v=zrcoD_vHzxU&feature=youtu.be
There is a somewhat longer video that will be released after the International Space Development Conference that will be held in San Juan, Puerto Rico, May 18-22.
I am not entirely happy about the direction this is going.
It’s nice to dream…and Roy sings a good tune
https://m.youtube.com/watch?v=ldDPkTuF7OY
Not happy?
What happened – did they security guards throw you out?
BTW – your link goes to nowhere… kinda like your solar theories
hkeithhenson’s link worked for me, just right click on it then left click on open in new tab. Firefox and Win 10. Nice PowerPoint.
glad somebody else has pointed out the necessity of utilising the industrial capacity of delusistan—-i really thought i’d missed something there.
loved the part about—–all we have to do is double the capacity of aircraft production, just like we did in ww2.
Just where is this ”capacity” supposed to come from???
Building the airfleets of ww2 required the very stuff we are now running out of, and don’t want to use anyway.
Eddy you are a very bad person sayin stuff like that
https://www.youtube.com/watch?v=dsUXAEzaC3Q
Not really bad — I just get really tired of the endless posts about satellite solar when NASA already looked at it and determined it made no sense… even Elon Musk – who is the king of funding things that make no sense without massive government subsidies — has said this is not possible.
Speaking of Musk – he’s just been appointed King of Crony Capitalism
If Elon Musk’s various projects are so Iron Man fabulous, why do they all need so much government “help”? Shouldn’t Tesla – and Solar City and SpaceX – be able to stand on their merits… if they actually have merit?
Tesla fanbois – and Musk himself – will tell you all about the virtues of his electric cars. They are sleek and speedy. This is true. But they are also expensive (the least expensive model, the pending Model X, will reportedly start around $35k, about the same price as a luxury sedan like the Lexus ES350) and come standard with a number of significant functional deficits such as a best-case range about half that of most conventional cars and recharge times at least 4-5 times as long as it takes to refuel a conventional car.
That’s if you can find a Tesla “supercharger” station.
If not, then the recharge time becomes hours rather than half an hour.
But the real problem with Tesla cars is that no one actually buys them.
Well, not directly.
Their manufacture is heavily subsidized – and their sale is heavily subsidized
Either way, the taxpayer (rather than the “buyer”) is the one who gets the bill.
On the manufacturing end, Tesla got $1.3 billion in special crony-capitalist “incentives” from the state of Nevada to build its battery factory there. This includes an exemption from having to pay any property taxes (unlike you and I) for the next 20 years. Another inducement was $195 million in transferable tax credits – which Tesla could sell for cash.
California provides similar inducements – including $15 million from the state of California to “create jobs” in the state.
Tesla does not make money by selling cars, either.
It makes money by selling “carbon credits” to real car companies that make functionally and economically viable vehicles that can and do sell on the merits – but which are not “zero emissions” vehicles, as the electric Tesla is claimed to be (but isn’t, actually, unless you don’t count the emissions produced by the utility plants that provide the electricity they run on, or the emissions produced mining the materials necessary to make the hundreds of pounds of batteries needed by each car).
Laws in nine states (including California) require each automaker selling cars in the state to sell a certain number of “zero emissions” vehicles, else be fined. Since only electric cars qualify under the law as “zero emissions” vehicles – and the majority of cars made by the real car companies are not electric cars – they end up having to “purchase” (air quotes for the same reason that you are a “customer” of the IRS’s) these “carbon credits” from Tesla, subsidizing Tesla’s operations and adding to the expense of manufacturing their own functionally and economically viable cars.Musk 3
The amount Tesla has “earned” this way is in the neighborhood of $517 million.
Tesla is a newfangled taken on the welfare queen. Or more accurately, the EBT card – which is designed to look like a credit card. To have the appearance of a legitimate transaction … as opposed to a welfare payment.
Underneath the glitz and showmanship, that’s what all of Musk’s “businesses” are about. They all depend entirely on government – that is, on taxpayer “help” – in order to survive.
Without that “help,” none of Musk’s Tesla’s could survive.
It is estimated that Tesla’s various ventures – including his new SolarCity solar panel operation and SpaceX – have cost taxpayers at least $4.9 billion, with Tesla accounting for about half of that dole.
And he still loses money.
Musk fanbois will counter by pointing out that other businesses – including the car business – also get “help” from the government (that is, from taxpayers) which is perfectly true. But that’s not much of a defense – much less a refutation of the charge that Musk is a crony capitalist.
Which is all he is.Tesla 5
The real difference between Musk’s operations and those of say General Motors is that General Motors’s products are fundamentally viable while Tesla’s are not. GM is happy to accept government “help” when offered but it is not necessary for taxpayers to bankroll the production of Corvettes – nor provide thousands of dollars in cash incentives to each prospective buyer in order to “stimulate” sales.
The straight dope is that Tesla could not build a single car without the government’s help. Take away that “help” and the actual cost would be so prohibitive that virtually no one except perhaps fellow billionaires like Musk with money to burn on toys would buy a Tesla.
As it is – even with massive subsidies at the manufacturing level and then again at the retail level – each Tesla still “sells” at a loss of several thousand dollars per car … adding up to almost $400 million so far this year (the company just announced this; see here).
The typical Tesla “buyer,” meanwhile, has an annual income in excess of $250,000.
Why are taxpayers – the majority of them not earning $250k annually – being taxed to support the “purchase” of electric exotic cars by extremely affluent people?
Why should taxpayers be made to subsidize any of Musk’s “businesses”?crony pic
He’s a billionaire.
And – we’re constantly told – a really smart guy.
Surely he could fund (or find) the private capital necessary to fund his various projects. The fact that he could not find private – that is, willing – investors but instead has to rely on the coercive power of the government to fund his projects speaks volumes about the fundamental worth of his projects.
He “succeeds” only because of his ability to game the system, not by offering products that people are willing to pay for (using their own money, that is).
The heroic real-life Tony Stark image notwithstanding, Musk is an operator – not a creator of value.
He has more in common with the vulture capitalist oligarchs of the former Soviet Union than with the namesake of his electric car company.
http://ericpetersautos.com/2016/05/05/crony-capitalist-king/
you just about summed up my thinking on “alternatives” there I think Eddy
wish science
wish economics
wish politics
Hear, hear!!! In my country came just last week up that Goverment has been sponsoring these so called “green” cars 500€ per month. So tax payers practically paid the rich that they could be able to drive their leased Teslas and feel Oh so good while doing it….
“Not happy?”
Main interest is military. I had rather that not happen.
“BTW – your link goes to nowhere…”
That’s odd. Works here. I I don’t think it should be blocked. Anyone else have problems with it?
“Main interest is military.”
I’m not surprised. The US government is all about it’s own “continuity” and control of everything else.
They have deep pockets for almost everything that keeps them in control and this HAS led to some technology that benefits the people at large, but surely not out of benevolence.
“but surely not out of benevolence.”
That’s the case. But when you think about it, who wants wars less than the military?
But there is also the weapons problem. Diffraction limited microwave beams are too weak to be considered weapons. However, power satellites can power big lasers. We want to build a few of these to bring down or vaporized space junk. But as weapons are big lasers worse than Predator Drones with Hellfire missiles or about the same?
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/05/09/20160509_world.jpg
According to a new count from Houston law firm Haynes & Boone, April saw 11 bankruptcy filings, the most of any month in the past two years. The headline failures that month were Ultra Petroleum UPL +%, which buckled under $3.9 billion in debt, and Energy XXI, which carried debt of $2.9 billion.
All told, 69 oil and gas producers with $34.3 billion in cumulative secured and unsecured debt have gone under. Since share prices peaked in 2014, the oil bust has wiped out about $1 trillion in equity, with the Dow Jones U.S. Oil & Gas Index off 40%.
There’s more to come. “Despite the modest recovery in energy prices, all indications suggest many more producer bankruptcy filings will occur during 2016,” writes Haynes & Boone. According to Deloitte, about a third of global oil and gas companies, or about 175 of them, are at risk of insolvency. Bernstein Research estimates that by 2019 we’ll see more than $70 billion in defaults amid more than $400 billion in high-yield energy debt — that would indicate that we’re only halfway through the bankruptcies.
….What’s striking is how little the creditors of some of these bankrupt firms are getting in liquidation. Quicksilver Resources filed Chapter 11 with $2.1 billion in debt. Its assets, in the Barnett shale and west Texas, eventually sold for just $245 million in cash.
Meanwhile, Dune Energy only got $20 million for its oil and gas fields in Texas and Louisiana, against $144 million in debt. BPZ Resources, which operates in Peru had $275 million in debt; its assets sold for only $9 million.
http://www.forbes.com/sites/christopherhelman/2016/05/09/the-15-biggest-oil-bankruptcies-so-far/#2dd9a08b739b
What a shame….these folks are the ones living outside of BAU and now must give way because BAU needs their lands to continue economic growth at any cost….whatever it takes..
http://www.theedgemarkets.com/my/article/being-human-when-indigenous-peoples-become-squatters-their-own-land
The bitter experience of villagers who had been resettled in Sungai Asap to make way for the Bakun Dam in 1998 stands as an important lesson for the people in the Baram area.
More than 15 years later, these families are still struggling to make a living and Sungai Asap has been declared a resettlement disaster, says the journal.
“The 10 acres of farmland per family that the communities were promised turned out to be three acres of often rocky, infertile and sloping land located a half day’s journey away from their new homes. Meanwhile, the dam has polluted the Balui River, poisoning their water source and killing the fish they depended on for food and income.
“The resettlement site is surrounded by oil palm plantations and the people no longer have access to their former hunting grounds … Life before resettlement had been isolated, to be sure, but the Bakun communities were able to farm, fish, hunt and feed their families, and make a living. Their quality of life has dramatically declined,” the journal states.
All around the world, there is a long history of conflict between proponents of rapid development and self-sufficient local communities that stand in the way. The struggle may be coming to a head in current times as the scale of resource depletion pushes more affected communities to the brink, forcing them to defend their living spaces or die trying
So these people were spared for now of the above
hree weeks before the Sarawak legislative assembly was dissolved to pave the way for the 11th state election, the news broke that Tan Sri Adenan Satem’s administration had revoked the gazettement of land earmarked for the Baram Dam.
The announcement brought great relief to the indigenous peoples who would have been uprooted by the massive project covering an area 1.5 times the size of Kuala Lumpur, and was hailed as a victory for their five-year battle for survival.
For the 20,000 people in 26 villages that would have had to make way for the dam, the project was nothing short of a calamity.
At the height of the campaign to stop the Baram Dam, Save Rivers chairman Peter Kallang wrote on a community blog: “For us who are the directly and adversely affected parties, no one can blame us in thinking that this is a calculated, intentional and purposeful manoeuvre to wipe out our races.”
The villagers were so vehemently against the development that they mounted a blockade for an unprecedented 29 months against the mega-dam, which was expected to produce 1,200mw of electricity, which would add one third more to the current capacity in Sarawak.
For some collapse will be a saving grace.
Almost six months ago, jihadists unleashed a murderous rampage on the French capital
http://observer.com/2016/05/the-world-needs-to-know-what-really-happened-last-november/
A spy joke. When you look at the man in the mirror in the morning and ask your self: who is that guy really working for ? Then it’s time for a holyday.
Oil discoveries slump to 60-year low
Slowdown in exploration activity as energy companies seek to conserve cash
The Financial Times, May 8, 2016
https://next.ft.com/content/1a6c6032-1521-11e6-9d98-00386a18e39d
Discoveries of new oil reserves have dropped to their lowest level for more than 60 years, pointing to potential supply shortages in the next decade.
Oil explorers found 2.8bn barrels of crude and related liquids last year, according to IHS, a consultancy. This is the lowest annual volume recorded since 1954, reflecting a slowdown in exploration activity as hard-pressed oil companies seek to conserve cash.
Most of the new reserves that have been found are offshore in deep water, where oilfields take an of average seven years to bring into production, so the declining rate of exploration success points to reduced supplies from the mid-2020s.
The dwindling rate of discoveries does not mean that the world is running out of oil; in recent years most of the increase in global production has come from existing fields, not new finds, according to Wood Mackenzie, another consultancy.
But if the rate of oil discoveries does not improve, it will create a shortfall in global supplies of about 4.5m barrels per day by 2035, Wood Mackenzie said.
That could mean higher oil prices, and make the world more reliant on onshore oilfields where the resource base is already known, such as US shale.
Paal Kibsgaard, chief executive of Schlumberger, the world’s largest oil services company, told analysts last month: “The magnitude of the E&P [exploration and production] investment cuts are now so severe that it can only accelerate production decline and the consequent upward movement in [the] oil price.”
The slump in oil and gas prices since the summer of 2014 has forced deep cuts in spending across the industry. Exploration has been particularly vulnerable because it does not offer a short-term pay-off.
ConocoPhillips is giving up offshore exploration altogether, and Chevron and other companies are cutting back sharply.
The industry’s spending on exploring and appraising new reserves will fall from $95bn in 2014 to an expected $41bn this year, and is likely to drop again next year, according to Wood Mackenzie. There also has been a predominance of gas, rather than oil, in recent finds.
In spite of the decline in activity, the total combined volume of oil and gas discovered last year rose slightly, but the proportion of oil dropped from about 35 per cent in 2014 to about 23 per cent in 2015.
Bob Fryklund of IHS said: “We’ve hunted a lot for oil over the years, and now the areas that are oil-prone are fewer than the areas that are gas-prone.”
The problem I have with this is that resource discoveries depend on price. There is a huge amount of very heavy oil we know about that could be extracted if the price were high enough. The problem is basically that the price is too low, not that there is no oil to be “discovered.” Of course, I see price as the limit, not the amount of oil in the ground.
Price is important, but wouldn’t quantity play a role too? For example, if there was an offshore field with small pockets of oil, with none more than 10k barrels, then price gets X by 10,000 barrels to determine if it makes economic sense to produce. Being offshore with very high expenses those pockets would be too small, but if it was on land it might produce a small profit. So many factors I’m sure come in to play, like sulphur content, API, depth, cost of lease, location, accessibility, etc.
Correct. Those smaller offshore “pockets” are called Stranded Reserves and would most likely not get developed due to economics.
“Stranded Reserves” – thanks, Veggie.
warm up the printer Donald is on the way :-
http://www.zerohedge.com/news/2016-05-09/trump-debt-renegotiation-you-never-have-default-because-you-print-money
A depletion of natural recourses should lead to inflation. If we continue to print dollars, but produce less oil, then the price of oil should rise.
But if the printed dollars only go to the elite at the top of the pyramid and there is no trickle down… if the printed dollars only inflate equity prices… then there is no inflation at the base of the economy.
Stagnated wages and debt up to the eyeballs at the base makes sure that there will be no inflation at the base of the economy. A rise in the oil price would only act as a brake on the economy and slow the economy down, which would lead to lower demand for oil and bring the price down again.
U.S oil producers who, who also had access to the printed money, need a higher price on oil to be able to pay off their debt and make a profit on their investments. They must then be protected with futures at a higher price than the market price for oil, to be able to continue their oil production.
Someone has to make a loss on the futures to keep the oil producers alive. Those losses could of course be hedged by gains in inflated equity prices. I could work for some time… at least until the inflated stock market bubble pops.
Gail
You have stated that solar power is a net loss of energy after you take the embedded energy used to make and install the solar cells into account. Has the recent reduction in cost and increase in efficiency changed this calculation?
There’s some solar/wind power folks over at Ron Patterson’s PeakOilBarrel.com site that are telling me not to worry, that electric-powered heavy-duty trucks and hydraulic lifts, all-electric factories, trains and ships are a no-brainer for the alt-energy, all-electric future. I guess I’m a Luddite for suggesting that such alt-energy is just “hamburger helper” for FF, and will be gone when the FF goes away. Sure, their recent growth rates are fast, but when will solar-wind power break out of under 2% of the energy mix and replace the other 80% or so that’s powered by FF?
Actually, their comments are pretty harsh when I suggest they’re delusional and in need of a broader perspective. They’ve almost hurt my feelings, so I have to come back here and reread Gail’s posts and the comments to regain my senses.
Try posting this
Replacement of oil by alternative sources
While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source. The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.
Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:
4 Three Gorges Dams,[14] developed each year for 50 years, or
52 nuclear power plants,[15] developed each year for 50 years, or
104 coal-fired power plants,[16] developed each year for 50 years, or
32,850 wind turbines,[17][18] developed each year for 50 years, or
91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years
http://en.wikipedia.org/wiki/Cubic_mile_of_oil
https://i0.wp.com/www.theoildrum.com/files/ncmo01_0.gif
A partial list of products made from Petroleum (144 of 6000 items)
One 42-gallon barrel of oil creates 19.4 gallons of gasoline. The rest (over half) is used to make things like:
http://www.ranken-energy.com/products%20from%20petroleum.htm
Renewable energy ‘simply won’t work’: Top Google engineers
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.
In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
http://techcrunch.com/2011/11/23/google-gives-up-on-green-tech-investment-initiative-rec/
New York State needs 75GW continuously. That could be 75 1GW plants say four per year for 12 years. Sited off the south shore of Long Island. Waste pools right in the Atlantic ocean never runs dry. After 10 years cask and drop in deep ocean within the 200 mile limit. The empire state must never go dark. Sunt , et duces secuti sunt.
Apparently google does not translate Latin.
Gail, as I understand you, it looks like debt in its different forms (including money) act as a transmitter of information, such as neurotransmitters and endocrine system of our body, directing the use of resources within society. The problem is that current economic system is not smart enough (some may say it’s not smart at all), and when eventually an imbalance occurs it causes a malfunction somewhere in our metabolic chain. In a situation of steady growth imbalances can be considered normal and can be easily overcome, but these are more likely and more dangerous in a situation of declining energy affordability, with the risk that the nervous / hormonal system itself becomes finally affected (global financial crisis), leading to a deep and widespread drop in metabolism non proportional to the magnitude of inputs restriction (international trade crash, worker strikes, government crises, infrastructure failures and so on).
Saudi Arabia’s Oil-Bust Cash-Flow Debacle Begins to Bite
It was supposed to be the biggest, most ambitious, most lucrative infrastructure project Spain’s construction industry had ever undertaken on the Arabian Peninsula. Launched three years ago, the high-speed rail link project between Medina and Mecca was a dream come true worth some €6.7 billion, the perfect payoff of decades of patient lobbying of the House of Saud by Spain’s former King Juan Carlos I. But now it’s a rotting financial albatross around the necks of 12 large Spanish companies.
Even from the beginning, things were not easy. Within a year and a half, the project was suffering significant delays. And two months ago, the consortium asked the Saudi government for more funds — “an absolute minimum of €1.4 billion” — to cover the Saudi Railways Organization’s “unforeseeable demands,” such as, amazingly, keeping desert sand off the tracks.
None of the consortium partners want to take responsibility — or the attendant financial hit — for keeping sand off the tracks. And the House of Saud, already hemorrhaging money due to the oil bust, is in no position to pay Spanish companies extra funds for it.
Now, news is leaking that the Saudi Railway Organization stopped paying advances on the consortium’s work over six months ago. According to the Spanish financial daily Expansión, the consortium could be owed hundreds of millions of euros in late payments. Although the reasons for non-payment are as yet unconfirmed, sources in Spain are blaming it on the House of Saud’s acute cash-flow problems.
Saudi Arabia’s oil-dependent economy is in a bit of a pickle. For its budget to break even, the country needs an oil price of $104 a barrel, claims the Institute of International Finance. The current price is around $45. According to the IMF, Saudi Arabia may run out of financial assets needed to support spending within five years. So severe is the problem that the House of Saud now has little choice but to do something it hasn’t had to do for decades: ration its spending.
To mitigate such economic pressures, Riyadh is planning a massive sell-off of major government entities, including up to 5% of Aramco, presumably the largest oil producer in the world, valued at $2 trillion.
Ominously, commercial banks recently began tightening lending to anyone outside of the government. As the cash flow problems of both the government and large domestic companies stack up, stories proliferate across the Middle East of salaries and contracts not being honored.
Saudi Arabia’s Oil-Bust Cash-Flow Debacle Begins to Bite
by Don Quijones • May 7, 2016
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Hangover of oil dependence has only just begun.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
It was supposed to be the biggest, most ambitious, most lucrative infrastructure project Spain’s construction industry had ever undertaken on the Arabian Peninsula. Launched three years ago, the high-speed rail link project between Medina and Mecca was a dream come true worth some €6.7 billion, the perfect payoff of decades of patient lobbying of the House of Saud by Spain’s former King Juan Carlos I. But now it’s a rotting financial albatross around the necks of 12 large Spanish companies.
Even from the beginning, things were not easy. Within a year and a half, the project was suffering significant delays. And two months ago, the consortium asked the Saudi government for more funds — “an absolute minimum of €1.4 billion” — to cover the Saudi Railways Organization’s “unforeseeable demands,” such as, amazingly, keeping desert sand off the tracks.
None of the consortium partners want to take responsibility — or the attendant financial hit — for keeping sand off the tracks. And the House of Saud, already hemorrhaging money due to the oil bust, is in no position to pay Spanish companies extra funds for it.
Now, news is leaking that the Saudi Railway Organization stopped paying advances on the consortium’s work over six months ago. According to the Spanish financial daily Expansión, the consortium could be owed hundreds of millions of euros in late payments. Although the reasons for non-payment are as yet unconfirmed, sources in Spain are blaming it on the House of Saud’s acute cash-flow problems.
Saudi Arabia’s oil-dependent economy is in a bit of a pickle. For its budget to break even, the country needs an oil price of $104 a barrel, claims the Institute of International Finance. The current price is around $45. According to the IMF, Saudi Arabia may run out of financial assets needed to support spending within five years. So severe is the problem that the House of Saud now has little choice but to do something it hasn’t had to do for decades: ration its spending.
To mitigate such economic pressures, Riyadh is planning a massive sell-off of major government entities, including up to 5% of Aramco, presumably the largest oil producer in the world, valued at $2 trillion.
Ominously, commercial banks recently began tightening lending to anyone outside of the government. As the cash flow problems of both the government and large domestic companies stack up, stories proliferate across the Middle East of salaries and contracts not being honored.
Just this week Saudi construction firm Binladin Group laid off over 12,000 Saudi employees. A further 77,000 out of a total 200,000 foreign workers were shown the door, though approximately 50,000 of them are refusing to leave the country because they haven’t been paid for at least four months.
It’s not just in Saudi Arabia that infrastructure projects are feeling the crippling knock-on effects from the oil crisis. This week Qatar Railways Company terminated the €1.5 billion contract of an international consortium that was building the stations of the Doha Metro project. The company did not give any reason for the contract termination but emphatically insists that every effort will be made to “ensure continuity of the project.” It even hired a replacement contractor to back up its claim.
More http://wolfstreet.com/2016/05/07/saudi-arabia-cash-flow-oil-bust-unpaid-bills-layoffs/
thanks for the link back to wolf street Eddy—good one. I hadn’t seen that site before
I’d also missed out on the fact that Saudi had terminated it’s “protection” contract with the Pakistani army–surprised there hasn’t been more made of that in the general news.
If Saudi can no longer afford to protect itself, then it no longer has anything to pay their wages.
If that’s the case, then saudi really is in deep do -do’s, and the rest of us. If Isis comes screaming out of the desert then fighting over the oilwells will shut them down anyway–what little there is left there.
It means Saudi must be close to collapse—re the comment the other day about “IF” we have no oil by 2020 by prince wassname—and also reinforcing my guessdate of 2022 for overall collapse
Wolfstreet has fewer articles than Zero Hedge – but the quality of the articles is far superior.
It turns out you can all relax about this stuff now because we in the UK know exactly what is behind the problems the world economy is facing today.
We know because every time we see under performing economic data the media and politicians are quick to to tell us the reason.
It’s all being produced by fears over the possibility of Brexit!
You see if the UK votes to leave the EU then it’s Armageddon I’m afraid but if we remain then everything is going to be fantastic.
I’m sorry to have to inform you that the future of human populations on this planet depends on the British electorate but there it is.
A person sometimes gets the impression from the press that Brexit is all important.
I am still waiting for the Welsh, Cornish, and Scots to throw off the yoke of English oppression.
How Wall-Street Hocus-Pocus Inflates S&P 500 Revenues
For example, Telecom Services. According to Wall Street data, revenues in the sector soared 11.2% year-over-year. FactSet cautions that the biggest – or rather only – contributor to growth was AT&T, which reported $40.5 billion in revenues, up a dazzling 24%.
Alas, AT&T is a slow-growth or no-growth behemoth. So it acquires companies to grow its revenues. The last big fish it caught was DirecTV, whose revenues now adorn AT&T’s income statement. But DirecTV wasn’t included in the “Telecom Services” sector before the acquisition. The acquisition brought it and its revenues into the sector.
Without that one deal, year-over-year revenue growth in the Telecom Services sector would have been a nearly invisible 0.3%. The dazzling revenues growth of 24%? A mirage caused by M&A.
AT&T’s acquisition of DirecTV combined two S&P 500 companies into one and put both their revenues under one ticker symbol (T). This made room in the S&P 500 index for another company.
So Signet Jewelers was added to the index last July to fill that vacant slot. In the fourth quarter, this addition inflated S&P 500 revenue growth by $2.4 billion year-over-year. But not a single extra thing or service was sold to get that “revenue growth,” and there was zero impact on the economy.
http://wolfstreet.com/2016/05/09/wall-street-inflates-sp-500-revenue-growth/
I they raise a good point here–essentially the S&P 500 is becoming a bigger and bigger share of the economy.
Let me tell you how all this ends.
It ends with investors accepting that they can pretend no longer and profits are sliding into recession.
It ends as the equity market spirals into a deep bear market as company management reach the end of the road in the face of the recessionary conditions and ‘kitchen sink’ years of EPS manipulation.
It ends as corporate bond spreads explode as years of excess debt accumulation lead to widespread corporate bankruptcies, making the recession much deeper.
It ends with social unrest and double digit budget deficits (again).
It ends with investors losing faith with the Fed as the resumption of QE proves ineffective in reviving the economy.
It ends in deeply negative interest rates, currency and trade wars, helicopter money and ultimately inflation.
In a nutshell, it ends badly.
http://www.zerohedge.com/news/2016-05-08/albert-edwards-let-me-tell-you-how-all-ends
I disagree. It ends in mass starvation … violence… epic releases of radiation … and finally – extinction.
Albert may know this – but he’s not going to say it.
Sorry, this always has been and still is a planet of “do-ers”, meaning all life forms, every organism is extremely busy doing its thing, and it’s not enjoying going into night voluntarily. It’s unlikely the collapse scenario of this fossil-energy-techno civilization would equal 100% global human extinction level. That being said, I agree I’d not want to be part of the collapse tremors, nor to be among first generations of the post event “survivors” with some feel and knowledge what has been lost both in civilization brakeup and ecology deprivation. Few hundred years after (several more cycles of 4th turnings) it will be mostly psychologically cleaned out into neo~pastoral settings, jolly good again even in relative proximity to former civilization hubs of Europe/US, obviously with some toxic hazard no go zones here and there, predominantly former industrial infrastructure valleys.
Doing our thing is killing. Killing other species and our own. Our slave oil has negated this a bit.
One it and the food it provides is gone yes we will be doing onto others before they do onto you.
The FUTURE is NOW
A Fast Eddy Production
https://m.youtube.com/watch?v=szrCg4hbqMs