An Updated Version of the “Peak Oil” Story

The Peak Oil story got some things right. Back in 1998, Colin Campbell and Jean Laherrère wrote an article published in Scientific American called, “The End of Cheap Oil.” In it they said:

Our analysis of the discovery and production of oil fields around the world suggests that within the next decade, the supply of conventional oil will be unable to keep up with demand.

There is no single definition for conventional oil. According to one view, conventional oil is oil that can be extracted by conventional methods. Another holds it to be oil that can be extracted inexpensively. Other authors list specific types of oil that require specialized techniques, such as very heavy oil and oil from shale formations, that are considered unconventional.

Figure 1 shows the growth in unconventional oil supply for three parts of the world:

  1. Oil from shale formations in the US.
  2. Oil from the Oil Sands in Canada.
  3. Oil characterized as unconventional in China, in a recent academic paper of which I was a co-author. (Temporarily available for free here.)
Figure 1. Approximate unconventional oil production in the United States, Canada, and China. US amounts estimated from EIA data; Canadian amounts from CAPP.

Figure 1. Approximate unconventional oil production in the United States, Canada, and China. US amounts estimated from EIA data; Canadian amounts from CAPP. Oil prices are yearly average Brent oil prices in $2015, from BP 2016 Statistical Review of World Energy.

Oil prices in 1998, which is when the above quote was written, were very low, averaging $12.72 per barrel in money of the day–equivalent to $18.49 per barrel in 2015 dollars. From the view of the authors, even today’s oil prices in the low $40s per barrel would be quite high. Since the above chart shows only yearly average prices, it doesn’t really show how high prices rose in 2008, or how low they fell that same year. But even when oil prices fell very low in December 2008, they remained well above $18.49 per barrel.

Clearly, if oil prices briefly exceeded six times 1998 prices in 2008, and remained in the range of six times 1998 prices in the 2011 to 2013 period, companies had an incentive to use techniques that were much higher-cost than those used in the 1998 time-period. If we subtract from total crude oil production only the production of the three types of unconventional oil shown in Figure 1, we find that a bumpy plateau of conventional oil started in 2005. In fact, conventional oil production in 2005 is slightly higher than the later values.

Figure 2. World conventional crude oil production, if our definition of unconventional is defined as in Figure 1.

Figure 2. World conventional crude oil production, if our definition of unconventional is defined as in Figure 1.

I would argue that far more crude oil production was enabled by high oil prices than I subtracted out in Figure 2. For example, Daqing Oil Field in China is a conventional oil field, but greater extraction has been enabled in recent years by polymer flooding and other advanced (and thus, high-cost) techniques. In the academic paper referenced earlier, we found that the amount of unconventional oil extracted in China in 2014 would be increased by about 55%, if we broadened the definition of unconventional oil to include oil made available by polymer flooding in Daqing, plus some other types of Chinese oil extraction that became more feasible because of higher prices.

Clearly, this same kind of shift to more expensive extraction methods has occurred around the world. For example, Brazil has been attempting to extract oil from below the salt layer of the ocean using advanced techniques. According to this article, Brazil’s “pre-salt” oil production was expected to exceed 600,000 barrels per day by the end of 2014. This oil should count, in some sense, as unconventional oil.

Massive investments in the Kashagan Oil Field in Kazakhstan were enabled by high oil prices. Some initial production began, but was discontinued, in September 2013. Production is expected to resume in October 2016.

There are clearly many smaller fields where higher extraction was made possible by high oil prices that allowed oil companies to utilize more advanced techniques. Deepwater drilling also became more feasible because of higher prices. Another example is Russia, which is reported to have heavy oil extraction that would not be commercially feasible if oil prices were below $40 to $45 per barrel. If we were to add up all of the extra oil production in many areas of the world that was enabled by higher prices, the total amount would no doubt be substantial. Subtracting this higher estimate of unconventional oil in Figure 2 (instead of the three-country total) would likely result in more of a “peak” in conventional oil production, starting about 2005.

Thus, if we think of conventional oil production as that which is possible at low oil prices, the forecast by Colin Campbell and Jean Laherrère was pretty much correct. Production of conventional oil did seem to peak about 2005 or shortly thereafter. We simply don’t have the data to estimate how much we could have extracted, if oil prices had remained low. Furthermore, oil prices did rise substantially, relative to 1998 prices, making Campbell’s and Laherrère’s forecast of higher prices correct.

I suppose that we could even say that if conventional oil were all that we had in 2005 and subsequent years, supply would have fallen far short of demand, based on Figure 2. This last statement is somewhat debatable, however, because there would have been other feedbacks, as well. It is possible that if total supply were very short, oil prices would have spiked to an even higher level than they really did. The resulting recession would likely have brought prices down, and temporarily brought demand back in line with supply. If prices had stayed low, there might have been a second round of shortages, with an even greater supply problem. This, too, might have been resolved by another price spike, quickly followed by another recession that brought world demand back down to the level of supply.

Of course, conventional crude oil isn’t the only type of liquid fuel that we use. When we add all of the pieces together, including substitutes, what we find is that since 1998, broadly defined oil production (“liquids”) has been rising quite rapidly.

Figure 3. World Liquids by Type. Unconventional oil is from Exhibit 1. Conventional oil is total crude oil from EIA, and other amounts are estimated from EIA International Petroleum Monthly amounts through October 2015. (Other Liquids is referred to as Biofuels, since this is its primary component.)

Figure 3. World Liquids by Type. Unconventional oil is from Exhibit 1. Conventional oil is total crude oil from EIA, and other amounts are estimated from EIA International Petroleum Monthly amounts through October 2015. (EIA’s category “Other Liquids” is referred to as Biofuels in Figure 3, since this is its primary component. Other liquids also include coal and gas to liquids and other small categories.)

In fact, since 2005, Figure 4 shows that the single highest year of growth in oil production (broadly defined) was 2014, with 2.47 million barrels per day. (This is based on crude oil data from EIA Beta Report Table 11.b, plus values for other liquids from EIA’s International Energy Statistics. Annual amounts for 2015 were estimated based on data through October.)

Figure 4. Increase over prior year in total oil liquids production, based on EIA data. 2015 other liquids amounts estimated based on data through October 2015.

Figure 4. Increase over prior year in total oil liquids production, based on EIA data. 2015 other liquids amounts estimated based on data through October 2015.

Figure 4 shows that the increase in oil supply in 2015 is almost as high as in 2014. The 2005 to 2015 period shown indicates a lot of “ups and downs.” The only two high years in a row are 2014 and 2015. This would seem to be at least part of our “oil glut” problem.

Exactly by how much oil production needs to increase to stay even with demand depends upon price–the higher the price, the smaller the quantity that buyers can afford. At a price of $100 per barrel, a reasonable guess might be that about 1 million barrels per day in consumption might be added. If categories other than crude oil are increasing by an average of 440,000 barrels per day, per year (based on data underlying Figure 4), then crude oil production only needs to increase by 560,000 barrels per day to provide an adequate supply of fuel on a total liquids basis.

If production of crude oil is actually increasing by more than 2.0 million barrels per day  when only 560,000 barrels per day are needed at a price level of $100 per barrel, clearly something is badly out of balance. According to EIA data, the countries with the five largest increases in crude oil production in 2015 were (1) US  723,000 bpd, (2) Iraq 686,000 bpd, (3) Saudi Arabia 310,000 bpd, (4) Russia 146,000 bpd, and (5) UK 106,000 bpd. Thus, US and Iraq were the biggest contributors to the global glut in 2015.

What Is Going Wrong?

Not only did a lot of people hear the Peak Oil story, a great many responded at once. Governments added requirements for more efficient vehicles. This tended to lower the quantity of additional oil supply needed. At the same time, governments added mandates for the use of biofuels, also reducing the need for crude oil. Arguably, the US-led Iraq war, which began in 2003, was also about getting more crude oil.

Oil companies also rushed in and developed oil resources that might be profitable at a higher price. These new developments often take more than ten years to produce oil. Once companies have started the long path to development, they are unlikely to stop, no matter how low oil prices drop.

It is becoming apparent that if oil prices can be raised to a high enough level, a lot more oil is available. Figure 5 shows how I see this as happening. We start at the top of the triangle, where there is a relatively small quantity of inexpensive oil, and we gradually work toward the expensive oil at the bottom.

Figure 5. Resource triangle, with dotted line indicating uncertain financial cut-off.

Figure 5. Resource triangle, with dotted line indicating uncertain financial cut-off.

The amount of oil (or for that matter, any other resource) isn’t a fixed amount. If the price can be made to rise to a very high level, the quantity that can be extracted will also tend to rise–in fact, by a rather large amount. The “catch” is that wages for the vast majority of workers don’t rise at the same time. As a result, goods made with high-priced oil soon become too expensive for workers to afford, and the economy falls into recession. The result is prices that fall below the cost of production. Thus, the limit on oil supply is not the amount of oil in the ground; instead, it is how high oil prices can rise, without causing serious recession.

While wages don’t rise with spiking oil prices, increasing debt can be used to hide the problem, at least temporarily. For example, cars and homes become less affordable with higher oil prices, since oil is used in making them. If governments can lower interest rates, monthly payments for new homes and cars can be lowered sufficiently that new car and home sales don’t fall too far. Eventually, this cover-up reaches limits. This happens when interest rates start turning negative, as they now are in some parts of the world.

Thus, by ramping up buying power with low interest rates and more debt, governments were able to get oil prices to stay above $100 per barrel for long enough for producers to start adding production that might be profitable at that price. Unfortunately, the amount of additional oil demand isn’t really very high at that price. So, instead of running out of oil, we ran into the reverse problem–too much oil relative to the amount that the world economy can afford when oil prices are $100+ per barrel.

The attempt by governments to fix the oil shortage problem didn’t really work. Instead, it led to the opposite mismatch from the one we were expecting. We got an oversupply problem–a problem of finding enough space for all our extra supply (Figure 6). Unless we have infinite storage, this pattern clearly cannot continue forever.

Figure 6. Weekly ending stocks of crude oil and petroleum products through July 29. Chart by EIA.

Figure 6. Weekly ending stocks of crude oil and petroleum products through July 29. Chart by EIA.

Eventually, this oversupply problem is likely to result in “mother nature” cutting off oil production in whatever way it sees fit–oil prices dropping to close to zero, bankruptcies of oil companies, or collapses of oil exporters. With lower oil supply, we can expect recession.

Misunderstanding the Real Problem

In the early 2000s, the story that Peak Oilers came up with (or perhaps the way it was interpreted in the press) was that the world was “running out” of conventional oil, and that this would lead to all kinds of problems. Oil prices would rise very high, and oil depletion would take place over a long period, as shown in a symmetric Hubbert Curve. As a result, at least small quantities of additional energy products with high “Energy Returned on Energy Invested” (EROI) were needed to supplement the energy products that would be produced based on the slowly depleting Hubbert Curve. Our oil supply problems were viewed as a unique situation, calling for new and unique solutions.

In my view, this story came about through over-reliance on models that likely were accurate for some purposes, but not for the purpose that they later were being used. One of these over-extended models was the supply and demand curve of economists.

Figure 6. From Wikipedia: The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.

Figure 7. From Wikipedia: The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product.

This model “works” when the goods being modeled are widgets, or some other type of goods that does not have a material impact on the economy as a whole. Substituting high-priced oil for low-priced oil tends to make the economies of oil importing countries contract. This effect indirectly reduces demand (and thus prices) for many products (not just oil), an impact not considered in the simplified Supply and Demand model shown in Figure 7. Also, the very long lead times of the oil industry are not reflected in Figure 7.

Two other models that were used beyond the limits for which they were originally designed were the Hubbert Curve and the 1972 Limits to Growth model. Both of these models are suitable for determining approximately when limits might be hit. Even though Peak Oilers have believed that these models can accurately determine the shape of the decline in oil supply and in other variables after reaching limits, there is no reason why this should be the case. I talk about this problem in my recent post, Overly Simple Energy-Economy Models Give Misleading Answers. Thus, for example, there is no reason to believe that 50% of oil will be extracted post-peak. This is only an artifact of an overly simple model. The actual down slope may be much steeper.

The Real Story of Resource Limits that We Are Reaching

Instead of the scenario envisioned by Peak Oilers, I think that it is likely that we will in the very near future hit a limit similar to the collapse scenarios that many early civilizations encountered when they hit resource limits. We don’t think about our situation as being similar to early economies, but we too are reaching a situation of decreasing resources per capita (especially energy resources). The resource we are most concerned about is oil, but there are other resources in short supply, including fresh water and some minerals.

Research by Joseph Tainter and by Peter Turchin indicates that some of the issues involved in previous resource-based collapses are the following:

Growing Complexity. Citizens who discovered they were reaching resource limits typically tried to work around this problem. For example, hunter-gatherers turned to agriculture when their population grew too large. Later, civilizations facing limits added irrigation to raise food output, or raised large armies so that they could attack neighboring countries. Making these changes required greater job specialization and more of a hierarchical system–two aspects of growing complexity.

This increased complexity used part of the resources that were in short supply, since people at the top of the hierarchy were paid more, and since building new capital goods (today’s example might be wind turbines and solar panels) takes resources that might be used elsewhere in the economy. Eventually, growing complexity reaches limits because costs rise faster than the benefits of growing complexity.

Growing Wage Disparity. With growing complexity, wage disparity became more of a problem.

Figure 7. People at the bottom of a hierarchy are most vulnerable.

Figure 8. People at the bottom of a hierarchy are most vulnerable.

I have described this problem as “Falling Return on Human Labor Invested.” Ultimately, this seems to be a major cause of collapse. Workers use machines and other tools, so this return on human labor has been leveraged by fossil fuels and other energy resources used by the system.

Spiking Resource Prices. Initially, when there is a shortage of food or fuel, prices are likely to spike. A major impediment to long-term high prices is the large number of people at the bottom of the hierarchy (Figure 8) who cannot afford high-priced goods. Thus, the belief that prices can permanently rise to high levels is probably false. Also, Revelation 18: 11-13 indicates that when ancient Babylon collapsed, the problem was a lack of demand and low prices. Merchants found no one to sell their cargos to; no one would even buy human slaves–an energy product.

Rising Debt. Debt was used to enable complexity and to hide the problems that people at the bottom of the resource triangle were having in purchasing goods. Ultimately, increased debt was not successful in solving the many problems the economies faced.

Ultimately, Failing Governments. Governments need resources for their purposes, whether hiring armies or making transfer payments to the elderly. The way governments get their share of resources is through the use of tax revenue. When people at the bottom of the hierarchy were cut out of receiving adequate resources (through low wages), the amounts they could afford to pay in taxes fell. Governments would sometimes collapse directly from lack of tax revenue; other times collapses occurred because governments could no longer afford large enough armies to defend their borders.

Ultimately, Falling Population. With low wages and governments requiring higher tax levels to fund their programs, people at the bottom of the hierarchy found it difficult to afford adequate nutrition. They became more susceptible to plagues. Loss of battles to neighboring countries could at times play a role as well.

Lessons We Should Be Learning

Even if we made it past peak conventional oil, there is likely a different, very real collapse ahead. This collapse will occur because the economy cannot really afford high-priced energy products. There are too many adverse feedbacks, including increasing wealth disparity and the likelihood of not enough revenue for governments.

We can’t count on long-term high prices. The idea that fossil-fuel prices will gradually rise, and because of this, we will be able to substitute high-priced renewables, seems very unlikely. In the United States, our infrastructure was mostly built on oil that cost less than $20 per barrel (in  2015 dollars). We know that with added debt and greater complexity, we were temporarily able to get oil to a high-price level, but now we are having a hard time getting the price level back up again. We really don’t know how high a price the economy can afford for oil for the long term. The top price may not be more than $50 per barrel; in fact, it may not be more than $20 per barrel.

We need to look for inexpensive replacements for both oil and electricity. Many substitutes are being made to produce electricity, since indirectly, electricity might act to replace some oil usage. There is considerable confusion as to how low these prices need to be. In my opinion, we can’t really raise electricity prices without pushing economies toward recession. Thus, we need to be comparing the cost of proposed replacements, including long distance transport costs and the cost of adjustments needed to match electric grid requirements, to wholesale electricity prices. In both the US and Europe (Figure 9), this is typically less than 5 cents per kWh. (In Figure 9, “Germany spot” is the wholesale electricity price in Germany–the single largest market.) At this price level, producers need to be profitable and to pay taxes to help support governments.

Figure 8. Residential Electricity Prices in Europe, together with Germany spot wholesale price, from http://pfbach.dk/firma_pfb/references/pfb_towards_50_pct_wind_in_denmark_2016_03_30.pdf

Figure 9. Residential Electricity Prices in Europe, together with Germany spot wholesale price, from http://pfbach.dk/firma_pfb/references/pfb_towards_50_pct_wind_in_denmark_2016_03_30.pdf

Replacements for oil need to be profitable and be able to pay taxes, at currently available price levels–low $40s per barrel, or less.

We need to be careful in aiming for high-tech solutions, because of the complexity they add to the system. High-tech solutions look wonderful, but they are very difficult to evaluate. How much do they really add in costs, when everything is included? How much do they add in debt? How much do they add (or subtract) in tax revenue? What are their indirect effects, such as the need for more education for workers?

We need to be alert to the possibility that solar PV and most wind energy may be energy sinks, rather than true energy sources. The two hallmarks of providing true net energy to society are (1) being able to provide energy cheaply, and (2) being able to provide tax revenue to support the government. When actually integrated into the electric grid, electricity generated by wind or by solar generally requires subsidies–the opposite of providing tax revenue. Total costs tend to be high because of many unforeseen issues, including improper siting, long-distance transport costs, and costs associated with mitigating intermittency.

Unless EROI studies are specially tailored (such as this one and this one), they are likely to overstate the benefit of intermittent renewables to the system. This problem is related to the issues discussed in my recent post, Overly Simple Energy-Economy Models Give Misleading Answers. My experience is that researchers tend to overlook the special studies that point out problems. Instead, they rely on the results of meta-analyses of estimates using very narrow boundaries, thus perpetuating the myth that solar PV and wind can somehow save our current economy.

Too much debt, and too low a return on debt, are likely to be part of the limit we will be reaching. Investment in complexity requires debt, because complexity requires capital goods such as wind turbines, solar panels, computers and the internet. The return on this additional debt is likely to drop lower and lower, as complex solutions are added that have less and less true value to society.

We need to remember that as far as the economy is concerned, it is total consumption of energy resources that is important, not just oil. Wages reflect the leveraging impact of all energy sources, not just oil. If energy consumption per capita is rising, more and better machines can help raise output per capita, making workers more productive. If energy consumption per capita is falling, the world economy is likely moving in the direction of contraction. In fact, we may be headed in the direction of early economies that eventually collapsed.

When we look at the data, we see that world energy consumption per capita appears to have peaked about 2013. In fact, the big drop in oil and other commodity prices began in 2014, not long after energy consumption per capita hit a peak.

Figure 9. World energy consumption per capita, based on BP Statistical Review of World Energy 2105 data. Year 2015 estimate and notes by G. Tverberg.

Figure 10. World energy consumption per capita, based on BP Statistical Review of World Energy 2105 data. Year 2015 estimate and notes by G. Tverberg.

The world seems to have hit peak coal, because of low coal prices. In fact, falling coal consumption seems to be the cause of falling world energy consumption per capita. Whether or not most people regard coal highly, coal is pretty much essential to the world economy. A recent decrease in coal consumption is what is pulling world energy consumption per capita down. We do not have any other cheap fuel to make up the shortfall, suggesting that our current downturn in energy consumption (shown in Figure 10) may be permanent.

Figure 9. World and China appear to be reaching peak coal.

Figure 11. World and China appear to be reaching peak coal.

We should not be surprised if the financial problems that the world is now encountering will eventually resolve badly. This seems to be how the Peak Oil story will finally play out. Without rising energy per capita, the world economy tends to shrink. Without economic growth, it becomes very difficult to repay debt with interest. Wealth disparity becomes more and more of a problem, and it becomes increasingly difficult for governments to collect enough revenue to support their needs. Our problems begin to look more and more like those of earlier economies that hit resource limits, and eventually collapsed.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,968 Responses to An Updated Version of the “Peak Oil” Story

  1. Yoshua says:

    If the central banks stopped supporting the governments, the banks and the market and just allowed the market to find a new equilibrium, then what would happen ?

    My guess is that the oil price, the stock market and the banks would crash through the floor. The governments would be taken over by militaries and they would start shooting rioting populations in our cities.

    • Fast Eddy says:

      See the weeks after Lehman… massive job losses…. trade was freezing up … supply chains had stopped…

      If the central banks had sat back …. we would not be here right now

      • Fast Eddy says:

        http://www.economicshelp.org/wp-content/uploads/blog-uploads/2012/10/uk-us-eurozone.png

        If central banks do not act… that line continues to plunge

        • Yoshua says:

          I’m trying to understand that the collapse would have just continues in 2008 without the action of the central banks… but I just can’t grasp it. I was in blissful ignorance at that time about our problems.

          Only lately have I read that top bankers called their wife’s and told them to take their children to a safe location since they actually thought that it was the end of the world.

          • Fast Eddy says:

            A very good friend of mine has a daughter who teaches in a very expensive private school in the US…. when Lehman happened many banker kids came to school in tears…. and needed counseling…

            Fortunately Bernanke acted — and they continued to spend their weekends in the Hamptons with their sweaters tied about their necks enjoying their precious lives…

            I am not sure why — but when she blows sky high — I will take pleasure in knowing these pampered darlings will be eating rat meat… then succumbing to cholera…

            It’s not their fault they are what they are….

        • Sungr says:

          The central banks created the crisis in the first place after they figured out the profits possible with a burgeoning computerized financial sector. I remember the cries well-

          “Oh please oh please take these Depression era banking regulations off the books. This is a new era and we must be unencumbered in order to compete with the aggressive policies of the Japanese and European banks.”

  2. Christian says:

    It is amazing how close ruble and canadian dollar copy the price of oil. I didn’t expected it from Canada, which is a bit older in this tradition; thus, I infer that Canadian and US purchasing power don’t match as much as I used to believe

  3. Vince the Prince says:

    Hold on now…..new and improved will hold off collapse….maybe…

    “Hold your fire, people. Yes, this is a story about a new kind of internal combustion engine. Yes, we’re all in favor of zero emissions vehicles. Yes, internal combustion is so last century. But settle down out there. In all likelihood, the infernal combustion engine will be with us for a while yet as we transition to a sustainable economy.”

    http://gas2.org/2016/08/14/nissan-re-invents-internal-combustion-engine/

    “The turbo 2.0-liter, four-cylinder VC-T engine averages 27 percent better fuel economy than the 3.5-liter V-6 engine it replaces with comparable power and torque. It is expected to debut at the Paris auto show next month in a new Infiniti model that will come to market next year. It will then spread to other Nissan models and may find its way into selected Renault offerings.

    The VC-T is cheaper to manufacture and also will meet or exceed tougher emissions rules in major global markets. The Nissan V-6 engine has been one of the sweetest power plants available for decades. If the VC-T can exceed that beauty in terms of power and refinement, that will be quite an accomplishment”

    See…all worry for no reason

    • Stilgar Wilcox says:

      “The turbo 2.0-liter, four-cylinder VC-T engine averages 27 percent better fuel economy than the 3.5-liter V-6 engine it replaces with comparable power and torque.”

      Ok, but how many miles does the 2.0 last vs. the 3.5 under the same driving conditions?Smaller engines tend not to last as long even if there is a way to get as much torque out of it as a larger engine.

      • Vince the Prince says:

        Hi Stilgar, need not ask too many details…the MSM puts this out to give the illusion all we need to do is modify, tweak and fine tune to make it right and maintain BAU.
        I agree, this is all fluff and who knows how this new engine will preform or hold up on real driving conditions. Hey, maybe if they are able to make it run on used photocopier fluid we might have something! Right Fast Eddy?
        LOL

        • Tim Groves says:

          The trouble is that used photocopier fluid is in short supply now that most of the machines are inkjets or lasers. I have a mate who runs an aging VW diesel-engined car on used cooking oil. We call it the tempura-abura-mobile and it smells like a fish ‘n’ chip shop on wheels.

          • Vince the Prince says:

            Timmie, dude lighten up…mine was just a joke as well as was Fast Eddy. What we were more than likely referring to was the feeder stock tight oil that does not have punch power of sweet crude. All tongue in cheek. Please do not take everything poster here at face value. Hey, maybe we can fill her up with used fast food French fries oil from Mickey D’s!

            • Tim Groves says:

              I try to keep things light, Vince, without spoiling the general atmosphere of gloom for those who like that, but I do sometimes take things too literally and pick up the wrong end of the stick. Thanks for the tip.

              Well, on the upside,I’ve heard that there’s plenty of “photocopier oil” in Venezuela that will be “ours” for the drilling once the locals get desperate enough to give up on socialism, if of course the rest of the world can find the dosh to pay for it.

            • Wow it looks like Venezuelan oil production dove as soon as Chavez got in power:
              http://www.investorvillage.com/uploads/18058/images/venezuela.png

              From ~3.3 million to ~2.6 in a few years. Probably something to do with nationalization and failure to invest. Looks like only the huge boom in oil prices managed to delay the massive rise in their national debt once the socialists took power:
              https://www.quandl.com/data/SGE/VENGDG-Venezuela-Government-Debt-to-GDP.png?dataset%5Bcollapse%5D=monthly&dataset%5Bgraph_title%5D=Debt+to+GDP+-+Venezuela&dataset%5Bheight%5D=300&dataset%5Bwidth%5D=450

            • Some of the dive in oil production may have to do with depletion and low oil prices. Chavez might partly be unlucky, but he did mess things up pretty badly as well.

              According to this Columbia University article http://energypolicy.columbia.edu/sites/default/files/energy/Impact%20of%20the%20Decline%20in%20Oil%20Prices%20on%20Venezuela_September%202015.pdf

              “The populist presidency of Hugo Chávez (1999–2012) used the income from high oil prices to dramatically boost domestic consumption and to grow his power and influence at home and abroad. He not only spent most of the profits without generating any significant rise in productive investment, but he also rapidly increased the foreign debt.”

              “Even at peak oil prices in 2011–2012, the country was running very high public sector deficits of around 17% of GDP, the foreign debt was increasing at an unsustainable pace, the domestic currency was severely overvalued, shortages of basic goods were widespread, and a recession had begun. Paradoxically, this precarious situation was generated during the largest oil income in the history of the country.”

              “Still, the consumption bonanza, allowed by the increasing imports that were fueled by the surge in oil export revenues and the increase in foreign debt, enabled the president to have relatively high levels of popularity and easily win reelections in 2006 and 2012. In the case of the presidential contest of 2012, a consumption boom was engineered using different tools that would later aggravate the existing distortions, such as price controls, exchange rate controls, and significant interventions in labor and financial markets.”

      • I have run into this problem with my clothes washer. It iS more efficient in theory, but needs frequent repairs and has a short life expectancy.

        • Vince the Prince says:

          Of course there is computer hardware and software that makes it more efficient!
          What can possibly go wrong? Surprised Nissan is going to experiment their new toy engine on the upscale Infiniti brand clients. Couldn’t go to a more deserving class….
          No matter, they more than likely will take a three year lease.

    • This most likely stands for (variable compression + turbo) gasoline engine, i.e. more electronics and tinier tolerances inside = non serviceable without JIT/BAU …
      So very cool as daily BAU driver, but certainly not your proverbial doomsday machine. Anyway still expect for early production years paying at least 30% more over older model, which makes it not that cheaper than diesel option unit.. And smaller version bellow 2liter displacement certainly WON’T provide similar gains of said 27% !
      So, interesting news, but solving nothing.

  4. Fast Eddy Wrote :This is an interesting article….

    http://www.nakedcapitalism.com/2014/02/james-surowiecki-promotes-myth-consumer-empowerment-face-crappification-almost-everything.html

    The author – a former investment banker – fails to recognize that this phenomenon is caused by:

    This is neat you found this–I have a post on there where I basically point out what you said Eddy. By then, I had come across The Oil Drum. I still thought we could transition to a renewable energy source back then.

    Yves Smith is a a rank-and-file Liberal Democrat*. She has bought into the narrative that our problems are largely caused by Wall Street “Greed” and “the 1%”. At one point, I asked her why we should applying greater effort at a failing system and she said that she doesn’t want to see things fall apart. I accused her of being insincere about wanting the status quo to change if she’s also supporting an unsustainable lifestyle that the majority of Americans engage in and my IP was blocked.

    • dolph says:

      I’ve never been a Republican and never will, but slowly I’m coming to realize that Democrats are hypocritical and tyrannical.

    • Fast Eddy says:

      I have had a similar journey in some respects … mine started with liberal idiocy (I used to think the NY Times was awesome!)…. BAU Lite aficianado… doomsday prepper and organic farmer phases…. renewable energy acolyte… steady state economy ….

      I spent decades living in ignorance captured by the matrix….

      • Ert says:

        “BAU Lite aficianado… doomsday prepper and organic farmer phases…. renewable energy acolyte… steady state economy …. “

        Wow, seems to be a pattern – sounds like me 😉

      • Tim Groves says:

        Since we’re in the confessional, I’d like to make it known that I am former subscriber to the Guardian Weekly and the Whole Earth Review. But my favorite magazine from the old days was always The Herb Quarterly. I haven’t read it in over ten years, but apparently it’s still up and running.

        http://www.herbquarterly.com/

        • Fast Eddy says:

          🙂

          It is wonderful to have escaped the matrix! It makes life so much more interesting.

      • Sungr says:

        Yup same here. Now we just live by the seasons on our little rural property and have as little dealings with the dying empire as possible.

  5. dolph says:

    You are correct about negative interest rates. It is, basically, eating your seed corn.
    But how is that different from falling interest rates? We’ve been eating our seed corn for decades, might as well continue.

    Inertia! Always remember inertia. Truly I tell you, people do things out of habit. I am not lying to you. My own father and mother and family are oblivious to collapse. Completely oblivious. People out there actually do believe that population and energy production and consumption will increase to infinity. They believe their wealth will increase to infinity. They do not believe the party will end. The party is all they’ve known their entire lives, there is nobody left who knows otherwise, and those who do are senile.

    This is how the world operates:
    -keep the party going, at all costs, and using every means necessary
    -silence the opposition, at all costs, and using every means necessary

    And you thought you had a chance! To 99% of people out there, you are worse than a criminal. A criminal performs a specific crime and either gets away with it, or is captured and punished. Big deal. But you…you tell people their entire lives, the entire system which gives them their comfort and existential meaning, is unsustainable and will crash.

    They will not tolerate you. They will shut you up and kill you if necessary.

    • Fast Eddy says:

      The party requires cheap to extract oil — we are out of that.

      We can drink the photocopier fluid to keep things going a bit longer….

      But this party is going to end abruptly at some point.

      It does not matter what we believe … just as the man who believed he could fly crashed into the pavement from 30 stories up…

    • You are right. People can’t tolerate the idea that things will change dramatically for the worse.

    • Repeat after me, again, Howe and Strauss “The Fourth Turning”..

      They have it right, after 4generation it’s all gone, I see it all around me, most of the post WWII generation is absolutely helpless, those last surviving people (+80’s) of “interwar period” and especially growing up (taking lessons) with even older siblings or parents of WWI experience are the best: frugal, don’t trust politicians, able handyman, healthy, independent, smart, ..

      • Sungr says:

        So what happens if the US is in the 4th turning and the Chinese are in their 2nd turning and the Africans are in their 3rd turning?

        • The US + West gets impoverished (for the non elite strata), while some Asian EMs stand ground or relatively improve, most of third world incl. Africa – we really don’t want to even know..

    • Sungr says:

      The central banks are in quite a mess here. And all that money borrowed at near 0% over the years since 2008….. my oh my if those medium and long rates return to anything near normal spreads- maybe due to global reserve currency issues, huh?

      One rational for negative rates is that supposedly large cash balances lurk on the account of some rather large US & western financial institutions (because they are not finding opportunities to deploy the capital in the current environment). But one key to reviving the economy, in the feds eyes, may be putting those lurking cash balances to work in the real economy or equities. So they bid up bonds into the stratosphere and achieve negative rates- these negative rates punish the holders of cash accounts and so motivate them to get out of the NRB exposure and out into riskier asset classes or invest in the real economy.

  6. Gregg Armstrong says:

    As of June 2016, according to OECD global trade data, global trade is -$10.7 trillion off of the long-term pre-Global Financial Crisis growth trend of +6.83%. That is just global trade not global GDP. That is 8 years and counting of constantly below trend global trade. Cumulatively that is a lot of missing trade. [From a report written by Jeffrey P. Snider, http://www.alhambrapartners.com ]

  7. Gregg Armstrong says:

    The central banks think that they are stimulating the economy with zero and negative interest rates. That’s the ‘interest rate’ fallacy at work. ZIRP and NIRP are only short term stimulants in a growing economy. In the long term they are indicative of monetary strangulation. The “Eurodollar” or “dollar”* funding market that supports international trade irrevocably broke down in the Great Financial Crisis and the era of the great “dollar” short arrived.

    “Dollar” means the international wholesale, ledger-based market that supports international trade. There are no actual physical dollars or euros or yen or yuan in this wholesale market. In fact, physical currency cannot be used in this market. Physical currency has to first be converted into wholesale ledger entries before it can be used. “Eurodollars” or “dollars” are used worldwide not just in Europe or the United States.

    The United States Federal Reserve, and other central banks, have not required that banks hold any capital against “dollar” liabilities since ca. 1990. That allowed bank leverage in the “Eurodollar” or “dollar” markets to explode beyond reason. Because of that leverage the banks had to be rescued by taxpayers after loans began failing. The international banks that funded international trade with “dollars” have been withdrawing support because they were and still are massively over-leveraged and losing money. Central banking money printing operations have been entirely inadequate in the face of the resulting monetary contraction in “dollar” funding markets.

    *”Dollar” is from the work of Jeffrey P. Snider at Alhambra Partners
    (See http://www.alhambrapartners.com ). Mr. Snider writes extensively regarding the non-recovery from the 2007-2008 Great Financial Crisis and the central played by the failure of the US dollar as the global reserve currency. He also writes about the “interest rate” fallacy, the “dollar” short, and many other topics explaining why we are essentially in a world wide economic depression.

  8. Yoshua says:

    Signs of a collapsing civilization: People start to believe in Abracadabra.

    My sister is a yoga teacher, she is selling miracles and doing every trick in the book, like promoting eternal health, inner harmony and an enlightened soul, while she is ripping off her customers with a smile during an aura painting workshop.

    She just made one fatal mistake. She never read the drug pushers manual which says: Never use your on stuff.

    • Froggman says:

      Although doing yoga is almost certainly more worthwhile than most of the other “stuff” we could be doing. I often reflect, after a long day at work as a cog in the machinery of industrial civilization (pushing papers, sending emails, presenting to boards or commissions, sending other people scurrying around to do similar things) , that the one hour spent on a yoga mat doing virtually nothing was possibly the most productive and valuable thing done all day.

    • Fast Eddy says:

      Ya… that can end badly …

      http://www.screeninsults.com/images/scarface-cocaine.jpg

      Flash back… Ubud Bali … Kafe … stinky hippy central…. sitting at that very table below… the stinky hippies at the adjacent table are groaning with concern over exactly what is in the organic whatchamcallit…. making sure it is as pure as the snow in Resolute Bay….. seemingly satisfied… they placed their order…

      Then they both flipped open their cancer packs… and began puffing away….

      https://foodcomments.files.wordpress.com/2011/10/kafe3.jpg

  9. MG says:

    The energy consumption per capita clearly correlates with the fertility rate:

    http://www.prb.org/images09/US-TFR.gif

    Source: http://www.prb.org/Publications/Articles/2009/usrecessionandbirthrate.aspx

    But what about the fossil fuel energy consumption as % of total energy consumption:

    http://data.worldbank.org/indicator/EG.USE.COMM.FO.ZS?locations=US

    It seems that fertility rate is clearly influenced by the energy source.

    The fossil fuels are mobile sources of energy (the oil is at the top, the coal and natural gas are mobile, but their mobility is limited), but the water, wind, solar, nuclear are not mobile sources of energy. They need electricity and static grids as the intermediate link.

    The primary energy source – fossil fuels – are very simple as regards the transformation of the energy source into heat or movement: simple combustion devices and engines are needed.

    But reverse transformation of the electricity into heat and movement requires much complicated devices – the electricity requires more complexity. The move from the fossil fuel consumption to the electricity consumption is the move from simplicity to complexity.

    As the fossil fuel energy per capita declines, also the fertility rate declines. All this is due to the fact that the we face the decline of the simple, mobile source of energy and we need more and more complex electricity grids, batteries and the complex devices to transform the electricity back to heat and movement.

    Although the electricity enabled us to dose the heat and movement in very precise amounts, and thus allowd us to increase complexity, it is not mobile per se.

    With the move towards the static sources of the energy that require static grids and storage facilities, the mobility of the population declines, as the population concentrates around the endpoints of the grids that distribute these static sources of the energy.

    Thus solar and wind are of the same quality as nuclear: the move of your solar panels array or the heavy energy storage devices is very limited.

    • xabier says:

      Mobility is a very important aspect in human survival.

      Mobility of fuel source, or ability to move in order to access fuel and water sources.

      Mobility of shelter.

      Mobility of food source.

      If we look back to the pre-civilised, pre-fossil fuel ages of mankind, we can see this clearly in the migrations of our ancestors.

      Consider nomads: the Turkmen of Iran were one of the few peoples able to escape conquest and murder by the Mongols in the 13th century because they could simply ride out of reach with their flocks and tents.

      Mobility: resilience against human aggression, against climate events, against resource depletion. Using transport which one can be nourished by: meat, milk. And clothed by: skins. Also, transport that requires considerable fitness to be able to utilise: the horse.

      Moreover, nomads, as opposed to urban people, have a strong sense of group identity, essential to survival in the face of stress. (And it must be admitted, in helping to predate on other human groups.)

      When I look at people in cars, I just see semi-incapacitated animals who have largely forgotten to use their limbs and senses. Now, with sat nav, they often don’t even know where they are!

      We have used oil to impose our static structures in all conceivable climate zones, and transport food and building materials regardless of local conditions, soil fertility, temperatures, etc: modern China is the most fantastic and grotesque example of this (one could also cite the destruction of both urban and rural Japan in the course of modernization, ie conversion to coal, oil and nuclear -based civilization.) And of course our old friends, the Gulf States and Saudi.

      Our civilization, static and in crisis, is just now really only digging its burial hole deeper and deeper…….

      But who will be around to wonder at our vast and unlovely concrete tombs?

      • Hunter gatherers were the original nomads. This lifestyle was successful through ice ages and other adversity.

        • xabier says:

          Exactly!

          ‘We are alive because of this: that we have no rest.’

          And it is not the idiotic movement from A to B in cars and planes to which this refers.

      • Artleads says:

        Great reasoning, Xabier. I’m a little skeptical, though. I don’t see 7 billion people moving around, having not the slightest clue what they’re doing. Maybe if there was more time to learn. I don’t know. I’d more count on maneuvering micro climates within cities. Cities/civilization on one hand (but different mission from what now prevails) and nothing workable on the other.

        • xabier says:

          Artleads

          Oh, I expect hardly any humans at all will be around in quite a short (historically-speaking) time frame, a thought which makes me rather cheerful, when one contemplates what we have come to (Olympics -induced misanthropy.)

          Like Don Stewart, I seek to make no prescriptions for saving 7 billion lives. Although I do hope the best of humanity will survive in some form.

          Creating one’s own micro-climate is certainly an interesting concept: if one examines tales of survival in crisis, this is actually what people do.

          And I meant to add, the greatest enemies of nomads were…other nomads. Barbarians spent most of heir time chopping one another up, rather than civilised peoples. ‘Man is Wolf to Man’, and ever shall be….

          • Stefeun says:

            Xabier,
            I have a sort of nostalgy when thinking of what the mobility of information (instead of physical) could have acheived.

            But as you say, we didn’t change our archaic behaviour and didn’t realize the planet was full (of us).

      • Fast Eddy says:

        “Now, with sat nav, they often don’t even know where they are!”

        I have a theory … that GPS is responsible for the population explosion …. because couples no longer argue about whether or not to ask for directions … which means more nookie… which = more babies….

      • Christopher says:

        “Turkmen of Iran were one of the few peoples able to escape conquest and murder by the Mongols in the 13th century ”

        I don’t understand how nomadic tribes from mongolia could ravage almost all of asia. The civilizations they met where after all much more advanced.

        • “I don’t understand how nomadic tribes from mongolia could ravage almost all of asia. The civilizations they met where after all much more advanced.”

          They had several horses per man, so they could travel much faster than a normal rider. They could advance faster than news of their advance could spread.

          They had armies in the hundreds of thousands, quickly able to invade before a large enough force could group up.

          Most of the places they invaded were internally divided into small states, not large organized empires.

          They used catapults to fling corpses over walls, spreading the plague, which I suspect due to natural selection they had already survived and were resistant to.

          As far as technology goes, it seems to me better to separate into a few categories: sticks and stones, metal, gunpowder, modern. It doesn’t matter if you have bronze weapons from 5000 years ago or steel from 500 years ago, the advantage is not enough to overcome superior numbers. Just like having modern assault rifles alone would not guarantee a victory against a force armed with World War I era weapons.

          The Mongols were defeated by the Vietnamese, however, since riding horseback doesn’t work so good in the jungle, and they used guerrilla warfare rather than open combat.

          • Christopher says:

            Thanks for the answer! But I still don’t get it.

            “They had armies in the hundreds of thousands, quickly able to invade before a large enough force could group up.”

            How could the poor fields of mongolia (modern BAU population of 3 milj, not counting the chinese part called inner mongolia) mobilize so many men fit for an army?

            “Most of the places they invaded were internally divided into small states, not large organized empires.”

            China consisted mainly of the Jin and the Song dynasty at this time. China divided by two but still bigger states. Also at least Persia was a powerful state. Maybe some more.

            “They used catapults to fling corpses over walls, spreading the plague, which I suspect due to natural selection they had already survived and were resistant to.”

            I guess this was regular behaviour in any siege. But it can’t have been the plague as in the black death since it appeared first in the century following the mongols. Also the epidemic pressure on nomadic people should be lighter than in more advanced societies where you have cities and generally higher population density. This would imply that the mongols should be less resistant.

            Whatever the mongols did they seem to have created the biggest man made mess in history, this far at least. It enabled them to move from the poor mongolian steppes to richer lands. Maybe the mongol tricks could be useful to copy when BAU goes… But I don’t really understand these tricks. It’s not as simple to understand as the european colonization of America.

          • Fast Eddy says:

            “They used catapults to fling corpses over walls, spreading the plague”

            Doomsday Prepper Tip of the Day – brought to you buy Fast Eddy Enterprises…

            Invest in 2 dozen 2 metre long stakes …. when BAU ends … gather some dead bodies and put them onto stakes surrounding your property … as a warning to others …

            http://www.homedepot.com/catalog/productImages/1000/67/67b8cb19-2e84-414f-af76-a8ee47a92220_1000.jpg

            • Froggman says:

              I knew there was a reason I keep so many T-posts around.

            • Fast Eddy says:

              It seemed to work well for Col Kurtz…

              Speaking of the Colonel…. his model could be applied to post BAU quite well…. present yourself as a god like figure then gather around you people willing to do anything to survive…

              I reckon children work best ….they are pliable… see Cambodia under the KR…

              However as they become adults they might present a challenge…. I recommend the Menudo Strategy (recall menudo tossed members out when they hit 14?)

              When members of your child army reach the age of maturity — you gun them down…. adults are bad (except for you – but you are a god not a man… )

              https://s-media-cache-ak0.pinimg.com/236x/73/e4/20/73e4208358e941e559b2a3ba48d7f52c.jpg

            • DJ says:

              You don’t think you will experience disciplinary problems amongst your soldiers aged 13.75?

              You have to keep lowering (just like interest) the kill off age. In the end you will have a toddler army.

            • Fast Eddy says:

              I reckon kids start to rebel around 14… as they start into high school….

              Let’s set an arbitrary cut off age of 12 — just to be safe….

      • Sungr says:

        xabier- nice writeup. Agreed.

    • Good point about electricity of any kind not being mobile.

      • Stefeun says:

        Never thought in those terms, but that’s right!
        Electricity and Mobility are contradictory.

        Absent a super-light & super-capacitive battery technology (not in sight), electricity is suitable for sedentary use only.

        Except maybe for railways (don’t know about figures), but that require even heavier infrastructure (= “grounded” capital) compared to standard supply lines.

    • MG says:

      I should have used the word “stationary” instead of “static”, as “stationary” is the opposite of “mobile”.

      • MG says:

        It is no wonder that the mortgage crisis around 2008 caused such a mayham: the immovable property is a very precarious thing: you can not raise its price with moving it elswhere… Especially when the owners of such properties are not workers via internet.

        The idea of building a nice house in the countryside, away from the towns or cities will be more and more nonsensical: with the falling mobility, the local depletion is uncovered. Especially the lack of healthcare, because with the ageing population, the healthcare will be more and more important thing than the food production.

        In Slovakia, there are villages in the mountains with 30 % or even 60 % of empty houses. And you can not count on healthy milk from sheep anymore: tick-borne encephalitis seems to be a rising problem.

        http://spectator.sme.sk/c/20179834/number-of-people-infected-with-tick-borne-encephalitis-rises.html

        • DJ says:

          Oh hsit! TBE without being bitten by a tick?

          For how long do you expect health care will be more important than food?

          • MG says:

            Dear DJ,

            the healthcare is the key and at the top of all the needs: you need nothing else than health when you are ill.

            Food, pharmaceuticals, clothing and fire itself are all the means to keep you alive, i.e. they enable you to transform food, external energy etc. into energy of your body, which is called the life of the human being.

            • DJ says:

              Dear MG,
              Already we see that employed get better healthcare than unemployed. Rich no doubt gets even better.

              Healthcare is really expensive and will get downsized long before anyone starves.

              I don’t expect I will get a liver transplant 20 years from now, but, being an optimist, maybe antibiotics or a plastered leg and crutches.

            • Fast Eddy says:

              Your health will deteriorate quickly if you don’t eat for a week….

        • Fast Eddy says:

          “And you can not count on healthy milk from sheep anymore: tick-borne encephalitis seems to be a rising problem.”

          Parasites and disease are going to hit barnyard animals with a vengeance when the BAU medicines are no longer available…

          Just as they are going to hit the human population.

          They are all waiting for their big moment — when the pill factories close — and they are gonna have a massive party — at our expense.

          • psile says:

            The germs have always been in control. We just kept them at bay for a little while with cheap FF’s. Once collapse ensues, expect them to make a big comeback. Bigger than ever, because our efforts at banishing them from existence did not eliminate them. It just made them stronger! >> Superbugs…

          • evolution is a hoax
            so bugs can’t evolve into life forms that can kill us off
            as the POTUS Rep candidates, and various political ostriches—they know what’s happening

            • “so bugs can’t evolve into life forms that can kill us off”

              Are you claiming antibiotic resistant bacteria do not exist?

              Even if they didn’t, without BAU there probably won’t be much in the way of antibiotics. Up to half the people in dense urban areas, once malnourished, could die from plain old cholera.

            • Sungr says:

              “they know what’s happening”

              Don’t be so sure of that- the mass of Republican political thinking has been characterized by a near total belief relationship with FoxNews.

            • Tim Groves says:

              Relax Matthew. Norman’s just pulling your leg.
              My guess is he’s irritated by the anti-evolution stance that’s widespread in the US red states and rears its ugly head every time the election season comes round.

            • that’s the problem with comments—nobody knows who’s pulling who’s leg—I’m as guilty as anyone

            • “Relax Matthew. Norman’s just pulling your leg.”

              It is hard to keep track of all the posters here, which ones are fanatical Young Earth Creationists. I was probably confusing Norman with someone else.

            • most people do

              All the “wanted” posters that look like me are invariably identikits pics gone wrong

          • smite says:

            The entire human body is a big collection of single celled organisms, its system controlled and orchestrated by the DNA and environment.

            So even as today, the human body is a carrier of the very first single celled organism replicator molecule.

            We are nothing more and nothing less than an advanced form of a bacterium.

        • I’m not sure you really want to advertise that publicly on English speaking forum..

          As the Dutch and Britons (of modest means) already bought up all Polish (factually correct: derelict East Prussian) country estates, also Britons keep snapping some real estate in the mountains of Balkans etc.

          It depends on many things, including historic connotations, but I seriously doubt people from west being expropriated in Poland (as they just pathologically hate Russians more) in the the mid future post semi collapse, not sure about the hot heads in the southern Balkans though.

          As for Slovakia, don’t know, the Hungarians seem a bit out of juice this time around, and large part of the nobility (who perceived Slovakia as hereditary colony) moved from .hu to west (Germany, Austria, US) after WWII anyway, so the traditional danger transformed.

  10. Ert says:

    Another Peak…

    Reported from the (normally) “always optimistic” Technology Review: China’s Solar Binge Is Turning Into a Hangover: https://www.technologyreview.com/s/602136/chinas-solar-binge-is-turning-into-a-hangover/

    “China’s epic solar binge accelerated in the first six months of 2016, as the country added more than 20 gigawatts of new solar installations. That’s nearly three times as much as the same period last year, and is more than the total installed capacity of all but Germany, Japan, and the United States. But signs are growing that the boom is starting to fade. Investment firm Macquarie Capital said last month that many of the solar farms built this year were hastily completed to meet the deadline of July 1, when government subsidies for new solar were cut. Further cuts are expected next year as the government tries to rein in runaway development…….”

    When the build out in China will be curbed the whole industry will get into problems… further price cuts of PV panels will not be cause of sustainable development but of overproduction… but this is then destructive to the industry… same picture as with oil.

    This will have an unhappy ending…

    • DJ says:

      “Much of the new solar generation, particularly in the desert provinces of western China, is not even hooked up to the grid. That means much of the power is going to waste—39 percent in Gansu Province and more than half in Xinjiang”

    • richard says:

      unhappy ending? Just recently Chinese solar firms were reporting 100-200 percent increases in profits. These are the companies that make and install the panels.
      China wants to reduce its coal consumption. I’m tempted to say that leaves an awefully big hole to fill. Apologies for that.
      http://www.reuters.com/article/us-china-coal-environment-idUSKCN10P03V
      “What was once a boon for governments has now turned into a burden: Xiaoyi has already spent more than 6 billion yuan ($901.31 million) to treat subsidence, the government said. Together with the neighboring city of Luliang, it plans to relocate as many as 230,000 people over 2014-2017. Little of the money to move communities and restore the land is coming from the miners themselves, although that was supposed to be the plan in the beginning. Miners are required to pay “subsidence fees” to pay for the cleanup when their mines close. The Datong Coal Industry Group, the only state miner to give breakdowns, paid just 1.4 million yuan in those fees from January to March this year, or 0.04 percent of its total costs, according to its quarterly report.”
      “Many of the worst-hit sites have been long abandoned, making it harder to decide who is responsible, she noted, so Beijing also needed to set up dedicated funds to help pay remediation costs, including treatment and disposal of mine waste.”
      “”Before we got here this piece of land wasn’t suitable for any kind of planting, but now at least some of it can be used,” said He Xin, project manager with the United Photovoltaics Group, which owns and operates a 100-megawatt solar farm at the site.”

      • Stefeun says:

        Externalities, entropy for which nobody wants to pay. Accepting would be suicidal, in the economic competition.

        Eventually, we’ll all “pay” for cumulated externalities, all at once.

  11. Niels Colding says:

    Tim Morgan’s latest article – worth reading as usual:

    https://surplusenergyeconomics.wordpress.com/2016/08/13/76-the-point-of-no-returns/

    • Thanks! I very much agree. I am an actuary. Long ago, I figures out this whole process couldn’t be sustainable in a finite world. Someone had to end up short, and it looks like it will be the pension holders.

    • Ed says:

      “A negative yield means that capital is being cannibalised.”

      This the first time I have understood negative interest rates. Eating the seed corn, destroying the future.

    • Fast Eddy says:

      I had trouble his answers to these questions:

      Since we have seen how lethally destructive the central banks’ addiction to ultra-cheap money has become, one question remains. Why are they doing this?

      (Or perhaps there is a second question – are these people complete idiots?)

      My response to his answers:

      Why are they doing this?

      Surely you know the reason Tim. No need to sugar coat the situation.

      They are of course doing this because we are out of cheap oil.

      The economy cannot grow when oil is priced anywhere near the level required for producers to break even (over $100 per barrel for most).

      So when oil started to rise off a low of $12 in 1998 and busted through $35 just after the turn of the century — the central banks were left with 2 choices:

      1. Stand by and watch increasingly expensive oil destroy growth — resulting in a deflationary death spiral — and the near term collapse of civilization.

      OR

      2. They could do ‘whatever it takes’ to fend off the deflationary pressure of expensive oil in order to keep civilization alive for as long as possible.

      They very obviously opted for door number 2. As is obvious — they are doing whatever it takes — printing trillions of dollars – ZIRP – NIRP – bail outs — making hundreds of billions of dollars available to failing corporations for buy backs – subprime everything etc etc etc…

      They are not stupid. Absolutely not.

      What they are is desperate. Beyond desperate. They understand what we are up against here.

      So what the pensioners don’t get paid and have to eat cat food for dinner.

      When these policies push on a string — cat food will sound pretty darn appetizing when collapse hits — and the grocery stores are emptied – forever.

      • Stefeun says:

        “Why are they doing this?”

        You’re answering on the causes of NIRP and cuts, which are well known here on OFW: declining (growth of) energy per capita, that eventually forces the real economy to shrink.

        I understood the question in another way: “Why are they attacking the pensions first?”
        What came to mind is: because it’s the low-hanging fruit.
        It’s obviously a can-kicking desperate policy, and in such case, start by stealing the money from where there’s quite big amounts, with lowest systemic risk.
        Retirees will protest? So what! There are already hundreds of such protests every week around the world (I googled) and nobody cares. The younger generations already know they won’t get any pension anyhow (other than out of individual savings).
        There was also a real size experience after collapse of the Soviet Union, from which we can expect Western PTB to have taken some lessons.

        Unless some big disruption or black swan, after the pensions will be slashed healthcare and education, justice, … Cuts have already started everywhere, we can expect them to worsen exponentially.

        • Fast Eddy says:

          I don’t see this as specifically attacking pensions…

          Look at hedge fund performance…. these guys are unable to make money in this environment…. really nobody is able to make money without taking on enormous risk

          Pension funds are getting hit the hardest because many of them are required to invest in ‘safe’ assets…. the problem is that safe assets are yielding nothing — or even negative returns….

          • Stefeun says:

            “Pension funds are getting hit the hardest”
            I can’t imagine this as a fortuitious or unexpected consequence.

  12. Fast Eddy says:

    The Massive Prop Barely Holding up the US Economy Cracks

    “The so-called car recession”: Ford, AutoNation wave red flags

    http://wolfstreet.com/2016/07/29/autonation-ford-sales-decline-auto-loan-bubble-us-gdp-growth/

    • People can’t buy more and more expensive cars unless their incomes are rising. Too many are finding that it is difficult to get a good-paying job.

  13. dolph says:

    It’s a question of event and response, action and reaction.
    If we face another cyclical downturn, such as we faced in 2001 and 2008, this time the central banks will go to negative rates instead of zero. They will ramp up their bond buying programs. They can eliminate creating new cash to further the move to digital money. They can naked short gold bullion. They have lots of options, not all of them have been exercised yet.
    Along with this, the state will add draconian police state measures, mostly to keep people in place and showing up to work. You just have to make sure the basic needs are met.
    The vast majority of people just need work and food, they don’t need luxury let alone middle class items. You can dangle that in front of them, to be sure, but they don’t really need it.

    There is no systemic fast collapse. You’ve wasted your time. You would have been much better off making as much money as you possibly could, or, if you had access to cheap credit, use it to acquire assets.

    • Fast Eddy says:

      Did you not see that a number of central banks are already running NIRP?

      The rest are headed in the same direction ….

      Everything will be done to fend off the collapse for as long as possible.

      When it arrives — there will be nothing left in the tool box.

      That is an absolute guarantee.

      • Ed says:

        FE, interest rates are the last soft tool. Then comes guns and violence, the hard tools.

      • Sungr says:

        “FE, interest rates are the last soft tool. Then comes guns and violence, the hard tools.”

        Nope nope nope. This is the digital age- not so much guns and bars anymore. More like cancel facebook accounts, turn off vehicle ignition at random times, cancel internet accounts, cancel credit cards, publicly disclose personal information, threaten with endless IRS audits into every area of your affairs, etc.

    • Pintada says:

      Dear dolph;

      You made perfect sense, until the last paragraph, and then went off the rails. Actually, the part about making money was reasonable. Of course, the more not money, but actually capital, one has, the better off one will be in any event.

      The problem comes where you say, “… if you had access to cheap credit, use it to acquire assets.” How does one “acquire assets” by spending borrowed money? When I borrowed money (before I caught a clue) the lender always made me provide collateral (or made it clear that someone would come and get stuff – with the police in tow – if the payment wasn’t made). Where do you go to get free money with no strings?

      Spending borrowed money helps one acquire debt, not assets.

      As to the rest of your rant:
      Sorry buddy, you can have an opinion about how the future will play out, but you do not and cannot know what will happen. Your insistence that the collapse will be slow is just as silly as Fast Eddy’s weird obsession with spent fuel ponds as a cause of human extinction.

      Enjoy the ride,
      Pintada

      • Fast Eddy says:

        It is backed by hard facts I don’t think it would be considered an obsession …

        If I tell you that some day you will die… and you disagree with me — and I tell you again you are some day going to die and provide evidence… yet you still disagree…

        Would you say that I am obsessed with your death?

    • richard says:

      “If we face another cyclical downturn,”
      Read Taylor’s 2014 update on LTG? I know your comment refers to finance, but there is an equivalence between money and energy. We have begun to see the effects of demand on resource extracton in the form of falling productivity per capita. Less stuff produced means higher prices. For Example :
      2011: 1.00; 2016: 1.066; 2017 : 1.109; 2026: 3.0; 2030 : 9.0
      In theory, theory should be the same as practice, in practice it never is. Things should be “fine” as long as wages keep up with inflation – the two are closely connected. But … unless history gets re-written, the rate of productivity change will become more negative – somewhat like “the beatings will continue until morale improves” – or until Barbarians appear outside the Gates. History is not kind regarding these matters.

  14. Ert says:

    Something interesting… new loans in china -68,7% to July of 2015 (http://www.querschuesse.de/china-kreditvergabe-juli-2016/ – sorry, have only a German link). The whole year 2016 already performs in a slight minus 0,6% (http://www.querschuesse.de/wp-content/uploads/2016/08/s155-600×433.png).

    It seems that even China somehow reached a limit…. and if Chinas debt is the engine that fueled the world that we should watch the developments there and prepare to take cover. Looking at many other indicators as US earnings, negative interest rates, South Koreas diminishing exports and much more – I don’t have a good feeling for 2017.

    Currently China has still exuberant growth rates in all other sectors like vehicles – but that may not last much longer… I will see and watch… sold cars may be one of the first consumption indications of a stagnation or reversal (decline) even in China.

    • DJ says:

      Ert and others,
      farming advice please.

      Now that the peas are finished, and soon the squash. Should I just leave the leaves there? Cut it down? Work it into the ground that seems to be the mainstream advice?

      • Ert says:

        @DJ

        What I do is: As long I don’t need the space – leave it where it is. Cut it in pieces and use it as mulch to cover and nourish the (barren) soil. Don’t rip out the roots… cut the plant above the root.. the root may still be active and nurishes or supports beneficial bacteria and fungi.
        I wouldn’t work it into the ground at first… let it cover and rot first… later work it in, or even better give your soil a cover-crop over the winter to produce additional bio-mass and support the soil with the root system – this since its the microbes and fungi with are the real benefactors of the soil which have to be supported (http://books.wwnorton.com/books/The-Hidden-Half-of-Nature/)

        • DJ says:

          Thank you

          I run it over with the lawn mover and leave the remains. Will look for cover crop but in the “gardening chain stores” they are mostly supporting miniature industrial farming.

          This is quite far down on my hobby list. But climbing.

          • Ert says:

            @DJ

            Great! I do the same with the lawn mover… totally forgot to write that. Leave it rot and then start some weeks later to plant cover crop… depending on what you want N, P or K-fixing, deep roots to pull up deep minerals and work the soil, something that freezes over the winter or even endures over the winter and the like.

            But here I’m only starting, too. I currently try a rotation gardening where 1/3 of my land has only 2-3 different cover crops each year that I then cut and let rot.

      • Pintada says:

        Dear DJ;

        I must rake all of the garden waste up, and put it in my compost pit/pile. In the climate I deal with, nothing ever rots by accident. If you live somewhere wetter, as Ert obviously does, his system obviously works.

        If I left my garden waste in the garden, it would simply dry out, and accumulate.

        All gardening is local,
        Pintada

        • DJ says:

          Dear Pintada,
          Avg temp 7C (5C 1700-1980).
          Rainfall 500-600mm, apparentely it rains every 2-3 days

          From what little I have seen of weeds and grass clippings it should rot.

          More skeptical of being able to grow an extra cover crop after harvest.

          • Christopher says:

            My opinoin is that tilling should be avoided as much as possible. An alternative to cover crops is to cover with even more leaves. Every autumn many people get loads of leaves for free from trees. The worms like it and will do plenty of tilling during the winter. When I lived in a suburb (in fact, having the same climate parameters as yours) people used to gather the leaves in autumn in plastic bags and drive to the dump. It seemed like a waste to me.

            If you prefer a cover crop there are two alternatives.
            i) a cover crop that survives the winter. They will do the job longer but you will have to till in spring.
            i) a cover crops that not survive the winter like for instance oats. Will be simpler in spring as not much tilling will be necessarry.

            Or you try all the alternatives to study which one you prefer.

            • Artleads says:

              My kind of program. No cover crops (too much work). No tilling. Just add organic matter in winter (which I depend on snow to help break down). NO WEEDS! To plant in spring, use micro, micro digging to insert seed or seedlings, having ascertained there is enough micro-added soil to get the plants started. The roots will grow down to meet soil that should have been building over time through all that organic layering.and below.

            • DJ says:

              Thank you
              I will add leaves, when available.

            • Christopher says:

              I also used to urinate on the mulch in dark winter evenings. I imagined that the neighbours never saw anything…

              The carbon rich mulch gets fertilized by the urin. I think this will increase the compostation as well.

            • DJ says:

              I have a drunken brother in law who takes care of urinating the garden for me.

            • Christopher says:

              “I have a drunken brother in law who takes care of urinating the garden for me.”

              Everyone has some important role to play, not least the drunkards.

      • Tango Oscar says:

        Depends on your climate. Maybe plant a cover crop or work some manure/compost into the bed and cover it. All is variable on when you want to plant again, how depleted the soil is, and what you’re planting in it next.

        • DJ says:

          Cover as in physically cover it?

          I’ll plant again next spring when it is warm enough. I follow a fourway rotation. Keeping it simple.

          • Tango Oscar says:

            Cover crops are things like alfalfa, clover, or grasses. It keeps the soil from eroding as much if nothing were to be planted there. It also helps keep the food bioweb active by keeping living things in your garden/farm area. Then when it dies you can just tuck it into the soil for extra nutrients as you replant a crop.

          • Tango Oscar says:

            Also you can just amend the bed and then cover it with cardboard, shadecloth, or something else you have laying around. This encourages soil activity while preventing weeds from taking over. This is usually what I do because it’s easier, but if I had the time/energy I’d do cover crops in some beds.

    • Wow! Without debt growth, we can’t keep ou whole economy inflated.

  15. Barr says:

    The energetic output and movements of humankind are causing the closed-system biosphere to heat and creating mass extinction. Holding still seems not to be a part of our human predisposition. Even when we become aware of as many human ecology/socioeconomic variables as we can cogitate, we continue on our trajectory towards ecocide. This paradoxical behavior has been described as the “madness gene”

    If I were to proffer an idealistic “hopium” smoked solution I would suggest:training my mind towards compassion combined with realization of the interdependent nature of reality. In practice: hold still, work at arm’s length, and share, (everything except the toothbrushes).

    Happiness to y’all
    -Barr Bentley

    • Fast Eddy says:

      I see no madness.

      Any more than if you landed a ship of grain on an island with 50 rats and were to describe what happened next as madness…

      We are behaving as would be expected of any species that stumbled across what amounts to an enormous pile of food (oil = food) …. we are gorging and reproducing on an epic scale…

      When the food is no longer available – we will – just as the rats would when the ship was emptied – die off ….

      The difference with this situation is that the overshoot is so massive + we have used our big brains to kill the soil and create spent fuel ponds… that we have guaranteed our extinction.

    • DJ says:

      You are some kind of hippie?

      The masses believe technology will solve anything, we here believe it will not.

      Except for that … I agree with you.

    • Sungr says:

      “Even when we become aware of as many human ecology/socioeconomic variables as we can cogitate, we continue on our trajectory towards ecocide.”

      Regular feedings makes the quarrelsome ape way over-confident.

      We humans like all this industrial stuff so much that we willingly tossed out our pre-industrial skills and perspectives. We like grocery stores full of food and powerful tiger machines that let us fly euphorically across the landscape at 65mph -or cruising in airplanes across the oceans to foreign lands. We like the idea of procreating for recreation and not having to deal with child mortality. We like the freedom to just get in our machines and move far away from the small village- or from a modern neighborhood.

      We won’t go back to a pre-industrial lifestyle. We won’t give up our beloved power- no matter how severe the dark clouds ahead.

  16. dolph says:

    Let’s see if this post makes it through.
    You guys are barking up the wrong tree. What matters now in the world is images, fantasy, and the endless repetition of events and work. In a way, we’ve already made the transition to a post industrial economy.

    The fast collapse is wrong. Believe me I didn’t want to admit this, I actually want a fast collapse, or at least versions of it. But we face the long grind, the transition to scarcity and recycling.

    • Artleads says:

      I believe the trick (or the natural inclination) is to keep everything looking normal enough. But it doesn’t feel like this can continue for much longer. Already, this year, with the US presidential elections, a very extreme “end point” (of something significant) can be sensed. Whoever gets elected, do you believe that public sense of normalcy experienced hitherto will continue? Or that the Middle East will settle down to the MOL manageable status quo experienced over past decades? Sure, there will be forces and memes trying to maintain that sense of normalcy, but that might be like trying to drive a car with the wheels falling off. And I also believe there are starkly opposite choices to be made. Something important is happening or will soon be seen to be happening right about now. There are opportunities on one side of the equation as well as on the other. People have to choose which side they are on. And short of that, their ability to choose may be foreclosed.

    • Civilization can be viewed as a Sisyphean task. Like King Sisyphus, as members of society, we each have to do our bit to push our collective rock (the sum total of our productive work) uphill day after day, And by industrializing the process through the harnessing of energy, technology and finance, we have created a very powerful and very complex machine for pushing a bigger boulder up a steeper slope than we could ever have hoped to have done before. But if we ever lose our grip and this boulder escapes our clutches, it will tumble down the slope a lot faster than we pushed it up. How fast will it tumble? Partly, it depends on the steepness of the slope, but anything over around a 20% slope and it is likely to keep rolling with enough momentum that all we can do is get out of the way. On the other hand, we can imagine that we might lose our energy slaves while still maintaining a grip on the boulder, allowing us to manually hold it in place or lower it in a gentler and more controlled fashion.

      Regarding this analogy, my gut feeling is that the boulder is far too large for us to keep a grip on it in the absence of the machinery we have used to roll it this far uphill, and that this will lead to an uncontrolled plunge down the slope, just as Seneca observed happens when things fall apart. I assume there will be several trigger points where managed decline is replaced first by unmanaged decline and later by rapid collapse. I also assume that we will not recognize these trigger points clearly until some time after we have passed them, but with hindsight they will become obvious. The important thing is that it is the failure of the machiner, through whatever cause, that will precipitate the fall of the boulder.

      • common phenomenon says:

        Do I sense a certain phy-sician longing to set up some de-ath cli-nics? 🙂 “Six gallons of eu-thanasia, please, Doc.”

  17. Creedon says:

    The Wall Street Journal this week made it clear that the investment community still believes that the price of oil will go back up. They are fighting the last war. They believe in scarcity. They do not understand net energy. They believe cheap oil will cause the economy to improve. If and when they begin to understand that the world will never make money off of oil ever again the economy will be in trouble and it may be that they never will understand that, .

    • Fast Eddy says:

      Definitely … if they did not then all oil producers would have collapsed already.

      There is no additional downside for investors — if they stand on the sidelines and watch thinking the price of oil cannot significantly increase without blowing up the economy — they eat boiled rat…. if they throw money at producers expecting a price surge … they still get rat.

    • Stefeun says:

      Creedon,
      Quite strange to figure out that it’s probably because they don’t understand, that we’re still all alive.

      When they realize there’s really nothing to back their bets, they’ll start panicking, and then…

  18. Gregg Armstrong says:

    I think that Seneca’s cliff is going to be much steeper than anyone cares to imagine because of the feedbacks in our modern fiat financial system. The fiat financial system processes use mostly positive feedbacks. Positive feedback in inherently very unstable and results in wild overshoots and undershoots.

    The high degree of financialization exacerbates positive feedback instabilities. Financialization turns many assets into money-like instruments. For instance, there are exchange traded products that create money-like securities out of highly illiquid real estate holdings. The illiquidity is not apparent until a market clearing event occurs and those securities holders all rush to sell. That phenomenon came into play following Brexit where a number of ETFs, holding London real estate, blocked all redemptions for an indeterminate period and at least marked down net asset value by ~15%.

    These fiat financial system positive feedback processes have allowed a massive overshoot (Economystics* call it malinvestment) in all types of crude oil, crude and condensates, and natural gas exploration and production (E&P). From a qualitative perspective it’s possible that the US production of millions of barrels of oil equivalent per day from shale is indicative of the overshoot in E&P. Without that US shale world wide energy production would now be severely deficient instead over supplied.

    Unfortunately, the Economystic profession in general completely neglects energy in their economic models. They certainly do not produce quantitative models to analyze positive feedback processes that could cause massive overshoots or undershoots in energy production.

    Central banks have created bubbles in every imaginable asset class especially in energy E&P. So far they been able to keep the bubbles inflated. But, the debt-based fiat economic system will collapse when the bubbles burst and the illiquidity of securities based on illiquid assets strikes. Collateral chains will collapse because no one will dare exchange real cash for illiquid securities or illiquid assets. Energy E&P corporations will be in the center of the collateral chain breakdowns and energy production will plunge drastically and will probably never recover.

    *Economystic — yeah, you got me. I do not have any respect for the economics profession.

    • Fast Eddy says:

      ++++++++++++++++++++++++

    • In a sense, land, labor, and capital all represent energy products. They just don’t recognize the nature of the underlying forces.

      • Gregg Armstrong says:

        Good point. Money is a several times removed derivative of useful energy. Economists would be better off measuring economic activity in terms of units of energy instead of in currency units. It would surely be a very eye opening event for them to discover that energy, not money, is central to everything. Our fiat money regime only works as long as energy production continues growing from current levels. Trillions of dollars won’t mean wealth at all if energy production were to collapse.

        • Energy is not entirely equivalent. We have human energy, but a human who needs to in a nursing home is not equivalent to a highly trained scientist in the prime of his life. Oil of the right kind to operate a particular vehicle is needed–electricity won’t substitute. With electricity, precisely the right type is needed to operate electronic equipment. Part of our problem with energy theory today is that not enough attention is paid to details. Intermittent energy is not equivalent.

  19. Gregg Armstrong says:

    Since 2000 (Q2 2000 — Q4 2015) approximately 41,000,000 (+19%) more Americans have been added to the pool of working age Americans. Yet, the total number of hours worked has only increased by about 2%. This is indicative of a depression, a more than temporary divergence from the economic growth trend, a +16 year divergence in growth. The Great Recession was not a recession after all, it was another episode in an ongoing depression.

    • Interesting way of putting the problem. I understand that in blue collar areas, the labor force participation rates are way down. In high income areas, this is not as bad a problem. And of course, a lot of young people are in school almost endlessly.

  20. Gregg Armstrong says:

    Unfortunately, I do not believe that there will be anything resembling a happy ending to our dilemma. I came to that conclusion doing a very detailed analysis of the cost of replacing gasoline and diesel transportation fuels with non-fossil fuel derived ethanol.

    The short answer is that gasoline and diesel fuels, as non-renewable resources, are unbelievably under priced. You would not believe the replacement cost on a per gallon basis—I have difficulty believing the number. It is simply not possible to replace gasoline and diesel fuels. [By the way, forget about hydrogen because the most efficient and feasible gaseous hydrogen production process uses natural gas as the primary feedstock.].

    Ethanol production currently enjoys massive government and forced consumer subsidies and massive hidden fossil fuel subsidies. Every aspect of ethanol production has very significant fossil fuel inputs and accounting for those are highly problematic. Also, significant fractions of every gallon of ethanol would be required for the massive, and, by the way, currently non-existent, industrial-scale distillation and refinery complexes required not to mention the required capital investments.

    For example, without natural gas derived ammonia based fertilizers crop yields drop back to 19th century levels which were at the best of times less than 20% of today’s yields. Battery technology is wholly inadequate to power heavy farm machinery not to mention long-distance transport. To replace the energy of 1 kilogram of diesel fuel would require around 470 kg in lead-acid batteries (without including the initial and subsequent battery charging energy requirements).

    I rarely discuss these issues because very, very few people have the required scientific and engineering knowledge provide the contextual basis for a discussion. The vast majority of responses are out of the realm of science-fiction. Now I do like science-fiction for entertainment, but the vast majority of science-fiction authors are totally illiterate regarding physics and the laws of thermodynamics.

    [For instance, an infantry laser battle rifle using a D-cell battery-sized power source, with nearly inexhaustible capacity, versus the reality of needing to carry around a 10 kW gasoline-powered portable generator.]

    Electrochemical energy storage requires massive amounts of finite resources (primarily pure lead in lead-acid batteries) compared to chemical energy resources (gasoline, diesel, natural gas, jet fuels, etc.). US World War 2 diesel-electric fleet submarines used Diesel engines, generators and massive banks of lead-acid batteries. During wartime they sacrificed battery life for performance. Even so they required around 470 kilograms of battery to get the energy benefit of 1 kilogram of diesel fuel.

    Most fleet submarines had diesel fuel capacity of 94,000 to 100,000 gallons. They carried 2 batteries composed of 126 individual cells each or 252 cells. Each cell weighed ~1,650 (750 kg). The total battery weight, not including wiring or monitoring equipment, was ~415,800 pounds (189,000 kg). At full charge and moderate discharge rate the batteries gave the submarine the equivalent of about 402 kilograms of diesel fuel.

    Battery technologies have seen some improvement since WW 2. I use the fleet submarine battery because I can get performance data on it and perform some reasonable cost estimates because the raw materials are mostly pure lead. I cannot find comparable performance on automotive lithium batteries. Apparently every manufacturer goes to great lengths to conceal automotive lithium battery pack cost data.

    • Stefeun says:

      Gregg,
      “I rarely discuss these issues because very, very few people have the required scientific and engineering knowledge provide the contextual basis for a discussion.

      That’s why it’s important that people like you give us rough ideas of real proportions. Thanks.
      The meat doesn’t hold on fantasy-bones.

    • Fast Eddy says:

      We can extrapolate from this info:

      Unfortunately, the Phone does not have a battery that a user can replace. That means you have to send the iPhone to Apple to replace the battery after it’s spent (Apple is estimating one battery will last for 400 charges — probably about two years’ worth of use).

      http://edition.cnn.com/2007/TECH/ptech/07/03/iphone/index.html

      If this applies to an EV … then Tesla owners are in for a shock when they get the bill for a replacement battery ….

      • Ert says:

        @FE

        Its even worse… Tesla is already scrapping their warranty scheme – at least for the power-wall: http://investorintel.com/cleantech-intel/tesla-energys-incredible-shrinking-powerwall-warranty/

        For their cars they still claim more – but the 8 years guarantee doesn’t say anything about the capacity in % left in the battery… so it may be 50% and wont take you far. The replacement of the Model S 85 Wh battery pack is a whopping $44,000…

        In addition every load-cycle on a “super-charger” is as harmful to the battery as 10 regular charges. After 100 super-charger load-cycles the battery may have degraded 30% already! If you life in a very warm state (Nevada, etc.) it may even be worse due to the higher outdoor temperature.

        Lithium battery packs are really problematic in the long therm, depending on usage, environment and storage parameters. I currently have my 3rd battery pack in my bike since 2010 (one replaces on warranty) due to massive performance degradation, so I could not to my round-trip anymore — and the manufacturer of the cells is the same as Tesla, even if my chemistry (LiMn) is a bit different.

        • Fast Eddy says:

          If the MSM published this stuff… Tesla would not exist the next day

          • Ert says:

            @FE

            Yes – everything beginning with battery is hyped. People don’t seem to grasp, that that what happens with their (i)Phones and Notebooks also happens with their cars. Sure, the car battery management is better and the manufacturers operate the battery not within 100% of the capacity. Most operate only from 30% to 80% at the max. – and some starting with a reserve capacity, so that you won’t (or may not) experience a degradation effect in the first 2-4 years of operation. This all will extend the lifetime of the battery cells quite much.

            But this makes the “effective” energy density of the battery even worse, because you operate the battery only at approx. 50% of the rated capacity! I now do the same thing with my E-Bike battery to extend its life. Only when I must I will drive it within 70% of capacity.

            Note: I have a 36V 400Wh rated capacity LiMn Panasonic cells battery -> 280Wh usable capacity from full load to critical voltage under 250W E-Bike load. But this stresses the battery already. So I try to drive within 200Wh effective capacity, only charging up to 80% of capacity (like Tesla in Model S) and going down until critical cell voltage is reached under load.

        • Yorchichan says:

          I drive a Toyota Auris Petrol/Electric hybrid. It’s got 80K miles on the clock. When new, it got over 60mpg; now gets low 40s. The battery has a 100K mile warranty. I’ve tried complaining to Toyota that the battery needs replacing. Their excuses for the ever decreasing mpg are laughable. It’s due to my driving style (unchanged), excessive use of aircon (as a UK resident, rarely use it), cold weather (mpg has dropped 20% from last winter to this summer), playing the stereo too loud (LOL), etc.

          The warranty is obviously worthless. I expect only when the mileage goes over 100K will Toyota admit the battery needs replacing.

          • Ert says:

            @Yorchichan

            Toyota may not make any money on your car – Can’t remember that the great deals are also valid for the hybrids – or that you get then 20-30% under the official price.

            If they would replace your battery – others would want the same… looking at the amount of deployed Toyota hybrids… this could severely damage Toyotas revenue!

            Your problem is: If you sell that car… and the potential buyers get educated… then you get a very big penalty. Hybrid and the like are only worthwhile if the vehicle is used a lot (delivery, taxi) and in addition the owner knows about how he has to drive it to maintain the battery.

            Problem with the Hybrids is in addition the recuperation and the constant charge/discharge cycles. That really kills all current chemistries. It would be better is a super-cap would be used for recuperation and charging while operating the vehicle (hybrid). But their energy density is even worse that that of a modern Li battery.

    • Ert says:

      Thank for putting the numbers in perspective!

      For the automotive industry I don’t see the hype, either. The poster child Tesla sells luxury products for the rich, not a mass product. Even Model 3 will not be a mass product at 35K $ +++. And this price really need a working GigaFactory which is far from delivering its promises (http://investorintel.com/technology-metals-intel/petersen-on-the-tesla-gigafactory-and-model-3/)

      As it takes approx. 10 years from successful laboratory test to a (mass produced and certified) battery pack in a vehicle, we know what (may) will be in vehicles in 2020-22 -> NMC 811 which approx. equals that (energy density) what Tesla does with its current (less chemical stable) NCM batteries. What a joke!

      Also I don’t see >>quality!<< LiMn batteries getting significantly cheaper in the last years… at least not when bought in smaller quantities and from high quality producers.

      Who wants to buy expensive cars with less range and a replacement battery after 8+ or 10+ years – after which even the "best" manufacturer guarantee ends?

  21. Fast Eddy says:

    City in the Sky

    What does it take to get a million people and their luggage off the ground and up in the air?

    http://www.bbc.co.uk/programmes/b07g70j1

    There are over 1M people in the air right now…. I felt rather uneasy watching the first of the 3 episodes – our complex globalized world is exposed as precarious … I think the intention was for me to be impressed…

    http://eztv.unblocked.club/ep/150143/city-in-the-sky-s01e01-720p-hdtv-x264-tastetv/

  22. Christian says:

    Stef,

    It seems chez Auzanneau we got peak comments…

    • Stefeun says:

      Christian,
      I stopped reading the comments on OilMan quite a long time ago because it was generally narrow-minded discussions about details, totally missing the global picture (my feeling).

      With the latest post, there seems to be many long comments with sound and detailed arguments, which is a big improvement in the quality of discussion, but unfortunately (from the ones I took time to read) still seriously lack of system-thinking.

      Quite strange, by the way, because they seem to very well see the problems and trends, but don’t connect the dots nor draw the consequences. The very few comments that talk about near collapse are either ignored or questioned on details. A pity, because there are really all required elements there, to “think a step forward” (still my own impression).

      Thank you anyway for warning, that was interesting.

      • Quelqu'un says:

        Yes, Stef

        I did some “steps forward”. Not sure they liked

        • Stefeun says:

          I think your post was among the ones I read, Qqun,
          (“Wake up guys!”). I was actually disappointed with the absence of reaction to it, given its disrupting content. Same happened to me 1 or 2 years ago.

      • Stefeun says:

        BTW, I learnt there that David MacKay passed away last April, 14th (stomach adénocarcinome).

        For those who wouldn’t know, he was the author of the famous book “Without the Hot Air” (2008), available for free on the Internet.
        https://en.m.wikipedia.org/wiki/David_J._C._MacKay

        • Fast Eddy says:

          Sounds like he died from puffing too much hopium….

          ‘individual change’…. ‘sharing renewable power with foreign countries’…

          Forgive me if I don’t read further….

          Sustainable Energy – Without the Hot Air
          by David J.C. MacKay
          4.39 · Rating Details · 650 Ratings · 78 Reviews

          Addressing the sustainable energy crisis in an objective manner, this enlightening book analyzes the relevant numbers and organizes a plan for change on both a personal level and an international scale—for Europe, the United States, and the world. In case study format, this informative reference answers questions surrounding nuclear energy, the potential of sustainable fossil fuels, and the possibilities of sharing renewable power with foreign countries. While underlining the difficulty of minimizing consumption, the tone remains positive as it debunks misinformation and clearly explains the calculations of expenditure per person to encourage people to make individual changes that will benefit the world at large.

          • Stefeun says:

            I don’t think so, FE.
            He was a genuine debunker in the first place, and did his maths honestly.
            Then, maybe he also had a living to make, I can’t say.

  23. Yoshua says:

    So if this planet had 1.7 trillion barrels of conventional crude oil originally that was economically extractable and we now have consumed 1.4 trillion barrels, which leaves us with 300 billion barrels left to burn, or 15 years with todays production of 20 billion barrels of conventional crude oil a year… and the other types of oil (super heavy, heavy oil and super light) are uneconomic… then things should look quite dramatic in world by now… like economic and financial collapses, war and refugee floods…

    • Ert says:

      Thats the problem “economical ex-tractable” is a fuzzy term… as it depends on the state of the economy which it itself depended on oil availability, price and other factors and feedbacks. The final decline may happen very fast.. due to the amplifying feedback processes.

  24. Nobody gets more subsidies than oil companies all around the world. The subsidies renewables receive pale in comparison. I’d be surprised if they amounted to even 1%. Solar panel efficiency is increasing rapidly, and the cost of solar diminishing rapidly. Same with pretty much every other renewable energy technology and that’s because as a rule prices decrease as technology advances. Green energy subsidies are not a “sink” we are losing money in, its an investment in clean energy we need to survive the environmental calamities we’ve ourselves created. 20 years from now, renewable energy will be so plentiful and efficient it’ll practically be free.

    • “Same with pretty much every other renewable energy technology and that’s because as a rule prices decrease as technology advances. ”

      More like, if you make a bigger factory, the cost per unit is less, provided you ship enough units. So you invest ten times as much in a new factory, and the cost and price per unit falls in half compared to previous generation, provided you sell four times as many units.

      “20 years from now, renewable energy will be so plentiful and efficient it’ll practically be free.”

      Wow, can you clarify “practically free”?

      • Ed says:

        “practically free” they said they same about electricity from nuclear.

      • Ert says:

        “Wow, can you clarify “practically free”?”

        Only when the sun shines and the wind blows and there is a surplus in the network that MUST go away. Then the price drops to zero, destroy price-discovery and harms all producers which have no feed-in tariff. In conclusion more and more producers which provide base load and stability for the network drop out of businesses until the whole charade fails.

      • Gregg Armstrong says:

        Where are your facts and data? The truth is that for every dollar in oil company subsidies government’s receive thousands of dollars in taxes. Do the research and prove me wrong.

        • Fast Eddy says:

          The words facts, logic, data, evidence…. are not in the DelusiSTANI dictionary…

          If you can imagine it — it can be…. and if anyone objects… you just turn the music louder:

        • I agree. Oil companies pat a lot of taxes.

          The one place this historically not been the case is in oil exporting nations. In those countries, the local people are typically given an oil price that is closer to the local cost of production than the world oil price. The low price for locals is sometimes referred to as a subsidy. It only means that they choose to get their tax revenue only on exported oil.

    • DJ says:

      How does this oil subsidy work?

      Saudi Arabia/venzuela/etc extracts oil, finances their whole country with the proceeds, sell the oil cheap to the west who slaps a couple of hundred percent of taxes before the oil reaches the end customer.

      Where is the subsidy?

    • Fast Eddy says:

      If oil did not generate a return on the energy in — which includes the subsidies — then we would not be here right now.

      Solar panels generate a negative energy return with or without the subsidies.

      Today you will learn something very interesting. Hopefully.

      Have a look at what happens when you try to generate electricity from ‘renewable energy’

      Germany’s Expensive Gamble on Renewable Energy :

      Germany’s electricity prices soar to more than double that of the USA because when the sun doesn’t shine and the wind does not blow they have to operate and pay for a completely separate back up system that is fueled by lignite coal

      http://www.wsj.com/articles/germanys-expensive-gamble-on-renewable-energy-1409106602

      Why Germany’s nuclear phaseout is leading to more coal burning

      Between 2011 and 2015 Germany will open 10.7 GW of new coal fired power stations. This is more new coal coal capacity than was constructed in the entire two decades after the fall of the Berlin Wall.

      The expected annual electricity production of these power stations will far exceed that of existing solar panels and will be approximately the same as that of Germany’s existing solar panels and wind turbines combined. Solar panels and wind turbines however have expected life spans of no more than 25 years. Coal power plants typically last 50 years or longer.

      At best you could call the recent developments in Germany’s electricity sector contradictory.

      https://carboncounter.wordpress.com/2015/06/06/why-germanys-nuclear-phaseout-is-leading-to-more-coal-burning/

    • Tango Oscar says:

      Even if the cost (sticker price) of solar is diminishing rapidly, that cost doesn’t reflect negative externalities, diminishing returns, and other problems. Look at China’s pollution where most of the solar panels (and everything else in the world) is made. You think it’s possible to increase output from here and grow?

      How much mercury is that lignite going to put off when you build tens of billions of solar panels to even attempt to make an effort to replace a fraction of the current electricity usage? What about the failing grid, how is solar going to tie into that with its erratic loads? What about when the sun doesn’t shine? What about the fact that battery technology is a total fail for renewable energy? How are you going to manufacture, transport, and replace solar components without using massive amounts of fossil fuels?

      • The idealist answer to your questions is the dream of making what they call “solar breeder factories” or something similar. The idea is to build a giant solar farm in the Sahara that runs the factory that makes the solar panels.

        The big part of the picture that few in the “renewable energy” camp want to accept is reducing energy consumption something like 99% and using power on-supply instead of on-demand.

        It seems everyone thinks that even more complex and energy hungry solutions will allow renewable to work. Heavier cars with more energy embodied will somehow make things more efficient and sustainable.

        • Tango Oscar says:

          Step 1. Get a brilliant idea to make endless solar panels.
          Step 2. Be totally ignorant of all the fine details of how this won’t work.
          Step 3. ??????
          Step 4. Save humanity with endless energy!

  25. Fast Eddy says:

    Disaster…

    Shell misses expectations as profits plunge 72%

    ConocoPhillips and Total also announce steep drops in earnings

    https://www.ft.com/content/21d88b66-5496-11e6-befd-2fc0c26b3c60

    Paste the headline into google news if you run into the paywall…

    • These earnings go to pay dividends and to fund future development. Adding more debt only works for s little while as a substitute.

      • Fast Eddy says:

        They are all slashing capex…. they are not replacing reserves…. I do not think we have ever had a situation where big oil was not replacing reserves…. I have read comments from analysts indicating that if an oil company fails to replace reserves it won’t be in business for long….

        Without a doubt oil execs know or at least suspect that their days are numbered…

    • Yoshua says:

      “On Thursday, prices continued to decline, as Brent oil was trading at $43.49 and the US WTI was at $42, hovering near three-month lows.

      Oil is being dragged down by a report from the US Energy Information Administration (EIA). American stockpiles unexpectedly grew by 1.7 million barrels last week, instead of falling 2.3 million barrels as had been predicted. Gasoline inventories increased by 452,000 barrels, instead of a forecast 40,000 barrel increase.”

  26. psile says:

    Filmed in 20154. How dated does this already seem now?

    https://www.youtube.com/watch?v=gNE7VPtvfbI&t=0s

    More bull in a china shop…lol…

  27. psile says:

    More evidence of humans doing, saying and dreaming of stupid things…

    https://www.youtube.com/watch?v=yOCpo10zQlM&spfreload=5

    We are so f#cked…

  28. psile says:

    If you’re going to dream. You may as well dream big!

    https://www.youtube.com/watch?v=Ce7Ncxr2e7Y

    I don’t even know where to begin. I’ll let it speak for itself…

    • Might as well just make tunnels through the center of the Earth, providing virtually free gravity powered rapid transit, it is only slightly more ambitious:

    • Pintada says:

      OK, it was only a matter of time. As part of the plan, just add a High Voltage DC conduit, and complete the trip with a cable from Newfoundland to Iceland to Norway. That would silence the people that worry about renewables intermittency. Windmills in Siberia generating electricity for sale in New York. Could happen … with robots. Yeah.

      • Froggman says:

        I’m a member of a message board unrelated to collapse/peak oil/etc (if you can believe such things exist…) where a conversation started about the economy and the outcome of the elections in the US. A young, optimistic guy in the tech industry proceeded to tell us about all of the wonderous advances under works and how they were accelerating, and how this would change the world. He proclaimed that another Clinton presidency would unleash this technological dynamo and (his words) produce “economic growth on steroids” and “a world of trillionaires” unlike anything ever seen. The relentless expansion of technology would be unstoppable.

        I told him we could agree to disagree, and that I’d be satisfied if I make it to 55 before dying of starvation, violence, or radiation. And that voting wouldn’t matter.

        It really is a whole different reality for some people. It will be very hard on them when they can no longer support the fantasy.

        • Ed says:

          That is why you need old pessimistic tech industry guys like me. Self driving cars will be nice but they will not make energy. Intelligent self aware machines will be fun to talk with but they will not make energy. Some problems do not have solutions no matter how smart the entity trying to solve them. No high density energy no high density civilization.

          • Stefeun says:

            Nicely put, Ed.

          • They will take away jobs from humans. How is that helpful?

            • smite says:

              Economic growth theory which emphasizes productive saving and investment in technology on the producer side as the drivers of economic growth. Consumer spending is largely the effect, not the cause, of prosperity.

              The consumer basically is skimming the surplus left over by their masters. Just as the “trade” of the past was between the wealthy and powerful. Whatever was left over after taxation and theft, the pawn/pleb could consume.

              But I digress, moving back to the subject: What is the point of these jobs one could ask? Why not just send the mostly useless “workers” home with a basic income instead? Finland seem to be on it after the collapse of Nokia.

              https://www.theguardian.com/world/2016/jun/02/state-handouts-for-all-europe-set-to-pilot-universal-basic-incomes

            • Big problem will be “not enough to go around.” Governments can’t get enough revenue to fund these basic income scemes. They certainly can’t get enough government revenue except by deficit spending. This can’t last for long.

            • smite says:

              I think they can, instead of having an enormous horde of highly paid welfare state bureaucrat who supervise handouts and allowances, most could simply be dismissed and if their skills are sought after, could enter the private sector for some additional income.

        • Ert says:

          @Froggman

          ” The relentless expansion of technology would be unstoppable.”

          Is this guy a singulatarian? Like Kurzweil or Diamandis?

          Its funny… most of these “tech” is then software driven… and doesn’t to anything to make the real world really better. Lots of the valley stuff provides comforts financed or subsidized by advertisement. In the case of apple, people pay… but still everything is about media, messaging, services which are all not essential for anything… only comforts. All this stuff burns primarily energy and resources…. like the 49€ Android Dual-SIM 4″ Smartphone my discounter offers next week.

          Same as the big data fad… everyone hopes to sell more.. analyze its customer… benefit if all do it? Mostly none… The VR fad – for what is it really good? Which real problems does it solve? All those stuff does make everything core complex and complicated…

        • Fast Eddy says:

          I sometimes wish that collapse would arrive … as one big fat ‘I told you so morons’

        • karl says:

          One thing that I am grateful for is the fact that my parents were young and I was partially raised by my WWII era grandparents. It significantly expanded my sense of time compared to my cohorts (I’m 36). My grandfather told me about growing up in the 1920s in West Virginia in what basically amounted to a subsistent farming level of existence. They only wore shoes 6 months out of the year, had an outhouse and shallow well with a hand pump, used a horse and wagon until after he got back from the war. Granted, WV was (and is) poorer and slower to “progress” than the rest of the country, but this wasn’t ancient history for me, it was within living memory. That frame of reference makes the ff bonanza easier to view from the long perspective, and see it for the brief burst of exuberance that it is…….

          • Fast Eddy says:

            This puts into perspective the blip in time the period that we would refer to as modern civilization …. we’ve lived with modern comforts for maybe 100 years….

    • Hahaha, the mad ape’s gone bonkers for sure.

      Perhaps along with the power plants & water facilities along the highway they could have launch pads for Space X missions to Mars?

      The rest of life on earth must long for the day when the crazy ape’s gone for good……………………..

      • Fast Eddy says:

        I have been supporting a subway from Shanghai to London, New York and various other major cities of the world dug by millions of worker using tea spoons and paid $50 per hour as way to keep BAU online for a few more decades….

        We may yet see this….

        • Great idea! /sarc

        • Tango Oscar says:

          If everything became affordable we would quickly realize the limits on global growth from a supply side. Within days almost all essentials stockpiles would be out. In effect the western world’s stronger currencies are a moat to third worlders because it makes goods/services less affordable or available for them. This is particularly the case with the U.S. Dollar.

  29. Fast Eddy says:

    This is an interesting article….

    http://www.nakedcapitalism.com/2014/02/james-surowiecki-promotes-myth-consumer-empowerment-face-crappification-almost-everything.html

    The author – a former investment banker – fails to recognize that this phenomenon is caused by:

  30. Fast Eddy says:

    Dug up that article on retail….

    https://mishgea.files.wordpress.com/2016/05/amazon-apparel-share.png

    Blaming most of this funk or even a third of it on Amazon is a bit misguided. Simple math explains why.

    In the above chart, the percentage total excluding Amazon is 41.6% of the market. Amazon is 6.7%.

    How much did Amazon grow in the last year? Two percentage points? One? Spread that growth out and Amazon cannot possibly be the largest problem.

    No Head Scratching Needed

    Instead of scratching his head, Macy’s CEO ought this take note of this comment from the article.

    Discount chains like T.J. Maxx and fast-fashion retailers such as H&M, which can offer jeans as cheap as $17 and polo shirts for $10, are grabbing foot traffic and hurting demand for the $50 jeans and $80 polo shirts that Macy’s sells.

    “People are getting pickier,” said Ken Bernstein, chief executive of shopping center owner Acadia Realty Trust, in a recent interview. He said sales at his malls increased in the first quarter, but noted that shopping centers were increasingly housing services such as hair salons and fitness centers instead of stores where people buy goods.

    Mish 12-Point Summation

    Macys, Nordstrom, Dillards, Kohls, Ralph Lauren, etc., all overexpanded mightily. Stores are in such strong competition they cannibalize their own sales.

    Boomers are retiring and have less money to spend. At some point they start wondering if they will outlive their savings.

    The Millennials and generation Z don’t make as much as the retiring boomers did.

    Priorities and attitudes of the millennials and generation Z are far different than that of their parents and grandparents. Relative to older generations, Millennials shun debt. Store executives still have not figured out this attitude shift.

    Health care costs are going up far faster than wages. This weighs on consumers’ minds.

    Consumers are tired of high prices.

    Consumers have too much debt.

    Women can only buy so many shoes and purses (I think).

    Consumers sense a recession, even if analysts don’t.

    It takes sales staff to run a store, overall profits decline at some point.

    It takes inventory to fill a store, inventory-to-sales numbers rise as a result.

    OK, somewhere in here blame Amazon.

    More https://mishtalk.com/2016/05/13/retail-department-store-carnage-amazon-to-blame-mish-12-point-summation/

  31. dolph gives you the red pill says:

    You are all are barking up the wrong tree.
    You keep quoting all of these markers of so called collapse, without realizing that the development of our systems has allowed humans to enter the artificial reality world as their main world of thinking and acting.

    The world has become fake. It’s not going to become real again anytime soon, no matter how many times you keep posting that “this is it! it’s happening now!”.

    Because everything is fake, we really don’t have good indicators anymore. We have numbers and things to look at, sure, but you can’t draw conclusions from them.

    If economic numbers look bad, perversely the stock market and prices go up, because of the anticipation of central stimulus, or actual stimulus. The issuance of long term debt at zero interest, at any sign of downturn, is the name of the game. The result? Inflated prices with few buyers. The triage of the middle and working classes away from asset ownership altogether. The stock market is not going to go down. Real estate is not going to go down. Bond prices are not going to go down. Commodity prices are not going to go down. They will trend upward, and upward, and keep trending upward for years.

    What is hard about this to understand? Everything is going to get worse and worse and prices will keep rising. It’s not going to end until our whole system implodes but that point hasn’t arrived.

    • “The world has become fake. It’s not going to become real again anytime soon, no matter how many times you keep posting that “this is it! it’s happening now!”.”

      The fake world needs real energy to run, no matter how much you can insist it does not. People must eat. All the electrically powered systems for distraction need real energy to power them. The Central Banks and all the governments cannot conjure food or oil into existence.

      • Fast Eddy says:

        It’s kinda like believing you can fly — then jumping out of a 30th floor window….and shouting ‘I can fly!!!’ — all good — till you hit the pavement…

      • Tango Oscar says:

        I don’t think anyone is in disagreement with the fact that our world, fantastical as it seems, does indeed need real, cheap energy to run it. I think perhaps the original post was referring to the “this is it” moments as when, for example, we associate a bank imploding or some bad economic number as predicting that collapse is imminent.

    • common phenomenon says:

      How’s life at the Swiss clinic? 😉

    • Fast Eddy says:

      “It’s not going to end until our whole system implodes but that point hasn’t arrived”

      I am in complete agreement with that statement.

  32. Gregg Armstrong says:

    I have not seen any quantitative examples showing how much more massively resource intensive the renewable energy sources are over conventional sources. The following is a rough comparison.

    The Laws of Thermodynamics requires that renewable energy sources will consume far more resources per unit of energy produced. That is because they extract energy from very diffuse sources such as sunshine, via thermal or photovoltaic collectors, or from wind with wind turbines.

    The installed cost of a nameplate rated 1.5 Mega-Watt wind turbine is around $1.5 million ($1 million per Mega-Watt). The average wind turbine will randomly produce 21% of its rated nameplate capacity over a calendar year of operation .21 X 1.5 MW = 315 kW, $3.17 million per MW). Therefore it’s neither suited for base load (scheduled) or peaking load (on demand). Therefore it requires backup for when not in operation. Not only that, but it will consume significant energy from the grid during cold weather, to keep sensitive components and lubricants warm, and also to set blade angles and turbine heading.

    The 6.7 liter Diesel engine Ford F-250 is rated at 440 horsepower (325 kW) and 860 foot-pounds of torque. [Without internal modifications diesel performance tuners easily extract 800 horsepower from these engines.]. Simply reprogramming the existing engine control unit (ECU) would easily produce much more than the 315 kW that the 1.5 MW wind turbine produces on average.

    The Diesel engine option costs an extra $8,595 over the gasoline engine equipped F-250 MSRP. The total MSRP for the engine is probably around $15,000. Deleting the truck-specific accessories (air conditioning compressor, power steering pump, etc.). adding a 3-phase 325 kW alternating current load would probably not add more than $30,000 in additional cost. Total cost including installation would probably be around $50,000 ($0.15 million / MW). [Note that Alibaba.com lists a new Volvo 400 kVA (volt-ampere) diesel generator in single unit quantity at $58,000 and multi-unit quantities at $45,000.]

    The cost ratio between the wind turbine and the diesel generator is about 21 ( ($3.17 million / MW) / ($0.15 million / MW) = 21.1). The diesel generator set would be practical as backup power but it could also provide base load capability which the wind turbine cannot perform. Also installation is far cheaper and requires far less land than a wind turbine.

    Granted, this is not by any means an apples-to-apples comparison. But, it provides a good example of the massive disparity in resource requirements. Note that a gas turbine, an aircraft engine converted to function as a fixed power source, fueled by natural gas or jet fuel, would provide far more power and perform more efficiently than the Diesel engine example, especially because the exhaust gas energy can be captured in CHP (combined heat & power) installations. But, I don’t have any gas turbine power figures or cost data for comparison purposes.

    The wind turbine solution is roughly 21 times (~2,000%) more resource intensive than the diesel generator solution, assuming that dollars roughly equals physical resources consumed. Plus, the wind turbine requires significant inputs of liquid transportation fuels at all phases of production and installation, from raw resource extraction to final installation and maintenance. Without liquid transportation fuels wind turbine fabrication and installation is simply not possible.

    • A 300 KwH diesel generator will consume about 20 gallons per hour of diesel:
      http://www.dieselserviceandsupply.com/Diesel_Fuel_Consumption.aspx

      So roughly a barrel of oil every two hours. So 12 * 365 = 4380 barrels of oil equivalent per year. At $2 per gallon, that would be about $350,000 per year in fuel.

      Over a 15 year life-cycle, the diesel generator will cost you over $5 million compared to your $1.5 million windmill. So, now you have to find out the comparative maintenance costs and figure out the value of dispatchability over intermittent power output.

      • Fast Eddy says:

        Actually … if you want to generate power 24/7… you need the windmill … and the generator…. unless the wind blows 24/7….

        So your cost is determined by the cost to build install and maintain both systems of generation …. and the fuel that you put into the generator when the wind is not blowing

      • hawkeye says:

        If MK’s calculations are correct, then a constant and continuous supply of 300KwH from a diesel generator, 24/7/365, will cost $350,000 per year in fuel.

        Before we even start to ask about maintenance costs and dispatch reliability, there’s an even more important question to answer:

        How many $1.5 million wind generators are required to provide a constant and continuous supply of 300KwH?

        When the wind stops blowing at one location, how far away must the next wind generator be located to keep that constant and continuous, 24/7/365, supply of power? The next township? The next county? The next state?

        And when there’s calm in a large region of the country, how many $1.5 million wind generators are then required to to provide a constant and continuous 24/7/365 supply of power?

        A total of 30 or 50 or 100? Now the costs really begin to add up. Not to mention the embedded fossil fuel energy required to produce these wind generators in the first place.

        Systems thinking is needed in providing a true cost comparison. Very few people use systems thinking in their analysis.

        Cheers.

        • “How many $1.5 million wind generators are required to provide a constant and continuous supply of 300KwH?”

          The original guesstimate was that the wind blows about 21 percent of the time – presumably at the best possible locations for a wind farm.

          The original windmill the original poster was comparing had a nameplate output of 1.5 MW, which equaled an average output of something like 350 Kw due to intermittence.

          So all you need is a massive set of batteries that can store about, say, 3 MWh of electricity, plus the one windmill, and you should be good to have 300 KW continuous output.

          From what I can see, if we look at small Caribbean islands and compare their diesel generator electricity to a windmill with batteries, either way you are looking at $0.30 to $0.50 per KWh. Solar Thermal with dispatchability seems to be in the same price range.

          It is just that hydro, coal, natural gas and nuclear are able to produce power for around $0.05 per KWh, so comparatively all other means are non-competitive, at six to ten times the cost.

          In the case of hydro, there is unfortunately a limited amount of capacity. For natural gas, it is only because the price is currently extremely low compared to production cost. For coal and nuclear, it is because no one factors in the cost of the externalities, as the risks and costs are shared socially with everyone.

          • greg machala says:

            I read recently that the battery in the Tesla Roadster which has a 200 mile range takes as much energy to produce as it would take to propel the car 90,000 miles. So, the battery alone has 90,000 miles of embedded energy in it (just to produce the battery).
            Ouch. The Tesla model S was about 50,000 miles of energy equivalent in its battery. I’d hate to see the energy requirement to build really large battery banks for solar and wind turbine storage.

            • Fast Eddy says:

              Green Cars Have a Dirty Little Secret

              Electric cars are promoted as the chic harbinger of an environmentally benign future. Ads assure us of “zero emissions,” and President Obama has promised a million on the road by 2015. With sales for 2012 coming in at about 50,000, that million-car figure is a pipe dream. Consumers remain wary of the cars’ limited range, higher price and the logistics of battery-charging. But for those who do own an electric car, at least there is the consolation that it’s truly green, right? Not really.

              For proponents such as the actor and activist Leonardo DiCaprio, the main argument is that their electric cars—whether it’s a $100,000 Fisker Karma (Mr. DiCaprio’s ride) or a $28,000 Nissan Leaf—don’t contribute to global warming. And, sure, electric cars don’t emit carbon-dioxide on the road. But the energy used for their manufacture and continual battery charges certainly does—far more than most people realize.

              A 2012 comprehensive life-cycle analysis in Journal of Industrial Ecology shows that almost half the lifetime carbon-dioxide emissions from an electric car come from the energy used to produce the car, especially the battery. The mining of lithium, for instance, is a less than green activity. By contrast, the manufacture of a gas-powered car accounts for 17% of its lifetime carbon-dioxide emissions. When an electric car rolls off the production line, it has already been responsible for 30,000 pounds of carbon-dioxide emission. The amount for making a conventional car: 14,000 pounds.

              While electric-car owners may cruise around feeling virtuous, they still recharge using electricity overwhelmingly produced with fossil fuels. Thus, the life-cycle analysis shows that for every mile driven, the average electric car indirectly emits about six ounces of carbon-dioxide. This is still a lot better than a similar-size conventional car, which emits about 12 ounces per mile. But remember, the production of the electric car has already resulted in sizeable emissions—the equivalent of 80,000 miles of travel in the vehicle.

              So unless the electric car is driven a lot, it will never get ahead environmentally. And that turns out to be a challenge. Consider the Nissan Leaf. It has only a 73-mile range per charge. Drivers attempting long road trips, as in one BBC test drive, have reported that recharging takes so long that the average speed is close to six miles per hour—a bit faster than your average jogger.

              To make matters worse, the batteries in electric cars fade with time, just as they do in a cellphone. Nissan estimates that after five years, the less effective batteries in a typical Leaf bring the range down to 55 miles. As the MIT Technology Review cautioned last year: “Don’t Drive Your Nissan Leaf Too Much.”

              If a typical electric car is driven 50,000 miles over its lifetime, the huge initial emissions from its manufacture means the car will actually have put more carbon-dioxide in the atmosphere than a similar-size gasoline-powered car driven the same number of miles. Similarly, if the energy used to recharge the electric car comes mostly from coal-fired power plants, it will be responsible for the emission of almost 15 ounces of carbon-dioxide for every one of the 50,000 miles it is driven—three ounces more than a similar gas-powered car.

              Even if the electric car is driven for 90,000 miles and the owner stays away from coal-powered electricity, the car will cause just 24% less carbon-dioxide emission than its gas-powered cousin. This is a far cry from “zero emissions.” Over its entire lifetime, the electric car will be responsible for 8.7 tons of carbon dioxide less than the average conventional car.

              Those 8.7 tons may sound like a considerable amount, but it’s not. The current best estimate of the global warming damage of an extra ton of carbon-dioxide is about $5. This means an optimistic assessment of the avoided carbon-dioxide associated with an electric car will allow the owner to spare the world about $44 in climate damage. On the European emissions market, credit for 8.7 tons of carbon-dioxide costs $48.

              Yet the U.S. federal government essentially subsidizes electric-car buyers with up to $7,500. In addition, more than $5.5 billion in federal grants and loans go directly to battery and electric-car manufacturers like California-based Fisker Automotive and Tesla Motors. This is a very poor deal for taxpayers.

              The electric car might be great in a couple of decades but as a way to tackle global warming now it does virtually nothing. The real challenge is to get green energy that is cheaper than fossil fuels. That requires heavy investment in green research and development. Spending instead on subsidizing electric cars is putting the cart before the horse, and an inconvenient and expensive cart at that.

              http://www.wsj.com/articles/SB10001424127887324128504578346913994914472

            • These low range cars are additional cars in households that already have gasoline powered cars. I would not be surprised if their mileage is generally low.

            • Fast Eddy says:

              I can imagine EV drivers only need them to make it as far as the organic low fat latte coffee shop where they park out front and wait for the ooohs and aaaahs from the Green Groupies….

              Nobody would really consider an EV a practical driving machine…

          • hawkeye says:

            MK wrote:

            “So all you need is a massive set of batteries…”

            This is why we have these discussions, to ferret out the overlooked and inconvenient details – details that end up being deal breakers.

            “So all you need…”

            Or from another poster today:

            “Surely we could theoretically…”

            “I think it’s even politically possible…”

            “But if enough of us choose to…”

            All wishful thinking imho, not because of any particular bias but because of the laws of physics and the principles of ecology. These numbers have been crunched many times before and, alas, they just don’t pencil out. Reality bites, I know, but there’s no fooling nature.

            Feynman said it best, “The first principle in science is that you must not fool yourself – and you are the easiest person to fool.”

            Or for the plebes among us:

            If wishes were fishes, we’d all swim in riches.

            And what is the cost of the sixth massive biosphere extinction event going on, virtually unnoticed, as we talk about energy and its externalities?

            Oh ye blind guides, who sieve for a gnat and swallow a camel.

            Cheers.

    • You make a good point. Most comparisons assume the once variable electricity is made, it is equivalent to dispatch able electricity. They also assume that specialized long distance cable (that operates only a small fraction of the time) is cost free as well. There are other changes that need to be made to bring renewable power up to grid standards. These seem to be cost free as well.

  33. Christian says:

    Why know very well who is exposed to low price. Do we have any graph reg. exposure to a high one?

  34. Christian says:

    If I understand correctly Bloomber’s articles, the main point is that low price hits exporters and high price hits China (the only importer of the list) -rather than Europe or Japan. I bet bankrupting China would be a case important enough as to abandon petrodollar or leave the White House

  35. bh2 says:

    “Without economic growth, it becomes very difficult to repay debt with interest.”

    A self-inflicted wound. Without debt, perpetual economic growth is no longer demanded by the Red Queen Effect (“You must run faster!”).

    Debt cannot substitute in the long run for “capital” (savings), which rising debt increasingly undermines to the point that capital is eventually extinguished and its sources destroyed. Debt has a time-based carrying cost (interest). Capital does not.

    The lead producer for mounting debt is government, which isn’t equipped to make rational investment decisions. It can only make political decisions, often masqueraded to the public as “investments”. The ideology served by those political decisions is completely irrelevant.

    Taxes are not the cost of civilization. Taxes are the cost of government, which often becomes the greatest single destroyer of civilization (by war and other aggression). When increased tax revenues are no longer politically or economically feasible, government steadily substitutes more and more debt until eventual collapse becomes a mathematical certainty.

    • Christian says:

      “Without economic growth, it becomes very difficult to repay debt with interest.”

      Unless rates are negative, according to ECB…

      That’s the other major change the Fed will introduce under Trump, or before

    • Diminishing returns is the problem, not debt per se. It becomes more and more expensive to extract resources. Perpetual growth is not possible, unless we can somehow offset diminishing returns with technology gains. Unfortunately, this doesn’t really work. The economy uses more and more Of its resources to produce intermediate goods (deeper oil wells, air scrubbers for coal fired electricity plants, water desalination plants) leaving fewer resources to grow the economy.

    • “Without debt, perpetual economic growth is no longer demanded by the Red Queen Effect ”

      As long as human population, like any living organism, tries to rise exponentially through breeding at a rate greater than replacement, the Red Queen Effect is in effect.

      So, if we had zero population growth, and an equity-only system with no debt-with-interest, and people were immune to the hedonic treadmill and the desire for more, and we did not use fire or cut down trees, maybe a quasi-steady state could be achieved, that would fluctuate with natural cycles.

  36. Christian says:

    Before the rise of the dollar currencies floated freely against each other, which led to a war that generated 30’s depression. Don’t know which system would be better post Lehman II

  37. Christian says:

    And also perhaps Trump is aware it could be better for him not to win next ellections, remaining free to seat on power when the bomb basts Hillary’s administration, whitout being ellected.

    Then he buries petrodollar to save the situation and blame neocons about a thousand evils that will advent, buying a year or two of political credibility

    He can make reality JFK’s wish of statization of the Fed in the process, of course

    • The lower classes of the flyover states are not energized (angry – impoverished) enough to vote massively Trump yet, plus there is this effect of peculiar US voting system, which is not a popular vote, as it is generally understand elsewhere. So unless Clinton gets emotional meltdown (severe psychotic outburst) during TV debates, which is possible but not probable (she’s being now coached intensively not to over react to Trump’s direct insults), he can’t win now.. But he can return in 4yrs (gets much visibly older though) or perhaps sooner during some huge crisis under Clinton.

      • Christian says:

        You don’t think he will go so far as to execute her, don’t you?

        • Christian says:

          He would do better just as here, starting an endless judicial process against her upon whatever excuse (there are many), so he can buy up two extra years

  38. Christian says:

    Perhaps it’s not so strange that Trump disqualifies so much Islam, given Arabs are the main competitor for Russia

  39. Fast Eddy says:

    Profits Plunge, Sales Drop at Macy’s. Slashes Jobs, Closes Stores. Stock Jumps 18%

    Brick-and-mortar retail sinks artfully into coma.

    It’s been a tough quarter for Macy’s. Again. Sales dropped 4% to $5.87 billion in the second quarter, it reported today. It had already closed 41 “underperforming Macy’s stores” in its fiscal year 2015. So among the remaining company-owned stores, comparable sales fell 2.6%. Operating income plunged 73% to $117 million. Net income plummeted 95% to a nearly invisible $11 million, or 3 cents a share.

    The first quarter, on a year-over-year basis, was even worse. So for the first half, sales dropped 5.7%, operating income 53%, and net income 82%.

    “We are encouraged by the distinct improvement in our sales and earnings trend in the second quarter,” is how CEO Terry Lundgren explained the phenomenon. He even gave credit to “a normalized weather pattern” – rather than blaming the weather, as is normally the case. And tourist spending dropped again, but less than before.

    Then came the music to Wall Street’s ears.

    In a separate statement, Macy’s announced that it would be “reallocating investments to highest-growth-potential store and digital businesses, and capitalizing on opportunities within the company’s real estate assets.” These changes “represent an advancement in our thinking on the role of stores….”

    What this corporate speak means in numbers is this: It will shutter “approximately” 100 Macy’s full-line stores, or about 15% of its current 675 full-line stores. Final decisions which stores to close haven’t been made yet, it said. Most of this will happen in early 2017.

    And there’s a real estate angle, testament to the breath-taking commercial property bubble that has transpired across the US, and particularly in large urban markets. It’s going to shutter “a number of stores” and sell the locations because the “value of the real estate exceeds their value to Macy’s as a retail store.”

    One of them is the Macy’s Men’s Store on Union Square in San Francisco, a fabulously expensive location. It’s a big store, with a number of floors. You don’t have to wind past perfumes, bras, stockings, and handbags to get to the escalators or the underwear section. It’s a little threadbare, but who cares. I treat shopping like I treat unpleasant jobs around the house, such as replacing tile grout in the shower. When I finally decide to do it, I make a plan, and I execute the plan as efficiently as possible. That store allows me to get in, get my business done, and get out.

    But that’s not what Macy’s wants. It wants me to wander past bras and perfumes apparently. So it’s “in negotiations” to sell the property. If the deal goes through, the big men’s store will be shuttered, and merchandise will be crammed into a floor or so in “a comprehensive and compelling men’s shopping experience” at the women’s store across the street. Surely, men can find other suppliers for their stuff, like online.

    Macy’s figured that out too. Online retailers are eating its lunch. Amazon is cleaning house. Millennials, the customers that Macy’s really, really needs, are shopping online. And so Macy’s will try to gravitate that way and “invest in growth sooner and more aggressively in digital and mobile.”

    Given all these store closings, the already declining sales will be “somewhat smaller” still – by about another $1 billion!

    But as miserable as 3 cents a share in net earnings is, Macy’s couldn’t leave it at that. So it adjusted its earnings by removing the biggest bad items, such as the costs of closing stores and axing employees – which is not a one-time item but part of its regular business model these days – and the costs of the retirement plan settlement.

    Thus, it managed to pump up its adjusted fictional ex-bad-items earnings to 54 cents a share, easily blowing past analysts’ expectations of 48 cents a share. But the most positive thing must have been the layoffs and store closings coming down the pike. That always sells on Wall Street.

    And Macy’s shares soared 17% today. You’d think Microsoft had made one of its wild-and-woolly buyout offers, or something. But shares are still down 45% from their peak during the glory days of mere sales stagnation in July last year.

    These store closings, and those over the past few years – in total nearly 200 – show that Macy’s is trying to shift its footprint out of brick-and-mortar retail into online and mobile. They’re all trying to do it, spread over years. Brick-and-mortar retail is sinking into a coma, artfully dressed in corporate speak and “adjusted” accounting figures to cover up declining sales and plunging earnings.

    It’s really tough out there. American consumers are squeezed. The shift to online has been brutal. Numerous retail chains have already taken refuge in bankruptcy. Private equity firms, which thought that retail was the best thing since sliced bread and bought out numerous retailers, are now getting burned. Read… Another Leveraged Buyout of a Retailer Bites the Dust

    More http://wolfstreet.com/2016/08/11/profits-plunge-sales-drop-at-macys-slashes-jobs-closes-stores-stock-jumps-18/

    • Macy’s can only sell goods at big discounts if it wants to stay competitive with Amazon. It can’t cover its own expenses at this price level.

      • Vince the Prince says:

        Gail and Fast Eddy, this article by David Stockman is over a year old bit still worth reading.
        It may have been already posted here but worth a repeat

        “the instantaneous re-rating of its market cap by $40 billion in the seconds after its earnings release had nothing to do with Amazon or the considerable entrepreneurial prowess of Jeff Bezos and his army of disrupters. It was more in the nature of financial rigor mortis——-the final spasm of the robo-traders and the fast money crowd chasing one of the greatest bubbles still standing in the casino….And, yes, Amazon’s $250 billion market cap is an out and out bubble”

        http://davidstockmanscontracorner.com/the-last-bubble-standing-amazons-same-day-trip-through-the-casino/

        “Amazon is not a profit-making enterprise in any meaningful sense of the word and its stock price measures nothing more than the raging speculative juices in the casino. In an honest free market, real investors would never give a quarter trillion dollar valuation to a business that refuses to make a profit, never pays a dividend and is a one-percenter at best in the free cash flow department—–that is, in the very thing that capitalist enterprises are born to produce.”

        “Why don’t the gamblers see this? The answer is quite simple. They have been in the casino so long they wouldn’t know honest price discovery if it slapped them in the head.

        Indeed, the nation’s and the world equity and other capital markets have been well and truly broken by the relentless, massive intrusion of the central banks and the resulting falsification of asset pricing everywhere on the planet.

        Whatever….it takes

        • Fast Eddy says:

          I had a row on the Mish Shedlock site with the author who was upset that France’s government was trying to disrupt Amazon because it was wiping out bricks and mortar by selling at a loss … as you point out they can do that because investors are in it for the long run with the expectation that when the competition is gone – Amazon can raise prices dramatically…

          Mish seems to think this is free enterprise at its finest… I am of the opinion that it is an abomination of the free market…. we agreed to disagree…

          It was either MIsh or Wolfstreet that ran a very good article last year that indicated that while online sales are hurting bricks and mortar substantially … that the volumes were nowhere near close to offsetting the losses at bricks and mortar…

          The reality is that people are simply buying less stuff…. because they have less money in their pockets.

        • Let’s all go invest in Amazon, Tesla, Facebook. These are the way of the future.

          • Fast Eddy says:

            If people only knew what was coming they would not spend their mental energy on ROI…. rather they’d take the money they were investing and blow it enjoying the last days of civilization…

            I tell friends that I no longer invest – that I just blow cash as if it were already toilet paper — I suppose they think I am crazy….

            • Gregg Armstrong says:

              “If people only knew what was coming they would not spend their mental energy on ROI…. rather they’d take the money they were investing and blow it enjoying the last days of civilization…

              I tell friends that I no longer invest – that I just blow cash as if it were already toilet paper — I suppose they think I am crazy….”

              Physical fiat currency units are cheaply produced Monopoly money. Digitally stored fiat currency units don’t even have the advantage of being Monopoly money. You are quite right to quickly get rid of them in exchange for useful physical goods (e.g., gold, silver, ammunition, 25-year Mylar packaged freeze-dried foods, toilet paper, medicines, etc.). Even metallic fiat coinage (bronze pennies, nickels, dimes, quarters, halves and dollars in America) will be in demand to make small change for gold and silver. But, physical fiat paper units will just be a poor substitute for TP.

            • Fast Eddy says:

              While I do have my 20 ft container full of stuff…. and I do have a box full of gold coins stashed away …

              I was thinking more along the lines of pissing away the TP enjoying the joys that BAU has to offer while it lasts… mega bucket list…

            • It is in some sense freeing if a person doesn’t feel like it is necessary to hold onto your money forever.

            • Fast Eddy says:

              The trick is to make sure you don’t run out of cash before the end of days….

  40. Tom S says:

    Great article Gail. I’ve come to much of the same conclusions.

  41. Christian says:

    Remember the classical athenian procedure to judge? There were not two moments, as now -declaration of culpability/innocense and eventually establishment of punishment. After the jury hearing everybody, the accuser finally proposed a punishment and the accused counter proposed another measure (be it a lesser punishment, not innovating or a reward; guilt was not addressed properly speaking)

    In case my salary was denominated in USD, I’d start thinking what to propose, just in case Russia is beliving at some point it will be able to set itself alone the price of oil

  42. hikerguy22 says:

    But is collapse such a bad thing, as without it we continue heat up the planet and most of the population will die anyway. With degrowth at least more of us have a chance to return to a more sustainable world.

    • Christian says:

      Could be, except whether a little bit more of bau gives us a chance to react and do something reg. nuclear spent fuel pools

      • Artleads says:

        If we can take advantage of bau to clean up nukes, we automatically would be advanced enough to maintain a version of civilization that is relatively harmless to nature. If we can do one, we should be able to do the other?

        • Christian says:

          Tell it to Putin

        • Fast Eddy says:

          Don’t you think that if there was a way to deal with spent fuel ponds we would not already be doing it?

          The reality is that spent fuel is volatile — it must be kept in high tech cooling ponds for years before it can be dry casked…

          There is huge incentive for someone to come up with another way …. some things just cannot be done… no matter what the incentives…

          • “There is huge incentive for someone to come up with another way ….”

            Sounds like Bill Gates is investing in some sort of “traveling wave” nuclear reactor that runs on nuclear waste. I wonder if we’ll ever hear of one existing in the real world.

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

            • scott says:

              A Traveling Wilbury’s reactor would be more fun. This new type of reactor will be coming online right about the same time as fusion, about 20 years.

            • I bet if they do successfully make a traveling wave reactor and start using spent fuel rods as fuel, suddenly there will be mass propaganda to instill terror in the public that nuclear waste is a danger to us all, in order to get subsidies for more reactors.

              Until there is such a solution, however, we will hear hardly a peep about spent fuel from any major politician, celebrity or rich person.

            • Fast Eddy says:

              +++++++++++

        • Stefeun says:

          Nope, Artleads,

          the worse the situation, the harder to cooperate.
          Atomization is most likely outcome 😉

      • Curt Kurschus says:

        The idea of using the temporary continuation of business as usual to clean up our mess whilst we still can may seem rational, but I do not see such a lot of rational or responsible thought or decision making by politicians or business leaders at the moment. Or mainstream journalists. Or homebuyers, property investors, car buyers, holiday makers, the list goes on.

        • Christian says:

          Do you think Putin do never think about this things?

          • Curt Kurschus says:

            Putin strikes me as being better than most in some respects (not so much in others), but he does appear to be still relying upon oil and gas exports to keep the Russian economy going through the decades ahead. That would suggest either that he has not seriously considered the developing global situation, or he does not wish to alert others to the probability that Russia may not be a reliable supplier of oil on the future.

            • Christian says:

              Nobody will be a reliable supplier of oil in the future

              But Russia is still a reliable supplier, even to Turkey who hit one of its jets

          • Duncan Idaho says:

            I used to think that Putin was a secondary KGB thug who accidentally ended up in power.
            He has proved himself very adept, and a force to be reckoned with.

    • Tim Groves says:

      All of the population will die anyway, apart from those who are immortal. 🙂

      The Stoic philosophers used to say that if a thing was outside of the realm of choice or control, it was neither good not bad. So if collapse is unavoidable, it is neither a good nor a bad thing. How individuals elect to cope with the consequences is where good and bad come into it.

      Is a more sustainable world going to be a more comfortable, convenient or pleasant world for its denizens? I suspect most of us in the First World would go for sustainable BAU-lite if the alternative was Third World poverty, slavery or starvation. But that option may not be on the menu. Third-Worlders manage on a tenth or less of the resources that First Worlders use, and yet in quality of life terms the differences are not nearly as great. A lot of happiness and satisfaction and a lot of misery and suffering can be found in palaces and mansions as well as in rural shacks and urban slums.

      • Fast Eddy says:

        Third Worlders are still deeply plugged into BAU…. they generally have access to roads, BAU goods and services, food, electricity etc….

        A collapse in population would mean the end of BAU — as there is not such thing as BAU Lite — so that would mean that even a Third World lifestyle would not be possible …

        A population/BAU collapse would mean a horrific situation for 7.4 billion people…. if any were to survive they would be living more like the primitive tribes of the Amazon and Africa… the lifestyle of a Third Worlder would be luxurious by comparison…. in many respects….

        I was just reading the article about how farming came about as a result of resource deficiencies… that of course lead us to where we are in terms of overshoot…

        Primitive tribes were able to relieve the pressures of resource (food mainly) scarcity by moving up the energy chain … first using wood to make metal tools …

        As we know — this lead to a huge deforestation problem… and the move to coal and oil….

        This time we get to find out what happens when the forests are gone… and there is no other energy source available….

        • Tom S says:

          Way too many people walking the earth. At least 80% too many. But we have 25 years left of cheap oil.

        • Stefeun says:

          FE,
          “if any were to survive they would be living more like the primitive tribes of the Amazon and Africa

          OK with “like”, but it’ll likely be in worse conditions, health-wise.
          Yesterday we visited a medieval castle in which there was a room dedicated to prehistoric stuff they found nearby.
          Exhibited was the skeleton of a 13500 years old lady, and I noticed that her teeth were absolutely perfect.

          That made me think that they were adapted to their environment and ecosytem including microbiote, which will NOT be the case for us when we find ourselves in the same situation.

          Same for knowledge: we may return back to stone age, but no longer knowing how to shape them (the stones).

          • Fast Eddy says:

            Like taking a primitive man and dropping him off on Wall Street and asking him to get a job at Goldman Sachs….

            • Christian says:

              Ha, very good, but personally I am far from being able to get a job at Goldman Sachs

              Never tried, but perhaps I would be more able to flint stones whithin a few months (have seen a couple of videos)

          • Ert says:

            “Exhibited was the skeleton of a 13500 years old lady, and I noticed that her teeth were absolutely perfect.”

            Our diet got certainly worse. Especially over the last 100-200 years. Without sugar, without refined products, additives, it will be better. In addition even our todays fruits are highly breed for sweetness and are picked unripe, thus having to much tooth destroying acid formic stuff in them.

            But the gene pool must be cleansed and my very basic knowledge of epigenetics let me assume that this may take lots of generations… since lots of damage has been done.. and the awaiting collapse will make it much worse before it gets better.

            • Artleads says:

              “But the gene pool must be cleansed…”

              This is where I tend to draw a blank. I just can’t see the future that involves these cleansed gene pools. I can only see the hyper complicated mess we have. No going back to “purity,” AFAICT.

            • Stefeun says:

              Right, Artleads,
              I forgot this sentence: there’s no going back, always forward (2nd law again…).

            • DJ says:

              If you have the genes that prevent you from procreating in a fossil free world you won’t. After that those genes will have been cleansed . What is so hard to understand?

              According to some/many here all of our genes will be cleansed.

            • Artleads says:

              @ DJ,

              “If you have the genes that prevent you from procreating in a fossil free world you won’t. After that those genes will have been cleansed . What is so hard to understand?”

              Hmm. This presupposes some kind of clear path to ANYBODY surviving the current trajectory/collapse of industrial society (IC). I know some people think there will be outlying pockets where humans will survive in small numbers. Could be, but I don’t sense this intuitively. Nobody can really PROVE this one way or another. What I DO sense intuitively is that there will be a way for most humans to survive. Not cleansed in any conventional way, however. No majority die-off. Just a very, very great cultural transformation. Just my 2 centavos…

    • Fast Eddy says:

      You won’t like downsizing | End of More
      http://www.endofmore.com/?p=1464

      • scott says:

        Pessimist: Things are so bad they can’t possibly get any worse.
        Optimist: Sure they can.

  43. cassandraclub says:

    Emerging markets (Brazil, China, Colombia, Indonesia, Kazakhstan, Kuwait, Malaysia, Mexico, Nigeria, Qatar, Russia, UAE and Venezuela.) have run up a debt of over $400 billion.
    https://www.bloomberg.com/gadfly/articles/2016-03-30/how-the-oil-market-is-like-the-housing-bubble
    I can’t imagine any of those countries giving a decent return on the invested capital. But I can imagine countries defaulting on that debt.
    https://www.bloomberg.com/gadfly/articles/2016-08-10/emerging-market-debt-bomb-ticks-for-oil-prices

    • Sungr says:

      These countries are really hurting. Most of their debt was in dollars via cheap US loans after 2008. Then the bottom dropped out as resource prices went DOWN and the dollar went UP due to a number of factors- a big slowdown in China for one- so they are paying back what have become expensive loans with a shrinking export income.

      Many observers feel that the USD strength is due to a broad international consensus to discontinue use of the USD because of the criminal nature of Wall Street and it’s link with US global hegemony schemes. Unfortunately, it takes USDs to get out of USD
      obligations.

      Also, some may view the US as a sort of safe haven due to the size and depth of US financial markets. A lot of people were scared back into the USD when the Chinese gov started doing major totalitarian interventions in Chinese markets in 2015.

      • Christian says:

        “Unfortunately, it takes USDs to get out of USD obligations.”

        That’s why usd obligations and oil price should be disengaged (asap)

      • Sungr says:

        Just noting, I guess the resource nations were double-blinded by not only a drop in most commodity prices but also by their own dropping currencies. And then the rising dollar made the pain worse with each loan payment.

        Correction- USD strength is not because of it’s unpopularity- just mentioning that some USD usage comes from nations like China that are actively working to disengage from the USD- but need to maneuver in FX markets with USD securities to accomplish their objectives.

        Here look at this chart for copper- from 12/15 That’s what deflation looks like.
        http://investingnews.com/daily/resource-investing/base-metals-investing/copper-investing/copper-price-forecast-2016-quaterra-resources/

        • Christian says:

          USD strenght is becoming increasingly unpopular, I thought about SDR but do those articles propose a means to put it where it should be?

        • Fast Eddy says:

          In order for these prices to recover we need to see China – or some other driver — replicate what China did post 2008… i.e. a massive build out….

          Actually we need that and then some … because we must forever spin the wheel faster… otherwise we get a deflationary collapse…

          It is difficult to imagine the economy getting back to those levels – never mind exceeding them — overall debts are through the roof…. and China achieved that growth spurt by building infrastructure and houses that were not needed to generating no return….

          It’s been said before — it feels like a Wiley E Coyote moment….

          • doomphd says:

            Well, I want to personally volunteer to pour more concrete in 6 months than China did in 3 years, which was moron than the USA poured in all of the 20th century. That should help us build a causeway between Hawaii and the west coast of the USA, and keep BAU going for at least one more year.

            • Tim Groves says:

              Interesting novel use of the word “moron”. You may have done it as a typo, but I like the sound of it. To be moron than = to be moronic on a large scale than. It ranks right up there with some of the classic GW Bushisms.

    • Tim Groves says:

      I’m not an economist and nor do I play one online, but I have a general question. Why are all these resource-rich “emerging market” countries suffering currency devaluation re. the US dollar, while resource-poor “basket case” Japan can’t keep the yen from soaring against the Greenback despite the government making devaluation a priority?

      • Fast Eddy says:

        NZ just dropped rates … and the NZD spiked higher against the USD…. the given reason was that the drop was expected and baked in …

        What I think is that we are not being given the full picture in terms of currency policies of the CBs… we are seeing only the tips of the icebergs…. if the general public were given full details they’d likely panic… stop spending … and cower in fear….

      • Christian says:

        Beacuse devaluation is the mark of the neocon tax in third world CB’s and treasurys balance accounts

      • Christian says:

        Since when is the yen soaring against usd? Any chart?

        • Tim Groves says:

          Basically the yen’s risen by 20% against the USD since its June 7, 2015 low point of 124.63 to the current 102.3. I’m not sure how to embed charts, but this page at Xe has most of the relevant info.

          http://www.xe.com/currencycharts/?from=USD&to=JPY&view=1Y

          Five years ago the yen rose as high as 75~80 to the USD, partly due to the repatriation of large amounts of funds held abroad by insurers in the wake of the big earthquake, and the Japanese government made it a plank of their economic strategy (the so-called Abenomics) to try to lower the yen. By 2014, they had succeeded in getting it to 120~125 to the USD, but since then it has “soared” back to just over 100.

          Japanese fundamentals are apparently so bad that nobody has had a good word to say about them for years. Yet for some reason the currency remains a safe haven.

      • “Why are all these resource-rich “emerging market” countries suffering currency devaluation”

        The value of a currency is based on demand for it, so if no one is buying what they are selling, their currency is less valuable. Particularly compared to how much they in turn demand goods from outside their country.

        “while resource-poor “basket case” Japan can’t keep the yen from soaring against the Greenback”

        Maybe carry-trade or something else creating demand for Yen, idk. Keep in mind, Japanese debt is mostly internal and Yen-denominated, unlike many debtor nations.

      • Good question! We can no longer use the resources of emerging markets profitably. Japan sees the funeral industry as a growth industry, but little else.

  44. Stilgar Wilcox says:

    http://peakoil.com/production/the-consequences-of-big-oils-exploding-debt

    I’m going to keep this short in hopes of getting it posted here. Nothing we didn’t already know, but it is another article on the ballooning debt of the oil industry.

  45. Yoshua says:

    Low oil prices destroys demand. Oil producing nations with falling revenues from oil exports are forced to also cut imports.

    Since the oil production costs did not decline equally with the declining oil price, their currencies started to collapse with the collapsing oil price.

    A devalued currency also destroys demand for imports or the amount of energy as goods and calories a nation can afford import, as a desperate way of cutting a nations energy use in their production of energy or oil.

    Most major oil producing nations currencies collapsed with the collapse of the oil price. The only nations that went against that trend was Saudi and company, but they are now burning through their dollar reserves.

  46. People seem to believe that somehow a simple solution is just around the corner.

    • Pintada says:

      They hope with all their being, in spite of the facts. Its called being human, and that in a nutshell is why this civilization is toast.

    • common phenomenon says:

      Oh no! Now it’s peak “blue response boxes” for Gail. 🙁

    • Ert says:

      I certainly is – the problem for most is that it doesn’t include themselves and most (or all) others.

      Nature can thrive without humans 😉

    • Stefeun says:

      Right, Gail.
      Unfortunately (or not), a solution is a specific answer to a well-defined problem, which itself is an isolated question, separate from all external influence.

      Therefore, by definition, a complex system cannot accept any “solution”, it’s a nonsense. Rather, it constantly shifts from an equilibrium to another.
      And has no other goal than to reach thermal death ASAP (2nd law of TDs), not “live happily for ever”.

      We’ve been excellent at that problem-solving game and managed to fix lots of particular points, but never really have considered the side-effects of our fixes, into which we’re now drowning.

  47. Tim Groves says:

    Ambrose Evans-Pritchard has become a cheerleader for renewables, and he’s touting the potential of rhubarb-based electricity storage (I am not making this up!) as the headline to his article claims “the holy grail of energy policy is in sight”.

    http://www.telegraph.co.uk/business/2016/08/10/holy-grail-of-energy-policy-in-sight-as-battery-technology-smash/

    • Greg Machala says:

      You can sense the desperation in the air. Words like “holy grail” just reek of a sales pitch and desperation. Unfortunately, I think technology will ultimately lead to the discovery of the “holy grail” of reality.

    • Fast Eddy says:

      Pritchard is of course a tool … and many of his articles are regurgitated press releases from the Ministry of Truth … which is tasked with calming the sheeple before they head for the starvation pits….

      • Tim Groves says:

        This one reads like Ambrose barely even chewed over the Ministry’s talking points before swallowing and regurgitating them for his audience in tasty bite-sized portions. There is a total absence of balance and no discussion of the possible impediments, drawbacks or imponderables involved in grasping the “holy grail” of “renewables we can rely on”.

        Hard on the high heels of Theresa May’s intervention in the Hinkley Point project, along comes Ambrose to tell his readers that they don’t need no stinking Franco-Chinese nuclear power plants, giving HM Government some useful cover if they decide to pull the plug on the deal. Then they can spend the budget on more Chinese solar panels and wind turbines instead.

        • Fast Eddy says:

          DT like most other MSM sites have now removed the comments section …. that allows them to publish lies without being called out on them….. which means the sheeple don’t get a whiff of truth …. only the hopium gets through

          • Ert says:

            Same in Germany. Comment sections are highly moderated, comments get deleted if they do not match the agenda (especially in case of the illegal immigrants topic) and in addition comment sections get closed very fast. Information about world affairs portrait often fals information, even years after the facts are established (i.e. Syria, Ukraine) or don’t question politicians (i.e. when Merkel stated recently that she never was supporting the Irak invasion under Bush II – in fact she opposed the Schröder government and visited Bush to speak her support as German opposition leader for invading Irak).

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