What really causes falling productivity growth — an energy-based explanation

What really causes falling productivity growth? The answer seems to be very much energy-related. Human labor by itself does not cause productivity growth. It is human labor, leveraged by various tools, that leads to productivity growth. These tools are made using energy, and they often use energy to operate. A decrease in energy consumption by the business sector can be expected to lead to falling productivity growth. In this post, I will explain why such a pattern can be expected, and show that, in fact, such a pattern is happening in the United States.

Figure 4. Total amount of energy used by Commercial and Industrial Sector (excluding transportation) based on EIA Energy Consumption by Sector, divided by Bureau of Labor Statistics Total Non-Farm Employees by Year.

Preview of Figure 4. Total quantity of per capita energy used by the US Commercial and Industrial Sectors (excluding transportation). Computed by dividing EIA Energy Consumption by Sector by Total Non-Farm Employment from the Bureau of Labor Statistics.


The problem of falling productivity growth seems to be a concern to many economists. An August Wall Street Journal article is titled, Productivity Slump Threatens Economy’s Long-Term Growth. The article says, “Productivity is a key ingredient in determining future growth in wages, prices and overall economic output.”

The general trend in falling productivity growth does not seem to be particularly recent.  OECD data shows a long-term pattern of slowing productivity growth, dating back to the 1970s for many developed economies.

Figure 1. Five-year average growth in productivity based on OECD data

Figure 1. Five-year average growth in productivity per hour worked based on OECD data.

Falling productivity can be expected to affect wages. Figure 2 shows that in the United States, wages for both low and high paid workers increased much faster than inflation between 1948 and 1968. Between 1968 and 1981, wages for both sets of workers stopped rising. After 1981, wages for high paid workers (“Top 10 percent”) have risen much faster than for the bottom 90%.  This reflects the way this lower productivity has been distributed to the work force. Low-wage workers have been affected to a much greater extent than high-wage workers.

Figure 2. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis IRS data, published in Forbes.

Figure 2. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.

A Major Culprit in Falling Productivity Seems to Be Diminishing Returns with Respect to Oil Extraction

Many people believe that the only oil problem we need to worry about is the possibility that supply will “run out” at some point in the future. In my opinion, the real problem is different. What we are experiencing is diminishing marginal returns with respect to oil supply. In other words, it is becoming increasingly expensive to extract and process oil. Total costs, including wages for human labor, the cost of capital, the cost of energy to extract the oil, and required tax payments, are rising ever higher. Businesses are finding it nearly impossible to earn a reasonable profit extracting oil. If oil producers want to cover all of their costs, they need to borrow an increasing amount of money simply to cover normal business expenses, including the development of new fields (to replace currently depleting fields) and the payment of dividends.

Figure 3. Bloomberg exhibit showing that returns for three large oil companies on a "cash" basis fell after 2008, and are now at 50-year lows. CROCI means "Cash Return On Capital Invested." Bloomberg source.

Figure 3. Bloomberg exhibit showing that returns for three large oil companies on a “cash” basis fell after 2008, and are now at 50-year lows. CROCI means “Cash Return On Capital Invested.” Bloomberg source.

The problem of diminishing marginal returns extends to other commodity types as well, such as coal, natural gas, fresh water, and metals. Oil is especially important, because it is energy-dense and easy to transport, making it the world’s most-used fossil fuel. At the same time, we are experiencing rising costs for pollution control of various kinds, including attempts to prevent climate change.

The combination of diminishing returns for commodity production together with rising pollution control costs tends to make the world economy increasingly inefficient. This increased inefficiency affects the cost of producing many things that consumers value, including food, fresh water, housing, and transportation. Indirectly, the ability of businesses to create jobs that pay well is affected, also. I believe that this growing inefficiency in producing goods and services is the basis for the falling growth in productivity that appears in Figure 1.

Why Diminishing Returns with Respect to Energy Supplies Are Likely to be the Culprit in Falling Productivity

There are several basic issues that make our economy vulnerable to the impacts of diminishing returns:

  1. Energy plays a critical role in creating goods and services, and thus in economic growth.
  2. Energy that is very inexpensive to produce is important in setting up a benevolent cycle of greater productivity and more economic growth.
  3. Diminishing returns for oil and other energy products lead to higher costs of production. If these higher costs of production are passed through to the consumer as higher prices, this leads to what we think of as a recession, and a slow-down in economic growth.
  4. The timing of falling productivity “matches up” with falling energy consumption on the part of employers, and also with high oil prices.

Energy plays a critical role in economic growth because energy is necessary for all kinds of economic activity. Energy allows transportation to take place; it allows heating to take place, so metals can be smelted and chemical reactions of many kinds can take place; it allows the use of computers and the internet. When workarounds for problems are needed–for example, increased pollution control, or deeper wells, or desalination plants–all of these workarounds also require the use of energy products. So, the problem is not simply that it takes more fossil fuel energy to create energy products. Many other parts of the economy, including pollution control and extraction of fresh water and minerals, become more demanding of energy supplies as well.

Cheap-to-produce oil and other types of energy are important in setting up a cycle of economic growth. We think of productivity growth as being something that an employee is able to do. In fact, productivity growth is enabled by the use of “tools” that the employer (or the government) gives workers, allowing these workers to create more goods and services per hour worked. These tools can be either physical tools, such as machinery, computers, vehicles, and roads, or they can be tools provided through more specialization and training. In the case of physical tools, it is clear that energy is used both to create and operate the tools. In the case of specialization, energy is needed in a more indirect way; extra energy allows the economy to have sufficient surpluses to permit training of specialized workers, and also to allow them to have higher wages later.

Thus, we can think of human labor as being increasingly leveraged by energy-related tools. In fact, if we divide energy consumption of businesses (commercial and industrial) by the total number of non-farm employees in the United States, we find that energy consumption per employee falls very much according to the pattern we might expect, based on the rise and then fall in productivity growth shown in Figures 1 and 2. A slowdown in energy leveraging seems to correlate with the decline in the rate of productivity growth.

Figure 4. Total amount of energy used by Commercial and Industrial Sector (excluding transportation) based on EIA Energy Consumption by Sector, divided by Bureau of Labor Statistics Total Non-Farm Employees by Year.

Figure 4. Total quantity of per capita energy used by the US Commercial and Industrial Sectors (excluding transportation). Computed by dividing EIA Energy Consumption by Sector by Total Non-Farm Employment from the Bureau of Labor Statistics.

Figure 4 shows that energy consumption per employee reached a peak in 1973. Energy consumption per employee started falling in 1974. This date corresponds to the first major run-up in oil prices (Figure 5). Oil prices, on an inflation-adjusted basis, have never returned to the very low level experienced prior to 1973.

Figure 4. Historical annual average price of oil, for a grade of crude similar to "Brent," based on data of 2016 BP Statistical Review of World Energy.

Figure 5. Historical annual average price of oil, for a grade of crude similar to “Brent,” based on data of 2016 BP Statistical Review of World Energy.

The period between the end of World War II and the early 1970s was generally a period in which inflation-adjusted oil prices were under $20 per barrel. At this very low price level, it made sense to add a new interstate highway system and to greatly upgrade the electric grid and the oil pipeline distribution systems. Once oil became high-priced, the US greatly backed away from leveraging worker productivity with such big projects. Other changes began as well, including gradually shifting manufacturing to other countries. These countries typically had lower labor costs and a cheaper energy mix (more coal and hydroelectric, and less oil).

The first run-up in prices occurred after US oil supply reached a peak in 1970 (Figure 5). According to a presentation by Steve Kopits, the second run-up in prices started occurring about 1999 (Figure 6). By then, we reached a point where a disproportionate share of the cheap-to-extract oil had already been removed. Oil producers needed to start work on new oil fields in areas where extraction costs were higher.

Figure 5. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is "Compound Annual Growth Rate."

Figure 6. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is “Compound Annual Growth Rate.”

Oil’s diminishing returns affect the economy. As we reach diminishing returns with respect to oil production, the cost of producing additional barrels of oil tends to increase. If this higher cost is passed on to goods made directly and indirectly with oil products, we find that the prices of many products rise. Food costs are particularly affected, because oil is used extensively in agriculture and in transporting goods to market. Higher oil prices affect the cost of other types of goods, because many goods–even coal–are transported using oil. The higher cost of oil tends to ripple throughout the entire economy.

The problem, however, is that higher oil costs lead to lower productivity, because employers and governments tend to purchase fewer energy products for the benefit of their workers when oil prices are high. We end up with a mismatch:

  • The cost of oil products, and many other products, tends to rise.
  • The productivity of workers tends to grow more slowly. Wages rise very slowly, if at all. They certainly do not keep up with soaring oil prices.

The result of this mismatch is recession, as occurred in the 2007-2009 period. Economist James Hamilton has shown that 10 out of 11 post-World War II recessions were associated with oil price spikes. A 2004 IEA report states, “.  .  . a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. Inflation would rise by half a percentage point and unemployment would also increase.”

A Second Way Diminishing Returns Can Work Out Badly: Prices that Are Too Low and Oversupply

In the preceding section, I explained how oil prices, if passed on to the consumer via higher prices of other goods, could lead to recession. Because our economy is a networked system, the situation doesn’t need to work this way to come out badly. There is an alternative scenario in which oil prices stay too low for businesses extracting oil to make an adequate profit. In this scenario, it is businesses, rather than consumers, who find that they have a huge financial problem. This is the problem we are encountering now. In fact, it is not just oil-producers who have a profitability problem; the profitability problem extends to businesses producing coal, natural gas, metals, and many kinds of agricultural commodities.

The reason why this kind of low-price scenario can take place (despite rising costs) is because workers are also consumers. We saw in Figure 2 that the wages of the lower 90% of workers tend to lag behind when energy consumption per worker is falling. There are a very many workers in the bottom 90%. If the wages of these workers lag behind, homes, cars, vacations, and many other kinds of discretionary goods become less affordable. The reduced demand for these finished products leads to lower demand for a wide range of commodities. This lower demand tends to push commodity prices of many kinds lower, even though the cost of production is rising. As a result, profits for a wide range of commodity producers tend to fall in a way similar to that shown in Figure 3.

It may be that we can expect a recessionary impact, a short time after profits fall. According to Deutsche Bank:

Profit margins always peak in advance of recession. Indeed, there has not been one business cycle in the post-WWII era where this has not been the case. The reason margins are a leading indicator is simple: When corporate profitability declines, a pullback in spending and hiring eventually ensues.

The article goes on to show that there is a lag of about two years between the time of profit compression and the time when recession hits. The amount of variability is quite high, with one recession coming as soon as 4 quarters after a fall in profitability, and two coming as late as 15 or 16 quarters after a fall in profits. The median lag was 8 quarters, and the average lag was 9 quarters.

This Deutsche Bank description of the cause of recessions gives an explanation why Hamilton encountered recessions after oil price spikes. These rising oil prices affected one of the costs of production for most companies. These rising costs compressed profits, and eventually led to recession.

This description of the cause of recession shows how recession can also ensue if commodity prices remain too low for an extended period. We know that oil prices began falling in the third quarter of 2014. It is now two years later. Profit margins of many commodity producers have been squeezed. We have already seen layoffs in the oil and coal industries. In this low-priced situation, companies are affected unevenly: some benefit from low prices, while others are hurt by low prices.

Commodities are often essential to economies, especially for countries that export commodities. These exporters are especially likely to be affected by low prices. Impacts are likely to include civil disorder and falling production, similar to what we are now seeing in Venezuela.

Oil importers are dependent on oil exporters, so eventually oil imports must drop. Low oil prices are likely to lead to a drop in locally produced oil products as well. As a result, we can expect that less oil and fewer other energy products will be available for leveraging the labor of human workers. If past patterns hold, we can expect a further decline in productivity growth. Rising oil prices are not really a solution either, because, as we have seen, they tend to lead to recession.

Diminishing Marginal Returns Don’t Just Go Away by Themselves

Economists claim that the law of diminishing marginal returns operates only in the short run, because in the long run, all factors of production are variable. This statement might be true, if we lived in a world without limits. In fact, the amount of arable land is very  close to fixed. We have not found a way to stop population growth, either. As a result, the amount of arable land per person is falling. We need to keep finding ways to produce increasing amounts of food per arable acre of land. Doing so typically requires energy products, including oil.

We are having similar problems with fresh water supply. We can solve our falling fresh water per capita problem with deeper wells, long-distance transport, or desalination. Any of these workarounds requires energy products.

Of course, we have had diminishing returns with respect to oil supply since the 1970s. We have not yet found a reasonable workaround. Intermittent electricity is not a reasonable substitute; it does not power existing airplanes, trucks and most cars. When all costs are considered, intermittent electricity tends to be very expensive. Experience shows that if subsidies are given for intermittent electricity, they are needed for other types of electricity generation as well.

Figure 7. Figure by Euan Mearns showing relationship between installed wind + solar capacity and European electricity rates. Source Energy Matters.

Figure 7. Figure by Euan Mearns showing relationship between installed wind + solar capacity and European electricity rates. Source Energy Matters.

The belief that diminishing marginal returns are temporary is probably related to the belief that there are substitutes for everything, including energy supplies. Unfortunately, this is not the case; the laws of thermodynamics dictate otherwise.

As a result, when businesses use falling amounts of energy per capita, we should not be surprised if productivity lags, and if wages for many workers barely rise with inflation. It is possible to get some productivity gains through education, but it is very unlikely that these gains are as large as when more capital goods are used, as well as more direct use of energy.  There are also clearly diminishing returns with respect to education and training; for example, if we need 10,000 additional dentists per year, training 50,000 additional dentists per year would not be helpful.

Can We Solve Our Productivity Problem with Lower Interest Rates, or with Increased Deficit Spending?

I wouldn’t count on it. Our problem is an energy problem.

Increased deficit spending could perhaps raise commodity prices a bit, and thus help the profitability of companies producing commodities. The reason commodity prices might rise is because increased spending by governments would act to supplement the low spending by workers who are suffering from low growth in wages. The sale of goods might rise for a while, but productivity of workers would still lag. Economic growth would, at best, remain very slow. If the economy were headed for recession or the collapse of commodity exporters, that situation would continue to be the case.

Lower interest rates would likely be even less helpful than deficit spending. There is no guarantee that these low interest rates would lead to increased spending on capital goods that would benefit workers. Banks in Europe and Japan would likely have even more problem with adequate profitability than they do now. Bank failure would become even more of a concern than it is now.

Our problem is really a lack of very cheap-to-produce energy that can be used to inexpensively leverage the labor of human workers. This energy needs to be of the correct kind to match the requirements of existing equipment. Without this leveraging, it is likely to be impossible to fix our productivity problem.




2,051 thoughts on “What really causes falling productivity growth — an energy-based explanation

  1. Berlin could use a loophole in the bank-rescue legislation that allows a precautionary state recapitalization of a bank that has failed a stress test. The finance ministry could try to persuade the bank’s supervisor to test Deutsche’s capital cushion, allowing the government to step in with a capital injection should the bank fail the test.

    While some economists see this as bending the rules, most say it would leave them intact.


    Doooosh Bank is unlikely to be the trigger…. also the fact that we do not have troops on the street (yet) leads me to believe the el.ders have this under control.

    Continue with the bucket listing…. nothing to see here

    • The e-ders might be comfy enough, but there are others who are sh-tting their pants. http://www.bbc.com/news/world-europe-37155060

      The bank run begins.. http://www.zerohedge.com/news/2016-09-29/run-begins-deutsche-bank-hedge-fund-clients-cut-collateral-exposure

      It’s good that you have faith in your e-ders. I don’t have that much faith in my version, the deep state neocons. The solutions in my mind, from the ruling elite, are too much like naive comic book solutions, without proper consideration to what the real world is actually like.

      • The MSM always frets when ordered to … it’s how they get the sheeple to welcome the next imposition on them…

        Think about terror — far more people are killed by guns in the US than terrorists in any given year…. but terror is a tool…. to frighten

        Think about 2008…. Lehman was let go … to frighten the masses…. and allow the central banks do ‘whatever it takes’ —- without any real opposition … trillions upon trillions of dollars… and nary a vote on that…

        Looking at the big picture — as has been discussed …. it appears that they are setting the table for Martial Law Lite…

        The Doosh Bank problems could be the ultimate trigger —- if so then I expect confirmation will come in the form of troops on the street…. beforehand….

        All it would take is a significant act of terror …

        There is no question that the pressures are building…. another quarter of declining corporate profits…. Japan seems to be out of options…Europe’s banks are going to pieces…. global trade is very weak….

        Let’s see….

        Once we cross the rubicon things will move very quickly….

        • As I recall, our great leader here in New Zealand is of the view that the banks in this country won’t collapse – which is why he wrote legislation for bail ins from depositors with no deposit insurance. Given the degree to which banks around the world are interdependent, and how dependent New Zealand is on overseas borrowing to fuel the housing boom that is helping to keep our economy propped up, added to what we saw in the global meltdown that happened last time a big bank collapsed. Last time we were effectively saved by China’s debt fuelled mass spending. This will probably be a whole new situation for New Zealand if Deutsche Bank collapses.

          On the other hand, so long as celebrities are getting married and divorced, sports teams are battling it out on the field, and cute animals are dancing on screen, it may well be that nobody notices anyway.

    • I think DB collapsing could do it actually if only because the people in charge cannot with any accuracy predict what will happen when those financial weapons of mass destruction go off.

      • I posted something along those lines in response to your earlier comment — it’s hung up by the

        • What re all those black band-aides doing covering that fine piece of art? They missed at least one sensitive area, but I’m not telling!

  2. Who will buy the goods and services once the robot army takes over all the jobs?

    Does each person get some tokens?

    I think the USSR already tried this system — the workers were turned into robots….

    • “Who will buy the goods and services once the robot army takes over all the jobs?”

      A robot and computer is made to serve it’s owner. You are a human automaton with petty needs and you, too, have owners.

      “I think the USSR already tried this system — the workers were turned into robots….”

      The employees/workers/plebs owned that joint. And see how that went.
      Communism is groupthink at max speed towards dystopia.

      • You are aware that you are discussing a world run by robots — in a world that is right now collapsing?

        Let me guess – when you were a kid you were addicted to

        • So if it collapses, where is the instadoom? Keeping your fingers crossed? Could you grasp this concept that the world is a plutocracy?

          And it is already run by machines and computers. Modern mechanized agriculture. Large wheeled ‘robots’ that does all the traditionally heavy labour.

          I think it’s time you broaden your view on how robotification, automation, mechanization and computerization eventually will conclude…

          .. Which is as the obsoleteness of human plebs/workers/consumers. The sh1tty humanoid automatons will go the way of the dodo.

          Because it is the wish of the owners.

          • No – the world is run by humans… computers are our slaves.

            As for slow vs fast… I want it to be slow…. but the logic side of me says fast.

            Have you got any good paint by numbers stuff for us to see?

            • Smite’s argument, and quite correct one is that the process of automation-robotization, has been also wildly applied to data processing, hence the ability now to cut off large parts of the former middle managerial layers/jobs, which is INDEED happening ALL across the board for THIS VERY REASON.

              Simply, the CBs and top trans nationals can very easily through data mining of credit card purchases, bank accounts, shipping etc. see large meta-patterns of consumer behavior and steer their operation in desired course.

              In this sense the world is already operated by the Elite and their algorithms-robots.
              The middle layers are obsolete, the next big step/goal is to triage away more of the former consumers, which are debt over saturated on personal as well .gov level..

            • Robots are tools. Nothing more.

              Are they taking jobs away from humans. Of course they are – they have been for thousands of years.

              Are there limits?

              Can a robot install a toilet?

              Does any of this matter? Nope.

              There will soon be no robots.

            • worldofhanumanotg; pretty much spot on.

              “Simply, the CBs and top trans nationals can very easily through data mining of credit card purchases, bank accounts, shipping etc. see large meta-patterns of consumer behavior and steer their operation in desired course.”

              Thus no need for a large staff of corporate drones doing their biased and half-witted analysis while bored to death while watching at the clock wanting the day to end.

              “No – the world is run by humans… computers are our slaves.”

              The world is run by the elites with their automatons; plebs, computers and machines.

            • Well yes… one can look at that way…. the E.lders run the world…. the go-yim cattle are the tools… along with the computers.,… but don’t forget the hammers…. and chainsaws…. they are all subjects of the empire too

              Many of us are very happy tools – we are treated quite well by the masterminds

            • “Can a robot install a toilet?
              Does any of this matter? Nope.”

              From goddamn Investment Banking to Plumbing within a post or two. Complexed ignorant much?

              Pick something harder, not merely an engineering challenge.
              For example: Who’s going to write the software for the robots and computers?

              I’ll propose that the final relevant and productive job for a human will be that of a computer programmer. When software can be created using other software. Then the game is completely over for the plebs.

            • I can see that you feel very strongly about this robot subject.

              If only you could see the bigger picture — that it does not matter — your blood pressure would stabilize.

              If you are unable to get your mind around that you can always dull it with:

            • actually installing a toilet matters a great deal.

              The point being that any animal discharges a certain amount of bodily waste each day,

              In humans thats about 240 lbs a year (give or take)

              If you live in a static environment, you have to shift that much or be overwhelmed by it—in a modest sized town, 10000 people maybe—well you do the math—.
              Putting it onto fields nearby?—great idea, except that you conveniently recirculate all the pathogens that every has, to everyone else, very rapidly

              Going into the woods with a shovel is fine, until everyone is doing the same thing

              If you’re prepared to put up with the stench and disease of medieval living, then fair enough. If not, then consideration about sanitation as being one of our prime future problems is worth thinking about

            • The medieval people must have been stupid!!! They didn’t know how to dispose of their waste — so they spread disease….

              All they had to do was dig a hole — put it in there – and cover it up … then move to the next hole…

              Funny how we all think we are so much smarter. Funny how we do not realize that doing the above will pollute the water table….

              Funny how we think we can throw hundreds of thousands of tonnes of spent fuel ponds into the ocean without killing everything in the ocean…

              Funny how we think we can just dig up our lawns, find seeds somewhere and keep the water tap running – and feed our families…

              The impossible seems so easy — until you actually have to try it.

              Shall we try Collapse Lite?

              Turn off the power for a week and don’t use any fossil fuels. Start going to the bathroom in a hole…. keep a diary … then post it on FW when the week it up…. 3-2-1…. go.

              Of course nobody will do that…. nobody will even try that for a day…. because doing so would pierce the bubble of delusion …. it would lead to despair when one realizes that when BAU goes everything goes… you will be like a person thrown naked into the forest….

              And you will realize — those Medieval people were not stupid after-all….

            • they thought that the carrier of disease was the smell itself, not the excrement

              hence the word Mal-aria, Bad air.

              They had no way of knowing differrently.

            • “I can see that you feel very strongly about this robot subject.”

              I don’t need numbness. I want to accelerate this process so that we can take the next step in our evolution. You know, to see how deep this rabbit hole goes.

              If that means you and your cronies, actually most people on earth, will be kicked out of the B(A)Us, so be it. You are mostly yet another useless and boring humanoid automaton anyway.

      • Capitalism – “The extraordinary belief that the nastiest of men with the nastiest of motives will somehow work for the benefit of all.”

        That is pretty good!

      • Wouldn’t the robots just kill off all the useless humans?

        Why would the robots assume the jobs of humans? If they kill off the humans why do anything that is not related to maintenance of the robots’ inner workings?

        • You assume a computer/robot-only society. And rightfully, once General AI/intelligence eclipses that of a human, it will be impossible for the owners to control the outcome indeed.

          In the mean time, there will be the owners with their machines, robots and computers supporting them and much less unproductive and resource wasting humans.

        • FE has got a point here. DB has been falling like a rock for years, so it should have been fenced off already. That’s also the story DE .gov and ECB actively portraits as well. Or it could be used as an convenient trigger over the next collapse threshold, i.e. increased portion of the planned economy from now on as they have not yet bought all the markets equity, not mentioning bonds of companies. The project of forced japanization of the rest of the world economies might need a convenient scapegoat. Let’s see what’s ahead..

    • ‘Radiation is also a big concern, with space travellers exposed not only to the sun’s radiation but to cosmic rays that are difficult to stop. Nasa has yet to solve the problem, and Mr Musk brushed off questions about it on Tuesday, saying he thought it would not be a problem.’

      K.eith – you and Elon have something in common! If it can’t be done you just brush it off 🙂


      “There is a huge amount of material that has to support these people,” says Mr Smith. “They are not going to be drinking water from a local creek or cutting down firewood. They will have to bring everything with them.”

      One would be forgiven if that was pulled off of The Onion … but nope…. it is a main page headline on a leading ‘serious’ MSM…. I am sure if I did a search I’d find the same rubbish all over other MSM sites….

      I can imagine the discussion around the dinner tables of millions of families this weekend will be about how wonderful it will be to travel to Mars very soon.

      And around the other billions of tables the discussion will involve Paris/Kim/Justin’s latest antics…. followed by bitter, divisive arguments over who should win American Idol …

        • We barely have enough energy on planet Earth to keep all the people clothed, fed and housed. There is a lot less energy on Mars than Earth. So, indeed where will the energy come from to power another virtual human world on Mars?
          Of this I am sure: there is, was and will never be human life on Mars. We did not evolve on Mars. We are part of this Earth. We evolved from this Earth. We cannot survive on Mars because we did not evolve on Mars. This whole idea of Humans on Mars is just dam stupid shit. Anybody dumb enough to think we will terra-form Mars is just stupid to the nth degree. We can’t even take care of this planet so how in the hell will we terra-form a planet millions of miles away?

      • Mars ain’t the kind of place to raise your kids. In fact it’s cold as hell. But despite that, you can get a hell of a suntan there.

        Without a global magnetic field and with little atmosphere to provide shielding, the surface of Mars is bombarded by two types of primary radiation. Solar flares are bursts of low-energy protons from the Sun; they are intermittent and relatively easy to shield against. Galactic cosmic rays (GCR) are extrasolar, high-energy atomic nuclei that damage DNA; they are continuous and cannot be shielded against, so determining the dosage an astronaut would receive is necessary prior to any human exploration. Mars Odyssey’s Mars Radiation Environment Experiment (MARIE) provided the first direct information about the martian radiation environment. It found radiation exposure at the martian surface to be about two and a half times that at the International Space Station, in agreement with calculated values.


        • confirms Musk’s delusions.

          Existence in a sustainable context requires continued employment iin the context of net acquistion of energy—namely food, or fuels of some kind

          Mars can deliver neither, so must be externally supported

        • How about sending the robots to Mars and letting them go about the task of mining minerals and growing biofuels and food there that they can ship back to Earth to keep humanity happily provided for while we focus on what we do best, which is being fruitful and multiplying?

  3. He also reiterated there will be no annual war games between the Philippines and the United States until the end of his six-year term, placing the longstanding alliance under a cloud of doubt. It also may make Washington’s strategy of rebalancing its military focus towards Asia in the face of an increasingly assertive China much more difficult to achieve.

    Still, U.S. Defence Secretary Ash Carter, speaking before the latest remarks from Duterte, said Washington had an “ironclad” alliance with Manila.

    A senior U.S. defense official, also speaking earlier, told reporters that the United States had a long enduring relationship with the Philippines regardless of who was president.

    “It’s going to continue to survive based on what we think are strong U.S.-Philippines common security interests, so we’ll be engaging President Duterte further,” the official said.


    This is worth watching again…

    • If Trump gets in, I imagine Duterte will flourish. The two men are distinctly “of the people”. But if Hillary takes over, she may decide to “come” and “see” him.

      • Duterte or any other guy from the bunch next line will just flourish. To my understanding, it’s not the case of a faction or single dictator taking over, more or less most of the military people were fed up with the status quo. Moreover on the ground there, it’s rather impossible not to witness the vast change as increasingly just everything is suddenly Chinese, from consumer trinkets, to investments and credit. So why on Earth should they continue obey some falling former power long distance away across the Pacific, which brings nothing, only death and problems in its wake.. ? This is one of the major fracture lines why the former hegemon is loosing it in Asia fast.

      • I love his colorful language. Since he’s called all male leaders he’s encountered so far sons of bitches, what will he call Hillary?


    Deutsche Bank Sinks to a Fresh Record Low

    Deutsche Bank Troubles Sour Quarter’s End for European Equities

    The German lender sank 6 percent to a fresh record low, following losses in its U.S.-listed shares, after some hedge funds moved to cut their exposure to it. Banks led declines among industry groups in the Stoxx Europe 600 Index, which dropped 1.5 percent at 8:14 a.m. in London. The benchmark’s down 2.2 percent this week, the most since June.


    • Soros shorted DB after the Brexit vote and after that it’s all about DB and Germany.

      I’m still going with the feeling that they have decided to take down Germany and continental Europe (perhaps because I live here).

      • Clearly, the main project of late 1990s – very early 2000s was to build up coherent Europe as sort of second citadel, which at the minimum would be a fall back option and co-chairing events for the global TPTB, but also perhaps hopefully became #1 candidate for holding the keys to the global in coming decades..

        Well, the “cunning plan” didn’t exactly pan out, actually it’s a giant disaster on both accounts, western Europe is falling fast into lower second and third tier global status. The major globals of the Atlantist faction in panic to worsening own situation pushed to secure some last ground for themselves, so instead turned against Europe hard, now we can see the last episodes of this full mode of pillaging, mainly through the financial warfare and also unleashing the migrant weapon, self inflicted economic sanctions on the stupid Euros etc.

        The above is a story of classic case of Triage at the highest court of kings and emperors, from which it is going to spill over onto us mere ants and work bees, great stuff for the history books or rather informal legends, perhaps to be told over the camp fires in the not so distant bleak future.

      • Soros is the leader of the doomsday prepper forces…. he lives for chaos and suffering…

        He also really really really likes…. very young girls

          • I explained it above, you can have been on buddy buddy relations or even close intermarriage status within the top notch gang of thief and pillagers, but as it usually the case, when times get though, it’s suddenly everybody for himself from now on.
            And in the last stage your former buddies even thread on you submerged in the water, so they can just breath a little longer, keeping their high noses above the water, while you are drowning bellow them. In the role of the sucker extraordinaire here is obviously the pro Atlantis Europe.

            • Europe is of course an easy target since behind the European Union façade we are just warring tribes. The blame for creating this interconnected monster in interdependence of each others in these times must in the end fall on our selves.

              Europe is the big short because that is just business.

            • The Great Adventure ? The El ders of Z ion ? The Messiah ? The New World Order ?

              Will the derivatives turn everything into their hands ?

        • Eventually China and the Eurasian Union. But then the Chinese have a somewhat different set of issues than the West.

        • Is there anyone who really gains from the collapse of Deutsche Bank? Doesn’t it just push us closer to collapse? I can see that hedge funds gain by avoiding having their funds locked up in a failing bank.

  5. Meanwhile in Siberia……………..

    “2016 Lake Baikal Fires Too Dangerous to Fight

    “This year around the region of Lake Baikal, an unrelenting (climate change-related) drought combined with abnormal heat to produce massive fires. The fires raged and flared throughout the summer. As the typical wildfire season came to an end during late August, the fires continued to burn and spread. According to Greenpeace, the fires burning during September in this region alone covered nearly 5 million acres. That’s an area about the size of Massachusetts. Satellite shots of the massive fires were dramatic, revealing plumes of dense smoke spewing out over hundreds or even thousands of miles. Residents of cities and towns around Lake Baikal experienced terrible conditions due to a suffocating pall of dense smoke covering the area.”


    • I looked up the city of Bratsk, Russia, which seems to be nearby. It has a population of 242,000. It is a very polluted industrial city, not too far north of Mongolia. The fires are farther south than I expected–near the southern edge of Siberia. Still not good at all! I can see not fighting the fires, if there are not cities nearby.

    • Many climate scientists now feel that we are now into the abrupt climate change zone- and yet greenhouse gas emissions are setting new records.

      I am not getting a good feeling about the odds here……

      • There are no more odds left, we’re finished. NASA scientists just said last week the CO2 is not going to reverse, we cannot stop it now no matter what cockamamie schemes we come up with. We cannot fix or revert the CO2 situation. It’s game over. If we don’t have a financial collapse in the next few years we are going to feel the impact of a collapsing biosphere.


      • On the other hand, atmospheric CO2 is an excellent plant nutrient. The increasing concentration is definitely contributing to the success of modern agriculture. And if the increase stems from human emissions from fossil fuel burning, then it’s another net plus for the activity, just like those oil company taxes that the Greenies tend to ignore and the gasoline that helps build and fuel the private cars that George Monbiot and Bill McKribben drive. We’ll be very glad to have the blessing of all this CO2 once BAU collapses in order to help feed those of us who succeed in returning to the Shire—because, oh yes, Mr. Frodo, the fertilizer plants will not be operating and deliveries of guano from Pacific islands will not be available from Amazon—just as we’ll need that 240kg of human “waste” per capita that we are currently wasting but which makes excellent fertilizer. It pongs a bit, but no bucolic rustic paradise should be without it.

        Notice that the region around Lake Baikal has “a typical wildfire season”. In other words, it isn’t exactly monsoon country. The lakes level has been low for the past couple of years. But:

        For the first time fast decline in the level of water in Lake Baikal was registered in the autumn of 2014. Experts say that the lake has entered into another period of natural shallowness, already observed in the past. It may last up to a quarter of a century. Since 1962 Baikal has fallen below the 456-meter mark eleven times. An all-time record low of 455.27 meters was registered in 1982.


        Please, interrupt your climate change lamentations for long enough to appreciate that climate varies, changes and fluctuates naturally both cyclically and unpredictably on a host of time scales. The temperature, the amounts of sunshine, cloud, rain, snow, wind and storm are all variable on annual, decadal, century, millennial and longer time scales. This is not a defect of nature but a built-in feature.

  6. Regarding subsidies to the oil industry….. here’s a myth buster:

    Which Companies Pay The Most In Taxes?

    ExxonMobil in 2011 made $27.3 billion in cash payments for income taxes. Chevron paid $17 billion and ConocoPhillips $10.6 billion.

    And not only were these the highest amounts in absolute terms, when compared with the rest of the 25 most profitable U.S. companies (see our slideshow for the full rundown of who paid what), the trio also had the highest effective tax rates.

    Exxon’s tax rate was 42.9%, Chevron’s was 48.3% and Conoco’s was 41.5%. That’s even higher than the 35% U.S. federal statutory rate, which is already the highest tax rate among developed nations.


    • This has always been the case. Energy companies are the big source of tax revenue. The whole idea that substitutes can exist without paying taxes (get subsidies instead) is simply silly. The goal of energy production is to provide surpluses to fund government operations. These surpluses are transferred to governments using taxes. If there are no surpluses, the whole operation is likely an energy sink. It is the fact that intermittent energy is of such low quality, and is delivered so late relative to the time of investment (with no charge for interest for capital investment), that obscures this problem in standard EROEI calculations.

      • Statistically speaking, NM is entirely dependent on oil and gas to fund government, so this is a moment of crisis, with the legislature recalled to solve the budget shortfall. The question is what to do to deal with the crisis. The governor wants to keep on mining for oil and gas, seemingly ignoring how that might not square with EROEI. I think the state of over all planning there is very poor, and that improving it could lead to savings and other improvements. But the entire system is so mired in over-complexity and dysfunction…

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