Our economy is a mystery to almost everyone, including economists. Let me explain the way I see the situation:
(1) The big thing that pulls the economy forward is the time-shifting nature of debt and debt-like instruments.
If we want any kind of specialization, we need some sort of long-term obligation that will make that specialization worthwhile. If one hunter-gatherer specializes in finding flints that will start fires, that hunter-gatherer needs some sort of guarantee that others, who are finding food, will share some of their food with him, so that the group, as a whole, can prosper. Others, who specialize in gathering firewood, or in childcare, also need some kind of guarantee that their efforts will be rewarded.
At first, these obligations were enforced by social norms such as, “If you don’t follow the rules of the group, we will throw you out.” Gradually, reciprocal obligations became more formalized, and included more time shifting, “If you will work for me, I will pay you at the end of the month.” Or, “If you will pay my transportation costs to a land of more opportunity, I will repay you with 10% of my wages for the first five years.” Or, “I will sell you this piece of land, if you will pay me x amount per month for y years.”
In some cases, the loan (or loan-like agreements) takes the form of stock ownership of an enterprise. In this case, the promise is for future dividends, and the possibility of growth in the value of the stock, in return for the use of funds. Even though we generally refer to one type of loan-like agreement as “equity ownership” and the other as “debt,” they have a great deal of similarity. Funds are being provided to the enterprise, with the expectation of greater return in the future.
As another example, governments make promises for future benefits, such as Social Security, healthcare, and payments to the unemployed. These payments are not guaranteed, so are not considered debt. Even without a guarantee, they act in many ways like debt. Citizens plan their lives around these payments, even though they may be reduced or eliminated.
Surprisingly, even “cash” is debt. It is similar to a bond that pays zero interest and has no redemption date; this type of bond can also be easily transferred from person to person. Since cash can be hidden under mattresses, it too can be used as a device for time-shifting.
(2) The big thing that goes wrong in this time-shifting approach to operating the economy is the loss of what I would call an “opportunity gradient.”
As long as the future looks better than the past, it makes sense to make these debt-like obligations. But as soon as the future looks worse than in the present, the whole model falls apart. Even if the future looks exactly the same as the present, there is a problem, because taking on these long-term obligations has some overhead costs, such as administrative costs and a margin to cover the possibility of defaults on loans. These overhead costs need to be paid in some way. Because of this, there needs to be enough of an upward gradient to cover the necessary costs of the loans or the loan-like agreements. (This is part of what makes a Steady State Economy, advocated by many, an absurd idea.)
Once the opportunity gradient becomes negative, it becomes very difficult to get anyone to borrow money and to use the resulting debt to lead the economy forward. When the opportunity gradient becomes negative, young people are less inclined to get married, and tend to have fewer children. International organizations of countries (such as the European Union) have a harder time staying connected. The whole model of cooperation working better than “every country for itself” starts falling apart.
Just as human bodies often go downhill before dying, an economy that finds itself on a downward slope may very well be near collapse.
(3) The loss of an opportunity gradient comes from diminishing returns in many areas, including:
- Rising energy extraction costs
- Rising costs of mitigating pollution, as increasing resources are extracted and used; these pollution mitigation costs are really part of total extraction costs
- Reduced quantity of arable land per person
- Reduced fresh water per person, without high-cost treatment such as desalination
- Fewer investment opportunities that allow for true growth, such as providing tractors to farmers who previously used draft animals, or adding a new road that permits fast transit across a country for the first time
- Many more required “investments” that are simply for the purpose of offsetting deterioration in previously built infrastructure
Figure 1 illustrates the extent to which current business and government investment in the United States offsets either depreciation on old investments, or previous investment that was no longer needed for one reason or other–perhaps because manufacturing moved to China.
Figure 1. US Business and Government Capital Investment, based on Table 5.1 (Savings and Investment by Sector) of the US Bureau of Economic Analysis.
Between 2008 and 2015, only 17% of “Gross Capital Investment” actually became “Net Capital Investment.” With this small amount of true addition to capital investment, it shouldn’t be surprising that what seems to be “productive investment” doesn’t really raise productivity by much. It mostly raises the debt level, without necessarily providing a corresponding benefit to the economy.
(4) Increasing complexity is what acts to offset the many diminishing returns we face. Thus, the situation we face is an increasing battle between growing complexity and diminishing returns.
Many people would consider increasing complexity to be similar to improved technology, but increasing complexity really is broader than improved technology. Besides involving the development of new devices, it involves greater use of specialization, and more use of education. Businesses become larger and more international in scope, and governments offer more services. Organizations become more hierarchical as the economy becomes increasingly complex. With these types of approaches, it is sometimes possible to overcome problems associated with diminishing returns.
If an economy is already reaching limits because of the long-term battle between diminishing returns and rising complexity, the use of an increasingly hierarchical structure tends to lead to a society of “haves” and “have nots.” The people at the top of the hierarchy have more than enough. Those at the bottom of the hierarchy find it increasingly difficult to meet their basic needs for food, housing, and transportation. They find it difficult to afford the output of the economy. This is a problem we are increasingly facing today, because of the way our self-organized economy operates.
(5) Debt plays a greater role, as the economy becomes increasingly complex and uses more technology.
Debt, because of its time-shifting ability, acts almost like magic in allowing an economy with adequate resources to grow. In part, this is because improved technology allows more capital goods used by businesses and governments to be produced. Capital goods made in the year 2016 are designed to provide a long-term benefit into the future, over a future period of, say, 2016 to 2066. Paying workers making these goods becomes a problem unless the future benefit of these capital goods can somehow be brought forward to 2016, so that the workers making the capital goods can be paid. In fact, there is a whole supply chain of workers that needs to be paid. There is also a need to pay many other kinds of costs, including taxes for government services and dividends to shareholders. All of these costs can be paid, using the magic of debt to bring forward the hoped-for future income from the new technology.
Debt is also frequently used for convenience for large purchases, such as buying a house or car. Here, debt effectively promises that the buyer will have enough future income to make the planned payments. It thus brings forward the future income of the debtor, and, through the magic of debt securities, adds this future income to the balance sheet of some organization–a bank, an insurance company, a pension fund, or the purchaser of a bond related to this debt, as if the debtor had already earned the funds needed to pay for the large purchase.
Of course, the problem with using debt and other debt-like approaches to bring forward future revenue flows is the fact that we don’t really know what the benefit of a new capital device will be, and we don’t really know whether a particular individual will be able to continue paying his mortgage or other loan. Perhaps he will become ill; perhaps he will lose his job in a recession, and not be able to find another job that pays as well. With a mortgage, there is a backup possibility that the house can be sold, and its value be used to provide the necessary repayment, but we saw in the Great Recession that property values can drop, so this doesn’t necessarily work either.
The way today’s economy is structured assumes that these future payment streams can be counted on. The value of stocks and bonds are the “assets” of insurance companies and pension plans. Banks can only exist if the loans they make can really be repaid. Our whole financial system is dependent on the current system continuing as usual, with at most a small number of loan defaults, such as are priced into the system.
(6) Growing debt tends to raise commodity prices and encourage commodity production, while falling debt levels tend to lower commodity prices.
If an individual obtains a loan, he or she can buy a home, a car, or other high-priced object, such as a boat. If a business takes out a new loan, it can build a new factory or buy new equipment. Making these objects requires the use of a wide range of commodities, typically including many kinds of metals and energy products. Once these items are placed in service, they are likely to need to continue to consume energy products.
Adding more debt allows the economy to make more goods using commodities. The way the economy encourages more production of a commodity is by bidding up its price. With this higher price, ores of lower grade can be converted to metals, and higher cost energy products can be used to make the desired end products. Alternatively, the higher cost can be used to open new mines or new oil fields, to try to pull the cost of production back down again.
Of course, if debt levels start to shrink or even rise less quickly, the opposite effect tends to happen. Commodity prices tend to fall, because not as many mines and oil wells seem to be needed.
(7) Nurturing economic growth; the key to growth seems to be growing “Disposable Personal Income”
With the magic of borrowing and promising to pay back the borrowed amount with interest (or through share appreciation and dividends), it is possible to start with very little, and gradually create a large economy. The situation is almost like planting an “economic seed,” and nurturing it with (a) additional debt as needed, (b) a growing supply of cheap energy, and (c) a growing population of workers. As long as the debt grows rapidly, the supply of cheap energy grows rapidly, the population of available workers grows rapidly (without becoming too hierarchical), and the other types of diminishing returns listed in Section (3) don’t become too great a problem, the economy can grow and prosper.
One of the keys to producing economic growth seems to be getting sufficient funds back to workers as “disposable personal income.” Disposable personal income (DPI) is after-tax income that gets back to individuals one way or another: as wages, dividends, interest, or rents, or as transfer payments, such as pensions for the elderly and payments to the unemployed, or as government employment of some kind, such as payment for being in an army.
There is a popular belief that GDP is the Goods and Services that an economy can make. As far as I can see, GDP is the Goods and Services that the people living in the economy can afford to buy. There is clearly a commonsense reason why this might be the case: an economy cannot grow, if the people living in the economy cannot afford to buy the goods and services that the economy produces. In the US economy, there is a .98 correlation between the growth in DPI (for all people in the economy combined) and the growth in the US GDP, as shown in Figure 2.
Figure 2. Comparison of 3-year average change in disposable personal income with 3-year average change in GDP, based on US BEA Tables 1.1.5 and 2.1.
The GDP used to compute growth rates is not inflation adjusted, nor is the DPI inflation adjusted. These amounts are thus different from the more commonly shown inflation-adjusted amounts.
The way I see things, the amount of inflation in commodity prices is to a significant extent determined by the match between how much disposable personal income is rising, and the quantity of goods and services being produced. As I have discussed previously, energy is essential for producing goods and services. A suitable quantity of energy products must be purchased, no matter how inexpensive or expensive the price of energy may be. If the energy purchased is very cheap, it is likely that the goods and services can be produced very inexpensively. The benefit of this cheap production of goods and services can encourage growth in many parts of the economy at the same time:
- Wages
- Profits to the owner(s); stock dividends
- Interest on debt
- Taxes
- The financial sector can flourish, with all kinds of new products
- Commodity price inflation
- Economic growth
The reason why this pattern happens is because the DPI of citizens (plus whatever amounts that governments and businesses can add to DPI) doesn’t necessarily match up with the cost of making those goods and services.
When energy prices are low, and when there are many opportunities for productive investments, the excess buying power can partly go into new productive capacity, leading to economic growth. Some of it can also go to provide higher wage growth. In fact, all of the items on the above list can be higher.
Figure 3. Average annual Brent equivalent oil price, in 2015 US$, from BP 2016 Statistical Review of World Energy.
When energy costs are at a high level (see Figure 3), all other parts get squeezed. Instead of seeing inflation in commodity prices, we start seeing deflation in commodity prices. In fact, deflation can bring energy prices below the cost of production. This effect, together with the end of US Quantitative Easing, likely explains the sharp drop in oil prices starting in mid-2014.
Figure 2 shows that, in recent years, the overall annual growth in US DPI and in GDP has been only about 4%. Growth of 4% doesn’t go very far when it needs to cover growing population (about 0.7% per year in the US), plus inflation, plus “real” growth in wages. No wonder commodity prices get squeezed! Because of diminishing returns, the cost of their production rises far more than the modest growth in DPI can afford to cover. Something gets squeezed: energy prices remain far below the cost of extraction.
(8) The 1980 Economic Turning Point
If we look back at Figure 2, we see that the recent peak in the growth of GDP and DPI occurred about 1980, at approximately 11% per year. At 11% there is room for many economic “goodies,” including funds for new investment, raising wages, and inflation.
When growth in GDP and DPI started falling shortly after 1980, many changes occurred in the economy. For one thing, wage disparity in the US started increasing (Figure 4).
Figure 4. Chart comparing income gains of the top 10% to income gains of the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.
This was also about the time when US interest rates started to fall. Ten-year treasury rates hit a peak in 1981.
Figure 5. Ten-year treasury interest rates, based on St. Louis Fed data.
It also seems to be the time when increases in debt no longer automatically triggered a corresponding increase in the wages of non-government workers (Figure 6).
Figure 6. Three-year average increase in debt compared to three-year average increase in Wage Base, defined as non-governmental wages plus proprietors’ income.
In Figure 6, “Wage Base” is wages of non-governmental workers, including wages of proprietors, such as farmers. I consider my wage base to be “regular” wages, before all the government manipulations that produce the much higher DPI, which includes transfer payments, and wages paid under government programs. Figure 7 shows a comparison of the relative amounts. On Figure 7, note that the upward “blip” in the Wage Base occurred in the 1998-2000 period, when the price of oil was unusually low (Figure 3), leaving more for wages.
Figure 7. Personal Income, Disposable Personal Income, and Wage Base, as Percentage of GDP, Based on BEA tables 1.1.5 and 2.1.
(9) The Problem of Ever Rising Government Expenditures, and Government Receipts that Don’t Increase Enough
If we look at the historical pattern of governmental costs, we see that there has been a long-term upward trend in governmental costs. Figure 8 combines receipts and disbursements for all types of governments (federal, state, and local). The Wage Base, mentioned previously, is used as the denominator, because even taxes paid by businesses will indirectly affect prices paid by customers.
Figure 8. US government expenditures and receipts compared to wage base, based on BEA Table 3.1. Amounts include federal, state, and local taxes, and include funding for Social Security.
In Figure 8, Government expenditures peaked at over 90% of the wage base. Clearly these expenditures are only possible because they include a big increase in debt at the time of the bank bailouts and all of the stimulus activities.
The fact that government receipts have stalled at about 66% of the wage base since 1981 suggests that there is a problem in raising taxes above the current level. We may not even be able to maintain our current tax level, if required payments for health care coverage under the Affordable Care Act behave like another tax.
(10) The Recent Decline in US Debt Growth
If we compare the growth in total US debt (not just governmental debt) to the Wage Base (includes all non-government wages, including proprietors’ income), we see a rather surprising pattern (Figure 9):
Figure 9. US debt as compared to Wage Base, based on FRED and BIS data.
The ratio of debt to wages remained pretty constant until about 1980, when it began to rise sharply. This was about the time when wages started to diverge, and interest rates began to decline. Once oil prices fell to lower levels in the late 1980s, the non-financial debt level settled back, compared to wages. When oil prices began to rise in the early 2000s, the total debt level skyrocketed. These patterns suggest that debt growth is strongly related to the price of oil. Less debt is needed to keep the economy going when oil prices are very low; much more debt is needed when the cost of oil production is high.
Since 2008, we see a different pattern. The debt level is falling, despite record low interest rates. We discussed in Section 2 the need for an “Opportunity Gradient” to encourage borrowing. At this point, there does not seem to be a sufficient Opportunity Gradient to keep borrowing at the very high 2008 level, and even grow from this point. The failure of US debt to grow relative to wages is thus part of the reason why oil prices cannot be raised to a high enough level to make oil production profitable.
The low growth in US debt is likely a problem for the rest of the world, too. Since oil is priced in dollars, I expect that the US really needs to be a leader in debt growth, if the world economy is to grow. The US no longer seems to be trying to be a leader in debt growth; it ended Quantitative Easing in 2014, has raised interest rates once, and is now planning to raise interest rates again. This creates a problem for other countries, because their currencies tend to fall relative to the dollar, when US interest rates rise. If these other countries do attempt to raise their debt levels, their currency levels tend to fall relative to the US dollar, mostly negating the benefit of the debt increase when it comes to buying oil and other energy products. This makes it very difficult to use debt to provide new programs, such as guaranteed income plans for citizens.
(11) Conclusion
This analysis is based on US data, but it gives some insight into what is happening on a world basis. I would expect that Europe and Japan are in many ways not too different from the US. The world economy has done better, because it includes countries with more opportunities for investments that might truly be associated with economic growth.
The situation everywhere may very well be that growth is a temporary phenomenon. Rapid growth occurs for a while, but then it fades away. When it fades away, inflation tends to shift to deflation. This presents a huge problem, because our financial institutions are built using debt and debt-like instruments. When deflation hits, the “Opportunity Gradient” changes from favorable to unfavorable for future investment. This creates a much greater likelihood of future debt defaults, and discourages citizens from wanting to take out loans to finance new investments. All of these things are concerns for the future functioning of the economy.
The situation we seem to be encountering is that economies, both of the world and of individual countries, are dissipative systems. As such, they require energy. Similar to other dissipative systems (hurricanes, ecosystems, stars, plants and animals), they grow for a while, and eventually collapse.
Economies, as dissipative systems, seem to need several kinds of systems. Energy provides sustenance for an economy, in a way similar to the way food provides sustenance for humans. The debt system acts somewhat similarly to the way a human’s circulation system works; the time-transfer mechanism provides a pumping action similar to that of the heart. The pricing system acts very much like a human’s sensory system; it allows the system to discern whether the current opportunity gradient is sufficient to justify adding more debt. Thus, this analysis suggests that one way the system may fail is through commodity prices that fall too low. Most people have never considered the possibility that this could happen.
Intermittent renewables, such as wind and solar, might be considered as similar to a type of food that causes the sensory system of the economy to malfunction (similar to deafness or blindness). This happens because, as I discussed in a previous post, intermittent renewables disrupt the pricing system for electricity by dumping electricity on the grid without regard to whether the price signals indicate that the additional electricity is actually needed. As a result, prices for other types of electricity (such as nuclear and natural gas) become depressed, necessitating subsidies. This shows why overly simple models cannot be relied upon when evaluating possible solutions to our energy problems.
It would be nice if we could figure out a way to make our economy last forever, but it is doubtful that we can. Ultimately, the battle between diminishing returns and increased complexity seems likely to be settled in a way that causes the economy to collapse.
The [car,fuel] combo situation is interesting to think about. When fuel production volume starts to shrink, cars will start to last longer since they are driven less. It may actually lead to very low demand for new cars. This in itself is a very serious threat to the system since so many jobs are tied to the production of cars.
Since there is a need to sell cars, it has to become ‘uneconomical’ to repair existing ones. This can already be seen in the market where I live. At the lower end you can find cars for $3000 that are perfectly good, but once a repair rivals the value of the car insurance companies definitely total them.
The US economy simply wouldn’t have the size it has today without the joyrides. I’m not sure people would do many trips over 1 mile.
Why can’t car manufacturers simply adapt by making bicycles instead of cars?
“Since there is a need to sell cars, it has to become ‘uneconomical’ to repair existing ones.” I’m afraid demographics is a large contributor to making things uneconomical to repair, at least in the U.S. There was a poster in the comments section of the “The Energy Problem behind Trump’s Election”, which was posted on OFW recently, who wrote about how the aging U.S. population is contributing to a decline in the number of available skilled technicians who can repair things like cars. The decline in the number of available skilled technicians is, according to the poster is driving up wages for skilled technicians who can repair things, thus helping making stuff unrepairable.
Manufacturers have done everything they can to make things (not just cars) unrepairable.
Combine with high taxes and wages in the west and expensive spare parts (due to logistics being expensive because of high taxes and wages in the west).
When something breaks it is often most economic to just buy new from Farawayistan.
Another great post Gail. Exponential debt which has led to human overshoot and vice versa continues to plague planet earth. Is there an answer that we can actually live with? No, because the problem is US. We’ll come to terms with that by and by.
Exactly!
Protests grow in Poland as political crisis deepens
http://edition.cnn.com/2016/12/17/europe/poland-political-protests/
What is the reason? My opinon is that the Poland’s dependence on less and less profitable and more and more polluting coal power is surely the main factor.
http://www.bbc.com/news/world-radio-and-tv-17813431
Furthemore, both Poland and Hungary have a lower electricity consumption per capita than Slovakia and Czech Republic, and both Poland and Hungary suffer certain democracy defficiences. The per capita electricity consumption of Poland and Hungary si similar to Ukraine, but higher than Romania.
http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC
Everywhere, we seem to have a problem that prices for energy products (including electricity as well as oil and natural gas) are too low. Part of this has to do with intermittent renewables, but part of it simply has to do with the fact that people cannot afford increasingly expensive to produce electricity. These businesses need to make money, or they collapse.
People don’t realize how dependent we are on electricity. I am afraid I don’t have a solution.
” I don’t have a solution.”
As you all know, I think there is a solution.
Gail makes the case that the cost of power should not exceed 2-3 cents per kWh. That’s an input parameter to a design-to-cost effort. How much investment can we tolerate? Given the scope of the energy market, it seems this could be a fairly large number. How fast do we need to do it? That takes a reasonable estimation of existing reserves and rate of use. How fast do we need to grow this source till it can replace fossil fuels?
Needing numbers to feed into models, I have assumed values, but I am interested in what others think.
I really think what we are seeing (on a global scale now) is that people cannot afford the output of the system. This is something that we have not seen on this scale before since the industrial revolution began more than 100 years ago. So, we have no compass for it.
Sure we do. We need to get rid of the worthless eaters.
MBA credentialed professionals believe we can afford the services part of the output of the economy because:
1.since the profit margin for “non-physical” services is higher than that for physical goods.
2, They think services can allow growth to continue because costs can be socialized more easily. They believe they can make high costs go away with financial wizardry. Every new product is presented as service.. self-driving cars will not be cars people own but rent through a service-provider.
Are they wrong? With the exception of financial services, and cable subscriptions, what other service have experienced a decline in consumption in the last six years?
you cant change something that was meant to collapse so not having a solution to the end of bau is natural we all need to just accept it. i believe in re-incarnation so perhaps when bau finishes and we all die we shall be reborn somewhere else just as nice
It’s sort of strange situation since Poland is apparently doing much better in recent ~15yrs than for most past centuries. Moreover as the post coup Ukraine continues to implode, not only ~1M people left for jobs in Poland, which boosted Poland’s economy, there are now also voices especially in the western provinces of Ukraine to split and rejoin Poland.. Kind of interesting how the post WWII boundaries are slowly chipping away on many fronts.. that’s usually a precursor for further future chaos..
A lage part of the population of Poland emmigrated or works abroad and its population growth has stalled. It is clearly the case of an implosion.
https://www.populationmatters.org/documents/overshoot_index.pdf
Poland 53% dependent. If they can’t export resources or refine resources they have to export population. Or starve.
It’s all because of one man: https://en.wikipedia.org/wiki/Jaros%C5%82aw_Kaczy%C5%84ski
His party won elections last year, because he promised to send money to people with children. Now he’s “emperor” of the country, because both President, and Prime Minister are dependent on his will. When he’s gone, it will be normal in Poland again.
Dear Gail, what is your opinon about the Great Inga project?
https://en.wikipedia.org/wiki/Grand_Inga_Dam
Is there any chance that this project could reduce the poverty in Africa? Some mention that the biggest problem are the transmission lines, which could further increase the costs, plus the transmission and distribution losses, while the poor populations could not afford the produced electricity.
My opinon about it is, that the big problem of this project is that it is situated in the equatorial area, so the demand from the poor populations can not be very high. Morover, the experience until now shows that the hydrpower is used mainly by the mining industry and the awaited benefits for the populations through generated wages which in turn could secure affordability of this electricity for the populations have not come true.
If this were a small river being dammed 100 years ago, I could see that it might help Africa, just as hydroelectric has helped many people around the world. There would be an abundant supply of oil, coal, and natural gas to further develop the whole system.
At this late date, my guess is that the dam will never get finished, or if it does, it will stop operations within a few years after opening, for lack of spare parts. If the purpose of the dam is to provide electricity for mining, the problem with low mineral prices is likely to persist. This means that actually getting very many mining jobs will be a problem.
Large dams tend to displace a lot of farmers, and stop the natural replacement of silt that makes farming along rivers very successful. These dams also create a lot of CO2. I would expect from these points of view, the dam would be a net loser, unless the dam was in operation quite a long time. If we are quickly going back to a situation where we cannot import fertilizer from around the world to try to make up for loss of topsoil, then adding the dam would be silly.
My general impression is that there is no point in putting in the dam now; it is too late, relative to the world’s problems.
How would a hydroelectric dam produce a lot of Co2?
“How would a hydroelectric dam produce a lot of Co2?”
What are dams made of? How carbon-intensive are those materials?
The production of concrete is extremely Co2 intensive.
There is an analysis of Hoover Dam ERoEI here http://www.theoildrum.com/node/5588#comment-527997
On the whole collapse subject, this might be of interest.
https://en.wikipedia.org/wiki/Roman_aqueduct
Good point. In China, it is done with coal.
“coal”
I don’t know if China has reached that place yet, but in a lot of places they burn worn out tires as cement kiln fuel.
Worse than coal, I expect.
“Worse”
It’s actually an excellent way to dispose of old tires. Fuel wise it takes the same amount. the cement absorbs all the sulfur, and the steel in the treads becomes a useful part of the cement.
See https://en.wikipedia.org/wiki/Portland_cement#Cement_plants_used_for_waste_disposal_or_processing
Interesting that they are feeding kilns with Meat and bone meal as a way to get BSE out of the food supply. I didn’t know that.
Hydropower seems to be a huge emitter of methane. This is not CO2, but has even worse carbon emissions. The methane is partly from decomposing vegetation, and partly from microbes that grow in the water and emit methane. One of the articles talks about siting dams in arid areas to prevent some of this problem. Central Africa doesn’t come across as arid.
http://www.sciencemag.org/news/2016/09/hundreds-new-dams-could-mean-trouble-our-climate
https://www.washingtonpost.com/news/energy-environment/wp/2016/09/28/scientists-just-found-yet-another-way-that-humans-are-creating-greenhouse-gases/?utm_term=.82c5e358756d
This is an article more generally about carbon emissions. It says:
Truce! Eddy.
Craig, would you pls willing to tackle these questions few pages back:
https://ourfiniteworld.com/2016/12/07/what-has-gone-wrong-with-oil-prices-debt-and-gdp-growth/comment-page-13/#comment-109652
I never thought I’d say this , but ,yeah FE please come back.People may misunderstand my about turn, however my main gripe about EDDY was that he lumped anyone that was’nt one of his groupies into the same category.. 95% of what FE believed in I believed in. The only difference was that he threw in the towel regarding survival and I refuse to follow suit.In the process he alienated himself from many due to his refusal to compromise. However there appears to be a new breed of Elon Muskovites on the scene which need to be put in their place. I can’t think of anyone better than FE to accomplish this.
You don’t really appreciate someone until they are missing.
I agree. There are not many people capable of thinking of the big picture (systems thinking if you will). People compartmentalize too much. Compartmentalizing may help to understand a problem but that kind of thinking does not solve complex interconnected problems. Try whack-a-mole for a real world example of this paradox. Or watch the Afflac commercial with the duck trying to plug hole after hole that keeps popping up.
Another real world analogy is trying to mend a piece of clothing that develops new holes every week.Everything time you mend one part that has a hole, a new hole will appear shortly because the overall tensile strength of the piece of clothing, as a whole, is becoming weaker. This analogy obviously makes sense in a situation where new clothing is in short supply.
I appreciate that he’s “missing.” The comments are much more readable.
The bottom line is we have way too many people in the USA/North America for the number of jobs and resources, and so our government doles out benefits/entitlements and racks up the national debt. Until we get rid of 30 – 40% of the people here we will never keep the debt down. Sound fiscal policy and massive fat-cutting in the federal government by Trump MAY put us back on a fiscally responsible path, but we still have the problem of way too many people in this country.
“…we still have the problem of way too many people in this country.”
Will you volunteer to “leave”?
Will there be a choice?
Actually, when you look around the globe, North and South America, and perhaps Australia, are the places where population aren’t terribly high, relative to resources. It is the part of the world that filled up first that is worst from the overpopulation point of view.
The way our economy works, paying off debt collapses the economy. In fact, it is hard to keep the economy from collapsing, no matter what we do. Simplification might help a little.
https://www.populationmatters.org/documents/overshoot_index.pdf
Wow! Haiti is the most sustainable country shown at 0.6. I think there is something wrong with the metric.
I read it like latin america having 1500 million hectares until overshoot.
Also Canada, Australia, Scandinavia and Madagaskar having space to spare.
Unlike Canada and Scandinavia, Latin America won’t be horded from south.
Australia’s maximum sustainable population is limited by availability of water.
The table linked is certainly a rough estimate and using a lot of assumptions, but in general it follows my gut feeling, and not to far off of Gails if I read her correctly.
If they would only burn down Amazonas they could feed 500M more. Minimum.
Looks like Brazil and a few African countries are based on the self sufficiency metric.
The ecological footprint metric is screwed up, especially for Haiti, which has soil erosion problems related to deforestation. I quickly looked up the deforestation problem in Haiti and it looks like initial claims were overestimated. As much as 30 percent of Haitian territory is covered with plants. but it’s not enough.
Here’s what I think is going on. Deforestation has slowed down in recent decades. Haitians’ ecological footprint is represented elsewhere since they import the majority of what they need to survive. Haiti is no different than North Korea in this regard.
They get by on humanitarian aid and remittances.
Interesting about deforestation.
Haiti 56% dependent, North Korea 47%.
Africa as a continent is barely in overshoot.
Swedens sustainable population, 14M in this study, is close to the 13.5M a recent detailed study concluded was possible to self-sustain.
Everyone who puts together Ecological Footprint metrics assumes that fossil fuels can continue forever. I expect this analysis has quite a few of the same problems. Without fossil fuels, there is no chance that any of these amounts would be even close.
They seem aware of the difficulties
“It does not include non-renewable resources like fossil fuels and other minerals. The true balance between consumption and demand for resources will appear even more unfavourable when the progressive reduction towards zero use of non-renewables is factored into the numbers. A satisfactory way to do this has yet to be devised. It also assumes that 100% of biocapacity is allocated to humans, since there is no agreed figure for the necessary share needed to conserve biodiversity.”
“100% of biocapacity is allocated to humans” – I can tell what direction that needs to go. I know one paper talks about 50% being too high.
Maybe you’re talking about HANPP (Human Appropriation of the Net Primary Production).
I couldn’t find recent papers about this metric (seem to remember having read 40% somewhere, though).
This one states 25% for 2005, doubled during 20th century:
http://www.pnas.org/content/110/25/10324.full#F3
http://www.pnas.org/content/110/25/10324/F3.large.jpg
(“Luc” means Land Use Change)
No doubt the figures would be MUCH higher without fossil fuels (therefore unsustainable within short), because of fertilizers, draft animals replaced by machines, fuel-wood per capita, etc…
Thanks. Forecasts seems harsh despite assumptions of improved efficiency.
Something I haven’t seen mentioned is what driverless cars will do to fossil fuel consumption. Owning a car could become completely unnecessary when you just send a text for one to pick you up in 1 minute. Of course many will still choose to have the car to themselves, but there would also likely be many who use some sort of car pooling which would drastically reduce fossil fuel usage. Perhaps in such a scenario our fossil fuels can last much laster than currently expected. I wouldn’t be surprised if driverless cars are common within a decade and for safety reason, standard cars become banned within 2 decades.
FE – where are you? Please defend the fort! I just don’t have the time to crank out the 1000 word scathing response that you normally muster up for this nonsense. We miss you, soooooo much. Come back now, please!
Brent Mills could be right (for the near/mid term), rumor has it Musk will be on the industrialist advisory board for Trump. Lot of misallocations of resources could still happen like building giant robotic batt factories for EVs/PHEVs on the US soil..
Obviously, it would be better to put it into rail, but that’s not going to happen, only some token repairs for the cargo rail network related to energy production.
Fast Eddy must be living his so called “challenge”…. about time he did something instead of harping about Kumbaya. I can see him now in the outhouse forgetting to bring his toilet paper….oh well, better use your LEFT hand!
Hope he posts something like this on YouTube
https://m.youtube.com/watch?v=oXSQWQP4tmw
what an inspiring video
Jeremy, I greatly appreciate you, but I’m not sure how much you’ve considered the subtle dynamics of rich, educated first world people plunking down to find their personal nirvana in the third world.
There’s a great deal of asymmetry in these arrangements. These ex pats have large amounts of cash relative to the native, who gets thrown off the land s/he might have owned or been squatting on before the ex pat bought it. Natives higher up on the education chain might feel their entire social “ecology” has been disturbed by the foreigner…even thought the American foreigner does not recognize ancient, oppressive class distinctions. Something just doesn’t sit right, despite that.
I’m not sure about the claimed simple life of this lady. There’s a substantial building in the background that I presume she uses too. She must be well off to hire someone to maintain that immaculate yard. A white lady walking naked up and down the hill is not exactly playing to the native’s cultural rules or understanding.
The entire relationship strikes me as one of neocolonialism. OTOH, uninformed, misled natives cannot process the new arrival in an empowering way, and suck up to it in a fawning way (if they don’t instead attack the person violently–a possible more dignified stand)
So it’s par for the course. Pax Americana. The beautiful-people side of the American juggernaut ascending in this case. I’ve seen American women go in and live with simple people and learn their lingo and live their simple third world lifestyle. I’m not sure how that works either, but I have more respect for it. 🙂
Artleads, hello and nice post… mostly true I’m afraid…However, I hinted it was directed at the one and only Fast Eddy, who in my opinion is no better than that neo-colonialist white woman, who happens to live elsewhere in Costa Rica. Fast Eddy is doing pretty much the same in New Zealand!.
I agree 100% with you; us white devil’s (being cute here), scrrwed up the planet and now are escaping to pristine regions to save ourselves from our own mess!
To be honest, that is why I staying put where I am with a front row seat when the BAU shuts down! South Florida is a rocking showcase that will explode like nothing else in past human history. Should be entertaining.
Am I sad or bitter? Hardly, actually very fortunate to have been born in this era…
Can’t understand others, who feel cheated or scrambling to escape.
But to each his own…one thing that really sets me off is whining…
Pleaase…like any of us here should.
A sing a long for Eddy
https://m.youtube.com/watch?v=IdF94-g7n58
Very nice one. Now we a song that says no tantrums either. 🙂
Afraid Gail deleted that one already
“FE – where are you? Please defend the fort! I just don’t have the time to crank out the 1000 word scathing response that you normally muster up for this nonsense. We miss you, soooooo much. Come back now, please!”
Why is this nonsense? I don’t disagree with OFW’s general premise and all I’m saying is that driverless cars could have an impact on fossil fuel usage which may keep things going a bit longer, nothing more , nothing less. And it’s not just the fuel usage of running the cars, it’s also less usage in making them because instead of 1 car per person, there might be 1 car per 100 people, much less natural resources required in construction and upkeep.
Wouldn’t it be 100 times more sensible to just put this effort in to public transportation? If people don’t mind carpooling with strangers, then they could just take the train/bus/tram/subway instead.
Exactly! We want increasingly complex solutions.
public transport isn’t nearly as flexible as what driverless cars can achieve
But there is inadequate investment in public transport. If we are talking about which alternative to invest in…
And then we have Jevons.
If you somehow can eliminate drivers cost and get good routing demand would increase and fuel use would be up and speed down.
And then there is outside the cities ..
And what to do with the cars when not in use ..
Driver less cars are well within our technological capabilities. Truck driving jobs will be the first. More demand destruction.
” More demand destruction.”
Another one is 3 D printers. Why order a spare part when you can just make it?
I can’t think of a relatively small plastic spare part that I have ordered in the last 5 years. I have ordered many other things though. Gaskets, exhaust systems, paint, … you name it. 100% of the people with 3D printers have negative ROI. This is a hobby for most, and a prototyping tool for some professionals.
I have used 3d printers for prototype parts, just to make sure the part fits. I have never used 3 d printers for production parts. It is not cost effective and there is always other qualities in the material needed for the production part. You see Keith the 3d printer is just spraying a polymer like a ordinary printer sprays ink. The polymer it sprays must have specific qualities to allow it to be sprayed and those qualities are not compatible with the solid polymer it produces for most uses. Even if the spraying produced a suitable material producing the product that way instead of taking the raw material and forming it is incredibly wasteful. 3d printers detract from value they dont add it.
Or are you saying that marble or titanium can be produced with 3D printers like some of the advocates I have met?
Not much about the power satellites since futuresystemsanalyst confronted you. 3d printers and nano tech now is it?
“Even if the spraying produced a suitable material”
I have followed 3D printer development for 30 years. I don’t think I have seen one that sprays a polymer. Perhaps you have a pointer to an article about one? Some of them are the kind that harden a liquid plastic with a UV spot, but more of the ones I have seen in recent years are the hot filament type that melts a plastic thread with a hot head.
I am aware of some high end ones that fuse metal powder with lasers, but have never seen one. Also know of one where the working head is a TIG welder. They have a way to go before one can make a ring gear for your Model T cheaper than one that has been machined, but they are getting there.
Re power satellites, I thought I had responded comprehensively. If you want to learn more about what I have been up to recently, try http://www.htyp.org/DTC
The most important news re power satellites this year is that Erik Larson and others from NOAA produce a paper “Global atmospheric response to emissions from a proposed reusable space launch system” [3] The paper makes a case that up to 2 TW/year of power satellites could be constructed without intolerable damage to the atmosphere. Before this paper there was concern that the NOx produced by reentry would destroy too much ozone.
The 3d printer has to Place the molecules. I call that spraying. By definition a printer places small molecules. If it is shaping a monolithic material it is not a printer. If it is doing that it is a mini terribly inefficient manufacturing process.
The people that are interested in 3D printers are not interested in manufacturing processes. What is the attraction about 3d printers? The attraction is that they represent a idea. That Idea is something from nothing. It is a idea that rejects finite planet. It is a idea that rejects placing our attention on our interaction with the planet. It is a Idea that rejects entropy.
This why advocates of these ideas have no problem leaping from one idea to the next. It is actually preferable. Nothing is ever actualized. Work is for suckers they are obviously way to sophisticated for that. Work is that evil XXX that hate humanity that are enslaving you. They dont really care if the ideas have a relationship to the real world or not. All they care about is how the words and ideas presented make them feel. By the time the dates they mention actually arrive they are spun off on another idea. Endless hour are spent talking about imaginary things just like a playstation games fantasy football, harry potters wand or imaginary impossible projects. It distracts from the human condition. There might be some pain associated with the growth of addressing that and it is to be avoided at all costs.
This condition is so common that it makes for a incredibly effective marketing strategy. The beauty of it is that a physical product never has to be delivered. The real product is the idea and the feelings it creates/allows.
3-D printers are the microwave ovens of our time. i recall wondering what the use is of an oven that just cooks and warms things a little bit faster.
From soon after I first saw one I have used a microwave oven daily.
I am still not able to imagine when a 3D printer would be useful to me.
correct me if i’m wrong here—i am often guilty of over simplification
but
with a microwave domestic oven, the idea is to put foodstuff in, cook it and eat it—you can only take out of the oven what you put in.
with a 3d printer, you keep materials in a hopper, then convert those materials into some kind of usable object—you cannot convert those materials into other elemental forms.
thus if you wanted to ”print” a steak, it could only be done with a hopper full of powdered meat and fat concentrate
“thus if you wanted to ”print” a steak, it could only be done with a hopper full of powdered meat and fat concentrate”
True; however, you could use crickets instead of beef to make the “steak”:
“Or are you saying that marble or titanium can be produced with 3D printers like some of the advocates I have met?”
Here’s a company that 3d prints (additive manufactures) with titanium, so it is clearly a real thing that already exists, rather than a hoped-for future technology:
http://www.sciaky.com/additive-manufacturing-titanium-parts
Looks like an 80 percent reduction in time and near elimination of waste, so for specialized titanium products, this may actually be a viable implementation.
or even surplus finite worldsters, suitably dried and processed
So my TIG welder is an additive manufacturing 3D printer?
“Looks like an 80 percent reduction in time and near elimination of waste, so for specialized titanium products, this may actually be a viable implementation.”
These “printers” amount to a in situ manufacturing. Whatever the material or deposition method it has to be formed into the shape the deposition method uses. That same use of energy could be used to form the end product and be done with it, The bonding energy of the material is the same regardless.
The “printer” has to have a means of moving the formed base material to the deposition point then apply the energy for bonding a second time(waste). The material has to be applied in very thin film so that dimensions can be met. A CNC mill does not have to move the base material nor apply thin film deposition. All of the incredible amount of creating and maintaining the deposition arm 0f the “printer” is waste.
As thin film is inherent to the printer this jepordizes the inherant characteristics of a monolithic material formed by conventional means. The bonding characteristics of the molecules of a monolithic material manufactured by conventional means can be trusted. How can quality be maintained of a material manufactured in situ in a thin layer? Why would you take that risk?
The chips from a CNC mill are recycled regardless of the material. They are not a waste.
3D printers are a ill conceived exercise in poor engineering. Their existence is a waste. Creation of the technology is a waste. Maintenance of the technology is a waste. The double use of energy is a waste.
The real product as I mentioned is the illusion that something can be created from nothing. That illusion has market value.
Good points! They may have occasional uses, for example, for prototypes. But mostly what is created is an illusion that has market value.
“Another one is 3 D printers. Why order a spare part when you can just make it?”
Printing is great for prototyping, custom builds, or one-off replacements, or in far off places like Antarctica or the International Space Station. Mass production and overnight delivery make spare parts in most cases much faster and cheaper to order through the usual production chains. Maybe that will change, or maybe not.
Three D printers only work as long as the material being melted to make the output is readily available–in other words, you need the equivalent of ink cartridges for the printer.
Once these are not available, the printer is useless.
nooooooo
according to popular opinion—when everything is automated, we will be able to sit at home all day, and print breakfast lunch and dinner.
(and new clothes as required)
While writing comments on OFW
oh—and print fuel cartridges for our driverless vehicles.
nothing could be simpler
I will believe those things when I see them. We are too “close to the edge” to develop very far in that direction. For one thing, getting insurance companies to insure them would be a problem. Driverless cars would destroy too many jobs. The basis of our economy is jobs.
I admire your patience and tact Gail. I simply would not be able to hold my civility intact, with the amount of depressing naivety and suedo science that is presented as fact. The amount of “if we”, “we could”, “we should” appears to be escalating.
The dreamers think there is only one problem…….electricity. They think that if the world had all the electricity it needed, all other problems would somehow dissolve, so they set about presenting plans for unlimited windmills and solar panels, electric vehicles, robots with unlimited endurance, governments with unlimited finance, resources that penetrate to the centre of the earth and elevators to the stars. They were and still are the bandits that are ensuring the demise of civilisation is assured and complete.
What is bizarre is that absolutely everyone assumes that BAU will continue indefinitely in their models. It doesn’t matter who is doing it–people who are concerned about peak oil or climate change, or whatever. This is part of what leads to absurd indications.
For the record, I don’t imagine BAU will continue as normal, just that driverless cars could have an impact and perhaps prolong it.
I never said anything about all that you mention above, I was just wondering what impact driverless cars will have. They are real, they exist, they are very likely to change how we get around drastically. No dreaming here.
I’m afraid you don’t have a clue as what “driverless cars” are. They still would require a driver to punch in coordinates, like a GPS. How do they find a parking place, especially at supermarkets or crowded roads? How do they fix a flat tyre? How do you change your destination, are they simply A to B robots? Do they refuel themselves? Are you assuming that every vehicle on the road is “driverless”……police, ambulance, fire, military, service, delivery, trucks…….Go stand on a freeway overpass for an hour then tell me you are not dreaming.
of course they wouldn’t need a driver to punch in co-ordinates. You just have an app on your phone that communicates with the car, or heaven forbid, you could just punch in co-ordinates yourself on the actual car..
Ok some cars will require drivers, police etc, but what’s that? ~0.1% of all vehicles?
‘How would they find a parking space?’ Really you’re asking that? The car can drive itself, I think it can park too!
‘How do they fix a flat tyre?’ just sends out a ‘assistance’ signal and the AA come do it.
‘How do you change your destination, are they simply A to B robots?’ Seems you’re really clutching at straws. We have GPS’s already were you just change the destination with a few taps on a screen, I don’t see what the issue is here.
The technology that you think of as making cars driverless is being put in “regular” cars now. It is helping to reduce accidents. From this point of view, it likely is somewhat holding down insurance premiums.
I expect that this will be the biggest impact of this technology. I don’t expect completely driverless cars to catch on. It is not safe to have a car on the road without an operator watching to see what is really happening. No insurance company would cover the risk. There are too many risk. Too many flat tires to change. Too many dead batteries and other problems. It is just another form of added complexity, that we likely cannot get completely right.
Well I guess I disagree with you there Gail. their safety record is exemplary even with the prototypes so I imagine a day when they are far preferred for safety reasons than human-driven cars. and breakdown issues aren’t really issues because either the passenger can change a tyre, or AA can come fix it, other maintenance issues would just be covered as they already are. I think they will be revolutionary in the decades ahead.
if machines take all the jobs will people be paid a salary for doing nothing i dont think so collapse is baked into the pie
Sure, and let me know when Elvis gets here…
Looks like technophilia is on a roll here at the moment.
No, in fact the basis of our economy has always been and still is living off energy potential from the wider environment, 5-15-20-60% real unemployment rates, it all just *doesn’t matter, when the society redistributes under whatever scheme the spoils-wages-food, perks, leisure (games), .. etc. be it under slave empire, feudal order, or quasi liberal oligarchies/democracies.
*obviously you get on the ladder of technology complexity far higher and faster with as true high employment/specialization rates as possible, but that’s not the point of the debate here..
I can’t imagine that something that would be in demand would be stopped just because it will destroy jobs. When the automobile was invented no doubt there was an outcry of all the jobs that would be lost int he horse transport business but it didn’t stop it happening. Nature of capitalism no?
New jobs will also be created by the new industry but granted there are likely to be fewer than the ones that are replaced
The motor industry kicked off on the back of the oil industry.
As did all other subsequent employment
You cannot have employment in the context we know it without constant increasing input of primary energy—ie hydrocarbons,, giving a high rate of return on energy input.
Thus solar farms and wind turbines cannot support sufficient surplus energy to sustain the level of civilisation we have become accustomed to
You can run a car on electricity, but you cannot build one, or maintain the infrastructure it needs to move around—the same applies to any artifice you can think of.
I tend to agree Norm. If horses drank oil, and shit waffles I guarantee that the oil industry would have supported more horses. As it turned out, the ICE was born and a market for oil and support products was created. The oil industry was nothing without a market. Oil was so plentiful and cheap, waste was encouraged….bunker oil for battleships and steam trains, powered flight became possible, V16 engines for motor vehicles, massive mining and agriculture machines, electricity generation, suburbs built, roads and super highways, massive bridges and tunnels, trucking industry, the list could be as long as one cares to iterate.
The stranglehold and network of interconnectedness the oil industry has developed, is ingredients baked into a inconceivably large cake. The technology and accompanying complexity is an attempt to support the oil industry and in no way a possibility of replacing it. The new technology is a child of hydrocarbons and other FF’s, as they go so does the tech fixes.
I understand that there was an illness that was killing horses at the time. There was a desperate need for replacements for that reason. Also, horses caused a huge waste removal problem in cities, and this was getting completely out of hand, besides being smelly and quite possibility contributing to illness.
The transition to cars occurred surprising quickly for these reasons. Cars were also quicker, allowing people to take jobs at a greater distance and work more hours. They thus greatly contributed to efficiency, and for this reason added jobs.
Our success with adding jobs has gone downhill greatly since 2000. We basically shipped jobs to where wages were cheaper. Adding new jobs only occurs if we truly increase efficiency in a way that can get more wages back to workers. Replacing workers with something else doesn’t work at all.
I wonder if there’s a way to fancy up those coal mining jobs in W. Virginia–integrate them with tourism or education, etc., paying the workers more to mine less coal?
the basis of our economy (and civilisation) is conversion of explosive force into rotary motion.
All employment is ultimately geared to continuation of that—indefinitely.
When we no longer have the means to continue our “forward motion” then employment in the sense we know it—ie the support system for 7.4 Bn people– will cease.
After that, the existence of 90% of those people will be unsupportable, because our “forward debt” system of infinite sustainability will collapse.
We will then be left with the global population as it was before our “explosive force” industry started
Their employment will be keeping themselves alive.
I am afraid you are right.
“Their employment will be keeping themselves alive.”
As in permaculture?
As in permanently engaged in agriculture, morning till night, six days a week.
“I will believe those things when I see them. We are too “close to the edge” to develop very far in that direction. For one thing, getting insurance companies to insure them would be a problem. ”
Not so, when they’re shown to be so much safer than human driven cars, the insurance premiums would likely be trivial. afaik, the only driverless car in an accident so far was caused by someone rear-ending it.
“afaik, the only driverless car in an accident so far was caused by someone rear-ending it.”
Tesla on auto-pilot gets confused by white freight truck, does not apply brakes:
http://www.livescience.com/55273-first-self-driving-car-fatality.html
There are unlimited ways for a car accident to happen, weather conditions, terrain, visibility, cars/animals/people/stuff coming in from unexpected angles. There would be a huge amount of collateral damage until all the bugs and eventualities are sorted out.
Thank you Gail! It seems to me that many people lack perspective on just how huge the BAU/car transportation system is and just how long it would take to deploy new systems that would have any meaningful impact. I’ve spent my entire career agonizing over the fact that the numbers just keep growing no matter what technology or social engineering we throw at the problem. Unless one believes that we have 50 more years of BAU to burn there is just no way.
Take Uber as an example, one we would all agree is “successful” and accepted. The company was incorporated in 2009, so they already had the technology business-ready 7 years ago. What kind of impact does this wildly successful technology have after 7 years? About 600 million trips per year in the US. Meanwhile, about 450 BILLION vehicle trips are taken. In other words, a wildly successful “disruptive” technology and system has displaced (rather replaced) about 0.1% of vehicle trips in 7 years: less than the amount that trips have grown in that same period.
So even if we did see a business-ready model of autonomous vehicles in the next 3 years or so, and the system was hugely successful 10 years from now, the actual market penetration and impact on vehicle trips and FF use is not even a drop in the bucket. It’s virtually nothing.
It sounds like a great story, but it’s just a fairy tale.
‘So even if we did see a business-ready model of autonomous vehicles in the next 3 years or so, and the system was hugely successful 10 years from now, the actual market penetration and impact on vehicle trips and FF use is not even a drop in the bucket. It’s virtually nothing.
It sounds like a great story, but it’s just a fairy tale.’
And what if it’s as revolutionary as the automobile vs horse was? What if every car is self-driving in 10 years? I can easily envisage a situation where in a decade or 2’s time, human-controlled cars become illegal for safety reasons. They might be viewed in the same light as cigarettes in restaurants are viewed today, extremely selfish and harmful to others health.
Vehicle movement has to have purpose
That’s the crunch factor
If there’s no purpose at the end of a journey, the journey will not be made.
“journey purpose” is the current function of our economy, remove that purpose and we have no economy.
Touché Norm touché! Awesome summary of the situation.
Again, it’s easy to underestimate how long it really takes to deploy these major technological changes.
The first production automobile was developed in 1886. You might say this is where we are now with autonomous vehicles.
It took 14 years to get mass production running in the US at scale (1900).
It took another 20 years (1920 or so: 34 years after the first commercially available automobile) to mostly clear the horses out of major US cities.
But outside of big cities horse and carriage remained a dominant form of transport. During the depression (1930s: 44+ years after the first commercial auto) many people could not afford cars which reinforced the prevalence of horses outside of major cities.
It wasn’t until the end of the depression (1939: 53 years after the first commercial auto) that the car completely displaced the horse in the US.
Anyone who believes we have another 50 years, or even 25, to implement technological fixes to our problems is not working from the same set of data as the rest of us on this site. We’re out of time, the game is over.
Brilliant summary! Thanks, Froggman.
Exactly!
I am certain there will be driverless cars in our future. lots of cars without drivers. The automobile is rapidly becoming (if it is not already) the most expensive part of families today. I can see a time coming where people won’t be able to afford to drive anymore. The 99% is rapidly approaching bankruptcy (in terms of dollars and energy). A car that drives itself is of no use if a family cannot afford it. The same is true for electric cars. It is all becoming too complex and expensive relative to real world salaries.
i need eddys wall to bang my head against
prosperity allowed us to have individual wheeled transport
individual wheeled transport will not and cannot give us prosperity
But people don’t understand this. They think even very high-priced vehicles, with roads we cannot maintain, will work.
I think it was a great joke.
Right! Families move back together again, to avoid needing to have multiple cars.
How would this lower fuel consumption?
Cars would drive empty between clients and people who now take the bus, bicycle or walk would instead take a cab.
This is is under assumption driverless cabs will be cheaper than cabs are today, which they won’t.
Driverless cabs for the drones, the owners will show status by having a uniformed human driver. The rest will stay in their pen preoccupied by VR or soma or something.
“This is is under assumption driverless cabs will be cheaper than cabs are today, which they won’t.”
Why not? Typically 50% of a cab fare is profit for the driver. Unless the cost of the extra technology exceeds this amount then fares could be reduced. Fuel is, perhaps, 10% of the fare.
However, I’m not worried about being replaced by a machine any time soon. Perhaps if my sat nav and google navigation could actually take me where I wanted to go I’d be more concerned.
Driver 121
During the transition it will be cheaper, otherwise there won’t be any transition.
But after, drivers cost replaced by tech, dedicated cleaners etc. Possibly cab company has monopoly. Why should a cab company buy cars from different manufacturers? Car manufacturer gets monopoly.
Add more expensive fuel and cars due to depletion.
No, I don’t think we will travel more passenger miles in the future.
The driver clearly has expenses to pay. One of them is replacing the car at some point. Another is liability insurance. He or she has health insurance to buy, and food, and other personal costs.
A driverless car would still have the costs of owning the car, including replacing the car at some point, and liability insurance for the car. But the true wages of the driver, net of costs such as these would be replaced. The system would be worse off, because the profits of the system would be concentrated in the owners of the fleet of driverless cars. There would be fewer people with wages who could actually buy the output of the system. The change would push the economy toward collapse.
I don’t understand how people fail to follow your logic Gail. Automation can only have so much penetration into the work environment before you run out of people to buy the output of the system.
The rulers will dole out free money when that happens so that everyone can lounge around, high on the hog. Haven’t you heard? /sarc off
So useless humanoid automatons are denied frivolous consumption and reproduction – good news then!
We need more of this ‘automation’ I can tell after applying my intellect on the premise for about 10 seconds, including writing this.
https://i.ytimg.com/vi/uptlCsTTWJ8/maxresdefault.jpg
“How would this lower fuel consumption?
Cars would drive empty between clients and people who now take the bus, bicycle or walk would instead take a cab.”
Well I imagine a new type of vehicle with separate compartments for privacy that would pick up people and drop them off, all controlled by a very sophisticated central hub program to minimise route diversions. So instead of a car per person, you have a car per 6 people = much less fuel used.
This suggestion have nothing to do with self-driving cars. And self-driving cars has nothing to do with electric vehicles, even if they’re often lumpen together, Brave New world I suppose.
It could be true already today if it was possible to organize with very little detour.
It is already (kind-off) implemented for airport transfer, it is called “a bus”.
Imagine that we actually have resources to build all of this stuff, and can ramp up debt to add all of this. I don’t think so.
Well we’re building cars right now so I don’t see the issue. I do agree with you that it is a question-mark whether the complexity of society can continue long enough to see it all happen though. But if we do manage to keep going another few decades I think it’s a safe bet it’ll happen. Can’t stop progress. (unless you run out of energy first that is 😉 )
Agreed. It appears that the same said characters here fail to accept that we have reached the end of the road where it comes to this stuff. Which is why we’re scraping the bottom of the barrel on energy and interest rates. And then there’s the externalities of climate change, environmental destruction and species extinction to factor in. We immediately fall back to the same strategies that have landed us in the soup in the first place, because the tech fix is easy, whereas behavioural change is well nigh impossible. We are a species. WYSIWYG.
Actually, the problem is that we are dissipative systems. We are meant to use energy supplies. We cannot voluntarily turn this off, as a species.
This pre-supposes that there will be people to afford to travel and they have somewhere to go despite all being out of work.
Except for the compartments you are describing “a bus”, a hundred year old invention.
Maybe the compartments are needed to get people to pay when there is no driver.
https://www.google.se/amp/www.dailymail.co.uk/sciencetech/article-4038346/amp/The-REAL-cost-meal-Expert-warns-takes-200-gallons-water-feed-ones-person-says-risk-famine-war-don-t-change-ways.html?client=safari
Vertical aquaphonycs?
It takes a lot of water for meat. I wonder if the water figures are really world averages, or are averages for a heavy meat-eating country like the United States.
Foreign cows must be very thirsty, ours eat rainwatered food and minimal amount tap water on the side.
Meat does not seem to be the only problem.
http://www.businessinsider.com/amount-of-water-needed-to-grow-one-almond-orange-tomato-2015-4?r=US&IR=T&IR=T
California’s agricultural system seems to be unsustainable.
Farmers have resorted to depleting groundwater sources formed over thousands of years for short term profit.
Two important products are produced there,
almonds, which are used to make a healthier alternative to milk for adults.
and alcoholic products.
I see very few environmentalists calling for restrictions on human agriculture in California.
Fruits are grown in California, as well.
The real significance of almonds is that they require a lot of water to be grown while their popularity among consumers has increased in the last 15 years.
Depleting the ground water seems obviously unsustainable to me, but I suppose the plan is to finish the ground water and then desalinate sea water.
Is that not an activity where intermittency is no real problem?
Even is solar is used on an intermittent basis, I think it is still a terribly expensive process, compared to simply pumping ground water.
How much more expensive is “terrible”?
If it is “only” x5 then farmers can grow something else (rich can of course get what they want), if it is x100 it is a real problem.
On “wine – alcholic products” well historically, wines were for very long time just a basic necessity at the table and during the whole day, it was much safer than usual ground water sources around urban areas, especially the first ~thousand years after the destruction of roman aquaducts and on as early industries polluted the country side heavily..
In many “western” cultures it was absolutely normal not to be completely sober around the clock.. till very recently..
Quite likely we are going to return to this sane practice of “wine and diy distillate culture” – obviously in different areas than of today depending on pumped water, fine machinery, and other massproduction methods etc.
Obviously it was structured: quality wines for the elite, while cheap wines – beers – diy distillates for the workers, dirty ground/shallow cistern water level for the poorest strata..
Bilge!
Bilge water for the poorest strata of mariners and for passengers in steerage.,washed down with brine.
https://www.bloomberg.com/news/articles/2016-12-17/bp-awarded-abu-dhabi-concession-as-emirate-gets-2-bp-stake
Saudi Arabia is willing to let someone else take the risk of low oil prices?
Risk always turns into losses for the majotity in a fiat currnency environment.
Perhaps the IOC’s and the NOC’s will merge into one giant interconnected entity through ownership and deals to secure financing to the whole oil industry ?
Look at the nuclear industry in France. It seems to be merged into one giant company (EDF), and it is failing. http://www.theecologist.org/News/news_analysis/2988433/french_taxpayers_face_huge_nuclear_bill_as_edf_financial_crisis_deepens.html
How do you fix the problem for the people of France?
I don’t know what to think anymore. Everything is just falling apart.
How can 17 reactors go down at the same time?
I didn’t know that nuclear was uneconomic. Has it always been? Or is the cost of production rising and the price of electricity falling right now?
All these nukes are turning into a nightmare. I guess no one actually thought of how to deal with them in the case of a economic collapse.
Or do they know that something is coming and have now decided to take them down?
“17 reactors go down ”
The article says. “Currently 17 French reactors are shut down for safety checks, ” which is rather different. They even say why.
“How can 17 reactors go down at the same time?”
They were turned off for safety checks, probably after Fukushima, just like the reactors in Japan.
“I didn’t know that nuclear was uneconomic. Has it always been?”
I don’t know if they did not bother to calculate the cost of decommissioning old plants or were just extremely optimistic.
“I guess no one actually thought of how to deal with them in the case of an economic collapse”
No one plans to have an economic collapse.
We are having a worldwide problem with low commodity prices of all kinds. Electricity prices are low too. Part of the problem is that intermittent renewables dump wind/solar on the grid when it is not needed, and bring down the prices for other types of providers, such as nuclear. They thus drive nuclear providers out of business. This is a disaster, because intermittent renewables really provide very little electricity themselves and they can’t stand on their own without backup, yet they drive the backup they need out of business.
Back when nuclear was first developed, fossil fuels were very cheap. This probably influenced cost estimates. And I am sure they didn’t really contemplate everything that would be needed.
In my province, power production is a regulated monopoly. There is a review board that looks at the costs the power producer has, and can fairly justify, and sets the rates based on these costs and allowing a rate of return with an upper limit. There is even a fuel adjustment mechanism in which customers get money back if, for example, fuel costs are lower than expected. $30 million was given back this year. Many people hate the fact it is a monopoly but it does seem to be a better than what is happening in France.
There are some parts of the US where power production is a regulated monopoly, and the same thing happens there.
Even this does not completely fix the problem though, because in the areas where prices are set based on demand, and intermittent renewables feed in artificially, the prices for wholesale electricity drop too low. This in turn drops the prices of coal and natural gas too low, and tends to put nuclear out of business. The places with regulated monopolies get the benefit of these artificially low coal and natural gas prices, so the fossil fuel industries end up in a depressed state, borrowing more and more money to stay alive. The utility itself does well, however.
The price of electricity in Europe seems to fairly low… except in Germany and Denmark.
http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Electricity_prices_for_household_consumers,_2016s1_(EUR_kWh).png
These countries are of course the big intermittent electricity (wind and solar) countries. It is high priced.
The economy is driven by human knowledge and quest for the new which is limitless. As such, the dimensions of the economy as we see it today may shift, commodities and resources will be replaced by new ones and therefore “the economy” will last till the end of time.
Where is the Gatekeeper? Out bucket listing again?
Yeah, the sign from Dante’s entrance to hell should really be put up here before you post
“Abandon all hope, ye who enter”!
The end of time, as it is experienced and recorded by humans, is just around the corner. Cancers don’t grow forever. That’s why they call them terminal.
Physics says that economies cannot last until the end of time. They are based on resources which are subject to diminishing returns. Also, population tends to keep rising, creating a problem with declining farmland per capita; this is another form of diminishing returns. If we didn’t have to eat and drink water, I might agree with you. Needing to keep warm in cold countries is an issue as well.
“Needing to keep warm in cold countries is an issue as well.”
Thats what global warming is for!
“Physics says that economies cannot last until the end of time”
I am not so certain that we need to be concerned about “the end of time.” It’s harder to define “economy” but it started out with the economy and the ecosystem being much the same thing to our hunter-gatherer ancestors. The ecosystem comes about as the intersection of sunlight and a wet planet. Unless humans take the whole Earth apart (possible eventually) it seems likely that an ecosystem (proto economy) will exist for a much longer time than humans have been around.
The other objections, farmland, water and staying warm are all fixable if we solve the energy problems. There are several ways that could happen. Full blown molecular nanotechnology could well be developed before we run out of fossil fuels. We could breakout into space and solve the energy problems that way.
Most hopeful, well off humans with good birth control and educated females tend to ZPG. Why is not entirely clear, but it is observed.
“Americans have more faith in technology that hasn’t been discovered yet than God”
Exploitation of that faith is very effective. Winning!
“more faith in technology”
The future may be more dependent on how the Chinese feel about technology.
We could genetically modify humans to be a tenth of their current mass by breeding us like Chihuahuas. Then we’d effectively have ten times as much planet and resources and could run the economy largely on photovoltaics. The only problem is we’d have to be constantly on the lookout to defend ourselves from all the giant snakes, crows, foxes and pussy cats that roam or soar above the broccoli and potato forests.
LOL-liput
Dear god man. Bears would be like dragons to us. Also I would be investing in ladders.
We seem to have been doing precisely the opposite: feeding children large amounts of high protein food as children, resulting in oversized adults who need more calories.
More people put faith in technology that hasn’t been discovered yet than God. Before we do might I ask why no one has developed a solution to nuclear waste? Also why has maned space flight peaked and declined? Why don’t we have a space shuttle? Why don’t we have super sonic passenger flight? Why has the financial sector grown exponentially while GDP has remained stagnant? At some point people will learn that energy is the economy. It always has been always will be. From the day Marx theorized Surplus Labor we’ve known it. Energy merely is labors leverage this is what we call productivity. When energy becomes constrained the first step is increased efficiency. The next step is financialization. The third step is globalization and distribution. The final step is contraction. Is any of this sounding familiar?
JT Again a cogent look at the future. When we begin to understand that ALL technology is developed because there was someone with enough spare time (i.e. excess energy) to develop it, and they used excess energy over what they needed to feed, cloth and warm themselves to construct that technology. SO, efficiencies are a form of technology and they require some extra energy to develop and manufacture. In the big picture there is not as much energy saved as thought. All technologies are interdependent. Like the game of JENGA, when a stick is removed the chance of collapse grows. As more are removed the pile becomes wobbly. As our available energy continues to decline we will in effect be removing stick after stick. The bottom line of what I want to say here is that the inter dependency of all technologies is usually ignored when someone says we can have a smooth descent from our current level of science and technology. The god of technology is very fragile.
“Before we do might I ask why no one has developed a solution to nuclear waste?”
Solution is a matter of preference. The original design is that one day, the spent nuclear waste will be reprocessed and used again in the reactors. Eventually, breeder reactors are supposed to take over, so the amount of available fuel increases over time.
For economic and non-proliferation reasons, spent fuel recycling is halted in several countries. Alternatives include storing it in large underground repositories – except the people living near those places always block the projects because no one wants the waste in their backyard.
There is some research into making a powerful laser or something similar that will greatly accelerate the decay of unstable isotopes, to make the waste much safer for long term storage.
“Also why has maned space flight peaked and declined?”
There is no economic reason, currently, to go into space, beyond putting satellites in orbit. People are trying to create reasons, like tourism or colonization or mining or solar power.
“Why don’t we have a space shuttle?”
Bad design, was subject to chunks of foam damaging the ceramics leading to catastrophic failure. There are several private companies working on new alternatives.
“Why don’t we have super sonic passenger flight? ”
Not economical. Not enough people will pay the premium to go faster. More speed = less fuel efficiency.
Spent fuel recycling/storage is back in a big way in some countries, I’ve been posting details for months. It’s not experimental, it’s commercial grade, mature technology developed over past ~40yrs. Obviously it’s not miracle for 100% of waste from everything, more research and time is needed for some specific isotopes and to gradually upgrade the know-how for possible higher efficiency and economy along the way. But the existing stuff is evidently good/mature enough to drastically lower the spent material storage bulk and time from most nuclear facilities both in civil and military application (to realistic cavern storage of few hundred years longevity as opposed to formerly assumed hundred thousands)..
But for some other global players it was up to this point easier in terms of energy (more profitable) just to bribe, subvert or bomb adversaries into stone age instead. Not a long term viable strategy lolz..
Do you have a link for this recycling?
As .ru based it has been mentioned numerous times, BN600/800/1200, nitrate fast reactors, .. The Chinese stuff is as of now less publicly propagandized/documented, but something could be perhaps dug out as well.
It’s right in front of you! Why don’t we just send all the nuclear waste into SPACE?
“Why don’t we just send all the nuclear waste into SPACE?”
Hahaha! Funny joke.
In case you are serious:
1) what happens if just one load blows up in high atmosphere?
2) there are literally millions of tonnes of waste. At a cost of about $20,000 per Kg, it would take hundreds of trillions of dollars.
“a cost of about $20,000 per Kg”
Musk will get the cost down to $2000 per kg, to GEO eventually. Reaction Engines may get it down to $200/kg which is required for power satellites to make economic sense If you are serious about moving nuclear waste to space you want to be sure it will stay up long enough to decay so LEO is not a good idea. But I agree with you, moving radioactive waste to space is a silly idea no matter what the cost.
‘Musk will get the cost down to $2000 per kg, to GEO eventually’. Prove it.
“Prove it.”
Obviously I can’t, no more than FE can prove his instant doom. We just have to wait and see. However, I don’t think $2000/kg is unreasonable. The energy cost to lift something to GEO is around $1.50 a kg at ten cents a kWh.
Now what’s required for economical power satellites, about $200/kg to GEO, is harder. But I think it can be done with Skylon to LEO and beamed energy powered arcjets to move 15,000 ton blocks of cargo above LEO.
If you want to dig into the details and critique them, let me know.
Here Are the Multinationals whose Bonds the ECB is Discreetly Buying
For instance, the fact that Europe’s oil majors have been particularly spoiled, with the ECB splurging on bonds issued by Shell no less than 11 times. The central bank bought bonds from Italian oil company Eni 16 times, Spain’s Repsol six times, Austrian OMV six times, and Total 7 times.
Gas companies have also fared remarkably well. When counting the purchase of bonds in Spain, for example, 53% are from companies involved in the natural gas sector. The corresponding number in Italy is an astounding 68%.
http://wolfstreet.com/2016/12/15/here-are-some-multinationals-whose-bonds-the-ecb-is-discretely-buying/
The article implies the ECB is venal… foolish… stupid.
It is the author who is stupid… befuddled….
For he does not understand that if the ECB failed to make funds available to keep Big Oil alive … when they lose money on every barrel they pump …. there would be no oil ….
Other key industries are being funded as well … because no other entities are willing to step up …. and if they are allowed to collapse…..
BAU would collapse.
How the author cannot see this is beyond me … but then most people cannot see beyond the point of their noses.
I think you are partly right. However, another important consideration for propping up these domestic zombies is to delay the day of reckoning, when forces outside the EU, most likely/notably Russia will own and operate the whole energy chain from A to Z, fair and square, including the “last mile” of energy infrastructure inside the EU.. Nowadays, thanks to legacy CB system, there are still policy tools (including “renewables” mania), be it temporary fixes and head fakes, how to pretend some level of EU autonomy..
Nice point. People aren’t seeing that we are exchanging one form of energy for another already through this back door means of debt issuance. It’s a complete paradox. The debt is being securitized as equity in pension and retirement systems from an industry that has no future. When it finally breaks it’ll be like someone turned off the lights. One day BAU next day What Happened?
I had never considered the QE might be used to prop up energy companies. Interesting!
That’s a very important point with large propensity to prolong BAU.
It was commented on/predicted here by several contributors already..
Also QE like measures will be likely utilized to transform energy sources, according to given preference of the day, e.g. liquid fuels preference would materialize through heavily subsidized coal, natgas, shale operations and even nuclear for capable regions (Russia, China, S.Korea, ..). Extraction companies will be either directly or indirectly nationalized, subsidized and commanded to stated goals.
You are correct for the long term, the financial stuff will eventually brake our necks.
Not in the near/midterm though! The post 2008/9 development has rewritten all old rules. Lot of suffering is expected for the meantime though..
I understand the big nuclear company EDF in France is in financial trouble. Is anyone going to be able to prop it up?
I specifically mentioned regionally diverse focus on the importance of nuclear for the long term strategy, hence the list of the best viable out there: Russia, China, S. Korea. The French nuclear industry as in other countries there is trapped inside the overall/German EU dictate for “renewables independence” and circling the wagons on geopolitical issues with the “wrong partner”, also specifically as of lately the EDF is wining low to no new contracts internationally. It’s a doomed increasingly local company, only to be propped up on ad hoc basic by the French state alone (how long is it going to work?), no longer term vision, no systemic projects like next gen breeders, although they were at it focused few decades earlier etc.
Why the name change and dearth of posts? The mystery deepens 😉
When we go into the past and observe the life in the Middle Ages, we can find the answers to what can be expected when the collapse comes.
The principal source of the stored energy during the Middle Ages was wood, as a battery accumulating the yearly energy of the sun. During the Middle Ages, the role of the states was in a significant extent performed by the monasteries: they provided social and healthcare services and were the centers of learning.
When the battery of wood was depleted, the collapse ensued:
“Decline of the monasteries
Monasteries were most numerous in Britain during the early 14th century, when there were as many as 500 different houses. The Black Death of 1348 dealt the monasteries a major blow, decimating the number of monks and nuns, and most never fully recovered.
When Henry VIII engineered his break with Rome in the 1530’s, the rich monastic houses were one of his first targets. A few of the abbey churches near large centres of population survived as cathedrals or parish churches (for example Canterbury Cathedral, Durham Cathedral, and Westminster Abbey), but those that were isolated, including almost all the Cistercian monasteries, were demolished. Throughout the Tudor and later periods these shells of buildings were used by local people as a source of building material.”
Source: http://www.britainexpress.com/History/medieval-monastery.htm
http://image.slidesharecdn.com/nhmlecture-dec2013-131204100820-phpapp02/95/sharing-the-planet-humanitys-greatest-challenge-43-638.jpg?cb=1386174490
The depletion of the wood supplies during the given period was unprecedented. And this depletion of the stored energy source was also the only principal reason for exploring other parts of the world. No new lands were important, but the new accumulated energy source was needed.
Yep, especially after the late 15th century successful ocean voyages, the proto globalization/capitalism key features jump started (global import/export share on GDP rising to 5-10%), that included new technologies in transport and warfare. All that was mightily taxing on the woods for smelting (iron-charcoal). So by the end of 30yrs war in the mid 17th century, the European forests were in quite dilapidated state, however the overall civilization-knowledge advancements up to this point were high enough to launch more gentle farming managerial methods into the forestry by their land owners, as well as the explosion of sciences allowed for the nascent coal era starting just in few decades time.
“Coal was so abundant in Britain that the supply could be stepped up to meet the rapidly rising demand. In 1700 the annual output of coal was just under 3 million tons. Between 1770 and 1780 the annual output of coal was some 6¼ million long tons (or about the output of a week and a half in the 20th century). After 1790 output soared, reaching 16 million long tons by 1815 at the height of the Napoleonic War. By 1830 this had risen to over 30 million tons”
Wow! That is quite a slide showing the deforestation of Europe. I am guessing that if we had an image for 5000 BC, there would have been even more forest cover in Greece, Italy, Turkey, and the area which is now Israel. I know that Sing Chew, in “The Recurring Dark Ages,” claims that deforestation began very early. Also, the “Promised Land” of the Israelites seems to have partially been possible, by deforesting hill country. Joshua 17:14-17 reads:
This timeline puts the date when the Israelites settled the Promised Land at 1200 to 1300 BCE, which is even before the earlier map.
One a see how the Third Reich, some 3,000 years later, ironically followed this ancient -and in this instance Israelite – pattern of tribal aggression expulsion/annihilation/enslavement, and settlement to gain resources.
It is no wonder that Jesus Christ was the son of a carpenter: probably the wood was already in a very short supply at that time.
“Other scholars have argued that tekton could equally mean a highly skilled craftsman in wood or the more prestigious metal, perhaps running a workshop with several employees, and noted sources recording the shortage of skilled artisans at the time.[20]”
https://en.wikipedia.org/wiki/Saint_Joseph
I have heard that wood was not something most people could afford.
It seems that Christianity was accepted in Europe when the supply of wood was declining due to the deforestation. The symbol of the crucified Christ unites the human being with the source of the accumulated energy in a very clear way: the body of the Christ is nailed to the wood.
I think this is the reason why Christianity gained such a popularity and acceptance: it contains the real story of the population of the human race dependent on the accumulated external energy.
In the more rainy regions, there is still some hydro as the source of the accumulated energy. But in the dry regions of the Israel, the end of the forests meant the end of the world.
Interesting way of seeing the story.
For your Saturday night / Sunday morning viewing entertainment
https://youtu.be/-evIyrrjTTY
Thanks! I noticed it was all men fighting. This is exactly what happens in the animal kingdom as well. A person might think that this was instinctual; something to do with keeping population down. Of course, killing off men does’t keep population down too much. It is necessary to kill of women to keep population down.
Just as the monks stored past knowledge, we could store knowledge of how to burn coal for power or drill for oil, even as the market forces behind those technologies declined. If we knew how to keep fossil fuels burning without money, we wouldn’t again need to cut down all the trees.
I also wonder about the efficacy of being attached to large centers, and why those nearby cathedrals were not vulnerable to VIII.
http://www.hindustantimes.com/india-news/headed-home-many-workers-abandon-building-sites-after-cash-crackdown/story-zpX9eHb9KcNyKIdUy17EKM.html this is getting very interesting in india i think the central banks will be feeling very nervous as the latest attempt to grow is backfiiring well see if india could be ‘the straw that broke the camel’s back’
Poor India. The Cartel plays with it like a rag doll, First the precious metals ban now this. What exactly is a “black” market? I cant think of a less likely candidate for a cashless society, The inhabitants dont even trust fiat that much less plastic digits. Every aspect of the place runs off of cash. Street vendors, auto rickshaw drivers, tailors the list is endless. Not to mention the honorable profession of beggars, Are they now supposed to chase after you wailing baksheesh with a credit card machine in a unmaimed appendage? Is everyone supposed to just die now if only cash works for your angle? The people will burn down Delhi over this, The police wont do a damn thing to stop them. They are rather fond of their baksheesh also.
Baksheehs are probably necessary because there isn’t enough tax revenue collected to pay the police adequately to do their job. Workers who are underpaid are susceptible to bribes.
Good thing civilized countries pay government compensation twice the rate of the private sector ensuring that wealth has no effect on justice. LOL Id rather give my rupees to the wino in the park than pay the nonprofits CEO mcmansion mortgage. Id rather pay for my services direct with baksheesh in the government sector rather than pay for bloat that results in overcompensation for individuals providing little or no service.
Bizarre!
Unintended consequences!
This is the sort of thing that makes me angry. Dangerously so sometimes. At the same time, I can’t say it doesn’t have some usefulness, at some time, in some way…
http://www.planetizen.com/node/90266/roads-could-soon-charge-electric-trucks-colorado
I can’t say it doesn’t have some usefulness, at some time, in some way…
The guy that wrote it got paid, It was useful to him. the readers got a warm fuzzy and a renewed belief in the energy tooth fairy, It was useful to them.
I was thinking of it like the solar panels on my roof. My wife got them, actually, and I pitched in, despite a lack of enthusiasm. It’s doubtful that they’ll last long enough to pay for themselves, but it does reduce utility bills in the meantime and holds out the possibility of being convertable to off-grid in a pinch. Nice feeling, whether true or not. So it’s that kind of murky ‘usefulness’ that I mean. Not a good idea to begin with, but once it’s there might as well get something out of it.
The low prices you get from the electric company and the intermittent supply they get are direct harms to the electric company. It is unfortunate the benefit you are getting is at the expense of the system as a whole.
Good to realize that. At the same time, just leaving simple market forces to lessen transportation requirements/costs doesn’t seem to kick the can as far along as it needs to be kicked.
Sorry. My 11:51 post was meant to go where you said, “We have to keep the system up…(in relation to transportation needs)”
As to solar panels, I haven’t seen a utility alternative that is very appealing. I don’t doubt that many people feel trapped by having to pay a powerful, possibly corrupt, unaccountable far-away utility that can lobby to raise rates at will. Anything to gain a little more control is going to be appealing to customers (whether or not that’s rational for the entire system).
The long transmission lines from the utilities are said to waste a lot of energy (whatever the significance of that is for the system). So having more socialized, nearby small utilities that are accountable to local communities would get support. Our local water utility is run like that. There is only one paid employee. He works his tail off, but he comes from the community and you can find him to talk to anytime.
What I’ve been trying to say is that we need to get back to the coal burning that was the reason for my town. The problem is that, with the advent of diesel to run trains, the coal business died, the future had supposedly arrived, and the miners packed up and left. As is prevalent in our civilization, the old technology for mining was discarded, along with the equipment and knowledge of how to do it. So we are here sitting on coal that no one knows how to use. (We also have methane from all the minerals or whatever buried in mountains of “gob piles.”)
Then there is the concern over climate change. (I’m glad this isn’t a climate determinist site!!!!!) So, IMHO, it is not emissions that we have to worry about most; it is deforestation. What seems to be behind massive deforestation are industrial ag, commercial mining, industrial logging and commercial real estate development. The market forces behind these are bent on planetary extermination. So I say to it, “I’ll be glad when you’re dead, you rascal you…”
+++++++
I particularly agree with your final paragraph. Deforestation, development and in some places desertification are major horrors and the mess created and left behind by mining operations can poison land and watersheds far from the source of the pollution. It’s all very ugly, and a sane environmental preservation system would be focused on preventing this sort of vandalism from taking place.
“Vandalism”
Exactly, very appropriate at our level.
“I don’t doubt that many people feel trapped by having to pay a powerful, possibly corrupt, unaccountable far-away utility.”
Are you off grid? Otherwise your still depending on the utility company, and now also on the solar company.
“Are you off grid? Otherwise your still depending on the utility company, and now also on the solar company.”
We’ve paid the solar company in full. We don’t owe them anything.
I never said I wasn’t dependent on the utility. Due to advocates’ pressure, we get a good deal for plugging our solar into the grid. I’m not saying that’s good for the system. That is not the issue. The issue is the dependence on a large and unaccountable corporation for energy over a lifetime. It affects everybody, not just me. It sucks.
I was thinking about guarantees, service, replacement parts.
I can’t get a favourable feed in deal, and can currently not rationalize going of grid, enormous cost and/or low comfort.
But if they keep increasing rates 10% per year something must be done sooner or later.
“I was thinking about guarantees, service, replacement parts.”
I never had much faith in benefiting from guarantees, although I believe we’d have it if the system stays up relatively well. The product we have seems sturdy enough, and my preliminary research didn’t suggest that repairs was a major need. If it DID break down and couldn’t be fixed, we’d just have to depend on the grid while conserving like crazy.
It’s too bad that you can’t get a good rate for feed into the grid. And that you’re dependent on the utility’s whims, like most people. But what’s your choice? Going with the grid and conserving mightily, perhaps.
Artleads, I financed my system for 12 years, partly banking on the chance that there won’t be any paying back of loans that far into the future. If the financial system collapses 5 years from now then I got a hell of a deal on those panels.
I was the one pushing for the panels and my wife went along. Each of us for different reasons. She still believes in “saving the planet” and is less convinced of collapse than I am.
On the other hand, I was setting myself up with one more “prep” that might potentially help me in the future. Right now we’re grid tied but I do plan on setting up battery backup. The idea is that if things break down somewhat more slowly, perhaps there is a period of time where the grid is non-functioning or intermittent but we’re not yet forced to become migratory/nomadic. Whether this period is for a couple months or a couple of years, having solar electricity to cushion the fall into pre/post-history could be very nice indeed. I know that’s an approach on the “optimistic” end of the spectrum for this site, but why not, eh?
Thanks Art for that link. Art Berman says “Americans have more faith in technology that hasn’t been discovered yet than God” I tend to agree. How about someone figure out how to deal with all the nuclear waste and cooling ponds that were going to be “no problem” because of future technology before start planning some other mad perpetual motion machine
Left on there own one of these light bulbs will discover the profitable solution. Which will be to pave the highways with the nuclear waste to power our electric vehicle transformation. I bet I could find a venture capital firm who would invest in it.
Great quote: “Americans have more faith in technology that hasn’t been discovered yet than God”
The dialogue is remarkably fluid among technology believers. Its 3d printers one week gravity devices the next. These beliefs usually incorporate ideas about technology being suppressed by big oil interests.
I think the human desire to live in balance is one of very few admirable aspects of humanity. The habit of discarding very obvious truths in order to create a faux reality turns that aspect into something else entirely.
Gail,
You hit a home run with this post. I’m curious as to how the number of respnses for this one stack up. It seems way more than average. How does it look to your actuarial analysis?
Comments are definitely running ahead of the average. At this point, there are about 1250 comments. I would have expected 900 – 1000 comments, based on some recent posts. It seems like there are more diverse commenters, continuing more days after the post was put up, as well.
The page views for this post (on my site only) are at 22,512 in 10 days. They keep going up for a long time, and I don’t have daily views for earlier posts to tell how many views came in the first ten days. I can get average views per day in the first partial month, and recently these have been in the 1,800 to 2,000 range. Average views in ten day have been about 2,250, which might be somewhat higher than the recent average. (Averages are lower in past years.)
The thing that really increases views is having a simple to understand post, on a popular topic, with a simple title. “Why Oil Under $30 Per Barrel Is a Problem” has had 77,159 views so far.
“Why a Severe Drop in Oil Prices is a Problem” has had 125,000+ views so far.
“Twelve Reasons Globalization is a Problem” has had 282,000+ views so far.
“World Energy Consumption Since 1820 in Charts” has had 195,000+ views so far.
As I look back, I can see that the general trend in readership per post is definitely up for 2016 in general, even when considering the shorter time that they have been up than posts from prior periods.
By Studying Skinny Apes, Science Figured Out Why Humans Are So Fat
http://www.vice.com/read/science-can-now-explain-why-humans-are-such-fat-apes-394
“Compared to the apes, we have less muscle, which is an energy savings, because it’s such an expensive tissue. Two important things about the way we store fat: We store it around our buttocks and thighs, but you want to make sure that you’re storing fat so it doesn’t interfere with locomotion. You don’t want it on your feet, for instance. So you concentrate it around the center of gravity. And you also don’t want it to interfere with being able to get rid of heat.”
Somewhat related: People work out, to develop more muscle. The muscle raises the necessary food requirements, and helps the person keep from being as fat in the future.
I bet Trump will have to back off his policy of unrestrained fossil fuel extraction as that is likely to kill the North American E&P industry. Their cost of production is significantly higher than the Middle East and won’t be able to compete if oil falls below $40 again. It’s challenging as it is at $50 barrel thus the decline in rig counts from around 2,000 to below 500 today.
I agree the head wind is strongly against the plan working. However if Middleast exports can be increased their net energy can overcome the low net energy in North America. The oil industry is a global network so a major producer like Exxon can use profits from one area to offset losses in another. Before they give up I think we will see a major move in M&A with majors scooping up bankrupt frackers. Simultaneously a thrust in the Middle East to stop domestic demand growth which is killing their exports. Already Obama has stopped arms shipments to the Saudis because of “human rights violations” in Yemen. There will be future excuses for intervention which again fit the BAU model.
I do think that eliminating all the environmental and pollution related restrictions of oil extraction will allow oil extraction to be more profitable. But, all actions have consequences. Removing the rev-limiter from an engine will allow the engine to rev higher but not for very long.
I agree. Just recenly there was a small 176,000 gallons leaked into a creak from the Dakota Access Pipeline pretty near Standing Rock. As these increase the people will demand environmental oversight again. Water trumps oil any day.
Agreed but remember it’s not about profit it’s about net energy. Its value to drive profit growth. If the net energy value can increase sufficiently the activity will generate a cost plus environment. It’s a self reinforcing formula. However it will only last a few weeks or months maybe a year. So much is tied to oil financially that there is no choice but to keep it running.
I agree JT. We might get a year out of Trump’s plan if we can cut the external costs of energy extraction to the bone. There is nothing else we can do to continue powering the economy with oil.
unfortunately the cost of cutting energy extraction to the bone will ultimately the same as that use on the sugar cane plantations in the 19th c
feed the slaves as little as possible, and extract as much energy as possible, while breeding a fresh batch of slaves
The same applied to coal miners, pay them as little as possible (just enough to live on)–extract as much energy as possible, knowing that the average miner will be worn out or dead by 50/60, and in the meantime will have bred half a dozen new miners.
The perfect energy production system
JT, thanks for your great post about Nixon. I have lived through all that up to the present.
To pick a nit first. Most economists define price as what the highest bidder will pay. The costs of production do determine if something is produced. If the price falls below production cost then either it stops being produced or the actual costs are distorted, transferred or deffered in some way(s). Military intervention, offshoring to use cheaper labor or unregulated environmental areas and debt are all in use right now for the production of the master commodity, fossil fuels.
Central bank debt socializes the declining net energy. It is the emperor with no clothes. At some point quite soon, I think, the value of all the world’s debt instruments will become like the tree leaves in our forests. They will all turn colors and then become useless and fall off. That is the day of reckoning for the world’s economic system. Because debt (the great deferral) has been socialized, we will all find ourselves buck naked.
Thanks you get it.
Nice text end almost here.
A lot of people aren’t getting thermodynamic collapse in oil means so to illustrate in 1965 the world was producing 30million barrels a day today the world is producing 90million barrels a day. However the net energy that is left over after production has declined from 50% to 18% so in 1965 we had 15million barrels of usable energy and today we have 16.2million barrels. This is less than 10% gain on a 300% increase in effort. 2017 is projected to increase the decline to 14% net energy for us to just stay flat global production will need to increase by 25million barrels a day that is not going to happen.
Its likely no coincidence that Trump chose Rex Tillerson as Secretary of State. In order the keep the bus on the road more high value net energy has to be brought into the market. US frack oil is 5:1 at the well head where as Middle East is 20-30:1 that oil has to be in the market to slow the net energy decline. Some wrongly conclude supply demand principals will correct the situation with higher prices.
Oil is not likely to increase in price. The net value is the energy it supplies. So each barrel is less valuable then the one the preceded it as the vast majority is consumed by the Oil Industry. The only thing keeping the industry alive is a dramatic build up of debt. Chevron borrowed 18billion last year Exxon 8billion. At the same time they cut all E&P exploration and production. If the price per barrel increases it will gut the global economy.
Another way to look at it is this. At the pump the end user must bear all the cost of the product. So if a producers cost has increased 300% the end user has to pay that increase. The problem is he can’t because the net value is too low to produce profits from the use of it.
For example right now jet fuel is running around $2:50 a gallon. It needs to be $7:50 a gallon to maintain the production. If it was what would happen to air travel? That’s the conundrum. It’s the same with us would we commute 1hr each way to work at $7:50 a gallon. At some point you just quit. This is particularly true for low wage jobs who still make up the vast majority of wage earners.
So the collapse in oil prices is a collapse in business activity that preceded it. Look at all the macro indicators they’re all down. The “glut” is purely a function of the industry to keep cash flow. 1/3 of the frack oil is in bankruptcy but the creditors are making them pump like crazy hoping for a ROI.
Why it’s so hard to understand is because we’ve been lied to our whole life about how economies really work. We’ve been taught that it is all supply and demand. This is a lie. The true pricing mechanism is the cost of production. The cost of production determines if a product can be affordably brought to market. Not demand. If you don’t believe that then why don’t we have super sonic passenger jets anymore? Because no one wants to fly at the speed of sound? Is it because we don’t know how to produce the planes anymore? Or is it that the cost of production of the service exceeded the net value to the customer?
The same will happen to oil.
Here’s the most fascinating bit. The US hit this net energy crises in 1970 when domestic production peaked at 10 million barrels a day. We never recovered. Nixon however did 4 things. One he took the US off the gold standard. By making the US dollar fiat he could increase debt exponentially. This allowed the US to continue to grow without real growth. This is an absolute requirement for Capital economies. Second he opened China for manufacturing. China had untapped energy reserves and abundant labor. In essence the off shoring of manufacturing preserved vital US resources and reduced domestic pollution. Third he created the EPA this imposed a great deal of pressure on industry to produce there products elsewhere like China. As I’ve explained before manufacturing is a lead loss industry so it sells its product at the cost of production or even a loss but the true profits are made by the Banking and Transportation sectors including wholesale retail distribution. Fourth he convinced the Saudis to sell their oil only in US dollars for unlimited military protection. This expanded to the rest of the OPEC nations. This move created the Petro dollar system that artificially created demand for US dollars. Like economic extortion the oil hungry world had no choice but acquire US dollars with real goods and services so they could buy oil. The price of the real goods and services were the cost of production. So incredibly cheap products flooded into the US with absolutely no cost because the US dollar was now a fiat currency. All you had to do is allow your currency to inflate at the same rate as your import export imbalances. So free stuff is flooding in to support this New Consumer Based economy. Americans start believing the more they consume the more there will be to consume. Absolute break from reality.
Here’s the question do we think Nixon was bright enough to have figured all that out? I don’t think so. Trump is at the same inflection point. He has no idea why he is making the decisions he is. But this is the set up for the end. As one geologist states unlike 1970 the world can’t import oil. No one can Make America Great Again. But many will fall for his plan.
This is in today’s headlines about Trump policy.
The main thrust of his approach couldn’t be clearer: abolish all regulations and presidential directives that stand in the way of unrestrained fossil fuel extraction, including commitments made by President Obama in December 2015 under the Paris Climate Agreement.
He has to reverse the decline in EROEI. A way to increase net energy is to remove all pollution controls.
I think that pretty much sums it up. Now we get to see how the major powers divide up what’s left.
Thank you for your post
Great explanation (although some of it is over my head). Tim G was wondering if, at all costs, we can maintain the grid. Would you say that was possible?
Except for transportation, electricity is our most useful energy form. It is a secondary form that requires constant generation. Maintaining the grid with cheap electricity will be problamatic the further down the fossil fuel decline we go. Just think of how often the weather causes huge damage to the grid. Not even considering keeping the generators going the associated costs of keeping the wires functional will be hard. Our energy density is moving from whiskey and rum to hard lemonade and watery beer. Without coercive centralized control (which always has its own black swans) this diluted energy will go to those who can afford it . For the future, I wouldn’t bank on the grid as it is today.
“wouldn’t bank on the grid as it is today.”
As far as I remember, the electricity stayed up in the Russia when the economy collapsed.
The Soviet Union collapsed. And, only the Soviet Union collapsed. The rest of the world was doing fine and Russia still had a lot of cheap oil and gas. The difference this time is the whole global economy is in trouble and every one is becoming an oil importer.
I completely agree the interesting thing is that the Soviet Collapse was a product of low oil prices. They couldn’t compete with cheap Middleast oil. Because they were a closed economy at the time they could not benefit from the low oil prices. So as you stated this time is completely different. One commentator made a good point even if you have electricity to power your office buildings into run your cities how are people going to be transported to them? An interesting read is Nine Meals to Anarchy and it shows how in only a matter of days without enough transport fuel the food system runs out. The same is true of transport needed for coal fired power plants and nuclear power plants and gas power plants. So the Soviet collapse was really just a hard currency collapse. It wasn’t a net energy collapse.
No the grid is dependent on transportation fuel.
Everything depends on transport fuel, but it would not take a whole lot of transport fuel to keep the grid up.
Hope you’re right, Keith. There’s nothing like being up against the wall to make us change our ideas. 🙂
You have to keep the system up. That takes more transport fuel than you think.
Can you please put this transportation dependency info into a sentence? That makes it easier to explain to other lay people.
Transport drives all economic activity. Trade only exists because of transport. Remove it and you are relegated to only local production. Maybe the easiest sentence is all roads lead to Rome. No roads no Rome.
Thanks a lot, JT. Although I know this, it’s the sort of thing that lay people are conditioned not to itemize or take seriously as a “cost.” But this firms it up for me.
“Transport drives all economic activity”
That’s true, but it misses a lot of nuance, particularly transport cost and speed. The UK for example is covered with canals that were the lifeblood of the industrial revolution.
“The canal boats could carry thirty tons at a time with only one horse pulling[1] – more than ten times the amount of cargo per horse that was possible with a cart. Because of this huge increase in supply, the Bridgewater Canal reduced the price of coal in Manchester by nearly two-thirds within just a year of its opening.” https://en.wikipedia.org/wiki/History_of_the_British_canal_system
There is a huge variation in transport cost, between ships and air, 100 to one or more. The contribution of transport cost to the cost of goods must vary at least that much. Cement, for example, is relatively cheap and quite heavy so transport cost is the reason we are not going to outsource much cement manufacturing to China. On the other end, distribution of movies on DVDs has a low cost.
It’s complicated.
agreed—canals can carry vast tonnages with one horse—but the UK isnt “covered in canals”—true we have a reasonable network, but 30 tons + in a boat is only part of the story—
you have to get whatever produce it is to the boat, load it, move it at a top speed of 4 mph, unload it, then get it to the consumer. There are lock systems half a mile long that take 8 hours to pass through—and thats just one or two boats at a time!
It have a disused canal at the bottom of my garden, opened around 1780, closed by 1815 –the UK population then was under 20 million. It’s now 65m. There is no possible way that canal could be reopened. You cannot run a functioning modern economy on a barge fantasy, or anything else that’s horse drawn
“There is a huge variation in transport cost, between ships and air, 100 to one or more. ”
Someone had the idea that dirigibles could be cheap for some things too. The there are drones that need no operator costs…
I guess there is even more to it, expect coal/natgas/nuclear buildup near fracking/shale sites.. They will turn one resource into another one more important, that is everything eventually put on the line to have some liquid fuels..
Won’t that be nice radioactive contamination in exchange for oil.
No, it wouldn’t be. It would be a hard sell to put nukes near where people live now. And then there’s already the poisoned water from fracking. Gee, how much of this impasse is due to people wanting (and thinking they have a god given right) to get rich? What a freaking stupid impulse!
Net energy dropping from 18% to 14% in one year seems a hell of a decline. Any evidence for this? Does it explain Fast Eddy’s disappearance? Has he started his end of the world party without telling us? 🙁
Firstly it’s important to remember conventional oil wells decline at a 4-6% annual rate. Conventional oil peaked in 2005 according to Faith Birol at the IEA So all present growth has been “oil equivalent barrels” Frack wells decline at 30% or higher annual rate. Some of this stuff isn’t even oil it’s “nat gas liquids”. When you run the numbers the net energy of what we call “oil” now is declining very rapidly. The Hills Group demonstrates this but hasn’t calculated inefficiency. Louie Arnoux has.
http://www.thehillsgroup.com
https://m.youtube.com/watch?v=k7gJcfjyFpA
That is a VERY interesting interview.
Thanks for the link !
“Firstly it’s important to remember conventional oil wells decline at a 4-6% annual rate. Conventional oil peaked in 2005 according to Faith Birol at the IEA So all present growth has been “oil equivalent barrels” Frack wells decline at 30% or higher annual rate.”
The decline rates of conventional oil wells and frack wells do nothing to explain why average net energy per barrel would decrease by 22% in one year. All they tell us is overall production will decline rapidly if more wells do not come online. If anything, the fact frack wells decline more quickly than conventional wells would suggest an increase in net energy rather than a decline.
If you are correct and net energy is set to fall by 22% in one year it should be an interesting year.
That would be wouldn’t. It would be good for you to view the above links I posted. The decline in well production requires constant drilling to replace diminished production. So with conventional oil we need to drill 4-6% of the wells to maintain the same level of production. This can be done in some areas but globally it can not. Particularly in the US. So to make up the volume unconventional oil is required in the case of tight oil one needs to replace 30% of there wells to maintain production. So this is the net energy problem. I have to expend a tremendous amount more energy just to stay in the same place. Where does that energy come from? My product. So the value left over to grow the greater economy is diminishing. At some point it just breaks. But some are saying before that happens the industry will go into over drive like a last death throw or a Hail Mary pass in an effort to stay alive. They’ll pump every drop they can to maintain cash flow. The world will be awash with oil with no place to go. Prices are projected to decline to $12.00 by 2020-2022. But I don’t see any evidence of that do you?
The first link directs me to a site trying to sell me a mortgage. The video linked to lasts over an hour and I don’t have time for that.
I was asking for evidence that the net energy in an average barrel of oil will drop from 18% to 14% (i.e. a drop of 22%) and you were supplying me with evidence that the total net energy in all the oil produced will decline. Or so it seemed to me. I need to think about this some more when I am not so tired.
One question I will pose: If the price of oil is determined by its value to the economy (net energy), why did the price of oil increase so much up to 2008 even as the net energy was falling?
Most of what the Hills group says is wrong.
The reason the price spiked is that the cost of production spiked. Mostly in E&P as the majors were trying to find replacement conventional oil. When that happened it exceeded its net value to the consumer. The price then crashed with the economy. From $140.00 to $39.00. Most just viewed it as part of the collapse. Oil eventually climbed to near $100.00 and held for about 5 years bringing all the unconventional oil into the system. Then crashed in 2015 to $29.00. So the price is slowly walking down. And will likely continue. It might be that without the QE in place the industry wouldn’t have made it this far since most of it was pumped into speculative assets. Oil company stocks being one of many. When a producer no longer has the power to price a product to meet his production cost he has to start liquidating assets to meet his fixed costs. This is not an unusual phenomena it happens all the time in the mining industry. However generally it is caused by some other low cost competitive production or alternative. It’s very different with oil particularly this time. Because energy is the economy. When the net value becomes too low it can not drive industry fast enough to create the surplus needed to drive the greater economy. If you read Limits to Growth you’ll see how it was predicted. What no one understood is how the global system would react. It’s very counter intuitive because we have been indoctrinated into a supply demand belief system. Gail has done a good job explaining the global system with finance included. The hills group has added the principle of entropy to the mix. The most important element to their work is the entropy at the well head debunking false reserve claims by OPEC. I think what Gail doesn’t agree with is the price model. Time will tell on that. But entropy can not be reversed by man.
Thanks JT. I thought a little more and the fact the product of the oil industry must be reinvested in new wells doesn’t explain the large drop in net energy over the coming year. After all, this reinvestment was ever the case. I accept that oil finds are trending ever smaller and of lower quality and net energy per barrel is necessarily falling. The drop from 18% to 14% does seem rather large, however. As you wrote, no way could this be made up with an extra 25 million barrels/day.
If we have not undergone collapse by the end of 2017, I would deduce either:
a) Net energy has not fallen by 22%
or
b) Grow or die is false.
“If we have not undergone collapse by the end of 2017, I would deduce either:”
Are we talking about net energy total or net energy per barrel? If the later, increasing volume can help overcome declining efficiency.
Our issue is total energy, not so much oil. I see peak coal as a huge problem. We seem to be past peak coal. All the endless talk about peak oil and led people to miss the point that we desperately need other fuels as well.
Great posts JT.
Hi Matthew,
Sorry, I was being too loose with my wording. In this case I meant the net energy per barrel, but with the assumption that inevitably there would be a large decrease in total net energy; as JT wrote, it would not be possible to ramp up production enough to prevent the total net energy from falling.
I read that Kissinger now has second thoughts about the petrodollar. He now thinks that maybe they should just have let the market to deal with the oil.
if they had nobel prizes for retrospective economics—I’d win one every year
I do not agree with the material in this post. The EROEI figures quoted are not correct, and should not be used in this way. The study by the Hill group needs to be viewed as nonsense.
Mr Roberts,
This is a cracking piece. You manage to disseminate what is complicated material in a relatively straightforward manner. That is always the challenge in communicating this to the wider public.
Brush up the punctuation a bit and see if Gail will publish it as a guest piece, if you ask me it deserves wider attention.
Thanks
JT, I also thought it was a very good explanation on your part. On the other hand, I tend to agree with Gail that Louis Arnoux’s figures need to be taken with a pinch of salt, although I lack the specialist knowledge required to make a judgement. As you say, time will tell. In the meantime, it would be interesting to see further discussion of the Hills Group’s claims and the counter claim that their study needs to be viewed as nonsense. What are the key factors involved, what logical errors or false assumptions may have been made, how certain are the estimates, and what are the error bars on the study?
I agree that removing pollution controls is a way to improve EROEI.
But how much money per barrel of oil really goes into preventing air pollution, or any pollution for that matter? If we’re talking like $3.00 a barrel I don’t think his policy changes, if he can even implement them, will amount to a hill of beans. What is that going to do, delay Exxon Mobil from demanding bailouts by maybe 1 business quarter, at best? That’s almost not worth the time trying to change the policies.
Furthermore El Trumpo’s not so well thought out economic plans will have negative consequences as well, which he obviously isn’t going to mention. For starters all of the meteorology, climate, NASA, and other funding he wants to eliminate to save money translates to a direct hit to our consumption based economy; we’re talking about what could be thousands of well paid jobs with retirement plans and healthcare. As we all know the system doesn’t like shrinking. I’m not a big fan of losing the ability to see hurricanes approaching the U.S. either…
He wants to do the same thing with the nation’s air traffic control system as well by privatizing it. Again, thousands of high paying jobs will have their pay cut in half and many of them will simply vanish. That’s billions of GDP dollars going straight out the window or worse yet, these people are going to be signing up for unemployment benefits. Now instead of paying taxes these former government employees are going to be a drain on the system. Great, just what we needed more of!
But wait, it gets funnier. Trump thinks cutting taxes for corporations is going to somehow bring jobs back to America or save them somehow. This is how stupid Trump is, his own line of clothing is made in China and other foreign countries BECAUSE LABOR IS CHEAP! He’s either playing dumb with the American people or he’s truly incompetent and those 2 statements are not mutually exclusive. I’m just eating popcorn over here watching this mental midget start wars with China on his Twitter account because he knows absolutely NOTHING about foreign policy or history.
not a fan of Trump—he’s likely to collapse the economy sooner rather than later if no one puts a stop to him, however, I think I must pick up on one point there—about taxes paid by government employees.
Government employees have their wages paid by the government, and thus any taxes they pay are paid back to the government.
This isn’t to say the work they do isn’t critical, it is, but their “wages” do not increase GDP in real terms because it represents ”cash passing” not actual production.
I agree but cash passing looks better than an increase in unemployment benefits being doled out. Also most people can be easily fooled; the GDP being a higher number, even if it is cash passing, will have the media and government loudly parading about as if they’ve discovered the cure to cancer. Also, I don’t believe there is any possible way at this point to increase actual production of anything, outside of massive cash injections, and even that appears to be just barely keeping things going sideways.
i agree with you Oscar
there is no way of increasing real production, and that ’employment’ is a temporary illusion.
This whole thing is some sort of illusion. Our civilization is nothing but lies and tricks. Homo sapiens haven’t been on Earth for very long and we’re going to take down almost all living things with us, including species that are 20 times our senior. It sickens me to read modern day economic rubbish or anything the mainstream media has an opinion on. Christmas, in particular, is the apex of our disgusting species in our conquest to monetize virtually everything.
Dissipative structures–isn’t that more or less our purpose?
Yes but obviously something was whacked out of balance somewhere. I don’t see other dissipative structures depleting the planet to the point of biosphere extinction. Our technological marvels have hastened our demise or any sense of keeping within the limits of the natural world. Global population seemed slow enough to be manageable until around the 1700-1800 timeline and then it just starts to go vertical after that. Clearly we would not be in this situation, or perhaps here at all, if a just a small handful of inventions never came to be.
“Civilization is entropy in drag.”
Mr Roberts
That is one of the best summations of our situation I have read
I would like to reprint it in on my own blog, under your name of course.
http://www.endofmore.com/?p=1464
I don’t put much on there these days, because most of what can be said–has been said.
But your piece needs wider circulation among those who just “don’t get it”—clear, short and very much to the point and very scary
Thanks for writing it
Well done! Tricky Dick as the great neoliberal president. Trump as the narcissistic patsy.
When “Post-Truth” is the new word of the year, you know the abyss awaits….
I dimly recall someone saying something about Peak BS.
I think we are just after the bend on the BS hockey stick.
The whole US gov’t seems to be melting down as we speak. This election has been so chaotic and is still causing problems long after Nov 8th. The MSM is just openly spreading propaganda now as is Obama. What’s next? Assange gets hit by the CIA? It is getting so crazy.
It is amazing to see the veneer of “impartiality” come completely off the media. It’s not like I’m pro-Trump or anything, but NPR is basically nonstop attacks and innuendo since the election. The reporters aren’t even trying to hide their bias.
I’ve never seen anything like it except in reverse on Fox news: but at least they don’t pretend to be something their not.
You know the situation is grave in America when you resort to watching Fox News for impartiality.
Touché! I am 50 years old and have been a reader rather than TV watcher most of my life. I recently watched a few news programs to see the results of the election. I was dumbfounded by the biased reporting and statements bordering on lies and propaganda. I can’t believe people could possibly take that tabloid journalism seriously. My god man what a circus.
You know the situation is grave when the people realize that the republican party is more peaceful than the neocon democrats. The torch hasnt been passed just yet, Public media seems to be advocating a cou of some sort. Wont be the first time…
Wouldn’t that be something if there was actually a breakdown in the electoral college, like the narrative the media is pushing right now? Perhaps enough of the electors vote for a republican alternative to Trump that he doesn’t win the college, or something like that? Seems like something like this could lead to an armed struggle/coup much quicker than anything else I could imagine.
I think this is all about delegitimizing Trump’s victory so that his opposition can keep yapping at his ankles for the next four years. The Republicans did this to Bill Clinton throughout his presidency and the Democrats were gearing up to do it to George W. Bush when 9/11 intervened and the “if you aren’t with us, you’re with the terrorists” meme became the conventional wisdom. Obama took a lot of flack from the Republican base/Tea Party types, but as his presidency was essentially Bush-Lite (the US is still in Afghanistan; Guantanamo remains open; drone assassins have never been so busy; Libya and Ukraine have been regime-changed, Syria civil warred and the Latin American leftist revolution has been partially rolled back), so he was relatively well treated by the establishment.
Trump represents the loss of gravy train seating and other privileges and subsidies for a huge swath of people who have been sucking hard on the ample teats of the Federal Government and they are determined not to take it lying down. I’m expecting a very bumpy road ahead, regardless of how well Trump’s economic policies play out.
The cheaper, the better: toluene is the drug that prevails in the so called “hungry valleys” in Slovakia (the parts of country with the highest unemployment rates)
http://domov.sme.sk/c/20411222/hladovym-dolinam-vladne-toluen.html?ref=trz
No wonder: it is cheaper than alcohol and can be legally bought in the drugstores, hobby shops etc.
Sasol Oil the company that started coal to liquids production back in 1950’s,have many bi-products one of these is a range of what they call parafins of varying carbon chain lengths. The application of these products vary from use in process oils,feed stock in the blending of neat cutting oils and as an aluminium rolling oil. These parafins are completely odourless and colourless.Having plied my trade in the oil industry I was fortunate enough to be aware of the availability of these.products. I recognized that one of these parafins(carbon14 =17) had similar physical characteristics to diesel.I conducted some trials on a 1 cylinder Lister engine and it work perfectly.No lubricating additives were needed to be added as the product had sufficient lubricity in of itself.When it burns it gives off an odour of melted crayons.As to its availability in the US I really could’nt say. I’m taking a slight risk sharing this info with you I purchased this product under the guise of using it for a different application and not as a fuel thus avoiding levies etc.
Thanks, interesting. In post/de-globalization, most likely every region adapts to its strengths and weaknesses, yet perhaps there will be a window in which your country still can license this technology to other parts of the world as well.
Am I on the correct path for further inquiry elsewhere:
alkanes c14-c17, I hope this is not meant to burn the chlorinated variant ?
Continuing low oil prices will lead to depletion of sovereign funds of oil exporting countries, the Bank of Russia said on Friday in the Financial Stability Review.
“If oil prices remain at a low level in recent years, the need to spend the fiscal buffer may adversely affect financial stability of oil exporting countries. Depletion of sovereign funds may undermine confidence of market participants, adversely affect attitude of foreign investors and cause growth of borrowing costs,” the regulator said in the review.
Furthermore, withdrawal of government deposits from the banks may result in liquidity shortage in the banking system and exert pressure on interest rates, the Bank of Russia said.
At the same time, government bonds floating on domestic and international markets will contribute to financial market development on the one side but will escalate debt stability risks on the other side, particularly in case of declining confidence of investors and higher debt service costs, the Russian regulator noted.
http://www.hellenicshippingnews.com/bank-of-russia-says-low-oil-prices-lead-to-depletion-of-oil-exporters-sovereign-funds/
More stress
It also means that BAU right now is kept afloat by the sovereign funds of oil exporters, effectively putting all this money into the pockets into the pockets of fuel consumers (us). This is a massive wealth transfer, once it ends, also BAU will be over.
SWF ? That’s a token contribution, the main make or brake conduit now for BAU extension are strange tiny financial hubs like Belgium and Lichtenstein, .. , which distribute trillions of freshly printed digital monies made from nothing by the global CBs cartel (and their owners) as needed, flushed into stock markets, bonds, derivatives, .. etc. We have entered quasi calm period before a real storm, when the key players start to visibly reshuffle, that’s the end of the old regime. Most notably wait for signs like non USD denominated energy contracts on the global (not only regional) markets, perhaps even crazy new strange “trade alliances” emerging (like Russia-Syria-Gulf states or China-Gulf states) avoiding USD/EUR, etc. Something of that nature in 10-20yrs..
This is definitely a problem. It adds to the stress caused by China dumping treasuries to try to prop up the yuan. It is part of the rising interest rate problem. Of course, rising interest rates lead to lower commodity prices, which is not what we should want.
Joe,
I was born in South Africa. As far as climate goes, the climate is temperate, excellent rainfall(50ins) mainly Spring and Summer. Winters are mild compared to Canada. Due to the temperate climate the average daily temp in Summer is about 28 degrees celsius which is relatively cool compared to most areas in SA.
We do get Winter gales but thankfully nothing like what you’ve just experienced, However,the first year we lived here,the plastic on 30x10m tunnel got completely destroyed. We have since replaced the plastic with a poly carbonate which we imported from Israel (correct light diffusion etc) which was extremely expensive, but at least we are protected against hail and wind,and they guarantee the poly carb for 10 years.
So yeah! all in all the Drakensberg is a fairly good place to plant your roots, political, crime and racial issues aside, but I guess that is a story for another day.
Thanks for your detailed answers.
Could you please share more information on the starter fuel for your particular biodiesel setup – that low flash white oil with long shelf life derived from the fischer tropsch process by local refinery. Is it some sort of low temp flash marine application oriented product or did you perhaps find it useful that way, while it’s originally developed-marketed for completely different use (e.g. chemical stock)?
Craig-
Thanks for the reply. How I wish I could spend an evening in your yard with a BBQ and a bottle of whisky to talk about all the things you have going on. I love what you are doing even if there were no problems in the world.
I hear you on the people around you having to form a real community that has each others backs. That still exists here in a big way although obviously diluted from BAU.
Gail – there is an article in German language dealing with the the force for permanent economic growth. As a solution the authors suggest negative interest rates emitted by the central bank.
https://makroskop.eu/2016/12/gibt-es-tatsaechlich-einen-zwang-zum-wachstum/
Thanks! If growth is not positive, you effectively end up with negative interest rates. Everything gets worse and worse. There is little point in investing–although negative interest rates provide a work around.
the problem has always been eliminating the zero bound for interest rates and the only way they can do this is by eliminating physical cash and going to electronic cash that way negative interest rates can be brought in . it would be a tax on your money as it sits in your savings account so what you do then ? why spend it off course . a very interesting paper by ken rogoff goes into more detail about it all http://scholar.harvard.edu/files/rogoff/files/c13431.pdf
Worldofhanumaotg,
We live 55kms from Sani Pass.The pass itself has very little significance as a transportation route except for people in the South East who wish to enter Lesotho from this border post. The pass itself is gravel and is a major attraction for the 4×4 community due to its rugged terrain.My son has done many a tour, sadly, to say, with my land cruiser up this pass.(replaced wind shields etc).
The controversy surrounds the fact that an already bankrupt government want to tar the pass for tourism reasons, when one of the biggest attractions happens the treacherous climb or decline.I have been up once and believe it is not for the fainthearted.
Property prices are extremely cheap in dollar terms,a property just adjacent to mine(100acres) extremely fertile sold for 180000usd. The problem for foreign buyers is obtaining a residency permit.
Hey Joe,
I checked out Cape Breton, looks like an awesome place. The fishing must be excellent. How about winter looks like it could get almighty cold?
http://sanilodge.co.za/DAsani.htm
Any consideration with regard to planned Sani Pass upgrade ?
Or non issue, as you are at completely different place along the mountain range.. ?
FE, went suddenly suspiciously quiet, perhaps manically researching options of relocating to South Africa, lolz.. I guess the days of good opportunity buying land there are already decades away, also the issue of concern ~60M pop and growing..
Craig-
Fishing is really good and it is an awesome place, especially if you are a nature lover. Plenty of micro climates here but yes, it is cold in the winter. We are just getting our first snow but we can have winters with very little where I am. My biggest complaint would be the wind. We had 160 km wind gusts here just last week. I still can’t believe how beautiful it is where you are at. Are you from South Africa or did you move from someplace else? Does it get really dry or hot?
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http://scholar.harvard.edu/files/rogoff/files/c13431.pdf a very interesting read on what i believe the elites are planning to implement in the very near future to keep bau going it may get us a few more years of bau
India is moving towards digital payments really quickly at the moment, as a result of the government banning 86% of the rupees in circulation.
I think going to electronic money and abolishing the paper currency is certainly the trend.
It would make negative interest rates easier to implement. But, the paper claims we are in a low inflation environment. I don’t buy that argument. Nevertheless, I do believe this will be tried.
Here’s more:
https://www.theautomaticearth.com/2016/09/negative-interest-rates-and-the-war-on-cash-1/
A wonderful example of Ivory Tower Thinking. The author obviously has never had to pay protection money to his local paramilitaries. I’d suggest that a government reneaging on on it’s promse to pay “on demand” will guarantee more criminality, not less, so those hopes of lower law enforcement costs, and incorruptible officials will probably prove to be just another interesting economic theory.
India seems to be the poster child, as Venezeuela is already a basket case. As seems to be a more frequent occurence these days, I live in hope I am proved wrong.
https://www.bloomberg.com/view/articles/2015-0.7-03/-neglected-prophet-of-economics-got-it-right once the entire world goes cashless and all interest rates are negative growth or inflation will take off perhaps this is the only way we are going to produce energy sources that are energy sinks,
The problem I have with a cashless/negative interest rate economy is that it still takes energy to get energy. It may buy a few months but, in the end it comes down to the problem of finding enough excess energy to extract more energy from the Earth.
https://www.youtube.com/watch?v=_nVk25ZvTkU
Southpark do so well sometimes
War On Cash Escalates: Australia Proposes Ban On $100 Bill; No Cash Within 10 Years?
Ha ha ha ha, that long huh? Like I said a few days ago, Australia is the canary in the coal mine of anglo economies. The economic destruction downunder will be total. They are so desperate to keep the housing Ponzi afloat they would even sacrifice babies on the front step of the Reserve Bank, if they though it would do any good.
psile,
I’m one of the few in the “lucky country” who would agree with you.
Most folk are oblivious to what’s about to blow up in their faces. Their self centered sense of entitlement is about to come round & slap em in the face like a wet kipper. Their haughty smugness will turn to anger & blame when it does.
I’m a new car Pre-delivery Coordinator & watch day after day the slick finance dept hook people into finance & the sexy sheilas sucker the buyers into expensive but worthless aftermarket paint/interior protection & other rubbish.
The whole thing is a sham built on the me me me ego trip.
Your right in not being anywhere near a major centre when this sucker lets loose.
I’ve already got my place sorted out far from a city & even a big town & not because I’m trying to survive the coming meltdown (I know I won’t) but because I want to spend my last days in connection with the earth & her creatures.
http://www.abc.net.au/news/2016-12-14/morrison-debt-remarks-inane-stupid/8121086?section=business
Hey Brendon, thanks for replying. I can’t believe people are still falling for that aftermarket crap. Lol. What sheep.
Whereabouts are you? I’m in Sydney, & plan to drive 500 kms due west when the big one hits. Hopefully the couple of days of incredulity on most sheeple’s part will be enough to put some distance between me and the inevitable consequences.
Hi psile,
I’m from Sydney but left to live in Tassie about 2 years ago. Lasted 5 months there & now stuck in Melbourne which is a nighmare beyond nightmares of runaway urban sprawl.
Only here to put a few more dollars away then off north.
I’ve got 47 acres on the Western Downs Qld. Been building community there & going back in earlty Feb for about 10 days to catch up with the locals & do some more work on my block.
Feel free to email me (bc310568@hotmail.com.au) & perhaps we could catch up?
Notwithstanding the German accent, the swastika is backwards from the Nazi version. This “left hand” version is called a sauwastika.
More of bringing in the high valued bills. It seems like all of these changes will reduce spending (and demand, and oil prices), not increase it.
These steps, banning of cash, austerity, negative interest rates. The dragging of feet over Brexit, trying to delegitimise the Trump vote, the appointment of a technocrat post the recent Italian referendum, are just pathetic rear guard attempts by the establishment to stave off their inevitable demise.
I just hope that when it all comes crashing down, we’re still around long enough to be able to round up these odious characters and impart some swift justice.
Tico Tico :17 min. — on Hammond — take a break!
2:17 min:
In reply to my comments listing the many unsolvable crises industrial civilisation is accelerating
towards,Gail states ‘I am not sure that listing these crises is very beneficial.’ It is a good point.
Why bother listing them if we can’t solve them? My reasoning goes as follows. I am 61 now. I have
done enough university-level geology,chemistry,botany and zoology to have a sound understanding of how the natural world works. Even at eighteen I could see the trends were
ominous for our civilisation. I had no children and had a vasectomy as soon as I could.
I have read a lot since then and have a much more complete understanding of our situation than I
did when I was eighteen,of course. There is no doubt that this civilisation will be collapsing,and
the points that I list give a sketch of why that is so. No-one knows the exact course that collapse
will take. Wars,famines,pandemics? Probably a mixture of all. There are intelligent people in
this world. Perhaps my comments will help someone realise that bringing a child into this world
now means that it will have a short life filled with much suffering,and decide not to do so. All lives have some suffering,but would anyone here like to be born now and face the next few decades
as a child? If I spend a few minutes occasionally providing correct information which might result
in a child not enduring that suffering it is time well-spent,I think.
David,
To create a conscious being that must kill other living things to survive and that will at a young age be aware of it’s own mortality is the most selfish act imaginable. This is true even at the best of times. To have a child now knowing what we on this blog know about the future would be insane.
This is one of the ways in which Mr DNA selects for selfishness and limited imagination on the part of his creatures. If only people could imagine what a Pandora’s box they were opening every time they reproduced, but for the most part they don’t and the babies just keep coming.
I’ll go out on a limb and guess that reproducing is less an act of free will than what we are born to do. Especially now, it does seem to require a kind of mindlessness. Were our species to wise up enough to survive, it’s hard to see this behavior continuing in the same old way. In that eventuality, I could see procreation being more of a group choice, involving volunteers to procreate and widespread sharing of parental duties.
Artleads
Maybe gay people are a part of the DNA thing after all. In any case, put my name in for any volunteer non gay group procreation!
“Maybe gay people are a part of the DNA thing after all.”
Kathrine Hepburn thought so, fwiw. 🙂
“In any case, put my name in for any volunteer non gay group procreation!”
Poor man. You must be young. 🙂
“widespread sharing of parental duties”
It’s very difficult for human couples to raise children on their own. They get help, often from grandparents when they can.
Yorchichan-
As a practicing Catholic, I can honestly say I did not understand our energy predicament before my children were born, and it tears me apart everyday to think about the world they will inherit and suffer in. To say the least, there are difficult moral questions that people here are thinking about. I don’t know who said it but I like the message “Be kind, for everyone you meet is fighting a hard battle.”
There is a pattern….as in
Sensitive Chaos: The Creation of Flowing Forms in Water and Air Paperback – February 3, 2014
by Theodor Schwenk (Author), Jacques-Yves Cousteau (Author
From amazon
Why does water always take a winding course in streams and rivers? Do common principles and rhythms underlie its movement – whether it be in the sea, in a plant, or even in the blood of a human being? In this seminal and thought-provoking work, the laws apparent in the subtle patterns of water in movement are shown to be the same as those perceptible in the shaping of bones, muscles and a myriad of other forms in nature. Fully illustrated, Sensitive Chaos reveals the unifying forces that underlie all living things. The author observes and explains such phenomena as the flight of birds, the formation of internal organs such as the heart, eye and ear, as well as mountain ranges and river deltas, weather and space patterns, and even the formation of the human embryo. A perennial bestseller since publication, Sensitive Chaos is an essential book for anyone interested in the mysteries of life on earth.