Oops! The economy is like a self-driving car

Back in 1776, Adam Smith talked about the “invisible hand” of the economy. Investopedia explains how the invisible hand works as, “In a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.”

We talk and act today as if governments and economic policy are what make the economy behave as it does. Unfortunately, Adam Smith was right; there is an invisible hand guiding the economy. Today we know that there is a physics reason for why the economy acts as it does: the economy is a dissipative structure–something we will talk more about later.  First, let’s talk about how the economy really operates.

Our Economy Is Like a Self-Driving Car: Wages of Non-Elite Workers Are the Engine

Workers make goods and provide services. Non-elite workers–that is, workers without advanced education or supervisory responsibilities–play a special role, because there are so many of them. The economy can grow (just like a self-driving car can move forward) (1) if workers can make an increasing quantity of goods and services each year, and (2) if non-elite workers can afford to buy the goods that are being produced. If these workers find fewer jobs available, or if they don’t pay sufficiently well, it is as if the engine of the self-driving car is no longer working. The car could just as well fall apart into 1,000 pieces in the driveway.

If the wages of non-elite workers are too low, they cannot afford to pay very much in taxes, so governments are adversely affected. They also cannot afford to buy capital goods such as vehicles and homes. Thus, depressed wages of non-elite workers adversely affect both businesses and governments. If these non-elite workers are getting paid well, the “make/buy loop” is closed: the people whose labor creates fairly ordinary goods and services can also afford to buy those goods and services.

Recurring Needs of Car/Economy

The economy, like a car, has recurring needs, analogous to monthly lease payments, insurance payments, and maintenance costs. These would include payments for a variety of support services, including the following:

  • Government programs, including payments to the elderly and unemployed
  • Higher education programs
  • Healthcare

Needless to say, the above services tend to keep rising in cost, whether or not the wages of non-elite workers keep rising to keep up with these costs.

The economy also needs to purchase a portfolio of goods on a very regular basis (weekly or monthly), or it cannot operate. These include:

  • Fresh water
  • Food of many different types, including vegetables, fruits, and grains
  • Energy products of many types, such as oil, coal, natural gas, and uranium. These needs include many subtypes suited to particular refineries or electric power plants.
  • Minerals of many types, including copper, iron, lithium, and many others

Some of these goods are needed directly by the workers in the economy. Other goods are needed to make and operate the “tools” used by the workers. It is the growing use of tools that allows workers to keep becoming more productive–produce the rising quantity of goods and services that is needed to keep the economy growing. These tools are only possible through the use of energy products and other minerals of many kinds.

I have likened the necessary portfolio of goods the economy needs to ingredients in a recipe, or to chemicals needed for a particular experiment. If one of the “ingredients” is not available–probably because of prices that are too high for consumers or too low for producers–the economy needs to “make a smaller batch.” We saw this happen in the Great Recession of 2007 to 2009. Figure 1 shows that the use of several types of energy products, plus raw steel, shrank back at exactly the same time. In fact, the recent trend in coal and raw steel suggests another contraction may be ahead.

Figure 1. World Product Consumption, indexed to the year 2000, for selected products. Raw Steel based on World USGS data; other amounts based of BP Statistical Review of World Energy 2016 data.

Figure 1. World Product Consumption, indexed to the year 2000, for selected products. Raw Steel based on World USGS data; other amounts based of BP Statistical Review of World Energy 2016 data.

The Economy Re-Optimizes When Things Go Wrong 

If you have a Global Positioning System (GPS) in your car to give you driving directions, you know that whenever you make a wrong turn, it recalculates and gives you new directions to get you back on course. The economy works in much the same way. Let’s look at an example: 

Back in early 2014, I showed this graph from a presentation given by Steve Kopits. It shows that the cost of oil and gas extraction suddenly started on an upward trend, about the year 1999. Instead of costs rising at 0.9% per year, costs suddenly started to rise by an average of 10.9% per year.

Figure 1. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is "Compound Annual Growth Rate."

Figure 2. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is “Compound Annual Growth Rate.”

When costs were rising by only 0.9% per year, it was relatively easy for oil producers to offset the cost increases by efficiency gains. Once costs started rising much more quickly, it was a sign that we had in some sense “run out” of new fields of easy-to-extract oil and gas. Instead, oil companies were forced to start accessing fields with much more expensive-to-produce oil and gas, if they wanted to replace depleting fields with new fields. There would soon be a mismatch between wages (which generally don’t rise very much) and the cost of goods made with oil, such as food grown using oil products.

Did the invisible hand sit idly by and let business as usual continue, despite this big rise in the cost of extraction of oil from new fields? I would argue that it did not. It was clear to business people around the world that there was a large amount of coal in China and India that had been bypassed because these countries had not yet become industrialized. This coal would provide a much cheaper source of energy than the oil, especially if the cost of oil appeared likely to rise. Furthermore, wages in these countries were lower as well.

The economy took the opportunity to re-optimize. Part of this re-optimization can be seen in Figure 1, shown earlier in this post. It shows that world coal supply has grown rapidly since 2000, while oil supply has grown quite slowly.

Figure 3, below, shows a different kind of shift: a shift in the way oil supplies were distributed, after 2000. We see that China, Saudi Arabia, and India are all examples of countries with big increases in oil consumption. At the same time, many of the developed countries found their oil consumption shrinking, rather than growing.

Figure 2. Figure showing oil consumption growth since 2000 for selected countries, based on data from BP Statistical Review of World Energy 2016.

Figure 3. Figure showing oil consumption growth since 2000 for selected countries, based on data from BP Statistical Review of World Energy 2016.

A person might wonder why Saudi Arabia’s use of oil would grow rapidly after the year 2000. The answer is simple: Saudi Arabia’s oil costs are its costs as a producer. Saudi Arabia has a lot of very old wells from which oil extraction is inexpensive–perhaps $15 per barrel. When oil prices are high and the cost of production is low, the government of an  oil-exporting nation collects a huge amount of taxes. Saudi Arabia was in such a situation. As a result, it could afford to use oil for many purposes, including electricity production and increased building of highways. It was not an oil importer, so the high world oil prices did not affect the country negatively.

China’s rapid rise in oil production could take place because, even with added oil consumption, its overall cost of producing goods would remain low because of the large share of coal in its energy mix and its low wages. The huge share of coal in China’s energy mix can be seen in Figure 4, below. Figure 4 also shows the extremely rapid growth in China’s energy consumption that took place once China joined the World Trade Organization in late 2001.

Figure 3. China energy consumption by fuel, based on BP 2016 SRWE.

Figure 4. China energy consumption by fuel based on BP 2016 Statistical Review of World Energy.

India was in a similar situation to China, because it could also build its economy on cheap coal and cheap labor.

When the economy re-optimizes itself, job patterns are affected as well.  Figure 5 shows the trend in labor force participation rate in the US:

Figure 4. US Civilian labor force participation rate, based on US Bureau of Labor Statistics data, as graphed by fred.stlouisfed.org.

Figure 5. US Civilian labor force participation rate, based on US Bureau of Labor Statistics data, as graphed by fred.stlouisfed.org.

Was it simply a coincidence that the US labor force participation rate started falling about the year 2000? I don’t think so. The shift in energy consumption to countries such as China and India, as oil costs rose, could be expected to reduce job availability in the US. I know several people who were laid off from the company I worked for, as their jobs (in computer technical support) were shifted overseas. These folks were not alone in seeing their jobs shipped overseas.

The World Economy Is Like a Car that Cannot Make Sharp Turns 

The world economy cannot make very sharp turns, because there is a very long lead-time in making any change. New factories need to be built. For these factories to be used sufficiently to make economic sense, they need to be used over a long period.

At the same time, the products we desire to make more energy efficient, for example, automobiles, homes, and electricity generating plants, aren’t replaced very often. Because of the short life-time of incandescent light bulbs, it is possible to force a fairly rapid shift to more efficient types. But it is much more difficult to encourage a rapid change in high-cost items, which are typically used for many years. If a car owner has a big loan outstanding, the owner doesn’t want to hear that his car no longer has any value. How could he afford a new car, or pay back his loan?

A major limit on making any change is the amount of resources of a given type, available in a given year. These amounts tend to change relatively slowly, from year to year. (See Figure 1.) If more lithium, copper, oil, or any other type of resource is needed, new mines are needed. There needs to be an indication to producers that the price of these commodities will stay high enough, for a long enough period, to make this investment worthwhile. Low prices are a problem for many commodities today. In fact, production of many commodities may very well fall in the near future, because of continued low prices. This would collapse the economy.

The World Economy Can’t Go Very Far Backward, Without Collapsing

The 2007-2009 recession is an example of an attempt of the economy to shrink backward. (See Figure 1.) It didn’t go very far backward, and even the small amount of shrinkage that did occur was a huge problem. Many people lost their jobs, or were forced to take pay cuts. One of the big problems in going backward is the large amount of debt outstanding. This debt becomes impossible to repay, when the economy tries to shrink. Asset prices tend to fall as well.

Furthermore, while previous approaches, such as using horses instead of cars, may be appealing, they are extremely difficult to implement in practice. There are far fewer horses now, and there would not be places to “park” the horses in cities. Cleaning up after horses would be a problem, without businesses specializing in handling this problem.

What World Leaders Can Do to (Sort of) Fix the Economy

There are basically two things that governments can do, to try to make the economy (or car) go faster:

  1. They can encourage more debt. This is done in many ways, including lowering interest rates, reducing bank regulation, encouraging lower underwriting standards or longer term loans, taking out greater debt themselves, guaranteeing debt of non-creditworthy entities, and finding new markets for “recycled debt.”
  2. They can increase complexity levels. This means increasing output of goods and services through the use of more and better machines and through more training and specialization of workers. More complex businesses are likely to lead to more international businesses and longer supply chains.

Both of these actions work like turbocharging a car. They have the possibility of making the economy run faster, but they have the downside of extra cost. In the case of debt, the cost is the interest that needs to be paid; also the risk of “blow-up” if the economy slows. There is a limit on how low interest rates can go, as well. Ultimately, part of the output of the economy must go to debt holders, leaving less for workers.

In the case of complexity, the problem is that there gets to be increasing wage disparity, when some employees have wages based on special training, while others do not. Also, with capital goods, some individuals are owners of capital goods, while others are not. The arrangement creates wealth disparity, besides wage disparity.

In theory, both debt and increased complexity can help the economy grow faster. However, as I noted at the beginning, it is the wages of the non-elite workers that are especially important in allowing the economy to continue to move forward. The greater the proportion of the revenue that goes to high paid employees and to bond holders, the less that is available to non-elite workers. Also, there are diminishing returns to adding debt and complexity. At some point, the cost of each of these types of turbo-charging exceeds the benefit of the process.

Why the Economy Works Like a Self-Driving Car

The reason why the economy acts like a self-driving car is because the economy is, in physics terms, a dissipative structure. It grows and changes “on its own,” using energy sources available to it. The result is exactly the same effect that Adam Smith was observing. What makes the economy behave in this way is the fact that flows of energy are available to the economy. This happens because an economy is an open system, meaning its borders are permeable to energy flows.

When there is an abundance of energy available for use (from the sun, or from burning fossil fuels, or even from food), a variety of dissipative structures self-organize. One example is hurricanes, which self-organize over warm oceans. Another example is plants and animals, which self-organize and grow from small beginnings, if they have adequate food energy, plus other necessities of life. Another example is ecosystems, consisting of a number of different kinds of plants and animals, which interact together for the common good. Even stars, including our sun, are dissipative structures.

The economy is yet another type of a dissipative structure. This is why Adam Smith noticed the effect of the invisible hand of the economy. The energy that sustains the economy comes from a variety of sources. Humans have been able to obtain energy by burning biomass for over one million years. Other long-term energy sources include solar energy that provides heat and light for gardens, and wind energy that powers sail boats. More recently, other types of energy have been added, including fossil fuels energy.

When energy supplies are very cheap and easy to obtain, it is easy to ramp up their use. With growing supplies of energy, it is possible to keep adding more and better tools for people to work with. I use the term “tools” broadly. Besides machines to enable greater production, I include things like roads and advanced education, which also are helpful in making workers more effective. The use of growing energy supplies allows growing use of tools, and this growing use of tools increasingly leverages human labor. This is why we see growing productivity; we can expect to see falling human productivity if energy supplies should start to decline. Falling productivity will tend to push the economy toward collapse.

One problem for economies is diminishing returns of resource extraction. Diminishing returns cause the economy to become less and less efficient. Once energy extraction starts to have a significant problem with diminishing returns (such as in Figure 2), it is like losing energy resources into a sinkhole. More work is necessary, without greater output in terms of goods and services. Indirectly, economic growth must suffer. This seems to be the problem that the economy has been encountering in recent years. From the invisible hand’s point of view, $100 per barrel oil is very different from $20 per barrel oil.

One characteristic of dissipative structures is that they keep re-optimizing for the overall benefit of the dissipative structure. We saw in Figures 3 and 4 how fuel use and jobs rebalance around the world. Another example of rebalancing is the way the economy uses every part of a barrel of oil. If, for example, our only goal were to maximize the number of miles driven for automobiles, it would make sense to operate cars using diesel fuel, rather than gasoline. In fact, the energy mix available to the economy includes quite a bit of gasoline and natural gas liquids. If we need to use what is available, it makes sense to use gasoline in private passenger cars, and save diesel for commercial use.

Another characteristic of dissipative structures is that they are not permanent. They grow for a while, and then collapse. Later, new similar dissipative structures may develop and indirectly replace the ones that have collapsed. In this way, the overall system is able to evolve in a way that adapts to changing conditions.

What Are the Likely Events that Would Cause the Economy to Collapse?

I modeled the system as being like a self-driving car. The thing that keeps the system operating is the continued growth of inflation-adjusted wages of non-elite workers. This analogy was chosen because in ecosystems in general, the energy return on the labor of an animal is very important. The collapse of a population of fish, or of some other animal, tends to happen when the return on the labor of that animal falls too low.

In the case of the fish, the return on the labor of the fish falls too low when nearby supplies of food disappear, and the fish must swim too far to obtain new supplies of food. The return on human labor would seem to be the inflation-adjusted wages of non-elite workers. We know that wages for many workers have been falling in recent years, because of competition from globalization, and because of replacement of human labor by advanced machines, such as computers and robots.

Figure 6. Bottom 50% income share, from recent Piketty analysis.

Figure 6. Bottom 50% income share, from recent Piketty analysis.

Besides the problem of falling wages of non-elite workers, earlier in this post I mentioned a number of other issues that make the wages of these workers go less far. These include growing government spending, and the growing costs of education and healthcare. I also mentioned the problem of rising debt, and the increased concentration of wealth, as we try to add complexity to solve problems. All of these issues make it hard for “demand”–which might also be called “affordability”–to be sufficiently great to allow commodity prices to rise to the level producers need for profitability.

Prices Play a Very Important Role in the Economy

The pricing system is the communication system of the economy, as a dissipative structure. One use of energy is to create “information.” Prices are a high level form of information.

One big area where prices come up is with respect to the whole portfolio of products needed on a regular basis, which I mentioned earlier (water, food, energy products, and mineral products). In order for the system to continue working, the prices need to be both:

  • Affordable by consumers
  • High enough for producers to cover their costs, including a margin for taxes and reinvestment

Now, in 2017, prices are “sort of” affordable for consumers, but they are not high enough for producersOil companies will go out of business if these low prices persist.

Back in 2007 and 2008, we had the reverse problem. Prices were high enough for producers, but too high for consumers (especially non-elite workers). This is a big part of what pushed the economy into recession.

We noticed back in Figure 1 that quantities of energy products/goods tend to move up and down together. A similar phenomenon holds true for prices: commodity prices tend to rise and fall together (Figure 7).  The reason this happens is because when the world economy is moving swiftly forward (higher wages, more building activity, more debt), demand tends to be high for many different types of materials at the same time. When the economy slows, prices of all of these commodities tend to fall at the same time. Inflation tends to fall as well.

Figure 6. Prices of oil, call and natural gas tend to rise and fall together. Prices based on 2016 Statistical Review of World Energy data.

Figure 7. Prices of oil, coal and natural gas tend to rise and fall together. Prices based on 2016 Statistical Review of World Energy data.

If prices cannot rise high enough for producers, it is likely a sign that wages of non-elite workers are already too low. The affordability loop mentioned earlier is not being closed, so prices cannot stay up at a high enough level to maintain production.

Most Modelers Overlook the Fact that the Economy Is an Open System

Most energy models are based on one of two views of the world: (1) fossil fuel energy supply will eventually run short, so we must use it as sparingly as possible; or (2) we want to reduce the use of fossil fuels as quickly as possible, because of climate change. Because of these issues, we want to leverage the fossil fuel energy we have, to as great an extent as possible, with energy that we can somehow capture from renewable sources, such as the solar energy or wind. With this view of the situation, our major objective is to create “renewables” that use fossil fuel energy as efficiently as possible. The hope is that these renewables, together with the actions of governments, will allow the economy to gradually shrink back to a level that is somehow more sustainable.

Implicit is this model is the view that the economy, and the world in general, is a closed system. Our current government and business leaders are in charge; they can make the changes they would prefer, without the invisible hand causing an unforeseen problem. Very few have realized that the economy cannot really shrink back very much; past history, as well as the nature of dissipative structures, shows that economies tend to collapse. The only economies that have at least temporarily avoided that fate have shifted toward less complexity–for example, eliminating huge government programs, such as armies–rather than yielding to the temptation to add ever more complexity, such as wind turbines and solar panels.

The real situation is that we have a here-and-now problem of too low wages for non-elite workers. Commodity prices are also too low. Intermittent renewables such as wind and solar are thought to be solutions, but it is well-known that intermittent renewables cause too-low prices for other types of electricity generation, when added to the electric grid. Thus, they are likely part of the low-price problem, not part of the solution. Temporary solutions, if there are any, are likely in the direction of cutting back on government expenditures and reducing regulation of banks. In fact, with the election of Trump and the passage of Brexit, the economy seems to again be re-optimizing.

We also know that dissipative structures do not shrink back well, at all. They tend to collapse, instead. For example, you, as a human being, are a dissipative structure. If your food intake were cut back to, say, 500 calories per day, how well would you do? If you could not get along on a very low calorie diet, how would you expect the economy to shrink back to a renewables-only level? Renewables that can be used in a shrunken economy are scarce; we don’t have a huge number of trees to cut down. We cannot maintain the electric grid without fossil fuels.

The assumption that the economy is a closed system is pretty much standard when modeling our current energy situation. This occurs because, until recently, we did not understand that the self-organizing properties of inanimate systems were as important as they are. Also, modeling of the economy as a closed system, rather than an open system, makes modeling much easier. The problem is that closed system modeling doesn’t really tell the right story. For a discussion of some of the issues associated with this mis-modeling, see the recent academic paper, Is the increased use of biofuels the road to sustainability? Consequences of the methodological approach.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,573 Responses to Oops! The economy is like a self-driving car

  1. Dave says:

    Hawaii got more snow in one night than Denver’s had this year.

  2. Glenn Stehle says:

    US Senate Confirms Trump Pick Perry As Energy Secretary
    http://www.rigzone.com/news/article.asp?hpf=1&a_id=148706&utm_source=DailyNewsletter&utm_medium=email&utm_term=2017-03-02&utm_content=&utm_campaign=feature_1

    As energy secretary, Perry would lead a vast scientific research operation credited with helping trigger a U.S. drilling boom and advancements in energy efficiency and renewables technology, and would oversee America’s nuclear arsenal….

    Democratic lawmakers expressed worry Perry would weaken the department’s functions and potentially target its army of scientists focused on climate and clean energy research. Perry sought to reassure them saying he would protect scientists and the growing renewable energy industry.

    • Somehow, we need to get world demand (affordability) up. How would Perry do this?

      • Dave says:

        Perry is smart enough to do the con, but too stupid or sociopathic to care or realize the results.
        Maybe we could feed the massive supply of Neptune’s Moon Oily hydrocarbon reserves through a worm hole?

      • Glenn Stehle says:

        Gail,

        In the long run, I believe getting world demand up is achieved by getting the cost of energy production down.

        The lower extraction cost of shale oil and natural gas is a bandaid that might work for a while, but is no long-term solution.

        And I agree with you that the proven, demonstrated ability of renewables, as of this date, to deliver reliable and inexpensive energy except in very limited quantities is nonexistent.

        The only salvation would be some sort of revolutionary technological breakthrough in energy production, something that hasn’t happened yet. I, unlike some of the terminal pessimists, do not completely rule out the possiblity of that happening, even though I think the odds are against it.

        • Fast Eddy says:

          If shale is lower cost then why this?

        • Fast Eddy says:

          Just back from a visit to Google …. and still… I cannot find anything indicating that the Exxon acquisition of XTO has turned out well…

          You would have thought that since new technology is available to make shale profitable — that the XTO plays were now immensely valuable — like enormous pots of liquid gold…

          All I can find is this…

          COMMODITIES | Tue Jan 31, 2017 | 4:01pm EST

          Exxon boosts capital budget but takes $2 billion charge from XTO deal

          Exxon Mobil Corp (XOM.N) boosted its 2017 capital budget on Tuesday on a bet that oil prices have stabilized, but posted its lowest quarterly profit since 1999 as it took a $2 billion charge against the value of natural gas reserves from its buyout of XTO Energy.

          http://www.reuters.com/article/us-exxon-mobil-results-idUSKBN15F1JR

          WTF is going on here Glenn????

          I know! This is the new normal. And in the new normal bad = good…. for instance — CAT sales fall for 4 years straight and the share prices goes up…

          Therefore if bad = good …. good MUST = bad.

          Now that XTO shale properties can produce oil and gas at a profit — due to new technology that actually makes drilling more holes in the ground — blasting away — pumping in drano and water — then repeating the process a year later because the holes are dry —- is more profitable than just punching a few holes in the ground and pumping oil for decades…..

          Well… all that is good. Good = bad. Good means that pumping shale oil at a nice profit = you write off the investment because it is actually worth less now.

          Now I a get it.

          • Dave says:

            XTO was a disaster.

            • Fast Eddy says:

              Absolutely.

              But according to Glenn shale is now profitable — it took a bit of time but the ‘Saudi America’ dream has been realized.

              And thus the XTO asset should be immensely valuable.

              But it is not — it continues to be written down on Exxon’s books.

              If one dealt in facts and logic one might look at that and think (yes think — what a great idea — to think — to ponder – to consider) — hey — WTF — shale is profitable yet XTO is being written down…

              That does not compute. That does not make sense. Should XTO not be MORE valuable? Not less?

              A moderately intelligent person might begin to think something is wrong with the picture … perhaps that the MSM is lying ….. but the MSM does not lie — if CNBs says shale is profitable — and conventional oil plays are not profitable …..

              Then shale must be profitable.

              And therefore XTO must be profitable and valuable — not decreasing in value.

              But XTO lost 2 billion in value last month alone.

              Glenn — hold the line … hold the line….. do NOT allow the facts to interrupt your reality….

              Keith failed to hold the line —- Pete EV failed to hold the line…. and now look at them…

              I really must get on the road to my trout hole…. the fish are waiting …. I would hope they put up more than a fight than you have Glenn ….

            • Suppose the shale in Texas is profitable. (I think that this is all that Glenn has said, but I may have missed something.) It is relatively a drop in the bucket to what we need, for the world. It does not make all of the deepwater oil profitable, or all of the very heavy oil profitable.

              It also doesn’t make shale extractable elsewhere. They don’t have the US land ownership rights, that gives land owners mineral rights to the land. Without those, most people don’t want a lot of drilling done nearby. Also, they don’t have all of the pipelines already in place, which are effectively subsidizing the Texas oil. They have to start from scratch with everything. They also need to find water and sand for fracking–not necessary easy everywhere. Shale by itself is pretty light on diesel. If we can add heavy oil to the mix, it might make up for the shortage of light fractions.

            • Fast Eddy says:

              Sadly Glenn believes more than that… he believes shale is the saviour … he believes that there is going to be a global shale revolution where countries such as China replicate the US ‘miracle’

              Unfortunately this is a delusion – there is no US miracle — so there is nothing to replicate …

              The thing is…. if shale is so awesome why is only happening in one country?

              There is a parallel with the solar energy industry ….. the only countries where solar has any significant uptake are those where there are massive subsidies.

              There is no goddamn way shale is cheaper to produce than conventional. How can drilling a thousands of holes – blasting away at the rock – injecting chemicals and sand and water (that is often trucked in) and having to do it all over again a couple of years possibly be cheaper… it just makes no sense….

              The true numbers are not being disclosed…. some of the costs are being discounted … hidden…. Enronned….

              All for a good cause of course

              But I am not buying it. If it was so awesome there would be a global revolution and we’d all be saved…

              And of course there would be no red here

            • Glenn Stehle says:

              Gail,

              The problem is that if you go around repeating all the fact-free nonsense that folks like Art Berman, SRrocco and Fast Eddy propagandize, which anybody in the oil and gas business realizes are prima facie falsehoods, people in the know will dismiss you out of hand. They will tune you out immediately, and will miss out on the opportunity to have them entertain the more important, and what I consider to be more accurate, parts of your analysis.

              You must strive to get as many parts of your story right as possible.

            • Fast Eddy says:

      • Joel says:

        It is a predicament consumers tapped out and the affluent profit oriented, like Warren Buffet living well below his means still working.

        An endgame plan needs to be agreed upon soon for this dilemma. Time to thin the general population herd or the TBTF overhead and crash the system IMO. Of course I would prefer another decade.

        An interesting film where the system crashed after too much stolen money was given to the working class in District 12 (the industrial zone) they all took time off work.

        “In a future where people stop aging at 25, but are engineered to live only one more year, having the means to buy your way out of the situation ….”
        http://www.imdb.com/title/tt1637688/

  3. Fast Eddy says:

    Hey Glenn…. what do you reckon?

    • Glenn Stehle says:

      Fast Eddy,

      I am fully aware that you are so in love with your apocalyptic theology that no factual reality and no common sense will ever penetrate your mind.

      People, and especiallly people with some sort of religious, ideological or economic agenda, trade in distortions, partial truths and outright lies. And, believe it or not, it is not only the MSM that does this. The Hills Group is also quite adept at this.

      I already demonstrated on the last thread that the Hills Group analysis is out of date and obsolete, and that the pedictions put forth in the cited chart have already proved to be wrong.

      So do you care to try again, and with more recent empirical data?

      Hi Mark,

      You said:

      For example, according to those numbers, in 2016, those companies lost $19.974 billion. Let’s call it $20 billion.

      If you will look closely at the chart, you will see that it is dated July 15, 2015, and the numbers for 2015 and 2016 are in enclosed in a box.

      I think what that indicates is that the figures for 2007 to 2014 are historical, and that 2015 and 2016 are predictions.

      And the predictions in some cases have proved to be quite wrong.

      Pioneer (PXD), for instance, on the graph shows a -$661 million operating cash flow for 2016.

      Pioneer published its 8k for Q42016 on Tuesday of this week, and in 2016 the company actually generated a +$1.498 billion operating cash flow. So the prediction was off by more than $2 billion.

      Likewise, for 2015 the graph shows Pioneer with a -$624 million operating cash flow. In 2015, however, Pioneer generated a +$1.248 billion operating cash flow. So the prediction for 2015 were way off too.

      The chart in question was lifted from this article:

      https://srsroccoreport.com/the-blood-bath-continues-in-the-u-s-major-oil-industry/

      If you go read the article, you will note that the author in his writing above and below the article uses the words “profit,” “operating cash flow” and “free cash flow” interchangeably.

      Take this passage from the article, for instance:

      I have republished this chart from a previous article showing that the shale oil and gas industry hasn’t really made a profit since 2009.

      Then there is this passage:

      While some of the companies made free cash flow profits in various years, as an industry, these oil and gas producers have been in the RED since the U.S. Shale Energy Industry really took off in 2009.

      But notice that the heading on the chart says “Operating Cash Flow.”

      The words “operating cash flow” and “free cash flow,” however, are accounting terms that have very different meanings, as Investopedia explains here:

      http://www.investopedia.com/terms/f/freecashflow.asp

      “Profits” is also an accounting term that has a very different meaning from either type of cash flow:

      http://www.investopedia.com/ask/answers/070615/what-difference-between-earnings-and-profit.asp

      The Hills Group seems to be in the business of creating confusion and distortions, and I don’t know if this is done out of ignorance and incompetence, or malice.

      • Fast Eddy says:

        Oh but Glenn…. if these companies are profitable – on any basis other than the Ponzi System of Accounting…

        Then surely Exxon would not have just over a month ago — written down their XTO asset another 2 billion.

        Logic 101 Glenn. Facts 101.

        • Duncan Idaho says:

          Come now, don’t you believe in Enron Accounting?
          So what if a few (all) investors got burned

          • Fast Eddy says:

            Glenn is drinking the fake accounting kool-aid.

            Actually there is nothing fake about this —- these are failed businesses …. they are not even trying to fake positive cash flow …. seems they are not hiding anything — unless these numbers are optimistic…

            The question that arises is: How do they stay in business?

            As has been pointed out these are not tech plays where investors ignore massive cash burn recognizing that is how one establishes market dominance…. someone somewhere has decided that this industry is too big to fail (and it is)…

            Glenn – what does it matter if they are viable or not — what do you care —- this is not a revolution – this is a ‘retirement party’

            Grab a beer and enjoy it while it lasts….

            How many teeth do I have to knock out before you give up — how many ribs do I have to shatter — how much blood do I have to spill?

            You are beaten. You are destroyed.

      • Fast Eddy says:

        FYI:

        In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities.[1]

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

        When I see a balance sheet with that much red on it…. I try to move away as quickly as possible and get some fresh air…. breathing insolvents is really bad for your brain.

        I suggest you do the same Glenn — you are spending way too much time with these fake shale companies…. sniffing the insolvent — and your ability to reason is becoming seriously impaired.

        • Glenn Stehle says:

          Nevertheless, Operting Cash Flow, Free Cash Flow and Profits (or Earnings) are three very distinct terms, signifying completely different things.

          The Hills Group, by using them interchangebly, and by debauching the vocabulary, interjects a great deal of confusion and misinformation.

          Is this done out of ignorance and incompetence, or malice?

          • Fast Eddy says:

            Wiki is using them interchangeably too… funny that.

            In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities.

            Whatever Glenn — that is a f&^%$ sea of red — and red seas when it comes to operating a business — do not suggest health… do not suggest profits… they suggest the Titanic.

            • Glenn Stehle says:

              So Wikipedia is your source for sure truth?

              Why is it that that doesn’t surprise me?

            • Fast Eddy says:

              In financial accounting, operating cash flow (OCF), cash flow provided by operations, cash flow from operating activities (CFO) or free cash flow from operations (FCFO), refers to the amount of cash a company generates from the revenues it brings in, excluding costs associated with long-term investment on capital items or investment in securities.[1] The International Financial Reporting Standards defines operating cash flow as cash generated from operations less taxation and interest paid, investment income received and less dividends paid gives rise to operating cash flows.[2] To calculate cash generated from operations, one must calculate cash generated from customers and cash paid to suppliers. The difference between the two reflects cash generated from operations.

              Let’s go to the source:

              The International Financial Reporting Standards

              International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. They are the rules to be followed by accountants to maintain books of accounts which are comparable, understandable, reliable and relevant as per the users internal or external.

              http://www.ifrs.org/Pages/default.aspx

            • Glenn Stehle says:

              Fast Eddy,

              Please, let’s stop debauching the vocabulary in order to try to confuse people, or to confuse yourself.

              Operating Cash Flow ≠ Free Cash Flow ≠ Earnings ≠ Profits

              This is not rocket science.

              Free cash flow (FCF) is a measure of a company’s financial performance, calculated as operating cash flow minus capital expenditures.

              • Specifically, FCF is calculated as:
              EBIT (1-tax rate) + (depreciation) + (amortization) – (change in net working capital) – (capital expenditure).

              [I]t is important to note that negative free cash flow is not bad in itself. If free cash flow is negative, it could be a sign that a company is making large investments. If these investments earn a high return, the strategy has the potential to pay off in the long run.

              • Some believe that Wall Street focuses only on earnings while ignoring the real cash that a firm generates. Earnings can often be adjusted by various accounting practices, but it’s tougher to fake cash flow. For this reason, some investors believe that FCF gives a much clearer view of a company’s ability to generate cash and profits.

              Read more: Free Cash Flow – FCF Definition | Investopedia http://www.investopedia.com/terms/f/freecashflow.asp#ixzz4aJ2mKxQL
              Follow us: Investopedia on Facebook

          • I have zero love for the report put out by The Hills Group. My guess is that ignorance is a big part of their problem.

            I think, however, that people today assume too much of accrual accounting and of models based on accrual accounting. The real world is governed by flows of stuff: oil, natural gas, coal, water, minerals, food, and versions things made from these things. The capital goods we make require frequent repairs, or they lose their usefulness. Eventually they wear out. People need food to eat and water to drink every day.

            The materials available govern what can happen in the future. We know how much oil, coal, and gas we can get out today, but how much can we get out tomorrow, and later? Engineers would like to think that the amount that can be extracted depends only on the amount that remains in the ground, and our technical ability to get the oil, coal, and gas out. In fact, we have a whole superstructure put together, that has to stay in place for this to happen. It includes a government, banks, wages, laws, and many other things. The things that go wrong are (1) too little wages, especially for the non-elite workers, (2) too little tax revenue to support the government, and (3) too much debt (really, promises based on the assumption that BAU can continue, when it really can’t) (4) not enough materials available to cover all of the promises made to different groups simultaneously (owners of stock, owners of debt, retirees, non-elite workers, government officials, etc.) Our financial system sounds the alarm, by making the prices of commodities too low.

            The negative operating cash flow is a concern because it does not suggest a sustainable pattern. The company, looking at only the “operating” portion, is using more resources than it is producing. At some point, presumably very soon, this pattern has to turn around. I know that at one point, accountants were putting together models that assumed that oil extraction could on almost indefinitely, and that it would be this very late oil extraction that would somehow “save the day.” But can it really? Some would like to think that oil price can rise endlessly. This isn’t really happening. Oil companies have a lot of fixed costs. Even if dribbles of oil can come out indefinitely, is it realistic to believe that those dribbles will be profitable? There will be employees to be paid, and repairs to be made on equipment.

            Models are easy to put together. The devil is in the details. It is easy for someone to claim long term profitability, but for it not really to be the case. Very few are going to go through and see what is going to go wrong. But pretty clearly, every year, companies are going to have to go to lenders with their new needs for cash in hand, and a pretty good story about why they are not yet actually seeing flows in the direction that they should be. At some point, the lenders will cut them off.

            I would be very suspicious of oil companies needing more and more debt. Traditionally, oil companies have been hugely profitable. Governments have been able to tax them heavily. (I expect a profitable company to be able to pay high taxes. This is what an energy surplus involves.) They have had little need to borrow. The red ink model is way too different.

            • redisgrey says:

              “At some point, the lenders will cut them off”.

              Knowing what you know and the effects it would have would you cut them off if you were a “lender”? This is not a “christmas story” anymore. Too big to fail is a foundation part of our financial institutions paradigm now. It supersedes “red ink” “cut off”. And why not? Would anyone shut down the BAU part before it had to end for a little “red ink”? Look around at the US government balance sheet. Its a brings the meaning of red to red. Red is the new black.

            • Fast Eddy says:

              If they have been deemed Too Big To Fail — I would agree — they won’t be cut off.

              I suspect the shale industry has been identified as TBTF – however letting a few of the smaller/worst businesses go down would not matter in the bigger picture

      • Fast Eddy says:

      • psile says:

        Yet, if you followed their forecasts since they began you would have made a lot of money shorting oil.

      • Dave says:

        Sure don’t change your mind.
        XTO was, and is, a disaster.

        • Glenn Stehle says:

          You theologians and ideologues like to paint with a broad brush. These sort of overgeneralizatons are what causes many of the distortions, partial truths and disinformation that are so prevalnet in the comment section on this blog. The devil, however, is in the details.

          PXD ≠ XOM

          PXD ≠ XTO

          PXD ≠ CHK

          All of these companies have entirely distinct holdings, or investment portfolios.

          XOM’s investment portfolio is heavily loaded with Canadian oil sands, deep water offshore and other mega-expensive to extract projects.

          XTO’s and CHK’s investment portfolios are heavily loaded with natural gas extraction, at first in the Barnett shale, with very small exposures to oil production. XTO, however, is now struggling furiously through a number of major acquisitons to add more liquids production to its portfolio. You can do that when you have someone like XOM with almost unlimited capital to back you up.

          XTO Energy Inc. is an energy company, principally operating in the United States, specializing in the drilling and production of unconventional oil and natural gas assets, typically from shale rock through a process known as hydraulic fracturing. It is a subsidiary of Exxon Mobil Corporation.

          The acquisition of XTO Energy in 2010 made ExxonMobil the largest producer of natural gas in the U.S. Since then, XTO Energy’s resource portfolio has tripled through several acquisitions. The company owns interests in approximately 40,000 active oil and natural gas sites across North America.

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

          The chart below is what caused XTO and CHK to be, and still to be, “a disaster.” And it has a name. It’s called the collapse of natural gas prices beginning in 2008, with extremely depressed natural gas prices having not recovered to this very day.

          Oil prices, however, have had a very different history from natural gas prices.

          • Fast Eddy says:

            ‘oil and natural gas resources — XTO Energy owns interests in approximately 40,000 active oil and natural gas sites’

            But Glenn – don’t all shale plays tap oil and gas — or are there some fields that only have gas — and some that only have oil?

            It says ‘oil and gas’ therefore they are an oil producer — and the company is worthless…

            Just like the rest of the industry — if logic were applied — is worthless.

            Shale exists ONLY because conventional oil peaked in 2005 — we need to beg borrow and steal otherwise we would have collapsed by now.

            Seas of red ink …. oceans of red ink….

          • Duncan Idaho says:

          • redisgrey says:

            “You can do that when you have someone like XOM with almost unlimited capital to back you up.” As you said CHK is in the same dismal boat but without the “unlimited capital”. So why are they still here? I guess there’s unlimited capital then there is unlimited capital. You could see this as CHK “unlimited capital” being better than appraised compared to XTO’s obviously top notch “unlimited capital”. Or perhaps in the final analysis all “unlimited capital” is rat poop.

            • Fast Eddy says:

              Central banks are buying stocks and bonds to the tune of hundreds of billions — and probably trillions of dollars/Euros/yen etc…

              http://www.zerohedge.com/news/2017-01-23/80-central-banks-plan-buy-more-stocks

              What caught our attention on the ECB’s shopping list?
              They bought “topical” credits such as VW, Glencore and EdF.
              They bought “high-yield” credits such as Telecom Italia and Lufthansa.
              They bought “foreign” credits such Bunge and Schlumberger (US), Nestle and ABB (Swiss).
              They bought long-dated bonds (2036s), but they also bought plenty of short-dated bonds. In fact, 35% of the bonds that they bought are negative yielding.
              The Central Bank of Italy seems to be the most “active” central bank thus far, purchasing 43% of their eligible universe (55 out of 127 bonds).
              The Banque de France seems to be relatively “lagging” at the moment, purchasing just 29% of their eligible universe (115 out of 399 bonds). In addition, the BdF has shied away from buying issuers such as Alstom and Legrand.
              The ECB has been involved in primary – buying recent supply from Bunge, Repsol, ASML, Iberdrola, Tennet, Total and Air Liquide.

              http://www.zerohedge.com/news/2016-07-19/so-what-did-ecb-buy-short-almost-everything

              First some perspective on this weekend’s activities. The most important of the salmagundi of actions is the security regulator’s promise of an initial 120 billion yuan ($19.3 billion) via 21 brokerages to stabilize the market, alongside the People’s Bank of China’s agreement to provide liquidity support for the margin-trading clearinghouse—what David Cui, strategist at Bank of America/Merrill Lynch, says might be its first step toward becoming the ailing market’s buyer of last resort.

              The government also vowed to make sure the Shanghai Composite hits 4,500. The scope of this gambit is breathtaking, says Anne Stevenson-Yang, founder of J Capital Research. She notes that analysts comparing China’s current rescue efforts to the Troubled Asset Relief Program, the US government’s 2008 bank bailout package, miss the fact that TARP rescued operating companies, not a stock index. “[TARP] focused on the viability of operating companies, not the optics that a speculative derivative of the economy represented.”

              https://qz.com/445477/to-save-its-stock-markets-china-is-putting-its-whole-financial-system-at-risk/

              Keep in mind these are they activities they are disclosing — we can’t even begin to guess at what is going on behind the scenes….

              Would anyone be surprised to find the invisible hands of the central banks behind the shale industry…. I would not only not doubt it — I would expect it

      • Fast Eddy says:

        When more-ons refused to accept facts what do you do?

        Mock and ridicule them in the hope that they will stop polluting FW with lies and spin regurgitated from the Ministry of Truth.

        So Glenn – about that $2 billion dollar write off that Exxon just booked against the XTO acquisition — can you dig out some account terms that demonstrate that actually that is not a negative?

        Surely it must be an indication that XTO is actually more valuable?

        Could it be that Exxon is playing a tax avoidance game here…. they write profitable assets down to avoid taxes?

        I am not an accountant so I do not understand the nuances of tax accounting for public companies….

        So maybe I am missing something.

        All I can see is an asset marked down by 2 billion dollars — in an environment where the asset should be generating profits for Exxon…. and I am wondering — why they are writing off the value of this profitable asset?

        Please Glenn — help me. Help me to understand.

        Maybe you could pull a quote from Aristotle?

        • Glenn Stehle says:

          Logical Fallacies Handlist
          https://web.cn.edu/kwheeler/fallacies_list.html

          COMPONENT FALLACIES:

          Hasty Generalization (Dicto Simpliciter, also called “Jumping to Conclusions,” “Converse Accident”): Mistaken use of inductive reasoning when there are too few samples to prove a point.

          Example: “Susan failed Biology 101. Herman failed Biology 101. Egbert failed Biology 101. I therefore conclude that most students who take Biology 101 will fail it.”

          If a logician considers only exceptional or dramatic cases and generalizes a rule that fits these alone, the author commits the fallacy of hasty generalization.

            • Glenn Stehle says:

              Shale oil makes up a very small part of the investment portfolios of the majors. Some of the majors, like ExxonMobil, are frantically acquiring shale oil positions.

              Shale was, and still is, for the most part the domain of the independents.

            • Fast Eddy says:

              Ya I have heard that they are such great operators…

              The small operators are always going to win …. right… they have the economies of scale…. better funding …. are able to attract the very best management …. have larger R&D budgets… all those things that big operators don’t have….

              https://www.walmart.com/

              Oil Majors are buying shale plays because they are dying — they are grabbing onto anything that will help them book reserves —- doesn’t matter that it makes no sense — if it holds bankruptcy off another year then they do it…. because they know — we will all soon be dead… they don’t want to go down ahead of the ship.

        • Duncan Idaho says:

          Maybe you could pull a quote from Aristotle?
          He got just about everything wrong.
          Modern Science began with the rejection of Aristotle

          Baghdad Bob is more in Glenn’s style:


          .

      • david higham says:

        I can’t find evidence that Samuelson ever said that. The correct quote is:
        ‘When my information changes,I alter my conclusions. What do you do,sir?’,and is from
        John Maynard Keynes,not Samuelson.
        https://www.goodreads.com/author/quotes/159357.John_Maynard_Keynes

  4. Fast Eddy says:

    Now if I was running a huge oil company —- and I was staring the End of Days in the face ….

    https://srsroccoreport.com/end-of-the-u-s-major-oil-industry-era-big-trouble-at-exxonmobil/

    Would I go quietly into the night?

    Or would I call in the PR team for a heavy duty brainstorming session to discuss how we can delay collapse of the company….

    Would I not drag out this wonderful example of how to defy gravity:

    For several years, the U.S. Shale Revolution seemed like it was going to defy the laws of gravity (and finance) to provide the country with limitless oil production forever. However, something started to go seriously wrong as these shale oil companies reported their financial earnings. One by one, these oil companies financial losses and debts continued to pile up.

    https://srsroccoreport.com/continental-resources-example-of-what-is-horribly-wrong-with-the-u-s-shale-oil-industry/

    Would I not inform the PR team that Exxon is planning to pile into shale in order to ride the fake news meme…. and claim that we are turning things around here?

    Would I not — when informed by the head of PR —- that our earlier foray into shale with XTO ended really really badly — and that just last month we wrote off another 2 billion —– tell him to SHUT THE F UP!

    Yes of course I would do all of the above. Why should Chesapeake and Continental and all these other insolvent companies get the headlines???

    Exxon is JUST as insolvent. We can beat them at their game. We can be new and improved insolvent.

    Heck — we might even end up bankrupt by ‘investing’ in the shale ‘revolution’ It is after all — a great way to lose a lot of money. Never in the history of the world has there been a more ‘profitable’ cash-burning machine.

    I have an idea – why not just patent the cash-burning machine and sell it —- I am sure BP and Chevron and all the others would be keen to buy some of these. This could be an entirely new line of business for Exxon.

    Glenn – this is why I get paid the big bucks. I am an abstract thinker…. I create reality.

    I make things better. I am a magician. I have been referred to as ‘god’ by the PR department — but the jury is still out on that

    • Duncan Idaho says:

      Anyone at this time without a positive cash flow in a mature business like shale, had better learn some econ 101 before proceeding.
      Booking reserves that will probably never be used doesn’t count, even though it keeps the stock price up for the rubes.

  5. edwinlloyd says:

    Back to Mr Pery’s role in all this. It would appear that his primary role will be to dismantle/ignore/discredit the environmental protections that impose direct costs on producers. Those costs then become mixed into the soup of non accounted costs like military. The producers look better on paper. Our finite world suffers the socialized and physical consequences. Smoke and mirrors, smoke and mirrors, it’s all more smoke and mirrors.

  6. Americans can’t admit they worship false Gods. All the Devils are here, and you worship them. Just listen to the cheers for Trump–An adulterer, liar and con-artist protected by the Rothschild Family. And you guys put him in office.

    The only saving Grace is that the other option was demonic war criminal “We came, we saw, he died.” No not quite right … “We came, we killed, we robbed his gold and oil.” There you go, fixed it for you. And that person got the popular vote.

    The hidden hand? You may want to get your priorities in order before the collapse happens.

    Cathal Haughian
    http://www.beforethecollapse.com/about

    • redisgrey says:

      “You may want to get your priorities in order before the collapse happens. ”
      Such as? What possible actions would be appropriate for the collapse?

      • dolph says:

        Decide if you want to have children or not. If you do have them, decide on what beliefs, training, and inheritance you want to leave.
        Decide your level of participation in society, work, politics, etc., and do that without delay.
        Relocate if you have to.
        Make a list of things you want to do before you die, and start doing them tomorrow.
        Get out of the system, liquidate and keep all of your assets and wealth where you have direct control with few counterparties.
        Get your health in the best order you can.

        • grayfox says:

          Along with getting your health in the best order you may want to develop your running ability and form. Running with efficiency and good economy has been one of our evolutionary triumphs. It is still a reliable way to get from point A to point B, as many tribal people (men, women, and children) would attest to.

      • That’s between you and God. None of my business pal.

        • redisgrey says:

          You post a condemnation of a large group of people but when you are asked for the tiniest clarification you withdraw with indignation. Sorry to interrupt your self righteous rant. I hope I didn’t take time away from enjoying “I live on a tropical beach”.

          • Fast Eddy says:

            My take on Cathal is that she is a bit… shall we say…. ‘touched’ She is somewhere in DelusisTAN… I have not yet identified the province yet

          • What’s there to clarify? Can’t you read? The point is quite simple, those with Capital are worshipped in this Age. They are false gods. So yeah, I live on a tropical beach. I’ve chosen a nice beautiful place with beautiful people, wouldn’t you if you could?

            • Fast Eddy says:

              ‘with beautiful people’

              Sounds awesome!!! Can you get me a VIP pass?

              Do you have regular themed parties? Like say everyone wears white?

              Do I need to wear designer clothes? Will these do

              http://www.thewarehouse.co.nz/p/basics-brand-mens-tee/R1559510.html#start=1 I also have a lot of black ones….

              Beautiful people…. have you lost your mind?

            • Fast Eddy says:

              Can I bring my 308 along?

            • redisgrey says:

              “I’ve chosen a nice beautiful place with beautiful people, wouldn’t you if you could?”
              Generally I find beach crowds and the people that inhabit them exquisitely boring. How many fried bananas, thai sticks, and drinks can you consume before you are bored? For me thats less than a day. Then id rather be getting back to work. The garden and the goats ecetera. As far as beautiful people my idea of beauty tends toward the inward as well as the outward. While outward form certainly is pleasing to the senses without inward aspects outward form is also boring.

              Thank you for your response. Im sorry my reading skills are so poor. My question was
              “You may want to get your priorities in order before the collapse happens. ”
              Such as? What possible actions would be appropriate for the collapse?

              You still have not outlined what you consider appropriate actions in the face of the end of industrial civilization Hanging out on the beach is actually not a bad choice. Is that what you consider getting priorities in order a pursuit of sensual pleasures?

            • My network have modeled the system in its totality. The death will be concentrated in particular places, so location is most important. Some Finite Worlders have read our output, I can’t condense it further.

              Articles by Gail are important but don’t provide Understanding at the System level.

              Priority no one is enjoy these last days of calm and tranquility, I have my study and writing to do so I’m busy at the beach. I don’t own anything except Gold, a phone and laptop.

              Luck will play a large part in who survives. So good luck,
              Cathal

            • Fast Eddy says:

              Sounds awesome!

              I am sure it will all work out just fine — it is important to model the system in its totality — there are so many who just model one component — and that is where you get unexpected weaknesses post BAU

              Have you tried the Fast Eddy Challenge? It is a way to test your post BAU plan and improve it while BAU is still in play.

            • Fast Eddy says:

              I understand that Louis Veeton is launching a new line — Prepper Chic…. along with all the accessories…

              Whole Foods has bulk packs of freeze dried organic food available know — you have the choice of a 20ft or 40ft container delivered anywhere in the world including beautiful beach locations.

              And Estay Lodder is flogging giant packs of cosmetics — enough for a life time — so that the beautiful people will all look their best during the Apocalypto ….

              Oh — and don’t forget to stock up on the Perrier…. and grow a lemon tree….

              It’s all sounds so wonderful! Like a paradise.

            • Joel says:

              Not sure!
              Good luck with the global civilization model, I assume its running on your only possession the phone. The Cal Tech guys I used to work with loved models, even after repeated ridicule, they rarely worked well even on simple weapons systems. Unicorns are just so cool though.

          • I suppose I can expand on my earlier reply. My first post was a pithy one because Gail is our host and I refrain from criticizing her.

            The Hill Group and her inform my friends of what’s happening at the level of the Natural System. My friends write letters and discuss such things.

            If the problem is too many people then the solution is less people. So a lot of people are going to die; this is obvious; and you may be one of those that die.

            Given this, you may want to reorder your priorities. I reordered mine long long ago, and I’ve had a great time since 2008. And it only gets better. But I know the music will stop one day and it’s clear, that basic behavior and beliefs at the mass level, hasn’t changed.

            They still hope a false god will save them.

            • Volvo740 says:

              “I’ve had a great time since 2008”. That’s wonderful!

              What did you do that made you have such a great time? Reading “The Hill group”? (They’ve taken a bit of a beating lately over at peakoilbarrel.com) OFW?

              And how can it only get better? Nothing that didn’t go your way? My list is pretty long on things that didn’t go my way…

            • It’s all about understanding, once you understand the System your expectations are aligned with what must happen. So just strap yourself in and enjoy the ride. Since 2008 I finished seeing the World–51 countries. Didn’t have children because I knew that was a bad idea. And now that my buddies and I have modeled the Collapse; I’ll be fine if I survive.

              Read volume 1 of The Philosophy of Capitalism, it’ll take you 5 hours and you’ll understand. You’ll get it.

              I’ve got God on my mind since we’re discussing the relationship between Religion and God for the concluding volume. It’s interesting but slightly troubling since all the devils are clearly here.

            • Fast Eddy says:

              Could you give us a summary within 140 characters?

          • Tim Groves says:

            Tropical beaches will be death zones for the beautiful people when the ballon goes up and BAU goes down. The beautiful people had better be armed with more than a beach towel and a bottle of suntan lotion when they’re caught between the pirates, the slave traders and the cannibals.

    • Fast Eddy says:

      And did you know that HRC is being controlled by the North Koreans? Watch as they log in to her mainframe….

      • Fast Eddy,

        You’re correct that Central Banks are providing financing directly to particular companies. It’s all or nothing now. So I’m sure energy companies are in the mix.

        I can state as fact that “the Fed chairs are terrified behind closed doors.”

        My network has now essentially modeled the System in its Totality. The third volume is about the future, an interesting question which Gail may investigate is what is the carrying capacity of the planet going forward.

        • Fast Eddy says:

          There are 3 types of people:

          1. Those that refuse to acknowledge the finite world theory — who no matter how you lay things out to them will never ever accept that the world is about to end (they usually also believe in renewable energy)

          2. There are those who do accept the finite world theory and that something bad is imminent — but who believe in some flavour of BAU Lite (even though there is no way to logically support their position)

          3. Then there are those who accept the finite world theory — and recognize that this will result in a truly apocalyptic outcome that may extinct the human species (or at least be so horrible that anyone living through the nightmare will wish they were dead) — there is a sub group who believe that there is a creator and that it is not finished with us (perhaps we get re-digitized into characters in The World 2.0 — in stores soon on Planet XYZ!)

          • Van Kent says:

            Maybe there are just two groups?

            Those who have done their homework, thought it out by themselves, looked in to every nook and cranny for loopholes, and found none. Group one thinks end is imminent.

            Then we have the lazy, every opinion matters, lets listen to what everybody else are saying, lets avoid using individual reasoning and thought, lets just trust in intuition and what the next door neighbour is saying. This group thinks in tooth fairies.

    • Joebanana says:

      I don’t think anyone looks down their nose at Americans more than Canadians. I happen to think Americans are some of the kindest and most generous people on earth. No people are so exposed to big money propaganda and manipulation either so we cannot judge fairly.

      • Fast Eddy says:

        I am frequently mistaken for an American — when that happens I just slough it off and say — no offence — it’s pretty much the same thing….

        One time I responded with — whenever you think someone is an American instead ask them if they are a Canadian — they won’t be offended if they turn out to be a Yank…

  7. Artleads says:

    Paul Prew, “The 21st Century World-Ecosystem: Systemic Collapse
    or Transition to a New Dissipative Structure?”

    Thanks to the person who posted this link. It’s as close to my understanding as any academic paper I can manage to noodle through.

    http://courses.arch.vt.edu/courses/wdunaway/gia5524/Prew.pdf

    • redisgrey says:

      “Transition” Death that’s a transition too right? Transition that’s like a opportunity yes?
      Like “the 30 year prison sentence was a opportunity for contemplation and transition”?

      • Artleads says:

        I guess I read too quickly to pick up on anything said about death or transition. It seemed to be mostly about dissipative structures. Here’s a small sample of what I read on that subject:

        “For Altvater, the capitalist system demands that energy use increase to meet the demand of accumulation and expansion of the system. Jeremy Rifkin and Ted Howard (1989) also argue that 205 entropic processes reduce the available energy in the environment. Efforts to reverse the entropy process, according to Rifkin and Howard (1989: 51), only result in “increasing the overall entropy of the environment.” 3

        Although many authors have described entropy and attempts to reverse it, the concept of entropy only explains part of the story. The increase in entropy is intimately connected with the creation of order and complexity. Similarly, capitalism, although destructive, produces its own form of order such as social arrangements and technological gadgets.

        William Greider (1998: 11), in his book One World, Ready or Not, described capitalism as a machine that ‘throws off enormous mows of wealth and bounty while it leaves behind great furrows of wreckage.’

        How is it that capitalism can create at the same time it is argued to be so destructive? There appears to be a contradiction if we cannot describe capitalism solely on the basis of its destructive impacts, but must also acknowledge its ‘creative’ abilities. How can a system be, at the same time, both creative and destructive? Although Rifkin and others allude to the solution, by arguing that attempts to reduce entropy increases overall entropy, the answer to these questions can be found in the concept of “dissipative structure.”

        The very basis of life is dependent on a counter tendency to the second law, otherwise complex life-forms could not exist. If entropy were truly the overriding logic of reality, development of the basic building blocks of life would have been impossible because the law of entropy would demand that matter, organic or otherwise, become less complex, not more. In order to evolve and survive, living organisms must find a way to combat entropic forces that would break them down before development and organization could take place.

        According to Prigogine (1989: 398), ‘increase in entropy is not an increase in disorder, for order and disorder 206 are created simultaneously.’ Thus, order and entropy are intimately linked, and dissipative structures are a counter tendency to entropy.”

      • Artleads says:

        Paul Prew, “The 21st Century World-Ecosystem: Systemic Collapse
        or Transition to a New Dissipative Structure?”

        Sorry. I got confused by the mention of transition and death in the same sentence. The article does indeed mention transition.

    • DJ says:

      Relative poverty is a inequality measure, not a wealth measure.

      • Bergen Johnson says:

        As in what’s poor in Brazil is most likely much lower than what is perceived as poverty in Germany.

        • DJ says:

          If average gross income was €2900 in 2005 and 14.7% “earned” less than 60% of this. And in 2015 average income was €3750 and 15.7% earned less than 60 % of this. Certainly price inflation of necessities during this time.

          How many, if any, are worse off?

    • Part of the problem is the lower value of the Euro relative to the dollar. This pushes up the relative price of energy products, which are priced in dollars.

      Also, Germany decided to pursue wind and solar in a big way. This is a horribly high cost decision.

  8. dolph says:

    On the question of whether facts matter, may I politely suggest that opinions matter more than facts.
    A brief review of human history suggests that humans have always operated in a cultural sphere in which what matters is what they believe, and they will act on what they believe. Whether true or not.
    Consider: there is little to no truth in Christianity or Islam other than a few psychologically comforting myths, yet they continue to this very day with billions of followers. More people in this world believe that Jesus of Nazareth was literally the Son of God, and that Muhammad literally received God’s final dictation, than believe that the earth’s resources are finite and are being depleted.

    • Fast Eddy says:

      Yes most people in the world are delusional and/or stupid — it does not mean facts and logic do not matter.

    • Bergen Johnson says:

      Good point, Dolph.

    • Glenn Stehle says:

      dolph,

      That’c certainly what a great deal of research by psychologists and neuroscientists is showing:

      You can’t understand the river of fMRI studies on neuroeconomics and decision making without embracing this principle. We have affectively-valenced intuitive reactions to almost everything, particularly to morally relevant stimuli such as gossip or the evening news. Reasoning by its very nature is slow, playing out in seconds.

      Studies of everyday reasoning show that we usually use reason to search for evidence to support our initial judgment, which was made in milliseconds. But I do agree with Josh Greene that sometimes we can use controlled processes such as reasoning to override our initial intuitions. I just think this happens rarely.

      MORAL PSYCHOLOGY AND THE MISUNDERSTANDING OF RELIGION
      https://www.edge.org/conversation/moral-psychology-and-the-misunderstanding-of-religion

    • Glenn Stehle says:

      And then there’s this by the evolutionary biologist David Sloan Wilson:

      Even massively fictitious beliefs can be adaptive, as long as they motivate behaviors that are adaptive in the real world.

      — DAVID SLOAN WILSON, Darwin’s Cathedral, Religion and the Nature of Society

      There’s a big knockdown dragout going on between evolutionary biologists like Sloan Wilson and anti-religous bigots like Richard Dawkins over whether relgion is adaptive or not.

      Evolutionary biologists of course have to explain the existence of the ubiquity of religion using evolutionary theory, and Dawkins has to go through some pretty amazing mental gymnastics to come to the conclusion that religion is not adaptive.

        • Fast Eddy says:

          Glenn – it is fun to surf the web and self-diagnose…. isn’t it!

        • Artleads says:

          Great quote, Glenn. I almost think illusion is all there is. Some forms of it may be more useful than others. You also had a fine quote by Reinhold Niebuhr that I haven’t tracked down so far. It had something to do with the human need for glory. I know praise is extremely important to me. It’s closely related to glory, which can be a little dangerous.

          Being the least technical person you’ll ever encounter, I haven’t followed you long articles about shale, although the idea of blasting underground gives me the horrors. I also appreciate your description of the old oil wells as inefficient and clumsy. I had been thinking they were the best thing from an environmentalist perspective: they are there already–just use them up and try living within that oil budget.

          But more to what, as a trained conservator of cultural property, I know more about. I was just thinking tonight about Gail’s call for higher commodity prices and higher oil prices. She perhaps sees that as the only way to keep BAU going and maybe save our skins for some period. But my well-tuned intuition suggests that our economic system is just plain exhausted. Trying to start it up again with higher prices feels like beating a dead horse to get it up and running. Which is where my conservation and restoration experience applies. Illusion again.

          If people are more governed by illusion than so called reality, they only need what Nietzsche prescribes: an illusion that’s good enough to get by. In extreme cases you can restore an art work to LOOK fairly decent, although it’s a wreck structurally. Following that line of thought, the system only needs to be patched up to appear normal enough to avert universal panic and craziness. The analogy would be patching something up with the cheapest of means–string, duck tape, wire, chewing gum. If a high and subtle level of artistry is used for this patch job, the result is not only attractive, but potentially mind shifting. Shanty towns using stuff from the dump can be most elegant in the hands of the artist. These days you can spin anything. While we have roads and cars, people will go to great lengths to visit and spend at well presented shanty towns. They will even visit scenes of disaster. Tourism also conforms to an art and conservation background. It’s a form of economic endeavor that is only ancillary to Norm’s rotary motion…

    • Joebanana says:

      What truth is there in atheism? Is it supposed to make you wise? I know plenty of atheists, and they have their heads up there arse every bit as far as religious people.

      And I would argue that people do not often act on what hey believe. How many people know they spend too much, eat poorly, don’t exercise, etc? Yet they continue to do it. How many people have the humility to know they have no clue what they are talking about? Exceedingly few.

      • Pinhead says:

        ” How many people have the humility to know they have no clue what they are talking about? Exceedingly few.”

        Realizing that language, the primary tool of our species, has great and inherent malfunction in truthfully mapping reality is rare. Even if if this realization is actualized there is no alternative other than abstinence of speech. While abstinence of speech is a admirable effort it does not change that the thoughts themselves are occurring with the base of the same dysfunctional tool. If one had the capability to delete language capability at the thought level what would be left?

        • Joebanana says:

          I have no idea what your point is but what would be left is symbolism without words. Another very human way of communicating. I’m not down on language, I think it beautiful and powerful. It is like all powerful things; subject to abuse.

          • Pinhead says:

            If you could pick the tool up like a hammer, and lay it back down again it would be fine. The problem is you become the hammer. Being a hammer may not be appropriate. but we have no choice. We cant lay it down. Most dont even know they have a hammer in there hand.
            Am I “down on language”? You are not “down on language”. Are you down with language? 🙂 As we flow these representations back and forth we are their slaves. Slaves to things that have no substance. Nor does freedom come from understanding we are slaves. The very rare understanding that these relationships are a imaginary creation that may or may not have some degree of validity does not bring freedom. We are fearful creatures. We huddle with others that form the relationships the same way to reassure ourselves. The commonality of our illusion emboldens us to actions that please us.
            Without our language our essence would be something we are not now. That thing which we are not is unknown. The fear of that which we are not works against any true exploration of our essence.

            • Fast Eddy says:

              I don’t get this ‘slaves’ thing…. it’s been mentioned a few times on FW.

              Are we not kings?

              We certainly live like kings — we have houses that are warm/cool… that do not leak … we have hundreds of slaves pushing our cars around for us …. washing our clothes… turning the generators to keep the lights on… we fly on planes powered by slaves… food grown by slaves is plentiful….

              Sure we have to report to the office for 8 hours a day 5 days a week…. in return for the above.

              But even kings of old had to push paper around…. they had responsibilities and pressure… they didn’t generally just sit on their thrones gnawing on bbq chicken wings, quaffing wine and ale and shouting ‘bring me prettier women — these will not do!’

            • Van Kent says:

              Freedom to choose..

              Slaves to words and concepts..

              Opinions from other people are more important than physical reality..

              Shale oil will save everything, just because it will..

              Oh jeez, what a clusterf-ck of a species we are. Pampered and spoilt rotten by cheap FF. Is it possible there are people that are actually this clueless? WTF?

              Example. In Scandinavia, up in the north, in the winter, when its -30C, if you go out driving and your car breaks down.. If not prepared, the you will die.. its not a matter of choice.. words and concepts.. or other peoples opinions.. or shale coming to rescue you.. if you are out in -30C walking for hours on end without proper clothes, you die.

              I don’t think our species has much of a hope coming out of this bottleneck.. there can’t be any magic thinking even for some of us to survive.. But freedom to choose.. slaves to words.. shale is the saviour.. jeez.. we’re done for

            • Pinhead says:

              “Example. In Scandinavia, up in the north, in the winter, when its -30C, if you go out driving and your car breaks down.. If not prepared, the you will die.. its not a matter of choice.. words and concepts.. or other peoples opinions.. or shale coming to rescue you.. if you are out in -30C walking for hours on end without proper clothes, you die.”

              Just for the record I have lived and worked In Prudhoe bay Alaska. Lots of people live in extreme weather. You living a extreme weather climate does not make you sane or an authority on the world although portraying that was part of the groupings of words you chose.

              Not a matter of choice? How about the choice to leave shelter? How about the choice not to have adequate protective insulating clothing? The mind determines our actions. our actions determine our fate. Duh

              In many ways your post epitomizes the problems inherent with language. You associated your argument with death. We all know death is a reality. You arbitrarily associated your argument with death in order to bring its reality to your argument. You made the association so that the obvious untruths of your argument were associated with the reality of death You did this for reasons that please you. a entirely incorrect representation was made based on your wanting to please yourself for some unknown motive.

              Your argument disregard the things the mind can effect profoundly. No the mind can not defy gravity or change external temperature. The things that the mind can and does do has profound and real effects on our actions and our actions do have a profound effect on many aspects of the physical world. DUH.

              “I don’t think our species has much of a hope coming out of this bottleneck.. there can’t be any magic thinking even for some of us to survive.. But freedom to choose.. slaves to words.. shale is the saviour.. jeez.. we’re done for””

              Well if your framework is your done for I can state you most certainly are. In the end we all are.

              Examine the ways Olympic athletes develop themselves. It always comes back to their mind. Over and over again to make progress at that level the framework gets in the way for the progress that is needed. the progress comes from that which is not.

              Examine the ways top physicists have reached understanding. It always comes back to their mind. Over and over again to make progress at that level the framework gets in the way for the progress that is needed. the progress comes from that which is not.

              The mind has a profound effect on the body it inhabits. This is proven fact.

              The ability to form a series of relationships that are a representation of reality that is called language is IMO mankind’s greatest attachment. Mankind’s failure to understand the tool is not reality is its greatest failure IMO.

              Take two programming languages c and lab view. There are solutions available in labview that are not possible in C. If one believes the structure in which the mind works (language)is what one is they will not end it as that is death. That structure may not allow solutions and if the need for solutions is dire then that clinging to structure may well mean death.

              Exponential growth in a finite world is insane. It probably will result in our species extinction. Denying it certainly will result in our species extinction. Denying that their are absolutely no possibilities which will prevent our extinction will certainly result result in our extinction also. Could cro magnum forsee us now?

              Belief in the possibility of appropriate actions allows the possibility of appropriate actions.
              It is the start of all creative change. That is self evident. If you dont know that I feel sorry for you.

            • Van Kent says:

              Pinhead,

              There are such things as time and resources. Physical realities that persist.

              Take your olympic athlete you liked to take as an example. Without time to practice or the resources to do so.. no matter of WILL, WANT, or motivation.. nothing comes of it.

              As for the Tsunami that is headed our way..

              Well.. for some of us commenters here, its abudantly clear what the survival our species would require. But its not words, your neighbours opinions, concepts, will or motivational speakers, that are needed. What is needed is a very precise skill set, a very broad one at that. Skills that are not in any way common today. And after mastering the skill set, its just incredibly hard work, blood sweat and tears, decade after decade. The ability to just do what is necessary, despite the hurt, pain, setbacks and injuries.

              Our third world relatives, who are not as pampered spoilt little children as us, might handle the toil part. But it would be up to us, who have time and resources to do so, to gather all the necessary skills and skill sets. But instead, we have an incredible amount of delusion, negotiating, anger and denial. And magic thinking going on. Not exactly sane responses, when we know the deluge that is soon to follow..

            • Glenn Stehle says:

              Pinhead the humanist (or Pelagianist) vs. Van Kent the naturalist.

              Which theology will win out?

              We don’t know, because the future is unknowble.

        • xabier says:

          ‘Be mindful of the eloquence which is really empty; and of apparent emptiness which is truly eloquent.’

          Plenty of candidates these days -as always-for having that branded on their foreheads……

          ‘In the beginning the Way was a reality without a name; then it became just a name without a reality.’

          • Fast Eddy says:

            That’s why you should not believe what you read in the MSM about shale…. you are being played… like a dumb human/rat…. you are being run around the maze in search of cheese.

            Join The Core. We can help you overcome

      • There is a huge amount of pattern to the way everything is made, and in terms of the way the universe evolves.

        The system we live in seems to be a self-organizing, open system.

        It is OK to hypothesize that this can happen all on its own. Another hypothesis is might be that there is an external force behind this hypothesis. People will disagree whether his external force might have any interest in humans, and how this might affect what will play out in the future.

      • bandits101 says:

        “What truth is there in atheism? Is it supposed to make you wise?” Change atheism to “religion” and it makes far more sense. Although imo religion “making you wise” is next to impossible.

        Religion operates on zero facts only collective belief. Can’t go around having a secret personal religious belief, it must be divulged, shared and predominately imposed. Children are the victims and the fodder to maintain the belief. Meetings and gatherings reinforce the collective beliefs, a form of confirmation bias.
        But the problem with you joe imo, is that you fear atheism, so you deride it at every opportunity. You claim that atheism is a belief, even though it’s the exact opposite. You do this to justify the irrational beliefs of the religion or cult in which you participate, yours of course being Catholicism.

        • Prices operate in a similar way. It doesn’t make them “wrong,” unless they are distorted by government subsides.

        • Fast Eddy says:

          I had the misfortune of being dropped into a Catholic school until grade 8 as the school was the nearest to us… these schools are brainwashing machines with techniques that have been adopted by other cults…

          I fortunately was able to escape the cult…

          Joe is still drinking kook aid…. some never leave…. I guess they like the idea of the meek inheriting the earth and all that.

          The meek get stomped on in this life — and they will inherit nothing.

          The computer simulation model is far more intriguing …. and the good thing is — nobody asks you for money — nor do they expect you to come to a church each Sunday and worship a computer programmer — and because you are digital you live forever… assuming the creator has a perpetual energy machine….

        • Glenn Stehle says:

          bandits101 and Fast Eddy, two more anti-religious bigots.

          Why don’t you two go read some more Richard Dawkins and Sam Harris, and let the rest of us alone to live in the reality-based community.

          • Sorry, sometimes we have commenters who get carried away. You clearly know quite a bit about some aspects of what is happening. I figure I can learn from a wide range of people, even people I don’t 100% agree with.

          • Fast Eddy says:

            Glenn … I can see that all the logic and facts are really getting to you now…. they eventually always do ….

            The problem is that when your understanding of the issues of the world are fundamentally flawed… you must rely exclusively on defense mechanisms such as cognitive dissonance…. which means you live in a make-belief world — a…. false reality ….

            Normally that would be fine — you could live your entire life without experiencing any side-effects… your fake reality would — for all intents and purposes — be real. You could mingle with others who share your fake reality — and that would reinforce your fakeness.

            The problem arises when you enter the world of people who have escaped the fake reality. They (we) know exactly where you are coming from – because we were there…. we used all the same mechanisms that you do to maintain your blurred view of the world.

            So we know how to trash your delusions… your myths….. in a very … effective manner.

            Your mechanisms can protect you for some time…. but eventually …. reality starts to impinge … facts and logic hammer your defenses…. and if you do not break contact with The Core…. there are two —- only two — not three — not one — two potential outcomes:

            1. You see that your reality was fake — you take the red pill — you become alive

            2. You end up with people like Keith and Pete EV …. who stayed too long … and are now in La-La Land….

            Based on that last comment …. if I may speak for The Core…. we believe you are about to choose door number 2…. is that a bad choice? what is bad – what is good? We do not judge.

            Can you hear Keith calling? And Pete EV?

            Let’s all listen ….

            ‘Glenn… Glenn…. come to us … join us…. we have saved a spot for you…. come to a place where there is no Fast Eddy… no Core… no facts… no logic… only peace and joy…ignorance and bliss…’

            • Glenn Stehle says:

              Fast Eddy,

              You are cut out of the exact same cloth as the New Atheists.

              They believe themselves to be members of a select little club, and that by branding their defactualized nonsense as “science” — or “logic and facts” to use your vernacular — that they have managed to find sure truth. They truly believe that they have managed to overcome the human condition, with all its weaknesses and fallibilities.

              The New Atheists then drape their pseudoscientific nonsense in the garments of self-righteous piousness and hubris, and go about unmercifully bashing anyone who dares disagree with them with a hail of name calling and ad hominems.

              It’s extremely ugly, and it doesn’t get any more dogmatic and doctrinaire than that.

            • Fast Eddy says:

              The thing is….

              I have to tolerate fools and delusional people on a constant basis — FW is a haven — a place where fools are few and far between.

              In an ideal world — when fools show up — and they refuse to deal in facts and logic — and they pollute FW with rubbish — we could just show them the door and say thanks for coming — but you do not pass the test so we are referring you to Peak Prosperity —– but that is not possible.

              So instead I prefer to resort to mocker in the hopes that it drives the fools to the insane asylum.

              Think of it this way — if I were to gate crash a rocket science conference and continuously blurted out stuff like ‘what about George Jetson — he had a rocket! — can we all have rockets? And what about warp drive — The Enterprise had that — why can’t we build a star ship like that and seek out new worlds?’

              What do you think would happen to me?

          • redisgrey says:

            Glenn you are cracking me up! 🙂

            • doomphd says:

              If there was an all-powerful, all-knowing, wise God, would He/She/It allow humans to trash up His/Her/Its beautiful planet and all the other creatures and plants? To what Devine Purpose that? I think the answer is obvious: there is NO all-powerful, all-knowing, wise God. And even if there was, why would He/She/It single out humans to protect/destroy? Why not the brainy dolphins or whales? Humans have evolved opposible thumbs and much later, large brains. Some would argue these two features in combination have led us to our predicament. What we haven’t already killed or subjugated we will take down with us with human-induced rapid climate change. I believe we’re special all right, about as special as a parasite that kills its host.

            • Fast Eddy says:

              If I had to guess…. I’d peg Glenn as a member of an Evangelical church… he is clearly a believer that Trump will Make America Great Again …. he has at least 4 hand guns…. an American flag in his front yard…. he spends Sundays watching NFL triple-headers …. he is a big fan of Fox and Friends… I see Texas… or Oklahoma … he can quote the bible verbatim… he believes America is a force for good in the world…. he fears ‘The Terrorists’ …. might have done a stint in the military — but did not actually fight…

            • Glenn Stehle says:

              Fast Eddy,

              Well not quite.

              However, I would never mount my moral high horse the way you and Hillary Clinton do and blast Trump supporters as being “a basket of deplorables” and “irredeemable.”

              I’d a thousand times prefer to be somebody like the guy pictured here, than someone like you or Hillary Clinton.

            • the speech bubble in that picture—if there was one one would say
              ”look, the earth is only 10000 years old, jesus is returning next year to refil all the oilwells and trump is his prophet”

            • Fast Eddy says:

              Glenn – please do not pollute FW with political cheer leading …. we are just so far beyond that childish idiocy…

              Yes Trump will make it all better Glenn…. And shale oil will ensure that you continue to enjoy the NFL on the teevee….

        • Joebanana says:

          bandits101-
          “Religion operates on zero facts only collective belief.”

          Can you point out a culture that does not operate this way? How about our money system?

          As for the rest of your remarks about me you are just wrong. Atheism is like industrial agriculture to my mind. It only became a cultural force with fossil fuels and will die with fossil fuels.

          I make a few remarks on atheism now and then because of the the bigotry here.

          • Actually, our financial system is a self-organized system that works by itself. In fact, our solar system is a self-organized system that operates by itself. In fact, gravity might also be a self-organized system that acts by itself. We don’t understand a lot of things about the financial system.

            Religions seem to also be self-organized, and borrow a great deal from each other.

            You may be right about atheism being like industrial agriculture. We feel that we can do everything on our own (or our financial leaders can fix all problems). In fact, we cannot. There seems to be some force behinds this self-organized system, but we cannot understand it very well. Should we worship it? Figure out how to go best with its flows? Religion in many respects has to do with how to handle the adversities of this world. If someone else offends us, do we obsess about it endlessly, or do we “forgive them.” If we did not do as well as we could have in a particular situation, do we obsess about it endlessly, or do we move on?

            I learned in Lutheran study material that the concept of forgiveness had been developed in some predecessor religion to Christianity, and was “picked up.” The idea of “Do unto others as you would have them do unto you” in some version comes from many different religions. Even the idea of some sort of life after death may be a way of preventing obsessing over how bad things are now. It is, unfortunately, often better to just make the best of the situation and go on.

            • Fast Eddy says:

              ‘Should we worship it?’

              If there is a creator of all of this — one would have to assume that it does not require us to get on our knees and profess our undying love and devotion.

              After all – no other animal is required to do this – why only humans?

          • Fast Eddy says:

            Ooops….

            Atheism (derived from the Ancient Greek ἄθεος atheos meaning “without gods; godless; secular; denying or disdaining the gods, especially officially sanctioned gods”[1]) is the absence or rejection of the belief that deities exist.

            The English term was used at least as early as the sixteenth century and atheistic ideas and their influence have a longer history. As a doctrine, atheism emerged in India in the sixth century BCE.

            Over the centuries, atheists have supported their lack of belief in gods through a variety of avenues, including scientific, philosophical, and ideological notions.

            Philosophical atheist thought began to appear in Europe and Asia in the sixth or fifth century BCE. Will Durant, in his The Story of Civilization, explained that certain pygmy tribes found in Africa were observed to have no identifiable cults or rites. There were no totems, no deities, and no spirits.

            Their dead were buried without special ceremonies or accompanying items and received no further attention. They even appeared to lack simple superstitions, according to travelers’ reports.[citation needed] The Vedas of Ceylon[clarification needed] admitted only the possibility that deities might exist but went no further. Neither prayers nor sacrifices were suggested in any way by the tribes.

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

          • democracy has been the collective product of fossil fuel input

            atheism, to whatever degree has always been kept under wraps, and has nothing to do with current religions.

            the reason being that whatever the state religion was, it was tied in with fascist/extremist doctrine in which the preists were usually an essential component.
            therefore if you espouses athesism it would cost you your life.

            when our current democratic/commerce system collapses, we will return to theofascism.
            And for as long as that holds together, atheism will again recieve extreme punishments

      • Fast Eddy says:

        I believe in Santa Claus – and the Tooth Fairy.

        I don’t think you do – therefore you are an atheist.

        Do you believe that you are superior to me in any way? Intellectually perhaps?

        Keep in mind Santa gives me stuff – and the tooth fairy gave me cash when I was a kid.

        They never once asked me for money — Santa likes a cup of milk and a cookie — but that’s not a condition of getting stuff.

        • Tim Groves says:

          An atheist is a label pinned (or self-pinned) on people who positively believe in the non-existence of the Big Guy who made the world in seven days or set off the Big Bang or programmed the simulation some are now speculating we all inhabit. Belief in Santa or the Tooth Fairy or Batman or even the Shale Revolution as a game-changer have nothing to do with the dichotomy between theism and atheism.

          Thomas Huxley, who became known as Darwin’s bulldog because he couldn’t tolerate fools gladly and relished crushing his opponents with good arguments as much as Fast Eddy does (whereas Darwin himself, much like Newton before him, couldn’t stand fools or debates at all and preferred to stay home and study). Huxley, much like the Buddha long before him, decided he had no need to form an opinion about how the Universe was created or whether there was a deity managing or micro-managing its goings on, so he coined a new label just for people like him. The word he chose was “agnostic”.

          Philosophers and theologians have argued much over whether Socrates was an atheist or a theist. However, the only evidence we have that Socrates ever existed is that Plato wrote about him. It’s OK to believe in the existence of Socrates or to disbelieve—as neither stance is going to upset millions of people with an emotional stake in the issue—but the most intellectually honest position about Socrates is, surely, an agnostic one. Had Socrates—the wise man who admitted that he didn’t know—actually existed, surely he too would have been happy to have been labeled an agnostic.

          One last thought, there seem to be a lot of Roman Catholics or lapsed ones or ex ones here at OFW (me included). Is there something special about a Catholic upbringing that leads people to be more interested in the big issues of the Universe, Life and Everything?

          • Glenn Stehle says:

            Tim Groves said:

            Thomas Huxley, who became known as Darwin’s bulldog because he couldn’t tolerate fools gladly and relished crushing his opponents with good arguments as much as Fast Eddy does.

            And what “good arguments” does Fast Eddy put forward?

            Can you point to even one?

          • Joebanana says:

            “One last thought, there seem to be a lot of Roman Catholics or lapsed ones or ex ones here at OFW (me included). Is there something special about a Catholic upbringing that leads people to be more interested in the big issues of the Universe, Life and Everything?”

            Tim- I think there is something to it. Eschatology is important in Catholic thought so it would seem somewhat unsurprising if people from that culture would be led to think about our finite world.

            • Fast Eddy says:

              Tim — I think what is special is that for those who are able to escape the DelusiSTANI province known as CatholicSTAN — we are perhaps more able to recognize brainwashing when it is happening… because we have extensive experience with the ultimate brainwashing institution — we are wary — we are curious — we investigate…

              So in that respect the Catholic upbringing was useful…. it teaches some people to question everything. It puts you always on the lookout for bullshit.

              The same goes for all organized religion — I can respect the argument for a creator — but some guy in the sky who needs to be worshiped and who needs money — or we get shipped off to the fires of hell? That is just … madness.

          • timl2k11 says:

            My experience, I went to a catholic grade school and a jesuit high school. I think the high school did a good job of teaching me to think for myself. So much so that I’m no longer a “believer”. The bible has some good “teachings”, but is mostly rubbish that people use to advance their own agenda.

          • Glenn Stehle says:

            And Tim,

            Regarding Darwin and his bulldog Thomas Huxley, you might want to think twice before you coronate them as your new-found divinities. But I suppose that determinism and predestination are so rampant on this blog that it might be difficult to deprive Darwin of his divine status.

            As Robert H. Nelson explains in Economics as Religion:

            In the nineteenth century the key scientific event was the publication, in 1859, of Chrarles Darwin’s On the Origin of the Species. The impact was so powerful in so many domains of society that the last part of the nineteenth century and the early twentieth would later often be described as the Age of Darwin….

            For Herbert Spencer in England and for his follower in the United States, Yale economist William Graham Summer, the most important form of evolutionary survival of the fittest took place in the competition in the marketplace….

            The new titans of American industry indeed looked to social Darwinism to bless their victories in the market and resulting accumulations of vast wealth — potentially a source of considerable anxiety in an America where Calvinist and Puritan impulses were still strong…. Apparently, the survival of the fittest in the new industrial world [was] a lesson that American businessmen took newly to heart and for which the ideas of Spencer could offer a seemingly scientific justification….

            Spencer is yet another of the economic determinists of the late nineteenth and early twentieth centuries. No less than for Marx, the underlying workings of economic forces in history determine everything important that happens in society. In the advance of the world, old ideals like social justice, fairness, equality, and so forth will do more harm than good; they impede — even though they can never permanently frustrate — the evolutionary workings of the iron laws of economic progress.

            — ROBERT H. NELSON, Economics as Religion

            As Michael Allen Gillespie notes in The Theological Origins of Modernity, Calvin’s unwavering belief in determinism and predestination provided the goundwork for the equally unwavering belief in determinism and predestination found in modern “science.” Darwinism is, of course, the poster child for this sort of determinsim to be found in modern science.

            In recent years scholars have begun to recognize that Reformation theology was particularly hospitable to the development of modern science…. Reformation thought and Calvinism in particular promoted modern science and gave it a theological justification….

            I will argue that [Descartes’] dark view of the world is the result of his acceptance of the basic tenets of nominalism, especially as it is received and transmitted by the Reformation. I will argue further that Hobbes transofrms this thought in essential ways. Luther and Calvin sought to show that nothing we do on earth can affect our chances of salvation, which depend solely on divine election. Hobbes accepts this doctrine of unconditional election, but he turns it on its head. If nothing we do on earth affects our salvation, then there is no soteriological reason to perform any earthly action….

            [Hobbes] was also more prone to see humans in a Calvinistic light as natural creatures subject to God’s all-powerful will and less apt to see them humanistically as quasi-divine beings freely choosing their own natures or as even artists shaping their own characters. Hobbes’ humanism was thus much closer to Calvinism and to modern science.

            — MICHAEL ALLEN GILLESPIE, The Theological Origins of Modernity

            What happens in modernity is that God’s omnipotent divine will is substituted by nature’s equally omnipotnet will, man is left with no free will, and his fate is pre-determined and predestined.

            • Glenn. I think you need to do a little more reading. We are dealing with a lot of self-organized systems. Whenever parents produce offspring, there are random deviations from the parents. Of these random deviation, the best adapted tend to survive. We can call this an act of God. We can call it the way nature works. We can call it “survival of the fittest.” We can call it the way nature produces bacteria that are resistant to antibiotics and the way nature produces weeds that are no longer killed by standard weed killer.

              Man thinks he has a lot of free will, but in fact, what he can do is small and temporary. Making “tools” for extracting oil and many other things does a few things, but it cannot save us.

              Today, the Old Testament reading in the church I attend was Genesis 2:15-17, 3:1-7.

              Genesis 2:15-17New International Version (NIV)

              15 The Lord God took the man and put him in the Garden of Eden to work it and take care of it. 16 And the Lord God commanded the man, “You are free to eat from any tree in the garden; 17 but you must not eat from the tree of the knowledge of good and evil, for when you eat from it you will certainly die.”

              Genesis 3:1-7New International Version (NIV)

              The Fall
              3 Now the serpent was more crafty than any of the wild animals the Lord God had made. He said to the woman, “Did God really say, ‘You must not eat from any tree in the garden’?”

              2 The woman said to the serpent, “We may eat fruit from the trees in the garden, 3 but God did say, ‘You must not eat fruit from the tree that is in the middle of the garden, and you must not touch it, or you will die.’”

              4 “You will not certainly die,” the serpent said to the woman. 5 “For God knows that when you eat from it your eyes will be opened, and you will be like God, knowing good and evil.”

              6 When the woman saw that the fruit of the tree was good for food and pleasing to the eye, and also desirable for gaining wisdom, she took some and ate it. She also gave some to her husband, who was with her, and he ate it. 7 Then the eyes of both of them were opened, and they realized they were naked; so they sewed fig leaves together and made coverings for themselves.

              The original sin is thinking that we can save ourselves. All we need is a little technology. And a great deal of knowledge. Technology and knowledge will overcome all our problems. We can make ourselves better than others with this technology as well. While it seems to work this way for a while, it is not a permanent long-term solution, unfortunately. We are deluding ourselves. We think of ourselves and our technology as gods.

            • Glenn Stehle says:

              Gail,

              Your position on human free will sounds like the Calvinist/Naturalist position.

              According to this philosphy, man has no free will, either because everything he does is pre-determined by an omnipotent, all-powerful God or by omnipotent, all-powerful natural processes, such as evolution.

              The opposite theology to this is what is called Pelagianism, or humanism. As Michael Allen Gillespie explains in The Theological Origins of Modernity, the problem with Pelagianism is that

              with the attribution of such freedom [free will] to man is that it might be construed to imply that just as humans chose to sin and therefore merited damnation, so they can choose not to sin and thereby earn salvation. This was precisely the conclusions that Pelagius drew. This idea, however, was anatnema to Christians because it implied that Christ and his sacrifice were unncesssary….

              Scholasticism…was forced to confront the question that Augustine had papered over, that is, how human will could be free in a world ruled by an omnipotent and omniscient God. This proved difficult….

              In the midst of this conflict, a small group of thinkers sought a new path, abandoning both God and man as the foundation of their investigations, turning instead to the natural world….

              The two great strains of modern thought that begin respectively with Descartes and Hobbes seek to reconstruct the world not as a human artifact or a divine miracle but as a natural object. They disagree, however, about the nature and place of God and man in the world as they open it up. For Descartes, man is in part a natural being, but he is also in part divine and is thus distinguished from nature and free from its laws. For Hobbes, man is thoroughly natural and thus free only in a sense compatible with universal natural causality. These two poles of modern thought are thus rent by the same contradiction that set humanism and the Reformation at odds with one another.

              — MICHAEL ALLEN GILLESPIE, The Theological Origins of Modernity

            • Glenn Stehle says:

              Richard Dawkins did an interview with PBS about human free will.

              It goes to show just how difficult the problem is, and in the end he flames out in an bout of cognitive dissonance.

              http://www.pbs.org/faithandreason/transcript/dawk-frame.html

            • Glenn Stehle says:

              Gail,

              And as Stephen Toulmin explains of the Modernist project in Cosmopolis: The Hidden Agenda of Modernity:

              The function of cosmopolitical arguments is to show members of the lower orders that their dreams of democracy are against nature; or conversely to reassure the upper class that they are superior citizens by nature.

              In The Worldly Philosophers, Robert L. Helbroner explains how this sleight of hand of making nature the all-powerful, omnipotent determinent — that is the “invisible hand” — plays out in everyday economics and society:

              They lived in a world that was not only harsh and cruel but that rationalized its cruelty under the guise of economic laws. Necker, the French financier and statesman, said at the turn of the century, “Were it possible to discover a kind of food less agreeable than bread but having double its substance, people would be reduced to eating only once in two days.”

              Harsh as such a sentiment might have sounded, it did ring with a kind of logic. It was the world that was cruel, not the people in it. For the world was run by economic laws, and economic laws were nothing with which one could or should trifle; they were simplly there, and to rail about whatever injustices might be tossed up as an unfortunate consequence of their working was as foolish as to lament the ebb and flow of the tides.

              The laws were few but final. We have seen how Adam Smith, Malthus, and Ricardo elaborated the laws of economic distribution. These laws seemed to explain not only how the produce of society tended to be distributed but how it should be distributed.

              The laws showed that profits were evened out and controlled by competition, that wages were always under pressure from population, and that rent accrued to the landlord as society expanded. And that was that. One might not necessarily like the result, but it was apparent that this result was the natural outcome of society’s dynamics: there was no personal ill-will involved nor any personal manipulation.

              Economic laws were like the laws of gravitation, and it seemed as nonsensical to challenge one as the other.

              — ROBERT L. HEILBRONER, The Worldly Philosophers

            • Fast Eddy says:

          • Joel says:

            Tim said:
            “Is there something special about a Catholic upbringing that leads people to be more interested in the big issues of the Universe, Life and Everything?”
            Its a big world wide org, as in lots of members, a small percentage adds up to big numbers fast. If one was to question alternative ideas it was dangerous in the past, maybe not anymore. One must conform to the herd resistance is sometimes futile.

            Nice post BTW

  9. Bergen Johnson says:

    http://www.cnbc.com/2017/03/03/oil-majors-move-deeper-into-shale-country-bumping-up-us-production.html

    According to this article Exxon can make money even at $40 bucks a barrel!

    • edwinlloyd says:

      So how does Exxon’s claim to $40 a barrel oil and the evolutionary development of morality find common ground?

      Each one of us lives as individuals within a group setting. We may think of ourselves as identifying with a particular group that is bigger than those with whom we work, get food, and live next to daily. These physical, as opposed to virtual or theoretical, relationships are far more critical to our long term survival. That’s because harm and hunger are physical. (spoiler alert) Societal collapse will include harm and hunger.

      If we are only relying on the laws of a nation to enforce/reinforce moral behavior then the importance of the truth or falsity of Exxon’s statement is much greater than if we are relying on the morality of the daily physically present folks we rub shoulders with daily.

      If Exxon is wrong, for what ever reason, then the likeliness of collapse for national government/business entities is much greater and the threat of your moral universe collapsing looms larger. These bigger entities rely on a big EROEI to survive.

      My personal bias is to really get to know the physically present people in your life. In doing that you are giving your moral barometer much more accurate data than you get from virtual or contrived affinity groups. Be in touch with your harm and hunger zone.

    • Do not believe everything you read. There are many different levels of costs that can be reported. They need to cover their overhead, pay taxes, and pay dividends to policy holders. How many of those things are covered in the $40 per barrel figure head? The companies that renting drilling rigs have temporarily cut their rates, so that they have some business. These rates will go back up, as soon as drilling demand increases very much. Some of oil company costs are commodity related, such as the price of steel. When its price goes back up, its cost will rise as well.

      Commodities tend to rise and fall together in price. This happens because the things we make (cars, homes, factories, roads, schools, computers, electric cars etc.) all take a variety of different kinds of commodities, at the same time. If for some reason these finished goods are affordable (because of higher wages or more cheap debt), then demand for a wide range of commodities will rise at the same time. If the price of oil goes up, it is a good guess that most of the commodities going into making oil production will rise in price too.

      • Fast Eddy says:

        It’s not called CNBs for nothing…. the king of fake financial news… I understand that they only hire presenters with cheerleading backgrounds.

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