Why We Should Be Concerned About Low Oil Prices

Most people assume that oil prices, and for that matter other energy prices, will rise as we reach limits. This isn’t really the way the system works; oil prices can be expected to fall too low, as we reach limits. Thus, we should not be surprised if the OPEC/Russia agreement to limit oil extraction falls apart, and oil prices fall further. This is the way the “end” is reached, not through high prices.

I recently tried to explain how the energy-economy system works, including the strange way prices fall, rather than rise, as we reach limits, at a recent workshop in Brussels called “New Narratives of Energy and Sustainability.” The talk was part of an “Inspirational Workshop Series” sponsored by the Joint Research Centre of the European Commission.

Figure 1. Empty Schuman room of the Berlaymont European Commission building, shortly after we arrived. Photo shows Mario Giampietro and Vaclav Smil, who were the other speakers at the Inspirational Workshop. Attendees started arriving a few minutes later.

My talk was titled, “Elephants in the Room Regarding Energy and the Economy.” (PDF) In this post, I show my slides and give a bit of commentary.

Slide 2

The question, of course, is how this growth comes to an end.

Slide 3

I have been aided in my approach by the internet and by the insights of many commenters to my blog posts.

Slide 4

We all recognize that our way of visualizing distances must change, when we are dealing with a finite world.

Slide 5

I should note that not all economists have missed the fact that the pricing situation changes, as limits are reached. Aude Illig and Ian Schindler have recently published a paper that concludes, “We find that price feedback cycles which lead to increased production during the growth phase of oil extraction go into reverse in the contraction phase of oil extraction, speeding decline.”

Slide 6

The comments shown in red on Slide 6 reflect a variety of discussions over the last several years. Oil prices in the $50 per barrel range are way too low for producers. They may be high enough to get “oil out of the ground,” but they are not high enough to encourage necessary reinvestment, and they are not high enough to provide the tax revenue that oil exporters depend on.

Slide 7

Most people don’t stop to think about the symmetric nature of the problem. They also don’t realize that the adverse impacts of low oil prices don’t necessarily appear immediately. They can temporarily be hidden by more debt.

Slide 8

There would be no problem if wages were to rise as oil prices rise. Or if there were an easily substitutable source of cheap energy. The problem becomes an affordability problem.

Slide 9

The economists’ choice of the word “demand” is confusing. A person cannot simply demand to buy a car, or demand to go on a vacation trip. The person needs some way to pay for these things.

Slide 10

If researchers don’t examine the situation closely, they miss the nuances.

Slide 11

 

Slide 12

Many people think that the increasing use of tools can save us, because of the possibility of increased productivity.

Slide 13

Using more tools leads to the need for an increasing amount of debt.

Slide 14

Read this chart from left to right. If we combine increasing quantities of resources, workers, and tools, the output is a growing quantity of goods and services.

Slide 15

Read this chart from right to left. How do we divide up the goods and services produced, among those who produced the products? If we can only use previously produced goods to pay workers and other contributors to the system, we will never have enough. But with the benefit of debt, we can promise some participants “future goods and services,” and thus have enough goods and services to pay everyone.

Slide 16

If we decrease the amount of debt, we have a big problem. Instead of the debt adding to the amount of goods and services produced, the shrinkage acts to decrease the amount of goods and services available for distribution as pay. This is why moving from deficit spending to a balanced budget, or a budget that reduces debt, is so painful.

Slide 17

When I say (resources/population), I mean resources per capita. Falling resources per capita makes it harder to earn an adequate living. Think of farmers trying to subsist on ever-smaller farms. It would become increasingly difficult for them to earn a living, unless there were to be a big improvement in technology.

Or think of a miner who is extracting ore that is gradually dropping from 5% metal, to 2% metal, to 1% metal content, and so on, because the best quality ore is extracted first. The miner needs to work an increasing number of hours to produce the ore needed for 100 kilograms of the metal. The economy is becoming in some sense “worse off,” because the worker is becoming “inefficient” through no fault of his own. The resources needed to provide benefits simply are less available, due to diminishing returns. This problem is sometimes reported as “falling productivity per worker.”

Falling productivity per worker tends to lower wages. And lower wages put downward pressure on commodity prices, because of affordability problems.

Slide 18

The problems that prior civilizations reached before collapse sound in many ways like the problems we are seeing today. We are seeing increased specialization, and falling relative wages of non-elite workers.

Slide 19

We seem to have already gone through a long period of stagflation since the 1970s. The symptoms we are seeing today look as if we are approaching a steep downslope. If we are approaching a crisis stage, it may be much shorter than the 20 to 50 years observed historically. Earlier civilizations (from which these timeframes were observed), did not have electricity or the extensive international trade system we have today.

Slide 20

The period since 1998 seems especially flat for wages for US wage earners, in inflation-adjusted terms. This is the period since energy prices started rising, and since globalization started playing a greater role.

Slide 21

This is a list I made, showing that what looks to be beneficial–adding tools and technology–eventually leads to our downfall. The big problem that occurs is that non-elite workers become too poor to afford the output of the economy. Adding robots to replace workers looks efficient, but leaves many unemployed. Unemployment is even worse than low pay.

Slide 22

We can think of the economy as being a self-organized network of businesses, consumers, and governments. New products are gradually added, and ones that are no longer needed are eliminated. Government regulations change in response to changing business conditions. Debt is especially important for economic growth, because it makes goods affordable for customers, and it enables the use of “tools.” Prices are created almost magically by this networked system, through the interaction between supply and demand (reflecting affordability, among other things).

Slide 23

It is only in recent years that physicists have become increasingly aware of the fact that many types of structures form in the presence of flows of energy. We have known for a long time that plants and animals can grow when conditions are right. The networked economy illustrated on Slide 22 is one of the types of things that can grow and flourish in the presence of energy flows.

Slide 24

This is my view of how an economy, as a dissipative structure, works. “Tools and technology” are at the center. If a person doesn’t think too much about the issues involved, it is easy to assume that tools and technology will allow the economy to grow forever.

There is a potential for problems, both with respect to inputs and waste outputs. Early modelers missed many of these “issues.” M. King Hubbert created a model in which the quantity of energy supply and technology are the only issues of importance. He thus missed the impact of the Waste Output problems at the right. The Waste Outputs lead to falling prices as limited supply nears, and thus lead to a much steeper drop in production than Hubbert’s symmetric model would suggest.

Slide 25

Peak oilers recognized one important point: our use of oil products would at some point have to come to an end. But they did not understand how complex the situation is. Low prices, rather than high, would be the problem. We would see gluts rather than shortages, as we approach limits. Much of the oil that seems to be technologically extractable will really be left in the ground, because of low prices and other problems.

Slide 26

Here, I am getting back to the topic I was originally asked to talk about. What else, besides low energy prices and too much debt, are likely to be problems as we reach limits?

Slide 27

The easy way of modeling the use of wind turbines and solar turbines is to assume that the electricity produced by these devices is equivalent to electricity produced by fossil fuels, or by hydroelectric. Unfortunately, this is not the case.

Slide 28

Trying to integrate solar panels into an electric grid adds a whole new level of complexity to the electrical system. I have only illustrated some of the issues that arise in Slide 28.

The fact that the price system doesn’t work for any fuel is a major impediment to adding more than a very small percentage of intermittent renewables to the electric grid. Intermittent renewables can only be used on the electric grid if they have a 24/7/365 backup supply that can be ramped up and down as needed. Unfortunately, the pricing system does not provide nearly high enough rates for this service. We are now seeing how this works out in practice. South Australia lost its last two coal-fired electricity power plants due to inadequate wholesale electricity prices when it added wind and solar. Now it is experiencing problems with both high electricity prices and too-frequent outages.

Another problem is that new [long distance] transmission makes buying from neighbors optimal, over at the left of Slide 28. This is a new version of the tragedy of the commons. Once long distance lines are available, and a neighbor has a fairly inexpensive supply of electricity, the temptation is to simply buy the neighbor’s electricity, rather than build local electricity generating capacity. The greater demand, without additional supply, then raises electricity prices for all, including the neighbor who originally had the less expensive electricity generation.

Slide 29

It is easy to assume that EROEI (Energy Returned on Energy Invested) or some other popular metric tells us something useful about the cost of integrating intermittent renewables into the electric grid, but this really isn’t the case.

Slide 30

We are now beginning to see what happens in “real life,” as intermittent renewables are added. For example, we can now see the problems South Australia is having with high electricity prices and too many outages as well as the high electricity prices in Germany and Denmark (Slide 29).

Slide 31

Wind and solar are not very helpful as stand-alone devices. Yet this is the way they are modeled. Some researchers have included installation costs, but this still misses the many problems that these devices cause for the electrical system, especially as the share of electricity production by these devices rises.

Slide 33

A networked system works differently than a system that is “user controlled.” It builds itself, and it can collapse, if conditions aren’t right. I have shown the economy as hollow, because there is no way of going backward.

Slide 34

Many people miss the point that the economy must keep growing. In fact, I pointed this out in Slide 2 and gave an additional reason why it must keep growing on Slide 16. As the economy grows, we tend to need more energy. Growing efficiency can only slightly offset this. Thus, as a practical matter, energy per capita needs to stay at least level for an economy to grow.

Slide 35

If energy prices rise, this will tend to squeeze out discretionary spending on other goods and services. If we cannot obtain energy products sufficiently cheaply, the system of economic growth will stop.

Slide 36

The fact that energy prices can, and do, fall below the cost of production is something that has been missed by many modelers. Prices can go down, even when the cost of production plus taxes needed by governments rises!

Slide 37

Wind and solar are part of the category at the top called “renewables.” This category also includes energy from wood and from geothermal. Many people do not realize how small this category is. Hydroelectric is also considered a renewable, but it is not growing in supply in the United States or Europe.

Slide 38

It takes energy to have an intergovernmental organization, such as the European Union. In fact, it takes energy to operate any kind of government. When there is not enough surplus energy to go around, citizens decide that the benefits of belonging to such organizations are less than the costs involved. That is the reason for the Brexit vote, and the reason the question is coming up elsewhere.

Slide 39

The amount of taxes oil-producing countries can collect depends on how high the price of oil is. If the price isn’t high enough, oil-exporting countries generally have to cut back their budgets. Even Saudi Arabia is having difficulty with low oil prices. It has needed to borrow in order to maintain its programs.

Slide 40

Oil prices have been too low for producers since at least mid-2014. It is possible to hide a problem with low prices with increasing debt for a few years, but not indefinitely. The longer the low-price scenario continues, the more likely a collapse in production is. Also, the tendency of international organizations of government to collapse (Slide 38) takes a few years to manifest itself, as does the tendency for civil unrest within oil exporters (Slide 39).

Slide 41

Slide 42

It is easy to miss the point that modeling a piece of the system doesn’t necessarily tell a person very much about the system as a whole.

Slide 43

Once an incorrect understanding of our energy problem becomes firmly entrenched, it becomes very difficult for leaders to understand the real problem.

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 inadequate supply.
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2,716 Responses to Why We Should Be Concerned About Low Oil Prices

  1. jerry says:

    The bloodbath began last Thursday morning…
    J.C. Penney’s stock plunged 14% on the news. The iconic retailer is now down 45% since the start of the year. It’s trading at its lowest price ever.

    And just like the day before, panic quickly spread across Wall Street.

    Nordstrom closed Friday down 11%. Sears fell 7%. Macy’s fell 3%. Kohl’s fell 2%.
    http://www.caseyresearch.com/articles/the-retail-industry-is-at-its-breaking-point

    • Volvo740 says:

      No worries. It’s just the millennials preferring to shop online!

      • jeremy890 says:

        What do they WANT…I bought my lawnmower at Sears…last year some time…on sale …like 25% off….other than that….nope, nope, nope….

      • grayfox says:

        My favorite local second hand store is doing well. Just moved into a newer building. Its the wave of the future.

      • Peak Oil Pete says:

        Agreed,
        Just a paradigm shift to online purchasing.
        Nothing to see here folks. Just move along now.

    • Bergen Johnson says:

      Going from walk in retail to internet sales is like going from taking a ferry to driving over a bridge. It’s faster and all these huge retail spaces that cost so much overhead that has to be tacked on to every sale can’t compete with digital sales via warehouses with robots and fast shipping right to the door. Times change and if people who own stock in major retail stores can’t read the writing on the wall, then a fool and his money are soon parted.

      • doomphd says:

        i’m sure next up will be 3-D virtual browsing on the Amazon web site, to give you that “mall shopping experience”, and being served by on-line robots that look and sound just like real people (without all their expensive fringe benefits and pension plans). Progress.

        • xabier says:

          Quite so. But you can’t get a date from a virtual reality salesgirl. How eager people seem to forget or avoid Real Life! 🙂

      • Slow Paul says:

        Good analogy. A ferry needs a crew as well, jobs that pay money so people can afford to drive over the bridge, as it were.

      • Sceadu says:

        Good points. In the context of collapse, we tend to be dismissive of the changes to retail, but some of the explanations are valid. I’m in my early 30s and I buy almost everything online. I don’t bother with driving all over the place to find something when I can locate *exactly* what I want within minutes on Amazon or eBay — it’s just not worth the trouble. I also think that department stores used to represent the cutting edge and were a place to go to find out what was in fashion. They no longer represent that and tend to carry things that are generic or dowdy compared to what people can find online.

        • Fast Eddy says:

          One thing I am loathe to buy online is clothing … I really need to try something on before I buy it…

          Amazon knows that and I understand that they allow you to return items at no cost….

          Imagine how much that costs Amazon….

          But of course Amazon is like Tesla — costs don’t matter … for now.

          But at some point — when Amazon has left bricks and mortar looking like a bombed out Vietnamese village…. and they have a near monopoly on retail…

          Guess what’s going to happen Mr Happy Millennial?

          Returns ain’t gonna be free no more. Not unless Amazon invents a teleporter machine….like in Star Trek

          And you can bet your bottom dollar prices are going to rise.

          Jeff Bezos and his MBAs are right this minute regaling investors with tales of fees on this and fees on that that they are going to apply once the competition is napalmed….

          And your love affair with buy and click is going to go sour.

          Alas — the good news is that we are never going to arrive there…. because when you wipe out bricks and mortar you eventually get yourself a massive financial crisis —- because when you have thousands upon thousands empty malls and strip retailers …. that means owners collect no rent… and when owners collect no rent…. they do no service debt….

          So go ahead — order another pair of jeans — awwwwhhh WTF … order 5 different brands — then see which one fits best and send the rest back.

          Enjoy it while it lasts.

    • Fast Eddy says:

      Thanks for the link … I have not seen any of this in the MSM.

      There is no fooking way this is Amazon-related only….

      Amazon is not a start up —- it has been around for years…

      This has got to be first and foremost a product of a brutal job market — no wage growth — and the fact that consumers are exercising a ‘no mas’ in terms of their ability to take on more debt.

      The mother of all tsunamis is headed our way — and most people have not the slightest clue….

    • Shorts on REITs are up ~10% since I last posted about it around reaching bottom in April..

      • Duncan Idaho says:

        Lots of losers at the Dog Track down on all Street today.
        How long before he slips on a banana peel?

    • Retail stores are a big worry. So are auto sales. It seems like we are not far from recession.

      • Buzz Lightyear says:

        Have we survived recession in the past?

        On the auto thing… apparently the current model is indeed dead in the water. What is being bandied about as its replacement is a transportation as a service model.

        As usual as with any novel way of thinking we witness a knee jerk equal and opposite reaction to such skullduggery…

        “I like to keep ma stuff in ma vehicle at all times”
        “How am I gonna go offroading or camping or… some other off topic excuse”
        “I don’t want to share”
        “I don’t want the state telling me how to get around”

        And for some reason much of that logic applies to electric vehicles too. For example…

        “How are you going to power Rio Tinto trucks with batteries”
        “And what about ships, planes and trucks”

        So, to clarify, personal car sales would indeed go away over time for the majority of the population that does not have “special needs”

        Transportation as a service would target urban areas and surroundings much as other forms of public transport have done only this would be more practical. All other vehicles would continue to use oil and be subsidised.

        Oil consumption would go down. Remaining oil still used for roads and plastics etc. Would there be a problem with such a reduction?

        Same goes for retail. Massive transformation in the way things get done. It all leads to mass unemployment and we’re already at 50% youth unemployment in some eu countries.

        Large numbers of unemployed including children and retirees still need to get around locally at low cost

        Monthly credits can be paid into individual accounts that have to be redeemed each month i.e. no hoarding. Not possible anyway with such small amounts. People have to eat.

        Where does the money come from? that’s a good one. But look at how much the developed world spends on cosmetics, sugar, coffee, chocolate, plastic toys, etc etc etc

        Trillions of dollars are wasted on unnecessary “stuff” along with the energy and effort that goes with it

        we are not very smart

        What would the smartest entity on the planet do?

        • Buzz Lightyear says:

          Oh wait… silly me… I’ll just ask Fast Eddy, our resident god.

          And on second thought maybe chocolate shouldn’t be on that list…

        • bandits101 says:

          Unemployment sends government broke. After that living as we know it changes.

          • Buzz Lightyear says:

            No gov? Yippee! Could be fun

            But seriously though… I’m kind of parroting / parodying what others say will happen

            not sure if it’s ironic or has some element of truth to it

            could be because I have no idea how things are going to go down

            it certainly looks like we’re sitting at the uppermost apex of the rollercoaster waiting for something to give us a little nudge…

            • going down will be sequential (as least as i figure it):
              (this applies to any nation.)

              A stable society must consume (finite) energy to maintain stability.
              (confirmed by energy input slowdown producing immediate recession)

              Therefore as energy input slows, and it becomes apparent it isn’t going to restart. denial will kick in, so governments will start collapsing and reforming, each with a new ”policy” to put things right.

              with each ”downstage” politicians will get more desperate with their promises, as more and more people enter a state of physical depravation and desperation. Transport slowdown means food slowdown

              Once food is obviously getting short (rows of empty supermarket shelves), governments will lose credibility altogether, and civil disorder will break out–sporadically at first, then en masse.

              There will then be no option but to introduce martial law, under a dictator. any constitution will be suspended, and democratic assembly disbanded (or worse)

              This cannot kickstart an energy-short economy, though your dictator will insist that it can. Anyone who says otherwise will be jailed (or worse). Disagreeing media will be shut down. There will be plenty of helpers to do this.

              So the downspiral will continue, until the dictatorship itself runs out of energy.
              The population will continue to reduce itself to a low balance point of self support.

              After that there may be recovery—depends how low we go.

            • Fast Eddy says:

              Norman – I am not so sure about the dictatorship phase…

              When growth stops — the financial system stops — and total chaos will soon follow.

              I do not expect a dictatorship — because there will be no point in maintaining a dictatorship.

              And there will be no means to maintain a dictatorship (a dictatorship requires fuel – why waste stock piles on trying to delay the inevitable)

              There will be no economy — so what point would there be in trying to maintain control over millions of people who cannot even feed themselves?

              Why try to feed them? Just let them die.

              If I am in the elite I draw back into one of these — and wait… no doubt they would have years of supplies … and radiation filters…

              https://en.wikipedia.org/wiki/Category:Nuclear_bunkers_in_the_United_States

            • i wouldnt expect a dictatorship to last long—as you say they need fuel.

              i should have said—a series of petty dictatorships of fiefdoms, all short lived and self exhausting

            • Fast Eddy says:

              That makes sense.

        • Fast Eddy says:

          Yes – we have survived recessions in the past…

          How?

          We dropped interest rates. We launched stimulus.

          In case you hadn’t noticed — rates are near zero — so dropping them will have no impact now.

          As for stimulus — there are literally trillions of stimulus surging through the global economy now … and yet recession threatens.

          Take for instance autos — rates are at record lows — and the pay back periods are longer than ever — subprime is nearly 30% of the market … rebates are at record levels… and people are drowning in debt… Yet sales are plunging

          How do you turn that around?

          I suggest you google the term ‘pushing on a string’

          • Fast Eddy says:

            Gail – I suggest FW offer an internship program. New people don’t get to post until they have lurked for say a year….

            It would save people like Buzz from making a fo.ol of himself

            • He’s yet another poster one just has to scroll past. In the past I used to have few drinks and take potshots at them but I’ve cut down so there’s no longer any fun in it.

            • ITEOTWAWKI says:

              futuresystemsanalyst cut down on alcohol?? I would have thought that regulars here, with the knowledge of what we are facing, would actually increase their intake!! 😉

            • Buzz Lightyear says:

              Someone asked for a replacement fool so I offered my services

              I am not as new as you think I am

              can’t see the fun in agreeing all the time

              I can see that you’re tired of your role as resident god / gatekeeper / bully

              looking for ways to automate

              maybe you should retire as you have become obsolete

            • Fast Eddy says:

              Fast Eddy will never be obsolete — Fast Eddy will never retire

            • Buzz Lightyear says:

              Hi Futuresys

              How do you know I’m a he?

              You can save your scrolling finger. I’m not here for long. Just having some fun taking pot shots at the locals before the world explodes

              since everything is going to hell in a handbasket what difference does it make what we say or do

              you could say one is a little bit peeved at not having a future. FE makes sure to remind me of that fact every time he posts. It’s relentless. It makes me want to vomit

              Personally I don’t think there can be any rational measured response to the kind of discussion that takes place on this blog

              I understand the predicament that we are in

              What I can’t understand is the morbid acceptance and mutual back slapping that goes on here. Somehow it doesn’t fit the theme

              If you truly are the only people on the planet to have figured this out then what I would like to see is a panel of Our Finite Worlders face off against the best of the best of everyone else

              now that would be fun

              and a fair fight

              on this blog that’s just not possible

            • Fast Eddy says:

              Is a MOREon a he – she – or transgender?

            • Van Kent says:

              Buzz,
              There are commenters here from every walk of life. And there are lurkers here, with an even broader view of life.

              By putting our views and thoughts out in the open, free for anyone to bash, we in fact invite everybody for a good peer review of all of the views or thoughts presented here. But we also expect some respect for facts and logic. A small pinch of reality would be nice with the bashing..

              Now after a few years of throwing every possible idea, solution, technology, innovation and systems thinking at the problem.. here we are. Zero solutions. And the predicament seems even worse, when we factor in all of the hypercomplexity that will also crash. Many have left, when finally getting the situation, angry, disappointed, raving about how morbid it all is. Yet. There are a few extremely sharp commenters here who by the goodness of their heart still keep on providing powerful insights and excellent links for everybody to enjoy. Not a bad community, at all.

          • Buzz Lightyear says:

            Transformation Eddy… tranformation

  2. adonis says:

    to my comrades on OFW what do you think of this article that i found recently on the web i am thinking that this may be the elites next plan to kick the can down the road very interested to hear other commenters assesment of this article here http://finalwakeupcall.info/en/2016/05/11/sdr-global-currency/it is

      • Fast Eddy says:

        USD… Euro… Gold … Silver… SDR…

        It don’t matter…. there won’t even be a can of beans to purchase post BAU

        There is no future.

        Just picked up one of the kids we sponsor here in NZ – he was stoked having just won his basketball match — the universities are making the rounds and he was jabbering excitedly about medical courses at Otago….

        I listened enthusiastically — all the while feeling rather sad for him. This is a very sad situation we are facing. Very sad indeed.

        It is much better than people remain oblivious to what is happening as the sadness would overwhelm them. We must thank the MSM for having done a tremendous job keeping the monster behind the curtain.

        On the positive site he is a very quick point guard. It will be very difficult to catch and eat him.

      • I suppose that anything that somehow adds the possibility of more debt has the possibility of kicking the problem down the road a bit–I just wouldn’t count on it, however.

        • adonis says:

          it could give us some more time maybe enough time for management to see where we are headed and prepare accordingly do something about the spent fuel pools and tell the truth to the public.

      • if the plan really exists for an elite to grab all the wealth—then they miss the ultimate point, that wealth is the result of resource conversion and selling/buying

        without that mechanism, oil and ”resources’ are of no value if no one can buy whats being produced and sold—hence ‘superwealth’ must dissipate.

        or am i being too simplistic here?

        • Joebanana says:

          Right on the money. If I have a giant pile of iron, tin, wood, rare earths etc, and no demand for it, what is it worth?

        • adonis says:

          cant the governments of the world just massively increase spending and do it all on negative interest rates there would be no need to pay anything back Norm.

          • that goes against my law of nations:
            ……if a nation doesn’t produce enough indigenous surplus energy to support the demands of its people, they must beg, buy, borrow or steal it from somewhere else, or face eventual collapse and starvation until their numbers reach a sustainable level…….

            You can print money for a while to circumvent that law, but eventually the ‘actual’ value of money collapses because the nation has no viable energy resources to support it—you’re just left with stacks of notes with zeroes printed on them. (Weimar Germany, Zimbabwe etc)

            We got ourselves into this mess by convincing ourselves that we owned the earth we live on. (ground is bought with money, but money is an energy substitute) With that in mind we converted all earth-resources into money, and proceeded to sell the earth itself, to each other. it was supposed to last forever. this is the predicament the world now finds itself in

            This is why aboriginal tribes had no concept of money or land ownership, they could only own what they could carry.

            We on the other hand can own stuff without having to carry it around with us, we can only do that through the concept of ‘money’….and we are conditioned to demand “More”, so our elected leaders undertake to provide more…but in fact ‘more’ is finite in earth terms.

            So instead we are offered cheap debt as a substitute.(that way we can go on buying stuff) But debt is a call on future energy resources, which aren’t going to be there, because without energy resource, any future economic system must collapse.

            • xabier says:

              ‘We converted all the Earth’s resources into money’: like Midas, who thought it would be great if everything were gold and found that he had, as a result …..nothing, and starved.

            • ITEOTWAWKI says:

              ‘We converted all the Earth’s resources into money’…Steve Cutts (same guy who created the excellent MAN cartoon) has a nice illustration about this:

            • Sceadu says:

              “When the last tree is cut, the last fish is caught, and the last river is polluted; when to breathe the air is sickening, you will realize, too late, that wealth is not in bank accounts and that you can’t eat money.” — Alanis Obomsawin

            • Fast Eddy says:

              That all sounds really really nice…

              Except that it is a load of horsesh-it.

              I think I’ll jump in the car and head down to the grocery store now….

        • Slow Paul says:

          “that wealth is the result of resource conversion and selling/buying”

          IOW wealth is a metric for resource dissipation ability. And the wealthy will be looking to stay wealthy. That’s why we will go on maximizing resource dissipation on the downslope of civilization as well. At some point in the future, the wealthy will no longer go for maximizing their return but rather minimizing their losses. “Are you promising me 6% YoY loss of my portfolio? Heck bank XYZ is guaranteeing only 5%!”

          Except it won’t be called “loss” but “efficiency” or something Orwellian.

          • “wealth is a metric for resource dissipation ability.”

            Good point! Parents seem to have the ability to pass this ability on to their children, as well. We think that schools can do this, but in fact, the children who come from unstable families, with hardly enough to eat, often do poorly.

            • Buzz Lightyear says:

              There’s a lot of talk going around about how IQ is hereditary and so not necessarily dependent on economic background i.e. put a poor bright kid in a supportive environment and they’ll do well.

              But low IQ will always be low IQ. There’s not a lot you can do about it. And some regions have majority low IQ. I believe some elites have referred to them as useless eaters. Or was it retired people…?

              If I was a god like FE I would take the top few million brains in the world (not the richest) and put them to work on what comes next – a form of life that is able to sustain its existance extremely efficiently. Ascension comes to mind. The physical is left behind while the intellectual and spiritual are somehow captured and preserved for all eternity.

              Oh but wait… that’s exactly what is happening. For those holding a losing ticket ignore what I just said.

  3. Third World person says:

    i was recently watching movie called the big short one of character in the movie made a quote that 1% unemployment goes up, 40,000 people die is this is truth
    have there any research on this

    • xabier says:

      I’m sure it’s impossible to quantify such things accurately; but unemployed males will be more likely to drink themselves to death and die of despair much earlier than they would otherwise. Older ones that is. Younger ones will still be able to find consolation.

      I believe there are good statistics for the increased death rate in post-Soviet Union, resulting from the loss of employment and hope.

      • Fast Eddy says:

        Worth watching to understand real despair…. and by despair I mean something a lot worse than missing the Justin Bieber concert….

        • Buzz Lightyear says:

          Thanks. Looks good!

          Any reason why the channel is called OFW Memories?

          I mean any connection to Our Finite World?

    • I don’t know. I haven’t worked in life insurance; what I know is mostly what I have read in literature aimed at actuaries in general. I know that unmarried men have a much shorter life expectancy than married men in the United States. Also, men who retire and stop working tend to die off more quickly than those who do not retire.

      I don’t know about unemployment impacts, but it would be reasonable to expect that the general direction of the death rate would be up.

      • Don says:

        Married men live longer? Could it be a matter of perspective, Gail? If I were to marry a local, plump Delusitani woman, I’m pretty sure that the years I have remaining would seem like an eterniy. 😂

      • DJ says:

        Correlation or causation?

      • Buzz Lightyear says:

        Could that statistic have anything to do with the possibility that unmarried men are unmarryable for a wide variety of reasons and that wide variety of reasons may be responsible for the shorter life spans?

        i.e. heavy drug users, alcholics, disabled etc

        not just that being married somehow magically extends life

  4. JT Roberts says:

    They call themselves think tanks but that is clearly a misnomer.

    A group claims there won’t be fuel powered cars produced by 2024. This will boost the general economy just like cheap gas prices did.

    http://www.chinadaily.com.cn/world/2017-05/16/content_29358137.htm

    • ITEOTWAWKI says:

      Tony Seba again…a friend of mine (who knows my views on collapse and what’s coming but does not believe it at all) sent me Seba’s Clean Disruption presentation a few months ago…could not bear to watch him for more than 5 minutes… just the title put me off:

      Clean Disruption – Why Energy & Transportation will be Obsolete by 2030 – Oslo, March 2016

      • adonis says:

        i actually enjoyed it thank your friend

      • Bergen Johnson says:

        That guy makes a convincing argument! I highly recommend for all posters here.

      • Hm, somehow one important factor is left out of the equation, namely for how long is the world ready to continue subsidizing “Ave ICE Car cost in the US at $33k” ..

        Simply, we don’t now the sequencing of the future, should the world fracture into attempted autarkies and limited int trade first or new block of trade/defense arrangements, the US public can’t suddenly afford ~$35k average pricing ICE nor EVs anyway (among other stuff).

        However, should the single point threshold collapse theory materialize, parts of that graph pertaining to early 2020s are indeed relatively possible, as the US sucks the blood out of the globe till the last minute..

        • Buzz Lightyear says:

          Transportaion as a service

          Individuals still get where they need to go for a small fee

          Car ownership is optional

          Car ownership with all related costs will possibly be viewed as an enthusiast activity

          Car manufacturers have been functioning as financial services for some time now

          Transportation providers should quickly recoup cost of investment in fleets of vehicles

          I will refrain from mentioning self driving capabilities for now

          oops I just did… but you know… we have to wait patiently until the end of this year to see how that pans out

          And even then… roll out would begin with trucks full of merchandise not human passengers

          Phase two would be human passengers / suckers / crash test dummies in urban environments

          Specialised taxi and delivery services still require human drivers for obvious reasons

          Ooof… too much complexity even for me but remember folks… complexity does not equal unstable or vulnerable… look at yourself in the mirror… that bunch of cells is the most complex configuration of anything that we know off in the universe… and i would say it’s been fairly resilient and stable for millions of years… and still is

          • Fast Eddy says:

            You are living in a delusional fairy tale…. you have not the slightest clue… you remind me of a 7 year old who thinks solutions to really complex problems are really simple —- and is unable to recognize that pulling out a peg will take the entire house down….

            50% of all companies in the Dow rely on the auto industry for revnue.

            America’s automobile industry is one of the most powerful engines driving the US economy.

            The manufacturers building cars and light trucks, along with their suppliers and dealers, generate billions of dollars for the US economy and employ tens of thousands of skilled workers in all 50 states.

            The greater automobile industry extends well beyond the iconic names of auto companies familiar to us all. Auto manufacturing depends on thousands of companies supplying parts, components and materials, as well as a vast retail and vehicle maintenance network of dealers. No other industry in America has such an expansive reach to every state, delivering economic benefits and creating jobs in so many different sectors.

            https://autoalliance.org/economy/

            Observe what happens as this gathers steam http://wolfstreet.com/2017/05/16/carmageddon-ford-to-slash-10-of-global-workforce-3bn-cost-cuts/

            • Buzz Lightyear says:

              Ha ha!

              I’ve obviously taken this too far

              enough to fool you anyway and several others here

              so who’s the greater fool?

              I’ve had fun but I’ll ease off on the troll pedal now

              I’ve been telling people what you just laid out for years but nobody wants to know

              They always say that things have always worked out and… solar panels

              I tell them it’s different this time and point to the same papers and studies that you have

              catastrophic cross contagion of the supply chain and spent fuel pools etc etc etc

              So yes I have a clue… possibly more than you

              I’m just not as comfortable with it as you are

      • Bergen Johnson says:

        One of the things he talks about in that video is businesses installing large battery systems to draw in power during off hours like after midnight then use during peak hours. He gave an example of peak KWH at .45 cents vs .06 cents during non-peak. I’m going to look into that because we get raked over the coals during the Summer because of AC in our hot area 90-110F.

        • Fast Eddy says:

          too expensive

          • Buzz Lightyear says:

            Until it’s not

            • Fast Eddy says:

              The thing is… the more batteries you manufacture… the more expensive they become… it has to do with the extremely limited amounts of the materials used to make these batteries….

              Renewable energy ‘simply won’t work’: Top Google engineers

              Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.

              Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.

              Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.

              All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.

              In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).

              http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/

            • Buzz Lightyear says:

              Holy cow

              Eddy please just stop it

              You’ve being doing this for years

              Yes… I’ve been here for years

              I have never been witness to stranger behaviour than that which you display

              it is truly beyond human comprehension

              copy paste copy paste copy paste

              the same thing again and again and again… for years

              my unleashing of the dissenter parody bot is partly to draw this kind of response from you to show you how much you have become a bot yourself

              have you nothing else to do except swat OFW noobs. You spend and inordinate amount of time doing this

              If I was your doctor I’d worry about your sanity

            • Fast Eddy says:

            • Buzz Lightyear says:

              That’s me… on a good day!

              Imagine when everyone’s like that…

              Need moar sentry guns…

      • fascinating video

        completely nuts though

        He starts out in the usual way—comparing telcoms improvements (shifting weightless electrons) to growth in shifting stuff—they do not compare at all
        Then we have the assertion that ic cars will be obsolute by 2030—proving it by comparing horse being replaced by cars in 13 years –not the same thing at all

        currently there 1bn ic vehicles on our roads, and about 0.01% of other powered vehicles.

        To replace the ic vehicles you need a hydrocarbon based industrial system to replace the world vehicle fleet—which forms the basis of our entire world economic system

        coupled with the fact that you cannot run ev vehicles outside a hydrocarbon based environment anyway

        • Joebanana says:

          It is hard to believe that a man that educated could go on stage and say what he does. Bergen, .06 cents is coal fired generation price. .45 cents is whatever it takes o replace that when the coal is not available and it can get much higher than that. I work in the industry and know. Big industry cannot run on $450 a megawatt.

          I guarantee you that batteries that can store comparable energy are going to cost much, much more than $450 a megawatt.

          Norm, that cars replaced horses in 13 years as one of his arguments…the fact he could get away with that during the talk shows how little understanding there is about energy. No excuse for him though.

          • thanks for the confirmation Joe

            I was having one of my “is it me?” moments watching that—he has a crowd of people to feed this stuff to—and they obviously loved it

            goes with my own experience, that if you give a lecture and tell it like it is you have an audience of one

    • It is possible to publish almost anything today!

  5. JT Roberts says:

    https://us2-broadcast.officeapps.live.com/m/Broadcast.aspx?Fi=9e29d86fd00220c6%5Fdf68c2a2%2D6bb5%2D41d6%2D9eb9%2D58fc6607ab84%2Dasync%2Edocx

    These two articles were written in 75 describing exactly our present predicament. And what comes next.

    • Bergen Johnson says:

      Did that whale swallow all that plastic or did someone throw that stuff in there after it beached itself? It’s not a cynical question. It’s just that people do all sorts of weird stuff and it would be good to know for certain if the plastic was the cause of death. I know this happens to sea birds, but whales? I guess it’s possible. That would just add to the tragedy of plastic trash at sea if that is what is happening.

        • Fast Eddy says:

          Here’s the thing…

          The culprit here is not those of us who use plastic bags when we shop — then reuse them as bin liners….. those bags get buried deep in land fills and rot away… they generally do not end up inside a whale.

          I lived in a third world village — I recall instructing one of our workers to take the trash to the waste disposal site. There is no rubbish pick up in such places because people have no money to pay for it.

          Apparently what he did with the rubbish was bring it home and burn it. We explained to him that this released toxic fumes… so no doubt he just did what most people did — he tossed it in the river.

          This is par for the course in the third world — into the river with it… then the next big rain flushes it into the ocean.

          So you see — using an organic hemp fair trade bag made by hippies in a commune is a wonderful gesture….

          But it is meaningless.

          It is futile.

          • Duncan Idaho says:

          • xabier says:

            Hemp bags. Probably sold wrapped in plastic.

            Yesterday, while parking my rusty squeaking bicycle, I saw a bike with a seat rain-cover, emblazoned ‘City Green Bike Challenge’.

            Plastic of course, and, yes, when I lifted it: Made in China……..

            Oh, and the huge building site opposite, to and from which massive trucks rumble all day is totally Eco too: it has hoardings painted with a nice design of trees……….

            There, planet saved!

            • Fast Eddy says:

              I frequently rate hotels on Tripadvisor… I am in fact a Level 6 contributor… akin to god-status over there …

              When I communicate with hotels by email I paste my Level 6 badge into the email — that tends to result in them frequently giving me free things.. like upgrades — rooms with better views — in a Budapest hotel last year I am sure it resulted in a couple of free glasses of champagne at dinner… (now that could been because they confused me with Justin Trudeau…. but probably not)

              But I digress…

              When reviewing a hotel they have this field to fill out ‘How do you rate the green policies of this hotel’

              To which I respond always — this hotel is made out of thousands of tonnes of concrete — it uses mega amounts of electricity every day —- no matter what policies they put in place (such as reusing a f789(ing) towel….. it is not f&*((ing) going to be even remotely green.

              If I could upload a sack of steaming dog sh-it to that part of the review — believe you me — I would.

              D to the Lusion.

  6. Dorvek says:

    “As wonderful as the spectacle in George Miller’s vision of the post-apocalypse may be, in reality, the end of the world would probably look less like Mad Max: Fury Road and more like The Survivalist. Set in the near future, when overpopulation has led to widespread starvation and the breakdown of society, director Stephen Fingleton’s spare, striking debut feature takes a minimalist approach to the post-apocalyptic thriller. The film—which is coming to American theaters two years after its debut at the Tribeca Film Festival and a year after its release in its native U.K.—shares similar settings and themes with Krisha director Trey Edward Shults’ upcoming It Comes At Night. The difference here is in the direction: Shults uses the tension between a small band of survivors to create nail-biting suspense, while Fingleton concentrates on quiet character moments to explore themes of loyalty and betrayal.
    Martin McCann stars as the title character, a nameless thirtysomething man who has been living in an isolated cabin in the northern Irish countryside for the past seven years. In the interim, he’s settled into a comfortable, solitary routine, tending to plants in his garden and setting traps for any animals—or humans—who wander too close to his homestead. This lonely peace is shattered by the arrival of two women, tough-minded Kathryn (Olwen Fouere) and her meek daughter, Milja (Mia Goth). After first offering up jewelry, then seeds, the women eventually offer Milja’s body in exchange for food and a place to sleep, beginning an extremely uneasy alliance that’s cemented when the Survivalist saves Milja from a stranger who attacks her as she bathes in a stream.”

    http://www.avclub.com/review/survivalist-post-apocalyptic-action-its-most-minim-255423

  7. Following the conversation I had with CTG, I read his comments a few times and found there is really no good way to get away from the whole picture.

    I wanted to save some of the civilization and at least save something for the future, but looks like it is a very hard, if not impossible, task.

    So, sorry for all the posts I have had made, and I will return when I can reach an understanding about what could be done about the current situation.

    • Fast Eddy says:

      Kulm… once the reality of the situation sinks in … despair will soon be replaced by calm acceptance…. if not… there is always Abilify

    • bandits101 says:

      Amazing. Good luck with your sabbatical.

    • ITEOTWAWKI says:

      Happy you’re getting the full spectrum of the predicament which is completely insoluble….however if you only plan to return when you find something that can be done…you will never come back, since nothing can be done!

      • Fast Eddy says:

        What is this…. lend me bend an ear….

        Ah yes…. a god has spoken.

        The bell must be rung.

        Keith — where are you … the gods have a job for you … it’s a very simple yet important job…

        Each time an FW God speaks… you ring the bell.

        Like this:

    • Slow Paul says:

      It is path we all must walk down. Everything has a beginning and an end, this includes all civilizations. Everybody on OFW has worked through lots of bright ideas on how to “save us”. Eventually one comes to peace with the finiteness. Good luck on your journey.

    • xabier says:

      kulm

      If it’s any consolation, I too made a collection of books on old technologies and crafts thinking to save something. The desire to save things is by no means something to feel sorry about.

      We have all climbed along the same path, getting a changing view of the Valley of Desolation as it unfolds below us.

      On the whole, I prefer contemplating the changing sky these days….

    • Fast Eddy says:

      Burn More Coal Now!

      • Duncan Idaho says:

        Once the rockets are up, who cares where they come down? That’s not my department.

        — Wernher von Braun

        • jeremy890 says:

          Operation Paperclip….Top Natzi Scientists were given top jobs regardless of their past during the war….including this Guy…believe awarded the Medal sarcasm f Freedom…
          Book by the same name is very good read….

    • Aubrey Enoch says:

      Thanks for the link. I feel better now. Also President Thump is working on getting the lead back into gasoline and paint. It’s sad that so many million lead industry jobs have gone to China from those stupid liberals and their “Get The Lead Out” hoax.
      God bless America.

      • doomphd says:

        If you have a candid talk with an older professional painter, they will tell you that oil-based, leaded paint was the best.

        it’s unfortunate that the poor getto kids got so hungry that they would eat pealing paint chips, causing lead poisoning. so now they can eat lead-free, water-based latex acrylic paint chips, a much healthier choice. Progress.

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