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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2,683 Responses to Why We Should Be Concerned About Low Oil Prices

  1. Bergen Johnson says:

    https://dailyreckoning.com/get-ready-quantitative-tightening/

    Quantitative Tightening – The Opposite of Quantitative easing Fed undertakes:

    The Fed does this by buying bonds from the big banks. The banks deliver the bonds to the Fed, and the Fed pays for them with money from thin air. The popular name for this is quantitative easing, or QE, although the Fed’s technical name is long-term asset purchases.

    The Fed did QE in three rounds from 2008 to 2013. They gradually tapered new purchases down to zero by 2014. Since then, the Fed has been stuck with $4.5 trillion of bonds that it bought with the printed money.

    When the bonds mature, the Fed buys new ones to maintain the size of its balance sheet. But now the Fed wants to “normalize” its balance sheet and get back down to about $2 trillion. They could just sell the bonds, but that would destroy the bond market.

    Instead, the Fed will let the old bonds mature, and not buy new ones. That way the money just disappears and the balance sheet shrinks. The new name for this is “quantitative tightening,” or QT.”

    Isn’t that great?! How to create money out of thin air to help a recession, then make it disappear. Presto!

  2. Ed says:

    China to mine methane hydrates
    https://www.rt.com/business/388964-china-mining-flammable-ice/https://www.rt.com/business/3889

    “the energy content of methane occurring in hydrate form is immense, possibly exceeding the combined energy content of all other known fossil fuels”
    https://energy.gov/fe/science-innovation/oil-gas-research/methane-hydrate64-china-mining-flammable-ice/

    Happy days are here again?

    • Fast Eddy says:

      The Ministry of Truth is getting lazy … they already used this hopium flavour …

      Japan achieves first gas extraction from offshore methane hydrate
      http://www.reuters.com/article/us-methane-hydrates-japan-idUSBRE92B07620130312

      As we know Japan is no longer importing energy nor do they need their nuclear plants — they have are energy independent.

      As will China be shortly

    • Partly, it depends on cost. There are of course many other issues as well. I am sure methane hydrates would take time, infrastructure, and debt to scale up. Meanwhile, climate change continues or gets worse. Population continues to grow. At best, the problem gets pushed down the road a bit.

      • Bergen Johnson says:

        Here’s an important question about methane mining; What percentage of what is disturbed on the ocean floor is captured and how much escapes up through the water column into the atmosphere (if shallow enough)? Of course none of these mining operations are going to be forthcoming with that type of information because if methane enters the atmosphere it’s multiple times greater a greenhouse gas than C02 and could hasten GW.

        • Buzz Lightyear says:

          Climate Roles of H2O, CH4 and CO

          Water vapor is the most important greenhouse gas. Not only are its infrared absorption features widespread and strong, but it displays a significant continuum absorption

          https://tes.jpl.nasa.gov/mission/climateroles/

          we need more airplanes

          use the contrail clouds as a global sunscreen

          increase or decrease as required

      • Buzz Lightyear says:

        Population continues to grow but there are only about one billion cars in the world

        If you add another billion scraping about in the dirt does it really change anything?

        Isn’t it the top two to three billion that voraciously consume all the stuff that requires all that energy to be harvested in the first place?

        Lets push the problem as far down the road as is humanly possible

    • greg machala says:

      I saw the methane clathrate story and wonder how energy intensive it is to extract and process into a useful form. Somehow I don’t think it is economic.

    • Jesse James says:

      The ice must be heavy. I wonder how economical it is. First it must be deep sea mined (sounds costly), then raised to the surface, then either burned in place on the sea platform to create electricity. How does the electricity get to shore?
      It sounds very costly to move the ice to shore to burn it there.

  3. Duncan Idaho says:

    GS puts a sell on the Trump Regime:

    SCOOP: Goldman Sachs exec Jim Donovan is pulling out as Trump’s nominee to serve as number two at Treasury.

  4. ITEOTWAWKI says:

    Everybody starts off at Stage 1, but most here on OFW are probably at Stage 5…

    Climbing The Ladder of Awareness (taken from paulchefurka.ca)

    When it comes to our understanding of the unfolding global crisis, each of us seems to fit somewhere along a continuum of awareness that can be roughly divided into five stages:

    1.Dead asleep. At this stage there seem to be no fundamental problems, just some shortcomings in human organization, behaviour and morality that can be fixed with the proper attention to rule-making. People at this stage tend to live their lives happily, with occasional outbursts of annoyance around election times or the quarterly corporate earnings seasons.

    2.Awareness of one fundamental problem. Whether it’s Climate Change, overpopulation, Peak Oil, chemical pollution, oceanic over-fishing, biodiversity loss, corporatism, economic instability or sociopolitical injustice, one problem seems to engage the attention completely. People at this stage tend to become ardent activists for their chosen cause. They tend to be very vocal about their personal issue, and blind to any others.

    3.Awareness of many problems. As people let in more evidence from different domains, the awareness of complexity begins to grow. At this point a person worries about the prioritization of problems in terms of their immediacy and degree of impact. People at this stage may become reluctant to acknowledge new problems – for example, someone who is committed to fighting for social justice and against climate change may not recognize the problem of resource depletion. They may feel that the problem space is already complex enough, and the addition of any new concerns will only dilute the effort that needs to be focused on solving the “highest priority” problem.

    4.Awareness of the interconnections between the many problems. The realization that a solution in one domain may worsen a problem in another marks the beginning of large-scale system-level thinking. It also marks the transition from thinking of the situation in terms of a set of problems to thinking of it in terms of a predicament. At this point the possibility that there may not be a solution begins to raise its head.

    People who arrive at this stage tend to withdraw into tight circles of like-minded individuals in order to trade insights and deepen their understanding of what’s going on. These circles are necessarily small, both because personal dialogue is essential for this depth of exploration, and because there just aren’t very many people who have arrived at this level of understanding.

    5.Awareness that the predicament encompasses all aspects of life. This includes everything we do, how we do it, our relationships with each other, as well as our treatment of the rest of the biosphere and the physical planet. With this realization, the floodgates open, and no problem is exempt from consideration or acceptance. The very concept of a “Solution” is seen through, and cast aside as a waste of effort.

    For those who arrive at Stage 5 there is a real risk that depression will set in. After all, we’ve learned throughout our lives that our hope for tomorrow lies in our ability to solve problems today. When no amount of human cleverness appears able to solve our predicament the possibility of hope can vanish like a the light of a candle flame, to be replaced by the suffocating darkness of despair.

    • Fast Eddy says:

      6. At this point one transmutes from human to god.

    • JMS says:

      I spent most of my adult life in phase 3, outraged by political corruption, economic injustice and the absurdity of consumerism. I knew that the American way of life for all humans was impossible on a finite planet, and therefore capitalism was condemned. But believed that collapse would take decades.
      In 2012 I found the blog of George Mobus and I went to phase 4. And soon after I found OFW and I reached phase 5. But since I do not have children and always have been a misanthrope, I do not feel despair or depression. We humans deserve everything that will happen to us. It is only regrettable that with us we will kill most of the biosphere. Well, at least bacteria will have great fun when everybody else is gone.

      • Buzz Lightyear says:

        Pretty much my story. Apart from the depression part. It was rough for a while but the need to not drag others down turned that around in the end.

        You could say the delusional ignorance of others keep you from despair because you don’t want them to suffer before it’s absolutely necessary… so you learn to lie, cover up divert instead of always pushing the doom the button.

        We are no different than all other species that have become extinct. Our ability to reason and plan ahead doesn’t really change that. Any one weakness in the human life support apparatus can take us down. I have always assumed it would be a virus of some sort – possibly one that we tamper with i.e weaponise

        As to the radiation threat the chernobil zone wildlife appears to be making a go of things which means that even if some mutation or sterility occurs generations of life can survive.

        Of course 4000 spent fuel ponds may up the game somewhat. Would be interesting to see what survives that.

        • ITEOTWAWKI says:

          These little guys seem pretty resilient, they can even survive in space:

          https://en.m.wikipedia.org/wiki/Tardigrade

          • Buzz Lightyear says:

            ITEOTWAWKI

            I bet all the male tardigrades go crazy when she crawls by! What a hottie!

            • ITEOTWAWKI says:

              Hahahahahaha Buzz….it does kinda look like a magazine spread for (male) tardigrades!! It’s Miss Tardigrade from May ’13 lollll

        • JMS says:

          “You could say the delusional ignorance of others keep you from despair because you don’t want them to suffer before it’s absolutely necessary… so you learn to lie, cover up divert instead of always pushing the doom the button.”

          Yes, I do most of that all the time now. To be a party pooper was my favourite sport in 2012 and 2013, but not anymore. I gave up of trying to enlighten my friends and family about our predicament, because is useless (they can’t hear about that) and anyhow it really doesn’t matter. But instead of lying, I prefer a pious silence or an absent hum-hum when someone speaks to me about our solar-teslian-technoutopian future.

          • ITEOTWAWKI says:

            JMS you got tired of being Rachel Dratch’s character Debbie Downer on SNL…classic..this one is one of the best appearances of the character (I especially looooooooove how they break the fourth wall hahahahaha):

          • Buzz Lightyear says:

            JMS… it IS difficult but I’ve noticed that it gets easier with practice. It helps to think of others as children who are not quite ready to have their santa claus myth blown to smithereens. The look in their eyes…

      • ITEOTWAWKI says:

        I was in phase 1, but at the same time, I was never really in phase 1…I knew early on that something was wrong..for example, when I started in finance in 1996 (as I have said here before) I could not wrap my head around the fact that publicly listed companies had to grow their earnings every quarter…forever (obviously at that point I had not seen Bartlett’s presentation, so had not wrapped my head around the exponentiality of this, but I knew intuitively that it made no sense)..I also noticed how every year my city did not stop expanding into the countryside…again I thought to myself, how far do we go..at this rate we will asphalt the whole world..I also remember telling a colleague in the early 2000s that life is one big game…without knowing it, I had understood that all we were doing in our economy is doing each other’s laundry (credit to Norman Pagett for putting in words years later what I had felt back then)…

        So like I said to I was in phase 1, but at the same time I wasn’t…to reprise Morpheus’s words to Neo in the Matrix:

        ” You’ve felt it your entire life, that there’s something wrong with the world. You don’t know what it is, but it’s there, like a splinter in your mind, driving you mad.” 😉

        PS Now that I have been in Stage 5 for a few years (about 5 years) I am so happy that I don’t have kids…not that I was that inclined towards that to start off with, so that helped…

        • ITEOTWAWKI says:

          On that Neo – Morpheus exchange, it reminded me of this video from 5 years ago…really liked it:

          • ITEOTWAWKI says:

            Except the part at the end that says “It does not have to be this way”…sorry it does it’s called BAU, and TINA to BAU…

        • JMS says:

          I remember feeling exactly the same, that it was absurd to expect GDP and profits to grow every year, since nothing in this world grow infinitely.
          What I did not know (and for that I am forever indebted to Gail and some commenters here) was 1) that financial system “requires” eternal growth (otherwise it implodes), 2) that transition to a decarbonized economy (or degrowth) is not possible and 3) that we humans could never have acted otherwise, since we are genetically engineered (and also culturally programmed) to desire & acquire more and more.
          I feel rage sometimes and sadness when I think of what we did to this beautiful planet, but the idea of doom never really depressed me. If I was younger maybe i would feel “robbed” of my life, and if i have had children i certainly would be in pain now, thinking in their grim future. But i’m almost fifty, have no children, lived the live of a pharao (like all of us in western world), and I think is only fair that our party ends some of this days. Carpe diem and deep acceptance of what tomorrow will bring is the only things I feel now (and compassion, but not for the humans, just for the animals we are condemning to extinction.)

          • ITEOTWAWKI says:

            Very well put JMS…however like I posted yesterday, if we had never come along, there would be no one to realize that this planet of ours exists…no other species can “perceive” the planet..so on a philosophical “if a tree falls in the forest and no one is there, does it still make a sound?” way, if we had not come along, it would be like this planet would never really have “existed” in the first place…

            • JMS says:

              Philosophy is not my kind of cake (although i’ve studied it in college), but your zen statement sounds a little idealistic (in berkeleian sense) to my hear.
              But sometimes I think (and try to console myself with the ideia) that destruction of the world is the price we pay for knowledge. After all, without fossil fuels and industrial society there would be no Darwin, Pasteur, Einstein, etc, or, in other fields, the wonderful literature and art of 19th and the first half of 20th century.
              So in a certain way we can say knowledge entails doom. An ideia that brings to mind, of course, the byblical myth of the tree of knowledge. Which seems funny, especially for an atheist like me.

  5. ITEOTWAWKI says:

    We all start at Stage 1, but for those curious enough to take the red pill and go all the way to the end of the rabbit hole, you eventually reach Stage 5…

    Climbing The Ladder of Awareness (taken from Paul Chefurka’s website)

    When it comes to our understanding of the unfolding global crisis, each of us seems to fit somewhere along a continuum of awareness that can be roughly divided into five stages:

    1. Dead asleep. At this stage there seem to be no fundamental problems, just some shortcomings in human organization, behaviour and morality that can be fixed with the proper attention to rule-making. People at this stage tend to live their lives happily, with occasional outbursts of annoyance around election times or the quarterly corporate earnings seasons.

    2. Awareness of one fundamental problem. Whether it’s Climate Change, overpopulation, Peak Oil, chemical pollution, oceanic over-fishing, biodiversity loss, corporatism, economic instability or sociopolitical injustice, one problem seems to engage the attention completely. People at this stage tend to become ardent activists for their chosen cause. They tend to be very vocal about their personal issue, and blind to any others.

    3. Awareness of many problems. As people let in more evidence from different domains, the awareness of complexity begins to grow. At this point a person worries about the prioritization of problems in terms of their immediacy and degree of impact. People at this stage may become reluctant to acknowledge new problems – for example, someone who is committed to fighting for social justice and against climate change may not recognize the problem of resource depletion. They may feel that the problem space is already complex enough, and the addition of any new concerns will only dilute the effort that needs to be focused on solving the “highest priority” problem.

    4. Awareness of the interconnections between the many problems. The realization that a solution in one domain may worsen a problem in another marks the beginning of large-scale system-level thinking. It also marks the transition from thinking of the situation in terms of a set of problems to thinking of it in terms of a predicament. At this point the possibility that there may not be a solution begins to raise its head.

    People who arrive at this stage tend to withdraw into tight circles of like-minded individuals in order to trade insights and deepen their understanding of what’s going on. These circles are necessarily small, both because personal dialogue is essential for this depth of exploration, and because there just aren’t very many people who have arrived at this level of understanding.

    5. Awareness that the predicament encompasses all aspects of life. This includes everything we do, how we do it, our relationships with each other, as well as our treatment of the rest of the biosphere and the physical planet. With this realization, the floodgates open, and no problem is exempt from consideration or acceptance. The very concept of a “Solution” is seen through, and cast aside as a waste of effort.

    For those who arrive at Stage 5 there is a real risk that depression will set in. After all, we’ve learned throughout our lives that our hope for tomorrow lies in our ability to solve problems today. When no amount of human cleverness appears able to solve our predicament the possibility of hope can vanish like a the light of a candle flame, to be replaced by the suffocating darkness of despair.

    • ITEOTWAWKI says:

      “Investigate what is, and not what pleases.” -Johann Wolfgang von Goethe

    • psile says:

      A beautiful synopsis of the rite of passage many of us here have gone through. I am fortunate in that my cousin also has reached at least stage 4, (after many years stuck at stage 3), and that I have someone to whom I can relate, face-to-face, so that my suffering can be mitigated somewhat, having been marooned in the hell of stage 5 for over 5 years.

    • MM says:

      I also want to let my fellow OFW group know what I was going through.
      I came in contact with the word peakoil in 2003 during the runup to the irak war and figured when they do this stupid war it must be dead serious. I must say that I was in 4 since maybe 1980. I was long time environementalist and fighting countless “mega projects” in germany and nearly all resistance was futile. There was one succes that was the nuclear reprocessing facility in Wackersdorf. But that involved some real civil war like scenes (helicopter accident, thousands of burned police vehicles, Nerve gas usage CS etc pp. In the end, that war became too expensive and they revoked the building allowance)
      I think when the internet came up around 2000 I had a little period of distraction with all the new freedom. Today, well. I have some friends that know what I am about but I do not have anybody besides some blogs that understand the shere size of the problems (Al Bartlett, cubic Mile of oil, 2% renewables globally, CO2 emissions and rise thereof etc pp)
      As all exponential curves are nearly vertical now, even if we made a full break on all, we would need a lot of time until we could go to horizontal and THEN we should go to downward (orderly). It simply is impossible. We will consume this planet and every living thing on it and then ourselves. As the old greenpease sticker about money said, 40 years ago?………….

  6. Buzz Lightyear says:

    Is it your birthday Norman?

    Is a full-scale limited hangout coming on Kushner and Chabad? (+ How they’ll play it)

    It has me wondering if the globalists are about to sacrifice Jared Kushner in a limited hangout operation. I noticed that back on April 9, both mainstream and alternative media started breaking the news about Kushner and the Lubavitchers’ connection to Trump and Putin (here are examples from Politico and Henry Makow)…

    It was as if someone in the hierarchy had decided that “we can’t hide it any longer, so we’d best turn it to our advantage.” Of course, their outing of Kushner and Chabad will not change the fundamental plan, since I seriously doubt the MSM will go into the “prophecy fulfillment operations” part of it; they’ll likely stick to the business relationships.

    Read Trump and Putin: Agents of Chabad-Lubavitch for the full story.

    HOW THEY’LL PLAY IT

    It is unlikely that the Jewish media will skewer Chabad-Lubavitch during the hangout. I expect them to present it more in terms of “a group of nefarious individuals who met through the ‘Chabad-Lubavitch humanitarian organization’ embarked on a series of shady dealings that connect Trump with the evil Putin.”

    So if the MSM present Trump’s son-in-law as his link with the “evil Putin,” how can Trump sever that link? He cannot; even if he fires Jared as his senior advisor, he’d still be connected to him through family ties. So this would provide a good basis for Trump’s removal or resignation at some point. And as soon as Pence succeeds him, the globalists’ “Gog/Magog War” card will be back in their playing hand again.

    On the other hand, though, if the “Dump Trump” crowd let the special counsel complete his investigation before they make a move, Trump could survive. Such an investigation could take several months, and Erdogan’s Holy War and Putin & Trump’s Big Surprise could be triggered before it’s done. Again, we’ll have to watch what Erdogan does at his summit with the EU next week.

    http://redefininggod.com/2017/05/is-a-full-scale-limited-hangout-coming-on-kushner-and-chabad/

  7. Buzz Lightyear says:

    Some more interesting commentary (not mine) for you to consider…

    To give an example of what I mean, consider the “Fed Mistake” card I identified a few years ago. It will be played after the beginning of the next economic crisis and will involve the politicians and the talking heads blaming the Federal Reserve’s “too loose for too long” monetary policy for contributing to the collapse of the financial system.

    The playing of this card will set in motion a full audit and reform of…

    the Federal Reserve,
    the central banks of other nations, and
    the Bank for International Settlements.

    The most likely outcome of this “reform” is that the globalists will fold the central banks’ functions into the national treasury departments and the BIS’ functions into the United Nations financial arm (the IMF and World Bank). And as a result of this “reform” process, many central bank duties currently handled at the national level will be handled at the international level “so a financial crisis like this will never happen again.”

    Cards like the Fed Mistake card are designed to be played in certain combinations and sequences to achieve globalist aims. I call these combinations and sequences “set pieces,” and each realm of human activity the globalists are trying to overhaul (such as the financial/economic, political, and religious realms) has a set piece in place. To give an example of what I mean, here is a quick outline of the set piece they’ve prepared for the financial/economic overhaul…

    1) The “World War 3″ card
    …and/or…
    the “Black Swan Event” card
    will be played to get the Big Financial Crisis started.

    2) Once the global economy begins its descent, the “Bank Bail-in” card will be played to seize wealth under the pretense of trying to save the current financial system. The “Fed Mistake” card will also be played to start a public discussion about central bank reform.

    3) Once enough wealth has been seized and central bank reform is on the public’s mind, the “Global Financial Heart Attack” card will be played, which will shut down the global financial system and economy to the maximum permissible degree.

    4) This will be quickly followed by the playing of the “China Gold” card, in which China will offer gold to back the IMF in exchange for “reforms,” thus leading to the playing of the “Golden Phoenix” card, by which a new “gold/commodities-backed” financial system will be erected to “restore public trust.”

    All this being said, I intend add a new section to the Understanding the NWO Strategy page which will outline major globalist goals and sub-goals that cannot be changed, such as their immediate, inalterable goal/sub-goals in the political realm:

    GOAL…

    TO COMPLETE THE TRANSITION TO THE NEW WORLD ORDER, WHICH WILL BE CENTERED AROUND A STRENGTHENED, “REFORMED” UNITED NATIONS WITH VLADIMIR PUTIN AS ITS DE FACTO OR DE JURE LEADER

    SUBGOALS…

    Scrapping unilateral vetoes in the Security Council so no nation can stand against the UN mob
    Expanding the Security Council permanent membership to include more nations so the UN will appear “more inclusive and fair”
    Establishing a regular, standing UN mechanism / procedure for enacting crushing multilateral economic sanctions on non-compliant nations
    Strengthening the UN’s military capacity to force its will on non-compliant nations
    Setting up Putin to look like the hero of our age and the obvious choice to guide the new UN

    http://redefininggod.com/2017/05/the-real-life-illuminati-card-game/

    Crazy stuff huh

  8. Third World person says:

    do you know 3 type of peoples in this world
    1 zerohedge type of guys and those gold selling guys who believe after economic collapse we will have new system of economic
    2 tesla and those solar and wind type of fanboys who believe 7.5 billion will all living in solar and electric cars
    3 people who are in ofw that neither believe in 1 type of people or 2 type of people and have that believe we 7.5 billion people are goes straight into collapse of industrial civilization

    • ITEOTWAWKI says:

      I know personally a couple that fit in category 1, loads who fit in category 2….as for number 3, I don’t know any personally…that’s why I love OFW: on top of the excellent articles by Gail, it is nice to hear from others who have also put the pieces of the entirety of how the system functions and the incestuous relationship between the financial system, the economy and energy! 🙂 And although we can disagree here between fast collapse and long drawn out collapse, pretty much everybody here is aware that the system is effed beyond repair….they get that little thing where infinite growth on a finite planet is well..impossible (so easy to grasp, yet so few get it)

      • Jesse James says:

        Interesting plan Buzz. There are also plans to subvert our contitutional republic with a technocracy. Get rid of the wasteful congress and democracy. The black swan/crisis events will be used in an attempt to usher that in also.
        I don’t agree with you on Putin though.

        • Buzz Lightyear says:

          I agree that an artificial black swan can be created to bring about radical change.

          The problem I see with this kind of thinking is the ability of the populace to go along with such changes even if their choices are somewhat reduced i.e. little to no choice if they want to survive

          Inertia is the other problem. Systems such as the one we live in take a relatively long time to adapt to new ways of life. Take humans out of the equation and that would speed things up but unsurprisingly this is not acceptable to most humans.

          People adapt very quickly to smartphone adoption for example but this is micro adaptation and not really representative of the kinds of change we would face under the above scenarios. Far too drastic for most people in the developed world. And possibly the cause of mass death in the rest of the world through lack of food and medicine.

          By the way that post isn’t mine nor do I agree with some of the ideas put forward. But the connections are interesting and can be verified through further research.

          I suspect that the owner of the blog has never read Our Finite World.

  9. jeremy890 says:

    Just another reason why prepping is just a waste of time and effort!

    When it was constructed, the Global Seed Vault was embedded deep into the arctic permafrost and placed 130 meters into the rock and 130 meters above sea level. The permafrost combined with the high latitude was designed to help keep the facility at a constant three to four degrees Celsius below zero, making the cooling of the facility easier.

    Unfortunately, a record heatwave in the Arctic that was part of the world’s hottest year on record melted the permafrost that surrounded the vault, sending a flood of meltwater into the 100-meter long entrance tunnel. When the vault was designed, the thick layer of permafrost and rock were meant to ensure that the seed samples would be protected from both man-made and natural disasters. Additionally, at a time when there is usually snowfall, the warmer temperatures created heavy rains, making the problem that much worse.

    http://www.inquisitr.com/4230985/doomsday-seed-vault-floods-as-record-highs-melts-permafrost/

    The Svalbard Global Seed Vault currently holds over 930,000 samples from nearly every country in the world, stretching out to almost 5,500 distinct species

    Climate scientists have been warning for years about the dangers of global warming. In 2016, average temperatures were seven degrees Celsius over the norm, a trend that has been continuing since the 1980s

    http://www.inquisitr.com/4230985/doomsday-seed-vault-floods-as-record-highs-melts-permafrost/

    BURN MOAR COAL (Sarcasm)…. and esape to NZ. LOL

    • Fast Eddy says:

      BURN MORE COAL (no sarcasm)

      • jeremy890 says:

        Be careful what you wish for….too funny

        • Fast Eddy says:

          You won’t like what burning less coal looks like.

          • Buzz Lightyear says:

            Don’t know why people don’t get this.

            That is an impressive flood though.

            • jeremy890 says:

              Oh, I “get” it alright…..Fast Eddy is ALWAYS right 100% correct in all matters regarding this comment page, and everyone else that deviates is a blimey fool…well, the moar fool YOU!
              Did you get that? Probably not…

              You’re not going like the alternative folks.
              Try to grow you food in that!

            • Fast Eddy says:

              When you believe I am wrong please feel free to point that out — using facts and logic … I will consider your argument.

            • Buzz Lightyear says:

              When FE makes statements of fact or points to material that is factual… I have no alternative but to agree with him

              When he attempts to terrorize people… I shake my head

              We don’t need terrorists here… or anywhere for that matter

              As far as climate change goes there’s really nothing we can do about it considering our economy is about to tank and go bye byes

              Even if there are less humans around in the aftermath any effects that we may have had on the earth will not dissipate overnight since they are baked in

            • Fast Eddy says:

              Is it ok that I terrorize DelusiSTANIS using facts?

            • ITEOTWAWKI says:

              I agree with Buzz jeremy..what is the overarching point you are trying to make here with all these postings on AGW?..whether you believe we had a role in the changing weather (of which I wholeheartedly do) or not is irrelevant…we need BAU to survive..there is nothing we can do to mitigate its effects (short of collapsing BAU, which the financial system will do on its own anyway in the very near future)…so just enjoy these last months/years of BAU..the result of AGW is already baked in the cake…It’s the End of the World as We Know It (And I Feel Fine) 🙂

            • Fast Eddy says:

              I would like to put forward a motion…

              If anyone wants to post something that supports the assertion that man is wrecking the climate…

              The assertion must be followed by a solution to the problem that does not involve wrecking BAU.

              If people cannot provide number two — then they need to shut their holes and pull their fingers off the key board

            • jeremy890 says:

              Yo, Fast Eddy wants MOAR reason!
              Well, if you need MOAR…this is the best one can do, Bro..
              Enjoy the Hip Hop…
              LOL…Point it out…too funny!

            • Buzz Lightyear says:

              jeremy… so you have nothing then

              except some admittedly impressive video of weather events

            • Buzz Lightyear says:

              Dear FE

              “Is it ok that I terrorize DelusiSTANIS using facts?”

              As a god in residence you are free to do as you wish and…

              I apologise for my recent display of OFW schizophrenia syndrome better known as near term instacollapse vs some other version of future events flip flopping

              I have suffered this affliction my whole life and it constitutes something known as weighing all the options before leaping in and jumping to conclusions

              which can lead to uncomfortably holding two opposing ideas in my mind simultaneously until one of them is finally extinguished… a bit like schrodingers cat

              since we have not yet experienced the apocaplyse my mind hasn’t fully settled into the instacollapse camp even though I am perfectly comfortable with it

              An apocalypse (Ancient Greek: ἀποκάλυψις apokálypsis, from ἀπό and καλύπτω, literally meaning “an uncovering”) is a disclosure of knowledge or revelation. In religious contexts it is usually a disclosure of something hidden, “a vision of heavenly secrets that can make sense of earthly realities”.
              Apocalypse – Wikipedia
              https://en.wikipedia.org/wiki/Apocalypse

            • Fast Eddy says:

              ‘As a god in residence you are free to do as you wish and…’

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

  10. Duncan Idaho says:

    Privatize the profits
    Socialize the risk

    Oil industry to get $235 million government loan to help clean up abandoned wells

    http://business.financialpost.com/news/energy/oil-industry-to-get-235-million-government-loan-to-help-clean-up-abandoned-wells

    • JT Roberts says:

      Nice article in abandoned oil wells in Canada. The problem is exponentially larger in Texas with 1.1million abandoned. Not a a word about control and closing being talked about. Whether it’s tailing dams, abandoned wells, cooling ponds, it’s just ignored likely because the cost associated would have cut off the industries a long time ago. It just proves the point that capitalism’s profits are based on off shoring or ignoring environmental impacts.
      You have to ask what good is a loan to a dying industry other than subsidize economic growth? You can’t profit from ignoring pollution then profit from cleaning it up.

      Madness

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