A Video Game Analogy to Our Energy Predicament

The way the world economy is manipulated by world leaders is a little like a giant video game. The object of the game is to keep the world economy growing, without too many adverse consequences to particular members of the world economy. We represent this need for growth of the world economy as being similar to making a jet airplane fly at ever-higher altitudes.

Figure 1. Author’s view of the situation we are facing. World leaders look at their video screens and adjust their controllers to try to make the world economy fly at ever-higher levels.

World leaders look at their video game screens for indications regarding where the world economy is now. They also want to see whether there are specific parts of the economy that are doing badly.

The game controllers that the world leaders have are somewhat limited in the functions they can perform. Typical adjustments they can make include the following:

  • Add or remove government programs aimed at providing jobs for would-be workers
  • Add or remove government sponsored pension plans and payments to those without jobs
  • Add or remove laws regulating efficiencies of new vehicles
  • Change who or what is taxed, and the overall level of taxation
  • Through the above mechanisms, change government debt levels
  • Change interest rates

There are numerous problems with this approach. For one thing, the video game screen doesn’t give a very complete picture of what is happening. For another, the aspects of the economy that can be controlled are rather limited. Furthermore, the situation is very complex–there seem to be several “sides” of the economy that need to “win” at the same time, for the economy to continue to grow: (a) oil importers and oil exporters, (b) businesses and their would-be customers, (c) governments and their would-be taxpayers, and (d) asset holders and the would-be buyers of these assets, such as families needing new homes.

An even bigger problem is a physics problem that is hidden from the view of those operating the control mechanism. Jet airplanes in the real world cannot rise beyond a certain altitude (varying depending upon the plane), because the atmosphere becomes “too thin.” There is a parallel problem in the economic world. The atmosphere that allows an economy to grow is provided by a combination of (a) an increasing supply of cheap-to-produce energy, and (b) increased technology to put this growing energy supply to use. This atmosphere can become too thin for several reasons, including the higher cost of energy production, rising population, and growing wage disparity.

We know that in the real world, a jet airplane cannot rise ever-higher. Instead, at some point, the airplane hits what has been called its “coffin corner.”

Figure 2. Diagram of Coffin Corner by Aleks Udris of Boldmethod. On the chart, Vs is the velocity; MMO is the Maximum Mach Number.

According to Aleks Udris, “The region is deadly. Get too slow, and you’ll stall the jet at high altitude. Get too fast, and you’ll exceed your critical mach number. The air over your wings will go supersonic, you’ll pitch down, the aircraft will accelerate, and your wings will fall off. Also bad.”

What Happens As Coffin Corner Limits Are Reached in the Economic World?

What do world leaders do, as the world economy hits limits? One temptation is for the world leaders in Figure 1 to take their foot off the throttle that is operated by low interest rates and more debt, because they don’t seem to be providing very much benefit anymore. The leaders fear that if more debt is added at low interest rates, it risks creating “asset bubbles” that are easily disturbed if any little bump to the economy occurs. If a big bubble pops, there is a significant risk that the economy could fall down to a much lower level. This is like stalling the jet at high altitude.

World leaders can also use approaches that create situations more like “making the wings come off” the economy. These approaches involve favoring one group over another. For example, a government can give big tax breaks to businesses, but raise taxes on individual citizens. Businesses will ultimately be harmed by this approach, because they depend on individual citizens for their sales. The result is like tearing the wings off the airplane.

Another approach that would tear the wings off the economy involves actions by a different group of world leaders than those shown in Figure 1, namely the leaders from OPEC and Russia. These leaders have different video game screens and different game controllers. They can manipulate the world economy by reducing the supply of oil they provide. With this approach, they hope to increase the price of oil, and thus obtain a larger share of the world’s goods and services through higher tax revenue.

Raising the oil price would benefit oil exporters, but would make goods and services more expensive for oil importing countries. Ultimately, this approach would lead to recession in oil importing nations. The result would likely be worse than the 2008-2009 recession–another way to make the wings come off the economy.

Let’s look in a little more detail at what is happening, and what goes wrong:

[1] Energy plays a huge role in this game, because a growing supply of cheap-to-produce energy allows greater worker productivity.

It takes energy of various types to make the economy grow, because energy is needed whenever we move something, or heat something, or use electricity to operate something. We use energy products to leverage our human labor. For example, we use a truck to deliver a package, rather than walking and carrying the item in our hands. If fresh water is in short supply, we use energy to operate a desalination plant, and thus produce the fresh water we need.

It is generally workers who produce goods and services. If energy supply is inexpensive and readily available, it is easy for governments or businesses to create “tools” to make these workers more productive. These tools include such things as roads, vehicles, machines of all types, and even computers. If the quantity and capability of these tools are increasing, the labor of these workers is increasingly leveraged by the availability of these tools. This is what allows economic growth.

[2] The extent of world economic growth seems to depend primarily on how quickly total energy consumption is growing

If we look at historical economic growth, we see that the rate of growth of energy consumption seems to play a major role.

Figure 3. World GDP growth compared to world energy consumption growth for selected time periods since 1820. World real GDP trends for 1975 to present are based on USDA real GDP data in 2010$ for 1975 and subsequent. (Estimated by author for 2015.) GDP estimates for prior to 1975 are based on Maddison project updates as of 2013. Growth in the use of energy products is based on a combination of data from Appendix A data from Vaclav Smil’s Energy Transitions: History, Requirements and Prospects together with BP Statistical Review of World Energy 2015 for 1965 and subsequent.

The highest rates of world economic growth took place in the 1950-1965 period, and in the 1965-1975 period. These were both periods of very high growth in energy consumption. As we will see below, these were both periods when the price of oil was less than $20 per barrel, for almost the entire period.

If we look at economic growth over shorter periods, we also see a strong correlation between world economic growth and growth in energy consumption:

Figure 4. World growth in energy consumption vs. world GDP growth. Energy consumption from BP Statistical Review of World Energy, 2017. World GDP is GDP in US 2010$, as compiled by World Bank.

[3] On Figure 4 (above), the widening gap between GDP growth and energy consumption since 2013 could either represent (a) Much greater efficiency in using energy or (b) A problem in measuring true economic growth.

We can see true efficiency improvements in the 1975-1985 and the 1985-1995 periods shown on Figure 3. These were the periods when the world was truly trying to “get away from oil,” after a spike of high prices in the 1970s. Governments around the world were encouraging new smaller cars; electricity generation was being changed from oil to nuclear; home heating was being changed from oil to natural gas or electricity. The new furnaces installed were much more efficient than the old ones. Thus, during this period, efficiency/technology improvements were aiding economic growth to a greater extent than usual.

Now, in the period since 2013, much of the “low hanging fruit” has already been picked. We may still be finding some technology gains, but it seems likely that at least part of the problem is an “economic growth counting problem.” GDP looks like it is growing, but it is really very hollow economic growth. Governments invest in projects of essentially no value, and their investment is counted as GDP. For example, they invest in unneeded roads, in apartments that citizens cannot really afford, in educational institutions that do not produce graduates with wages that are sufficiently high to pay for education’s high cost, and in high-priced medical cures that are unaffordable by 99% of the population. Are these things truly contributions to GDP?

We also find businesses that look like they are growing, but in fact are taking on increasing amounts of debt as they sell off assets. This is not a sustainable model! We encounter energy companies that claim to be doing “sort of” alright, but their profits are so low that they need to cut back on new investment, and they need to borrow in order to have funds to pay dividends to shareholders. There is something seriously wrong with this growth!

[4] The economic “atmosphere” becomes thinner and thinner, when oil prices rise above an inflation-adjusted price of $20 per barrel.

Back in the time period prior to 1973, oil prices were generally below $20 per barrel, in inflation adjusted terms. Since then, prices have tended to be above this level.

Figure 5. Historical oil prices are Brent oil prices in 2016$ from BP Statistical Review of World Energy 2017; $20 per barrel is the maximum price level where oil is truly affordable; and $300 per barrel is the maximum price per barrel that the International Energy Agency seems to believe is possible for the world economy.

When oil (and other energy prices) were very low, companies could add tools to make workers more effective with little expenditure. As a result, the United States saw wages growing much more rapidly than inflation prior to 1968 (Figure 6).

Figure 6. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.

Once prices of oil started rising, prices of tools (broadly defined) rose. Governments and companies needed more debt to buy these tools. It became more of a burden to add capital goods of all kinds. Governments tried to raise GDP by adding debt, but to a significant extent they ended up with higher debt to GDP ratios rather than the rapid growth they were looking for (Figure 7).

Figure 7. Worldwide average inflation-adjusted annual growth rates in debt and GDP, for selected time periods. See post on debt for explanation of methodology.

The changes in the economy that allowed continued growth (more debt and more technology) tended to push the economy toward more wage disparity, in part because more technology required more training for some of the workers, but not for others. This allowed wages of the workers with special training to rise.

Furthermore, the need to repay debt with interest tended to funnel wealth toward the financial sector, and toward those within the economy who could afford to hold financial assets. These changes left less of the output of the economy for non-elite workers.

Economists never really understood what was happening. They had never thought through the important role that energy plays in the economy. Cheap energy is needed to create jobs. It is jobs, and the wages that those jobs pay, that tend to suffer when oil prices are too high (Figure 8). Thus, high-priced oil has a double impact on the economy:

  1. It makes goods of many kinds more expensive.
  2. It reduces job availability and wages.

Figure 8. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided by total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Logic would suggest that the economy cannot really operate on high-priced oil. Lower wages and higher prices do not peacefully coexist! We should expect high oil prices to be very unstable. Even if prices can reach a high level in response to a specific shortage or stimulus, we cannot expect these high prices to be maintained for a sustained period, without added stimulus. Unstable high prices are not likely to give rise to more oil production; they cannot be depended upon.

Economists have never understood this situation. Instead, they have made pronouncements that at some point in the future, they expect that oil would become scarce. Because of this scarcity, oil prices would rise. In their view, when oil prices rise, high-priced substitutes would suddenly become the best option available; somehow, the economy would become able to operate using these high-priced substitutes. (If energy products were not needed for labor productivity, this view might make some sense. In the real world, it does not.)

It never occurred to organizations such as the International Energy Association (IEA) that high oil prices might be a problem for the economy. The IEA has shown exhibits suggesting that oil prices could theoretically rise to $300 per barrel. Of course, at such an elevated price, there would be an almost unlimited amount of oil available to extract (Exhibit 9).

Figure 9. IEA Figure 1.4 from its World Energy Outlook 2015, showing how much oil can be produced at various price levels.

[5] The real enemies of continued economic growth are (a) diminishing returns with respect to oil and other energy production, (b) continued population growth, and (c) increasing wage and wealth disparity. 

We seem to be playing a video game where the players don’t understand who the real enemies are.

Diminishing returns with respect to oil and other energy production have to do with the cost of energy extraction rising ever-higher, as more resources are extracted. There are a lot of resources that we can “see,” but that we cannot economically extract, unless prices rise to very high levels.

Figure 9. My version of the resource triangle for oil. Note that oil shale is not the same as tight oil, found in shale formations. Oil shale is kerogen that must be processed at very high temperatures in order to produce oil. This is rarely done, because of the high processing cost. Tight oil is not on this chart. Tight oil probably would be above “onshore heavy oil; oil sands.” It still would disappear, if oil prices permanently fell to $20 per barrel or less.

Continued population growth is a problem because it is really “energy per capita” that matters. Each individual needs food, transportation, and housing. All of these things take energy. Many years ago, when most of the workers were farmers, it was necessary to create ever-smaller farms, as population rose. This clearly would lead to lower food production per farmer, unless some sort of technological breakthrough was taking place at the same time. Today, we have a parallel issue.

Increasing wage disparity tends to be associated with the rising use of technology. When most labor is hand labor, workers truly do “pay each other’s wages.” All wages can be fairly equal. With increased technology, some workers have specialized training; others do not. Some workers are supervisors; others are laborers. Unless the overall output of the economy is rising very rapidly, non-elite workers find themselves increasingly unable to afford the output of the economy. It is this falling “demand” (really affordability) that tends to pull an economy downward.

[6] High oil prices can be temporarily tolerated by an economy, if interest rates are lowered to make this arrangement work.

Clearly, lower interest rates make capital goods of all kinds more affordable to both businesses and individual workers. If we look back at the period since 1981, we see a long period of falling interest rates, acting to stimulate the economy.

When oil prices exceeded $20 per barrel, the economy did not collapse immediately. In “normal” times, lowering interest rates was sufficient stimulus to keep the economy growing (Figure 4).

Figure 10. Ten-year treasuries through Nov. 17, 2017. Chart produced by FRED.

When there is a very big drop in oil prices (as in 2008, related to falling debt levels), then Quantitative Easing (QE) has been helpful (Figure 11). The US began its program of QE in late 2008, when oil prices were near their low point. There were three phases of the US’s QE. The US discontinued the third phase in late 2014, just as oil prices started to slide again.

Figure 11. Monthly Brent oil prices with dates of US beginning and ending QE.

[7] It is quite possible for a disconnect to occur between (a) the cost of oil extraction, and (b) the selling price of oil.

Oil that costs more than $20 per barrel is never very affordable by the economy. It really needs continual stimulus to keep prices at an elevated level. Once debt growth falls too low, the balance between the supply and demand for oil is settled in the direction of the amount of goods and services made with oil that non-elite workers can afford. Prices fall below the cost of production. This seems to be what has happened since 2014.

[8] In fact, since 2014, the selling prices of oil, natural gas, and coal have all fallen below the cost of extraction.

Figure 12. Price per ton of oil equivalent, based on comparative prices for oil, natural gas, and coal given in BP Statistical Review of World Energy. Not inflation adjusted.

It is popular to think that the reason why oil prices are too low is because of overproduction by the United States or Saudi Arabia. When a person stops to realize that essentially the same situation arises for all three fossil fuels, a person begins to understand that there likely is an affordability issue underlying the low prices for all three fuels. The affordability issue, of course, arises because energy supply is not rising quickly enough because (at over $20 per barrel), it is too expensive to be truly affordable. The “atmosphere is too thin” at today’s high cost of energy extraction.

9. Coal production seems to have “peaked” because at today’s low prices, few mines find the extraction of coal profitable.

It is popular in “Peak Oil” circles to believe as the economists do: oil and other energy prices can rise endlessly, because of growing “demand.” Economists have never stopped to think that at any given price, there is an affordability issue for customers. If prices drop too low, there is a profitability issue for those operating extraction facilities.

If we look at the situation with coal, we see a situation where peak production seems to have been reached because of low prices. China has closed down mines because falling prices have made mines that were previously profitable, unprofitable (Figure 13). Coal is the lowest-cost fuel; if it cannot be mined profitably, the world economy has a problem.

Figure 13. China’s energy production, based on data from BP Statistical Review of World Energy, 2017.

In fact, it appears as though we have reached peak coal on a worldwide basis, as a result of low prices (Figure 14). It is hard to see any major production area that can grow substantially in the future, without much higher prices.

Figure 14. World coal production, based on BP Statistical Review of World Energy Data. (For 1965-1980, consumption is substituted for production, because only consumption is given, and imports/exports are likely small.

[10] The world economy needs to be able to keep repaying debt with interest. If world economic growth slows too much, this will not be possible. 

We may already be reaching a “too slow growth limit.” Below this growth limit, it becomes impossible to repay debt with interest, especially if interest rates rise. We may already be reaching this point, based on the lack of growth in energy consumption per capita shown in Figure 15. (Also, as noted in Item [3], it seems quite possible that recent GDP growth indications are overstated.)

Figure 15. Average energy prices (averaging oil, coal, and natural gas) versus the total quantity of energy products consumed per capita, based on BP energy consumption data and UN population data. (Prices have not been inflation adjusted.)

Figure 15 suggests that affordability and price go together. When the world economy is growing rapidly, energy prices tend to rise (as does energy consumption). When energy consumption per capita falls, it is a sign that the world economy is not doing well.

One of the things that confuses matters is the very different economic growth results for different parts of the world. If oil prices are low, this improves economic growth prospects from the point of oil importers, such as the United States and China. This is what our video game players are looking at, not the results for the world as a whole. It is oil exporters, such as Venezuela and Saudi Arabia, who are having problems.

If we look at world news, Venezuela may collapse because of low oil prices. Saudi Arabia has found it necessary to take on debt, and has undergone regime change, at least partly related to low oil prices. Norway is proposing that its oil and gas fund no longer invest in oil and gas companies, because it expects that there is a significant chance the oil price will not rise high enough to bring companies back to adequate profitability.

[11] The whole “game” has been confused by a lot of not-quite-correct pronouncements from academic circles.

A lot of well-meaning people have tried to solve our energy problems, but haven’t gotten the story right.

Economists have gotten the story pretty much 100% wrong. Energy is very important for the economy. Furthermore, energy prices don’t rise endlessly.

Peak Oilers have confused matters by talking about oil, coal and natural gas being determined by the amount of technically recoverable resources in the ground. This might be true if energy prices could rise endlessly, but clearly they cannot. By following the wrong views of economists, Peak Oilers have led world leaders to believe that far more resources are available to be extracted than really is the case.

People who call themselves Biophysical Economists haven’t really gotten the story correct either. The Biophysical Economists realized that there was a need for a measure for diminishing returns. They put together a measure which they called Energy Returned on Energy Invested. The measure, unfortunately, only “sort of” works. It gives a lot of wrong answers. It does not suggest that oil prices above $20 per barrel are a problem. It also does not suggest that substitutes for oil that are priced above $20 per barrel are a problem. It tends to give a lot of “false positives” when it comes to the question of whether renewables can be substituted for fossil fuels. It seems to suggest that a particular ratio is important, when it is really the total quantity of an energy product available at a very low price that is important.

I should not pick on the Biophysical Economists. There are many others with academic credentials who produce metrics that really aren’t very helpful. Energy payback time is not a very helpful metric, especially from the point of view of deciding whether or not to use a particular device. It is not the energy that the economy must pay back; it is the full cost of manufacturing the device that needs to be recovered, including human labor costs and taxes. In some applications, the cost of mitigating intermittency may also need to be considered.

Even the standard Levelized Cost of Energy calculations can give misleading indications, if they are used on intermittent renewables without taking into account the cost of mitigating the intermittency.


Conclusion

With all of these issues, it is not surprising that world leaders have difficulty playing the energy and economy game. In fact, it is hard to see any winning strategy.

One of the issues that makes the game impossible to win is the fact that all sides must win. A solution that cuts out the oil exporters is a problem for an economy dependent on oil. Any solution that cuts out the workers is a problem, partly because businesses need workers as consumers, and partly because governments need workers as taxpayers.

The reason I have not included any discussion of renewables is because at this point in time, we do not have any renewables that are sufficiently inexpensive and sufficiently scalable to represent a solution.

 

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,788 Responses to A Video Game Analogy to Our Energy Predicament

  1. Baby Doomer says:

    This tax bill is an abomination, an act of brutal plunder. Its sponsors should be tarred and feathered and ridden out of town on a rail, if not hung from a lamp post.

    -Dr Paul Craig Roberts

    https://www.paulcraigroberts.org/2017/12/04/plunder-capitalism/

    • jupiviv says:

      And that’s Reagan’s Asst. Secretary of the Treasury!

      But really, the tax bill is essentially a partial admission of collapse. The promises made during the age of cornucopia are being retracted.

    • The Second Coming says:

      This Guy is such a good read…sounds like Ralph Nader

      What we are witnessing in the US and indeed throughout the western world is the total failure of capitalism. Capitalism is now merely a looting machine. The financial sector no longer supplies capital for production. What the financial sector does is to turn discretionary consumer income into interest and fee payments to banks. Aggregate demand can only grow through debt expansion, and the consumers reach a point where they cannot expand their debt.
      Capitalism, hiding behind “globalism,” which is misrepresented as a good thing when it is death itself, locates production where labor is cheapest, thus depriving First World labor of good wages and work opportunities and putting First World countries on the path to becoming Third World countries. Short-term profits and executive and board bonuses and stock options are maximized at the cost of the destruction of the domestic consumer market.
      Plunder Capitalism also privatizes as much of the public sector,

      BAU at any means…

  2. Fast Eddy says:

    Recycling is on my mind at the moment…

    This morning I picked up a used tractor tire at the tire shop…. the guy said – take your pick – take as many as you want – free — it costs us 60 bucks to give them to the recycle people….

    For a moment I was thinking… if you give me $80 bucks I will take two … and buy a couple of nice bottles of wine at the bottle shop…

    But then … it was epiphany time — I was momentarily staggered by the sheer genius of an idea…. as I realized the idea had private jet written all over it….

    What IF…. I cut a deal with this guy to take all the used tires — there must have been a couple of hundred sitting there… and he paid me 40 bucks each – saving 20…. and I agree to ‘dispose’ of them….

    Then I pick up the tires … drive to a quiet place with a cliff overlooking the ocean …. then heave the f789ers over the cliff?

    What IF… I set up a tire fueled electricity generator … and opened an aluminum smelter in my backyard… AND an EV plug in station …

    Or What IF … I just piled up the tires during the day … and set fire to them when the sun went down— so nobody could see the smoke?

    What IF I cut deals with all the tire vendors in NZ… or the world even… to dispose of their tires at a huge discount?

    • The Second Coming says:

      Mafia, toxic waste and a deadly cover up in an Italian paradise: ‘They’ve poisoned our land and stolen our children’
      http://www.telegraph.co.uk/news/0/mafia-toxic-waste-and-a-deadly-cover-up-in-an-italian-paradise-t/
      Tosti explained that the Mafia dumped huge quantities of contaminated industrial waste there, then obtained backdated permission for their actions.

      These hazardous materials were left on prime agricultural land, next to a car dealership, with bingo halls and furniture stores nearby, and just a few hundreds yards from a town of 39,000 people.

      A criminal investigation was launched 18 months ago, but local people do not expect convictions. This was far from an isolated incident.

      There are thousands of similar dumps all over this once-paradisiacal slice of Italy: in canals and caves, in quarries and wells, under fields and hills, beneath roads and properties.

      • Fast Eddy says:

        Role models!

      • jerry says:

        you think that’s bad check out this video about the remnants of WW1

      • Harry Gibbs says:

        And also Somalia:

        “The ‘Ndrangheta, a criminal organization from Calabria (Italy) has been involved in radioactive waste dumping since the 1980s. Ships with toxic and radioactive waste were sunk off the Italian coast. In addition, vessels were allegedly sent to Somalia and other developing countries with toxic waste, including radioactive waste cargoes, which were either sunk with the ship or buried on land. The introduction of more rigorous environmental legislation in the 1980s made illegal waste dumping a lucrative business for organized crime groups in Italy.”

        https://en.wikipedia.org/wiki/Toxic_waste_dumping_by_the_%27Ndrangheta

    • grayfox says:

      Or What IF … I just piled up the tires during the day … and set fire to them when the sun went down— so nobody could see the smoke?

      Not very original idea. I read some years ago about a guy in a rural area not far away who accepted tires for a small fee and threw them on the back 40 until there were thousands. Then the tires caught fire (or were intentionally ignited) and burned out of control for weeks. Neighbors did not like it. Corrective legal action ensued for illegal dumping, open fire without permit, etc.

    • Lastcall says:

      The best scheme I heard of in NZ was a guy who took everyones tyres for 20% less than they were currently being charged. He leased a very large warehouse and stacked them to the rafters.
      When he left the country (he was only here on a work visa) he had amassed a few hundred thousand dollars and had even fallen behind the rent on the warehouse.
      The tyres became the problem of the property owner.

      • Fast Eddy says:

        Brilliant!!!!

        How about this …. lease some cheap sh it land …. and a digger…. and bury the tires….

        And if the authorities catch on and you get hauled into court — you simply argue that the world is about to end so what’s the big deal…. alternatively you put the blame on the tire manufacturers…. one could even argue that if $60 is being charged by the recycling companies that this = a huge amount of energy being expended — and that storing the tires under ground is a greener option — after a few hundred years they might even turn back into oil!!!

        Winning!

      • Sungr says:

        Tire Inferno

        An environmental disaster at a Virginia tire pile 30 years ago helped advance fire-monitoring methods and spark a recycling revolution

        It was a fire to remember. On Oct. 31, 1983, residents of the farming community of Mountain Falls, Va., awoke to a mushroom cloud of black smoke expanding into an otherwise cloudless sky. The 300-foot-wide plume rose 4,500 feet from the floor of their valley nestled between autumn-colored ridges of the Appalachian Mountains. Some wondered whether it was an early Halloween prank gone wrong, or whether the Russians had dropped the bomb.

        Estimates are that the Rhinehart tire-recycling operation had handled as many as 25 million tires in the decade leading up to the fire. The enterprise sold most of the tires for retreading and for ship docking bumpers, floor mats, shoe soles, and other uses. But some 7 million tires that were in too poor condition for resale had accumulated in a pile reaching 80 feet high and strewn across some 5 acres of wooded slopes on the Rhinehart farm. Paul had a plan for these tires—to melt them down to recover and sell crude oil and scrap metal. But the fire got to the tires first.

        The Rhinehart tire fire ended up burning for nine months, in the process generating a plume of toxic smoke that spread across four states and a stream of thousands of gallons of crude oil from melting tires that was contained in the nick of time. The environmental disaster created by the tire fire took more than 20 years and nearly $12 million to clean up.

        https://cen.acs.org/articles/91/i43/Tire-Inferno.html

  3. DavidinXyearswhoisa50somethingshorttermOptimist says:

    a quasi-recycling is on my mind at the moment…

    I’m thinking about new year’s predictions…

    which some here have earnestly begun, apparently because there seems too little time left in 2017 for The Collapse, so attention has turned to 2018.

    now, I’ll first refer to John Michael Greer who has consistently given good new year’s predictions over the years, and I think it’s because of one simple step:

    predict the incoming year to be very similar to the outgoing year.

    so here’s my general prediction: 2018 will be much more of the same slow process of resource depletion and debt building, with December 2018 looking pretty much the same as this month, at least in the core bigger-faster-stronger countries.

    other than by a Giant Black Swan (and they are by definition unpredictable), The Collapse will not appear in 2018.

  4. Fast Eddy says:

    KEVIN DRUM

    FEB. 9, 2011 5:36 AM

    The Guardian reports today on another WikiLeaks cable, this time about oil production in Saudi Arabia. Based on conversations with Sadad al-Husseini, a geologist and former head of exploration at Aramco, the Saudi state oil company, the U.S. consul general thinks the Saudis have been significantly overstating both the size of their reserves and their production capacity:

    The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels — nearly 40%….According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then — possibly as early as 2012 — global oil production would have hit its highest point. This crunch point is known as “peak oil”.

    ….The US consul then told Washington: “While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”….While fears of premature “peak oil” and Saudi production problems had been expressed before, no US official has come close to saying this in public.

    This won’t come as a surprise to anyone who’s been following the oil industry over the past few years. Matthew Simmons’ Twilight in the Desert, which I reviewed six years ago, made a detailed case that Saudi Arabia’s production capacity had pretty much maxed out already, and Business Week published an article three years ago based on internal Saudi documents that said much the same: the Saudis could pump 12 million barrels a day in short spurts but only 10 million barrels on a steady basis — and that’s all there is. Production capacity just isn’t going up.

    There’s always Iraq, of course, which certainly has more production capacity if it can develop it, but Saudi Arabia increasingly looks like it’s peaked already. And if that’s true, it probably means that the global peak in production, which was delayed a few years by the 2008 recession, is most likely not too far away. Our future is going to be increasingly oil free whether we like it or not.

    http://www.motherjones.com/kevin-drum/2011/02/wikileaks-saudi-oil-may-have-peaked-already/#

    So where does KSA stand nearly 7 years later…. with oil priced at half of what it was in 2011…

  5. Fast Eddy says:

    One way in which tires are used is as a fuel source for generating power, but this is very inefficient, not to say questionable in terms of emissions. Incineration occurs at higher temperatures than coal and produces 25% more energy, but since burning a ton of tires produces almost the same amount of carbon, it is hardly eco-friendly.

    Blue Circle, Britain’s largest cement maker, uses scrap tyres as a replacement fuel at its plant at Westbury, Wiltshire. The company argues that this is a “win-win” situation for the environment: fewer fossil fuels are burned and the tyres are re-used instead of being deposited in landfill sites; and Blue Circle benefits, since the 4m tyres it plans to burn every year help save the company an estimated £6m a year.

    https://recyclenation.com/2010/06/sea-rubber-truth-tire-recycling/

    What should happen — will happen.

  6. Baby Doomer says:

    The Great Recession is having an unexpected impact on Christmas tree sales nearly a decade later
    http://www.businessinsider.com/great-recession-affecting-christmas-tree-sales-2017-12

  7. Baby Doomer says:

    For shale oil to make up for the conventional oil supplies declining. It would have to ramp up at least 3-4 million barrels, every single year…Forever!

  8. Fast Eddy says:

    It has become obvious to nearly everyone that we have reached this stage on the planet and in our democratic institutions. We see how the absolute dysfunction of the global information architecture — represented in the intersection of mainstream media outlets, social technology platforms and giant digital aggregators — is generating widespread apathy, despair, insanity and madness at a scale that is terrifying.

    While progressives fight government, the corporations and the super-rich we drown in despair. While philanthropists, fueled by their own certainty and wealth, fight for justice or equality or for some poor hamlet in Africa we become apathetic and distracted from the real source of the problem. And while the president fights everyone and everyone fights the president, the collective goes mad.

    In the background, however, the game of hoarding resources and not redistributing them accelerates; absorbing the sum total of our collective actions and commitments into a singular unacceptable future. There is only one way to avoid this fate; uncover the source of the disease and cure it by mobilizing solutions.

    https://www.counterpunch.org/2017/12/01/the-collapse-of-media-and-what-you-can-do-about-it/

    NAFEEZ AHMED… is going insane… because he does not understand or refuses to accept that there are no solutions to mobilize…

    Ugo Bardi is also going insane … so is Richard Heinberg… Kunstler has a touch of insanity coursing through him as evidenced by his Made By Hand solution… Steve St Angelo is also certified insane believing that owning PM is a solution …

    The kitchen … she’s hot!

    • Isn’t this article a thinly veiled plea for funds for Nafeez Ahamed’s own organization?

      The last paragraph, and the about statement are as follows:

      Once seen, new information and ideas can flow into your mind, new emotions can flow into your body, and you will be empowered to take action. If you see you can act. It becomes obvious that the only solution is to redesign the journalistic format such that new ideas and information lead to constructive action. It becomes obvious that to enliven the public sphere and restore our democratic institutions, we should facilitate the flow of money in media back to where it belongs; into the hands of both journalists and reader-participants committed to the creation of a just and sane future.

      Nafeez Ahmed and Andrew Markell are two of the co-founders for PressCoin and Insurge. PressCoin and Insurge are next generation media and journalism platforms leveraging blockchain, crypto-currency innovations and an Open Inquiry investigative format to replace the maladaptive and destructive information ecosystem driving everything into chaos and confusion on the planet, with a coherent public intelligence system.

    • Nope.avi says:

      Many members of the professional class have literally lost their minds since Brexit and Trump’s election.

      “ehe does not understand or refuses to accept that there are no solutions t”He calls this apathy and sloth.

      Other people have called it nihilism

      These people believe it is better to do something even if it is not likely to work…it makes them feel better.

      Contemplating the (civilized) world ending in your life time is depressing for most people.

      Goals and having something to look forward to is an important part of mental health for most people.

      I suppose people will turn to religion when things get really really bad.

      • theblondbeast says:

        When you say “I suppose people will turn to religion when things get really really bad.” I would rejoinder that I think the problem is that people don’t realize their problem is that they already have a religion – techno progressivism – and that the odd behavior you mention is the result of this religion failing.

        • I would agree. We have many religions.

        • Fast Eddy says:

          Imagine that moment …. right at the very end … when the realization hits the green groopies that EVs and Solar and all that jazz did not save the day….

          It would be like being hit with a sledge hammer in the head that unequivocally stated ‘god does not exist… or god is dead’

          Or more likely they will stand their cursing our leaders because they did not do enough to shift us off of fossil fuels sooner

          Something like this .. (only different)

      • Fast Eddy says:

        ‘Goals and having something to look forward to is an important part of mental health for most people.’

        Very much so.

        ‘Knowing’ presents a problem because it destroys purpose … it exposes the reality that there really is no purpose and never was (other than to eat and procreate) …

        I am forever making what might be considered poor decisions because to a large extent… I have lost interest in the future (and to some extent the present) — because there is no future….

        I mentioned I sold a property recently … I could barely be bothered to negotiate — I just slapped an aggressive sale price on it to move it as fast as possible…. the buyer actually asked me ‘is there something wrong with this place that I should know about’….

        Ya there is …. it is a spectacular hunk of land — but it is sitting in the middle of a village of people who — when the power goes off and the urea required to grow their rice is not available — will gut you and put you in a pot…. so I am cutting and running …. and I want to get this done before the end comes and I cannot piss the cash away… now let’s get this signed off asap so you can enjoy the view.

        Good decision? Bad decision? What do I care. What does it matter.

        Nothing matters.

        Other than when.

        • xabier says:

          It is now very rational to believe that £40 spent on a truly excellent vintage, or similar pleasure in the present, is better than putting the same sum towards a never-never pension.

    • T.Y. says:

      Interesting

      For your information; i once tried to share some of the contents of OFW at work. the prime goal was to ensure awareness that renewable energy is probably going to face a lot more headwinds. To avoid getting labelled as a doomer i looked up the JRC EU workshop that Gail presented on a while ago (titled “alternative energy narratives” or something like that) and use the more respectable EU workshop as a platform to launch the issue. Kind of like “see ? the regulators are thinking fairly critically about this, we need to anticipate this…”

      The link to the presentations / video on the official website, didn’t work. When i contacted JRC to get a copy of the powerpoints they refused, citing some “post-event issue”. Gail presentation is online anyway but the presentations from the other presenters wasn’t. So i decided to contact them individually. Although i wasn’t expecting much response they politely provided the slides. Interestingly i had a brief telephone conversation with one of them. When i mentioned JRC refusal, the first reaction was something along the lines of “there was large discussion / row after the meeting” . Presumably referring to wether it should be publicly available or not ? Anyway the presenter checked and claimed to be able to see the video-stream of the presentation, whereas i couldn’t.

      Interpret it how you like; my paranoid mind instantly thought; “Jeezes; not only are they blocking it, they’re smart enough to make the presenters think they aren’t…..”
      So here’s my query for OFW people; i’m not sure if the link to the video recording is still there, but have any of you tried to access it when it was online (between march-june roughly ?). I

      • xabier says:

        I tried to access it at the time, and it didn’t work for me. I only tried once though.

        What the old tale didn’t say is that the little kid who pointed out that the emperor was in fact naked, got strangled. 🙂

        • T.Y. says:

          Thanks for letting me know.
          Hehehe; yeah for some reason i can’t help myself and always go after the shaky parts in any narrative. I’m not planning anymore to wake up anybody again on energy matters any time soon though 🙂

      • I checked. The video of the conference is available at this link. https://webcast.ec.europa.eu/inspirational-workshop-new-narratives-of-energy-and-sustainability#

        There was at least one person who was unhappy that our presentations did not mesh well with the official story, but ultimately that did not affect having the presentations put up on line.

        By the way, this isn’t my best “performance” for a variety of reasons–some of my slides did not render properly on their equipment; I found the setup strange (I couldn’t look at the audience at all); and confusion on how long I had for the talk.

        My write-up of the talk is available at this OFW link: https://ourfiniteworld.com/2017/05/05/why-we-should-be-concerned-about-low-oil-prices/

        • T.Y. says:

          Thanks for checking Gail.

          The link you gave me worked; so i guess i can put the conspiracy theory to rest right here.
          Its nice to know that i was indeed being too paranoid on this. Might have been company firewall blocking the videostreaming or something like that.

  9. Third World person says:

    what the hell France army doing in Mali

    is there any resources in Mali
    but if you ask french army general do they regret invaded Mali
    they will say no

    • I tried to figure out what is going on in Mali. This probably reads like rambling. There seems to be a possibility of oil and gas, but at today’s prices, I would question whether it would be economic to extract them. (Perhaps at $100+ per barrel in 2011, they made sense.) Thus oil and gas resources are one of the reasons for the conflict. I think population problems, lack of water, and lack of resources in general are part of its problems as well.

      According to Wikipedia:

      In January 2012, following an influx of weapons that occurred after the Libyan Civil War, Tuareg tribesmen of the National Movement for the Liberation of Azawad (MNLA) began a rebellion against Mali’s central government.

      So US arms in the wrong hands seems to be part of the problem.

      Also, sparsely populated Northern Mali wanted independence or greater autonomy. France got involved because the government of Mali asked for foreign military help to re-take the North.

      The possibility of oil in the North was likely the reason for the interest in ceding. http://www.oil-price.net/en/articles/mali-and-oil-untold-story.php

      Apart from oil, all the North seems to be part of the Sahara Desert, and thus is of little value. The US Geological Services shows some oil and gas resources for Mali. https://pubs.usgs.gov/fs/2016/3003/fs20163003.pdf

      Like all African countries, Mali has a problem with growing population. Mali’s population was 4.7 million in 1950 (UN) and 17.9 million in 2017 (CIA). Somehow, all of those mouths need to be fed.

      The US Central Intelligence Agency gives more information about Mali.

      According to the CIA, Mali is a landlocked country, a little less than twice the size of Texas. Its terrain is mostly flat to rolling northern plains covered by sand; savanna in south, rugged hills in northeast. Land use is agricultural land: 34.1%
      arable land 5.6%; permanent crops 0.1%; permanent pasture 28.4%
      forest: 10.2%
      other: 55.7% (2011 est.)

      Natural resources include

      gold, phosphates, kaolin, salt, limestone, uranium, gypsum, granite, hydropower
      note: bauxite, iron ore, manganese, tin, and copper deposits are known but not exploited

      Natural hazards:
      hot, dust-laden harmattan haze common during dry seasons; recurring droughts; occasional Niger River flooding

      Environment-current issues:
      deforestation; soil erosion; desertification; inadequate supplies of potable water

      Mali has a long history of seasonal migration and emigration driven by poverty, conflict, demographic pressure, unemployment, food insecurity, and droughts. Many Malians from rural areas migrate during the dry period to nearby villages and towns to do odd jobs or to adjoining countries to work in agriculture or mining. Pastoralists and nomads move seasonally to southern Mali or nearby coastal states. Others migrate long term to Mali’s urban areas, Cote d’Ivoire, other neighboring countries, and in smaller numbers to France, Mali’s former colonial ruler. Since the early 1990s, Mali’s role has grown as a transit country for regional migration flows and illegal migration to Europe. Human smugglers and traffickers exploit the same regional routes used for moving contraband drugs, arms, and cigarettes.

      Economy Overview

      Among the 25 poorest countries in the world, landlocked Mali depends on gold mining and agricultural exports for revenue. The country’s fiscal status fluctuates with gold and agricultural commodity prices and the harvest; cotton and gold exports make up around 80% of export earnings. Mali remains dependent on foreign aid.

      Trafficking in persons:

      Mali is a source, transit, and destination country for men, women, and children subjected to forced labor and sex trafficking; internal trafficking is more prevalent than transnational trafficking, but foreign women and girls are forced into domestic servitude, agricultural labor, and support roles in gold mines, as well as subjected to sex trafficking; Malian boys are forced to work in agricultural settings, gold mines, the informal commercial sector and to beg within Mali and neighboring countries; Malians and other Africans who travel through Mali to Mauritania, Algeria, or Libya in hopes of reaching Europe are particularly at risk of becoming victims of human trafficking; men and boys, primarily of Songhai ethnicity, are subjected to debt bondage in the salt mines of Taoudenni in northern Mali; some members of Mali’s Tamachek community are subjected to hereditary slavery-related practices; Malian women and girls are victims of sex trafficking in Gabon, Libya, Lebanon, and Tunisia; the recruitment of child soldiers by armed groups in northern Mali decreased.

      My comment: I suppose that if you don’t have other resources, you sell the labor of people. The birth rate is still 6 per woman, and the population growth rate is over 3%, among the highest in the world.

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