Will the World Economy Continue to “Roll Along” in 2018?

Once upon a time, we worried about oil and other energy. Now, a song from 1930 seems to be appropriate:

Today, we have a surplus of oil, which we are trying to use up. That never happened before, or did it? Well, actually, it did, back around 1930. As most of us remember, that was not a pleasant time. It was during the Great Depression.

Figure 1. US ending stocks of crude oil, excluding the Strategic Petroleum Reserve. Amounts will include crude oil in pipelines and in “tank farms,” awaiting processing. Businesses normally do not hold more crude oil than they need in the immediate future, because holding this excess inventory has a cost involved. Figure produced by EIA. Amounts through early 2016.

A surplus of a major energy commodity is a sign of economic illness; the economy is not balancing itself correctly. Energy supplies are available for use, but the economy is not adequately utilizing them. It is a sign that something is seriously wrong in the economy–perhaps too much income disparity.

Figure 2. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.

If incomes are relatively equal, it is possible for even the poorest citizens of the economy to be able to buy necessary goods and services. Things like food, homes, and transportation become affordable by all. It is easy for “Demand” and “Supply” to balance out, because a very large share of the population has incomes that are adequate to buy the goods and services created by the economy.

It is when we have too much income and wage disparity that we have gluts of oil and food supplies. Food gluts happened in the 1930s and are happening again now. We lose sight of the extent to which the economy can actually absorb rising quantities of commodities of many types, if they are inexpensive, compared to wages. The word “Demand” might better be replaced by the term “Quantity Affordable.” Top wage earners can always afford goods and services for their families; the question is whether earners lower in the wage hierarchy can. In today’s world, some of these low-wage earners are in India and Africa, or have no employment at all.

What is Going Right, As We Enter 2018?

[1] The stock market keeps rising.

The stock market keeps rising, month after month. Volatility is very low. In fact, the growth in the stock market looks rigged. A recent Seeking Alpha article notes that in 2017, the S&P 500 showed positive returns for all 12 months of the year, something that has never happened before in the last 90 years.

Very long runs of rising stock prices are not necessarily a good sign. According to the same article, the S&P 500 rose in 22 of 23 months between April 1935 and February 1937, in response to government spending aimed at jumpstarting the economy. By late 1937, the economy was again back in recession. The market experienced a severe correction that it would not fully recover from until after World War II.

The year 2006 was another notable year for stock market rise, with increases in 11 out of 12 months. According to the article,

Equity markets rallied amidst a volatility void in the lead-up to the Great Recession. Markets would make new all-time highs in late 2007 before collapsing in 2008, marking the worst annual returns (-37%) since the aforementioned infamous 1937 correction.

So while the stock market consistently rising looks like a good sign, it is not necessarily a good sign for market performance 6 to 24 months later. It could simply represent a bubble forming, which will later pop.

[2] Oil and other commodity prices are recently somewhat higher.

Recently, oil prices have been too low for most producers. Now, things are looking up. While prices still aren’t at an adequate level, they are somewhat higher. This gives producers (and lenders) hope that prices will eventually rise sufficiently that oil companies can make an adequate profit, and governments of oil exporters can collect adequate taxes to keep their economies operating.

Figure 3. Monthly average spot Brent oil prices, through December 2017, based on EIA data.

A major reason for the recent upward trend in commodity prices seems to be a shift in currency relativities for Emerging Markets.

Figure 4. Figure from Financial Times showing currency relativities based on the MSCI Emerging Market currency index.

While the currency relativities for emerging markets had fallen quite low when commodity prices first dropped, they have now made up most of their lost ground. This makes commodities more affordable in Emerging Market countries, and allows them to do more manufacturing, thus stimulating the world economy.

Of course, if China runs into debt problems, or if India runs into problems of some sort, or if oil prices rise further than they have to date, the run-up in currency relativities might run right back down again.

[3] US tax cuts create a bubble of wealth for corporations and the 1%.

With low commodity prices, returns have been far too low for many corporations involved with commodity production. “Fixing” the tax law will help these corporations continue to operate, even if commodity prices remain low, because taxes will be lower. These lower tax rates are important in helping commodity producers to avoid collapsing as a result of low commodity prices.

The problem that occurs is that the change in tax law opens up all kinds of opportunities for companies to improve their tax situation, either by changing the form of the corporation, or by merging with another company with a suitable tax situation, allowing the combined taxes to be minimized. See this recent Michael Hudson video for a discussion of some of the issues involved. This link is to a related Hudson video.

Groups evaluating the expected impact of the proposed tax law did their evaluations as if corporate structure would remain unchanged. We know that tax accountants will help companies quickly make changes to maximize the benefit of the new tax law. This is likely to mean that US governmental debt will need to rise much more than most forecasts have predicted.

In a way, this is a “good” impact, because more debt helps keep commodity prices and production to rise, and thus helps keep the economy from collapsing. But it does raise the question of how long, and by how much, governmental debt can rise. Will the addition of all of this new debt raise interest rates even above other planned interest rate increases?

[4] We have been experiencing artificially low oil prices since 2013. This helps the economic growth to be higher than it otherwise would be. 

In February 2014, I published an article documenting that back in 2013, oil prices were too low for oil producers. If a person looks at Figure 3, oil prices were over $100 per barrel that year. Clearly, oil prices have been much too low for producers since that time.

Unfortunately, it looks like these artificially low oil prices may be coming to an end, simply because the “glut” of oil that developed is gradually being reduced. Figure 5 shows the timing of the recent glut of oil. It seems to have started early in 2014.

Figure 5. US Stocks of crude oil and petroleum products (including Strategic Petroleum Reserve), based on EIA data.

If we look at the combination of oil prices and amount of oil in storage, a person can make a rough estimate of how this glut of oil might disappear. Quite a bit of it may be gone by the end of 2018 (Figure 6).

Figure 6. Figure showing US oil stocks (crude plus oil products) together with the corresponding oil prices. Rough guess of how balance might disappear and future prices by author.

Of course, one of the big issues is that consumers cannot really afford high-priced oil products. If consumers could not afford $100+ prices back in 2013, how would it be possible for oil prices to rise to something like $97 per barrel by the end of 2018?

I am not certain that oil prices can really rise this high, or that they can stay at this level very long. Certainly, we cannot expect oil prices to rise to the level they did in July 2008, without recession causing oil prices to crash back down.

What the Economy Needs Is Rising Energy Per Capita

I have published energy per capita graphs in the past. Flat spots tend to represent problem periods.

Figure 7. World per Capita Energy Consumption with two circles relating to flat consumption. World Energy Consumption by Source, based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects (Appendix) together with BP Statistical Data for 1965 and subsequent, divided by population estimates by Angus Maddison.

The 1920-1940 flat period came shortly after the United Kingdom reached Peak Coal in 1913.

Figure 8. United Kingdom coal production since 1855, in figure by David Strahan. First published in New Scientist, 17 January 2008.

In fact, the UK invaded Mesopotamia (Iraq) in 1914, to protect its oil interests. The UK wasn’t stupid; it knew that if it didn’t have sufficient coal, it would need oil, instead.

There were many other disturbing events during this period, including World War I, the 1918 flu pandemic, the Great Depression, and World War II. If there are not enough energy resources to go around, many things tend to go wrong: countries tend to fight for available resources; jobs that pay well become less available; deflation becomes more likely; population becomes weakened, and epidemics become more likely. I wrote about the 1920 to 1940 period in a recent post, The Depression of the 1930s Was an Energy Crisis.

The 1980-2000 flat period included the collapse of the Soviet Union, in 1991. The Soviet Union was an oil producer. The Soviet Union collapsed after prices had been low for a long time.

Figure 9. Former Soviet Union oil consumption, production, and inflation-adjusted price, all from BP Statistical Review of World Energy, 2015.

Even many years after the collapse of the Soviet Union, population growth in former Soviet Union countries and its affiliates was much lower than in the rest of the world.

Figure 10. World population growth rates between 2005 and 2010. Source: https://en.wikipedia.org/wiki/List_of_countries_by_population_growth_rate

Lower population (through falling birth rates, rising death rates, or rising emigration) are a major way that economies self-adjust because of falling energy per capita. Economies tend to fix the low-energy per capita problem by adjusting the population downward.

Recently, we have again been hitting flat periods in energy consumption per capita.

Figure 11. World per capita consumption of oil and of total energy, based on BP Statistical Review of World Energy data and UN 2017 population data.

The slowdown in world energy consumption per capita in 2008-2009 was clearly a major problem. Oil, coal and natural gas consumption fell simultaneously. Oil consumption per capita fell more than the overall mix, especially affecting countries heavily dependent on oil (Greece with its tourism, but also the US, Japan, and Europe).

The recent shift in political strategy to more isolationist stances also seems to be the result of flat energy consumption per capita. It is doubtful that Donald Trump would have been elected in the US, if world energy consumption per capita had been growing robustly, and if wage disparity had been less of a problem.

The primary cause of the 2013 to 2016 flat trend in world energy consumption per capita (Figure 11) is falling coal consumption (Figure 12). Many people think coal is unimportant, but it is the world’s second largest source of energy, after oil. We don’t have a good way of getting natural gas production to rise enough, to make up for loss of coal production.

Figure 12

Wind and solar simply do not work for solving our problem of flat or shrinking energy consumption per capita. After spending trillions of dollars on them, they make up only a tiny (1%) share of world energy supply, according to the International Energy Agency. They are part of the little gray “Other” sliver on Figure 13.

Figure 13. Figure prepared by IEA showing Total Primary Energy Supply by type from this IEA document.

Something Has to “Give” When There Is Not Enough Energy Consumption per Capita

The predicament we are facing is that energy consumption per capita seems to be reaching a maximum. This happens because of affordability issues. Over time, the price of energy products needs to rise to keep up with the rising cost of creating these energy products. But if energy prices do rise, workers earning low wages cannot afford to buy goods and services made with high-priced energy products, plus honor all of their other commitments (such as mortgages, auto loans, and student loans). This leads to debt defaults, as it did in the 2008-2009 recession.

At some point, the affordability problem can be expected to hold down energy consumption. This could happen in many ways. Spiking prices and affordability issues could lead to a worse rerun of the 2008-2009 recession. Or if oil prices stay fairly low, oil-exporting countries (such as Venezuela) may collapse because of low prices. Even if oil prices do rise, we may find that higher prices do not lead to sufficient additional supply because investment in new oil fields has been low for many years, because of past low prices.

As long as the world economy is expanding (Figure 14), individual citizens can expect to benefit. Jobs that pay well are likely to be available, and citizens can afford to buy goods with their growing wages. People who sell shares of stock and people who get pension benefits can all receive part of this growing economic output.

Figure 14. Author’s image of an expanding economy.

Once the economy starts to shrink (Figure 15), we start having problems with dividing up the goods and services that are available. How much should retirees get? Governments? Today’s workers? Holders of shares of stocks and bonds? Not all commitments can be honored, simultaneously.

Figure 15. Author’s image of declining economy.

 

One obvious problem in a shrinking economy is that loans become harder to repay. The problem is that there is less left over for other goods and services, after debt plus interest is subtracted, in a shrinking economy.

Figure 16. Figure by author.

Changing interest rates can to some extent help offset problems related to higher energy prices and shrinking supply. The danger is that interest rates can move in the wrong direction and make our problems worse. In the lead-up to the Great Recession of 2008-2009, the US raised short-term interest rates, helping to puncture the sub-prime mortgage debt bubble.

Figure 17. Figure comparing Case-Shiller Seasonally Adjusted Home Price Index and Federal Reserve End of Quarter Target Interest Rates. See Oil Supply Limits and the Continuing Financial Crisis for details.

We now hear a lot of talk about raising interest rates and selling QE securities (which would also tend to raise interest rates). If growth in energy consumption per capita is already flat, these changes could make the problems that the economy is facing even worse.

Our Economy Works Like a Bicycle

Have you ever wondered why a two-wheeled bicycle is able to stay upright? Research shows that a bicycle will stay upright, as long as its speed is greater than 2.3 meters (7.5 feet) per second. This is the result of the physics of the situation. A related academic article states, “This stability typically can occur at forward speeds v near to the square root of (gL), where g is gravity and L is a characteristic length (about 1 m for a modern bicycle).”

Thus, a bicycle will be able to continue in an upright manner, as long as it goes fast enough. If it slows down too much, it will fall down. Our economy is similar.

Gravity plays an important role in determining the speed of a bicycle. If the bicycle is going downhill, gravity gives an important boost to the speed of the bicycle. If the bicycle is going uphill, gravity very much pulls back on the bicycle.

I think of the situation of an economy having rising energy consumption per capita as being very much like riding on a bicycle, speeding down a hill. The person operating the bicycle would not need to provide much extra energy to keep the bicycle going.

If energy consumption per capita is flat, the person riding the bicycle must provide the energy to make it go fast enough, so it doesn’t fall over. This is somewhat of a problem. If energy consumption per capita actually falls, it is a true disaster. The bicyclist himself must provide the energy necessary to push the bicycle and rider uphill.

In fact, there are other ways that a speeding bicycle is analogous to the world economy.

Figure 18. Author’s view of analogies of speeding upright bicycle to speeding economy.

The economy needs a constant flow of outside energy. In the case of the bicycle, the human rider can provide the energy flow. In the case of the economy, the energy flow comes from a mixture of various fuel types, typically dominated by fossil fuels.

Growing debt (front wheel) is important as well. It tends to pull the economy along, because this debt can be used to pay wages and to buy materials to make additional goods and services. Thus, the effect of this increase in debt is indirect; it ultimately works through the bicyclist, the gears, and the back wheel.

In fact, the financial system as a whole is important for the “steering” of the economy. It tells investors which investments are likely to be profitable.

The gearing system of the bicycle plays a modest role in the system. Changing gears allows greater efficiency in the use of the energy that is available, under certain circumstances. But energy efficiency, by itself, cannot operate the system.

If the human rider does not provide sufficient energy for the bicycle to go rapidly enough, the bicycle glides for a while, and then falls over. The world economy seems to be similar. If the world economy does not obtain enough energy per capita, economic growth tends to slow and eventually collapses. The collapse can relate to the whole world economy, or to parts of the economy.

The Problem of Parts of the Economy Not Getting Enough Energy

We can think of the economy as being made up of many bicycles, operated by bicycle riders. At the beginning of the post, I talked about the problem of wage disparity. This issue occurred at the time of the 1930’s Great Depression and is occurring again now.

We might call wage disparity “too low a return on the labor of some workers.” In groups of animals in ecosystems, too low a return on the effort of these animals is what causes ecosystems to collapse. For example, if fish have to swim too far to obtain additional food, their population will collapse. It should not be surprising that economies tend to collapse, when the return on the efforts of part of their workers falls too low.

Wage disparity has to do with how well the operators of bicycles are doing. Are the operators of these bicycles receiving enough calories, so that they can keep pumping their bicycles fast enough so that the speed is high enough to remain upright?

If energy consumption per capita is growing, this greatly helps the operation of the economic system. If there is growing availability of inexpensive energy, machines of various types, including trucks, can be used to increasingly leverage the labor of workers. This increased leveraging helps each worker to become more “productive.” This growing productivity, thanks to growing energy consumption, allows more goods and services to be produced in total. It also allows the wages of the workers to stay high enough that they can afford to buy a reasonable share of the output of the economy. When this happens, “gluts” of unaffordable goods are less of a problem.

If energy consumption per capita is flat (or worse yet, falling), greater “complexity” is needed, to keep output of goods and services rising. Greater complexity involves more specialization and more training of individual members of the economy. Greater complexity leads to larger companies, more government services, and more wage disparity. Unfortunately, there are diminishing returns to complexity, according to Joseph Tainter in “The Collapse of Complex Societies.” Ultimately, increased complexity fails to provide an adequate number of high-paying jobs. Wage disparity becomes a problem that can cause an economy to collapse.

If there is not enough economic output, the physics of the economy tries to “freeze out” workers at the bottom of the hierarchy. Workers with low wages cannot afford homes and families. The incidence of depression rises. Debt levels of disadvantaged groups (such as young people in the US) may rise.

So the situation may not be that the whole world economy fails; it may be that parts of the economy collapse. In fact, we are already seeing evidence that this is taking place. For example, life expectancies for US men have been falling for two years, because of growing problems with drug overdoses.

Conclusions

In 2017, the world economy seemed to be gliding smoothly along because the economy has been able to get the benefit of artificially low energy prices and artificially low interest rates. These artificially low prices and interest rates have given a temporary boost to the world economy. Countries using large amounts of energy products, including the US, especially benefitted.

We cannot expect this temporary condition to continue, however. Low oil prices have already started to disappear, with Brent oil prices at nearly $69 per barrel at this writing. The trends in oil prices and oil stocks in Figure 6 are disturbing. If oil prices begin to rise toward the price needed by oil producers, they are likely to trigger a recession and a drop in world energy consumption, just as spiking prices did in 2008-2009. There is a significant chance of collapse in the next 12 to 24 months. It is hard to know how widespread such a collapse may be; it may primarily affect particular countries and population groups.

To make matters worse, our leaders do not seem to understand the situation. The world economy badly needs rising energy consumption per capita. Plans to raise interest rates and sell QE securities, when the economy is already “at the edge,” are playing with fire. If we are to keep the world economy operating, large quantities of additional energy supplies need to be found at very low cost. It is hard to be optimistic about this happening. High-cost energy supplies are worthless when it comes to operating the economy because they are unaffordable.

Many followers of the oil situation have had great faith in Energy Returned on Energy Invested (EROI) analysis telling us which kinds of energy supplies we should increase. Unfortunately, EROI doesn’t tell us enough. It doesn’t tell us if a particular product is scalable at reasonable cost. Wind and solar are great disappointments, when total costs, including the cost of mitigating intermittency on the grid, are considered. They do not appear to be solutions on any major scale.

Other researchers looking at the energy situation have not understood how “baked into the cake” the need for economic growth, rising per capita energy consumption, and rising debt levels really are. Rising debt is not an error in how the financial system is put together; a bicycle needs a front wheel, or it cannot operate at all (Figure 18). I have written other articles regarding why debt is needed to pull the economic system forward.

This economic growth cannot be “fake growth” either, where a debt Ponzi Scheme seems to allow purchases that real-life consumers cannot afford. Quite a bit of what is reported as world GDP today is of a very “iffy” nature. If China builds a huge number of apartments that citizens cannot afford without subsidies, should these be counted as true GDP growth? How about unneeded roads, built using the rising debt of the Japanese government? Or recycling performed around the world, because it makes people “feel good,” but really requires substantial subsidies?

At this point, it is hard for us to know where we really are, because every government wants to make GDP results look as favorable as possible. It is clear, however, that 2018 and 2019 can be expected to have more challenges than 2017. We have interesting times ahead!

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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1,647 Responses to Will the World Economy Continue to “Roll Along” in 2018?

  1. TangoOscar says:

    Neat bicycle analogy. What would a partial collapse look like, being that 2017 was simply ridiculous with news headlines that almost seem fake due to their absurdity? Collapse seems to already be occurring. In the bigger scheme of things nobody would miss Greece or Cuba or even Venezuela maybe, but if a country like China or India goes down I think that would likely be game over. Like half of the stuff in every store in America has made in China labels. Could American teenagers survive a 50% drop in consumption? I know I wouldn’t survive the whining.

    I’m of the opinion that there has to be at least three major things that have to happen soon in order to extend things out another few decades. A major population reduction in westernized countries, a forceful push towards veganism for all, as well as some sort of technological miracle. America simply uses too much energy and produces too much trash. Eventually, mathematically even, it is inevitable that the biggest super powers will obliterate one another, probably with very large hydrogen bombs or an electrical pulse attack that destroys the grid. America already lives a lifestyle as if there were 5 Earths to draw resources from.

    • Fast Eddy says:

      A major population reduction in westernized countries

      • doomphd says:

        FE, I’m getting blacked out boxes (2) in your post above. Censored?

      • Tango Oscar says:

        Cute diagram. You forgot to insert one thing though, right between debt defaults and bankruptcies that says QE forever. This breaks the cycle until physical limits are hit. This whole economy thing is pretend and money does grow on trees, until gas physically stops coming to the pumps or the grid explodes, this game can be played until you drive yourself far beyond insane. If a casual observer were to read your comments, I think the case could be made that you’re already arrived.

        • Greg Machala says:

          Your right about QE and debt giving us access to resources that we would not otherwise have been able to use. However, I personally think QE is reaching limits and here is why:
          1) Energy prices are too low for energy producers.
          2) Resource prices are too low for profitable mining operations.
          3) Exploration costs are soaring.
          4) Wages not keeping up with inflation.
          5) QE historically helps the well-off not the poor.

          I think what is needed to keep the wheels on a bit longer is QE for the poor. That is coming up with some way of getting money into the hands of the poor and lower-middle income class. This might push up demand and prices for producers and get the economy to roll a few more feet to the cliff edge.

          • Tango Oscar says:

            I concur that some sort of living expense is in the works. And it will greatly boost asset prices when it happens. Robots don’t buy stuff. From my perspective QE is just getting started. There are so many more ways to cook the books. See China.

    • Davidin100millionbilliontrillionzillionyears says:

      “I’m of the opinion that there has to be at least three major things that have to happen soon in order to extend things out another few decades. A major population reduction in westernized countries, a forceful push towards veganism for all, as well as some sort of technological miracle.”

      in other words, three miracles.

      • psile says:

        Depopulation, austerity and conservation. These things are not conducive with technological miracles. In fact, any such “miracle” would probably restart the fire of human expansion, given a biological predisposition to growth.

        • Tango Oscar says:

          They wouldn’t all be happening in the same place, although that would be a miracle in and of itself. Ebola or some highly evolved swine or bird flu could shred a third of populations at the same time as a few world leaders become elected who make Trump look like Ghandi. Fear changes everything.

          All this would be doing is possibly buying time, and yeah it would almost certainly lead to another population explosion. What really remains to be seen is if a world super power like China or the US can stay afloat through a partial global collapse of sorts. It’s already happening right now, just at a very slow pace. And I use words like miracle, god, problem, ethics, and solutions to merely relate to others. They are loaded words with a very different meaning to all. I know that all life here, on a star, is temporary. I dont really view any of this as a real problem with a solution, more of a situation or game really.

          • Davidin100millionbilliontrillionzillionyears says:

            it is a game…

            no one wins.

            • Tango Oscar says:

              Yes because winning isn’t the point. And how do you define winning anyways. Dying in your sleep at 90, bored out of your mind? Sounds amazing!

            • Davidin100millionbilliontrillionzillionyears says:

              sure…

              so it’s a game that goes on for eternity…

              where humans can’t score any points…

              where we players can play for at most a bit over 100 years…

              where there are no rules…

              no judges or referees…

              but everyone gets to watch!

            • Tango Oscar says:

              Not a game in the sense of scoring points with clear winners or losers. You’re thinking too in the western box. There are all sorts of other “players” all around us, including plants and animals. The rules are subjective as are the ethics, depending on your location. Rules are also optional, again to preference. Consequences are not optional. Not everyone got to watch until the 20th century with the advent of screens. And any belief to the contrary is purely self-limiting in nature.

    • Curt Kurschus says:

      Veganism for all is not a viable option, unless your intent is to kill everybody. Humans have evolved to be omnivores. At present, it is possible for a vegan to supplement his or her diet with tablets and injections to ward off the serious illness or death that may result from insufficient Vitamin B12 intake. That option disappears with the end of an economy that sees B12 produced in factories / laboratories in China and France and sold to people around the world. A human being who has previously consumed animal products can last a little while on a Vegan diet, but eventually the body’s natural stores are depleted and very serious health issues develop.

      In addition to that, it is doubtful that we would be able to produce sufficient food to meet everybody’s needs on a strictly Vegan diet due to a lot of the world’s livestock being raised on land that is only good for raising grass (let alone the issue of a dramatic decline in food production that can be expected to be associated with the end of the application of enormous quantities of agrichemicals).

      Veganism may sound nice in a supposedly be-nice-to-the-animals way, but it is biologically reckless and non-viable. Unless, as mentioned, the intent is for everybody to die of malnutrition.

      • xabier says:

        Perhaps some great hallucinations would accompany the malnutrition – this might explain the Vegan tweets I get from family members…..

      • Tango Oscar says:

        I was proposing forced veganism to conserve resources and extend BAU. It’s a better idea than anyone here has come up with. But yeah, sure, talk about all the stupid nonsense with B12 and livestock some more. If we were forcing it we could force supplementation too. And I believe you’re wholly uninformed on the topic. My 7 year old has always been a vegan and he’s flawless other than the fact that he won’t stop tallking. And I really don’t care if people die, people are going to die anyways, it’s a mathematic certainty.

        • Fast Eddy says:

          How would banning or dramatically reducing meat consumption extend BAU?

          • Tango Oscar says:

            Gail says it herself. Why not go argue with teacher, simpleton. Lol.

          • With the timing involved, it is not clear that it really would extend BAU.

            What reducing meat usage does is dramatically reduce the amount of land that needs to be farmed to provide feed for the animals. While we would need to be fed ourselves, eating meat is a very inefficient way of getting calories. The animal itself needs to eat something like 10 calories of food, for every calories that is available as meat. There is also a water requirement to produce meat; I know it is very high for beef.

            Eating plant food directly is a much more “efficient” way of getting calories. This has been confirmed by the fact that populations of hunter-gatherers who at primarily plant food were much more dense than those that ate primarily meat.

            To the extent that we can live on much less meat, farmland could be replanted in forests, and water supplies would be more abundant. This would thus give population more room to “grow” before it hits some types of limits.

            The question is how this would fit in with financial and debt problems. Would the value of farms drop, and many farmers default on their loans? Would a lot of jobs be lost, in many areas (farming, food processing, food storage, herbicides and pesticides, even medicine (as people became healthier)? The combination might bring the system down, if too many jobs are lost.

            • dje says:

              “The animal itself needs to eat something like 10 calories of food, for every calories that is available as meat.”

              Yes, but the animal can convert fiber to calories at a high rate with the remainder turning into fertilizer. Humans can only metabolize something like 5% of the calories in fiber and do not generate high quality fertilizer and the fertilizer they do generate needs extensive composting. No, it isn’t efficient to feed grain that people could eat to the cows but the vast majority of ungulate food is stuff that humans cannot eat anyway.

            • Fast Eddy says:

              I wonder how many people the meat industry directly and indirectly employs….

            • Tango Oscar says:

              It saves land, water (lots), fossil fuels, and the health of most people who engage in a mostly vegan diet. I don’t know either if it’s too late to change, it very well may be. That said, change is coming no matter what. Better to bring on a controlled demolition than just keep building and ignore the problem, imo. Start by cutting their subsidies and charging them accordingly for grazing on public lands and the problem will take care of itself.

  2. Jada Thacker says:

    Gail, while it is so that Britain invaded Iraq in 1914, the reason behind the invasion was not necessarily based upon their peak coal the year before (did they even realize it had peaked?) but more likely because the Royal Navy had recently (1908, I believe) been converted from coal to oil fuel. After the Germans had announced, prior to the war, they were planning to extend their railway from Constantinople to Iraq, thus imperiling British foreign oil supply, the Brits were faced with an real and present danger to their empire. Interestingly enough, when the coalition forces invaded Iraq again in 2003, Basra was again occupied and managed by the the British, just as it had been 89 years previously.

    • I think Britain realized it had problems with coal for quite a while. It was hard keeping wages up, because profits of coal companies were so low. In fact, when WWI started in 1914, many miners wanted to enlist, because the pay was better, and the risk of death was not necessarily higher. There were frequent problems with strikes and lockouts. The shift to oil for the Royal Navy may have recognized this back in 1908.

      Also, oil was more energy dense, so it took less space to store. As a liquid, it had other advantages. It could be easily shifted from one place to another. In many ways, it was a better fuel, even if there was enough coal.

    • djerek says:

      Why do you think the RN switched to oil?

      • Niko B says:

        Battleships running on IC engines were superior in speed and maneuverability to coal powered behemoths. Also less oil for the same energy density as coal could be stored on board and piped to the engines not needing to be shoveled into boilers like coal.

  3. Ed says:

    https://www.nextbigfuture.com/2017/12/game-changing-nuclear-molten-salt-reactor-will-be-cheaper-than-natural-gas.html
    Home heating at only 20% than nat gas. Molten salt heat only reactors do not require pressure vessels, do not require cooling both major cost reductions. Low waste due to 100% burn up, not 1% burn up as in current bomb material making reactors.
    I’m going to the town board to see if we can get one installed in town. We can also use it too heat air for compressed air powered cars and to run our electric generators, we will be using the atmosphere as the cold side.

    • Fast Eddy says:

      Ya I think I will drop by the local council and let them know about this breakthrough….

    • Ed says:

      Self driving cars. We can heat the roads in winter to melt the snow! Cheers from the empire state.

    • On this post, Brian Wang seems to be quoting someone else. http://www.terrestrialenergy.com/low-cost/

      We really do need a breakthrough. It has been a series of breakthroughs that have kept the world economy going this far. If this really works, and can be scaled up, it could be a big step in preventing collapse. Of course, it only provides electricity, but at least they are smart enough to understand that dispatchable electricity is much more helpful than intermittent electricity.

      • Graviora Manent says:

        In France there is Jean Marc Jancovici who’s got the same idea. To sum up, he tells about use the Nuclear power plants to moderate transition. He insists moderate not avoid.
        But current power plants are old in the country, (average 40 years) and replace them is very expensive (if the technology works.). More, Areva seems to be broke.
        But in fact is that just another “kick the can”? Troubles will be for my grandsons not my daughters.
        I remember LTG scenarios, a breakthrough in energy supply push pollution rates higher, and the result, the collapsing population was the same wasn’t it?

        Sorry for the mistakes English is not my native language.

        • Jean Marc Jancovici is very good. I like his Manicore site. But I don’t know whether this proposed solution will work.

          • Greg Machala says:

            To me It isn’t so much that it will work- it is the time factor that scares me. We just don’t have much time left to find and install a really effective, low-cost energy source to inject into our industrial engine.

            • Agreed. It is impossible to change types of fuels quickly, even if a new approach appears on the horizon. We are talking 30 to 50 years, with the depreciation of vehicles and other machines currently and operation, time to build new factories, and time to accumulate the new devices.

        • Fast Eddy says:

          Unless you are in failing health and near death …. the troubles will almost certainly be yours.

    • psile says:

      Might need to lay of this sh*t Ed. They’ve been talking about thorium, molten salt and other stupid Gen V reactor ideas for decades now. All are big nothing burgers, whose only purpose is to manufacture false hope, newspaper and magazine fillers, seperate the gullible from their cash. And, most importantly, create well paid government welfare jobs for uni grads.

      • But these jobs are no worse than jobs that create medical “solutions” at prices that send health insurance costs through the roof. We need jobs for the huge number of STEM graduates going through school. Even if the chance of success is slim, it is sort of the way the system works.

    • MG says:

      There is an interview in Czech about this nuclear molten salt reactor and the given company from 2015:

      https://technet.idnes.cz/reaktor-od-soukrome-firmy-098-/tec_technika.aspx?c=A150224_162141_tec_technika_mla

      The discussion to the article mentions that the problem can be the material that can hold such molten salt for a long time, so nuclear molten salt reactor seems to be the same phantasy as nuclear fusion.

      “Souhlas. Četl jsem před pár lety v Nature Materials review známého fyzika, že podle současného stavu našich znalostí takové materiály co by to dlohodobě vydržely neexistují.

      Takže zatím je to podobné fantasírování jako třeba jaderná fůze ….”

      https://technet.idnes.cz/diskuse.aspx?iddiskuse=A150224_162141_tec_technika_mla

    • JesseJames says:

      Sounds great Ed! Let me know the part #, reliability history, price, and warranty so I can order one for my town.

  4. Davidin100millionbilliontrillionzillionyears says:
  5. Walt says:

    Will the world economy continue to “roll along” in 2018? NOT A SNOWBALLS CHANCE IN YOU KNOW WHAT. U.S. crude oil inventories are being drained at a rate of about 20 million barrels a month, even with shale adding new production of about 167,000 barrels a day over the last month. Inventories are now in the low 400 million barrel range. At this rate we will be witnessing a severe shortage of crude oil in about 6 months time. As you can not use energy you don’t have, the federal reserve will be forced to raise interest rates faster and higher then anyone is expecting. Stock and Bond investors around the world are about to get a “learn the hard way” lesson in capital allocation.

    • I should go back and reread Collapse, from a point of view of how self-organized systems worked in the past. The Norse leaders realized that if they didn’t make it through the short term, there would be no long term. The area occupied by the Norse was unfavorable from a climate point of view. Its natural energy from the sun was low, so agriculture could not support a very large population. Fishing needed to supplement what was available from the land. The area occupied by the Norse was very much “behind” areas farther south from a “development” point of view, based on the historical site I saw in Norway.

      I am sure the standard second guessing of who was right and who was wrong misses a lot of important points. Nature always bats last.

  6. MG says:

    My opinion is that, besides the ageing populations, there will be more and more physics problems causing the delays of the infrastructure construction: i.e. low prices will cause that not enough workers will be available for performing the construction and repairs, or, due to the underestimated costs, there will be further hurdles that will need changes in techniques, construction, costs etc. And Tesla and similar large scale producers of electric vehicles will fail to meet their promises, too.

    This all combined will make the GDP growth and energy consumption falter, as various promises will be more distant or will show to be completely beyond ones reach.

    • djerek says:

      Infrastructure is thwarted now by both high costs and low availability of funds. Investing in infrastructure is a long term planning kind of thing, and increasingly governments are squeezed on budget and only hoping to pay tomorrow’s bills rather than building something for the next decade.

      I think Tesla will go under but since it will come after companies like Mercedes and Porsche enter the EV fray it will be framed as not being able to compete rather than the complete unviability of EVs.

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