Our Latest Oil Predicament

It is impossible to tell the whole oil story, but perhaps I can offer a few insights regarding where we are today.

[1] We already seem to be back to the falling oil prices and refilling storage tanks scenario.

US crude oil stocks hit their low point on January 19, 2018 and have started to rise again. The amount of crude oil fill has averaged about 365,000 barrels per day since then. At the same time, prices of both Brent and WTI oil have fallen from their high points.

Figure 1. Average weekly spot Brent oil prices from EIA website, with circle pointing to recent downtick in prices.

Many people believe that the oil problem, when it hits, will be running out of oil. People with such a belief interpret a glut of oil to mean that we are still very far from any limit.

[2] An alternative story to running out of oil is that the economy is a self-organized system, operating under the laws of physics. With this story, too little demand for oil is as likely an outcome as a shortage of oil.

Oil and energy products are used to create everything, even jobs. If all humans have is energy from the sun, plus the energy that all animals have, then humans would be much more like chimpanzees. All humans would be able to do is gather plant food and catch a few easy-to-catch animals (earthworms and crickets, for example). They certainly could not extract oil or find uses for it.

It takes a self-organized economy to support the extraction and sale of energy products. We need a complex web that includes:

  • Equipment to extract the oil
  • Training for engineers and other workers
  • Devices that use oil, such as vehicles, farm equipment, road paving equipment
  • A financial system to enable transactions to purchase oil
  • Buyers with jobs that pay well enough that they can afford to buy goods made with oil

The things that go wrong with this economy can be on the buyers’ end of the economy. Buyers can have jobs, but these jobs may not pay well enough for the buyers to afford the output of the economy. A falling share of the population may be able to afford cars, for example.

[3] It is possible that a recent rapid increase in oil supply is contributing to the current mismatch between supply and demand. 

Data of the US Energy Information Administration indicates that US oil supply has recently begun to surge. It is not just crude oil production that is higher. Natural gas liquid production is higher as well. As a result, Total Liquids production is reported to have been more than 16 million barrels per day in November 2017.

Figure 2. US Liquids Production, based on International Energy Data provided by the US EIA.

Oil production of the rest of the world has been relatively flat, as planned.

Figure 3. World excluding the US oil production by type, based on EIA International Energy data through November 2017.

Total world production, combining the amounts on Figures 2 and 3, set a new record of 99.1 million barrels of oil per day for November 2017, based on EIA data. This level is above the November 2016 level, which was the previous record at 98.9 million barrels per day.

At this high level of production, it is not surprising that the economy cannot absorb the full amount of extra supply.

There are also a number of issues that affect buyers’ demand for oil.

[4] The percentage of US residents who can afford to buy a new automobile or light truck seems to be falling over time. 

If we look at the number of autos and trucks sold in the US, per 1000 population, we see a pattern of falling humps, as a smaller and smaller share of the population can afford a new car or light truck, each year. The big drops occur during the gray recessionary periods marked on the chart.

Figure 4. Figure showing US Passenger Cars and Light Trucks Purchased per Year per 1000 Population. Original graph by FRED (Federal Reserve of St. Louis). Retitled by author, because units were confusing on original chart.

The first peak came in 1978, at 67.3 units. The second, slightly lower peak came in 1986, at 66.7. The third peak came in 2000 at 61.5 units. The fourth peak came in 2015, at 51.6 units. Early 2018 amounts suggest that the trend in units sold per 1000 population will continue its downward trend.

Part of what is happening is that vehicles are becoming longer-lasting, so that there is not as much need to buy new cars frequently. But having a short-lived, cheap car has an advantage, if it makes cars available to a larger percentage of the total population. With a vehicle, a person has a much better ability to participate in the US workforce. US Labor Force Participation Rates peaked in about the year 2000, which is about the time of the third peak in affordability.

Figure 5. US Labor Force Participation Rate. Chart by FRED (Federal Reserve of St. Louis).

[5] There was a steep rise in the cost of auto ownership in the 1995- 2008 period. This has since fallen back, but the cost is still high relative to the wages of many workers.

One estimate of the cost of auto ownership is the reimbursement rate that the US government allows businesses to pay workers who use their own cars for company business.

Figure 6. Auto reimbursement rates as compiled on this list. Amounts shown on “As Stated” basis, and also at the 2017 cost level, based on CPI Urban.

These costs peaked about 2008 and were reflected in high reimbursement rates for 2009 as well. More recently, buyers of cars have been helped by longer term loans and ultra-low interest rates. If interest rates rise at all, the share of people buying or leasing new vehicles can be expected to fall further from the level shown on Figure 4.

[6] Building homes also requires oil. There has been a sharp drop in US home building, both on an absolute basis, and on a per capita basis, since 2008.

Figure 7. US Housing Units Completed, related to US population. Population from Census Bureau; population from UN 2017 population summary.

Building homes is part of oil demand. It takes oil to transport all of the materials used (lumber, siding, wiring, pipes, appliances) to the place where the house will be built. Furthermore, many of the materials used in building a home are produced using petroleum products.

The number of homes built depends on the number of new households that can afford a separate place to live. The low level of building makes it look as if the economy is still seeing a pattern of young adults living with their parents much longer than in the past. If buildings are to be replaced every 75 years, my calculation suggests that about 6 housing units per 1000 residents need to be built each year. About 2.5 units per thousand are needed, just to keep up with rising population, if upgrading and remodeling can be done almost indefinitely.

The fact that there is little home building reduces the number of jobs available in the building industry. The lack of jobs in this industry helps hold down the demand for oil, because these workers would use their wages to buy goods for themselves, such as food and vehicles. Food is grown and transported using vehicles powered by oil.

The lack of home building also contributes to the nation’s homelessness problem. If there were plenty of inexpensive apartments, there would be fewer homeless people.

[7] There is no longer an oil price at which both oil exporters and oil importers are satisfied. Oil prices today are too low for oil exporters.

I started writing about oil producers complaining that oil prices were too low in early 2014. At that time, oil companies were looking back at prices of over $100 per barrel in 2013. They were saying that $100+ prices were too low to provide adequate funds for reinvestment in new fields. Now prices are in the $65 range, which is even farther below the desired level.

Oil exporters are especially unhappy about today’s low prices, because they need high prices in order to collect needed tax revenue. This is why OPEC members and Russia have been holding back production. The plan is to deplete the glut of oil in storage, and thus get prices up.

It is not at all clear, however, that consumers in oil importing countries can really withstand higher prices. The fact that Brent oil prices could only stay above $70 per barrel for one week on Figure 2 (in the red circle), suggests that consumers in major oil importing countries cannot really withstand oil prices at this high level. I have observed previously that a sustainable price, without adding a huge amount of debt each year, is only about $20 per barrel.

[8] If we analyze vehicle purchases by country, we can see that low oil prices since 2014 seem to be helping major oil importers but are hurting Tier 2 countries that are commodity-dependent.

Figure 8. New vehicles (private passenger and commercial combined) purchased per capita for selected groupings of countries. Amounts shown are from OICA estimates by country.

In this chart, the grouping of Advanced Economies includes:

  • USA
  • Europe
  • Japan
  • Canada
  • Australia

For this grouping, growth in auto sales is again rising, but has not regained its prior level. This is somewhat similar to the indications in Figure 4, for the US only, looking at cars and light trucks. The main difference is in the last two years. Changes in currency relativities may be helping recent vehicle sales for the other countries in the grouping.

On this chart, the Tier 2 grouping includes:

  • Brazil
  • Russia
  • South Africa
  • South Korea
  • Malaysia
  • Mexico

This group includes several oil and other resource dependent countries. South Korea is perhaps more like the industrial countries in the first grouping. This grouping shows a downturn in the purchasing of vehicles in the last three years, when commodity prices have been depressed. If oil prices were higher, this group would probably be buying more vehicles.

Figure 8 shows that China’s auto sales have been growing rapidly. In fact, China has surpassed the Tier 2 average in per capita sales. In the past year, China’s growth in auto sales has flattened. But with China’s huge population, the absolute number of vehicles sold is still very high: 29.1 million vehicles, compared to 17.6 million for the United States, and compared to 20.9 million for Europe.

India and the Rest of the World account for surprisingly few vehicles sold. On Figure 8, their lines overlap at the bottom of the chart.

[9] The push toward raising interest rates and selling QE securities will tend to reduce oil prices and add to the oil glut.

I wrote about some of the issues involved in Raising Interest Rates Is Like Starting a Fission Chain Reaction. When interest rates are higher, economies are pushed in the direction of recession. All kinds of discretionary spending are reduced. Use of oil will almost certainly be reduced. This could lower oil prices significantly, as it did in 2008 (Figure 1).

[10] To a significant extent, China has been helping hold up world oil consumption, with its rapidly growing economy. It is hitting headwinds now, however.

The International Monetary Fund recently showed an exhibit indicating how China’s debt is growing very rapidly, but its growth in output is slowing. The combination could very easily lead to a credit crisis.

Figure 9. Exhibit from IMF Working Paper called Credit Booms: Is China Different?

Now, the rest of the world depends on China for many imported goods. If China should have problems, it would indirectly affect oil demand elsewhere as well.

Even China’s recent ban on importing certain types of materials for recycling can be expected to have an adverse impact on oil demand. Very often, if a container is sent from China to the US or to Europe, there will be no exported goods to send back to China, except for material for recycling. If China refuses to take recycling, containers will need to be returned empty.

Recycling generally needs to be subsidized. Part of what this subsidy is used for is to pay the cost of shipping material to be recycled to China. If China does not take the recycling, this payment for shipping materials in the otherwise-empty containers will not be made. The shipping company will need to charge exporters more for the one-way trip, if the shipping company is to be profitable. This higher cost, by itself, is a deterrent to trade. In many ways, the higher shipping cost is like a tariff.

[11] Conclusion.

My expectation is that the general direction of oil prices is likely downward, especially if interest rates rise. A major financial disruption of any kind would have a similar effect. Gluts of oil can be expected with lower prices.

Many groups, including the IEA, have been warning about oil shortages because of inadequate investment in new production. Oil shortages, and energy shortages in general, have a multitude of adverse impacts on economies. One of them is loss of jobs, because jobs require the use of energy, for example, to deliver goods in a truck. If many more people are unemployed, there is less demand for oil.

Thus, it is not at all clear that a shortage of oil leads to high prices; it may very well lead to lower prices. Many people are confused about this issue, because the word demand gives a misleading impression of the mechanism involved. Lack of demand comes from part of the population not being able to afford cars and homes. It also comes from cutbacks in government spending and from failing businesses. In an interconnected system, even failing banks tend to reduce oil demand.

Another adverse impact of oil and energy shortages tends to be fighting and wars. The fact that the US seems to be raising its energy production, in apparent disregard for countries that have been trying to cut back, is likely to make some oil exporting countries quite angry. It could sow the seeds for another war.

Economists do not seem to understand that GDP growth rates don’t tell very much about the well-being of individual citizens in an economy. A major issue is wage disparity. If there are many very low wage people, there is likely to be downward pressure on the sale of automobiles, and on the purchase of petroleum products. Economists are likely to think everything is fine, up until a major crisis occurs.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,023 Responses to Our Latest Oil Predicament

  1. JH Wyoming says:

    Thanks for the latest installment, Gail.

    I actually see just one resulting problem; Rising debt to meet growth expectations.

    There are numerous underlying reasons why the above is occurring, nonetheless that is the big gorilla in the room no one can ignore forever. It’s like Stockman says, we’re on a collision course with a ‘debtberg’. The fall from grace will be the failure to service government, state, local and personal debt. Once a threshold of defaults ensues, a deeper recession than 08 will follow and what CB’s do from there is anyone’s guess, but whatever hail mary pass they throw, it will amount to the final desperate fiscal folly in a long line of desperate measures to keep BAU chugging along.

    • Right. We have been using rising debt to sustain the high oil prices. I once mentioned that a sustainable oil price, without a large run-up in debt, is about $20 per barrel, in today’s prices. We need to keep adding debt, even to keep the price at $60 or $65 per barrel.

      • Greg Machala says:

        That is the root of the problem Gail. Unless oil production is profitable at $20 per barrel, the debt will continue its exponential rise with no end in sight. There will be a point (I think we are close) where consumer debt will be maxed out. Corporate debt appears to be reaching limits too as evidenced by the retail meltdown. However, how high can government debt go? What good is the government without consumers and corporations? If just seems like we are reaching a huge point of disconnect between government and the people. It is difficult to see how this will play out.

        • Davidin100millionbilliontrillionzillionyears says:

          I generally agree with all of the above…

          but debt is just an aspect of the secondary economy…

          the economic problems are (mostly) rooted in the real economy of work and production…

          (almost) all natural resources (oil and all the rest) have been diminished by the extraction of the “low hanging fruit” first…

          now, the remaining resources are lower quality and cost more to extract…

          I’m sure most of us know this already…

          rocketing debt is just a symptom of this primary economic reality.

          • JH Wyoming says:

            “rocketing debt is just a symptom of this primary economic reality.”

            Yes, that’s why I wrote, “There are numerous underlying reasons why the above is occurring, nonetheless that is the big gorilla in the room no one can ignore forever.”

        • Countries seem to be moving in the direction of cutting taxes. I expect that they will ramp up debt, and use QE to keep interest rates from going through the ceiling.

          Ultimately, all we have is the resources we can extract each year. Wage disparity seems to be the result, and a lot of fighting among countries over resources. At some point, relationships among countries become too strained.

  2. Brilliant analysis!

    • Davidin100millionbilliontrillionzillionyears says:

      “Nevertheless, Miknes was strongly challenged by an economist who didn’t like his field invaded by another one of those pesky physicists. So far, economists have been able to keep physics away from their secluded garden and continue keeping the field open only to people with the right credentials (according to them). For how long, it is all to be seen.”


      I admit I can’t follow the specifics of the physics…

      but it’s easy enough to understand in general…

      the concentrated energy contained in FF allows humans to produce many times more wealth than without FF…

      “So far, economists have been able to keep physics away…”

      not for long…

      eventually, most people will get to know why the economy is falling apart…

      the truth (of physics) that is being avoided by “economists”.

      • robert wilson says:

        The economics professor, Georgescu-Roegen was challenged by other economists. http://webpage.pace.edu/dnabirahni/rahnidocs/law802/The%20Entropy%20Law%20and%20the%20Economic%20Problem.pdf

        • Davidin100millionbilliontrillionzillionyears says:

          “An unorthodox economist — such as myself — would say that what goes into the economic process represents valuable natural resources and what is thrown out of it is valueless waste. But this qualitative difference is confirmed, albeit in different terms, by a particular (and peculiar) branch of physics known as thermodynamics. From the viewpoint of thermodynamics, matter-energy enters the economic process in a state of low entropy and
          comes out of it in a state of high entropy.”

          the average person won’t try to understand entropy…

          but it’s easy enough to grasp that FF allows a worker to produce 10 to 100 times what he could do without FF…

          by extension, when there are no more FF, then there will be 10 to 100 times less “stuff”…

          of course, the average person will respond:

          “but then They will think of something!”

        • I don’t think that Georgescu-Roegen really understood the full story either. All of the energy from the sun, and from burned fossil fuels, gives our system self-organizing principles that he never considered. Agreed, there are entropy problems, but the self-organizing property is what allows the economic system to work. It allows prices to be formed. It means that if there is an oil shortage, the result can be wage disparity rather than high prices.

    • Davidin100millionbilliontrillionzillionyears says:

      thanks, BD…

      highly entertaining!

      “Lately he has started claiming that he is going to send cargo-laden rocket ships to Mars by the middle of President Trump’s second term, in advance of the establishment of a permanent human colony. I’m not holding my breath.

      Why have we allowed this lunatic a prominent place in our public and commercial life?”

      why o why?

      • Dennis L says:


        Ah, who knows? The certitude of this site is at times a bit disturbing. There is more to the universe than meets the eye.

        What if Musk mines an asteroid(too big, well think of a small step in nuclear disarmanent), pure nickel, etc. drop a correctly sized piece down the gravitational well, and voila, another fortune. We sent astronauts into earth in part because getting funding for robots was hard. Good science in space is now done mostly remotely. The raw materials in and on this earth came from stars, catch a piece of a star going by and raw materials for all.

        Can’t be cone, read the link. These guys were pretty good and a bit ahead of their time.

        The book “Limits to Growth.” was wrong for almost fifty years(yes, I know the graphs are correct), but poverty has been reduced in the entire world, a used, old automobile is more dependable than anything my parents had from the thirties to almost the end of the century.. It is not all bad.

        • One thing we tend to discount is the advances that science can make. As I look at the situation, there has been a constant battle to keep energy per capita up. Various technical advances have helped improve production, and kept us away from the edge pretty much the whole time since World War II.

          • Fast Eddy says:

            The financial innovations that keep the ball in the air are also evolving and incredible….

      • Fast Eddy says:

        Hopium peddler.

  3. JT Roberts says:


    This link is an interesting study that shows how abundance can mask scarcity and why.

    Basically what Reynolds is saying is the real cost of resources is exploration not extraction. So once exploration is exhausted (as it was with oil around 2012) the commodity price can fall and supply can simultaneously increase because capital has moved to efficiency of extraction. (improved technology)The danger is it sends false market signals making people believe there is abundance when there is actually scarcity. This leads to a sudden crash in production.

    It makes a lot of sense because exploration is really information which is a form of capital albeit intellectual but very valuable and costly. For example Columbus need a substantial investment to develop the information he returned with. That information sparked massive exploration and development of resources. Since the lowest hanging fruit was the most profitable we can safely say that most all resource discovery was completed globally over the coarse of the next 450years or so.

    Obviously any mining operation has to balance supply and demand with affordability so the least expensive production will prevail until exhausted. Since price always is established by cost of production, which includes exploration, once exploration stops finding new inexpensive resources, that capital cost is removed from production because the activity ceases.

    This will allow and industry like the oil industry to turn inward to survive by focusing on efficiency of there best resource plays. That’s why everyone is in the Permian now. However the harder they work at producing there best plays they risk falling prices which shuts in the more expensive plays. Basically it’s creating a financial feedback loop that is removing known technical reserves, because they are booked based on price as a cost of know technologies. So reserves becomes resources.

    UK coal is a good example. They still have vast coal resources but no reserves because the technical cost exceeds the value of production.

    What is interesting that Gail has previously posted is that the depression seems to correlate to the demise within the coal industry. Could it be that the sudden shift to oil caused investments to be stranded? Also the initial ROI of oil was very high so the energy that replaced coal from a BTU perspective had much much lower economic activity associated with it. Basically you had much more employment with coal then with oil. Russia interestingly escaped the depression but was also slow to change to oil for transportation so retained more value in it’s infrastructure investments.

    Unfortunately this time there is no low cost high energy replacement for oil. There is no competitive technology taking over rather just a slow burn out. But maybe not so slow. Hirsh in broad terms suggests that 50-100trillion dollars of infrastructure is dependent on liquid fuels. With as little as 1% decline in production will cause a 2-3% decline in GDP. So we’re talking only 960,000 barrels a day but the cost of a crash coal to liquid program to supply 960,000 barrels would cost 10billion and take ten years. Given the fact that Giants and Super Giants end their life at 10-16% historic annual declines things can unravel far quicker then is anticipated. Far more quickly then anyone one will be able to fully depreciate the value of the systems that depend on liquid fuel. So clearly the economy is the lead indicator of a fuel crisis. Since we are now seeing a slow down in all real indexes (excluding stock market mal investment which could be a currency collapse) it appears we are deep into the collapse all ready.

    Presently even Wall Street is starting to realize that shale isn’t going to payout and much of their investment is gone. They’ve put tremendous pressure on the Shale Players but still 80% are unprofitable. They have been able to increase initial well head production but it’s leading to steeper decline rates. This has made it appear that the industry can handle higher debt service costs but for how long and at what terms.

    It seems to me before the whole thing blows up there will be a move to nationalized all energy systems. Probably in the name of environmental climate change. This has already happened in the UK as Jeremy Corbin has floated the idea in Parliament. Universal Basic income is also being embraced here in the US of all places (as polls reveal) and seems likely to be the only way around the impossible debt expansion we have witnessed in recent years. This of coarse can be leveraged up and allow people to increase borrowing which would immediately increase GDP making it appear that there is a solution. But as no one seems to understand you can’t borrow your way out of debt and we have been living on borrowed stored surpluses for a long time now.

    • Thanks for your very fine comment.

      With respect to the coal and its peak in 1913 in the UK, I remember that some commenters posted references saying that there had been huge financial problems before them. Companies were trying to cut pay, and unions were resisting. At other times, unions were going on strike. Mines didn’t seem to be making enough money to pay workers a living wage. Also, once war was declared in 1914, miners deserted the mines to work in the war, because the wages for being a soldier were higher, and it was no more dangerous. They had to pass a law, not allowing more miners to leave. So I think the problem truly was depletion. I don’t thin oil ramped up very quickly. I remember it was mentioned as being attached in 1914, because of the UK’s interest in oil. The US may have been a little ahead on oil.

      [I fixed the dates above. Originally, I added 100 years.]

    • Excellent overview, thanks.

      Actually, the brief moment of desperation, e.g. phase in of UBI and likely accompanied by a gov scheme of vast debt nullification would rip the social structure apart even more as in preparing the stage for another deeper leg in the collapse.

      So, in a way I’m theorizing we are just two steps from real doom and one step from nightmarish existence.., approx. 5-15yrs to go perhaps a bit more..

      • Davidin100millionbilliontrillionzillionyears says:

        “approx. 5-15yrs to go perhaps a bit more…”

        yes, that is very reasonable!

        the “gov scheme” that I think is more likely, is to give the domestic oil industry huge tax breaks, like down to nothing, and huge 0% “loans” so that oil production can continue for those 5-15yrs.

        • DJ says:

          2008 was ten years ago and we have barely begun with negative interest rates and helicopter money.

    • Davidin100millionbilliontrillionzillionyears says:

      thanks, JT…

      “So clearly the economy is the lead indicator of a fuel crisis.”

      yes, but of course that is to be understood that the fuel crisis (oil depletion) is the cause of the economic problems…

      “It seems to me before the whole thing blows up there will be a move to nationalized all energy systems.”

      yes, could be… or, as was hashed out here a while back, some of us thought that it would continue to be a stealth operation where the oil industry is propped up by federal debt…

      oil is so valuable, it needs to be produced even at a “loss”…

      either way, your summary here is that oil exploration is basically over…

      and all that’s left is to extract the remaining quasi profitable oil…

      sounds like “the end game” to me.

      • MickN says:

        As usual a great and illuminating comment JTR. I’m still working my way through his airplane analogy on Tim Morgan’s blog-very thought provoking. It goes without saying but tremendous work Gail.

      • JT Roberts says:

        I agree producing oil at a loss will be attempted but will likely fail. Because it takes energy to produce energy in the oil business it would require substitution for oil and transportation by some other energy source. But that is the very crux of the problem. Already oil is being delivered at a loss economically and has been the case for the last decade. In 2012 the industry reached the tipping point where they became the single biggest consumer of there product. So rising prices no longer benefit there bottom line.

  4. Tim says:

    So what is the magical price for a barrel of oil, at which producers and consumers can live in peace and harmony?

    • ITEOTWAWKI says:

      None…the classic supply and demand curve do not cross at any point anymore…the price the consumer can afford the producer can’t make a profit…and the price where the producer can extract at a profit, the consumer can’t afford…and that is the crux of the problem which will eventually collapse the financial system, which in turn will collapse Industrial Civ.

      • Davidin100millionbilliontrillionzillionyears says:


        but for our (USA) economy, oil is worth way more than $60 or so per barrel…

        that’s less than $2 per gallon… and what do some of us pay for a quart of spring water?

        so, the latest quasi solution is for our government to prop up the shale oil industry to keep the oil flowing, and now even at an all time high:


        in effect, our government is going further into debt to stealthily subsidize oil production…

        it’s working for now…

        but you are right…

        eventually, the system will crash.

        • Lastcall says:

          I still maintain this funding via the ‘limitless’ reserve currency is an attempt to undermine other oil producers; one in particular. Thats why other key competitor countries are trying to wean themselves off the petrodollar. The Gulf Co-op Council members tried of course, but they did so without a nuclear umbrella. That got sorted; no trading oil for gold or Euro’s for them. Tricky this time though.

      • DJ says:

        Supply and demand curves for Mars vacations doesn’t cross either.

        But oil is still being produced.

    • $20 per barrel. All we need is some actual supply at that price.

    • i1 says:

      With a fiat reserve currency, that’s a moving target. In 1998, gold, silver, and oil were in the exact same dollar price ratio as today. The problem, as Gail has explained previously (and I had been a bit slow on the uptake with), is that wages have not kept pace with the 400% rise in the pricing of those commodities.

  5. Fast Eddy says:

    Thanks for the new post

  6. Fast Eddy says:

    ‘Yes fast eddy we can tell you are trying to work some things out…but please unless you have some intelligent thing to say can you refrain from your endless diatribe and let others comment on here?’

    Hey Daniel — I’m about to head out on a long bike ride… so now is your chance… post something brilliant…

    • Davidin100millionbilliontrillionzillionyears says:

      I quite liked Daniel’s very own (ironic) “diatribe”…

      come on, more diatribes, please!

      meanwhile, Fast Eddystein goes on another (dangerous) bike ride…

      OFW needs him to survive…

      alert those NZ truck drivers!

  7. Stephen Luz says:

    It is unfortunate that, despite my having brought it to her attention, Gail continues to forget that many technological advances occurred before oil. For example, humans were able to make bows and arrows , swords , even gunpowder before oil was discovered. This means that in a situation without oil, we would be able to hunt, for example and be able to eat other things than earthworms and inspects. This, of course, leaves aside entirely the pre÷modern agri culture that was in practice for thousands of years before oil came into common use.

    Perhaps because Gail, without 20th century tech, is only able to imagine being able to catch earthworms and insects, that’s what she thinks is available to everyone.

    I could go on, but Gail’s chimpanzee argument, as attached to it as she is, has no place in a discussion like this.

    • I believe that the situation was that we did not use any external energy, such as burned biomass. Our ability to harness burned biomass gave use powers greatly in excess of those of chimpanzees. The use of supplemental energy allowed us to cook part of our food. Because of this, we did not need to spend literally half of our days chewing. We could spend our free time making tools. Our teeth and jaws did not need to be as big, allowing our brain to become larger. We started cooking part of our food over one million years ago, so our bodies are well adapted to needing a different type of food than the raw food most primates eat.

      We moved away from being like other animals back in hunter-gatherer days. This is what allows human population to overshoot.

    • Davidin100millionbilliontrillionzillionyears says:

      “This means that in a situation without oil, we would be able to hunt, for example and be able to eat other things than earthworms and insects.”

      sure, let’s think what 7+ billion people could eat, if they had no FF…

      well, no industrial large scale farming, so I guess you’re right… we could hunt… good luck feeding 7+ billion…

      now, let’s think where we would live without FF…

      tents, huts, caves… maybe “cabins”… no plumbing, no running hot water, no electricity, no refrigeration, no AC, no meds (no “medicine cabinets” in the “bathrooms” that won’t exist)…

      so, um…

      is that life without oil?

      • Kanghi says:

        David, that place is called good old fashioned summer cottage in Finland. It makes you appreciate energy, when you need to make the firewood on your own, food making itself takes longer, as well warming up water you need to carry to sauna to heat it up. Foods get stored outdoors, to root cellar and well. Also you live with the rythm of nature. Summer is ok, but I dont really envy my ancestors, who had to make the long winters trough in high latitudes.

    • Fast Eddy says:

      And I have posted this quite a few times previously — it’s for f789ing MORE ons like you:

      Soil that is farmed using petro-chemical inputs — will support no crop once the additives are stopped – without years of intensive rejuvenation involving organic inputs

      Effect of Pesticides on soil fertility (beneficial soil microorganisms)

      Heavy treatment of soil with pesticides can cause populations of beneficial soil microorganisms to decline. According to the soil scientist Dr. Elaine Ingham, “If we lose both bacteria and fungi, then the soil degrades. Overuse of chemical fertilizers and pesticides have effects on the soil organisms that are similar to human overuse of antibiotics.

      Indiscriminate use of chemicals might work for a few years, but after awhile, there aren’t enough beneficial soil organisms to hold onto the nutrients” (Savonen, 1997). For example, plants depend on a variety of soil microorganisms to transform atmospheric nitrogen into nitrates, which plants can use. Common landscape herbicides disrupt this process: triclopyr inhibits soil bacteria that transform ammonia into nitrite (Pell et al., 1998); glyphosate reduces the growth and activity of free-living nitrogen-fixing bacteria in soil (Santos and Flores, 1995) and 2,4-D reduces nitrogen fixation by the bacteria that live on the roots of bean plants (Arias and Fabra, 1993; Fabra et al., 1997), reduces the growth and activity of nitrogen-fixing blue-green algae (Singh and Singh, 1989; Tözüm-Çalgan and Sivaci-Güner, 1993), and inhibits the transformation of ammonia into nitrates by soil bacteria (Frankenberger et al., 1991, Martens and Bremner, 1993).

      Mycorrhizal fungi grow with the roots of many plants and aid in nutrient uptake. These fungi can also be damaged by herbicides in the soil. One study found that oryzalin and trifluralin both inhibited the growth of certain species of mycorrhizal fungi (Kelley and South, 1978). Roundup has been shown to be toxic to mycorrhizal fungi in laboratory studies, and some damaging effects were seen at concentrations lower than those found in soil following typical applications (Chakravarty and Sidhu, 1987; Estok et al., 1989). Triclopyr was also found to be toxic to several species of mycorrhizal fungi (Chakravarty and Sidhu, 1987) and oxadiazon reduced the number of mycorrhizal fungal spores (Moorman, 1989).


      Organic inputs will be hard to come by considering nothing can be grown – and most if not all animals are killed and eaten.

      Less than 1% of all farmland globally is farmed organically.

      Get ready to starve. No matter where you are:

      https://www.weforum.org/agenda/2015/08/which-countries-have-the-most-organic-agricultural-land/ (note – most organic land in Australia is rubbish and supports sheep only)

      • Kanghi says:

        Tsek, tsek Mr. Pointy Finger. If you would know your Elaine, you would know, that you can with the good compost tees and compost kickstart the system really fast, depending from the availability of water. In my view the problem is death of funding, industrial farms run on meagre profit and high loans. Those mega farms dont even feed the farmers family. Many will go down when the interest rates go up. What will FE’ s hungry mobs and gangs find there? 1000+ acre Wheat field? No tools to gather the harvest nor to process it 🙂

        • Fast Eddy says:

          Really fast as in 3 years or more…. assuming you had organic inputs such as cow manure…

          Which you won’t have… because the cows will be one of the things the hordes will kill and eat… because they will not be able to wait 3 years…

          Catch 22…

    • Fast Eddy says:

      OH … and would you like me to repost my research on the 4000 spent fuel ponds that are going to burn out of control when the electricity turns off… spreading gargantuan amounts of radioactivity across the planet — which will extinct humans (and just about everything else).

      I’ve posted this many times… just let me know bud

    • xabier says:

      The effect of technological innovation using fossil fuels and re-balancing of a civilization on the new technologies and networks thus created, and a new division of labour, is the destruction of many or all of the previous technologies, networks, experience and mentalities.

      Eg. There aren’t many plough horses and no oxen in England today, whereas in 1945 there were many thousands. The gene stock is too small in most breeds to start programmes, and the people who knew how to handle the animals and live old way of life have long gone.

      People were bred to their roles as much as the animals.

      To put it simply for you: as we climbed, we kicked out the lower rungs of the ladder.

      This has been global. Even in the poorer countries, most traditional and useful crafts have only a handful of practitioners now, and plastic and metal crap from China has displaced most natural and local materials.

      Civilization is cumulative, ‘basic’ cultures are in fact very complex, and we have trashed everything in our pursuit of the FF lifestyle.

      • We keep making new dissipative structures. At the same time, we let the old dissipative structures fall apart from lack on energy flows. We don’t have infinite energy flows, so we can’t keep up all of the dissipative structures.

        Even the way the soil is cared for and the resulting structure represents a dissipative structure. The bacteria and fungi that build up to support the recycling of nutrients, together with the full collection of biological wastes that need to be recycled represent on such system. It provides a wide range of nutrients, because animals from long distances leave their waste to be recycles.

        The green revolution provides a different approach–a different dissipative structure. It kills off some of the bacteria and fungi, and stops recycling of biological waste. Instead, it provides a collection of targeted nutrients. It uses herbicides and pesticides to get rid of unwanted plants and animal life. It plants one crop repeatedly, or perhaps cycles among two or three. Certain nutrients are stripped from the soil–namely the ones most needed by those crops, less the particular nutrient added. Since not all nutrient are added, many of the minor nutrients are stripped from the soil.

        Compost teas will do something to restart the system, but they cannot replace the missing nutrients. Even the current organic system likely leaves the soil worse off than if nature had been able to provide. All of our sewer systems are not helping our soil system. (Of course, with all of the medicine in the water, even drinking the water tends to be problematic.)

      • Fast Eddy says:

        When I lived in Bali — we had an organic farm – we had to have a trainer come in and teach the guys who managed the garden how to save seeds… make compost etc… and these guys were from a primitive rice farming village….

        All they know is how to throw urea into the rice paddy…. and spray pesticides….

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