How the Peak Oil story could be “close,” but not quite right

A few years ago, especially in the 2005-2008 period, many people were concerned that the oil supply would run out. They were concerned about high oil prices and a possible need for rationing. The story was often called “Peak Oil.” Peak Oil theorists have also branched out into providing calculations that might be used to determine which substitutes for fossil fuels seem to have the most promise. What is right about the Peak Oil story, and what is misleading or wrong? Let’s look at a few of the pieces.

[1] What Is the Role of Energy in the Economy?

The real story is that the operation of the economy depends on the supply of  affordable energy. Without this energy supply, we could not make goods and services of any kind. The world’s GDP would be zero. Everything we have, from the food on our dinner table, to the pixels on our computer, to the roads we drive on is only possible because the economy “dissipates” energy. Even our jobs depend on energy dissipation. Some of this energy is human energy. The vast majority of it is the energy of fossil fuels and of other supplements to human energy.

Peak Oilers generally have gotten this story right, but they often miss the “affordable” part of the story. Economists have been in denial of this story. A big part of the problem is that it would be problematic to admit that the economy is tied to fossil fuels and to other energy sources whose supply seems to be limited. It would be impossible to talk about growth forever, if economic growth were directly tied to the consumption of limited energy resources.

[2] What Happens When Oil and Other Energy Supplies Become Increasingly Difficult to Extract?

Fossil fuel producers tend to extract the fuels that are easiest to extract first. Over time, even with technology changes, this tends to lead to higher extraction costs for the remaining fuels. Peak Oilers have been quick to notice this relationship.

The question that then arises is, “Can these higher extraction costs be passed on to the consumer as higher prices?” Peak Oil theorists, as well as many others, have tended to say, “Of course, the higher cost of oil extraction will lead to higher oil prices. Energy is essential to the economy.” In fact, we did see very high oil prices in the 1974-1981 period, in the 2004-2008 period, and in the 2011-2013 period.

Unfortunately, it is not true that higher extraction costs always can be passed on to consumers as higher prices. Many energy costs are very well “buried” in finished goods, such as food, cars, air conditioners, and trucks. After a point, energy prices “top out” at what is affordable for citizens, considering current wage levels and interest rate levels. This level of the affordable energy price will vary over time, with lower interest rates and higher debt amounts generally allowing higher energy prices. Greater wage disparity will tend to reduce the affordable price level, because fewer workers can afford these finished goods.

The underlying problem is that, from the consumer’s perspective, high oil prices look like inefficiency on the part of the oil company. Normally, being inefficient leads to costs that can’t be passed along to the consumer. We should not be surprised if, at some point, it is no longer possible to pass these higher costs on as higher prices.

If higher extraction costs cannot be passed on to consumers, this is a terrible situation for energy producers. After not too many years, this situation tends to lead to peak energy output because producers and their governments tend to go bankrupt. This seems to be the situation we are reaching for oil, coal and natural gas. This is a much worse situation than the high price situation because the high price situation tends to lead to more supply; low prices tend to collapse the production system.

The underlying problem is that low prices, even if they are satisfactory to the consumer, tend to be too low for the companies producing energy products. Peak Oilers miss the fact that a two-way tug of war is taking place. Low prices look like a great outcome from the perspective of consumers, but they are a disaster from the perspective of producers.

[3] How Important Is Hubbert’s Curve for Determining the Shape of Future Oil (or Coal or Natural Gas) Extraction?

Figure 1. M. King Hubbert symmetric curve from Nuclear Energy and the Fossil Fuels. Total quantity of resources that will ultimately be extracted is Q.

Most Peak Oilers seem to believe that if we see Hubbert shaped curves in individual fields, we should expect to see a similar shaped curve for total oil supply or for the supply of other fossil fuels. They think that production patterns to date plus outstanding reserves can give realistic views of the future extraction patterns. Frequently, Peak Oilers will assume that once production of oil, coal or natural gas starts to fall, we will still have about 50% of the beginning amount left. Thus, we can plan on a fairly long, slow decline in fossil fuel production.

However, many Peak Oilers will agree that if the energy used to extract energy is subtracted, the result will be more of a Seneca Cliff (Figure 2). Seneca is known for saying, “Increases are of sluggish growth, but the way to ruin is rapid.”

Figure 2. Seneca Cliff by Ugo Bardi.

Peak Oilers also tend to limit the amount of resources that they consider extractible, to exclude those that are particularly high in cost.

Even with these adjustments, it seems to me that the situation is likely to be even worse than most Peak Oil analyses suggest because of the interconnected nature of the economy and the fact that world population continues to grow. The economy cannot get along with a sharp reduction in energy consumption per capita. Some governments may collapse; many debtors may default; some banks may be forced to close. The situation may resemble the “societal collapse” situation experienced by many early economies.

One concern I have is that the Hubbert model, once it became the standard model for what energy supply might be available in the future, could easily be distorted. With enough assumptions about ever-rising energy prices and ever-improving technology, it became possible to claim that any fossil fuel resource in the ground could be extracted at some point in the future. Such outrageous assumptions can be used to claim that our biggest future problem will be climate change. After hearing enough climate change forecasts, people tend to forget about our immediate energy problems, since current problems are mostly hidden from consumers by low energy prices.

[4] Is Running Out of Oil Our Biggest Energy Problem?

The story told by Peak Oilers is based on the assumption that oil is our big problem and that we have plenty of other fuels. Oil is indeed our highest cost fuel and is very energy dense. Nevertheless, I think this is an incorrect assessment of our situation; the real issue is keeping the average cost of energy consumption low enough so that goods and services made from energy products will be affordable by consumers. Even factory workers need to be able to buy goods made by the economy.

Figure 2. Historical oil, natural gas, and oil production, based on Statistical Review of World Energy, 2017.

The way the cost of energy consumption can be kept low is mostly a “mix” issue. If the mix of energy products is heavily weighted toward low cost energy-related products, such as coal and labor from low wage countries, then the overall cost of energy can be kept low. This is a major reason why the economies of China and India have been able to grow rapidly in recent years.

If underlying costs of production are rising, mix changes cannot be expected to keep the problem hidden indefinitely. A recession is a likely outcome if the average price of energy, even with the mix changes, isn’t kept low enough for consumers. Energy producers, on the other hand, depend on energy prices that are high enough that they can make adequate reinvestment. If they cannot make adequate reinvestment, the whole system will tend to collapse.

A collapse based on prices that are too low for producers will not occur immediately, however. The problem can be hidden for a while by a variety of techniques, including additional debt for producers and lower interest rates for consumers. We seem to be in the period during which the problems of producers can be temporarily hidden. Once this grace period has passed, the economy is in danger of collapsing, with oil not necessarily singled out first.

Following collapse, large amounts oil, coal and natural gas are likely to be left in the ground. Some of it may even cease to be available before the 50% point of the Hubbert curve is reached. Electricity may very well collapse at the same time as fossil fuels.

[5] How Should We Measure Whether an Energy-Producing Device Is Actually Providing a Worthwhile Service to the Economy?

The answer that some energy researchers have come up with is, “We need to compare energy output with energy input” in a calculation called Energy Return on Energy Invested (EROI). This approach looks like a simple ratio of (Energy Output)/(Energy Input), but “the devil is in the details.”

As I looked through the workings of the Limits to Growth model, it occurred to me that the EROI calculation needs to line up with how the economy really operates. If this is the case, we really need a very rapid return of the energy output, relative to the energy input. Also, in the aggregate, the energy output needs to scale up very rapidly. Furthermore, the energy output needs to match the types of energy needed for the devices the economy is currently using. If the output is different (such as electricity instead of fossil fuels), the EROI calculation needs to be adjusted to reflect the expected energy cost and time delay associated with a changeover in devices to match the new type of energy output.

In a footnote, I have attached a list of what I see as requirements that seem to be needed for EROI calculations, based on the LTG model, as well as other considerations.1

Of course, in a setting of many researchers working on a subject and many peer reviewed papers, a concept such as EROI is gradually modified and enhanced by different researchers. For example, EROI is turned around to become the Energy Payback Period. This is used to show prospective buyers of a device how helpful a particular device supposedly is. Researchers who are trying to “push” a type of energy product will find ways to perform the EROI calculation that are as helpful as possible to their cause.

The problem, though, is that if more stringent EROI requirements are put into effect, wind and solar can be expected to do much less well in EROI calculations. They very likely drop below the threshold of being useful to the economy as energy producers. This is especially the case if they are added to the economy in great numbers to try to significantly replace fossil fuels.

Regardless of their value as energy producers, there might still be a reason for building wind and solar. Building them probably does help the economy in the same sense that building unneeded roads and apartment buildings does. In theory, all of these things might someday be somewhat useful. They are helpful now in that they add jobs. Also, the building of wind and solar devices adds “demand,” which helps keep the price of coal in China high enough to encourage additional extraction. But in terms of truly keeping the world economy operating over the long haul, or in terms of scaling up to the quantity of energy supply that is really needed to operate the economy, wind and solar do very little.

[6] How Should Net Energy Be Defined?

Net Energy is defined by EROI researchers as (Energy Output) minus (Energy Input). Unfortunately, as far as I can see, this calculation provides virtually no valid information. Instead, it promotes the belief that the benefit of a device can be defined in terms of (Energy Output) minus (Energy Input). In practice, it is very difficult to measure more than a small fraction of the Energy Inputs needed to produce an Energy Output, while Energy Output does tend to be easily measurable. This imbalance leads to a situation where the calculation of (Energy Output) minus (Energy Input) provides a gross overestimate of how helpful an energy device really is.

If we are dealing with a fish or some other animal, the amount of energy that the animal can expend on gathering food is not very high because it needs to use the vast majority of its energy for other purposes, such as respiration, reproduction, and digestion. In general, a fish can only use about 10% of its energy from food for gathering food. Limits to Growth modeling seems to suggest a similar maximum energy-gathering usage percentage of 10%. In this case, this percentage would apply to the resources needed for capturing, processing, and distributing energy to the world economy.

Perhaps there is a need for a substitute for Net Energy, calculated compared to the budgeted maximum expenditure for the function of “Energy gathering, processing and distribution.” For example, the term Surplus Energy might be used instead, calculated as (10% x Energy Output) minus (Energy Input), where Energy Inputs are subject to suitably wide boundaries. If an energy product has a very favorable evaluation on this basis, it will be inexpensive to produce, making it affordable to buyers. At the same time, the cost of production will be low, leaving plenty of funds with which to pay taxes.

Alternately, Surplus Energy might be calculated in terms of the tax revenue that governments are able to collect, relative to the new energy type. Tax revenue based on fossil fuel production and/or consumption is very signification today. Oil exporting nations often rely primarily on oil-based tax revenue to support their programs. Many countries tax gasoline consumption highly. Another type of fossil fuel tax is a carbon tax. Any replacement for fossil fuels will need to replace the loss of tax revenue associated with fossil fuels, because taxation is the way Surplus Energy is captured for the good of the economy as a whole.

When we consider the tax aspect, we find that any replacement for fossil fuels has three conflicting demands on its pricing:

(a) Prices to the consumer must be low enough to prevent recession.

(b) Prices must be high enough that the producer of the replacement energy supply can earn adequate after-tax revenue to support its operations.

(c) The mark-up between the cost of production and the sales price must be high enough that governments can take a very significant share of gross receipts as tax revenue.

The only way that it is possible to meet these three demands simultaneously is if the unsubsidized cost of energy production is extremely low. Wind and solar clearly come nowhere near being able to meet this very low price threshold; they still rely on subsidies. One of the biggest subsidies is being allowed to “go first” when their energy supply is available. The greater the share of intermittent wind and solar that is added to the electric grid, the more disruptive this subsidy becomes.

Afterword: Is this a criticism of Peak Oil energy researchers?

No. I know many of these researchers quite well. They are hard working individuals who have tried to figure out what is happening in the energy arena with very little funding. Some of them are aware of the collapse issue, but it is not something that they can discuss in the journals they usually write in. The 1972 The Limits to Growth modeling that I mentioned in my last post was ridiculed by a large number of people. It was not possible to believe that the world economy could collapse, certainly not in the near term.

Early researchers were not aware that the physics of energy extraction extends to the economy as a whole, rather than ending at the wellhead. Because of this, they tended to overlook the importance of affordability. Affordability is important because there is a pricing conflict between the low prices needed by buyers of energy products and the high prices needed by producers. This conflict becomes especially apparent as the world approaches energy limits; this conflict was not easily seen in the data reviewed by Hubbert. Once Hubbert missed the affordability issue, his followers tended to go follow the same path.

Researchers needed to start from somewhere. The start that Peak Oil researchers made was as reasonable as any. They were convinced that there was an energy problem, and they wanted to convince others of the problem. But this was difficult to do. When they would develop an approach that they thought would make the energy problem clear to everyone, other researchers would modify it. They would take whatever aspect of the research seemed to be helpful to them and would tweak it to support whatever view they wanted to encourage–often with precisely the opposite intent to what the original researchers had expected.

Thus, the approaches that Peak Oil researchers thought would show that there was a likely energy shortage ahead ended up being used to “prove” that we have an almost unlimited amount of fossil fuel energy available. It seems as though the world has such a strong need for happily-ever-after endings that self-organization pushes research in the direction of showing outcomes people want to see, even if they are untrue.

Footnote:

[1] The following is from an e-mail I sent to some energy researchers concerned about EROI calculations:

A concern I have is that EROI really needs to match up with the concept of Fraction of Capital to Obtaining Non-Renewable Resources (FCONRR) in the Limits to Growth model. If a person looks at how the 2003 World3 model functions, the person can figure out several things:

1. FCONRR is what I would call a calendar year “in and out” function. Forecasting EROI using a model year approach gives artificially favorable indications. FCONRR calculations line up fairly well with many fossil fuel EROI calculations, but not with the usual model approach used for capital devices used to generate electricity.

2. I would describe FCONRR as corresponding to “Point of Use (POU) EROI,” not Wellhead EROI.

3. If a newly built device causes a previously built capital device to be closed down before the end of its useful lifetime (for example, solar output leads to distorted electricity prices, which in turn leads to unprofitable nuclear), this has an adverse impact on FCONRR. Thus, intermittent renewables need to be evaluated on a very broad basis.

4. In the model, FCONRR starts at 5% and gradually increases to 10%. This is equivalent to overall average calendar year POU EROI starting at 20:1 and falling to 10:1. The model shows the world economy growing nicely, when total FCONRR is 5%. It gradually slows, as FCONRR increases to 10%. Once overall FCONRR exceeds 10%, the model shows the world economy contracting.

5. I was struck by the fact that FCONRR equaling 10% corresponds to the ratio that Charlie Hall describes as the share of energy that a fish can afford to use to gather its food. Once a fish starts using more than 10% of its energy for gathering food, it is all downhill from there. The fish cannot live very long, without enough energy to support the rest of it functions. Similarly, an economy cannot last very long, without enough energy to support its other functions.

6. In the model, necessary resources out depend on the population. The higher the population, the more resources out are needed. It is falling resources per capita that causes the system to collapse. This is why FCONRR needs to stay strictly below 10% and energy consumption must be ramped up rapidly. This would suggest that average POU EROI needs to stay strictly above 10:1, to keep the system away from collapse.

7. If there are not enough resources out in total, for a given calendar year, this becomes a huge problem. The way this works out in practice is that if a device uses a lot of upfront capital, these devices can sort of work out OK, if (a) only a few are built each year, (b) they have very high EROI, and (c) they last a long time. Thus, hydro and dams can work. But devices with an EROI close to 10:1 cannot work, especially if they need to be scaled up quickly and need a lot of supporting infrastructure.

8. Clearly, using the FCONRR approach, eliminating a high EROI fuel is as detrimental to the system as adding a low EROI device with a lot of upfront capital spending required. It is the overall output compared to population that is important. The quantity of output is even more important than the EROI ratio.

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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1,605 Responses to How the Peak Oil story could be “close,” but not quite right

  1. Third World person says:

    another week of bau is gone

    this call for celebrating with peak 80s peak song https://youtu.be/sOnqjkJTMaA

    • Xabier says:

      You are right TWP: an awful lot of oil went into making that video, and into us watching it so many years later- every day all the switches and buttons work is one to celebrate….

  2. Chrome Mags says:

    https://cassandralegacy.blogspot.com/

    Remember when the airline industry was going really big with the A380? Well, it would seem that era has now passed us by a those contracts dry up.

    “And there goes the A380, too. You would think that the European aerospace industry wouldn’t repeat the mistake they made with the Concorde, would they? But they managed not only to repeat it, but too make it bigger. At the time of the Concorde, everyone said that the future was with supersonic passenger planes. At the time of the A380, everyone said that the future was with large wide-body planes. Now, I wonder what else they could concoct if someone doesn’t stop them, and I can easily think of them doing something even worse. Fortunately, with the EU in the sad state it is, maybe they won’t have that chance. In any case, a just punishment for those who think they can predict the future by extrapolating the past.”

    • Duncan Idaho says:

      In South America was flying on small jets, and turbo props.
      Time to cut the waste.

    • We have tried faster and faster planes (Concord), and had to cut back. Now we have tried bigger and bigger (A380), and figured out the limit on this as well.

      I expect limits hold on ships as well. I know that in the state of Georgia, there is a plan for deepening the port in Savanna.
      https://www.timesfreepress.com/news/business/aroundregion/story/2018/mar/04/973m-deepening-savannah-harbor-nearing-halfwa/464946/
      $973 million deepening of Savannah harbor nearing halfway point March 8, 2018

      A dredging ship on the Savannah River emptied another load of sand and mud capable of filling roughly 170 dump trucks last week as officials overseeing the $973 million deepening of the shipping channel to the Port of Savannah declared the project had nearly reached its halfway point.

      Almost 2 and a half years have passed since dredging began along the 40-mile (64-kilometer) stretch linking the nation’s fourth-busiest container port to the Atlantic Ocean. Great Lakes Dredge and Dock Company, which was hired to deepen the first half from the ocean into the Savannah River past Tybee Island, is scheduled to finish its job in March.

      The Army Corps of Engineers, the agency overseeing the project, says if there are no delays, the Savannah harbor deepening could be finished in January 2022.

      Like other East Coast seaports, Savannah is racing to dig deep and make room for larger cargo ships now arriving through the expanded Panama Canal. Until the dredging is completed, those big ships have to carry lighter loads and navigate the river at higher tides.

      Is all of this expenditure of fuel really going to be worthwhile, if the world economy is soon to begin shrinking back?

      • Chrome Mags says:

        “Is all of this expenditure of fuel really going to be worthwhile, if the world economy is soon to begin shrinking back?”

        Probably not. One thing that will be interesting is looking out enough years to have descended down the other side of the bell curve, will be the interstate highway system crisscrossing the US. They’re going to seem like a lot of wasted space once they aren’t used that much. .

      • Artleads says:

        Thanks. Bigger and faster doesn’t seem to be working well these days. And I don’t see any radical change as helping much either. That includes changes away from the businesses that currently exist. Changes of any kind that are erroneously though to make a difference by the mere fact of changing them. In other words, the idea that radical change is needed by default might be a problem all by itself. .

    • Well, the story is a bit different in reality, simply the advance in efficiency of engines “unexpectedly” leapfrogged the former top concept of ~1000 passenger airplanes, hence nowadays smaller jets (Boeing and Airbus) with only two engines can dominate the sky.

      Additional factor was move towards low cost operators, which are often using small cheaper airports, you need nimble aircraft for that. So these booked in past ~decade and half the largest orders for smaller two engine jets, likewise this entire “biz concept” of so many new smaller jets was propped up in the times of cheap credit to these travel companies and overall frivolous consumption debauching on debt..

  3. Duncan Idaho says:

    • Very Far Frank says:

      Duncan- interesting the cartoons making their way around socialist circles. Kill your political opponents right? Problem is, socialists tend to assume the government will do this for them, when governments are the very bodies that are most prone to collapse.

      • Xabier says:

        The Left are prone to be obsessed with the romance of violence, the glamour of rebellious (brain-washed) youth, etc – I see it all the time on my sister’s Twitter.

        They are all, of course, people who have never lived through a real revolution and seen the downside of violent societal change emerge.

        There is a good reason that revolutionary Utopian movements often end in labour and death camps, torture and a culture of lies.

        The funniest ones are the wealthy (in global terms) ‘Resisters’. And the Champagne Revolutionaries.

        ‘The road to Hell is paved……..’

      • aaaa says:

        You’re in delusionstan if you think conservatives don’t want the same for members of the left that they dislike.

        • Xabier says:

          Maybe they do, it’s human nature: but on the Left it’s actually built into their theories of social and economic advance, and highly romanticised….. Dumb kids just suck it up, with half-formed brains and ignorant of history.

          • jupiviv says:

            If you’re going by history then capitalism caused both world wars, plus the two biggest communist revolutions. Capital is ultimately resources on the ground which are plundered against the wishes of whoever lives near or on them.

            • Tim Groves says:

              Nobody—with the possible exception of Milton Freedman—said capitalism was perfect. But for a lot of people—and you’d be surprised how many—the prospect of owning some of the shiny toys capitalism provides outweighs the security of lifetime employment laboring for the monastery, the lord of the manor, the people’s republic, or some other collective.

            • jupiviv says:

              “the prospect of owning some of the shiny toys capitalism provides outweighs the security of lifetime employment laboring for the monastery, the lord of the manor, the people’s republic, or some other collective.”

              And here I thought cheap energy, labour and resources luckily found at home or plundered abroad were responsible for BAU.

              Guarantees of a certain standard of living are precisely why a relatively small fraction of humanity has been OK with “capitalism” aka state-corporate industrialism. Those guarantees were not secured by worshipping the individual.

            • JesseJames says:

              “capitalism caused both world wars, plus the two biggest communist revolutions.”
              What a shallow statement.

            • Tim Groves says:

              Even with cheap energy, labour and resources luckily found at home or plundered abroad, without the magic of capitalism and its entrepreneurial spirit which birthed the free market, free enterprise, double entry book-keeping, innovative technological and financial development, 57 flavors of ice cream and 57 channels and nothing on, we might as well all be stuck with the the security of lifetime employment laboring for the monastery, the lord of the manor, the people’s republic, or some other collective.

            • jupiviv says:

              Well the biggest extant people’s republic is a big part of the reason why a lot of us roundeyes still enjoy BAU. It turns out the “magic” of capitalism means its actual causes and functioning, which capitalists wish to ignore.

    • MG says:

      Socialism killed capitalism also in Venezuela: They thought that they can create capital by printing money. No, because they need imported energy from outside to continue oil production and their existence. That is the essence of capitalism: bringing energy where there is a lack of energy in an attempt to kick-start the energy production.

      • Duncan Idaho says:

        Actually, capitalism is the difference between user value and exchange value, and the capitalist exploiting that difference, through profit.
        But we are traveling into territory that is beyond the neural capabilities of our readers.

        But a smile is always good–

        • Chrome Mags says:

          True enough DI, and one major component is cost of labor. US companies are allowed to pay people what amounts to slave wages to increase profit for shareholders and top execs. Those massive bonuses come from cheap labor. American workers have lost ground as labor unions have decreased and the political landscape is pro-employer, not pro-employee. Most people working overtime just get the same old wages, but they should upon passing 40 hours a week get 1.5 times & past 50 hours get 2 x’s wages. People in Europe get a mandatory 4 weeks paid vacation when they START a job. I worked in Scotland and after 3 months they said you have a week paid vacation – so I took a trip with a girlfriend up into the highlands. Aye, the heather! And the Glenlivet, Grouse, Glenmaranche and Drambuie!! Came back to work with a smile on my face. In the US you just keep working.

          What’s the difference between the US & Europe? Several decades ago workers protested for better pay, more vacation time, maternity leave (yes, people have children), but in the US people just keep taking it on the chin. I’m not even sure why. The labor union movement was strong in the time of FDR but since then the Republicans have done everything they can to take away workers rights and their followers just jump in line like that’s the American way and even feel patriotic about taking it for the boss and the shareholders. Ok. it’s your lives.

          The fact is my wife and I came to the conclusion the best way forward was to have our own businesses. Much less taxes paid, and I mean huge reductions. Also, own your home so you can use the mortgage to reduce taxes but also build equity. Renting is another form of slavery. Someone I knew that worked at a bank ran the numbers on me as to how much we were paying for rent over time and I gasped – run the numbers, it’s huge, so if you’re gaining equity that’s another way of working for yourself. Now I need to go get some work done.

          • Can either of these strategies really work? Right now, it looks to me as if the European model is going down more quickly than the US model. I could be wrong; both may collapse at the same time.

            The laws of physics seem to determine what wage distributions “work,” and for how long. More even distribution seems to lead to happier, healthier citizens, but tends to use up resources more quickly. It may also discourage innovation. Too even distribution discourages people doing any work at all. We have examples of communist systems collapsing; Cuba is not doing well, even now. Ultimately, the laws of physics will try to squeeze out any who are not contributing sufficiently to the system.

            • Artleads says:

              It’s now fairly easy to see why equality doesn’t work. Took me awhile. Maybe a machine can function without some parts? And how do you define it when some parts of a machine drive while others are driven?

            • MG says:

              On the other hand, the problem of the US is the big distances, that is why its countryside is and will be depopulating fast. These big distances make also public transport uneconomical.

              Although Europe does not have much oil, it still has got huge amounts of conventional gas on the Northern shores of Russia. We will see how economical will be the shale oil extraction of Bazhenov. The pipes and infrastructure are there like in Texas.

              The big distances are a big energy problem.

            • the USA is a nation stitched together with iron and fossil fuels

              remove the fossil fuels and the iron stitches come apart.

              Europe will follow the same route. Relying on Russian gas is ultimately self defeating, because eventually Russia will turn the taps off—either because they need it for themselves, or to gain political/military advantage (Probably both).

              Europe can’t keep itself warm and functioning without Russian gas, so will revert to the warring states it used to be

            • In the US, cement is important as well. I would imagine it is used in roads and commercial/industrial buildings in Europe as well. Without cement and iron, the world would be in tough shape. I expect wind and solar installations would go to zero.

            • Artleads says:

              Sand is now scarce, so cement won’t be around too long.

            • Duncan Idaho says:

              Cement is incredibly energy intensive.
              A disaster in the past, a nightmare currently.

            • Our roads are either made of cement of asphalt. Take your pick.

          • Xabier says:

            US workers are certainly exploited, the vacation allowance is derisory: in Europe and Britain,industrialisation eroded traditional days off and festivals -usually seasonal and religious – and it was a long hard fight to claw some free time back.

            Ironically, those who lived under the heel of the Catholic church did better in that respect as the old religious festivals were maintained by the priests who wanted to maintain their control on life.

            Today, in Spain, people have a way of stretching out weekend vacations to Thursday-Tuesday (the so-called ‘bridge’) and there is a lot of absenteeism in the public sector among the category of unsackable ‘functionaries’.

    • Third World person says:

      haha duncan you think people will lynched billonaires

      when billionaires own media companies, governments
      well you of touch https://youtu.be/s_8KR-n2fBQ

  4. MG says:

    The human species, trying to survive, applied various techniques: fristly, it was gathering food, theny hunting, later agriculture. The last stage of its existence is dominated by mining: we mine for energy in order to keep running all the previous stages: gathering food, hunting and agriculture.

    • doomphd says:

      actually, the last stage could be fusion synthesis of needed food and commodities, using the very high energy gain of fusion nuclear power, which seems like such a waste of energy today, but today’s energy is fossil fuel produced. of course, we need to demo a continuous fusion reaction that is contained. still waiting for that. meanwhile, we have dirty fission.

      • Country Joe says:

        When I was getting my Post Hole Digger degree, they taught me that 6 CO2 + 6 H2O – in the presences of Sunlight – = C6 H12 O6 + 6O2. There was no mention that the energy in the bonds of the new sugar molecule was fusion produced solar energy. There was no mention that the heat coming out of the wood in the fire place was fusion energy from the Sun that the tree had stored in the bonds of the wood molecules. There was no mention that all our fossil energy is fusion energy that was stored photosynthetically millions of years ago.

        It was 30 or 40 years later that I dawned on me what “in the presence of Sunlight” meant. All the focus in school was on the H and the C and the O with no concept of the energy involved. Earth is solar-fusion powered.
        We’ve got some fission and some geotherm but life on Earth is Sunshine.

        So with Sunshine powering photosynthesis, we currently have all our food produced by fusion energy.
        We have a wonderful fusion reactor setting out there, safely 93,000,000 miles away that has been quite reliable for the past 3-4 billion years.

        Earth has had this small blip of stored fusion that caused an unfortunate biological imbalance, but nature always corrects. Earth will go back to life on current Solar Income. As long as we have liquid water on Earth, some kind of life will carry on.

    • Davidin100millionbilliontrillionzillionyears says:

      “The last stage of its existence is dominated by mining: we mine for energy…”

      and lots of other resources… and all of this mining will gradually and continually get more expensive due to diminishing returns…

      Peak Oil is just one special case of diminishing returns… obviously, FF diminishing returns are the most important and are leading to the end of prosperity…

      though this might be the penultimate stage…

      the last stage might be human quasi-civilization with zero FF…

      • Tim Groves says:

        The last stage will doubtless be very smug and superior pure energy beings who regard even Mr. Spock’s logic and Engineer Scot’s ability to fix warp drive engines as the primitive antics of upstart carbon-based lifeforms.

        • Davidin100millionbilliontrillionzillionyears says:

          or the last stage will be just the remaining Preppers…

          I don’t really think so…

          but perhaps they do…

  5. SuperTramp says:

    Abrupt Collapse…now, that’s what I’m talking about!

    LONDON (AP) — Hundreds of passengers throughout Europe have been stranded by the abrupt collapse of the British regional airline Flybmi
    British Midland Regional Limited, which operates as Flybmi, said it’s filing for administration — a British version of bankruptcy — because of higher fuel costs and uncertainty caused by Britain’s upcoming departure from the European Union.

    “Current trading and future prospects have also been seriously affected by the uncertainty created by the Brexit process, which has led to our inability to secure valuable flying contracts in Europe and a lack of confidence around bmi’s ability to continue flying between destinations in Europe,” the airline said on its website late Saturday.

    The airline thanked workers for their dedication and said “it is with a heavy heart that we have made this unavoidable announcement.”

    The airline operated 17 jets on routes to 25 European cities. It employed 376 people in Britain, Germany, Sweden and Belgium and says it carried 522,000 passengers on 29,000 flights last year
    https://news.yahoo.com/hundreds-stranded-british-airline-flybmi-collapses-094458110–finance.html

    Here today…on a razors edge.

    • I think that there have been some other airline bankruptcies recently as well.

      Air Germania Feb. 5, 2019 https://phys.org/news/2019-02-germania-airline-bankruptcy-cancels-flights.html

      The airline with 37 aircraft had flown mainly Mediterranean, North African and Middle Eastern holiday routes for German sun-seekers on package trips, and said it transported over four million passengers a year.

      One reason: “steep kerosene price increases over the summer of last year with a simultaneous fall of the euro against the US dollar”

      There also seems to be a change in rules that hurts airlines. https://www.aerotime.aero/gediminas.ziemelis/22216-2019-will-be-a-year-of-crossroads-for-aviation-industry The International Financial Reporting Standards (IRFS) is requiring companies to bring most leases onto their balance sheets in 2019.

      This new standard – IFRS 16 – will enable analysts to see a company’s own assessment of its off-balance sheet lease liabilities. The new standard covers commercial aircraft so some airlines will be in trouble as the new prescribed methodology will require many to re-negotiate covenants with their bank. As the airlines will now be required to increase the liabilities and assets they report it will have a significant impact on their financial standing, bringing mostly negative consequences. For the airlines that have traditionally kept their leased aircraft classified as a finance and operating lease this change means the assets will be more visible on their balance sheets so they will appear to be more indebted. In addition to this structural change in the accounting of the balance sheets there will also be changes in accounting over the life of the lease contract which ultimately will mean more costs to the airline when these changes go into effect. Even into the future, managing these now on-balance assets will prove costlier over the life of the lease.

      I suppose this accounting change was to protect riders, but driving them to bankruptcy isn’t entirely helpful.

  6. SuperTramp says:

    When I lived in North Carolina, the good old boys, shrugged and said if there was a Collapse, all they would do is grab their gun a go out in the woods to kill a deer….see…preeping at it’s hunting and gathering Level….there is always something…
    ‘Zombie’ deer disease is in 24 states and thousands of infected deer are eaten each year, expert warns
    https://amp.usatoday.com/amp/2882550002
    Chronic wasting disease, or CWD, has afflicted free-ranging deer, elk and/or moose in 24 states and two Canadian provinces as of January, the Centers for Disease Control and Prevention says.

    “We are in an unknown territory situation,” Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, told USA TODAY on Friday.

    Last week, Osterholm testified before his state lawmakers warning about possible human impacts.

    “It is probable that human cases of chronic wasting disease associated with consumption with contaminated meat will be documented in the years ahead,” he said. “It’s possible the number of human cases will be substantial, and will not be isolated events.
    Zombies!!!…

    • I saw the story earlier about the rising incidence of CWD in deer. This is frightening. There are epidemics of many kinds. We won’t necessarily know in advance what they are.

    • Tim Groves says:

      Chronic wasting disease is an appropriate description of human life under modern consumerism. We (the common “we”) waste perfectly good stuff by trashing it when we get bored with it, we waste inordinate amounts of time and energy in trivial pursuits and frivolous antics, and we create poor quality goods by wasting perfectly good resources, all on an impressive and unprecedented scale.

  7. Lastcall says:

    Interesting how insects are promoted as a future protein source; looks like that resource may be disappearing as well.

    The limits to growth graph that probably represents this best is the line depicting services per capita.This blog discusses mined energy available made available per capita and its declining performance. Meanwhile services per capita from the insect world appear to be in rapid retreat.

    My personal belief is that we have overlain the subtle geo-magnetic and cosmic radiation signals that guided natural processes on this planet with a fog of telecommunication and satellite wi-fi etc that dis-orientates, and in the case of 5G, will likely fry, our insect support systems. Apparently a smart-phone, if it was on the moon surface, would be brighter than any natural microwave signal from space other than the sun.

    Anyway, my point is that food is a pretty basic need, and even with some new magical energy source (fusion) I doubt the enormous loss of insect energy inputs can be compensated for.

    Was it Einstein that said that 4 years after the bees are gone, so too will we?

  8. Lastcall says:

    Also for animals…plenty of evidence to show we are building our road (5G information highway) to perdition!

    ‘The present time is characterized by great technological advances that bring together electromagnetic pollution. Power lines and mobile transmission antennas are sources of this pollution but in different frequencies. Recently, it has been shown that electromagnetic noise, in the frequency range of 50 kHz to 5 MHz, can affect the magnetic compass orientation of migratory birds, becoming totally disoriented [95]. The results of Burda et al. [9] show a similar result for extremely low frequencies in mammals. A general conclusion from both studies is that alternating magnetic field pollution in higher and lower frequencies can affect the magnetic sensibility of animals, and animal preservation policies must be aware of this.

    https://www.hindawi.com/journals/jbp/2015/423838/

    • This is a 2015 article, pointing out the possibility of a problem. It doesn’t go as far as mentioning 5G, probably because 5G wasn’t really thought about at that time.

      I don’t know that there is any way of stopping the movement toward 5G apart from general collapse of the economy. We have way too many ways of overusing our resources.

      • Lastcall says:

        More recently we have;

        “These ELF frequencies are the Schumann resonances, and are identical to the brain wave frequencies of every animal. It also contains VLF frequencies. These are generated by lightning, vary seasonally, and regulate our annual biorhythms. We pollute this circuit at our peril.
        The strength of the atmospheric electrical current is between 1 and 10 picoamperes (trillionths of an ampere) per square meter. Dr. Robert Becker found that 1 picoampere is all the current that is necessary to stimulate healing in frogs. (R.O. Becker and G. Selden, The Body Electric, New York: Morrow 1985, p. 142; R.O. Becker and A.A. Marino, Electromagnetism and Life, Albany: State University of New York Press 1982, pp. 49-51). It is these tiny currents that keep us alive and healthy.”

        Further on;
        “What does this have to do with SpaceX and OneWeb? Or, to rephrase the question, if a single half-watt radio station broadcasting from the earth has a measurable effect on the magnetosphere, what effect will 20,000 satellites, some located directly in the ionosphere and some directly in the magnetosphere, each blasting out up to five million watts—what effect will that have on life below?

        The answer has to do with the fact that the satellite signals—like all wireless signals today—will be pulsed at ELF and VLF frequencies. That is how the data will be sent. Like an AM radio, the ionosphere and magnetosphere will demodulate, or extract, the ELF and VLF components, and then amplify them tremendously.”

        And because science is in the service of business, it is business that will decide out fate.
        For a long time I have been wondering whether it will be a collapse of the financial system or a collapse of our natural system that will be the deciding factor.

        Now I believe a financial system collapse (well underway in the periphery, including for those within the G20 countries whom are outside the upper 20% and normally below the decision making radar…deplorables, brexit, yellow vests etc) will merely end our way of life.

        It will be the ecological collapse (again well underway but similarly mostly under the radar except for the headline acts; polar bears, Panda, Silverbacks, whales, rhino’s et al) that end any way of life.

        Jellyfish for dinner anyone?

          • Davidin100millionbilliontrillionzillionyears says:

            thanks for that… I like to read new chapters of our story…

            “It is these tiny currents that keep us alive and healthy.”

            so perhaps we will be healthier with stronger currents?

            it seems to me that these kinds of new doomer science stories often don’t amount to much of anything…

            this one could be the big one… or not…

            • Tim Groves says:

              Imagine what they would have said if the Elephant Man had used a smartphone?

            • Davidin100millionbilliontrillionzillionyears says:

              hey, Merrick, call me (maybe)…

            • Lastcall says:

              ‘Insects are most numerous & successful creatures on Earth. Their species richness or diversity surpasses any other group of organisms. Throughout the insect evolution, several factors have combined to make insects the most successful of all species on this planet.’

              It could very well be that its more of the same-same, but when we see such a success story being turned on its head it does beg the question; where to from here?

              I guess we all have different trigger events; I believe technology is a false and universal G*d to a new urban elite,. In much the same way the elites ignored the deplorables/brexiteers/yellow vests’, because they didn’t show up on their twitter feeds, the last to know about the collapse of ‘natural energy flows’ of the real world will be those latte sipping chattering classes. texting each other while clutching their empty recycled bamboo bags that they brought home from their holiday to Bali.

              Me, I and more a short black type of guy.

      • Xabier says:

        Sophisticated technologies, deployed without any forethought on the part of their developers and sponsors, are nothing more than a crude and destructive intervention in a delicately balanced complex system.

        Arrogance and hubris have their price, and always have.

        Earlier technological changes – pre-historic or associated with civilisations – generally resulted in the sever disruption/ destruction of established human ways of life: generally, however, as many befitted as suffered, and only localised environmental damage was caused (although it could be quite extensive – deforestation and soil erosion, etc).

        Now we can wreak fatal havoc in the whole planetary life system on which we depend, seeking to maintain a financial system and civilisational structure which is doomed in the short-term.

    • Interesting! I can see that the travel industry is headed for worse times, as the higher cost of oil in 2018 works its way through the system. Also, as I mentioned yesterday, there is an accounting change relating to the many airline leases that adversely affects many airlines that takes place in 2019. This further raises needs prices for airlines.

  9. Harry McGibbs says:

    “Auto sales in China continued to fall in the first month of this year after the first full-year slump in sales last year following more than two decades of growth.

    “Wholesale passenger vehicle sales fell by 17.7% YoY to 2.02 million units last month to make seven straight months of monthly declines for the world’s largest auto market. The decline follows a 15.8% fall in sales during the month of December and an overall 4.1% decline for the whole year.”

    https://www.chinaknowledge.com/News/DetailNews/85313/Car-sales

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