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.
I have always known that clowns are the essential ingredient in a circus.
What I have just realised is that they are all economists.
Miserable people.
Miserable science.
Miserable outcome.
Inevitable end.
Four in five Vatican priests are gay, book claims
French journalist’s book is a ‘startling account of corruption and hypocrisy’.
https://www.theguardian.com/world/2019/feb/12/four-in-five-vatican-priests-are-gay-book-claims
I can think of several explanations. One is that if a person is gay, this is a good place to find like-minded people.
Another explanation is that people have sexual attraction urges. We know that studies have shown that if people are asked to choose which of several paintings to take home and put on their walls, and are given their second choice instead of their first choice, after a period of time of living with what they have been given (when tested again), they suddenly prefer what they have been given. So at least when framed pictures for the wall are involved, preference do change somewhat to match availability. If this happens at all in the priesthood, it would tend to add to this.
A third explanation is that back at the time when celibacy as encouraged for priests and nuns, a major problem was keeping population down. The church acted as an employer for “extra children” who couldn’t be accommodated on a farm. Keeping wages low and requiring celibacy was the way this approach could be put to maximum use. Homosexuality channeled in unproductive ways a tradeoff that people were willing to live with. It was a way a low-energy society could serve the maximum number of people.
In Old Europe, even rich people – not just peasants – dumped extra daughters in nunneries, so as to avoid the cost of dowries. And younger sons could become monks or priests.
In India and China, excess girl babies were killed. Each area of the world needs to come up with a solution to keep population in check.
By the way, there are a lot of religious people in the world who have no problem with homosexuality. They probably do with molesting their children. In a high energy world, we have higher standards than a low energy world could afford to.
Don’t think that is the issue– it’s the “corruption and hypocrisy” that is systemic in almost all religious cults.
My advice is to stay away from organizations that you consider to be religious cults, then.
The Catholic Church certainly can provide valuable services to their members and others, whether or not they are “a religious cult guilty of corruption and hypocrisy.” I think one of the major roles of religious organizations throughout the ages has been to show people how they can survive (as a group) on what we would consider less than an optimal amount of energy per capita. Members are taught to moderate their desires for worldly goods and to share with those with less. Women ended up in subservient roles, to keep total energy consumption down. When there is not a lot of energy per capita, the style of the organization indeed does have to be closer to a “cult” than an organization whose leaders are elected by its members. To survive persecution, and organization almost has to be like a cult. Lots of survivalist groups have figured out that elected leaders don’t really work; the group tends to disband too easily.
Now we have all kinds of hypocrites peddling the message that all you have to do to fix our energy problem is to switch out your light bulbs and buy an EV as your second car. These are “good” people. They don’t molest anyone. But they spread a false message. Is the current approach a whole lot better? It is what “sells” in today’s high energy world.
The physics of the situation figures out what survives, even if we, in modern society, don’t like the outcomes.
Please run this by me again, Duncan.
Do you have any problem with homosexuals per se?
Or with homosexual men becoming priests?
And are you suggesting that being a homosexual is in some way equivalent to being a child sex abuser?
Because if not, then I can’t see any reason why you should care what a priest’s sexual orientation is.
Please clarify what your objections are to 4 our of 5 Roman Catholic priests having a homosexual as opposed to heterosexual orientation.
the energy surplus within societies often dictates how crime is dealt with
ie a low energy society can’t afford jails, so they execute folks for many petty crimes
The USA seems to have turned this on its head—incarcerating petty criminals for life, as a business investment
This but there’s a donkey down there with the elephant.
https://i.redd.it/36tb8eb258g21.png
I don’t get the Soros thing.
Should’t these greed heads admire someone that made lots of cash?
Maybe that are just envious?
ALEXANDRIA OCASIO-CORTEZ’S ‘CORRUPTION GAME’ SPEECH IS NOW THE MOST VIEWED TWITTER VIDEO OF ANY POLITICIAN
https://www.newsweek.com/alexandria-ocasio-cortezs-corruption-game-speech-now-most-viewed-video-any-1327816?fbclid=IwAR0MCXAkqDBq8BfzIs5cXvFzO5tOZy2Pbe8FPjPXSsG24_c-06XQI_mI9RQ
Trump has been watching this all day on executive time..😀😀
Economic Crisis Can Trigger World War
http://www.ipsnews.net/2019/02/economic-crisis-can-trigger-world-war/
“Economic recovery efforts since the 2008-2009 global financial crisis have mainly depended on unconventional monetary policies. As fears rise of yet another international financial crisis, there are growing concerns about the increased possibility of large-scale military conflict. More worryingly, in the current political landscape, prolonged economic crisis, combined with rising economic inequality, chauvinistic ethno-populism as well as aggressive jingoist rhetoric, including threats, could easily spin out of control and ‘morph’ into military conflict, and worse, world war.”
That’s from your link, BD. I can was as a definite possibility because what could be done to reignite the world economy with unconventional monetary policies was a huge one shot deal that can’t be repeated at that scale or the valuation of currency will fail. The alternative will be for governments to blame other countries for their woes and at some point all hell will break loose.
“I can was as a definite…” should be, “I can see that as a definite…”
https://www.usatoday.com/story/news/politics/2019/02/12/national-debt-tops-22-trillion-first-time-ever/2849978002/
The national debt surpassed $22 trillion for the first time on Tuesday, a milestone that experts warned is further proof the country is on an unsustainable financial path that could jeopardize the economic security of every American.
The national debt has been rising at a faster rate following the passage of President Donald Trump’s $1.5 trillion tax-cut package a little more than a year ago and as the result of congressional efforts to increase spending on domestic and military programs. The nation has added more than $1 trillion in debt in the last 11 months alone.
“Reaching this unfortunate milestone so rapidly is the latest sign that our fiscal situation is not only unsustainable but accelerating.”
What they should do is come out and have a press conference and say the following, “We have been giving tax cuts away like there’s no tomorrow as a way to manipulate for votes, but if there is going to be a tomorrow, then we need to retract all of them going back as far as we need to so that these 1T deficits in 11 months stops happening. So that we can at least get closer to balancing the budget. So that’s what we’re going to do. Have a nice day.”
“The party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”
― George Orwell, 1984
‘Putting this in context, total US debt has now risen by over $2 trillion since Trump took office… but notably slower than Obama’s pace of borrowing..’
https://www.zerohedge.com/news/2019-02-12/us-national-debt-tops-22-trillion
So whose truth are you going to choose?
My calculator doesn’t have enough columns to do trillions, but counting on my fingers and toes, $22 trillion works out to about $70,000 per capita for the US population. If you all took out an interest-free mortgage for a round 100,000 each, you could pay that debt off and have ¥30,000 each left over for shopping!
But on top of the debt, there is a much bigger mountain of unfunded “commitments” such as social security in the pipe. Our public servants are going to have to get really creative in order to keep that rolling over.
$70,000. is a pretty close number, Tim – this website, http://www.usdebtclock.org/ has it at $66,998. but even more if only taxpayers are taken into account at $179.805.
$179,805.
Tax cuts also help keep oil flowing. Also help other energy producers in dire straights.
Bass Says China Is ‘Just a Paper Tiger’
https://www.bloomberg.com/news/videos/2019-02-11/bass-says-china-is-just-a-paper-tiger-video
Doug Casey has an interesting article up on the Auto industry:
• The auto industry can’t afford for this to continue…
The chart below says it all. You’re looking at how much total outstanding auto loans have grown since 2009.
You can see that it’s surged 65% since 2010. The median U.S. household income is up just 26% over the same period.
So a healthier consumer hasn’t been fueling auto sales. Cheap debt has. And if it goes away, the auto industry could run into serious problems.
https://www.caseyresearch.com/this-key-us-industry-is-flashing-danger/
Cheap and plentiful debt just like cheap and plentiful oil is what turns the wheels of globalized industrial civilization. Without cheap debt there would be NO shale oil, without cheap debt people wouldn’t buy cars, houses or other durable goods.
Too many signs are flashing red at the same time. The US housing industry isn’t doing well, as Casey mentions at the end of the article. And we know Germany, China, Australia, and the UK aren’t doing well. Yoshua posted a graph showing that refineries aren’t making money on gasoline refining.
The Fed will have to start cutting rates soon. The 10 year treasury yield is falling and will soon fall below the Fed’s funds rate at 2.5 percent.
In the end the funds rate will have to turn negative and QE will have to monetize the government debt.
This is what’s keeping BAU alive, for now. Boy we’re so close to the end, it’s not funny.
5 Out Of 6 Global Central Banks Are Still Flooding Markets With Liquidity
“Global Central banks had stepped in to flood the system with liquidity. …, while the Fed had stopped expanding their balance sheet, everyone else went into over-drive.”
Good point. I also noticed this article toady in the WSJ about junk-rated property developers going on a debt spree, taking out US$ denominated debt. What could possibly go wrong?
China’s Developers Go on Borrowing Spree
As the Fed strikes a more dovish tone, junk-rated property firms sell dollar-denominated debt
Good point! Many people don’t understand why this difference is important. Banks tend to make fairly long-term loans to customers, somewhat based on the 10 year interest rate. They pay their depositors mostly based on short-term rates. If the difference is large, it helps banks profitability. They stop making loans when the “spread” turns negative. It is the “stopping making loans” that is the deal-killer, because growing debt pulls the economy forward.
Italy is in dire straits, too.
The Washington Post is also reporting on US auto loans. Gail, you looked at the figures a year or so ago and called the timing on this.
“A record 7 million Americans are 90 days or more behind on their auto loan payments, the Federal Reserve Bank of New York reported Tuesday, even more than during the wake of the financial crisis.
“Economists warn that this is a red flag. Despite the strong economy and low unemployment rate, many Americans are struggling to pay their bills.
““The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market,” economists at the New York Fed wrote in a blog post.
“A car loan is typically the first payment people make because a vehicle is critical to getting to work, and someone can live in a car if all else fails. When car loan delinquencies rise, it is usually a sign of significant duress among low-income and working-class Americans.”
https://www.washingtonpost.com/business/2019/02/12/record-million-americans-are-months-behind-their-car-payments-red-flag-economy/?utm_term=.c1dff1c2b7b2
“The U.S. household debt and credit report, published Tuesday by the Federal Reserve Bank of New York, showed that the overall debt shouldered by Americans edged up to a record $13.5 trillion in the fourth quarter of 2018. It has risen consistently since 2013, when debt bottomed out after the last recession…
“Another signal of weaker demand, the closing of credit cards and other accounts, jumped to its highest level since 2010, while flows into serious delinquency for credit cards rose 5 percent, up from 4.8 percent in the third quarter.”
https://www.reuters.com/article/us-usa-economy-debt/red-flags-emerge-as-u-s-household-debt-notches-another-record-idUSKCN1Q11YV
“[A new survey] found that 29% of Americans have more credit-card debt than they do emergency savings. And the problem is getting worse. In 2018, 21% said they had more credit-card debt than emergency savings. And in 2015, 22% said they had more credit-card debt. This disturbing trend is “evidence of a lot of the strain households are under,” said Greg McBride, the chief financial analyst at Bankrate.”
https://www.marketwatch.com/story/a-growing-number-of-americans-have-more-credit-card-debt-than-savings-2019-02-13
Not to mention student loans!
Right.
All of the emphasis on higher mileage has tended to sent the cost of vehicles higher. As we have seen, the price of oil has not really risen to compensate for the higher cost of extraction, however.
I think we are seeing another version of this issue here. As the price of vehicles has risen, the wages of many young people have not risen correspondingly. They cannot really afford these vehicles, especially when the cost of oil rises, as it did up until about Sept 30, 2008.
Rising interest rates also discourage more loans, making it harder to handle emergency medical bills and other unexpected expenses.
Major global (group) brands like Renault-Nissan still offer econoboxes of various kind, even incl. midsized family vans, for ~ >$9k, as I understand these models are usually not available specifically within the US/NA markets, although they have the minimum crash ratings and emissions up to date etc. Now to the core topic, I’d say it is a mix of issue forcing it: demography, existing overhang of used stock of cars, barriers to entry lower cost models, general frivolousness of luxury and size, and your correctly made point about efficiency bound race increasing prices, another contributing factors are also fast phase in of enviro mandates which the manufs can’t absorb quickly,..
Fifty Shades Of Shale Oil
Considering that the majority of U.S. tight oil production growth is generated by a single field, the Permian, changes in the growth outlook of this basin have major implications as to the evolution of global oil prices over the short, medium and long term. Its important to keep in mind that the Permian oil field, despite its large scope, is bound to flatten, peak and decline at some point. While forecasters differ as to the exact year when the Permian oil production will flatten, the majority agree that a slowdown in Permian oil production growth will take place in the early 2020s.
According to OPEC (2018 World Oil Outlook), the Permian basin oil production curve is likely to flatten by 2020, with growth slowing down from 860K barrels in 2018 to a mere 230K barrels by 2020:
There are many factors that can accelerate or delay the projected flattening phase, but there is no doubt that sooner or later Permian oil production will flatten. An eventual plateau in Permian oil supply effectively translates into a flattening of non-OPEC global oil supply, the importance of this event can’t be overstated. The year the Permian flattens is the year OPEC will regain control of the market, this seminal event will have major implications on long term oil prices. There is no doubt that Saudi Arabia and Russia are aware of the Permian growth and flattening dynamic and are co-managing their oil supply over the short term and medium term to allow for an orderly entrance of U.S. tight oil supply, aka Permian oil supply, into the market. It’s indeed telling that OPEC is attempting to extend its alliance with Russia for another three years, exactly the time window required for growth in the Permian oil field to flatten and for pricing power to return to it.
https://oilprice.com/Energy/Crude-Oil/Fifty-Shades-Of-Shale-Oil.html
National debt hits new milestone, topping $22 trillion
https://www.apnews.com/91b54fd7207c45eb93523567152e43dc
“..$22T? Few nickles among friends..”
The Elders
Not to mention all of the unfunded promises, like Social Security and Medicare.
(The little bit of debt associated with Social Security has to do with an attempt to pre-fund part of the Baby Boomer bulge in benefits. Since the government is on a “cash” rather than an “accrual” basis, this didn’t really work. The money was spent on other things, such as wars. Non-marketable US debt as added in place of the money collected as “Social Security Contributions” and spent for something else.)
A record 7 million Americans have stopped paying their car loans, and even economists are surprised
https://amp.businessinsider.com/auto-loan-delinquency-number-record-new-york-fed-2019-2
new report from the Federal Reserve Bank of New York revealed 7 million Americans are behind on their auto payments by at least 90 days.
Most of the Americans who have recently fallen behind on their car payments have low credit scores or are younger than 30 years old.
Fed economists said the rise in the number of delinquent borrowers is “surprising” considering a strong labor market and economy.
I am not certain how leases affect these numbers. If leases have been growing, and they are excluded from the loan default numbers, it would make the issue even worse than it seems.
With the US-Russian Nuclear Treaty in Tatters, Is ‘Doomsday’ Ticking Closer?
https://www.livescience.com/64742-nuclear-treaty-breakdown-doomsday.html
I think a more pertinent question might be: Is there anything people like you and I can do about this?
It’s late stage capitalism–
This is a predicament, not a problem.
End stage regimes never produce good leaders.
Nero or Caligula as Rome collapsed, and Trump in the decline of the US, for example.
From an existentialist perspective, I do what I believe is right, without hope for results.
But realistically, we are in a predicament.
Nero and Caligula were merely self-obsessed amateur artists.
Trump, by contrast, is a ROCK STAR!!!!
He even has his own version of a well-known Pink Floyd album.
https://s.hdnux.com/photos/01/00/41/12/16913055/235/920×920.jpg
We certainly are in a time now during which war is more likely. As long a prices stayed high enough, we could get enough out for everyone. But if prices won’t rise enough, we have a problem. That is when conflict occurs.
A record 7 million Americans are 3 months behind on their car payments, a red flag for the economy
https://www.washingtonpost.com/business/2019/02/12/record-million-americans-are-months-behind-their-car-payments-red-flag-economy/
Ukraine has become an abundant source of working force for other, mostly EU, countries: Poland, Czech Republic, Russia, Germany, Isarael, Scandinavia, Slovakia… A half of the productive population works outside the country.
https://www.lidovky.cz/svet/vysavate-nasi-pracovni-silu-zlobi-se-kyjev-v-zahranici-je-zamestnana-polovina-produktivni-populace.A190212_175450_ln_zahranici_ele
Better than being ripped off by right wing thugs in the Ukraine.
People in economies that are doing poorly want to migrate, especially if they have salable skills.
“Anyone who knows history, particularly the history of Europe, will, I think, recognize that the domination of education or of government by any one particular religious faith is never a happy arrangement for the people.”
~ Eleanor Roosevelt
https://www.theguardian.com/environment/2019/feb/10/plummeting-insect-numbers-threaten-collapse-of-nature?utm_campaign=the_download.unpaid.engagement&utm_source=hs_email&utm_medium=email&utm_content=69772546&_hsenc=p2ANqtz–Ej-GMP0cqS7EiIA30JaAbKYAHZ2fSXJREAyAol3AB0Z7aAHTcKr0Oeiyor79cHsT8ymXV6xf7yAFAGEzngS5zumP2EA&_hsmi=69772546
But, will the human population keep up, with the demise of fossil fuels?
Right! Falling human population may fix the problem.
Auto sales plunged in the last quarter of 2018 around the world. Today gasoline crack spreads have turned negative around the world.
Saudi Arabia has decided to cut production to 9.8 mmbpd. SA obviously needs higher oil prices…but the global economy doesn’t seem to be able to handle higher oil prices.
https://pbs.twimg.com/media/DzMyUtVW0AEqE_D?format=jpg&name=900×900
We shall see.
Our first ever actual oil shortage is coming up.
We will get real time results.
I think we are already seeing what the effect is. We get a cut in demand to go with the cut in supply. So the result ends up being a wash in terms of prices and supply, or even results in added oil glut.
But we have not hit a shortage.
That is in the future.
Then we can see the results.
Until then, it’s speculation.
Not much motivation to produce gasoline when crack spreads have turned negative. Too much gasoline out there.
I presume the 9.8 million barrels a day is comparable to the 10,213,000 reported by OPEC for January. So it is down another 400,000 barrels or so. Production is reported to have been a bit over 11.0 million barrels per day in November.
New Jersey man involved in scary crash after autopilot Tesla veers off road
NORTH BRUNSWICK, New Jersey (WABC) — A man in New Jersey was involved in a scary crash Sunday after his autopilot Tesla Model X suddenly veered off the road, and crashed through signs and bushes.
The owner says the car’s autopilot forced him to jump the curb and mow down several signs before coming to a muddy stop along Route 1 in North Brunswick. Bits and pieces of the Tesla were scattered along the northbound side of the highway.
https://abc7ny.com/nj-man-involved-in-scary-crash-after-autopilot-tesla-veers-off-road/5133538/
https://proxy.duckduckgo.com/iu/?u=https%3A%2F%2Fmedia.giphy.com%2Fmedia%2F3jcgPn9fzfaXc1EHJC%2Fgiphy.gif
It amazes me to what extent people will trust their lives to “technology”. Remember that technology is crafted by human hands. Beneath the thin veneer of advertised perfection lies the shortcomings of human weakness.
It need not be that amazing. Most people let themselves be taken in by first impressions rather than engage in a careful evaluation of what they see or hear. That’s how sci-fi movies work — by presenting a breathtaking spectacle of hi-tech stuff.
Besides, technology did ‘deliver the goods’ during the halcyon days of cheap and abundant energy, as in improved living conditions, higher work efficiency etc. We now know of course that it’s the energy that should be given the credit, not the technology, but nevertheless the delusion is a very persistent one…
How many of these crashes will it take to get people to figure out that the feature is dangerous?
I have read stories of people blindly following their GPS mapping app literally into lakes and ravines trying to find their destination. It’s nuts. I don’t even trust the switch on my table saw. When I change the blade, I unplug it. And the electronics of a saw are much less complex than AutoPilot. How can you put your life in such jeopardy to where you let a computer drive your car. Imagine how many things can go wrong. Way too many variables to trust a machine with.
They buy it for a status symbol..
Saudi Arabia goes on the hunt for global oil and gas
https://www.ft.com/content/e0a6775c-2e4f-11e9-ba00-0251022932c8
Why would you go hunting if you had 260 Gbs left in your backyard?
Doesn’t pass the smell test..
Good point!
Another desperate oil producer looking at economic diversification:
“Promises by Nigerian presidential candidates to fix an economy that vies with South Africa’s to be the continent’s largest could be unfulfilled unless the country is weaned off its oil dependence.”
https://www.bloomberg.com/news/articles/2019-02-12/nigeria-faces-lost-decade-as-economic-growth-stagnates
written as if there’s another teat to go to
one wonders who writes this stuff
«There is a new economic theory that has emerged on the left called Modern Monetary Theory (MMT). It is basically the opposite of conservative austerity economics. While Reaganites will argue that you must cut government spending to help grow the economy, MMT adherents assert that currency itself is a public monopoly, and so the only limit to government spending is inflation, not the total money the government is taking in, since if the government ever needs more money, it can just print it, because there is no other competition for spending in the economy.
This matters now because the Green New Deal has finally manifested in legislation co-sponsored by top 2020 contenders like Kamala Harris, Bernie Sanders, Kirsten Gillibrand, Cory Booker, and Elizabeth Warren. Alexandria Ocasio-Cortez’s companion Q&A cites two pieces, one in Forbes and the other in Huffington Post, which assert that the question of “how do you pay for the Green New Deal?” has already been answered. The HuffPo piece was written by Professor of Economics and Public Policy at Stony Brook University, Stephanie Kelton, who was also the Chief Economist for the Democrats on the U.S. Senate Budget Committee. Yesterday, she posted a thread outlining some legitimate economic questions that MMT claims to answer.»
https://www.pastemagazine.com/articles/2019/02/what-is-modern-monetary-theory-and-why-is-it-so-im.html
“What if there really is a magic money tree? What if governments can spend as much money as they want, without raising taxes or borrowing? What if they can pay for free college education for all, free health care, decent social housing, shiny new infrastructure and a universal basic income – all without worrying about deficits or debt accumulation?
“…[The] notion of free money for all is a deeply seductive one. Unfortunately, there are some big flaws in MMT – institutional, economic, and political…”
https://www.scmp.com/week-asia/opinion/article/2184741/even-china-theres-no-magic-money-tree-modern-monetary-theory
Energy runs the economy – not money. Money is just a promise of the future availability of energy. There is nothing modern about it. Money is ancient. As long as resources are abundant and cheap, money works. But, as resources per decline, so to will the standard of living – regardless of how much money is printed.
I would argue that it is only cheap energy that can successfully run a large, complex industrial economy like the US. Now that energy is expensive and less affordable to the general economy, we are left with lower quality goods and services than people have been accustomed to. So, the first knee jerk reaction of people is that we have a money problem. They don’t realize that the real problem is resources (which power the economy) are becoming more scarce and expensive to extract. It is tempting to thing that we can print money and use that to extract more resources. But it still takes energy to get energy and resources – not just money.
People see money as prosperity. But, it is really the control of resources that is the real source of prosperity. Money used to be a proxy to control resources because resources were cheap to extract. Now, the tables are turning. Resources are becoming more valuable than money.
Lower quality goods and services?
Automobiles have never been better, required less maintenance.
Medical care in the right setting has never been better and is getting better due to AI.
Dental care has never been better.
Education has never been better – look at the MIT courses on line, Coursera – the education monopoly has been broken.
If anyone wants to do quantum computing IBM makes it available on line for free
What is broken is the Catholic Church which with all its imperfections was a cornerstone of Western Civilization for the majority of the population. We need it and it needs a fix of some sort.
Price’s Law was originally the square root of the work force did 50 percent of the work, maybe with modern learning is is ls less than that.
The world is unfolding as it should, there is so much that is positive.
Dennis L.
“Automobiles have never been better, required less maintenance.
Medical care in the right setting has never been better and is getting better due to AI.” – For whom? They well-off maybe. But, IMO the average American is seeing a decline in the quality of goods and services they can truly afford. And I am not talking about taking huge loans to get these goods and services. I mean truly afford! I am spending weekends helping my friends repair their aging cars because they cannot afford a newer one.
“Lower quality goods and services?” Yes. Only the well off can truly afford the best goods and services the economy has to offer. Those that are falling out of BAU no longer have access to the same quality of products and services. More than 1/4 of Americans are on food stamps. Homelessness is becoming a huge problem. The vast majority of Americans are living pay check to pay check with no retirement. One health problem could bankrupt them. Most Americans are one pay check away from bankruptcy. Compare that to the 60s when incomes were growing and one person could earn enough to support a stay-at-home mom and save money too.
We are becoming a two-class country…the rich and the poor. I think that is because affordable energy and resources per capita are declining. As long as the economy can hold together, the rich can have access to the best of the best while the poor barely scrape by living increasingly harsher and shorter lives. Well, until something breaks.
That’s it Greg. Here’s a really simple example of what is happening. My wife likes Collared Greens, so I always pick up a bunch of organic leaves at Safeway because the store she goes to doesn’t have them. This last time I was there I picked up a bunch and my hand jetted upward because I expected it to be slightly heavier – it’s the same price but half as many leaves. So I thought, oh well, and went and got some almond milk, got it home and instead of the rich almond milk I remember, it’s now water with a hint of almond milk taste. Our water bill use to be about $90. bi-monthly, so about $45. a month. Now it’s $125 a month, or $250. for two months and there are all sorts of volume penalty’s if you water your foliage which they didn’t use to have. The Association we live in privatized the water/sewage so they have investors wanting continuous price increases. It’s slated to continue to increase every year from now on 10% a year. We may have to let the foliage fend for itself which my mid-Summer will mean it’s all dead and fire hazard, then have to tear it all out and have a barren property. My truck is a 1997, my wife’s car is a 2002 and I maintain them both religiously for fear of having to replace them. Ever watch YouTube? Noticed lately the massive increase in ads dotted throughout the videos?
It’s all going downhill but all any of us can do is try to keep going. It’s easy to see though that at some point it just won’t work for the majority of people anymore. I wonder what happens then. Do we all live in our vehicles while the super wealthy fly gold plated private jets?
What is your skill set? What can you do for me?
It does seem like (the US) is heading for a two-tier system. A few people of insane wealth and the rest under massive amounts of debt and poverty. If too much of the working class falls out of the system the resulting instability could put the whole of industrial civilization in peril. I don’t know what will break. But, I think it is inevitable. A massive debt default, energy/resource shortage, power outage, natural disaster, disease. We are all on a runaway train and it is moving very very fast and accelerating.
Industrial civilization cannot be sustained much longer. The insane luxuries like computers, air conditioning, instant communication, air travel, engineered homes, supermarkets, automobiles, profitable jobs, retirement, indoor plumbing, and on and on and on cannot be sustained even for a handful kings and queens. It requires global cooperation and resources and a full workforce to build and maintain it. And most of all, it has to be profitable. Which implies the energy to power it all is abundant and cheap.
I posted a video a couple of weeks ago showing the horrible quality of some of China’s newly built apartments that people buy as investments. Some were falling apart three years after they were built.
The same problems are appearing in Sydney, everyone’s just in it for the money
The saga of Opal Tower, the 36-storey Sydney apartment building evacuated on Christmas Eve after frightening cracking, has helped to expose the deep cracks in Australia’s approach to building apartments.
An interim engineering assessment released yesterday indicates concrete panels cracked due to their manufacture and assembly deviating from the original design. Though the building is structurally sound and in no danger of collapse, repairing the faults will be costly, slow and disruptive to residents.
The tower’s size, age (it is less than six months old) and the timing of its cracks might have made it particularly newsworthy, but badly built apartment blocks are far from unusual. Right now across Australia’s cities many buildings have significant leaks, cracks and fire safety failings.
So we can’t just address faults in individual developments. We need to identify the systemic flaws in how “compact city” policies have been planned and implemented.
Cutting corners to keep costs down seems to be a popular approach to solving the “lack of affordability” problem. If the results cannot be detected by the first buyer walking through the development, the deception can be kept hidden.
Whether or not energy runs the economy, adding more debt adds the promise of future goods and services made with energy. One of the big dangers now is that the debt bubble will collapse. If anyone can concoct an excuse to add more debt it tends to kink the problem down the road a bit. From this point of view, MMT somewhat makes sense.
But I would’t recommend that an individual country take this approach on its own. It currency is likely to fall very low relative to the currency of other countries.
“The long-awaited earnings recession has finally arrived, but investors are still too optimistic and should anticipate more disappointment as the year drags on, according to Morgan Stanley.”
https://www.cnbc.com/2019/02/11/an-earnings-recession-has-arrived-morgan-stanley-says.html
“There is a significant chance the world economy is headed for a recession in 2019, according to Nobel Prize-winning economist Paul Krugman. Market participants are increasingly worried about the prospect of a serious economic downturn in the coming months, with a long-running U.S.-China trade war souring business and consumer sentiment.”
https://www.cnbc.com/2019/02/11/paul-krugman-warns-of-a-possible-global-recession-this-year-or-in-2020.html
““A new, highly complex and destabilised ‘domain of risk’ is emerging – which includes the risk of the collapse of key social and economic systems, at local and potentially even global levels,” warns the paper from the Institute for Public Policy Research. “This new risk domain affects virtually all areas of policy and politics, and it is doubtful that societies around the world are adequately prepared to manage this risk.””
https://www.theguardian.com/environment/2019/feb/12/climate-and-economic-risks-threaten-2008-style-systemic-collapse
What the economy is sleepwalking into is collapse, also known as “Peak Oil.” But that is not what the “guiding story” we are being told is saying.
The deflationary spiral beckons:
“Global central banks may keep interest rates lower for longer… The world economy is set to get fresh insight into whether inflation is turning sluggish again as the U.S. and China publish price data that’s set to endorse the decision of central banks to steer away from tighter monetary policy… While China’s factory inflation reading on Friday will probably show a mere 0.3 percent increase from a year earlier, economists at Goldman Sachs Group Inc. expect a fall back into negative territory for the first time since 2016.”
https://www.bloomberg.com/news/articles/2019-02-11/world-economy-gets-inflation-checkup-as-u-s-china-data-looms
“The situation could be even bleaker than China’s official statistics suggest, according to many analysts.”
https://edition.cnn.com/2019/02/11/business/china-economy-growth-data/index.html
“The collapse in China of a complex web of debt guarantees involving several private firms highlights risks in its financial system and opens up a potentially hazardous front for an economy in the grip of its slowest growth in nearly three decades.”
https://www.reuters.com/article/us-china-economy-debt/debt-guarantee-tangle-chinas-private-firms-hit-by-default-contagion-idUSKCN1Q107W
Singapore is touted as a ‘canary in the coalmine’ for the global economy:
“Retail sales in Singapore fell by 6.0% on a year-on-year basis in December, worsening from the 2.4% decline in the previous month as sales from all segments in the index including motor vehicle sales and computer and telecommunications equipment fell except for medical goods and toiletries and other retail items.”
https://www.ig.com/au/news-and-trade-ideas/other-news/singapore_s-retail-sales-slump-6-0–in-december-190212
Page can’t be found:(
Agreed! I think we should be very concerned about the network of one company guaranteeing the next company in China.
“While many bullish (optimistic) investors were attempting to shrug off the European economic slowdown several months ago, including the ECB, claiming a rebound was just around the corner in 2019, the data is here to refute that claim.
“The economic data across the Eurozone has deteriorated at an accelerated pace in 2019 as the probability that the entire Euro Area falls into a recession is rising.”
https://seekingalpha.com/article/4240041-recession-risk-rising-europe
“Since 2010, the UK has endured its slowest economic recovery on record and the outlook is merely worsening… in December the UK economy contracted by 0.4 per cent…. Manufacturing has now contracted for six months in a row, while business investment has fallen for the last four quarters. By historic standards, the UK is due another recession — defined as two consecutive quarters of negative GDP growth — and Brexit (and a global trade war) have merely heightened the risk.
“An already weak economy — too unbalanced, too unproductive and too unequal — now faces the threat of a painful rupture with its largest trading partner.”
https://www.newstatesman.com/politics/economy/2019/02/threat-new-recession-rising-and-uk-dangerously-unprepared
“An investigation has been opened into anti-Semitic graffiti which appeared on the front of a bagel restaurant in central Paris at the weekend.
“The word ‘Juden’ (Jews in German) was sprayed in yellow on the front window of a restaurant belonging to the Balgestein chain on the touristy Ile Saint-Louis.”
https://www.thelocal.fr/20190211/outrage-in-paris-over-anti-semitic-graffiti-on-bagel-restaurant-window
“Matteo Salvini has raised the possibility of wresting control of Italy’s sizeable gold reserves away from the country’s central bank in the latest in a series of threats to the independence of the Bank of Italy by Rome’s populist coalition.
““The gold is the property of the Italian people, not of anyone else,” Mr Salvini, deputy prime minister and leader of the League party, said in comments to reporters on Monday.”
https://corporatedispatch.com/archives/23302
again—the EU was a construct of common prosperity
take that away and things start to come apart in all kinds of unimagined ways
Agreed!
same thing also applies to USA
maybe you should join Canada and get Queenie back as head of state while she’s still around
The EU originated out of necessity as EEC, when e.g. France was heading towards energy crisis because of the peaking coal production:
https://jancovici.com/wp-content/uploads/2016/04/picp_charbon_graph3.png
The desintegration in the depleted world is less likely, as there are no alternatives. There is no way back into isolation, as Britain sees it now.
The EU is becoming like the old Habsburg Empire: it’s simply there, no one quite believes in it anymore, a few do very well out of it and repress nationalist sentiments as they rise.
“The naked pro-Europe campaigner Victoria Bateman has repeated her challenge to a debate with the arch-Brexiter Jacob Rees-Mogg on live TV but has dropped her demand that the Tory MP should also take off his clothes for the event.
“Appearing nude on ITV Good Morning Britain, Bateman, an economics fellow at Cambridge University, again threw down the gauntlet to the chair of the European Research Group…”
https://www.theguardian.com/politics/2019/feb/12/naked-anti-brexit-campaigner-challenges-rees-mogg-on-live-tv
I sincerely hope Mary Beard doesn’t follow suit – I believe she is pro-EU: if this behaviour spreads, I may have to bring forward my departure for the Pyrenees……
Oh, I don’t know – I think some rampant nudity might be rather fun. Also Cara Delevingne is a Remainer.
Soros: “EU Is Sleepwalking Into Oblivion”
https://www.project-syndicate.org/commentary/political-party-systems-undermining-european-union-by-george-soros-2019-02
this article i found seems to be acknowledging the problems with renewables and the report was commissioned by the UN it looks like the world may finally understand what we understand and lead to a real plan B….. https://www.independent.co.uk/news/long_reads/capitalism-un-scientists-preparing-end-fossil-fuels-warning-demise-a8523856.html
The problem with renewables could be solved to some degree with suitable energy storage, which has been so far too costly (both capital and final product), longevity issues, rare elements based etc. There are at least two big industrial groups planning solid state battery products before 2025, and they apparently have it available now on some testing grounds. The expected energy density of that “first” available generation should be ~15-50% higher vs today’s latest revision of lithium at higher longevity (more yrs/cycles) and easier production since it’s not liquid electrolyte anymore requiring cumbersome manuf facilities, also not dependent on rare elements for scaling up volume production etc.
This would “solve” (or transform) the transportation and home scale renewable energy storage question profoundly. Remind you nowadays standard of ~40-60kWh sized mid sized cars (not talking ~100kWh luxury models) are ALREADY proven to deliver at minimum >100mi range after applied ALL derating: winter climate, winter tires, hw speeds, shallow ~65% discharge for fast charging, etc.. hence getting almost 2x nominal advertise performance in normal ~summer condition. So, even the early revision of solid state batteries would improve the situation and push it to say ~95% of normal usage of contemporary demands, as the subgroup of people flying thousand km per day on highway without making a stop is a fringe cult, not worth the attention.
Now in terms of this stuff applied for truly backing up large renewable generation on the grid we are talking hundreds, perhaps thousands of TWh needed in aggregate for major IC hubs, that would not scale up overnight obviously. So perhaps the tech is already here but ironically too late for these scenarios of hard crash GFCvXY incoming in just few yrs time.. or at minimum the implementation might get delayed if get sequence scenario of several GFCs of various intensities.
oops correction: obviously meant no longer liquid electrode not electrolyte..
This is a link the paper prepared for the UN, by a group of Finnish Researchers. https://bios.fi/bios-governance_of_economic_transition.pdf
The report is concerned about fossil fuels. Regarding transportation it says, “In cities, walking and biking should be emphasized and the remaining public or semi-public transport in and between cities should be largely electrified.” How do we keep roads paved? How do we maintain electricity transmission? What evidence is there that electricity will be more available than oil? How do we produce parts for public and semi-public transport?
With respect to food, it says, “With regard to both production and consumption practices, dairy and meat should make way for largely plant-based diets.” They also point out that low income countries should be producing food for themselves, rather than importing it.
Regarding housing, it recommends, “long-lasting wood buildings.” Without fire engines and water to pump, I would suggest that wood buildings are not “long-lasting.” Termites are a big problem in the US South, where I live, as well. Perhaps Finland has not heard of this issue.
I read the Finnish report and concluded that some of their recommendations were not realistic such as the long-lasting wood buildings i think ‘cob houses’ would last longer and survive the elements .Their idea that biking and walking and living closer to work makes sense but i was thinking that most of our work or jobs will have to be abolished as food production will be your main priority. This report just shows how out of touch humanity has become to the predicament we face their probably will be many more reports in the future with different recommendations as they realize what works and what doesn’t.
It’s been almost 100 years since America’s 1% had this much wealth
https://www.marketwatch.com/story/its-been-almost-a-100-years-since-the-americas-1-had-so-much-wealth-2019-02-11
They might also mention that this much wage disparity is a big part of what causes depressions.
https://www.bbc.com/news/science-environment-47203344
“Scientists warn of a potentially deadly combination of factors. These include climate change, mass loss of species, topsoil erosion, forest felling and acidifying oceans. “This destabilisation is occurring at speeds unprecedented in human history and, in some cases, over billions of years.”
They say since 2005, the number of floods across the world has increased by 15 times, extreme temperature events by 20 times, and wildfires seven-fold.”
◾Topsoil is being lost 10 to 40 times faster than it is being replenished by natural processes
◾Since the mid-20th Century, 30% of the world’s arable land has become unproductive due to erosion
◾95% of the Earth’s land areas could become degraded by 2050
“The report warns: “We define this as the ‘age of environmental breakdown’ to better highlight the severity of the scale, pace and implications of environmental destabilisation resulting from aggregate human activity.”
“Future problems with food supplies could cause price spikes that drive civil unrest, while increases in levels of migration can strain societies. “Both together could overload political institutions and global networks of trade. “This century will be marked by rapid social and environmental change – that is certain. What is less clear is if societies can make wise political choices to avoid disaster in the future.”
This last part of the article is telling as it indicates the status quo won’t be budged easily.
“We know lots of good things to do,” she said, “but often the argument is made that we need to have ‘evidence-based policy’. “This can, of course, be used as an excuse for delay. So, I guess the question is how much more evidence is needed for action?”
“Future problems with food supplies could cause price spikes [emphasis added] that drive civil unrest, while increases in levels of migration can strain societies.”
Nobody understands the real situation. It is an affordability situation. The problem is with low prices and gluts of food that cannot be sold because no one can afford it.
The situation is starting to unravel now, but this is missed as well.
There are way too many of these stories that miss what is going on in the here and now.
“In the land of the blind drunk, the mere tippler is sober.”
— Me
https://cdn.images.express.co.uk/img/dynamic/1/285×214/206425_1.jpg
Let your hair down, baby
Let’s have a natural ball
If you don’t let your hair down, woman
We can’t have no fun at all
“Education is an admirable thing, but it is well to remember from time to time that nothing that is worth knowing can be taught.”
– Oscar Wilde
This is a good point. I am afraid it tends to get lost today.
Test
I have a friend on Reddit who lives in Mexico..I asked him what he thought about Trump’s border narrative..This is what he said..
“I do believe mass immigration from Mexico to the US to be a non-issue, practically the same culture, no radical change, the idiots of the republican party could have appealed to Mexican immigrants, who are mostly conservative, religious, anti-abortion, etc, but because they stood against them, they now vote D.”
Yea, I just moved back to the States from Mexico.
It depends where you are.
https://blazepress.com/.image/t_share/MTI4OTg1ODgxNTAyNjA5Mzc4/523.jpg
There are at least two problems in Mexico’s: (1) Depleting oil exports and (2) the continued low oil prices. These will gradually make the situation worse in Mexico.
I can see why someone who is aware of the situation might be concerned. The central government could collapse at some point.
MG….My grandfather loved Budapest…My grandmother didn’t approve of his party trips…
This article caught my eye….
Hungary’s prime minister has announced a raft of measures aimed at boosting the country’s declining birth rate and reducing immigration.
Giving his annual State of the Nation address Sunday, Hungarian Prime Minister Viktor Orban announced a seven-point “Family Protection Action Plan” designed to promote marriage and families.
Measures announced included waivers on personal income tax for women raising at least four children for the rest of their lives and subsidies for large families to buy larger cars. The ‘action plan’ also extended a loan program to help families with at least two children to buy homes. Every woman under 40 will also be eligible for a preferential loan when she first gets married
https://www.cnbc.com/amp/2019/02/11/have-four-or-more-babies-in-hungary-and-youll-pay-no-income-tax-for-life.html
Remarkable isn’t it…overpopulation isn’t even on the radar screen any longer….that’s why I’m a retired “environmental activist”….why bother…no better than yeast in a petri dish.
Overpopulation will solve itself in its own good time, in its own good way.
A thoughtful and meditative kid, I did my bit for overpopulation by declining to reproduce. However, my two boisterous brothers, who couldn’t give a toss about anything, to be honest, managed to produce eight kids between them. And their kids went on to produce even more kids…..
So if there’s anything DNA-ish controlling human attitudes to reproductive behavior, then “not giving a toss about anything” DNA will always win out in the end.
The DNA will not win, as the human race is somewhat screwed: it depends on exploiting non-renewable energy.
Is it winning if you win over others via more progeny, but you and they hit the concrete wall of resource depletion?
Over exploitation of renewable energy is pretty much as bad as reaching limits on non-renewable energy. Think of ethanol and palm oil, and the soil depletion that accompanies them.
Ahh, How nice….Remember Richard Here and Cindy Crawford back many decades ago were an item together. Ms,. Crawford broke off the relationship because Richard did want children …perhaps because of overpopulation….Gere was married to supermodel Cindy Crawford, from 1991 to 1995 Well, now …surprise, surprise…I🤣…but Richard can AFFORD all the offspring he WANTS…
but can the petri dish afford to support them?
Richard Gere is a dad again.
A representative for the 69-year-old actor told CNN on Monday that Gere and his wife, Alejandra Silva, 35, have welcomed a baby boy. Further details on the date and name were not given.
This is the first child for the couple but they both have children from previous relationships. Gere has a 19-year-old son from his marriage to Carey Lowell and Silva has a son with her ex-husband, Govind Friedland.
https://amp.cnn.com/cnn/2019/02/11/entertainment/richard-gere-baby-boy/index.html
Seems people now have multiple families …must be nice😍
Even in China, I ran into men who got around the one-child rule by divorcing their first wife and marrying a younger second wife.
This is one of the many ways that “freedom” can work against women’s interest. In this case, the freedom to divorce leading to the dumping of wives, often for no other reason than that the’ve developed wrinkles and a newer, younger model is available.
Hungary was the first country in Central Europe where the population started to decline, already in the 80s
https://www.google.com/search?q=hungary+population&oq=hungary+population&aqs=chrome..69i57j0l5.2366j0j7&sourceid=chrome&ie=UTF-8
No wonder, quite a big country with not very much energy resources. More and more dependent on nuclear power.
Such pro-family measures are a pure marketing, which aim to show to the public how the states cares for the family, but the amount of the incentives in real terms is ridiculous, so no one will act accordingly, i.e. start to proliferate.
They were decimated by the WWI reshuffle, as the country was stripped of its vassal cash carrying provinces in the CEE/Balkans. In comparison Austria-proper fared much better, but that’s to be expected as being more core-ish country: global tax heaven, UN/OPEC HQ, int spy hideout, tourism destination, small innovative industrial base..
Not exactly that “They were decimated by the WWI reshuffle”, it is called the depletion. Also the neighbouring countries reached their population limits, like Romania, Serbia etc.
Its about the population growth, not about taking some land from somebody. The depleted land as such is useless. There were different states here in Central Europe before Austria-Hungarian empire. From that perspective, we could say that Hungary stole the resources of those preexisting states.
The point is that Austria and Hungary had urban centers which grew into inefficient giants full of bureaucracy etc. The result was the desintegration of the monarchy. The same can be seen anywhere where the town/city becomes a burden. We have experienced this in Slovakia later on, during the postwar era of WWII, when the people in the countryside had similar opinion about some regional or district center towns and did not like them, they considered them to be blood-sucking monsters.
According to BP, Hungary’s energy consumption peaked in 1987. Not by coincidence, that is also the year that the Soviet Union’s oil supply peaked. The Soviet Union started cutting back on exports shortly thereafter. CIS is more or less the former Soviet Union.
https://gailtheactuary.files.wordpress.com/2019/01/cis-oil-consumption-production-exports-to-2017.png
I think that a lot of Hungary’s problems arose from being dependent on the Soviet Union for imported oil. Low prices starting with the 1981 interest rate rise had an adverse impact on the Soviet Union’s ability to reinvest. It took until 1987 for oil production to peak because of low prices. The government collapsed, indirectly from this, but I expect the inefficiency of the communist system also played a role as well. Once prices rose again, the countries of the former Soviet Union were able to raise oil production.
https://gailtheactuary.files.wordpress.com/2016/02/fsu-oil-production-and-price-2014.png
BP’s data for Hungary show that its oil consumption didn’t rise to the 1987 level even after Russia and the other countries previously in the Soviet Union raised their production. This is similar to CIS’s pattern, shown in the first chart. The industrialization that had taken place could not be maintained. The only growth area in Hungary’s energy consumption has been nuclear electricity. It has been close to flat since 2009 or 2010, however. So not a huge amount of later industrialization has been possible.
Dear Uncle Bill, by the way, Pompeo in Slovakia now:
https://slovensko.hnonline.sk/1889663-slovensko-nikdy-nebolo-nezavislejsie-a-prosperujucejsie-ako-dnes-hovori-pompeo
Russian govenment planning to spend 26 trillion rubles ($400b) on national projects in the next 6 years. Most of it are infrastructure spending (roads, ports, etc…). Last decade most of the income from oil revenue was spent on import. Now the politics has changed to spending inside the country. It will require lot of energy, raw materials and less import from western contries (like cars, machines, equipment, etc…).
Russia imports little:
Russia has very low debt-to-GDP ratio, it is among the lowest ratios in the world. Most of its external debt is private. In 2016 its debt to GDP ratio was 12%.
With all of its exports, Russia doesn’t need to be a debtor to afford all of its imports. I am not sure what Russia’s debt level has to do with anything.
Russia is a big oil exporter, as well as an exporter of coal, iron ore, scrap iron, wood pulp, fertilizer, and a few manufactured items. It imports a long list of items including broadcasting equipment, computers, harvesting machinery, cars, vehicle parts, packaged medicaments, medical instruments, shoes, and a number of kinds of foods (such as citrus, grapes, soybeans).
https://atlas.media.mit.edu/en/profile/country/rus/
Trading economics indicates that its imports are down since 2014 when oil and quite a few other commodity prices dropped.
https://gailtheactuary.files.wordpress.com/2019/02/russia-imports-of-good-and-services-trading-economics.png
(Units are in Millions of US$) Source: https://tradingeconomics.com/russia/imports
Lower imports for Russia (now that prices are down from the level earlier this year) helps reduce world demand for goods and services, and thus tends to depress commodity prices.
Lower imports are primarily recent embargo based.
They mostly solved it on the core food imports already, reviving domestic food sector instead (investment), on replacing the industrial analogues it will take more time, but it’s ongoing process.
In terms of oil prices, they joined the OPEC pricing snake liftathlon, which might unravel again if that sort of wide ranging depression and energy price massacre you predict finally arrives.
The wheels are getting a little wobbly
Two Large Chinese Borrowers Miss Bond Payments, Sources Say
Bloomberg) — Two large Chinese borrowers missed payment deadlines this month, underscoring the risks piling up in a credit market that’s witnessing the most company failures on record.
China Minsheng Investment Group Corp., a private investment group with interests in renewable energy and real estate, hasn’t returned money to bondholders that it had pledged to repay on Feb. 1, according to people familiar with the matter. And Wintime Energy Co., which defaulted last year, didn’t honor part of a restructured debt repayment plan last week, separate people said.
China has been seeking to limit the fallout from its deleveraging campaign by adding cash to the financial system and unveiling stimulus such as increased infrastructure spending, a boon to indebted property and local government borrowers. While that’s restored demand for some risky debt, the impact has been uneven.
The yield spread on five-year AA- rated notes (considered a junk score in China) is still more than 300 basis points over top-rated peers, more than twice the level of a year earlier, according to ChinaBond data.
The “market is clearly pricing in a lot of credit differentiation as access to refinance remains firmly shut for certain issuers yet widely open for others,” said Anne Zhang, executive director for fixed income, currencies and commodities at JPMorgan Private Bank. “Defaults will become more frequent yet more idiosyncratic
https://finance.yahoo.com/news/two-large-chinese-borrowers-miss-073109320.html
There was a Financial Times article referenced here recently called China’s Private Sector Struggles for Funding as Growth Slows.
It shows this chart:
https://gailtheactuary.files.wordpress.com/2019/02/china-flow-of-new-loans-to-non-financial-sector-financial-times.png
According to the article,
Also,
I wonder how much of these issues are involved. I don’t think we would be hearing about defaults on debt owed by state owned companies. The government would simply hide the problem in some way. But the private sector is very important. Without access to enough debt from some source that charges reasonable rates, new investment in the private sector will shrink greatly.
Western Media Fall in Lockstep for Cheap Trump/Rubio Venezuela Aid PR Stunt
Context that, when presented to a neutral observer, would severely undermine the cartoonish narrative being advanced by US media.
Both the Red Cross and UN warned the US not to engage in this aid PR stunt.
The bridge in question is a visual metaphor contrived by the Trump administration of little practical relevance.
The person in charge of US operations in Venezuela has a history of using aid as a cover to deliver weapons to right-wing mercenaries.
(1) Not only has the international aid community not asked for the “aid,” earlier this week, both the International Red Cross and United Nations warned the US to explicitly not engage in these types of PR stunts.
https://fair.org/home/western-media-fall-in-lockstep-for-cheap-trump-rubio-venezuela-aid-pr-stunt/
“We are in the end time of an unprecedented era of financial expansion – the greatest expansion of the world’s money supply ever attempted, expansion of the Federal Reserve’s vast and unchecked powers far beyond what the Fed could do before the financial crisis, and super-sizing expansion of banks that were already way too big to fail.
“I am calling this time in which we are now unwinding this monetary expansion the Great Recovery Rewind because I believe this attempt by the Federal Reserve and other central banks of the world to move us away from crisis banking is taking us right back into economic crisis…”
https://seekingalpha.com/article/4239718-great-recovery-rewind-federal-reserves-balance-sheet-unwind-unwinding-recovery
“The idea was once things had stabilised, the central banks would just allow the bonds to be run off to maturity. Pfft, gone.
“It was supposed to be a relatively short-term addiction, but as it is said, “old habits die hard”. Dangerous habits often have an even stickier end.
“A concerted money printing operation by global central banks already appears to have kicked in weeks before Mr Powell opened up about the possibility of getting back on his “full range of tools”.
“2MG Asset Management’s Mike Mangan says since the market meltdown scare in December, the four largest central banks have increased the size of their balance sheets by $US428 billion ($603.3 billion) to global liquidity across the last month.”
https://www.abc.net.au/news/2019-02-10/federal-reserves-panic-supports-markets-but-adds-to-debt-pile/10789888
“As Donald Trump rhapsodised last week about the “unprecedented economic boom” he is seeing across America, central bankers in Australia, India and the UK were preparing to join a broader retreat from plans to tighten monetary policy.
“Hours after the US President finished his State of the Union address, Philip Lowe, the governor of the Reserve Bank of Australia, stood up to warn of an “accumulation of downside risks”…”
https://www.afr.com/business/banking-and-finance/the-shift-in-global-economic-mood-that-caused-central-bankers-to-blink-20190210-h1b2j7
“For the coming 2020, the stage will be set for the next downturn, and policymakers will be unable to act freely with their hands tied while overall debt levels are more significant than the previous crisis.
“Unlike in 2008, governments will lack the needed policy tools to manage it and avoid a free fall. When it happens, the next economic crisis and recession might be even more rigorous and might last longer than the previous one.”
https://markettactic.com/another-financial-crisis-and-recession-is-looming/1524/
Looks bad, Sir Harry.
Water filter? Check!
Firewood? Check!
Chorizo? Check!
Ehh, one out of three ain’t bad. 😀
Better get my skates on though!
“The British economy plunged into reverse in December, with a broad-based slump in economic output completing the weakest year for growth since 2012.
“The Office for National Statistics said gross domestic product contracted by 0.4% from the previous month… With less than 50 days to go before Brexit, the figures showed all three drivers of growth in the British economy – services, production and construction – shrank during December.”
https://www.theguardian.com/business/live/2019/feb/11/uk-gdp-report-economy-growth-brexit-business-live
“As Donald Trump rhapsodised last week about the “unprecedented economic boom”
If that were true then why did the US have to borrow 1T to cover the deficit, he said would never happen because the massive tax cuts he and the R’s did were suppose to jack the economy up high enough that in spite of huge tax cuts the deficit would actually decline? He exists in an alternate reality.
Promises, promises!
The Slovak police officers openly talk about being forced to collect more money from penalties and being threatened and mobbed by their chiefs. Some of them leave the police or end up in psychiatry ward.
https://domov.sme.sk/c/22047173/pomery-v-policii-strach-sikana-nezmyselne-tresty.html
That’s what I’m talking about….the rabble needs a shake down…
Poor little Alex…that’s too bad….
https://m.youtube.com/watch?v=nNKvRZFKACI
Monies got to come from somewhere
Refreshing to see.
When the police could still give the right people a good belting, Britain was a lot less violent. Same goes for Spain: the one good thing about the dictatorship.
No irony intended.
One thing is good belting for the perpetrator, another thing is getting money for finanincing the police. I am affraid the current situation is more about getting money from somewhere.
Back years ago, before Interstate Highways became into as widespread use, collecting revenue from speed traps seemed to be a popular way for small towns to collect more revenue. It helped if a major road went through the town.
An Italian friend told me a good story about the speed limits being changed over-night, with no warning, with the police being out next day to collect all the fines….
The Baltic Dry Index is plunging. The price is now below the break even point and would have to double to make it economic for ship owners. The reason for the plunge is said to be a slowdown in China.
https://pbs.twimg.com/media/DzEA1-kW0AAzjLP?format=jpg&name=large
“China’s Lunar New Year holidays through Sunday saw single-digit consumption growth for the first time on record, as an economic slump dampened one of the year’s biggest shopping seasons.” [8.5% growth doesn’t sound too bad to me but it still constitutes a major disappointment in context].
https://asia.nikkei.com/Economy/China-s-Lunar-New-Year-sales-lose-steam-as-economy-slumps
“Either China stimulates its economy and lets provincial level creditors go hog wild in the Year of the Pig, or the trade war sends China’s outperforming stock market back into negative territory.”
https://www.forbes.com/sites/kenrapoza/2019/02/10/either-china-stimulates-economy-more-or-trade-war-whacks-market-hard/#21ec7ce33f7b
“South Korea’s manufacturing inventory levels last December have piled up to their highest since the 1998 Asian financial crisis due to slow sales, in an another alarming sign of a lengthy slump in the economy…
“The inventory ratio is calculated by dividing the amount of unsold goods at the month-end by its monthly shipments. It has been on an upward curve since late last year.”
https://pulsenews.co.kr/view.php?year=2019&no=82559
Yoshua, thanks! That looks worrisome.
National Socialism (Fascism) vs. International Socialism (Communism).
Time to choose sides. Let’s turn it into another blood fest.
“Unless Europe can demonstrate greater economic vibrancy, the protests will escalate. And this is why the new evidence of stagnation is so alarming to the European high command.”
https://www.independent.co.uk/voices/brexit-eu-economy-latest-business-france-protests-gilets-jaunes-italy-a8771586.html
The politically correct high command in France is still only using teargas, stun grenades and rubber bullets against their own people.
Somewhere a banker rubs his hands together in glee.
Gosh, thugs of both sides are indistinguishable! Who would have guessed?
‘I’ll hit you with my flag! Take that!’
What a contemptible species…..
IMF warns of global economic “storm” as growth undershoots
https://economictimes.indiatimes.com/news/international/business/imf-warns-of-global-economic-storm-as-growth-undershoots/articleshow/67931691.cms
Christine Lagarde
“Clutches pearls”
“Last month, the IMF lowered its global economic growth forecast for this year from 3.7 per cent to 3.5 per cent.”
when lower growth looks certain, they just can’t give a realistic number ever… it always has to be just a bit lower, so as not to hurt consumer confidence…
I have also lowered MY global economic growth forecast for this year from minus 1% to minus 2%… 😉
and late this year, the IMF will be telling us about all of the countries that have been in recession since Q1 2019…
by then, they will be saying that recovery is near…
I predict no recovery…
finally, don’t be too concerned about when she clutches her pearls… look out when she sells her pearls…
BAU…Full THROTTLE BABY….Whatever it TAKES and MORE…
Big oil and the environment
The truth about big oil and cc
Even as concerns about global wg grow, energy firms are planning to increase fossil-fuel production. None more than ExxonMobil
In america, the world’s largest economy and its second biggest polluter, climate change is becoming hard to ignore. Extreme weather has grown more frequent. In November wildfires scorched California; last week Chicago was colder than parts of Mars. Scientists are sounding the alarm more urgently and people have noticed—73% of Americans polled by Yale University late last year said that cc is real. The left of the Democratic Party wants to put a “Green New Deal” at the heart of the election in 2020. As expectations shift, the private sector is showing signs of adapting. Last year around 20 coal mines shut. Fund managers are prodding firms to become greener. Warren Buffett, no sucker for fads, is staking $30bn on clean energy and Elon Musk plans to fill America’s highways with electric cars.
Yet amid the clamour is a single, jarring truth. Demand for oil is rising and the energy industry, in America and globally, is planning multi-trillion-dollar investments to satisfy it. No firm embodies this strategy better than ExxonMobil, the giant that rivals admire and green activists love to hate. As our briefing explains, it plans to pump 25% more oil and gas in 2025 than in 2017. If the rest of the industry pursues even modest growth,
From “The Economist”
Feb 09, 2019
Looks like we may have a few more years of BAU….Wonderful ..I can look forward to many more posts here with all my friends….
There is nothing we can do about the climate, as far as I can see. Maybe some geo-engineering plan can do something, but I wouldn’t count on it. So we end up with endless stories of this sort.
I agree Gail. It would take global cooperation to make an attempt at climate action but we can hardly drive down the street without fighting each other. I’m with David, Uncle Bill and others here – hopefully we can keep BAU running for as long as possible.
It is more than global cooperation that would be needed. The story about “renewables can save us” or even help the problem is simply false. The models “proving” this are constructed in a way that proves nothing.
In order to use less, we need a new guiding story, explaining how the economy can use less and how this will change peoples lives. One example would include taking women out of the workforce. Then, what jobs were available could go to men. Women would have more time to care for family at home, including elders. There would be less need for homes for the elderly. Also, young people would need to again live with their parents until they marry. Women’s schooling would need to be dramatically cut back. Spending on health care would need to be dramatically cut back as well. Spending on things like home decoration and remodeling would need to fall way back. Spending on special accommodations for the handicapped would be cut way back. We would need to go back to spending energy only on “essentials” in some sense.
Needless to say, it is hard to see how people would accept these kinds of changes. We now have a picture of a different world in front of us. Going back to the old “unenlightened” ways would seem crazy.
The other issue is that the financial system could not withstand these kinds of changes. Many assisted living organizations would fall into bankruptcy. Many fewer homes would need to be occupied, as families moved in together more. The need for processed food would go away because women at home could prepare from scratch again. The price of oil, coal, and natural gas would fall even farther than today. The companies extracting these fuels would go bankrupt. The governments of oil exporting countries would be overthrown, because they could not collect enough taxes to operate their countries. The whole system would fall apart, even if we did try to go back to what seemed to work before.
Gail, love your response. The first time I have seen someone tell that truth. Keep up the good work it helps us feel not crazy.
Thanks, Ed.
I don’t understand why people “accepting ” facts matter.
I gather that the gist of Gail’s post is (for climate and other kinds of environmental stability to happen) is:
1) Social and economic programs would need to be rolled back.
2) Society is too invested in these programs to accept them going away.
So maybe we need some different approach. You can roll back material consumption (without sacrificing major social–not economic–expectations), but only artists have the skills to do that on a global scale. The trouble is that artists don’t read OFW, and so are wasting those skills trying to succeed in a failing system.
I AGREE…more importantly Exxon-Mobole AGREES….can they do the impossible?
Satisfy need of Fossil Fuels for 8 Billion people with increasing demand?
Rust never sleeps….should be a good show.
Not a lot of people know this, but now readers of this site can be among the cognoscenti.
Or you can elect to remain mired and wallowing in ignorance. It’s entirely your own choice.
maybe it’s time to “make a stratospheric volcanic eruption”. this could be done by finding a capable one that is posed to erupt, then triggering it, but with no control on output, unfortunately. another way is to launch gazillions of gallons of sulphuric acid into the stratosphere. maybe that could have some controlled impact, but maybe not. /sarc
Fake Tan gauge of economic distress: when Christine has plastered it on even thicker, you know she’s pale with fear underneath……
https://twitter.com/bopinion/status/1094676160867418114
1 Clinton had the dotcom bubble, and cheap oil too!
2 Obama began with the bottom of the stock market (S+P 666!) in his 3rd month in office in March 2009… so the recovery was conveniently there for him, when QE came along…
often, it’s not much at all about what the POTUS did… just the times in which they served…
though for Obama, he wisely left the Wall Street croooks alone to do whatever they wanted, which helped to move the economy up for most of his 8 years…
that sure helped to keep BAU Full Throttle, baby!
mmm didn’t Clinton ‘set-up’ the GFC by eliminating Glass-Steagell.
They all cooked the books in their own way.
All are war criminals as far as UN definition goes. But that is what sustaining an empire requires. All went to church to virtue-signal to the punters, but they all have so much bl**d on their hands.
Simple comparisons during presidency are useless indicators. Whats the legacy?
good point about Glass-Steagell… which Clinton wisely waited to eliminate in his last year…
then Bush is #7 on that list because of that “set-up”…
Adding China to the World Trade Organization in 2001 greatly increased the demand for oil and all commodities. This, together with China’s added debt to finance all of this growth, helped bid up oil prices to unaffordable levels for oil importers. While banks could cool their books, the underlying issue was the unaffordability of goods and services made with $147 barrel oil. Lots of things went together.
Sounds fair. Yeah, what’s the legacy?
Sorta like, “What’s the FREquency, Kenneth?”
Who would come tops on drones used in extra-judicial murd – hers, and in number of new countries invaded?
“When the whole world is running towards a cliff, he who is running in the opposite direction appears to have lost his mind.”
– C. S. Lewis
1967 — Blue Cheer, the Mojo Men & the Jook Savages in “A Tribute to J. Edgar Hoover” at California Hall, February 10th, 1967 — “a dream that is a public event.”
Anybody remember Blue Cheer? (the acid, not the band)
Some of the best ever– but it was the 60’s.
The decline of the Middle East is inevitable. And who will want the heavy oil from Venezuela?
New Oil Project in the Works – World’s Largest “Light Tight Oil” Development Begins in Yugra Region
Exclusive: Russia’s Sechin raises pressure on Putin to end OPEC deal
https://www.reuters.com/article/us-oil-opec-russia-rosneft-exclusive/exclusive-russias-sechin-raises-pressure-on-putin-to-end-opec-deal-idUSKCN1PX1R7
The quality of the Bazhenov oil is higher than the quality of the Brent oil:
The history of Russian oil – a good documentary in Russian for those who understand Russian:
This documentary particularly stresses the role of the newly found and developed Western Siberian oil in the 70s energy crisis, i.e. that this oil saved the Western World against the blackmail of the Middle East oil producing states.
People who want diesel will want heavy oil from somewhere. Whether they can afford it is another question.
I guess the Middle East with its rising own portion of heavy oil will not have free light oil for Venezuela. Moreover, when the Middle East theoretically starts to explore shale oil, it will be quite a costly business for them, which will keep prices too high for the consumers and too low for the producers. The same applies for Russia, but Russia is still better off with its water and food availability. Technologically, Russia seems to be also better off, thanks to its coal and nuclear availability and also skilled workforce on its own territory, close to the oil production places.
As it was said many times before: Venezuelan oil is very capital, technology and investment intensive. With the price levels that are too high for the consumers, there is not much left for such a vast population as Venezuela currently has. It practically means that no one will risk repeated expropriation of its assets. Although Russia agreed to invest recently into Venezuelan oil (https://www.reuters.com/article/us-venezuela-russia/venezuela-signs-oil-gold-investment-deals-with-russia-maduro-idUSKBN1O51WX), there are many ifs.
The situation of Venezuela sems to be a chronic status quo, which means that there will be no miracle return to the previous prosperity with the current level of population, which will be repeatedly igniting civil disorder. The transformation of the economy from oil dependency, i.e. the vast amounts of low skilled people into a technologically developed nation, is very painful and given the lack of other energy resource like coal and nuclear, practically impossible. You need some other energy resources like Russia has, to keep the economy operating. Firstly, Venezuela needs rebuilding its energy sector, building some nuclear. All this requires years of work and investment, which is hard to imagine under actual situation.
Simply said, it is not just the investment into oil production, but the investment into the energy sector in general, that can mitigate the energy shortages in Venezuela. As was done e.g. by Argentina with its nuclear energy program after the fall of its oil production.
It looks like most of what Venezuela has been pumping recently has been heavy oil (with lower API gravity). It is the light oil that is not holding up.
https://gailtheactuary.files.wordpress.com/2019/02/venezuela-crude-production-by-api-gravity.png
Source: https://www.rystadenergy.com/newsevents/news/press-releases/Sanctions-on-Venezuela-would-hurt-US-Gulf-Coast-refiners/
In Venezuela, White Supremacy Is a Key Driver of the Coup
https://truthout.org/articles/in-venezuela-white-supremacy-is-a-key-driver-of-the-coup/
obviously, when Obama staged the (successful) coup in Ukraine, it wasn’t a case of white supremacy…
obviously…
Yea, but they lost Crimea.
It was 90% Russian anyway.
And has been a part of Russia about as long as the US has been a country.
Of course, the Russians could “give back” Crimea.
Of course we could “give back” the States.
As far as a race issue, you are on the wrong page, obviously.
The Russians leave the famous Czech spa town Karlovy Vary (https://en.wikipedia.org/wiki/Karlovy_Vary). There are many houses left after their leave which fail to be sold due to their exaggerated expectations. In the past, the prices have risen to record level due to the low offer and big demand, now, it is difficult to understand for many owners that with the low demand their selling price expectations are exaggerated.
https://www.lidovky.cz/byznys/firmy-a-trhy/rusove-opousteji-karlovy-vary-zustavaji-po-nich-desitky-domu-prodat-je-se-nedari.A190209_144807_ln_domov_form
https://en.wikipedia.org/wiki/Karlovy_Vary
http://en.infoglobe.cz/region-of-karlovy-vary2/cz-karlovy-vary-or-how-the-czechs-sold-this-town-to-the-russian-video/
Same with the elderly British trying to sell their houses in France and Spain: not much local demand. Which is, of course, exactly why they were for sale to the Brits in the first place…..
were Brits told that housing prices “always” go up?
as it used to be proclaimed in the USA…
Partly, but it’s mostly the lure of the sun: one can get quite desperate to see and feel it in Britain. And those Continental properties seemed so cheap……
And the wine really was even cheaper. I know a few expat Brits who love(d) to fill up 20 litre plastic containers with plonk at the local winery, bring it back to the cottage in Provence or Catalonia and bottle it themselves.
I understand that the Japanese government is the owner of a lot of otherwise unsalable rural properties in Japan. Perhaps governments of other countries need to try the same approach. I have heard that because of high taxes imposed when a farm is inherited by a child, the Japanese government is the owner of these properties. It is my understanding that the homes are allowed to fall apart (but I may be wrong on this). I don’t know what happens to associated farmland. I suppose printed money could be used for this purpose as well.
Your understanding is basically correct. But there are big differences between small town and “out in the sticks” rural properties.
In the towns, the land is often worth more than the buildings standing on it. The market value of Japanese homes declines rapidly and few people are interested in buying or living in old houses. So often the houses will be demolished by the owners prior to selling the land.
A friend of mine disposed of their deceased parent’s house in a small city last year and they had a originally planned to demolish and sell the land, but fortunately a buyer for the house turned up and this saved them having to pay several million yen to the guys who knock down buildings and cart off the debris. But the buyer also gained as they paid only for the the land obtained a substantial good-quality 40-year-old house for free.
Another friend has a nice 30-year-old home with all mod cons in a small city, and an older house that he built 50 years ago in a smaller town 20km outside the city. He has spent the past 30 years still maintaining the old house and tending the small garden, and as the owner he has continued to pay property taxes on it. But the house has a value on the market of Zero. There are no buyers. For many years he had a sentimental attachment to it and he thought one of the children might like to live there some day, and so he didn’t get rid of it while he could. Now he realizes that nobody wants it, he is at a loss as to what to do with it.
In the countryside, population decline and the aging society are in full swing and it is extremely difficult for people to find new buyers for farmhouses with adjacent fields. The farmer’s kids have often grown up and left for the cities, so there is nobody to take over. Then when the older generation dies, the homestead is abandoned, in the case of traditional timber and dirt wall houses with thatched roofs, of which there are many, they go rotten and eventually collapse due to a combination of damp, mold, termites and snow, while all around the grasses and shrub trees take over. It can be quite spooky.
Japan has been transforming from largely rural to largely urban living in recent decades. They are carrying out the kind of transformation that Britain did at the time of the Enclosures and the Highland Clearances, but doing it not with brutality but by creating a motivation for people to move.
We no longer have faith in technology to solve global issues
https://www.weforum.org/agenda/2018/10/digital-distrust-we-re-losing-faith-in-technology-to-solve-the-world-s-problems
On the other hand, at least at the church I attend, attendance is up. Today was very close to standing room only.
Perhaps the “technology will save us” story is wearing thin. We need a guiding story; technology will save us won’t work. More goods and services for everyone, made with limited oil (and other energy) supplies, doesn’t really work, either.
Perhaps a different guiding story is needed. Religions have long provided guiding stories. They have talked about moderating our own desires for goods and services. They have talked about sharing (at least within our own in-group) with those less fortunate than ourselves.
The “equal goods and services for all” story is appealing, but it doesn’t work under the laws of physics. It lets those who are not producing goods and service get as much as everyone else. This tends to deplete resources too quickly; it doesn’t reward adequately those who are contributing to the overall effort. Religions have passed on the understandings of the day as to what arrangements “work” and satisfy the needs of the system.
As more energy is available, different systems work, and we seem to think that they will always work. For example, with more energy, women can play a bigger role. They can have their own cars; contraceptives can limit births. But if transportation and jobs are limited, and death rates from childhood illnesses are higher, then the system has to shift away from the system that practically everyone believes is the “right” system to something else that uses much less energy. It will take a new guiding story, perhaps from a religious perspective, if it is to be at all possible to transition to a lower energy economy.
“…then the system has to shift away from the system that practically everyone believes is the “right” system to something else that uses much less energy.”
Much less energy along a declining scale, the bottom of which we have no idea where it will end up. More people going to church is probably a sign people are losing faith in the current system to support their needs and seeking a different type of venue to transfer that faith to, almost like a balancing act. The problem is as the squeeze continues more and more people will be living on the edge of financial disaster and one really big recession and the percentage of people on the skids will go up so dramatically the landscape of civilization will not look the same again, like the US economy didn’t look the same after the 08/09 mortgage meltdown. I think we aren’t near total collapse, but do think we are near that point in which millions upon millions fall off the rails so to speak. Expect the crime rate to rise exponentially after that happens which will put tremendous pressure on those still in the game.
Just a comment – when someone compares year-on-year data (housing, etc), there must be growth because (1) inflation and (2) population growth. So, if the growth is less than the combined inflation and population growth, then it is “bad” for the economy. It does not mean that the growth has to be negative to be “bad”. Technically, a few quarters of very low or zero growth is more than sufficient to cause problems.
Same goes for whatever numbers that is bandied around like the USD1T that China has in reserves. It does not mean that it has to go from 1T to 0T in order to be “bad”. Just a drastic drop will do as they have a minimum number that they need to maintain/use in which we have no idea what that number is.
Good points! This is one reason I keep going back to “per capita” numbers and economists keep talking about “real” (inflation adjusted) growth.
When it comes to world economic growth, there is also the issue that China, India, and other developing countries are given very large weights in the calculation, even these countries likely have optimistic estimates of what their growth rate really is. This gives an upward bias to reported world GDP.
“Bank Of America: Oil Demand Growth To Hit Zero Within A Decade”
https://oilprice.com/Energy/Energy-General/Bank-Of-America-Oil-Demand-Growth-To-Hit-Zero-Within-A-Decade.html
This is another one of the “electric vehicle” articles. If the price of oil is unaffordable, demand growth goes to zero right now. This has nothing to do with electric vehicles.
IMF’s Lagarde says oil exporters not fully recovered from 2014 shock, warns of ‘white elephant projects’
https://www.cnbc.com/2019/02/10/imfs-lagarde-oil-exporters-have-not-fully-recovered-from-2014-shock.html?__source=twitter
No kidding! They clearly need higher prices. More debt doesn’t fix the problem.
Federal Reserve chair calls income inequality the biggest challenge in next 10 years
https://www.washingtonpost.com/business/2019/02/07/federal-reserve-chair-calls-income-inequality-americas-biggest-challenge-next-years/?noredirect=on
It’s probably a challenge that will only get more challenging as the chasm gets wider, unless campaign financing reform takes place, so politicians have incentive to be concerned about regular people again instead of just big money donors.
The problem behind income inequality is the laws of physics. When there is not enough to go around, the economy needs to “freeze out” the least productive portion of the economy, and at the same time distribute what little wealth is available to the already-wealthy. This assures that some can survive the current bottleneck, even if all cannot. We may not like this outcome, but this is the way the physics-based system is designed to work.
Distributing the wealth evenly to all is a formula for running through what resources are available quickly. It is popular with voters, but it cannot really work in the real world, unless everyone is working and there is virtually no “complexity” –roads, pipelines, electricity transmission, computers. Even wealth can go with a hunter-gatherer society, but not much beyond that.
https://twitter.com/profwolff/status/1094300648328155136
Actually, without adequate energy consumption per capita, the popular type of economy moves from Capitalism to Fascism.
haha today fascists are nothing compared to the previous century
https://www.historyinorbit.com/wp-content/uploads/2015/06/WP_dailysanctuary-com_2015_03_RP041.jpg
http://4.bp.blogspot.com/-zsK9qQYIe5w/UyXN0TX1rwI/AAAAAAAAIy8/Jm_GgG6lHmI/s1600/The+lynching+of+Thomas+Shipp+and+Abram+Smith,+Marion,+Indiana,+1930.jpg
you ain’t seen nothin yet
imagine Hitler with the means to implant locator devices in everyone he needed to control
imagine the Lynchmobs of the Deep South able to coordinate using modern media devices
those people are still there
when all else is seen to be failing, and a fascist strongman appears and promises solutions
then idiots fall for it