The true feasibility of moving away from fossil fuels

One of the great misconceptions of our time is the belief that we can move away from fossil fuels if we make suitable choices on fuels. In one view, we can make the transition to a low-energy economy powered by wind, water, and solar. In other versions, we might include some other energy sources, such as biofuels or nuclear, but the story is not very different.

The problem is the same regardless of what lower bound a person chooses: our economy is way too dependent on consuming an amount of energy that grows with each added human participant in the economy. This added energy is necessary because each person needs food, transportation, housing, and clothing, all of which are dependent upon energy consumption. The economy operates under the laws of physics, and history shows disturbing outcomes if energy consumption per capita declines.

There are a number of issues:

  • The impact of alternative energy sources is smaller than commonly believed.
  • When countries have reduced their energy consumption per capita by significant amounts, the results have been very unsatisfactory.
  • Energy consumption plays a bigger role in our lives than most of us imagine.
  • It seems likely that fossil fuels will leave us before we can leave them.
  • The timing of when fossil fuels will leave us seems to depend on when central banks lose their ability to stimulate the economy through lower interest rates.
  • If fossil fuels leave us, the result could be the collapse of financial systems and governments.

[1] Wind, water and solar provide only a small share of energy consumption today; any transition to the use of renewables alone would have huge repercussions.

According to BP 2018 Statistical Review of World Energy data, wind, water and solar only accounted for 9.4% 0f total energy consumption in 2017.

Figure 1. Wind, Water and Solar as a percentage of total energy consumption, based on BP 2018 Statistical Review of World Energy.

Even if we make the assumption that these types of energy consumption will continue to achieve the same percentage increases as they have achieved in the last 10 years, it will still take 20 more years for wind, water, and solar to reach 20% of total energy consumption.

Thus, even in 20 years, the world would need to reduce energy consumption by 80% in order to operate the economy on wind, water and solar alone. To get down to today’s level of energy production provided by wind, water and solar, we would need to reduce energy consumption by 90%.

[2] Venezuela’s example (Figure 1, above) illustrates that even if a country has an above average contribution of renewables, plus significant oil reserves, it can still have major problems.

One point people miss is that having a large share of renewables doesn’t necessarily mean that the lights will stay on. A major issue is the need for long distance transmission lines to transport the renewable electricity from where it is generated to where it is to be used. These lines must constantly be maintained. Maintenance of electrical transmission lines has been an issue in both Venezuela’s electrical outages and in California’s recent fires attributed to the utility PG&E.

There is also the issue of variability of wind, water and solar energy. (Note the year-to-year variability indicated in the Venezuela line in Figure 1.) A country cannot really depend on its full amount of wind, water, and solar unless it has a truly huge amount of electrical storage: enough to last from season-to-season and year-to-year. Alternatively, an extraordinarily large quantity of long-distance transmission lines, plus the ability to maintain these lines for the long term, would seem to be required.

[3] When individual countries have experienced cutbacks in their energy consumption per capita, the effects have generally been extremely disruptive, even with cutbacks far more modest than the target level of 80% to 90% that we would need to get off fossil fuels. 

Notice that in these analyses, we are looking at “energy consumption per capita.” This calculation takes the total consumption of all kinds of energy (including oil, coal, natural gas, biofuels, nuclear, hydroelectric, and renewables) and divides it by the population.

Energy consumption per capita depends to a significant extent on what citizens within a given economy can afford. It also depends on the extent of industrialization of an economy. If a major portion of industrial jobs are sent to China and India and only service jobs are retained, energy consumption per capita can be expected to fall. This happens partly because local companies no longer need to use as many energy products. Additionally, workers find mostly service jobs available; these jobs pay enough less that workers must cut back on buying goods such as homes and cars, reducing their energy consumption.

Example 1. Spain and Greece Between 2007-2014

Figure 2. Greece and Spain energy consumption per capita. Energy data is from BP 2018 Statistical Review of World Energy; population estimates are UN 2017 population estimates.

The period between 2007 and 2014 was a period when oil prices tended to be very high. Both Greece and Spain are very dependent on oil because of their sizable tourist industries. Higher oil prices made the tourism services these countries sold more expensive for their consumers. In both countries, energy consumption per capita started falling in 2008 and continued to fall until 2014, when oil prices began falling. Spain’s energy consumption per capita fell by 18% between 2007 and 2014; Greece’s fell by 24% over the same period.

Both Greece and Spain experienced high unemployment rates, and both have needed debt bailouts to keep their financial systems operating. Austerity measures were forced on Greece. The effects on the economies of these countries were severe. Regarding Spain, Wikipedia has a section called, “2008 to 2014 Spanish financial crisis,” suggesting that the loss of energy consumption per capita was highly correlated with the country’s financial crisis.

Example 2: France and the UK, 2004 – 2017

Both France and the UK have experienced falling energy consumption per capita since 2004, as oil production dropped (UK) and as industrialization was shifted to countries with a cheaper total cost of labor and fuel. Immigrant labor was added, as well, to better compete with the cost structures of the countries that France and the UK were competing against. With the new mix of workers and jobs, the quantity of goods and services that these workers could afford (per capita) has been falling.

Figure 3. France and UK energy consumption per capita. Energy data is from BP 2018 Statistical Review of World Energy; population estimates are UN 2017 population estimates.

Comparing 2017 to 2004, energy consumption per capita is down 16% for France and 25% in the UK. Many UK citizens have been very unhappy, wanting to leave the European Union.

France recently has been experiencing “Yellow Vest” protests, at least partly related to an increase in carbon taxes. Higher carbon taxes would make energy-based goods and services less affordable. This would likely reduce France’s energy consumption per capita even further. French citizens with their protests are clearly not happy about how they are being affected by these changes.

Example 3: Syria (2006-2016) and Yemen (2009-2016)

Both Syria and Yemen are examples of formerly oil-exporting countries that are far past their peak production. Declining energy consumption per capita has been forced on both countries because, with their oil exports falling, the countries can no longer afford to use as much energy as they did in the past for previous uses, such as irrigation. If less irrigation is used, food production and jobs are lost. (Syria and Yemen)

Figure 4. Syria and Yemen energy consumption per capita. Energy consumption data from US Energy Information Administration; population estimates are UN 2017 estimates.

Between Yemen’s peak year in energy consumption per capita (2009) and the last year shown (2016), its energy consumption per capita dropped by 66%. Yemen has been named by the United Nations as the country with the “world’s worst humanitarian crisis.” Yemen cannot provide adequate food and water for its citizens. Yemen is involved in a civil war that others have entered into as well. I would describe the war as being at least partly a resource war.

The situation with Syria is similar. Syria’s energy consumption per capita declined 55% between its peak year (2006) and the last year available (2016). Syria is also involved in a civil war that has been entered into by others. Here again, the issue seems to be inadequate resources per capita; war participants are to some extent fighting over the limited resources that are available.

Example 4: Venezuela (2008-2017)

Figure 5. Energy consumption per capita for Venezuela, based on BP 2018 Statistical Review of World Energy data and UN 2017 population estimates.

Between 2008 and 2017, energy consumption per capita in Venezuela declined by 23%. This is a little less than the decreases experienced by the UK and Greece during their periods of decline.

Even with this level of decline, Venezuela has been having difficulty providing adequate services to its citizens. There have been reports of empty supermarket shelves. Venezuela has not been able to maintain its electrical system properly, leading to many outages.

[4] Most people are surprised to learn that energy is required for every part of the economy. When adequate energy is not available, an economy is likely to first shrink back in recession; eventually, it may collapse entirely.

Physics tells us that energy consumption in a thermodynamically open system enables all kinds of “complexity.” Energy consumption enables specialization and hierarchical organizations. For example, growing energy consumption enables the organizations and supply lines needed to manufacture computers and other high-tech goods. Of course, energy consumption also enables what we think of as typical energy uses: the transportation of goods, the smelting of metals, the heating and air-conditioning of buildings, and the construction of roads. Energy is even required to allow pixels to appear on a computer screen.

Pre-humans learned to control fire over one million years ago. The burning of biomass was a tool that could be used for many purposes, including keeping warm in colder climates, frightening away predators, and creating better tools. Perhaps its most important use was to permit food to be cooked, because cooking increases food’s nutritional availability. Cooked food seems to have been important in allowing the brains of humans to grow bigger at the same time that teeth, jaws and guts could shrink compared to those of ancestors. Humans today need to be able to continue to cook part of their food to have a reasonable chance of survival.

Any kind of governmental organization requires energy. Having a single leader takes the least energy, especially if the leader can continue to perform his non-leadership duties. Any kind of added governmental service (such as roads or schools) requires energy. Having elected leaders who vote on decisions takes more energy than having a king with a few high-level aides. Having multiple layers of government takes energy. Each new intergovernmental organization requires energy to fly its officials around and implement its programs.

International trade clearly requires energy consumption. In fact, pretty much every activity of businesses requires energy consumption.

Needless to say, the study of science or of medicine requires energy consumption, because without significant energy consumption to leverage human energy, nearly every person must be a subsistence level farmer, with little time to study or to take time off from farming to write (or even read) books. Of course, manufacturing medicines and test tubes requires energy, as does creating sterile environments.

We think of the many parts of the economy as requiring money, but it is really the physical goods and services that money can buy, and the energy that makes these goods and services possible, that are important. These goods and services depend to a very large extent on the supply of energy being consumed at a given point in time–for example, the amount of electricity being delivered to customers and the amount of gasoline and diesel being sold. Supply chains are very dependent on each part of the system being available when needed. If one part is missing, long delays and eventually collapse can occur.

[5] If the supply of energy to an economy is reduced for any reason, the result tends to be very disruptive, as shown in the examples given in Section [3], above.

When an economy doesn’t have enough energy, its self-organizing feature starts eliminating pieces of the economic system that it cannot support. The financial system tends to be very vulnerable because without adequate economic growth, it becomes very difficult for borrowers to repay debt with interest. This was part of the problem that Greece and Spain had in the period when their energy consumption per capita declined. A person wonders what would have happened to these countries without bailouts from the European Union and others.

Another part that is very vulnerable is governmental organizations, especially the higher layers of government that were added last. In 1991, the Soviet Union’s central government was lost, leaving the governments of the 15 republics that were part of the Soviet Union. As energy consumption per capita declines, the European Union would seem to be very vulnerable. Other international organizations, such as the World Trade Organization and the International Monetary Fund, would seem to be vulnerable, as well.

The electrical system is very complex. It seems to be easily disrupted if there is a material decrease in energy consumption per capita because maintenance of the system becomes difficult.

If energy consumption per capita falls dramatically, many changes that don’t seem directly energy-related can be expected. For example, the roles of men and women are likely to change. Without modern medical care, women will likely need to become the mothers of several children in order that an average of two can survive long enough to raise their own children. Men will be valued for the heavy manual labor that they can perform. Today’s view of the equality of the sexes is likely to disappear because sex differences will become much more important in a low-energy world.

Needless to say, other aspects of a low-energy economy might be very different as well. For example, one very low-energy type of economic system is a “gift economy.” In such an economy, the status of each individual is determined by the amount that that person can give away. Anything a person obtains must automatically be shared with the local group or the individual will be expelled from the group. In an economy with very low complexity, this kind of economy seems to work. A gift economy doesn’t require money or debt!

[6] Most people assume that moving away from fossil fuels is something we can choose to do with whatever timing we would like. I would argue that we are not in charge of the process. Instead, fossil fuels will leave us when we lose the ability to reduce interest rates sufficiently to keep oil and other fossil fuel prices high enough for energy producers.

Something that may seem strange to those who do not follow the issue is the fact that oil (and other energy prices) seem to be very much influenced by interest rates and the level of debt. In general, the lower the interest rate, the more affordable high-priced goods such as factories, homes, and automobiles become, and the higher commodity prices of all kinds can be. “Demand” increases with falling interest rates, causing energy prices of all types to rise.

Figure 6.

The cost of extracting oil is less important in determining oil prices than a person might expect. Instead, prices seem to be determined by what end products consumers (in the aggregate) can afford. In general, the more debt that individual citizens, businesses and governments can obtain, the higher that oil and other energy prices can rise. Of course, if interest rates start rising (instead of falling), there is a significant chance of a debt bubble popping, as defaults rise and asset prices decline.

Interest rates have been generally falling since 1981 (Figure 7). This is the direction needed to support ever-higher energy prices.

Figure 7. Chart of 3-month and 10-year interest rates, prepared by the FRED, using data through March 27, 2019.

The danger now is that interest rates are approaching the lowest level that they can possibly reach. We need lower interest rates to support the higher prices that oil producers require, as their costs rise because of depletion. In fact, if we compare Figures 7 and 8, the Federal Reserve has been supporting higher oil and other energy prices with falling interest rates practically the whole time since oil prices rose above the inflation adjusted level of $20 per barrel!

Figure 8. Historical inflation adjusted prices oil, based on data from 2018 BP Statistical Review of World Energy, with the low price period for oil highlighted.

Once the Federal Reserve and other central banks lose their ability to cut interest rates further to support the need for ever-rising oil prices, the danger is that oil and other commodity prices will fall too low for producers. The situation is likely to look like the second half of 2008 in Figure 6. The difference, as we reach limits on how low interest rates can fall, is that it will no longer be possible to stimulate the economy to get energy and other commodity prices back up to an acceptable level for producers.

[7] Once we hit the “no more stimulus impasse,” fossil fuels will begin leaving us because prices will fall too low for companies extracting these fuels. They will be forced to leave because they cannot make an adequate profit.

One example of an oil producer whose production was affected by an extended period of low prices is the Soviet Union (or USSR).

Figure 9. Oil production of the former Soviet Union together with oil prices in 2017 US$. All amounts from 2018 BP Statistical Review of World Energy.

The US substantially raised interest rates in 1980-1981 (Figure 7). This led to a sharp reduction in oil prices, as the higher interest rates cut back investment of many kinds, around the world. Given the low price of oil, the Soviet Union reduced new investment in new fields. This slowdown in investment first reduced the rate of growth in oil production, and eventually led to a decline in production in 1988 (Figure 9). When oil prices rose again, production did also.

Figure 10. Energy consumption per capita for the former Soviet Union, based on BP 2018 Statistical Review of World Energy data and UN 2017 population estimates.

The Soviet Union’s energy consumption per capita reached its highest level in 1988 and began declining in 1989. The central government of the Soviet Union did not collapse until late 1991, as the economy was increasingly affected by falling oil export revenue.

Some of the changes that occurred as the economy simplified itself were the loss of the central government, the loss of a large share of industry, and a great deal of job loss. Energy consumption per capita dropped by 36% between 1988 and 1998. It has never regained its former level.

Venezuela is another example of an oil exporter that, in theory, could export more oil, if oil prices were higher. It is interesting to note that Venezuela’s highest energy consumption per capita occurred in 2008, when oil prices were high.

We are now getting a chance to observe what the collapse in Venezuela looks like on a day- by-day basis. Figure 5, above, shows Venezuela’s energy consumption per capita pattern through 2017. Low oil prices since 2014 have particularly adversely affected the country.

[8] Conclusion: We can’t know exactly what is ahead, but it is clear that moving away from fossil fuels will be far more destructive of our current economy than nearly everyone expects. 

It is very easy to make optimistic forecasts about the future if a person doesn’t carefully examine what the data and the science seem to be telling us. Most researchers come from narrow academic backgrounds that do not seek out insights from other fields, so they tend not to understand the background story.

A second issue is the desire for a “happy ever after” ending to our current energy predicament. If a researcher is creating an economic model without understanding the underlying principles, why not offer an outcome that citizens will like? Such a solution can help politicians get re-elected and can help researchers get grants for more research.

We should be examining the situation more closely than most people have considered. The fact that interest rates cannot drop much further is particularly concerning.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,253 Responses to The true feasibility of moving away from fossil fuels

  1. Harry McGibbs says:

    “…should we be worried about another crisis? Yes, the authors say, in a final chapter that is downright scary.

    “…crises will still happen, and when they do, the firefighting abilities of policymakers will have been gravely compromised. Interest rates are too low for cutting them further to do much good. Fiscal stimulus, which BGP (Bernanke, Geithner and Paulson) agree was crucial, will be much harder to sell given high levels of debt. And Congress has taken away much of the authority that made extraordinary measures possible in the crisis. In other words, it’s hard to imagine BGP’s modern successors carrying out the kind of rescue operation the authors managed a decade ago.

    “And it’s not even clear whether they would try, or at any rate have any idea what they’re doing. The authors are too nice to say this, but today’s top economic officials seem to be systematically drawn from the ranks of those who got everything wrong during the crisis. The failure of Bear Stearns was the first solid indication of how much trouble we were in; Donald Trump has just chosen David Malpass, Bear’s chief economist at the time, to head the World Bank. Larry Kudlow, now the administration’s top economist, ridiculed “bubbleheads” who claimed that housing prices were out of whack, then praised Paulson for refusing to bail out Lehman — just hours before financial markets went into full meltdown.

    “In other words, we seem to have learned the wrong lessons from our brush with disaster. As a result, when the next crisis comes, it’s likely to play out even worse than the last one. Isn’t that a happy thought?”

    • Harry McGibbs says:

      Bond sales running at record pace: ” After a period of policy tightening, the shift among central banks spells a return to the ultra-accommodative approach that boosted debt issuance in the years after the financial crisis and prompted companies to take advantage of low interest rates by borrowing more from investors.”

    • “today’s top economic officials seem to be systematically drawn from the ranks of those who got everything wrong during the crisis”

      This seems to be the way it works! Actuaries seem to have gotten their analyses all wrong at the time of the great financial crisis, as well. The way the system really works is difficult to figure out.

      • Rodster says:

        Hank Paulson in his book wrote that he was scared sh*tless that the global economy would completely come to a halt and the US would have had to implement Martial Law with tank roaming the streets of every major US city if the TBTF Banks were not bailed out.

        Hence instead of having to answer to an angry mob holding torches and pitchforks they opted for “kicking the can down the road” hoping that when there was NO solutions to the debt crisis they would be long gone and someone else would have to deal with the global crisis.

        The problem now is 10x worse than it was in 2008/09.

        • I am afraid you are right.

        • Yes Rodster, thank you, I read Hank’s book (On the Brink) too and quote from it in my book. His assessment of the situation is exactly as you say and they were frightened to death at the time, hence the over reaction. When faced with even the LCs freezing and trade ceasing the whole edifice was ready to collapse and tanks in the streets was a real possibility.

          As you say it is much worse now, so when the next crisis comes only the IMF with the SDR will be able to save the global economy, or at least temporarily halt the financial meltdown. His appraisal of the current situation is revealing:

          Since he (Hank Paulson) left the Treasury he had been approached by people eager to hear
          about his experiences and two questions often appeared: “What was it like to live
          through the crisis?” and “What lessons did he learn that could help us avoid a
          similar calamity in future?” He hopes that the first one is answered by reading his
          book and goes on to list some lessons, although complex, he narrowed them down to
          just four crucial ones:
          1. “The structural economic imbalances among the major economies of the
          world that led to massive cross-border capital flows are an important source
          of the justly criticised excesses in our financial system. These imbalances lay
          at the root of the crisis which causes the US government to borrow large
          amounts of money from oil-exporting countries and Asian nations which it can
          never repay except by bond issuance and thus inflating away the debt burden”.
          2. “Our regulatory system remains a hopelessly outmoded patchwork quilt built
          for another day and age. The system has not kept pace with financial
          innovations [see Chapter 8 about Financial Engineering] and needs to be fixed
          so that we have capacity and the authority to respond to constantly evolving
          global capital markets”.
          3. “The financial system contained far too much leverage [excessive borrowings],
          as evidenced by inadequate cushions of both capital and liquidity [money].
          Much of the leverage was embedded in largely opaque and highly complex
          financial products [derivatives]. It is generally understood that both
          commercial and investment banks in USA, UK, and Europe as well as the rest
          of the world did not have enough capital [they ran out of money!]. Less well
          understood is the important role that liquidity [cash – again!] needs to play in
          bolstering the safety and stability of the banks. The credit crisis [global
          financial meltdown] exposed widespread reliance on poor liquidity practices,
          notably a dependence on short-term funding; which means institutions using
          these methods need to have plenty of cash on hand for bad times and many did
          4. “The largest financial institutions are so big and complex that they pose a
          dangerously large risk”. In 2015 the top ten financial institutions in the USA
          held close to 60% of total financial assets, up from 10% in the 1990s, and
          continually growing bigger. The concept of ‘To Big To Fail’ (TBTF) has
          moved from academic literature to reality and must be addressed.
          Hank goes on to list a number of steps to be taken by the US government to reduce
          global imbalances that have been decried for years by many prominent economists,
          some, even Nobel Prize winners, who should know better. Perhaps they actually do
          know better but, like many politicians and media pundits, they are captured in the
          merry-go-round of financial opportunity and reward? I think it important to quote
          Hank Paulson in his book, “On the Brink,” [at page 441]: “Our government needs to
          tackle its number one economic challenge, which is reducing its fiscal deficit. Our
          ability to meet this challenge will to a large extent determine our future economic
          success. We are now on a path where deficits will rise to a point at which we may
          simply be unable to raise the necessary revenues even if significant tax increases are
          imposed on the middle class.”

          I think Hank sums it up fairly well and his thoughts are prescient today.

  2. Craig Walters says:

    For Australian readers – just finished a new book ‘Blackout’ by Matthew Warren about the fragility of the grid with respect to renewable energy and uncoordinated long term planning (though does not recognise the limits posed by depleting non-renewable natural resources). Good read. I’ve heard that voltages in Castlemaine central are around 250V, I’ve seen large solar systems in industrial Melbourne that are not permitted to feed back into the grid, last week it was revealed that the Silverton wind farm can only operate at 1/4 capacity when the Broken Hill solar power station is operating, and not to mention the difficulties revealed from the EV recharging trials in Adelaide. Yes the grid can be fixed; but who is going to pay for it is not discussed.

    And I must say how much I’ve been enjoying reading and learning from the comments on OFW now that Gail is often contributing and the sarcasm from FE is missing.

    • SUPERTRAMP says:

      BTW, what happened to Fast Eddie!? No goodbyes, farewells, hope to see you all again, perhaps at the End of the World Party! Has he morphed elsewhere, or still posting here under a new pseudonym?
      Lookout for FE, wanted alive!
      Well, at least we can give him a farewell
      A Memorial to Fast Eddie

      See you in a place that has NO Limits….

    • Comments on OFW seem to be yet another self organizing system. When one commenter leaves, others come.

      Blackout looks like an interesting book. I see it can be purchased from I am not sure how that site works for people outside Australia. I presume it is necessary to set up an account with that site as well.

      • SUPERTRAMP says:

        A Fast Eddie sighting….Showing us all a self organizing system.
        Yo Yo Get Funky…Fast Eddie at his BEST ….

        Now that’s End of the World Party…
        We can only hope….

    • jha says:

      Second paragraph spot on!

  3. adonis says:

    the truth is there is a solution quantative easing infinity which will be invested in the green economy as for the human race the majority are not required so that may be the reason that great lies and ignorance of our collective predicament have been orchestrated by the powers that be.

    • Sounds like a logical conclusion.

    • jupiviv says:

      Debt fuelled asset inflation is possible because of cheap surplus energy that can stay cheap due to the activities of the human race as a whole.

      A green economy of far fewer people cannot survive without the aforesaid larger system, i.e. the global industrial & trade infrastructure.

      The reason for our ignorance of our predicament as a species is that we haven’t evolved enough to transcend our selfish desires and goals. The dangers to our species are too nebulous and disconnected from our quotidian existence for most of us to genuinely care about solving them.

      The above is precisely why cynical, reactionary nihilism is so common on this and other collapse-related websites/blogs.

      • Tim Groves says:

        * Note to readers whose educations have been even more neglected than Jupiviv’s hs (which probably covers all of us): Quotidian is a fancy way of saying “daily” or “ordinary.” Quotidian events are the everyday details of life. When you talk about the quotidian, you’re talking about the little things in life: everyday events that are normal and not that exciting, like having a cup of tea and waking the dog.

      • Davidin100millionbilliontrillionzillionyears says:

        “The above is precisely why cynical, reactionary nihilism is so common on this and other collapse-related websites/blogs.”

        I think a farcical, passive nihilism is much better suited to the collapse-related topics here at OFW…

  4. milan says:

    is it not amazing that not even 24 hours after the burning of a Cathedral in France some 700 million dollars shows up for its rebuilding? 100 million alone from a gas company Total? I find this truly incredible and staggering? Gas companies have lots of money apparently to do as they please? Meanwhile orphans and widows walk the street looking for bread, housing etc etc etc?

    • Lastcall says:

      Have a good look round at all the significant buildings in your town, especially the public/cultural/political/banking ones. Tell me which church, sports arena, glass tower etc doesn’t represent historical and current ongoing theft. All were promised to be the bringer of benefits; has there ever been a better thief than a cost-benefit analysis?

      Expand that to the military infrastructure and the investment is for the taking by naked force.

      • All of these big buildings brought jobs and helped keep commodity prices up. In that sense, they were helpful.

        I expect that the cathedrals with ongoing employment for 200 years could act as an unemployment system, and as a source of labor, if individuals were needed for war.

        All of the big buildings are helpful, in the same sense that wind turbines and solar panels are. They are an excuse for more debt, in addition to propping up employment and commodity prices.

        • Lastcall says:

          Thats true enough, but isn’t it interesting that almost all of them achieve the almost exact opposite of their intended purpose …IMHO.
          For example, the Pentagram seems to spread terror not security, the Fed reserve seems to corrupt the value of dollars not preserve, and the buildings of government seem to put greater distance between the voters and any true democracy.

        • Robert Firth says:

          Sigh. All of those big buildings helped to elevate the human spirit, and teach us that there is more to life than subsistence. They connected us to our past, and to the great men of the past. They gave us hope for a better future, and encouragement that we could perhaps help create that future, even if all we did was carve a gargoyle or help pull a stone. They were a triumph of hope over despair. They remain a priceless heritage.

      • Tim Groves says:

        Has the gas company Total been thieving its way to profitability all this time? In my naivety, I thought they were working hard to extract useful energy for the benefit of all mankind, womankind, childkind and familypetkind at less-than-extortionate prices.

        I’d like to see the wind and solar power industries cough up 100 million euros in donations for anything.

    • Margot says:

      Why focus on orphans and widows? 80% of homeless are men.

      • This is a link to a 2018 report on US homelessness.

        When they did a survey on one night, they found that 60.2% of the homeless were male.

        If only those who were not staying in shelters were counted, the percentage increases to 69.9%.

        The analysis also shows that blacks and hispanics are over-represented. The total number of US homeless has been falling, according to the report.

      • DJ says:

        If bad things happens to men they have probably deserved it. At least if they’re white.

  5. Yoshua says:

    Notre Dame burned down. So what…who cares?

    France is turning into a failed state whit 50 nuclear reactors. That is what really matters.

    • Many people care, Yoshua, it is not only the actual building, itself a magnificent work of art, but the metaphor it represents.

      • Xabier says:

        One can only be amused by the innate cultural parochialism of the French, saying that Notre Dame is ‘a symbol of Europe’: not at all!

        Of Paris, certainly, and of France, of course although there are many finer buildings scattered throughout what was once a beautiful land.

        I would suggest Santiago de Compostela as a truer European symbol, having drawn pilgrims from all over Europe for many centuries.

        And for a conjunction of fine architecture and art, the whole of Renaissance Florence: Italy, after all, taught the French to be civilised people. (Although it took cultured British and Yanks to stop the Florentines developing their city out of existence in the 19th century – they pulled down quite a bit as it was).

        • Excellent information ,Xabier, thank you, as ususal you have put a completely different angle on it for me. I must agree with your suggestions.

        • Robert Firth says:

          Thank you, Xabier, for a profound thought. I have visited that place, but refused the scallop shell. As a pagan, I am most at home in Classical Antiquity, the civilisation that was created in Greece and spread, all unwittingly, by the legions of Rome. So I would name as my own personal symbol the Pantheon, the greatest temple of that age.

    • Notre Dame is a interesting diversion from today’s problems. The rebuilding effort is an excuse for more debt and for hiring quite a few workers.

    • Davidin100millionbilliontrillionzillionyears says:

      I was watching it burn on TV while drinking a cup of coffee…

      French Roast…

  6. Wolf Street has an article up by “MC01,” a frequent commenter on the site. Its titled,
    More Airlines Collapse: Jet Airways India, Alitalia, WOW Air

    And a subtitle, And the 217 planes that Jet Airways has ordered from Boeing?

    Today, another major airline collapsed. Jet Airways, India’s largest private airline, announced “with immediate effect” that it was “compelled to cancel all its international and domestic flights.”. . .

    Unpaid lessors scrambled to get their aircraft back: According to India’s Directorate General of Civil Aviation (DGCA) in the April 8-14 week alone, 22 of the company’s leased 737-800’s were deregistered and handed back to lessors. Between leased aircraft being repossessed and others being grounded for financial issues, Jet Airways’ operational fleet has gone from 124 planes in February to just 14. . .

    Jet Airways presently has 217 aircraft of various models on order from Boeing. How many are going to be paid for and will be delivered remains an interesting question and raises even more questions about the feasibility of the maxi-orders placed by many other Asian airlines with vulnerable financials.

    It seems as though Alitalia’s problems and WOW (of Iceland)’s problems have been known for a while. But the big Indian airline failing, without a government or other rescue, looks to me like a major problem. It seems like Boeing’s stock will be under pressure. In fact, with so many airlines doing poorly, aren’t a lot of orders likely to be cancelled?

    • Jason says:

      Scratching my head as to why they had 176% more planes on order than they were using.
      Go big or go home. It would be interesting to track the number of airlines in use by year and see if it resembles oil production graph. I bet its similar.

      • I don’t see any impact on Boeing’s share price recently, so I think the author may have overstated the story in some way. Perhaps Jet Airways was only thinking about the extra planes, without putting cash down, so that Boeing didn’t really record these as expected sales, for example.

        This recent article says, “India’s booming economy, the deregulation of the aviation industry, and government’s goal to enhance regional connectivity has brought about a huge increase in the number of domestic airlines in India in recent years (although not all of them have survived).”

        The same article lists several Indian airlines that have run into financial problems. One of these is Air India (owned by the government). It has been experiencing financial problems for “a number of years,” and its market share has dropped to 13%. The government plans to privatize the airline.

        It looks like there are way too many competitors trying to fly in India. There will be a big shakeout one of these days, especially if oil prices stay sort of high. But for right now, this particular airline doesn’t look like it is causing as big a problem as the author thought.

    • It would be interesting to see how this particular aircraft manuf industry evolves out of it, is it going to be a triage thing among them for the near-midterm, i.e. Airbus, Russians and few others keeping some production plateau at whatever level, while Boeing going on quasi bust down spiral into national and mil support only.. Or is it going to be synchronized wide spanning aircraft industry bust.. ?

  7. Jason says:

    I meant track the total number of airplanes used by airlines.

    • doomphd says:

      Here is a response I got from a professor colleague, now retired, on the Scarcity book by Chris Clugston:

      “I was looking over the Scarcity book you had noted below. It reminded me of three former studies.

      1. The 1865 study by Jevons – Britain’s coal minister, showing there were no more easily accessible shallow coal seams (which was correct) and hence the industrial revolution would grind quickly to an end.
      Problem- steam power made abundant deep, difficult coal seams economic and when the last British coal mine closed about 10 years ago there were over 300 years supply of proven economic prime coal reserves left in place ( to the great anguish British miners still protesting to this day)

      2. The early 1970s study called ‘Famine 1975’ correctly showed that current food production could not keep up and massive famine was coming.
      Problem – the green revolution, which it labelled a hoax, doubled crop production in the third world

      3. CIA study of about 2005 reiterating the ‘Famine 1975’ work ( which was very credible other than its one error) and noting it would create wars in the third world,
      Problem – discounted aquaculture which went on to produce 100 million tons a year of protein and computer enhanced food distribution which reduced waste from over half of the food supply to less than one quarter.

      While we will eventually run out of stuff, I strongly suspect we are good for our lifetime. The great economic Ship of State sinks very slowly.

      There is more oil still left in the Alberta tar sands than ever existed in Saudi Arabia. It turns out that with the figures just released, there is as much heavy oil in Lake Maracaibo as in Saudi.
      The US , now the world’s largest producer of oil and gas, is likely to stay so for a decade (with shale oil).

      In terms of minerals, there has been almost no exploration in Central Northern Canda, Arctic Canada, Siberia , the Russian Arctic ( now opening up with access to the north coast through its three big (2000 miles long) rivers ( Ob, Lena and Yenisey), Central Brazil and the Interior of Africa. The world mining congress just voted the best mineral exploration area in the world as Nevada ! They aren’t even thinking about the other logistically challenged places (not to mention the seafloor). It is the same error as Jevons, finding no easy shallow close in coal seams means no resources (only what it actually means is you have to build some roads through the arctic and across the jungle). Eventually, of course, there is a limit- just not in the next decade or two.


      • I think that the limit is how high the prices can rise. There are indeed unexplored areas. Also, USGS has made a lot of estimates, even of these remote areas. But it is necessary to build roads and railroads to these remote area, and transport the minerals from these areas. Also, there needs to be housing built for all of the workers in these remote locations. The cost tends to be high. This is why these resources have not been used in the past.

        I don’t really like Clugston’s analysis, because he focuses too much on peaking based on known resources. If the price goes up, we will figure out more. Our big problem is that prices don’t rise high enough, a point Clugston’s analysis misses.

      • Kowalainen says:

        As I have stated. This joint will be kept lit until the end of this century.

        Hopefully the machines will have reached sentience by then and with that Homo sapiens enters twilight and it’s journey to inevitable irrelevance will be completed. From there on it’s all machine.

        Now our moral duty as humans is to make this transition as swiftly as possible while conserving the remaining earthly resources for the machine to create the first interstellar ‘civilization’ of human origin.

      • JesseJames says:

        “There is more oil still left in the Alberta tar sands than ever existed in Saudi Arabia.”
        This is simplistic. It takes enormous amounts of water and energy to extract the bitumen from the tar sands.
        Just because it is there, does not mean it will ever be extracted.

        • I expect that theres is a huge amount of oil, coal and natural gas that we never will extract. Knowing how much we can technically extract at current prices tells us very little. Prices are likely to fall, for one thing.

      • the existence of humankind is supported and driven by our ability to make buy and sell things to each other

        to make that equation work, we must strive to find more of everything with which to do that

        but in that striving, we reproduce more of ourselves because part of it is improving our survival rate

        so no matter how much we produce there will always be more of us demanding a share of what we produce, so there can never be enough of anything to satisfy everyone

        Because of that, the haves will always be defending themselves against the have nots, and building weapons to do so, which of course burns still more resources to keep our current level of BAU. The have nots see our cars, planes, cities, plentiful food and water.
        They don’t want a life if unremitting dirt.

        If we stop building weapons, the have nots will invade and take what they want, imagining that is the solution to their personal survival problem.
        Short term, it might be. But long term they will still fill the planet with too many mouths demanding food (and energy)—which of course will not be available.

    • SUPERTRAMP says:

      Thank you Sven, the Bardi article was spot on and I’ve been a student of Late Roman Imperial History for decades. It is obvious we are in the throngs of Financial and Commercial downward spiral. The burden of the bloated Government Bureaucracy, Military force, and Entitlements will topple the societal structure, as it did then.
      I agree with Gail, we are close to the breaking point. It could occur at any time.
      Thanks for the link to Dmitry and his book on stages of collapse.
      Have not gotten his book yet but been looking in at his site for some insight.
      Looks like we are in a slow train wreck. Ironic as it is, our complex, gigantic Financial system has a lot of inertia too, like the Climate system, takes a while for actions to work it’s way through.
      Maybe all will meet at the same point in time….The Rapture

      The rapture is an eschatological concept of certain Christians, particularly within branches of North American evangelicalism, consisting of an end time event when all Christian believers who are alive will rise along with the resurrected dead believers into Heaven and join Christ!

    • I like Dmitry’s writing. I am not sure how applicable past experience will be to what we are encountering now, however.

      In the case of the Soviet collapse (which Dmitry writes about), it was really only a partial collapse. It was part of a world system, and the government of each of the individual republics continued. And there really has been a long-term impact of the collapse, more than Ugo suggests in his article:

      The Soviet Union no longer has the same place it had in the world order, back before 1991.

      In the case of the Roman Empire (which Ugo writes about), most people had jobs that they could use almost anywhere. If they were a farmer, they could continue farming, with or without most of the rest of the system staying in place. They could even move to a different area, and farm there. It is not the same with a programmer, if there is no electricity. The collapse is likely to be quicker.

      • Xabier says:

        Movement of whole peoples and tribes was in fact a major feature of all the Ancient empires -the Persians did it a lot for instance: only possible with low-energy transferable skills, such as in agriculture.

  8. Harry McGibbs says:

    “Imagine going to the bank for a mortgage and getting paid to take out your vast home loan. You would still pay in monthly installments, but the total repayments would add up to less than the total. The longer you take to pay it back, the more money you save. Too good to be true, right?

    “Or how about putting your spare cash in a savings account at the end of each month, only to find your balance was smaller than when you last looked. Who would put cash into an account like that?

    “This is what life could look like in a world with deeply negative interest rates.

    ““Going deeply into negative territory with interest rates would change the world as we know it,” says Ricardo Garcia, author of the UBS report The future of Europe: the eurozone and the next recession.

    “…The key problem is the terrible starting point: the European Central Bank and governments have little ammunition in a battle against a recession.

    “The ECB is far from alone, though. Almost all central banks already slashed interest rates close to zero after the financial crisis in a desperate effort to stave off another great depression… Even when growth did return, it was modest and fragile.

    “Interest rates have stayed at or close to rock bottom.

    “Savers might pull their cash out of the bank and stuff it under their mattresses instead to stop negative rates pinching their hard-earned deposits. This would undermine the goal of policy and threaten banks, so an even more radical policies has been discussed: abolish cash.

    “If all money is electronic, savers cannot hide it at home.

    “The IMF studied the feasibility of this last year. It looked at “decoupling” cash from electronic money, instituting an exchange rate between the two, set by the central bank to match the negative interest rate. Cash would lose its value in line with electronic money regardless of efforts to keep it safe.

    “Meanwhile, borrowers would face different incentives. Debt would be better than free, pushing businesses and individuals to borrow as much as possible.

    “Low borrowing costs have already built fears of a debt bubble. Negative rates would threaten to become a bonanza. Regulators would probably step in to ration loans…

    “…in desperate times, rates might go deeply negative, along with bumper rounds of money printing as central banks purchase assets other than the government bonds favoured so far – perhaps even shares.

    “If one major central bank takes the plunge, others might be forced to follow as negative rates push a country’s currency down, to the detriment of other nations’ exports.

    ““If we have an important player within the OECD going for interest rates significantly below minus 1pc, it creates a strong incentive for others to do the same,” says Garcia. “It could trigger a chain reaction.””

    • Harry McGibbs says:

      “Almost 10 years after the Great Recession ended, the growing threat of a new economic slowdown raises a troubling question: When the next recession strikes, what can the world’s central banks do? With interest rates low and their balance sheets still loaded with assets bought to fight the 2008 crisis, do they have the tools to respond? This column is one of six looking at that question.”

    • Xabier says:

      When the gods fail, there is no madness that men will not embrace…..

      With have a great deal of entertainment ahead of us.

    • Thanks Harry.

      Hm, predicting this for years ‘and now it’s official’ – they will attempt to kick the can by whatever means possible incl.:

      -> stricter cash ban – withdrawal limits or equivalent scheme
      -> direct buying of core shares ala Japan+
      (so not only becoming top3 but eventually major shareholders)
      -> above eventually evolving into mixed economy increasingly biased for command style variant

      = this shift will likely happen before ~2025-30 and then the later stage development of it might soldier on for few more decades in selected regions keeping the IC hubs humming obviously not as predominantly ‘frivolous crap’ consumer oriented societies anymore..

    • I don’t think negative interest rates can work, if they actually get back in the way the article describes. They seem to imply that investors cannot really earn a positive return on their investments. If this is the case, very few will invest. The system will collapse.

      • DJ says:

        Thus cash ban and negative interest on savings account.

        Probably cash ban wont be necessary until several percentage points negative. -1% on $1M = $10k/y, what does it take to guard/insure $1M?

    • Robert Firth says:

      Harry, I respectfully disagree. If governments systematically use their money as a weapon, people will eventually respond by going back to a store of value that governments cannot control. And four thousand years of history will be on their side.

      • If our economy collapses, there is no store of value. Perhaps the food in your cellar, but that is all.

        • Robert Firth says:

          Thank you, Gail, but I respectfully disagree.

          Yes, I can exchange my chicken for his root vegetables, but what then? For what could he exchange the chicken? Only if I paid him in an accepted “medium of exchange”, that others would also accept.

          I saw that myself, growing up in Africa some 60 years ago. The traders of course used the currencies of the various colonial powers: Britain, France, Belgium, Italy. But among themselves they settled their debts in coin: coin that bore the image of an empress who had died in 1780. But each coin contained 3/4 ounce of pure silver.

          Yes, the Maria Theresia Thaler. And that is perhaps the definition of “real money”:
          whatever will be accepted without the backing of any government.

          • stores of value can ultimately only be stores of energy–and that can only be whatever can be extracted from the land we live on—or the land someone else lives on. If you have no store of energy, then you have nothing that can support value

            money is a token of energy transfer, it has no intrinsic worth, If you have no money, you cannot trade for someone else’s energy-store

            all the complexities of business hinge on that simple concept, and there’s no escape from it, now or in a collapsed future

            no matter how high flown your job is, it is wholly dependent on someone, somewhere extracting surplus energy from land to support whatever it is you do

            if you happen to be a billionaire, then your billions are in effect expropriation of energy stores that belong to other people. Which is precisely the situation we have globally now, when 1% of the population own a third of all global assets, forcing poverty to increase exponentially because the wealth of the billionaire is diverting energy/assets for his exclusive use. ie either as goods, or in the making of still more money

            • A lot of what is considered “stores of energy” is really “promises of future goods and services made with energy.” If the economy is not functioning well enough, these future goods and services made with energy are likely to never to become available. To a significant extent, these promises of future goods and services have been separated from any real “store of value.” A government can promise pensions to everyone over age 67 (or 60 or whatever age the government chooses), but this will only be possible if the economy is wealthy enough to a significant share of its output with a non-working group. Up until very recent times, there was no concept of retirement. Only a very rich economy can afford to give retirement benefits.

          • The stored food is a store of value in that you can eat it yourself. I didn’t expect that you would be able to exchange it for anything else. In an economy that is no longer functioning, the lack of things to exchange for whatever you have stored up (gold coins, silver coins or whatever) is precisely the problem.

  9. Harry McGibbs says:

    “Energy shortages in Portugal sharpened on Wednesday as a strike by fuel-tanker drivers entered its third day in the worst industrial unrest of the Socialist government’s four-year rule. Panicked motorists formed long lines at petrol stations, some crossing into Spain to refuel, while at airports reserves reached critically low levels in the run-up to the tourism-dependent economy’s busy Easter season.”

    • Harry McGibbs says:

      “The manufacturing sectors of the eurozone’s two largest economies [France and Germany] missed expectations as they continued to contract in April.”

      • Harry McGibbs says:

        “Germany is bracing for its worst GDP growth in a decade as its economy grapples with the global industrial downturn and the eurozone’s slowdown. Its government halved its growth forecast for 2019 to just 0.5pc after Europe’s biggest economy narrowly avoided recession last year.”

        • Harry McGibbs says:

          “Tomato ketchup, handbags and video game consoles are among the US imports facing EU tariffs, as the European bloc hit back in the latest twist in the transatlantic dispute over aircraft subsidies. The European commission threatened to impose tariffs on US imports worth $20bn (£15.3bn) on Wednesday, publishing an 11-page catalogue of items at risk, which also included aircraft and tractors, following a World Trade Organization ruling against Washington last month.”

          • SUPERTRAMP says:

            I’m beginning to feel nervous and uneasy, like I felt back in 2007, when a friend and colleague from California told me how bad the housing market was there….he stated terrible and had a worried look on his face.
            Harry, thank you for the updates, I have a worried look on my face…brace yourself…
            This is the BIG ONE…

            There ain’t going to be Fairy Godmother coming to bail us out this time around. Every man for himself!

            It’s a MAD, MAD WORLD…

            • Harry McGibbs says:

              You are welcome, Supertramp. Re the housing market:

              “A decade after the financial crisis, the government still maintains many of the same incentives that drove too much investment into residential real estate. Washington still stands behind mortgage monsters Fannie Mae and Freddie Mac. Mortgage rates remain historically low and recently moved lower. And anyone hoping it will be a long time before America’s next housing mania has to be concerned about a revival in a particular type of risky lending.”


            • Harry McGibbs says:

              And here in the UK

              “The Financial Conduct Authority (FCA) is to investigate parts of the second charge and subprime credit markets which it believes are designed to benefit from consumers going into arrears. It raised concerns that the business models of some retail lending products, including some subprime credit and second charge mortgage products, “are designed to benefit from consumers not repaying their debts”.”


            • What next? I suppose there are companies that make their money off those least able to afford their services.

            • Yes Gail, there are many. I was talking to an ex-banker the other day. He asked me who did I think where the most sought-after credit card customers? I tried a few guesses about FICO numbers etc. He explained that it was ‘nurses’ because they are moral and rarely default, they are in a form of regular income and just high enough living standards/knowledge to manage debt but not high enough to know how they are being ripped off. How cynical can you get?

            • SuperTramp says:

              Harry, here in South Florida one tell tale sign are numerous advertisements of special workshops that show how an individual can make money in real estate not using their own money and become financially wealthy! They run on TV late at night and remind me of before the meltdown of 2008.
              This is just one example
              Now, I don’t begrudge anyone investing and real estate is indeed one option.
              But the hype now is Gonzo on some of these events!
              One only has to look at cable TV with shows about flipping or renovating can see the mania.
              This is not going to end well.
              In my older neighborhood, see the older homes are being bought up and upgraded for a nice profit. Many signs on the roadside, “We BUY UGLY Houses.. CASH!”
              Also, get unsolicited calls for investors wanting to buy my house! Asking me how much longer I intend to live here.
              Now South Florida is a big demand market, no doubt. I’m just worried one major hurricane event will wipe out all these investments. We will be already seeing sharp increases in insurance rates, if that happens…forget about it!
              Enjoy the ride now…

              Because reality will bite!

    • Fuel shortages don’t come from actual physical shortages; they come from too much wage disparity. The wage disparity is the cause of the strikes.

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