The climate change story is half true

The climate change story is true in some respects: The climate is indeed changing. And CO2 emissions do seem to affect climate. Burning fossil fuels does indeed make a difference in CO2 levels.

The problem I have with the climate change story is that it paints a totally inaccurate story of the predicament the world is facing. The world’s predicament arises primarily from too little affordable resources, especially energy resources; climate change models tend to give the illusion that our problem is one of a superabundance of fossil fuels.

Furthermore, the world economy has no real option of using significantly less energy, because the economy tends to collapse when there is not enough energy. Economists have not studied the physics of how a networked economy really works; they rely on an overly simple supply and demand model that seems to suggest that prices can rise endlessly.

Figure 1. Supply and Demand model from Wikipedia.
Attribution: SilverStar at English Wikipedia CC BY 2.5 (, via Wikimedia Commons

The quantity of energy supply affects both the supply and demand of finished goods and services. History shows that the result of inadequate energy supplies is often collapse or a resource war, in an attempt to obtain more of the necessary resources.

Climate scientists aren’t expected to be economists, but have inadvertently picked up the wrong views of economists and allowed them to affect the climate models they produce. This results in an over-focus on climate issues and an under-focus on the real issues at hand.

Let’s look at a few issues related to the climate change story.

[1] Growth in energy consumption and in world GDP are very closely linked. In fact, energy consumption seems to be the cause of GDP growth.

If we look at the relationship between World GDP and energy consumption growth, we see a close correlation, with energy consumption increases and decreases often preceding GDP growth changes. This implies a causal relationship.

Figure 2. World GDP Growth versus Energy Consumption Growth, based on data of 2018 BP Statistical Review of World Energy and GDP data in 2010$ amounts, from the World Bank.

The reason why this close relationship exists is because it takes the “magic” of energy consumption to make the physical changes we associate with GDP growth. It takes energy to transport goods. It takes energy to heat goods, whether to refine metals or to cook foods. Refrigeration is similar to heating, except that heat is moved out of the space that is to be cooled. Electricity, of course, depends on energy consumption.

We cannot expect the relationship to be as close at an individual country level as at the world level, because service economies tend to require less energy per capita than manufacturing economies. If a government sees that energy supplies are running short, it can direct the economy to become more services-oriented. This workaround can keep the local economy operating fairly close to normally, at least for a time.

Longer-term, an economy that has been hollowed out by a lack of energy supplies is likely to find that a substantial share of workers are earning only very low wages. With this reduced buying power, many citizens cannot afford to buy expensive goods like homes and cars. This lack of purchasing power tends to hold down commodity prices of all kinds, since finished goods are made with commodities. It is this lack of purchasing power that tends to hold down oil prices and other energy prices.

[2] There are two very different views of our energy future, depending upon whether an analyst believes that oil and other energy prices can rise endlessly, or not.

Figure 3. Two Views of Our Energy Future

There is substantial evidence that the second view is the correct view. Nearly every time the price of oil rises very much, the US economy has tended to head into recession. And forecasters tell us that while some countries (oil exporters) would be winners with higher prices, on average the world economy will tend to shrink. Oil importers, especially, would shrink back in recession. Figure 4 shows a recent chart by Oxford Economics with the conclusion that oil prices cannot rise very much without adversely affecting the world economy.

Figure 4. Chart by Oxford Economics on their view of the impact of oil prices reaching $100 per barrel. Chart shown on WSJ Daily Shot, April 25, 2019.

Climate change modeling has inadvertently incorporated the opposite view: the view that prices can be expected to rise endlessly, allowing a large quantity of fossil fuels to be extracted. Of course, if fossil fuel prices are expected to rise endlessly, then expensive renewables such as wind and solar can become competitive in the future.

[3] To date economists and their policies have had pretty close to zero success in reducing world CO2 fossil fuel emissions.

Figure 5. World Carbon Dioxide Emissions for selected groupings of countries, based on BP 2018 Statistical Review of World Energy data. Growing Asia is my grouping. It is BP’s Asia Pacific grouping, excluding Japan, Australia, and New Zealand. It includes China and India, among other countries.

A popular view of economists is, “If every country limits its own CO2 emissions, certainly world emissions will be reduced.” In practice, this does not work. It simply moves emissions around and, in the process, raises total world emissions. A carbon tax sends high-carbon industries to Emerging Market nations, helping ramp up their economies. The country with the carbon tax on its own citizens then imports manufactured items from the Emerging Market nations with no carbon tax, aiding the Emerging Market countries without a carbon tax at the expense of its own citizens. How reasonable is this approach?

When Advanced Economies transferred a significant share of their industrial production to the Growing Asian nations, the growth rate of industrial production soared in these countries, at the same time that it stagnated in Advanced Economies. (Sorry, data are not available before 2000.)

Figure 6. Percentage increase over prior year for Industrial Production, based on data of CPB Netherlands Bureau for Economic Policy Analysis. Advanced Economies is as defined by CPB. My Growing Asia grouping seems to be very similar to what it shows as “Emerging Asia.”

This soaring production in the Growing Asian nations led to a need for new roads and new homes for workers, in addition to new factories and new means of transportation for workers. The net result was much more CO2 for the world as a whole–not considerably less.

If we calculate the savings in CO2 between the date of the Kyoto Protocol (1997) and 2017 for the US, EU, and Japan (the bottom grouping on Figure 5), we find that there has indeed been a savings close to 1.0 billion tons of carbon dioxide over this 20-year period. Unfortunately, Figure 5 shows:

  • Growing Asia added 9.0 billion tons of CO2 between 1997 and 2017
  • Middle Eastern oil producing nations added 1.1 billion tons of CO2 in the same period, and
  • The Rest of the World added 1.5 billion tons of CO2.

So, what little CO2 savings took place in the US, EU, and Japan during the 20 year period between 1997 and 2017 were dwarfed by the impact of the ramp up of industrial growth outside the US, EU, and Japan.

[4] Probably the single most stupid thing world leaders could have done, if they were at all concerned about CO2 emissions, was to add China to the World Trade Organization in December 2001.

In looking at world CO2 emissions from fossil fuels, we can see a distinct bend occurring in 2002, the year after China was added to the World Trade Organization.

Figure 7. World CO2 Emissions with Trend Line fitted to 1990-2001 data, based on data from 2018 BP Statistical Review of World Energy.

The fitted trend line shows that emissions were growing at about 1.1% per year in the 1990 to 2001 period. Once China, with its huge unused coal reserves, was added to the World Trade Organization, both China’s coal production (Figure 8) and its coal consumption (Figure 9) soared.

Figure 8. China energy production by fuel, based on BP Statistical Review of World Energy 2018 data.

Figure 9. China’s energy consumption by fuel, based on BP 2018 Statistical Review of World Energy.

With the extra “demand” from China for roads, homes, airports, and new factories, oil and other energy prices soared in the 2002 to 2007 period. Energy prices were again high in the 2011 to 2014 period, after the Great Recession was over. These higher energy prices (see Figure 10 below) encouraged drilling for new oil and gas, such as that from shale formations in the United States. This further helped raise world fossil fuel consumption and thus world CO2 emissions.

Figure 10. Historical inflation-adjusted oil prices, based on inflation adjusted Brent-equivalent oil prices shown in BP 2018 Statistical Review of World Energy.

[5] One way of seeing the truth of the close tie between the growth in energy consumption and economic growth is to observe the dip in world CO2 emissions at the time of the Great Recession of 2008-2009.

If a person looks at any of Figures 5, 6, 7, or 8, it is easy to see a clear dip in CO2 emissions at the time of the Great Recession. What seems to happen is that high prices lead to recessions in oil importing nations. These recessions lead to lower oil prices. (Note the dip in prices in Figure 10.) It is the fact that high prices lead to recessions in oil importing countries that makes the belief that energy prices can rise endlessly seem absurd.

[6] The European Union is an example of a major area that is fighting declines in nearly all of its major types of energy supplies. In practice, energy prices do not rise high enough, and technology does not help sufficiently to provide the energy supplies needed.

Figure 11. European Union energy production versus total energy consumption, based on BP 2018 Statistical Review of World Energy.

In the chart above, the colored amounts in the lower part are the amount of energy produced within the European Union, shown in layers, based on BP’s evaluation. The black line at the top is the amount of energy consumed by the European union. The difference between the black line and the colored part is the amount that must be imported from somewhere else.

The problem that the European Union has had is that nearly all of the energy types that the EU has been producing have been declining in spite of higher prices and improving technology. Coal is the EU’s largest source of energy, but it has been declining since before 1965. Oil, natural gas, and nuclear are also declining. Hydroelectric isn’t very significant, but its supply is staying more or less level.

The only category that is rising is “Other Renewables.” This category includes biofuels, wind and solar, and wood and trash burned for fuel. Except for the wood burned as fuel, these are what I would call “fossil fuel extenders.” They are only possible because we have fossil fuels. They help reduce the size of the gap between what is produced and what is required by the economy, but they come nowhere close to filling the gap.

There is controversy regarding how wind and solar should be counted in equivalence to fossil fuels. BP data treats the output of wind and solar as if they replace somewhat less than the price of wholesale electricity (worth about 3 to 5 cents per kWh). The International Energy Agency treats wind and solar as if they only replace the fuel that operates power plants (worth about 2 to 3 cents per kWh).* In practice, the IEA gives less than half as much credit for wind and solar as does BP. In exceptionally sunny places, solar auction prices can be low enough to match its value to grids.

It would make sense to treat wind and solar as replacing electricity, if the systems were set up to include substantial storage capacity. Without at least several days of storage capacity (the situation today), the BP method of counting wind and solar overstates the benefit of wind and solar. Thus, the value of Other Renewables to the EU tends to be overstated by the BP methodology used in Figure 11.

[7] There are huge differences in CO2 growth patterns between (a) countries whose governments have recently collapsed and (b) countries that are growing rapidly.

Government Collapse Related Countries.  Russia, Lithuania, and Ukraine are all countries whose central government (the Soviet Union) collapsed in 1991. Romania was “only” a country that was dependent on the Soviet Union for imported oil and other trade. These countries all saw a major fall in industrialization after the collapse of the Soviet Union. Ukraine has been especially hard hit because it has never been able to replace the industry it lost with new industry.

Figure 12. Selected countries with falling CO2 emissions since 1990, based on BP 2018 Statistical Review of World Energy.

As I see the situation, the Central Government of the Soviet Union collapsed in 1991 because the Soviet Union was an oil exporter, and the price of oil had fallen too low for an extended period of time, leaving inadequate funding for investment in new productive capacity. Russia was able to recover better than the other countries shown because once the price of oil rose again, it was able to again ramp up its oil production and exports, supporting its economy.

Examples of Rapidly Growing Countries. If we consider the CO2 patterns of a few  growing Asian nations, we see very different patterns than those of the countries attempting to recover from the collapse of the Soviet Union’s central government. The CO2 emissions of the Growing Asian Countries have been rising rapidly, relative to 1990 levels.

Figure 13. CO2 Emissions of Selected Asian Countries, based on BP 2018 Statistical Review of World Energy.

China’s flattening CO2 emissions since 2013 are an indication that much of its cheap-to-extract coal has been mined out. It has been difficult for China to maintain its level of coal production (see Figure 8, above), given the low level of coal prices in recent years. This problem of low coal prices seems to be parallel to the problem of inadequate prices for oil producers.

[8] Unfortunately, the real story about economies is that they are governed by the laws of physics. Like plants and animals, and like hurricanes, they are dissipative structures that grow for a time and eventually come to an end. 

We know that over the ages, many, many economies have grown for a time and then collapsed. But the study of how and why this has happened has been divided among many fields of study, including physicists and historians. Economists, who tend to be hired by politicians, seem to be among the last to understand collapse. They simply model the future as if it will reflect a continuation of past patterns. With such models, economic growth will continue forever.

But growth forever isn’t what really happens. Eventually, growth in population outstrips growth in resources. Various workarounds are tried, often requiring growing specialization, bigger businesses and governments, improved technology and more international trade. This additional complexity tends to lead to too much wage disparity. The problem with wage disparity is that it tends to lead to a large number of workers with very low wages.

The low wages caused by increased wage disparity tend to harm the economy. These low-paid workers cut back on their purchases of discretionary goods–for example, they delay buying a new car or visiting restaurants. These cutbacks lead to what look like “gluts” of commodities such as oil and metals used in making finished goods. Commodity prices tend to fall instead of rise, in order to clear the gluts.

As wage disparity grows, low-wage workers become very unhappy. They may elect radical leaders, or they may try to overthrow a king. With the many low-wage workers, it becomes difficult to collect enough tax revenue. Governments may collapse for lack of tax revenue. Sometimes, governments will attack other economies to try to solve their low-resource problem in this way.

[9] Climate change modelers have not understood that one of the things that they should be concerned about is near-term collapse. The rising wealth disparity in recent years is a major indicator that the world economy may be headed toward collapse. 

Economists and politicians model the world as if business as usual will continue forever, but this is not the way the real situation works.

Meteorologists and other climate scientists have closely examined historical climate situations, but when it comes to future patterns of energy consumption, they are far outside of their field. They miss the likelihood of near-term collapse. With the assumption of economic growth forever, it is easy to arrive at projections of growth in fossil fuel consumption almost forever. This, of course, leads to growth in CO2 pollution and a very concerning rise in temperature.

In fact, with the story of economic growth forever, climate change becomes the most serious problem the world is facing. People believe that 100 or 500 years from now, the economy can be expected to operate as in the past. One of our biggest problems will be rising oceans and the need to move our cities back from them. Also, weather changes will be of huge concern.

[10] If the world economy is headed toward near-term collapse, climate change shrinks back in the list of things we should be worried about.

Most of us remember what happened in the Great Recession of 2008 and 2009. Collapse of the world economy would likely be far, far worse than this recession. It would involve debt defaults as the economy stops growing fast enough to repay debt with interest. It could perhaps involve collapses of governments, similar to the collapse of the central government of the Soviet Union in 1991. If low oil prices are again a problem, collapses could especially affect oil exporting nations. In some cases, the use of fossil fuels could fall as quickly as the decline in CO2 emissions for Ukraine (Figure 12).

I often think that the concern about climate change comes from the fact that it can be modeled as if nothing else changes in the future. Surely, if researchers were modeling the overfishing in the sea, they would come to a correspondingly bleak view of how the sea might operate 50 to 100 or 1000 years from now. Similarly, if researchers were modeling our problems with soil erosion, they would come to a correspondingly bleak view about soil conditions, 50 or 100 or 1000 years from now.

One of the problems with the climate change model is that it overlooks the huge number of limits we are reaching simultaneously. These issues will surely change how the economy functions in the future, in ways that are not reflected in today’s climate models.

[11] The great draw of wind and solar is that they seem to solve problems of any type: either too much fossil fuels or too little.

Very few dare talk about the real problem we are facing–a huge number of limits coming at us from many directions at once. World population has risen too much relative to resources. Wage disparity is too great. Aquifer levels are being drawn down, far more quickly than they are being replaced. Pollution of many types (not just CO2) is becoming a problem. Microbes are mutating more quickly than we can find new antibiotics to fight them.

There seem to be plenty of fossil fuels in the ground, but there is a mismatch between the prices consumers can afford and the prices producers need in order to be profitable. It is not just the price of gasoline used at the pump that is important; the prices of finished goods made with energy products (such as homes and automobiles) are just as important. Young people are especially being squeezed with all of their educational loans.

If our problem can be framed as a problem of “too much,” rather than “too little,” we have a situation that is much more salable to the average consumer. People can easily believe that prices will rise endlessly, and that the economy will continue to grow forever. If economists have faith that this can happen, why not believe them? In this context, potential solutions such as wind and solar seem to make sense, even though, with adequate storage, they tend to be high-cost.

[12] Wind and solar, when analyzed without the need for energy storage, seem to help reduce CO2 emissions. But if substantial electricity storage needs to be included, this CO2 benefit tends to disappear.

Most analysts (such as those doing Energy Returned on Energy Investments calculations) have overlooked the need for electricity storage, if penetration is to ramp up. If the direct and indirect energy costs of storage are considered, the expected climate benefit of wind and solar tends to disappear.

Figure 14. Slide by author referencing Graham Palmer’s chart of Dynamic Energy Returned on Energy Invested from “Energy in Australia.”

This is only one estimate. More extensive calculations are needed, but the indications of this example are concerning.

Conclusion: Ultimately, the climate story, as it tends to be quoted in the news media, is misleading.

The climate story we hear tends to give the impression that climate change is a huge problem compared to all the other resource and environmental problems we are encountering. Furthermore, a person gets the impression that simple solutions, such as wind, solar, carbon taxes and voluntary cutbacks in fossil fuel use, are available.

This is a false picture of the situation at hand. Climate change is one of many problems the world economy is facing, and the solutions we have for climate change at this time are totally inadequate. Because an increase in energy consumption is required for GDP growth worldwide, even voluntary cutbacks in fossil fuel usage tend to harm the economies making the reductions. If climate change is to be addressed, totally different approaches are needed. We may even need to talk about adapting to climate change that is largely out of our ability to control.

The benefits of wind and solar have been greatly exaggerated. Partly, this may be because politicians have needed a solution to the energy and climate problems. It may also be partly because “renewable” sounds like it is a synonym for “sustainable,” even though it is not. Adding electricity storage looks like it would be a solution to the intermittency of wind and solar, but it tends to add costs and to defeat the CO2 benefit of these devices.

Finally, IPCC modelers need to develop their models more in the context of the wider range of limits that the world is facing. Perhaps it would be worthwhile to model the expected impact of all limits combined, rather than limiting the analysis to climate change. In particular, there is a need to consider the physics of how an economy really operates: Energy consumption cannot be reduced significantly at the world level without increasing the probability of collapse or a major war.


*Island economies and other remote economies sometimes burn oil to produce electricity. In this case, the cost of fuel consumption for electricity generation will be much higher than the $0.02 to $.03 cents per kWh quoted in the text, so the economics will be different. For example, if diesel is selling for $3.00 per gallon, the cost per kWh of fuel for electricity from diesel will be $0.24 per kWh, based on EIA efficiency estimates. With this high cost of fuel, substituting wind or solar for part of the diesel generally makes economic sense.

The “catch” is that whether the remote economy powers its electricity with oil or with oil plus wind/solar, the price of electricity will remain high. If the remote economy is primarily operating a tourist trade, high electricity prices may not be a major issue. But if the remote economy wants to sell goods in the world economy, its cost of finished goods can be expected to be high compared to the cost of goods made elsewhere, because of its high electricity cost. The high cost of electricity is one of the reasons for the economic problems of Puerto Rico, for example.



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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1,529 Responses to The climate change story is half true

  1. Duncan Idaho says:


    Quite a hit.
    You can see why this guy has been bankrupt 6 times.
    China is not some scammer from Queens.

      • China has retaliated with higher tariffs on some goods it buys from the US, effective June 1. This is the WSJ summary of changes:

        China said tariffs will increase to 10%, 20% or 25% for most of the 5,140 U.S. products on which it currently imposes levies of 5% or 10%. Goods that China will charge at 25% include animal products, frozen fruits and vegetables and seasonings. Goods it will charge at 20% include baking condiments, chemicals and vodka. Tariffs will stay at 5% for certain items, including vehicle parts, medical equipment and farm equipment such as tractors.

        For now, China is not extending to items that aren’t currently subject to levies, notably aircraft such as Boeing Co. jetliners and U.S. crude oil. China must import both oil and passenger aircraft to meet domestic demand.

        • Davidin100millionbilliontrillionzillionyears says:

          for those of you out there who are longing for the emergence of a big black swan…

          I think there is one, now flying between the USA and China…

          will it land with a catastrophic crash?

          • Sheila chambers says:

            Have you read about the attack on several oil tankers off UAE? Reminds me of the Gulf of Tonkin false flag event.
            I wonder if that dam Bolton is behind this? He’s been DROOLING for an excuse to attack Iran.
            Things are going downhill fast now aren’t they.

            • Rodster says:

              It’s funny what a person sees, when one becomes awake to all the corporate media and Government lies. This has all the makings of 9-11.

            • Sheila chambers says:

              9/11 was a false flag orchestrated between the US & Saudi Arabia but Bush blamed Iraq who had nothing to do with 9/11 but they were virtually unarmed & they had OIL!
              I don’t listen to MSM any more, even PBS has become a mouthpiece for our RULERS & lies constantly not to mention all the ADS they have for their donors, supporters & sponsors every few minutes!
              That’s one of the reasons I dumped TV, “infotainment” instead of actual news & I’m sick of being lied too & being filled with propaganda, it’s 24/7 now!

  2. Robert Rapier has a post that has been republished on called Debunking the Oil Industry Cash Flow Myth. The point he makes is

    It is true that capital expenditures are the main reason that FCF went deeply negative for so many companies in recent years. When oil prices were $100 a barrel, oil companies invested every penny they could get their hands on into producing more oil. There were no guarantees of how long the high prices would last, but it’s understandable why they were plowing all their cash back into their business.

    He points out that recently Free Cash Flow for a group of shale companies amounted to $384 million positive in 2018, despite the fact that the oil price that was $35 per barrel lower than it was in 2013. He also points out that Chevron and Occidental Petroleum company both evidently consider Anadarko an extremely attractive asset, even though it has only had positive cash flow for three years in its history.

    I personally would point out that the frequent assertion by the author of the SRSrocco Report that shale extraction has low EROEI is simply the author’s own conjecture, perhaps based on the negative cash flow. Either that, or he is using a reference to a totally different type of shale (baking oil out of shale in the four corner states, using long-term heat) that was only experimental, and has never been used at all commercially. (This reference shows up time and again in EROEI reference tables, however, with the label “shale.”)

    The only reference I have seen to the EROEI calculations of shale of the type in the Permian and the Bakken has shown quite favorable high EROEI estimates.

    Adam Brandt talks about a median net energy return (which is his version of EROEI) of 29.7:1. This is a lot better than for other types of oil.

    • Neil says:

      Interesting that you sire Diamondback Energy. I had a quick look at their quarterly report and no where does the word ‘Profit’ get printed

      Please explain!

      • The news release you provided makes it look like Diamondback Energy is imploding.

        It is indeed interesting what Robert Rapier has to say about Diamondback Energy.

        Some companies go for years without generating positive FCF. Diamondback Energy, for example is one of the largest pure shale/tight oil producers. They went public in 2012 and have never generated positive FCF. But that hasn’t posed a problem, as their debt/EBITDA ratio is at a manageable 2.5.

        Further, Diamondback shares have risen by 470 percent since the company’s 2012 initial public offering — nearly five times the return of the S&P 500. Thus, despite years of negative FCF, Diamondback’s stock market performance leaves most of its peers in the dust.

        A recent article is titled Diamondback Energy stock surges 9% after driller launches $2 billion buyback program

        So despite these problems, stockholders figure that their value per share will be greater with fewer shares, so “all is good.”

        It is a strange world!

        • It works as you probably know the following way, dark pools (heavy weight dealers for CB owners) initiate a new mega trend lets say via infusion into alt oils, and the average ‘smart investor’ jumps on the mega trend right away.. And everybody is happy, only for those few serial worriers discussing insta or sequential doom theories like we do..

    • jupiviv says:

      Doesn’t the EROEI of shale vary greatly based on region, type etc?

      • Adam Brandt says that the return is sensitive to many things, including model parameters. So there is a lot of variability. In fact, part of this variability seems to have to do with how much future returns in oil supply these wells will have.

        I doubt we know very precisely.

        With traditional oil fields, EROEI is energy in versus energy out in the same year. This is the definition that really makes sense. The return has to be pretty much instantaneous. Once a person gets into the world of modeling, whether it is the world of modeling solar panels and wind turbines or the world of modeling shale returns, assumptions make a huge difference in what the return is calculated to be.

        As a practical matter, however, the economy operates on energy available each year. It doesn’t matter what is promised in the future. The calculation should not give credit for future hoped for oil production (or future hoped for electricity from wind or solar).

    • srsrocco says:

      So, you are quoting a positive $384 million in positive free cash flow from a group of shale companies in 2018. While $384 million in positive free cash flow is indeed a nice chunk of change, I would kindly like to remind you and your followers that several sources estimate the total U.S. Shale Industry debt is now $300+ billion.

      So, it would take a lot of free cash flow to BREAK EVEN over the next decade, if that’s ever possible.

      Lastly, while Brandt et al., have calculated a near 30/1 EROI for U.S. shale oil in the Bakken, I wouldn’t place too much faith in that figure. When one of the larger Shale oil companies becomes the next ENRON, then we can revisit the EROI of U.S. Shale oil.


      • I agree that $384 million is not much compared to what the companies owe.

        I think that the reason that Adam Brandt’s calculation is not publicized by the EROEI community is because they are more than a little bit embarrassed by the high number. Can it be right? (Adam Brandt is highly respected researcher at Stanford, by the way.) I think his EROEI calculation has the same calculation problems that the wind and solar EROEI calculations have. All of them tend to be biased on the high side because of the modeling that go into them. The models ignore the fact that the economy really needs energy on a year by year basis. Also, it is easy to overestimate the future output and underestimate the future input.

        The calculation by Cutler Cleveland that purports to be EROEI for Shale should never be quoted because that is something totally different than the product that is extracted today.

        I am not convinced that EROEI calculations are as helpful as people say they are because it is very easy to get really misleading numbers indications from them.

        Robert Rapier works in the energy business. He has worked both for oil companies and renewables. I expect that he believes that oil prices will rise. When oil prices rise, he expects this will fix a lot of oil company problems and will make renewables competitive. Most of our problems will be solved. If you don’t believe this combination of things will happen, then things don’t work out so well.

        • The y/y energy throughput for an economy is not entirely – precisely valid argument either. Despite of JITs as you know people tend to horde-buffer everything from oil bunkers and moored tankers to heaps of already mined coal to natgas and raw uranium/ready pellets storage etc. Yes, it’s usually only matter of weeks-month of buffer capacity but in times of recessions, trade blockades, environmental destruction and other events which severely crush demand the role of buffers essentially increases even more..

          • I don’t think that this would make a lot of difference. US crude oil stocks today are reported to be 28.5 days of supply. Gasoline stocks are reported to be 23.9 days of supply. If the supply isn’t there, it is felt pretty quickly, not months away.

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  4. jupiviv says:

    I’ve recently stumbled upon an economic blog by one Dr. Jack Rasmus:

    His latest article is about the April jobs report:

    “Problems with the April Jobs Report

    While the Current Establishment Survey (CES) Report (covering large businesses) shows 263,000 jobs created last month, the Current Population Survey (CPS) second Labor Dept. report (that covers smaller businesses) shows 155,000 of these jobs were involuntary part time. This high proportion (155,000 of 263,000) suggests the job creation number is likely second and third jobs being created. Nor does it reflect actual new workers being newly employed. The number is for new jobs, not newly employed workers. Moreover, it’s mostly part time and temp or low paid jobs, likely workers taking on second and third jobs.

    Even more contradictory, the second CPS report shows that full time work jobs actually declined last month by 191,000. (And the month before, March, by an even more 228,000 full time jobs decline).

    The much hyped 3.6% unemployment (U-3) rate for April refers only to full time jobs (35 hrs. or more worked in a week). And these jobs are declining by 191,000 while part time jobs are growing by 155,000. So which report is accurate? How can full time jobs be declining by 191,000, while the U-3 unemployment rate (covering full time only) is falling? The answer: full time jobs disappearing result in an unemployment rate for full time (U-3)jobs falling. A small number of full time jobs as a share of the total labor force appears as a fall in the unemployment rate for full time workers. Looked at another way, employers may be converting full time to part time and temp work, as 191,000 full time jobs disappear and 155,000 part time jobs increase.

    And there’s a further problem with the part time jobs being created: It also appears that the 155,000 part time jobs created last month may be heavily weighted with the government hiring part timers to start the work on the 2020 census–typically hiring of which starts in April of the preceding year of the census. (Check out the Labor Dept. numbers preceding the prior 2010 census, for April 2009, for the same development a decade ago).

    Another partial explanation is that the 155,000 part time job gains last month (and in prior months in 2019) reflect tens of thousands of workers a month who are being forced onto the labor market now every month, as a result of US courts recent decisions now forcing workers who were formerly receiving social security disability benefits (1 million more since 2010) back into the labor market.

    The April selective numbers of 263,000 jobs and 3.6% unemployment rate is further questionable by yet another statistic by the Labor Dept.: It is contradicted by a surge of 646,000 in April in the category, ‘Not in the Labor Force’, reported each month. That 646,000 suggests large numbers of workers are dropping out of the labor force (a technicality that actually also lowers the U-3 unemployment rate). ‘Not in the Labor Force’ for March, the previous month Report, revealed an increase of an additional 350,000 added to ‘Not in the Labor Force’ totals. In other words, a million–or at least a large percentage of a million–workers have left the labor force. This too is not an indication of a strong labor market and contradicts the 263,000 and U-3 3.6% unemployment rate.

    Bottom line, the U-3 unemployment rate is basically a worthless indicator of the condition of the US jobs market; and the 263,000 CES (Establishment Survey) jobs is contradicted by the Labor Dept’s second CPS survey (Population Survey).”

  5. Lastcall says:

    Rare earths are not unusual in being contaminating; hydraulic fracturing, nuclear waste, farming. Superfund sites are, I believe, areas of severe contamination?
    Here in NZ (clean green image anyone?) we continue to import and use phosphate rock with a high cadmium content. Our agricultural soils have slowly but steadily increasing levels.
    But we fixed that; we had a legislative change recently that removed the category ‘contaminated land’ being able to be applied to farmland.
    China is just playing catch-up.
    The poisoning of our earth being closely matched by the poisoning of our minds via toxic messaging.

    • Lastcall says:

      Oops this ended up in an unusual place…

    • Xabier says:

      I’ve noticed an inventive use of the word ‘sustainable development’ in government circles here: it now appears to mean ‘ unrestricted and perpetual’ ie pouring concrete forever.

      So, a ‘sustainable development ‘ plan is about to be dropped on this region, obliterating farmland and destroying what real quality of life remains. Sad that this is happening in the last days of the industrial system, but inevitable.

      Likewise ‘clean’ and ‘green’ have been emptied of meaning, or, rather. they have had their meanings inverted.

      This civilization will go down lying to itself to the very end. Never so much data, never so little truthfulness and comprehension.

      • Likewise ‘clean’ and ‘green’ have been emptied of meaning, or, rather. they have had their meanings inverted.

        This civilization will go down lying to itself to the very end. Never so much data, never so little truthfulness and comprehension.

        I agree with you. Just turn the understanding upside down!

  6. Harry McGibbs says:

    “The world’s biggest economies are on track for their worst year since 2009, with early warning signals pointing to a sustained slowdown in growth.

    “Growth in the US, Japan, Canada and the eurozone is easing, according to an index compiled by the Organisation for Economic Co-operation and Development (OECD).

    “The index for the 35-strong club of developed economies fell to 99.0 in March, the lowest reading since September 2009 and below the average of 100 seen over the past few years.

    “The scores are based on components such as demand for services, car sales, consumer confidence, industrial output and share prices. The aim of the index is to predict growth patterns six to nine months into the future…”

  7. Harry McGibbs says:

    “A backbone-breaking crisis is “imminent” in [India’s] non-banking financial companies (NBFCs) sector, India’s Corporate Affairs Secretary warned in an interview last week calling this a defining moment for India’s economy. Speaking to PTI news agency, Injeti Srinivas said a few recent misadventures by some large entities and a general credit squeeze will lead to the disaster, according to NDTV.”

    • Harry McGibbs says:

      “Passenger vehicle sales in India registered the steepest decline in about eight years in April as tighter availability of credit in a slowing economy damped demand. Automotive demand in Asia’s third-largest economy has been cooling since July amid a credit crunch and distress in rural markets.”

    • We should be watching India more closely. The situation reminds me quite a bit of the situation with Diamondback Energy situation we talked about yesterday. To an outsider, it looks like the company is imploding, yet investors keep pouring money in. In the case of India, outsiders say, “Wow, look how the country has been growing. Nothing could possibly go wrong.” Yet growth is increasingly financed by imported energy supplies, and the country’s financial situation is going downhill. The country doesn’t have much in the way of bank lending capability internally. It must borrow from outside, or the shadow banking sector.

  8. Harry McGibbs says:

    “President Recep Tayyip Erdogan’s mishandling of his country’s currency crisis heightens substantially the probability that Turkey will soon default on its external debt. That could jeopardise the rest of the emerging market economies’ prospects as well European banks, particularly in Spain, with high Turkish debt exposure…

    “After plunging by 30% in 2018, since the start of this year the currency has lost a further 14% in value and shows no signs of stabilising.”

    • Harry McGibbs says:

      “Turkey election authorities annulling the Istanbul municipal vote, after an opposition candidate was elected as mayor, has increased the risk of political instability while the Turkish Lira gave way against the Euro. The country’s Supreme Electoral Board announced that the election would be re-run on June 23, state media reported.”

      • Harry McGibbs says:

        “The ruling coalition of Argentine president Mauricio Macri suffered a heavy defeat Sunday in elections held in Cordoba province, the country’s second most populous district… He has implemented a series of unpopular austerity policies to try to restore stability in the face of soaring inflation, huge debt obligations and a currency crisis. The measures came in exchange for a US$ 56 billion loan from the International Monetary Fund.”

        • The IMF really seems to like austerity measures. Austerity measures mean “use less fossil fuels,” and “buy fewer goods made with fossil fuels.” There is no surer way to send the prospect for an economy downward than less energy consumption. It is hard to understand what the IMF is thinking of, except that austerity measures for poor performers leaves more for everyone else.

      • Harry McGibbs says:

        “Investors in Turkey are calling on the government to urgently implement measures to deal with possible capital problems in the banking industry. Tens of billions of dollars of non-performing loans and restructured borrowing are hurting banks’ balance sheets. Last year’s currency crisis and a deep economic contraction has created financial problems for many of the nation’s firms.

        “Turkish companies have already requested debt restructuring of almost $30 billion, analysts say.”

  9. Harry McGibbs says:

    “Young people who entered Britain’s labor market amid the 2008 financial crisis are still “scarred” by its impact on their employment and earnings potential, researchers found. The so-called “crisis cohort,” who entered the world of work following the financial meltdown of 2008, have continued to face higher unemployment, lower pay and worse job prospects more than a decade later, according to a new report.”

  10. Harry McGibbs says:

    “Neither Donald Trump nor Xi Jinping can afford to blink. A personal duel between two rival presidents could ensure that the escalating trade war across the Pacific may last longer than anyone expected.

    “The showdown is now no longer just a confrontation between China and the US — one a rising power challenging the long established dominance of the global economic leader. It’s become a test of wills between two of the world’s most powerful men, each of whom has political interests that are more likely to deepen the conflict than to quickly ease it.”

    • Harry McGibbs says:

      “A Chinese cargo plane arrived in the Venezuelan capital of Caracas on Monday, the Venezuelan Ministry of Communication has told CNN.

      “The plane was carrying aid for the impoverished nation: approximately 2 million units of medical equipment, including medicine and surgical medical supplies. The supplies will be distributed by agencies designated by the government of embattled President Nicolas Maduro.”

    • TIm Groves says:

      Here’s how the Trump administration sees the US-China war. For them, it IS a trade war, but it’s much much bigger than just trade.

      Why exactly did progress towards a US-China trade deal apparently slow down, and President Trump finally enact his promised 25% tariff on 200 billion dollars in Chinese goods? What will the impact of this be on the US-China trade war, and can the Chinese communist party be trusted to live up to any deal at all?

      Today we sit down with Curtis Ellis, who was special advisor to the Secretary of Labor in the Trump-Pence administration, and is now a Senior Policy Advisor with America First Policies. We discuss the rationale behind President Trump’s tariffs on China, and the longer-term implications of the US-China trade war—and US-China relations overall.

      • Interesting. We all know that China expects to get the benefit of any technology that comes its way, even if it has to “reverse engineer” it products. There are many other versions of its approach as well.

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