Seven Reasons Why We Should Not Depend on Imported Goods from China

It seems to me that the situation in China is far different from what most people think it is. Even if we would like to depend on China, we really cannot.

Reason 1. When we depend on goods from China, an amazingly large share of the world’s industrial activity gets concentrated in China.

The five largest users of energy in the world are China, the United States, India, Russia, and Japan. The International Energy Agency shows total energy consumption as follows for the year 2016:

Figure 1. IEA’s estimate of energy consumption (total fuel consumed, or TFC) by sector in 2016 for the top five energy consuming nations. Mtoe is million tons oil equivalent. Source: IEA. Non-energy use is the use of fossil fuels as a material to create end products that are not burned. Examples include medicines, plastics, fertilizers, asphalt, and fabrics.

When these countries are compared, restricting our analysis to the portion of energy used by industry, we find the rather disconcerting result shown in Figure 2:

Figure 2. Chart by the International Energy Agency showing total fuel consumed (TFC) by industry, for the top five fuel consuming nations of the world.

China consumes more fuel for industrial production than the next four countries listed (United States, India, Russia, and Japan) combined. Of course, we don’t know exactly the corresponding amounts for other countries of the world, but we can observe that if a country is concerned about its CO2 emissions, the easiest way to reduce these emissions is to send heavy industry elsewhere, such as to China or India. There are likely many countries that are primarily service economies, thanks to the option of outsourcing most industry to other countries.

Much of the discussion I have read regarding sending industry elsewhere has been in the direction of, “As advanced as our economy is, we don’t need heavy industry; service jobs will substitute. Industry can be developed at lower cost elsewhere. Everyone will be better off with this arrangement. The invisible hand will provide jobs and goods and services for everyone.” In addition, corporations saw the possibility of adding customers from around the world. Not too many thought about the real-world problems that might result.

Clearly there is a problem with the jobs being lost to China and other Emerging Markets. When new service jobs are added, they often do not pay as well the industrial jobs they replaced. In fact, there might not be enough jobs in total, if automation plays an important role as well.

Another issue is that the level of industrial concentration can be a problem. We are now depending on China and perhaps a few other countries to provide for a large share of the “stuff” we use. Even if China is not the only provider, it is often an important part of the supply chain. If something should go wrong (for example, widespread riots in China), we don’t have a Plan B.

Reason 2. China needs energy products to make the goods it uses for itself and for the goods it exports. China’s own energy supply is faltering. Because of China’s huge size, it is becoming increasingly difficult to keep China’s energy consumption rising sufficiently rapidly using imported energy.

China’s own energy production is shown in Figure 3. (Note: Hot off the press! New BP report released this week.)

Figure 3. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.

It is easy to see that China’s coal production hit its highest point in 2013 and has stayed at a lower level since that date. Also, China’s highest oil production occurred in 2015, with lower production since that date. China’s total energy production has been rising recently, but only with great effort. Total energy production is only 8.9% higher in 2018 than it was in 2012, implying an increase of less than 1.5% per year, relative to 2012 amounts.

A standard workaround for inadequate energy production growth is imported energy products. Even with these imports, it has been impossible to keep total energy consumption rising as rapidly as it rose in the 2002 to 2007 period. The cost with imports is greater, also.

Figure 4. China energy production by fuel, plus line showing its total energy consumption (including imports), based on BP 2019 Statistical Review of World Energy data.

In 2018, China imported 71% of its petroleum (either as crude or as products), and 43% of its natural gas. It was the largest importer in the world with respect to both of these fuels.

In 2018, China’s coal imports shrank as its own coal production surged. This was almost certainly a change planned by China. China would much prefer producing its own coal (and keeping the jobs within the country) to importing coal from elsewhere. China imported 4% of its coal from elsewhere in 2018.

Reason 3. The commodity demand from China is so huge that, to a significant extent, it determines world commodity price levels. Where regional energy prices exist, China’s choice regarding whether or not to import from a country can influence local price levels.

Chile is the largest copper producer in the world. A recent article regarding problems associated with lower copper prices notes that the demand for Chilean copper has been driven “almost entirely by the expanding Chinese economy over the last three decades.” For many commodities, China consumes over half of the world’s commodity supply. If China’s industrial demand is growing, prices will tend to rise, allowing more of the mineral to be extracted. Higher commodity prices tend to be needed over time because the ores of highest concentration (and otherwise easiest to extract ores) tend to be extracted first. Ores extracted later tend to be more expensive to extract, so higher prices are required for extraction to be profitable.

This situation of China playing an extremely large role in commodity prices holds for a very large number of commodities. If China is building widgets or any other product, using a particular commodity, China’s need to buy this commodity in the world market will tend to hold up world prices for the commodity. This situation holds even for fossil fuel prices.

Reason 4. Over the next few years, China’s coal supply is likely fall significantly because of depletion. This lower fuel supply is likely to lead to a shrinkage of China’s industrial capability, and, indirectly, falling world commodity prices of all kinds.

The problem that China is encountering in Figure 3 is “peak coal.” This is a similar problem to that encountered by the United Kingdom immediately before World War I, and to that Germany encountered just before World War II.

Figure 5. The timing of the peaks is peculiar, relative to wars.

Coal tends to be the industrial fuel of choice because it is cheap. Goods made with coal tend to be inexpensive, especially if wages paid to workers are low and if the company making the goods does not spend much money on pollution prevention. Hydroelectric can be an adequate substitute for coal, if the water flow can be depended upon. Wind and solar are too intermittent and not sufficiently inexpensive to be adequate substitutes for coal. Wind and solar (included in “Other Ren” on Figure 3) are also far smaller in quantity than coal.

Outsourcing a large share of the world’s manufacturing to China seemed like a great idea back when it was started, often in the early 2000s. If, at some point, China cannot really handle the responsibility it has taken on, outsourcing gets to be a huge problem.

The reason why coal prices cannot rise very high is because if they do, the prices of finished goods will need to rise as well. Wages of workers around the world will not rise at the same time because the higher cost of production takes place due to something that is equivalent to “growing inefficiency.” The coal mined is of lower quality, or in thinner seams, or needs to be transported further. This means that more workers and more fuel is needed for each ton of coal extracted. This leaves fewer workers and less fuel for other industrial tasks, so that, in total, the economy can manufacture fewer goods and services. Because of these issues, countries experiencing peak coal are pushed toward economic contraction.

Unfortunately, rather than leading to high prices (to compensate for the higher extraction costs), running short of inexpensive-to-extract fuel tends to lead to war, or to tariff fights. Countries whose coal is depleting will try to maintain their own supply as long as possible. They will invent excuses to stop importing coal. Back in September 2018, the Financial Review reported, “China has introduced unofficial restrictions on coal imports in a bid to prop up domestic prices by slowing down customs approvals at key ports.” China needed higher internal prices to make it profitable to extract coal from its depleting coal mines.

Figure 6. Chart showing prices of Brent Oil, China Qinhuangdao Spot Coal price, and Asian Marker Coal, all in US$ of the day. Amounts from BP 2019 Statistical Review of World Energy. Note also that the units of coal (ton) are much larger than the units of oil (barrel) used on this chart. Thus, the same number of dollars of buys a much larger quantity of coal than of oil; coal is cheaper.

If higher coal prices really were possible over the long term, it would make it possible to open new mines in more distant locations. The location of coal mines is important because transport costs by rail or truck tend to be high. China built the large ghost city of Ordos, Inner Mongolia, on the expectation that coal prices would rise, making development of coal in the area profitable. Unfortunately, coal prices fell, making the project not economic. I visited the area in 2015, after teaching a short course on Energy Economics in Beijing. There was a large almost empty airport, and few vehicles were using nearby multi-lane roads.

Reason 5. All of the concern about future tariffs artificially raised China’s 2018 industrial production and commodity prices. Because production was brought forward into 2018, China’s production and world commodity prices can be expected to be lower in 2019 and in future years.

Manufacturers wanted to front-run tariffs, so they tended to ramp up production in advance of the tariff implementation date. This higher production in turn tended to raise commodity production and prices around the world. Note on Figure 6, above, that coal and oil prices are both higher in 2018 than in 2017. Prices in 2019, not shown, are tending to trend downward again.

China badly needed higher coal prices in order to help its coal extraction. Thus, part of the reason that China was able to continue to function as well as it did in 2018 was because of all of the discussion about future tariffs. If this discussion had not taken place, employment in China would likely have been lower. With this lower employment, sales of automobiles and smartphones would have been lower as well.

Note, too, that even with the demand brought forward into 2018, China’s economy was not functioning very well in 2018. Private passenger automobile sales for the year fell by 4%. Smartphone sales fell by a worrisome 15.5%. Clearly, workers were having difficulty buying the kinds of goods a person would expect a growing economy to be selling. I would attribute these problems to the peak coal problem mentioned earlier, making it increasingly difficult to increase the amount of industrial operations provided by China’s economy.

Reason 6. The Chinese economy has been gradually changing and adapting to hide its energy problems. Even more changes will be needed in the future, potentially affecting the world economy, with or without tariffs.

The Chinese economy reports carefully massaged GDP numbers, which many analysts consider to be inflated in recent years. Its debt level keeps rising to try to keep all of its operations going.

We know that China discontinued one major industry at the beginning of 2018: recycling plastic and other types of low-valued recycling. With low oil and natural gas prices, this type of recycling cannot be profitable. Of course, discontinuing a major industry can be expected to lead to a loss of jobs within China. But, on the positive side, it frees up coal and other energy resources in China for other industries that can (perhaps) make more profitable use of them.

On a world basis, the loss of the plastic recycling industry becomes a problem. If rich countries are willing to subsidize the cost of sending plastic recycling to China, this subsidy allows containers that bring goods to rich countries to be sent back to China with a paid load inside. Thus, operating the plastic recycling industry helps keep the cost of shipment of goods from China to the US or Europe down because the shipping costs only need to cover the one-way cost of transit, rather than also covering the cost of shipping the empty container back. Without the subsidy to pay the freight of the plastic recycling, costs for the shipping industry rise, making international trade more expensive. Eliminating the subsidy that rich countries are paying to ship otherwise-empty containers back full of mixed trash is part of what pushes the world economy to contraction.

Other countries are not taking over very much of China’s role in recycling plastic, either. The net effect is that the loss of recycling is one of the things pushing the world toward contraction.

China has no doubt been cutting back in other ways as well. It is likely that it is not building as many uninhabited cities and roads that are really not needed. Ugo Bardi recently posted this chart showing global cement production.

Figure 7. World Cement Production by Ugo Bardi from a blog post on January 19, 2019.

China produces over half of the world’s cement; part of the reduction we are seeing relates to China’s falling use of concrete in new buildings and roads.

In some cases, China is moving in the direction of being a service economy. A recent video states that of the $237.45 cost of producing an iPhone in China, Chinese workers only provide assembly services, worth $8.46. The US contributes $68.69 of the cost, mostly in the design and distribution phases. The parts are generally outsourced from other parts of the world.

One way of looking at what is happening in China’s economy is to analyze the country’s oil consumption in terms of the relative amounts of diesel (used primarily by industry) and gasoline (often used by private passenger vehicles).

Figure 8. Gasoline and diesel consumption for China, based on data from 2019 BP Statistical Review of World Energy.

Based on Figure 8, it appears that China’s industrial growth suddenly leveled off about 2012. This, not by coincidence, is about the time that China’s coal problems were becoming apparent in China. China’s gasoline consumption has continued to rise, however. It appears that once it became apparent that its coal supplies were starting to seriously deplete, China began to “grow” China’s economy more as a service economy. After 2012, most growth seems to have come in the non-industrial sectors of China.

Reason 7. A major concern should be a financial collapse, far worse than 2008, both in China and for the world as a whole.

The world needs growing energy supply to support the world economy. China is increasingly having difficulty with its energy supply. When China has trouble with its energy supplies, the world as a whole has a problem with its growth in energy supplies.

A few months ago, I showed the role China has played in the world economy is this chart:

Figure 9. Ten year growth in world energy consumption, divided between the blue portion associated with rising population, and the red portion associated with higher energy consumption per capita, which I have called “Living Std.”, meaning “Higher Living Standards.”

China added a little bump in GDP growth at the end of the nearly 200-year time period shown, after it joined the World Trade Association in December 2001. The energy added by China (mostly in the form of coal) allowed the world economy to continue to grow, when it otherwise would have been up against limits.

Now we are reaching a situation where China’s energy production is likely to flatten or fall because of the depleted state of its coal mines, and the fact that coal prices can’t rise high enough, for long enough, to open new mines. The world economy, over the period shown, has always had rising energy consumption. In most cases, energy consumption rose faster than population growth, allowing some growth in the standard of living over time.

Changing to a situation of shrinking energy consumption per capita would likely be extraordinarily traumatic. Population would likely fall. Commodity prices would drop to low levels. Debt would tend to default; prices of shares of stock would fall. Many governments would fail. If shrinking energy consumption per capita starts in one country (whether China or elsewhere), it could easily spread to other countries around the world.

We don’t know what is ahead, but we know that the low points on Figure 9 were very bad times, even though energy consumption in total was not contracting. The decade of 1860 to 1870 was the decade of the US Civil War. The decade of the 1930s was the decade of the Great Depression. The decade of the 1990s was the decade of the collapse of the central government of the Soviet Union.

We also know that world energy consumption and GDP growth tend to be highly correlated.

Figure 10. 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.

This is as we would expect, because energy consumption is required for the many aspects of GDP growth. Transportation, heating and/or cooling, and electricity all require energy consumption, for example.

The recent divergence between GDP and energy consumption on Figure 10 may be the result of overstated GDP amounts by China, India, and other countries. If a country wants to appear inviting for new investment, there is a temptation to overstate GDP since other countries seem to be doing so, without penalty.

Back during the Great Recession of 2008-2009, our problem was with homeowners who took out loans that were far higher than they could really afford. Today, we have whole economies taking on more debt than properly stated GDP reports would suggest they are able to handle. We go from one version of optimism regarding debt levels to another.

Conclusion. If a person doesn’t understand how badly the energy situation is working out for China, or how important energy consumption is, it is easy to think that the problems China is facing are primarily tariff-related. In fact, China’s situation is a very worrisome one, with or without tariffs being added.

To fix the situation, China would need a very cheap, non-intermittent, locally produced, non-polluting additional energy source. This energy source would also need to be rapidly scalable. Such an energy resource doesn’t appear to be available.

 

 

 

 

 

 

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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890 Responses to Seven Reasons Why We Should Not Depend on Imported Goods from China

  1. Dennis L. says:

    My concerns are more local than some of the posters in as much as I look at what I can and cannot do to adjust as things change. Some of you have mentioned keeping cars running so I submit this video regarding a 29 year old truck being repaired by a fellow who seems pretty knowledgeable. Even with almost 20 year old technology, the main roadblock to keeping it running is electronics and sourcing replacement parts.

    From what I can see as we go to less complexity, the big issue will be time, there are no 48 hour days, living overhead(food, clothing, maintaining transportation, etc) will require more and more time, much will need to be simplified.

    I am an old man, expecting change, trying to prepare for it and taking considerable joy out of the weeks with dance lessons and the social environment it provides – it is a very expensive hobby but the costs are variable and the knowledge usable for the remainder of my life(thanks Gail for that one.)
    Enjoy the video, Wes is a smart guy adjusting to a real world changing around him.

    Dennis L.

    • doomphd says:

      “Even with almost 20 year old technology, the main roadblock to keeping it running is electronics and sourcing replacement parts”

      this is a much wider problem than with autos. it affects all things electronic. and, 20 years may not seem that long to us humans, but is like geologic time to the fast evolving electronics field. a lot of improvements today involve engineers sourcing new components to replace the older ones, working or not. the hope is the newer components will still have replacement parts available a few years out.

    • Xabier says:

      I think many builders, for instance, would be rather shocked to discover how different time is when working with hand-tools: I mostly avoid using power tools, as I hate the noise, and drilling, sawing etc are a very different matter by hand.

      Nothing as beautiful as a well-balanced (wooden-handled) hammer though, or the rhythm of a keen saw cutting straight.

      Another thing is that with hand-tools you can meditate a little, with power tools it would be far too dangerous.

      Life and death are always ‘local’, speculate as we might about the fate of civilizations, just as local weather kills or favours a crop, whatever the global climate is doing.

  2. MG says:

    Turning away from the dollar: Russia & EU keen on switching to national currencies for mutual trade

    https://www.rt.com/business/461933-russia-eu-ditch-dollar/

    • Denial says:

      In 2014 I dumped all my Amazon stock because of doomer blogs…..Particularly this one and the the Automatic earth. The crash was just around the corner and still is for that matter. The above story was printed every other week…maybe Russia influence. I now take all this with a grain of salt. Gail on one day claims this is the year for collapse of biblical proportions and then the next day laments on her daughter getting student loans. If the collapse is the size and proportion of what she is talking about then nothing matters..student loans car loans etc……we will all go down the drain. I think we will have a depression but come out of it and move on as we have in the past….be careful what you read…might be “fake news”!

      • I increasingly think that everything goes down together, or very similar to together. Selling stock ahead of time doesn’t work the way a person would expect. About all one can do is diversify.

        • Tsubion says:

          What’s the point of diversifying if collapse is always one or two years away?

          • Tsubion says:

            What if we don’t get a systemic collapse?

            Instead… a series of problems are allowed to manifest in a more or less controlled fashion and solutions are implemented.

            I think World of Hanuman has been preaching along the lines of the most probable outcome. This process can indeed go on for decades. In which case… as Keith would say… ALL BETS ARE OFF!!

            • if you are homeless and living on a park bench somewhere, and you do not possess sufficient energy resources to pull yourself back up into conventional society, then for you—collapse has already happened.
              you face a life of deprivation and early death.

              if you are someone underwater on a mortgage, just lost your job and do not have the necessary energy resources to resurface, then for you collapse is about to happen. (borrowing money just delays the inevitable, the lender demands remaining energy resources as collateral))

              if you happen to be wealthy, you imagine yourself proof against such calamity. It doesn’t apply to you.
              Unfortunately, your wealth is entirely supported by the energy surpluses of the millions of people lower down on the prosperity ladder. You might own dozens of oilwells, or blocks of real estate—but both are worthless without people to use them. (think of Saudi).
              You might be sitting on $1bn in gold bars—but you can’t eat it.

              So for you collapse is at some time in the future. But it is as certain as the other two.

              It is an accelerating process, none of us can judge the overall scenario as it plays out.

          • Maybe diversification gives one or two years. It also doesn’t hurt to have a little extra food and water, in case a temporary outage is a problem.

            • Rodster says:

              Having plenty of extra food is always good as a hedge against inflation. That’s why I stock up.

            • SuperTramp says:

              Mary Papenfuss
              Mary Papenfuss
              HuffPostJune 15, 2019, 11:49 PM EDT
              Panicked farmers throughout the Midwest are facing the increasing probability that vast tracts of fields will remain unplanted or crops will fail this year as much of their land remains under water or too sodden for farm equipment and plants.
              The crushing weather conditions come on top of President Donald Trump’s trade war with China that has already triggered a record number of farm bankruptcies.
              It’s been the wettest 12 months ever in the U.S.
              “The frequency of these disasters, I can’t say we’ve experienced anything like this since I’ve been working in agriculture,” John Newton, chief economist at the American Farm Bureau Federation, told The Washington Post.
              It’s the slowest planting time in 39 years.
              Sodden fields lie fallow, and corn and soy crops that have been planted are stunted in the mud. Hard-hit states include Ohio, Iowa, Illinois, Indiana, Kansas, Missouri, South Dakota, Oklahoma, Nebraska and Michigan. Waters began to recede in some areas in recent days but there’s more rain in the forecast.
              Think that’s a fine course, stock up on beans and rice and canned goods.
              https://news.yahoo.com/farm-armageddon-flooding-tariffs-climate-change-trump-034954667.html

            • This is sort of what happens when we try to us dams to dry out the flood plain. It works some years, but not others. We expect miracles.

            • Dan says:

              My goal and preps are 2 yrs – How many do you know can say they can stand that long or can look out that far.
              The name of the game is to beat the average

      • Xabier says:

        Although demonstrably in the collapse phase, the system is showing remarkable resilience in keeping running – far into the realms of irrationality and pretence now – and will do so, with the superficial appearance of prosperity and health, until……

        As El Mar said: ‘Carpe Diem’.

        • Tsubion says:

          I understand where Denial is coming from. Not good to spend the past ten or twenty years “prepping” and worrying about what might be. Always one or two years away.

          But it is clearly undeniable now that we have been collectively propping up a fantasy for the past ten years if not more.

          – far into the realms of irrationality and pretence now

          I will say that rational thinkers have been wrong more times than right. They only claim the victories.

          The real question is whether people like Gail and other doomers have been lead astray by their overly rational and analytical view of things. These analysts tend to focus on what is happening in the now and previous trends leading up to the now, but not a single one of them has the humility to say that they don’t really know what will happen next.

          I say not a single one because Gail comes close but still prefers to shut down any possibility of a way forward when she feels challenged. This is an obvious tell that there is more to the story here. And I would suggest that there is some religious bias at hand.

          On the other hand, our dear Keith and myself to some extent cling on to the idea that all is not lost. We are simply witnessing in real time a radical process of adaptation. The irrational propping up of the global economy allows for green shoots to take hold in terms of transitional science and technology.

          You simply can’t rule out a restructuring of global society, manufacturing, money and energy. It’s a question of enough of industrial civilisation holding together for long enough for the restructuring process to complete. Not entirely impossible.

          A little irrational behaviour could end up being our saving grace.

          • TIm Groves says:

            People generally don’t like to admit to themselves that they haven’t really got a clue what’s going on. And so they convince themselves that they know quite a bit more than they actually know. According to Plato, Socrates considered himself the wisest of men because he alone knew that he knew nothing. Very few of us share Socrates’s insight into the extent of our own ignorance and many of us are consummate know-it-alls.

            When we try to form a general view of what’s going on with the world economy or any other really big system, we bring our particular lifetime of learning about the world, our particular expertise in relevant fields, and our common sense and general knowledge to bear on the subject, we attempt to model reality, and we also hunt around for relevant data on all kinds of things.

            The problem with our learning, our common sense and our general knowledge is that they are not as reliable or as useful as we assume them to be. The biggest problem with models is that they ignore important factors that we are unaware of but which are bound to make the real world operate differently to how the models operate. And the problems with data are that it tends not be accurate and it may even be deceptive because in the political, social and economic realms, deception is the rule rather than the exception.

            Given the above, trusting the players in this huge game of Monopoly to be completely honest would be the height of irrationality. So we also have to factor into our models the human tendency to deceive, and this factor is bound to make our models so fuzzy that our confidence in their accuracy must be low.

            Gail is more Socratic than most in that she doesn’t try to claim that she knows what is going on or what is going to happen, but only that based on her analysis, this or that result seems probable or likely. And quite unlike the typical doomer, she is not ruling out the potential for acts of God, or for something else as yet unseen coming into play and changing the situation drastically.

          • Xabier says:

            Well said. The idea that irrational extend and pretend might make a new economy viable, bridging The Transition, is tempting.

            Except, I don’t really see any far-sighted re-structuring.

            Just more concrete being poured wherever practical, and as much fuel as possible being burned, creating proportionate pollution and waste. And heaps of shoddy, ugly building misnamed ‘development’. Oh, and yet more vital farmland being eliminated instead of restored and revived. And creeping totalitarianism.

            I live bang in the centre of in a high-tech growth hub, Cambridge UK, drawing in global investment, and if the innovative future were taking shape it would be here, but it ain’t.

            Same old same old, resulting in more environmental degradation and selling stale and implausible fantasies to people.

            ‘Megacancer’ James has it spot on;: his model is what I see under my nose every day.

            One doesn’t need to be a seer or prophet, nor even a Doomer.

            • In similar vein, one can observe that the most ‘advanced’ – interesting development in low (energy) input agriculture and living arrangements takes place on the periphery now, which makes sense as such experimenting needs to have low barrier of entry for those few willing to try it against all the BAU distractions around. So, are the centers going to crumble and depop completely or some level of preserved cohabitation of cities and country-village we had enjoyed since middle ages will be eventually preserved?

            • TIm Groves says:

              Xabier, I share your sentiments regarding the ugliness. I have strong aesthetic and moral objections to many aspects of the modern world. However, for health reasons, I can no longer “go there.” Ten years ago I made myself ill by musing too much on the megacancer aspects of “development”. It got the point where i couldn’t pass by some particularly monstrous example of modern architecture or a waste dump or a graveyard of rusting construction machinery, and cars!—cars everywhere!, without getting debilitating emotional reactions and I would avoid taking certain roads and looking at certain views out of train windows.

              For my own mental health, I had to change my mindset to one of not giving a damn about the progressive destruction of everything we once held sacred, from England’s green and pleasant land and Kyoto’s formerly iconic skyline to Africa’s remaining megafauna, Hinduism as a philosophy of life rather than a politic creed, to Confederate war memorials. Caring about these things (apart from the last one) is just too painful for me personally.

              I try to keep my little corner of the world looking tidy and pretty, making what I think are improvements here and there and cleaning up other people’s messes, and I try to participate as little as possible in activities that feed the megacancer, without feeling smug about it, and in that way I live at peace with myself while waiting for the end of the world, the end of my world, or the end of BAU.

              Old people are fragile and rigid. We are less flexible and don’t bounce very much like the youngsters do. Not physically, not mentally and not emotionally. I didn’t realize this when I was younger.

              I have personally known two activists in Japan who went to early graves that were chalked up to cancer, but with hindsight could well have been due to dwelling overlong on subjects that were emotionally traumatic for them. One was a nuclear engineer who became a prominent campaigner for nuclear safety and the other spent their entire adult life as fighter for Ainu rights and animal welfare and who founded and ran the Japan Anti-Vivisection Association.

              It would be simplistic to suggest that any one factor alone caused their cancers, but it is clear that obsessing about negative subjects can cause depression and suppress immune function, which can contribute to cancer, and these two wonderful, concerned and dedicated people were obsessed with negative subjects and reacted emotionally to them on a daily basis to the point that their concerns dominated their lives and they spoke of little else.

            • doomphd says:

              you need to be as safely far away from imploding cities as possible. don’t expect US FEMA to rescue you (if living in the USA) so avoid flooding areas, tornado alleys, and hurricane impact areas. that eliminates the entire gulf coast, Caribbean and the east coast south of Maine, most of the Mississippi watershed. there are a few areas on the west coast, away from the cities. maybe islands offshore that can be provisioned and more easily defended. these places just buy you some time, but maybe some time is all you’ll need. learn to sail a boat.

            • Slow Paul says:

              Get on a boat? And then what? I for one do not want to live in an imploded world. Live life now and have no worries. We all end up in the same place,

      • 2014? You are such a youngster still..
        Some of the regulars over here have been at it for decades already.. it’s a journey of learning and appreciating in a way. Simply, there is no proper ‘solution’ you could either join the ‘dark side’ and just gorge on the frivolous opulence in all its forms while it last, or attempt to diversify on the ‘material side’ as lite precautionary measure, or just go with the flow and not doing anything differently at all. All three approaches are sort of valid responses for such influential terra forming agent we humanoids represent in our (latest?) impact – forcing stage on the environment. It will likely end up just as another (forgotten) geological layer anyway to whoever inherits this place..

      • Rodster says:

        My advice to you would be, to enjoy life regardless. There’s no sense in worrying about the future because everyone and everything eventually dies. Me personally, I hope the banking magicians and the financial plate balancers on a stick can keep it altogether until i’m gone.

  3. Dennis L. says:

    Another seeming well sourced article consistent with Gail’s thesis that most remaining oil will be left in the ground. The comment regarding expensive(read shale?) oil pricing out other segments of the economy and the issues of the young looking for solutions, e.g. AOC seems well thought out.
    https://damnthematrix.wordpress.com/2019/05/16/ants-and-what-it-means/

    Dennis L.

    • TIm Groves says:

      I don’t have nearly enough knowledge or expertise about the oil industry to be able to make a judgement on how long we can keep pumping the stuff up cheaply enough to keep the system operating. But what I take away from this article is that we are in for a very bumpy ride ahead.

      • Davidin100millionbilliontrillionzillionyears says:

        from my seat here in the USA…

        oil will continue to be too low in price for producers to make a profit, BUT nationalization of the domestic oil industry would take away the need for the industry to make a profit…

        in that scenario, oil would in effect be subsidized by the government, and that would push the problem over to the national debt and the long term economic stability/instability of the government…

        in a roundabout way then, the declining net (surplus) energy of the industry would eventually wreck the economy which would then cause the end of most oil production…

        looks like everything is interconnected…

        • Slow Paul says:

          In general it seems like being profitable is no longer the end-all-be-all of industry. Now it comes down to getting sufficient investments to keep the lights on. Larger and larger shares of resources are directed towards keeping alive the energy business, i.e. less and less resources are available for the general population.

          But we still have ways to go. Both in level of lifestyle and consumption but also less environmental considerations can help getting out more hydrocarbons. There are no “transitions” that’s just narrative for the masses, in the same vein that “green” energy will save the planet and space exploration will save humanity.

  4. SuperTramp says:

    The super duper trumpie high rollers have so much dough why not invest it ?

    Babe Ruth jersey auctioned for record $5.64 million
    A jersey worn by Yankees icon Babe Ruth around 1928-30 sold for $5.64 million, a record price for sports memorabilia, during the Babe Ruth Collection auction at Yankee Stadium on Saturday, according to Hunt Auctions. The previous mark of $4.4 million was set by a 1920 Ruth jersey
    https://nypost.com/2019/06/15/babe-ruth-jersey-auctioned-for-record-5-64-million/

    Yes, it must be a different dimensional reality ….

    See there is an explanation

  5. SuperTramp says:

    Ahh, a dress rehearsal for the day we go unplugged!
    https://finance.yahoo.com/news/target-outage-shoppers-reporting-registers-183827722.html
    It was a tough afternoon to be at Target.
    After a two-hour nationwide outage Saturday, Target’s registers are back online in the retailer’s 1,849 U.S. stores, spokesman Joe Poulos confirmed to USA TODAY.
    “The temporary outage earlier today was the result of an internal technology issue that lasted for approximately two hours,” Poulos said in a statement. “Our technology team worked quickly to identify and fix the issue, and we apologize for the inconvenience and frustration this caused for our guests.”
    The outage tried the patience of some, while others did their best to take it in stride. Shoppers posted to social media about long waits at the checkout line and then leaving stores empty-handed Saturday afternoon!
    Coming sooner than we think….

  6. SUPERTRAMP says:

    This just in….the Party Line ….
    China prepared for long trade fight with the US – party journal
    SHANGHAI, June 16 (Reuters) – The United States has underestimated the Chinese people’s will to fight a trade war and Beijing is prepared for a long economic battle, an influential Chinese Communist Party journal said on Sunday.
    China would not give way on major principles in its negotiations with the United States on ending the dispute, the commentary in the ideological journal Qiushi, or Seeking Truth, said
    China will not be afraid of any threats or pressure the United States is making that may escalate economic and trade frictions. China has no choice, nor escape route, and will just have to fight it out till the end,” the commentary said.
    “No one, no force should underestimate and belittle the steel will of the Chinese people and its strength and tenacity to fight a war.”
    The commentary also accused the United States of trying to hamper Chinese technological innovation.
    “We must keep the initiative of innovation and development firmly in our hands, increase investment and research in key, core technology areas, pool together more high-value talents, enhance innovation and get rid of the core technology plight,” it said.
    https://news.yahoo.com/china-prepared-long-trade-fight-080410150.html
    How DARE THEY, aren’t the happy just doing the grunt, slepping, low wage work we here in the West hate to do? Boy, some People…

  7. SuperTramp says:

    More, MORE, More….How do we Like IT?
    U.S. Oil Demand Was Scorching Hot Last Year — but Gas-Guzzling SUVs Aren’t to Blame
    https://finance.yahoo.com/news/u-oil-demand-scorching-hot-220400786.html
    The U.S. economy burned through an average of 20.46 million barrels of crude oil and related liquids each day last year, according to BP’s (NYSE: BP) latest annual Statistical Review of World Energy. That was about 500,000 barrels per day (BPD), or 2.5%, more than 2017’s total, and the largest demand increase in more than a decade. Overall, America accounted for 20.5% of the world’s oil and related liquid consumption last year. (That includes liquid derivatives of coal and natural gas, as well as biodiesel and biogasoline products such as ethanol
    ……Phillips 66 and Chevron invested $6 billion into three facilities, one of which will crack ethane to produce 1.5 million metric tons of ethylene a year. Ethylene is the most common building block for plastics, which is what the other two CP facilities will convert it into

    If life gives you lemons…make them out of plastic!

    • Actually, it was the threat of future tariffs that turned up the volume of all kinds of industry around the world. The threat encouraged everyone to stock up, before the tariffs started. Prices of all kinds of commodities, including fossil fuels, were higher. Plastics are some of the goods that were made. When we have uses for some parts of the barrel of oil, we need to find uses for other parts of the barrel. Plastics are one thing that helps use up the short hydrocarbon chains

      • SuperTramp says:

        Yes, when you scrap the bottom of the barrel, you need to figure out a way to utilize it all!
        The average person eats at least 50,000 particles of microplastic a year and breathes in a similar quantity, according to the first study to estimate human ingestion of plastic pollution.
        The true number is likely to be many times higher, as only a small number of foods and drinks have been analysed for plastic contamination. The scientists reported that drinking a lot of bottled water drastically increased the particles consumed.
        The health impacts of ingesting microplastic are unknown, but they could release toxic substances. Some pieces are small enough to penetrate human tissues, where they could trigger immune reactions
        They concluded: “Growing scientific evidence on the hazards of uncontrolled microplastic pollution, combined with its long-term persistence and irreversibility, suggests that reasonable and proportional measures should be taken to prevent the release of microplastics.”
        Cox said his research had changed his own behaviour. “I definitely steer away from plastic packaging and try to avoid bottled water as much as possible,” he said.
        “Removing single-use plastic from your life and supporting companies that are moving away from plastic packaging is going to have a non-trivial impact,” Cox said. “The facts are simple. We are producing a lot of plastic and it is ending up in the ecosystems, which we are a part of.
        https://www.theguardian.com/environment/2019/jun/05/people-eat-at-least-50000-plastic-particles-a-year-study-finds
        Humans consume the equivalent of a credit card worth of plastic every week: Report
        Well, at least we won’t feel hungry after the real food is gone!

        • Tsubion says:

          Humans consume the equivalent of a credit card worth of plastic every week

          That’s a hard story to swallow.

  8. Harry McGibbs says:

    “A massive electrical failure has left all of Argentina and Uruguay without power, according to a major Argentine electricity provider.”

    https://www.bbc.co.uk/news/world-latin-america-48652686?fbclid=IwAR00G3Ng3Sg1OGzSfNFBep9Jly0NuiyUq6C_AooQmXtPdWmi1ag67iulm3M

  9. Harry McGibbs says:

    “A massive electrical failure has left all of Argentina and Uruguay without power, according to a major Argentine electricity provider.”

    https://www.bbc.co.uk/news/world-latin-america-48652686?fbclid=IwAR00G3Ng3Sg1OGzSfNFBep9Jly0NuiyUq6C_AooQmXtPdWmi1ag67iulm3M

    • DJ says:

      60% fossil, 36% hydro, should be easy restarting?

      • Yes, but lets not forget the country suffered decades of capital and human talent outflows, so that had to left imprint on the upkeep of infrastructural as well.. One day we will reach a threshold when some of these countries won’t be able to restart their national grid for weeks and months, or never in full actually. I’m not sure we are there yet, but getting close..

        • Davidin100millionbilliontrillionzillionyears says:

          “… upkeep of infrastructural as well…”

          this version has some very telling quotes:

          https://apnews.com/a29b1da1a91542faa91d68cf8e97a34d

          “Argentina’s power grid is generally known for being in a state of disrepair, with substations and cables that were insufficiently upgraded as power rates remained largely frozen for years.”

          and this beauty:

          “Since taking office, Argentine President Mauricio Macri has said that gradual austerity measures were needed to revive the country’s struggling economy. He has cut red tape and tried to reduce the government’s budget deficit by ordering job cuts and reducing utility subsidies, which he maintained was necessary to recuperate lost revenue due to years-long mismanagement of the electricity sector.

          According to the Argentine Institute for Social Development, an average family in Argentina still pays 20 times less for electricity than similar households in neighboring countries.”

          in other words: if you wanna dance, you gotta pay the piper…

          • John Doyle says:

            Macri is a neo-liberal politician using all the neoliberal tools to govern. Unfortunately these tools are much criticised today as they just don’t work.Never have. What cutting spending will do is send the country into recession if it isn’t already and the evils of Austerity are now widely known. Argentine just got a large loan, but it’s in US Dollars a dead set No-No because it allows the wealthy ones to trade their overvalued currency for Dollars and expatriate them. This burdens the government for no benefit to the majority. Still, that’s one aim of neoliberalism along with privatising everything possible. Once again Argentina will bankrupt itself to repudiate the debt.
            There is a solution, MMT. MMT will strip away the neo-liberal crust and show how the economy can actually work,as I have explained before.

            • Harry McGibbs says:

              Hardly a solution when we are chaffing against so many non-monetary limits to growth – a temporary stimulant at best; a terminally destabilising attempt to tinker with a complex system at worst.

            • John Doyle says:

              It’s not a forever solution. But why needlessly make it worse? Is that OK by you?
              Certainly not by me.

    • It seems like the electrical system is very east to go out, compared to oil. People who buy electrical powered cars seem to me to be dreamers.

      • Yes and no, as some types of non grid tied renewables are likely (‘guaranteed) to produce at least for next 10-15yrs with no or few spare parts. Which is not a lot, but it’s at least something. Obviously, the more pressing question is likely future situation in which fuel rationing, road blockades, or worse (expropriation) are established to some degree. Now, it could well happen before ~2025 or in ~15-20yrs, your particular area. So, again as always we are back to the pesky moving sand biz of sequencing, scenarios, and timelines.. of the future.

        • Xabier says:

          Location, location!

          Best to visualize it like one of those exciting films were the hero jumps from ice floe to floe, with killer whales popping up here and there.

          And, in the end, he’s lunch – quite unlike the films…..

          Knowing that each day successfully negotiated is a reprieve from the axe simply adds to the zest of life, when seen in the right perspective.

          • Tsubion says:

            Dear Leader, I’m obviously not trying hard enough to see the sword of damocles hanging over my head from the preferred perspective. Twenty lashes should set me straight. Then everything will be rosy. no /sarc whatsoever.

        • Battery backup for these resources is likely iffy, however. Intermittent resources aren’t worth very much. You can’t provide jobs based on intermittent energy, for example. You can’t run vehicle on intermittent energy, unless it has a working battery. You can’t bake a cake based on intermittent energy. About all you can have with intermittent energy is very intermittent activities, like watching television and surfing the Internet.

          • Tsubion says:

            That’s not the way it works Gail. And I’m sure you know that.

            In the end storage will be just enough to cover all the gaps from a mix of all energy producers.

            And jobs? There are and will be plenty of jobs installing and maintaining equipment for many decades to come.

            It’s the other sectors we need to worry about.

            • Energy is the essential sector. It needs to become a smaller and smaller percentage of the total, for other sectors to grow.

            • Grant says:

              Storage might be just enough.

              How much generating capacity is required to ensure that the storage can always be certain to be at the “just enough” level?

              What is the cost effectiveness of that capacity?

  10. Harry McGibbs says:

    “Beyond the US, the fragility of growth in debt-ridden China and some other emerging markets remains a concern, as do economic, policy, financial, and political risks in Europe. Worse, across the advanced economies, the policy toolbox for responding to a crisis remains limited. The monetary and fiscal interventions and private-sector backstops used after the 2008 financial crisis simply cannot be deployed to the same effect today…

    “While trade wars and potential oil spikes constitute a supply-side risk, they also threaten aggregate demand and thus consumption growth, because tariffs and higher fuel prices reduce disposable income. With so much uncertainty, companies will likely opt to reduce capital spending and investment.

    “Under these conditions, a severe enough shock could usher in a global recession, even if central banks respond rapidly. After all, in 2007-2009, the Fed and other central banks reacted aggressively to the shocks that triggered the global financial crisis, but they did not avert the “Great Recession”.

    https://www.theguardian.com/business/2019/jun/14/the-risk-of-a-2020-recession-and-crisis-is-growing

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