Do the World’s Energy Policies Make Sense?

The world today has a myriad of energy policies. One of them seems to be to encourage renewables, especially wind and solar. Another seems to be to encourage electric cars. A third seems to be to try to move away from fossil fuels. Countries in Europe and elsewhere have been trying carbon taxes. There are also programs to buy carbon offsets for energy uses such as air travel.

Maybe it is time to step back and take a look. Where are we now? Where are we really headed? Have the policies implemented since the Kyoto Protocol in 1997 had any positive impact?

Let’s look at some of the issues involved.

[1] We have had very little success in reducing CO2 emissions.

CO2 emissions for all countries, in total, have been spiraling upward, year after year.

World CO2 Emissions

Figure 1. Carbon dioxide emissions for the world, based on BP’s 2019 Statistical Review of World Energy.

If we look at the situation by part of the world, we see an even more concerning pattern.

Figure 2. Carbon dioxide emissions by part of the world through 2018, based on BP’s 2019 Statistical Review of World Energy. Soviet Empire is an approximation including Eastern Europe and the Former Soviet Union, based on the BP report. It would not include Cuba and North Korea.

The group US+EU+Japan has been able to reduce its CO2 emissions by 5% since 2005. Emissions were slowly rising between 1981 and 2005. There was a dip at the time of the Great Recession of 2008-2009, followed by a downward trend. A person might get the impression that CO2 emissions for the EU tend to rise during periods when the economy is doing well and tend to fall when it is doing poorly.

The “star” in emissions reductions is the former Soviet Union and its Eastern European satellites. I refer to this group as the Soviet Empire. Emissions fell around the time of the collapse of the central government of the Soviet Union in 1991. This big decrease in emissions seems to be related to huge changes that took place at that time. Instead of one country with a single currency, the individual republics were suddenly on their own.

The high point in CO2 emissions for the Soviet Empire came in 1990, the year before the collapse of the Soviet Union central government. By 1999, emissions had fallen to a level 37% below their 1990 level. In fact, even in recent years, emissions for this group of countries has stayed low. Much industry collapsed and has never been replaced.

The group that has more than doubled its emissions is what I call the Remainder Group. The group includes many countries, including China and India, that ramped up their manufacturing and other heavy industry in the late 1990s and early 2000s, when the World Trade Organization added members. The Remainder Group also includes many countries that suddenly found new export markets for their raw materials, such as oil, iron ore, and copper. The Remainder countries became richer; they became more able to pave roads and build more substantial homes for their citizens. With all of this GDP-related activity, CO2 emissions increased rapidly.

[2] Population growth has followed a pattern that is in some ways similar to CO2 growth. 

Figure 3. Population from 1965 to 2018, based on UN 2019 population estimates.

In Figure 3, we see that population has been virtually flat in the former Soviet Empire (2% growth between 1997 and 2018). With the economy not doing well, young people emigrate to countries that seem to provide better prospects.

Population in the US+EU+Japan Group grew by 11% between 1997 and 2018.

The group that is simply outstanding for population growth is the Remainder Group, with 35% growth between 1997 and 2018. A big part of this population growth comes from improved sanitation and basic medical care, such as antibiotics. With these changes, a larger percentage of the babies that are born have been able to live to maturity.

It is hard to see any bend in the trend lines, which would indicate that recent actions have actually changed the course of activity from the way it was headed previously. Of course, the trend is only “linear,” implying that the percentage growth is gradually slowing over time.

This rapidly growing population feeds into the CO2 problem as well. The many young people would all like food, homes and transportation. While it is possible to obtain some version of these desired products without fossil fuels, the version with fossil fuels tends to be vastly improved. Most people prefer homes with indoor plumbing and electricity, if given an opportunity, for example.

[3] Deforestation keeps growing as a world problem.

Figure 4. Chart showing World Bank estimates of share of world forested by economic grouping.

High Income Countries keep pushing the deforestation problem to the poorer parts of the world. Heavily Indebted Poor Countries are especially affected. Worldwide, deforestation continues to grow.

[4] With respect to fossil fuels, there is a great deal of confusion with respect to, “What do we need to be saved from?” 

Do we have a problem with too much or too little fossil fuel? We hear two different stories.

Figure 5. Author’s image of two trains speeding toward the world economy.

Climate modelers keep telling us about what could happen, if indeed we use too much fossil fuel. In fact, the climate currently is changing, bolstering this point of view.

It seems to me that there is an equally great danger of collapse, accompanied by low energy prices. For example, we know that energy production in the European Union has been declining for many years, without the countries being able to do anything about it.

We also know historically that many civilizations have collapsed. The Soviet Empire collapsed in 1991, illustrating one type of collapse. The Soviet Union was an oil exporter. Its collapse came after oil prices were too low to allow adequate investment in new oil fields for an extended period of time. The Great Recession of 2008-2009 offers a much smaller, temporary version of what collapse might look like.

Another example of low prices accompanying collapse comes from Revelation 18: 11-13, warning of possible collapse like that of ancient Babylon. The problem was inadequate demand and low prices; even the energy product of the day (human beings sold as slaves) had little value.

11 The merchants of the earth will weep and mourn over her because no one buys their cargoes anymore— 12 cargoes of gold, silver, precious stones and pearls; fine linen, purple, silk and scarlet cloth; every sort of citron wood, and articles of every kind made of ivory, costly wood, bronze, iron and marble; 13 cargoes of cinnamon and spice, of incense, myrrh and frankincense, of wine and olive oil, of fine flour and wheat; cattle and sheep; horses and carriages; and human beings sold as slaves.

What we have been seeing recently is falling prices and prices that are too low for producers. Such a result can lead to collapse if too many energy producers go bankrupt and quit.

Figure 6. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.

If we are in danger of collapse from low prices, renewables would not seem to be of much assistance unless they (a) are significantly less expensive than fossil fuels and (b) can be scaled up sufficiently rapidly to more than replace fossil fuels. Neither of these seems to be a possibility.

[5] Early studies overestimated how much help renewables might provide, especially if our problem comes from too little energy supply rather than too much.

Renewables look like they would be great from many points of view, but when it comes down to the real world situation, they don’t live up to the hype.

One issue is that while wind, solar, hydroelectric, geothermal, and other devices for capturing energy are called “renewables,” they are really only available through the use of the fossil fuel system. They are made using fossil fuels. If a part breaks, or if insects eat away the insulation on wires, replacements need to be made using the fossil fuel system and transported using the fossil fuel system. At best, renewables should be considered fossil fuel extenders, using less fossil fuels than conventional electricity generation. They are also dependent on other resources, which may eventually deplete, but which are not a problem at this time.

A second issue is that it is extremely difficult to do a proper cost-benefit analysis on renewables because they can only be used as part of a larger system. They tend to look inexpensive, when viewed in isolation. But when total system costs are viewed, they often are quite expensive.

One difficulty in a proper cost-benefit analysis is the fact that renewables are often sited at quite a distance from where electricity is to be used, leading to the need for a significant number of long distance transmission lines. Furthermore, if renewables provide intermittent power, they need to be sized for the maximum output, not their average output. All of these long distance lines need to be properly maintained, or they tend to cause fires. In some instances, burying the lines underground at significant cost is the only solution. Somehow, these higher costs need to be recognized as part of the cost of the system, but this is rarely done.

Another difficulty in a proper cost-benefit analysis is the fact that renewables’  intermittency must be overcome, if the electricity is to be of benefit to a modern economy that requires electricity 24/7/365. In theory, we could greatly overbuild the renewables system and the transmission. This might work, but we would end up with a large percentage of the system that is not used most of the time, greatly adding to costs.

Batteries can be added, but the cost tends to be high. One commenter on my site recently observed:

EIA reports the average cost for utility scale battery systems to be about $1500 per kWh. At that rate the batteries needed for backing up a solar or wind facility for three days cost around 30 times as much as the RE facility. But wind is often unpowered for more like seven days, during huge stagnant high pressure episodes. Thus the backup battery cost is more like 100 times the wind farm cost. Batteries are not feasible.

The major intermittency problem is season-to-season, especially saving up enough for winter. We do not have a way, today, of storing energy from one season to another, short of making it into a liquid (such as ammonia), and storing the liquid from season to season. This would be another way of driving up costs of the overall system. It has not been included in anyone’s cost calculations.

For the time being, we are forcing nuclear and fossil fuel to provide backup electrical services to intermittent renewables without adequately compensating them for their services. This tends to drive them out of business. This is not an adequate solution either.

A third issue is that renewables really need to be “economic” to work. In other words, they need to generate a profit for their owners, when comparing the unsubsidized costs with the benefits of the system. In fact, their owners need to be able to pay fairly substantial taxes to governments, to cover their share of governmental costs as well. If renewables truly were providing substantial benefit to the system, their use would tend to “take off” on their own, because they would be providing “net energy” to the system. Instead, renewables tend to act like “energy sinks.” They need endless subsidies. They can never substitute for fossil fuels. In fact, they can’t even pay their own way.

A related issue is that, because of the high total costs (as well as their lack of true net energy benefits), it is almost impossible to ramp up the quantity of renewables such as wind and solar very high. The EU has been a big supporter of renewables other than hydroelectric. Figure 7 shows a chart of the EU’s own energy production, together with its energy imports.

EU Energy by Type and Whether Imported

Figure 7. EU energy by type and whether imported, based on data of BP’s 2019 Statistical Review of World Energy. Renewables are non-hydroelectric renewables such as wind, solar, and geothermal.

After at least 20 years of subsidies, the EU has been able to increase renewables (other than hydroelectric) to about 10% of its total energy supply. The EU’s oil imports are roughly level, and its natural gas imports have been increasing. Even with rapid growth in non-hydro renewables, the EU has been experiencing a decrease in total energy consumption.

[6] Looking at the actual outcomes, a person might ask, “What in the world were policymakers really thinking about?”

We are told that the reason policymakers made the decisions they did was because they thought that they could reduce CO2 emissions in this way. Really? If a person really wants to reduce CO2 emissions, it is easy to see how to do it. A person simply has to take steps in the direction of reducing global co-operation. One step would be to reduce international trade. Another would be to get rid of umbrella organizations such as the World Trade Organization, the United Nations and the European Union. In fact, within individual countries, the top level of government could be removed, leaving (for example) the provinces of Canada and the states of the United States. In other words, policymakers could push economies in the direction of collapse.

Another way collapse could be encouraged would be by rapidly raising interest rates or cutting off credit. With less purchasing power, the world would be pushed into recession.

At the time of the Kyoto Protocol, policymakers moved in precisely the opposite direction of pushing the economy toward collapse. They moved in the direction of adding international trade and more debt to enable the growth. The countries with greater trade had huge coal resources that had not been used. With the help of this coal, the world economy was able to continue to grow. This approach only made sense if the real problem at the time of the Kyoto Protocol in 1997 was too little energy resources, not too much. The economy needed the stimulation that more low-cost energy and more debt could provide.

It is now more than twenty years later. The coal resources of China are starting to deplete. Coal is also causing serious ground-level pollution problems, both in China and India. Without growing coal production, world GDP growth starts slowing. We are again facing low oil prices and other commodity prices–a problem similar to the one present when the government of the Soviet Union collapsed. The world economy seems again to be headed toward having some of its governmental organizations collapse from inadequate energy. Political parties are becoming more extreme; countries are enacting new tariffs. If we go back to Figure 5, the concern should again be collapse, on the left side of the figure.

[7] The scenarios considered by the IPCC climate model need to be revisited.

A climate model looks to the past and tries to forecast what would happen in alternative “scenarios.” The concern I have is that the scenarios evaluated are not realistic. To get to the level of CO2 that would produce the most extreme scenarios, coal production would need to continue at a high level for many, many years. This seems unrealistic because world coal production has been fairly flat for several years, and prices tend to be lower than producers require if they are to stay in business. The likely direction for coal production seems to be down, rather than up.

Figure 8. World Energy Consumption by Fuel, based on data of 2019 BP Statistical Review of World Energy.

In order for coal production to grow as much as the higher emission scenarios assume, there needs to be a major turnaround in the situation. World coal prices would need to rise substantially. In fact, coal in very difficult locations for extraction, such as under the North Sea, need to become profitable to extract. This situation seems very unlikely.

It seems to me that climate modelers should be considering more realistic scenarios regarding CO2 emissions from fossil fuels. One scenario which should be considered is the possible near term collapse of several governmental organizations, such as the European Union, World Trade Organization, and the governments of several oil exporting countries.

[8] The push toward renewables makes little sense without a firmer foundation than currently exists.

Early studies looked only at the cost of renewables themselves, without the cost of extra long-distance grid transportation and battery storage. Such an estimate makes renewables look far more valuable than they really are.

We now have enough experience that we can see what goes wrong. A hydroelectric plant that operates during the wet season in a tropical country may be of little practical use, for example, if there is no fossil fuel energy available to provide backup electricity production during the dry season. The total cost of the overlapping systems needs to be taken into consideration, including the need to hire staff year around for both the fossil fuel and hydroelectric facilities. Electricity transmission will likely be needed for both types of generation.

There are many other real-world examples that can be examined, before blanket “use renewables” recommendations should be issued. If renewables are not truly very inexpensive (around 2 cents per kWh or less), without subsidies, they are likely not to be long-lasting. Subsidies become more and more difficult to maintain, as a system scales up.

This entry was posted in Energy policy, Financial Implications and tagged , by Gail Tverberg. Bookmark the permalink.

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.

1,380 thoughts on “Do the World’s Energy Policies Make Sense?

  1. “Due to a lack of funding, Reykjavík cemeteries [Iceland] are having difficulties providing their services… In fact, the only cremation furnace in the country, located in Reykjavík, now faces the risk of collapsing…

    “In 2005, the state and the cemetery council signed a contract that stipulated that the cemeteries’ projects would be fully financed. Soon after, the 2009 economic crisis led to cuts in funding and the state stopped complying with the contract…

    “Currently, the cremation oven is 72 years old and at risk of collapsing… if the furnace stops working, the only other option for cremation would be to get the service done abroad.”

  2. Two of the world’s major national airlines have hurtled closer to the possibility of going bust after a difficult weekend that’s left both with even more uncertain futures.

    “Italy’s flag carrier Alitalia and South African Airways… have been haemorrhaging money for years but a series of fresh blows have raised concerns of collapse for both… the airlines… may be the latest flag carriers to crumble in the wake of low-cost competition, rising fuel prices and global economic uncertainty.”

      • like Iceland, another easy one:

        sell off all their planes…

        and voila!

        sometimes the best strategy is the obvious one…

        • I can speak to the problems with South African, since I grew up there. It used to be a very well run airline but today, like with all large South African enterprises, it is used as a cash cow to to advance political agendas. In other words, it’s stocked top to bottom with unqualified affirmative action hires on bloated compensation packages and corrupt politically-connected management. You can see similar financial problems at other formerly profitable companies like Eskom, Denel, many of the big mining companies, banks etc. and the reasons are the same. This has been an explicit policy of the government since 1994, officially called “Black Economic Empowerment”. The attempted land-grab from white farmers a year or two ago (anyone remember that?) was also tangentially related to this policy. South Africa is essentially Zimbabwefying itself but at a much slower pace, because it started from a much, much higher point of accumulated wealth and capital stock. For the past 20 years a lot of that wealth has been spent into feeding Swiss bank accounts and many millions of unproductive mouths. It’s now to the point that the whole country has regularly/daily scheduled power blackouts, because Eskom underinvested in power generating capacity for the past 2+ decades (read: the money was frittered away) and the coal mining companies that supply the power plants can’t meet their obligations…for the same reasons.

  3. “Today, more than a decade on from the crisis, interest rates are close to historic lows throughout much of the developed world. The problem of too much debt has been solved with even more debt.

    “The nature of the debt has changed, so too has the make-up of debtors and creditors, but the very low level of interest rates, when compared to 2008, means that small changes in interest rates have a greater impact on the price of credit.”

    • “US corporations are sitting on nearly $10 trillion in debt. That’s equivalent to roughly 47% of the overall economy, which is a record, according to data first cited by the Washington Post.

      “Since the financial crisis in 2008, corporations have splurged on debt amid historically cheap borrowing costs. In recent months, experts have warning that ballooning corporate debt could worsen a future economic downturn.”

        • whatever it is, it doesn’t have to be huge…

          just big enough to cause widespread panic…

          group behavior will ensure a swift collapse…

          • Yes, but what? What is actually subject to breakage?

            Give me one timeline of a breakage, its effects and consequences.

            I’m not interested in having “magic” or “then stuff happens” in the chain of reasoning leading to a complete collapse.

            • David Korowicz’s ‘Trade Off’ paper looks at how, in his example, a sovereign default in the Eurozone could lead to socio-economic collapse:

              “David Korowicz explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure. He uses a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.”

              Click to access Trade_Off_Korowicz.pdf

            • Plenty of lofty words and fluff in that piece. I want to see a clear timeline including exactly when and what is going to break and why it will lead to a collapse. Yes, a detailed chain of reasoning pinpointing the exact mechanism which inevitably have the outcome of collapse.

              It is all plenty of words and little substance, droning on about complexity in the supply chain, finance, energy supply, risk this, predicament that.

              Where is the inevitability in the same sense that The Hills Group puts a definitive measure of the entropy generation as a measure of the consequences of depletion and outlining the effects of the pricing the oil.

              Yes, I want to read in great concise clarity in the spirit of how M King Hubbert outlined his peak oil observations, theory and inevitable conclusion.

    • Hawaii not living the US opulence ways would be theoretically plenty ok with contemporary offgrid batt setup for ecovillages style tourism. Frankly, not knowing their specific insolation numbers (assuming above average / seasonal overcast days).

      Now, return to reality, Hawaii is an industrial (tourism) place and mil/gov outpost, hence the sucking sound of imported energy..

    • more affordable?

      “Karin, a 31-year-old postdoctoral fellow at Lawrence Berkeley National Laboratory, spent just under $4,000 for his battery by taking advantage of tax credits.”

      oh, I see!

      more affordable with tax credits!

      we should give tax credits on all food purchases, and that way food would be “more affordable”…

    • Yet another apples to oranges price comparison. Renewables look good, but really aren’t, when the cost of paying backup providers and extra grid capacity is included. Batteries are needed for a far longer time than a few hours to replace backup providers. Batteries are needed to store energy for weeks or months. In places that are not right on the equator, batteries are needed to store electricity from summer to winter.

      When I visited Hawaii recently, I was told that Hawaii is having a problem with the cost of living being too high to attract people willing to work in Hawaii. This high cost of living is to a significant extent driven by the high cost of electricity and the high cost of oil. Some estimates say the total population of Hawaii reached a peak in 2016 and is beginning to fall.

      Hawaii is still shipping so much diesel fuel to run their power grid because renewables are no longer growing by much, relative to the total. The Puna Geothermal Venture has been non operational since May 2018, because of the lower Puna Eruption. (People forget that “renewable” doesn’t mean permanent.) Neither the burning of biomass nor wind turbine use seems to be growing. Hydroelectric is tiny. Renewables growth is now coming solely from solar in Hawaii.

      • Hawaii is also being crippled by the Jones Act, which requires all commerce between the islands, or between the islands and the mainland, to be carried by US ships. Ships crewed by union labour. Set the people free, and the cost of imported goods would drop by at least 25%.

        Alternatively, decolonise Hawaii and give the native people their country back.

        • Hawaii’s living costs are so high, and Hawaii is located so far from other inhabitable areas that it seems to me that crew on the ships need union wages for themselves and their families to survive, if they are not on the ship. It is not like there is a lower living cost are nearby.

          • Gail, with the present arrangements, I agree. But before its seizure by the US, Hawaii was prosperous, and its (zero carbon) commerce with the Polynesian islands to the West was flourishing. It was, again, the US sugar planters and their fossil fuel economy that made them so dependent on others.

        • Or, a better solution is to end the privileges enjoyed by descendants of Hawaiian nobles and their white hangars on , as described in the George Clooney movie Descendants.

          Hawaii is a feudal area where the pre-US annexation landowners still hold tremendous powers.

          • Yes! Let the competitive collaborative forces rule the world. We already got the technology for that.

            The smart would prosper, the ordinary thrive as administers and the wise to critique.

    • Hawaii has two refineries that make JP-8 for the airline industry from imported Indonesian crude. That process produces bunker oil that is pretty useless and would have to be shipped out at some cost to the refineries. Therefore, they sell the bunker oil to the power plant at nearby Kahe Point, where they burn the oil and produce about 1.6 GW of electrical power for Oahu.

  4. Gobble, gobble….Plastic People eat Plastic….what a surprise!😘
    We tend to look at drugs and toiletries as a category far away from food, even though we often ingest them orally and they end up in our stomachs along with everything else we eat. Because of this, maybe it doesn’t seem so crazy that petro-products that were once crude oil are in our medicine because we are aware that medicine is synthesized and created in laboratories full of all kinds of chemicals. But when it comes to actual food, most of us would never imagine that there is crude oil lurking in our fridges and pantries. But there is. And a lot more of it than you would expect.
    Thought Co. reports that “petrochemicals are used to make most food preservatives that keep food fresh on the shelf or in a can. In addition, you’ll find petrochemicals listed as ingredients in many chocolates and candies. Food colorings made with petrochemicals are used in a surprising number of products including chips, packaged foods, and canned or jarred foods.” Chewing gum also includes crude oil as the basis for not just one but many of its primary ingredients. LiveScience reports that “People who enjoy the snap and long-lasting texture of their chewing gum can give a nod of thanks to petroleum-derived polymers. Today’s gum bases can consist of both natural latexes and petroleum products such as polyethylene and paraffin wax, which also means most gums are non-biodegradable. But the first chewing gums typically relied upon the natural latex known as chicle — still the gum base of choice for some upscale gum brands and certain regional markets.”

    This is to say nothing of the synthetic petrochemical fertilizers that are used to grow nearly all of the produce that we consume (especially in more developed countries) and that give nitrogen, phosphorous, and potassium to our soils and the fruits and vegetables grown from them. As summed up by Thought Co., “More than a billion pounds of plastic, all made with petrochemicals, find use annually in U.S. agriculture. The chemicals are used to make everything from plastic sheeting and mulch to pesticides and fertilizers. Plastics are also used to make twine, silage, and tubing. Petroleum fuels are also used to transport foods (which are, of course, stored in plastic containers).” In fact, our entire food system is fueled by oil, and agriculture is responsible for a quarter of all greenhouse gas emissions, making it the second biggest greenhouse gas-emitting sector after the energy sector itself.

    While we as consumers may not be aware of or mindful about the fact that so much of the things that we choose to consume contain some amount of crude oil in the form of petrochemicals, at least the petrochemicals were put there on purpose and are therefore almost certainly measured or regulated in some way. But there are also plenty of things that we consume that are full of petrochemicals that are not supposed to be there at all. And it’s no simple feat to avoid consuming these hidden petrochemicals, because one of the most common sources is something that we can’t live without: water.

    Like Gail stated…a lot of oil use is hidden from ordinary people…
    Someone please inform Greta and Jane Hanoi Fonda…

    Yep, you’ll act alright….when you are freezing and starving because no energy to serve you.

    • “In addition, you’ll find petrochemicals listed as ingredients in many chocolates and candies.”

      as younger ones say: “sweet!”…

      another reason to love crude…

      the electricity is on, the house is toasty warm from the forced hot air produced by the oil furnace in my basement… yes, here in the northeast USA, heating oil is still a somewhat common way to go, not the cheapest, but the furnace still has some years of life left, so the cost equation says to keep it for now…

      and Ghirardelli 60% Intense Dark later, I think…

      they subtitle the bar as “Evening Dream”…

      life’s a dream, Greta… BAU tonight, baby!

  5. HaHaHa…Back YahooFINANCE
    There Are More Dollars in Venezuela Now Than There Are Bolivars
    Alex Vasquez
    BloombergDecember 3, 2019, 11:36 AM EST
    (Bloomberg) — The U.S. dollar has extended its dominance in Venezuela as locals increasingly turn to the greenback for even the smallest of purchases.

    Physical dollars now account for more than half of all retail transactions as the amount in circulation has increased to as high as $2.7 billion, according to data from the Caracas-based research firm Ecoanalitica. That’s three times the value of all the cash bolivars in existence combined with the amount of local currency held in checking and savings accounts, the data show.

    The dollar has taken hold of the economy following years of devaluations and hyperinflation that eroded the value of the bolivar to a level that hovers just a hair above worthless, and amid a shortage of local-currency notes. Rather than putting in the work to assemble a big enough pile of bolivar notes and dragging them around in bags, it’s more practical for Venezuelans to conduct their commerce in dollar bills flown into the country as remittances or picked up at exchange houses at the borders of Colombia and Brazil
    While until recently it was illegal to transact in U.S. currency, those restrictions have all but evaporated in any practical sense. Even the authoritarian President Nicolas Maduro, who has generally tried his best to keep an iron grip over the economy, has accepted the transition as the country suffers from a crippling economic crisis that has caused mass emigration amid growing poverty. Things are so bad, and the bolivar so weak, that Venezuela has struggled to print enough physical bolivar bills to keep up with the devaluation.

    “That process that they call dollarization can help the recovery of the country, the spread of productive forces in the country, and the economy,” Maduro said in a televised interview last month. “Thank God it exists

    That’s why the call it THE GOD ALMIGHTY 🙏 Dollar!

      • Poland uses about 18 million metric tonnes of cement a year in recent years. That’s quite a big number. About 180 thousands of dwellings is completed a year, plus all the other buildings, and roads.

        • The US seems to use about 100 million metric tons a year.

          The US has a population of about 329 million and Poland has a population of about 38 million, so Poland is about 11.5% the size of the US. If Poland used the same amount of cement as the US per capita, it would only use 11 or 12 million metric tonnes of cement a year.

          Of course, in the US, we tend to use more asphalt and wood, compared to a lot of other countries. This holds down our cement use.

      • This is related to the physics of the situation. What energy there is, tends to “rise to the top.” The rural areas get frozen out, so to speak.

        • When the soil was not depleted and the food production was cheap, the rural areas could at least produce some workforce for the cities. Now, the food production is costly and producing workforce for the cities brings little benefits to the rural areas, as preserving the cheap food production in the rural areas requires more and more industrial inputs like machines and fertilizers.

          The rural areas do not need so much human workforce, but there is a rising need for machines. Like in the cities. The humans are too costly in comparison to machines.

          • I think you are right. Our rural areas are doing terribly, also.

            The people making the agricultural machines are not doing very well either, however, because with low farm profits, people cannot afford the expensive machinery.

            John Deere is a major manufacturer in the United States. An article today says, Deere & Co. Ag and Turf Sales Downturn Forecast for 2020

            John Deere’s worldwide sales of agriculture and turf equipment are forecast to decline 5 to 10 percent for fiscal-year 2020, including a negative currency-translation effect of 1 percent, according to a company press release issued November 27.

  6. The WSJ is reporting, Iraq, Other Countries Support Extra OPEC Cuts
    Oil minister said Iraq and other countries would support more cuts by 400,000 barrels to 1.6 million barrels a day

    “All countries should share and no country should take that [alone],” Mr. Ghadhban said. “It has been calculated that 1.2 [million barrels a day] has not been enough so there’s an additional cut required…and 1.6 was one of the alternatives discussed last year.”

    The Saudi Arabia-led OPEC cartel is set to meet with a 10-nation coalition led by Russia on Dec. 5 and 6 in Vienna to debate to extend a pact to curb production by 1.2 million barrels a day beyond the agreed end of March 2020.

  7. “The oil patch is facing a reckoning in coming years when billions of dollars of debt that helped energy companies weather the prolonged commodity price slump comes due.

    “Scheduled debt maturities among oil and natural gas production and services companies amount to roughly $3 billion in 2020 but will skyrocket from there to $20 billion in 2021, $41 billion in 2022 and $59 billion in 2023, according to data compiled by asset manager Angelo Gordon.”

    • It sounds like 2020 will not be a bad year for debt maturities. The problems are farther out. I am sure that oil and gas production and service companies assume that prices will be higher by then, so there will be no problem. Probably, investors think this way as well.

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