Expect low oil prices in 2020; tendency toward recession

Energy Forecast for 2020

Overall, I expect that oil and other commodity prices will remain low in 2020. These low oil prices will adversely affect oil production and several other parts of the economy. As a result, a strong tendency toward recession can be expected. The extent of recessionary influences will vary from country to country. Financial factors, not discussed in these forecasts, are likely also to play a role.

The following are pieces of my energy forecast for 2020:

[1] Oil prices can be expected to remain generally low in 2020. There may be an occasional spike to $80 or $90 per barrel, but average prices in 2020 are likely to be at or below the 2019 level. 

Figure 1. Average annual inflation-adjusted Brent equivalent oil prices in 2018 US$. 2018 and prior are as shown in BP’s 2019 Statistical Review of World Energy. Value for 2019 estimated by author based on EIA Brent daily oil prices and 2% expected inflation.

Figure 2 shows in more detail how peaks in oil prices have been falling since 2008. While it doesn’t include early January 2020 oil prices, even these prices would be below the dotted line.

Figure 2. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.

Oil prices can temporarily spike because of inadequate supply or fear of war. However, to keep oil prices up, there needs to be an increase in “demand” for finished goods and services made with commodities. Workers need to be able to afford to purchase more goods such as new homes, cars, and cell phones. Governments need to be able to afford to purchase new goods such as paved roads and school buildings.

At this point, the world economy is struggling with a lack of affordability in finished goods and services. This lack of affordability is what causes oil and other commodity prices to tend to fall, rather than to rise. Lack of affordability comes when too many would-be buyers have low wages or no income at all. Wage disparity tends to rise with globalization. It also tends to rise with increased specialization. A few highly trained workers earn high wages, but many others are left with low wages or no job at all.

It is the fact that we do not have a way of making the affordability of finished goods rise that leads me to believe that oil prices will remain low. Raising minimum wages tends to encourage more mechanization of processes and thus tends to lower total employment. Interest rates cannot be brought much lower, nor can the terms of loans be extended much longer. If such changes were available, they would enhance affordability and thus help prevent low commodity prices and recession.

[2] World oil production seems likely to fall by 1% or more in 2020 because of low oil prices.

Quarterly oil production data of the US Energy Information Administration shows the following pattern:

Figure 3. Quarterly World Crude Oil and Natural Gas Liquids production, based on EIA international data through September 2019. This is a fairly broad definition of oil. It does not include biofuels because their production tends to be seasonal.

The highest single quarter of world oil production was the fourth quarter of 2018. Oil production has been falling since this peak quarter.

To examine what is happening, the production shown in Figure 3 can be divided into that by the United States, OPEC, and “All Other.”

Figure 4. Quarterly world crude oil and natural gas liquids production by part of the world, based on international data of the US Energy Information Agency through September 30, 2019.

Figure 4 shows that the production of All Other seems to be steady to slightly rising, more or less regardless of oil prices.

OPEC’s oil production bobs up and down. In general, its production is lower when oil prices are low, and higher when oil prices are high. (This shouldn’t be a surprise.) Recently, its production has been lower in response to low prices. Effective January 1, 2020, OPEC plans to reduce its production by another 500,000 barrels per day.

Figure 4 shows that oil production of the United States rose in response to high prices in the 2010 to 2013 period. It dipped in response to low oil prices in 2015 and 2016. When oil prices rose in 2017 and 2018, its production again rose. Production in 2019 seems to have risen less rapidly. Recent monthly and weekly EIA data confirm the flatter US oil production growth pattern in 2019.

Putting the pieces together, I estimate that world oil production (including natural gas liquids) for 2019 will be about 0.5% lower than that of 2018. Since world population is rising by about 1.1% per year, per capita oil production is falling faster, about 1.6% per year.

A self-organizing networked economy seems to distribute oil shortages through lack of affordability. Thus, for example, they might be expected to affect the economy through lower auto sales and through less international trade related to automobile production. International trade, of course, requires the use of oil, since ships and airplanes use oil products for fuel.

If prices stay low in 2020, both the oil production of the United States and OPEC will likely be adversely affected, bringing 2020 oil production down even further. I would expect that even without a major recession, world oil supply might be expected to fall by 1% in 2020, relative to 2019. If a major recession occurs, oil prices could fall further (perhaps to $30 per barrel), and oil production would likely fall lower. Laid off workers don’t need to drive to work!

[3] In theory, the 2019 and 2020 decreases in world oil production might be the beginning of “world peak oil.” 

If oil prices cannot be brought back up again after 2020, world oil production is likely to drop precipitously. Even the “All Other” group in Figure 4 would be likely to reduce their production, if there is no chance of making a profit.

The big question is whether the affordability of finished goods and services can be raised in the future. Such an increase would tend to raise the price of all commodities, including oil.

[4] The implosion of the recycling business is part of what is causing today’s low oil prices. The effects of the recycling implosion can be expected to continue into 2020.

With the rise in oil prices in the 2002-2008 period, there came the opportunity for a new growth industry: recycling. Unfortunately, as oil prices started to fall from their lofty heights, the business model behind recycling started to make less and less sense. Effective January 1, 2018, China stopped nearly all of its paper and plastic recycling. Other Asian nations, including India, have been following suit.

When recycling efforts were reduced, many people working in the recycling industry lost their jobs. By coincidence or not, auto purchases in China began to fall at exactly the same time as recycling stopped. Of course, when fewer automobiles are sold, demand for oil to make and operate automobiles tends to fall. This has been part of what is pushing world oil prices down.

Sending materials to Asia for recycling made economic sense when oil prices were high. Once prices dropped, China was faced with dismantling a fairly large, no longer economic, industry. Other countries have followed suit, and their automobile sales have also fallen.

Companies operating ships that transport manufactured goods to high income countries were adversely affected by the loss of recycling. When material for recycling was available, it could be used to fill otherwise-empty containers returning from high income countries. Fees for transporting materials to be recycled indirectly made the cost of shipping goods manufactured in China and India a little lower than they otherwise would be, if containers needed to be shipped back empty. All of these effects have helped reduce demand for oil. Indirectly, these effects tend to reduce oil prices.

The recycling industry has not yet shrunk back to the size that the economics would suggest is needed if oil prices remain low. There may be a few kinds of recycling that work (well sorted materials, recycled near where the materials have been gathered, for example), but it probably does not make sense to send separate trucks through neighborhoods to pick up poorly sorted materials. Some materials may better be burned or placed in landfills.

We are not yet through winding down the recycling effort. Even the recycling of materials such as aluminum cans is affected by oil prices. A March, 2019, WSJ article talks about a “glut of used cans” because some markets now prefer to use newly produced aluminum.

[5] The growth of the electric car industry can be expected to slow substantially in 2020, as it becomes increasingly apparent that oil prices are likely to stay low for a long period. 

Electric cars are expensive in two ways:

  1. In building the cars initially, and
  2. In building and maintaining all of the charging stations required if more than a few elite workers with charging facilities in their garages are to use the vehicles.

Once it is clear that oil prices cannot rise indefinitely, the need for all of the extra costs of electric vehicles becomes very iffy. In light of the changing view of the economics of the situation, China has discontinued its electric vehicle (EV) subsidies, as of January 1, 2020. Prior to the change, China was the world’s largest seller of electric vehicles. Year over year EV sales in China dropped by 45.6% in October 2019 and 45.7% in November 2019. The big drop in China’s EV sales has had a follow-on effect of sharply lower lithium prices.

In the US, Tesla has recently been the largest seller of EVs. The subsidy for the Tesla is disappearing in 2020 because it has sold over 200,000 vehicles. This is likely to adversely affect the growth of EV sales in the US in 2020.

The area of the world that seems to have a significant chance of a major uptick in EV sales in 2020 is Europe. This increase is possible because governments there are still giving sizable subsidies to buyers of such cars. If, in future years, these subsidies become too great a burden for European governments, EV sales are likely to lag there as well.

[6] Oceangoing ships are required to use fuels that cause less pollution as of January 2020. This change will have a positive environmental impact, but it will lead to additional costs which are impossible to pass on to buyers of shipping services. The net impact will be to push the world economy in the direction of recession.

If oceangoing ships use less polluting fuels, this will raise costs somewhere along the line. In the simplest cases, oceangoing vessels will purchase diesel fuel rather than lower, more polluting, grades of fuel. Refineries will need to charge more for the diesel fuel, if they are to cover the cost of removing sulfur and other pollutants.

The “catch” is that the buyers of finished goods and services cannot really afford more expensive finished goods. They cut back in their demand for automobiles, homes, cell phones and paved roads if oil prices rise. This reduction in demand is what pushes commodity prices, including oil prices, down.

Evidence that ship owners cannot really pass the higher refining costs along comes from the fact that the prices that shippers are able to charge for shipping seems to be falling, rather than rising. One January article says, “The Baltic Exchange’s main sea freight index touched its lowest level in eight months on Friday, weighed down by weak demand across all segments. . .The Index posted its biggest one day percentage drop since January 2014, in the previous session.”

So higher costs for shippers have been greeted by lower prices for the cost of shipping. It will partly be ship owners who suffer from the lower sales margin. They will operate fewer ships and lay off workers. But part of the problem will be passed on to the rest of the economy, pushing it toward recession and lower oil prices.

[7] Expect increasingly warlike behavior by governments in 2020, for the primary purpose of increasing oil prices.

Oil producers around the world need higher prices than recently have been available. This is why the US seems to be tapering its growth in shale oil production. Middle Eastern countries need higher oil prices in order to be able to collect enough taxes on oil revenue to provide jobs and to subsidize food purchases for citizens.

With the US, as well as Middle Eastern countries, wanting higher oil prices, it is no wonder that warlike behavior takes place. If, somehow, a country can get control of more oil, that is simply an added benefit.

[8] The year 2020 is likely to bring transmission line concerns to the wind and solar industries. In some areas, this will lead to cutbacks in added wind and solar.

A recent industry news item was titled Renewables ‘hit a wall’ in saturated Upper Midwest grid. Most of the material that is published regarding the cost of wind and solar omits the cost of new transmission lines to support wind and solar. In some cases, additional transmission lines are not really required for the first additions of wind and solar generation; it is only when more wind and solar are added that it becomes a problem. The linked article talks about projects being withdrawn until new transmission lines can be added in an area that includes Minnesota, Iowa, parts of the Dakotas and western Wisconsin. Adding transmission lines may take several years.

A related issue that has come up recently is the awareness that, at least in dry areas, transmission lines cause fires. Getting permission to site new transmission lines has been a longstanding problem. When the problem of fires is added to the list of concerns, delays in getting the approval of new transmission lines are likely to be longer, and the cost of new transmission lines is likely to rise higher.

The overlooked transmission line issue, once it is understood, is likely to reduce the interest in replacing other generation with wind and solar.

[9] Countries that are exporters of crude oil are likely to find themselves in increasingly dire financial straits in 2020, as oil prices stay low for longer. Rebellions may arise. Governments may even be overthrown.

Oil exporters often obtain the vast majority of their revenue from the taxation of receipts related to oil exports. If prices stay low in 2020, exporters will find their tax revenues inadequate to maintain current programs for the welfare of their people, such as programs providing jobs and food subsidies. Some of this lost revenue may be offset by increased borrowing. In many cases, programs will need to be cut back. Needless to say, cutbacks are likely to lead to unhappiness and rebellions by citizens.

The problem of rebellions and overthrown governments also can be expected to occur when exporters of other commodities find their prices too low. An example is Chile, an exporter of copper and lithium. Both of these products have recently suffered from low export prices. These low prices no doubt play a major part in the protests taking place in Chile. If more tax revenue from the sales of exports were available, there would be no difficulty in satisfying protesters’ demands related to poverty, inequality, and an overly high cost of living.

We can expect more of these kinds of rebellions and uprisings, the longer oil and other commodity prices stay too low for commodity producers.

Conclusion

I have not tried to tell the whole economic story for 2020; even the energy portion is concerning. A networked self-organizing system, such as the world economy, operates in ways that are far different from what simple “common sense” would suggest. Things that seem to be wonderful in the eyes of consumers, such as low oil prices and low commodity prices, may have dark sides that are recessionary in nature. Producers need high prices to produce commodities, but these high commodity prices lead to finished goods and services that are too expensive for many consumers to afford.

There probably cannot be a “one-size-fits-all” forecast for the world economy. Some parts of the world will likely fare better than others. It is possible that a collapse of one or more parts of the world economy will allow other parts to continue. Such a situation occurred in 1991, when the central government of the Soviet Union collapsed after an extended period of low oil prices.

It is easy to think that the future is entirely bleak, but we cannot entirely understand the workings of a self-organizing networked economy. The economy tends to have more redundancy than we would expect. Furthermore, things that seem to be terrible often do not turn out as badly as expected. Things that seem to be wonderful often do not turn out as favorably as expected. Thus, we really don’t know what the future holds. We need to keep watching the signs and adjust our views as more information unfolds.

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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1,162 Responses to Expect low oil prices in 2020; tendency toward recession

  1. Daniel says:

    It seems moot to talk about retirement etc…when the system goes down as we have been saying, there will be no pension…401 k etc..almost as naive as the preppers !!! Probably better off to take on debt! There is no way I can put money in the stock market! And I am pretty sure pensions are tied to that!! the best investment is in your health and friends and good walking shoes.

    • 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.
      Gail Tverberg says:

      Exactly. I seem to keep wearing out walking shoes. They have holes because of the many miles.

  2. MG says:

    The sincere words of the former car industry top manager, who is no longer in the game:

    The former chief of the Czech car maker Skoda, belonging to VW, says: German VW concentrates its efforts on electric cars, but where they want to take the electricity from when they are closing the coal and nuclear power plants? USA put the plans for massive implementation of electromobility aside, China changed its plans as soon as they discovered that they can not afford subsidizing it, only EU sees it as an important topic which can knock the EU down.

    • 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.
      Gail Tverberg says:

      The EU is basically desperate. They don’t have any reasonable source of electricity, so they are hoping against hope that wind and solar will work. The issue isn’t climate change; it is not having fuel to burn. The EU also cannot afford to buy diesel for all of the cars, either.

  3. Dennis L. says:

    Pensions:

    “Late last year, the investment management giant Morningstar published a report concluding that most people can either save money for retirement, or save money for their kids’ education… but NOT both. They make the economic realities very clear: parents have to choose between their own future, or their children’s future. And one of the report’s lead authors went on to say that the RIGHT choice– the ONLY choice– is to choose your retirement over your kids:”

    Given negative bond yields, a stock market that no longer reflects economic reality other than too much liquidity and too few opportunities for capital investment, the only biological alternative seems to either invest in ourselves or our children. For most of us, this means radically simplifying our lives, downsizing our homes, driving used cars in to the ground, eating at home, home parties with friends and making wise educational choices. Well, this sounds like my youth, it is what I know.

    My current personal education experience is at a local CC which to date is excellent. Were I an average student(most of us are), I would save the money and go to a CC. With hard work one can learn a trade or get the first two years of a 4 year degree . If one is above average, in MN there are programs where high school students spend their senior year in the CC. This has the advantage of cost as well as not jumping into the social whirl of college which seems to often center around sex, drugs and rock and roll – always that rock and roll. At this stage of life we are not only getting an education, we are growing into ourselves. I was a housefellow at Madison, I know of what I speak. What I am seeing at the local CC is a very solid education and maybe a little slower social experience which is not all bad.

    I am not unaware that as Gail points out, this is not good for economic growth, large universities will suffer, expensive student housing will suffer, housing will suffer all of which implies banks will suffer(man, we can’t have that, can we – imagine all the suffering billionaires), but life will go on. Maybe more will be made here, in the US, maybe better jobs, maybe less waste of natural resources and energy, maybe less physical waste to be disposed in land fills, maybe less frenetic running around.

    BAU did not ask us, it is leaving the party, so we need to find a new party. We will get to the other side of this virus, we always have, things will change, we will grumble, but in the end it is a beautiful world and there has always been a tomorrow.

    Dennis L.

    • 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.
      Gail Tverberg says:

      We don’t really understand how this will end. Life will likely go on for some, but not for others. This is the way it always is.

      I always have advised others, “Don’t overspend on college. Don’t go into debt, if you can avoid it.” Private colleges are generally not worth the expense. Go with schools that are offering your child big scholarships and aren’t terribly expensive to begin with.

    • Duncan Idaho says:

      Hint:
      When education is “capital investment” one is doing so for employment (often just training).
      True education often makes one unemployable in a capitalist system.

    • Xabier says:

      As Jung put it: ‘A cruel and brutal world, of sometimes very great beauty.’

  4. Dennis L. says:

    A tangential reply to Xabier at 6:07 am.

    Any thoughts on this spreading to the homeless encampments in the US, particularly CA? Hygiene is an issue in those places. San Francisco comes to mind with its human excrement maps, steaming streets to clean them with workers in hazmat suits if I recall correctly.

    “cleanliness is next to godliness. Being clean is a sign of spiritual purity or goodness, as in Don’t forget to wash your ears—cleanliness is next to godliness. This phrase was first recorded in a sermon by John Wesley in 1778, but the idea is ancient, found in Babylonian and Hebrew religious tracts.” This quote is from Dictionary.com

    Many of these old myths, stories were probably learned the hard way, we might expect some or perhaps many of them to reappear is we move toward a “simpler” lifestyle.

    Dennis L.

    • Xabier says:

      The British ruling class only started to do something about public health, housing and, above all, the water supply in the early 19th century when the problem had become so severe that they themselves stood a high chance of catching cholera and ‘fevers of the poor’. The levels of filth we see in some parts of the US will surely come back and bite everyone, eventually. Let’s hope the politicians first of all…..

      • civilisation hangs on getting clean water in and waste water out

        we’ve got used to ‘flush and forget in no more than 4 generations at most

        I think we are about to be reminded of that law

        • worldofhanumanotg
          worldofhanumanotg says:

          Yep, sort of “3rd/4th turning” at play again, simply latest generation takes for granted temporarily existing reality nexus which is build upon legacy optimization leading to that very fragile end point of their present time. And I don’t mean it as blaming this or that generation, it’s more like a re-building nest on very old fragile tree in front of incoming windstorm..

          • i think we certainly take for granted things that have ”been” for our living memory

            ie, I have had electric light, plenty of food, warmth and fresh running water since I was born. I have to force myself not to take those for granted, but it’s difficult not to.

            If i wasn’t a diehard doomster, I guess I would assume they will go on forever

    • 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.
      Gail Tverberg says:

      They are sort of related to the germ theory of disease before we understood the germ theory of disease. They are helpful ideas, even if the people promulgating them didn’t understand why. Jesus never said, “Cleanliness is next to godliness.” But people who learned helpful ideas wanted to pass them along, so cloaked them in religious sounding words.

      • all life threatening stuff was either the work of god or satan

        it wouldnt take long to figure out that if you wallowed in filth most of the time, you would likely contract some unspeakable disease, whereas if you kept reasonably clean you were less likely to

        so god obviously preferred clean believers (though they could be struck down for having unclean thoughts of course)

        satan wanted the other kind

        all perfectly logical

        • 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.
          Gail Tverberg says:

          People liked stories to explain things for them.

          Now we have models without nearly enough dimensions that allow people to forecast the future, with about 0% accuracy. But these are viewed as scientific. I’ll take stories.

      • Xabier says:

        Washing carefully, wearing clean new clothes, etc, features in most magical rituals for summoning demons and spirits, together with not eating meat and abstaining from sex for 40 days or so – pretty squeaky clean in fact!

        ‘I met the Devil the other day; he was a charming, well-dressed man….’

        • 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.
          Gail Tverberg says:

          The people in China seem not to wash very often. They tend to wear the same clothes over and over. I expect that this is the case all over the world with poor people.

          In fact, my own mother would not consider washing clothes after one wearing, unless there was visible soil on it. She grew up in the Depression era.

  5. Yoshua says:

    A locust plague in the horn of Africa is threatening to cause famine.

    https://mobile.twitter.com/dwnews/status/1221989019229122561

    This year has started of on a dark note.

  6. “The global rush for safer assets [partly driven by fuels re the novel coronavirus] has fueled a huge jump in the world’s stockpile of negative-yielding bonds, snapping months of decline in the value of subzero debt…

    “The resurgence is a potent reminder that the market distortions synonymous with loose monetary policies have not gone away.”

    https://www.pionline.com/markets/worlds-pile-negative-debt-surges-most-2016

  7. “World trade was poised to post its first annual decline since the financial crisis at the end of 2019, according to a closely watched gauge of activity… Businesses and market watchers don’t expect a full recovery anytime soon.”

    https://markets.businessinsider.com/news/stocks/world-trade-drop-first-time-since-financial-crisis-contraction-tariffs-2020-1-1028847156

    • “For global business-cycle analysts, the 2.5%-3.5% growth band is considered the danger zone. When world output growth slips to the lower half of that range — as it did in 2019 — the risks of global recession need to be taken seriously…

      “Downside risks are especially worrisome, because a 2.9% growth outcome for the world economy underscores the lack of a comfortable cushion in the event of a shock.”

      https://www.marketwatch.com/story/with-global-trade-barely-growing-theres-no-cushion-for-the-world-economy-2020-01-27?mod=newsviewer_click

      • “Housing markets across the world, from the U.K. to China to Australia, are losing steam, holding back prospects for the global economy that last year grew at its slowest rate since the financial crisis…

        “A key catalyst is the global slowdown over the past two years that kept a lid on housing demand and home-price gains. In large cities, affordability constraints are deterring many would-be buyers, and foreigners’ appetite for overseas properties has cooled.”

        https://www.wsj.com/articles/new-risk-to-world-economy-synchronized-housing-slowdown-11580121001

        • “The Baltic Dry Index – which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities – is down a staggering 78 percent from highs in September…

          “The index… is considered a valuable indicator of the stage of the global economy. The steep slide, therefore, is also being viewed as a sign of a global economic slowdown.”

          https://www.fxstreet.com/news/global-slowdown-baltic-dry-index-is-down-78-from-september-highs-202001280120

          • 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.
            Gail Tverberg says:

            Wow!

      • 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.
        Gail Tverberg says:

        Thanks! I hadn’t seen that rule of thumb. The article says, “Since 1980, trend world GDP growth has averaged 3.5%.” But during that time, it has headed downward.

        There seems to be a minimum growth rate before the economy hits stall speed. GDP growth per capita needs to rising, just to stay even, because wages keep falling as a % of GDP.

    • 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.
      Gail Tverberg says:

      No kidding! The reason doesn’t have to be tariffs. People not wanting to travel to China and other affected areas will be a big issue too.

  8. CTG says:

    The resilience of supply chain will be severely tested in Hubei province. Remember that after a certain inflection point of supply chain interruption, it will never recover (see what happened to the near-catastrophic 2001/2002 strike in UK). If there are no food and supplies being sent in to the city before the inflection, anarchy will happen and any supplies will be hijacked by the people (11m in Wuhan). The death rate will be very significant (plus the potential of being infected by the virus or being killed by your nieghbour looking for food).

    I seriously doubt that China is looking at the supply chain issue (food to stores) or even electricity. If there is no one interested to work in the power plant of if half of the workers die, then who can run the power plant. If there is no power, then all hell will break loose almost immediately (water has to be pumped by electricity)

    • I would suggest that if you have considered the food and energy supply issues today, then the Chinese leaders have already done so a couple of days ago at least. Nobody is perfect, no leader is perfect, but China has a long history to learn from and the Communist Party aren’t going to allow themselves to be kicked out of office by a microscopic lifeform if there is anything at all that they can do that might make a difference.

      • CTG says:

        11m people in large city. It is beyond possible to prepare sufficient material, food or supplies for so many. The logistics is a nightmare and in terms of executing it, not possible.

        • 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.
          Gail Tverberg says:

          No kidding!

    • worldofhanumanotg
      worldofhanumanotg says:

      In “sitting out” type of quarantine there is substantially decreased caloric input vs say concentration camp type of intense labor 24/365 output. Also China will be able up to some point mustering large “volunteer” cadre from the army and workers in other region etc. to haul supplies into these most troubled zones.. etc.

      However, we still don’t know the type and origins of this event, it could be:

      – genuine out-brake linked to gross unsanitary medieval practice going on even in today’s urban China
      – out-brake from leaking research lab (ehm biow. facility) in China
      – deliberate (crazy indiv) domestic out-brake / test from such facility
      – deliberate (gov depop) domestic out-brake / test from such facility
      – deliberate (crazy indiv) foreign made out-brake / test targeting China (using wet food markets as cover)
      – deliberate (gov depop) foreign made out-brake / test targeting China (using wet food markets as cover)
      ..
      .
      So many (+other) options, and therefor so many different outcomes.

      • Yoshua says:

        It would be the weirdest black swan in history.

        The global economy was taken down by someone ordering a bawl of bat soup.

        • Xabier says:

          Bowl of bat soup = butterflys wing…..

        • 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.
          Gail Tverberg says:

          Not really. Epidemics have been part of collapses from the beginning of civilization. When a civilization has been weakened, it becomes vulnerable to collapses. If the population is generally young and well fed, the immune systems of its inhabitants generally work well. Also, a margin is built into crop yields, so that a plague like the locusts or the pig virus in China can be worked around. Once an economy tries to function too close to its upper limit, it becomes more vulnerable to the effects of epidemics.

          • Xabier says:

            I can see evidence of that in the old fields here: just before the 14th-century Black Death they had pushed the woodland back and expanded the area for crops to the maximum possible.

            From a population of about 60 in 1100, they reached over 350 by the time the great plague hit, taking out 30% or so of the villagers. No doubt many were malnourished and firewood was in short supply.

            For about a century or so before that you could say that they had really been pushing their luck…..

            Records seem to show that the mortality rate also went up among the royal family, but not as severely as among the common people.

            As well as being well-fed, they also had the option of moving ahead of the plague as it spread, not staying in one place for too long: Movement is Life!

      • 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.
        Gail Tverberg says:

        The virus could just be very contagious. It doesn’t matter the source, and whether the intent was good or bad.

        From the articles I looked up recently and linked to earlier, Wuhan is a low-lying city at a place where another river enters the Yangtze River. It has a lot of trouble with flooding. Wuhan gets its water from the river, but it doesn’t publish water quality reports on a regular basis. I would be willing to bet that in rainy times, its waste processing equipment is overwhelmed by runoff water getting into the system as well. As a result, some of the time there is unprocessed human and animal waste getting into the water.

        Most people in China recognize that the water is not safe to drink without boiling it. But a lot of water is used, for example, to wash hands, without boiling. There could still be a problem with the virus spreading in the water, inadvertently, I would expect. I suppose that some people might have started to believe that boiling water is no longer necessary, as well.

    • 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.
      Gail Tverberg says:

      I think you are right. Trying to cut off Hubei province in crazy. Even the plan to do so is crazy, because it will make people more fearful than necessary, especially if the bad effects are mainly on those who are elderly or in poor health to begin with.

  9. The Magus says:

    And, the moment we have all been waiting for, (drum roll please):

    The End of the World has Arrived

    China coronavirus: Hong Kong government asks civil servants to work from home after Lunar New Year holiday and urges private sector to enforce similar arrangements

    – Hong Kong government asks civil servants to work from home and urges private sector to follow suit

    – Bloomberg, PricewaterhouseCoopers, some law firms and some divisions of Hong Kong stock exchange have already rolled out similar plans

    https://www.scmp.com/news/hong-kong/politics/article/3047860/china-coronavirus-hong-kong-government-asks-civil-servants

    What do the HK authorities know about what’s really happening in China to precipitate this drastic action? Even during SARS they did NOT lock down the city like this.

    This will destroy airlines, hotels, restaurants, retail and everything else in Hong Kong. Nobody will move. And what about China?

    Will they shut their markets? What about global markets? Plunge protection teams warming up?

    This is the beginning of the end.

      • Yoshua says:

        Bat flu or bioweapon?

        Do bats or aliens come out from the bodies?

        4500 confirmed cases
        30000 suspected cases

        • Dennis L. says:

          Bit of humor, bit of seriousness:
          Yoshua:
          Let us assume the following:
          1. This virus came out of some lab with someone or some group playing games with DNA or RNA for other than altruistic reasons.
          2. Let us assume there is a creator who has taken billions, and billions of years to get us this far.
          Is it fair to assume he/she/it will be more than a bit displeased with the group that tampered with the code of life?

          I have not followed up in other than a cursory manner, but it appears the genetic sequence is not random but has recurring patterns which imply some sort of design – we do not make anything in the modern, industrial world without some sort of plans, most very detailed, it is consistent with experience.

          Someone in this case would have been screwing around with the plans, that could be a very uncomfortable place to be when the metaphorical father returns home.

          Dennis L.

          • 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.
            Gail Tverberg says:

            I think that the creator is in charge, even with respect to the person in the lab, making the virus for other than altruistic reasons. We don’t live in a random world. We don’t understand the whys. At best, we can figure out the hows.

    • 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.
      Gail Tverberg says:

      This is crazy overreaction. We can’t stop the virus, but we can collapse the economy trying to stop it.

    • It’s worth adding that Hong Kong is already in recession thanks to the ongoing civil unrest there, so this lockdown will be particularly painful on top.

      I saw that rioters have already firebombed a housing complex in Hong Kong on learning it was about to be turned into a coronavirus quarantine zone in a convergence of the two crises.

      Perhaps ultimately fear of the virus will keep protesters at home – if we are searching hard for silver linings in all this!”

      • 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.
        Gail Tverberg says:

        I hadn’t thought about the coronavirus keeping people home. Almost anything is possible.

    • 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.
      Gail Tverberg says:

      I don’t think that this advice is really adequate to prevent the disease from spreading around the world. If might somewhat protect you, as an individual, but it will mostly delay when you will get it, because the disease will continue to circulate.

      I looked up the likelihood of catching a contagious illness like the flu was on a plane. According to the article,

      Researchers found that, for people seated within a seat or two to the side, or within one row forward or backward, the chances of catching a contagious virus were about 80%. Outside of that immediate radius from a sick passenger, however, the risk was much lower—only about 3%.

      Hertzberg says it’s a myth that recirculated air in planes make it more likely for viruses to spread through an entire cabin. “Most modern planes infuse fresh air at a very high rate,” she says, “actually more often than in your typical modern office building.”

      If you want to stop a very communicable disease, it is necessary to do more than reduce the chance you will catch it. You really need to stop all instances of it. Washing your hands and doing a few other things will help a bit to reduce the chance of catching diseases in general, but it doesn’t stop the disease.

  10. Yoshua says:

    The WTI USD 52 is right on the support line from the lows of 2016 and 2018 ( not shown on this graph).

    It will bounce from here. The end is not nigh.

    https://pbs.twimg.com/media/EPPpWILWAAY_HFC?format=png&name=large

    • 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.
      Gail Tverberg says:

      Perhaps!

    • worldofhanumanotg
      worldofhanumanotg says:

      The so far very correct theory of ever decreasing oil price (bust) might continue to hold for a while, especially during time of recession, depression, GFC_ver_xy etc. In the meantime temporary bursts up are welcomed as well, if you are shorting this stuff..
      Now where is the ultimate hell frozen over last barrier level? At $20-30 per barrel ?

      Or another possibility after decade+ the theory no longer fits reality, perhaps global govs over reach into everything economy would play into this eventually as well, setting up “permanent” rescue/snake/boundary floor for it. Sounds improbable now, but today’s reality of CBs owing share of every market (and %increasing to %%) was far fetched not long ago as well..

    • “It will bounce from here. The end is not nigh.”

      in normal circumstances, a bounce is probable…

      but the governmental/business/consumer reaction to the Wuhan Black Swan (not the effects of the virus itself) could cause huge economic disruptions…

      I predict WTI below 50 very soon…

      after that, the end is not nigh…

      if things calm down (some infected persons die, but most don’t) then the situation could normalize and oil prices could revert to the mean…

      it’s all quite good entertainment…

      • denial says:

        When the collapse happens the rich will be scapegoated much like the jews of Germany…..it is not their fault… but I for one may look the other way and many people I have talked to feel the same……anger has to go somewhere and the wealthy have been so blasé about everything for so long…..I hear the drumbeat growing louder and louder….most people on here don’t as they are “protected” and self assured that they will be fine

        • worldofhanumanotg
          worldofhanumanotg says:

          Well, that’s debatable, firstly what is “rich” – hard to quantify.

          The very top tier guys have either their own doom bunkers or direct access to such gov facilities. Some or most of them will be eventually toppled – replaced by their agile security detail “lieutenants” and various even more unscrupulous characters of their own entourage. That’s what both recent and ancient history is teaching us about such events and their inner dynamics. The ordinary agitated mob usually can’t reach this caste for quick revenge.

          So, who is the “next lesser rich” – more handily around, yes various pseudo upper middle classes with ostentatious cars, grotesque art or unpractical furniture, and other crap on display. Not much to loot there anyway.. it’s then more or less about resorting to vandalizing and having street corner fire fest thing..

        • 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.
          Gail Tverberg says:

          If the rich get access to antiviral drugs and others do not, this will be a big problem, I expect.

    • 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.
      Gail Tverberg says:

      Ninety-thousand is still less than 1% of the 11 million population of Wuhan.

      As I mentioned above, it is the death rate (3%, or something lower or higher) that is important. A lower percentage (with higher denominator) is better.

      • Chrome Mags says:

        Aren’t we forgetting the disruption this might cause to commerce? At 90,000 with coronavirus mostly in Wuhan, that city is shut down. If that’s the response wherever it spreads, that’s going to slow the world economy to a crawl with defaults on loans occurring as a result.

        • 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.
          Gail Tverberg says:

          No kidding! I am trying to write a post related to the virus now.

          • worldofhanumanotg
            worldofhanumanotg says:

            How this is going to end up after-all?
            Here some broadly bracketed options to keep it simple:

            1/ Mostly kept to China and fizzling out at thousands to few k-dozens dead
            2/ More or less Spanish flue like impact, i.e. ~100M dead globally max
            3/ True pandemonium level in ~B causalities ala historic plague (~40% pop delete)

            You see, the economic and other specific outcomes are vastly different for each scenario. In case of #3 let me congratulate to survivors for their “newly acquired” nice vast acreage.. It won’t be easy but certainly very different with suddenly so few peoplez around.

            • 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.
              Gail Tverberg says:

              I think it ends up being a communicable disease like measles that circulates for a long time, killing mostly the elderly, if they haven’t had the disease when they were young and healthy. Parents will take their children to parties for their children to catch the disease while they are still young and healthy.

              That is, if the economy doesn’t come down first, primarily from our reaction to the new disease. If the Wuhan Virus affects one-third of the population, as the Spanish Flu did, and 3% of those 1/3 die, the world population will decline by about 1%. This comes close to offsetting the natural increase in population for one year. Not a whole lot of impact on population.

          • Chrome Mags says:

            “I am trying to write a post related to the virus now.”

            Thanks, Gail, and looking forward to it. The official numbers so far are 106 out of 4515 infections per the following linked article:

            https://www.cnbc.com/2020/01/28/cdc-tells-travelers-to-avoid-china-in-expanded-travel-warning-as-coronavirus-spreads.html

            That works out to a fatality rate so far of .023 or 2.3%, X’s 8 billion = 184 million, but that’s if it goes global and there is no vaccine. But of course if it goes global the biggest problem will be its effect on the economy. Can’t have everybody hunkered down and have much in the way of monetary velocity.

            https://www.youtube.com/watch?v=pTWZPGzvJIo&t=291s

            That’s a video by Chris Martenson on pandemic preparation. He seems quite alarmed by it and has a medical education. Get this, which is in his video, Hong Kong medical experts saying their probably are 10’s of thousands of cases. They estimate 44,000 cases with 25,000 likely to be sick, which is about 1/2 of what the whistleblower nurse was claiming. So maybe she was a bit high, but even if that number is correct, then this is a full blown pandemic, right, unless someone has information to counter that assertion.

            • Chrome Mags says:

              Or maybe I should say, it’s likely to become a pandemic, provided those numbers are correct and the other continents have already been seeded by those sick with the virus.

            • Chrome Mags says:

              Correction: Based on numbers above, likely to become a pandemic, due to people without symptoms spreading the virus on other continents.

              Meanwhile of course the big mainstream news is about the impeachment or the Grammy’s.

            • 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.
              Gail Tverberg says:

              I don’t think it makes sense to use 100% of 8 billion as your base. The virus never hits everyone. The Spanish flu hit 30% of the total population. This was in two rounds, according to Chris Martenson.

              I think Chris is too alarmist on this one. There is really nothing we can do to fix the problem, apart from taking a few commonsense precautions when the virus hits our location. Also we need to make certain that we are in as good health as possible ourselves. It will spread, whether we like it or not.

  11. https://www.eia.gov/international/data/world#/?pa=0000000000000000000000000000000000vg&tl_id=5-A&c=00000000000000000000000000000000000000000000000001&ct=1&f=A&s=INTL.57-1-WORL-TBPD.A&cy=2015&start=1980&end=2015&ug=g&tl_type=p&vs=INTL.53-1-WORL-TBPD.A&ord=CR&v=H&vo=0&so=0&io=0

    Quite a cumbersome URL, but if you click open “Petroleum and Other Liquids”, it yields links for tables of monthly, quarterly, or annual world production — it indicates that world “peak oil” occurred in about November, 2018 — you can drag the table back into the past, with the arrows at the bottom.

    • DJ says:

      I think we first need a bigger drop and a few more years to call PO. Maybe a global recession could seal the deal quickly?

    • 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.
      Gail Tverberg says:

      That is pretty much the same data I have been saying to say that the peak in world oil production seems to have been during the fourth quarter of 2018, based on what we can see to date. The same data can be displayed in quarterly form.

      In order to get production higher, we would need higher prices, I expect. I have a hard time seeing prices rising enough higher to get production up.

  12. Yoshua says:

    According to the mayor of Wuhan 5 million people left before the quarantine was imposed.

    If these numbers below are correct then 60 million will be infected within a month and 1 million will be dead.

    https://pbs.twimg.com/media/EPKz6ZMWkAAjzYz?format=png&name=900×900

    • 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.
      Gail Tverberg says:

      I image that quite a few people who left Wuhan before the quarantine did not have the virus.

    • “According to the mayor of Wuhan 5 million people left before the quarantine was imposed.”

      if 1% were infected (and probably yet without symptoms) then that would be 50,000 infected persons traveling to some other city or region perhaps to stay with relatives for a while until the outbreak in Wuhan was downgraded…

      thus probably 100% ensuring that this will spread to almost every city and town in China…

      • Chrome Mags says:

        https://www.nytimes.com/2020/01/26/world/china-coronavirus.html

        Here’s the latest folks: The death toll rises to at least 80, and Wuhan has 1,000 more cases, totaling 3,000.

        Only yesterday the total deaths was 56 with 2,000 infected, so the numbers are going up dramatically, especially for those infected. But also 24 more dead in one day is a rather big statistical rise in 1 day.

        What’s fascinating is the total lack of information coming out about possible ways of transmission. All we hear is we don’t know yet if there is human to human transmission. Well what do they think is happening if it’s not human to human? Human to pet dog to pet cat to human? I think it’s more likely they don’t want to say the obvious – since this virus is in the same family as the common cold, it’s being transmitted just as easily as a cold. If that’s true, it’s unlikely they will be able to stop it from spreading.

        • I agree…

          definitely every continent (come on, Antarctica doesn’t count), probably every country, and then “everyone” gets it in the next few years…

          if the 3% mortality rate holds steady, that’s 200+ million dead…

          NOT a prediction, just fun with numbers…

          • 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.
            Gail Tverberg says:

            If everyone got the flu, and the mortality rate was about 3%, the number of dead would be approximately the same percentage of world population as died from the Spanish Flu in 1918-1919. The number dead then has been given at 50 million (or perhaps more). World population seems to have been about 1.8 billion, implying that about 2.8% of world population died. Transportation was a lot less good back then. It seems like some people would have been spared, simply because they did not have contact with the outside world.

        • Chrome Mags says:

          https://nypost.com/2020/01/26/coronavirus-whistleblower-nurse-says-china-has-90000-sick/

          “The coronavirus now has a whistleblower — a nurse in Wuhan who insists in a shocking online video that close to 90,000 people in China have the disease, far more than the 1,975 reported by officials.”

          90,000 sick in Wuhan?!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! That better not be true, because if it is we’re all in a whole lot of trouble.

          • Chrome Mags says:

            It starts to make sense now what the mayor said, that 5 million left the city of Wuhan before the lock down.

            • Chrome Mags says:

              It also makes sense now the hospital they’re trying to build in a very short period of time. Also, that Prez Li said there would be many more sick, suggesting he already knew there were many more sick. Why doesn’t China ever come clean?

          • 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.
            Gail Tverberg says:

            The death rate is perhaps more important than the number sick.

            If the number ill is very much higher, but the number who have died is close to correct, then the death rate is much lower than reported. If the death rate is very much lower, and the virus does not mutate, the situation is much better than otherwise.

        • Robert Firth says:

          The reports I’m reading today say that many health experts are recommending a 14 day quarantine for people arriving from infected areas (ie from Asia, Europe, or North America). Leaving aside the objection that this is completely unrealistic, it implies that they believe these people may be infectious but asymptomatic for 10 to 12 days. If that is so, then there is no hope of containing the disease, and we do indeed have a global pandemic on our hands. The critical number is then indeed the death rate, which so far is unknown, because we can count the dead today, but how many now infected will die tomorrow?

          • 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.
            Gail Tverberg says:

            I agree. I expect the 3% estimate of the death rate is overstated because many mild cases go uncounted. The fear factor is high because of all of the publicity about the deaths.

      • 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.
        Gail Tverberg says:

        A look at the map of China shows that the virus seems to be spreading everywhere.

  13. Best Party Like it’s lights out after the decade of the 2020s….
    Peak Permian Is Approaching Faster Than You Think
    (Bloomberg Opinion) — The heart of America’s oil renaissance is found in the Permian basin, which is showing signs of maturing fast. And for shale basins, that’s not a good thing. If the rich petroleum region wanes, U.S. oil independence will remain elusive and the OPEC cartel may finally see off its greatest threat.
    The Permian, spread across west Texas and southeast New Mexico, yields more than a third of all U.S. oil production and it has contributed about two-thirds of the past three years’ worth of growth. Its boom has allowed America to export more than 3 million barrels a day of crude on a regular basis since May — more than every OPEC country except Saudi Arabia and Iraq. But the U.S. still imports twice that volume. A slowdown in the Permian would see that gap widen again.
    Output from the region, where oil was first discovered by W.H. Abrams a century ago with a well that produced just 10 barrels a day, is hitting new heights. Production has continued to grow in recent months despite a drop in the number of rigs drilling in the basin, which fell by 17% last year, according to data from the Energy Information Administration, as the chart above shows. But that cannot last forever
    https://finance.yahoo.com/news/peak-permian-approaching-faster-think-070036730.html

    And ClubOrlov wrote….

    Back in my halcyon days of youth I went to some anti-war demonstrations, not to protest against the first Gulf War, since I could already see that such protest would turn out to be futile, but to pick up women. Sure, I shouted “No war for oil!” as loud as I could, but that was just my mating call. Even in those salad days of yore I was already smart enough to know that “No war for oil!” was a spectacularly stupid thing for us to be shouting. “We want to die!” would have been equally dumb. What would North Americans, with their own reserves badly depleted, but with their car-dependent suburban sprawl still sprawling, do without oil stolen from some unlucky country? Crawl slowly toward the nearest gas station and expire from exhaustion along the way? But we aren’t dead just yet, so let’s crawl back down the memory lane and see how this situation came about, then crawl back to see where we are today.

    Once upon a time the USA was a remarkably oily nation, with prolific oil wells such as the renowned Spindletop in West Texas. Juvenile USAnians competed against each other on who could burn the most rubber while getting the shittiest gas mileage. I caught the tail end of that failed experiment: my first car was a monstrous, hulking land yacht: a ’68 Chevrolet Caprice. In 1970 a phenomenon called Peak Oil arrived in the US, oil production fell and drastic steps became necessary. One of them was to convert from a “take our dollars or our gold” scheme to a “take our dollars or else” scheme: if you don’t like dollars, we also have bombs. Another was to start going directly after the oil wherever in the world it is found and trying to take it without paying for it. But all things, good and bad, must come to an end eventually, and free oil is no exception. In fact, what we may be witnessing at the moment is a phenomenon I wish to call Peak Free Oil

    http://cluborlov.blogspot.com/

    Yes, the winds are a changing…..will you be blown away?

    • Dennis L. says:

      Doing my best not to make an ad hominem attack.

      Jordan Peterson often tells the lobster story, sort of king of the hill. Choosing a wife is the second most important decision of one’s life right behind choosing a career as the career determines what kind of wife one can attract – sorry guys, they judge for a number of things and living on a leaky, humid sail boat is not on their list. That is a metaphor, if the living arrangement is that poor, perhaps the rest of the advice should not be taken too seriously, particularly his ideas on dating; he was representing himself as something he was not inorder to…

      As for the oil, it was never free, more went broke than made fortunes and it took Rockefeller to bring some order into the market. Someday it will run out, but this story has been around since the sixties. With regard to our peak, we adjusted, pretty well based on the number of people who wish to move here.

      There is a recurring leitmotif here that things are always getting worse, that whatever we have we don’t deserve. We are still a remarkable nation, we have had some hard times, the period from before the Civil war until the early twentieth century was not particularly easy, three US presidents were assassinated in those forty or so years; today’s discourse and disagreements are not new.

      As for your last question, I bend pretty good, I do not break; as things change I hope to make myself useful in some way to those around me perhaps in ways other than currently. I do grumble a lot when things change, but don’t we all?

      Dennis L.

      • worldofhanumanotg
        worldofhanumanotg says:

        Well US chlorinated chickens are certainly a notch above mutant bat disease from “wet food market” spreading wildly in China now. But that doesn’t mean there should not exist even higher standards above that mentioned industrial chicken level..

        • Tim Groves – Japan
          Tim Groves says:

          I guess the answer could be non-industrial free-range chickens, each with their own name and health care plan. For myself, I’d be useless as a chicken farmer. I couldn’t bear the thought of ringing their little necks. Sentimental animal tales and BAU have fairly ruined me.

          • Xabier says:

            Never give ’em names…..

            A great -grandmother of mine rather shocked people with the careless ease with which she would kill a chicken or rabbit: a tough old bird herself, she survived the 1918 Influenza wrapped in blankets in front of a fire.

      • Think one needs to take into context what Orvol meant by “free”.
        From what I read he was referring to basically the American motoring pubic .
        Up to now they (WE) have been insulated by the true cost(s).
        Reality has not struck yet when the product is not available for consumption at any dollar price or means.
        I’m at the age when a gallon of Petro sold for 29.9 cents and vaguely as a child 24.9 cents!
        That’s about 2 bucks in today’s money.
        I can find gasoline here in South Florida for about $2.50 a gallon.
        So, not much has changed since that “free” time for the American motorist.
        How much longer can it last? Well, hopefully for another decade….I’ll turn 72 years old and not care. Do I think it will? Judging from the capital expenditures in Fossil Fuel based industries….Yes, I do, but some folks will be cut loose from BAU nipple….😭
        In the process, humanity may just destroy themselves.
        https://m.youtube.com/watch?v=AHz-zZoBnbc

        Those days are long gone….

  14. Duncan Idaho says:

    #2. Actuaries

    – Divorce rate: 5.7% (85.3% lower than national rate)
    – Separation rate: 0.6%
    – Job employment: 20,760

    • 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.
      Gail Tverberg says:

      After some looking, I found this recent reference:

      https://thestacker.com/stories/2413/jobs-lowest-divorce-rates#1

      https://thestacker.com/stories/2413/jobs-lowest-divorce-rates#50

      I have known a few actuaries who got divorced.

      • 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.
        Gail Tverberg says:

        I noticed this 2017 study as well.
        https://www.businessinsider.com/10-jobs-with-the-highest-divorce-rates-and-10-with-the-lowest-2017-10

        It put actuaries as lowest (of a smaller total group of professions), at a divorce rate of 17%. I can believe the 17% divorce rate more easily than a 5.7% divorce rate. Some of these studies look at a shorter period, such as the first ten years after marriage.

  15. I think i remember Gail having a post out recently – or was it just a comment? – about how commodity- prices were moving together. I cant find the source or the figure, however?

    • I found this figure from EIA https://www.eia.gov/todayinenergy/detail.php?id=42395
      A bit suprising to read that many commodity prices – apart from natural gas – actually rose in 2019?
      2 considerations: the prices are not adjusted for inflation i assume + what would a longer timeseries reveal?

      • 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.
        Gail Tverberg says:

        Looking at month to month variations in prices (as in the EIA data) has way too much noise in it to see trends. It is longer-term trends over which prices move together. Farmers tend to be losing money at the same time that miners are losing money.

        Precious metals are sort of a special case. They are often hoarded. The hope is that they will go in a different direction than other commodities, and thus provide a way for people to save up for hard times ahead.

    • 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.
      Gail Tverberg says:

      The issue is that over the long run, the various commodity price tend to follow the same general pattern. Over the short run, individual commodities follow different patterns, based on scarcity and demand for that particular commodity. So the situation among the commodities is “similar,” not the “same.” Other people recognize this issue. Bloomberg has an index that they call the Bloomberg Commodity Index.

      I remember talking about this issue particularly in 2016 at that year’s Biophysical Economics Conference. This is a link to the write-up of the talk. https://ourfiniteworld.com/2016/07/06/energy-limits-why-we-see-rising-wealth-disparity-and-low-prices/

      I have mentioned the issue several times since.

  16. Hubbs says:

    Don’t blink. It still may only last for 2 seconds this time.
    https://www.newscientist.com/article/2231341-uk-nuclear-fusion-reactor-will-fire-up-for-the-first-time-in-23-years/

    In the meantime, this article might explain some of the irregularities of the Corona virus story. I mean, snake and bat recombination?
    https://www.zerohedge.com/geopolitical/did-china-steal-coronavirus-canada-and-weaponize-it

    • another story in a long series of stories about a certain kind of multi-billion dollar nuclear reactor that doesn’t produce any electricity…

      UK tax dollars at work?

    • 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.
      Gail Tverberg says:

      The zero hedge article you link to is called, Did China Steal the Coronavirus from Canada and weaponize it?

      The article talks about a husband and wife team from China who worked in Canada until July 19, 2019, at the National Microbiology Laboratory. At that time, they were kicked out because of allegations that they had been stealing virus samples and sending them to China between 2006 and 2018.

      Meanwhile, China seems to be working on weaponizing viruses, for use in warfare, at several locations in China (perhaps 40 different locations). One of these location is in Wuhan, at the same facility where they previously had difficulty with the SARS virus escaping.

      Unfortunately, these allegations of China intentionally working on developing bioweapons are relatively easy to believe. It will not help US – China relations if this story is found to be true. Of course, the danger is that China’s own people will be hurt most by such a virus, if it gets out and there is no vaccine for it.

    • Xabier says:

      Unfortunately, the tech investors want to be the new feudal lords, and will force so-called ‘smartness’ on us, in very possible aspect of our lives, whether it is wise or not.

      The lack of resilience in ‘smart’ structures is obvious to a blind man, but is of no concern to them.

      Self-conceit and money-making nearly always trump good sense.

      • Robert Firth says:

        Xabier, one of my simple case studies on safety critical systems concerned a lift (or elevator) built in, of all places, a major US university. It is well known that when a class lets out, the lifts tend to get overloaded, so they made the lifts “smart”. The official maximum load was W, say. So they specified that the main lift cables would be able to support 1.5W. They then added a safety feature, an emergency braking system, that was specified as being able to cope with … wait for it … 1.25W.

        Of course, one day the students overloaded the lift, the cable broke, and the emergency brake failed about half a second later. Splat! Yes, a blind man and a fool could have told them this would not work.

        A much worse case was built into the Airbus. This beast is computer controlled, with lots of automatic safety features. For example, if the computer thought the plane was too low, it would order it to climb by (1) lifting the nose, and (2) increasing engine power. But those oh so smart techies forgot something: the nose lifts immediately, but the engines need 5 to 8 seconds to power up fully. So the first time this feature was triggered, the plane stalled. And a stall at low altitude means … Splat!

    • 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.
      Gail Tverberg says:

      The problem is that people are trying to make money off any of these ideas.

      Cheapest is best in many ways, but it doesn’t contribute the most to wages and profits. So it tends to get left out as a choice. It is only when it is not possible to find enough tax dollars that people try a cheaper, more natural approach.

      • Artleads says:

        So it appears that more than one style of economy is called for?

        “The US has the most resources per capita, in terms of farmland and energy products. This allows the US to produce relatively more foods, bigger homes and more nicely paved roads than other countries. Citizens can have more changes of clothes than in most other countries.”

        It’s great that the US has these advantages. But we can’t rest on our laurels. There are more people all the time, relative to finite land. I get the sense that food production is increasing in cities, and that city planning is slowing wising up to the need to empower this trend.

        On finite land with more people houses need to get smaller rather than bigger.

        On finite land with more people, waste going into landfills has to go elsewhere.

        On finite land with more people, and water tables lowering, the maximum of rain water or waste water needs to percolate into the ground where it it is generated.

        Although major roads need to be paved and maintained, private driveways don’t need to be paved.

        The system is very complex and diverse, meaning that some things can be rigid and others flexible.

        Not being at the top of consumption might have advantages, since it could take pressure off of having to maintain the number one position all the time But it needs to stay up there among the top countries.

        • 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.
          Gail Tverberg says:

          World GDP calculations are usually shown based on combining growth rates of countries, based on a weighing scheme that depends on Purchasing Power Parity (PPP) GDP. On a PPP basis, China GDP far exceeds the US (2018 GDP – China 25.4 Trillion PPP dollars; USA $20.5 Trillion PPP dollars). I don’t know what is included in these PPP calculations. Clearly food, housing, and manufacturing are cheaper on a PPP basis. Perhaps insurance, lawyers fees, and medical care is much cheaper as well.

          • Artleads says:

            I imagine that China (per capita) is much more connected to third world economies than the US. (Like being no more than one generation away from a hardscrabble rural lifestyle.) If so, their entire system would have third word, inexpensive connections, making it less costly over all?

          • Artleads says:

            A first world system connected to a third world system is not so hard to conceive of or put into practice. Wasn’t early to medium term job offshoring a crude version of that? If “insurance, lawyers fees, and medical care is much cheaper” in poorer parts of your system, could that raise your PPP? And when you say “growth rates of countries”, is that growth of population or size of economy?

      • Xabier says:

        Exactly, Gail.

        It’s like the traffic congestion problem here: there is a sensible – and truly eco-friendly – solution costing a few £ millions,and the government/University sponsored fake-‘Green’ solution costing £220 millions, and we know which is going to go ahead.

        Much more for all the parties involved to feed off.

        Also, there is the propaganda value for attracting inward investment and business relocation: ‘Look how much we spent on infrastructure!’

        • «It’s like the traffic congestion problem here: there is a sensible – and truly eco-friendly – solution costing a few £ millions,and the government/University sponsored fake-‘Green’ solution costing £220 millions, and we know which is going to go ahead»
          Would be nice to know which options you are talking about?

  17. https://www.americanexperiment.org/2019/06/every-wind-turbine-solar-panel-built-today-will-scrap-metal-2050/

    «Here today, scrap metal by 2050. That’s the rough life of wind turbines and solar panels, which only have useful lifetimes of 20 and 30 years, respectively, according to the National Renewable Energy Laboratory (NREL) and Energy Sage….

    That’s a lot of money to spend on part-time energy sources that do not last as long as coal, natural gas, or nuclear plants, which can run for 40 to 80 years.»
    Do anyone, Gail or someone else, have a reference/source for the average lifespan of powerplants?

    • 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.
      Gail Tverberg says:

      I have heard the 40 to 80 year average lifespan of plants before, but I have not seen a reference for it.

      Wind turbines seem to get upgrades (“repowering”) so they can qualify for more tax credits. Their lifespan, to me, seems to be closely related to how long production can be subsidized. When there aren’t enough subsidies, the next time the wind turbine breaks, it isn’t repaired. This can be far less than 20 years. https://www.eia.gov/todayinenergy/detail.php?id=33632

      This is the age distribution of coal plans in the US, as of December 2016. The average age was 39 years.

      https://www.eia.gov/todayinenergy/images/2017.04.17/chart2.png

      As of December 2016, the average age of hydroelectric plants was 64 years.

      https://www.eia.gov/todayinenergy/images/2017.03.13/main.png

      As of December 2016, the average age of US nuclear plants was 36 years.

      https://www.eia.gov/todayinenergy/images/2017.04.27/main.png

      • An additional thought is that Florida Power and Light has received permits to operate their 2 nuclear power plants to 80 years(second 20 year extension). Which other plants are also investigating.

        Economics tend to make the decision, retire early or extend life.

        T2M

        • 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.
          Gail Tverberg says:

          Good point!

        • worldofhanumanotg
          worldofhanumanotg says:

          In terms of NPPs what they usually update is the non (or low exposure) nuclear part of the site, e.g. control room IT, the steam turbine section, the HV output station, or the other various supporting subsystems etc.. That way you are gaining both operational lifetime extension as well as few% of efficiency gains at each update cycle..

      • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
        doomphd says:

        maybe i’m slightly color blind, but i find it hard to distinguish the color scheme in those charts.

        • 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.
          Gail Tverberg says:

          These charts aren’t easy to read.

          The top one is only coal, broken into three different kinds of coal. There was another chart on the page I got the chart from, which showed how coal fit in with the rest:

          https://www.eia.gov/todayinenergy/images/2017.04.17/main.png

          The charts that try to emphasize one particular form of generation do it by making that form of generation darker. This is the chart that shows newly built natural gas generation by year.

          https://www.eia.gov/todayinenergy/images/2017.04.20/main.png

          Gas generating capacity increased greatly in the early 2000s, when gas seemed to be cheap and the US seemed to have growing available supply. Also, new techniques make gas fired generation more efficient (more electricity relative to gas burned). Even with this, you can see that there are still gas generating units from the late 1950s and the 1960s that are still operating.

          Building generating units seems to go through “fads.” There was hydroelectric, then coal, then nuclear, then natural gas, then wind, finally solar.

          • doomphd – Honolulu – I really hold a doctor of philosophy (phd) in geological sciences and study pretty doomy topics like giant landslides, volcanic eruptions and megatsunamis.
            doomphd says:

            Thanks, Gail.

      • Robert Firth says:

        Gail, the oldest windmill in the Netherlands was built in about 1450, and it is still working. By contrast, the average offshore windmill has a half life of about 8 years (that is, after 8 years half of them will no longer work).

        Some years ago, I gave a conference talk in which I contrasted “brute force” technology with “finesse” technology; the former working against Nature at great expense, and the latter working with her more cheaply, more effectively, and far more reliably. And indeed, one of my examples was the windmill.

        It is not that we have much to learn; it is rather that too much of what we once knew has been forgotten.

        • 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.
          Gail Tverberg says:

          I am afraid you are right. I had the opportunity to visit the inside of one of these old windmills in Netherlands, when my husband and I visited there a few years ago. The operator and his family lived inside the windmill (small quarters). The share of the available wind power that was used was determined by cloths put over the blades (which were otherwise an open grid, which the wind could flow through). The operator added these cloths and removed them, as needed. There was also a signal system between the windmills, to tell nearby windmills when to add or remove cloths, depending how high the water was rising and the strength of the winds.

          The operator earned only part of his income from controlling the windmill. In his spare time, he and his family also raised crops nearby.

  18. Chrome Mags says:

    https://www.bbc.com/news/world-asia-china-51249208

    “What is the coronavirus, and what does it do?
    A coronavirus is a family of viruses which include the COMMON COLD” – capitalized to emphasize just how easy it is for a cold to spread. “But this virus has never been seen before, so it’s been called 2019-nCov, for “novel coronavirus”.

    “The coronavirus has killed at least 41 people and infected some 1,400 since its discovery in the city of Wuhan.” Just yesterday the count was 1,300, so it went up 100 overnight. That’s fast!

    • Chrome Mags says:

      https://www.youtube.com/watch?v=lg925coC5sc

      The Brit on this video news interview says nurses and doctors in Wuhan started wearing goggles because they were being infected through their eyes. Presumably coronavirus is in the air near those sick with it from coughing and it’s entering the eyes. That sounds very communicable.

    • CTG says:

      The economic impact of a pandemic will be much more devastating to every part of the connected and civilized world than the virus itself. The virus itself is not an extinction level event but the collapse of worldwide supply chain is.

      Just assuming that flights in/out of China is suspended. What are the ramifications?

      • 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.
        Gail Tverberg says:

        Right.

        If the flights in and out of China were suspended, a lot of parts used in manufactured goods would likely disappear. A lot of flights are cargo flights, or cargo on passenger flights, I expect. Perhaps some would eventually make it over by boat.

        There would be an issue of airlines going bankrupt, and airlines defaulting on their debt. Chinese banks would likely have even more debt problems than they do now.

        From an industrial point of view, China is the biggest economy in the world.

        • Chrome Mags says:

          https://www.cnet.com/how-to/coronavirus-death-toll-rises-to-56-cases-approach-2000-everything-we-know/

          “Coronavirus death toll rises to 56, cases approach 2,000:”

          “Yesterday those numbers were 41 & 1300.

          “There are now more than 60 patients under investigation for possible infection in over 20 US states.”

          “Coronaviruses belong to a family known as Coronaviridae, and under an electron microscope they look like spiked rings. They’re named for these spikes, which form a halo around their viral envelope.”

          “This work is really interesting, but when we compare the genetic sequence of this new virus with all other known coronaviruses, all of its closest relatives have origins in mammals, specifically bats.”

          • perhaps a lesson learned… don’t eat undercooked bats…

            I mean, I never have…

            • worldofhanumanotg
              worldofhanumanotg says:

              Yep, over exhausted Chinese assembly line worker fixing quick meal, well, in fact preparing “bat stew” in slow cooker on ~75watts. Lets save some pennies on energy and preserve those juicy nutrients of flying mini mammals (likely cage farmed in their own poop in the first place), what could go wrong, hah. Unfortunately and eventually it results in aggregate $Ts damage over the years as China folds prematurely (bellow its peak potential)..

              Human efficiency for the win.

            • I’ve always said:

              ‘Bugs rule’

          • worldofhanumanotg
            worldofhanumanotg says:

            Good Dr. Ken B. recommended few days on YT the following:

            ” 1) Stay Home, 2) Discourage/Deny Visitors, 3) Wear a Mask (M95/K2 Quality Medical Mask) 4) Wrap-around Safety Glasses, 5) Gloves, 6) Wash Hands Often, 7) Avoid Crowds/People, 8) Avoid Clinics/Hospitals. ”

            And btw even the upscale respiratory type of mask he linked on Amazon is out of stock now..

            • worldofhanumanotg
              worldofhanumanotg says:

              He who made the transcript made a typo as the Dr. talked about and linked “N95” standard mask..

            • worldofhanumanotg
              worldofhanumanotg says:

              Clearly just enough people (pre-)panicking everywhere, e.g. in Europe the respiratory masks bordering on usable i.e. perhaps filtering ~.5mikron dia sized corona viral bugs are already out of stock.. And these could be no good anyway, we don’t know yet the exact shape and properties of this one, although even optical lab equipment for less than .5mikron studies is supposedly available since early 2010s.. it has been supposedly updated worldwide after the ~2009 swine flue episode.

              Good luck and good night.

            • “… masks bordering on usable i.e. perhaps filtering ~.5mikron dia sized corona viral bugs are already out of stock.. And these could be no good anyway, we don’t know yet the exact shape and properties of this one…”

              okay, scientists out there, could a virus actually be floating on its own in the air or would one/lots/billions of them be within water vapor (expelled from an infected human body) as it floated through the air?

              I suspect a mask that could block water vapor would be helpful…

            • 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.
              Gail Tverberg says:

              Let’s stop all other manufacturing and only make face masks. Maybe we should add better protective wear for health care workers as well. I still ca’t imagine that it would stop the virus.

            • Robert Firth says:

              Do none of the above. Your last and best line of defence is your own immune system. If you avoid all disease, it will not develop properly. The common cold, or even the flu, has a very small chance of killing you, but it will greatly strengthen your immune system, so making the worse viruses less likely to kill you.

              One reason we Europeans are so resistant to disease is that we were exposed to a wide variety for a couple of thousand years. That is our genetic inheritance: trust it.

        • Artleads says:

          “From an industrial point of view, China is the biggest economy in the world.”

          I greatly appreciate this clarification. So how would you define the US economy by contrast?

          • 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.
            Gail Tverberg says:

            China is also the largest in terms of population, with India close behind and catching up.

            The US has the most resources per capita, in terms of farmland and energy products. This allows the US to produce relatively more foods, bigger homes and more nicely paved roads than other countries. Citizens can have more changes of clothes than in most other countries. Many of these things are not made in the US; they are purchased elsewhere thanks to the favorable exchange rate that the US has with other countries.

            The US is the country with the most high-priced specialty physicians (per capita and in total, I would guess). The US has a huge number of lawyers, again per capita and in total. It has a bigger insurance operation than most other places, because liability law suits allow bigger awards than other places.

            The US is at the bottom in terms of the share of the population involved in farming (1%). The US uses many more large machines to leverage the output of farmers.

            The US is not the country that uses the most energy per capita. There are a number of other countries ahead of it.

          • Merrifield says:

            Admitting that we don’t yet know all about the transmission rates/vehicles, even wearing a lower quality mask is a good thing as it reminds you not to touch your face, the eyes, nose and mouth all ports of entry for this thing.

  19. denial says:

    this virus will peter out and a month from now no one will be talking about it…..enough said….

    • It is most likely just another shot across the bows – a warning that the world’s self-regulating intelligence will not indefinitely tolerate the excesses of man.

      And it is an additional stressor on the global economy at a time when it could really do without one.

      But then predicting BAU is the safe and easy option.

    • Duncan Idaho says:

      SARS is gone for the moment (2004), but MERS is still around.
      Take your pick—

    • worldofhanumanotg
      worldofhanumanotg says:

      Some western msm outlets are already trying to present it as utter incompetence on the Chinese side, meaning the late coherent response, surprising out of stock of basic medical supplies in urban centers, and also pointing out some of the peculiar individual kind of reactions to the chaotic situation (aka throwing other people under the proverbial bus)..

      Could be all true, but seems a bit overplayed.
      One reporter made the point regarding the origins of the mutation unknown, and whatever, we all better know the Asians/Chinese eat anything that moves, incl. bats (flying mice), dogs, worms, ocean mammals, .. so that could be it (implying their fault), lolz.

      • Dennis L. says:

        This might be relevant:

        https://kfgo.com/news/articles/2020/jan/25/two-cases-of-coronavirus-suspected-in-minnesota/978344/

        Quote from above:
        “Health officials believe the coronavirus was first transmitted to humans from animals in a wet market in Wuhan where dead and live animals are sold. Live animals are commonly slaughtered in the market in front of customers.
        It’s reported the now-closed market would sell bamboo rats, wolf pups, hedgehogs, and snakes for human consumption. ”

        Perhaps as a huntergather one would want some myths about what not to eat, just saying.

        Dennis L.

        • worldofhanumanotg
          worldofhanumanotg says:

          OMG, thanks.
          Yes, rats-hedgehogs-bats are known to transmit pretty awful stuff..
          So if the vendors gradually cross contaminated tthat street market – well lot of wild things went out there.. sort of like in mad science lab on fast forward button.

        • Yoshua says:

          A guy from the U.S bought masks online to protect him self against the coronavirus.

          All was well until he saw that the masks came from Wuhan.

      • 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.
        Gail Tverberg says:

        If there is a long period before symptoms appear and a person is contagious during this period, it is not clear that there would have been anything China could have done. In fact, if people don’t necessarily have a fever with this, it is extraordinarily difficult to figure out who might have bought it and be passing it on.

        • Rodster says:

          I read that this virus is NOW transmittable even in the incubation period. Scary stuff if true because it could easily multiply and make it harder to track.

          • 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.
            Gail Tverberg says:

            If the virus can be transmitted during the incubation period, it is hard to believe that there is much that can be done to stop its spread.

            • Rodster says:

              China coronavirus ‘spreads before symptoms show’

              https://www.bbc.com/news/world-asia-china-51254523

            • 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.
              Gail Tverberg says:

              Rather than saying that fact that “the coronavirus spreads, even without symptoms” makes the illness “more difficult to stop,” I would say this issue makes it impossible to stop the illness. What do you test for?

            • 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.
              Gail Tverberg says:

              Actually, a 14 day quarantine for everyone who has been on a plane with someone who has recently been to China might stop the illness. But how is it possible to quarantine so many people for so long? How do the pilots and other staff members of planes earn a living, if they need to be in quarantine for 14 days every time they return to a country other than China?

            • Rodster says:

              Chris Martenson posted this commented on his website comapring the Spanish Flu and the Wuhan Coronavirus:

              just interviewed John Barry today who wrote the NYTimes best selling book on the Spanish Flu (“The Great Influenza: The Epic Story of the Deadliest Plague in History.”)

              He’s served on quite a few high level Influenza Preparedness committees.

              I asked him that very question.

              He said that the 1918 Spanish flu clocked in at around R0 = 1.8

              The most recent H1N1 seasonal flu was around 1.3

              But his unnamed world class infectious disease contact says this nCoV is somewhere between 2.5 and 3.5

              Based on the numbers we’re now seeing, the high end seems appropriate? Also, not to give the whole interview away, but he said there’s no chance of containing this one. None. The incubation period and the high R0 make it so.

            • 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.
              Gail Tverberg says:

              Thanks! I had sort of come to this conclusion myself. The issue is how do we react to something that we cannot fix. We may have some antiviral drugs, but I am sure the supply isn’t adequate for everyone.

            • Artleads says:

              I like your idea for total quarantine. So it would play havoc with companies, but it’s en route to playing havoc with companies any way. Treating it and funding it as though a nuclear bomb had gone off in the US (which there would be no choice but to deal with, whatever it would do to BAU). If the program started pointing to a result more dire than leaving the virus to spread at will the program could be stopped. You house all these people in abandoned military bases, and you dig down into emergency and volunteer means to keep it going for some months. Call it practice for when things get even more dire. I could see the commander in chief getting mileage in an election year out of this. “So voters, we are going to extremes to save your lives!”

  20. MUST CONSOOM! MORE BOOM BOOM! ZOOM ZAP BING BADDA BOOM!
    Man what a great movie can’t wait for Captain Generismo 654 coming out THIS SUMMER!

  21. Dennis L. says:

    As always, it is enjoyable to read comments and appreciate viewpoints from around the world; my concern is at times things are always assumed to be getting worse and becoming hopeless. So, what if this works?
    https://www.zerohedge.com/health/scientists-britain-may-have-just-accidentally-found-cure-cancer

    If it works, think of all the laboratories around the world that have been working in a different direction, now could that direction turn into a dead end? What happens to grant money? What happens to graduate student’s who have specialized in this one very small area? We like to cling to what we know, very difficult to change; unless of course, you as a researcher have a cancer that could be cured by this process then an open mind might be in order.

    Life is a funny voyage.

    Dennis L.

    • 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.
      Gail Tverberg says:

      Whether or not this is good news to the whole system depends on a lot of things:

      1. If this is implemented, does this lead to many more elderly people needing to obtain retirement benefits that the world economy cannot really afford? In a way, it would have more or less the opposite impact of the Wuhan flu?

      2. What would be the cost of the new treatment? Would it be reasonable?

      3. What wound happen to all of the world’s oncologists and the world’s surgeons, whose high incomes now depend on providing expensive oncology treatments? Would they simply need to find some other disease that they can supposedly cure?

      4. What would happen to the portion of the pharmaceutical industry that is devoted to the drugs to treat cancer? How would they repay their debt?

  22. Xabier says:

    Will this become a Korowicz Event which takes down important global hubs and cascades?

    • Yoshua says:

      What happens to global trade? Who wants to import Chinese goods?

    • 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.
      Gail Tverberg says:

      Perhaps if the virus mutates and kills off a lot of young people, it could directly become a Korowicz Event. If the virus mostly kills off 80 year old men, its direct effect won’t be great.

      The effort to stop the virus could have a very significant impact on the world economy, however. Closing down economic production from a major area of China would likely be a problem. Cutting off travel to and from China could be a problem. In a way, it might be the reaction that badly disturbs today’s system. If it was just left alone as another form of flu with a higher death rate (and not publicized) this effect theoretically wouldn’t be there.

      • Right. Kind of like sepsis for the global economy (when the immune system’s overreaction to an infection can cause death via multiple organ failure).

        • 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.
          Gail Tverberg says:

          Good point!

          We humans have become overconfident that we can solve all problems.

          There is another analogy too. Keeping all of the people who are over 80 and/or in very poor health alive and having many contacts within the community is sort of like keeping the deadwood in a forest. The deadwood helps forest fires to propagate. I would expect that Africa, with its small elderly population and a lesser conviction that medicine can solve all problems, would have much less of a problem with this virus.

      • Xabier says:

        Exactly. One might compare it to the innumerable premature – and agonizing, far worse than pneumonia – deaths caused by diesel pollution here in Europe over the last few years.

        Mild asthmatics became severe, and severe asthmatics died: the problem is easing as diesel vehicles come off the road, and still very few appreciate just what happened.

        Nicely covered up, and no one thought to stop driving as a result – zero disruption, and rather good for funeral directors.

        Even in the 16th century, when dealing with plagues, it was argued that the economic damage from restrictions and quarantines would be much worse than the increased death rate.

        (The life of St Carlo Borromeo (The Plague Saint) from that time is quite inspiring, by the way).

        Well, let’s see whether this one mutates in an unfavourable direction……

      • worldofhanumanotg
        worldofhanumanotg says:

        Not sure I overheard it correctly, China supposedly halted all in/out tourist transportation, i.e. on national level not only regionally for impacted provinces, well that could be few % of GDP down right there if lasting for months or full yr..

        • 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.
          Gail Tverberg says:

          Nearly all provinces were affected this morning (32 out of 34, IIRC), I would imagine that eventually there could be a travel ban, but I haven’t heard about one yet.

          The travel ban I heard about was from Taiwan. They have suspended their tours to China.

          There is a lot of vacation travel within China, too. This could affect China’s airline industry.

          we have heard that Shanghai’s Disneyworld is closed indefinitely.

  23. oil prices now infected by the coronavirus:

    https://www.cnbc.com/2020/01/24/coronavirus-fear-hits-oil-prices-drop-most-since-may.html

    as we fondly recall the 2019 highs of 66 for WTI and 75 for Brent, we can look on in amusement as the prices now are at their lows for 2020!

    WTI 54
    Brent 60

    the dead Iranian General fiasco never did push oil above those 2019 highs…

    the 6 to 7 % drop in prices in one week may not be repeated, but there is a strong possibility that this is a worst case scenario where the (un)expected 2020 global recession is now certain to be upgraded in severity, and this will push oil prices much lower…

    the Wuhan Black Swan has now appeared…

  24. Hubbs says:

    Building Johnny-come-lately hospitals! It’s madness. Just one infected person “escapes” and then yet another hospital will have to be built. This horse has long since left the barn. Like other viruses like Ebola, Spanish flu, SARS etc, it will not be a matter of whether they can build hospitals fast enough, but the effectiveness of quarantines. I have been thoroughly unimpressed by the effectiveness of any of these so-called vaccines, which basically are a high stakes gamble that it will be effective against the new year’s strain. Big pharma of course, is guaranteed to win no matter whether their predictions are right or wrong.

    Meanwhile, the usual interplay of host resistance (eg., cytokine storm hyperimmune response is what actually killed the young vigorous men in the 1918 flu in contrast to the usual old, very, young and immunocompromised), transmissibility, latency period before symptoms appear, rate of mutation, and plain old lethality will be the things to watch. A virus that is extremely contagious but only kills 1% of its victims still may be more deadly than a less contagious one that kills 50% of those it infects.

  25. Pingback: Expect low oil prices in 2020; tendency toward recession - Newzlab

  26. Rodster says:

    Recent reports suggest the coronavirus is being under reported. A recent twitter video shows corpses lying in a Wuhan hospital hallway. So expect the official 25 dead toll to rise if everyone is being told the truth or if the governments want to calm the population.

    A makeshift hospital is being constructed in Wuhan in 5 days to house a thousand patients. Which got me to thinking of how fossil fuels makes it all possible. A total of 35 diggers and 10 bulldozers were called in for the construction. People take for granted how energy, in this case fossil fuels makes this 1,000 bed hospital in 5 days, possible.

    • 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.
      Gail Tverberg says:

      The virus wouldn’t spread rapidly, if everyone were a hunter-gatherer, dealing with only a few people in the particular area. The more transportation and international travel, the farther and more quickly the virus will spread.

      • worldofhanumanotg
        worldofhanumanotg says:

        We can’t discount the possibility if it is going to be really serious that it was sort of “pushed button” by someone to launch serious bio weapon or depop program or at least threatened to show having possession of such capability..

        In disgusting selfish note, in any case that’s a bummer I wanted to import some gear this year from Asia. Even if it gets mildly serious also expect quality of production getting badly downwards, workers on all levels stressed out etc..

        • Chrome Mags says:

          https://www.nytimes.com/2020/01/24/world/asia/china-coronavirus.html

          “Fifteen more people have died in the city of Wuhan, the Hubei provincial capital and epicenter of the outbreak, the health authorities in Hubei said. The new figures, announced early Saturday, represented a nearly 60 percent jump from the previous death toll of 26.”

          “Nationwide, more than 400 new cases of the virus were diagnosed, officials said early Saturday, bringing the total number of confirmed cases in China to nearly 1,300.”

          In that article is a new map showing where cases are in China and they are suddenly all over the place. This is looking like it’s out of control and if its not a super spreader then how is it defined? This looks bad folks.

      • interguru
        Interguru says:

        Smallpox, brought by the Europeans at the beginning of the 16th century, spread rapidly among the American Indians. Estimates of kill-off are as high as 90%. This left the Americas open for settlement and exploitation. It was introduced inadvertently but I suspect had the Europeans known they would have done it deliberately.

        • Robert Firth says:

          Interguru, we did do it deliberately. There are trustworthy reports of the Europeans gifting the Indians with blankets for the winter: blankets taken from victims of smallpox. However, I do not feel guilty for the crimes of earlier generations: the dead pay all their debts by dying.

  27. Yoshua says:

    In Wuhan 2 million people have dropped offline.

    They probably left Wuhan before the quarantine was imposed and are now spreading the virus among New Lunar Holiday travelers.

    • 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.
      Gail Tverberg says:

      How is it possible to even keep the system going, without regular deliveries to an area with 30 million plus people and its industries?

      Do children continue to go to school? Do teachers continue to be paid? Do manufacturing businesses stay open? Do tourist attractions stay open? Who pays all the laid-off workers?

      Hunan is a major port city on the Yangtze River. Do port operations continue?

  28. “Half of Canadians are on the verge of insolvency, according to a survey on household debt levels in this country.

    “The latest MNP Consumer Debt Index published Monday shows 50 per cent of respondents said they’re within $200 of not being able to cover their monthly bills, and nearly an equal proportion of participants in the survey (49 per cent) said they aren’t confident in their ability to cover expenses without going deeper into debt.”

    https://www.bnnbloomberg.ca/50-of-canadians-face-insolvency-amid-debt-hopelessness-survey-1.1376463

    • “… growth was being crimped by a lack of demand from Australian consumers, who are burdened by debts that on average are more than 200% of household disposable income.”

      https://www.theguardian.com/australia-news/2020/jan/21/australian-economic-forecast-hit-by-bushfires-low-wage-rises-and-high-household-debt

      • 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.
        Gail Tverberg says:

        Once debt levels are this high, not much more can be added. If prices of homes fall, defaults are likely to rise. If Australia’s economy slows, more auto defaults seem likely as well. If China and India are not doing well, those countries will not want to buy Australia’s exports.

    • 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.
      Gail Tverberg says:

      An economy grows by technology making goods progressively cheaper, relative to disposable income. It seems like this has not been happening for a long time.

  29. “The incoming Bank of England governor has admitted that he is concerned about how ill-prepared the UK is for a prolonged fall in the stock market or house prices.

    “Andrew Bailey, chief executive of the Financial Conduct Authority, the City regulator, said that increased exposure to asset values had been accompanied by declining understanding of the fallout from a decline in prices, saying that the issue was “one of the things that worries me most”.”

    https://www.thetimes.co.uk/article/britain-badly-prepared-for-market-crash-says-andrew-bailey-0h6hjcb8q

    • “The profitability of UK companies has dropped to a 10-year low, according to official figures that came as surveys showed a fall in retail jobs, a surge in profit warnings, a slowdown in pay growth and a fragile outlook in the construction sector.”

      https://www.independent.co.uk/news/business/news/uk-companies-profitability-decade-low-business-survey-a9299221.html

      • 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.
        Gail Tverberg says:

        It will be interesting to see what post-Brexit brings.

        • this says that Brexit will have an 11 month transition period:

          https://www.breitbart.com/europe/2020/01/23/boris-uk-crossed-brexit-finish-line-bill-passes-parliament/

          “The UK will leave the EU as Mr Johnson pledged on January 31st.
          The UK will then move into an 11-month transition period, where the country will remain subject to the EU’s Customs Union and Single Market rules, as well as the free movement regime, while London and Brussels thrash out a future trade deal. There can be no extension of the transition period, as that provision was ruled out in a clause of the withdrawal agreement bill. If there is no deal agreed by December 31st, 2020, the UK will simply trade with the EU on World Trade Organization (WTO) terms.”

          so our UK friends can party on 1/31, while the significant change(s) won’t arrive until 12/31…

          • Xabier says:

            Every morning that the bedside lamp comes on when I touch it (it’s a very dark and dismal winter here in England!) I feel as though a party might be in order AS IT IS ALL STILL WORKING!

          • 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.
            Gail Tverberg says:

            I wonder what the chance will be of another extension, regardless of what this says.

    • Xabier says:

      Puzzling phrase ‘declining understanding’: are we to suppose that they are suffering from brain degeneration?

      More a case of ‘Won’t see, can’t see’…..

      Poor chap, I hope he doesn’t have too many sleepless nights.

    • 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.
      Gail Tverberg says:

      I expect that pension plans and insurance companies will be especially badly affected by a decline in stock prices. Those holding mortgage loans (banks?) will be especially affected. Failing governmental debt, such as that from Lebanon, could affect any organization holding it.

  30. Yoshua says:

    …and a 50% mortality rate among people over the age of 60…

    • Xabier says:

      An epidemic which corrects the demographic imbalance could be quite desirable in many respects.

      Enormous numbers of Chinese in this city, mostly academics: if I go quiet, you’ll know what’s happened…….

    • 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.
      Gail Tverberg says:

      Mortality rate is certainly higher of those over 65 (not necessarily 60) based on this Bloomberg article that lists the deaths they are aware of.

      https://www.bloomberg.com/news/articles/2020-01-23/several-china-coronavirus-victims-didn-t-even-have-a-fever

      According to the title of the article, some didn’t even have a fever, either.

  31. Yoshua says:

    “China built a lab to study SARS and Ebola in Wuhan – and US biosafety experts warned in 2017 that a virus could ‘escape’ the facility”

    WHO estimated that SARS had a 15% mortality rate.

      • 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.
        Gail Tverberg says:

        I saw something below this video that said something like, “UK scrambles to respond as 14 people seem to have the Wuhan virus.” But it disappeared, and Google didn’t find it. I can imagine this happening shortly, if it hasn’t happened already.

        • It does look like 14 people in the UK are being tested at four locations (Belfast, Glasgow, Edinburgh and Hillingdon, which is in far W London) but we won’t know if the cases are confirmed for a while.

          • Robert Firth says:

            The UK government has convened their expert “COBRA” team to address the corona virus problem. So far, they have recommended testing of arrivals from “suspected” countries, such as China. Of course, since asymptomatic people can be carriers, this is near enough useless. Any other measures have not yet been reported.

            Perhaps some “higher power” induced me to live on this small isle of Gozo. On the other hand, perhaps not.

    • 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.
      Gail Tverberg says:

      This is a link to an article that says what you say in the first sentence about the lab in Wuhan.

      https://www.legitgov.org/China-built-lab-study-SARS-and-Ebola-Wuhan-and-US-biosafety-experts-warned-2017-virus-could-escape

      This is a link to an earlier article saying: Only one lab in China can safely handle the new coronavirus Of course, this lab is the same one the other article expressed concern about.

  32. “Corporate America is awash in junk debt, and the situation could deteriorate substantially…

    Moody’s Investors Service warned Thursday that default risk is on the rise for the nearly $1.2 trillion of speculative-grade loans, bonds and various related instruments maturing from 2020-24.

    “While low interest rates have allowed spec-rated companies to continue to roll over all that paper, a slowdown in the economy or a reversal in Federal Reserve monetary policy could pose problems.”

    https://www.cnbc.com/2020/01/23/junk-debt-hits-new-record-posing-elevated-default-risks-moodys-says.html

    • “The trouble currently is that global short-term interest rates are still close to, or below zero, and cannot be cut much more, which has deprived central banks of their main lever if a recession strikes.

      “The biggest challenge the Fed faces currently is how to deal with a recession.”

      https://seekingalpha.com/article/4318544-yes-rates-are-still-going-to-zero

      • “George Soros said that the U.S. economy could be headed for calamity as a result of President Donald Trump’s efforts to juice American business.

        “”The stock market, already celebrating Trump’s military success, is breaking out to reach new heights,” he said. “But an overheated economy can’t be kept boiling for too long.””

        https://www.cnbc.com/2020/01/23/george-soros-warns-trump-of-potential-economic-doom-before-election.html

        • worldofhanumanotg
          worldofhanumanotg says:

          You basically have only ~10months remaining to turn around pub opinion in fly over swing states, not the coasts. That would equal to massive depression / stock market crash / violent coup / lost war kind of mega event debacle occurring just inside this time window or rather in its first third/half (i.e. before summer) to digest widely among electorate. Yes possible, not very probable though. Hence the Orange Jesus is on track for second term – gliding on the wings of printed everything bubble and rattled oligarchy with msm minions.. The contrarian – outlier case could still happen, the odds were ~12:1 as listed in gambling parlors as of OCT/NOV 2019, now slightly better..

          • 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.
            Gail Tverberg says:

            Growth in real US per capita disposable income actually has been doing pretty well, according to FRED. It is a lot of other countries around the world that have not been doing very well on this measure. Trump’s goal is to push the problems elsewhere, and he has been pretty successful.

      • 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.
        Gail Tverberg says:

        Wolf Richter is showing a chart that makes it look like the Federal Reserve has taken its foot off the pedal. The title of his article is Fed’s Repos Drop to Oct Level, T-Bills Surge, But MBS Fall, and Total Assets Decline Further.

        This is the chart he shows:
        https://wolfstreet.com/wp-content/uploads/2020/01/US-Fed-Balance-sheet-2020-01-23-overall-weekly.png

        The stock market is down, but perhaps the problem is more than the Wuhan virus.

  33. The Magus says:

    Details of those who have died after contracting the virus, which now includes someone as young as 36 years old, showed that several didn’t have a fever, potentially complicating global efforts to check for infected travelers as they arrive at airports and other travel hubs.

    https://www.bloomberg.com/news/articles/2020-01-23/china-expands-travel-limits-who-says-virus-remains-local-crisis?srnd=premium-asia

    Doctors once had little choice but to be fatalistic about deaths from pneumonia. Sir William Osler, sometimes called the father of modern medicine, famously called it “friend of the aged” (often rendered as “the old man’s friend”) because it was seen as a swift, relatively painless way to die

    Might the PTB, seeing collapse is now imminent, be introducing this virus for the purpose of killing all humans and saving them from the starvation and violence and other horrific ways we will all die when the economy ceases to function?

    If so, then this is brilliant.

    • Chrome Mags says:

      “Might the PTB, seeing collapse is now imminent, be introducing this virus for the purpose of killing all humans…”

      Or on a religious angle, it could be divine intervention now it’s pretty obvious greed is more important than any other consideration even with dire warnings on numerous issues. Maybe it is time to pull the plug. In the movie ‘Dark City’, the aliens decide their experiment is done, so they give the command to “Shut it down.”

      • 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.
        Gail Tverberg says:

        We don’t really have the resources to provide the pensions promised to the huge number of people expecting them. If the virus really does target older adults and younger people in poor health, it could have a favorable worldwide benefit, in some sense.

        Of course, shutting down a large share of travel to China and disrupting businesses by a ban on travel to Wuhan and surrounding areas could have a very negative impact. A lot depends on how the virus spreads in the next few weeks. If we are dealing with shutdowns in travel and businesses on a widespread basis, the virus by itself could push the world into recession.

    • Yoshua says:

      China has an ageing population after the one child policy. This is probably the best way to cut down expenses on pensions.

      The Wuhan virus seems to have “escaped” from a lab.

    • Xabier says:

      I almost pegged it from pneumonia in 2013: I have to concur, it feels much less unpleasant than a bad ‘flu.

      That’s the danger, you don’t feel all that bad – I thought it was a chill (it was a nasty Spring here) that I could fight off – and then suddenly you are in crisis…….

      Of all the ways to go, I’d settle for pneumonia as a relatively benign option.

      • Tim Groves – Japan
        TIm Groves says:

        I was floored by a norovirus around the same time. I caught it from my dog, who caught it on a visit to the vet’s. A very interesting experience although I wouldn’t care to repeat it. No energy, 36 hours spent laying on the floor within crawling distance of the loo, complete and involuntary evacuation of the alimentary canal, thirst for water followed soon drinking after by overpowering desire to vomit. But absolutely no headache or fever that I can remember.

    • worldofhanumanotg
      worldofhanumanotg says:

      Bad Panda timing, they had to die out just at the moment PV panels and batteries finally got near the price-performance sweet-spot.
      /sarc off

  34. Yoshua says:

    People are just dropping dead to the ground in China.

    The Corona virus is killing 3% of the infected in China. If every one in China gets inflected, then 45 million will die.

  35. Combining the news reports presented by the very esteemed Harry McGibbs with news reports and data from other sources, one gets the picture of a global economy which may already be in recession. Declining commodity prices (of particular concern being oil and copper) together with declining shipping rates, at the same time as costs are increasing. Global manufacturing declining – especially cars – as well as some service sectors – with tourism coming to mind there. Interest rates at historic lows, bankruptcies on the increase.

    Perhaps the corona virus can be useful for governments and economists as an excuse when presenting and reviewing poor economic data later on in the year. For anybody who has a serious look at the data and trends, however, the global economy has been in trouble for some time before the virus came along, just as it has been for some time before President Trump took office.

    • Bless you for the esteem, Curt Kurschus. This survey of economists points to a 2020 much like 2019 with anaemic growth and crazily ebullient markets. We shall see!

      “A significant global upturn will remain elusive this year as many economies still face an array of daunting risks…

      “The global economy in 2019 may have been near its weakest since the financial crisis thanks to trade protectionism and political uncertainty, but world stocks had a blowout year with several indexes repeatedly setting record highs.

      “With easy policy from central banks set to continue, that split between markets and events on the ground may extend into this year, according to surveys of over 500 economists covering 46 major economies conducted Jan. 10-22.”

      https://www.reuters.com/article/us-global-economy-poll/global-economy-snapback-to-prove-elusive-despite-market-joy-reuters-polls-idUSKBN1ZN00H

    • Chrome Mags says:

      “…gets the picture of a global economy which may already be in recession.”

      I wonder though after the level of financial fear wrought by the 08 debacle, if countries will admit to being in a recession or not. Maybe many already are but instead publish bogus numbers to hoodwink the populace into borrowing just a few bucks more to keep the good ship lollypop floating a tad longer. My writing’s getting very creative. Maybe it’s time for me to go to sleep…zzzzzzzzzzzzzzzzzzzz

    • 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.
      Gail Tverberg says:

      The virus may push the economy in the direction it is already headed.

      Epidemics are often part of collapses. It is the old/weak they particularly target. After they hit, the economy is able to rebound, because the “resources per capita” ratio is better. I don’t think a 3% drop in population, even worldwide, would be enough, though.

      • Robert Firth says:

        Gail, I respectfully point out an exception. The Black Death killed about 30% of the population of Western Europe. The consequence was a labour shortage, and a resource surplus, that helped create a century of growth in living standards. Indeed, some historians have cited it as an important factor in the subsequent Renaissance.

        Collapse is associated with too many people and too few resources. If the latter cannot be increased, perhaps a decrease in the former is a positive development (for the survivors, of course).

        • 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.
          Gail Tverberg says:

          I think we are saying the same thing. There is a collapse and a rebound that follows. The collapse often is (partly) caused by an epidemic. The fact that the immune systems of much of the population were in poor shape due to ever-poorer nutrition as the wages of common laborers sank lower and lower no doubt played a major role in allowing the epidemic to spread as it did.

          A rebound was possible because a sizable share of the population was killed off by the epidemic. Resources per capita suddenly rose. Wages rose as labor shortages appeared. This is exactly what a person expects.

          What I said in the above comment was that I didn’t think a 3% reduction in population would be big enough to fix our overshoot population problem. Some of the past epidemics killed 30% or more of local populations.

  36. President Trump said in a Wall Street Journal interview Tuesday that the White House plans to unveil a new tax-cut proposal in 90 days.
    “We’re talking a fairly substantial … middle-class tax cut that’ll be subject to taking back the House and obviously keeping the Senate and keeping the White House,” the president said. Trump declined to provide specifics about the plan.
    The White House has been saying for several months that they plan to release a proposal for a middle-class tax cut as Trump runs for reelection. The exact contents of the package are still being discussed.
    https://thehill.com/policy/finance/479196-trump-says-new-tax-cut-plan-to-be-unveiled-in-90-days

    MORE TAX CUTS….MORE DEBT….MORE INTEREST RATE CUTS

    MORE, MORE, MORE…the cry of a mistaken soul…
    More! is the cry of a mistaken soul, less than All cannot satisfy Man. VI If any could desire what he is incapable of possessing, despair must be his eternal lot..
    William Blake

    • 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.
      Gail Tverberg says:

      Keep the system going! Good idea, going into election!

  37. Chrome Mags says:

    https://www.marketwatch.com/story/the-federal-reserve-is-stuck-in-quantitative-easing-hell-2020-01-16

    ‘Opinion: The Federal Reserve is stuck in quantitative-easing hell’

    “Imagine doing the same thing over and over again, with little progress and no relief. Sounds like most people’s vision of hell — or the Federal Reserve’s current predicament.

    “Booth thinks we’re on the cusp of QE4, or may already be there.”

    “We’ve surpassed the $400 billion mark,” she said in a phone interview. “They call it ‘not QE’ because it’s maturities of 12 months or less and therefore presupposed to roll over within 12 months.”

    “We’ve just had commercial and industrial lending turn negative on a year-over year basis,” she told me. “Not only have banks become less willing to extend the commercial and industrial loans, there has also been less demand for them.”

    “That’s why I think if there are any signs of economic weakness by spring — particularly in manufacturing and the industrial economy — the Fed will find a way to keep the bond buying going, while calling it anything but QE.”

    “We have certainly started to see some signs of slowing, and I think Jay Powell is trapped,” said Booth. “The Fed is trying to keep a bucket filled with holes, full.”

    “Welcome to QE — or not QE — hell.”

    • “It is usually overlooked that QE has also led the central banks into an industrial role that is normally restricted to governments (except the Fed, which works hand in hand with the US Treasury in this regard).

      “For instance, while over 80% of the ECB scheme buys government and other public sector bonds, a huge chunk still goes into corporate bonds and other assets…

      “…central banks are now in the business of picking winners and losers in the corporate world. They’re likely to be embroiled in this for a long time: even if they did abandon QE, they are buying assets with lifespans of over 30 years in some cases. As the Bank of Italy has admitted, the possibility of some of these companies going insolvent creates financial risks for the whole eurozone system.”

      https://reaction.life/quantitative-easing-now-looks-permanent-and-has-turned-central-banks-into-pseudo-governments/

      • “The tools these central banks have relied on for years aren’t working. Inflation is stubbornly below their targets, and economic growth is sluggish.”

        https://www.marketplace.org/2020/01/23/central-banks-are-searching-for-new-tools/

        • 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.
          Gail Tverberg says:

          Ordinary workers need to be getting wealthier to keep economic growth happening. Technology needs to be making goods and service relatively cheaper, compared to incomes. This is not happening sufficiently, around the world.

          • The Economist summarizes the discussion on technological change
            https://www.economist.com/finance-and-economics/2020/01/16/economists-explore-the-consequences-of-steering-technological-progress?cid1=cust/dailypicks1/n/bl/n/20200122n/owned/n/n/dailypicks1/n/n/E/385692/n

            Since 2000, published work on directed technical change has focused largely on environmental challenges. Path dependence means that research on fossil-fuel technologies can often be more fertile than research on cleaner alternatives. There are more experts in the relevant disciplines, better-funded research labs and an established complementary economic infrastructure. Efficient decarbonisation might thus require subsidies for clean-energy research, as well as a carbon price. Indeed, efforts to slow global warming represent a massive attempt to realise one technological future—a zero-carbon version—rather than another.

            • 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.
              Gail Tverberg says:

              I think that this is basically a bunch on nonsense. Financial outcomes show which direction technological change will take place. All of the push toward zero-carbon choices are basically a push toward inefficiency. As oil and gas prices drop, the benefit of saving energy becomes less and less.

              The world economy cannot tolerate a trend toward inefficiency, no matter how well-intentioned such a change is. As entropy grows, we can try to spend our efforts on fighting entropy, but it doesn’t help individual citizens looking for food, clothing, homes and transportation for their families.

            • Thanks for your answer, Gail. It is consistent with what you have expressed in many different ways for many of us who are not used to seeing the economy through the lenses of physics.
              « Financial outcomes show which direction technological change will take place». Does this mean that we should just follow the money to see where the technological changes are happening? I would guess that much of this so called development – 5G and the Internet of Things – will be part of what you call a push towards inefficiency i.e.it makes ordinary workers playing more for basic energyservices?

            • 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.
              Gail Tverberg says:

              5-G is a push toward inefficiency. The higher cost will burden poor consumers especially. It will mean that they have less funds left to spend on transportation, housing, and food.

              It is not even clear that the end product delivered will be significantly better for many types of internet usage.

      • worldofhanumanotg
        worldofhanumanotg says:

        Time for a victory lap dance.
        My analysis vindicated, lolz.

        ps now for the less funny news, expect more authoritarian stuff coming our way..

      • 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.
        Gail Tverberg says:

        According to the pseudo-government article, “As at September 2017, the sectors they came from [in ECB holdings] included utilities (16%), infrastructure (12%), automotive (10%) and energy (7%).”

        I can see any of these sectors running into difficulty. Automotive is clearly doing poorly. If infrastructure is transmissions line or roads, I can imagine its funding doing poorly. Prices for energy tend to be too low. I don’t know whether utilities have “cost plus” pricing structure in the EU. If they don’t they could run into difficulty.

        • Robert Firth says:

          So 45% of the ECB’s holdings are in areas that are clearly and seemingly unstoppably contracting. This cannot end well.

          • 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.
            Gail Tverberg says:

            I am sure the ECB was trying to hold up areas that were doing poorly. Not a smart idea for the long term, however.

  38. Denial says:

    Wait! what??? I have to question your stance above …..yes spending needs to keep going but wasting it on military is just plain dumb at this point…..spending on infrastructure while we still can would be much wiser……I do wonder sometimes if you are not favoring one party over the other???? Not funded by Russia are you?

    • Dennis L. says:

      Denial,
      It is all waste, it is the rate that is relative, it can be slow and perhaps this is what caused the Great Depression and WWII stopped it due to increased rate of waste. A steel plant can “waste” iron ore much more quickly that a simple iron works of the 18th century.

      Oil is subject to competition:
      “Natural gas reservoirs were buried shallowly and always associated with or close to heavy oil which was subjected to serious biodegradation, with occurrence of 25-norhopane. All above indicate that the natural gas in Santai area is typical oil degraded gas by bacteria. Biodegradation was a process of water-hydrocarbon reaction which was affected by the bacteria and thermodynamics.
      https://www.sciencedirect.com/science/article/pii/S1876380415300392

      If humans don’t use oil bacteria will albeit much more slowly which is perhaps a reason why they are bacteria. Don’t have a clue, but is is a nice sound bite.

      The paradox of life is everything including earth, sun turn to waste. The expanding universe is a conundrum, it is going the wrong way which is always sort of distressing when brought up to enquiring minds such as ourselves.

      Dennis L.

      • 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.
        Gail Tverberg says:

        Whenever there is an oil spill or natural seepage of oil from beneath the sea, eventually it is eaten up by oil eating bacteria.

        I see that Amazon sells a product for $15.00 a pound that bio-remediates and removes any hydrocarbon-based stain. They advertise it for use on concrete, asphalt, porous stone, driveways, streets, garages, and parking lots.

        Pull-It-Out by Chomp seems to be another similar product.

    • 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.
      Gail Tverberg says:

      It is hard to know what to spend money on.

      In a way, the US spending money on military is not as dumb as it sounds. One function of US military spending is to keep the dollar as reserve currency, so the US can perpetually do deficit spending. Military spending also likely helps keep the US dollar high relative to other currencies, allowing the US to buy commodities more cheaply than other countries.

      Money going to the military helps keep up demand for fossil fuels in a couple of ways:
      (1) The military is a big spender on fossil fuels.
      (2) The wages distributed to young people will disproportionately be spent on commodities.

      At least some of the young people who go into the military get training that they can use after they finish. Unlike many other young people, they are able to get this training without going into debt, so they are in better positions to get married and start families, when they get out. As long as wars are not fought on US territory, damage to US property is minimal.

      What we need most with respect to infrastructure is repairs to existing bridges, roads, long distance transmission lines, pipelines, and railroad tracks. Such repairs help prevent going in reverse, but don’t do much going forward. It is hard to justify much debt for this. I can’t imagine that people would be willing to spend much on infrastructure maintenance and repair.

      Adding long-distance transmission for wind and solar would be favored by some. The catch is that with our pricing system, adding the wind and solar is very detrimental to other types of electricity generation. Also, the new generation will need to be maintained properly in the future, or it is likely to cause fires, too. Wind and solar need lots of batteries as well, if they are really to be useful. Adding everything they need makes them terribly expensive as an electricity type.

    • cashisking says:

      Well Tulsi isnt funded by Russia but that 50 million defamation $ from Hillary should fund her pretty good. Trump should sue that drama queen schiff next.
      And the crowd goes wild!

    • Duncan Idaho says:

      US industrial production has fallen from 5.4% growth in September 2018 to minus-1.01% in December. “Production has been negative for the last four months.”

      • 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.
        Gail Tverberg says:

        It looks like the US’s industrial production growth was very low in the 2015-2016 era as well. In fact, industrial production growth seems to have been as low as -4% in early 2016. This was when oil prices were very low, in fact, much lower than now. Somehow we got through this earlier period. China added more stimulus, for example.

        Let’s cross our fingers that we can do as well now.

  39. ‘Who the hell cares about the budget?’: Trump tears into critics of mounting federal spending and debt under his watch
    https://markets.businessinsider.com/news/stocks/trump-responds-critics-rising-federal-spending-debt-deficit-presidency-fundraiser-2020-1-1028833452
    Trump tore into critics of rising government spending and mounting debt under his watch, The Washington Post reported.
    “Who the hell cares about the budget? We’re going to have a country,” Trump reportedly said at a Friday fundraiser at his Mar-a-Lago estate.
    The comments offer a remarkable window into Trump’s approach to federal spending as the debt and deficits have increased every year he’s been in office.
    Republican calls to rein in federal spending and curb the deficits have largely died down
    Trump campaigned in 2016 on eliminating the federal debt in eight years and reining in the deficit, a key concern of Republicans throughout President Obama’s two terms in office. They often accused Democrats of being excessive spenders, which racked up the deficit.
    The 2017 tax cuts blew up the federal deficit, which neared $1 trillion in fiscal year 2019 – a 26% jump from the year before as it steadily increased every year in office.
    The Tax Cuts and Jobs Act will cost $1.9 trillion over the next decade, according to the Congressional Budget Office. Trump also signed a $1.4 trillion budget in December that boosted defense spending.
    The Committee for a Responsible Federal Budget, a nonpartisan budget watchdog, estimated earlier this month that Trump’s spending priorities will pile an additional $4.7 trillion onto the debt through 2029.

    It’s so in your face that spending and deficit spending is beyond out of control and will spiral out of control, why pretend to act like it’s a concern?
    We all know here where this eventually lead to….

    https://m.youtube.com/watch?v=ZuXxy8cjZQA

    • 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.
      Gail Tverberg says:

      Perhaps all of the spending will help keep the economy from crashing.

      • For the last few decades it has worked, until it doesn’t…..
        Once Humpty Dumpty falls and is broken, good luck putting it all back in a functional
        Piece of an Economy.
        A foundation of our transactions is based on Trust and a reasonable explanation of the future. When that evaporators, just like this video posted February 2008….

        https://m.youtube.com/watch?v=fsFEteP-lzg

        The fact is we have gone too far this road only to see it to the bitter end….

        • Chrome Mags says:

          “For the last few decades it has worked, until it doesn’t…..
          Once Humpty Dumpty falls and is broken, good luck putting it all back in a functional”

          True enough, Herbie, and the argument rising debt hasn’t been a problem so far won’t mean much once we’re all looking in dismay at Humpty Dumpty’s egg shell pieces.

      • worldofhanumanotg
        worldofhanumanotg says:

        Yes, ~ $5T per decade is really nothing these days..
        Obviously there are other debt chapters at play (corp, bank-fin, private, ..) so it’s more than the quoted figure in the end.. nevertheless we might have simply slipped into different time epoch, so “debts don’t matter” especially when supported openly as official policy. Imagine a socialist – populist coming into the office, the same outcome only spent on different priorities.

        He who is going to challenge this trend? The Chinese? Nope they keep dreaming about leapfrogging in the future hence head down and workaholic program continues. Europe, Japan and S Korea are aging and falling into irrelevance. And the emerging have no real (truly global) power or are being triaged out of the IC nexus..

        So, this could take a lot of additional time to unravel.
        And actually we can’t forget about the “low probability” case the Muskovian-Bezosian “abductees” eventually came about with decent energy storage formula,for their humanoid subjects and the grand finale doom will be postponed by decades or centuries.

        • If we placed a reasonable rate of interest on that accumulated debt, don’t think it would be nothing, now a days! What till the chickens come home to roost. There ain’t no free lunch, regardless of the what we wish for in make believe fiscal policy land of the Federal Reserve.
          You can only “make believe” for so long, and then reality strikes out of no
          where…version of a Zen saying…
          Life Strikes at any time….

          https://m.youtube.com/watch?v=8ny3N-smAUc

      • John Doyle – Seeker of truth in a world of falsehoods
        John DoyleJohn Doyle says:

        That is supposed to be the general idea.

    • Dennis L. says:

      Herbie,
      “We all know here where this eventually lead to…”
      The problem is we don’t, it truly is different this time, there are resource constraints and yet there are strange visuals of Navy fighter jets chasing impossible objects and then claims of need to classify the high definition data.

      Combinatorial matricies have some tantalizing hints of things unknown, the problem is the amount of math needed to even read about them intelligently.

      Earlier I sited a video about the information enigma, Herbie, we don’t know it all, life is emergent, but we don’t really understand why. Looking back it has puzzled minds far greater than ours, Einstein did not like the big bang and some physicists changing his cosmological constant so the bang could exits, he engineered the math so it did not.

      Much of the universe is missing, we can’t find it, something greater than 80% I think from memory, needs to be referenced. Where is it? What does it do?

      This game isn’t over and if it is, what does it matter? Better to assume a tomorrow and do one’s best to accept change. Some of the ability to do this seems to come from mind types, open minds and that is said in a non pejorative manner. That said, being open minded does not make differences comfortable, but it does help us try and understand them.

      Dennis L.

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