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. denial says:

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

    • Harry McGibbs says:

      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.

      • Davidinamonthorayearoradecade says:

        “But then predicting BAU is the safe and easy option.”

        and for most years in most countries, it has been the correct option also…

        but the Wuhan Black Swan could be a game changer…

    • Duncan Idaho says:

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

    • 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.

        • 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.

      • 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.

          • 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

            • 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?

            • 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.

            • 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!”

  2. 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:

      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?

      • 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.”

          • Davidinamonthorayearoradecade says:

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

            I mean, I never have…

            • 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’

          • 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..

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

            • 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.

            • Davidinamonthorayearoradecade says:

              “… 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…

            • 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?

          • 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.

  3. Sven Røgeberg says:

    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?

    • 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.

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

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

      • Thinkstoomuch says:

        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

        • 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..

      • Sven Røgeberg says:

        Interesting. Thanks!

      • doomphd says:

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

        • 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:

          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.

          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.

      • 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.

        • 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.

    • 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!

    • 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.

        • 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!’

        • Sven Røgeberg says:

          «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?

  4. 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

    • Davidinamonthorayearoradecade says:

      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?

    • 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.

  5. Sven Røgeberg says:

    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?

    • Sven Røgeberg says:

      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?

      • 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.

    • 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.

  6. Duncan Idaho says:

    #2. Actuaries

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

  7. Herbie R Ficklestein says:

    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.

      • 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 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.

      • Herbie R Ficklestein says:

        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.

        Those days are long gone….

  8. 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

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

      • Curt Kurschus says:

        As true as this is likely to be, fear breeds discrimination. Humans are experts at discrimination.

    • Davidinamonthorayearoradecade says:

      “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:

        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.

        • Davidinamonthorayearoradecade says:

          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…

          • 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?

          • 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?

          • 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.

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

  9. 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?

      • Davidinamonthorayearoradecade says:

        “Maybe a global recession could seal the deal quickly?”

        yes, amplified by the Wuhan Black Swan…

        should seal the deal quickly…

    • 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.

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