Today’s Energy Predicament – A Look at Some Charts

Today’s energy predicament is a strange situation that most modelers have never really considered. Let me explain some of the issues I see, using some charts.

[1] It is probably not possible to reduce current energy consumption by 80% or more without dramatically reducing population.

A glance at energy consumption per capita for a few countries suggests that cold countries tend to use a lot more energy per person than warm, wet countries.

Figure 1. Energy consumption per capita in 2019 in selected countries based on data from BP’s 2020 Statistical Review of World Energy.

This shouldn’t be a big surprise: Our predecessors in Africa didn’t need much energy. But as humans moved to colder areas, they needed extra warmth, and this required extra energy. The extra energy today is used to build sturdier homes and vehicles, to heat and operate those homes and vehicles, and to build the factories, roads and other structures needed to keep the whole operation going.

Saudi Arabia (not shown on Figure 1) is an example of a hot, dry country that uses a lot of energy. Its energy consumption per capita in 2019 (322 GJ per capita) was very close to that of Norway. It needs to keep its population cool, besides running its large oil operation.

If the entire world population could adopt the lifestyle of Bangladesh or India, we could indeed get our energy consumption down to a very low level. But this is difficult to do when the climate doesn’t cooperate. This means that if energy usage needs to fall dramatically, population will probably need to fall in areas where heating or air conditioning are essential for living.

[2] Many people think that “running out” of oil supplies should be our big worry. I believe that lack of the “demand” needed to keep oil and other energy prices up should be at least as big a worry.

The events of 2020 have shown us that a reduction in energy demand can occur very quickly, in ways we would not expect.

Oil demand can fall from less international trade, from fewer international air flights, and from fewer trips by commuters. Demand for electricity (made mostly with coal or natural gas) is likely to fall if fewer buildings are occupied. This will happen if universities offer courses only online, if nursing homes close for lack of residents who want to live there, or if young people move back with their parents for lack of jobs.

In some ways, the word “appetite” might be a better word than “demand.” Either high or low appetite can be a problem for people. People with excessive appetite tend to get fat; people with low appetite (perhaps as a side-effect of depression or of cancer treatments) can become frail.

Similarly, either high or low energy appetite can also be a problem for an economy. High appetite leads to high oil prices, as occurred back in 2008. These are distressing to oil consumers. Low appetite tends to lead to low energy prices. These are distressing to energy producers. They may cut back on production, as OPEC nations have done in the recent past, in an attempt to get prices back up. Some energy producers may file for bankruptcy.

Figure 2. Weekly average spot oil prices for Brent, based on data of the US Energy Information Administration.

Just as people can die from indirect effects of too little appetite, an economy can fail if it cannot keep its energy prices (appetite) up. In fact, an economy will probably collapse quite quickly if it cannot keep oil and other energy prices up. The cost of mining or otherwise extracting energy supplies tends to increase over time because the cheapest, easiest-to-extract supplies are taken first. The selling price of energy products needs to keep rising as well, in order for producers to be able to make a profit and, therefore, be able to continue production.

We know that historically, many economies have collapsed. Revelation 18:11-13 tells us that in the case of the collapse of ancient Babylon, the problem at the time of collapse was inadequate demand for the goods produced. There was not even demand for slaves, which was the type of energy available for purchase at that time. This lack of demand (or low appetite) is similar to the low oil price problem we are encountering today.

[3] The big reduction in energy appetite since mid-2008 has particularly affected the US, EU, and Japan. 

We would expect lower energy prices to eventually lead to a decline in energy production because producers will find production unprofitable. On a world basis, however, we don’t see this pattern occurring except during the Great Recession itself (Figure 3).

Figure 3. World per capita energy consumption, based on data from BP’s 2020 Statistical Review of World Energy. On a worldwide basis, energy production and consumption are virtually identical because storage is small compared to production and consumption.

Note that in Figure 3, energy consumption is on a “per capita” basis. This is because energy is required for making goods and services; the higher the population, the greater the quantity of goods and services required to maintain a given standard of living. If energy consumption per capita is rising, there is a good chance that living standards are rising.

The countries of the US, EU, and Japan have not been very successful in keeping their energy consumption per capita level since the big drop in oil prices in mid-2008.

Figure 4. Per capita energy consumption for the US, EU, and Japan, based on data from BP’s 2020 Statistical Review of World Energy.

The falling per capita energy consumption for the US, EU, and Japan is what one would expect if economic conditions were getting worse in these countries. For example, this pattern might be expected if young people are having difficulty finding jobs that pay well. It might also happen if repayment of debt starts interfering with young people being able to buy homes and cars. When fewer goods of these types are purchased, less energy consumption per capita is required.

The pattern of falling energy consumption per capita cannot continue for long without reaching a breaking point because people with low wages (or no jobs at all) will become more and more distressed. In fact, we started seeing an increasing number of demonstrations related to low wage levels, low pension levels, and lack of government services starting in 2019. This problem has only gotten worse with layoffs related to the pandemic in 2020. These layoffs corresponded to substantial further reduction in energy consumption per capita.

[4] China, India, and Vietnam are examples of countries whose energy consumption per capita has risen in recent years.

Not all countries have done as poorly as the major economies in recent years:

Figure 5. Some examples of countries with rising energy consumption per capita, based on data from BP’s 2020 Statistical Review of World Energy.

These Asian countries could outcompete the US, EU, and Japan in several ways:

  • Big undeveloped coal reserves. These resources could be used as an inexpensive fuel to compete with countries that had depleted their own coal resources. Coal tends to be less expensive than other types of energy, especially if pollution problems are ignored.
  • Warmer climate, so these countries did not need much fuel for heating. Even Southern China does not heat its buildings in winter.
  • Pollution was generally ignored.
  • New, more efficient factories could be built.
  • Lower wages because of
    • Milder climate
    • Inexpensive fuel supply
    • Lower medical costs
    • Lower standard of living

The developed economies were concerned about reducing their own CO2 emissions. Moving heavy industry to these Asian nations meant that the developed economies could benefit in three ways:

  1. Their own CO2 emissions would fall, whether or not world emissions fell.
  2. Pollution problems would be moved offshore.
  3. The cost of finished goods for consumers would be lower.

Moving heavy industry to these and other Asian countries meant the loss of jobs that had paid fairly well in the US, Europe, and Japan. While new jobs replaced the old jobs, they generally did not pay as well, leading to the falling energy consumption per capita pattern seen in Figure 4.

[5] The growing Asian economies in Figure 5 are now reaching coal limits.

While these economies were built on coal reserves, these reserves are becoming depleted. All three of the countries shown in Figure 5 have become net coal importers.

Figure 6. Coal production versus consumption in 2019 for China, India and Vietnam based on data from BP’s 2020 Statistical Review of World Energy.

[6] World coal production has remained on a bumpy plateau since 2011, suggesting that its extraction is reaching limits. (Figure 7)

Figure 7. World energy consumption by type, based on data from BP’s 2020 Statistical Review of World Energy. “Renewables” represents renewables other than hydroelectricity. Total world consumption is approximately equal to total world production, since stored amounts are small.

Figure 8, below, shows that growth in China’s coal production was the major reason for the big rise in world coal consumption between 2002 and 2011. In fact, this rise in production started immediately after China joined the World Trade Organization in 2001.

Figure 8. World coal production by country based on data from BP’s 2020 Statistical Review of World Energy.

China’s rapid growth in coal production stopped in 2011. The problem was that extraction from an increasing share of coal mines became unprofitable: The cost of extraction rose but coal prices did not rise to match these higher costs. China could build new mines in locations more distant from where the coal was to be used, but transportation costs would tend to make this coal higher-cost as well. China could increase its coal consumption by importing coal, but that would also be more expensive.

Figure 9. Coal production for selected areas based on data from BP’s 2020 Statistical Review of World Energy.

In Figure 9, above, we see how dramatically higher China’s coal production has been, in comparison to coal production in other areas of the world. After China’s coal production stalled about 2011, it bounced back in 2018 and 2019 as the country opened mines in the north of the country, farther from industrial use.

Figure 9 indicates that the US’s coal production was on a long plateau between 1990 and 2008; more recently, the US’s production has fallen. Coal production for Europe was falling even before 1981, but the data available for this chart only goes back to 1981. Declining production again results from the cost of production rising above the prices producers could obtain from selling the coal.

Whether or not world coal production will increase in the future remains to be seen. Normally, a person would expect a long bumpy plateau in coal production, such as the world has experienced since 2011, to precede a fall in production. This would be similar to the pattern observed in the US’s coal production. This pattern would also be similar to the shape modeled by geophysicist M. King Hubbert for many types of resource production.

Figure 10. M. King Hubbert symmetric curve from Nuclear Energy and the Fossil Fuels.

[7] World oil production through 2019 has continued upward in an amazingly steady pattern, despite low prices. Its major problem has been unprofitability for producers. 

Figure 7 above shows the total amount of oil produced has continued upward in almost a straight line, except for a dip at the time of the Great Recession.

In fact, every person needs goods and services made with energy products. Rising energy consumption per capita will mean that, on average, every person is getting the benefit of more energy supplies. Figure 11 shows information similar to that on Figure 7, except on a per-capita basis.

Figure 11. World per capita energy consumption by type based on data from BP’s 2020 Statistical Review of World Energy. Total world consumption is approximately equal to total world production, since stored amounts are small.

Figure 11 indicates that on a per capita basis, oil supply has been approximately flat. In a way, this should not be surprising. Oil is absolutely essential in many ways. It is used for agriculture, transportation and construction. Oil is also used for its chemical properties in medicines, herbicides, pesticides, lubricants, and many other products. Oil is very energy dense and can be easily stored.

Because of its special properties, many people have assumed that oil prices will always rise. We saw in Figure 2 that this doesn’t actually happen. Low prices have continued for long enough now that they are becoming a serious problem for producers. Many companies are seeking bankruptcy. One analysis shows that 230 oil and gas producers and 214 oilfield services companies have filed for bankruptcy since 2015.

Oil exporters find their countries in financial difficulty, because at low prices, the taxes that they can collect are not sufficient to maintain the programs needed for their people. If the programs cannot be maintained, citizens may become unhappy and revolt.

At this point, oil production during 2020 is down. Figure 12 shows OPEC’s estimate of oil production through July 2020. World oil production is reported to be down about 12%. The highest month of supply was about November 2018.

Figure 12. OPEC and world oil production, in a chart made by OPEC, from the August 2020 OPEC Monthly Oil Market Report.

Figure 13 shows oil production for selected areas of the world through 2019.

Figure 13. Oil production for selected areas of the world based on data from BP’s 2020 Statistical Review of World Energy. Europe includes Norway. Russia+ is the Commonwealth of Independent States.

Middle East production tends to bounce up and down. If prices are low, the tendency is to reduce production, as occurred in 2019.

US production rose rapidly between 2008 and 2019, but dipped in 2016, as prices dropped way too low.

Europe’s oil production (including Norway) reached its highest point in the year 2000. It has been declining since then, causing concern for governments.

The production of what I call Russia+ dropped with the collapse of the central government of the Soviet Union in 1991. Oil prices had been very low between 1981 and 1991. It appears to me that these low prices were instrumental in the collapse of the central government of the Soviet Union. Production was able to rise again in the early 2000s when prices rose. My concern now is that a similar collapse will happen for some oil exporters in the next few years, due to low prices, and it will lead to a major decline of world oil production.

[8] Natural gas is the fuel that seems to be available in abundant supply, if only the price could be made to rise to a high enough level for producers. 

Natural gas production can be seen to be rising on both Figures 7 and 11. The fact that natural gas consumption is rising on a per capita basis in Figure 11 indicates that production is rising robustly–enough to offset weakness in coal production and perhaps help increase the world standard of living, to some extent.

We can see from Figure 14 below that the increase in natural gas production is coming from quite a number of different areas, including the US, Russia and its affiliates, the Middle East, and Australia. Again, Europe (including Norway) seems to be in decline.

Figure 14. Natural gas production for selected areas of the world based on data from BP’s 2020 Statistical Review of World Energy. Europe includes Norway. Russia+ is the Commonwealth of Independent States.

The problem for natural gas is again a price problem. It is difficult to get the price up to a high enough level to cover the cost of both the extraction of natural gas and the infrastructure and fuel needed to transport the natural gas to its destination.

We used to talk about “stranded natural gas,” that is, natural gas that can be extracted, but whose cost of transportation is simply too high to make the overall transaction economic. In fact, historically, a lot of natural gas has simply been burned off as a waste product (flared) or re-injected into oil wells, to keep up pressure, because there was no hope of selling it profitably at a distance. It is this formerly stranded natural gas that is now being produced.

Figure 15. Historical natural gas prices based on data from BP’s 2020 Statistical Review of World Energy. LNG is liquefied natural gas transported by ship. German imported natural gas is mostly by pipeline. US Henry Hub gas is natural gas without overseas transport costs included.

The increase in investment in natural gas production in recent years has been based on the hope that prices would rise high enough to cover both the cost of extraction and transportation. In fact, prices have tended to fall with crude oil prices, making the overall price far too low for most natural gas producers. Prices in 2020 have been even lower. For example, recent Japan LNG prices have been about $4 per million Btu. Thus, natural gas seems to have exactly the same problem as coal and oil: Prices are far too low for producers.

[9] The world economy is a self-organizing system, powered by energy. It can be expected to behave in a very strange way when diminishing returns become too much of a problem. 

In the language of physics, the world economy is a dissipative structure. This has been known at least since 1996. The economy is a self-organizing system powered by energy; it is not possible to significantly reduce energy consumption without a major collapse.

The economy has many parts to it. I have illustrated the situation in the following way:

The fact that consumers are also employees means that if wages fall too low (for a significant share of the population), then consumption will also tend to fall too low.

Prices are set by the market. Contrary to the popular view, prices are not based primarily on scarcity. Instead, they are based on the quantity of finished goods and services that consumers in the aggregate can afford. If wage disparity gets to be too great a problem, commodity prices of all types will tend to fall too low.

[10] Economists and modelers of all kinds have completely misunderstood how the economy actually operates.

Our academic communities each seem to exist in separate ivory towers. Economists don’t talk to physicists. Physicists know that dissipative structures cannot last indefinitely. Humans are dissipative structures; they each have limited lifetimes. Hurricanes are also dissipative structures that last only a limited time.

Most economists and modelers have never considered the possibility that today’s economy, like that of ancient Babylon, could be reaching collapse because of low demand, and thus, low prices.

Economists don’t realize that once energy resources become too depleted, energy prices are not likely to rise high enough for producers to make a profit; instead, the overall system will tend to collapse. Central banks have been trying, without success, to get commodity prices up to the point where they can be profitable for producers, but they have not been successful to date. I am doubtful that even more new tricks, such as Universal Basic Income, will work, either.

The erroneous belief systems of most economists and modelers leads to all kinds of strange results. The economy is modeled as if it will grow indefinitely. Most modelers assume that if we have oil, coal, or natural gas in the ground, plus the technical capability to pull these resources out, we will eventually pull them out. Perhaps a later civilization, built on the remains of our current civilization, can do this, but our current civilization cannot.

Climate change models are applied to fossil fuel assumptions that are absurdly high, given the problems with low energy prices that we are currently encountering. No one stops to model what will happen to the climate if fossil fuel consumption is decreased very quickly, which seems to be a real possibility in 2020. The loss of aerosol emissions (smog, for example) from fossil fuels will tend to spike world temperatures, even with reduced CO2 emissions from fossil fuels.

We are led to believe that an economy similar to today’s economy can operate solely on renewables. This is simply absurd. Figures 7 and 11 show that there are nowhere near enough renewables to support today’s population, even if substitution were possible for fossil fuels. In fact, we need fossil fuels to make and maintain solar panels, wind turbines, electric transmission lines, hydroelectric plants, and nuclear power plants.

If we cannot keep fossil fuels operating because of continued low prices, today’s economy can expect a disturbing change for the worse.

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

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

2,368 thoughts on “Today’s Energy Predicament – A Look at Some Charts

  1. “Soaring prices of agricultural products are stoking food-security jitters in China. According to the China’s National Bureau of Statistics, food prices went up by 13 percent in July, compared to the previous July; the price of pork rose about 85 percent. On a year-on-year basis, food prices have increased by 10 percent in 2020 — the price of corn is 20 percent higher and the price of soybeans, 30 percent.”

    • “HSBC Holdings Plc slumped below its financial crisis closing low set more than a decade ago as pressures mount on several fronts, including political tension in Hong Kong, the fallout of the pandemic and renewed Brexit turmoil in the UK…

      “Europe’s largest bank has been caught in a maelstrom of trouble over the past year amid unrest in its biggest market, Hong Kong. It also faces difficulties in navigating low interest rates and surging loan losses sparked by the global pandemic.”

      • How does a country deal with a truly international bank? The bank is very large, and its main market is Chinese (through Hong King), I believe. Yet it has a large presence in Europe. Which country bails it out? Or can parts of it be bailed out separately? It is really HSBC “group”. This is a wikipedia article about it.

        • Interesting, perhaps the decision level above HSBC group (aka shareholders of other top global fin groups and CBs) selected this one specifically as the failed entity to unload risk and bad assets.. Just live and enjoy spoils for few more decades, give me another decade..

        • When Lehman went down, there were insolvency regimes in each country, the biggest in the US and UK. In the US, the broker dealer had a SIPC administration as well as the holding company chpt 11. There were insolvencies in Germany, Netherlands, Singapore, Hong Kong, Japan and more.

          • Also, recall during the financial crisis, AIG had to be bailed out in order to indirectly bailout goldman and other U.S. financial institutions, but even bigger indirect bailouts for french (and other) banks, SG, BNP etc. So it’s a question of who will it hurt and whether those who’ll be hurt will have “pull”.

        • Very interesting question. Bail out only the accounts relevant to the bailor and let the bailee deal with the rest?

          Dennis L.

    • Many experts are warning and predicting food shortages and the double whammy will be inflation which can also be lumped into food insecurity. Maybe it wasn’t a good idea by those pulling the levers to blowup the eCONomy over this Covid 19 hoax. Unless they planned and hope for the manufactured chaos.

  2. “Global light vehicles sales are expected to fall by 20 per cent this year compared with 2019 following sales and production disruption due to the Covid-19 pandemic, S&P Global Ratings in a report published on Friday.

    “”This new forecast follows a first-half 2020 sales slump of 25 per cent, an unprecedented shock for the global industry,” said S&P Global Ratings analyst Vittoria Ferraris.”

    • We will have to see whether the second half sales are good enough to bring auto sales up to “only” a 20% slump. Will the last quarter of the year be better than earlier, or worse?

  3. The Czech professor of ecology and evolutionary biologist Jaroslav Flegr, forecasts, that the Czech healthcare system will collapse next week due to the actual exponential spread of the coronavirus in the Czech republic:

    “Scientist Jaroslav Flegr on the resurgence of Covid-19
    A lot more should have been done to prepare for what we’re seeing now

    Well-known evolutionary biologist and parasitologist Jaroslav Flegr, who teaches at CU’s Faculty of Science, anticipated in August that things weren’t going to go the way we hoped regarding the coronavirus. As of last week, cases jumped to record levels in the Czech Republic – a marked turnaround from the situation just a few months ago.”

    He predicts worse mutations of coronavirus to come. That is what he predicted in the beginning of September:

    Jaroslav Flegr: It is time to close schools and ban mass events

    • The expected – predicted spike in virulence (bad mutations) is a novel idea in the discourse of this very pandemic. He could be right or not.

      Obviously, in the grand scheme of things it’s bullsh%t concept to begin with, otherwise there would be no survivors of previous outbreaks..

      Nevertheless, one also needs to know the background story, as that “DVTV” channel is staffed by two msm individuals, who were deemed even too cheesy for the state TV news ~propaganda channel, so they had to left for “their own” online platform, well paid by some peculiar investors.

    • Relative to population, the Czech Republic’s number of new cases seems to be a little above the US’s, but increasing rapidly.

      Deaths are still quite low.

      Some places don’t have many intensive care beds. Of course, they may not be needed either. Depends on the age mix of the cases and how medically they are treated. Also, their vitamin D levels.

        • We now know how to treat COVID a whole lot better, now. Steroids are cheap treatment. Young people tend not to get very severe illnesses.

          If more ICU beds are needed, “regular” beds can be repurposed. The problem is getting enough nurses.

          Death rates are down around the world.

            • The students are back here in Cambridge: good to see intelligence, youth, strength and vigour back on the streets and zooming about on bikes after they were thrown out by the cowardly lecturers and ancient , fearful dons in March.

              But it seems they are now being screwed on their new tenancy contracts subject to expulsion with only very short notice.

              The delightful experience of a Cambridge education -very hard work in a beautiful setting – which they have all worked hard for, for many years, won’t be worth much if if they are going to be pushed around like this.

              Set the young free, and protect the elderly to the extent consistent with a functioning economy and society.

        • But once young people start spreading the disease, the rate per 100,000 rises rapidly. We have seen this in the US and in Spain and other countries. The death rate does not rise correspondingly. People worry, perhaps more than they should. Historically, we have only been able to “contain” a few viruses. COVID may not be one of them.

  4. There is a big ‘he said, she said, I just said’ going on today about an SNP article about the impact of demographic shift in Scotland on support for Yes.

    Both a Tory and an SNP writer happened on the same day to write about it, and now the Unionists have all queued up to jump on the SNP writer, ‘what an awful thing to say in a pandemic, you are such a callous, awful person, it just shows what SNP is really like &.’

    Such is the silliness that British politics can descend to. I mean, politics is supposed to be a serious business, not about whether it is ‘appropriate’ to point out the pertinent facts or about opportunities to fake outrage.

    What a food fight, a right farce. These people make me laugh.

    I recently pointed out the same thing, facts are facts and people like to understand trends and what is going on behind the surface of polls.

    > A PROMINENT ally of Nicola Sturgeon has been accused of “a new low for the SNP” after saying the death of old people was delivering a “gain” for independence.

    Angus Robertson, a former SNP Westminster deputy leader who is trying to become an MSP, said “55,000 predominantly No supporting voters [were] passing away every year”.

    Combined with more Yes-supporting young people reaching voting age, that had produced a “gain of over 100,000 for independence” since the referendum of 2014.

    Critics said the comments were “disgraceful” given the recent loss of thousands of old people from coronavirus and the emergence of a potentially lethal winter surge.

    In response, Mr Robertson called the criticism “politically motivated” and “manufactured outrage”…………..

    • dear,

      It is demographics, fighting reality is a losing position. His comments are not disgraceful, they are reality, disgraceful is a value judgment, reality is independent of judgment. His comments are probably insensitive and they will convince no one with an opposing view, but demographics marches on. The “manufactured outrage” is real, unfortunately there is not good solution.

      You are our resident philosopher: Came across Hegel and his dialectic which appears to be basically a reasoning process, have a thesis and then try and disprove it. He lived at the end of the 18th century; modern thought is have a hypothesis, test it against observation(recall, hit you thumb with a hammer and the pain is the effect of reality on one’s senses), if it seems to work in general, it becomes theory until further observations cause it to be modified.

      The old philosophers were limited in their ability to observe the world and they had no statistically way to observe the actions of humans or collect data about civilizations, we are a along way from that. Elegant circular arguments going nowhere.

      Modern society now sees the results of various social experiments and doesn’t like the results so it goes to denial and elegant arguments – Kubler Ross.

      My thesis is this is we are living through, the end of the high energy age and denial that it is happening, add various conflicting social theories and it is chaos. Gale’s observation of the world substituting cheap, Chinese coal for declining Western energy is convincing. If that fix is over, there will be considerable social discomfort.

      Dennis L.

      • Thanks for that. Science is basically the natural philosophy department that has come into its own, and its methods, foundations and implications remain matters of the philosophy of science. Science is an application of philosophy not its antithesis.

        Thanks for your accolades (blush) but I suspect that your intention is to mock and to deter. I am a mere student and I have never suggested otherwise.

        Yes, that is not really what Hegel said, the antithesis and synthesis logically, naturally, historically and psychologically present themselves as implicit in the thesis. It is a particular theory of development.

        I would be happy to discuss philosophy with you but you should probably pursue your own interest in it first.

        Thanks for your support and I wish you well with your own studies.

      • The conflicting theories mostly originate in the 19th and early 20th centuries, which is really no help to us.

        Politicians are like priests repeating the litany of a religion that has died.

        Modern archaeology has opened fantastic vistas on the theme of the decline of civilisations – even down to how well-nourished people were from analysis of their skeletons.

        We can dump the old philosophers, like the old, out-moded political ideologies – but not perhaps the real sages (the Tao is evergreen) – and keep our eyes peeled.

        And duck when needed.

      • Some politicians love the idea of elderly voters; others, of clueless, indoctrinated, 16-y old voters.

        If all the conservative elderly were to be wiped out, they would find the resource and energy crisis would be unchanged: the jaws of the vice would still close on mankind.

      • “It is demographics, fighting reality is a losing position. His comments are not disgraceful, they are reality, disgraceful is a value judgment, reality is independent of judgment.”

        I totally agree. We have much common ground there.

        “My thesis is this is we are living through, the end of the high energy age and denial that it is happening, add various conflicting social theories and it is chaos. Gale’s observation of the world substituting cheap, Chinese coal for declining Western energy is convincing. If that fix is over, there will be considerable social discomfort.”

        Interesting, thanks for that. It will be interesting to see how it all develops from there.

      • ‘You are our resident philosopher’

        He isn’t. The people he mentions are philosophers. At best, he is a student of philosophy – if he is even that.

        • We need the return of FE, our genuine drunken, raving, Nihilist……

          I haven’t seen him on other sites for ages: I do hope there wasn’t a fatal accident with that shotgun and whisky in the early hours.

          • FE can get rather stuck on a single issue and worry away at it endlessly and with manic energy, plus he can be a little abrupt with other commenters, but he has some interesting things to say and he does have a sense of humour, which counts for a lot IMO.

            I hope, wherever he is his, his shotgun remains in its cabinet and his brain in its cranium.

  5. U.S. adult obesity rate tops 40 percent, highest ever recorded – Obesity is single highest risk factor in COVID-19 mortality – “That’s extremely alarming in terms of its medical implications”

    Obviously higher in the South, with more educated and progressive States having lower rates.

    • I got to thinking: There was a big step down in health, as the world went from hunter-gathering to farming. The same thing happens, when the world goes to the Green Revolution and industrial food production. The people who feel the worst impacts of this are the poor people in the US. Many of these poor people are black, but they can be of any color. Their caloric needs are met, long before their need for fiber and for nutrients of many kinds. Their bodies keep telling them that they are hungry, because they have been badly fed.

  6. The pandemic eliminated cognitive dissonance. La La Land is gone

    It changes the tune somewhat. I was rather to be found among the most doomers of my entourage, not so much nowadays, rather in the middle

    Vaccines have become the new version of wind turbines. We got global warming, now this s–t. What’s next?

    Last big crisis was 12 years ago. New normalcy until 2032? Looks like a long shot, they can throw a new little monster every now and then in case hoi polloi are rumbling too much (but I’d rather prefer novelties)

    • You are right. The people have to have the image of a savior at hand. They like to believe authorities. I am always shocked when I talk to people, regarding their great respect for/belief in what they hear from their personal sub-specialist doctor or from the television. Anything a person hears often enough must be right.

        • “Changing his mind several times a day” can be a useful strategy. No one is quite certain what he is saying. He has time to listen to alternatives. The outcome is a little more flexible than if someone from “on high” tried to dictate a path to follow.

          We are dealing with a self-organizing system. The path to follow is not obvious. The many changes of mind can be viewed as simply a reflection of the way the world is today.

  7. Reuters
    ‘Free money’ for banks as investors pile into fractured gold market
    With supply routes now reopened and the price premium outweighing the cost of making and shipping bars, which bankers say has ranged between $0.50 and $10 an ounce this year, more than 700 tonnes of gold worth some $45 billion at current prices has moved to New York since March, CME data show.
    Before that influx, vaults registered with the exchange held less than 300 tonnes.
    Flows of gold to the United States have begun to ebb, but another money making opportunity also opened in a transaction known as a roll, in which, every few months, investors in futures must swap expiring contracts for later-dated ones.
    To swap the February 2020 contract for the April one cost around $6 per ounce of gold, CME and Refinitiv data show — or around $240 million in total for the roughly 400,000 100-ounce contracts trading.
    When the London-futures connection broke and banks became reluctant to sell in unlimited quantities, the price rose. To roll from June to August cost around $15 an ounce on average. The longer, four-month roll from August to December cost $25 an ounce — or $1 billion in total for 400,000 contracts.
    A boon for the seller, the market is costly for futures buyers.
    “There is no free lunch,” said a source at a large U.S. bank. “Somebody has to lose money along the way … those people (with long positions) are every time paying money to those willing to take the other side.”
    The scope for big profits has attracted more sellers into the market, from smaller banks to hedge funds and asset managers.
    A further uptick in futures supply could eventually temper profits, particularly if it’s accompanied by a drop in demand, but in the meantime, banks are coining it, both by managing their own trading books and facilitating trades by new entrants.
    “The amount of business we’ve done with hedge funds around this is unprecedented,” said one banker, adding that his desk’s profits from gold were already double last year’s total.
    “It’s a glaringly obvious cash and carry opportunity.”
    (Reporting by Peter Hobson; Editing by Veronica Brown and Carmel Crimmins)

    Yes, moving around paper provides immense profits!
    If you don’t hold it in your greedy little hands, you don’t own it!

  8. “…the effects of greater uncertainty will include higher precautionary savings by households and lower business investment, particularly by companies with high debt.

    “Structural changes in sectoral output caused or accelerated by the pandemic will trigger bankruptcies and job losses… There is huge uncertainty, acknowledged by policymakers, about the scale of these scarring effects…

    “Bond yields and policy interest rates, which would normally fall to cushion the decline in risk assets in such circumstances, are already close to rock bottom, so they would not provide much of a safety net as the equity risk premium increases.

    “Markets have been very optimistic since the global economy reached its trough in the spring. The harder part is now just starting.”

    • It is not just “higher precautionary savings,” we are facing. It is a lot of the kind of travel people are used to (visiting grandchildren, for example) not being available, because of state restrictions. And international travel is still is still mostly out of the question, because of international restrictions (and the possibility of future international restrictions).

      It is also a perception by a lot of older people and people who are quite overweight that catching COVID-19 is likely a death sentence. It is fear by a lot of people of visiting establishments viewed as unsafe, without a lot of paraphernalia (N-95 masks, for example).

      I am amazed at the people I talk to (on the phone, or over Zoom) who say, “I don’t mind being at home and having all of my groceries delivered. I don’t want to go out, except to visit outside with my nearby neighbors (or not at all), until there is a vaccine in widespread use.” These people’s spending is way down because their only expenditures are on television, perhaps a few online movies, and a few puzzles. Even getting a hair cut seems to be out.

  9. “US Treasury market’s brush with disaster must never be repeated:

    “…the coronavirus crisis caused trading conditions in the normally well-behaved US government bond market to deteriorate dramatically in March.

    “The dislocations were so bad that the Federal Reserve was forced to intervene even more aggressively than it did in the financial crisis of 2008.

    “This kind of chaos should not be allowed to happen in such a vital part of the financial system.”

Comments are closed.