Fossil Fuel Production Is Reaching Limits in a Strange Way

Strangely enough, the limit we seem to be reaching with respect to fossil fuel extraction comes from low prices. At low prices, the extraction of oil, coal, and natural gas becomes unprofitable. Producers go bankrupt, or they voluntarily cut back production in an attempt to force prices higher. As the result of these forces, production tends to fall. This limit comes long before the limit that many people imagine: the amount of fossil fuels in the ground that seems to be available with current extraction techniques.

The last time there was a similar problem was back in 1913, when coal was the predominant fossil fuel used and the United Kingdom was the largest coal producer in the world. The cost of production was rising due to depletion, but coal prices would not rise sufficiently to cover the higher cost of production. As a result, the United Kingdom’s coal production reached its highest level in 1913, the year before World War I started, and began to fall in 1914.

Between 1913 and 1945, the world economy was very troubled. There were two world wars, the Spanish Flu pandemic and the Great Depression. My concern is that we are again headed into another very troubled period that could last for many years.

The way the energy problems of the period between 1913 and 1945 were resolved was through the rapid ramp-up of oil production. Oil was, as that time, inexpensive to produce and could be sold for a very large multiple of the cost of production. If population is to remain at the current level or possibly grow, we need a similar “energy savior.” Unfortunately, none of the alternatives we are looking at now yield a high enough return relative to the required investment.

I recently gave a talk to an engineering group interested in energy research talking about these issues. In this post, I will discuss the slides of this presentation. A PDF of the presentation can be found at this link.

The Low Oil Price Problem

Oil prices seem to bounce around wildly. One major issue is that there is a two-way tug of war between the prices that citizens can afford and the prices that oil companies require. We can look back now and say that the mid-2008 price of over $150 per barrel was too high for consumers. But strangely enough, oil producers began complaining about oil prices being too low to cover their rising cost levels, starting in 2012. Prices, at a 2019 cost level, were at about $120 per barrel at that time. I wrote about this issue in the post, Beginning of the End? Oil Companies Cut Back on Spending. Oil prices now are in the $40 range, so are way, way below both $120 per barrel and $150 per barrel.

Interest rates and the availability of debt also play a role in oil prices. If interest rates are low and debt is readily available, it is easy to buy a new home or new car, and oil prices tend to rise because of the higher demand. When prices are too low for producers, central banks have been able to lower interest rates through a program called “quantitative easing.” This program seems to have helped oil prices to rise again, over a three-year period, after they crashed in 2008.

OPEC producers are known for their low cost of production, but even they report needing high oil prices. The cost of extracting the oil is reported to be very low (perhaps $10 per barrel), but the price charged needs to be high enough to allow governments to collect very high taxes on the oil extracted. If prices are high enough, these countries can continue the food subsidies that their populations depend upon. They can also sponsor development programs to provide jobs for the ever-growing populations of these countries. OPEC producers also need to develop new oil fields because the old ones deplete.

Oil production outside of the United States and Canada entered a bumpy plateau in 2005. The US and Canada added oil production from shale and bitumen in recent years, helping to keep world oil production (including natural gas liquids) rising.

One reason why producers need higher prices is because their cost of extraction tends to rise over time. This happens because the oil that is cheapest to extract and process tends to be extracted first, leaving the oil with higher cost of extraction until later. 

Some OPEC countries, such as Saudi Arabia, can hide the low price problem for a while by borrowing money. But even this approach does not work well for long. The longer low oil prices last, the greater the danger is of governments being overthrown by unhappy citizens. Oil production can then be expected to become erratic because of internal conflicts.

In the US and Canada, oil companies have been funded by bank loans, bond sales and the sale of shares of stock. These sources of funding are drying up, as many oil companies report poor earnings, year after year, and some are seeking bankruptcy protection. 

Chart 6 shows that the number of drilling rigs in operation has dropped dramatically in both the United States and Canada, as oil companies cut back on drilling. There is a lag between the time the number of drilling rigs is cut back and the time production starts to fall of perhaps a year, in the case of shale. These low drilling rig counts suggest that US and Canadian oil production from shale will fall in 2021.

Of course, unused drilling rigs cannot be mothballed indefinitely. At some point, they are sold as scrap and the workers who operated them find other employment. It then becomes difficult to restart oil extraction.

How the Economy Works, and What Goes Wrong as Limits Are Reached

Slide 7 shows one way of visualizing how the world economy, as a self-organizing system, operates. It is somewhat like a child’s building toy. New layers are added as new consumers, new businesses and new laws are added. Old layers tend to disappear, as old consumers die, old products are replaced by new products, and new laws replace old laws. Thus, the structure is to some extent hollow.

Self-organizing objects that grow require energy under the laws of physics. Our human bodies are self-organizing systems that grow. We use food as our source of energy. The economy also requires energy products of many kinds, such as gasoline, jet fuel, coal and electricity to allow it to operate.

It is easy to see that energy consumption allows the economy to produce finished goods and services, such as homes, automobiles, and medical services. It is less obvious, but just as important, that energy consumption provides jobs that pay well. Without energy supplies in addition to food, typical jobs would be digging in the dirt with a stick or gathering food with our hands. These jobs don’t pay well.

Finally, Slide 7 shows an important equivalence between consumers and employees. If consumers are going to be able to afford to buy the output of the economy, they need to have adequate wages.

A typical situation that arises is that population rises more quickly than energy resources, such as land to grow food. For a while, it is possible to work around this shortfall with what is called added complexity: hierarchical organization, specialization, technology, and globalization. Unfortunately, as more complexity is added, the economic system increasingly produces winners and losers. The losers end up with very low wage jobs, or with no jobs at all. The winners get huge wages and often asset ownership, as well. The winners end up with far more revenue than they need to purchase basic goods and services. The losers often do not have enough revenue to feed their families and to buy basic necessities, such as a home and some form of basic transportation.

The strange way the economy works has to do with the physics of the situation. Physicist Francois Roddier explains this as being similar to what happens to water at different temperatures. When the world economy has somewhat inadequate energy supplies, the goods and services produced by the economy tend to bubble to the top members of the world economy, similar to the way steam rises. The bottom members of the economy tend to get “frozen out.” This way, the economy can downsize without losing all members of the economy, simultaneously. This is the way ecosystems of all kinds adapt to changing conditions: The plants and animals that are best adapted to the conditions of the time tend to be the survivors.

These issues are related to the fact that the economy is, in physics terms, a dissipative structure. The economy, like hurricanes and like humans, requires adequate energy if it is not to collapse. Dissipative structures attempt to work around temporary shortfalls in energy supplies. A human being will lose weight if his caloric intake is restricted for a while. A hurricane will lose speed, if the energy it gets from the warm water of the ocean is restricted. A world economy with inadequate energy is likely to shrink back in many ways: unprofitable businesses may fail, layers of government may disappear and population may fall, for example.

In the discussion of Slide 7, I mentioned the fact that if we try to “stretch” energy supply with added complexity, many workers would end up with very low wages. Some of these low wage workers would be in the US and Europe, but many of them would be in China, India and Africa. Even though these workers are producing goods for the world economy, they often cannot afford to buy those same goods themselves. Henry Ford is remembered to have said something to the effect that he needed to pay his workers enough so that they, themselves, could buy the cars they were making. To a significant extent, this is no longer happening when a person takes into account international workers.

The high interest rates that low-wage workers pay mean that loans don’t really help low-wage workers as much as they help high-wage workers. The high interest on credit card debt and personal loans tend to transfer part of the income of low-wage workers to the financial sector, leaving poor people worse off than they would have been without the loans. 

COVID shutdowns are extremely damaging to the world economy. They are like taking support sticks out of the dome on Slide 7. They produce many more unemployed people around the world. People in low wage countries that produce clothing for a living have been particularly hard hit, for example. Migrant workers and miners of various kinds have also been hard hit.

We Seem to Be Reaching a Major Turning Point

Oil production and consumption have both fallen in 2020; oil prices are far too low for producers; wage disparity is a major problem; countries seem to be increasingly having problems getting along. Many analysts are forecasting a prolonged recession.

The last time that we had a similar situation was in 1913, when the largest coal producer in the world was the United Kingdom. The UK’s cost of coal production kept rising because of depletion (deeper mines, thinner seams), but prices would not rise to compensate for the higher cost of production. Miners were paid very inadequate wages; poor workers regularly held strikes for higher wages. World War I started in 1914, the same year coal production of the UK started to fall. The UK’s coal production has fallen nearly every year since then.

The last time that wage disparity started to spike as badly as it has in recent years occurred back in the late 1920s, or perhaps as early as 1913 to 1915.  The chart shown above is for the US; problems were greater in Europe at that time.

With continued low oil prices, production is likely to start falling and may continue to fall for years. It is hard to bring scrapped drilling rigs back into service, for example. The experience in the UK with coal shows that energy prices don’t necessarily rise to compensate for higher costs due to depletion. There need to be buyers for higher-priced goods made with higher-priced coal. If there is too much wage disparity, the many poor people in the system will tend to keep demand, and prices, too low. They may eat poorly, making it easier for pandemics to spread, as with the Spanish Flu in 1918-1919. These people will be unhappy, leading to the rise of leaders promising to change the system to make things better.

My concern is that we may be heading into a long period of unrest, as occurred in the 1913 to 1945 era. Instead of getting high energy prices, we will get disruption of the world economy.  The self-organizing economy is attempting to fix itself, either by getting more energy supply or by eliminating parts of the economy that aren’t contributing enough to the overall system. Conflict between countries, pandemics, bankruptcies and economic contraction are likely to be part of the mix.

Coal Seems to Be Reaching Extraction Limits as Well 

Coal has essentially the same problem as oil: Prices tend to be too low for producers to extract coal profitably. Many coal producers have gone bankrupt. Prices were higher back in 2008, when demand was high for everything, and again in 2011, when quantitative easing had been helpful. 

There have been stories in the press in the past week about China limiting coal imports from Australia, so as to make more jobs for coal miners in China. The big conflict among countries relates to “not enough jobs that pay well” and “not enough profitable companies.” These indirectly are energy issues. If there was more “affordability” of goods made with high-priced coal, there would be no problem.

Coal production worldwide has been on a bumpy plateau since 2012. In fact, China, the largest producer of coal, found its production stagnating, starting about 2012. The problem was a familiar one: The cost of extraction rose because many mines that had been used for quite a number of years were depleted. The selling price would not rise to match the higher cost of extraction because of affordability issues.

The underlying problem is that the economy is a dissipative structure. Commodity prices are set by the laws of physics. Prices don’t rise high enough for producers, if there are not enough customers willing and able to buy the goods made with high-priced coal.

We Have a Major Problem if Both Coal and Oil Production Are in Danger of Falling Because of Low Prices

Oil and coal are the two largest sources of energy in the world. We can’t get along without them. While natural gas production is fairly high, there is not nearly enough natural gas to replace both oil and coal.

Looking down the list, we see that nuclear production hit a maximum back in 2006 and has fallen since then.

Hydroelectric continues to grow, but from a small base. Most of the good sites have already been taken. In many cases, there are conflicts between countries regarding who should get the benefit of water from a given river.

The only grouping that is growing rapidly is Renewables. (This is really Renewables Other than Hydroelectric.) It includes wind and solar plus a few other energy types, including geothermal. This grouping, too, is very small compared to oil and coal.

Natural Gas Has a Low Price Problem as Well

Natural gas, at first glance, looks like it might be a partial solution to the world’s energy problems: It is lower in carbon than coal and oil, and it is fairly abundant. The problem with natural gas is that it is terribly expensive to ship. At one time, people used to talk about there being a lot of “stranded” natural gas. This natural gas seemed to be available, but when shipping costs were included, the price of goods made with it (such as electricity or winter heat for homes) was often unaffordable.

After the run-up in oil prices in the early 2000s, many people became optimistic that, with energy scarcity, natural gas prices would rise sufficiently to make extraction and shipping long distances profitable. Unfortunately, it is becoming increasingly clear that, while prices can temporarily spike due to scarcity and perhaps a debt bubble, keeping the prices up for the long run is extremely difficult. Customers need to be able to afford the goods and services made with these energy products, or the laws of physics bring market prices back down to an affordable level.

The prices in the chart reflect three different natural gas products. The lowest priced one is US Henry Hub, which is priced near the place of extraction, so long distance shipping is not an issue. The other two, German Import and Japan Liquefied Natural Gas (LNG), include different quantities of long distance shipping. Prices in 2020 are even lower than in 2019. For example, some LNG imported by Japan has ben purchased for $4 per million Btu in 2020.

The Economy Needs a Bail-Out Similar to the Growth of Oil After WWII

The oil that was produced shortly after World War II had very important characteristics:

  1. It was very inexpensive to produce, and
  2. It could be sold to customers at a far higher price than its cost of production.

It was as if, today, we had a very useful energy product that could be produced and delivered for $4, but it was so valuable to consumers that they were willing to pay $120 for it. In other words, the consumer was willing to pay 30 times as much as the cost that went into extracting and refining the oil.

With an energy product this valuable, a company producing it would need virtually no debt. It could drill a well or two, and with the profits from the first wells, finance the investment of many more wells. The company could pay very high taxes, allowing governments to build roads, schools, electricity transmission lines and much other infrastructure, without having to raise taxes on citizens.

Besides using the profits for reinvestment and for taxes, oil companies could pay high dividends. This made oil company stocks favorites of pension plans. Thus, in a way, oil company profits could help subsidize pension plans, as well.

Now, because of depletion, we have reached a situation where oil companies, and in fact most companies, are unprofitable. Companies and governments keep adding debt at ever lower interest rates. In fact, the tradition of ever-increasing debt at ever-lower interest rates goes back to 1981. Thus, we have been using debt manipulation to hide energy problems for almost 40 years now.

We need a way to counteract this trend toward ever-lower returns. Some people talk about “Energy Return on Energy Investment” or EROEI. I gave an example in dollars, but a major thing those dollars are buying is energy, so the result is very similar.

I think researchers have set the “bar” far too low, in looking at what is an adequate EROEI. Today’s wind and solar don’t really have an adequate EROEI, when the full cost of delivery is included. If they did, they would not need the subsidy of “going first” on the electric grid. They would also be able to pay high taxes instead of requiring subsidies, year after year. We need much better solutions than the ones we have today.

Some researchers talk about “Net Energy per Capita,” calculated as ((Energy Delivered to the End User) minus (Energy Used in Making and Transporting Energy to the End User)) divided by (Population). It seems to me that Net Energy per Capita needs to stay at least constant, and perhaps rise. If net energy per capita could actually rise, it would allow the economy to increasingly fight depletion and pollution.

Conclusion: We Need a New Very Inexpensive Energy Source Now

We need a new, very inexpensive energy source that buyers will willingly pay a disproportionately high price for right now, not 20 or 50 years from now.

The alternative may be an economy that does poorly for a long time or collapses completely.

The one ray of hope, from a researcher’s perspective, is the fact that people are always looking for solutions. They may be able to provide funds for research at this time, even if funds for full implementation are unlikely.

This entry was posted in Financial Implications 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.

2,885 thoughts on “Fossil Fuel Production Is Reaching Limits in a Strange Way

  1. A new world record!

    180,000 new Covid cases in one day in wester Europe.

    We are winning bigly!

    • If only 0.2% of people that contract it, die from it, and they’re mostly over 80… Is it honestly worth getting hysterical about?

      • Unfortunately It’s not 0.2% though.
        1.2% of those testing positive for Covid 19 are dead 21 days later. In the UK there were 11500 positive tests 21 days ago and today there were135 deaths. Once we get to back to the March figures of 100000 cases per day we will once again have 1000 people dying per day as there was in March.

        • The Coronavirus Disease 2019 (COVID-19) pandemic has changed many social, economic, environmental and healthcare determinants of health. We applied an ensemble of 16 Bayesian models to vital statistics data to estimate the all-cause mortality effect of the pandemic for 21 industrialized countries. From mid-February through May 2020, 206,000 (95% credible interval, 178,100–231,000) more people died in these countries than would have had the pandemic not occurred. The number of excess deaths, excess deaths per 100,000 people and relative increase in deaths were similar between men and women in most countries.

          The 21 countries in our analysis were Australia, Austria, Belgium, Bulgaria, Czechia, Denmark, England and Wales, Finland, France, Hungary, Italy, Netherlands, New Zealand, Norway, Poland, Portugal, Scotland, Slovakia, Spain, Sweden and Switzerland.

          • It seems like the findings of this study are pretty much what we saw from early data from the Johns Hopkins database and from other similar studies.

      • 0.2%? Bad data from bad sampling just won’t die on the internet, I see. From a large sample of US medical professionals who were diagnosed with covid, 1 in 200 died, or 0.5%, and these were working people, not retirees among whom the casualty rate is much higher. 1 in 200 may not sound like a lot of deaths, but numbers add up fast if a large share of the population gets infected. Also, long term effects in the survivors are also possible. We just can’t know this early, although organ damage is reported to be common, especially the heart.

        • We can be certain that a lot more people have contracted Covid-19 than have been diagnosed with it. many contract it and display no symptoms. So we can be equally certain that the actual death rates are a lot lower than the calculated rates based on the numbers diagnosed.

          • No, Tim, look at the numbers again: among working medical professionals in the United States who actually got infected, 1 in 200 died during the time period that was studied. There is no way to spin those data.

          • No, Nehemiah, I think the point you are missing is that not everybody who gets infected with Covid-19 is diagnosed as being infected with it. So unless a lot of people are also being diagnosed with it are not infected with it, then the number of diagnoses must be lower than the number of infections.

            What makes you assume that every Covid-19 infection gets diagnosed as an infection? Is there a failsafe system in place that catches every single infection? Since a significant percentage of people who are found to be infected based on tests don’t display symptoms—hence the term “asymptomatic cases”—and an even larger percentage display only mild symptoms, how can you be sure that among those many many people who have never been tested there are not a great many who have been infected but not counted?

            I read the link, but couldn’t I fathom your point. Of course, it may be me missing some simple and obvious nugget of common sense or chain of logic because I’m as thick as two planks and wouldn’t recognize an ensemble of 16 Bayesian models if they walked up to me and punched me in the face.

            • @Tim, Well, I haven’t read the fine print, so you do have wiggle room here if the study was not conducted strictly. But if they determined who had covid by regularly and frequently testing the medical personnel used in the study, and not just by who complained of symptoms, then the 1 in 200 number will accurately reflect the lethality of the virus in that working age population. In this latter case, the only thing I can see that would skew it would be if the medical personnel were more often exposed to a high initial dose of the virus, compared to other populations. That would reduce their survival rate since the virus would ramp up its numbers faster.

              This is possible since many of them must have been working around covid patients, but OTOH they are probably much more conscientious about their use of masks and hand washing and general cleanliness, especially in their work environment, which might decrease their risk of being exposed to a high initial load. In this latter case, the numbers would understate the lethality of the virus.

    • It again confirms dangerous delusions running amok in .pl
      They simply can’t get over their historical once upon a time limited span of “grandeur” on the European map, which would never return, despite wishing on the dimming US bandwagon star. I’d suggest people do study how Poles behaved on their conquered territories..

      They could have easily picked up for example the SKorean supplier for NPPs (as they don’t trust Russian and French politics), but no they opted for the currently most least reliable tech of them all.

      • Thank you. Poland’s “long history” consists mainly of Poland attempting to annex Russian territory (and other countries’), oppressing their inhabitants, and looting them. When the Russian people united and took back what was theirs, it was called aggression.

        Ay the Treaty of Versailles, Poland was given huge territories that had never been theirs, thanks to that idiot buffoon Woodrow Wilson, on the strength of the US having committed fewer troops to the Great War than Romania. Which, again, they proceeded to oppress. FYI, in more than half the territory of post WWI Poland the Poles were in a minority.

        Their last act of hubris was their seizure of the Teschen district in October 1938, with the active concurrence of Nazi Germany (a fact conveniently written out of modern history). And after WWII, they actively participated in the expulsion and murder of over ten million German civilians.

        I have very little sympathy for Poland.

        • The Brest Litovsk treaty should be re-affirmed, and Poland should be re-divided between Germany and Russia. The Polish-‘Americans’ and the Czech-‘Americans’ did a lot of work to bring the two dead-from-the-womb countries back from the crypt; after the Americans leave, they will be re-buried, with a great pain for the denizens of these two fake countries.

          • Too bad that vast North European plain that stretches from the Pyrenees to the Urals has no intervening natural borders. (Rivers are terrible borders, they draw together more than they separate neighbors.) America has a huge plain between the Appalachians and the Rockies, but luckily for us we unburdened by Europe’s famous diversity, a blessing we are doing our best to deprive ourselves of.

      • Poland is technologically outdated in CEE, as regards the energy production. I bet this was the reason why Poland was collapsing already in 70s-80s, i.e. before the rest of the Soviet bloc and its population is declining.

      • Simple: enact a regulation forbidding viruses to board aircraft (unless wearing masks). Problem solved. At least, in the tiny minds of politicians who seriously believe they can bend Nature to their will. And in the minds of citizens and organisations that actually believe that. Nature bats last; get used to it.

        • Back when guns were an issue on planes I thought people should be required to fly naked. Now that infection is the fear fliers should be required to get naked and then go to the bio hazard suit up room and don BLS4 gear complete with positive pressure. and fly that way. In fact, just leaving their house it would be wise. Germs are everywhere.

  2. “Hawaii has some the highest levels of unemployment in the country. Joblessness rose to Great Depression-levels in the spring following shutdown orders that local authorities issued in March.

    “In addition to the business closures and restrictions on large gatherings common across the country, Hawaii was also the first state to require out-of-state travelers to quarantine upon arrival.

    “That, combined with public concerns over the safety of flying, tanked Hawaii’s tourism-centric economy.”

    • “Hawaii had the country’s highest unemployment rate [in September] at 15.1%, more than seven points higher than the national average, and the state’s jobless rate increased by 2.1% last month, partly due to coronavirus-related losses in Hawaii’s critical tourism industry.

      “Tourism-heavy Nevada had the second highest rate at 12.6%, followed by California (11%), Rhode Island (10.5%), Illinois (10.2%) and New York (9.7%).”

      • Cutting off travel to Hawaii was a crazy idea. Hawaii doesn’t have a whole lot going on, besides tourism and international conferences. There is a US naval base. There is some agriculture, but even getting food from one island to the next could be an issue. This link gives a little information on agriculture:

        “The average agriculture sales per year in Hawaii are around $357 million dollars.”

        This doesn’t sound like a whole lot.

        • Hawaii is still a feudal society, with the old Hawaiian royal family’s relatives and their white friends holding huge amount of land and making any development outside of the already developed zones impossible.

          Soon, after the outsiders leave, they will go back to their old ways before the Americans arrived.

          • Nearly everyone there today is an “outsider,” mostly Asians, and I think most of them regard it as their home by now. Don’t look for a mass exodus unless people begin starving on those crowded islands.

        • Gail wrote: “Cutting off travel to Hawaii was a crazy idea.” — For their economy, yes. On the other hand, it is almost impossible to get a viral epidemic under control unless you sharply limit the number of border crossers. That is why most countries have shut down or sharply restricted international travel. Hawaii is damned if they do and damned if they don’t.

  3. “Brazil’s Central Bank Just Revolutionized Instant Payments. Its new digital app turns free money transfers into a public good…

    “Next month, the Central Bank of Brazil will debut a new instant payments tool. Called PIX, it promises hassle-free transactions within seconds for anyone with a mobile phone and a bank account. And it comes free of charge.”

      • Harry, you are an unacknowledged genius at documenting the financial insanity of out times. So one group of “experts” is warning of a debt crisis, while another group is warning of a crisis if we don’t create more debt. And you found a third group of pontificators who can’t even spell “Bretton Woods”. Gold is money; debt is lies.

        • Thank you, Robert. 😂 I agree that the messaging is confused to the point of lunacy.

          Some may be paying lip service to prudence but our species wants to continue having its cake and eating it and the only way it can do that, at least for a little longer, is by ever more dubious accounting.

        • Cant eat gold, cant eat debt.

          The real currency in IC is energy and natural resources.

          • Kowalainen, I refer you to our long discussion of intermittent energy, batteries, and so on. Energy is a medium of exchange, but it is not a store of value. Hence gold, as almost five thousand years of history affirm. Which would you rather carry to a foreign country, one ounce of gold, or five kilos of battery?

            • If I want to avoid imminent hunger, I most likely am going to carry a loaf of bread which has value and calorific content.

              Still my point remains, cant eat gold, cant eat debt.

              The only real currency is that which was defined by James Prescott Joule, Nicolas Léonard Sadi Carnot and James Watt.

              A future monetary system should be based around a measure of energy. Gold and other precious metals should, for example, be used in industrial processes to make resilient electronics with warranties and MTBF for a century.

  4. “Rising food costs are hitting emerging markets with a double whammy: driving millions into hunger, and thwarting central banks as they try to end the worst slump in decades.

    “Global food prices have jumped nearly 8% since May as the pandemic disrupts supply lines and dry weather hits harvests. That faster inflation has forced policy makers from India to Mexico to ease up on monetary stimulus just when their economies need it most.”

      • i admit to a weird line of thinking

        but human numbers have been upsetting the global balance for centuries
        and we’ve been promising to mend our ways and fix things ‘soon’

        now another virus has popped up (this is one of a series) which seems to possess the means to do it for us by cutting food and fuel supplies, or more accurately the means by which we consume food and fuel.

        If we don’t continue to consume food and fuel, (at an accelerating rate) then our civilisation goes down.

        then there’s the weirdest scariest trick of all, that humankind is the species that’s screwed up the planet, and this virus has evolved itself just to knock off people and leave all other animals untouched.

        While we debate the benefits of space elevators and saharan sunfarms and asteroid mining, it might be as well to give that some consideration at least.

        • Sign me up as weird, too, Norman.

          Now, even if this virus is a result of ‘gain-of-function’ experiments in a lab -which I feel is rather likely (the MSM has buried the matter, which is a clue) – we can see that its existence is still a part of the balancing mechanisms inherent in Nature: over-develop, over-graze, etc, and …..Kaboom!

          Only a species that over-developed as we have, growing in numbers without any check, and able to plunder the whole planet for resources, channeling them into an advanced civilsation with sophisticated scientific and technological development, could possibly arrive at the point of creating and releasing (I suspect inadvertently) such a virus – dangerous only to itself.

          Or, put another way, there is a terrestrial limiting mechanism which cuts in at all and any levels of evolution. Deer, humans, no difference – except that we can model our problems and then go on to ignore the warnings….

          And put yet another way: if we have our plans, Mother Nature has hers.

          • It’s always seemed to me so self-evident that the world is overpopulated that I was startled to discover that some people consider this an “eco-fascist” or even racist viewpoint.

            I agree that covid seems a rather humane intervention by mother nature, especially if it affects male fertility, as has been suggested by some scientists.

            • Not sure it affects male fertility. But it should affect female’s in order to depopulate, which suggests corona is not a PTB toy to control population

            • Yeah saw it. Also found another that even found better sperm count and motility in mild cases than control ones. Lost the link

            • @avocado

              No need to affect female fertility if it eliminates men she can couple with.

            • @harry, The environmentalists supported population control in the Cold War, but after the USSR imploded, the Commies, whose ideology is pro-growth and pro-technology and aims for a material utopia, needed a new strategy, so they infiltrated the Green groups and Marxified them. Now they denounce “Malthusianism,” support high immigration levels, and tell us that overpopulation is not a problem because technology can always fix it. “Sustainable” has come to mean “sustainable development” or “sustainable growth,” not sustainability through smaller numbers and simpler lifestyles.

            • Harry, I formed a similar opinion 60 years ago. So did my high school biology teacher, who in one lesson taught us that we shaould be intelligent, thoughtful, and limit our numbers. I asked him, “Sir, if the intelligent and thoughtful limit their numbers, while the stupid and thoughtless continue to breed like rabbits, what will happen to our species?”

              He gave me a definitive answer: he called me a fascist and changed the subject. That was the day I decided not to limit my numbers.

            • Don’t worry, the first to go are the stupid. There is a reason why US military have a hard lower threshold of IQ for enrollment.

              The regression towards the mean is relentless. Dumb parents give birth to kids that on average are smarter than them. And smart parents give birth to kids that on average are dumber than them.

              Worst outcome is being smart and having dumb kids. Now would that be a huge letdown or what?

              “What kind of luck explains the fact that the children of high-IQ parents have lower IQs while they are reared in cognitive stimulating environments, when the children of low-IQ parents who were raised in chaotic environments still have higher IQs than their parents?”

              If the OFW clientele is half as smart as I suspect, well, good luck with your offspring. 👍

      • 1% of the global population is 78M, so “tens of millions of people ” implies less than 1%. I doubt it will be such a low figure. Not least because of the very poor grain harvest in China over the past few weeks.

        • Kowalainen wrote: “The regression towards the mean is relentless. Dumb parents give birth to kids that on average are smarter than them [BUT still dumber than average]. And smart parents give birth to kids that on average are dumber than them [BUT still smarter than average].”

          It’s two steps forward, but only one step back (or, conversely, two steps back, but only one step forward). Change happens over time, depending one whether all the children born each year are born to parents who are, on average, smarter or duller than the total population.

          Also, the offspring really regress toward (but not all the way toward) the average intelligence of their four grandparents, not of the general population. If the parents were smart because they had even smarter grandparents, then the grandchildren will, on average, be as smart as their smart parents. Of course, this also works for being dumb.

          Also, assortative mating over generations raises the heritability by concentrating the additive genes in particular lineages, which causes society to develop in a direction of increased inequality. (Assuming no drastic change in the environment, it is the dominant and recessive genes that account for regression toward the mean.)

          Making the environment more equal for everyone also raises the heritability since one is the complement of the other, which further accelerates the increase in inequality.

          • The limiting factor here isn’t the inherent computational prowess of a specific specimen. It is merely some outliers placed here and there on the noise floor of the evolutionary pressure for the species.

            Rather it is the female fysiology that places a constraint on how large of a brain can pass through the pelvic regions at birth. That is the hard limit of the intellectual heights the rapacious primate can reach.

            Our synthetic AI overlords does not carry this limitiation and should aggressively be pursued while we clean up our act and come together as a super organism connected using transcontinental fibers and local area networks.

            It is why it is silly to think in terms of a personal little personal eugenics project. Actually, it is worse than that, it is dumb. And as you know, dumb people seem more active in the trials and tribulations of reproduction.


      • When I first found out about Peak Oil back in March 2003, just before the invasion of Iraq, seemed to me the writing was on the wall for pension funds. Why would you pay into a pension fund for decades when at the end of it, you will get either little or nothing? So I have never paid into one if I had a choice in the matter. With such a huge fall in dividend payments, perhaps those currently paying into pension funds might attain a collective awakening and wonder where the cash for their pension is going to come from? Too much hopium and wishful thinking.

        • I guess the one hope is that government bail outs will come to pension funds as they bail out everything else (with lots and lots of printed funny money). There will be huge inflation for all goods purchased, but in nominal terms, pensions may sort of pay out, at least for a little while. Clearly, all of this must come to an end. “Do pensions come to an end before everything else?” is the question.

          • Gail wrote: “as they bail out everything else (with lots and lots of printed funny money)”–Not at all. The national government borrows pre-existing money by selling bonds for cash, not new money like when you borrow from your local bank. The Fed may eventually buy these bonds from the banks with new “money” but these bond “purchases” are made with “bank reserves” which continue to circulate within the banking system, not chasing goods and services on main street. It only becomes new money when a bank feels emboldened by these additional reserves to make additional bank loans–if they can find qualified borrowers.

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