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. Xabier,

    I haven’t read this, but the cover image makes me think it might be of interest to you.,

    Artleads

  2. https://www.dailymail.co.uk/sciencetech/article-8874025/SpaceX-aims-build-Starlink-mega-constellation-MARS.html?ito=social-twitter_mailonline

    “SpaceX aims to build a Starlink mega constellation around MARS to provide internet to the one million people the firm will send to colonize the Red Planet.

    SpaceX revealed plans to bring its Starlink satellites to Mars
    The firm wants to provide internet to those who colonize the Red Planet
    The satellites would act as a communication bridge between Mars and Earth
    CEO Elon Musk has plans to send one million people to Mars by 2025”

    • Okay, I will settle for the moon and a low gravity well, G-5 and a few towers will probably be sufficient until 2030.

      If a previous post is correct, there are 233,333 people on earth with IQ>=160, that would sure make learning things much easier. Tough to find someone to talk with though.

      Dennis L.

      • First, the average IQ of the human race, based on the most recent research, is only 82, so the calculations should be redone on that basis. (OTOH, the far right tail is “fat,” perhaps because of assortative mating for intelligence.)

        Second, and more seriously, it is likely that the vast majority of people with an IQ of 160 are far too smart to volunteer for a one way trip to Mars that will almost certainly be suicidal, as I am sure they will deduce.

          • GM Sells Out First Year of Electric Hummer Production
            General Motors said it has sold out the first year’s worth of its hulking GMC Hummer EV electric pickup truck after a splashy video reveal on Tuesday. Reuters reports: The GMC website showed a “reservations full” banner over the Hummer EV “Edition 1,” ..

          • Fair enough. BTW, I never trust Wikipedia for info on any subject of a controversial nature. The only possible exception is if I find an article on Wikipedia that contradicts the “woke” narrative complex, which is rare. That’s like a witness giving testimony contrary to his own interest–it boosts credibility. Okay, here’s a cite for global IQ=82:

            https://viewoniq.org/?p=124
            A new version of the NIQ dataset was completed yesterday and uploaded today. It now includes 669 samples with a total of 617,581 individuals from 130 different countries. The global IQ is now 81.98 (N=130; SD=13.43) for measured IQs only or 81.90 (N=201; SD=13.47) if missing countries have been supplemented by geographical averages of their neighboring countries -end quote-

            And below is an article that discusses some of the implications of this finding. Keep in mind that IQ tests (especially “culture fair” tests like the Raven’s that do not test subjects learned in school) that are commonly used are subject to the Flynn Effect (Cattell’s Paradox) which may well distort scores farther upward in some countries than in others. School achievement tests are less “Flynned,” but not entirely free of the effect. Some countries also have very scant data. Still, the overall pattern of scores follows regional lines fairly well. You don’t see countries that are geographically and racially similar with wildly different scores. Countries with lots of revenue from oil or tourism do not have radically different scores from nearby countries that are much poorer. And while Cattell’s Paradox may raise scores in poor countries in the future (ASSUMING THERE IS ENOUGH ENERGY TO “FUEL” CONTINUING HUMAN PROGRESS), this will be somewhat offset by the fact that IQ scores in developing countries appear to be falling about a point per decade since the middle 1990’s.
            http://webmail.azeah.com/jthompson/world-iq-82/?showcomments

            • “BTW, I never trust Wikipedia for info on any subject of a controversial nature”

              Normally they get definitions right. By definition, the average IQ is 100. The article compares the IQ of geographic areas “in comparison with an idealized distribution of a British norm-sample.” The article could have set the world IQ at 100 and got the same relative results.

              I don’t find the subject controversial. IQ selection was “carried along” with the various traits such as numerosity and literacy in the selection for wealth that Gregory Clark writes about. The difference between the smart populations and the not so smart is the harsh selection of the ancestors of the present-day smart

    • Somebody has been taking “The Martian Chronicles” too seriously. And what is the point of sending artificial satellites to a planet that already has two excellently placed natural ones?

      And one million people living deep underground to keep away from the radiation? That one is from the Doctor Who show “Underworld”.

  3. The signal for a market crash is now here.

    First the yield curve inverts…which causes a recession as banks stop lending…then the yield curve uninverts…and the 10 year treasury yield spikes…and as rates spikes too the markets crash.

    I’m not sure if this will happen this time since the Fed isn’t going raise rates as there’s no inflation.

    https://pbs.twimg.com/media/ElBISZoWkAAOq-4?format=png&name=large

    • And besides…the Fed is doing QE and buying treasuries to control the yields.

    • “The coronavirus crisis and the November election have driven fears of a major market crash to the highest levels in many years.

      “At the same time, stocks are trading at very high levels. That volatile combination doesn’t mean that a crash will occur, but it suggests that the risk of one is relatively high. This is a time to be careful.”

      https://www.nytimes.com/2020/10/23/business/people-fear-a-market-crash-more-than-they-have-in-years.html

      .

      • “Deluge of central bank funding upends typical market reaction to economic downturns:

        ““Everything has been turned on its head,” observed Matt King, global head of credit strategy at Citigroup. Rather than focus on fundamentals, investors “spend their time looking at central bank liquidity” and the level of inflation-adjusted Treasury yields for guidance…

        “The bill for this year’s debt binge beckons once the pandemic abates. It can only hold back an economic revival when companies focus on cost-cutting at the expense of investing and hiring staff.

        “That leaves credit markets sitting on far more expensive values than what is warranted by the economic realities of high debt and modest growth prospects.”

        https://www.ft.com/content/498313d1-0e4e-4810-87c8-cda1f651c375

        • When the economy goes into a recession…the government starts spending to get the economy out of the recession…as it starts borrowing massive amounts of money the 10 year treasury yield spikes…and then the markets crash.

          But not this time?

          Now it’s all about if the Fed and the government can get the economy out of the recession?

          • It seems like TPTB are very aware of the risk and will try to do everything that they can do to keep the market from crashing. So perhaps it won’t happen this time, but we just don’t know.

            There is also the possibility of derivatives having a big problem, with rapid changes in currency relativities (or some other change). It seems like any one upset will feed into other upsets.

          • Yoshua wrote: “But not this time?” Not how it normally works. Usually, the Fed tightens (targets higher rates) while the economy is still growing. (As William McChesney Martin, Fed head under President Ike, put it, his job was to “take away the punch bowl just as the party gets started.”) Then the market crashes *before* the recession. Then the recession starts. Then the Fed says the economy is fine and there is no recession on the horizon according to their computer model that assesses a gillion variables. Then the Fed realizes it is wrong and begins targeting lower rates. This time the sequence of events has been somewhat unusual.

      • The current market is driven higher by ma and pa investors/speculators, while billionaires like Buffet and Soros have been reducing their holdings and accumulating cash while they wait for the next bottom. Typical ending to a market cycle.

    • Yield curve inverted in 2018. It always uninverts before the recession, and there is a considerable lag before the recession. (This is in the post-war era. Before the Fed was created in 1913, yield curve inversions were not recession signals, although I don’t know for sure that there is a connection.) However, the lag was much shorter than normal on two occasions, prior to the recessions of 74/75 and 81/82, when OPEC doubled the price of oil. This time, the Wuhan virus accelerated the recession, although not by as much. Without the virus, the most probable date of onset for the next recession was between June 2020 and Dec 2021.

      Stock markets have been terrible around the world for some time, even before 2020. The US market has been an anomaly, but the tech stocks are the real anomaly. Five or six stocks account for more than 100% of the SPX gains. Russell2000 is down. The broad NYSE (symbol NYA) is still off its highs. Bank stocks, which lead in a recovery, are not rising. This is a very narrow market. We are just waiting for the tech correction.

      Even before 2020, corporate earnings were flat, with per share earnings rising only because of corporate stock buybacks (because executive compensation is tied to stock prices), which used to be illegal in days when financial regulation was saner.

    • I have no idea, read a paper sometime back by some physicists, matrix theory, predicting anything economic more than 30 days in advance is impossible. I have moved some things around, need to find that paper.

      What goes down, can go up, oil has gone down for a long time, printing money has gone into high gear, really tough to know what to do. Owning land is great as long as those working it don’t become ill.

      The wealthiest men in the world have not done it watching patterns, just saying.

      Dennis L.

    • A spike in interest rates does seem likely to push the oil price down.

      We have a bunch of investors around here trying to fix up old houses and sell them for more money, given the interest in buying suburban homes. I expect that the number of people seeking mortgages for these homes will go down, if interest rates rise from their current low level.

      There also seem to be some people selling because their current income is too low to afford their homes (wife can no longer work, for example). These folks aren’t fixing their homes up, keeping some prices lower. This will add to the supply, eventually, pushing prices back down.

  4. “Local governments are scuttling borrowing plans that would normally be put before voters on Election Day as financial uncertainty strains municipal budgets and stresses taxpayers that need to sign off on such debt…

    “And it’s not just towns and cities that are nixing bond-ballot measures this election. New York state pulled a $3 billion environmental bond from the November ballot, citing a dire financial situation stemming from the pandemic.”

    https://www.bloomberg.com/news/articles/2020-10-23/stressed-cities-strike-billions-in-debt-plans-from-ballots

    • “The US arts sector did receive government assistance through the stimulus bill known as the CARES Act. The legislation allocated a combined $115 million to the grant-making National Endowment for the Arts and the National Endowment for Humanities. The sector also received $1.8 billion in loans through the Paycheck Protection Plan.

      “However, the assistance came to just a fraction of the $9.1 billion in estimated losses to arts organizations between March and July of this year.”

      https://qz.com/1920970/the-financial-crisis-threatening-us-arts-organizations/

      • O the horror! No more statues of Jesus soaked in urine, cows pickled in formaldehyde, or maggots zapped by electricity. How will our civilisation survive? Will we be reduced to peeling $50,000 bananas of the walls of our art galleries?

        • Here, here.

          Do hope the local symphony can make it, they are trying zoom, seems like a good CD is stiff competition.

          Dennis L.

          • Dennis, I have no quarrel with art paid for by the people who enjoy it. Art paid for by pubic bodies is almost always garbage.

            • Yes, something paid for by others on behalf of someone who has a good idea to them and sells it to others, mostly the seller is looking for a job. That is the case with many public/private interfaces now. Traditionally the wealthy supported the arts, seems Michelangelo had a patron, patron sold indulgences perhaps, many went to heaven helping create wonderful art. Sort of sarcastic, but not really.

              Dennis L.

            • @Dennis@Norman@BeiDawei, Those nudes in the Sistine Chapel scandalized the parishioners. Americans are not uniquely prudish. Some Italians were demanding that clothes be painted over the images.

              Nude female models were also discouraged. Normally, painters had to use nude male models and then feminize their features using their imaginations.

              And Michelangelo? He was a closet Protestant sympathizer.

          • Michelangelo’s patron was the Medici banking family. Art seems to have remained beautiful when it was financed by wealthy private patrons. When the government doles out taxpayers’ cash, the artists produce what they want, which may be original, but not necessarily beautiful. Patrons who use their discretion would not be subsidizing artists with poor taste. Unfortunately, government bureaucrats do not apply a “good taste” standard.

            • Always learn something here,

              “Michelangelo (6 March 1475 – 18 February 1564) had a complicated relationship with the Medici family, who were for most of his lifetime the effective rulers of his home city of Florence. The Medici rose to prominence as Florence’s preeminent bankers. They amassed a sizable fortune some of which was used for patronage of the arts. Michelangelo’s first contact with the Medici family began early as a talented teenage apprentice of the Florentine painter Domenico Ghirlandaio. Following his initial work for Lorenzo de’ Medici, Michelangelo’s interactions with the family continued for decades including the Medici papacies of Pope Leo X and Pope Clement VII.

              Despite pauses and turbulence in the relationship between Michelangelo and his Medici patrons, it was commissions from the Medici Popes that produced some of Michelangelo’s finest work, including the completion of the tomb of Pope Julius II with its monumental sculpture of Moses, and The Last Judgement, a complex fresco covering the altar wall of the Sistine Chapel (the earlier Sistine Chapel ceiling was not a Medici commission).”

              https://en.wikipedia.org/wiki/Michelangelo_and_the_Medici

              Medici’s purchased a couple of papacies, sounds sort of like today’s politicians.

              Thanks,

              Dennis L.

    • Lack of bonds to fund new projects like new schools, parks, and roads means fewer jobs in the future. If tax revenue is lower, budgets for all kinds of services (including schools and libraries) may need to be cut.

  5. “Studio Movie Grill Holdings, the theater chain where film-goers can order Sriracha chicken sliders and a Cruzan mango mojito right in the middle of the latest blockbuster, filed for bankruptcy on Friday after the Covid-19 pandemic kept audiences away.

    “It’s another sign that the movie industry is caught in a downward spiral, with people staying home to avoid catching the disease, and studios holding back new films that might attract them. The biggest chain, AMC Entertainment Holdings Inc., has said it may run out of cash by the end of this year or early in 2021.”

    https://www.bloomberg.com/news/articles/2020-10-23/studio-movie-grill-goes-bankrupt-with-covid-19-slamming-theaters

  6. “Losses are mounting for the U.S. airline industry as the coronavirus pandemic continues to wreak havoc on the economy and hope dims for an immediate government aid package.  

    “Karl Moore, associate professor at Desautels Faculty of Management at McGill University, says, “We’re looking at flights being down in the area of 90% less in March and April than they were the year before. So, it’s a time of enormous crisis. And there are hundreds of thousands of people who work in the airline industry.””

    https://www.voanews.com/economy-business/us-airlines-await-critical-aid-deal 

      • “Airlines are struggling to find enough planes to take holidaymakers to the Canary Islands during the half-term break, after the industry was caught short by the government’s decision to remove the islands from England’s quarantine list.

        “Prices for flights to the Canaries surged after the islands… joined the list of “travel corridors”, meaning visitors do not have to self-isolate on their return.”

        https://www.theguardian.com/business/2020/oct/23/airlines-in-scramble-to-find-planes-for-holidaymakers-to-canary-islands

        • By the end of the century, I expect many of these island tourist destinations to be incredibly isolated from the rest of the world. The Canaries will be too far away for most tourists from Europe or America. Africa is closer, but not close enough that the Africans will care to visit. Africa has it’s own warm beaches. Hawaii’s economy will be mostly local and visitors will be very rare except for the occasional sailing vessel stopping to resupply on its long voyage across the Pacific. Easter Island, Pitcairn Island, and Tristan da Cunha? They might as well have fallen off the planet by then! New Zealand is a larger island that accommodates enough people that it may be able to maintain a somewhat advanced civilization, but even they may start feeling rather isolated. Looked at a map lately? It’s a pretty remote place. I imagine they must import a lot of their raw materials, but in a post-industrial world, what will they have to offer in exchange? They will become a total backwater.

          • NZ will probably be ruled by American tech billionaires from their underground bunkers, like Tolkien’s “dwarf-lords in their halls of stone.”

            It was still around in the future of Aldous Huxley’s “Ape and Essence” (in which a NZ ship explores post-apocalyptic, Satan-worshipping California).

            • Aside from help needed on the culinary end, NZ is one of my favorite spots.
              Police are almost nonexistent on the South Island.
              Great fly fishing, and the country, about the size of the UK (with 66 million) has 5 million people.
              Its good its out of the way——

            • Bei,

              Maybe, but a talent in one area does not necessarily translate into a talent in another. My guess is the wealthy will be welcome as long as they bring in things useful to others, when that stops it is the invariable question, “Yeah, that was yesterday, what have you done for me today.”

              Dennis L.

    • People on the flights are down, but the number of flights is not yet down anywhere near proportional to the loss of customers. If this happens, there will be many more layoffs and loss of value of airports and airplanes.

      • Airlines will try to avoid grounding aircraft for as long as possible due in part to training costs. Because of employee seniorty, airlines face huge training costs, both in time and money, when senior equipment (international 787’s for example) get parked. You see, these senior pilots are not the ones who would get furloughed. They instead, get to displace other junior pilots flying more junior equipment and routes. A junior captain becomes a senior copilot until eventually the last one hired becomes the next one fired. Seat changes generate training costs in contracting as well as expanding conditions. There are other situations which result in additional required traing, but I think you get the idea.

        Cheers,
        D3G

      • I believe, same with trains in the UK which are being subsidised by the UK govt with billions of tax payers money. I was hoping that this might kill off the HS2 project (High Speed 2 rail link from London to middle England at a cost of £100B+), and it probably will get killed off eventually. Unfortunately they are clear felling the native / semi-ancient woods first, now, about 100 of them. The UK has little native woodland left.

        • What? Killing off infrastructure jobs programs?

          What exactly do you want the useless eaters in the buearocracy to do, some more SJW agenda or maintain tracks?

          UBI is out of the question in your world, right?

      • Where is her husband? Women can do it all, go for it girl, all your fellow women will be happy to kick in a bit to see you through.

        We live as a group, going alone is hopeless, we live with partners, complimentary skills and abilities work well, two people fighting to be top dog end with some pretty beaten up dogs.

        Dennis L.

        • I am not a parent so I must proceed with caution here. But, if I raised a daughter I would hope that I encouraged her to follow here passion wherever it leads. I would rather that she worked toward becoming a doctor or a pilot rather than try to marry one.

          Things have certainly changed over the years. My German immigrant father, a tool & die maker, provided a very comfortable living in a modest home, a late used model car and my mother was a full time mom. We could afford a vacation and he paid for my flying lessons. Actually, almost all the moms stayed at home in those days. Some of what has changed since then is our idea of what we need to be happy. For example, my childhood home, a model home in 1956, according to a realtor friend is now a ‘starter’ home. I would argue that some of our problem is not the high cost of living, but rather the cost of living high. Today couples have homes and new cars requiring both incomes to support. That doesn’t work out well one one loses their job. Our American way of life encourages a constant upgrading and our system especially loves divorces in that a doubling of households increases overall consumption.

          I’ve come this far, now where was I going with this. Oh yeah, if I hear you correctly, you seem to place blame on the woman in the relationship because she might be too assertive…one of the dogs fighting. Well, if her income is required to make it all work, she should have equal say in the matter. JMHO.

          Cheers,
          D3G

          • in general terms, the pressure of population increase and the decline in available surplus energy has led to the average home being 10x average wages, instead of 4x average wages as it was 60 years ago

            • price per sq ft i tnink only relates to the location of the building itself.

              if i could magically transport my house to an expensive part of central London, it would be worth 1000+ x times what it is worth here.

              that is just ‘demand’.

              the price/surplus energy equation is still driven by pressure of population

          • “Oh yeah, if I hear you correctly, you seem to place blame on the woman in the relationship because she might be too assertive…one of the dogs fighting.”

            Fighting is a losing game, I place no blame, it is what it is, some things work some do not.

            Can of worms, appreciate your thoughts,

            Dennis L.

      • I take it is a UK story. When countries are worse-off, they cannot afford the support systems of the past. Women with husbands will be in better shape than single mom’s. It sounds like a time for a push toward conservative values.

            • I married, and I put my family first. I worked less than full time, so that I would not have to be away from my family a great deal of the time. I passed up promotions, so that I would not have to move from city to city and uproot the family (let my husband find a new job and the children find new friends). We bought homes that were far less expensive than someone looking at our incomes would think we could afford. So I some ways I am not the best example of a non-conservative person you could find.

            • Kowalainen,

              The opposite way does not work, it may be fun, it may be great for the individual and truly exceptional individuals have to work hard for failure, but the left does not work.

              The left almost seems to mimic some of the Indian philosophies in that it has gone so far left it is coming back to a very intolerant right – and I don’t care for philosophy.

              My city if I read the paper correctly is now pushing to have single gender restrooms in a new grade school. That is insanity. Which teacher, M/F goes into the restroom? I am uncomfortable when a man brings his daughter into the men’s room, imagine a male teacher going into a mixed restroom with little girls.

              People have to have a set of beliefs that work most of the time, accommodation is wonderful, but there is neither time nor resources in life to accommodate that.

              Life is very hard, it is not fair, it is life.

              Dennis L.

            • @Kowaleinen, Our dear blogger does not really strike me an exemplar of anti-puritan backlash. Try Hillary, Kamala, or Angela Merkel. Or Alice Friedmann at http://www.energyskeptic.com (a well deserved plug for her extensive and detailed website). I love her deep dive into energy and resource issues, but now and then she can’t resist gong off on these wild denunciations of her favorite political “devils” who consist of highly stereotyped caricatures of their real life counterparts, shrill over-the-top hysteria that’s good for a chuckle or two but drags on too long to retain its entertainment value. She probably thinks “A Handmaiden’s Tale” is a documentary.

              Just to get her goat, I should, one of these days, point out to her that culturally “progressive” values are a byproduct of the the industrial revolution and its accompanying disruption of the social order, and that a return to a more historically normal and economically static way of life will be followed by a reversion to values appropriate to that sort of social order. Even today, the rural areas and very small towns retain quite conservative social values.

            • In scandinavia it is quite common with mixed sauna and topless baths. You anglo saxons are way too “catholic” in the sense of sexuality. Getting a boner in that sauna? The joke is on you. Getting a boner around children? That job isn’t yours.

              It must be the easiest thing in the world to test out. Just show the job candidates images of naked children, computer generated/hallucinated and non existing in the real world, and watch if there is some genital “reaction”.

              I believe in liberty for all and that society should be a meritocracy. Equal opportunity gives this by default. If a person decide to be a house wife/man, fair enough. If a person decide to be the CEO of a company, fair enough. And of course everything in between.

              The divorce racket is despicable in anglo saxon countries where men gets taken to the cleaners, stripped of their property just so that the consumerism hoopla can perpetrate and take another swing in the orbit of grand deluision.

              In summary, the relentless narratives being pumped out on the devices of brain washing is despicable. Its about time to end the social(ist) engineering practise and just leave people the fsck alone.

              Furthermore I seriously doubt this blog would exist without the fact that Gail is female. If you ponder upon this, I know you will agree with me.

              As always, you don’t have to agree with me, but then you’d be wrong.

          • Beliefs will change with the time. This is evidently what Timothy thought was appropriate at the time.

            When you have a rich government, which can pay for a safety net so a single mother can raise a child without too much difficulty, then maybe single mothers make sense. We need two arms, two legs, two ears, and two eyes. Perhaps two parents for children make sense as well.

            I have mentioned previously that my daughter is married to another woman. I also have a sister who is married to another woman. (No children in either case.) In some of these same-sex marriages, the couple may be able to give children the needed stability.

            • Gail,
              Not an expert, opinions subject to revision, children from two traditional parents seem to do better than from single parents across a broad spectrum. Raising children singly may be a rationalization by elites who have tried it and failed. Raise two children of identical abilities(yes, impossible, pretend we are economists and assume), one with two parents, one with one, one spot in life, the one with two parents will most likely get it. That is a high price for a belief system to put on a child.

              If there are no children, same sex marriages probably are not an issue, in part it is most likely dopaminergic and if it works, who cares? Biology has separated mammals into opposite sexes over many years, if it did not work, it would not be here.

              I don’t see single mothers, pointing out one exceptional example does not make it work for society.

              As for same sex marriages, sex is tough enough for an adolescent without all the variations, it is one thing to accommodate variations, it is another to proselytize that variation become the norm.

              Endless can of worms,

              Dennis L.

            • Here is another negative externality of our energy rich economy. Minor physical “anomalies” (defects), decreased bilateral symmetry (“Fluctuating Asymmetry”), non-right handedness (rising for over a century and not just for handwriting), criminal violence, assorted mental disorders such as autism and schizophrenia, and sexual orientations that cannot lead to reproduction (homosexual, pedophilic, and zoophilic orientations) are all positively correlated. These are all the sorts of things that one would expect to see rise in prevalence after generations of rising mutational load as a result of collapsing childhood mortality because of modern sanitation and vaccinations, and some other medical interventions. And of course western civilization has been living with the mixed blessing of low childhood mortality longer than any other part of the world.

              A hundred years ago, even back before World War One, the eugenics movement, which was immensely popular among many of our most eminent citizens, many of whose names are still instantly recognizable, and seems to have had few opponents, was aware of this problem but was not able to find an adequate strategy to counter it. During the “anti-fascist” war hysteria of the 1940s, the baby was thrown out with the bathwater. Now it is probably the best thing that can happen to the human race that our energy-rich civilization collapse to a point that we return to a high mortality regime. Populations of short lived animals which are bred under controlled conditions without natural or artificial selection accumulate mutations until they eventually go extinct. Unfortunately, the transition from this age to that one (the “return to normality”) will be traumatic for most of those who must live through it, or who will not be able to live through it.

              I must sound like the ultimate bad news bear. My advice: don’t bring this subject up at Thanksgiving dinner. It really kills a party.

            • Calhouns ”Rat Utopia” experiment indicate that something goes awry when the selection pressure is removed.

              What you describe is one of the things I despise about pandering to the cult of children.

              A gazillion halfwits floating around in the system making life a bore as they perpetrate the defect and mundane.

              The herd is terribly boring, even as they riot in the streets. It’s all say to see it from their faces that something isn’t quite right.

              However, some traits that in historic times was problematic, seem today, as an advantage.

              Autism spectrum for example. The best coders need to be on the spectrum to endure debugging and developing in highly complex software stacks.

              I have met plenty of rather clever ladies and gentlemen with some childhood “defects”.

              So the pendulum swings both ways it seems.

              As the Buddhist would say:

              When shift happens, is it really shit?

              Gaia works in mysterious ways.

            • I agree that we have been meddling with the selection process for a long time. The system, before we started medicines with it, seems to be set up for women to have quite a few children (perhaps five or six), and all except two die before childbearing age. Using birth control to adjust the number of births doesn’t really fix the problem that “survival of the best adapted” is supposed to fix.

              The fact that people have moved to a different part of the world than their skin color is adapted for is a problem as well.

            • Gail wrote: “people have moved to a different part of the world than their skin color is adapted for”–Thus, world’s highest rate of skin cancer has been reported to be in Australia. Second highest: Israel. Ashkenazi Jews are biologically adapted to life in Northern Europe, not in the Middle East.

            • Nehemiah,

              Blacks in Northern Europe is having problems with depression. It’s barely the indigenous, Sámi people, can fight off depression from the dictates of nature. Suicide rates are high for them. But that could of course be a cause from other aspects, such as the irrelevance of animal herding IC.

        • Gail, yes I agree, but it is also the other way around, the wife can help the man when need be and with children two can double team the child. It seems to me an illusion that one person can do it all. It is not easy over a period of years no matter what.

          Dennis L>

          • @kowalainen, The autism spectrum is measure by a questionnaire which, according to one the world’s top personality researchers (McCrae, who co-developed the popular NEO-PI-R “five factor” personality test) plots a normal distribution and, in his professional opinion, should probably be regarded as a sixth major personality trait. Of course, scores on the extreme right tail are strongly predictive of Asperger’s and autism, but extreme scores on some other major personality traits, especially neuroticism, are also very problematical. High spectrum scores are also associated with many genes that are also associated with increased intelligence and brain size, which may be one of the reasons (not the only factor, though) why Asperger’s and, even more extreme, autism, keep cropping up in the population. Some of these genes are beneficial, but if you happen to inherit too many, you become a less functional human being. (However, there must be an environmental component too, because the prevalence has increased too rapidly in recent decades.)

            • Yes, it is mysterious.

              My take is that it is the concious and subconcious of the female that dictates some aspects of the pregnancy process. It’s not simply mechanistic, rather a combination of gentetics, psychosocial and psychological effects that causes these variations.

              It’s like the age old question between nurture and nature. However, with nurture equally important before birth.

            • well

              my missis was given thalidomide for pregnancy problems (she was a qualified nurse/midwife incidentally)

              One tablet on her tongue and an instant spit out.

              ” Im not taking THAT” was the violent reaction. “whatever it is”

              You can imagime the years of gratitude whenever I think of that moment, all those years ago.

              IAfter that never dismiss female instinct, no matter what the context.

      • Macron (FR) said something to the effect of this plandemic-shut downs to continue till at least Q2 / 2021. I’d be very surprised if there is not going to be at least some attempted “global reset” via MMT rule book, debt jubilees, bond cancellation, UBI etc.. in that time window.

        Obviously, the situation could anytime lapse into sheer chaos, but firstly the opportunity will be likely taken to transform the system.

          • I looked up Kali Yuga. It is the last of four ages, in Hindu religious documents, described as “the age of darkness and deception.” Some quotes:

            “Then, O King, religion, truthfulness, cleanliness, tolerance, mercy, duration of life, physical strength and memory will all diminish day by day because of the powerful influence of the age of Kali.” — SB 12:2:1

            “In Kali-yuga, wealth alone will be considered the sign of a person’s good birth, proper behavior and fine qualities. And law and justice will be applied only on the basis of one’s power.” — SB 12:2:2

            “ Men and women will live together merely because of superficial attraction, and success in business will depend on deceit. Womanliness and manliness will be judged according to one’s expertise in sex, and a man will be known as a brahmana just by his wearing a thread.” — SB 12:2:3

            “A person’s spiritual position will be ascertained merely according to external symbols, and on that same basis people will change from one spiritual order to the next. A person’s propriety will be seriously questioned if he does not earn a good living. And one who is very clever at juggling words will be considered a learned scholar.” — SB 12:2:4

            “ A person will be judged unholy if he does not have money, and hypocrisy will be accepted as virtue. Marriage will be arranged simply by verbal agreement, and a person will think he is fit to appear in public if he has merely taken a bath.” — SB 12:2:5

            The article continues with more quotes and more explanations. It does sound a lot like today, unfortunately. Its forecasts are not pleasant:

            “ The citizens will suffer greatly from cold, wind, heat, rain and snow. They will be further tormented by quarrels, hunger, thirst, disease and severe anxiety.” — SB 12:2:10

            • All this probably sounds a lot like what was going on back then, too. It’s a bit like Jesus predicting earthquakes and war.

            • The cycle of yugas (ages) proceeds according to the break down of castes and of the stages of life (what is appropriate to a person at their age).

              Kali Yuga is the final of the cyclic ages and it leads back to Satya Yuga and to the re-establishment of the castes and stages of life, and so to virtue and well-being.

              Kali is the lord of ‘confusion’ of the castes and stages of life, of disorder and he is defeated by Kalki who re-establishes Dharma, which is order and law. Whence our Kalki?

              > Narration of the four Yugas: castes and stages of life

              https://www.wisdomlib.org/hinduism/book/the-brahmanda-purana/d/doc362849.html

            • If you want riotous fun in an apocaliptic novel starring Kalki Himself, you just need to read “Kalki” from Gore Vidal. Hilarious and sobering at the same time.

          • I should add, the last part of the Kali Yuga section sounds surprisingly like the Bible:

            “At that time [the end of the bad period following all of this movement away from religion], the Supreme Personality of Godhead will appear on the earth. Acting with the power of pure spiritual goodness, He will rescue eternal religion.” — SB 12:2:16

            • Oh, you’re reading the Hare Krishna version. (“Supreme Personality of Godhead”)

            • Jesus said there would be earthquakes, wars, etc., and then added a conclusion that is often overlooked for some reason: “but the end is NOT YET.” People have been confused by the “apocalyptic” language (“apocalyptic” is a technical term referring to a spiritual literary genre) such that they overlook that the Olivet discourses are primarily about the destruction of the temple in AD 70, and likewise they have been much too swayed by the even more apocalyptic language of the book of revelation. (Thus, “this generation shall not pass until all these things have come to pass” refers to a Biblical generation of 40 years from the time that Christ spoke these words until the destruction of the temple in AD 70, which must have been viewed by early Christians as an event of enormous theological significance.

              But in places where Jesus was clearly speaking about eschatology, he was clear that life will continue in its essential features as it always has until the son of man comes “as a thief in the night,” that is, when no one is expecting it. I once told someone who was raised in one of these many chiliastic (millenarian) denominations that have become so popular since the beginning of the Industrial Revolution that I had discovered the very hour of the Lord’s return. He was skeptical until I gave him the chapter and verse. He looked it up and read, “The son of man cometh in an hour that ye think not.” I sometimes tell people that, according to the Bible, the end of the age cannot be near because there are too many people who expect it now.

            • I have thought about the conflict between thinking the end comes with overshoot and collapse, and the son of man comes “as a thief in the night,” myself. Perhaps a person can’t really believe what the Bible says. That was the understanding at the time, but it is not really right. The end of our current civilization could come (just as the end of many other civilizations have come), without “the son of man” coming.

            • Children growing up a century or so from now will consider their simpler way of life to be unremarkable, just like pre-industrial generations. It is only the generations that must live through a fairly rapid transition as energy and minerals deplete rapidly in the context of an enormous population that will endure trauma. Even the thought of surviving the transition but having to return to the lifestyles of our pre-industrial ancestors strikes many people as traumatic, but future generations who have known nothing else will perceive it differently. Our own historical interlude–Hubbert’s Pimple–is so strange that it will be hard for future generations to understand, or even believe. Just as there are moon landing skeptics today, there will probably be people in the future who will refuse to believe stories about big iron birds that whisk hundreds of people across the ocean in a matter of hours, horseless carriages that routinely travel at speeds of 60 mph or more, and the internet.

            • Nehemiah,

              Perhaps the “Man” have already arrived.

              Different eras – different representations of the divine one.

              Only in hindsight will it be revealed.

              Buddha and Jesus were merely two esoteric characters with their cult following, if they existed at all. It does not really matter.

              Our images of the divine and spiritual might be a reflection of who we are once looking past the rapacious monkey business.

              Okay folks, it’s about time to pack our stuff and leave the cruft behind. Any takers?

        • You are probably right. It doesn’t even take a very big level of reduced demand to push the world economy into a cycle of collapse. Intentional shutdowns, to hold down COVID, add to this. Debt is a part of they system that is severely tested early on. Somehow, income needs to continue for the world’s many unemployed, and businesses need to be kept from failing. The only way this can sort of the done is by some approach to money printing/debt cancellation/etc.

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