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.

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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

    • “After a near-miss debt crisis in 2015-16 Russia’s Ministry of Finance cracked down and introduced a “manual control” control system after several of Russia’s poorer regions nearly went bankrupt.

      “The next few years saw the system put back on its feet. But since the start of the coronavirus (COVID-19) epidemic earlier this year many of the regions are being rocked by the shock of the extra spending needed to combat the virus, and a new debt crisis is looming.”

      • The 2015-2016 period is when oil prices were very low before. Low oil (and gas) prices now are a problem for Russia. The pandemic adds to the problem.

      • From the article:

        “Russia’s total outstanding mortgage debt should come in this year at around 8% of GDP, compared to 50% in the U.S. and 30-40% across Europe.”

        This fits with my understanding of the situation. Russia does not have a very long tradition of buying homes using mortgages. The government either built homes, or people built homes a piece at a time, as their accumulated wages permitted.

        Salaries are low. It will be hard for very many to afford homes, even if they are built. We saw on a chart yesterday that a large share (50%?) of workers are concerned about losing their current job. But many other countries have used subsidized mortgages to push start growth. Remember the US subprime housing? Mortgages were issued to many people without little evidence of income.

  1. “A $50 billion bond market once heralded as the future of housing finance has been stuck in limbo since the start of the coronavirus crisis, and now proposed regulatory changes have left investors worrying that they might be left holding the bag.

    “At issue are so-called credit-risk-transfer securities offered by Fannie Mae and Freddie Mac. They are tied to Fannie and Freddie’s mortgage-backed securities and pay investors principal and interest as long as the borrowers don’t default…

    “If Fannie and Freddie stop issuing new securities, it could become increasingly difficult for investors to trade the CRT bonds they already own as the market and investor base dwindles. Investors, for their part, say they see evidence of the market breaking down.”

  2. That was an unbelievable torrent of hatred toward me over the last two days after I posted the ONS stats that suggested that Chinese, Indian and black African kids do better on average in UK schools, and likely have a higher IQ, than English kids. And yet many of those same posters would have been eager to hear that whites have higher IQ – that sort of thing is often posted and no one has a meltdown – do not even try to deny that. Really. Shoot the messenger much. The resentment, the torrent of hatred was unbelievable.

    • “The resentment, the torrent of hatred was unbelievable.”

      I don’t believe it.

      • I don’t believe it either, and I followed that thread quite carefully. I also don’t believe the statistics: the UK educational system is institutionally corrupt, and a teacher who graded a “minority” as they deserved would be keel hauled on a charge of systemic racism.

        • Oh dear, if you are referring to me, I didn’t even read what you posted about IQ statistics. Not that interested to be honest. My issue was two-fold, 1) you were being dismissive of other people on the forum (referring to one as ‘trash’). 2) I wanted to engage you in dialogue regarding dissipative systems in relation to Brexit, as that context was missing from your comments.

          For an internet forum, I think our conduct is generally pretty good (I think Gail’s patience sets a gentle tone which most of us follow).

          • I have just reviewed every on of my comments on this topic, and in none of them does the word “trash” appear, in any contest or about any thing, animal, vegetable, or mineral. Given the tone of your accusation, I respectfully request a retraction and apology.

            • Robert,

              I think All is Dust’s email was directed at oh dear, not you. I can see why you got confused. Or maybe I am confused.

            • Robert, my comment is clearly addressed to Oh Dear. What is going on here lately? Is everyone OK?

        • Robert, teachers don’t grade the children. The age 11 SATs are independently marked.

    • I experience that torrent of hatred quit a lot. You say something that challenges a comfortable bubble in which it is forbidden to think differently from the insiders, and watch out!.

      It’s very clear that black Africans are “smarter” than Western Hemisphere blacks who have learned to belittle and disrespect themselves (and to have lost cultural values that teach logic and precision). This is not at all the case with black Africans.

  3. For those of you interested in sustainable building, this is a course at MIT, either free, or you can get a certificate for $99.00, 13 week course. MIT seems to really have distance education down, at least from what I have taken to date.

    This stuff is not trivial and it is very expensive and it doesn’t work as well as a simple, modern heating system.

    Good luck,

    Dennis L.

    • Overly complex which simple stuff like thickly insulated walls solves. If it works? Just have a look at the regular villa in northern scandinavia. Heat pumps and thick walls. It isn’t rocket science, folks.

      What is this thing about building houses with thin walls and then stuffing them full of silly gear? Could it be because it is difficult to add some insulating materials and thermal zoning and air ducts to circulate air to avoid mould? Or is it this eternal pandering to gizmos and hopium peddling while keeping the fundamentals of construction as cheap and jank as possible?

      Just build houses properly insulated. It keeps the cold and heat out.

      Yes, you Anglo Saxons suck at building houses. So do East Asians, their “houses” cold as F during winter, and hot as H, during summer.

      You might disagree with me, but you already know the consequences of that.

      • Kowalainen,

        My, my. Bored this PM but still Minnesota nice.

        I have built a reasonable number of structures, some with professional engineers and architects. There are serious issues with building tight buildings, have you built much yourself?

        Won’t go further, if it is easy, build one – my advice which you can ignore, bring twice as much money as you think necessary and then put aside the original estimate for cost over runs.

        Dennis L.

      • Good post. if you live where its cold once you live in a good r house U WILL NOT GO BACK. r 40 wall r60 ceilings minimum. And get rid of those stud and rafter thermal bypasses!

    • How about looking at the designs early settlers used in different parts of the country? These would be not too complex, and would use local materials.

      • Early settler got one thing right. They built small basically shacks. Even a plywood shack with no insulation is very pleasant with a 100,000 btu wood stove in it. Just like the early settler had abundant calorie resources running about in food they had abundant heating calories in wood available. The native americans used snow in there designs. snow is a good insulator if you place your shelter where it will drift and surround your house. Settler designs just do not compare to even a shoddy built modern house. Log homes suck. I wont go into it. about your 7th time staining… If you really are hung up on local materials you look for scoria or perlite in a earthbag design. with a r of 1-1.5 a 24 inch wall does ok. Straw bale still king. Earthbags can be domed but they dont shed water well. By far earthbag and straw bale are at their best with conventional truss roofs. And this is the most important insulation value. your NOT going to put 67 tons of scoria load on your trusses. Whats going to be up there? Fiberglass or cellulose. Now if you are really really insane sawdust from the mill is not a terrible insulator with borax added. NOT recommended. I saw many a old house insulated with newspaper. NOT NOT NOT recommended.
        Sure build your 8×12 sod shack. great fun! Even useful because it is so small it can be heated. Look at a ice fishing shack. If you can throw in some scavenged rigid polyiso insulation you just took it from a curiosity to something.
        Re Sustainability. Martin Holliday is a pioneer in Green building. A honest man. “the most sustainable choice is not to build”. If you really want to be sustainable live in a apartment in the city with lots of roomates. Most of what passes for “GREEN” “Sustainable” is a lie a serves to pamper guilty conscience. That doesn’t make the people who buy it bad.

      • In Westby the first settlers lived in bark huts(bark off trees, local materials), WI was a lumber source in the later 1800’s. My grandfather’s house had no insulation save some newspapers, and a cook stove in the kitchen which sort of heated the upstairs. Plumbing was an outhouse, there was one cold water tap in the kitchen, cistern fed, same as for the cows.

        Bottom line, it was very efficient energy wise. I seriously think it is the only solution which is economical, well insulated homes with good interior air quality are a rich man’s privilege.

        Mom moved from the farm, to the city, converted former whore house, I guess one could say it was hot. Octopus furnace wrapped in asbestos, fired up in the AM, I sat in front of a heat register to warm up winter mornings, heated with good, clean coal – ahead of our time if presidential campaigns are be believed.

        It was not complex, temperature controlled by the number of shovels full of coal each day, plus minus 10 degrees was considered exceptional.

        Dennis L.

        • “Insulation is a rich man’s privilegie?” Not anymore it isn’t.

          It’s merely a matter of incompetence and an affinity to build jank that last max 30 years, consumerist bonanza style, before the next yahoo owner shows up at the front porch and decideds to tear it down. Then proceeds with building a new “house” with the same cheap, jank materials.

          I recall a short stay I had in Newbury, the landlord ran in red in face and told me that I forgot to turn off the heater after I returned in the evening.

          I thought WTF, this is worse than Swedish housing in the 50’s. At least at that stage we weren’t fully electrified and burned oil to heat our homes in the north, yeah it was cheap back then. Nobody switched off the burners when leaving the house. Back in Newbury: In the bath room, two dedicated taps, one for hot and the other for cold water. Yup, that was also Sweden in the 50’s. However, I got news for you, this is 2020.

          Insulation and heat pumps. Stop being so notoriously and obstinately jank with your cars and houses. Save up to 90% of the energy used in housing by, dunno, copy Scandinavia perhaps? No?

        • Your right about air quality being counterproductive to insulation. Take that beautiful old poorly insulated home. Drafts all over the place. fresh air. Thats a healthy home! A energy pig but healthy. Now take a home sealed up. Convection is the greatest heat loss. You HAVE TO introduce air. The other thing about high insulation values. Take a r13 fiberglass wall assembly. Vapor drive adds moisture in winter but sun drys it out in spring. Now make it r40. Suns energy cant get to the moisture to dry it out. The higher the R the more problems. If you live where its cold and have high R walls and ceilings your not going back to low r. Low r sucks. It doesnt cost that much more. The problems have solutions.

          • Bad ‘air quality’ in scandinavian houses? Have you ever been inside a newly built one? Warm, cozy, the scent of wood, silent. Lasts for a century and then some. Proper thermal zoning and ventilation is key. But that is a bygone era of problems.

            However, Anglo Saxon and East Asian houses, hot, cold, drafty and generally moist, mouldy and miserable. Not exactly a “home”, but rather a temporary shed with some bells, whistles and chrome on top, that lasts for 30 years before falling to pieces.

        • “rich mans privledge” A home is becoming a rich mans privilege period. The cost in the ceiling of blowing in another foot of cellulose or glass is negligable. NADA. The walls are more dificult because of space constraints. It is more expensive to go double stud to get space for glass or cellulose OR add the rigid insulation to the outside. Where is the real $ on new construction? Its the finish work for the ooohs and awwws and $. Simple houses of 1000 to 1200 sq feet with good r values and lots of south facing glazings dont cost that much. The storage space should be in a separate uninsulated shed. DUH. Those house are not being built. BECAUSE ITS ALL ABOUT THE $. Buy a manufactured home. Contract it without siding. Blow the attic full of cellulose. Add 4″ of poly iso to exterior. add a appropriate cladding. Done.

          • Okay, this can go on forever. I have recently done this, I am very aware of costs. There are also sales taxes around 8% in our area and if you diy then transportation costs.

            Wrapping it with poly iso – how do you account for the windows?

            4″ iso? clad with plywood to hold the siding, need to screw the siding to “hang” it, plywood doesn’t hold nails well.

            Go double stud and you have extension jams for the windows, even with 6 studs, jams are more expensive.

            Looked cellulose up for cost, about $2K installed for 1000 ft sq., or $2/sq foot, it will always be more.

            Have fun, there is not cheap way to do it, materials are too expensive now.

            All the best,

            Dennis L.

            • “How do you account for the windows”

              Exactly like in scandinavia. Make em’ small. At least 3 sheets of glass for every window.

              The problems with Anglo Saxons is even worse in that of the Norsemen from the north, stop pretending being rich. Living large with rickety albatross sized houses leaky as MS Estonia after being torpedoed.

              @misanthropr#7, in scandinavia the concrete fundament gets isolated with poly iso.

              Most new houses over here does not even have radiators, rather heated floors. Heat exchangers and heat pumps is the norm. The walls are thermal zoned to mitigate the dew point.

              If you live in Minnesota, there is no excuses to follow the jank “house” construction of the Anglo Saxons. Yeah, they are cool and all that, but can’t build houses worth a cr@p.

            • Sure there are costs. My reference was to new construction. $2 a square foot is not a lot compared to the other costs. A large part of that is labor.There certainly ARE cheap ways to do it but they take some effort not just calling the contractor. You can look on craigs list for fiberglass bats. Ditto fior cellulose and rent a blower.

              Compared to the overall value of the house these are small costs. I assume there is some insulation in your ceiling. When the house was built more could have been added at not much more cost. Labor is a large part of the cost.

              If you have fiberglass insulation in your ceiling a cellulose layer on top will increase the effectiveness of your fiberglass my limiting the inherent convection losses of fiberglass while still allowing it to breath.

              “accounting for windows” You flash them of course. This is not rocket science.

              Rigid foam is installed with long screws with large plastic washers, If stucco is the cladding they go through the lathe and felt too. 4 ” is a lot of insulation because there IS a lot of weight on the end of those fasteners. Most only do 2″. “outsilation” is done all the time. Its not my favorite.

              Ive seen retrofits done on the inside with rigid and mobile homes also. Screw the rigid to the walls and add drywall. Your better adding more insulation in ceiling above the rafter because of drywall weight.

              You can add interior insulation via 2×6 fiberglass added and drywall. Easy its non structural. Ive done it. 2×6 4′ on center.

              Convection losses are the biggest. You start there. Air is introduced through a heat exchanger. This can be via tubes ala earthship or simply cracking a window during the warm part of the day.

              The easiest way to make a home warmer in cold climates is to make it smaller. This can be done by simply adding a non central heating source to the kitchen. The great room of old. Core area. Temperature can be lower in the bedrooms because your under blankets. The rest of the house does need to be kept well above freezing for the plumbing.

              You can add interior insulation to a core area via 2×6 fiberglass added and drywall. Easy its non structural. Ive done it. 2×6 4′ on center studs. Just making a box to hold the glass and screw the drywall to.

              All of this can be designed in. Limiting where the plumbing goes to core areas. High r values. south facing glazings. It doesnt have to be taken to a extreme. Just common sense. Yes retrofitting is a pain.

              If you like your house the way it is more power to you. Anyone with a house is blessed. We are not helpless. We dont have to build 3000 sq feet houses with low r values. We dont have to go crazy eliminating every single energy loss eithor. Common sense.

          • “Good luck with insects and critters on the cellulose.” The boric acid acid asses to cellulose has had some people comment that it is a rodent and insect repellent. If you live rural any cavity and any loose fill type insulation is vulnerable to rodents and insects. Its a BIG advantage to a solid fill design like earthbag, If there is a rat that chews scoria i would not want to meet him. Every cleaned pounds of rodent poop of a log cabins rafters? I have. Where I live most people keep a dozen semi wild barn cats. problem solved. All indications are rodents dont like cellulose. They dont like sprayed foam either . i never seen even one bite out of spray foam or poly iso for that matter. They say they get into straw bale. Ive never seen it with a standard lime plaster finish.

        • “Mom moved from the farm, to the city, converted former whore house, I guess one could say it was hot.” Now theres a sustainable energy source!

        • One of the videos posted on an earlier thread here showed Australian aboriginals girdling trees to create temporary shelter. They’d use a 5′-6′ tall swath of bark (the entire circumference of the tree) as curved sections of roofing in a very casual and disposable hovel. Biodegradable yes, and deforestation, too.

          I believe this was the video, with Peter Finch (of “Network” fame) narrating.
          The segment I was thinking of starts at around 4:00′

      • A big issue is cost/time. Apparently, Americans move on average once every five years. There is little incentive to invest in infrastructure that you are going to leave behind soon; it’s cheaper just to pay a little more in utilities. Europeans historically seem to stay in the same dwelling for many decades.

        I added a lot of insulation to my current house, but won’t recoup any of that value upon sale, nor will I have re-couped it in fuel savings by the time I will need to sell it.

      • In fact, researcher Malcolm Light has been thinking about fixing it for long enough. This article is from 2015.


        “I and some other workers have designed a radio-laser Atmospheric methane destruction system based on the early Russian radio-wave induced conversion of methane to nano-diamonds. This radio-laser system can be installed on nuclear powered boats such as the 40 Russian Arctic ice breakers and start immediate work on destroying the atmospheric methane clouds that are building up in the Arctic. An abstract about the system is attached and it has been accepted for presentation at a congress of the American Meteorological Society to be held on January 10 – 14, 2016 at New Orleans in Louisiana, U.S.A. This system should be mounted on the nuclear icebreakers and used onshore. Once the methane is brought under control there should be a reduction in the massive fire hazards, heat waves and severe storms systems that are plaguing Russia and the rest of the world.”


        My own comment: such actions would undoubtedly also have unintended effects that cannot be foreseen or modelled. However, perhaps NOT doing it might have worse effects. Let’s see if Elon Musk gets wind of this plan and tries to put together a system to implement it.

    • I don’t blame them. Parents want some control over the number of children they have. Birth control too often doesn’t work. If a couple is depending on the wife’s income, and she is out with a baby, this causes a problem.

      • Interesting point of view. One wonders how our grandparents did it living on a farm with no available childcare at first. Throw the baby out with the bathwater and one has no available labor in the pipeline. Wife there too was an important part of the family income, or family survival both in childbirth and other chores.

        It is difficult to understand why compared to fifty years ago we are having so many problems making our way, going back another generation and my grandparents certainly had much less per capita energy, somehow more things seemed to work.

        We seem to be going back that way, finding solutions would be helpful.

        Dennis L.

        • @Dennis L

          “Wife there too was an important part of the family income, or family survival both in childbirth and other chores. ”

          Women contributed more manual labor in history alongside being more specialized in childcare. Paying others to raise one’s own children was often more likely to be for those who were very wealthy.

          And I think that the wife didn’t handle the children alone. Other female relatives would have pitched in.

          But the Husband did the majority of the work in bringing in income.

          • Depends on the culture. In some places, women do the bulk of the work while the men laze around (kind of like the lion paradigm).

            • That’s why the Patriarchy was created:

              When Men get Headship over their own families with children that they know are of their blood.

              Men will put in the work of providing for the family and nurture their offspring.

              Hence also the rise of chastity culture to ensure Paternity certainty.

            • You know the relationship between the Alpha and the group of males that he leads?

              And the implication of the natural instinct of being loyal to and taking care of his group?

              Now apply that to the family.

            • Interesting read regarding the rise and fall of patriarchy. My take is that we live in an age of abundance (compared to pre-industrial civilization) and that man and woman are no longer in dire need of each others full commitment and partnership for survival. You can go out, copulate with whoever, go eat a burger, survival ensured. Let kindergarden and school raise your offspring. In hunter gatherer times, the man would hunt for food while the woman raised the offspring. A mutual contract were necessary for survival.

            • Yes, Slow Paul.. the State has taken over the function of the Patriarch. That’s the “contract” that is coming into question for energetical reasons (which will translate into political reasons).

      • Sorry, the genuine issue of stricter abortion regulation there (sidestepped for ages by “tourist abortions” done elsewhere in EU) is hijacked for yet another “color revolution” escapade. It’s the very same people, foreign NGOs, behind it as well as the similar profile of their foot soldiers (not very bright and gullible segment of the youth) on the ground.

    • The way I am reading this, it is more about a common currency for some countries that used to be part of the Soviet Union, so that they don’t have to switch back and forth to the US dollar.

      The Eurasian Economic Union (EAEU), an analogue to the EU in the post-Soviet space, should begin using its own currencies in trade, rather than the Euro and Dollar, which dominate commerce between the member states and China.

      That’s a consensus agreed upon at a virtual forum on Monday, dedicated to integrating the five EAEU member states with China’s flagship foreign policy initiative, ‘One Belt, One Road’. Founded in 2010, The EAEU is made up of Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, and in recent years has actively sought a closer relationship with Asia, especially Beijing.

      This same currency would be used in trade with China, cutting the US dollar out of the picture. I am sure the US will not be happy about this either.

      I have written about more local alliances, instead of the globalization we have been seeing. I think that this is part of it. Financial systems start being more local as well.

      • It seems it doesen’t happen elsewhere. It’s a bit of comeback of Ussr and a lot of China’s growing influence.

        In Latam there are no internal currency swaps, not even at Mercosur, the biggest free trade agreement. Not even talks about it. But there are currency swaps with China. It’s likely that Argentina, for exemple, will pritty soon be a province of China, reg. financial issues. CB has almost zero reserves, usd bonds price is falling and ability to borrow from IMF is likely exhausted. Everybody seems to agree that China is the only path left, also because their demand of goods still grows and all the rest shrinks because of the pandemic

  4. Neil McCoy Ward is an investor who puts out videos. He seems more sensible than most business people.He says he is totally out of the stock market fearing crash. This video he show how dead downtown London is, Trafalgar square, and the subway etc. Eye opening to me how bad it is (and also how beautiful the buildings are). He has previously called for a real estate crash/collapse early 2021. He predicts deflation, but doesn’t ever mention the energy component to the economy. The second video he gives his analysis and prediction.

    • Thanks for the videos. There’s something particularly poignant about the electronic ads in the subway and Picadilly billboards displaying their messages to no-one.

    • Interesting! London looks more empty than the Wall Street area of New York City.

      People in the UK are having their salaries paid through the end of October. Expect a big falloff in employment at that time. Many workers will see their incomes fall, making the situation much worse. (I think Europe and Australia are somewhat similar.)

      People are being told to stay inside with harsh penalties because of the current spike in COVID cases. They are being told to be terribly afraid of going out.

      Small and medium sized companies hire a surprisingly large share of workers (60% in UK), and pay a disproportionate share of taxes. They are the ones that are in danger of failing. The loss of all of these businesses and jobs will lead to deflation.

      • The chancellor announced a new package of payments for areas in tier 3 lockdown, soon to be most. It pretty much replicates the furlough scheme which is to be wound down in a few days.

    • The segment opens with a clip that says ‘peak hour’ but actually the clocks on the tube say1122. Not surprising there are no commuters around and the train is empty.

    • @#$%! I thought from the date that Russia must have intervened in the Karabakh war. But no, these are just clips from this year’s military exercises.

  5. Yet another peer reviewed article showing that people with higher vitamin D levels seem to be less likely to become hospitalized COVID patients, at least in one hospital system in Spain.

    This is a link to the write-up More than 80 per cent of hospitalized COVID-19 patients had vitamin D deficiency: study

    This is a link to the academic study: Vitamin D Status in Hospitalized Patients With SARS-CoV-2 Infection


    In COVID-19 patients, mean±SD 25OHD levels were 13.8±7.2 ng/ml, compared to 20.9±7.4 ng/ml in controls (p<0.0001). Wow!

    Vitamin D deficiency was found in 82.2% of COVID-19 cases and 47.2% of population-based controls (p<0.0001). Wow!

    Paper says:

    Probably, the best approach should be to identify and treat vitamin D deficiency, especially in high-risk individuals such as the elderly, patients with comorbidities, and nursing home residents, to maintain serum 25OHD levels above 20 ng/ml, and probably with a target between 30 ng/ml and 50 ng/ml. Whether the treatment of vitamin D deficiency will play some role in the prevention of the viral disease or improve the prognosis of patients with COVID-19 remains to be elucidated in large randomized controlled trials which will be certainly necessary to precisely define the role of vitamin D supplementation in futures waves of SARS-CoV-2 infection.

    Even if the story is not 100% proven, it makes sense to get people’s vitamin D levels up.

    • I just had blood tests for vitamin D and was found to be deficient and advised to take supplements over the winter. Problem is I am already taking supplements and have done so for the for the last six months (75micro g/3000 UI per day).

      How much of this stuff can you take?

      • Increase the dose, distribute it evenly during the day. Do a blood test. Rinse and repeat.

      • It depends to large degree also on your life style..

        Say if you are physically active even per off/winter season (farmer, construction worker, athlete, or submerged in very stressful office job) the all spectrum vitamins and minerals drain from the body is just enormous, you are always running on deficit.

        Ever wondered why “workers” in previous centuries received good amount of beer and wine on the job, and no it was not for the alcoholic content.. Another important facet of life those fuc#. global capitalists and liberal progressivist-fantasmagoos erased from our cultures..

        In other words, try to replenish these by whatever means available to you.

        • I can tell from my experience is that you do indeed need eat more if you start going full bore on a bicyle at your 40km daily commute.

          Best source of rapid burning energy is a fruit smoothie juiced up with plenty of sugar. It’s like kerosene for a jet engine. It hits like a hammer, and then get on the bike to capitalize on it. Vitamins + fibres + micronutrients + sugars = nitromethane for the rapacious primate protoplasm.

          When there is plenty of sugar floating around in the body with the insulin receptors in the leg muscles wide open, you’ll feel great. You’ll crank those pedals like there is no tomorrow.

          LCHF and Atkins is BS.

        • The rapid drain issue could be another reason why dark skinned workers seem to have higher death rates. Dark skinned workers are more often in jobs that require physical labor, perhaps also keeping vitamin D buildup down (besides dark skin providing this effect).

    • Thanks for another confirmation.
      If you recall in late winter/early spring very few suspected or advised about this, while nowadays it’s becoming common knowledge all these supplements are flying off the shelves like crazy, no wide spread shortages though. There is evidently spike in demand both from retail (pharmacies) as well as already hospitalized (procurement).

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