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

    • France has pursued a very odd course. On the one hand, it has very many speech crime laws, like other Western European countries. All sort of subjects are subject to strict boundaries, especially with regard to minorities – gays, J ews, migrants. France has no real pretence to uphold ‘free speech’, any more than UK or other countries.

      And on the other, France ‘singles out’ for defence cartoons that are liable, and in some cases obviously intended, to provoke an inflamed response, under the pretence of ‘free speech’. All speech is controlled apart from that which is liable to provoke the worst response and to leave the most bitterness.

      One can only wonder what that ‘strategy’ is intended to achieve. It does not seem to be ‘liberty’ because France has all sorts of speech crime laws. So, what on earth do they think that they are doing? Maybe it is just a lingering RCC resentment against other religions that is behind this civil disaster? Otherwise France would be consistent with its already strict speech crime laws.

      “We ban all sorts of speech and expression, but we absolutely reserve the right to publish insulting and mocking images of other religions.”

      It is hard to see any other ‘explanation’ that ‘fits’ the facts. A defence of ‘liberty’ and ‘free speech’ does not explain the ‘strategy’ – France has loads of laws against liberty and free speech. A desire for harmonious community relations (often the reason for speech crime laws) obviously does not explain the incongruity. So what on earth is France doing?

      The result is that Macron has been forced to adopt much of the rhetorical ground of Le Pen in order to stay in office – but without the immigration controls that Le Pen would want. France seems to be handling its transition to a multicultural society spectacularly badly, and it seems doubtful that they have really thought their ‘strategy’ through.

      Obviously I am not ‘advocating’ any policy, liberal or otherwise. It is just hard to see how France has any coherent explanation of what it is doing – certainly not a defence of ‘free speech’ that it generally does not uphold, and certainly not the pursuit of harmonious community relations for which it has many laws against free speech – so what exactly does France think that it is doing?

      • I don’t understand what you don’t understand.
        Mocking a religion is an absolute right. A belief doesn’t define who you are.
        But mocking people who are a minority is absolutely different.
        Here in France we love to mock catholicism, the pope, why not Islam? What do you not understand?
        But maybe this a french cultural bias, I don’t know!

        • No, its not a french cultural bias, its the spirit of the enlightenment.

            • Bad memes trash good policy.
              As long as ignorance and superstition, coupled with violence (a given), prevail among the hosts of religious memes, the hosts are sacrificed , as long as the meme can prevail.

            • Duncan, that was as a profound and sublime a nugget of wisdom as I’ve read in a long time. I shall treasure and ponder it.

              Thierry, a lot of people enjoy mocking Catholicism. But then again, Catholics will not generally kill people who mock them. Back in the days when they burned heretics and athiests at the stake, people were much more reticent to mock Catholicism openly.

              Absolute right or not, getting your head chopped off for blasphemy is a powerful disincentive to making any overt negative comments about Islam or the Prophet, Pease Be Upon Him.

              Sven, arguably, the founding of the Enlightenment was dependent on the termination of the Catholic Church’s right to retaliate physically if mocked. Since the practitioners of Islam still claim this right, then Islam is incompatible with Enlightenment values. Ultimately, the two ideologies cannot coexist in the same sociocultural space.

              However, that may not be such a big problem as in the West, Enlightenment values are now honored more in the breach than in the observance; like Avalon or Arcadia, the Enlightenment lives only in the hearts of those who are nostalgic for the good old days when everything made sense.

        • Free speech is free speech.

          Any state that enacts limits on free speech, for whatever reason, does not have free speech.

          CCP curtails speech that is contrary to CCP values, the Saudi Arabian state curtails speech that is contrary to Islamic values, the French state curtails speech that is contrary to PC identarian values.

          All of those states have some criteria, just a different criteria, that is used to limit speech. As soon as you limit free speech according to some criteria, it is no longer free speech.

          It is not like PC identarian values are the unique criteria to limit free speech that leaves free speech intact.

          That is just entirely ‘made up’ and contrary to the facts. Controlled speech is not free speech.

          Any state can ‘say’ that it has free speech in so far as it enacts its own criteria to limit speech.

          CCP: ‘Yes, free speech, just not against CCP, that is wrong.’

          Saudi state: ‘Yes, free speech, just not against Islam, that is wrong.’

          French state: ‘Yes, free speech, just not against PC identarian values, that is wrong.’

          The values are relative to the state culture, and so are the criteria that are used to limit speech – but none of it is free speech.

          The French state has particular values that function as criteria to limit free speech. It does not have free speech, it has controlled speech. Its controls on speech are ordered to the objectives of the French state.

          All countries allow some speech but that is not free speech. Free speech is free speech and controlled speech is controlled speech.

          And who gets to decide what ‘defines’ a person? Do they get to decide that for themselves? Or do you do it for them? In any case, it is just another criteria that is used to limit speech. It is controlled speech, not free speech.

          The decision to ban all sorts of speech contrary to PC identarianism, but to allow the abuse of the religions of persons, is entirely arbitrary.

          There are no ‘commandments’ written in stone to say that is the ‘right’ approach to speech. It is entirely ‘made up’.

          And it is not free speech, it is controlled speech.

          • We are talking about a cartoon vs. beheading someone.

            ISIS is true Islam. Islam is a brutal religion. Their prophet beheaded people. ISIS just follows true Islam.

            Christianity on the other hand produces lambs.
            .
            It’s a match in hell.

          • OK Oh Dear, this is indeed controlled speech. But it is a social agreement to draw the lines between what we can mock and what we cannot. It is not the state or whatever that defines it. This our culture. People admit it, that’s all.
            What you call free speech, I don’t think it really exists, anywhere.
            So let’s celebrate, as Robert says, Frenchness, the spirit of the Revolution, liberty, equality, fraternity and, in this case, a secular state”. We won’t give up on this.

            • Then maybe the French state should put all of its speech crime laws to referenda, and find out what laws the French citizens really want. But states never do that. They are the laws of the state not of the citizens. Citizens change their opinions over many matters, so the referenda should be repeated once a generation.

              It is not ‘liberty, equality, fraternity’. It is ‘speech is controlled and banned on many matters but we can insult your religion publicly as much as we like.’ That is not liberty – it is controlled speech. It is not equality – it is freedom for some to say some things and not for others to say other things. It is not fraternity – it is simply controlled, unequal speech in a society that has a distinct lack of fraternity.

              You cannot call that ‘French culture’. The culture of France has changed through the ages. It was RC for most of its history. It is the laws that are imposed in an incoherent manner by a bourgeois state that wants to pretend that it has liberty, equality and fraternity when it has the opposite – controlled speech, unequal speech and a distinct lack of fraternity.

              All that you can say is: this is our law. You cannot justify it in any way, not rationally and not democratically. France is an unfree country that encourages the public abuse of religions – that is all it is. The French state has not got a clue what it is doing and the whole world is frankly shocked at the state of French society.

            • The French state may be ‘secular’ in so far as it does not establish any theological religion as the basis of the state – but that does not mean that it ‘has to’ allow the public abuse of religions. That is a distinct choice that the French state makes.

              The French state is ‘multi-ethnic’, in so far as it does not establish any ethnicity as the basis of the state – but that does not mean that it allows the abuse of ethnicities. On the contrary, it prohibits that, it does not enshrine it as a ‘right’.

              For the state to have no religious or ethnic basis does not itself dictate state policy on what kinds of speech are allowed. It can mean that any speech on the matter is allowed, as with religion, or that no abuse is allowed, as with ethnicity.

              The French state has ‘singled out’ religions as the sole legitimate target for public abuse. It does not ‘have to’ do that because it is ‘secular’. It simply chooses to do that. And it has got nothing to do with ‘liberty, equality and fraternity’, it is simply a choice of the state to allow the public abuse of religions.

            • Oh Dear, we don’t agree, that’s all.
              “it is simply a choice of the state to allow the public abuse of religions”, and if so, who are you to tell us not doing this? If you are shocked, well stay home and don’t visit France, who cares after all? Nobody will force you to watch our cartoons.
              France is an unfree country but be careful, we do love revolutions and the next one might happen very soon.

            • I seem to remember saying that I am not ‘advocating any policy, liberal or otherwise’. I suggested that the French state hold referenda on all speech crime laws to find out what ones, if any, the demos actually wants.

              Yes, ‘who cares’, I had no intention of visiting Paris anyway, why would I? It is a few square miles surrounded by endless suburbs of high rise housing blocks. I could visit south London if I wanted to see that. The Eiffel tower looks like an electricity pylon and we have plenty of those here. The northern countryside is quite nice but not really that different to the English countryside that I live in anyway.

              I am sure that the French state is just trembling at your ‘love’ of revolutions – even though you seem to agree with the French state anyway. Thanks for your insights.

            • Right for the pylon, at last we agree!
              The situation is complex here and what you call “state”, can have different meanings. Macron is not the State, just an elected president for 5 years, but his end is near. I expect many surprises.

        • In France you can go to jail for challenging Jews.. Iran’s ayatollah just pointed out that little discrepancy.

      • “One can only wonder what that ‘strategy’ is intended to achieve.”

        The strategy is at least 50 years old and it’s called strategy of tension. It worked pretty well in Italy when the strategists realized there was a risk that the PCI would win the legislative elections, and that it was important to demonize the extreme left movements that swarmed politics at the time. Gianfranco Sanguinetti explained it all in his book “On Terrorism and the State”

        For the French state today, the useful idiots on duty are the “Islamic fundamentalists”, and its enemy is the French people, whose mania for attempting revolutions is well known. Without all the “islamic attacks” of the last 10 years it would be impossible to implement the repressive legislation neccessary to quell the coming “deluge”.

      • Your post made a lot of sense to me. I also agree France does not know what it is doing. It celebrates Frenchness, the spirit of the Revolution, liberty, equality, fraternity and, in this case, a secular state. And yet it has imported millions of barbarian invaders who share none of these values, who are implacably opposed to them, and who grow ever more menacing, brutal and murderous in their attempt to destroy the French state and enslave its people. And the politicians rabbit on about education and assimilation, about “French Islam”, in blind obedience to their liberal dogma, while churches are desecrated and blood flows in the street. Charles Martel knew better, and so does Marine Le Pen.

        • Instead of bringing people to IC, why not bring IC to people instead?

          They can secularise at their own pace and place.

          I’m sick and tired of both the elitist right wing “we are better than thou” and the nauseating left wing “white man bad” sanctimonious hypocrisy.

          How about this: Leave people alone until they ask for help? Yes, how about that for a change?

        • Robert, maybe the Frenchness is not a problem but a feature. We won’t have to endure a pompous group such as Deirdre, think of French Islam as a cleansing, what do they gain? Minerals, none, philosophy, nonesense, some old reactors waiting to fail. Worst of all, they have to put up with the bombastic French. If France fails, parts of Africa are defacto liberated, what is not to like?

          Dennis L.

          • Dennis, I agree that our philisophy has long gone, our economy is very bad and our reactors old.
            Green energy won’t save us either.
            French Islam? I don’t know what this is. So maybe we are doomed. Or maybe the reset will give us some opportunities, who knows?
            I still prefer to be french than english, the situation here seems less despaired here.

          • Dennis> Well, you are missing the historical context. Gargantuan amount of blood and treasure went into curbing the islamist foothold in Europe throughout past centuries, be it the Iberian or the wider CEE/Balkan/ClubMed vector.. The spoiled creti#ns.. of north-western Europe negated all that effort just in few decades..

        • Why is it bad to have separate cultures and have them within geographic areas? No one would dream of combining vanilla chocolate and strawberry milkshakes. They each have their own flavor. What makes them unique is that flavor. Those flavors are what make the world so special. If I want to visit Morocco and appreciate its uniqueness i will be respectful of its uniqueness. The last thing I want to do is change that. I also can respect that culture without wanting to make my own the same culture. If that culture is so fantastic that it holds great meaning to me i can move there not to change it but to live within a culture that speaks to me. It would seem to me that diversity is sustained by the milkshake cups not discarding them and pouring the milkshakes into a puddle. I say this love and appreciation for all cultures. The opposite is also true. The most intolerant action is to pour all the milkshakes into a puddle. That doesn’t mean that we cant have different cultures within a community but their is a point when essence is lost.

          • Yes, ethnic homogenity with some spice on top for that genetic and cultural diversity. I would also hate to see the different cultures and characters of the world end with uniformity.

            I love being in East Asia, work with Middle East people, East Europeans, West Europeans.

            And for FSCK sake, make sure that the borders are open for highly skilled artisanry.

      • “One can only wonder what that ‘strategy’ is intended to achieve.”

        The strategy is at least 50 years old and it’s called Strategy of Tension. It worked pretty well in Italy when the strategists realized there was a risk that the PCI would win the legislative elections, and that it was important to demonize the extreme left movements that swarmed politics at the time. Gianfranco Sanguinetti explained it all in his book “On Terrori.sm and the State”.

        For the French state today, the useful idi.ots on duty are the “Isl.amic fundamentalists”, and its enemy is the French people, whose mania for attempting revolutions is well known. Without all the “isla.mic attacks” of the last 10 years it would be impossible to implement the repressive legislation neccessary to quell the coming “deluge”.

        • While a beheading is extremely gruesome, is it any more tragic than a gunshot to the head? This is not unusual in America with mentally unstable extremist, and should be expected in other countries where freedom leads to extremists views in some cases. What the beheading does is put a very graphic visual in the populations’ minds, so much easier to associate the Muslim religion, and its’ followers, with medieval thoughts and acts of violence. The question should be, what Islamic ‘strategy’ is the encouragement of violence against a much larger native population supposed to achieve? What it will achieve is a much higher amount of suspicion and hatred, leading to possible deaths and expulsion of the very people that should be trying to offer services, gratitude, and integration into the host nation. As the world economies start to crumble and resources become scarce, I would hate to be surrounded by a desperate, angry French population looking for a scapegoat. Bad strategy!

          • When some group behaves in a way that is flagrantly antagonistic to its own interests, we can only conclude one of two things: either that the members of that group are abysmally stupid, or that they are being manipulated as well-trained patsies.

          • This story of “mental instability” is getting old. The news here in the US reports “we still don’t know the motive”, even though the beheaders routinely and clearly state their motives. Islam (submission) is spreading because its believers actually believe in its practice. I don’t see why we choose to be mystified by that just because, if we are secularists, we can’t imagine ourselves behaving in that way.

            Very bizarre that you would think the French need a “scapegoat” for what is righteous anger. They’ve just had two major cathedrals burned down. How is this not war? One side declared war and the other hasn’t even begun to rub the sleep from its eyes. It’s hitting the snooze button.

            In talking about the ridiculous lockdowns, I was talking with a female veteran. I asked her rhetorically whether she didn’t think some things were worse than death and she declined to respond. What did Japanese kamikaze pilots “achieve”? Even in an objectively ‘lost’ cause, they achieve an intensity of commitment that is communicated to their own side if not the enemy’s. Islam knows they will wear down the West. It doesn’t matter if they are right or wrong in their beliefs.. they are just clearly more committed to them. If France were committed to a secular state, they wouldn’t sponsor these people or allow outside funding for mosques, etc. They wouldn’t allow “no-go” zones. If they are wishy-washy about self-preservation then they won’t be preserved.. don’t know how much simpler it could be.

        • JMS> Exactly. This pivoting maneuver also tries to sidestep the more genuine nationalist French political groups which were focused on the issue for decades. The French PM came from key (perennial) banking house, enough said..

          • It’s very enlightening to me that we have here a bunch of very smart people dutily discussing a subject without deviating a millimeter from the discussion parameters set by the Communication Masters, aka, the Planners – namely, that there is supposedly an huge problem with Islamic terrorists in France, in addition to a deep and irreparable clash of cultures).

            I wonder how people can believe in anything they see on telly? Don’t they know tv and MSM are pure tools for ideological manipulation of masses? Apparently, even the most clever and informed people can be clueless about the way deep politics works. In fact, it’s in the realm of politics that cognitive dissonance manifests itself most clearly.

            • The way “deep politics” seems to be working is not only to divide people and heighten tension (it certainly does that) but to—at the same time—force them away from any safe or stable haven which might be contrary to global corporate interests, be that church, family, a stable workplace, local or national organizations… by breaking down all of those.. This seems to be the plan, once applied by communists to achieve power but now applied by “globalists” and the “Great Reset” crew in a kind of grand techno-utopian synthesis they openly promote:

              “The world must act jointly and swiftly to revamp all aspects of our societies and economies, from education to social contracts and working conditions. Every country, from the United States to China, must participate, and every industry…must be transformed.”

              Forcing us to submit to their “new ways of living and working” will be seen as a good thing. They acknowledge the Covid-19 pandemic as their tailor-made “window of opportunity”, not just to propose this Great Reset, but to enact it.

              Maybe you see some other way this is going?

            • I would be worried about the above to the extent I thought they could actually enact much of their depressing vision. I doubt the lights will be kept on long enough. Check out the list of sponsors who are on board with the global reset project. I assume they think they can all survive the end of cheap energy.. not sure how.

              https://www.weforum.org/great-reset
              https://www.weforum.org/partners

              You just lost your job, and the shelves at the supermarket look kind of thinly-stocked, but at least you can watch a Syrian chef use sign language in her cooking show, or take comfort in the fact that Tanzanians are recycling plastic bottles into Covid face masks. Anyone who needs a boost, just browse that site.

            • Lidia, I fully agree with you. I would say the divide and rule strategy has as much application in the realm of imperial geopolitics as in the small affair of governing the masses.To destroy connections between people/communities, or obliterate personal/ historical identity, is certainly another way of divide to better rule.

              The plan seems to be to create a (no) society of depressed and frightened atoms, each one in his/her “safe” cocoon, an herd of obedient underpaid workers, watched 24/365 by state or corporate entities, etc., etc., following closely the chinese model for 21st century capitalism. But all this served of course with three things that human beings appreciate a lot: security, two meals a day, and electricity. For everything else, the planners will rely on police and army, while capturing for themselves all the wealth once at disposal of the middle classes.

              The plan sounds sort of good, it was obviously carefully thought. But like you, I believe the planners will have a hard time keeping the sheep calm just with a bowl of rice and netflix. Months of this and people will become fully demoralized (the drop and die kind) or fully enraged (the young).Then the enraged ones will try to break everything into pieces, and riot police come into action. Who knows how long that situation can go on? I wouldn’t rule out that with full control of media (totalitarian kind censorship), a generous use of violence and a 25 kg rice bag/month per sheep, the planners could extend the fake game of capitalism for.. what,two years, ten? Who knows?

              Thanks for the link to the WEF partners. You’re right, the whole corporate world is there. Perfectly united. And “we the people” so disunited. If this were a race i would say the other team has a very comfortable advantage. They will win, ie, they will die after us and with much more toys.

    • of course it is.

      the profitability of economic activity is in an unrelenting irreversible decline due to the end of the growth of net (surplus) energy.

      there is always the possibility of a sudden drop in oil production, which would bring a brief spike in oil prices, but that almost enters the territory of black swans.

      the years ahead look like a continuing slog through worsening economic conditions and perpetual low oil prices.

      eventually, oil producing countries which don’t yet have control of their private production will have to nationalize in order to remove the price and profit problems and keep the oil flowing.

  1. The price of oil seems to be on a downwards roll:

    INDEX UNITS PRICE
    WTI USD/bbl. 35.12
    Brent Crude USD/bbl. 36.85

    • Doesn’t sound good!

      By The way, I am without electricity right now, thanks to Tropical Storm Zeta. I have a little internet connectivity through my phone, at least until the battery wears down. There seem to be thousands of people without power, so I am not optimistic that it will be back any time soon.

      • The remnants of Zeta are headed over here to the UK once it’s done with you, Gail. Hope you get your power back soon.

        • When I was out walking, I saw a tree down that took a bunch of wires down. I imagine that is the problem. There are actually several trees and large limbs down in the neighborhood. I am sure there are a lot of areas with similar problems. Eventually, a truck will come by and fix the problem. The UK has enough problems. It doesn’t need a tropical storm!

      • When I was a lad, back in the day, early 1970s, power cuts were common due to strikes. I don’t remember much about them except that for me they were fun and a thrill, being only 9-10 y.o. Difficult to see how the UK could cope with extensive power cuts now.

          • Putin?

            I know it’s a typo, but it’s funny.

            it is election season, though I haven’t yet seen the damage caused by storms blamed on Russian disinformation.

            Biden and associates are under an ongoing (since 2019) FBI investigation for money laundering, and most of our media refuses to report about it.

            it’s outrageously Orwellian. This is a mostly good place to live, but it is heading downhill.

      • My electricity came back on Friday afternoon, so it was out something like 34 hours. Now it is back on. We bought little headlights that use AAA batteries to wear. This helped us get around and even read the newspaper.

  2. Our situation reminds me of 2008. The Fed and the government created a bunch of money. It hit the economy like a sugar rush. Markets went up. There was economic activity. Then the sugar rush wore off. Markets went down. Then we returned to a normal. The normal we returned to ZIRP was not very normal. This time they have created A LOT MORE money. The sugar rush did not last as long. as far as the future who knows.

    • 2008 was mostly about global financial mismanagement. After global finance was manipulated, BAU returned more or less to average levels.

      2020 is very much worse. The economy in 2019 was already stagnating due to the imminent end of the centuries long increase of net (surplus) energy.

      There is no fix for this energy scenario.

      Soon, there will be a reversal of the past pattern of mostly growth years interspersed with rare recessions.

      By the end of this decade, growth years will be the rarity, and most years will be recession years.

      • Now the question is, how long can the economy survive such prolonged contraction ?
        Under it’s current form probably no more than a few years… A decade seems impossible

        • This is the big question. How long is decline slow, and when does it speed up? My guess is that it will vary by area. The loss of electricity will be a bag step downward. Gasoline and diesel dispensing requires electricity. Natural gas heating doesn’t work without electricity. Water purification plants require electricity, chemicals, and most likely oil products. Everything is hooked together.

      • >>By the end of this decade, growth years will be the rarity

        I am inclined to believe that the global economy is close to popping. The current eye-watering levels of debt, globally, have got to have consequences, and economically things are going to get much worse over the next few months / year or so.

      • I think that 2008 was also about how high an oil price could be sustained. It was also about giving too much debt to people with little chance of repaying it.

        • I found it very odd that the price of oil climbed from about $10 /barrel in 1999 to just under $150 /barrel in 2008, and the MSM was flooded with commentators/experts, some of whom are still around, saying nothing to worry about here, move along now, plenty of oil left. And the general population believed them, or rather, they did not want to know the reality. And now, there is no new cheap-enough oil left.

    • The 15% cut is over the next two years. I expect most of this will be by attrition. Of course, there will be few jobs for new graduates.

    • These vaccines are expected to Do only a little for the prevention of COVID. It would seem more sensible to tell people to take vitamin D. This likely is not harmful and has some other benefits. It is also inexpensive.

      • That can’t be the case my coverment does not tell me to take vitamin D
        / sark

      • Remembering, of course vitamin D isn’t really a vitamin, it’s a hormone OFW-orlders. May your immune systems be regulated well.

  3. Hawaii Covid observations
    I live on the Big Island of Hawaii in a rural area, the poorest area of Hawaii, and the cheapest, as lava does tend to flow across parts of it from time to time. The population here is mostly local groups eg. Hawaiian or Pacific Island ancestry or Asian mix, and lastly white mainlanders like myself. People have seemed to me to be very independent, identifying not as a state of USA but as it’s own culture and people and politics. I have never seen an American flag except for a few public buildings, and have seen lots of (unofficial) Kingdom of Hawaii flags or the Hawaii state flag flown upside down to indicate their nonacceptance of the state authority.
    So it surprising to me to see how willingly they accepted all the CDC and government shutdown measures. It is well known just how dependent we are on tourism. Even before Covid the local news would give numbers of how many tourists had flown in that month, and hotel occupancy rates compared to recent years etc. Currently tourists are 20 percent of normal and our unemployment is the nations highest at 15 percent. I have heard of zero mandate push back in my area and only a little from a tourism industry group on Oahu. The public here is very accepting of mandates. I interact with some locals and it seems odd to me that they are so fearful of this virus and at the same time are rebels of a sort living in makeshift houses maybe a surfer or motorcycle rider, (helmets not legally required and not usually seen.)
    Outdoor coffee shops, farmer’s markets are deserted even of locals. Lots of kids live in the district but schools are closed. This includes a large local one I had frequented that had every classroom with two doors open at all times to the outdoors. But it too is closed.
    Most people are not news junkies and don’t seem like the conditioned mass culture people I knew on the mainland, but they still are fine about being led in this matter. Myself, usually a middle of the road, rule following kind of guy find myself a rebel in complaining publicly about the loss of liberty or whatever.
    It seems like the nation and many nations are committing collective suicide by destroying the economy and livelihoods all the while fearing getting a not very deadly disease.
    I know of course that our days were numbered anyway due to factors Gail has outlined for years, but we sure are speeding things up. I am reminded of Nietzsche words “That which is falling, should be pushed.” And that we’re doing. Thanks for reading, Randy

    • Thanks for your report on what is happening on the Big Island of Hawaii. As I keep saying, people’s reaction seems very strange to me as well. People assume any chance of death should be avoided at any cost, even if there are very high indirect costs. They assume we can defeat any illness, even though it is clear this possibility must come to an end, sometime. They assume medical people should be able to make economic decisions.

    • I wonder how many of these local islanders rely on government handouts/payments? One way to make people “obedient” is to make them helpless and dependent. Nowhere was this more clearly demonstrated than LBJ’s remarks after enacting his “Great Society” programs that he “would have those “Ns” voting Democratic for the next 200 years.”

      • One huge issue is that the tax system was fixed so that poor people were financially better off if they did not marry, in other words, they just lived together. This change has led to a lot of instability. Couples don’t stay together long when they are not married and the woman is getting benefits for being an “unmarried head of household.”

        • I wonder if it wouldn’t work better to rely less on marriage, and more on women’s “coops” to rear children. (Make it a very organic and flexible arrangement.) Undocumented Mexican immigrants do something like that now. 15 to a flat. Those who can work out. Others stay home and mind the kids. Housing would be through retrofitting what now exists and easily assembled/disassemble modular units. The MO of education would be learning by doing. Kids contribute to the community Girls’ pods, boys’ pods. Male “staff” and female “staff share tasks as appropriate, but mostly female run. So you end up having cultural separation (that can overlap with ethnicity or not), and gender separation, with some overlap…

  4. oil prices are down but:

    natural gas $3.33 which is just about a two year high.

    • I expect that natural gas prices will vary quite a bit around the world. If Europe goes into lockdown mode, its prices will fall very low. There has been snow in quite a bit of the northern US now. This may be affecting prices. Cold weather is forecast for here in the next few days, too.

Comments are closed.