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 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 cards 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.

988 thoughts on “Fossil Fuel Production Is Reaching Limits in a Strange Way

  1. Gail, can you give us a quick wrap-up of what you discussed on Peak Prosperity with Art Berman and other industry oil experts? Is Chris Martenson going to allow you to make your video available?

    • Yes, Chris Martenson’s assistant Adam Taggart promised my a copy of the panel discussion video. I told him, when I asked about getting the copy, that I would not put it up until after Martenson’s conference, which is on October 24-25.

      I thought the discussion went well. We know each other fairly well from Oil Drum days and from ASPO meetings. At the beginning, Chris said, “I will ask questions of a particular person, but be sure to jump in if you have something to add.” Also, Chris follows my writings to some extent, so he was directing questions to me, when he knew my view was different from Art’s and Richard’s.

      A few points I made during the panel discussion:

      –It isn’t the EROEI of a particular energy source that matters as much as the total quantity of net energy. In fact, the required quantity of net energy increases with the number of people. Each person requires 2,000 calories of food, plus additional energy to cook the food. The system also requires energy to pump the water that the person needs to drink. As water resources get depleted, the amount of energy required to obtain a given quantity of water tends to increase. So the total quantity of net energy required tends to rise, with population. This rising need happens at the same time that the EROEI of depleting energy resources falls.

      –When world population falls, it will be the poor people, in poor countries, who are hit hardest.

      –COVID restrictions will indirectly lead to population declines, especially in poor countries. (Richard Heinberg had earlier talked about how horrible it was that Trump hadn’t shut down the economy to prevent COVID’s spread.)

      –The expected result of falling oil supply will likely be a troubled economy, as in the 1913 to 1945 period, rather than oil high prices. I don’t remember getting any argument from the others on this point.

      Chris was going to create and record an introduction to the panel discussion, after the fact, when he know who said what.

      One thing that annoyed me, but hopefully won’t bother those watching too much, was the fact that I had sunlight coming in through a palladium window, shining on me and my computer screen during the panel discussion.

        • It is a half circle window above a rectangular window, installed in a room with a high ceiling. I have my desk in the dining room, and this type of window is frequently used for decoration in dining rooms. There are shutters on the lower part of the window to provide shade, but if the sun comes in from the top (at a certain time of day and a certain time of year), a person is sort of stuck with the result.

          • Thanks. We used to have a house with those, but I never knew their name. I think we referred to them as “sky lights”, definitely to those recessed in the ceiling.

          • Gail, it is actually called a “Palladian window”, since it was popularised hy Andrea Palladio in his “I quattro libri dell’architettura”, published in 1570. It is considered the most significant book on architecture since Marcus Vitruvius’ “De architectura”.

      • “–When world population falls, it will be the poor people, in poor countries, who are hit hardest. ”

        That’s what Gregory Clark says about the period in the UK from about 1250 to 1800. The relatively wealthy had about twice as many surviving children as the poor. The last couple of pages of “Genetically Capitalist?” goes into how this selection applied to China and Japan.

  2. A new poll has found that 58% of Scots now support Scottish independence from the UK, the highest level ever recorded. It is the tenth successive poll this year to find majority support for independence. Independence polls were neck and neck throughout 2019 but that has changed.

    Recent polls have found that younger generations overwhelmingly support independence and that persons who voted to stay in the UK in 2014 are moving in increasing numbers toward support. The feeling is that Scotland should make its own political decisions and that it can do better outside the UK.

    SNP is set for its largest ever majority in the Scottish parliament in May 2021, and two-thirds of Scots think that there should then be an independence referendum. It would be untenable for Boris to deny such a clear democratic mandate.

    Gail has explained the energetic basis of regional independence movements, as societies shed the complexity involved in centralisation in order to dissipate less energy – energy consumption per capita has fallen in UK for decades.

    > Poll: Support for independence hits historic high of 58%

    STV/Ipsos MORI poll finds record support for independence and puts the SNP on course for a Holyrood majority.

    Support for independence has risen to an unprecedented 58% of Scots, according to a new poll.

    The Ipsos MORI poll for STV News found just 42% back staying in the union when undecided voters are stripped out, with 58% in favour of a breakaway.

    Including undecideds, 55% of people would vote Yes if there was an independence referendum tomorrow, 39% would vote No and 6% said they didn’t know.

    It’s the biggest lead in a poll ever recorded for the pro-independence side.

    The STV/Ipsos MORI survey also suggests the SNP is on course for a Holyrood majority in next year’s Scottish Parliament election, with 58% of likely voters planning to back the party in the constituency vote.

    And should the SNP win a majority of seats next May, nearly two-thirds of Scots (64%) say the UK Government should permit a second independence referendum within the next five years.

    Meanwhile, people overwhelmingly back Nicola Sturgeon as First Minister, with 72% saying they are satisfied with the job she is doing compared to 24% dissatisfied, giving her a net approval rating of +49.

    The poll was conducted by Ipsos MORI between October 2 and October 9 and spoke by telephone to 1045 Scots….

    According to the website Election Polling’s seat calculator, this result next May would see the SNP win 73 seats, a gain of ten, and four more than in the historic majority the party won under Alex Salmond in 2011, which paved the way for the first independence referendum.

    The Scottish Conservatives, meanwhile, would remain the official opposition but be reduced by nine to 22 seats and Labour would fall to a historic low of 15 seats, down from 24 currently….

    • The 64,000 dollar question is, which comes first: Scottish independence or collapse?

      We get independence and then what? We celebrate in a world of unemployment, hunger, pestilence, and no-one is allowed to do what they like except for members of the security services / police, and senior politicians. And it’s downhill from there.

      • ‘Cheer up, Brian’, Scotland may get to enjoy independence for a couple of decades, maybe even a few, before collapse sets in – no one knows the exact timescale or the exact path downward, and life goes on in the meantime. Enjoy BAU while it continues.

        • M, one way to look at it is that industrialisation was never going to go on forever, and some people must have always realised that from the simple finitude of fossil fuels, from the finitude of all things.

          We always knew that all previous civilisations had come to an end, and it did not take that much imagination to foresee the same of ours. It was a simple matter of induction from precedents and of deduction from finitude, really.

          Liberals and Marxists ran with the idea of ‘progress’, and even of the ‘perfectibility of society’, but there were always voices like Thomas Malthus who pointed out that there were always going to be limits to development.

          And that ‘positive’ attitude served humanity well for a few centuries. It allowed millions, billions of people to live with an optimism for the future.

          In retrospect, some persons may well ponder that we might have done things differently and stretched it out for a bit, but history is what it is and it had to happen that way otherwise it would have happened differently.

          We spent fossil fuels in a concentrated manner that allowed a wild flourishing of human life, and who can really regret that? It was magnificent while it lasted.

          It would all have been gone one day in any case, whether seven billion people lived all at once or over a longer period. So, it makes no real difference on that count.

          Life is all about living with a positive attitude in the moment. Industrial civilisation was never going to last forever. We could have realised that 200 years ago, 100, 50, 20 or now – even so, one has to enjoy life while it lasts, however long one thinks that it will last.

          That is the human condition in any case, life has its time, everyone knows that, and the art of life is to enjoy it nevertheless. The fall of civilisation is analogous to the finite human lifespan. Its finitude is no argument against it, rather it is the condition of everything that life affords.

          So, whether Scots get to enjoy independence for 50 years, 30 or 20 before collapse sets in makes no real difference. They still have to live in the moment and to enjoy civilised life while it continues. Most of them have no inking of what is coming anyway, so it makes no difference to how they enjoy it in the meantime.

          That is how life is and they may as well enjoy BUA, independence and all that it entails while they still can. No one can really do anything more. It will have its end in due time but we live with a view to life and not its end.

          Life always has its disappointments but it is a part of maturity to learn how to cope with that. Everyone who ever lived had to learn how to cope with that. It is just the human condition again. So, ‘cheer up, look on the bright side’ is probably not that bad advice.

          Human ‘dignity’ comes from coping, not from succeeding always and forever, which no one ever does.

          To be able to foresee failure and even demise, even to expect it and to live cheerfully anyway is a great demand and most people accomplish it with great psychological strength and even gracefully. It is the ultimate ‘success’ in its own way.

          Everyone is a stoic when it comes down to it, it is just the human condition. I ‘take my hat off’ in that regard to everyone who ever lived.

          • We had an elderly aunt of my husband living with us during the last two years of her life. Toward the end, she was in hospice care at our home. We were told to plan as many meaningful get-togethers and outings as we could, during what we knew would be her last days. We picked up her wheel chair and took her and the wheel chair (and oxygen tank) out to restaurants. She had COPD and heart issues, but her brain was in good shape.

            • Was she a smoker? We should not have to pay for smokers….but we do….I love how people try to paint everything black and white…I wish it was that simple but if you are a human on earth right now you are a burden…..

            • She was an unmarried lady who had lived in North Carolina nearly all her life. (North Carolina grows a huge amount of tobacco.) She was indeed a life-long smoker. When she started on oxygen, I took her cigarettes away from her. She was a very frequent visitor to the emergency room. I found myself taking her there on a regular basis. She usually didn’t need to remain in the hospital.

              She had a master’s degree in biology, but she found she didn’t like teaching, so she worked in a low-level support role at a company selling electrical products.

            • Thanks for that, Gail. It comes to us all in the end. I can only hope that I will be of some service to my parents as they age. They have certainly more than earned it. We have remained quite close emotionally, and they recently indicated that they will look to us for everyday assistance rather than to my siblings. It is just a part of life and it has to be done. Frankly it will be more of an honour than a duty.

            • Not that superficial concepts of ‘honour’ really come into it, which demeans the reality by making it ‘justified’ by some superficial aspect. I will act instinctively and intuitively. I thoroughly regret using that word and I certainly will not be motivated by it or by any other ‘words’.

          • “there were always voices like Thomas Malthus who pointed out that there were always going to be limits to development.” — Even Smith and Ricardo understood this, but today’s economists totally ignore it.

      • Lesson from Brexit is that you need a clear super majority say 70% for independence and with a straight majority in each region. You should also have a confirmation referendum once the final withdrawal agreement is available so everyone knows what they are getting.

        • Not really, democracy functions on a majority basis and it generally works pretty well. If Westminster bodged Brexit then that is its look out, and all the more reason for Scotland to go with a more functional parliament. Majoritarian democracy suits Scotland just fine.

          If Westminster cannot cope with majority democracy, then that is all the more reason for independence. It will be for the Scottish parliament, elected by Scots, to set the terms of the Scottish independence referendum, not Westminster and not you.

          Losers often would prefer to gerrymander the vote, cheat, but democracy does not work like that. You may just have to cope with that it will be the decision of the Scottish people and not your personal decision. You may have to cope with losing, which is part and parcel of democracy.

          If Westminster then wants to abandon majoritarianism in its own jurisdiction then it is up to the people of rUK whether they want that. No Westminster government ever gets anywhere near 50% of the vote but they are free to try for 70% if they want. I cannot see them getting it though.

          • Many assume that Scotland is a single entity? It is not. Indeed, many people living in Scotland are not Scots and many outside are.

            • The referendum will be conducted on the basis of residency. Again, the terms of the referendum will be set by the Scottish government, elected by the Scottish people (residents of Scotland who have the right to vote in Scottish elections) and not by Westminster or by you.

              Like I said, you may just have to cope with losing, it is part and parcel of democracy, and coping with disappointment is just a part of being an adult. It will be the democratic decision of the people of Scotland, and not your personal decision, neither will you get to gerrymander the vote in any way.

            • Aye, there’s more out than in. If it’s supposed to be a “national” vote, how are we supposed to define who are “the Scottish people” and who aren’t? Sean Connery should ge a vote, obviously. But how about the rest of the Scottish diaspora? There are 40 million of them around the world and there are more Scots in the US alone than there are in Bonny Scotland.

            • No one suggests that British ‘diaspora’ in USA, Canada, Australia, NZ etc should get to vote in British referendums, and there will be no gerrymandering of the Scottish referendum. It will conducted on the basis of Scottish residency and the usual right to vote in Scottish elections. You may just have to cope with that it will be the decision of the Scottish people (those resident in Scotland and with a right to vote there), and not yours. Get over it. Frankly this behaviour is embarrassing for the British.

            • Nothing for me to get over. I’m not Scottish and I—unlike you apparently—am not obsessed with the referreendum issue or with the issue of keeping the UK together or splitting it up further. I really don’t give a highlander’s curse about it. The whole thing bores me, to be frank.

              As far as I’m concerned, you and the Scots, the English and the British can make your collective beds and then you can wallow in them. The greatest country in the world in its time, the UK has already gone to pot, and now the pot is cracking. Incidentally, most of my English friends have gone from being in favor of maintaining the Union a decade ago to hoping the Scots leave and rebuilding Hadrian’s Wall now. It’s sad but understandable given the constant stream of anti-English hate speech from all the usual agitators.

            • There is no need for nastiness. If you are not interested in the subject then do not get involved, no one is forcing you to.

      • I doubt it. Scotland will probably use the vote as an excuse to say “give us more money and we’ll stay”. As Rudyard Kipling might have said: As long as you pay the Scotgeld, you’ll never be rid of the Scot.

        • People living in Scotland may very well decide how any vote on independence is carried out but the British people collectively will decide what form that independence takes.

    • Another new poll out this week has indicated that a full three-quarters of Scots would support independence should it benefit the economy. Similar numbers also think that the Scottish parliament alone should determine the relationship of Scotland with the EU, and that the Scottish parliament should have full control over all matters that affect Scotland.

      Clearly, campaigners for independence are pushing at an open door now. No more than a quarter of Scots have any dogmatic attachment to UK, and as Gail’ post about Moody’s below indicates, Unionists are going to find it harder to make an economic case for UK after Brexit. Scots are generally a pragmatic people with no real attachment to UK.

      > New poll: 75% would back independence if convinced it would be good for economy

      A NEW poll has found 75 per cent of Scots would back independence if they were convinced it would be good for the Scottish economy.

      The poll, conducted by Survation for pro-independence campaign group Progress Scotland, also found 57% agreed that independence would be good for the Scottish economy in the long run.

      Elsewhere, 70% agreed that control over all decisions affecting people in Scotland should be made by the Scottish Parliament and Scottish Government.

      And 74% agreed that decisions over Scotland’s relationship with the European Union should be made by Holyrood and the Scottish Government….

      The findings are the latest to be released from a “super-sized” poll of 2,093 respondents conducted by Survation for Progress Scotland.

      Scots were asked to agree or disagree with the statement “I would vote for independence if I was convinced that it would be good for the Scottish economy”.

      Three-quarters (75%) of those who expressed an opinion agreed and 25% disagreed.

      Findings from the same poll, published in the past week, also found more than a third of people who voted against independence in 2014 have changed their mind or are now undecided….

          • It’s nothing to do with attention spans. It’s just that he’s not interest in your petty obsessions.

            Who is interested?

            Nobody at all.

            Even the people who agree with what you say are bored with how often and how monotonously you you say it. It’s like sitting in a GP’s waiting room next to a hypocondriac who sounds off like an endless tape telling tales of their decades of suffering with athletes foot.

            But that’s one of the virtues of free speech. Let a hundred flowers bloom!!

            • Again, there is no need for nastiness. If you are not interested in the subject then do not get involved, no one is forcing you to.

  3. Boris Johnson just announced that talks with the EU are over and businesses need to prepare for no UK/EU trade deal. Discussions next week are cancelled. There are many who said he was just bluffing.

      • A limited trade (tariff only) deal offers nothing really of value to the UK and I think we will rip up the withdrawal agreement as well.

    • I looked at the WSJ to see what it has to say. There is no article simply talking about the talks being over. Instead, there is an article called, Moody’s Cuts U.K.’s Credit Rating Further

      It starts out

      Moody’s Investors Service cut the United Kingdom’s sovereign-debt rating further on Friday, citing weakening economic and fiscal strength exacerbated by the government’s inability to reach a deal with the European Union.

      The credit-rating firm reduced the U.K.’s rating one notch to Aa3 with a stable outlook, saying the economic outlook has worsened since Moody’s downgraded the country’s credit rating to Aa2 in September 2017.

    • Yes, Downing St. is now saying that ‘talks are over’ and that we are headed for ‘no deal’, though no one is convinced by anything that they say any more. EU reckons that talks are still on for Monday and we will not have to wait long to find out.

      So much for Boris’ ‘oven ready deal’ with which he won the last UK GE. It would surely be the end of Boris if he extended the Brexit transition period beyond Dec. 31, after he won the GE with the slogan ‘get Brexit done’.

      UK may be headed for WTO and tariffs, which would not be such a bad outcome, at least it would clearly enact the democratic decision of the referendum. Democracy must be done and be seen to be done. It would also ‘get Brexit done’ on which the GE was premised.

      The economics of that outcome are arguable, though not an argument that I fancy this morning. Moody’s have clearly got their own opinion on that.

      • Tariffs have never been the issue rather it’s inspection of products entering and leaving the EU single market. There is neither the staff, procedures, nor facilities at ports to do this. There is no deal at present even being discussed which solves this.

        • No deal means huge tariffs, decimating car industry, farming and just-in-time manufacturing – and tariffs will hit food and drink imports from EU, averaging 18%. Border delays and disruptions will also lead to further costs that will be passed on to customers. UK can expect to export less to EU and to pay more for imports. Tariffs are a massive issue for both imports and exports.

          Westminster has completely bodged Brexit and Scots are most unhappy about it. They voted against it in the first place. It is all the more reason for Scotland to quit UK and to develop its own relationships with the world, which is what 75% of Scots now want.

  4. Limits to Growth does not allow for a healthy Middle-class. Protests exist around the world and many, if not most are the result of declining standards of living. It’s degrow or go now.

  5. Not looking to argue, looking for solutions.

    Compare the size of the Saturn rocket to take men to the moon to the combination required to return the same three men, gravity wells at work. The lunar lander was a glorified toy, rickety at best.

    There have been discussions regarding solar power beamed to earth, my suggestion, manufacture on an existing satellite of size(moon), ship finished product back to earth. Raw materials are zipping around out there, we don’t know what is on the moon. Smelting, use the sun, shot stuff close to the sun(it is all relative, smelt, don’t vaporize) have it return, deorbit and finish processing on the moon with nuclear. We are robotizing factories at an amazing pace, robotize the moon, the thermodynamics work. The tough part is lifting stuff off the earth, dropping it down is relatively easy. Move all the pollution off the earth, in refining metals in solar orbit, don’t bring back the waste, kick it into the sun, the sun will never notice or burp. We are seeking fusion to power industrial scale manufacturing, we have a fusion reactor close by, use it, the energy is dense, solar energy on earth is diffuse, another problem solved.

    We are killing ourselves with pollution. The above paragraph is all engineering, we don’t have to invent the wheel.

    We have talked endlessly about the problems we face, the ideas seem mature, nothing looks to work on earth and back to the earthers have no clue how much work that is and how little surplus energy will be available for healthcare, or even sex. No, that is not a joke, one gets very, very tired working the earth.

    Population I will leave to others to solve, that truly is a third rail.

    Dennis L.

    • Dennis, the problem for the green movement is that your solution does not end capitalism. I once upon a time worked with my local Transition Towns group. I suggested we involve the supermarkets in the solution; big mistake!

    • Dennis, everything you write makes a lot of sense. Move all heavy industry off Earth and we drastically reduce pollution, and reduce our energy needs to the point where the parallel introduction of renewables with a reconfiguration of the built environment (no cars, no aeroplanes, efficient buildings) can probably pull us through.

      You are also right that we have had access to fusion power for four billion years, and on the moon, energy flux density is no longer a problem because we can sequester as much sunlight as we need. I suspect it would also be cheaper than installing renewable energy on Earth, if you consider life cycle cost, as we certainly should and the greenies certainly won’t.

      It also makes no sense to beam energy from space for use on Earth. Use the energy to make the finished products in space, and drop them on parachutes, which when I last looked require no energy input.

        • Ah, the arrogance of the obvious.

          Obviously the current scientific and technological progress is impossible as viewed through the eyes of a middle age man.

          Here is a thought experiment for you Norman. Let’s grab the flux capacitors and power us back in time using a slightly modified De Lorean and ask a Stone Age man how he foresee the future after some 10.000 seasons come and go.

          I still can hear his laughter echo through the halls of time. Just as I am laughing at you sitting in front of that marvel of human ingenuity and technology.

        • Erdles, a good point. But goods from the moon will be moving in lunar orbit, not low earth orbit, and so will be a whole lot slower (Kepler’s Third Law). It will be much easier to slow them down than it is to slow a space shuttle.

          Hey, let’s do the math. The Moon in its orbit makes one revolution in about 30 days, or 12 degrees a day. At 400,000 km, that is 13,000 km per day, or 1100 per hour. Low earth orbit is 11 km/sec, which is about 40,000 km/hr. So we need about 1/40 the orbital retardation to achieve geostationary entry. Not hard.

          • Cover it in rock and let it burn as it enters the atmosphere.

            Recover the fissile materials from the impact site.

            No fancy doo-dahs needed, solid fuel rockets or perhaps a catapult on the moon.

            Just send it. If it misses, so what. The earth is bombarded with space rock every day.

            • “Cover it in rock and let it burn as it enters the atmosphere.”

              A long time ago I was speculating on what to do with millions of tons of asteroidal iron. The idea was to vapor deposit ship hulls for a future version of the Society for Creative Anachronism for people who want to reenact WWII. Coat them with foamed rock and let them enter the atmosphere over the Pacific at a shallow angle. Nothing like a 50,000-ton battleship supersonically skipping across the ocean.

    • Transmute elements into fissile material on the moon, cover them in rock, strap on a few boosters and send em back to earth as a great fireworks display. Recover the fissile raw materials from the impact site. Let’s say in the vicinity of some great desert area in the US known for its UFO associations.

      No need for fickle space solar and energy beams to earth. Use the satellites to power the industrial processes on the moon instead.

    • ” looking for solutions.” — First we need to define the problem: we have painted ourselves into a corner, and we have an urgent need to get out of the corner BEFORE the paint dries but WITHOUT getting ourselves wet.

  6. CHS has a new “OfTwoMinds” up, a concluding quote:

    “I think you see the analogy to the present. Our leadership, such as it is, is devoting resources to maintaining the absurd pretense that everything will magically re-set to September 2019 if we just print enough money and bail out the financial Aristocracy.

    Whether we realize it or not, we’re responding with passive acceptance of oblivion. The economy and social order were precariously fragile before the pandemic, and now the fragilities are unraveling. We need to start thinking beyond pretense and PR.”

    We need a vision of the future, something to believe in. Even if the pyramids were useless they kept the people together and the Nile was worked for the greater good to provide for those moving stones. Mention has been made of cathedrals by myself and others, many took several hundreds of years to complete and in so doing provided jobs and instruction in masonry and associated mathematics. In these structures there was also something beautiful, something of the soul, compare them to modern architecture, it is butt ugly for the most part.

    Our civilization needs something bigger and better than the latest bust size out of Hollywood. Doing this project would probably take at least 100 years, but there would be something for everyone including hope for the lowest and incredible graft for the highest for graft seems to be with us always. Isn’t that what the elites mean by win win?

    Dennis L.

    • I think part of the problem is that we are so specialized today that it is hard to have projects that the many unemployed can work on.

      A favorite new project today seems to be COVID tracer. Call up people who recently came down with COVID, and try to get them to tell you who they had contact with more than 15 minutes, fairly close up, in the last several days. Then try to tell those contacts to self-quarantine, for a time. Unfortunately, this is just another “service” project that doesn’t really add much of lasting value. Case counts are going up rapidly, anyhow.

        • There are indeed. Everyday I walk rundown unmanaged woodlands in the UK crying out for unskilled labour. These once did and could do so again, provide work for millions, increasing both human, social and wildlife capital. It’s matter of priorities.

          • Nature “manages” woodlands in the way that it requires. This includes fires that we humans would prefer never take place. It is a myth that we can manage woodlands better than nature. We can temporarily make them “look better,” but the cost of preventing and controlling forest fires goes up over time. We can never manage woodlands as well as nature does.

        • Art,

          I would like to believe that, there may be niches that a group/clan, fill in the blanks can adapt to, but some of the jobs require a very high degree of intelligence.

          I loved the local CC, MIT is a different world, simple problems requiring fluency in the application of basic ideas. The problem is during my cc days I watched the classes thin down, I watched and made note of who did well. We were diverse only in having whites, Asian and I think Persian students at the end. Draw your own conclusions, others did not make it. Yes, I ranked myself, couple of brilliant kids, no way, rest of the class at the top, could run with them, each year the bottom became thinner and thinner. They all seemed to work hard, the ideas are tough to grasp and use.

          With todays population there are 70M in the top 1%, there are probably not 70m slots for that 1%. I have no solution, don’t want to be part of solving that issue. I have a combination solar, LP, electrical heating system at the farm, really could use PLC’s, simple programming. It is not trivial, have a friends son, recent ME grad, first in his class, weak in PLC’s, go figure.

          No arguments Art, not many jobs the unskilled can do for me personally. Farm is farmed by huge complex machines, western MN is now going to 45′ heads on a combine, add a 600hp tracked tractor pulling a multi hundred thousand dollar grain cart and the poorly talented need not apply. The grain cart and combine merge at 6 miles per hour, this is over 250, 000 pounds maintaining a distance of plus/minus say 4 feet, well over $1M on the roll not including three semi trailers to keep up with this process.

          Even digging a ditch, excavator is $3K+/week rental plus fuel, takes considerable skill to run one, not much use for a shovel, it would slow things down and actually cost money. I have a long ditch to dig, renting a excavator, hiring an operator, no shovels needed.

          Dennis L.

          • Of course, to use all of the fancy equipment, there is no possibility of terracing. Fences between smaller fields have long since been removed; also old farm houses. Going backward gets to be a huge problem. Erosion is a huge problem without terracing. There is nowhere to live near the fields. In fact, small towns have mostly a few low-paying jobs, making it difficult for there to be a real middle class in farming areas. Too many young people end up with drug problems or depression because they see no way for themselves to fit in. The highest local job available is working in a Walmart or in a gas station with a convenience store.

            Even hospitals are disappearing in rural areas; everyone wants to go to the big, well-known facilities like the one at Rochester Minnesota, near you. I heard however, that during the worst of the pandemic, doctors at Rochester were being asked to take a 20% pay cut. I don’t know whether the full pay level has been restored.

            • Again no arguments:

              Equipment: The work is too hard for humans, there is no surplus energy without it and it is back to the population problem which I choose not to touch, we have people to feed. Absolutely not trying to be right, people need to eat or they become very angry and tear the whole thing down, nothing to lose. I think you are right about the soil, but both the tenants and landlords watch that fairly closely. Farmers have a love of the land, it is a lifestyle which many including myself did not appreciate, it took me a few years.

              Population: you are right, there are fewer and fewer neighbors. It could be done differently were we to raise the prices, say by 50-100%, but then one is back to the system and maintaining order with food inflation.

              Mental health: There has to be hope, if anyone is missing it my frustration with some of the opinions here is the nihilism, nothing can be done. I made a bold suggestion much of which is uniformed nonsense, but compare the Saturn 5 leaving to the earth and the lander leaving the moon and common sense says do it on the moon, it gives hope, it gives a project for mankind, a second or third industrial revolution with out pollution – man what a campaign slogan! Somehow much of the population has to share this hope. It is not a great idea, but it beats burning down the town or yelling in the world’s town squares. Jordan Peterson says many of the mental problems he treated were not intrinsic to the individual but extrinsic to them in the situations they faced.

              Hospital salaries: Yes, there were cuts, there were layoffs I am told, all money taken away plus $1 000 bonus for all staff as I understand it was restored when Mayo reopened.

              Mayo does have many outreach clinics, I am not sure where they are or how many, there is a certain logic in doing that, practice makes perfect and the specialty clinics and associated hospitals have deep resources and protocols to handle emergencies. There is a great deal to be said about working with talented colleagues, doing presentations for fellow colleagues(we called them grand rounds), and having a ready source of continuing education. It is also a group, not lonely, lunch with friends, etc.

              Dennis L.

            • I have heard that surgical outcomes are much better in hospitals that do quite a few of some kind of specialty operation than they are in facilities where only a handful a that type of surgery is done. Having experience seems to help outcomes.

              I get my healthcare from Kaiser Permanente. As you know, Kaiser’s charges are mostly on a “capitated” basis, in other words, per person, regardless of the amount of treatment. Thus, there is no incentive to over treat. They keep track of what works and what doesn’t. I have discovered that my primary care doctor responds to my emails incredibly quickly–something like two hours, even on week-ends. There are other ways to get help as well, including “Nurse Advice” and a new “Text Message a Doctor.” Kaiser does a lot of telephone or over the internet appointments now, as well.

            • Gee, Gail, if the Maya were able to terrace the fields around Machu Picchu with no draft animals and without even the wheel, how hard can it be. I have seen them, and they are still in working order, even their water supplying canals and conduits are still functional.

            • easy to do

              all you need is a human workforce, focussed entirely on the job in hand, clear of outside distractions, prepared to work over a time period of xx years (you tell me)

              their labour is for food production, and stone piling—- virtually nothing else. They know nothing of the world beyond their own territory

              if one gets sick, he dies. No fuss.

              No vacations. I think I just desribed a termite colony

              Maybe to occasional virgin sacrifice for mass entertainment.

              Like I said—easy. (apart from finding virgins I guess.)

        • Art, I reread my post. I want to see us as a society succeed, I want everyone to have value. The problem when I looked at my own life and hiring practices, there isn’t time to organize but a few people and those need a considerable amount of talent. I have no answer and leave it to others to deal with that one.

          Dennis L.

          • Dennis L. Gail reminds us that we have little to no control over the system we’re part of. So one would do best not to worry about such limitations as you mention? Just do the best you can? And you’re right that it’s up to everyone to pitch in and help with whatever they can.

  7. It is the fertility cult of Mother Mary that became the root of the further division of Christianity in the times of the medieval energy collapse.
    It is noteworthy that the Orthodox and the Catholic churches give this cult a prominent position on their teachings, while protestantism rejects it.
    That way e.g. Brasil, once a Catholic country, becomes a protestant country now, as it’s limits are approaching. The same was happening in the medieval ages, when the individual European countries started to declare their independence from Roman Catholic church.
    The ordination of women is not possible in the orthodox or Catholic churches because it contradicts the cult of Mother Mary.
    The cult of Mother can not be served by women, as it is the men who provide support to motherhood. The women compete between themselves, are greedy to get the men with status or money, steal them one from another if there is a scarcity of such men. And are able to steal one from another in a most violent way in order to get the resources.

    A greedy woman is worse than a greedy man, as greed is the result of scarcity that limits the population growth. Mother Mary can be viewed also as a story of a greedy woman who lost everything, so the women invented the story about ressurection and taking her into heaven.
    It was the women who testified the ressurection of Jesus Christ, not men.
    The resource limits endanger the role of mother and the women must take other roles and compete with men.
    It is the women who invent the wildest lies in order to get hold of resources, money and status, when limits become reality, as accepting the reality of limits mean denying the possibility of creating a man via birth that can serve as energy source.

    • Nearly all of the “cult of Mary” things are not in the Bible. Coming from a Lutheran background, this view was completely lost. Also, the view of hell being real, or important, disappeared. The focus is much more on, “Do unto others as you would have them do to you.”

      When I visited Norway, I noticed that the sculpture there was not of male soldiers, as in many European countries. Instead, there seemed to be more women and children. Norway does not have military heroes; it could never fight anyone and win.

      I don’t know about women inventing the wildest lies to get resources. I know that historically, women (or their parents, choosing partners for the women) have tried to find the husbands who look most likely to be able to provide well for a family. Men who can barely support themselves are out of luck in finding a wife. Men, on the other hand, have tried to find healthy, good looking wives. Where divorce laws permit, they often find a new, younger wife in middle age, leaving women alone with not much means of support in their later years.

      • The situation of energy abundance created more favourable situation especially for women. That is why their reaction to the collapsing system is more desperate. They could live without men as husbands and without the male offsprings. That is why I wrote that they invent the wildest lies, fiercely defend their jobs or gain other sources of income, using even very dirty methods etc. to secure the resources.

        Losing both the status of a wife and mother due to the job and subsequently also the job is a total loss which the men do not experience. And having children and do not have resources for them is another reason for stealing from others, when the system is collapsing and the males are not able to provide resources.

        In such situations the women look worse than males, because they look like they were not careful, they relied too much on the system or on their male partner, who left them or died.

        I know the cases whan a woman, who was an only child, commited a suicide after the death of her parents or completely broke down.

        Such is the reality.

        • I know quite a few women are very big into maximizing their own careers, regardless of how it works out for the rest of the family. But I think most women still put their families first. I haven’t run into women telling wild likes to defend their jobs, but maybe I am not connected to enough people in this role today.

          Dmitry Orlov wrote that when the Soviet Union collapsed, it was the men who were especially depressed because they lost their jobs and didn’t have much else to hold onto. The women did better, because they were also mothers, and had this role to hold onto.

          • The point is that there expectations from men to provide energy. That is why they can not handle the rising complexity of both serving family and keeping the system going on.

            There are no such expectations from women, unless there is a shortage of men and the women have to take over the roles of the men, as in Russia, when the system was imploding and alcoholism of the males was a by-product of collapse.

            When the collapse accelerates, the alcoholism of both males and females, or some drug addictions are present.

            Or there are mothers who can not handle the care for their child because of their low income and the children are left to the fathers for raising or provided for adoption.

            The imlosion is multi-faceted.

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