Category Archives: Financial Implications

Models Hide the Shortcomings of Wind and Solar

Posted on June 2, 2023 by Gail Tverberg

A major reason for the growth in the use of renewable energy is the fact that if a person looks at them narrowly enough–such as by using a model–wind and solar look to be useful. They don’t burn fossil fuels, so it appears that they might be helpful to the environment.

As I analyze the situation, I have reached the conclusion that energy modeling misses important points. I believe that profitability signals are much more important. In this post, I discuss some associated issues. Continue reading →

Posted in Alternatives to Oil, Financial Implications | Tagged , , , | 3,344 Comments

The bumpy road ahead for the world economy

Posted on May 4, 2023 by Gail Tverberg

The path ahead looks very bumpy. The US is likely to be kicked out of its role as global hegemon. Rival countries may choose to attack the US with nuclear weapons, or the US may lash out with nuclear weapons as it sees its hegemony fail. Continue reading →

Posted in Financial Implications, News Related Post | Tagged , , , , | 4,101 Comments

The Fed Cannot Fix Today’s Energy Inflation Problem

Posted on April 5, 2023 by Gail Tverberg

I expect that the rich countries of the world, including the US, Europe, and Japan, are in line to be adversely affected by high interest rates this time. With their high levels of complexity, they are among the most vulnerable to disruption when there is not enough oil to go around.
The problem I see is that rich countries expect to maintain service economies that are fed by huge streams of manufactured goods and raw materials from poorer countries. This pattern appears unsustainable to me, in a world with falling exports because of energy problems.
Continue reading →

Posted in Financial Implications, News Related Post, oil shortages | Tagged , , , , | 4,007 Comments

When the Economy Gets Squeezed by Too Little Energy

Posted on March 5, 2023 by Gail Tverberg

When people forecast ever-rising energy prices, they miss the fact that market fossil fuel prices consider both oil producers and consumers. From the producer’s point of view, the price for oil needs to be high enough that new oil fields can be profitably developed. From the consumer’s point of view, the price of oil needs to be sufficiently low that food and other goods manufactured using oil products are affordable. In practice, oil prices tend to rise and fall, and rise again. On average, they don’t satisfy either the oil producers or the consumers. This dynamic tends to push the economy downward. Continue reading →

Posted in Financial Implications, oil shortages | Tagged , , , | 4,563 Comments

Ramping up wind turbines, solar panels and electric vehicles can’t solve our energy problem

Posted on February 3, 2023 by Gail Tverberg

Many people believe that installing more wind turbines and solar panels and manufacturing more electric vehicles can solve our energy problem, but I don’t agree with them. These devices, plus the batteries, charging stations, transmission lines and many other structures necessary to make them work represent a high level of complexity.

A relatively low level of complexity, such as the complexity embodied in a new hydroelectric dam, can sometimes be used to solve energy problems, but we cannot expect ever-higher levels of complexity to always be achievable.

According to the anthropologist Joseph Tainter, in his well-known book, The Collapse of Complex Societies, there are diminishing returns to added complexity. In other words, the most beneficial innovations tend to be found first. Later innovations tend to be less helpful. Eventually the energy cost of added complexity becomes too high, relative to the benefit provided. Continue reading →

Posted in Financial Implications | Tagged , , , , | 3,434 Comments