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Gail Tverberg: This Is The Beginning Of The End For Oil Production

Why the shale collapse is ushering in a permanent turndown
Saturday, January 17, 2015, 1:28 PM

With the recent collapse in the price of oil, Gail Tverberg, returns to discuss the likely impact on the US shale oil industry, as well as the global market for oil.

Gail is a professional actuary who applies classic risk assessment procedures to global resources: studying issues such as oil & natural gas depletion, water shortages, climate change, etc. These days, she writes at her website OurFiniteWorld.com.

While as an actuary, Gail is one to avoid hyperbole and the let the numbers speak, her analysis of the outlook for future oil production is nothing short of dire:

What we need is cheap energy. We need cheap, liquid oil. When it’s high-priced it really messes up the economy. We need oil to run our cars and to operate our trucks and such things, but it needs to be cheap. And it suddenly is today. 

But, you have to be able to keep pulling it out at that same price. And the critical thing is, we can’t keep pulling it out at that price. What is going to happen, I’m afraid, is that once production goes down, we won’t be able to get it back up again. 
 
There’s several reasons. One of them is that very low interest rates have been helping keep production up. Once you get your interest rates back up because there’s been a lot of failures, particularly in the shale industry, the costs will be higher. So, they can’t pump it out for the same price that they had it before. But, there’s also the issue that these old wells need to be produced continuously and they need continuous investment. If you cut that off, it’s going to be very hard to restart them. So, there will need to be an extra investment just to get it back online. Trying to do that becomes extremely difficult when the price is low. If it’s really an affordability issue, you've got a double hurdle then. Not only do you have to get the price up, but you have to get the price very high so you can get lots of investment dollars so you can kind of make up for lost time, besides everything else. As we know, it takes a long time to get new production online.
 
I think, too, that it gets to be even worse than that, because financial institutions have sold derivatives based on the assumption that things can kind of go along as normal. So, you start seeing very strange motions in terms of the rise of the dollar, the fall of the dollar, and a variety of other things besides just these oil price changes. Over time, what you're going to get is a bunch of business failures. That’s going to come through these derivatives and it’s going to come through the financial system in a different way than just the oil price itself would. We have multiple impacts of these things, some of which are not obvious when you just first look at the story. 

Suppose you have a derivatives problem. If you have a derivatives problem and you have to go back against depositors, your depositors are things like companies that are making payroll payments. So, the big danger is that these payroll funds will be taken in this process of taking the money away to try to get enough money to fund the derivatives problem. Or, they might not be derivatives problems. They might be other kinds of problems that are putting banks under.

If you start taking the money from the oil companies that they were going to use to pay their employees or if you take the money from electricity companies that they were going to use to buy coal or that they were going to use to pay their employees, you have a very bad effect on the economy, which has nothing to do with the shape of the oil depletion curve.

As I said, the big issue I see is an affordability issue. I don't see oil prices bouncing back up again, or certainly not bouncing up very long, for very far. So, for oil production, this is basically the beginning of the end…what we're seeing is the beginning of Peak Oil, basically. The oil production will actually permanently turn down at this point because we will not be able to get it back up, and because of all the financial situations coming along. 

Click the play button below to listen to Chris' interview with Gail Tverberg (44m:20s)

Transcript: 

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host Chris Martenson. The big news for late 2014 and now heading into 2015 is the collapse in the price of oil. As I look at my trading screen right here on the 12th of January, 2015 I see WTIC Crude, that’s US crude, falling another 4.8% on the day. It traded for a while at less than $46 a barrel—$46. And Brent Crude, the world benchmark, is trading at $47…$47. These prices are damaging to oil exploration companies' bottom lines today, tomorrow’s hope for production, and these prices are destabilizing to an increasing number of oil exporting nations.

To help us make sense of all of this today, we welcome Gail Tverberg to our program. Gail is a professional actuary who applies her risk assessment expertise to finite world issues—oil depletion, natural gas depletion, water shortages, climate change—and how this relates to the economy. For years, Gail authored some of the most informed analysis on the global net energy predicament in her posts at The Oil Drum, published under the pen name Gail the Actuary. But today, she runs the very popular blog, OurFiniteWorld.com. There you will find both intelligent articles and intelligent comments. Gail, thank you so much for joining us again.

Gail Tverberg: Thank you for inviting me.

Chris Martenson: First, the price of oil. How do you explain the dramatic and so far relentless decline in the price of oil—simple supply and demand or other factors at work here?

Gail Tverberg: Well, I think there’s a variety of factors at work. One of the things we’ve noticed is over the last, oh, more than ten years, the cost of extraction has been going up rapidly but people’s wages have not been going up, certainly not as rapidly as the cost of extraction has been going up. And at the same time, the governments have been doing all kinds of things to try to increase the amount of debt and to try to make debt more accessible. So, they’ve lowered the interest rates. They’ve done something which is called quantitative easing, which gets more money out there. And also, China has done some things in the growth of its infrastructure. That has added a great deal of debt as well and it’s added a great deal of demand for oil. But, what has happened is that this debt is starting to reach limits. The fact that it’s reaching limits and the fact that incomes aren't really growing to keep up with supply means that we can no longer afford the oil prices we were paying before.

Chris Martenson: So, if we can’t afford the price of oil… The numbers I’ve read is that there’s somewhere between a 1% and 2%, let’s call it a 1.5% over supply at this moment. I’ll admit, it’s hard to store oil above ground. So, even though that sounds small, it can create issues pretty quickly. But still, 1.5% oversupply of oil leading to a more than 50% price decline, is that normal behavior in your mind?

Gail Tverberg: Well certainly it isn’t for other kinds of commodities, but that’s what seems to happen for oil. We get all kinds of strange things, especially if there’s a lot of financial issues behind it. It’s really an affordability issue as opposed to a supply issues.

Chris Martenson: Yes. Let’s talk about that relationship really quickly then. One of the things I harp on a lot of course is the relationship between energy and the economy, but specifically oil and the economy. I know you do too. For our listeners, how important is oil to the global economy, generally, and to this concept of economic growth, specifically?

Gail Tverberg: Well, what we need is cheap energy. We need cheap, liquid oil. When it’s high priced it really messes up the economy. What we need is…we need oil to run our cars and to operate our trucks and such things, but it needs to be cheap.

Chris Martenson: Well, it’s cheap today.

Gail Tverberg: It is today. But, you have to be able to keep pulling it out at that same price. The critical thing is that you can’t keep pulling it out at that price. What is going to happen, I’m afraid, is that once it goes down, we won’t be able to get it back up again.

Chris Martenson: Really? Why is that?

Gail Tverberg: Well, there’s several reasons. One of them is that very low interest rates have been helping keep the production up. Once you get your interest rates back up because there’s been a lot of failures, particularly in the shale industry, the costs will be higher. So, they can’t pump it out for the same price that they had it before. But, there’s also the issue that these old wells need to be produced continuously and they need continuous investment. If you cut that off, it’s going to be very hard to restart them. So, there will need to be an extra investment just to get it back online. Trying to do that becomes extremely difficult when the price is low. If it’s really an affordability issue, you've got a double hurdle then. Not only do you have to get the price up, but you have to get the price very high so you can get lots of investment dollars so you can kind of make up for lost time, besides everything else. As we know, it takes a long time to get new production online.

Chris Martenson: It certainly does. The story that I hear emerging here, it’s one that I told a long time ago and I know other people in the peak oil arena have said as well. I’ve heard it from Hindberg [PH]. I heard it on The Oil Drum a lot. It’s this idea of both high oil prices being a problem and low oil prices being a problem. That sounds like a real predicament—not a problem. It sounds hard to solve. Is that really where we are at this point? You just said that above a certain price the economy can’t afford the oil. There’s all these feedback loops that sort of impact that whole scenario. But, at too low of a price then oil production can’t increase or even remain stable necessarily. So, A.) is that a fair characterization of where we are? If it is, what does that tell us about where we really are in this story?

Gail Tverberg: Yes. I think it is a fair characterization of the story. I think too that it gets to be even worse than what we think because financial institutions have sold derivatives based on the assumption that things can kind of go along as normal. So, you start seeing very strange motions in terms of the rise of the dollar, the fall of the dollar, and a variety of other things besides just these oil price changes. Over time, what you're going to get is a bunch of business failures. That’s going to come through these derivatives and it’s going to come through the financial system in a different way than just the oil price itself would. So we have multiple impacts of these things, some of which are not obvious when you just first look at the story.

Chris Martenson: They’re obvious to somebody because we know now that within the banking system, at least in the US, it looks like taxpayers have been put on the hook for a portion of the derivative structure that banks carry. We know that depositors have been moved down the chain of claimants to become almost last in line should any sort of a bankruptcy or other dissolution proceeding happen for a bank. But these derivatives that you're talking about are not just oil derivatives, right? You mean all of them—the credit default swaps, the interest rate swaps—all of those pieces. Those are all basically predicated on this idea that we’re going to have robust future growth like we’ve had in the past, say 4% real GDP globally, forever and ever. Is that right?

Gail Tverberg: Right.

[Talking over each other.]

Chris Martenson: Go on with that. I’m wondering, what do you think happens to that structure of…to me it’s like the price of the entire bond market and stock market has a growth component built into it. In the bond market, it's really explicit, as well as in the stock market. When that growth premium comes out, which is something Jeremy Grantham at GMO has been talking about, other people are starting to get their hands around this. I don't think the growth premium has been taken out of the markets yet. But if it does, what do you see happening?

Gail Tverberg: I think the issue is there’s not exactly a growth premium. It’s the fact that it either grows or it collapses…that you don’t have enough when you get to the end of the time period to pay back your debt with interest. In other words, a virtuous cycle turns to a vicious cycle. We hear about Ponzi schemes—this isn't a scheme as such, but what happens is you end up with a situation where you can’t repay a debt with interest. So, that affects everything all the way up from just your basic loans to your derivatives to everything else. I think that’s one of the big issues that’s coming up as we get to lower oil supply…not lower oil supply—an inability to keep the prices up with the cost of extraction.

Chris Martenson: I’ve studied this a bit and we’ve chewed these numbers at Peak Prosperity some. I’m wondering about your take on this. It’s tricky to get your hands around this idea of really what a marginal barrel costs. Of course all different projects have a different range. We know that some arctic stuff might have a full cycle cost $120 or more a barrel. We know there’s still a few cheap barrels to be had out there. But, the shale production seems to be the world’s new marginal producer, meaning that’s the one you can turn to and turn it on or off if the price is right. What’s your sense of what the full cycle or all-in costs are for shale? I understand it varies by region obviously, Bakken is different from Eagle Ford and all of that. But, I’ve seen Wall Street sell side analysts give us numbers as low as $25 a barrel. My numbers suggest that even at $90 a barrel I can’t find anybody who is turning a profit on a free cash flow basis ever, yet, so far. Have you looked at that? Where do you think the truth lies?

Gail Tverberg: I don't think we know for sure. I know that all the numbers we’ve looked at so far are based on a zero interest rate policy and lots of borrowing with cheap money. So, if it’s $90 today, it’s not going to be $90 when they come back in again. It’s going to be $135 or $150 a barrel. And, if it’s $25 a barrel today, it’s going to be $50 a barrel tomorrow when they have to pay real interest rates on this stuff. So, it’s going to change. Even if we did know what the marginal cost of the barrel was today, it doesn't tell us what it will be for the next few marginal barrels.

Chris Martenson: Yeah, it’s certainly a moving target because of course the cost structure of drilling and fracking a well is rapidly coming down as labor prices and bid prices for rigs and things comes down. I don't think there’s much more than 10-15% overall wiggle in those numbers because a lot of it is the cost of steel and sand and stuff that’s a little bit more firm. But, at any rate, there is a little wiggle room on that side as well. I’m just convinced that the all-in cost of production for the companies, when I was looking at it, was probably closer—on a break even standpoint—was probably closer to $110-$120 a barrel. But the thing that always concerned me was I don't think society is getting its proper severance taxes out of that to pay for road damage, bridge damage, the eventual capping costs of abandoned wells, and other things like that. It certainly seemed like if you wanted to fully burden the cost of a barrel of oil for all of the true costs, it would probably have been $150 a while back. That’s what I think, but it’s hard to get good numbers.

Gail Tverberg: Yeah, I would agree with you. I guess the point I was trying to make was even when you're doing it that way you have to be sure to also count in for the fact that estimate was made with ultra-low interest rates. So, if you're going to try to put in real interest rates besides, or you know interest rates that aren’t based on a zero interest rate policy, the cost…if they were $150 fully burden before, that’s comparable to something quite a bit higher if you have a higher interest rate that these folks have to pay when they’re trying to borrow a lot of money in order to try to extract this oil.

Chris Martenson: Alright. So let’s talk about peak oil. First of all, real or not?

Gail Tverberg: Well, I think that what happens is a financial collapse and as a result the oil production drops. So, it doesn't happen in the order that you think it does. Certainly, conventional oil has peaked and what has kept it up is all kinds of financial shenanigans. Once these financial shenanigans collapse, the whole thing falls down. But, it doesn't fall down in a way that the peak oil predictions were made.

Chris Martenson: We have to look at then a blended…there’s some geology at play obviously. Like, what’s happening in the North Sea is probably independent of financial shenanigans to a large extent, although it could wiggle a little I guess. But, largely speaking, there’s some geology. But we have to understand the intersection with prices and the cost of money.

Gail Tverberg: Well, I think it’s not even that. I don't know if you read my last article, but what I was talking about there is: Suppose you have a derivatives problem or whatever. If you have a derivatives problem and you have to go back against depositors, your depositors are things like companies that are making payroll payments. So, the big danger is that these payroll funds will be taken in this process of taking the money away to try to get enough money to fund the derivatives problems. Or, they might not be derivatives problems. They might be other kinds of problems that are putting banks under.

If you start taking the money from the oil companies that they were going to use to pay their employees or if you take the money from electricity companies that they were going to use to buy coal or that they were going to use to pay their employees, you have a very bad effect on the economy, which has nothing to do with the shape of the oil depletion curve.

Chris Martenson: Right. That’s a great point. What you're talking about here is around these bail-in provisions. So, depositors are supposed to share in the losses by haircuts to their deposits. Just to make sure everybody is following here: The depositors you are concerned about here would be companies who have, by default, their money in a bank. In fact, I don't know what I would do if I was CFO or treasurer of a large company knowing what I know about the banking system because you have to have your money in a bank. If those banks get in trouble and those funds get essentially haircut or frozen or taken, then you're talking about all of the follow-on effects that would happen after that.

Gail Tverberg: Exactly. That’s the kind of thing that we're up against. It’s as much the companies being affected as the individuals. But, they both can be affected and they can be affected pretty quickly if that’s the kind of program that’s put in place and people don’t realize what the follow-on effects are likely to be.

Chris Martenson: One thing I found is that the people who passed the financial rules seem to be just delightfully unaware of what the follow-on effects might be.

Gail Tverberg: Right.

Chris Martenson: I’ve been looking at peak oil as having both a geological component…we know that if everything was just firing on all cylinders, there hadn’t been an oil price collapse, if the cost of money hadn’t gone away, if everything was going along, the Energy Information Association (EIA) was projecting that US shale output was going to peak around 2020, give or take a year depending on how you count. So just accepting that as being true, we knew that the shale story was really not all that long lived, right?

Gail Tverberg: Right.

Chris Martenson: 2020 is almost tomorrow as far as I’m concerned. Yet, you know, to me that was probably the high water mark of international oil production at that point in time, taking US and everything in line. With this, the only wildcard in there I’m not clear on is Iraq. Iraq clearly could have a lot of extra capacity, I think, if they could become stable and get a lot of investment in there. But barring that, it seemed like we were probably facing this peak around…somewhere in that zone.

But, the world used to be aware of this: The conventional oil fields that are out there, all the fields that were drilled in the 20’s, 30’s, 40’s, 50’s, 60’s, 70’s, those fields are depleting at around 4% a year. I’m averaging. Some say as low as 3%, some say as high as 6.75%. I’ll just take 4%. So, that means 3-4 million barrels per year is coming offline from just regular depletion cycles, has to be brought back in through additional investment. So, now I want to turn to this part of future production and how you see today’s oil price affecting that.

Gail Tverberg: Well, as I said, the big issue I see is an affordability issue. I don't see oil prices bouncing back up again, or certainly not bouncing up very long, for very far. So, I see oil production—this is basically the beginning of the end of…what we're seeing is the beginning of peak oil basically. The oil production will actually permanently turn down at this point because we will not be able to get it back up, and because of all the financial situations coming along.

Chris Martenson: If that’s true though, then give me your follow-on prediction for what happens to the world economy.

Gail Tverberg: The world economy is what’s collapsing. It’s because the economy collapses that the oil production collapses. And, as does natural gas and coal at the same time. The renewables go down at the same time because they just support the electric system, which then the electric system goes down because the electric people can’t pay their employees. So you end up with a bad situation all over, but it’s because of the financial situation and most people will never figure out it had anything at all to do with oil.

Chris Martenson: They are both very well tied together. The oil business is really interesting. I mean, if you go…there’s a great little video I’m going to post on my site I found, which basically shows the complete drilling and fracking of a well from start to finish, from scraping the pad. It condenses it all into a minute and a half. It’s just a flurry of activity. Every one of these trucks have specialized people, specialized equipment, specialized tools. It’s a really heavily, heavily complicated business. For that to run, just looking at the number of different types of trucks that show up and all that, I’m going to guess there are several hundred companies making things that are used in that process. For those several hundred companies to be operating and delivering the things that they’re making, you need a functioning economy. Right?

Gail Tverberg: Right. Back at the time of the 2008 oil crash, one of the things we discovered was that a big problem was there are a lot of the small suppliers that have terrible credit ratings, even if the top company is a big company that has a good credit rating. What happens to the small suppliers is that they cannot get the financial backing that they need, so they drop out of the supply lines. It’s the fact that you can’t get the supply lines to work that’s the big problem.

Chris Martenson: Yeah. Any chance you think that…you know the Fed bailed out the housing market—bought $1.3 trillion of mortgages in order to affect that. Any chance you see a government response to say "this is too valuable of an industry. We can’t tolerate this sort of damage here"?

Gail Tverberg: I think the question is: Are we really talking about bailing out the financial system, and how big a bailout that really would be. I don't see that it’s going to be the oil industry so much as the financial system, maybe plus the oil industry that we’re talking about. At that point, I think it gets almost to be beyond what they can handle because we’re really talking about a fundamental mismatch at some point. We’ve made all kinds of promises that production and everything else can continue to expand in the future. You know, the thing you talked about in the beginning, that we’d have this continuous growth forever and ever. That promise really isn't true. So, at some point, that has to come to the floor.

Chris Martenson: Interesting that it would come to the floor as a consequence of low oil prices. That’s an interesting wrinkle in this story potentially, but I can see how it would happen.

Gail Tverberg: Lack of affordability.

Chris Martenson: Yeah. It’s interesting. I love the way you started by saying the cost of extraction is up a lot but wages are not. Wages for the average person are in the doldrums. It was always the broad middle class that really funded the type of consumption that led to the sorts of advances we’ve had in the past. We see lots of economists confused now by where’s our growth because by the headline numbers things look okay. The problem is they’re not analyzing it to the point of saying most of those gains are flowing to a very, very tiny fraction of players. They just pile the money up. So great. You know, we have excess reserves floating around by the trillions and all of that. But, that doesn't help anything if you really want this growth.

As you say now, we have to at some point as a species, or at least as a culture, square up to this idea, which is that endless growth was impossible anyway. And, we seem to have a system that you said—and I agree with this characterization—is either growing or collapsing. It doesn't seem to have a middle ground. Why is that?

Gail Tverberg: Well, it’s the way that the world is constructed. We are dealing in a competitive system. Each species and in fact, each individual must compete against other individuals and other species. It’s either grow and expand your population of your species or let some other species grow and expand the population of their species. Because of that, each species has more offspring than needed to reproduce themselves. It’s the ones that get the best control of energy that are able to outbid the other species. That’s what we’ve been able to do, first through our controlled use of fire over a million years ago. This is the way the economy is set up to go. Every little smaller civilization has grown until it reached a point of collapse. There’s never been a steady state system that I’m aware of.

Chris Martenson: This, to me, comes down to as well that when you have debt based money and you have an interest rate attached to it, as you mentioned before, in order to pay both the principal and the interest in the future there has to be some sort of growth associated with that. It just doesn't work otherwise. I know some people have put together spreadsheets and said with perfect flows it does, but in the real world it doesn't because you have imperfect flows. We really do seem to be trapped in this thing, this grow or die.

I’m concerned at this point, Gail, because what I’m looking at in terms of the future production of oil, I know that back in January and February of 2014, it was a year ago, Brent was still over $110 a barrel. And, all seven oil majors basically said "look, we can’t afford to explore at this price of oil and pay shareholder dividends." So, CAPEX verses dividends; something has got to give. So, they either froze or cut CAPEX back at $110. Here we are at less than half that number. I have to imagine that those CAPEX decisions are just getting absolutely shredded at this point in time, which means, in my world, if this low oil price persists for six months or longer, we’re going to have future production that’s not large enough to sustain the global economy at nearly the pace it needs to grow in order to justify current levels of indebtedness. That was a mouthful, but did that make sense?

Gail Tverberg: Right, right. The cutback that’s already flowing into the system is part of what’s going on. Oil production a year from now is going to be down regardless of what happens with all of these cutbacks we’re seeing in shale and such right now. The effect is we’ve got quite a bit of cutback already built into the system. That’s part of the reason why I’m saying that the system now is very well likely to be on a permanent way down because we’re going to be down so far there’s no possible way we can get back up again. We needed more than the $110 a barrel for the oil majors to keep the prices up back before for them to continue doing their exploration and production at the level they needed to. They needed a higher price than that. We’re not anywhere near there. We’re way, way, way, way down now. That’s why I say that I think we’re at a point where the oil production is going to end up permanently down.

Chris Martenson: With low oil prices, demand basically has to follow those prices down in some way because if demand picks up…normal supply and demand thing would say if we take the price point down, demand will go up and then supply will meet it there magically. You're saying that because the price has come down it’s likely to stay down because we won’t have the sort of economic activity we would need to drive demand up enough to create that price supply sort of rebalancing act. Is that right?

Gail Tverberg: Right. I guess the way I see it is that salaries…what we have is a network system. Salaries are determined…everything is hooked together. The reason why salaries are so low is because of diminishing returns that we’ve been reaching already. More and more of our resources are going into oil extraction and they're going into making renewables and they’re going into all kinds of other stuff that’s not really adding a whole lot to the economic growth of the rest of the economy. They’re certainly not adding proportional output to the input that they are. Anyhow, I don't see that we can get the growth back again.

Chris Martenson: That’s fascinating. As I look at this whole scenario of what’s really happening out there, it feels to me like the price of oil has to at least go back up to the marginal cost of production because the alternative to me is pretty much a collapse in the global economy. People tell me "oh, we’ve got thin film solar," which has nothing to do with oil. They say "oh, but we’re getting electric cars," at a fraction of a percent of the total vehicle fleet. That the world’s economy is decoupling from oil—I don't see any of that, Gail. One of my favorite things to do is go over to Vimeo and look at traffic jams around the world. We are 24/7, 365 a dissipating organism. We are just burning oil all the time.

Everything about…when I go online and I order something from Amazon, I click, and the big brown truck of happiness rolls up my driveway, the supply chain involved in anything that I bought is just so oillisously dependent on being transported that I can’t for the life of me imagine what people are thinking when they say "oh, we can still have a growing, functioning economy with less oil." What would you say to people who make that claim?

Gail Tverberg: I’d agree with you. They can’t. We can’t have a functioning economy with less oil. I think that the financial system is the first part to go. And, that’s not real easy to see.

Chris Martenson: Gail, one of the places I’ve been looking a lot is in the destruction of the, obviously, the equity prices for a lot of the shale drillers as well as other oil companies, service companies. We’ve seen their debt get hammered a lot. We’ve seen the cost of capital going up. Besides those obvious places, as you're looking for your clues that the financial aspect of the broader economy is starting to get hit because of this lack of ability to afford sufficient quantities of cheap oil, where would you be looking for signs and what are you looking for?

Gail Tverberg: I think what we’re going to be seeing is a lot of problems around the world of different kinds. I think the emerging market debt is going to be a problem. I think China may very well be one of the…you know, we consider that part of the emerging market, but I think they especially are going to have a lot of debt. We are going to be seeing a lot of different problems coming together. I think we’re also going to see things where it’s not just the oil is being cut back but areas…you know, there’s so much of the economy that depends on oil or is related to oil.

I think I put together a post where I showed a chart you may have seen elsewhere, where the shale states had pretty much all increase in employment in recent years, while the non-shale states are still way behind on jobs. So, you get a situation where there are a lot of different pieces of the economy that are doing badly at the same time. It’s a little hard to say exactly what it is that brings the whole thing down, but it’s a combination of things.

It may even be that the Federal Reserve raises the interest rates. Raising interest rates will really bring the US economy down if it's more than just a tiny, tiny percentage or fraction of a percent. That is something that is the lever that they use to get…that they’ve been trying to use to offset high oil prices. So, that could be one of the big pieces too that pushes the economy down.

Chris Martenson: I’ve heard it said, I think it was Jim Puplava—I thought it was very right at the time, a few years back—he said that the price of oil is the new fed funds rate. Meaning, as the price of oil goes up it’s providing a resistive effect on the overall economic growth. Now that the oil price has declined, it would have the reverse—it would have a stimulative effect. What do you say? I read a lot of comments where people say "oh, this is unequivocally good. Lower oil prices mean consumers pay less for fuel. That’s just a positive. "

Gail Tverberg: Well, it’s good from a first order kind of look at things. But, the fact that you can’t keep pulling the oil out at that rate is a big problem. The fact that there’s a lot of follow-on effects that you don’t see immediately. Part of those follow-on effects are in other countries around the world too. We need Saudi Arabia and we need all of the other countries, even Venezuela and all of our exporters, to continue their exporting. If the governments fail, then it’s not that they just cut back a little bit on their oil production, they are likely to be cutting back a whole lot on their oil production.

Chris Martenson: Interesting. The piece that’s come up a lot for me as I’ve read, honestly, very qualified economists say that this lower oil price is going to be a big boost to GDP because it puts all this disposable income back in people’s pockets. I’m like "whoa big boys and girls." GDP is a macro statistic. So, to the extent that oil companies operating in the US and the whole chain, from refining through distribution and retail, the extent to which they’re receiving less money and consumers are receiving that benefit on their side, that’s a zero on the GDP ledger. Nothing happened there. The only thing that matters is if you're importing oil it’s a positive because your imports deduct from your exports to give you an overall GDP boost or decline, depending on how those numbers balance out.

I see a little bit of a gain for the US because we still do import a lot of oil—5-6 million barrels a day. So, we’re paying less for that. That will boost GDP. Otherwise, it’s kind of a wash, isn't it?

Gail Tverberg: Well, I sat down and I wrote one post that I think it was called “Ten Reasons Why A Severe Drop in Oil Prices is a Problem.” As I sat down and looked at it and enumerated it, I realized that there were things that people are not taking into account in that analysis. It’s a lot worse than what you think. There’s enough bad effects…if you take some kind of a whole and divide it into two pieces—we’ll say and egg. You know, the two pieces are not equal to the one together. It really changes the whole situation materially. It’s the fact that it's materially changed that is a problem. You can’t put your egg back together again after you break it, even if you could say that’s the same egg you had before, even if you've cracked it in two.

Chris Martenson: Absolutely. As we look at the spill on effects that would happen here... North Dakota is going to have to wrestle with some stuff. They're going to have to figure out what a bust feels like in this story. If you lose $100,000 truck driving job in that area, there’s all the second order things that you would lose as well—the demand for the burger flipper at $20 an hour and the maid at $25 cleaning rooms in the hotel that’s selling rooms for $200 a night. All of that stuff gets impacted as well. So, the loss of a little bit of oil revenue can really ripple through an economy, can’t it?

Gail Tverberg: Exactly. One of the things I discovered as I was looking at this is things like, you assume that all of this savings is going to go back to the consumer. Well, are airlines going to give the lower oil prices back to the consumer? No. They’re not going to lower their prices. They’re going to take one of the empty planes they’ve got sitting around from 2008 and put it back in the air because there’s not much cost in doing that. And, they’re going to try to run more planes rather than trying to actually reduce the fares to give the savings in oil price back to the consumers.

Chris Martenson: As we look forward then, what do you see happening? You said you don’t see oil prices rising anytime soon. Do you literally mean like…what would your prediction for oil prices for 2015 actually be here?

Gail Tverberg: They probably will bump along, but we’re probably talking down to the $20 barrel range.

Chris Martenson: Twenty dollars, okay. Simply because somebody can make money selling it at that range, or that’s just where you see demand falling for this?

Gail Tverberg: Well, I think because we end up with so many financial problems.

Chris Martenson: Yeah. So then…

Gail Tverberg: The sole issue is how bad does the financial system come out? How many derivatives problems do we have? How many problems do we have of other sorts? How much haircut is being done of people’s bank accounts? That kind of thing.

Chris Martenson: Well so then, this sort of squares up with my personal opinion/prediction. I think there’s a deflationary impulse. For a long time, I thought that inflation was going to win. I kind of believed the whole helicopter money would do it. But, they failed to get the money in the hands of people. They got it into the hands of a concentrated set of speculators. That didn't do the trick. So, it looks to me like now we’re seeing more deflationary impulses than anything—China being a big wildcard in this. They went through their building boom. They are absolutely not importing nearly the same amounts of coal, oil, steel, copper—the big four I track for the macro story. Europe is in trouble. The United States, despite the 5% GDP reading, which is really just a whole lot of Obamacare brought forward into a single quarter for a nice bump effect—I’m seeing deflation as the impulse. That’s a scary proposition to our world leaders. I think they’ll fight it with everything they’ve got because deflation destroys institutions, it wrecks whole economies, it ruins financial systems, and it most importantly shortens political careers.

Do you agree that, in your $20 oil, I’m projecting that you're saying there’s a deflationary impulse on our way?

Gail Tverberg: Exactly. It makes debt harder to repay. So, you end up with more and more countries having difficulty with all of the debt they have outstanding and the businesses in those countries having difficulty with their debt.

Chris Martenson: What if the Federal Reserve went wild? That happens and they just go wild and they say "great. We’re going to just give everybody money." I don't care how they do it. They might give everybody a retroactive tax rebate for the last three years or they might just send checks or have the government do it but then fund the deficit—who cares. Would your opinion of all this change if the Fed just threw even more money at this?

Gail Tverberg: Well, I don't know. It may delay things…it may keep things, the financial crash that I’m concerned about, you know make it go out a few months or even a year or two. I don't know. We’ve managed to do some amazing things so far. There are a lot of things that are possible that maybe you could kind of keep the balls up in the air for a little bit longer. When you look at it, you say it can’t go on indefinitely. Maybe they can figure out something. I don't know. It certainly doesn't give us a corresponding amount of real buying power because there’s not that much stuff to be bought.

Chris Martenson: Right. This is really an interesting…this is why I love to keep focusing on the energy. Energy is everything in this story, as far as I’m concerned. We can’t have an analysis around just the economy and hope to get anywhere without really understanding the master resource, because energy is everything. The peak oil community has been talking about net energy and the role of that and energy return on energy invested. Obviously we’re slowly swapping high net energy oil for less high net energy oil. We’re in this part where I just can’t see global growth returning like people are counting on or like financial models are counting on. Because of that, I just have a sense right here, Gail, of tremendous pressures building because the fiscal and monetary authorities are blissfully unaware of that part of the energy story you and I are talking about. So, they just keep pushing and pushing, creating more debt, more derivatives, more lending, more money, more claims. I think you said it best. It’s the amount of real stuff that matters at the end of the day, not the claims. The claims are just piling up over there. That is a pressure, if you will, that’s going to connect at some point and either the economy really takes off and rip roar grows to the future, or the claims have to get reduced. You're saying that’s where we’re headed. In fact, we’re almost there.

Gail Tverberg: Right. I think though that the claims in the future, they really do play a role though in trying to keep the price of oil up. If you don’t have your debt growing, you can’t keep the price of oil up. So, cutting back on debt creates a real problem in terms of oil price. That sometimes is one thing that people don’t understand when they say "oh, we need to just roll back things." We’ll, you can only roll back things if you can keep your prices up high enough.

Chris Martenson: Interesting. Fascinating thoughts there. We’re out of time for this. I really want to thank you for your time today. Again, just remind people. Tell them about your excellent website and how to get there.

Gail Tverberg: Okay. My name is Gail Tverberg. The name of my website is OurFiniteWorld.com, Gail Tverberg, but either one of those will get you…if you put my name in, you can get to it as well.

Chris Martenson: And there’s just some fantastic articles there, full of data, very well done. So Gail, thank you so much for today and for the work you do in analyzing and spreading the word.

Gail Tverberg: Thanks for inviting me.

About the guest

Gail Tverberg

Gail Tverberg is 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 inadequate supply.

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54 Comments

JohnShippen's picture
JohnShippen
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David Allan's picture
David Allan
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Re: Essential reading

I completely agree with your recommendation John. It's hard to argue with Korowiczs logic. Like Chris he is a scientist, a clear thinker and he cuts to the heart of our global predicament. Hope to hear him on the podcast sometime...

Thetallestmanonearth's picture
Thetallestmanonearth
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I haven't been able to listen

I haven't been able to listen to this yet, but Mrs. Tverberg is one of my favorite thinkers.  I look forward to hearing the interview!

kwklein's picture
kwklein
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Wonky, but Outstanding

Subject says it all for me.

I know most people (non PP readers) will be unable to understand most of it.

Along with most world leaders.  Unfortunately.

The "Idiocracy" world has arrived ahead of schedule.

It's going to be a most interesting 2015 I think and I am grateful for all of the great information Chris and Adam give away for free.

KK

treebeard's picture
treebeard
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Interesting that in the

Interesting that in the preamble to the meat of the conversation Gail Tverberg takes a side step in the competitive nature of natural systems.  She gives as a reason for collapse the need for an individual species to dominate their environment, implying that it is hard wired into the human psyche as well.  I would agree in a way, but it is our competitive view of reality that will lead to collapse, the primary problem is that this competitive view is out of sync with what is.  It is this distortion of reality that has caused us to become so destructive as a species.  Avoidance of collapse is as difficult and simple as changing our view of reality.

All the technology and wisdom that we need is already here now.  We know now that the DNA in the cell of nucleolus is not the "brain" of the cell, that a cell can live happily for months without it.  We even have architectural DNA who's job it is to rewrite our genetic code as needed.  We are not materially destined to become something that we don't want to be. What will kill the cell is the removal of it's skin, its connection to the outside world.  Our connection to each other.  In these simple words that we share, we are saving the world and ourselves.  

Your beliefs become your thoughts, 

Your thoughts become your words, 

Your words become your actions, 

Your actions become your habits, 

Your habits become your values, 

Your values become your destiny.” 

Do not believe in collapse!

jgritter's picture
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So here we are, at the actual

So here we are, at the actual tipping point.  Global energy production will never be higher then it is right now, the global economy will never be larger.  The snow cornice has begun to move, the water tight bulkheads have been overtopped, the trailing eye wall has made land fall, pick your metaphor.

Sorry people, I'm just struggling with the enormity of it all, with the real possibility that I, and most of the people I love, are on the wrong side of the viability line.

This is hard to write about,

John G.

SingleSpeak's picture
SingleSpeak
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Listening to Gail

clarifies and unfortunately confirms what I (we) have sussed out here over the years.

You've given a very clear and sobering discussion with points like "companies will not be able to pay their employees" that ring truer than ever.

The funniest part is the inflection in Chris's voice when he hears the $20 per barrel prediction. If you listen very closely you can hear him falling out of his chair. wink

Thanks for another much needed kick in the pants.

SS

Time2help's picture
Time2help
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Influence is not control

treebeard wrote:

Your beliefs become your thoughts, 

Your thoughts become your words, 

Your words become your actions, 

Your actions become your habits, 

Your habits become your values, 

Your values become your destiny.” 

Do not believe in collapse!

Since the majority of the populous are Sheeple, and they believe nothing untoward will happen, the quantum directionality thus manifested should prevent any major issues.

The Right Brain whispers that I can influence my own destiny.  But we are all moving down a quantum tunnel in time. Can man change the course of a massive river? Yes, but not easily, and not without effort and time.

Where are we in time?

treebeard's picture
treebeard
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Collapse

Don't believe in collapse, believe in transformation.  We don't have to solve the worlds problems, only our own. The world was at a much higher energy state before it was habitable by humans and most other species currently on the planet. Energy is the story, but our future success and happiness are not dependent upon it.  It's diminishment is what drives evolution. The countervailing force to entropy is consciousness.  Don't become addicted to negative energy flows, there is a certain level of pleasure associated with emotional energy, regardless of the type or direction of movement.

The limitation of the rational mind are in full display at moments like this, there is to much information to be appropriately processed at that level. Take in what you can, but resist drawing conclusions, it is in the discomfort of knowing that we don't understand that the creative force within us can manifest.  You will know what to do when the time comes, we all will. 

Time2help's picture
Time2help
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Thanks

Awesome post Treebeard.

thatchmo's picture
thatchmo
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feel your pain

Hey John.  Yes, we humans are so clever we think we can predict the future with complete certainty.  Yes, things can "look" grim from here.  My suggestion: get out in some beautiful place in the wild with someone you love and just suck it all in- here and now.  What a gift this moment is.  Why it is called the "present", I've heard.  Then be thankful on the walk or drive home, that that semi stayed on it's side of the road.  Gratitude. I've found it helps temper things.....Take good care.  Aloha, Steve.

thatchmo's picture
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Fine job

I could almost visualize Gail at her harshly-lit desk with a green shaded visor on, pouring over piles of reports, being compelled to explain "things actuarial" to us less-inclined, but interested, parties.  Fine job interviewing her, Chris.  Aloha, Steve.

jgritter's picture
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With Respect

Treebeard, from a thermo dynamic point of view your post sounds a lot like all we need to do to avoid the collapse is click our heels together three times and say "there's no place like home."  The math would seem to suggest that an increase in the availability of cheap oil equals an increase in cheap food and an increase in population, the opposite would then seem to be true.  The elephant in the room continues to be that with a decrease in oil production there must follow a decrease in food production and a decrease in population.  David Korowicz makes the plausible case that a very complex society could unravel very quickly with food distribution being severely curtailed, or stopping, very abruptly.  Not to be an asshole, but if my family's welfare depends on my basing my preparations on the hope that humanity will reach a higher state of consciousness or the laws of thermo dynamics, I'm going with thermo dynamics.

Again, I mean no disrespect, but we are staring into the fangs of one of the greatest disasters that the human race has ever faced, to say "Don't believe in collapse" is an appalling disservice to humanity.

Steve, living today with love and gratitude seems to me to be good advise as tomorrow may bring an almost unimaginable shit storm.

Having second thoughts about posting this, but here goes...

John G.

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Merle2
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Thanks for shring your insights.

Gail, I do appreciate you sharing this, as well as the material you have shared at other sites.

You seem to suggest we are going to a world in which oil drops to $20 a barrel because people are so poor that they cannot afford to buy gas produced with $25 a barrel oil to get to work. That means that many people won't be getting to work. That seems to be where this is getting at--that in the near future people will be too poor to use a car for their basic transportation needs, so the glut of oil in the marketplace gets worse, and the price gets down to what people in their new state of poverty can pay.

I am very interested in how you see the future state of the world 5 years from now and 20 years from now. At the oildrum you had posted a comment on your last post which said, "I expect it will just mean that those people who are alive now will live less long. This will be good for the plants and (other) animals on the earth, but not for humans." Likewise here you suggest that the loss of energy for humans may mean some other species step into the gap currently occupied by humans.

Are we talking about a mass die-off? Are we talking about a chaotic struggle for survival in the near future, with only a small fraction surviving? Are we going back to the bronze age?

Or are we talking about a "correction" in human prosperity, a drop to a new steady state world at a much lower material consumption?

One does hope that, not only do folks find means of aiding their own survival, but also find the means to work with governments to adopt polices that ease the transition, and lead to a new equilibrium state.

thatchmo's picture
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I'm liking transformation

We could all start carpooling to work.  Tomorrow.  We could all start a garden.  Tomorrow.  We could all write a few letters to our legislators (just for kicks?).  Tomorrow.  We could all start discussing population control.  Tomorrow.  We could all start limiting our mindless consumption.  Tomorrow.  Actions, Habits, Values, Destiny.  Hmmm, could work.....I believe some of us are doing some.  The "all" (or most) will be the hard part.  Then there's that calendar on the wall, along with the clock, ticking.....Aloha, Steve.

ps- don't forget the 100th monkey!

Denny Johnson's picture
Denny Johnson
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collapse or transformation

It seems to me that whatever is coming down in the future can be perceived as collapse or as transformation.

And there will be a lot more weeping and gnashing of teeth by those who view it as collapse.
treebeard's picture
treebeard
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Nothing in my world view

Nothing in my world view precludes the potentiality of human beings not making it, or the prospect of a rather catastrophic future, they are all very real possibilities.  This is certainly not a dress rehearsal and if there were nothing at stake, then our lives would have very little meaning.  It is after all the reality of death that gives value and meaning to our lives. There is nothing easy about what we are up against, but there are many ways to use the anger and frustration that we are all feeling.

Cheap energy has allowed has to create the most inefficient and self destructive systems the world has yet seen.  To see what we have created as a pinnacle from which we must fall is a delusion, we still hold a very primitive conception and understanding of reality, to project that into the future is a mistake. The current paradigm is about energy, but the future need not be, we are just beginning to understand that.  There are possibilities that boggle the mind, but they are not the techno-fantasies that seem to be popular today (which are all still very energy centric).  We are creating our future now with each breath that we take. To give in to a dark and fatalistic future is to evade the responsibilities that we have to each other in this present moment.

sand_puppy's picture
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collapse vs transformation

So we have a situation here:

Global human population from 10,000 BC to the present.

And we understand that populations tend to cycle in response to resources and other organisms that co-evolved and share a common living space, such as this theoretical model (the Lotka–Volterra equation) of a population of cheetahs (predators) and baboons (prey).

From Gail Tverberg's site:

If species evolve together, a natural balance tends to remain in place. If a species suddenly finds a new, better source of nourishment (really, energy supply, since food supplies energy), its population may increase greatly. For example, yeast may metabolize the sugar in grape juice, converting it to alcohol. The yeast population temporarily rises and then declines, as the food source disappears and alcohol pollution poisons the yeast. ...

An example is sometimes given of reindeer introduced to St. Matthews Island near Alaska, where there was considerable lichen on the rock. The reindeer ate the lichen at a speed faster than the lichen could reproduce. Soon the lichen was gone, and the reindeer population crashed.

Summary:  I would expect that during the down stroke phase, 42 of the Saint Matthews reindeer considered the changes "a transformation" while 5,958 experienced it much more as "a collapse."wink

-----

I am guessing, that Treebeard was saying a number of things.  The main one is that we are shaping our future now by what we are doing and by what we value as "a good life."  For example:  if it involves small scale farming, friendships, working closely with neighbors, hand making clothing and shoes and bicycle and horse riding then we are valuing ways of living that may make it into a post-carbon world of tomorrow.

I really agree with John above, that the return to populations levels within the carrying capacity of a local environment will be brutal and traumatic.  Seeing this potential honestly and responding authentically (which includes with real fear!) is just honest, authentic and adaptive.  And it is how we humans get our butts moving.

Treebeard, if you see possibilities for a wonderful future "that boggles the mind" that you could share with us here, I would love to hear them.  A positive vision would be a great gift.  Please share yours. Paint us a picture.

rabblebabble666's picture
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Tipping Point was 1975 when Club of Rome report DeRailed

Greetings from Big Mango (BKK)- I'm 12 hrs in future from NY. I hav been reading Gail's blog for a few years, and i believe the tipping point occurred around 1975 when tame govt scientists and academics trashed / derailed the Club of Rome report- Limits to Growth. Dec 1 i predicted oil would be at $20 by end March 2015 and stay there in a vain attempt to revive the global economy. From 1920 to about 1970 it was $20, times were good. Its too late now. The global economy became a Zero Sum Game 7 yrs ago, so now if one country's input goes up 0.5%, another's must come down 0.5%. The collapse will not be sudden, but slow motion, like rollerskating down variable step/tread stairs, mabe 6 months one step, 14 months next step down, until we get to ....vacuum tube era.....steam punk......or pointy sticks and rocks, heh.

Regards, rabblebabble666

Time2help's picture
Time2help
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The collapse will not be sudden

rabblebabble666 wrote:

The collapse will not be sudden, but slow motion, like rollerskating down variable step/tread stairs, mabe 6 months one step, 14 months next step down, until we get to ....vacuum tube era.....steam punk......or pointy sticks and rocks, heh.

Yes, definitely, slow motion.

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The cost of oil

I think the one thing omitted is possible unrest in the Middle East.  It seems to me if the flow of oil were cut off from say, Saudi Arabia,  the cost of oil could soar.  Add in another country or two and who knows how high it could go.  Of course then we have all sorts of other problems.

Belmontl's picture
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Integral Theory and a Wider, more comprehensive view

"Things are getting Better and Better, Worse and Worse...Faster and Faster" --- this is the evolutionary perceptive I attempt to hold, Good News/Bad News (varying perceptives) is seemingly the Dialectic of Progress... where the "problems" at one level of Consciousness/Worldview are "solved" at the next level .. only to have their own "problems" and so forth... 

Strangely enough 13.8 billions years of evolution (cosmic, biological, Culture and consciousness) have "miraculously" brought us to this moment... yes we are amidst the 6th great extinction... but the first time any being is even conscious of it!! (Jefferson was looking for mammoths and dinosaurs in Lewis and Clark expeditions ... for extinction wasn't even thought of!) more amazing with 99.99% of all Life having gone extinct... we are still here with untold diversity.. Jim Morrison said it best "none gets out alive" and in a few  billion years it will appear as if nothing exisited ..and all of this is OK (hey why argue with Reality)

I've been a student of Integral Theory for many years .. perhaps the most comprehensive Map of Reality... (and if you're going to make a "prison break" (from paradigms, etc).. it pays to have the best map"

TreeBeard makes some valid points... We need an sense of urgency... without anxiety... we have to act or lead from the Future ( i tried to post to this free EDx Course 

U.Lab: Transforming Business, Society, and Self

Learn how to create profound innovation in a time of disruptive change by leading from the emerging future.

https://www.edx.org/course/u-lab-transforming-business-society-self-mitx...

25k people form 192 countries... worth a look ...

I also enclose an Integral Paper on Sustainability ... 

The Integral Framework is a comprehensive map of systems, culture, psychology, and behavior. It is used worldwide in some of the highest levels of business, government, and civil society. 

http://terrypatten.typepad.com/iran/files/quadrants_undp.pdf

I throughly appreciate the thoughtful, and diverse posts on this website

the best to all 

joe

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Theedrich
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Perhaps two more years to go

My short summary of this important interview:  Gail explained that “oil production is based on ‘zero-interest-rate policy and lots of borrowing with cheap money’,” and varies wildly.  Her analysis shows that what happens is a “financial collapse and as a result, the oil production drops.”  And “once these financial shenanigans collapse, the whole thing falls down, but it does not fall down in the way that the Peak Oil predictions were made.”  She sees affordability as the big issue — which means the beginning of the end of Peak Oil.  The world economy collapses, resulting in oil production collapse and other collapses, with the result that the entire system will be unable to be brought back up.  Even though a few big companies may have the cash to keep paying employees, the supply lines (small companies) will be dead.  It is the financial system even more than the oil system which will have to be bailed out, and this is beyond possibility.  The dilemma is that there is either growth or collapse.  There is no tertium quid — no steady-state system in reality.  A year from now, production will be down regardless of other developments.  Our networked system has reached diminishing returns, even though alternatives are being tried;  the EROEI is simply not there.  We can  not get the growth back.  Emerging market debt will be a major problem (China, etc.).  Non-shale states are way behind on jobs.  Reining in interest rates will really bring the economy down, since that is what they have been using to offset oil prices.  We need all the rest of the oil-exporting countries, but they will be cutting back on their exports due to the economic problems.  In short, it will be impossible to put Humpty Dumpty together again after his fall.  Derivatives, “haircuts” and many other problems are even now circling the drain of deflation.  Strenuous political and economic activity may postpone the collapse for some months or a year or two, but not much longer.  Cutting back on debt is lethal for oil production and the global economy, something most people do not understand.

One final thing that was not mentioned in this excellent dialogue:  before the 2008 collapse and the very disruptive revaluation of the Swiss frank last Thursday (2015 Jan 15), there was absolutely no warning to the financial markets, the governments or the public at large.  These events occurred like bolts out of the blue.  So we can probably expect the collapse to manifest itself in the same way. 

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mememonkey
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integral theory as framework for sustainablity

Belmontl wrote:

I've been a student of Integral Theory for many years .. perhaps the most comprehensive Map of Reality... (and if you're going to make a "prison break" (from paradigms, etc).. it pays to have the best map"

I am familiar with Integral theory, and have read much of Wilber's writings.   I  concur with Joe here that it is an excellent map for viewing reality or perhaps more accurately the multiple realities that encompass our evolving spectrum of consciousness.  That said,  I've often  wondered if it provides transformative tools for the predicament of biological overshoot that humanity faces.     I came to the conclusion that it doesn't.   When asked what the best use of higher states of consciousness, was Wilber stated (I am paraphrasing from memory)  that he believed it was to help the lowest states of consciousness move up incrementally.  

Due to the fact that humans are mortal and the consciousness development process must cycle and begin anew at birth, we don't accumulate  higher consciousness in a way that can outrun our Biology.

We are doomed to have the vast majority of our beings at the lower states of consciousness, at least on the time scale which we are facing this crisis.

I am grossly oversimplifying here, but my takeaway after pondering it was it's a great map, but it doesn't lead us away from our meeting  with die off.  That said, I look forward to reading the treatise on integral sustainability.

mememonkey

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Memes: The Never ending spiral of Development

Yes, A map, of any kind  is not the territory.. a useful tool, but in and of itself.. yes not transformative.. 

Development (in all areas) is Envelopment...where lower levels are transcended (as pathologies jettisoned) and included ..  Reality is Holonic (Its not atoms that make up Reality, but Holons: Whole/Parts..all the way and all the way down)...A Shift in Consciousness is unfolding... whether it's enough to Save (the majority) of people and life is another question (George Carlin had it right .."its not save the planet...which will do fine without us...but save the people),

and Yes Higher Consciousness...all the levels in this Spiral (below) have an effect on the lower levels (our founder fathers were at a Rational level...when the vast majority of people were not..yet they established our country on principles that effected those incapable of "getting" it...---everything over one's head developmentally ... truly doesn't exist for that person/peoples..thus the world is not laying out there equally for all to "see"... but is brought forth with our Conscious Development

I have included a more simpler Map of Value-Memes (individual and Cultural level of development .. the unfolding of Worldviews)... you are correct in stating that vast majority of people are at lower levels (naturally because everyone is born at fulcrum zero, and must navigate the Spiral... there are now people at Every Level/Color that has Ever unfolded historically over the last 100k years (recently data shows that 70% of Planet and 30% of USA are at a "Blue" traditional/Fundamentalists level (My Tribe/people/ideology right or worng.. willing to die..or kill for their belief... Pre-rational thinking) ...The Cultural Tipping point seems to be 10%, when 10% evolve to a new level (complex reasons why ... Cultural pull, brain functioning increased/reorganized, Changing Life Conditions and the associative responses) 

the Dark Ages/feudal period had to look like End Times for vast majority of people... Life was Short and brutish, Superstition reigned, disease rampant (Black Plaque), Kings/Lords controlled life, Church was corrupt etc.. wars, pestilence... and then an estimated 600-1000 people (Jefferson, Locke, Newton etc) ushered in the Modern (orange) age... 

Theorist Claire Graves wrote about the "momentous Leap" into 2nd tier (see Yellow_Integrative and Turquois holistic)...and estimate 4-6% at these stages and mounting (See the Edx Course I posted .. MIT's Otto Schamer reflects this consciousness)

http://eric-blue.com/wp-content/uploads/2009/05/spiral_dynamics_model.jpg

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clarification

All good points,  with one minor clarification, 

I have it on good authority that it's not Holons,  but rather "turtles all the way down."

mememonkey

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Keynes made a good point!

I'm not sure if Gail told us anything we weren't already aware of or anything, substantively new. High prices for oil are only an indication that we are paying more for a commodity than we can really afford. As in all bubbles, frenetic spending leads to over heated economies that are not as productive as they should be. The result  -  recession and falling prices! 1929 should be a prime example of this. If you don't believe we are currently in recession or about feel the effects of a long depression, think again! I think old Jimmy Kunstler called it The Long Emergency. Looks like Time2help wasn't far off the mark. "In the long term, we're all going to die".  -  Keynes

Think I'll split a bit more wood to stay warm while I read my seed catalogs. That's gotta be more more productive than my pension plan or agonizing over the future.

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This Cheap Oil is Like a Tsunami

As devastation approaches from afar, the water at the shore recedes rapidly, leaving fish flopping on the sand. Most run towards the unexpected bounty, blissfully unaware of the impending destruction.  A few understand this is a deceit; a harbinger of imminent danger, and they race for higher ground.

Gail captures and carefully analyzes what is likely misplaced joy at the dramatic fall - still continuing! - of prices at the pump, and why we should consider its graver implications. Whither higher ground?

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Wow , what a thread

Wow, what a thread.

I was about to jump in with a comment on tipping points. In the spirit of the site (which, in my understanding, is assisting people to become better informed) I note a school of thought inclined towards slow collapse.  Anyone in this camp who's genuinely interested in their own preparedness I'd refer back to comment 1 in this thread. There are extremely compelling reasons that beyond a certain point, collapse quickly becomes inevitable and irreversible. This doesn't preclude a  staircase down to the tipping point. And I'm not saying this is definitely going to happen; I'm saying the logic is plausible so it needs to be taken into account.

Then I read the conversation between Belmontl and mememonkey and I'm blown away. I havent heard the Integral approach mentioned here before and I agree that it is probably the best map of reality there is. Ken Wilber is the person I admire most on the planet full stop. And I also agree that integral theory won't save us. 

I've  listened to conversations with Ken Wilber, Andrew Cohen and other high level integral thinkers talking about a technological future. (Terry Patten is one of the few who gets the predicament IMHO). These radically positive people who are enlightened or at least highly developed spiritually still operate in samsara - the world of illusion, our world.

Quite simply they don't know all the practical details we regulars on this site know.

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Closet Integral People....

I must confess to also being surprised and delighted to find such a number of Integral Thinkers coming out of the woodwork here on PP.  Integral Theory and Spiral Dynamics (which is included in Integral Theory) are very central to my world understanding also.

I will take the liberty of somewhat shamelessly recommending an introductory book to Ken Wilber's Integral Theory written by my father.  It is aimed at a junior college reading level. (A big complaint of many is that Wilber's work is difficult to understand and spread out over countless volumes.  My dad wrote this book so that others less intellectually sophisticated but curious in his church study groups could "get it.")

Introducing Ken Wilber:  Concepts for an Evolving World

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In the weeds

Simplified models that involve a couple of species, or one species and a single resource don't tell a very accurate story, it's same issue that is playing itself out in the central banks appalling attempt to "manage" the economy.  Seemingly complex models are often built on reductionist and rationalized assumption that don't scale.  Steve Keen does a great job of tearing apart the "maximizing personal utility" principal that founds "classical" economics. But it seems that if you throw a couple layers of higher level high school math on top of a set of absurd assumptions and we seem to loose our ability to think rationally.  Discussions are then labeled  wonkish and impossible to follow except by the brilliant or over educated. Nothing could be further form the truth. We just need to roll up our sleeves and dig in a little deeper.

These grossly simplified examples of natural system failures are often used to correctly point to the catastrophic condition we are in.  Unfortunately this line of thinking carries with it the same level of consciousness that created the problem to begin with.  Modern "farming" practices have for all practical purposes destroyed the life in the agricultural soils they have been inflicted on.  The regenerative and naturally fertile soils are replaced with sterile soils that now "require" fossil fuel input.  We then condemn ourselves to mass starvation and population crashes because we don't have enough oil to maintain our soil fertility. In order the to maintain this insane system we propose and inflict ever more mechanically complex but conceptually simplistic and energy intensive solutions that mushroom into an ever widening array of unintended consequences.

The critical and most important point is that belief in collapse carries within it the mental forces that created the need for the current paradigm to collapse in the first place, regardless of whether or not the future holds some actual manifestation of "collapse" in whatever formation we visualize. To say we don't believe in collapse is not a denial or even an attempt diminish the probability of the event. We have to leave that false dichotomy behind if we are not going to continually repeat Allan Savory's mistake of killing 40,000 elephants.  To forgive is not to condone, it is to transform.

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The Future is calling us to greatness...

(Chris Martensen part of this)

The Future Is Calling Us to Greatness

with Michael Dowd + 56 Experts

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A positive future vision

I must say, Treebeard, that you did indeed show me a positive future vision.  It came in googling "Allan Savory's mistake in killing 40,000 elephants."  I found a TED talk by Allan Savory on the reclaiming desert lands by using herds of grazing livestock, kept in tight groups, and moved about frequently.  That is a very remarkable story and the pictures of transformed desert lands and dry lake beds filled with water were awesome.

It makes sense that a system that mimics nature would be right.

Ecologist Allan Savory blamed elephant herds for destroying African grasslands. It turns out, what all grasslands need to survive is more animals eating them.  [and to  have the herd clustered tightly together and moved about frequently, as they would do naturally when harried by predators].

The world’s grasslands are essential for holding soil in place, storing water and carbon, and providing food. And yet, up to one third of the Earth’s land surface is at risk of becoming desert, with potentially catastrophic consequences, not least for climate change.

An awesome TED talk:

http://www.fastcoexist.com/1681518/this-man-shot-40000-elephants-before-...

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"There is a huge gap between

"There is a huge gap between the desire for sustainability and proven traditional methods. The heritage based cultural approaches were proven in time as the means that brought us to now, the oil era. The culture of animal power is a precious instrument that should remain in the toolbox of humanity if just for the shear honesty of the animals. 75 years of cheap intensive energy shouldn't erase or destroy thousands of years of culture. Turns out that oil is a culturcide. I just made that word up or at least I'd never heard it before now."

a quote from a teamster of Suffolk Punch draft horses

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Turtles...all the the way down

Meme

Yes "Magical Thinking" ... all the way down

http://kunstler.com/TooMuchMagic/

“Too Much Magic” is what Kunstler sees in the bright visions of a future world dreamed up by overly optimistic souls who believe technology will solve all our problems. Their visions remind him of the flying cars and robot maids that were the dominant images of the future in the 1950s. Kunstler’s idea of the future is much more sober: he analyzes the various technologies (vertical farms, fracking, corn ethanol) suggested as overnight solutions to the energy crisis and finds none that he thinks will work long-term to cure a society dependent on gas-guzzling cars, in love with an inefficient ideal of suburbia, and unwilling to fundamentally change its high-energy lifestyle. Kunstler also offers concrete ideas as to how we can help ourselves adjust to a society where the oil tap is running dry.

 
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Good Genes and Memes Sand Puppy

Sand Puppy,

You seemingly hit the Genetic lottery having such a brilliant heart-centered Dad!! I have read all (yes all) of Ken's books ... and it is difficult to explain his work to anyone, without doing it an injustice,,, I will be buying your Dad's Book (an ebook bargain @ $3.00 -- less then a beer or coffee... and will be passing it on )

Beyond the Theory (or theories) is The Practical Transformative work one does -- "exercising" Mind, Body, Soul, Heart and Spirit -- Within and Without ... is critical to personal evolution/cultural evolution...

check out my pervious post ... Ken Wilber, Chris Martenson, Kunslter, Heinberg, Greer, Eisenstein, Patten, Korten and 50 or so other thought leaders on The Future is Calling us ...

All the best

Joe

sand_puppy wrote:

I must confess to also being surprised and delighted to find such a number of Integral Thinkers coming out of the woodwork here on PP.  Integral Theory and Spiral Dynamics (which is included in Integral Theory) are very central to my world understanding also.

I will take the liberty of somewhat shamelessly recommending an introductory book to Ken Wilber's Integral Theory written by my father.  It is aimed at a junior college reading level. (A big complaint of many is that Wilber's work is difficult to understand and spread out over countless volumes.  My dad wrote this book so that others less intellectually sophisticated but curious in his church study groups could "get it.")

Introducing Ken Wilber:  Concepts for an Evolving World

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Enacting an Integral Revolution: How Can We Have Truly Radical C

DavidAllan,

Peak Prosperity is an  eceltic group ...of thinkers... Integral (and many adjunct movements) are eeply attuned to what is unfolding ...many with great innitatives ... with great urgency...but not Anxiety ... (much of which I see .. right or wrong on this great site at times.. "we become what we think about most" -- Anorther Allen quote. 

I am an Optimistic trans-Realist .. I deeply/See and sense what is happening (& have a deep "external hardrive" of friends in various "high" positions (Wall St, Govt, Intelligence, Academia, NASA, etc) and a deep "faith" in the Kosmos (whether it ultimately includes us or not) AND I know there is much "Over" my head (trans-rational) that I can't see .. but can "sense"... ( for we all arise in the same Ground of Being, as we evolve in the ever unfolding world of Samsara) .. It's easy to fall into an Existential Angst ("do I commit Suicide now , wait for the (projected: inevitable, or take myself out later ) 

Much is congealing in the world right now (In his Book Blessed Unrest -- Paul HAwken estimates approx. 2 million NGO's, with millions of people mobilzing (like White Blood Cells in the human body) to "attack" the "problems"/Opportunities upon us (That's why I appreciate the Integral perceptive of Chris and Adam ... prepare for the best... and the worse .. Change your Thinking (Upper Left), Your Behaviors (Upper Right}, Cultivate Community (lower Left) and work ot change the existing systems (lower Right) --- what is missing is perhaps Levels of Development/Wordviews (the 6 or 7 broad Contact "lens" in which we "See" the world and literally bring it forth .. for the World is not laying out there for all equal to "see": that is the Myth of the Given...thus the more perceptives one can "hold" the better he can "triangulate" Truth ... it all boils down to "Wisdom" (the inner Path)... Compassion (The outer expression) and Love .. 

Strange but at the exact moment (like a 1950s serial movie ..where the Hero is tied to the train tracks in some way and looks doomed...) we have this Global/Planetary crises/opportunities .. The Komos provides us with the means for a Global Brain to arise (Internet, technology, etc) and The Mystics (deeply Realized/Awaken ones) East And West (Rumi, Aurobindo, DeChardin, Gebser, Dalai Lama, Shamans etc) all their Deep inner wisdom to literally come on-line... right when we need it ... (not that everyone can or will "get it" ... the historical Culture Tipping Point is 10% .. when 10% of a Population shifts to the next level/worldview (Integral in this case) .. the reverberating effect ripples though the Culture (e.g. last two Levels-- Modern (1600's) and Post Modern (1960s) were started by a few thousand people each... and the vast majority of those  populations (literally incapable of "seeing" grocing" what was coming )

Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.” 

― Arundhati Roy

Here a just a few Integral links/expressions... 

This paper begins by setting forth the basic facts of our current world crisis and the injunction this crisis implicitly sets before each and all of us to change our lives and ways of relating to one another, explaining how this has inspired recent innovations in my dialogic praxis—an emergent form of ragged truth-telling and inquiry. 

http://www.terrypatten.com/sites/default/files/ITC2013.Patten.pdf

The Four Worlds of Sustainability

DRAWING UPON FOUR UNIVERSAL PERSPECTIVES TO SUPPORT SUSTAINABILITY INITIATIVES 

http://nextstepintegral.org/wp-content/uploads/2011/04/Four-Worlds-of-Su...

ICE’s unique ability to influence politics at the level of culture comes from its use of the newly emerging understanding of values development and cultural evolution based on integral philosophy. This philosophy is described in detail in our White Paper on the integral perspective.

http://www.culturalevolution.org

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Replies and a toast

Belmontl, thanks for the entheos link. I hadn't seen this. The reason I didn't sign up for the seminar is that I think it will be froth rather than substance. These are genuine, thoughtful people but they're not necessarily going to say what they really think. It will be an introductory course and to enroll and inspire there needs to be a positive vision. Look at Peak Prosperity - the vision is to create a world worth inheriting. And that's why we're here. There are plenty of collapse and die-off sites. But most of us don't go there - we already know the grim details and still want to make the most of the situation. We want the hard facts and hope to see a way forward.

I don't want to be a wet blanket here. I agree the cultural tipping point seems to be about 10%. But just because emergent potentials exist doesn't mean the potentials will emerge. The conditions of support for emergence must exist ( as they have recently in the history of human development). But times and conditions are changing. Fast.

Sand puppy, it's always a pleasure to read your thoughtful comments. I'm intrigued that your dad wrote a book about Ken Wilber.

Treebeard, I appreciate the sentiment but I'm not sure I get your position entirely. That's fine. perhaps that's just my level or maybe I haven't read enough of your comments. Personally,  I'm not here for spiritual direction but to orient myself to the probable events unfolding in the near future.  My focus is preparation.  Furthermore I suggest the best time for personal transformation is NOW.  When things start to unwind and we get shaken to the bottom of Maslows pyramid it may be a transformation but in the wrong direction :-)

It would be great to sit round a table and have a glass of red wine with you people. (Actually that's already happening from my perspective.)  Look me up if you ever come to NZ

cheers!

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What are we preping for?

I'm not sure I entirely understand my position sometimes either.  Things are often much more complicated than we imagine. But one of the greatest errors that we can make is function in reaction mode rather in action mode.  It's OMG the SHTF, now what do I do, what do I do!  What do I do!  At the other end we can be in the analysis paralysis mode where a whole lot nothing happens.  Either way, not a good situation.

Personally I've been at this a very long time like some of the other posters.  I was sure that the end was near back in the 70's.  Back then a lot of my friends used to call me an angry young man. Bought land (much cheaper back then), built a passive solar house for myself, been working steadily to be able to be off grid as needed (nearly there with that).  Been doing the big garden thing, planting lots of fruit and nut trees, working with Transition groups, now recently opened a dormant branch of the Grange here in town. Etc. Etc.  That is my off line world.

But these days seem very strange to me now.  Back in the 60 and seventies there almost seemed to more awareness and energy around these issues than there is today.  Perhaps it was because we just woke up out of he coma of the 50's and everything was fresh and new, perhaps now we're sort of beneath the yoke of doing the hard work of making things happen. I don't know, but what I have finally realized is that this a marathon and not a sprint. As intense as things do seem (and that has a lot to do with where we are in our own particular process), and we do need to be focused and act on the best information that we have in the moment, a thoughtful and measured approach will always be the most efficient in time.  We must go slowly, slowly until we get to fast.

We can certainly fragment things and talk separately about spiritual work/preparations, political work/preparations, social work/preparations, ecological work/preparations, community work/preparations, financial work/preparations, etc., but in the end it is important, no lets say essential to our survival, to realize that as much we chops things apart as a part of the peculiarity of our own perceptual structure, that life really is whole.  It is sometimes certainly necessary to take things apart, but the greatest danger to our survival is that confusing our fractured perception with reality. It is acting fragmentally that has created all the chaos that we surrounding us.  If we are not acting out of our own center, I don't care how good the external advice is, we will be creating and adding to the insanity around us.

I have concluded that both collectively and individual nothing about that process can be rushed until we have created what PD Ouspensky called a magnetic center, when we move from the illusion of free will to active free will.  The collective, external and internal process are all aspects of the same process.  That may sound a little tinfoil hat to some, but ultimately the practical work that we do will impact our spiritual, and collective work and vice versa.  We all function wherever we feel most comfortable.  At some level talk about collapse is almost irrelevant, our process will be what it will be.

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What are we preping for

Treebeard, Andrew, excellent last post. I've read it carefully (sometimes I zip through) and I agree with every point you've made. We've got a big garden too, along with fruit and nut trees and the subtropicals we're lucky enough to be able to grow. Some mornings I feel quite zen. Used to get up and go to the office - now I get up and milk the cow and feed the chickens. Some days I work off property; some days its weeding, planting, watering, composting, sometimes even chopping wood... at home.

The focus must be positive. This is indeed a huge factor. What we focus on expands and becomes the content of our lives. In fact it is the content of our life simply due to focusing our attention on it.

Despite the seeming negativity of my world view I still see myself as an optimist. In the physical world I don't fixate on climate chaos, nuclear contamination, war, breakdown of law and order, extinction of bees, potential plagues etc etc. As you say this can lead to paralysis or panic.

And to keep things in perspective it's useful to be as aware we can that the physical world manifests moment to moment within the mind, within the consciousness that percieves it. Though most assume the opposite.

So to answer your question what are we prepping for? In my case a version of the future where our technological civilization may collapse but one where there are still opportunities to thrive.

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Robie Robinson said: "There

Robie Robinson said:

"There is a huge gap between the desire for sustainability and proven traditional methods. The heritage based cultural approaches were proven in time as the means that brought us to now, the oil era. The culture of animal power is a precious instrument that should remain in the toolbox of humanity if just for the shear honesty of the animals. 75 years of cheap intensive energy shouldn't erase or destroy thousands of years of culture. Turns out that oil is a culturcide. I just made that word up or at least I'd never heard it before now."

a quote from a teamster of Suffolk Punch draft horses

"Culturcide"; what a great word, Robie!  It sure does seem to fit the circumstances.

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Great conversation and discussion!

This podcast and discussion seems like just more of the same-old, same-old at PP.  And by that I mean a great conversation followed by a wide-ranging and thought-provoking discussion.

I think that Gail is dead-on in her analysis of the oil/finance situation.  However, like most mathematically-inclined people (I'm an engineer by profession so I see it all the time and still do it myself), I think she takes a wrong turn when discussing natural systems and the role of different species.

One thing I've learned from my study of permaculture, especially delving into soil ecology, is that nature does not simply reward those species who do the best at out-competing other species.  Rather, nature rewards those who are able to best live within symbiosis with other species while propagating their own species.

Now, the argument could be raised as to whether or not humans have been "successful" in this regard, or if we have behaved more like yeast in a petri dish full of fruit juice.  Certainly the arc of civilization does not yield a favorable impression, as we have overshot and collapsed more times than we could probably list here.  And the argument could even be extended back to paleolithic times, where we overhunted some of the big game fauna to the point of extinction.  Then again, in the past this may have just been the same kind of process by which a fire clears out portions of a forest, enabling new life to spring up to replace that which has been burned out.  The main difference this time, being, that instead of limiting our "disturbance" to distinct regions, the discovery of 500 million years of concentrated sunlight enabled us to disturb the entire planet at once.

Regarding the discussions around collapse in this thread, personally I think it's valuable to use the definition of that term as described by Joseph Tainter -- the resetting of a society to a lower energy level and lower level of complexity.  In this sense, collapse fits well with the notion of ecological disturbance that I described above.  And even more importantly, collapse is a process that carries out over considerable periods of time, constructed of countless small events and some bigger ones -- not a grand event by which everything instantly resets.

Dmitry Orlov has offered some interesting observations regarding the lowering of population following the Soviet collapse.  While the population did decline considerably, it was not as if everyone just dropped dead in droves.  Rather, much like during the Great Depression in the US, the birth rate declined considerably.  Added to that, the death rate year-to-year simply rose.  So, those who lived through it just went to more funerals each year, and saw more of their friends and family depart than they did during the old USSR.  It was a creeping decline, not necessarily a sudden one.  I think that is what awaits us, except that our initial shock might be more severe seeing how in Russia no one was kicked out of their homes or starved -- two things that will definitely happen here (and have already started to a small degree).

But enough of all this academic stuff.  Ultimately, it's about living day-to-day, forging deeper and more meaningful personal connections with those around us, and creating more meaning in our daily lives.  I know that while I'm ahead of the curve compared to many other people I know, I'm also way behind the curve of many of you on this site.  So, in this coming year, we're continuing with the passive solar and energy efficiency retrofits, bringing chickens into the homesteading mix, and I'm already expanding my community connections (helping out a permaculture design course taking place in my town, organizing a regular permaculture/homesteading/prepper meetup, volunteering with my daughter's school garden and getting them to incorporate permaculture patch "legacy" gardens for the elementary kids, working with my neighbor to harvest firewood, etc.).  My parents are now 6 miles away instead of 70, which makes a HUGE difference on a number of levels.  I'm getting my 7 year old daughter more and more involved in the homesteading work each year, especially with getting her to understand that it's an obligation of being a part of the family and not a choice.  Starting to ease my 3 year old son into some basic tasks (he loves to help me haul and stack firewood).  But perhaps most importantly, taking time with my wife and kids to enjoy those simple moments where, in the words of Kurt Vonnegut quoting his uncle, you just sit back and say, "If this isn't nice, I don't know what is...."

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Excellant thought provoking conversation

Hello to everyone

I am new to the site/conversation and am looking forward to joining this community of like minded thinkers.

I'm a relatively young guy just under thirty and live in upstate NY. I have spent the last five or so years learning about the three E's and spirituality. Just bought 50 acres and I'm thrilled to start the journey.

CAH your reference to soil ecology reminds me of the book I'm currently reading Mycelium Running: How Mushrooms Can Help Save the World by Paul Stamets. I would definitely recommend it.

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Welcome to the site, InfiniteSelf33!

PP is a great place and community for having discussions with like-minded people on the 3Es and what it means for our lives.  Glad you found us!

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Analysis Paralysis

Treebeard, analysis paralysis hits the nail right on the head.  Sometime it's good to hear a voice in your ear saying "Dude, look away from the headlights and MOVE!"

That said, I didn't know that you could process field corn with lime (calcium oxide) and make a variety of simple, nutritious, dishes.  So, look away from the headlights and get a corn grinder and some lime and learn to make hominy, corn pudding and tortillas on the wood stove.

Do the next thing, 

John G.

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Thanks pinecarr

I first came across this article on Zero Hedge near the end of 2011 which introduced me to Chris's work.

http://www.zerohedge.com/news/chris-martenson-lecture-why-next-20-years-will-be-marked-collapse-exponential-function

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Christopher H
Status: Silver Member (Offline)
Joined: May 29 2009
Posts: 123
Welcome!

InfiniteSelf33,

First off, welcome to the site.  PP is definitely a source for some of the most wide-ranging, deep-thinking discussions you can find on the net.

I'm familiar with Stamets' work but haven't actually read his book yet -- have to put that one on my "to read" list.  I'd also recommend looking up Dr. Elaine Ingham, a soil biologist who spoke at last year's Permaculture Voices Conference.  Her stuff will blow your mind -- I listened to a podcast of her presentation at PV last year something like 3-4 times so far while driving, and will have to sit down to take notes on it to really make sense of it.

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Mark_BC
Status: Gold Member (Offline)
Joined: Apr 30 2010
Posts: 380
The thing that's always
The thing that's always struck me as odd about deflationists is that I've never seen them explain what money is, where it comes from, and how it has its value. They describe all the carnage that's coming to the economy, how humpty dumpty is going to break and we won't be able to be put him back together, and how this is going to permanently destroy demand for oil, which will then result in a drop in price for oil, but it's always in relation to the dollar... as if the dollar is some almighty bastion of impartiality in the universe that's always been and always will be. The dollar just is. And based on the last 50 years of dollar hegemony, that logic is somewhat justified.
 
But what I think this site and others are trying to explain is that the dollar is not all that, and that it too is going to go down with the ship. In fact, the collapse we are anticipating is ultimately going to be precipitated by the dollar losing its hegemony. and the central banks thereafter being unable to use their printing presses to distort markets, with true fundamentals finally expressing themselves.
 
So there are of course two ways one could measure the price of oil in the future: in real terms or in dollar terms. I think it's entirely conceivable that oil could go down in dollars for a while (the deflationist view), but it's not going to stay there (aren't most hyperinflations preceded by a deflationary collapse?) The "transformation" we are experiencing is not a static photo. Soon afterwards the dollar will be devalued since the looming carnage to the economy will destroy the base of the dollar as well, and everything will get more expensive... in dollars. But in real terms? 
 
What should we use as a metric to judge true prices in the future, in an era of high inflation? Well, the best metric is to analyze affordability for the average person, which is what an hour of human labour will buy. But the problem we will face, the one which economists have been fighting for decades but only making worse, will be that unemployment will shoot way up and there won't be much human labour out there earning money... So, who knows, it may be that in human labour terms, oil will drop in price in the future, but that few people will have jobs so they won't be able to afford it. However, I don't envision this being a stable situation since 80% unemployment won't work in an economy. And I just can't in principle agree with the assertion that a critical commodity which will be getting scarcer will go down in price and stay there. How will that unstable situation play out? Who knows, but I envision some kind of a revolution or war.
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Mark_BC
Status: Gold Member (Offline)
Joined: Apr 30 2010
Posts: 380
Treebeard, I appreciate your
Treebeard, I appreciate your insight. I fully agree that human consciousness and social organization are not deterministic and cannot be accurately modeled, something that Atheists get wrong, and unfortunately, an approach that modern science and economics emulate too much (though they need not since there is nothing inherently reductionist about the scientific method). However, some things in the universe indeed are reductionist, and cannot be wished away simply by taking a different view of reality.
 
While it is folly to apply material reductionism in order to derive theories to predict how complex, non-deterministic systems behave, it is equal folly to presume that everything operates this way and to assume that genuinely deterministic systems aren't, and to rely on hope and faith, and a positive attitude in the hopes that maybe, just maybe, if we all just change the way we think and act, that things won't turn out that way. That is one of my biggest complaints about contemporary philosophy / thought / academia -- an unwillingness to understand when reductionism is valid or not, and a willy nilly application of reductionism when it's not warranted, which then alienates a lot of people from using reductionism where it is warranted!
 
Unfortunately, on the scale of resources that are needed to sustain civilizations and to prevent St Matthews Island-esque collapses, those processes are thermodynamic and therefore deterministic. They are fully predictable and that is what we are facing. While you may dismiss an overpopulated deer population as being too simplistic a model to apply to our own future, it is not. You point out that the "solutions" we are applying to agriculture (more mechanism, oil use, and further soil degradation) are from the same mentality that got us into this mess. I would agree; however, those previous naturally fertile soils would never sustain 7 billion people, the math just doesn't support it. That is the problem. Your argument would be sound if the global population was 100 million. If you disagree, the onus is on you to explain how changing our consciousness and perception of reality, and presumably our social systems as well, is going to somehow magically and radically increase per-hectare agricultural yields beyond anything seen before in the history of the world in any natural system.
 
I am glad that the 50,000 elephant cull example was brought up. This is a perfect example of how animal populations can be decimated. However, they can never be increased (sustainably) beyond the carrying capacity of the land. And as an aside, I have heard some criticisms of Allan Savory's claims. While I'm sure there is some truth to what he is saying, some of his claims just verge on bizarre.
 
And the thing about you being a doomer back in the 70's only to never see it materialize ... well the only reason disaster was averted then was because the US dollar reigned global, backed by the military, to become the sole reserve currency. This enabled the US to use the rest of the world's resources after it ran out. If not, it would have indeed collapsed in the 1970's. In 2015, there is nowhere else to run.
 
I don't envision fossil fuels running out, to a point that there won't be enough to feed the world, for at least several decades, maybe a century or more. But as I alluded to in my comment above, the end of growth will lead to economic and social chaos which will have a similar effect as starvation -- in fact, one could view this economic collapse as being simply the first signs of a die-off in an overly complex system. We are not going to be able to reach the 10% enlightenment necessary to make social-wide changes to avert this reality; we needed that 20 years ago.
 
Now, as to how we individually and culturally can react to the reality of the collapse that's coming, sure, I fully agree that we need a revolution in consciousness. It will help people in their chances of surviving, and maybe be useful in helping our descendants bring back a future civilization (of much less population) that does not destroy itself and the world, again. But it isn't going to prevent the collapse that is before us.
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treebeard
Status: Platinum Member (Offline)
Joined: Apr 18 2010
Posts: 500
Collapse II

Collapse is already here, we are at depression levels unemployment, real wages haven't budged since the 70's, income disparity is off the charts.  Call it inflation or deflation, but our ability to live on the income derived from the "system" is turning into a loosing battle.  We have a generation of people who are facing "retirement" with no retirement savings to speak off.  Our current economic and social systems are completely corrupt and in decay.  Have we degraded ourselves down to ambulance chasers who will not be satisfied till we see blood in the streets?  Turned on the TV lately, there is plenty to see if that is what we are looking for.  What are we waiting for?

Transformation is also already here now.  A whole generation of young people are getting into a whole new way of farming.  Young people are not participating in the old systems any more.  New modes of communication are transforming the media landscape.  There is a revolution going on in renewable technologies, PV are becoming ridiculously cheap, we are now talking about setting zero energy as new building standards in the near future.  It is there if you care to look for it as well.

Fear can exist only when you are living in the past or the future, it does not exist in the present moment. Fear of the future does not create rational or useful action, by not participating in that, I am doing a disservice to no one.  Rational action comes from allowing ourselves to look, to see with the suspension of belief of any kind and the suspension of a desire to reach an immediate conclusion. There is much to be done now and by moving fully into action in the present moment we do the most that we can do both for ourselves and everyone we come in contact with.  That kind of action is contagious and leads immediately to a quality of life that we all aspire to.  If we agree or say that collapse will occur at some point in the future, what is the actionable information comes out of that conclusion?  Look into the emotional energy associated with that statement, really look at.  What happens if we say collapse has already happened?  We may be surprised by what we see if we spend the time.

This has nothing what so ever to do with "positive thinking".  It is about a different qualitative relationship with ourselves and the world around us that is free of self justification and self absorption.  Its about removing the barrier between ourselves and world so we can see the world as it is and not how we want it to be, in all it's ugliness and beauty.  It is about stepping beyond me, myself and I and moving into us, we and now.  The moment you are certain that you know what the future will bring is the moment that you can be certain that you are wrong.

Will 3 or 4 billion people die in the next 10? 20? years. Are you certain?  I know that I don't know, one way or the other.  If you are, what will you do tomorrow morning when you get out of bed.  Something different? 

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