The Age of Compounding

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xxxxxx
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The Age of Compounding

All of us are bombarded with the daily disasters that are reported minute by minute on the financial networks and their websites.  In a way it is like watching the infamous low-speed white Bronco chase on the LA Freeways fifteen years ago.  We all know where this is going and pretty much how it is going to end (despite the protestations of the latest Bloomberg guest who says things will turn around in 3Q09).  We are witnessing the end of the fiat currency system that began in 1971.  All fiat systems fail at some point and it would seem that this one is going to defy the latest round of propping up that allowed it to lurch on for nearly four decades.  Watching the process can be mesmerizing and, despite the looming cloud over virtually every national economy, it is not the only thing going on in the world.  Every now and then we ought to look away from the unfolding drama and see what else is happening.

 

Two commodities essential to life merit a look to get a sense about where we might be headed as we rebuild our economic life; energy and water. 

 

There are any number of energy sources other than those we derive from extraction but the two leading candidates at this point are solar and wind.  The total energy absorbed by the earth from the sun is 3,850,000 exajoules (EJ) per year.  The amount of energy generated by wind is 2,250 EJ per year.  The total consumption of energy on the planet in 2005 was 500 EJ plus or minus 10%.

 

Water covers 70% of the earth’s surface, 97% of which is ocean water.  A small fraction of the remaining 3% is accessible for human consumption, the rest being frozen.

 

Suggestions that these energy and water sources could be used in the near term to solve the problems inherent in the use of fossil fuels and that the resources of the oceans could be harnessed to solve the escalating crisis in potable water are usual met with one of three reactions:

  • Derisive laughter
  • Sentences that begin with “They….”.
  • Sentences that begin with “Yes, but…”.

 

We’ll have to ignore the derisive laughter for the moment.  Those folks aren’t going to change their minds until circumstances change around them. 

 

The sentences that begin with “They…” are arguments that identify the formidable institutional resistance to a massive shift in energy resources; most notably the oil companies, the banks and the political parties that are funded by both.  These entities are so large and global that they seem to dwarf any desire to leverage alternate solutions.  Like any organization, they will resist change vigorously and sometimes violently until they see that change as being in their best interest.  It’s hard to tell where and when that tipping point will come, but we have historical examples that tell us that it always does and when it does it happens very quickly.  Remember the fall of the Berlin Wall and the collapse of the Soviet Union; it seemed like it happened within a few weeks but the seeds had been sown for some time.

 

The sentences that begin with “Yes, but…” tend to engage the issues from a practical perspective.  The current ability to capture solar energy is still in its early stages although there are constant breakthroughs.  Wind and solar are not ubiquitous all the time and storage of energy is a problem.  Desalinization of sea water is expensive.  Where will all the engineers come from to design these solutions and, more importantly, where is the money going to come from to pay for them?

 

We tend to forget that we are behind most of the rest of the world when it comes to alternate energy.  Germany has had a law since 2000 that guarantees priority access to the electrical grid for producers of alternative energy and guarantees them a profit.  There are homes in Germany that generate more energy than they need; imagine if that were a ubiquitous experience rather than a unique one.

 

There are over 13,000 desalination plants in the world producing 12 billion gallons of water a day .  The cost of the electricity to produce 1,000 gallons of this water in the US has dropped from $2.10 to $1.10.  California, with all its financial problems is investing in several plants.

 

Scientific advances in these areas and many others are compounding in a fashion similar to the interest on the debt.  There is increasing concern in the scientific community that so much is happening so fast that it is becoming more and more difficult to coordinate new discoveries and leverage the fruits of these efforts. Nice problem to have.

 

It is interesting to consider that the velocity of the disasters in our financial system is the same velocity that we are experiencing in a whole range of human experience.  We might want to remind ourselves every now and then that the barriers to potential solutions have more to do with our ability to conceive of them than the actual difficulty of their implementation.  We are in an age of compounding with as many solutions coming our way as there are problems.   

SamLinder's picture
SamLinder
Status: Diamond Member (Offline)
Joined: Jul 10 2008
Posts: 1499
Re: The Age of Compounding
Bill Sharon wrote:

 

There are any number of energy sources other than those we derive from extraction but the two leading candidates at this point are solar and wind.  The total energy absorbed by the earth from the sun is 3,850,000 exajoules (EJ) per year.  The amount of energy generated by wind is 2,250 EJ per year.  The total consumption of energy on the planet in 2005 was 500 EJ plus or minus 10%.

Bill,

While I have no quibble with your points in this post (a lot of which I tend to agree with), I would like to know where you got these numbers from per the FORUM GUIDELINES AND RULES

Please be sure to always:

  • Include a link to the source for any posted material.  A snip and a link, please.  Do not post entire articles.

Thanks,

xxxxxx's picture
xxxxxx
Status: Martenson Brigade Member (Offline)
Joined: Nov 27 2008
Posts: 32
Re: The Age of Compounding

My apologies.

 The source for the information about solar and wind energy is a Wikipedia article: http://en.wikipedia.org/wiki/Solar_energy

The source for the information about desalinization is: http://www.blogcatalog.com/blogs/seawater-desalination-water-water-everywhere.html

For a general overview of where we are with alternate energy I would recommend Dr. Tom Valones website: http://www.integrityresearchinstitute.org/

or you can listen to my interview with him at http://www.blogtalkradio.com/CommonControls/GetTimeZone.aspx?redirect=%2fBill-Sharon%2f2009%2f01%2f01%2fTom-Valone-Interview

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scepticus
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Posts: 129
Re: The Age of Compounding

Hi Bill,

I agree with most of what you said. Given the right prevailing wind behind the current and political and corporate establishment I see no reason why we can't have a significant improvement in renewable energy sources over the next few decades.

More problematic in my view is existing installed infrastructure that is oil based. That is cars, trains, planes and ships. Do you have any figures regarding the relative costs in replacing our electricity generating infrastructure with renewables or nuclear versus replacing the costs of replacing transport infrastructure with non-oil based alternatives (including the costs to develop and install electrical propulsion,energy storage (batteries) and charging infrastructure) for all these modes of transport, 

Just to re-iterate, I fully support escaping from the oil energy trap in which we find ourselves - but I want to drill down on where the largest challenge is located.

Regards,

Dan

 

 

SamLinder's picture
SamLinder
Status: Diamond Member (Offline)
Joined: Jul 10 2008
Posts: 1499
Re: The Age of Compounding

Thank you for the links, Bill.

Desalinization of sea water is expensive.  Where
will all the engineers come from to design these solutions and, more
importantly, where is the money going to come from to pay for them?

There will come a time when we won't care how much it costs to obtain drinking water. I just hope, when that time comes, that there will be enough alternative energy sources available to allow the plants to operate!

xxxxxx's picture
xxxxxx
Status: Martenson Brigade Member (Offline)
Joined: Nov 27 2008
Posts: 32
Re: The Age of Compounding

Dan,

I don't have any numbers on the costs but I'm not sure how relevant they would be.  Any costs that we could assemble now would be based on the high costs of emerging technology.  We know from our experience with computer technology that cost drops exponentially in a relatively short time.  I'm not a pollyanna about all this - there is going to be disruption and cost will be significant at various points, but I do have a sense that the past is not really a very good predictor of the future.  We know that from the failure of all the quant models in the financial industry.

 I think now that we have a new admininstration with a different attitude we will see  some rapid movement in the energy arena although it doesn't seem to me that there is enough awareness of the water issue outside of the areas that are affected.  My sense is that we are shifting to an empirical approach to problems rather than an idealogical one. 

 Bill

Rosemary Sims's picture
Rosemary Sims
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Posts: 81
Re: The Age of Compounding

"Desalinization of sea water is expensive.  Where
will all the engineers come from to design these solutions and, more
importantly, where is the money going to come from to pay for them?"

 Hard to break old habits, heh? :-)  My first thought and hope is that it will come from the engineers for whom the lives of their loved ones and their community are more important than fees.  Nobody is going to have any money anyway the way things are going, right?  I am more worried about where the durables will come from without oil. If one thinks of what needs to happen with regard to alternative energy in terms of human potential only we may be home free, er, so to speak. 

I had another thought the other day with regard to communications.  As I posted in another thread here, I am on dial up as there was nothing else available for the tiny town I moved to recently.  Then lo, here comes high speed in November from a company that serves my parish (county) only.  When I called them to get more information, the phone was answered by a local human, and I thought "How refreshing!"  Then I was talking to the salesman representative of this family owned little company in Acadia Parish LA who was explaining that the "tower" for my village was on our water tower.  The receiver will be put on my roof a la' Directtv.  And all the equipment will be owned by the company, which btw, started as a pager co.   Hmmmm....radio signals.  As we chatted, I asked him how they were doing in the spiraling economy.  He said there was no effect yet and they were hopeful they could "ride it out" if it came their way.  I don't think anybody in this economically well insulated area really has a clue about what will probably befall us. 

I referred him to cm.com to see if he thought the plunge would affect us and I hope he is here because I think that is the sort of local expertise that will be extremely important to our future.

I got to thinking about energy and realized that the last energy company I used was also local and in fact is a local co-op.  If there is any problem, you call them up at the local number and ask to speak to Brian or Mary or David or whoever.  There are also local telephone companies here although I frankly can't see how that form of communications will survive and question whether it is really necessary.  I bet cell phones are a heck of a lot cheaper to maintain, especially in hurricane country.  It would seem quite a lot simpler to provide alternative energy to 10,000 or so local homes and businesses.  Again, the locals with the expertise are already here.  And I will find out what their focus is on alternative energy. 

Anyway, this post is to show my deep appreciation that someone of your caliber and experience is thinking this through so very carefully, but also to remind you that future success of any community of any size will probably be born out of local expertise, alliances, plans and labor.  We will all weep to see the ATTs, Entergies and big city water companies go, and expecially will lament  the pain their customers will surely see.  But then I have great hope that there is sufficient expertise and experience at the local levels to take care of their own and create the renaissance of our communities that will be so very welcomed.

 Rosemary

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