The solution?

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The solution?

After listening to the Crash Course, things seemed a little hopeless for a few days. The energy problem will sort itself out, but the Social Security and Medicare problems that are right around the corner seem the most scary. The unfunded liabilities are simply too large to expect that new taxes can pay for them. The government needs a whole new source of revenue.

Then it occurred to me...The private sector has screwed up home mortgages twice now; the present mess and the S&L debacle. Maybe the current banking model can't deal with this kind of lending. Perhaps our leaders should consider writing all home mortgages directly through the Treasury/Fed. since all money is created through debt and created by the Fed, that's the ultimate channel for mortgage money currently.

There are somewhere between 12 and 20 trillion dollars worth of home mortgages are open at any time. the interested on these mortgages would be dedicated to SS and Medicare. That number on,,,,say 6% mortgage interest rate would provide between $720 billion and $1.2 Trillion per year to fund SS and Medicare. Seems like painless funding to me.

Allow banks to continue all other kinds of lending, but carve out home mortgages for own benefit. Kind of like our own Sovereign Wealth Fund

The question is: Why wouldn't this work?

Russ Fischer

 

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Re: The solution?

Russ,

This is an interesting thought but you must consider that even if the USGovt nationalizes the big banks that fail this means that they will take on these assets you mention but also the associated liabilities (to depositors and, say, bondholders) even if the preferred shareholders and common shareholders get wiped out.  Generally the bondholders would get paid back at the ultimate realized value of the assets less the amounts to repay depositors. 

So nationalization makes sense (so that the structure of the bank in servicing the mortgages is retained) but this doesn't create a windfall of income to the government without the associated liabilities.

But if it is any consolation - remember that this is a financial problem.  All the homes and cars and factories, etc., all continue to exist even if the economy doesn't work very well going forward, and even if we wish that the homebuilding and cars had been built with concern for the peak oil production that we are currently in (or will be back to once the bottom in the economy is reached and economic activity grows again). 

All the best,

James

 

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Re: The solution?
[quo te=russfischer]

After listening to the Crash Course, things seemed a little hopeless for a few days. The energy problem will sort itself out

  [/quote]

No it won't.  Sorry to burst your balloon...

Energy is actually THE issue.  Whilst not the only reason we are having this meltdown, it is a major trigger.  Growth cannot occur without growth in energy.  Even at $147 a barrel, the supply of oil would not grow.  You must have energy to do work, to make 'stuff'.  As my wife constantly reminds me, I have had YEARS to come to terms with this, understand it, and eventually come to grips with the repercussions of collapsing nett energy.

Everyone (almost) on this site is worried about money....  how to fix the SS, 400K, etc etc..  I worry about what you are going to EAT!  May I point you to another post of mine, http://www.peakprosperity.com/forum/food-and-farming-transition/8324

More energy is spent on food than transport.  90% of the calories in the food you buy in the supermarkets come from fossil fuels.  At any one time, HALF the food in the country is on the back of a truck.  The USA's 3rd largest oil supplier will be unable to export as early as next year.  The biggest manufacturer of ethanol has just declared bankruptcy.  Get my drift...?

The only solution to the debt issue, as far as I can see, is to cancel all debt.  PERIOD.

Debt has spiralled out of (exponential) control.  The only way it can be paid is with more exponential economic growth, which is impossible to achieve without exponentially growing sources of CHEAP and DENSE energy.  FOSSIL FUELS.  The debt can NEVER be repaid, so why would you pretend it can be?

Cancel all debts, start again.  Energy should be the next currency.  Out with the dollar, in with the MegaJoule. 

The biggest mistake our civilisation ever made was to monetise society.  We need a new world order.....

Mike. 

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Re: The solution?
[quote=russfischer]

The energy problem will sort itself out

  [/quote]

Russ, I have just found this thread on this site...  go read it...

http://www.peakprosperity.com/forum/problem-renewable-energy/8100

BTW, I live in a solar powered house...... 

Mike. 

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Re: The solution?

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By Chris Nelder | Thursday, November 6th, 2008

The people have spoken.

Now, President-elect Obama will tackle one of the most unenviable jobs in history. Saddled with two ongoing wars, a record budget deficit, an economy in a worsening recession, and Peak Oil on the immediate horizon, he's got one hell of a mess to clean up.

As my regular readers know, I believe energy is going to trump all other issues, and a number of energy companies (and their investors) will capitalize in a major way. (More on that below.) And so, I've watched this presidential campaign alert to any comments about energy policy. At first they were few and far between, but once oil prices blasted into record territory this summer, the candidates' positions on energy started to clarify.

In time, I came to support Obama's platform over McCain's (although the latter was clearly more knowledgeable about the geopolitics of oil) largely because he seemed to understand the reality of peak oil. "Without a doubt, this addiction is one of the most dangerous and urgent threats this nation has ever faced," Obama said. "We know that we can't sustain a future powered by a fuel that's rapidly disappearing, not when we purchase $700 million worth of oil every single day from some of the world's most unstable and hostile nations, Middle Eastern regimes that [will] control nearly all of the world's oil by 2030...We know that we can't sustain this kind of future."

How refreshing to hear a high-profile politician tell the truth about our oil situation! He even quoted T. Boone Pickens, saying: "This is one oil emergency we can't drill our way out of."

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Re: The solution?

http://www.opendemocracy.net/blog/ourkingdom-theme/brian-davey/2008/10/31/the-li\
mits-to-growth-the-real-case-for-a-green-new-deal

New Deals are clearly the new big idea. Governments need to spend to
avert the worse kind of slump and it makes sense for their expenditure
to focus on renewables and energy efficiency. At the same time the
finance system needs greater regulation.

This is instantaneously the new conventional wisdom. The beginnings of an
alliance created by the New Economics Foundation (NEF) for a Green New Deal
appears to be pushing at an open door. The United Nations Environment Programme
are calling, apparently, for something similar.
But are these ideas radical enough for the problems that we face? The NEF
alliance has created a draft programme
about the banking crisis, peak oil and climate change that is
effectively relating the finance and money system to the limits to
growth. However it leaves out that key idea and its implications for
the banking and finance system.


The significance of peak oil and climate change is that the economy
can no longer grow - or grow non destructively - because the energy
system cannot sustain growth any more. One half of the demand for
energy in the economy is the result of the growth process - it is used
to build infrastructure, buildings and machinery. But it is
increasingly costly to get hold of fresh carbon energy. Even with new
technologies of extraction the energy cost for acquiring oil and gas is
rising. Oil and gas can be replaced with coal but coal is more climate
toxic and even if pumping coal derived CO2 underground can be made to
work effectively at low cost...if.... nevertheless "carbon capture and
storage" is still 15 years and more away from generalisation. The
emissions of a coal renaissance in the meantime will be disastrous for
the climate system. Climate scientists warn we may already be in the
early stages of a self reinforcing avalanche to disastrously higher
temperatures.


This has implications in the finance and banking sector too. If the
energy system cannot sustain more non destructive growth then we need a
different kind of money and finance sector. 97 per cent of the money in
circulation are bank deposits which were created by the banks when they
lent money. Only 3 per cent is notes and coin. Lending money into
circulation, with the expectation that it will be repaid with interest,
pre-supposes that there is extra output that the banking sector can
share when they get those interest payments. If, on the other hand, the
economy shrinks, then some repayment and interest payments will not be
possible and the banks will lose more money. They will become
"de-capitalised" again. Depositors will get scared and we will be in
the throws of another banking crisis - with yet more taxpayers money
shovelled into a black hole in order to prevent the collapse of the
finance system.


None of the Green New Deals address this fundamental problem. The
NEF New Deal suggest that there *might* need to be a global jubilee of
debt cancellation, an extraordinary amnesty for debtors. However,
during energy descent, an economy with a debt based money system would
face the need to do this again and again....


....Or it would happen again and again if the banks could be induced
to lend and companies to borrow. However, in energy descent that
appears to be rather unlikely using current lending models. The risks
and challenges of a transition to the different economic structure
needed at this time are so great that conventional debt finance is not
going to be very useful anyway. There will be no "return to normal".
Because of climate change and peak oil risks in the real economy are
going to be much higher. Thus capital providers will need to spread
risks. But they will also want to have a deep knowledge of what they
are investing in and with whom they are investing. That means a
personal and deep knowledge between capital providers and capital users
in real relationships. They will also want to feel they can rely on
state backing. That is nothing like the global securitisation and
innovation trash that we have seen over the last decades.


What we need instead are financial institutions with some
responsibility to local communities and real relationships where
investors share risks with project developers by funding though taking
equity stakes. That means sharing in gains but sharing in any losses
too. This is the alternative to a debt relationship which attempts to
foist all the risks on borrowers while lenders kid themselves that the
risks are low because there have insurance against credit default in
derivatives markets.
http://www.opendemocracy.net/blog/ourkingdom-theme/brian-davey/2008/10/31/the-li\
mits-to-growth-the-real-case-for-a-green-new-deal

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why energy won't sort itself out
Nov 6 (Reuters) - The growing financial crisis and plunging
energy prices have forced oil companies to scale back spending
and delay projects, with expensive ventures in the Canadian oil
sands hardest hit.


Below is a list of projects that have been delayed or
scaled back in recent months, as well as other related
news.http://www.reuters.com/article/marketsNews/idUSN0638358120081106
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Re: The solution?

I'm not suggesting the nationalization of the banks. The banks go on with their normal lending in commercial, credit cards, auto loans, and everything else. Home mortgages seem to be a different animal....most borrowing (bank deposits, etc.)is short term and a mortgage is the longest term obligation that any of us will have.

We (the government) now owns Freddie and Fannie, so the infrastructure for originating and servicing mortgages is in place.

Some that I mention this to start to scream "socialism"....not true. The money would come from the same place it always came from; The Fed. The mortgagee still has to qualify and MAKE THE  PAYMENTS, or he loses his home.

The banking system has screwed up the home mortgage thing twice in my lifetime....why would we expect that it won't get screwed up again.

I guess the real question is: Is there another idea to solve the black cloud of Social Security and Medicare that we all know is right behind the current crisis? Can (will) the people take a total doubling, or more, of taxes?

For me, I would rather pay my home mortgage interest to an entity that can solve these huge problems. We simply cannot tax our way out of these problems.

The trick would be to keep the politicians hands off that kind of money.

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Re: The solution?
get rid of the fed get rid of the debt
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Re: The solution?

all talk about nationalizing banks is nonsense.

wake up the government has been PRIVATIZED.

the only thing nationalized in this country is the DEBT

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Re: The solution?

I guess I was a little quick on "the energy problem will sort itself out".

Energy has always been my first concern even since I was a young boy (I'm 64 now). I never could understand how we could expect to continue pumping oil out of the ground indefinitely....and the truth is that we can't expect to do that

I consider that there are three basic elements to a modern human culture. Those are human labor, human intelligence and energy; energy because it multiplies the effect of the other two. When I look at a soup spoon, I see it as iron ore that someone had to dig out of the ground with effort and intelligence and keep adding more of those two and an enormous amount of energy through the process of making iron, then steel, then forming it several times until it becomes a soup spoon....and then put it on a truck to deliver it to a store so you can drive your car there to buy it. Energy used all along the way as well as labor and intelligence.

We will run out of oil. Slowly, but very surely.

The solution is electricity. I personally prefer nuclear, but that is something for another debate

Transportation:

Personal transportation. We have only recently developed the technology to change personal transportation. That is battery technology that makes a plug-in hybrid electric vehicle feasible. A PHEV can effectively get 170+ mile per gallon of fossil fuel with very good performance. As the battery technology develops those vehicles will go total electric.

There are two sets of facts that make electric powered cars more understandable.

 Efficiency: An internal combustion engine is only 20% efficient under ideal conditions. In a typical application it is less than 15% efficient. That means that for every 100btus gong in, 85btus are wasted as heat.

An electric motor is 95% efficient. Only 5 of those btus are wasted. So, we only need less than 20% of the input energy to go the same distance.

Torque: An internal combustion engine develops maximum torque at about 3000 RPM, and its' efficiency declines during the idle-to-usable-torque transition. An electric motor develops maximum torque at zero RPM. So, electric motors are simply better suited for personal transportation.

Commercial transportation: Heavy duty trucks will have to make a transition to natural gas for fuel in the short and medium term. Very long term even trucks can go electric with a "power rail" running along a lane of our freeway system, using a motor generator (NG fueled) when they have to come off the power rail.

Railroads: Railroads should be electric now. Half of the rail traffic is for coal to power generating plants....that goes away with a nuclear generating system. since locomotives are basically "hybrid vehicles", i.e. diesel-electric generators running electric motors, this should be an easy transition.

Airplanes: Bio-fuels might be the only sustainable solution here. Air transport will shrink as fuel prices continue to go up, and this is as it should be. A cloud of aircraft overhead is one of easiest things we can do without.

Space heating: To burn NG for space heating is really dumb and it is an artifact of the days when NG was a waste product of oil production. Using electric powered heat pumps for space heating (and cooling)  get 4 btus of effect for every input btu. Burning NG is a 1 btu in, less than 1 btu out proposition that will never change.

The best short term effect can be had with conservation. The medium term will use a combination of technologies, The long term will be nearly total use of sustainable electricity. We will screw around with wind and solar and that is fine. They have their place. Then someday we will wake up and realize that nuclear generation is the only alternative with the scale, sustainability and energy return on investment to get the job done.

Changing the entire energy infrastructure is a huge and long term project. The arrow of progress will have lots of kinks in it, but we will get there because we got dealt the big brains.

 

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Re: The solution?
I love things that sort themselves out.
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Re: The solution?

" We will run out of oil. Slowly, but very surely."

In fact, we will NEVER run out...... because fully 1/3 of what is left will never come out of the ground.  It could even be half.

What you don't seem to grasp is the complexity and interconnectedness of the Matrix.  We may be able to generate electricity with coal and Uranium, but you can't mine the coal and Uranium, ship it, process it, refine it...  without oil.  And certainly not as cheaply as what we are now paying, nor in the enormous amounts.  We have in fact not just hit Peak Oil, but Peak Energy.  You ought to read Richard Heinberg's Peak Everything.

I also happen to think we will face very serious fuel constraints within 10 years.  I mean REALLY serious.... like rationing to below 25% of what we currently take for granted.

Efficiency, as it turns out, is my field of expertise.  I have been designing energy efficient houses for more than ten years, ours is so efficient our last quarterly energy bill was $5.65.....  and we need to replace our old crappy fridge!  Having said that, the twenty solar panels on our roof still can't generate all the power we use.  They will when the fridge goes, but in the meantime we are in deficit (we feed solar power into the grid).  To put this in perspectrive, we barely use 10% of the average electricity consumption in Australia (which I would assume would be similar to America's).

So you better believe that it takes some serious mindset changes to alleviate our energy problems with efficiency.  We are totally dedicated here, most people think I'm a nutter tree hugger.

Forget transportation of all kind, everything will need to happen locally.  EVERYTHING.

Obama promised you change, and boy you're in for it!

Mike. 

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Re: The solution?

We should probably have an "Energy FAQ" somewhere on here to address the "energy will work itself out" fallacy.  It seems to spring up fairly commonly.

1. It would take 20 years of a WWII scale effort prior to oil peaking to avoid a worldwide energy shortage.  We have either peaked already or we will very shortly.  Therefore an energy shortage is inevitable.

2. There is no mix of renewables that gets anywhere close to the energy density of oil.  Renewables generate electricity, whereas our economy runs on liquid fuel.  Even if 100% of cars were PHEVs in 10 years (an incredibly remote possibility), we still don't know how to run large trucks, heavy machinery, boats and airplanes on electricity.  These uses form the backbone of our transportation infrastructure and account for 63% of oil used for transportation.

3. As Damnthematrix pointed out, all large scale renewable energy technology and infrastructure is actually highly dependent upon oil.  The source of energy may be renewable, but the production and distribution of it is not.

4. The amount of money and energy we'd need to invest in the US to reach a hypothetical goal of 50% renewable energy by 2030 is absolutely staggering.  As we head into the one of the most severe economic recessions/depressions in the history of our country, one might legitimately wonder where those resources will come from.

Unfortunately, energy will not simply work itself out - unless by "work itself out" you mean slowly decline over time, causing social, economic and political turmoil along the way.

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Re: The solution?

[quote=russfischer]

We (the government) now owns Freddie and Fannie, so the infrastructure for originating and servicing mortgages is in place.

Some that I mention this to start to scream "socialism"....not true. The money would come from the same place it always came from; The Fed. The mortgagee still has to qualify and MAKE THE  PAYMENTS, or he loses his home.

[/quote]

There is a concept here that you are missing.  There are two kinds of money.  First the Fed prints currency money (in electronic form) in exchange for treasuries (or other assets these days).  Second when people are paid by the USGovt using the money the Treasury received from the bonds sold indirectly to the Fed (people are also paid by the USGovt from a recycling of tax dollars but this doesn't create money it just keeps existing dollars circulating) the money ends up being deposited in the Banks who loan it out using fractional banking which creates credit money.  Both currency kinds of money are identical after they have been created. 

The banks don't own houses - they use bank deposits (a liability to the banks) to make money on the loans (an asset to the banks).  The Fed could accept deposits and issue mortgages but they would only earn a spread on the money.

Under your scenario the Fed would have to OWN the houses so that they received all of the interest that you were talking about.  How do propose that this occur?  Having Freddie and Fannie means you have the mechanism to issue the mortgages but Fannie and Freddie don't own the houses - even if they foreclose on the mortgages and take back the houses Fannie and Freddie still have bondholders that they themselves owe.

Would be possible for the Fed to buy up houses by printing money?  Theoretically, but the glut of currency money created (in electronic form) by the Fed would enter the money system and be used by the banks to create new money through credit leading to hyperinflation. 

Deflation shows up in the destruction of money when banks write off bad loans previously issued that can't be repaid because the interest/liabilities exceed the income/assets that are its collateral - the deflation is a structural problem crashing backwards through the system as the pressure from the unwinding of the US housing bubble leans harder and harder on the financial system. 

Hyperinflation from new currency and credit creation would eventually erode the purchasing power of money but since it doesn't act directly on the old debt (that can't be repaid) it can't arrest the deflation process.  However the process of deflation of old debts should be slowed down if the hyperinflation boosts growth in the economy and turns the corner on the depression. 

So $100 in the bank becomes more valuable through deflation [unless it itself is destroyed if the bank can't meet its own liability to depositors and the FDIC doesn't make the depositor whole (the scale of the current problem is so huge that no assumptions can be made over the safety of money in any given bank, and no two banks are equal)].

Then the $100 becomes less valuable as hyperinflation sets in.  Since hyperinflation seems the likely policy response in one way or another down the road the idea now would be to have money placed somewhere safe to keep away from deflation and then to shift into hard assets as hyperinflation seemed to take hold.

Trouble is...once hyperinflation starts...what will slow it down?

So no free lunch.  But, as Chris has suggested today, we'll likely soon see some financial tricks to be played out.

I like Mike's comments on this thread considering local lending where people know the players and make an ownership investment.  It also keeps value within a community (for investors, producers, and consumers) and limits a flow of funds out of the community to Banks and Corporations.

All the best,

James 

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Re: The solution?
The IEA World Energy Outlook 2008 Executive Summary has found its way to the ASPO-Australia website, ahead of its formal release on Wednesday 12th.
 

World Energy Outlook  2008  Executive Summary

The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially. But that can — and must — be altered; there’s still time to change the road we’re on. It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution. This World Energy Outlook demonstrates how that might be achieved through decisive policy action and at what cost. It also describes the consequences of failure.

But field-by-field declines in oil production are accelerating…

 

The report confirms the leaked figure of a 9% pa natural decline rate worldwide, and even when extra development is counted, it is 6.7% pa decline on a production-weighte basis.   This is very scary, but very good that the IEA are starting to warn about oil depletion.

 

It is on the top of the ASPO-Australia website, and available direct at  http://www.aspo-australia.org.au/References/Bruce/WEO2008SUM.pdf

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Re: The solution?

And they make the mistake of assuming that demand will not grow. Exactly as Chris said in the Crash Course.

 

Quote:

 

Estimates of remaining proven eserves of oil and NGLs range from about 1.2 to 1.3 trillion barrels (including about
0.2 trillion barrels of non-conventional oil). They have almost doubled since 1980. This is enough to supply the world with oil for over 40 years at current rates of consumption.

 

Key word here is 'at current rates of consumption'  Wink

 

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Re: The solution?

<we still don't know how to run large trucks, heavy machinery, boats and airplanes on electricity. >

Large Trucks: Compressed Natural Gas. Bus fleets are doing it already. Lots of NG left...glut right now in fact. That will buy us  time to figure out how to electrify heavy trucks

Heavy Machinery: ?

Boats: I hope you  mean ships.....Micro nukes would work great there.

Airplanes: Bio-Fuels or GTL from NG. Maybe airplanes have to give way to surface transportation.

NG is the bridge fuel to buy time for full electric conversion of nearly everything.

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Re: The solution?
[quote=russfischer]

Large Trucks: Compressed Natural Gas. Bus fleets are doing it already. Lots of NG left...glut right now in fact. That will buy us  time to figure out how to electrify heavy trucks [/quote]

You're kidding, right?  

Natural gas will peak not long after oil, and it's expected to peak much more sharply. 

From a recent article on The Oil Drum:

Natural gas use, as you may have noted, has been increasingly, over the last few years, the fuel of choice for new power stations. And the increase in demand has led to a current increase in US production, although at a significantly higher price.However, a significant fraction of this new production is coming from shale deposits, where the high level of demand and the decline pattern of the wells (50% drop in the first year and economic exhaustion within 4 years) means that this is really a transient resource, with drilling having to increase more and more just to keep up with existing demand, and with the likelihood of that not being possible within the next few years. This becomes germane relative to the Pickens Plan, since by the time it becomes fully effective, it is likely that natural gas will be in significantly shorter supply than it is at present.

As a result any move to change, on a significant scale, the motive fuel for the American fleet from gas and diesel to natural gas power is likely to run out of that fuel, before there has been a significant economic return on the investment. It runs the risk of becoming an alternative, like corn-based ethanol, which will have limited impact, and where its contribution will turn out to be much less than had been originally hoped.

The US is heavily dependent upon Canada for its supply of natural gas.  Canada exports half of its output to the US.  Canadian reserves have been declining for decades. Their reserves of natural gas were estimated at 99.2 trillion cubic feet in 1985. That number fell to 56.3 trillion cubic feet in 2005. Canada has lost 43% of its proven reserves!

The EIA's 2006 International Energy Outlook also projected that natural gas demand in Canada's industrial and electric power sectors will more than double by 2030.

Last year Canada consumed half of its production and exported the rest. Overall Canadian consumption is expected to grow an average of 1.9% annually until 2030. This means Canada will consume 85% of its production.

 

That will reduce exports to the U.S. by 35%!

 

You might want to read this, and this.

 

Clearly, natural gas is not a viable liquid fuel alternative.  It's like moving from the frying pan to the fire.

[quote]Heavy Machinery: ?[/quote]

Nothing in sight.  Keep in mind that we depend upon such machinery for food production, road maintenance, building construction and infrastructure development of any kind - including building wind turbines, nuclear plants, etc. 

[quote]Boats: I hope you  mean ships.....Micro nukes would work great there.[/quote]

Thought the technology for this is relatively well-developed, it's not likey to be used in civilian vessels on a significant scale anytime soon - if ever.  Marine nuclear ships use a highly enriched form of uranium.  This presents three problems.  First, uranium is also expected to peak within the next few decades.  Second, the very high-pressure water coolant in such reactors often leaks, meaning the reactor has to be shut down while the craft pulls into a nearby port for repairs.  Third, and most importantly, a large supply of vessels with nuclear reactors would be ideal targets for terrorists who'd love to get their hands on highly enriched uranium.  Military vessels can protect themselves from such threats, but how would civilian vessels do that?

That's all a moot point, anyways.  My question to you once again is where are we going to get the money to retrofit a significant portion of marine transportation vessels with nuclear propulsion systems?  That's not exactly cheap, and it would take decades to implement.

[quote]Airplanes: Bio-Fuels or GTL from NG. Maybe airplanes have to give way to surface transportation.[/quote]

You're right about that: airplanes will have to give way to surface transportation.  Biofuels have among the lowest EROEI of any alternative fuels, and in many cases they compete directly with land we need for food cultivation.  Algae is a possible exception, but the technology is still young and not yet scalable to industrial use.  Natural gas is a non-starter for the reasons I detailed above.

Travel by air may continue, but only for the wealthy and on a much, much smaller scale.  Then again it may cease altogether because it may be too expensive to maintain airports, planes, and the entire aviation infrastructure for such a small number of passengers.

[quote]NG is the bridge fuel to buy time for full electric conversion of nearly everything.[/quote]

Sorry.  If only this were true it would make things so much easier.  But as I pointed out above, NG is not a viable transition fuel and only a small portion of our economy/infrastructure can run on electricity.  Read the articles I linked to and do some more research and you will undoubtedly realize what many here already have: we are headed for a worldwide energy shortage and very likely a permanent energy decline.  

The sooner everyone realizes this and begins to adapt accordingly, the better off we'll be.

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Damnthematrix
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Peak Gas

http://www.platts.com/Natural%20Gas/News/8149876.xml

Peak gas output could come 'earlier than we think': Shell's Mills

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Damnthematrix
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on aviation....

http://www.telegraph.co.uk/finance/newsbysector/transport/3373464/Ryanair-boss-predicts-airline-failures-this-winter.html

Ryanair boss predicts airline failures this winter

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Re: The solution?
ITHACA, N.Y. -- Turning plants such as corn, soybeans and sunflowers into fuel
uses much more energy than the resulting ethanol or biodiesel generates,
according to a new Cornell University and University of California-Berkeley
study.

"There is just no energy benefit to using plant biomass for liquid fuel," says
David Pimentel, professor of ecology and agriculture at Cornell. "These
strategies are not sustainable."

Pimentel and Tad W. Patzek, professor of civil and environmental engineering at
Berkeley, conducted a detailed analysis of the energy input-yield ratios of
producing ethanol from corn, switch grass and wood biomass as well as for
producing biodiesel from soybean and sunflower plants. Their report is published
in Natural Resources Research (Vol. 14:1, 65-76).

In terms of energy output compared with energy input for ethanol production, the
study found that:

* corn requires 29 percent more fossil energy than the fuel produced;
* switch grass requires 45 percent more fossil energy than the fuel produced;
and
* wood biomass requires 57 percent more fossil energy than the fuel produced.

In terms of energy output compared with the energy input for biodiesel
production, the study found that:

* soybean plants requires 27 percent more fossil energy than the fuel produced,
and
* sunflower plants requires 118 percent more fossil energy than the fuel
produced.

In assessing inputs, the researchers considered such factors as the energy used
in producing the crop (including production of pesticides and fertilizer,
running farm machinery and irrigating, grinding and transporting the crop) and
in fermenting/distilling the ethanol from the water mix. Although additional
costs are incurred, such as federal and state subsidies that are passed on to
consumers and the costs associated with environmental pollution or degradation,
these figures were not included in the analysis.

"The United State desperately needs a liquid fuel replacement for oil in the
near future," says Pimentel, "but producing ethanol or biodiesel from plant
biomass is going down the wrong road, because you use more energy to produce
these fuels than you get out from the combustion of these products."

Although Pimentel advocates the use of burning biomass to produce thermal energy
(to heat homes, for example), he deplores the use of biomass for liquid fuel.
"The government spends more than $3 billion a year to subsidize ethanol
production when it does not provide a net energy balance or gain, is not a
renewable energy source or an economical fuel. Further, its production and use
contribute to air, water and soil pollution and global warming," Pimentel says.
He points out that the vast majority of the subsidies do not go to farmers but
to large ethanol-producing corporations.

"Ethanol production in the United States does not benefit the nation's energy
security, its agriculture, economy or the environment," says Pimentel. "Ethanol
production requires large fossil energy input, and therefore, it is contributing
to oil and natural gas imports and U.S. deficits." He says the country should
instead focus its efforts on producing electrical energy from photovoltaic
cells, wind power and burning biomass and producing fuel from hydrogen
conversion.


http://www.sciencedaily.com/releases/2005/07/050705231841.htm
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Re: The solution?

Natural gas won't peak for along time if we stop using it to heat homes and generate electricity.

 Those are jobs for these little nuggets.

http://www.guardian.co.uk/environment/2008/nov/09/miniature-nuclear-reactors-los-alamos

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Re: The solution?

I fail to see the difference whether the current banking system lends the money or the Treasury/Fed lend the money directly.

Take the case of a current mortgage transferred to the Treasury/Fed. The new money created to move the mortgage to the Treasury/Fed would extinguish the old mortgage and the money associated with it.

New mortgages written by the Treasury/Fed would create the same amount of money as would occur in the traditional banking model.

Think of a bank with no depositors writing a mortgage today. The Fed would provide the money in exchange for a security issued by the bank involved.

It would reduce the recycling of existing money from offshore since this is where many of the mortgage backed securities wound up. And, of course, those offshore holders of the mortgage backed securities got screwed too.

there is no reason why the Treasury/Fed could not accept direct deposits only for home mortgages earning a spread would still help fund these enormous unfunded liabilities.

Once a steady state is achieved there would be as much money extinguished through mortgage payments as created by new mortgages.

Banks certainly do "own" the homes. They get them back on a default. Nothing different here, the Treasury/Fed would get them back on a default also. One would hope the lending criteria would be realistic enough that the default rate would be acceptably small.

 

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Re: The solution?
[quote=russfischer]

Natural gas won't peak for along time if we stop using it to heat homes and generate electricity.

Those are jobs for these little nuggets.

http://www.guardian.co.uk/environment/2008/nov/09/miniature-nuclear-reactors-los-alamos

[/quote]

Russ,

At this point I'm starting to suspect your comments are in jest.

You can't seriously believe that we're going to stop using natural gas to heat our homes and start using miniature nuclear reactors.  I don't even know where to start if you honestly think that's a viable possibility in the near term (or long-term, for that matter).

In any event, if you're absolutely intent on remaining ignorant to the extent and complexity of the energy problem and instead choose to put your faith in unproven technologies that we don't have the time, money or political will to implement on a broad scale, then there's absolutely nothing anyone here can do to help.

Perhaps you should read Chris M's "Six Stages of Awareness" post.  I would suggest you are vacilating between denial and bargaining.

 

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Re: The solution?

Russ,

At this point I'm starting to suspect your comments are in jest.

I'll second that emotion.....  Blind faith in the face of facts is religion.

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Re: The solution?

If you think I intended to suggest using mini-nukes to directly heat homes, I have to work on my communication skills.

The idea is to use nuclear generated electricity for powering heat pumps that get 4Btus of effect for each input Btu. If we didn't use NG for electric generation and space heating, It would be available as a transition fuel for well over 100 years while our big brains get to work on some of the problems outlined in Crash Course.

I know the mini-nukes don't exist at the moment, but they would certainly be a nice choice for decentralized power.....and to power those ships that someone mentioned. 

Here's a little more hopeful site for you to spend some time on:

http://www.ilsr.org/

Here's another one at the same site titled "Driving Our Way to Energy Independence" Don't let the title put you off it is a good read..quite long, but very well thought out.

 http://www.newrules.org/electricity/drivingourway.pdf

Still, on the energy front I am a big believer in nuclear energy and electric everything. Electricity is more efficient in nearly every energy application. I have probably read every pro and anti-nuke book ever published and by far the best treatment of the subject is in "Power to Save the World" by Gwyneth Cravens.

Sorry guys, I think the Crash Course is very enlightening, but I'm just not willing to roll up in a fetal position and suck my thumb until the end of the world comes. I am sure that the next twenty years are going to be very different from the past twenty, hell the twenty before that were also different. I believe we will see some dislocations that we have never seen before. it is always wise to at least try to prepare for the Black Swan event if, the possible effect of such an event is to end your life.

I came here to share ideas, even if some are flawed or incomplete. I didn't come here to be put down as a jokster. I'm not hearing any serious solutions to the problems from you so far.

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Re: The solution?
[quote=russfischer]

If you think I intended to suggest using mini-nukes to directly heat homes, I have to work on my communication skills.

The idea is to use nuclear generated electricity for powering heat pumps that get 4Btus of effect for each input Btu. If we didn't use NG for electric generation and space heating, It would be available as a transition fuel for well over 100 years while our big brains get to work on some of the problems outlined in Crash Course.[/quote]

Perhaps I need to work on my communication skills as well because clearly what I've been saying repeatedly throughout this thread is not getting through to you.  Whenever you propose an alternative source of energy, if you want it to be taken seriously as a possibility you must indicate how it could be implemented within the constraints of time, economy and current energy supplies that we are dealing with.  Otherwise, you are simply engaged in wishful or magical thinking.  

Not only does wishful/magical thinking not solve our problems, it actually makes them much worse because we waste time on "solutions" that aren't feasible.

You propose somehow replacing natural gas with nuclear power for heating our homes.  How long would that take, Russ?  Where would the money come from?  Let me give you a few sobering numbers:

- The mean age of the 439 nuclear reactors in the world is 23 years.  The "life expectancy" of these reactors is 40 years.  That means we'd need a large number of nuclear reactors built in the next 15 years just to maintain the same number we have now, not to mention adding capacity.

- According to the Nuclear Energy Institute (a pro-nuclear industry group) we can optimistically expect to have no more than four to eight new plants by 2016.  If those plants are working to schedule, within budget estimates, without licensing difficulties, and with continued public policy support (all of which is far from certain), only then would a new wave of construction begin.

- According to the Nuclear Power Joint Fact Finding Report issued in 2007 by the Keystone Center, we would need approximately 700 GWe of new net nuclear capacity by the 2050s in order to offset the decline of fossil fuels.  This would require, on average,the construction of fourteen 1,000-megawatt-electric (MWe) plants each year.  However, before 2050 it would also be necessary to replace the retiring nuclear capacity (approximately 370 GWe) which would require construction of an additional 7.4 1,000 MWe reactors each year.  Thus we would need to build a total of 21 MWe new 1,000 MWe plants each year to successfully offset the decline of fossil fuels.  This is not going to happen.  The best-case estimate of the NEI (previous bullet point) was adding 4-8 reactors in the next six years, for an average of approximately one per year.

- To meet the new demand for nuclear electricity we would also have to substantially expand fuel-cycle facilities (uranium mines, mills, enrichment plants, fuel fabrication plants and nuclear waste repositories).  Roughly that would include 11-22 new large enrichment plants (compared to 17 existing), 18 fuel fabrication plants (compared to 24 existing), and 10 nuclear waste repositories the size of the statutory capacity of Yucca Mountain.  (Statutory capacity is used because the Yucca Mountain project has been stalled and no new alternatives have been proposed.)

I could go on but I hope the point is clear.  Transitioning to a new source of energy isn't a simple matter of waving a magic wand and watching it happen.  It requires trillions of dollars of investments, decades of planning, preparation and construction, huge amounts of fossil fuel and a tremendous level of political will.  

[quote]I know the mini-nukes don't exist at the moment, but they would certainly be a nice choice for decentralized power.....and to power those ships that someone mentioned.[/quote]

More wishful thinking without any consideration of the realities involved in such a transition.  See above.

[quote]Here's a little more hopeful site for you to spend some time on:

http://www.ilsr.org/

Here's another one at the same site titled "Driving Our Way to Energy Independence" Don't let the title put you off it is a good read..quite long, but very well thought out.

http://www.newrules.org/electricity/drivingourway.pdf

[/quote]

Russ, many of us here have been studying energy intensively for years if not decades.  Speaking personally, I read just about all there is to read on the subject.  Articles suggesting that new technologies are going to save us from the energy crunch we're facing are a dime a dozen.  The key is to learn how to read these articles with a critical eye and ask the necessary questions.  The vast majority of people do not understand the complexity and depth of peak oil, peak credit and climate change and simply haven't grasped how they all fit together.

[quote]Still, on the energy front I am a big believer in nuclear energy and electric everything. Electricity is more efficient in nearly every energy application. I have probably read every pro and anti-nuke book ever published and by far the best treatment of the subject is in "Power to Save the World" by Gwyneth Cravens.[/quote]

Electricity will certainly be the energy source of the future.  But the questions at hand are 1) will electric energy produced by renewables ever make up for the energy density of oil, and 2) will we be able to replace oil and other fossil fuels with electric energy provided by renewables in time to prevent serious energy shortages.  The overwhelming evidence suggests that the answer is "no" in both cases.  If you have evidence to present that contradits this conclusion, I will happily read it. 

[quote]Sorry guys, I think the Crash Course is very enlightening, but I'm just not willing to roll up in a fetal position and suck my thumb until the end of the world comes. I am sure that the next twenty years are going to be very different from the past twenty, hell the twenty before that were also different. I believe we will see some dislocations that we have never seen before. it is always wise to at least try to prepare for the Black Swan event if, the possible effect of such an event is to end your life.[/quote]

Is that what you think we're doing here?  Quite the contrary!  Many of us are happily changing our lives to prepare for a less energy-dense society.  We're growing food, raising animals, working towards energy independence for our homes, riding our bicycles to work, shopping at farmer's markets, learning to preserve and store food, building relationships with our neighbors, educating others, and much more.  Curling up in a fetal position is a fear response, and if you take the time to read Chris's "Six Stages of Awareness" that I linked to above, you'll see that is Stage 4.  It's a perfectly understandable response, but it's not a stopping place.  Most of us have been through that stage, and while we may occasionally revisit it, we've moved on to Acceptance and have gotten busy transforming our lives.  

[quote]I came here to share ideas, even if some are flawed or incomplete. I didn't come here to be put down as a jokster. I'm not hearing any serious solutions to the problems from you so far.

[/quote]

I apologize if I came off too harshly.  I was honestly not sure if you were joking or not.  It just seemed like you were presenting a lot of ideas without thinking them through at all.  For those that have analyzed these alternatives in detail and can see very clearly where they come up short, it gets frustrating to see them promoted without any real consideration of their potential.

Russ, if your read Chris's posts and our comments on this site, you'll see plenty of serious solutions being suggested.  In short, the most "serious" and necessary response to fossil fuel depletion is to restructure civillization to run on less energy.  This is not only necessary from an energy perspective, it's vital if we are to reverse the destructive effects of climate change. 

Unfortunately, the powers that be aren't anywhere near realizing this.  Instead, they are blindly pursuing whatever means they can to perpetuate "business as usual".  The longer we do this as a society, the digger the hole we'll dig for ourselves (it's already pretty darn deep).  We need to accept the reality and indeed, necessity, of using less energy in the future and get to work on real solutions for changing the way we live.  I mentioned a few of them in my paragraph about what we're all doing to prepare.

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Re: The solution?

i would suggest reading some amory lovins and visiting rocky mountain institutes site. rmi.org

gotta go now and crawl into my fetal position. one of my goals is to be able to read these posts and type responses

from my curled up position .

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Re: The solution?
[quote=switters]

Perhaps I need to work on my communication skills as well because clearly what I've been saying repeatedly throughout this thread is not getting through to you.  Whenever you propose an alternative source of energy, if you want it to be taken seriously as a possibility you must indicate how it could be implemented within the constraints of time, economy and current energy supplies that we are dealing with.  Otherwise, you are simply engaged in wishful or magical thinking.  

[/quote]

Possibly you have ended up doing a bit of what I caught myself doing years ago, getting almost a little dismissive of yet another person who believes the claims of yet another "genius" that thinks he has built a car that runs on water or a permanent magnet motor /generator that puts out more electricity than it uses.

It is hard to bite your tongue and become a kindergarten teacher yet again, but so few people have sufficient engineering backgrounds to appreciate the FULL implications of any idea.

Well done on your detailed reply.

 

Hamish

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Re: The solution?
[quote=russfischer]

Still, on the energy front I am a big believer in nuclear energy and electric everything. Electricity is more efficient in nearly every energy application. I have probably read every pro and anti-nuke book ever published

[/quote]

Have you read this one? 

http://www.stormsmith.nl/publications/Energy%20from%20Uranium%20-%20July%202006.pdf

No one's suggesting you should roll up into a fetal position and wait to die......  But no one's worked out how to get rid of the wastes we have created to date, WITH vast amounts of liquid fuels in store.  It is obvious to me that post Peak Oil/Gas it would simply NEVER occur. 

Then there's the niggling issue that  Uranium. like Oil, will run out,and very quickly if we start building nukes all over the world.

http://www.peakoil.org.au/peakuranium.htm

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