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Gail Tverberg: The Coming Energy Depression

The math is straightforward, but cruel
Sunday, January 7, 2018, 4:52 PM

As most PeakProsperity.com readers know, we fully agree with the statement: Energy is THE master resource.

Without it, nothing can get done.

Energy analyst and professional actuary Gail Tverberg returns to the podcast this week to revisit the global energy outlook. And fair warning, Gail warns it's quite grim.

To her, it's a simple math problem. We have too many people placing too much demand on the world's depleting energy resources. The cost of energy is rising, which we are compensating for in the short term by using financial gimmicks to make "affordable" -- when all we're really doing is creating future promises that cannot possibly be repaid.

The increasing cost of energy is manifesting in higher prices (for everything, not just fuels) and lower real wages, a divergence she sees only worsening from here. This path leads to another Great Depression-style crisis from which she does not see a clear path out of:

What we really live on is what we pull out of the ground each year, in terms of oil or coal or natural gas or whatever. So what we have is just what we pull out.

Now, you accurately point out that we're making too many claims on the future using debt. We're actually doing this via a couple of different ways, which are pretty much equivalent. One of them is by issuing equity. This has the equivalent effect as using debt because what you're saying is I'll pay you dividends, and you're going to get a higher price in the future. This is simply different kind of claim on the future. Another way to borrow from the future is through government promises. While debt is the one that most people focus on, shares of stock and government promises have the same effect. They all are promising more and more future stuff. So unless we truly have more stuff in the future, we won't be able to make good on these promises.

But oil prices higher than $20 per barrel are putting too much pressure on the economy. The cost of everything goes up at the same time. You use oil to get your metals out because you're using that in your extraction process. Also, the same things that cause oil prices to rise cause natural gas prices and coal prices to rise, too.

So what happens is everything has to go up in cost at the same time. Though people's wages are the one thing that don't. So what happens is they get squeezed. They get squeezed badly, and they start defaulting on their loans; auto loans and student loans first. We probably will soon see more business loans default, too. But it's also the individuals who are getting squeezed the worst. This will only worsen as oil prices rise and as other prices rise, too.

The crisis we're likely to face is going to look like the Great Depression. It's going to look like people being laid off from their obs. It's going to look like banks closing. And it's going to be that kind of crisis.

We simply don't have nearly enough affordable energy to support today's population. This should be very disturbing to every one of us. Apart from taking increasingly desperate short-term measures to put the crisis it off a little bit, it's hard to see a solution.

Click the play button below to listen to Chris' interview with Gail Tverberg (63m:24s).

Transcript: 

Chris: Welcome, everybody, to the very first Peak Prosperity podcast of 2018. I am your host, Chris Martenson. It is January 3, 2018. Now, before I begin, I need to note that 2018 marks the 10th year anniversary of the Crash Course, the very first chapter of the online video series called the Crash Course. That went up in May of 2018, and as Adam and I have already mentioned, there will be a Peak Prosperity seminar in May of 2018 to mark that anniversary. That will be out, as we talked about, in Sebastopol, California. But, wow, ten years in, and there are certainly many successes along the way, but also some notable failures. Perhaps none larger than I personally take - the loss of focus on oil that society at large has undergone, lured by this false promise of shale oil, which to me is a flash in the pan, low net energy enterprise.

Many people have wrongly turned their attention away from energy and the role of energy in creating everything that we either hold dear or take for granted. No energy, no anything else. That's the formula. Said differently, without primary wealth you can't have any secondary wealth. And without secondary wealth, all the stocks, bonds, currency and derivatives, all of those expressions of tertiary wealth have no value. But, even as people were not paying attention to oil, the biggest news of our lifetimes was rather quietly snuck out and it's this: oil discoveries have been abysmal in each of the past four years. 2014 was bad. 2015 worse. 2016 was abysmal, and 2017 we now know was the lowest of them all. Now, those lack of discoveries sets the stage for future oil shortages that will absolutely, positively create massive damage to the tottering tower of tertiary derivative claims upon which so many unmet promises and dreams are perched.

And that's why we're starting out 2018 on the all-important topic of energy. Oil energy specifically, and how energy and the economy, debt financial markets, all the rest of those items, how those all interact. And who better to discuss this with us than Gail Tverberg? Gail has been on the program before several times. It's time to welcome her back. Gail is a professional actuary who applies her risk assessment expertise to finite world issues: oil depletion, natural gas depletion, water shortages and climate change. Now, for years Gail authored some of the most informed analysis on the global net energy predicament in her post at theoildrum.com published under the pen name Gail the Actuary. And today she runs the very popular blog ourfiniteworld.com, and there you will find both really hyper intelligent articles and intelligent comments as well. Gail, thank you so much for being back on the program with us.

Gail: Well, thank you for inviting me. Happy New Year.

Chris: Thank you. Happy New Year to you. Now, in my introduction, I made the assertion that the lack of oil discoveries is really big and really underreported news. Do you agree?

Gail: Well, yes, and no. I think it's hardly – you know, we've got an awfully lot of discovered unconventional oil that if we could get the price up high enough we could get out. But it's the fact you can't get the price up high enough that means that the stuff stays in the ground. So, if you look at the forecast of all of these other agencies, they're looking at it from a point of view of we already know about a lot of unconventional oil. If we could just get it out, all we have to do is get the price up higher, or at least that's their view of it. And so, if we could get the price up higher we could get the unconventional oil out, and we could probably get more even of the conventional oil out because we could use secondary and tertiary techniques. So I tended not to focus quite as much on that.

Chris: Now, the reason I'm focusing on it is because you have to find it before you can pump it, and the types of projects that have not been prosecuted, if that's reflected in those low discovery numbers, are the big, long running and long lag time sorts of projects: the deep water, the ultra-deep water, the very expensive capital intensive things that we might do in tar sands or in Orinoco Belt or the infill drilling that's required out in the North Sea, those sorts of things. Now those tend to be fairly high flow rates sorts of phenomenon and projects that can be run. So, I think we're in agreement around the idea that since those projects will not be coming online, the only way we're going to coax more out of the existing oil that we know about, in particular the shale oil, is much higher oil prices.

So, in your mind, what's the intersection of higher oil prices and the largest amount of debt that the world has ever seen? In my view, I love something that Jim Puplava said many years ago, which is that the price of oil is the new Fed funds rate, meaning that a big hike in the price of oil will operate in the same way that a hike in interest rates used to operate, which is it will slow down economic expansion. We might think about this more simply as the top selling cars in the United States these past four years have been the F 150 truck, the Silverado, and the Tahoe. Now, these are all big, giant gas burning vehicles. These have been purchased by people, in many cases, who live in exurbs, say, very far from where they work, and so of course, a price hike in oil leading to a price hike in gasoline in going to be very difficult for those people to endure. It will translate into a loss of purchasing power for other things as they spend that money on gasoline instead, and that's how it operates. So would you agree that the future has an oil – needs to see higher oil prices in order to remedy that discovery shortfall? And if so, I want to talk about what those higher oil prices will mean, given the level of debt we have in the world today.

Gail: Well, I agree with you that as soon as you start getting higher oil prices, that definitely puts pressure on the economy, and I think if you look at it, it's not – everything goes up at the same time. You use oil to get your metals out because you're using that in your extraction process. And you're also – the same things that cause oil prices to rise cause natural gas prices and coal prices to rise, too.

So what happens is everything has to go up at the same time. And people's wages are the things that don’t go up. So what happens is they get squeezed, and they get squeezed badly, and they tend to default on their loans. Auto loans are probably one of the first ones, so the student loans – we probably should be seeing more of the business loan defaults, too. But it's also the individuals who are getting squeezed. And I think we can expect to see more defaults as oil prices rise and as other prices rise.

Chris: One way that I look at this is 2008, right, and popularly in the United States press at least, we say oh, that was a housing bubble that burst, and there were these credit default swaps and other derivative things like CDOs and whatnots, and that was the problem. But when I look at why Greece toppled and failed, Greece didn’t have any exposure the US housing industry. What Greece had exposure to was the fact that it's a 100 percent oil importing nation, and in July of 2008 oil went to $147 a barrel. This created an enormous balance of payments problem for Greece, and suddenly Greece was exposed as a country that was insolvent fundamentally. And that led to the whole Greek crisis, which they are still fully enmeshed in.

Here we are a full decade after the onset of that, and Greece is in what I would call a capital "D" depression with no end in sight. They’ve had extraordinary austerity imposed upon them by Brussels, which is a whole different discussion, but fundamentally, when I look at that I say, here's a textbook example of what happens when you're even an entire nation, you produce no oil of your own, and you get exposed to a big oil price shock, and the rest is what happens when we see debt and oil prices combine.

Gail: Right. A different way of thinking about is it's very much dependent on tourism. Tourism depends on people flying by airplane and those airplane tickets cost a whole lot more when the price of oil goes up, or the price of boats, also the cost of running them, operating them goes up when the price of oil goes up. So, Greece was very much exposed to rising oil prices because it is such an oil dependent nation. It also has all these little tiny islands, and those islands it's hard to generate electricity except using oil. And that's another thing that tends to raise their prices. Anyhow, but that's part of the reason why Greece is in such a fix.

Chris: Well, absolutely, and that would be sort of my prediction going in. Now, we're going to see this again, and it's my view that these aren't just the worst oil discoveries. It's not like the headline for 2017 said, wow, we haven't discovered this small amount of oil since 1940. But the truth is, in my data series, Gail, I cannot find any four-year period – I couldn't find any three-year period – but four really cements this – that is this low in the entire history of my oil database which goes back to the '20s. So this is the worse four-year period of discovery, and so we have to believe one of two things is true; oil companies have been wasting a lot of money in trying to discover oil, and turns out that was an unnecessary enterprise that they, for many, many decades running, just were wasting money on, or it does matter.

And so, when it does matter, we're going to see oil shortages in the future, and under that scenario we will see oil price spikes. And this is why it's so important to talk about energy and the economy because of that linkage. I know it gets a little – it's tricky with the prices and all of that, and how much debt there is, all that, but let's just back up for a second. You do a lot of research and develop charts showing what appears to be a very tight linkage going to the economy and energy or GDP growth and energy consumption. What's the relationship there as you’ve determined it?

Gail: Well, I think of the situation being kind of like a bicycle. You have a front wheel and a back wheel, and actually you probably have the frame as well. And the debt is the front wheel. It's what makes it – pulls it forward. It makes it go. And the frame is all of these technologies that allow you to use this energy. And the back wheel is the actual energy itself. And in order for the economy to keep rolling along, you need to have this whole bicycle operating properly. And once – if you don’t have enough debt pulling the bicycle forward, the bicycle tends to fall over just as your bicycle would fall over if you stopped – if you slowed it down too much.

But it needs the real energy for the back wheel as well. And it needs additional technology. And of course, it needs the buyers for all of these goods and services, and they have to be – have enough money to be able to afford things. And usually the way you get that income down to the buyers is through debt. The businesses borrow some money, and they use that to hire workers. Our governments borrow money, and they use that to pay Social Security payments and such things. And it's this debt that enables this whole process.

Chris: Well, I want to get to debt in just a second. The charts, as I see them, on one axis we have GDP growth. On another axis there's energy consumption. And it's not like this is a scatter plot where we have to squint at it and say we think we see some sort of relationship. These two things come together into a series of dots that you can draw a darn straight line through, and it's a very, very high degree of linkage between the two, meaning that however many more units of GDP you're going to get, you can see that it requires a few more units of energy consumption. So it's a really – I've not come across, Gail, in my economic research yet, any tighter data series than this one. It seems pretty robust. It goes back many, many decades, and it simply says that economic growth requires growth in energy consumption. Would you agree?

Gail: Yes. Very much so.

Chris: So that's something that I'm interested in. Before we get to the, I think, the really interesting part which is what this means going forward - and we have to understand that in terms of per capita energy consumption, and then we'll get to debt as well. So bookmarks on both of those. There's this idea of decoupling. I read about it all the time, and I want to know if you have any evidence of decoupling which is this – decoupling is the idea that as we get more efficient or we increase productivity in economic parlance, that we will end up with more units of economic output for a given unit of energy consumption.

And if we were talking about this chart which has a really straight line, dots between energy and economic growth, decoupling would say we would see some wobble in that line. That over time it would, depending on how we oriented our axis, we would see us getting more units of GDP for a given unit of energy. That is, the line wouldn't be straight any more, it would begin to flatten, whichever direction you’ve drawn your axis in your brain. But that's what we would see. We would see this decoupling. Gail, do you have any evidence of decoupling in your data yet?

Gail: Well, we've got a couple of places where things looked like they got better temporarily. We'll say in the 1970s, you know, we went to some smaller cars, we took our oil-fired furnaces, and we replaced them with something else, at least more efficient furnaces. So there was some places where we used a huge amount of debt, and we managed to get a little bit of what could be interpreted as decoupling.

But what I've noticed, when we get something that looks flat, it's not a good situation. The flat per capita energy use is something that happened between about 1920 and 1945. Well, that wasn't a real good period of time. You had the Depression. This is what you get with flats per capita energy. We had, later on, there was a flat period which indirectly resulted from the greater efficiency of these automobiles and such things, so we really didn't need quite as much oil. But that was when the Soviet Union collapsed.

So there's indirect effects. Part of the world economy ends up collapsing, or at least that's what's happened. We've had different kinds of collapses, not really a complete collapse in terms of the Depression, but we had the collapse of the Soviet Union. So this is the kind of thing you get when you have flat energy per capita. If it actually goes down, this is not a good sign.

Chris: So let's talk about why energy per capita, if that's going down, that's not a good sign. And by the way, one of the charts that I've got that I've been talking about for a while that I think is really relevant and important – there's a mystery out there. Here's a mystery, an economic mystery which is, gosh, today it seems like people have a hard time getting by on minimum wage. In fact, it's impossible as far as I'm concerned. In fact, two wage earners earning minimum wage, not enough to support a household in a lot of communities and most major cities. And so we've gone from a situation in the 70s where we had this so called traditional nuclear family in the United States with one breadwinner supporting a household, and now it seems like even two breadwinners not quite enough. Gosh, such an economic mystery. Is it related to globalization, what is it?

Well, in my view you could do worse than to pull up a chart that shows per capita oil production in the United States, and discover that that peaked somewhere around 1970s, and it started to trundle down ever since. And it's only recently come back with shale oil, but that's not a high net energy oil as the original discoveries we were living off of back many decades ago. So, to me, it's an explanatory factor that says, wow, this per capita energy that we're developing as a nation, that somehow factored through very – in a lot of complex ways into the general prosperity of the nation. And there was enough that it could be shared broadly with this thing called the middle class. And that ever since that time, what we've seen is just a general sort of a steady erosion of that middle-class standard, certainly a hollowing out. And along the way, coincident with that, was the Federal Reserve couldn't figure out anything else to do besides continually drop interest rates lower, lower, lower, lower, across the entire 35-year timeframe to zero because we need more debt. We need that front wheel of the bicycle you said. We need more debt.

And all of that sort of comes together in this moment in time. Here we are in 2018 which is why I think this is really actually – I know it's complex and there's a lot of moving parts – but it's probably, nah, it's the most important thing that needs to be talked about and discussed because for me, let me back up to my introduction. Energy is everything. Everything else is a derivative of that. All the complexity, all the debt, the derivatives, bitcoin, new technology, all that stuff. None of that matters if you don't have energy.

And so we're here at this point in time where energy per capita is really probably an easier and maybe has more explanatory power. It's a better way of looking at this all than saying, tell us about the net energy of a situation because how much net energy shale is producing versus coal versus all that stuff. It's interesting, it's good, but maybe we could get a better glimpse at things by understanding that it's the number of people we have, and the amount of energy they have available to them that, in very complex ways, combines into what we might call our general experience economically, financially and all of that in the world. Is that – am I close to how you're looking at it, or is there more I need to understand here?

Gail: Yeah. I think you're right. And you know, the straight-line correlation you see is a straight line with total energy. It's not with oil, it's with total energy. And so, if somebody says, great, we closed down all this coal, you got to say okay, but what are we going to replace it with? You know, this is not a great outcome. It's pretty much equivalent to not discovering oil. Maybe it's worse because even if you voluntarily shut it down, the economy needs energy to grow. To get jobs we need energy. They depend on energy. Your employer wouldn't be able to hire people if they did not have fairly inexpensive energy. So I think this is the thing that people sometimes miss.

Chris: Yeah. And so, not just people but economists. I don’t know of any mainstream economists that have really factored in the idea of energy at all at this point. They just have this assumption that the lowest people – oh look, there's all this shale oil. But, of course, once you peel back the shale oil story you discover a number of kind of uncomfortable things, including the data that in no year running since 2008, which encompasses a very wide range of both financial conditions and oil price circumstances with oil over 100 and under 30 and everything in between, and under none of those years has the shale oil industry returned positive, free cash flow. In every possible regime, it's been a money burning enterprise. And that's okay, as long as there's more and more debt that's willing to be thrown into that, and you’ve got enough liquidity so that people don’t what else to do with it and, so they’ll support the equity issuances of these companies. But anyway, hundreds of billions of dollars have been thrown at this, and none have been returned yet.

So I think that's a really false promise at this point in time. I think there will be a lot of discovery around the idea that a money burning enterprise is not a healthy one at heart. I think shale could be a money generating enterprise, Gail, but at prices that are a lot higher than this. And then we have to broaden the understanding of that shale oil a between further to understand that it's also publicly subsidized in the sense that in Texas, for instance, I know in 2015 they gathered around 1.2 billion in severance taxes, and suffered about four billion dollars of road and bridge damage from all the trucks driving around given the fracking and whatnot. So the public subsidized that industry in that one year to the tune of a little over $2 billion. So once we factor in the total cash flow of shale, I think it's an energy and money positive adventure at oil prices that are twice what todays are. And it's around $60 today. So that's my personal analysis.

Gail: Well, it wasn’t positive cashflow before when the price was close to double what it is today. So I think we probably are causing – we have to cross our fingers. What they’ve been pulling out right now it the easiest-to-get-out oil. And so, by the time it goes back to double this amount, assuming it could, they're going to be working on oil that's that much harder to get out. So it's not all that clear that it would make money at double the current prices.

Chris: Yeah. And in fact, it's the reason they’ve been negative cash flow through every regime is because as the price of oil goes up, oops, so does the cost of getting it out of the ground because of normal economic pressures such as supply shortfalls of workers, and sand costs go up, and as the price of oil goes up all derivatives of oil go up which includes the steel used to produce – needed to produce the piping and all that stuff. So you're right. It's an open question mark as to whether if oil actually goes up in price, whether or not this will actually be a money-making enterprise. It might be that it's not. It might be that there's no combination of factors that will allow shale to actually be a money-making enterprise.

And so that bring us to something we bookmarked, which is this idea of debt. This front wheel of the bicycle, as you said. Now, our economy, it's intricately wedded to the form of money we've adopted, and that money is debt based. Every unit of currency. Be that a euro, a yuan, a yen, dollar, doesn't matter. All of them are loaned into existence. And therefore, what we can say is that all of our money is backed by debt. Debt is, therefore, it's a claim on future money. We borrow money today, then we back it with debt, and then we pay that back later. So, Gail, those claims on the future have been compounding in a faster rate than the economy for nearly five decades. And zero mainstream economists see any problem with that. Do you?

Gail: Well, what we really live on is what we pull out of the ground each year in terms of oil or coal or natural gas or whatever. So what we have is just what we pull out. Now, you point out that what we're doing is we're making claims on the future from debt. We could do it a couple of different ways, which are pretty much equivalent. One of them is that we could sell shares of stock. Now, this isn't what we call debt, but it has the equivalent effect because what you're saying is I'll pay you dividends, and you're going to get a higher price in the future, and somehow or another this is different kind of claim on the future.

And there's a second way beside the debt, and that's government promises. You know, you can say, when you retire we're going to give you Medicare, we're going to give you Social Security. we're going to do all these good things for you. But we don’t actually set it up so it's a liability on our balance sheet. So while it's a promise, there's no debt associated with it because tomorrow Congress could vote and say well, we decided to get rid of Social Security and Medicare, and so there's no liability there. So there's a lot of ways that the same thing results. I know debt is the one that people look at and say oh, that is just terrible. But in fact, shares of stock and government promises are the same things. They all have, in fact, are promising more and more future stuff which unless we really have more future stuff we cannot actually make good on these promises.

Chris: Well, thank you for making that point – both those points – because I support them just wholeheartedly. One is real wealth is the stuff we pull out of the ground and whether – and it begins with energy because without energy it's very, very difficult to mine anything or grow anything. So one of the other derivatives of a higher oil price is a higher food prices because of the degree to which fossil fuel energy is so intricately wedded to our current way of farming which involves creating nitrogen through Haber-Bosch process, and then using that nitrogen to put it into soils that have been fundamentally depleted of nitrogen, and then harvesting that, and then bringing that on to a plate, and then flushing the result out into the ocean eventually is the model.

So as we look at this, it's really important to understand the time series in all of this. So yeah, the original source of wealth is the stuff in the ground. Obviously, you can't get more and more and more out forever and ever and ever. That's called infinite growth on a finite planet. Bad model. Doesn't make sense. But what you're noting here is that debt is a claim of the future, yeah, but so is equity. Issuing shares – that's a claim on the future, and so are government promises. And we've been seeing those promises already buckle, and in some cases, fracture under the weight of zero percent interest rates have destroyed pensions. It's really ruined the idea of future compounding and growth. We already see the troubling warning signs there, but when we add it up we really have to say, look at all these – everything's a claim on the future. And we have all these independent, very large things, any one of which is too much already. Too much debt claiming of the future, too much equity claiming of the future, too many promises, combine all that and we have too many claims.

Gail: Even think about health insurance programs. If you have some kind of a program where you could somehow or other make everybody live to be 100, but it's going to cost you $10 million per person, and we're going to charge everybody health insurance premiums for that. The catch is you can't really afford it. You end up with a health insurance program, but it is a promise of future benefits which is not affordable and it, in a way, becomes just like all of these other things – the Medicare and the Social Security. But it becomes a promise of some kind of benefit that's just not payable with what we actually have available.

Chris: So how do you, in your mind when you look at this – a lot of your writing is around this idea of intellectually saying hey, people, here's some data. Look how this data comes forward. This was a really interesting period humans came through. You know, we went from one or two billion to seven and a half billion. We went through all the easy stuff in terms of fossil fuels. We're through the easy stuff. We're down to slightly harder stuff, and we're mixing that in with former easy stuff, so it's a blending process as we kind of blend in higher net energy stuff from the past with this new lower net energy stuff. So as you look at that where we are in this particular part of history, if you had to, Gail, set a dial, sort of an alarm scale, like one is nothing to worry about, ten is oh my gosh, we really have to be doing things differently right now to begin to confront this, where would you set that dial personally?

Gail: I think that once we left $20-barrel oil we had problems. We had to add more and more and more debt, more and more promises to try to cover up the problems. And you know, when we took our eye off the ball, when we started lowering our sights and saying oh, but maybe it's okay if it just sort of – it's not really a substitute for oil, and it's kind of expensive. Well, we could probably get along with that. I think when we didn't stop to realize that $20 a barrel oil in inflation adjusted terms is really all we could live with. And the coal and gas have to be low priced, too. And we've been covering it up with more and more debt and more and more promises. But it was very long ago that we left the what-we-could-afford kind of situation.

Chris: Yeah. And I guess that's been my main critique of the Central Banks, which I think they've got two fingers crossed behind their back. One set of cross fingers is because they're hoping, and the other is because they're lying to us about everything. And so what they're hoping for is that somehow miraculously rapid economic growth would return. And so under this model you just described, once you leave $20 a barrel oil in the past with coal and natural gas being derivatives of that price of oil, that once we left that in the past, the form of growth that we got addicted to during the heyday of high net energy or high per capita energy, that growth was no longer possible.

So we took actual organic growth that was fundamentally based and rooted on the idea of people organizing around extractable, economically extractable resources – energy and then everything else – and we replaced that with using debt as sort of a whipping – a horse whip to keep everything going. So debts been going up like crazy, but you know what we're got? These last ten years, Gail, are the lowest ten-year average global growth economically of the past sixty years. It's a really bad ten-year stretch. And so you're saying maybe we could understand that by just looking at the price of energy.

Gail: It has to be really cheap, and we have to be able to grow it really fast to keep the whole system going. And it's not affordable unless it's down under $20 a barrel. And we lost sight of the fact that you have to keep the cost low enough. I think what happens over time is that the cost of energy products has to go down. We become more and more efficient at using the energy we have. And so the way a world economy can grow is by spending less and less on energy related costs. Food becomes a smaller piece of the total cost of an economy, but so does oil for operating the cars and all of the other energy needs. But this is a long-term pattern – is a lower and lower cost so that other parts of the economy can grow.

Chris: Well now, people like to have hope, and right around now I'm sure some people are thinking hey, this is good news, Gail, because the price of solar has been dropping like crazy, and so has the price of wind power. So when I say alternative energy I'm talking solar and wind. I don’t' want to talk about hydro – separate topic – all of that. So alternative energy, solar and wind, do you see those as really viable replacements at this stage for the fossil fuels that we've been living on?

Gail: No. I think they're close to worthless. People have not stopped to figure out that intermittent electricity doesn't do much for you. In fact, it wrecks your system. It wrecks the pricing system for the electricity. And they haven't stopped to figure out that you really have to make it dispatchable. You really have to make it non intermittent, and fit in with the rest of your electricity production. What it tends to do is push out the types of electricity production that you really need to run your electrical company.

And so what happens is your nuclear power plants say they need subsidies, or they will go out of business. And that's right because you can't pay them negative amounts for the electricity they create. And you get the same problem with coal. I think it even artificially reduces the price of natural gas. So there's really a real problem for the electrical grid, and people have not stopped to figure out that you just cannot run your system on these things, on intermittent electricity.

Chris: Well, as well to that, one of my favorite videos – it a beautiful video – it's a time lapse of a wind tower going up – and what I like to do when I watch this is just see if I can spot any place where fossil fuels might be silently embedded in this. And the first thing you see is these giant CAT D9s show up to sort of level the space. And then the backhoes show up to dig out a spot. And then that spot dug out is where they're going to put in the 100 thousand pounds of steel into a multi-ton concrete base. And of course, concrete is formed from cement, and cement production requires – usually it's either natural gas or coal – it provides the heat that reduces the lime to create the concrete, the cement mix. On and on and on. Every single part of putting that wind tower up was an expression of either diesel, coal or natural gas at some point along the way. And then it produces electricity.

And my observation about that is that's cool, but it's only great if you use the electricity from that wind tower to manufacture entirely all the components for the next wind tower that's going to replace that when, not if, when, it finally becomes obsolete, it falls apart, it's no longer worth maintaining, whatever happens, right. And we don’t have any closed loop system like that, and I don’t see any plans for that at this point. I see people loving the idea that we can start to park these wind towers around and claim, wow, look at the cost of electricity that comes from that. But it's a subsidized, heavily subsidized number that has no actual bearing to the full life cycle replacement cost of that tower if we're using the energy from it to create a sustainable replacement pattern for that tower. It doesn't seem like that's too complex of an idea, but boy, you run across that almost never in print.

Gail: It's the fact that you have to somehow or other subsidize this whole system with other fuels that makes the thing such a problem. You have to have other fuels sitting there idly, and actually getting paid negative very often while – in anticipation of the time that they are needed to put out electricity to balance the wind and solar. And we don't have that built into they system. People say, oh, it's only costing four cents a kilowatt hour for wind or solar or whatever it is. Well, that isn't the cost of the dispatchable electricity. It's just of this electricity not necessarily when you need it. So it becomes a problem given the way the prices are.

Chris: Well, indeed. And the thing that would give me hope that I could say, wow, all right, I could see a path through this possibly – obviously, I don’t see a path that doesn’t require a future of less, right. I don't think 2,500, 3,000 square foot McMansions with one or two people rattling around with 38 very efficient, but each independently phantom load electricity sucking devices, so that what we see is – we can't persist with the same amount of per capita energy consumption. We'll have to make do with less. But the thing that would sort of change this for me to say – to move this from predicament to this is a problem. Predicament is not having any solutions. Problem is okay, we can do this is some form of storage.

And there's not that many opportunities for storing electricity. There's some low probability sorts of things or let me say low circumstance. There's not that many places to put in pumped water storage, and there are not that many places to put in air and cavern sort of solutions. So those will be kind of localized. But generally, we need batteries. And I still don’t see the battery thing coming along. I know people are all excited. Oh, Elon Mush, he put in a 100-megawatt plant down in Australia, but when I look at the battery chemistry, the full life cycle of how many cycles you can run a lithium battery through and how much lithium there is in the world, it just doesn’t seem to me that the chemistry of lithium at this stage is even remotely scalable to what we really need to see. I would be excited, Gail, if we had some new chemistry come along that could really change this. I haven't seen it yet. Are you at all familiar with this area? Do you look at this, and do you have a sense of whether or not that if we came up with the right kind of batteries that that could be a way to get through this?

Gail: Well, basically, I think the whole idea is silly. What happens is that you need to store the solar energy from summer to winter. So how much do you really have to set aside, and how much do you have to lose between summer and winter if you're going to store this stuff? I mean, this is just not going to work. Think about it – you know, the North Pole or the South Pole – you have a problem because it's not – it's just an hour or two difference in the timing. It's a time of year problem. And people don’t realize what a big difference it is.

I know that big battery out in Australia. They said, oh, it could provide the equivalent of the electricity for 30 thousand houses for an hour. Well, it turns out if you actually put the businesses with it that go with the houses, it would include the electricity for 10 thousand houses plus the associated businesses. So we're not talking huge amounts. We're just talking one hour for a smallish city – a smallish town probably. So the size they're talking about and the cost – it's absurd. It's not something you can do.

Chris: Well, and that's if you were willing to run the battery all the way down to zero, I bet, and you never do that with a battery because it destroys its overall lifecycle. A lithium battery run to zero has around 500 cycles in it, and if you run it to only 30 percent of its drawdown you can get up to 5,000 cycles. You would never do that because you would be damaging the battery. And of course, yes, this is the part that I find – when I said there have been some failures out there – and to me I consider it a little bit of a failure that there's not a more widespread general recognition of really how serious this energy predicament is, and that we're going to have to make some fairly serious tradeoffs over time, and we're not there yet.

And I'll give you my local example. I see houses going up in little housing developments, and they're not well insulated, and they're not oriented south, and the glazing of the windows is inappropriate, and all kinds of things which are very simple. Stuff we knew back in the 70s that if we were serious at all about this we would say every house would be facing the right direction to capture what solar is available here in Massachusetts passively. And we'd probably put some active systems on there including solar hot water which is a fantastic energy device over time – huge net energy returns on that as an idea because guess what? The sun heats stuff up brilliantly - making electricity out of it a little more complex, right. And so on and so forth. So it just doesn’t feel to me, Gail, like we're that serious about this yet, but you write a blog, and you go to conferences, maybe you have a different perception of this. Where do you think we really are in this story in terms of awareness of these issues?

Gail: Well, I think that the issue is not that you can suddenly save all of this energy, and it somehow or other will keep your system going. Even if we built all of the handful of new houses that we're building more efficiently, and even if we drove more efficient cars, it wouldn’t do much of anything. But the issue that happens is that we're facing – the crisis we're likely to face is going to look like the Depression. It's going to look like people being laid off from jobs. It's going to look like banks closing. It's probably going to look like low oil prices, low natural gas prices. And it's going to be that kind of a crisis. And even if people have a solar hot water heater, it's not necessarily going to help them that much if they have really no services, if the electricity goes off. I'm not sure what all is connected up, but there gets to be so many things that are interconnected, they may not have any water system that's working, for example.

So it becomes hard to know what you could do. How does this whole thing play out? Can we restrict it so it's only certain parts of the world economy that fall apart and not the whole world economy? But the concern is that what we're facing is not – there may be a spike in oil prices, but the general direction is down, not up. And it's not something that you can build you way out of, I don’t think. If you think about the 1930s, and that's the kind of thing that we're up against, I think.

Chris: So you're talking about a deflationary outcome, and this is a very easy to predict thing. Just economically, when you have too much debt deflation is the normal clearing mechanism for that. But in this story what's different this time is that whole world has gone on an extraordinary debt binge. So the overhang from that is likely to be extreme. As that gets worked through and goes into a deflationary spiral, low oil prices are just going to absolutely destroy the oil industry. Which the already did – we see that in four years of dismal discovery data. At some point, without additional equity and debt flowing into the shale business, we discover that that's a busted business and those companies all stop operating. So that's, I think, the model you're talking about is that they way this "resolves" itself here is by ringing out all the prior excesses. But there's so many in this story, Gail.

We discovered that our farming system was really a subsidized enterprise, and when you pull the subsidies away it collapses to a far lower state of output then it currently is. And we discover that cities are subsidized adventures in their giant resource consuming centers. They don’t produce anything, they consume, and that comes from an understanding that primary wealth and secondary wealth – from the land – those are the resources. That's the stuff that counts. So we've really been subsidizing a lot of things, probably the most important of which is this delusion, and we've been subsidizing it heavily as seen in the great signaling mechanism of the rising equity markets that signal to everybody that everything's okay. We're good. We'll put a few stories about Elon Musk out there and some big batteries and blog and feel good about this.

But the data say that what we've really been doing is borrowing heavily from a future that not only can't be larger, but may well be smaller, and that the sorts of solutions that we've been somewhat half seriously sort of poking toward which might include alternatives or one tiny home development in a giant city region that the zoning people can conceive of allowing, or whatever these things are, they're not serious given this time, the scale, the cost of what we're up against. And so what you see coming is that basically – would this be unfair to characterize it as the second Great Depression? Is that fair?

Gail: Yeah. I think that's the closest analogy we have is the Great Depression. Yes.

Chris: And so, as you mentioned, that's bank closures, entity failures, maybe a couple of sovereign defaults tossed in, a lot of people out of work. Not everybody I assume, but a lot of people, of course, because the frivolous jobs that were unnecessary go away. They no longer can be supported, so we get back down to the basics at that point. And I'm sorry this isn't the most upbeat possible way to start the year, but this is reality. So how do we go about getting people to face that reality? The data seems to work on a relatively few people. What do you think works? How do we get this across to more people going forward?

Gail: Well, if there was something that you could actually do I think it would be - people want a story with a happy ending, even if it's a made up happy ending. And that's why all of this stuff about renewables will save us is so popular is you’ve got to have some kind of a happy ending. And I haven't been able to come up with anything. Depression is just not a good outcome. And you don’t get enough energy from cutting down your forest. This is not a good idea to begin with, but that gets to be the only kind of renewable that really works when you lose the fossil fuels because you can't even maintain your hydroelectric without fossil fuels.

And so you don't have nearly enough energy to support today's population. So this becomes very disturbing. And we can party like it's 1929, but it's hard to come up with something. I'm hoping I'm not seeing something. I would like to think there's something – maybe there are little pieces that can break off that don't do well. The Yemen's of the world, even the Mexico's of the world that are not going to do well, and maybe the rest can kind of hang on for a little bit longer. But apart from putting it off a little bit, it's hard to see a solution.

Chris: Well, that's because predicaments don’t have solutions, the have outcomes. So we're at that stage where we have to manage this, and you and I haven't discussed the ecological side of this, but the data there is disturbing and increasingly disturbing. In fact, accelerating disturbing as we go into this with amphibians collapsing worldwide or reptiles as well or…

Gail: Insects.

Chris: Insects and coral reefs and phytoplankton. I mean, really bottom of the food pyramid kind of stuff which any sane, intact culture would say time out. We need to figure this out and stop doing whatever is causing that because that's not a good idea.

Gail: Well, clearly, one thing we could have done quite a while back is go to pretty much a plant based diet instead of so much animal food because that would reduce our pressure on the world ecosystem. But, of course, it would allow more people to live, so it really wouldn't do anything. It would allow the population to go from 7.5 billion to 9.5 billion or something. But that would be one way. I think that would be a more likely way of reducing pressure on a system then wind turbines and solar panels, for example.

Chris: Well, I'll tell you the way I use this macro data, which I agree, it's a predicament. I don't see any clear way through it. But the way I use it in my own personal life is to begin reducing my own energy dependence, begin growing my own food to begin preparing for the idea that many jobs may disappear, including my own. That is that I'm not taking today for granted, and I'm understanding that how things are currently arranged is unlikely to persist, and that there's a new world coming along, and that however this shakes itself out that in a thousand years there will still be people, there will still be something called an economy. All of that will be true. It will be vastly different from today.

My little waggish comment, Gail, that I tell people is I say, oh, I have every confidence that we're going to go into 100 percent renewable energy. But if you unpack that it really means that we may end up looking like people did in the 1700s which was entirely based on renewable energy. It's just whatever sun lands on your field, that's called the energy you got in that next year. So maybe we're going there, but the reason that I do what I do and think you do what you do is because there is a different path here, that we can understand these things, that we can craft a different narrative, that we could come up with something that we could believe in, but we'd have to begin doing things very, very differently. And if only we lived in a culture which valued making decisions based on available data, I think we'd be doing things very differently than we currently are.

So thank you for doing what you do. And I love your blog. People can find it, again, at ourfiniteworld.com. And Gail, it's wonderful talking with you and starting out the new year here with you. So thank you very much for being of the program. And is there anything else you'd like to tell people about where they can follow you or maybe see you speak any time in the future?

Gail: Just ourfiniteworld.com I think is what I'd suggest.

Chris: Well, fantastic. Well, thank you, Gail, so much for your time today and for the work that you're doing.

Gail: Well, thank you.

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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110 Comments

MKI's picture
MKI
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The idea we are short of energy is crazy.

<i>The crisis we're likely to face is going to look like the Great Depression...We simply don't have nearly enough energy to support today's population.</i>

The USA is absolutely awash in energy. How do we know? Price. Coal, nuclear, natural gas are all ridiculously cheap, and so much so that technologies like solar and wind are hardly worth pursuing right now. Americans drive and fly today for flat-out trivial reasons because, well, we can. We are energy rich. We don't even attempt public transport for the same reasons.

The Depression was indeed just like today, though: an oversupply of energy that drives down wages and makes good jobs hard to come by. That's the real threat, not energy shortage. The US is awash in so many energy options now it's just a matter of picking which ones to exploit.

planfortomorrow's picture
planfortomorrow
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MS.GT, you are the most

MS.GT, you are the most important voice in the world today with regards to our Oil predicament. I was honored to have heard you speak again on the truth facing the world today. Isn't it humbling to speak the truth yet be reviled for it? I admire and wish you only good health and happier times as you move forward into your life. 

Respectfully Given

Peace

AKGrannyWGrit's picture
AKGrannyWGrit
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MKI

"The USA is absolutely awash in energy. How do we know? Price."

Wow really, we should all believe we are awash in energy just because and only because of the "price"?  The word gullible jumps to mind.  What about contracts, finances, politics, traeaties, war and a whole bunch of other factors?  Who controls price and what's their agenda?  Hmmm maybe price and availability and not necessarily as transparent or as clear cut as you suppose.

Am interested in your data to backup your opinion.

AKGrannyWGrit

dcm's picture
dcm
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Vincent Price over a barrel

Like his cousin Vincent, the Energy Price story is one of horror, nightmares and special effects. Like most of Hollywood, our country's energy "plays" are over budget, self centered and lacking serious substance. .

If  America is awash in energy, why does it spend so much time in the "Killing Fields" of the Middle East?

If the USA were to add The Never Ending Cost of The Never Ending Story of These  Never Ending Wars to our true cost of energy, what's our real "Price" and would it scare us?  

If our domestic sources are awash in excess, why do our energy companies' balance sheets look like   Heaven's Gate instead of Star Wars?

In the end, even Dick Cheney,  our Darth Vader on medication, can't Force his way out of this mess.       

chipshot's picture
chipshot
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An Irony of Life

The last few minutes of this podcast got me thinking of a great irony in life:  Animals leave literal footprints all the time, but few ecological footprints.  Humans rarely leave literal footprints  (due to being on paved surface most of the time), while leaving a huge ecological imprint.

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jdsfrisco
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Yes and No...

Long debates about energy between techno cornicopians and doomers are silly. Mostly I've notice that memebrs of both groups live nearly identical lives. Same kinds of homes and apartments, same cars (an SUV and a Prius are more alike than they are different,) same flights, same food (Walmart vs. Whole Foods is a cosmetic variation,) same everything.

Personally, I live a plain vanilla regular life too, but I've made some modifications. I carry no debt. Not even a mortgage. I've super insulated my home room by room over the years and installed a high quality metal roof that reflects heat. The place basiclly doesn't need mechanical heat or air conditioning anymore. I own a car, but I live in a place where driving isn't critically necessary and only put about 2,000 miles a year on it. It's a small town that's easy and pleasant to navigate on foot and by bicycle without feeling like a loser. And I've transformed the half acre yard into a highly productive food garden and preserve the bounty with home canning, etc. https://granolashotgun.com/2016/12/27/how-to-ride-the-slide-suburban-homesteading/

I do these things because I enjoy this kind of life, and because I like knowing that I can ride out any number of serious difficulties if need be. If energy remains plentiful and cheap forever, great! If energy becomes scarce and expensive... shrug.

 

AKGrannyWGrit's picture
AKGrannyWGrit
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dcm

How interesting that you mention Vincent.  One of his movies, Vincent Price that is, was The Fall of The House of Usher (1960). The house was a mansion, big and grand like the US.  But as the twin siblings disintegrate and die the house, which we are lead to believe is alive, disintegrates and dies too. There is perhaps a lesson in the story.  Oh the story was written by Edgar Allen Poe, 1839, in case anyone is interested.

AKGrannyWGrit

MKI's picture
MKI
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If America is awash in energy, why...?

Colorful language...but what does it mean, if anything? I'm an engineer (petroleum) & only facts impress me on energy. America is indeed awash in energy by any country's standards. This is a fact, a reality. Coal? The world's largest reserves that sit untouched. Nuclear? We produce 33% of the world's supply but politics prevent using it. Oil? A huge player by anyone's view. Natural gas? Again lots of supply options; Alaska has so much they could build a pipeline and fuel our entire nation but NG is too cheap to build the pipeline. We have too much energy!

Now, oil is the liquid fuel that is hard to replace for transportation. But if oil got to $200, we would indeed see coal and nuclear and electric cars. America is just so rich we waste tons of energy and import lots of oil just because we can. But we are NOT energy short. We are energy rich. Period.

AKGrannyWGrit's picture
AKGrannyWGrit
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MKI

Well it's all a matter of perspective!  I was in Alaska before the Trans-Alaska Pipeline, during its construction and rejoiced, like everyone when the oil started flowing.  As a matter of fact I have been to Proudhoe Bay, to some of the pump stationed and to the Pipeline terminus.  It's very impressive. The oil is no longer gushing, I have heard it referred to as a trickle.  It's common knowledge up here that if and when that big oil field is targeted to be developed it will take years to get the oil out of the ground and into the pipeline.  So what are TPTB waiting for I have no idea.  The reality is, it doesn't matter how much energy there is if you can't access it, can't afford it and it's not developed.  It's like being stranded in a raft on the ocean, there is plenty of water you are surrounded by it, but what to drink?

AKGrannyWGrit

 

Snydeman's picture
Snydeman
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MKI wrote:Colorful
MKI wrote:

Colorful language...but what does it mean, if anything? I'm an engineer (petroleum) & only facts impress me on energy. America is indeed awash in energy by any country's standards. This is a fact, a reality. Coal? The world's largest reserves that sit untouched. Nuclear? We produce 33% of the world's supply but politics prevent using it. Oil? A huge player by anyone's view. Natural gas? Again lots of supply options; Alaska has so much they could build a pipeline and fuel our entire nation but NG is too cheap to build the pipeline. We have too much energy!

Now, oil is the liquid fuel that is hard to replace for transportation. But if oil got to $200, we would indeed see coal and nuclear and electric cars. America is just so rich we waste tons of energy and import lots of oil just because we can. But we are NOT energy short. We are energy rich. Period.

 

Back it up with data, numbers, and actual facts, or else it is a meme, a narrative, or an opinion. The people contributing to this site back up everything they say and post (in articles) with data to support it. If you don't do so, no one here will take you seriously. Just letting you know.

 

Ponder: What density is the coal you are quoting as our "massive reserves?" Is it anthracite? Lignite? How costly will it be to extract our supposedly huge liquid oil deposits? How large are those deposits? Why haven't we drilled them before? WHY would we be fracking (at a loss) if there were wondrous easy oil plays to be had? You might want to read Chris's recent articles on the oil problem and read his data, then go through and contest it point for point with your own data. That would gain some traction and validity.

 

I also use logic. An organism will never expend more energy to get energy than it absolutely must - I call it the "lazy law" - because to expend more energy than is needed would be foolish and inefficient; nature is many things, but never inefficient. So if we're fracking, and that fracking is way more costly than traditional "easy" oil plays would be, that tells me we are monkeys who are much higher up in the tree getting fruit...which tells me there is no more fruit lower down the tree. You, standing there at the bottom of the tree saying their is low-hanging fruit, but without providing any evidence thereof (or data to show you know what you are talking about, other than some easily-made claim of being a petroleum engineer), will not change that.

 

-Snydeman

Helix's picture
Helix
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Energy Rich. For Now.

... for now

MKI's picture
MKI
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Back it up with data, numbers, and actual facts

I backed up my position with numbers above. You didn't, you just demanded answers and made accusations without any basis in fact. You sound foolish and biased. Myself, I have no personal opinion or projections I'm offering, I'm merely dealing with reality as it is.

Fact: America is one of the wealthiest energy-rich nations on the planet. Look it up.

A few more facts, this time about fossil fuels:

1) Oil prices have recently collapsed from $150 to $60. Some shortage of energy! The sky is falling!

2) NG prices have collapsed from 4.5 to 2.8; it has fallen 25% in the last year alone.

CM had this guest on years ago, and I remember shaking my head then, just as crazy as now and has been proven 100% wrong. During that time, I've made lots of money taking the absolutely OPPOSITE position. Thank God I didn't listen to her (or CM). Regarding CM and oil, he's been so wrong the last few years there is simply nothing to say. The data speaks for itself. This isn't debatable.

Now, Art Berman, who also often interviewed on this site (and who is an actual registered petroleum engineer & quite knowledgeable about oil and energy) is excellent on the subject of energy. Makes sense; it's what he does for a living, he has to stay connected to reality and not get all wrapped up in ideology and wordsmithing. And not suprisingly I've never read anything he's said yet I disagree with. And he would never say something so stupid like the US is "running short of energy". Simply laughable. But again, he actually works in the real world. And it's sort of fun to watch Berman squirm when CM goes off the deep end on some crazy Malthusian position on energy in an interview, though...

Helix's picture
Helix
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I agree with some of the

I agree with some of the basic premises that underpin the discussion here, but...

First, much has been said about the correlation between energy consumption and economic activity, but this has somehow morphed into a causal relationship, which is not the same as correlation.  For example, we have lived in an environment of cheap energy for a century and a half now, and have lived in an economy one of whose main characteristics is fractional reserve lending for at least that long.  The unanswered questions are

  • Will more costly energy cause the correlation to change?
  • Will more (costly) debt cause the current financial arrangement to change?

I hear what Chris and Gail are saying, but I can't agree wholeheartedly with their conclusions.  First, let me just posit that the decline in oil use is likely to be somewhat of a mirror image of its rise.  If we take 1859 as the beginning of the oil era, that makes just under 160 years from then until now.  If we assume we're somewhere near the peak now, that implies that the oil era will close out sometime around 2180 or or thereabouts.  Widespread oil consumption will ramp down somewhat sooner, of course, but certainly not tomorrow.

Gail's comments are based almost entirely on the premise that energy consumption patterns will stay pretty much what they are now.  This just isn't going to happen.  Furthermore, considering only wind power and photovoltaics leaves out huge areas of energy usage that will almost certainly come into focus as energy resources become tighter and more expensive.  My guess is that passive solar heating of domestic living spaces and water will become the norm for new construction in temperate climates.  Housing insulation will dramatically improve.  In tropical and sub-tropical regions, now construction will focus on making use of convection to promote air flow through living spaces. 

I also think that industrial-level energy storage across large time frames will prove to be infeasible and that industrial activity at any distance from hydroelectric power stations will have no choice but to adapt to intermittent energy regimes.  The old adage about making hay while the sun shines will once again become more than just an adage.  "Home economics" will regain some of its former meaning and dignity.  "Victory gardens" might once again dot the urban and suburban landscape.  Streetcars, walkable communities, and inland waterways will enjoy a revival.  Oh, and forget the internet.  This is going to be a case of very tough love, but it -will- in fact happen.

As far as the current financial regime goes, I have no idea whether fractional reserve lending will survive the cheap-energy era or not.  My guess is that it will, but this is only a guess.  It's pretty clear to me that a large portion of our current debt is going to be repudiated in one way or another, but just what that means for the future of the financial system remains to be seen.

I'm quite sure that the future is not going to resemble the past.  I'm not as sure that the time frame is 20 years starting in 2008, as has often been stated.  I'm also sure that we're going to have a robust economy going forward, although perhaps operating under a different financial and technological regime.

Barring WWIII, and no new and practically limitless energy technology such as fusion of deuterium becomes technically and economically viable, of course.

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themccarthyfarm
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If we are awash in fuel how long will it last?

Are we going to be able to double the amount of fuel the world puts out in the next 70 years?  To me that seems highly unlikely.  How many new people are we going to add in the next 70 years?  If we use the past to project forward we should have twice as many people in that time.

The real crisis has already taken place.  We just haven't realized it yet.  The world has added more then 4 billion people, well over twice, since 1960, just 58 years ago.  That was the cause of the crisis we are facing today.  

The chance of doubling fuel production or population in the next 70 years is nearly zero.  But what is going to stop population from doubling?  As Chris and Gail said, it will be a lack of resources, all resources;  food, water, fuels, metal, wood, you name it.  So the death birth rate will at least equal out.  More likely it will swing sharply in the other direction and in a hundred years there will be a lot fewer people on earth.

As Gail said there really isn't a happy ending to this story as much as we all want there to be.  Some of us can feel smug because we saw it coming but what are we really going to do? 

I think Chris and Adam are pretty close with their book "Prosper" , do what you can to make life comfortable in the near future, love your family and friends and enjoy what you have now/

AKGrannyWGrit's picture
AKGrannyWGrit
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Dear MKI

Dear MKI,

I am taken aback, embarrassed.  I found your last post (13) to be insulting, disrespectful and contemptuous.  Dr. Martenson is the Host of the Podcast and Ms. Tverberg is his guest., they deserve our repect!  We each have the opportunity to listen and take away what we agree with and leave the rest.  Having already listened to a previous Podcast and disagreed with the presenters the respectful course of action would have been to skip this podcast rather than listen and then attack the presenters because you don't agree with them.

In your posts there are statements like "the data speaks for itself.  It isn't debatable".  or "We are energy rich. Period"  These statements shut down debate..  It's as if there is an expectation that we should all agree with you, without question, hook, line, and sinker, no debate!  

I come to this site to learn, and more often than not my thought is maybe, maybe not, I will have to ponder and read, search and learn more.  No one, let me repeat that no one has a corner on the truth or reality!  Each and every person that comes to this site has a unique perspective.  That is one reason I stick around because there are not a lot of silver haired Grandma's here and just maybe I can offer a perspective, on occasion that others don't have.  In order to learn and grow and create change we need polite and respectful debate and the only way to do that is to listen and respond with politeness and compassion.

Stephen Covey's 6th Habit of Highly Effective People is "Seek first to understand and then be understood".

I think you owe Dr. Martenson and Ms. Tverberg and apology..  

AKGrannyWGrit

 

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themccarthyfarm
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If we are awash in fuel how long will it last?

Are we going to be able to double the amount of fuel the world puts out in the next 70 years?  To me that seems highly unlikely.  How many new people are we going to add in the next 70 years?  If we use the past to project forward we should have twice as many people in that time.

The real crisis has already taken place.  We just haven't realized it yet.  The world has added more then 4 billion people, well over twice, since 1960, just 58 years ago.  That was the cause of the crisis we are facing today.  

The chance of doubling fuel production or population in the next 70 years is nearly zero.  But what is going to stop population from doubling?  As Chris and Gail said, it will be a lack of resources, all resources;  food, water, fuels, metal, wood, you name it.  So the death birth rate will at least equal out.  More likely it will swing sharply in the other direction and in a hundred years there will be a lot fewer people on earth.

As Gail said there really isn't a happy ending to this story as much as we all want there to be.  Some of us can feel smug because we saw it coming but what are we really going to do? 

I think Chris and Adam are pretty close with their book "Prosper" , do what you can to make life comfortable in the near future, love your family and friends and enjoy what you have now.

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We're at Peak Population — mostly

If the statistics and analysis on https://econimica.blogspot.com.au/2016/11/what-world-looks-like-x-africa... are correct, then the only part of the world where the population is growing is Central Africa.

This not good for Africa:

Sadly, the lack of growth in the rest of the world coupled with the ZIRP/NIRP driven overcapacity of nearly everything means there is no pathway for Africa to export themselves to prosperity.

He continues:

The global under 45yr/old population have essentially peaked, will flat-line for a decade, and then begin what appears to be a very long decline. THAT IS A BIG DEAL. With interest rates already at zero, debt and overcapacity rampant, and no population growth anywhere that matters (economically)...that means the current game premised on growth is over. The only question is what will the new game look like? Clearly the issues we face mean free-markets will not be allowed nor is a democracy seemingly capable of voting for long term solutions that mean significant short term pain. In truth, neither functioning markets nor functioning democracy's appears to exist any longer.

So, how are we going to feed Africa? Can we, even if at the moment the world grows more than enough food for everybody?

By the way, in Australia the only thing keeping our population growing is an immigration ponzi scheme run by desperate governments of all political complexions.

The whole thing looks to me rather like Jim Kunstler's long descent, and it started a few years ago.

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Habit #5

Habit #5 not 6

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Whack-a-Mole

MKI and Helix remind us about the quality of evidence and analysis. In my experience both sides in a debate are usually able to adduce fine-looking data and interpretation to support their position.

For example, on the Automatic Earth website there's one lone commenter who appears firmly convinced that climate change is not taking place, and from time to time he produces statistics and/or graphs to support his position. Some of these appear quite authoritative and I need to verify them, set them in context, etc. For lack of time the best I can do is to file them away "for future analysis," a future which never arrives.

The situation degenerates into a game of whack-a-mole, with each side seeking to knock down the other's claims. My personal policy is not to make claims in the comments stream without being able to show some form of evidence to back them up. Often a website URL suffices.

This doesn't mean I can't make comments. This is a different category completely.

At the moment I trust Chris' research and analysis. He has the educational background, the aptitude and ability to find, collect, analyse and report on data from a wide variety of sources — his reports never strike me as wild or fanciful — and he does this full-time. I am particularly pleased with his policy that he reserves the right to change his mind, that if he finds better data then he will use that, and so on. He is no politician.

As for me, I have other necessary things to do in my life and I must attend to these. For the most part, all I can do is I cross-check what I read on PP by reading other websites and literature, being careful to avoid the echo chamber syndrome.

I find general agreement among them: the climate is getting hotter, the oil supply is at peak cheapness, the oceans are being stripped of fish and refilled with plastic, and so on.

I am grateful to Chris (and many others) for helping open my eyes.

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Yes

crazy Malthusian” was enough for me. I mean, “malthusian” as a pejorative is usually enough as a thought stopper, but that really was some heavy artillery. It’s as crazy as believing this Cabernet in my glass will eventually run out, and that it will then take more energy to go and get the bottle rather than reach for the glass. And then, when the bottle runs out, I’ll have to go to the merchant in my car, 3 bloody miles! And get dressed, find the keys, spend some money...... Well, i could swing free I suppose, nah, too cold

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You are an engineer?
MKI wrote:

I backed up my position with numbers above. You didn't, you just demanded answers and made accusations without any basis in fact. You sound foolish and biased. Myself, I have no personal opinion or projections I'm offering, I'm merely dealing with reality as it is.

Fact: America is one of the wealthiest energy-rich nations on the planet. Look it up.

A few more facts, this time about fossil fuels:

1) Oil prices have recently collapsed from $150 to $60. Some shortage of energy! The sky is falling!

2) NG prices have collapsed from 4.5 to 2.8; it has fallen 25% in the last year alone.

 Actually, you didn't back up anything with facts.You used grandiloquent words and assertion without offering any charts, any sources, or any hard data. Your argument was as self-fulfilling (I'm right, as evidenced by me being right, therefore I am right!) as it was absent any actual data points. Oh, and about those "facts;"

 

1) "Recently?" Who does your data gathering, a five year old? Oil prices actually never quite hit $150, and they fell to close to $25 a barrel about eight years ago before recovering. Here's a chart to show you. Look...data! Sourced, too! You should try it sometime. You sound like a corporate shiv, an idiot with an axe to grind, or both. There, now we've both name-called. Feel better? I don't, because that's not how things are done here. Argue with intellect and logic, not emotion and supposition.

 

2) Damned good thing all our cars, planes, and transport vehicles run off of NG. Oh. Wait. You really think that conversion happens overnight? You are an engineer?

 

Now, I challenge you to offer a point-to-point, data-driven, and well argued counter-argument to Chris's most recent article, found here. I'll even send you a copy of the second-half of the article (behind the pay wall) so you can chew on that a while too, because it's chocked full of data, charts, sourced links, etc. Then, if you can, you are free to pick apart his data point by point using your own well-researched and sourced data.

MKI wrote:

Now, Art Berman, who also often interviewed on this site (and who is an actual registered petroleum engineer & quite knowledgeable about oil and energy) is excellent on the subject of energy. Makes sense; it's what he does for a living, he has to stay connected to reality and not get all wrapped up in ideology and wordsmithing. And not suprisingly I've never read anything he's said yet I disagree with. And he would never say something so stupid like the US is "running short of energy". Simply laughable. But again, he actually works in the real world. And it's sort of fun to watch Berman squirm when CM goes off the deep end on some crazy Malthusian position on energy in an interview, though...

 

No one said we are running short on energy. What people on this site and others have been saying is we are running short on the cheap, easy, high EROEI (that's energy return on energy invested, by the way) energy. Namely, the cost of exploration and exploitation is rising to the point where there is less and less net excess energy left over for society to use. Declining EROEI is the potential incoming hazard, not running completely out of energy. There have even been papers published on this very topic. The difference between running out of energy versus running out of cheap energy is a subtle distinction I'd expect a petroleum engineer to understand. Where do you work again?

 

So, back it up with data and evidence, if you are capable thereof. You may disagree with Chris all you want - in fact it is encouraged here - but the rules of the road demand you do so respectfully and with actual data and facts.

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I have no objections

I think the turn from positive to negative on the population front maybe a little slower than you suggest but otherwise I agree with you.  Too many people and not enough recourses is the problem but it looks like an economic problem on it's face.  How do you feed anyone when there is no economic system?

I live on a small farm where we can grow lots of food, our house produces all it's own energy and we have no debt.  But if the economy took a really bad nose dive we would be in trouble.  It would seem we would be somewhat better off than those with less preparation but what would I have to do to keep what I have?

I repeat;

As Gail said there really isn't a happy ending to this story as much as we all want there to be.  

There will be a lot less people on earth in a hundred years.

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NOT Kunstler's long descent

1949. thank you very much for bringing up these discussion worthy points.  Except for Africa the world population is definitely leveling off in a nice manner as you point out. 
This is perfect timing for advanced technology to make most undesirable jobs obsolete. This is great for everyone except the banksters who are placing many "news" reports in their broadcast control media about the dire consequences to others when the banksters lose their free money stream from exponential growth fiat schemes.  . 

Countries like Japan are greatly improving since they had too many people already, despite what the bankers tell you via the NYT and other banking run rags.  Contrary to the banker's published rantings and lament that THEIR ponzi scheme is blowing up in Japan, Japan does not need more people, and old people in Japan WANT to work and are resigned to the need for a currency collapse (something the country has experienced at least 5-10 times already and can deal with very well).  Moreover, the banker-media-lamented population decrease provides abundant, very beautiful, productive, and inexpensive land to for anyone who can escape cell-phone virtual reality and leave the city for a better life based on physical reality.  

This is NOT a long descent.  It just feels that way to a N American who is finally coming down to reality and no longer steals resources from the rest of the world and lives profligately based on old oil burning dreams.

Kunstler and other doomers in N America do not represent or speak for humanity. 

The normal (average, bulk of) people on this planet are enjoying a better existence just NOW and look forward to an even better future.  Forget the spoiled overindulged, narccisstic, underskilled under performing N American's view of their crumbling world. The people who create wealth (and support the spoiled Americans by sending that wealth to them) greatly outnumber the Americans (and W Europeans) and are creating a sustainable world now. Moreover, they are very optimistic and look forward to the future.  Their opinions count because they do most of the real work on the planet and they are the big majority.  The US mass media and doomer media represent the views of a spoiled minority who are looking at the past. 

The energy discussion in this thread suffers from this bias and has severe assumption flaws, which require a weekend seminar or the like, to sort out.

As mentioned previously I was in a major Chinese city last Fall wherein more than half of street traffic was on electric vehicles that consume 10-50x less energy compared to that found in America (and were fun). The discussions in America are based on facts and comparisons drawn from the golden age of 3000 pound vehicles running around on giant highways as a focus (as one example).  Another example is that American "experts" with PhDs in "environment" are squirting out resume stuffing  articles on things like how phosphate mines will run out and we have to recycle poop and even that is not good enough for long term agriculture, and topsoil is disappearing etc.(lamenting an imagined long descent)  Meanwhile the Asians who support these dilettantes by working hard and sending wealth to them have been recyling THEIR waste for more than a thousand years and have steadily built up their soil for increasingly excellent agriculture, and are now reducing their populations.  I asked a few Japanese if they were worried about food sufficiency and they just laughed and reminded me that the population is decreasing.  Also I note that much land has gone fallow (including productive orchards) due to low prices.  If you want to see the future go to Asia and try to move past the rotting American empire and its antiquated suburban lifestyle.

The amount of energy consumed in basic industrial processes and in living (including heat pumps, transportation, communication, etc) is drastically decreasing for those societies that are not mired in their past petroleum laced golden years such that the amount of renewables needed for a luxurious life is rapidly approaching the break even point. 

How many people are using petroleum consumption American profligancy as a measuring stick for how much energy is required to avoid "the long descent!!!". 

How many people are familiar with the Edo period wherein 20-30 million people lived in an area the size of California for more than 200 years completely sustainable (no net energy use) and developed a polite and civilized culture and WITHOUT any off the technology we have now?  Maybe the real issue is the lack of spirit in a small minority of the world's population that is too self absorbed to see what the leading countries are up to.
 

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double posting

double posting seems to be associated with a refusal by captcha to accept a first posting, prompting a retry

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Hoping for Kunstler's long Descent
Mots wrote:

1949. thank you very much for bringing up these discussion worthy points.  Except for Africa the world population is definitely leveling off in a nice manner as you point out. 
This is perfect timing for advanced technology to make most undesirable jobs obsolete. This is great for everyone except the banksters who are placing many "news" reports in their broadcast control media about the dire consequences to others when the banksters lose their free money stream from exponential growth fiat schemes.  . 

Countries like Japan are greatly improving since they had too many people already, despite what the bankers tell you via the NYT and other banking run rags.  Contrary to the banker's published rantings and lament that THEIR ponzi scheme is blowing up in Japan, Japan does not need more people, and old people in Japan WANT to work and are resigned to the need for a currency collapse (something the country has experienced at least 5-10 times already and can deal with very well).  Moreover, the banker-media-lamented population decrease provides abundant, very beautiful, productive, and inexpensive land to for anyone who can escape cell-phone virtual reality and leave the city for a better life based on physical reality.  

This is NOT a long descent.  It just feels that way to a N American who is finally coming down to reality and no longer steals resources from the rest of the world and lives profligately based on old oil burning dreams.

Kunstler and other doomers in N America do not represent or speak for humanity. 

The normal (average, bulk of) people on this planet are enjoying a better existence just NOW and look forward to an even better future.  Forget the spoiled overindulged, narccisstic, underskilled under performing N American's view of their crumbling world. The people who create wealth (and support the spoiled Americans by sending that wealth to them) greatly outnumber the Americans (and W Europeans) and are creating a sustainable world now. Moreover, they are very optimistic and look forward to the future.  Their opinions count because they do most of the real work on the planet and they are the big majority.  The US mass media and doomer media represent the views of a spoiled minority who are looking at the past. 

The energy discussion in this thread suffers from this bias and has severe assumption flaws, which require a weekend seminar or the like, to sort out.

As mentioned previously I was in a major Chinese city last Fall wherein more than half of street traffic was on electric vehicles that consume 10-50x less energy compared to that found in America (and were fun). The discussions in America are based on facts and comparisons drawn from the golden age of 3000 pound vehicles running around on giant highways as a focus (as one example).  Another example is that American "experts" with PhDs in "environment" are squirting out resume stuffing  articles on things like how phosphate mines will run out and we have to recycle poop and even that is not good enough for long term agriculture, and topsoil is disappearing etc.(lamenting an imagined long descent)  Meanwhile the Asians who support these dilettantes by working hard and sending wealth to them have been recyling THEIR waste for more than a thousand years and have steadily built up their soil for increasingly excellent agriculture, and are now reducing their populations.  I asked a few Japanese if they were worried about food sufficiency and they just laughed and reminded me that the population is decreasing.  Also I note that much land has gone fallow (including productive orchards) due to low prices.  If you want to see the future go to Asia and try to move past the rotting American empire and its antiquated suburban lifestyle.

The amount of energy consumed in basic industrial processes and in living (including heat pumps, transportation, communication, etc) is drastically decreasing for those societies that are not mired in their past petroleum laced golden years such that the amount of renewables needed for a luxurious life is rapidly approaching the break even point. 

How many people are using petroleum consumption American profligacy as a measuring stick for how much energy is required to avoid "the long descent!!!". 

How many people are familiar with the Edo period wherein 20-30 million people lived in an area the size of California for more than 200 years completely sustainable (no net energy use) and developed a polite and civilized culture and WITHOUT any off the technology we have now?  Maybe the real issue is the lack of spirit in a small minority of the world's population that is too self absorbed to see what the leading countries are up to.
 

Mots,

I don't disagree with what I believe is your underlying premise that sustainability or quality of life can and should be achieved and arguably improved on significantly less energy per capita. Or that North America is the poster child for profligate energy waste.  

That said,  the notion that Asia somehow represents the vanguard of this back to the humanure tilled land movement with intentional population degrowth aided by drudgery reducing smart technology ignores the reality that on a percentage basis those 'super efficient' electric vehicles in that Major Chinese city were and currently are primarily powered by coal. or that China is now the largest market for Cars and it's oil consumption is a close number 2 behind the US and closing the gap. With numbers 3 and 4 oil consumers being India and Japan.  Indeed  the bulk of Japan's economy is predicated on consuming energy to produce industrial output tools, vehicles and machinery.     Asian countries are no less rapacious in their exploitation of natural resources around the planet than North Americans or any other Western countries for that matter.  In many cases they are worse  due to lack of regulatory interference.   Last time I checked every country in the world 's economic models and policies are still predicated on an assumption of growth.

And it ignores the intractable nature of the predicament facing Industrial civilization i.e., that population overshoot is a function of this windfall of fossil fuel energy exploitation which is to say a symptom not a cause.  And the path down Hubbert's curve is going to look very different than the happy times climbing up.   (FWIW the meaningful time scale here is about 80 years not 160 as another posted)  The sheer scale of necessary population reduction over this time period is stunning. Japan may indeed be reducing it's population but it's not intentional.  There is no way for everyone to " go back to the land" or hunt and gather  without the fossil inputs there is no way to feed 7.5 - 9 billion people with the available natural resources

Again I agree that is the right direction and appropriate ethos, but the idea that we can revert to a 'no net energy' social construct like Edo Japan without the displacement and catastrophic disruptions to world society is to my mind are far fetched and also ignores the damages we have done to global eco systems.

Also, those advanced efficiency technologies that you speak of are a form of complexity that is part and parcel of the whole industrial system. You can't take the 'industrial' out of civilization without huge doomer like repercussions.  You can't mine for precious earths and minerals  with solar powered excavators.  Complexity is a function of and integral to the energy throughputs of a system.  Energy density of fossil fuels is responsible for those complex technologies and their production.

I would say that the problem is with the intersection of human nature and industrialism itself not one region or another...the Monkeys with bulldozers' dilemma if you will.   Even the bulk of the worlds populations living 'better' without North American excess that you refer are part of and dependent on industrial civilization.

 I hope we get Kunstler's long descent, the longer the better for transition.  My concern is that instead we get a short descent, as the wheels come off fossil fuel powered industrial society and we crash and burn.

 

Mememonkey

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Kunstler once

called it, long descent, the "remedievalization" of western culture.

hope your mare is settled

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22
Helix wrote:

I hear what Chris and Gail are saying, but I can't agree wholeheartedly with their conclusions.  First, let me just posit that the decline in oil use is likely to be somewhat of a mirror image of its rise.  If we take 1859 as the beginning of the oil era, that makes just under 160 years from then until now.  If we assume we're somewhere near the peak now, that implies that the oil era will close out sometime around 2180 or or thereabouts.  Widespread oil consumption will ramp down somewhat sooner, of course, but certainly not tomorrow.

I'll open this with the number 22.

In the past 22 years half of all the oil burned throughout all of human history, has been burned.  The reason is that we're burning a percent or two more each year than the last.  That means we're using it in an exponentially driven fashion.

Which means that taking a straight line approach to timing can be, actually is, wildly misleading.

Second, the oil in the early years was the low hanging fruit referred to above.  With such fruit one can do all sorts of fun things, like waste it or build out an enormously complex economic system that supports the increasingly difficult and energetically expensive proposition of getting to the higher fruit (much of which is barely ripe, and not as sweet as the lower fruit was).

Which means that assuming the upslope and the down slope of oil production will be similarly experienced is a false proposition.  The upslope is easy and fun, the down slope is dangerous and hard.  

My prediction is that much of the most difficult oil will never be accessed, even though technically doable by today's standards.  The necessary organization and complexity will simply not be there.  We'll have to make other arrangements.

22.

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The trends all agree with your conclusion
themccarthyfarm wrote:

I think the turn from positive to negative on the population front maybe a little slower than you suggest but otherwise I agree with you.  Too many people and not enough recourses is the problem but it looks like an economic problem on it's face.  How do you feed anyone when there is no economic system?

I live on a small farm where we can grow lots of food, our house produces all it's own energy and we have no debt.  But if the economy took a really bad nose dive we would be in trouble.  It would seem we would be somewhat better off than those with less preparation but what would I have to do to keep what I have?

I repeat;

As Gail said there really isn't a happy ending to this story as much as we all want there to be.  

There will be a lot less people on earth in a hundred years.

I’m trying to find a different conclusion than yours, but I am unable to.  I could find one if we humans immediately began doing things differently, but our belief systems are so entrenched, and people fight change so ferociously, that we’re going to “progress” ourselves right into a big disaster. 

And because everything is interconnected, we have to look at it all in proper context.  For example, the economy where debts are accumulating exponentially and at twice the underlying rate of economic growth and at 4x the rate of energy expansion.  That’s unsustainable.  What happens when a global pile of debt so enormous collapses?  It’s hard to posit how that happens without war, or the loss of a vast swath of unnecessary financial institutions, weaker member states, and a huge class of left-behinds.

We also have to look to the ecosystems where, frankly, the data is thoroughly depressing and alarming, or both.

Nothing can be examined in a vacuum anymore.  We are out of the prior times where abundant absorption buffers existed to hide our external effects from us.  The externalities are now here.

It’s starting to creep into the mainstream consciousness as this very recent Bloomberg article drives home:

Ecosystems are Collapsing, Food Bowls Are Next

Jan 8, 2018

The world we grew up in is disappearing.

From the tropics to the poles, the effects of climate change are transforming environments that humans have known since prehistory.

Chances of saving the world's coral reefs are disappearing because of mass bleaching, according to a paper by scientists on four continents published in the journal Science last week. Such events, caused by warmer-than-usual waters, had never been observed until the 1980s, but are now occurring once every six years. Many marine biologists now believe they'll see the demise of coral reefs worldwide within their lifetimes.

Similar trends are afoot in colder climes. The Arctic shows no signs of returning to the conditions of reliable ice cover that have persisted at least since data was first collected in the late 19th century, scientists at the U.S. National Oceanic & Atmospheric Administration wrote in an annual review last month. Permafrost temperatures hit record-high levels in 2016, and the region as a whole is warming at twice the global rate, they wrote.

If you think that's the worst thing the coming century of climate change has in store, check what's happening to agricultural land.

Production from the world's farms needs to grow at a headlong pace over the coming decades. Rising populations and growing incomes that are already driving up consumption of land-intensive produce such as meat mean demand for farm products will rise between 70 percent and 110 percent between 2005 and 2050, according to the UN's Food & Agriculture Organization.

Usable land, though, is expected to barely increase. Despite warmer climates opening up frigid stretches of Canada, Russia and China to agriculture, desertification and degradation elsewhere means the area of land considered moderately or highly suitable for agriculture will only rise from 33.2 million square kilometers to 34.1 million square kilometers toward the end of this century, according to one 2014 study.

For decades now, humanity has mostly kept its edge in the race between farm productivity and starvation. In the future, we'll be running faster just to keep up.

And all of that is based on a “business as usual” assumption set.  There’s no latitude in there for massive climate disruption, or for a loss of fertilizer production, or for an outbreak of new pest or plant disease that might mirror the fungal parasites that are now eliminating both amphibians and reptiles across the globe.

But perhaps some hormone mimetic will come along and utterly disrupt things before then.  You know, something so startlingly effective that it might cause human sperm counts to decline by 50% in just 40 years, or contribute to something even more alarming such as cause an oceanic turtle population to swing to a 99% female ratio.

Changes such as these are so alarming individually, that it’s difficult to combine them and make any sense of them.  The only possible response seems impossible which is to immediately stop doing…what exactly?  Well, all of the things that are new in the past 40 years, I suppose. 

As I said, that seems unthinkable.  But we have to keep trying to raise awareness, as cranky as that makes some people.

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It's easy

To cherish what remains of the Earth and to foster its renewal is our only legitimate hope of survival. Wendell Berry

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To whoever is left,

“Until we understand what the land is, we are at odds with everything we touch. And to come to that understanding it is necessary, even now, to leave the regions of our conquest – the cleared fields, the towns and cities, the highways – and re-enter the woods. For only there can a man encounter the silence and the darkness of his own absence. Only in this silence and darkness can he recover the sense of the world’s longevity, of its ability to thrive without him, of his inferiority to it and his dependence on it. Perhaps then, having heard that silence and seen that darkness, he will grow humble before the place and begin to take it in – to learn from it what it is. As its sounds come into his hearing, and its lights and colors come into his vision, and its odors come into his nostrils, then he may come into its presence as he never has before, and he will arrive in his place and will want to remain. His life will grow out of the ground like the other lives of the place, and take its place among them. He will be with them – neither ignorant of them, nor indifferent to them, nor against them – and so at last he will grow to be native-born. That is, he must reenter the silence and the darkness, and be born again." Wendell Berry

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Things that make you applaud

Chris wrote:

I’m trying to find a different conclusion than yours, but I am unable to.  I could find one if we humans immediately began doing things differently, but our belief systems are so entrenched, and people fight change so ferociously, that we’re going to “progress” ourselves right into a big disaster. 

And because everything is interconnected, we have to look at it all in proper context.  For example, the economy where debts are accumulating exponentially and at twice the underlying rate of economic growth and at 4x the rate of energy expansion.  That’s unsustainable.  What happens when a global pile of debt so enormous collapses?  It’s hard to posit how that happens without war, or the loss of a vast swath of unnecessary financial institutions, weaker member states, and a huge class of left-behinds.

We also have to look to the ecosystems where, frankly, the data is thoroughly depressing and alarming, or both.

Nothing can be examined in a vacuum anymore.  We are out of the prior times where abundant absorption buffers existed to hide our external effects from us.  The externalities are now here.

“A fire broke out backstage in a theatre. The clown came out to warn the public; they thought it was a joke and applauded. He repeated it; the acclaim was even greater. I think that’s just how the world will come to an end: to general applause from those who believe it’s just a joke.”

Søren Kierkegaard

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MKI

MKI, you seem to be missing a critical point when you say that the US is awash in energy, which is absolutely correct. It's the "petrodollar" and "trade deficit". The US has to import from 1/3 to 2/3 of the oil it consumes, not sure what the figure is today. Why has the US done this if it has huge reserves of easy oil?

The concern is what will happen when the petrodollar status is lost? This could occur over a span of weeks. 

I would tend tend to agree that there may be some good remaining oil left in currently protected areas that could be opened up when needed. The point there is, all it will do is buy the US a few more years. It will also take time to get these new reserves opened up. 

You say that Art Berman doesn't share these concerns about oil? Really? Just the other week I was reading an article of his which was very concerning about peak oil. I can provide you the link in a couple days since I'm currently on the road using my crappy iPhone 4.        

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Helix, I agree fully wit your position.

Helix, your comment is very much on target. Well written.

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The chance of doubling fuel production

I don't think we will need to so so. We merely use this much fuel because we can. Remember, 70% of the oil barrel is in transportation, and basically very little of it is needed at all. We just use it because we are rich. It would be easy to replace it with public transport or just living closer.

Same thing with population. We have a burginging population because we can. If you don't breed, somebody else will fill the space and utilize the resources. This is simple natural selection. You either play the game or get replaced until we fill our natural environment and fully utilized our environment. As of now, due to technology, we haven't even got close to filling our environment. QED.

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It's All About EROI

I appreciate the lively conversation on this topic and I refer you to a series of posts on The Oil Drum, where I first became acquainted with Gail's awesome analysis. 

Why EROI Matters

Energy Returned On Energy Invested

It's pretty simple.

I am grateful the Oil Drum archives remain available to us.....

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You say that Art Berman doesn't share these concerns about oil?

First, I never claimed to know what Art thinks, I merely said I've never heard Art say anything I disagree with. And who said I was "unconcerned about oil"? I'm quite concerned. It's my livelihood. I just bought a lot of EXX stock, so I'm concerned :-). But am I concerned about "running out" anytime soon? No. I wish! But if the price ever gets to say $200 for a long period of time, we should be getting near peak production worldwide. It will be a good time to be working in oil. I just don't expect it very soon. Can only hope...

Second, of course oil will peak sometime. I just am not foolish enough to claim to know when. Way too multilateral.

Third, peak oil, or peak liquid fuel, is not an issue with "energy". We only use (and waste) lots of oil because, well...we can! We're rich and awash in nearly all types of energy (coal, oil, NG, nuclear, you name it) so and live like we are rich. Now if we were in Japan and had to import everything I might be more concerned. But just look at our massive housing SF footprint and how far we travel by car or plane just because we can. What a waste. It's nice being rich, I guess. Just please don't claim we are "energy poor". We're not.

Fourth, I would love high oil prices for personal reasons. Would be much better for our culture in many ways IMO too. But unfortunately we are nowhere close right now. We are not even at $100/bbl yet.

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Perspective

 Just please don't claim we are "energy poor". We're not

Sorry I can't resist offering a different perspective.  I have a friend driving the Alaska highway right now and she said they are taking "extra" fuel because they might not be able to get fuel thus time of year.  I imagine if they ran out of gas they would feel "energy poor"!  Just because people say we are awash with energy does not equate with heat in our homes or fuel in our vehicles or cheap anything.  One of my kids made the mistake of buying a home with electric heat and their bill was $700 last month.  They sure wouldn't think we are an energy rich nation as a matter of fact they would adamantly say they are energy "poor"!

When one steps down from the 500' level and talks about PEOPLE the energy story isn't rosy.

AKGrannyWGrit

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Hi Chris, and thanks for your

Hi Chris, and thanks for your response.

I'm not willing to hang my hat on the number 22.  This number falls in the category of "past performance", and as we all should know by now, "past performance is no guarantee of future returns."

The logic is simple, and to my way of thinking, compelling.  As supplies tighten, prices rise relative to what people can afford.  This will cause demand to decline, which will tend to restrain the price rise.  So in my view, the long-term trend will be rising prices relative to incomes, but the rate of advance will be tempered.  As more and more people use oil more and more efficiently, or stop using it altogether for certain purposes, demand will continue to ramp downward.  As the process continues, the economics of production will be altered and oil usage will become focused on essential activities.  The bulk of society will redeploy around the new reality of oil (and energy generally) scarcity.  It is exactly the transition from abundant, cheap energy to scarce, expensive energy, and the altered supply vs demand paradigm that that implies, that will cause to downhill slide to extend for many decades.  So I'm thinking that the ramp down in usage will, in rough outline, mirror the ramp up.

There's no question that it will be a bumpy ride downhill.  Ideally the bumps will be manageable.

I am aware that my analysis does not reach the same conclusion as that reached in the Club of Rome's "Limits to Growth".  I tread lightly when disagreeing with this study.  But the differences are more a matter of timing than of trend.  Perhaps someday I will find the time to develop my own model and put my basic logic to the test.

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Helix...here's my basic concern in one chart

First, excellent conversation, we all get to check our assumptions and data.  Well, at least those willing to provide data.

Here's my most important chart of the future:

You said:

The bulk of society will redeploy around the new reality of oil (and energy generally) scarcity.

While 'society' may reorganize itself, because of course it will have to, I sincerely doubt that an exponentially-based system of credit will be able to pull off such a feat.

We are all fish in water....so "what is water"?  Hard to detect when you are the fish.

Except our question is "how important has access to high net energy BTUs from fossil fuels been to everything we see around us"?

About as important as water is to fish I would propose.

 

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Love The Analgy

Love the analogy Chris.  I was thinking of oil specifically as being the life blood of a person and that person as being septic.  A person can go for a while and not know they are septic but there comes a point that without immediate and intensive intervention that person will hit a tipping point and death follows.  I suspect that a hiccup in oil distribution for whatever reason will cause major disruptions and crisis for many.  I remember post 1964 Alaskan earthquake when bridges were out.  So how healthy is the patient?

AKGrannyWGrit

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Ha

I always thought Chris was a closet clown........ Could I borrow your shoes and your squirty bow tie Chris, I think it may help people on this side of the pond ignore me even more?

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Looking forward?

Adam: Maybe you should extend an invitation to the Sebastopol seminar to Oprah. Awareness to the Crash approaching is one way to "face that probability! If Gail is right, maybe it is time to capture the American spirit with a "happy story". If the U.S. isn't a "storybook" world, I don't know what is.Yes, Chris, if we don't change the perception, the status quo will continue. The apocryphal tone which seems rampant, especially in the U.S., does nothing but allow us to stick our heads in the sand. The current political cynicism of TPTB only confirm that

"we know the price of everything and the value of nothing" 

 

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Perspective

AKGran (btw I'm in Anchorage how's that for a coincidence?): Look, the reason I "stay at 500 ft" is because we Americans are so rich we can't see reality up close. We can't remember how normal people in the world still live and how we used to live.

The US housing footprint is twice the SF it was in 1950, yet our families are 1/2 the size as then. Think: one bath used to be the norm for a large family. The reason people have a hard time heating their homes today? We live in huge SF in isolated small families like only rich people used to. Meanwhile, why not walk or bike (we've done this for years in a cold climate, it's much healthier). With double-digit size family we can easily live in 1200 SF as well. Why don't people just cut back and live within their means if times hare hard?

If people just lived in extended families, got along better, stopping divorcing and arguing, walked and biked, stopped eating out, cooked heathy food at home, lived close to work...us oil producers would probably go out of business (yikes). So no, I'm not very sympathetic to a people consume resources like they are rich while going into debt to fund it all...then cry how resource short the US is. Crazy times these are. That's just my perspective.

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Hoping for Kunstler's long Descent

Meme, thanks for your thoughtful reply.  Very thoughtful but I think that your assumptions and facts are based on false facts from a bankerized media promoted GDP religion world view where racketeering activities form the majority of the GDP and total amount of oil/coal is an input necessary for human progress.  The "GDP" that CM keeps talking about is not a talisman of real world prosperity, progress or human happiness and the "news" is merely a dream state placed in front of sheeple to get them to believe things that facilitate their conversion into vassals of a neofeudal society owned and managed by those GDP experts.  Thus I disagree with your memes.  An objective view outside the US meme may be necessary to break the spell cast by the oligarchs and their financial analyst acolytes including those found on this site who promote the false religion of GDP.

Japan (and now China) are rapidly moving past industrialization and going into a knowledge based economy.  Those very efficient vehicles in China are progressively being powered by solar energy.  Even in parts of the West you have electric vehicles being charged by parking lots with roofs made of solar panels. These products are sold now.  The conversion to a solar powered transportation is real and not a dream or conjecture.  To say that electric vehicles (which WILL replace fossil fuel burners) require coal energy is a misrepresentation at best and a hallucination at worst.  In fact already there is much more solar electric energy entering the grid than there is electric car removal of energy from that same grid.  Further, already solar electric is being used more directly (solar to car when parked) without going long distances in the grid.  The old coal story doesnt even fit the rear view mirrer perspective, much less the fast ongoing reality of  rapidly increasing renewables powering the grid.

We moved from agrarian (99% farmers) to non agrarian (1% farmers) over a short period of not so many years from a historical perspective. The present reality of change to sustainable (mostly solar electric but also wind etc,) is just as fast, on the same time scale.  I dont see the point of looking in the mirror and talking about coal burning "but see....see.... there be coal burning!!" particularly when the majority population and technology (yes, China is advanced OVER the US in electric inventions and development change, I know this as a fact and I am developing my inventions there because they have so much more opportunity and more openness to change) are rapidly moving now  to power a non-fossil fuel future with renewables where those renewables even now are much more abundant than the "there be coal energy entering electric cars!" .  The Japanese rapidly moved away from smoke stack  industries and the Chinese are similarly moving away from coal to renewables and rapidly cleaning up their environment, just as the Americans did and the Japanese did.  Meme monkey, I was astonished to see that the meme presented by the oligarch's meme machine is totally wrong about Asia. You can continue to believe the monkey'd dream meme of a GDP evaluated world memed out by the American "media" dream meme machine.

The stuff you read in the American mass delusional news networks is very misleading.  I cant stop anyone from believing the hallucinations of the mass media or to follow the gospel of (the racketeers defined and measured) GDP and economic growth desirability and strategies.  By way of example, the BIGGEST cause of carbon burning by far (represented in that worshiped GDP) is the U.S. military.  The US military is the biggest source of carbon emissions on the planet and its continued growth is a big part of the "GDP."  If the US stopped killing and bombing and etc. around the world, a large portion of US oil would NOT be burned and the GDP would drop. This is just an example of what the GDP boys refuse to talk about but want to facilitate instead as "prosperity."

Bankers and their financial analyzers (now funded by web sites on the internet with paid for access to advertisers) make money from the rest of us who believe that "religion."  The GDP valuations are not even based on real wealth and do not  reflect  what people need. I predict that the racketeer's GDP will fall and that many of us outside the  neofeudal-izing US will be much better off and consider that progress, particularly if the bombs stop falling, the drones  stop flying, and the rest of the world stops sending THEIR wealth to the American GDP meme masters in return for nothing tangible expect maybe a promise not to bomb them. 
Maybe this is part my disagreement with financial analysts and their "I have a PhD in economics!!!" masters who include the insulting assumption that someone who makes twice as much money as another is twice as good as that  other, and that  someone who makes 1000 time as much as another  (such as found in America now) is 1000 times as good as another.  This is a bed  rock fundamental of that oligarch dream meme.  Meme monkey, I disagree with that meme and the meme that those racketeers' creation of GDP based primarily from racketeering and more often than not counting $ as progress something that hurts the people somehow should be the basis of evaluation.  I am done with  that. We need cryptos to abolish the banks. We also need  a different measure of human progress to abolish the GDP along with the bogus evaluation of employment and other things that go with it, and to help the GDP acolytes (financial managers) direct their efforts toward real wealth and prosperity.  dont need these dreams of get rich quick that just takes time away from our real lives......  No more time for this keyboarding chit chat.  I dont have any more time to defend my statements.
Best wishes
Mots

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So no, I'm not very

So no, I'm not very sympathetic to a people consume resources like they are rich while going into debt to fund it all...then cry how resource short the US is. Crazy times these are. That's just my perspective.

One advantage to growing older is being able to hold two emotions and thoughts at the same time.  I understand being frustrated with people but we have been lied to for so long people think cheap fuel will last forever and they don't understand where and why the economic bus derailment happened.  So, you, and society blames Mr. & Mrs Middleclass and they blame themselves and there is a ripple effect, like family violence, drugs, crime, and the effects goes on and on.I think it was Chris Hedges who talks about the war against the weak.  I think its a war against the people.

Secondly I don't know that many rich people, monetarily speaking.  But I do know people who live without running water or indoor plumbing.  People that don't have much but will share everything they do have with you if you are in need. People who pass things around and can squeeze a dime out of a nickel.

You say why don't people cut back and live within their means when times are hard?  You mean like paying 25% to 50% more in health insurance, paying off a catastrophic medical bill, or let's see the increase in utilities, food, fuel, and just for frivolous kicks ever priced braces or had an emergency vet bill. Probably not. For petes sake walk in some-one else's shoes.  I know I could introduce you to a friend that just lost a child to cancer, yep they should live within their means cause times hard.  How about the family who's father just committed suicide I could go on but won't.

Well if you live in Anchorage go volunteer at Bean's Cafe or Brother Frances Shelter or the Covenant house and come back and let's talk again and we will see if it's still easy to BLAME people.

AKGrannyWGrit

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Mots

Mots,

Thanks for your response.  I offer this rejoinder even though you indicate that you don't have any more time to to defend your statements.

First I can assure you that my arguments, facts and assumptions are not based on " banker memes" that I absorbed in some sort of fugue state perched in front of a TV news show or worshiping at the alter of GDP as a totem of success. My arguments are rooted in the science of ecology and the physics of thermodynamics. My facts are measurable and observable in the real world.

In your world the future is all about smart renewable electrical tech It is after all what you do and good for you! I approve and prefer that flavor of technology to conventional BAU.

And while you might feel it is impolite to point to China's Coal habit as the renewable future looks so promising to your eyes It is unfortunately current reality. 2017 saw a 3.5 percent increase in coal consumption in China and while yes that unpleasant fact gets reported in the corrupt  media but I can also see with my own eyes Mr. Buffett's Coal Train with it's miles of cars pass by me here on it's way to Vancouver for transshipment to China.

It is not an accident that China is economically colonizing Africa for access to it's energy and mineral resources, talking with the Saudis about a Petro Yuan or building out it's decidedly non solar powered Navy and Military to project power for the OBOR initiative. China, in fact all of Asia runs  fossil fuel powered industrial economies with rising material standards of living and growth as the de facto objective.

Your statement that Japan and now China are rapidly moving past industrialization and going into a knowledge based economy is belied by the observable and measurable energy inputs into and material goods out of those economies. Moreover, to the extent that there is a shift in those modalities in a given country such as China, they are due more to externalizing those industrial processes to poorer nations for the benefit of wage arbitrage (like the USA did with Asia)

To the extent that energy efficiencies are realized by technological advances in information processing or other technologies they appear to be obviated by Jevon's paradox as growth at any cost is still the context in which they occur.

While you talk about the rapid conversion to solar and renewable powered transportation, you ignore the necessary fossil fuel inputs to the system and grid that is responsible for that. The roads, mining, batteries, factories, plastics, electronics, maintenance etc. that are integral to the production and maintenance of those technologies.

With regards to your comment:

We moved from agrarian (99% farmers) to non agrarian (1% farmers) over a short period of not so many years from a historical perspective. The present reality of change to sustainable (mostly solar electric but also wind etc,) is just as fast, on the same time scale. 

Is revealing as well. It turns out that both those paradigms shifts are a function of the same thing. I.E,

Oil and related fossil fuel exploitation.

I would argue that you appear to confuse the initial rapid rate of renewable adoption with the reality of it's ultimate and inherent scalability given the resource constrained inputs to this build out you anticipate. At it's core this argument is most readily understood in the context of the low EROI of these renewables when conventional inputs are accurately and recursively accounted for. This is ultimately a function of the diffuse nature of sunlight and wind as an energy source.

Finally to end on an agreeable note I think that in many ways we are aligned on a philosophical basis with regards to the military carbon footprint and other exploitations of empire, banks, GDP as a measure of value, definition of work etc.  I even agree that China is where the better tech is increasingly arising.

I don't believe in the the religion of GDP as you put it but nor do I believe in the religion of progress technological or otherwise, either. I don't see it saving us from what is coming or making a smooth transition a world wide industrial system to an enlightened techno agrarian one.  Which is not to say that a transition won't happen. It just won't be techno, smooth or enlightened. 

I believe in the laws of Nature and think we are subject to them.  Industrial society as interesting and comfortable as many of it's benefits are,  is a crime against nature and the punishment is coming due.

thanks for the debate

mememonkey

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Granola Shotgun
jdsfrisco wrote:

Long debates about energy between techno cornicopians and doomers are silly. Mostly I've notice that memebrs of both groups live nearly identical lives. Same kinds of homes and apartments, same cars (an SUV and a Prius are more alike than they are different,) same flights, same food (Walmart vs. Whole Foods is a cosmetic variation,) same everything.

Personally, I live a plain vanilla regular life too, but I've made some modifications. I carry no debt. Not even a mortgage. I've super insulated my home room by room over the years and installed a high quality metal roof that reflects heat. The place basiclly doesn't need mechanical heat or air conditioning anymore. I own a car, but I live in a place where driving isn't critically necessary and only put about 2,000 miles a year on it. It's a small town that's easy and pleasant to navigate on foot and by bicycle without feeling like a loser. And I've transformed the half acre yard into a highly productive food garden and preserve the bounty with home canning, etc. https://granolashotgun.com/2016/12/27/how-to-ride-the-slide-suburban-homesteading/

I do these things because I enjoy this kind of life, and because I like knowing that I can ride out any number of serious difficulties if need be. If energy remains plentiful and cheap forever, great! If energy becomes scarce and expensive... shrug.

If you're not familiar with Johnny's blog, I highly, highly recommend it. Johnny has tremendous insight and a terrific personality to accompany that. The post to which he linked is easily one of his best. I'd also recommend the following two:

https://granolashotgun.com/2017/07/25/postcards-from-the-zombie-apocalypse/

https://granolashotgun.com/2016/01/16/living-a-resilient-life/

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mitigation

MKI-

I think an important consideration to "moving closer" and "having smaller homes" is the sheer amount of private fixed investment our society has sunk into "living far" and "having larger homes".  Plus, construction of public transit projects takes both time and energy to put in place.

Such a change as you describe could happen, but it would take a lot of time and investment to bring about - where investment means "spending energy to construct stuff".  Once we get to a point where energy is more scarce, we'll be in one of those catch-22s where we need to change our infrastructure in order to save energy, but we will be hard-pressed to find the energy to do so.

The Hirsch report talked about the time and expense of mitigations, projecting that once things flipped, it would take 10-20 years to implement enough structural changes to deal with the issue.  (It was a while ago I read this - this is based on my memory).  And that during that 10-20 year period, things would be pretty unpleasant.

It also suggested that if we started early, we could avoid the unpleasantness.

While I agree completely with the amount of waste, and the potential for reduction, I think we aren't "starting early", and that when things start to get serious, we won't have done anything to prepare for it (because of the 'oil is really cheap' viewpoint) and so it will be a 10-20 year period of no-fun-at-all that could have been avoided had we started preparing in advance of the problem.

https://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf

I'm also going to guess that when things get more serious, your private oil companies (and mine) will all be nationalized.  That, or a windfall profits tax will be imposed - like it was in the 70s - so our upside will most likely be capped by government action.  We'll be in a position of having made the right call, but not being able to benefit from it while at the same time suffering the downsides along with everyone else.

I've often wondered how to hedge against this.  A railcar full of oil in the backyard seems impractical.  Any suggestions - assuming government will act to cap "windfall profits" just like they did the last time?

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I would remind us...

that as a teacher of history, I am aware of no examples of large, complex societies voluntarily or involuntarily devolving to a less complex society without either substantial change (as the Mayans walking away from their cities, or the Anasazi doing the same) or substantial disruption and violence (such as the collapses of the "Golden Age" civilizations). We've never seen human civilization operating at the scale and complexity we are operating at now, so I find any notion that we will simply "scale back" without massive disruption and/or violence not rooted in any examples I can point to.

 

We also, psychologically speaking, are never as good at heading-off a crisis as we are as putting the pieces together once crisis hits. There are numerous examples I could highlight in both the modern and ancient worlds that show we are piss-poor long-term thinkers when in a group. The bigger the group, the worse we are at it too.

 

This will not slowly devolve, because a) too many people have their bets placed on the current system, and they will not give up their creature comforts easily or without a fight, and b) too many people are willfully ignorant of the dashboard of red warning lights flashing at us.

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