PG -

I never was really sure you had all the pieces. Thanks for tipping your hand.

I have avoided quoting Hoyle until now, but I just have to do it...

"It has often been said that, if the human species fails to make a go of it here on Earth, some other species will take over the running. In the sense of developing high intelligence this is not correct. We have, or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however competent can make the long climb from primitive conditions to high-level technology. This is a one shot affair. If we fail, this planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems. On each of them there will be one chance, and one chance only." (Hoyle, 1964)

Maybe, just maybe, this will sink into some of the thicker and more recalcitrant skulls that happen by this blog....

I hope the shuttle has a great flight...

Hoyle was right, J.

PG's post seems to center around this: "However, it is ONLY BECAUSE OF CHEAP OIL/ENERGY that economies have continually grown. "

This is why standard economics analyses of our current PO situation are bullshit. Each of them, if you trace their root assumptions, seems to depend on some cheap (or, if you like, economical) source of energy. At $100/barrel or even more, Walmart collapses like the China-importing delusional house of cards that it is. The transportation costs alone will ruin them all. And here in the US, Walmart and such (Nike, Pepsi, you name it) is about all we've got left.

Re: J's "recalcitrant skulls that happen by this blog"

Oh, and while I'm in the mood, speaking of collapsing business enterprises that depend on cheap energy in the Age of Globalization, let's not forget to mention:

Starbucks, steel, concrete, tee-Shirts and other clothing, computers, their parts and accessories like printers, you name it if it's not manufactured here. All of this trade depends on cheap movement of products around the world made easy by low oil prices. And America's trade deficit keeps rising and rising with no end in sight... on the assumption that cheap energy will keep the products flowing here and we'll keep buying them on credit....

Credit? Ahhhh...you mean INTEREST paid on LOANED MONEY! Hmmmm.. let's see; isn't this another type of overshoot?

But then again, all that is needed is cheap labor, even to ship across oceans by sail power. Where could we find that?

Ah-hah!! Slavery! That's the ticket!

Who needs cheap oil if your labor and transportation are negligible?

"Economics is a discipline that explains growing societies relatively well, when resources are available to allow for economic rationality to be the norm. Unfortunately, anthropology has been shown to be the discipline that best studies declining societies that devolved due to resource problems."

-Prof. Goose

Do you know if the per capita primary energy consumption includes all forms of energy source (electricity, etc.). If it is the case this graph do not necessary show that growth is dependant on cheap oil.

khebab,

The caption says primary energy consumption, so it would include oil, coal, natural gas, hydropower, biomass and all other inputs to energy use. Electricity itself would not be included, although the inputs to it would be.

"It also seems that, when you take cheap oil out of the equation,"

Could someone PLEASE explain to me what a comment like that is supposed to mean?

Cheap oil is already out of the equation. Long-term crude futures are trading at around $60/barrel. That's roughly the threshold where it becomes cheaper to dig coal out of the ground and heat it up with some hydrogen to make fake oil. That's near the threshhold where it becomes cheaper to grow vegetable oil and transesterify it.

A lot of peak oilers make a big deal about how uniquely suited long-chain hydrocarbons are for a wide range of important uses, but seem to overlook the fact that the stuff that comes out of pipes in the ground isn't the only source, it's only the cheapest source for the time being. When it stops being the cheapest (now, or soon thereafter), there will be a somewhat long, somewhat expensive, somewhat inconvenient transition to whatever the next cheapest happens to be.

But, after that transition, the economics of $60 petroleum look pretty much the same as the economics of $60 synfuel or $60 biodiesel.

Thanks Mr. Robinson. I guess we should close the blog now that we have the answer.

Robinson -

In inflation adjusted dollars, we are not even at the levels of the first oil crisis in the 70's.

We are all very hopeful about synfuels and biofuels - but they takke time to implement. They have their own set of problems, not the least of which are total dependency on climatic conditions, vulnerability to disease and insect vectors associated with any massively cultivated crop, and the amount of land required to replace oil at a reasonable rate of domestic consumption.

I won't even get into the possible problems inherent in GM biomass crops - let's just say that they are problematic, and lend themselves to huge agricorp monopolies readily.

What is the backup in case of crop failure or low yields?

It is just not as simple as it looks on paper - the more you dig into biofuels, solar, wind, etc. the more you come up with the fact that we will be FORCED to reduce per capita consumption and use multiple energy sources on a regional basis.

Americans are not ready or even considering this as an option yet.

Add what J said to the fact that when oil is $60/bbl you will no longer be able to get $60/bbl synfuel, because the cost of the required investments will increase by the same factor as the oil price. There is only a narrow window available where the U.S. will be able to afford the replacements.

I think Michael Robinson's point is that Peak Oil /= zero energy. Too many people forget this.

What it does represent is more expensive energy, in somewhat less convenient forms, that will require a partial revolution in the present-day way of running an economy. We'll have to be more careful with our energy usage: pay attention to energy efficiency, travel a bit less, shorten supply chains, make manufactured items last a bit longer.

This is not how our economy is presently structured. Those companies that can't make the transition from $20/BOE to $80/BOE (I believe there are economic/policy reasons why alternative energy costs will come in a bit higher than their break-even prices) will go the way of Gimbel's and Life Magazine. Indeed, whole sectors of the economy and whole sections of the country may find themselves unable to adapt.

Those that can will prosper.

The chart seems to show that U.S. uses more energy per uint of GDP than do other comparable nations. I think this is a good sign--there are efficiencies to be had, if we follow the example of other countries. We ought to be able to get to 250 or 200 GJ per capita without having to follow the curve back to $15,000 per capita.

Then I missed his point entirely, even though I agree with what jlw says. That is why I am hoping that oil inches up in steps as depletion becomes more entrenched in the picture. Those steps will allow time for adaptation that we really need, even if it is in full-blown crisis mode.

I think jlw's right too...and it is heartening to see that there's room for the US to fall and maintain a relatively high standard of living. My main concern is the dissonance of the American mindset with the idea that the US could be "going backwards." Capitalist/rationalist psychology has yielded amazing results while the cheap energy was around that we have all benefitted from...but what will it do once the cheap energy is gone...? It seems to me that if the mindset is maintained, then it would be dog-eat-dog. If the mindset changes, what will it change towards? and how quickly?

PG -

What really has me wondering is that our entire culture - monetary system, economic system, social stratification, education...everything I can think of - is predicated on GROWTH. This eternal growth is what caused us to deplete oil so damned quickly in the first place. Financial success is not something intensely rewarding to the human psyche - I have never read a tombstone that said "He was really, really, really rich." The drive for money to pay back interest on loans seems to be the cause if one does enough reading. The grubbing for money seems to lead the entire culture down the resource depletion path.

I don't see money going away - that is too big a paradigm shift. It could only happen with the complete destruction of current civilization. What I do see is that we retain the same systems but switch to the easiest energy alternative. That would be coal, and the argument will be that there is plenty to go around. Coal/electric is simply the easiest, the path of least resistance.

So we suffer through, switch over, and in another century or two, we are right back at the same bell-shaped curve! Or else we opt for nuclear and then hit THAT curve right after the oil fiasco we are dealing with now.

The only really sustainable long way out of this mess is solar, wind, hydro, wave, geothermal and whatever we can eke out of biomass technologies. Those do not have a depletion curve - they are not finite. But they require much bigger changes in lifestyle and behaviors than simply switching to a coal/electric model.

I so feel like a friggin hamster on a wheel right now...my brain hurts for my children and unborn grandchildren....

"Add what J said to the fact that when oil is $60/bbl you will no longer be able to get $60/bbl synfuel, because the cost of the required investments will increase by the same factor as the oil price."

That's just silly. In the past few years crude oil has tripled in price. By your argument, the cost of petroleum alternatives have also tripled in price, which is manifestly not the case.

"We are all very hopeful about synfuels and biofuels - but they takke time to implement. They have their own set of problems, not the least of which are total dependency on climatic conditions, vulnerability to disease and insect vectors associated with any massively cultivated crop, and the amount of land required to replace oil at a reasonable rate of domestic consumption."

You've provided a set of problems for biofuels only. Coal-based synfuels have none of these problems. The biggest problem there is, of course, peak coal, but that's a rather more distant proposition. And after peak coal, there's peak uranium, and after peak uranium, there's peak thorium, and all that will take us well beyond any reasonable planning horizon for now.

The point is that there is an upper limit on the long-term price of petroleum after which it's cheaper to replace it with something else, and that upper limit is very close to where we already are.

So, when you consider what the world will look like "when you take cheap oil out of the equation", just look around you. It's already here. If people can't satisfy their long-chain hydrocarbon fix for less than $80/bbl by poking holes in the ground, they'll just stop poking holes in the ground and do something cheaper instead.

Clearly the EU survives comfortably at an energy efficiency nearly double the USA. Switzerland is nearly triple. Neither are impoverished. We are extremely fortunate in that we have huge energy slack in our economy. As we start to get efficient, we will also start to conserve. A major aspect of conservation will be simply doing with less, eg keeping that old shirt another year before buying a new one. High oil and NG prices will begin to force great life style changes. Again we are lucky in that we have shipped countless consumer product jobs offshore, so when we conserve someone else loses the bulk of the jobs. Oh our economy will get bent for sure, but we have vast slack, which buys us time to adjust and to change. Prices rising before the decline really sets in are the best luck we have had yet. Murray

Murray, I don't have a problem with that interpretation actually with a couple of "ifs." The slack is positive, yes. But either way, lives are going to change...

If the decline is really slow and secular, I think you're right. If Americans can go "backwards" without completely destroying its social fabric.

But if it's a quick dive, I don't know that we'll learn how to conserve without some pretty strong breakage...

As an anthropologist, I will add a bit from what PG says above. We study societies as they come: growing, declining, or just getting by for the time being. What anthropologists can say about this dismal topic is that human societies have been in this position before. Many, many times before. We can also say with some certainty that most of the people in those societies had no idea where they were in terms of resource and ecological overshoot until enough people were suffering to realize that something was amiss. As long as there is corn in the silo, so to speak, no need to worry about those denuded forests. And as long as there were trees to burn, there would be plaster to keep the house looking in the height of fashion.

I think J is right about many of us. People don't want to conserve, they want to keep up with the Jones's. And, from my perch. the Jones's are pretty wasteful.

Tedman astutely taps into a deeper rooted issue...that of ecological overshoot. Cheap oil has allowed humans to consume resources of multiple types at a previously unheard of level.

Read "The Limits to Growth: The 30 Year Update" and H.T. Odum's "A Prosperous Way Down" or even some of Lester Brown's more recent essays and articles on the global agricultural situation. The original LTG, written back in the 1970s, estimated that we were still something like 15 or 20% below maximum carrying capacity. The LTG update of 2002 estimates we are now in 20% overshoot.

Humanity is on the precipice of many converging natural resource problems and the peak oil situation is only going to make it harder to assemble solutions to each one. When potable water gets scarce, it takes energy to pump from deeper wells, or even worse to desalinate seawater. When topsoil is lost (and it's disappearing at an alarming rate) it takes massive amounts of fossil fuel energy for the feedstocks of chemicals and fertilizers that maintain adequate growing conditions. When climate change causes localized variabilities in rainfall patterns how does the ever more populated world continue to feed itself. Have you looked around your produce section lately...not much of that stuff is coming from your local farmers. Crops have a certain threshold of temperature tolerance and if localized temps rise much beyond even current averages, we'll all start seeing declines in global food production.

Or even worse if the Gulf Stream/Great Oceanic Conveyor Belt hits an inflection point and flips as it has done in the past, how does Northern Europe get the energy required to supply the same level of heating for its residents as the Gulf Stream did? Some estimates peg the UK as benefiting from about 5-7 degrees Fahrenheit of warming from this North Atlantic cycle.

None of the alternatives, synfuels, biofuels, solar, wind, etc. have even close to the same energy density, flexibility of use, and energy return on energy invested of oil. I think Prof. Goose's comments on the two recent Jared Diamond books are right on...collapse doesn't come about from one cause, it is a synergistic affect where many causes magnify the effects of each other to the point where a culture can no longer respond to the rate of change that ensues.

And if you only read one book this year, I absolutely recommend "Panarchy" by Lance Gunderson and Buzz Holling! It will give you a better feel for the 4 phases of the "adaptive cycle" that all systems (human and non-human) go through (i.e. growth, peak/transition, decline, and reorganization).

good points Hal...well said.

I would add that if any of you are interested in these ideas, I would suggest reading some of the other Malthusian ideas in addition to the books Hal suggested...because we're getting into Olduvai Gorge, dieoff.org, Jay Hanson, and the like as well...

(See, we need to get someone from every discipline/strength in academia on this freaking blog and make them talk to each other! This is productive...not just because Hal agrees with me, but because these ideas can be discussed between disciplines!)

"None of the alternatives, synfuels, biofuels, solar, wind, etc. have even close to the same energy density, flexibility of use, and energy return on energy invested of oil."

See, there it is again. This is just plain false for any reasonable meaning of "even close".

Energy density: synfuel and biodiesel are indistinguishable from petroleum.

Flexibility: synfuel is indistinguishable, biofuels close.

Energy return on energy invested: completely meaningless assertion--the EROEI of a barrel of crude could be anywhere from 50:1 to 1:1. The only meaningful number for purposes of predicting global catastrophe is the EROEI of the marginally profitable barrel at market rates. With crude at $60-70/bbl, it's marginally profitable to extract petroleum with an EROEI that is less than the EROIE of synfuel and high-yield biofuel.

Robinson -

How many hectares at what yield are required for a barrel of biofuel?

How many joules of energy are required to synthesize a barrel of coal synfuel?

Now do the math for land requirements with biofuels.

Again, do the math for energy consumption to generate synfuels.

I can't - I'm at work and getting behind right now blogging. But with these numbers all of us can extrapolate.

Robinson -

One more thing. Your comment: " The biggest problem there is, of course, peak coal, but that's a rather more distant proposition."

THAT is why I think we will move to coal without a second thought. The move to oil was done prior to the resource depletion knowledge we have acquired today. To move to coal is to completely ignore the consequences we are facing today and dump them ON OUR OWN PROGENY! This is illogical and irresponsible in the extreme, very much akin to what government has done to the baby boomers and Gen-X'er with SS.

Why on earth would we want to go to coal other than as a stop-gap measure? Most people wouldn't, but since the depletion curve is so much longer than oil, it will then fall to climate changes to kill coal rather than resource depletion. There is enough coal so that people will forget what happened with oil! And IMHO, this is an even taller, thicker and kryptonitic wall to run into.

One point to consider is that the global economy is predicated on consistant growth, if for no other reason than to service the massive debts we have incurred (as governments, consumers and businesses, all around the world).

If you consider the standard stock market plug that brokers pass out, they invariably start with the years before the '29 great crash. (Not the 1870s, when industrialization really got rolling). That is because the mid 20s is when Homo Sapiens really began to make use of oil for transportation -- which eliminated "limiting factors" on a regional basis, and jump started the global economy, and exponential population growth.

Even with cheap oil and (more or less) constant growth, we have had to rely upon ever increasing amounts of debt to keep the economy growing. And that assumes cheap energy will increase at a like amount, essentially forever. (This is also the assumption behind the IPCC projections for global climate warming over the coming century.)

But as we know from ASPO's oil production curve, energy production is about to decline. So when you compare the ASPO curve to the never ending growth curve that is presently assumed, the shortfall between the two curves represents debts that become uncollectable.

It is difficult to envision an outcome that doesn't include a dramatic collapse in the banking system.

Do not forget that you need oil to mine the coal. Once you make synfuel out of coal to power the mining and energy generation infrastructure, how much coal is left over for everything else?

Also be mindful of recent comments and stories i have read that estimates of coal supplies are much less than everyone supposes. And also if the same growth continues, with everything moved to coal, that it will be depleted even faster.

Never mind, of course, all the pollution and climactic effects.

Burke -

I have been wondering if anyone had noticed the banking system. It is virtually unregulated, and very heavily into unsecured consumer credit, derivatives, mortgages, etc. Each bank is only required to retain something like 9 cents on the dollar for deposited funds..?

Just looking at consumer debt scares the beejeezus out of me, and I am not in banking. Commercial loans are not in much better shape, and they have hyper-extended their business credit lines. My folks just shut down their business, and their bank had recently offered them a $90k line of credit when their business was grossing less than $3k a month...