DrumBeat: November 28, 2008

David Strahan: Whatever happened to the hydrogen economy?

WHATEVER happened to the hydrogen economy? At the turn of the century it was the next big thing, promising a future of infinite clean energy and deliverance from climate change. Generate enough hydrogen, so the claim went, and we could use it to transform the entire energy infrastructure - it could supply power for cars, planes and boats, buildings and even portable gadgets, all without the need for dirty fossil fuels. Enthusiasts confidently predicted the breakthrough was just five to 10 years away. But today, despite ever-worsening news on global warming and with peak oil looming, the hydrogen economy seems as distant as ever.

Even in Iceland, whose grand ambitions for a renewable hydrogen economy once earned it the title Bahrain of the north, visible progress has been modest. After years of research, the country now boasts one hydrogen filling station, a handful of hydrogen cars, and one whale-watching boat with a fuel cell for auxiliary power. A trial of three hydrogen-powered buses ended in 2007, when two were scrapped and the third was consigned to a transport museum. More trials are planned, but that was before the meltdown of the country's banking system. In California, where governor Arnold Schwarzenegger promised a "hydrogen highway" with 200 hydrogen filling stations by 2010, there are just five open to the public. Ten hydrogen-fuelled buses are due to come into service in London by 2010, but a plan for 60 smaller hydrogen vehicles was recently scrapped.

Gas prices: Lowest since 2005

NEW YORK (CNNMoney.com) -- Gas prices fell to their lowest level since 2005, coming within 4 cents of $1.80 a gallon, according to a daily survey of gas station credit card swipes by motorist group AAA.

Facing low oil prices, Venezuela reevaluates funding for Ecuador, Nicaragua refineries

CARACAS, Venezuela (AP) _ A top official says Venezuela's state oil company is reevaluating how to pay for planned new refineries in Ecuador and Nicaragua because of the fall in oil prices.

The Venezuelan newspaper El Nacional says PDVSA vice president Elogio Del Pino says "international investments like the refineries in Ecuador and Nicaragua are under evaluation."

Companies keep drilling for natural gas in East

The deteriorating economy and a drop in natural gas prices has slowed a rush to snap up mineral rights to the thick, black rock called Marcellus shale, which stretches deep underground from West Virginia to New York state and could become the nation's most prolific natural gas reservoir.

But drilling goes on as exploration companies seek to make their investments pay off, changing places like Houston, an old iron and steel town near Pittsburgh which has become the epicenter of the exploration boom.

Oil, taxes and development

OSLO: Norway is a land of economic contradictions: a country that prides itself on its environmental record yet resumed whaling in 1993 despite an international moratorium, and a nation with a high per capita gross domestic product, thanks to oil and natural gas exports, yet with high taxes.

In charge of running this paradox is Prime Minister Jens Stoltenberg, 49, the head of a three-party coalition that has been in power since 2005. He spoke recently in Oslo about lower oil prices, development aid and, of course, taxes.

Chesapeake Energy may sell $1.8B stock to get cash

Chesapeake Energy Corp., the nation's largest producer of natural gas, seeks to raise up to $1.8 billion through common stock sales in an effort to fund its drilling and exploration activities and mitigate the impact of lower natural gas prices on cash flow.

In two filings with the Securities and Exchange Commission late Wednesday, the company said it will issue shares worth as much as $1 billion before fees and also registered 50 million shares worth at most $791 million for potential sale.

Gunmen seize Scottish oil worker in Nigeria - source

LAGOS (Reuters) - Gunmen have kidnapped a Scottish man working for an oil services firm in the southern Nigerian oil city of Port Harcourt, a security contractor working in the oil industry told Reuters on Friday.

The source, who asked not to be named, said the man was kidnapped late on Thursday in the main city in the Niger Delta, heartland of Africa's biggest oil and gas industry.

Russian missile plan gives a new European trade hub an old identity crisis

Former President Boris Yeltsin saw it as the Russian Hong Kong, a free trade zone to entice foreign investors. Yeltsin's successor, Vladimir Putin, drew it closer to Moscow, planning a nuclear power plant that would export energy to Europe. As oil and gas wealth poured into Russia, more ideas emerged: Las Vegas-style gambling, for instance, and a constellation of luxury resorts.

The most recent idea arrived early this month, when President Dmitri Medvedev said Russia would stage short-range Iskander missiles in Kaliningrad if the United States proceeded with missile defense facilities in the Czech Republic and Poland.

Scientists crack iceberg mystery

Oslo - US scientists have figured out how icebergs break off Antarctica and Greenland, a finding that may help predict rising sea levels as the climate warms.

Writing in Friday's edition of the journal Science, they said icebergs formed fast when parent ice sheets spread out quickly over the sea.

"It won't help the Titanic, but a newly derived, simple law may help scientists improve their climate models" and predict ice sheet break-up, they said in a statement.

Boreal forest lakes suffer from 'aquatic osteoporosis,' Queen's-York research team suggests

Kingston, ON – A new and insidious environmental threat has been detected in North American lakes by researchers from Queen's and York universities.

Along with scientists from several Canadian government laboratories, the team has documented biological damage caused by declining levels of calcium in many temperate, soft-water lakes.

Two degree rise could spark Greenland ice sheet meltdown: WWF

GENEVA (AFP) — A less than two degree Celsius rise in global temperatures might be sufficient to spark a meltdown of the Greenland Ice Sheet and Arctic sea ice, the WWF warned in a new study released Thursday.

"Scientists now suggest that even warming of less than 2 degree Celsius might be enough to trigger the loss of Arctic sea ice and the meltdown of the Greeland Ice Sheet," the WWF said in a statement to accompany the findings.

"As a result, global sea levels would rise by several metres, threatening tens of millions of people worldwide."

John Michael Greer: Looking for Roong Thisdara

If the crisis we face could be met by making plans, we’d have little to worry about; the difficulty is that making plans is the easy part. Go digging in the archives of most American municipalities and you’ll find an energy plan drafted and adopted, after extensive citizen input, in the 1970s, calling for exactly the changes that would have made matters today much less dire: conservation standards, public transit projects, zoning changes to reduce the need for cars, and so on. You’ll have to brush a quarter inch of dust off the plan to read it, though, since nobody has looked at it since the Reagan years, and not one of its recommendations was still functioning when the housing boom began in the early 1990s. A certain skepticism toward another round of plans may thus be in order.

Yet there’s a second dimension to the irony, because the recurrent gap between plan and implementation is not the only difficulty that has to be faced. The assumption common to all these plans is that it’s possible to anticipate the process of transition to a deindustrial society in enough detail to make planning meaningful. I suggest that this assumption is badly in need of a hard second look.

Energy Building massive projects in two phases is becoming the norm: expert says

SAINT JOHN - Building a second oil refinery in Saint John in two stages would allow Irving Oil Ltd. to test market demand for petroleum products with the first phase and reassess whether to continue building at all.

Experts say low demand for petroleum now, a tight market for accessing credit and a labour shortage in New Brunswick all likely drove Irving Oil's decision.

"The economic return for refiners today is quite different than what it was when they proposed the project," said Cathy Hay, a senior associate at Calgary-based petroleum consulting firm M.J. Ervin & Associates Inc.

Oil Price Decline Undercuts Policies of Oil-Rich Nations

The plummeting price of oil is having an impact on nations that restrict oil exploration and production to state-owned companies. Analysts say many use the revenues to further their ideological objectives and expand their influence, and falling prices could affect such policies.

Dubai: Has the bubble burst?

Gulf policymakers are still making cheery statements about the region’s limited exposure to subprime loans but are quieter about heavy investments in inflated local property markets by regional banks, particularly Islamic ones. But worried banks are sharply reining in their mortgage lending. A series of arrests of senior businessmen as part of a fraud investigation is also making people twitchy. There is even talk of a coming “Gulf Enron”.

Chavez offering heat to villages

With heating oil prices approaching $10 a gallon in rural Alaska and reports of neighbors stealing fuel from neighbors to warm their homes, a Venezuela-owned oil company plans to supply free fuel to villages again this winter.

Cheap gas stalls green efforts

Advocates of energy conservation and renewable fuels may be the only ones in America looking back nostalgically on the days of $4-a-gallon gasoline.

The political will to reform energy policy and the public's demand for alternative fuels and more efficient cars appear likely to fall off as rapidly as the price of a gallon of gas, posing a new dilemma for champions of green energy and conservation.

Energy Fears as Kyrgyz Winter Approaches

Kyrgyzstan faces uncertain times as winter approaches and electricity generation is so low that the government has been unable to honour a pledge to end power cuts.

Since August, the country has suffered rotating power cuts as part of an austerity programme to save water for a time , but the energy ministry promised these would end in October, well before temperatures started falling.

It is now late November, and the power cuts continue, albeit in changed form. Instead of blacking out whole areas for hours at a time, they are designed to kick in if a district gets through the “quota” of electricity assigned to it.

Ethiopia - Be stocked or lose license, Ministry warns fuel stations

The Ministry of Mines and Energy of Ethiopia (MoME) warned that it is going to revoke licenses of fuel retail stations if they are found empty in the coming week.

Plug-in technology for cars has limits

The bottom line is that the first 40 miles of driving has produced more CO2 and has cost very close to the same in electrical energy as the roughly 0.9 gallon of gasoline that is saved. (The comparative numbers vary with the local costs of gasoline and electricity.) The only way this technology could work is if the recharge is done with renewable energy technology such as an adequate solar photoelectric panel array. The $10,000 upfront battery cost and the solar array installation cost will never be recovered.

Bangladesh's climate refugees search for higher ground

HOAIKONG, Bangladesh (AFP) — In the mountainous village of Hoaikong in southeastern Bangladesh, villagers are used to welcoming new residents on a weekly basis.

The once-sparsely populated jungle, home to only a handful of tribal families, houses some 2,000 people who have sought higher ground as the island where they once lived becomes increasingly submerged by the sea.

Crude mathematics: A plunging oil price means cheaper petrol now – and no fuel later as industry investment shrivels

A snip at $48.50. Now that the price of a barrel of benchmark Brent crude continues to fall like a stone in the global recession, a drop of no less than two-thirds since the high point of $147.50 just four months ago, the relief is huge among motorists and hard-pressed consumers.

Conversely, for the oil-producing countries (especially Russia, Iran, Saudi Arabia, the UAE and Venezuela) it is potentially cataclysmic, though some, such as the US, may rejoice at that. But there is another dimension to this oil-price slide which has been little noticed, but which long-term is extremely serious.

If oil prices remain well below a certain critical level for any significant period of time, large amounts of investment in expected oil production capacity will simply be written off, and the consequence could then be a recovery-stopping supply-side crunch within little more than two years.

That critical level is widely reckoned within the oil industry to be $90 a barrel. A current price as low as half that critical level is already forcing many companies to drop oil projects, and the banking crisis is also squeezing project financing for foreign oil companies operating in OPEC and outside.

OPEC May Delay Output Decision Until December Meeting

(Bloomberg) -- OPEC ministers, arriving in Cairo for a meeting tomorrow, said they may delay a decision on production levels until December as they assess the impact of their last supply cut amid falling demand.

“Now we are preparing the data and we will take the final decision in Algeria,” Iranian Oil Minister Gholamhossein Nozari said at his hotel in Cairo. Saudi Oil Minister Ali al-Naimi declined to speak as he arrived in Egypt today.

Slim Chance of OPEC Oil Cut Before January, Global Insight Says

(Bloomberg) -- Organization of Petroleum Exporting Countries, which supply more than 40 percent of the world’s oil, has little chance of initiating a reduction in physical crude oil supply to markets before January, Global Insight Inc. said.

“With December approaching, the prospect of any further physical cuts before January is slim given advance sales allocations by a number of members,” Catherine Hunter, an energy analyst at consultant Global Insight, said today in an e- mailed statement. “This makes the meeting more about New Year’s resolutions, rather than the immediate present, whatever the rhetoric surrounding Saturday’s event.”

Russia and Opec

Russia, says President Dmitry Medvedev, is ready to "co-ordinate" - but not "collude" - with Opec to stabilise oil prices. Two other Russian ministers have been making similar noises, just as Opec prepares to meet in Cairo on Saturday to consider further output cuts. Yet before consuming countries quake about a new price-fixing alliance between the oil cartel and the world's second biggest crude producer, they should understand the precarious tightrope Moscow walks in relations with Opec.

Roubini Sees Oil Falling Further 20%, Hurting Russia (video)

Nouriel Roubini, the New York University professor who predicted the current financial crisis in 2006, talks with Bloomberg's Ellen Pinchuk about the outlook for oil prices and emerging market economies.

UK energy shortfall to be filled by gas-fired stations as nuclear reactors are built, says EDF chief

Lack of capacity in the nuclear construction industry means that Britain will have to rely on imported natural gas to meet an emerging shortfall in power generation over the next decade, according to a senior executive of EDF, the French utility that has agreed to acquire British Energy, the nuclear power generator.

Bernard Dupraz, senior executive vice-president for power generation at EDF, said Europe did not have the engineering and construction capacity to build enough nuclear plant at sufficient speed to fill the gap left in Britain by the planned closure of elderly and obsolete power stations. “I think to fill this gap it will have to be gas-fired power stations,” he said.

China: Domestic oil to move closer to international prices

Falling international oil prices have provided China an opportunity to reform its domestic fuel pricing system, an official has said to Shanghai Securities News.

Quoting an unnamed government source, the paper said the proposed reform would allow oil companies greater control on pricing of oil products in the domestic market.

Europe Inflation Rate Drops Most in Almost 2 Decades

(Bloomberg) -- Europe’s inflation rate fell by the most in almost two decades and unemployment increased, adding to pressure on the European Central Bank to continue cutting interest rates to battle the recession.

Missouri retailers selling gasoline without ethanol

HOUSTON (Reuters) – Retailers across Missouri have been selling gasoline without ethanol blended into the motor fuel for several weeks, according to a state official.

The absence of the grain-based alcohol, used to reduce pollution, has pushed Missouri's gasoline prices to the lowest in the United States, said Ronald Hayes, director of weights and measures for the Missouri Department of Agriculture, which regulates gasoline sales.

"If the price for ethanol is more expensive than the price for gasoline, retailers can sell straight gasoline rather than with ethanol," Hayes said explaining state law.

Western governors to Obama: Act quickly on energy

SALT LAKE CITY – The governors of the nation's largest energy-producing states are encouraging President-elect Barack Obama to quickly adopt a national energy policy that will reduce greenhouse gas emissions.

The bipartisan Western Governors' Association delivered Obama a four-page letter outlining what steps it believes his administration should take to address the issue in his first 100 days in office.

Sharp, Enel to tie-up in solar power

TOKYO (AFP) – Japan's Sharp Corp. said Thursday it would team up with Italian utility Enel to develop solar power plants in the Mediterranean region, seeking to cash in on growing interest in clean energy.

Jordan grapples with water crisis

DEIR ALLA, Jordan (AFP) – Gasping for water and fearful that climate change will amplify its problems, Jordan is pinning its hopes for liquid salvation on a scheme with no parallel: hauling water from the Red Sea to replenish the Dead Sea.

The 3.5-billion-euro (4.5-billion-dollar) "Peace Canal" is the heart of the government's vision of slaking thirst in a country that is mostly bone-dry desert and one of the 10 driest places in the world.

Global coal damage costs 360 billion euro annually: Greenpeace

WARSAW (AFP) – The use of coal for energy production causes at least 360 billion euros worth of damage to human health and the environment every year, Greenpeace said in a new report published on Thursday.

"When taking into account about 90 percent of the global emissions and looking at these damages, we get a conservative but robust cost figure of 360 billion euros annually," Agnieszka Markowska, damages expert and co-author of Greenpeace's "True Cost of Coal" report told reporters in Warsaw.

Bangladeshis rally against climate change

DHAKA, Bangladesh – Some 500 women rallied in Bangladesh's capital on Thursday, demanding richer nations cut their greenhouse gas emissions and compensate the impoverished countries that experts believe will be hardest hit by the impacts of climate change.

The women, mostly rural poor, wore masks mocking leaders from wealthy nations such as France, Britain and the United States, and marched through Dhaka University's campus carrying banners that read "Cut emissions, save poor nations" and "Stop harming, start helping."

This season, think inside the blue box

It may seem like too much work to be eco-responsible when your to-do list is already as long as Santa's. But you could aim for "the 20 per-cent rule" – a reasonable cut in conspicuous consumption – and stuff a few stockings with a pocket-sized book that spells out pretty clearly why The Most Wonderful Time of the Year isn't all that wonderful for the environment.

Green Christmas: How to Have a Joyous, Eco-Friendly Holiday Season (Adams Media, $8.99) focuses on the staggering extent of the holiday hangover south of the border and, since no one seems yet to have amassed similar seasonal statistics here in Canada, the numbers are worth bearing in mind.

Global warming a major threat to Nigerians

Lagos - Millions of Nigerians may have to flee rising sea levels in the next half century, as ocean surges swamp some of Africa's most expensive real estate and its poorest slums, scientists say.

Nigeria, stretching from the Sahara to the Gulf of Guinea, could come under triple attack from climate change as the desert encroaches on its northern pastures, rainfall erodes farmland in its eastern Niger Delta, and the Atlantic Ocean floods its southern coast.

But the greatest concern is the sprawling commercial capital, Lagos, one of the fastest growing cities in the world, spread over creeks and lagoons and dangerously close to sea level.

US ready to climb into hot seat on climate change

WASHINGTON (AFP) – Nations around the world are hoping the United States is set to come in from the cold and take a leading role in the fight against climate change as President-elect Barack Obama prepares to take office.

"It's a very exciting time. It's a moment we have been waiting for, many of us, for some period of time; we intend to pick up the baton and really run with it," Democratic Senator John Kerry told reporters, as he prepared to head to international climate change talks in Poland.

"That critical level is widely reckoned within the oil industry to be $90 a barrel. A current price as low as half that critical level is already forcing many companies to drop oil projects, and the banking crisis is also squeezing project financing for foreign oil companies operating in OPEC and outside."

Already happening in Alberta, although the ostensible reason is high construction costs for oilsands projects and high rates for drilling rigs. Some of the more vindictive companies are claiming it is because of Alberta's new royalty regime, but because other places have higher royalties the companies are happy to pay, that excuse doesn't wash. Some junior petes who live on a line of credit or regular stock issues instead of cash flow have been hit. Private equity petes who stay within their cash flow are well placed.

Calgary's economy is still booming but this is due more to ongoing projects such as a dozen or so skyscrapers under construction downtown and the municipality catching up on infrastructure projects such as roads and bridges. No matter what route you drive in Calgary, your lane is closed 500 metres ahead by the Waterworks Dept. installing a new line.

The retail scene will be confused by the Christmas shopping season just getting underway, but I expect a slowdown in January. 7-Eleven is still begging for clerks at $12/hour plus benefits plus retention bonus.

I wonder if demand destruction will outpace "supply destruction."

It's looking more and more possible, IMO...

Commercial mortgages could melt down next

WASHINGTON — The full scope of the housing meltdown isn't clear, and already there are ominous signs of a new crisis — one that could turn out the lights on malls, hotels and storefronts nationwide.

Even as the holiday shopping season begins in full swing, the same events poisoning the housing market are now at work on commercial properties, and the bad news is trickling in. Malls from Michigan to Georgia are entering foreclosure.

..."We're probably in the first inning of the commercial mortgage problem," said Scott Tross, a real estate lawyer at Herrick Feinstein in New Jersey.

And more evidence of softening consumer demand, even on the higher end, compounded by "Cheap is the new Chic."

WSJ: Luxury-Car Sales in Steep Decline
Luxury-car sales are getting hit as hard as the overall auto market, in contrast to previous downturns.

On top of rising foreclosures, a plunging stock market and thousands of pink slips on Wall Street, luxury-car makers say their customers also don't want their subordinates to see them driving a new car.

"People don't want to look like they have money now," said Mark Templin, group vice president of Toyota Motor Corp.'s North American Lexus division.

The opportunities and challenges going forward will be to figure out how to maintain an acceptable standard of living that is sustainable. Each person can benefit himself and the planet by investing in the future rather than simply consuming for the present. Insulating an attic is investing in the future; investing in a new big screen HDTV is simply consuming for the present. Investing in infrastructure, like solar panels, that provide a future return, means that their is less required throughput in the future to maintain the same standard of living. Our society focuses on consumption (throughput) as the end all and be all and then represents all that in GDP. Increasing GDP, year after year, represents failure, not economic success. Tearing down one's house to build a new one creates a lot of GDP but also represents the destruction of wealth.

Whats interesting is that you can lose a lot of GDP without impacting gasoline demand.

The luxury car example it takes just as much gasoline to go buy a cheaper toyota vs a BMW.
You lose a significant amount of GDP but the oil usage has not changed.

Someone that makes 100k a year used the same amount of gasoline per year as someone making 50k.

Going to the store and buying day old bread uses just as much energy as buying fresh bread.

I could go on for ever but you can see economic activity can shrink a lot before demand changes.

Growth in demand does not happen but the leap from growth to actual decline in demand is quite large.


Keppel Slumps by Most in Seven Weeks as Customers Review Orders

Nov. 28 (Bloomberg) -- Keppel Corp., the world’s largest builder of oil rigs, slumped by the most in more than 21 years after saying it was in talks with three customers to review options for new orders agreed earlier this year

Keppel earlier dropped as much as 15 percent, the most since October 1987, and closed 13 percent lower at S$4.20. The contracts were for a semi-submersible, two jack-up rigs and a support vessel signed by Seadrill Ltd., Scorpion Offshore Ltd. and Lewek Shipping Pte with Keppel Offshore & Marine Ltd., Keppel said yesterday in an e-mailed statement.

Demand for new ships and offshore projects has slowed as the global financial crisis has dried up funds, cut global trade and driven oil prices lower. That’s raised concerns that some orders may be canceled or delivered late.

The “announcement may set a dangerous precedent for more potential order cancellations,” Goldman Sachs Group Inc. analysts including David Ng said today in a note. “It has not only established that oil-services companies are backing out, it is hitting incumbents such as Keppel.”

Peace River project shelved by Shell

Published: Thursday, November 27, 2008

Royal Dutch Shell has put on hold another multibillion-dollar Alberta oilsands project, the second in a month, as it struggles with low commodity prices and increasing Alberta construction costs.

A spokeswoman with subsidiary Shell Canada Ltd. confirmed Wednesday the company has withdrawn its application for regulatory approval of the 100,000-barrel-per-day Carmon Creek in-situ oilsands project planned for 40 kilometres northeast of Peace River because it would not be economic as envisioned.

The project, for which no cost estimate has been released, was to have been sanctioned in 2010.

The latest megaproject chart looks to have severely trimmed tails after cuts to projects past 6 years.

Japan industry: 'Unprecedented' decline

TOKYO (AP) -- Production at Japan's vital manufacturers is sinking fast - and is projected to turn in its worst quarter ever - amid a plunge in global demand that is battering the core of the world's second-largest economy.

..."The world economy is a disaster," said Richard Jerram, chief economist at Macquarie Securities in Tokyo. "Exports are in the process of collapsing, and as a result industrial production is falling at unprecedented speed."

Yet, i just heard on the news that a in a wall-mart in my local area a worker was trampled to death by over eager consumers. It's speaks pretty sadly for this country really..

Youtube: Wal-Mart Worker Killed During Stampede

Just wait until 'thousands of Americans' are lined up not for a holiday sale, but for food with which to feed their starving families.

As tempers flare and tummies grumble, there will certainly be no shortage of trampling, conflict, and senseless violence. I wonder whether the cornucopian economists will refer to this as demand destruction..

"there will certainly be no shortage of trampling, conflict, and senseless violence. I wonder whether the cornucopian economists will refer to this as demand destruction."

LMAO !!! That is perfect. I can just see the economists on TV explaining "demand destruction" while charting the dead and maimed consumers after each rampage at the supermarkets.

It speaks badly for New Yorkers. There has been a lot written on The Drum lately about all the advantages of living in high density cities. I'll stay here in Decatur County IA where we lock our doors so the neighbors don't sneak in an leave a bushel of sweet corn.

Chuckle, up here if you leave your car unlocked in town in the summer, you'll most likely have a back seat full of zucchinis.

Don in Maine

Some Russian Oil Export Numbers


Russian crude exports to outside the CIS dropped 6.1% in the first ten months of 2008 compared to the same period of 2007, according to preliminary data from the Fuel and Energy Central Dispatch Center.

Transneft (RTS: TRNF) President Nikolai Tokarev said recently that Russian oil exports since the beginning of November have dropped by about a quarter compared to previous months as oil companies reacted to export duties. Sources close to producers said oil companies could substantially reduce crude exports in December compared to November. The sources said that applications for oil to be exported to the west in December were much lower at the beginning of the month than what the export schedule envisions and much lower than what was exported in November.

That would do a long way to support the price of Brent.

Meacher also writes (in 'Crude Mathematics'):

The consequences of this [i.e. downscaling of investment in natural gas extraction - CO] for the EU and the UK are very serious. Since the EU gets 40% of its gas from Russia, where 70% of the gas fields are already in decline, any further major cutting-back in future oil and gas investments could act as a pincer on EU and UK energy supply. Indeed, the Russian energy industry has warned that if the decline continues, Russia may not be able to service even its own domestic gas needs by 2010 – this from a country where Gazprom is the largest extractor of gas in the world.

For us in Europe, that's the really scary news.

[Gas here means gas, of course, not petroleum.]


Do you have a link to the article/post you quoted above?
Would appreciate it.

It's posted up top.

Surely it's

(listed above)

I'm glad the comments on TOD are more considered than they seem to be on the Guardian site. Michael Meacher doesn't deserve insults.

It's time for TOD to push Peak Gas. We need to get seriously stuck into a programme of rapidly insulating the European building stock to get gas demand down otherwise there is going to be a very serious 'winter of discontent'.


Thanks to you all.

I normally and daily scrutinize the excellent DrumBeats from Leanan, but it happens I overlook interesting posts......it could have to do with eyesights I am told. ;-)

I have some posts in the pipeline about Nat Gas based upon IEA WEO's and also a post from simulations of UK Nat Gas supplies this winter presenting two scenarios (as of now these seems to be the most likely ones and reality seems just now to be running a little ahead of the worst case).

your ...very serious "winter of discontent" could become reality sooner than expected if not some LNG tankers soon comes out from the fog.


Germany and Sweden are doing their bit.

Best Hopes for High R-value insulation and tight windows,


I've just got nice new windows (made in Poland) put in my living room. Very cosy. And my mother's knitted me a new pullover.

I went to a talk by Wolfgang Feist last week about the Passivhaus standard.

Very impressive. 96% reductions in space heating use.

So many people wanted to attend the talk there wasn't room in the Royal Institute of British Architects and it had to move to a local 'meeting place' (i.e. a basement disco).


Do you have a link ?

Here's a google search I did, but the returns look a bit off compared to what your post mentions.


There's a blog article about the talk at


The talk was actually organised by the UK Association for Environment Conscious Building



Alan - I had some friends that did a remodel and made their house so airtight that the pilot lights on their 4 burner gas range would drop out.

They are a family of 4, had a small 1200 sq' house with gas range, oven, insert in fireplace, I think they were depleting the oxygen in the house so I had them crack a window for the day and it didn't drop out.

They may have been pressurising the house also, not sure.

Do you think this is an issue or not?

By the way I do make artichoke soup that people still call about almost daily. Secret: Finish seasoning the soup with hint of good quality Dejon mustard.



There are code requirements for combustion air. Since this is a safety issue it was treated seriously in my HVAC/R program.

btu and others have had general remarks in other DB's regarding consequences to tight building envelopes. This is an old issue for wood burners.

For the purposes of load calculations combustion air is considered and calculated for.

Opening a window is less effective than managing with a ventilation system designed with a gas appliance in mind.

I'm an old fart in a new field but I'd say, ummmm, yeah it's an issue ;)

Another approach to this would be to look into an upgrade to a pilotless burner system for the range - or a new range.

Or to go so far as getting a professional for an onsite evaluation. Else good Luck to your friends in sorting it all out !

It's also a human health issue,
all that off gassing plastic, formaldehyde, etc. needs to get out, preferably not via the inhabitants.

And don't forget the pets !!

"I'm an old fart in a new field but ... "

I worked for a time on a DOE project in building energy conservation way back in the '70s. I remember us younger guys being warned about need for combustion air by a old fart back then. There is very little that is really new in building science, only old knowledge that is being rediscovered.

Because there is so much 'prior art' that is known only to old farts and patent lawyers, it is difficult for a business to claim patent protection on something that they have actually worked out for themselves. It is problematic relying on marketplace innovation to get us out of this mess.

There is very little that is really new in building science,

Science (of thermodynamics) wise that sure is true.

I framed for a couple years in the 70's, mostly residential some, commercial apartments.

With my new career education almost over, I'm looking for employment and trying to update my knowledge of building materials. Now there is something new !! Lots of new materials and products.

It is problematic relying on marketplace innovation to get us out of this mess.

I agree.

If the house is too tight, it would be necessary to install a exhaust system with an energy recovery heat exchanger to heat incoming air. The open window idea works, but defeats the purpose of the tight house, which is, to limit infiltration. The air is continually ventilated and the heat (and moisture in some systems) is returned to the inside with the incoming air. There is an added cost for the fan to run the vent system.

E. Swanson

The standard is to install an air to air heat exchanger, especially on SIP (structural insulated panels) houses.


I ran 4" PVC, underneath the foundation, out side it comes up 8 feet to the sill and is terminated with an elbow and hardware cloth. Inside, it comes up the cellar wall to what I call a back and forth, 4 elbows, then across the underside of the main floor, to a floor vent behind the woodstove intake. With no draw the colder air will settle under the cellar wall. With a fire, fresh air in drawn in slowly (elbows act as a baffle) and actually warmed as it passes thru the cellar. Warmed more as it passes under the woodstove to the air intake. Woodstove draws well, and holding a hand over the floor vent, you can feel air movement but it's not cold. Works fine and cost about $40.

Don in Maine

"....pressurising the house also,"

if the pilot lights are dying before the inhabitants, that would probably be the case.

Good advice above.

Low gas pressure is more likely cause of pilot lights going out. Lack of gas vs. lack of air/oxygen. Or bad tips on pilot lights on old stove.

Some good carbon monoxide monitors on the market, well worth buying one !

And pilotless stoves are a significnat energy saver.

Send me eMail for link to 100 Best New Orleans dishes, a dozen are soups (offer open to all).

Oysters & artichoke soup also requires oysters :-)

Best Hopes,


And let's not forget that Europe has no military power to speak of with which to drum up alternative sources of gas by force. They pretty much would need to rely on the US for that.

Not if you happen to live in Sweden(We don't use natural gas: http://ec.europa.eu/energy/energy_policy/doc/factsheets/mix/mix_se_en.pdf ).

Wind turbines just look crappier by the minute; sure, they save a little bit of natural gas in the short term. But in the long-term when natural gas begins winding down you're SOL if you can't criss-cross the entire continent with highly redundant HVDC-lines capable of shuffling power from anywhere to anywhere at short notice and integrated with days worth of grid energy storage; this is just never going to happen.

According to the item you are commenting on, 'the long term' starts around 2010.

Most of Europe simply has not got the hydroelectric resources Sweden has, with much of the balance being nuclear.
The anti-nuclear movement together with cheap fossil fuels has crippled the ability of the nuclear industry to build out fast enough to prevent at the very least the mother of all depressions, and the consequences of that will reach even Sweden.

Germany Reaches Kyoto Emissions Commitments.

The study points to the mild winter of 2006-2007 as being a factor in the recent decline. But it also says that greenhouse gas emissions from German households have been declining for years. The same trend has been observed when it comes to emissions from cars and trucks on the nation's roads.

I've noticed that if you want to know what's really going on inside the United States, the best place to look is the foreign press. In Mexico we get much better, and less biased, coverage and commentary about the United States than what you get in the United States. (Sad to say the same thing can't be said about what's going on in Mexico.)

I'm in Bogota, Colombia this morning and the lead editorial in El Tiempo treats of Obama's cabinet picks thus far:

[M]any analysists, even in the traditional media, have talked of the arrival of a new liberal era and a social impact like that of Franklin Delano Roosevelt in the 30s. With the appointments that Obama has announced thus far, the ascension of Obama looks more like that of 1993--that of Bill Clinton--than that of 1933--of Roosevelt and the Great Depression.


Denninger doesn't want another FDR.

I am not happy with the idea that we're going to play FDR, because any dispassionate analysis of the "New Deal" infrastructure and "make work" programs shows that they were quite counterproductive to economic recovery (never mind the other things FDR did like burning farmer's fields and shooting their livestock to "boost prices"!)

I'm really starting to think that we don't understand the Depression, or how we got out of it. Many "experts" think they do, but they don't. They've just never had a chance to test their theories and find out how wrong they are.


I don't doubt your wisdom, and I tend to agree with your comment on a purely emotional level--I believe FDR was all about saving the capitalists (bankers and such), and much less about saving the common man. Not unlike now, incidentally. That's what a lot of "common people thought, even at that time, so far as I can tell.

The question is, how did the myth of FDR the Savior get started? Who started it? Who pushed it?

I used to believe that the Press (that's what they called it before it became the "media") was once upon a time professional, dispassionate, and relentlessly honest in pursuit of truth. It was The Fourth Estate. But I'm beginning to see that it has always been the publicity arm of Wall Street.

Can we avoid getting bamboozled again? Does the fact that we know, or think we know, these things make any difference?

My guess is no. It's become so politicized already. Democrats and Republicans have very different views of the causes of the Great Depression, and whether FDR helped or hurt the recovery.

In any case, even if we fully understood the Great Depression, it's not clear it would apply in our current plight. How can we grow our way out of a depression in an age of shrinking resources?

I think you are right; we don't really understand the Great Depression. We tell each other stories which we believe explain the events therein, but it is narrative fallacy. Economies are not machines whose workings we can understand, but rather emergent systems.

Re: How can we grow our way out of a depression in an age of shrinking resources?

Easy one.

The resources are maldistributed. This happened during the Great Depression and in the former Soviet Union. When resources are over concentrated at the top as now and in 1929 or when the Central Committee or the Politburo have control of most of the resources there is gross inefficiency.

It is possible to have growth with declining resources if the resources are distributed is such a way that utility is maximised. When resources are concentrated in the hands of a few, it is obvious to me that utility is not being maximized and growth will suffer.

Those who can make better uses of the resource are denied them. And those who have much more than they need are careless in employing them. The shenanigans of the housing bubble are a prime example.

I can not understand what CEO's and other highly paid people do with their multi million dollar per year incomes. I do not have more than about average income, and I find it difficult to spend it without being silly.

In the case of the the former Soviet Union, it was to much socialism. In the current American case as in 1929 it is too much free market capitalism. We need an appropriate mix that maximizes the utility of available resources.

Let me make a heretical suggestion. That we not try to grow our way out of this recession (we are not in a depression and are not likely to be).

Growing our way out is considered imperative because a large amount of growth is necessary so that a few crumbs can be thrown to those at the bottom while the millions and billions held by those at the top are untouched. Our belief that growth is the only answer is a testament to the effectiveness of our media. Turn on CNBC today or any other TV channel and you can see this paradigm in action.

Growth is not only considered good; it is considered an imperative. We have been so brainwashed that we cannot consider any other way of constructing our affairs or the economy. I, certainly, am not immune from this paradigm.

Take out some of the fear and income inequity and you take out much of the need for growth. Take medical care, for example. If my ability to get medical care is dependent upon the perpetual growth machine, then I am going to be forced to be a big supporter of growth. On the other hand, if universal medical care is implemented, my survival will be less dependent upon that machine.

We are also in a period of relatively high unemployment. Accordingly, the first thing we do is ratchet up the credit and stimulus machines. Again, growth is the only perceived answer to this problem. There are other alternatives we should consider like transfers of wealth, longer term unemployment benefits, and even a guaranteed annual income. Instead, the only prescription is growth and more growth.

This growth is killing the planet. We need to look for alternatives. This is as good a time as any to do that.

we are not in a depression and are not likely to be

What makes you say that?

Britt Beemer, on CNBC this morning, said the economy is the worst since the Roman Empire. Okay, he was exaggerating, but things really are historically bad. I am expecting a depression, and I think it may well be worse than the Great Depression.

What is getting obscured in all of this talk about a declining economy is the specter of the sixth Mass Extinction the Late Quaternary Extinction.

The term Late Quaternary Extinction first appeared in David Quammen's book of short articles Natural Acts

... in line with all the other mass extinctions (five) to sum up our current situation this way:

"Finally and most dramatically, the Late Quaternary Extinction, during which more than a million species of living things perished within just a century. This quickest of all mass extinctions occurred (according to the local time system) in the span 1914-2014 A.D. The main cause was once again habitat loss, and the agent of that loss was the killer-primate Homo Sapiens, now itself extinct. Sapiens unaccountably violated the first rule of a successful parasite: moderation. Sapiens was suicidally rapacious.

That's the way it will look to some being on the Planet Tralfamadore with an idle interest in the paleontology of Earth. Life has existed on this mudball for about 3 ½ billion years, and we are just now in the midst of what looks to shape up as the third great mass extinction of all species. This episode threatens to be larger in consequence than the Permian and the Cretaceous and the other major die-offs put together: one-fifth of all forms of earthly organism could be done within thirty years."

The eminent biologist E.O. Wilson put it more succinctly:

...the current biodiversity crash appears to be more abrupt than any previous mass extinction.

Cause: Exponential human population growth with steep climbs in consumerism.

Interesting yet useless factoid: Total weight of humans and their cattle as a percentage of the total weight of vertebrae animals at beginning of industrial revolution: <1% Presently: >98%

The irony is the sooner we jump start the consumer economy again the sooner we'll be extinct!


The absolute bottom line.
But all efforts will be turned to preserve the stupid economy.
"It's the economy, stupid."
Irony abounding!

I don't doubt a crash is in the making, but H.Sapiens extinction? I haven't seen a credible argument for this yet. We're too geographically and dietetically diverse.

Leanan (and others). Does anybody have a list of depressions other than the "great Depression"? Specifically have historians/economists rated these other depressions for length/depth and for their social/political fallout. What was the worst depression ever?
I Have read that a depession in about 1842 caused large numbers of deaths even in places such as NY so if things get bad how bad do they have to get for a repeat of that?

Here you go:

Google is your friend! ;-)

Our basic problem is that we are following the advice of "economists", none of whom know anything or even think about economizing.

Growth is not simply multiplication like cells in a malignant tumour but development of new industries, new technologies and new ideas without which society is stagnant and will eventually die for failure to adapt.

x is 100% right. It's all about utility, and we can continue to have growth in an age of shrinking resources. Not sure we'll see growth in real life, though. Seems to me a more likely good scenario than actual growth would be quality-of-life improvement with shrinking resources.

Regarding the FDR discussions, an FDR style response is a great idea right now, especially the one planned (with investment in green energy, etc.) because it will redistribute resources in a way that improves utility. Plus, it's the moral thing to do. What we've got now is rich people driving Hummers cheaply, and poor people starving. Bad, and unnecessary.

Regarding the price of oil and production, I'd bet (and will be betting) a good chunk of money that we're going to be seesawing up and down between maybe $40ish and maybe $160ish for years, with the average high and low slowly rising.

All in all, because of the election of Obama, I feel optimistic about the future.

Democrats and Republicans have very different views of the causes of the Great Depression, and whether FDR helped or hurt the recovery.

It's called the underdetermination problem.

Underdetermination (sometimes indeterminacy of data to theory) is a term used in the discussion of theories and their relation to the evidence that is cited to support them. Arguments from underdetermination are used to support epistemic relativism by claiming that there is no good way to certify a theory based on any set of evidence. A theory (or statement or belief) is underdetermined if, given the available evidence, there is a rival theory which is inconsistent with the theory that is at least as consistent with the evidence. Underdetermination is an epistemological issue about the relation of evidence to conclusions.


The only solution is to make sure your theory is self-evidently true and derive your conclusions logically therefrom.

A tall order, though.

I'm not sure about your solution: Newton is said to have believed instantaneous action at a distance was self-evidently nonsense, but went with it as a means of formulating an effective theory that advanced things at the time. More generally, an awful lot of things that look self-evidently true at some point in time turn out not to be true.

The more general point is that the "Great Depression" was just one period of a decade or so. Trying to come up with the complete definitive view on the it, particularly if you're going to make your answer consistent with your world-view (which words like "dispassionate" signal to me using rhetoric rather than facts and argument), is not likely to be particularly useful for current conditions. Trying to figure out trends that seem to apply both there and in the host of other economic conditions we've got data on is a much better idea. In most machine learning the goal is not to reproduce the training data you've got but figure out as much as is useful without becoming so specific that your model generalises poorly to new data. And this is typically assuming that your new data is drawn from the same conditions as your training data, whereas I'm sure that at least some aspects of current conditions are new (levels of resource depletion, lack of savings in large parts of the world, etc).

In most machine learning the goal is not to reproduce the training data you've got but figure out as much as is useful without becoming so specific that your model generalises poorly to new data. And this is typically assuming that your new data is drawn from the same conditions as your training data, whereas I'm sure that at least some aspects of current conditions are new (levels of resource depletion, lack of savings in large parts of the world, etc).

Yes, spot on.

Those darn unpredictable Black Swans -- so many of them, these days, darkening our skies:


[for the 5% TOD fans who haven't yet heard of Nassim Nicholas Taleb -- apologies for redundancy to the other 95%]

Was that web page designed in 1993?

"How can we grow our way out of a depression in an age of shrinking resources?"

I agree completely, Leanan. This is the crucial question about the U.S.--and the world economy--that BAU folks of all stripes everywhere seem altogether unwilling to entertain, at least in public. Nevertheless, it is the question that must be addressed openly--sooner than later--by those capable of influencing events in any measure, if there is to be any real hope of achieving a sustainable or "steady-state" human economy without incalculable and unimaginable pain. Will the duly elected or constituted authorities soon address this question? I doubt it very much.

(shrinking resources)

-that BAU folks of all stripes everywhere seem altogether unwilling to entertain, at least in public. Nevertheless, it is the question that must be addressed openly--sooner than later--by those capable of influencing events in any measure, if there is to be any real hope of achieving a sustainable or "steady-state" human economy without incalculable and unimaginable pain. Will the duly elected or constituted authorities soon address this question?

I think there is some cause for hope. I have been trying to increase the visability of the half-way solution Increasing the utility per unit of resource consumed. At least initially this can be packaged as saving the BAU like growth model. I think this can buy us considerable time. It should also kick start the process of thinking differently about consumption. Keep pushing awareness of the needed changes into the public discourse -and into change.gov.

As an aside, so many of our institutions are predicated on funding due to investment returns. A change away from the growth model -or even a longterm decrease in the rate of growth will be pretty difficult to handle, as all sorts of programs that we believe are solem promises won't be capable of delivering.

All growth is based on appropriation, taking something from somewhere else and adding it to the resources here.

We could still grow, if we all agreed to become more ruthless in our treatment of each other and the ecosystem of which we're a part.

But some already realize that growth, itself, is part of the problem.

All growth is based on appropriation, taking something from somewhere else and adding it to the resources here.

That's not universally true: for some things, particularly highly finished items, increases in the efficiency of processing/general inventiveness can "grow" a market without increasing appropriation (or at least not by much). I'd imagine that the energy used in processing to put one replayable song in the hands of a consumer has probably decreased with the advent of CDs and mp3 downloads compared to records from, say, the 1940's.

I think its arguable that most of the most important things in life do have growth based on increasing resource usage over the past (I don't think we're heading into universal assembler nanotechnology living off ambient thermal gradients anytime soon), but it's worth pointing out that it's not universally true.

You are all making the mistake of thinking that all growth is bigger.
Population can GROW smaller, the amount of pollution can grow smaller, consumption can grow smaller, etc.....
I am all for "growth" if that growth is smaller!

Leanan - I believe that most if not all of the chattering classes (particularly the scholarly types who publish well reasoned tomes) don't have a clue about what the Great Depression meant.

My Grandparents (both deceased) on my father's side did however. Joe T. was a finish carpenter who can tell you of relocating from N. Carolina to Georgia (on foot) to seek work. He could tell in precise detail what it was like to stop building on a large house because there was a run on nails and moving an entire work crew to a barn deconstruction in order to salvage enough nails so they could continue working. My grandmother, May, never owned a store bought dress until she was in her fifties and only then because her kids bought them for her. She always had a vegetable garden and canned into her late sixties when Joe T. died and she was moved to a retirement home (that killed her a year later).

Most rural people people in America during the 30's never saw a dime of Federal help. Now we have to listen to people who have never sewed a stitch or hung a screen door talk about how they are going to re-light the furnace and get the "economy" working again.

"Boondoggles to the rescue" Dmitri Orlov


The Great Depression began in 1922, with the end of the Panic of 1921. The resulting low interest rates and the shift of farm workers - as well as European immigration - to industrial cities resulted in stagnating wages. Without wages aggregated as savings, the only other source of business (and government capital) was debt. Background can be found here:

Stagnating wages have also been a characteristic of the period 2001 - present, in fact the increasing layoffs and the probability of auto industry bankruptcy will depress wages further. There are few aggregated savings, the US individual savings rate is near zero;


The backdrop for both periods was highly leveraged speculative bubbles in stocks and real estate. Added together, the bubbles and lack of real or 'hard' capital suggest a 'depression indicator'.

All else being equal, the only way to escape the 2d Great Depression would be to increase wages over expenses and give wage earners a safe place to save. This would mean currency that is stable (not), banks that are sound (not), returns on savings that would be meaningful over time (not) and an economic context where investments made with those savings had a positive return over a span of time (not).

Plus, all else is not equal. The energy and climate effects are over the horizon. In the meantime, the US government seems hell- bent on bankrupting itself. The incoming administration seems content with this state of affairs; it is reasonable to wish them luck with their endeavor since they have come so far down the road without having to exert themselves. It is interesting to speculate on how new President and his Treasury Secretary will explain on television to the American people how the country is truly destitute ... and how they are not responsible.

I expect some great television out of this crisis.

Roosevelt tried a lot of different strategies; some failed and others failed worse. He expressed concern for the suffering public more effectively than did the Hoover administration. Hoover liked to go fishing and did quite a lot of it. Roosevelt was a 'great communicator' who used radio and the newreels and was accessible. Hoover's was a presidency under siege ... like Nixon's.

Roosevelt supported labor unionization and used the wartime mobilization to compress the difference between high- and low- wage sectors. This 'Great Compression' (thanks James Galbraith) lasted until the Reagan Revolution. During this period, a mid- level government employee could raise a family of seven with a stay- at- home mom, buy some real estate, save a substantial amount of money, and retire debt free.

I'd like to see anyone doing that today, certainly not in a year or two.

Roosevelt supported labor unionization and used the wartime mobilization to compress the difference between high- and low- wage sectors. This 'Great Compression' (thanks James Galbraith) lasted until the Reagan Revolution.

That's a good story. Probably as accurate as anything else I can read.

The great Wartime Mobilization converted unimaginable amounts of petroleum, iron ore and coal (plus water, sulfur, nitrogen compounds, etc.) to stuff that the group of human beings who are powerful enough to pretend to own the universe call "wealth", but which other species (and even a large number of the human species as well) could only call "devastation."

It seems to have come unglued starting with Nixon, not Reagan -- but Reagan put the icing on the cake, and Clinton temporarily convinced us that a mirage was a real economy.

Bush II may not have cause all our troubles, but his administration was able to point out the deficiencies in the way we organize our society in such stark terms that he may be dealt with as any unwelcome messenger.

It seems to have come unglued starting with Nixon

I agree.

And peak oil USA happened during Nixon's presidency.

Coincidence does not prove causation. It does seem to explain things like the mid 1970s being the time of peak purchasing power for the American worker.

I'm really starting to think that we don't understand the Depression, or how we got out of it. Many "experts" think they do, but they don't. They've just never had a chance to test their theories and find out how wrong they are.

Recommended reading: Chapter XVII ('Indirect Exchange') of Ludwig von Mises's 'Human Action, in particular the subsection entitled 'Inflation and Deflation; Inflationism and Deflationism'; also Chapter XX ('Interest, Credit Expansion and the Trade Cycle').

'Taster' extract (p. 573):

The popularity of inflation and credit expansion, the ultimate source
of the repeated attempts to render people prosperous by credit expansion,
and thus the cause of the cyclical fluctuations of business, manifests
itself clearly in the customary terminology. The boom is called
good business, prosperity, and upswing. Its unavoidable aftermath, the
readjustment of conditions to the real data of the market, is called
crisis, slump, bad business, depression. People rebel against the insight
that the disturbing element is to be seen in the malinvestment and the
overconsumption of the boom period and that such an artificially
induced boom is doomed. They are looking for the philosophers'
stone to make it last.

on line at:


[P.S.: Peak Oil is not LvM's strong suit.]

The quandary is this:
Ludwig von Mises followers such as Peter Schiff predicted the financial collapse.
Yet, LvM followers ala the Austrian school want no regulation and a pure laissez-faire economy.
So what is the best approach to avert capitalist catastrophe -- regulation or no regulation?

Regulation or no regulation? Clearly we should have some regulations, regardless of what the Austrian economists say. But I don't think that is the main issue, nor do I think that our understanding of the Great Depression is a main issue. The world today is much different than the world was in 1929 because, in my opinion, we are now at Peak Oil.

The big issue is: How can we manage declines in net oil exports? I'm not saying that questions of bank regulation or monetary policy are negligible, but the 800 pound gorilla in the room is Peak Oil. In other words the problem is not how to restore economic growth; the unavoidable problem is how do we manage long-term decline in real GDP. There are going to be declines in living standards because growth in nominal wages will lag behind growth in the Consumer Price Index. Worse, there will be increasing unemployment that results from the decline in real GDP caused by declining oil production.

In my opinion we may well avoid a deflationary depression caused by bad debts, but we cannot avoid the coming reality of a long-term decline in net oil imports. Thus I think the underlying realities today are so different from the Great Depression that studying the 1930s, when oil was cheap and abundant, is of limited value.

Using GDP as an indicator of well being is well known to be highly flawed. Here are just a few examples for this comment.

Every time there is an automobile accident, people tend to die or suffer injuries. When the injured go to hospital, the money spent increases GDP. The damage to the vehicles likely results in spending to fix the vehicles or replace them. That is another boost in GDP. In as much as the accident rate is related to the total vehicle miles traveled each year, reducing the total miles traveled by car would reduce the GDP from accidents. Also, the fuel consumed adds to GDP, as does the eventual replacement of the vehicles after depreciation. Fewer miles traveled implies fewer new vehicles required over the long term.

Adding insulation to structures reduces fuel consumption. Over the years, after the one time cost of insulation is considered, the GDP is reduced. The same if true for switching to CFLs or other appliances which use less energy while providing the same level of service. Conservation does not necessarily result in lower satisfaction to the consumer (such as lowering the thermostat) while it does reduce GDP. A reduction in individual consumption implies that one won't need to work as much, so a reduction in GDP coupled with a reduction in time spent working could well result in an increase in satisfaction as one has more time for other activities. Those activities can include low energy activities, such as exercise, which tends to further reduce long term health costs, which further reduces GDP. How many younger people bother to read books thee days?

Economists must stop thinking about GDP as the sole measure of society's well being. There are other ways to look at life...

E. Swanson


I know of no economist who regards GDP as a measure of human well being. It was not designed to measure well-being. But GDP growth or decline is linked--tightly--to growth or decline in employment. If GDP is going to decline countinuosly for fifteen or twenty years, then there is going to be a huge decline in employment, and hence a huge increase in unemployment. In my opinion, we need to break the linkage between jobs and income, because there are simply not going to be enough jobs to go around. The layoffs we've seen during the past few months are very small potatoes compared to what we will see as decline in oil production and oil imports causes economic decline.

You may not like the GDP concept at all. Sorry about that, but its rate of growth or decline determines the rate of growth or decline in employment, and there is no getting away from this fact. Unemployment in recent months has increased because real GDP has declined, and for no other reason. Already their are strains on the system of unemployment compensation, shortages at food banks, and more people without medical insurance, all caused by increases in unemployment.

Of course we should stop the wasteful use of resources, but that is not the big issue in the long run of diminishing oil production.

Accepting for the time being, the tight link between GDP and employment, and also considering that less emphasis should be placed on GDP, for the sake of sustainability, we should accept higher levels of unemployment. They have had high levels of unemployment in Europe for years and I think they are doing just fine in terms of overall quality of life, to include a much lower level of energy consumption.

While I think things could be done to mitigate the impact on employment of reduced GDP, we could also just learn to accept lower levels while providing generous and long term unemployment benefits or some sort of guaranteed annual income. Sure there will be slackers. But that might be a price worth paying if we could focus on something like a genuine progress indicator or gross national happiness instead of GDP as the end all and be all. Maybe economists don't believe that GDP is measure of well being but the vast majority of us act as if it does in fact measure well being.

As you probably know since you are a Kenneth Boulding fan, he was talking about "psychic income" as far back as the 50s.

But nooo. The future administration will frantically try to prime the pump and continue massive credit infusions as a way to resurrect the growth machine yet again. Too bad for whatever species are remaining.

They have had high levels of unemployment in Europe for years and I think they are doing just fine in terms of overall quality of life

I don't know about mainland Europe, but in the UK relatively high unemployment has been a bit of a problem, particularly since it's not uniformly distributed geographically and socially. Ironically the major thing cushioning the impact of being unemployed for those who aren't deriving extra income (through crime, relatives or lying to obtain further benefits) has been the relative cheapness of material goods for the past twenty-ish years which provided an "opiate" to absorb emotional issues and narrow the gap with the employed. If peak oil is now, then that's disappearing even faster than expected due to rising Chindia living standards. Even now children are apparently growing up in multigenerational unemployed families with ideas like timekeeping doesn't matter.

I'm also sceptical of proposals to maintain employment by reducing working hours: for some jobs that works, but for things like teachers, writers, programmers, etc, there's an inherent "unit" that only makes sense if it's delivered in a given timeframe (eg, teaching a class full of children one years academic knowledge in one calendar year, developing an application program before it's outdated, etc) which implies a standard-ish working week.

I don't really see a way out, beyond the vague hope that, precisely because GDP is measured in terms of money rather than concrete resources we can shift to more "value adding and intellectual work" so that GDP keeps rising whilst concrete resource usage falls. But that's about as realistic as a manned Mars mission in the next 5 years: probably physically possible but not gonna happen in the real world.

I'm also sceptical of proposals to maintain employment by reducing working hours: for some jobs that works, but for things like teachers, writers, programmers, etc, there's an inherent "unit" that only makes sense if it's delivered in a given timeframe (eg, teaching a class full of children one years academic knowledge in one calendar year, developing an application program before it's outdated, etc) which implies a standard-ish working week.

You can have a standard-ish work week while still reducing hours. For example, in the upper education levels, the kids switch classes. So instead of having each teacher teaching 5 or 6 or 7 classes a day, you could have them teach 3 or 4. (This is a major consideration for college professors, BTW. It's written into their contracts how many classes per semester they have to teach, and less is better.) Younger kids generally don't change classes each period, but you could hire more teachers by making the classes smaller. It is less work to teach 10 kids than to teach 40. While your actual hours teaching may not change, you will spend a lot less time grading papers, meeting with parents, etc.

College lecturers/professors are a weird case, in that everyone thinks they're employed to teach whilst they're really judged on how much grant money they bring in and how many papers they get their names on, so doing less teaching doesn't mean less work in total, just different work. (Particularly since I gather in the US it's completely standard that they have to fund their own summer salary from grants.)

Probably teachers were a bad example, in that once you've got into the swing of your subject you don't need too much practice to keep up proficiency, and as you say they're generally teaching the same level to a couple of groups so dividing things in half would still give them experience teaching at that level in that year. I was thinking more about jobs where people are working on some task where either their skills or the task requires a lot of getting up to speed if it's shared between multiple people. For the second, take writing programs, or designing buildings, or some other form of "constructive" work: they can and should be modularised to an reasonable extent, but beyond the point where you start job-sharing you end up with a situation where you come in on your work day and spend an hour wondering why on earth your colleague made that design decision and whether you should revert it.

I just find it likely that theres a percentage of jobs where going below a roughly 35 hour week is going to be difficult.

I just find it likely that theres a percentage of jobs where going below a roughly 35 hour week is going to be difficult.

Perhaps there are some, but my guess is not many. At least here in the States, the pressure to increase productivity means people are doing more work than ever. They are working on multiple projects at once, and wouldn't have too much trouble giving away some of them. Or they are already sharing out the projects with a group of people, and the "getting up to speed" is part of the job description already.

The trend in recent years has been toward a "modular" type approach. People have specialties, and work only on that specialty. So they may work on multiple projects, doing the same task for each. You could pretty easily divide that work among, say, four people, instead of having two guys do it.

In Europe a disfunctional labour market meant that growth was jobless. between 1970 and 1992 most European countries enjoyed good GDP growth but little or no increase in employment. In Spain GNP doubled but the number of people in work actually declined. Very strange.

Long ago I had a pleasant, extended conversation with Kenneth Boulding. He impressed me so much that I adopted whole almost all of his thinking as my own, and then proceeded to forget where I had got it. But I do remember his comment, delivered with a friendly wink, when I told him I was an engineer:

"An engineer is a person who spends his life trying to find the best ways to do things that should never be done at all".

It happened that my work at the time was trying to find the "best" way to kill lots of people very far away. So his remark hit me where I was living.

So now, what is going on? Pick up any catalog or walk into any store. Look around. Almost nothing we are making can be called even remotely necessary. And in making all that crap we are killing the one thing that really is necessary--the only planet we will ever have. Madness! Worse, worse, than ICBM's.

Throw out the whole economic system. Start over.

Most people are doing things that should never be done at all. Jobs? We don't need more jobs like that. We need NO jobs like that.

We need work that first of all will assure us the things we know are necessary- Air, water, food, shelter, connectedness,-- and so on down the well-known list of what we have to have. Those jobs we have in vast plenty, and we should be getting them done. We aren't.

So, invent a new economic system. How? How do I know- not my job. You do it. But a few elements of this new system are "self evident". First- the price of anything is its true cost. The true cost is what it takes to put the planet back to at least as good a place as it was before the thing was done. Second- corollary of first- all economic activity must have as its first goal making the world a better place. No activity should go forward that does not do that. And, no reward should be possible from any activity that does not do it. And, any citizen can bring a lawsuit againse any person or entity that can be shown to violate this law of the new economics.

And so on. As I say, You do it, Go get a Nobel prize. But, goddam it, quit boring me with all this stupidity about needing jobs that are best undone.

Now, I am going back to think about
Solar thermal in the desert
pumped hydro storage
HVDC transmission to everywhere

And don't tell me that costs too much-- until you have quit making the far worse than useless crap that you are doing now - which is costing us our planet and our grandchildren.

Costs too much? Indeed!


I agree with you that the economy needs massive restructuring; this prescription would be right even in the absence of Peak Oil, but the years ahead of declining net oil imports makes it urgent that we do some fundamental rethinking.

Boulding's economics is a good place to start; he was a maverick economist who asked questions that were ignored by mainstream economists, questions such as how we can humanely achieve zero population growth.

The way our economic system works now, income is linked to jobs. Thus given the current structure of the economy a large increase in the jobless rate is an unmitigated disaster. I think we should decouple income from jobs: Either provide a guaranteed annual (1.5 times poverty level + medical insurance) income or, even better, use a negative income tax that would provide a strong incentive to work along with a guaranteed annual income.

Even in Plato's "Republic" he allowed the masses to pursue wealth and buy useless stuff. He didn't think the masses could put philosophy into practice, and he was probably right about that.

With the lowered living standards that are going to be caused by Peak Oil and declining oil production, there will necessarily be more emphasis on essential jobs and less room for the "frills."

I think almost every economist would agree with you that negative externalities should be internalized. Destruction of the environment is the biggest negative externality of all. How to deal with it? Well, the power to tax is the power to destroy. If I were emperor I'd put a $5 a gallon tax on gasoline and a stiff tax on coal production, just for starters. Tax activities that destroy the environment, and subsidize activities that restore it.

You're 100% right that this economic restructuring does not cost too much. Survival never costs too much.


It's posts such as this that makes me glad you are again a TOD member--Kudos--keep flogging away! Let's hope that someone, anyone from Obama's staff is reading TOD, then passing good ideas on up the command chain.

Kudos--keep flogging away! Let's hope that someone, anyone from Obama's staff is reading TOD, then passing good ideas on up the command chain.

If you send stuff to Change.gov, at least a low level staff member will screen/read it. Getting someone to pass it up the command chain, probably requires a pretty convincing argument. Having sent in two inputs, I now get two emails every time the transition team is going to push something. Someone read enough of my posts, to at least classify them as energy & environment, and input my email address (twice) for their automatic mailer.

Great work, Don. And thanks for the thinking. Just keep a-goin and you get your Nobel.

As a simple R&D engineer, I have the luxury of merely tossing out my many great ideas that go bad, with only the loss of a bit of paper or/and scrap metal. You economists are a lot less fortunate, since your ideas might afflict real people in big and painful ways.

I have been playing around with economics recently as a result of a request from a local club to give a talk on it--ha ha, knowing nothing about the subject except the one thing obvious to all- it doesn't do what we want. So, as a hammer sees everything as a nail, I as an engineer see everything as a mere project task to get defined and solved.

Economic systems should be designed to get us what we need, and not mess up the future. After all, I am identical to the guy who will stand here a hundred years from now, so if I go with the greed thing and think only of myself in the here and now, and ignore the fate of me-in-the-future, I am committing a stupid error in logic.

Anyhow, you know all this. Thanks again, and I shall await your ultimate solution and vote for your reward.

"...we need to break the linkage between jobs and income..."

I agree with this. It is fundamental. But I don't think we can achieve it before our world disintegrates.

You have illustrated some of the problems of using GDP figures, however, accident rates etc are not going to change dramatically in the short term, and its short term changes in GDP that indicate longer term effects on employment.
Economists certainly look at other measures besides GDP, such as employment, life expectancy, savings...

The assumption that capitalism seeks growth does not match with reality, capitalism seeks profits on invested capital. Cartels such as OPEC seek to maximize income not sales. Lots of historical cases in US of corporations maximizing profits where they had a monopoly on a product.

The other assumption that we cannot have "growth" without increases energy consumption appears to be contradicted by many examples( California for instance).

Furthermore, why do so many at TOD go from the premise that oil or FF use must decline, therefore energy use must decline?

Why will energy use decline because of the decline in the use of fossil fuels? For at least two reasons:

1. There are no good substitutes for fossil fuels for many purposes.

2. To the extent that we can find substitutes for fossil fuels in nuclear or solar or wind power we must also provide massive capital spending to invest in these alternative technologies. Where is the financial capital to come from? In the case of nuclear energy, where are the nuclear engineers to come from? In other words, we lack the resources to make a transition away from fossil fuels.

California is an interesting case of a state that has managed economic growth without increasing energy consumption. But much of that energy consumption has been exported to other states and countries. For example, California's grandiose construction industry depended on lumber, copper, glass and other materieals that were produced outside of California. In other words, California has been going more in the direction of a service economy, expecially finance, insurance, and real estate; these sectors use relatively little energy compared to manufacturing industries. Note that the real estate bust has put California's economy in the toilet, and now it has one of the highest rates of unemployment in the U.S. What is true of a part of an economy (California) need not be true of a whole economy.

I don't claim that there is a one-to-one linkage between energy use and GDP, but if oil imports decline at, say, 4% per year we can be pretty sure that real GDP will decline by at least 2% per year, and perhaps by more than that. Evidence not only from the U.S. economy but also from economies around the world show a tight linkage between energy use and rates of growth in real GDP. And note that a rate of growth of at least 3% per year in real GDP is required to keep the rate of unemployment from increasing. Thus a switch from a positive 3% to a negative 2% is a big one--and the results accumulate, year after year.

You have raised two reasons why energy use could decline with the decline in FF availability.
"1. There are no good substitutes for fossil fuels for many purposes."
That is true for airline travel with present technology which uses 5% of total energy(15% of oil). Shutting down 90% of airline travel for a week or even permanently would not cripple the economy because substitutions are available (rail,). It is also true for most ocean transport used FF(3% of energy use) although nuclear powered ships are operating.

Other uses of FF for heating, vehicle transport, rail transport,generating electricity are often replaced by electricity, or can be replaced by an electric powered equivalent. Significant amounts of electricity are generated by non-FF and no resource barriers exists to expand electricity to 100% non-FF .

"2. To the extent that we can find substitutes for fossil fuels in nuclear or solar or wind power we must also provide massive capital spending to invest in these alternative technologies. Where is the financial capital to come from?"
All existing FF resources require capital to develop new reserves, replace infrastructure as it wears out. Matt Simmons emphasizes that much of the FF infrastructure is at the end of its useful life so will have to be replaced anyway.
Certainly wind energy generates new capital from the sales of wind energy, and similarly existing coal and NG fired plants generate capital that can be used by the utilities to invest in non-FF energy. Similarly new capital will be required to build EV or an electric rail system, but would be required anyway to replace vehicles or diesel trains or trucks as they wear out.

While their is a relationship between GDP growth and energy use, since 1970 the world growth in GDP has been 1% higher than growth in energy use. China has had a very dramatic increase in GDP/energy use even though it has increased the export of manufactured goods.

Thus if oil use in US declined 4% pa, and was not replaced by a similar increase in non-FF, we would expect about a 1.3% decline in energy use, but only a 0.3% decline in GDP. More likely, some or at least all non-airtravel oil use would be replaced by non-FF electricity, due to the higher cost of oil based transport and especially due to cost of using heating oil. Since electricity is x4 more efficiently used in transport than ICE using oil, this alone would give a very large boost to GDP/energy(an additional 0.9%).

Neil 1947,

I hope that your optimistic view of how easily we can transition away from fossil fuels proves to be correct. But the numbers that I've been seeing on TOD are not consistent with your interpretation.

First of all, there is the question of how easy and inexpensive it will be to find substitutes. I think it is going to be much more difficult and expensive than you do. For example, electric cars are currently an expensive and not very good substitute for cars powered by gasoline or diesel fuel. Batteries may get better and cheaper, but there are no assurances here. Plus we have an enormous amount of capital devoted to producing cars as they now are; a transition to electric cars would involve huge capital expenditures, and it is not at all clear where this capital would come from.

We could substitute coal-to-liquids for petroleum, but this is a very dirty process and also quite expensive and would require huge amounts of capital. At best this would be a short-term fix, because coal extraction and transport are increasing in cost as we mine lower and lower grade deposits. In regard to coal, it is cheaper by far to build a coal-fired power plant than to install wind turbines, for example. Where exactly is the capital to come from to pay for the extra cost of non-fossil-fueled power plants?

I think the evidence suggests that you underestimate the effects on real GDP of a transition away from oil. For one thing, as oil grows increasingly scarce its price will rise, and this will have the same effect as an income tax increase. Also the path of upward growth in real GDP over the past seventy years occured during a time of cheap and often falling oil prices; despite the current weakness in oil prices we're going to see generally rising prices in the future.

If sufficient amounts of capital could be raised, then I think a successful transition away from fossil fuels could also be made. Current fossil fuel electrical generating plants depreciate slowly, and it does not take a huge amount of new capital to refurbish or replace them. By way of contrast, the amount of capital to build non-fossil-fueled electrical generating plants is enormous, especially when you consider the need to have storage of energy for intermittent sources of energy such as wind and solar.

Business as usual has an powerful momentum built into it, partly due to the infrastructure that was built to support the oil and natural gas and coal powered economic system that we have now. Transition away from BAU is going to be extremely difficult in the capital-starved environment that we find ourselves in. In addition, any particular alternative approach has significant barriers against its adoption: Biofuels do not scale up; nuclear energy faces formidable political barriers; wind turbines come up against the NIMBY effect in many cases; we lack the HVDC network needed to support big solar-energy developments in the deserts.

Any public company that is not constantly growing both its revenue and bottom line is a company that will soon be out of favor and is a company whose stock will be in the tank. Growth is what is talked about 24/7 on the financial channels. Companies don't simply seek profits, they seek increasing profits. I don't see where you get the idea that capitalism doesn't seek growth. Growth is what it is all about. Growth is built into our DNA. We are positively addicted to it. This is why our government has totally freaked out in the current recession. We are willing to mortgage our children's future for what we consider the necessity of growth. We simply do not know how to run an economy where we are not growing every year. Our leaders simply can't or won't even think about imagining an economy without growth.

But there is another reason we feel we absolutely must grow. We must grow because we continue to have a larger labor pool. That is why the number of jobs has to increase each month just to stay even.

"Growth is what is talked about 24/7 on the financial channels. Companies don't simply seek profits, they seek increasing profits"
This is my point, corporations seek growth in PROFITS, not necessarily producing more products. They can achieve growth in profits by;1) selling more of a product at the same or less profit margin 2)sell a new product especially if it has a higher profit margin, 3)buy an existing company.

The Australian (and US )population is not increasing due to birth rates, but due to immigration, and in fact the need for additional jobs is going to decrease as the population ages. The expansion of the labor pool has been due to a very high participation 65% in the workforce, due to the post- WW11 baby boomers entering workforce, lower fertility rates so more women could work. This large segment of the population is now approaching retirement.

None the less almost everyone at TOD states that we are addicted to growth, and if growth stops due to declining FF we will have a depression. This assumption needs to be examined critically.

Are you seriously saying that our economy is not dependent on growth?

It's a pyramid scheme. Of course it's dependent on growth.

What I am saying is that if growth was needed as the work force expanded very rapidly after 1970 due to demographics, immigration and much higher participation rates, then growth may not be required to maintain employment levels if the workforce participation declines especially after 2011 when baby-boomers retire in big numbers.
Other possibilities are that immigration accelerates, baby-boomers may not retire when reaching age 65, or the US may have a prolonged recession with no growth anyway. If you were optimistic you would say that a massive build of non-FF energy capacity to replace declining( and expensive) oil and NG would lead to a higher GDP/energy use, so you may have growth in employment and a decline in energy use. Since the US has gone into recession, a prolonged recession which by definition is a prolonged period of negative growth, now seems a more likely possibility, especially if oil prices remain low.

Any public company that is not constantly growing both its revenue and bottom line is a company that will soon be out of favor and is a company whose stock will be in the tank.

This isn't necessarily so. The stock would be evaluated by the present value -essentially the sum of future earnings discounted by some future discount rate (which is essentially an interest rate). So a stock which throws off earnings, even declining earnings can still have a significant value. But it's price to earnings ratio will be low if its earnings are declining.


I agree. The past is a long time ago. We probably don't really understand the present all that well, and we're in it, part of it; so imagining we truly understand an era we're not part of is very problematic in my opinion.

This doesn't mean we cannot understand or learn from the past, only that we probably don't understand or learn as much as we think we do.

Comparing now, with then, is very complex and of limited value, it's interesting but how informative?

Austrians are TOTAL idiots because they don't understand human behavior.
And they don't BELIEVE in deflation.

There are three schools of monetary policy.
1.The monetarists like Bernanke--they believe in adjusting the money supply to maintain price levels, preferably at zero inflation. It's a feedback approach.

2.There are the Keynesians--they believe in slight inflation to keep the economy running smoothly because 'supply creates its own demand'. This is necessary because of what is termed 'sticky prices' i.e. the demand curve has a kink in it and isn't straight.

3.Then there are the mentally challenged Austrians--they don't believe in manipulating the money supply at all. The market will ALWAYS clear i.e. number of buyers will match sellers at the proper price.
Why not intervene?
Because it is unfair to producers. Redistribution(taxation) is theft!
This mirrors the anarchist mantra of Proudhon(Property is theft!)
The late Wall Street panics and liquidations prove beyond a reasonable doubt the childish naviety of the Austrians, unless you are can't understand that everyone suddenly waking up after a 3 month nap to find that 50% of the accumulated wealth gone is a VERY BAD THING FOR THE ENTIRE WORLD.

For Austrian believers, the economy will recover better without the horrors of redistribution(monetary intervention). Is it worth the world to steal from some rich bastard and lose your immortal soul?

The reality is the Austrian think-tankers have always been a handpuppet of wealthy agitating in favor the 'producer class' who pay their salaries.
In inflationary bubbles, when regulators are seen as 'party-poopers' and nobody can imagine a cloudy day they
dupe a good many folks.
In bad times they become psychotic, babbling about a return to the gold standard-the ultimate contraction of the money supply due to the fact that there is only about 90000 tons of gold on this planet.

There is nothing as economically/sociologically stupid as an Austrian school economist(with my apologies to the fine country of Austria).
Would it be too inhuman to suggest they have their tongues cut out?

There was at least one good Austrian economist--Joseph Schumpeter. And Friedrick Hayak wrote some good books, too. In general I agree with your criticisms of the Austrian school of economics, however--and especially about their nonsensical worship of gold.

There is one point you got wrong, however: Bernanke is not a monetarist, because monetarists reject the discretionary use of monetary policy. To some extent, Paul Volker tried to but monetarist policies into effect, and his Fed did squeeze most of the inflation out of the system (at the cost of a couple of severe recessions). That is the last time that a version of monetarism was tried in the U.S. In my opinion, monetarism would be the least bad system in an economy of long-term decline. Our present monetary and fiscal policies will cause severe inflation in years to come; basically the Fed and the Treasury are throwing in everything including the kitchen sink to avoid deflation. It is almost inevitable that they will overshoot in the battle against deflation; regardless of what happens in the next few months I think double-digit inflation will return by the end of Obama's term in office, along with double-digit unemployment.

Bernanke is a monetarist.
Ben Bernanke, Princeton Professor and current Chairman of the US Federal Reserve, has argued that monetarism could respond to zero interest rate conditions by direct expansion of the money supply. In his words "We have the keys to the printing press, and we are not afraid to use them.

Schumpeter thought business activity was a summation of the multi-year business cycle waves(Kondratiev waves)--i.e.
that the economic activity is time dependent like sunspot activity. It sounds rather silly to me and doesn't tell us anything useful about how to get out of this mess.

The Austrian school believe that the business cycle is created by the central bank expanding credit too much without which all economic activity would move into a steady state condition. Most people think that the business cycle is a mainly consequence of our economic system and not of government bank interference.
Marx rather sensibly said that boom/bust was caused by the capitalist production system, which is also not very helpful in our current situation.
We have rediscovered the business cycle of boom/bust, now what are we going to do about it?

Finally some clarity.
Mr. V did try a monetarist policy (after some arm twisting by the St Louis Fed) and just about put this puppy in the ditch. Uncle Milton had forgot to account for the velocity of money, so it was destine for failure, but he will not try that bit of nonsense again, you can bet on that.
Military Keynesiasm came to the rescue, along with Reagan opening the doors to casino capitalism (he actually through the doors away).
Of course we tripled the national debt.

By no stretch of the imagination is Bernanke a monetarist; he is an eclectic economist most influenced by something often called the post-Keynesian synthesis. Quantitative easing and the printing of money are anathema to monetarism, as is all discretionary use of monetary policy. Indeed, Milton Friedman suggested that we abolish the Federal Reserve System and replace it with a simple rule for expansion of the money supply. The goals of monetarism are to achieve stable prices and to damp down the amplitude and shorten the length of economic fluctuations.

The old debate as to whether decisions by business (regarding investment) or decisions by central banks (affecting interest rates and rates of growth in the monetary supply) create economic fluctuations has been resolved. Clearly, investment decisions by business tend to create business cycles, and just as clearly, mistakes by central banks tend to amplify and prolong booms and busts.

But to what extent can any monetary policy help in regard to the consequences of Peak Oil? I think the goal should be to minimize both deflation and inflation. If we rely on discretionary monetary policy, over time we are almost certain to have inflation; the past ninety-five years of discretionary monetary policy in the U.S. shows the truth of that generalization. If the dollar were a stable yardstick, we could use price stability to make better economic decisions. Instead, in the current economic environment we find investment policies increasingly driven by needs to hedge against fluctuations in the value of the dollar. In other words, discretionary monetary policies drives a great deal of "wasted" financial effort--much of it devoted to trying to guess what the Fed will do next. In my opinion, discretionary monetary policy is an economic tool that has failed, and it should be discarded.

I don't think there is that much clarity or distinction between the major schools; a better way might be to separate the 'Creationists' from the 'Distributionists'.

You could put the Friedmanites into the same camp as the Marxists having both redistributing wealth, albeit in different directions. I always read Keynes as believing that all wealth already existed and it could be adjusted the same way water could be directed with a nozzle.

The monetarists seem to feel that money is the necessary catalyst of wealth creation and that nothing else will do. This is pretty seductive for politicians, since they (at least now) can create as much money as they want. I suppose this is the underlying argument; that energy is the necessary catalyst of wealth creation rather than money or the inventiveness of various people.

Funny thing is the discussion isn't being made on a policy level. The dialog a few years ago was between Marxism (with wealth redistribution having a bad name) and liberal monetarism ... which was played out in Vietnam and Afghanistan I.

I suspect the hard- money people will win out in the end, because they can demonstrate that money is the servant of on- the- ground reality. None of the other schools can make the same claim. Economic theory has always begun from the standpoint of shortage, that there is a greater demand for wealth than nature can accomodate. Hard money means not the endless increase in the supply of money and does not consider velocity ... but that the distribution will take care of itself. Hard money gives the people at the bottom of the economic ladder the ability to accumulate wealth without the intervention of a business or government agency.

Never discount the ability of humans to adapt.

We are genetically programmed to cope with shortage and crisis. It is affluence that damages us; it makes us fat and lazy. Running out of things will be good for us, not all of us, but the clever and inventive, the violent and ruthless. This is nature and evolution, natural selection; the 'natural' economy in action.

Regardless of what economic policies we adopt, I think both the U.S. and the whole world is going to experience large increases in human misery as a result of declining oil production and declining net oil exports.

Monetarism does NOT state that money is the source of wealth. Money is a medium of exchange and a store of value. Monetarists focus on how to enhance the store-of-value function of money by having a rule that will tend to minimize inflations and deflations.

By hard money, do you mean gold? Nate Hagens has made some good remarks (a couple of weeks ago) about the non-workability of a gold standard. If by hard money you mean a currency that does not depreciate in value due to inflation--I'm all for that. And so are monetarists.

Monetarism does NOT state that money is the source of wealth. Money is a medium of exchange and a store of value. Monetarists focus on how to enhance the store-of-value function of money by having a rule that will tend to minimize inflations and deflations.

What else can it state? Monetarism means to fix the relationship between the worth of a particular currency and what that currency purchases. An integrated effect is to equate money with ... all else! Monentarism seeks to make money the measure of all things; otherwise it would have no 'throw weight'. Monetarism disregards the 'how' and intends to manage all the world by fixing 'interest rates' and 'money supply' ... through the (presumably rigorous) actions of a central banker. Why should such a person have so much authority? How does this authority manifest iteslf? How has it? Is monetarism anything other than theoretical?

I have but two words for monetarists; 'Alan' and 'Greenspan'.

I know, I know, you will counter with 'Paul' and 'Volcker' and how he saved the US economy in the late 1970's by raising short interest rates to quash inflation in the US. But this leaves out how the Carter Treasury stopped borrowing at the same time which dried up the source of expanding credit, plus (as I recall it) Volcker was led by long rates (which went up even more sharply) so the cost of credit in the marketplace, rather than Volcker's actions at the short end stifled inflation. Remember the 'Long Bond Vigilantes'? Plus ... inflation was transmuted through the entire economy; the rise in prices did not effect employment insofar as wages kept pace with prices. Added together, monetarism's triumph, if it existed at all, was press agentry.

Friedman and Schwartz' precept of the cause of the Great Depression is not accurate, in my opinion. Their theory is that central bank policy errors in contracting the money supply post- 1930 turned a garden variety money panic into something much worse. It is hard to see how the Federal Reserve would have relevant to anything as is the case, today. Short rates can fall to zero and liquidity is issued ... and then what? There would have been, as there is now, a liquidity trap.

The great problems with monetarism are its absolute reliance of GDP statistics and on honest and competent adminstrators. Such are always in short supply. A second problem is it favors consolidation of economic - particularly banking - power, which is dangerous.

It's fair to say that all economic systems are flawed. Some more so than others.

'Managed money supply' systems (fiat money) centralize economic power and serve the interests of the promoters to the degree that effects extend outside the reach of those promoters. A good example is today's 'Shadow Banking System' that is outside the reach of the central banks. Centralized economic power abets the centralization of political and social power, usually for ill. Diversification is strength in most things.

Economic systems provide sets of incentives. The incentives of all current systems are perverse, being designed to promote and reward maximum resource extraction and exploitation. This bias might have made sense in the 19th century, when the effects of technology were unknowable. The ignorance is now swept away, except for deniers and idiots; such incentives are economic and ecological suicide, now.

Non- monetary economic issues such as contracts, property rights, mineral rights, corporate structure and rights ALSO favor rapacity and discourage husbandry. These exist outside of monetary policy.

By hard money, do you mean gold? Nate Hagens has made some good remarks (a couple of weeks ago) about the non-workability of a gold standard. If by hard money you mean a currency that does not depreciate in value due to inflation--I'm all for that. And so are monetarists.

I don't know, anything is workable if people try hard enough. The great complaints about gold money is that it is a) old- fashioned, b) hard to get gold, c) deflationary and d) ignored by the managers of it, anyway.

First of all, gold is one basis for a hard currency. The bases can be gold, silver, land or mineral rights, reserves of all kinds and other valuables. Of course, these are old fashioned; what better for our return to a more old- fashioned post peak oil way of doing business? Hard currencies have withstood the test of time.

Second, there is little gold in the hands of the government - or any other reserves for that matter. The public owns great amounts of precious metals along with the other bases. It is up to the managers of a hard money system to make depositories for this wealth. There is a great amount of gold and other hard currency bases in private hands. Also, as the fiat banking system turns itself inside out, the need for safety for all precious things becomes more and more needed. To create such safe places would attract great amounts of 'hard capital' from all place both in the US and overseas.

Third, Gresham's Law governs hard currencies. This is an artifact of central depositories of gold and the need for the social/political authorities to maintian their grip on these depositories. For gold (or other valuables) must be put into circulation and doing so removes it from the depository; if all is in circulation then the authority has none and the people will hoard it so there is none in circulation. The authority consequently debases some of the gold (by alloying it) to put some in circulation and this (tha bad) eventually becomes all that is available. This, then is also hoarded and the some more of the authority's specie is debased even more and so on and so forth ... the bad driving out the good! However, with banks there a return on money lent an be paid as an incentive to put into circulation currency that is backed by the gold or other valuables that are held as reserve. I give credit to the Oil Drummers who suggest a rapidly depreciating local currency (or coupons) that would also promote currency circulation and give it velocity. The 'rent' of money would be expensive to any money- speculators, who can only profit with borrowed currency that is cheap to rent to the point of being worthless to them.

finally, would the managers of hard currency cheat? Of course, they have certainly done so in the past! The secret of any economic systems' success is diversification. If there is one central bank that is corrupted, the country within which that bank sits is greatly harmed. If there are fifty central banks, with all together acting as lenders of last resort to any one ... that are interconnected so that reserves can be managed between them, then the corruption of one or two or even ten would not be fatal to the entire system.

Finally - before this becomes a ten- thousand word post - the best feature of hard currency is that is preserves wealth for ordinary citizens by encouraging and rewarding saving. If a person earns and saves ten thousand dollars of hard currency, this is wealth that is hard to steal by stealth, monetary policy mismanagement or inflation. This empowers the citizen at the expense of the central government ... which is probably the greatest reason a central government hates hard currency, because all power to citizenry comes at its expense.

I do not oppose a currency based on "hard" assets, such as a bundle of gold, silver, copper, wheat, and ethanol. Commodity money has often been proposed, and I think it is worth trying.

Because it has nothing to do with Peak Oil, I do not want to get into a long debate on what monetarism is. But I do suggest that you Google "monetarism" and do a little reading.

Alan Greenspan is most certainly not a monetarist and is nothing close to a monetarist. He used and advocated discretionary monetary policy and thus is most emphatically not a monetarist.

With regard to Peak Oil, we will be forced to restructure our economy. I think we need some new ideas to be implemented, and one of them that I especially like is the idea of a negative income tax to provide a guaranteed annual income while preserving incentives to work. This idea happens to have been popularized and promoted by Milton Friedman.

In my opinion we are going to have negative economic growth for the next fifteen or twenty years. Our old structures, institutions, and ideas are based on the premise of economic growth. As I've stated elsewhere, what we need now is an economics of decline.

Negative income tax -- also promoted by presidential candidate Mike Gravel. Too bad the media turned him into a laughingstock

"No fighting, kids!"

"Okay, Mom!"

In my opinion we are going to have negative economic growth for the next fifteen or twenty years. Our old structures, institutions, and ideas are based on the premise of economic growth. As I've stated elsewhere, what we need now is an economics of decline.

I agree. Precipitous decline, since nobody in the establishment has a clue about what is actually happening outside the door.

The call is try to figure out an economic plan, everyone with a philosophical bent, those who have ideas outside of the Establishment, outside of the main stream ... have an obligation to contribute! At this point there are no right or wrong ideas, save by those of the people in charge. They are all corrupted.

I don't know about the negative income tax, somebody would have to figure out how to get the money to pay for it. The government will print and it is clear - at least to me and becoming more clear to the 'mainstream' - that we cannot go farther down that road. As the situation becomes more and more dire, the people will hide their wealth more deeply against the desperate rapacity of the government and starve it of funds, and trust will be destroyed, when it is most needed.

Whatever economic system comes next will emerge from rubble.

WebHubbleTelescope asks:

"Economic systems provide sets of incentives. The incentives of all current systems are perverse, being designed to promote and reward maximum resource extraction and exploitation. This bias might have made sense in the 19th century, when the effects of technology were unknowable. The ignorance is now swept away, except for deniers and idiots; such incentives are economic and ecological suicide, now."

Steve, I want to reference this quote w/attribution if you don't mind.

Go right ahead!

"Economic systems provide sets of incentives. The incentives of all current systems are perverse, being designed to promote and reward maximum resource extraction and exploitation. This bias might have made sense in the 19th century, when the effects of technology were unknowable. The ignorance is now swept away, except for deniers and idiots; such incentives are economic and ecological suicide, now."

Steve, I want to reference this quote w/attribution if you don't mind.

But to what extent can any monetary policy help in regard to the consequences of Peak Oil? I think the goal should be to minimize both deflation and inflation. If we rely on discretionary monetary policy, over time we are almost certain to have inflation; the past ninety-five years of discretionary monetary policy in the U.S. shows the truth of that generalization. If the dollar were a stable yardstick, we could use price stability to make better economic decisions. Instead, in the current economic environment we find investment policies increasingly driven by needs to hedge against fluctuations in the value of the dollar. In other words, discretionary monetary policies drives a great deal of "wasted" financial effort--much of it devoted to trying to guess what the Fed will do next. In my opinion, discretionary monetary policy is an economic tool that has failed, and it should be discarded.

I think you are contradicting yourself.
You are probably a classical monetarist by inclination--you favor at least by inclination and normally would favor the feedback model. But then you conclude that monetary policy has failed even though it hasn't been tried.

I would submit that the Bush approach of offering trillions of dollars to the banks without terms is not a monetary policy but rather the equivalent of Donald Rumsfeld conception of freedom on the streets of Baghdad

Freedom's untidy, and free people are free to make mistakes and commit crimes and do bad things... stuff happens"

The problem is that half? of the world's liquid assets have been destroyed by the irresponsibility of financial and corporate elite. In the last few years banks have been poorly capitalized having failed to keep adequate reserves.

I am also trying to understand Sailorman's arguments. If monetarism is controlling the money supply to keep inflation/deflation stable that means they are either creating or burning dollars (or indirectly by the Fed lowering or raising interest rates). Obviously Bernake is threatening to print money. Is it because he will thereafter not burn the excess that he is not a monetarist? BTW, Greenspan is also a monetarist. Is it because he had to deal with the Federal Reserve and not a central bank ala Uncle Miltie that Greensap was not a an actual monetarist, but just a theoretical one?

I wish there were some math involved in this :)

We can do the math on monetary policy if you really want to, but it takes us very far away from Peak Oil, which is what I keep trying to return to.

Monetary policy has been tried. Both Greenspan and Bernanke used discretionary monetary policy, and hence neither one of them were monetarists. I assert that the discretionary monetary policies of Greenspan and Bernanke have failed to prevent the gross excesses in credit expansion that led to the real estate collapse and our current economic troubles. Bad monetary policy was not the only cause of the credit mess, but it was the main one.

The kind of monetary policy I advocate is one that links the rate of growth in the M2 money supply to the expected long-term rate of growth or decline in real GDP. Finally, we get to Peak Oil and its consequences. Oil production and oil imports are going to decline; I think we can all agree on that, and here is where your mathematical models are a big help in predicting the rate of decline. In my opinion, there is abundant evidence to show that declining oil production and declining net imports of oil will lead both to higher oil prices and to falling real GDP.

In my opinion, there will be an irresistable political momemtum to increase the money supply and to increase deficit spending to stimulate the economy. These policies will lead to destructive inflation--inflation which will make it more difficult to adapt to declining oil production.

By the way, I am not a monetarist, though I have been influenced by the writings of Milton Friedman, particularly his recommendation of a negative income tax. However, I have been equally influenced by John Maynard Keynes, Kenneth Boulding, and Herman Daly, just to mention a few.

OK, I think I understand. The fact that it is "discretionary" implies that they are almost trying to play little empirical games by fiddling with the interest rates to influence the direction one way or the other. OTOH, strict monetarism is highly disciplined where you would set pre-determined dependencies on money supplies according to the GDP levels and let recessions strike us as needed to stabilize prices. That is the opposite of discretionary.

You've got it exactly right. Greenspan and Bernanke believe in "leaning against the wind," easing monetary policy in times of low growth in real GDP and tightening it when GDP growth and credit expansion increase at unsustainable rates. Two big reasons why discretionary monetary policy doesn't work well are:

1. We cannot reliably predict growth trends in real GDP a year or two hence.

2. Monetary policy acts with long and unpredictable time lags; sometimes the impact of monetary policy is felt mainly within six months, other times maximum impact is eighteen months away and some impact remains even at thirty-six months.

The extremely easy policy we see now (which includes quantitative easing as well as low interest rates) assumes that the trend in real GDP will be down six to eighteen months from now. I think that is a pretty safe assumption. We should not expect to see immediate effects from current monetary expansion; the impact will be felt sometime between mid 2009 and mid 2010.

I don't expect to see tightening in monetary policy until real growth in GDP exceeds 3%, and I think that could be a long, long time in coming. Thus I expect to see worsening inflation as monetary policy works to drive up the price level rather than driving up the rate of growth in real GDP. On the other hand, because of the power of expansionary monetary policy and all the bailouts I don't expect debt deflation.

I don't expect debt deflation.

I think you should clarify what you mean here.

I think what your trying to say is the US will throw enough money at the debt deflation problem to prevent
it from driving the economy into and overall deflationary collapses. If so this I agree with.

However even as this goes on we will see massive debt deflation of various sorts.
The Fed throwing money at debt deflation is not a clean approach it has to take on debt it can identify
and its a "big" company in that sense it will try to save the largest companies by taking on their debt.
This just massively distorts the market and does nothing to help most companies or even most banks.

Its effectively your traditional planned economy approach Soviet/Japan style with the same outcome
large "to big to fails" don't fail but they also become moribound unable to repay the government and
unable to grow. I suspect the next step will be to break up these companies trying to get a healthy
super giant TBTF ( tob bit to fail ).

This does little to stop debt deflation at the consumer and small company level it continues in full force.
These groups move over to a cash economy. Next you have enourmous debt deflation in the sense that consumers
are either unable or unwilling to take on large long term debt. Thus you have a overall persistant debt deflation
in the sense that less and less long term debt is created. This absence of creation of debt is the real problem
for keep things like they used to be. The government is busy backstopping old debts that are now well in the past
and is unable to create new ones.

The reason I think all this is important is simply because the worlds economy under these conditions becomes stagnant
focusing on short term transactions most having to do with daily living.

And this is why I think attempts to expand the money will simply result in either price inflation and paying down debt.
Plenty of insolvent borrowers want to take on debt but nobody solvent will sure they can force lending to insolvent companies and individuals but these debts will simply default.

Bottom line is to many people are broke and in debt up to their eyeballs and nothing can fix this.

By debt deflation I mean what happened during the Great Depression--a cascading failure of banks and other financial institutions that destroyed money deposits and led to a deflation in the price level caused by the decrease in money supply and decrease in credit from the failed institutions.

I agree that extreme monetary ease is likely to result in more price inflation and little stimulation of the real economy. The real economy may stagnate or (more likely) decline, but I don't see prospects for a return to growth, though there will be some upward fluctuation as next year's stimulus package increases spending power.

BTW, it is incorrect to say that credit is frozen and that nobody is lending and nobody is borrowing. Home mortgages are still being written, even though the quantity is perhaps only about half what it was a few years ago. Car loans are still being written, though of course the volume of them has gone down a lot in the past couple of years.

There may be a short and mild price level deflation, but so far what we have seen lately is mostly the result of falling oil prices. I agree with you that oil prices can go up faster than they went down, and it may be only a matter of months before oil prices zoom up in response to OPEC production cuts.

The analogy is to a drunk driver(economy) who crashed his car and has lost half of his blood.
Do we treat with transfusions as suggested by doctors(economists)?
Do we risk depleting the local blood bank?
If we save him he may drive again and kill innocent schoolgirls!(Austrians)
What if we give him too much blood..could he explode(with inflation)?
Okay, let's let him die and SEND A MESSAGE(don't go to the hospital!).

INSANE...we can observe how the patient responds to treatment. If the patient starts walking on ceiling we can check for inflation.

The doctor (monetarist) will seek to raise the patient's blood pressure by..adding blood. If the blood pressure drops too much we will have vascular collapse and he cannot breathe. (Local vascular collapse can be treated by amputation as in diabetes.)

Would the economy/society be better off with far fewer businesses operating?
My intuition says no, that society would be sicker.
People living in a healthier way doesn't mean that fewer people should live, does it?

We have to let the voodoo doctors do their thing.
(And if they fail we should kill them.)

This is the first time I have seen Austrian economists compared to innocent schoolgirls !


I get the toppled analogy, but the intent was to compare to drunk drivers that never learn.

What do you have when a billionaire loses 90% of his wealth?
An extremely wealthy man.
How much of the lost wealth was only paper wealth? Those houses that have lost half their price did not lose half their floor space. There have been stories that foreclosed homeowners have stripped the wires and pipes out of the house before moving on but they are just a small percentage. The hard things of value are still with us as the world adjusts to the new prices. The median home price is still way too high. We as a society ought to support those who have lost income so the number of foreclosures each day go down. We need to keep folks properly fed and warm for the coming winter. We need to keep our municipal services going so cities are somewhat livable. This is definitely no time to cut back on our public schools since coming generation will need to be a bit smarter than we are about how to manage their world.

Ludwig von Mises followers such as Peter Schiff predicted the financial collapse.
Yet, LvM followers ala the Austrian school want no regulation and a pure laissez-faire economy.

It gets even wierder. A close associate at work (and one of the smarter people I know (uncle had a Nobel prize etc.)), is totally convinced by this stuff, with Ron Paul appearing to be the font of all economic/political truth for these folks. In any case, he/they are totally convinced that it is all a conspiracy by a small group of well connected individuals intent on controlling the world. I.E. the crash isn't an accident of human foolishness, but a deliberately planned strategy by the conspiracy. And, yet, they have no place for regulation.... They cannot see that laissez-faire degenerates to the law of the jungle, with a few sociapaths destined for the top of the heap.

Yes, maybe, and what if this self inflicted crash came 6 months earlier. With gas at the $1.99 range, who would be in the White House come Janaury?

They just timed it wrong? Yeh...I got a bridge to sell ya.

I heard comment that they may want something akin to the euro-dollar to replace the US dollar, so that if they can inflate the dollar out of existence that they can start over.

What the no regulation-ists miss is that regulations are a structure for success in a marketplace.

The law, for instance, is regulation, and that most definitely is a structure for the success of business. Take away the law to enforce contracts, delineate intellectual property (patents) and so forth and business would crumble in a heartbeat. And many other regulations round out the structure. In particular, environment regulations help provide a structure for the continuation of the environment. From a business perspective, this means continued ecosystem services that allow us to live, be prosperous and thus purchase the business' products.

But here is the key point, I believe:

The conversation to remove regulation has the conversational age of a teenager, which is exactly where one finds a variant of that conversation ("I want to stay out as late as I want.").

Another way of saying that is that it is a juvenile conversation — quite literally. I don't want regulations == I want to do whatever I want, no matter what Dad and Mom say

People who speak that conversation would do well to ask themselves this question: if I were to raise the age of that conversation to that of an adult, what would I say instead?

Bernake & co are prepared to fight this depression in just the same way as generals are always prepared to fight the last war.

The experts will never have a chance to test their theories on how to get out of the depression of the 30's. Social Security,SSI and Medicare are such large and growing programs which redistribute income. This in effect creates velocity in money which did not exist during the 30's. If you are on SS or SSI you are probably more predisposed to spend all of your income because it is guaranteed by Uncle Sugar where as if your are working you may not spend all of your money because your employer could lay you off. By spending the money these people are creating jobs. SSI has a resource limit so you pretty much have to spend what you receive.

Most workers do not save any money because they are not paid enough. I'm talking about the 75% who didn't graduate from some overpriced college. Families with children must spend all their income or be hauled into court for child neglect. Because of housing and health care being so expensive most workers can not save for any future event. When the job is lost there are dependent on the social safety net (which has some pretty big holes) to get by until they get a new job which may usually pays less than what they lost.
I do agree that the GOP seems to think if investors have enough credit and no taxes then customers don't matter. Too many Dems seem to think so also.

Families with children must spend all their income or be hauled into court for child neglect.

Solution: give up the kids and start practising Birth Control.

Tongue is only half in cheek.

UK:Fuel poverty to cost lives this winter

One in three pensioner households – that is 2.75 million – live in fuel poverty, where one tenth or more of a household’s income goes on fuel bills. Energy suppliers have increased their prices by an average of 42 per cent this year, taking household’s average annual bill to £1,300.
Age Concern says that two-thirds of pensioners have cut back on the amount of gas and electricity they use, terrified of being landed with an enormous bill that they cannot afford to pay.


Pensioners can be a stubborn bunch. My parents are in their 80s and not short of money. They never seem able to keep their unnecessarily large house warm enough for their old bones. Yet my dad still refuses to get cavity wall insulation, even though he has been offered a 100% grant from the council, because of the cosmetic damage to the paintwork on the house. The house needs repainting anyway...

They have just given away their only back-up source of heating in the event of a power cut. A stand alone CalorGas burner.

Thanks for the link, Dave.

Note introductory paragraph:

Tens of thousands of pensioners could die this winter because they cannot afford to heat their home, charities for the elderly said today.

Tens of thousands?

That's the kind of puffed-up stats that give charities and similar action groups a bad name.

Millions of songbirds could die this winter because they cannot afford to heat their nests ...

Hi CO,
It is not really that puffed up, as we are talking about the excess of winter deaths compared to the spring and autumn, which for the UK runs at around 26,000.

Here is more information on the calculation:

What causes excess winter deaths?
* The poor standard of housing in this country. Older people tend to live in the oldest houses and these are harder to heat.
* Not being able to adequately heat the home is an issue and it is essential that older people do not switch off their heating to save on bills.
* Spending too long in the cold can often aggravates circulatory diseases, which can lead to strokes and heart attacks or respiratory illnesses such as bronchitis or pneumonia.

Perhaps though, it is a better idea to compare it with other counties with similar or colder climates, to get an idea of how many are to some degree 'inevitable' and how many are the result of poor standards:

Winter mortality in other European countries reveals some surprising trends. The countries with the highest winter death rate are Portugal and Spain. The explanation for this unexpected occurrence probably lies in the quality of a housing stock that is not built to protect from cold weather and in the comparative poverty in some regions of these countries. A better comparison can be made between Great Britain and other affluent countries of northern Europe. Whilst it is generally agreed that factors affecting excess winter mortality are varied and complex there is a strong relationship between thermal standards in housing and excess winter deaths.


As can be seen in the accompanying table in the link given, warmer countries have higher winter excess deaths, in large part due to poor insulating standards.

The rate for the UK and the rate for England will not be significantly different, as the overwhelming bulk of the population lives in England.

So if you compare 19% for the UK and 'best practise' of 11% in Germany, where the age structure is also no younger, then you have an 8% discrepancy, or from 26,000 deaths around 11,000 would be preventable.

Since fuel bills have risen by around 40% in the UK whilst pensions have risen by around 5%, it is pretty apparent that if the figure of tens of thousands of excess (preventable) deaths has historically not been correct, instead referring to total winter excess mortality, it seems very likely that the figure of tens of thousands of preventable excess deaths per winter should be shortly arrived at, perhaps this winter.

For convenience in the above argument I have treated German standards as though they are in some sense the best level that can be obtained, and in practical terms the UK would have to make massive efforts to approach them.

However, in reality, German standards are far from perfect, and given the clear correlation between insulation standards and excess winter deaths, it seems likely that if substantial numbers of German houses were built to the full Passivhaus standards, then you might expect to perhaps halve their figures.

Under that argument, the claim of 'tens of thousands' of excess winter deaths in the UK seems substantially vindicated, or near as darn it.

Thank you for your well-informed comment.

Frankly I'd never even known that comparative 'excess winter mortality' statistics exist -- fascinating stuff anyhow. Is there any breakdown by social class, I wonder?

I do feel tempted to make some snide Darwinian comment about Mother Nature's culling techniques, though...

Excess winter mortality correlates with how difficult the house is to heat and how well it is insulated rather than social class or income, which is counter intuitive, but as the link I give here indicates in the last paragraph the mortality rate for lower incomes and social classes is vastly higher throughout the year to start with.


Note the higher figure here of 40,000 for winter excess mortality, which I would guess may be due to the winters in the study period being on average colder than more recent winters.

As regards culling, possibly we were too hasty in accusing Brown of disregarding public finances, as it is clear that rapidly rising gas prices and insecurity of supply are likely to result in very large savings in the pensions bill, and in health care, providing the NHS doesn't fuss around too much when the old contract bronchitis and Pneumonia.

I've just checked out two stories at the top which feed into each other to demonstrate the UK's extreme insecurity of supply.

EDF, who are to build Britain's new nuclear reactors, say that it will take years to ramp up capacity, which had been severely run down since the days when 5 a year were being built by France in the 70's.
Licensing alone means that the first one won't be started until 2012.
Undoubtedly this will mean that some of the coal stations due for retirement will be kept going, and hang the emissions, but still there is a huge gap, which the head of EDF says will have to be filled by gas.

At the same time Meacher in 'The Guardian' indicates that Russia may not be able to export gas by 2010.

Severe shortages of gas here would be likely to mean that excess winter deaths might go over 100,000, I would guess.

How much over is hard to say, but possibly Age Concern might be talking in terms of hundreds of thousands of winter excess deaths rather than tens of thousands.

Sounds like death is the plan in the U.K. In the mean time, they best get crackin' on massive insulation retrofits and solar thermal.

Oh, they are.
The latest plan includes the money to insulate 60,000 more houses.
That is out of a total stock of 24 million, of which 3 million are in the very lowest band with almost no insulation and a further 9 million are in the band just above.

Chiming in as an MD, again. Excessive winter deaths from cardiovascular diseases are not at the forefront of research, but certainly piqued my curiosity as we environmentalists go around recommending people live at 65 degrees instead of 75. The question of whether that would impact cardiovascular mortality is extremely important!

Reading both DaveMart's reference and a 2003 UK study at http://qjmed.oxfordjournals.org/cgi/reprint/96/1/45 I remain unconvinced that the cold temperature in the house is the cause of excess deaths. Maybe it costs more to heat and they skimp on food. Maybe they curl up under blankets and don't move enough (lack of exercise does bad things in short order). Maybe it's just poorer, more depressed people with fewer social connections and less wherewithal living in those houses. Those people would have higher death rates no matter how warm you kept them. You would have to randomize folks to houses and then see whether the ones in colder houses died at a higher rate, and control for known confounders like activity level. It's really hard to do it any other way. But we do need to know...

A classic cause of dangerous chest pains "angina" involves walking against a cold headwind. An explanation from answers.com runs as follows:

The greatest rate of heat production which an individual can achieve depends on his maximal ability for muscular work, linked to his maximal rate of oxygen usage. This in turn depends on the supply of oxygen and therefore on the greatest rate at which the heart can pump blood around the body, and on the efficiency with which the muscles can utilize the oxygen. These all increase with improving fitness. For any level of exercise the oxygen consumption and cardiac output need to be higher in a cold environment than in a warm one; this explains, for example, why angina may develop during a particular level of activity in the cold but not at normal temperatures. Also, during sleep in the cold, unfit people are repeatedly awakened by shivering, whereas the greater heat generating ability of ‘fit’ muscles allows sleep undisturbed by shivering.

This makes me want to stay fit. I see that recommending low home temperatures to unfit people could be a problem.

I'm not an MD so take this as you like.

Here in Japan most homes are not centrally heated. We might heat one room with a space heater or use a heated table called a kotatsu.

I've been told that the winter is especially deadly for the elderly. Its not the cold per say, but when they move from the heated room into an unheated part of the house (say, to go to the bathroom). The shock of the temp change is too much for the old folks, they have heart attacks.

There have been some mornings where I was amazed my toilet wasn't frozen over. Thank god for heated seats :-)

Hi, it is good to have an MD commenting.

If you re-read the links I have provided, I think you will see that the data given is pretty robust.

The factors you mention other than pure cold are extensively dealt with there, and organisations like Age Concern do not disagree that many of the effects are indirect - people not moving around enough, so that their circulation deteriorates as they are huddling to stay warm, improper diet etc.

The socio-economic factors that you mention are specifically taken into account.
The correlation to poor insulation seems solid, but there is no correlation to income or social class.
As mentioned in the links, part of this is due to many of the poorer living in relatively well-insulated and modern council houses, whilst wealthier people often live in draughty older properly, with large rooms.
In addition, the death rate for the poorer groups in the UK is already far, far higher than for the wealthier throughout the year, due to many factors such as diet, lifestyle and medical care, so they are operating from an elevated base level.
In Glasgow, for instance, the death rate for the poor over 60 is massively higher than for the upper classes, so not so many of them are about to die of cold in the winter.

As far as I can see the conclusions seem solid, although the chain of causation is not entirely direct.
There is even a solid link to higher death rates in colder winters, which seems unlikely to be the case if there was not heavy linkage.

One ray of light in a very dark night is that the effects are indirect. The people most at risk are the old, who tend to be set in their ways, and many of those ways are not optimal to surviving when the temperature plummets.
This perhaps means that folk like yourself may have a large role to play in attempting to mitigate some of the likely massive rise in excess winter deaths.

It is clear that no effective action is to be taken to better insulate most houses, and also from numerous sources here including very notably Euan's articles that it is inevitable that massive shortages and disruptions will occur to the supply and cost of gas, which also substantially powers electricity.

I would also argue that with the Government taking on around twice the GDP in bank assets which are in reality far less value than face, that the country is also effectively bankrupt, it will just take some time for this state of affairs to work through the system - at the moment TPTB are closing their eyes and hoping that it will all have gone away when they open them.

If this reasoning is correct, then we are unlikely to be able to pay for gas even if it is available.

Under these circumstances it would appear to be an invaluable service if you could find the time in a busy schedule to look at medical mitigation strategies and advice regarding excess winter deaths, as they seem set to soar.

My own personal efforts are centred on devising strategies for isolating a one room area of the house, and as cheaply as possible keeping that one area warm at minimal cost.

Previous patterns of life adapted to an energy rich environment seem certain to create a catastrophe.

As a final thought, any medical strategies to cope with very little availability of fuel ought not to rely on anything but the cheapest generic medicines or natural remedies, as it seems doubtful that monies will be available to buy anything else.

Dave, I am not practicing at the moment (I quit in February to stay home with my 3 kids) so I don't have an overly busy schedule. I took an interest because in 20 years of practice the topic had never come up (!!) and because I have been recommending people turn down their thermostats from a global warming perspective.
I read your sources quickly and mainly saw observational studies which suffer from various forms of bias. I don't know the UK much, and I have trouble believing folks in upper socio-economic levels would sit around in a cold house (16 degrees celsius!!!). I plan to call up some local cardiologists to see what they know on the topic.
My quote from answers.com supports the idea that cold temperatures seem to increase oxygen demand, thus may put prolonged stress on the heart which needs to pump harder to meet this demand, eventually leading to repeated bouts of angina and perhaps heart failure. So I can see a mechanism for cold indoor temperatures eventually resulting in more deaths.
I am happy to think this through some more re mitigation strategies and communicate with you via email - myrtoashe ( ) yahoo dot com

Is preventing "winter deaths" just postponing death by a few months ? Any SWAG on the life expectancy of the deaths prevented by warmer indoor temperatures/hot tea/warm clothes ?


I haven't managed to google up that information, Alan.

The subject seemed to attract some attention in 2001, since when it has been put to one side.
Here are a couple of links I did find, here is one from the British Medical Journal:

And here is one specifically on Bronchitus, which seems to account for around one third of British excess winter deaths:

It also appears that a substantial proportion of the problem is due to inadequate shelter and clothing when outdoors:

Home heating has improved greatly over the past 30 years. Particular focus is now needed on exposure to the cold outdoors. Age Concern and other charities have responded by giving advice on avoidance of cold stress outdoors, but campaigns by government departments have remained fixated on indoor cold. Apart from personal measures such as warm clothing and exercise when outdoors in cold weather, there is scope for official action on physical measures such as windproof bus shelters, and in some cases heated waiting rooms. The effectiveness of such a campaign could be evaluated statistically if it were focused initially on a specific region.

It does seem that the issue can be greatly mitigated by relatively cheap measures and educative efforts.
It seems to me though that this is unlikely to keep pace with increasing fuel poverty and inadequate insulation.

Hi, I will drop you an e-mail, and would welcome any thoughts you might have.
Perhaps it is appropriate to point out the limits to my likely contribution.
It is usually a good idea to start with some realistic knowledge of one's own limitations,and although I can dig around and to a certain extent perhaps evaluate when some of them are total tosh, I have neither the background nor the training to carry out a proper evaluation, nor can I have without several years of training.

That does not mean, of course, that people with expert knowledge may not be wrong, as our recent experience with economists and bankers demonstrates, but it does mean that beyond a basic, citizen's viewpoint , a more precise evaluation is beyond me, just as I might criticise the running of the economy but in no way would be able to manage the money supply from a technical POV.

In this context it seems clear that many in the UK are adversely affected by the cold, and that poor insulation standards and lifestyle contribute to this, that other countries do much better, and that the problem will get much, much worse due to rising costs of fuel, continuing low standards of insulation and fuel shortages.

Rather than the main interest being in arriving at precise figures, it would seem then that the chief concern should be trying to work out strategies and recommendations to minimise the damage.

Over to you doc! I am happy to act as a sounding boards for your thoughts though, and probably have about as much to contribute as the average board! :-)

BTW, in Britain, particularly the old, still have something of a tradition of 'the stiff upper lip', and I suspect that many in the higher income groups simply continue living in the same spacious, draughty house and to heat it as they did when they were younger.
In those cases then the relevant advice would seem to be simply to draw their attention to the need to heat their houses better, or have them better insulated.

Not too much emphasis should be placed on the relatively rare occurrence of cold related death in the comparatively wealthy anyway.
How is it possible to say that it is comparatively rare when the figures show that the increased winter death incidence is the same across all classes?

Simply because the underlying death rate throughout the year is massively higher in the UK as you go down the social classes, with poor lifestyle choices, especially smoking, and poor medical attention and diet contributing:

in the U.K. In the mean time, they best get crackin' on massive insulation retrofits and solar thermal.

I don't think solar thermal will work for the UK. I was fascinated by the following stuff about a potential improvement in wnd turbine efficiency. I don't know I Leanan might have posted a link, the technology review blurb is about a week old:
MIT link


They claim by using Lidar, they can predict the wind gusts 20-30 seconds before they hit the turbine. The result of being able to make adjustments supposedly could improve power output about 10%, along with a decrease in wear on the WT. So potentially we have a 10-15% improvement in cost effectiveness possible with this single advance.

Considering the WT blades are still straight (obviously not an optimal shape), and other studies have shown that strategically placed bumps on the blades (as seen on whale flippers) could improve efficiency as well, I'd venture that optimization of WT technology has barely begun. I guess we had better get cracking on getting this technology optimized, as we are going to need it more and more.

Having read the associated posts regarding winter mortality I'm surprised. There's suggestions that the house stock should be insulated, solar technologies applied, etc. I would have thought the starting point would be care of the person by ensuring that they had the correct clothing for the conditions they faced.

Where money is a problem (and it will be in a Depression) then my suggestions would be appropriate clothing, zoned heating and insulation (single room if necessary), and finally installation of an ultra efficient hot water system for household use (the cost of providing hot water is often overlooked).

I believe we should keep things simple and use what we've got.

I think this deserves a read:
Coming 2009 Food shortage (dailyKOS site). Great layout of why a propane shortage and wet corn is killing harvests. Minor Doomer porn?

This is a inclusive snapshot with a timeline out to next season's planting season by TOD poster SacredCowTipper. It includes material posted at theautomaticearth.com.

For those who are US based and non-ag based this material is background to this request:

If you're not in an agricultural state and you see something come up about a plan to address these issues please take the time to call or write your delegation members and let them know that you realize how important this is, even though it doesn't directly affect your state.

That is a very good read as it links back to TOD :)

I just read the DailyKOS post. It said that this problem with corn moisture reached as far as St. Louis.

I live about 130 miles southeast of St. Louis and we have had no out of the ordinary problems with corn moisture this season. Yes we had some blown down due to hurricane Ike.

All our corn is in. We did have a late problem getting soybeans in but thats just about over.

We mostly do not use corn dryers. Used to but found that they were not necessary since we can get corn to field dry at 14%. If a farmer pushes it and combines wetter corn then he can pay the increased cost at the elevators,if its not that high.

So we combine and go straight to the bins with 12,13 of 14 percent corn.

Overall though this year was not a bountiful corn harvest. I say on the average here it was about 140 bu/ac....oh some brag on 200 bu/ac but thats very rare. Overall is far different than what just one specific area of just one field yields.

Propane is not a problem here either but I have stopped using it for heating. I do keep some on hand though just casual use.

What will really hurt is when gas prices hike skyward and the LP gas follows it for there are many here who do heat with propane(LP gas) and they are going to be hurting badly. Thats why I got off it.

Fact is that its very dry in my part of Ky. Many ponds are lower than I have seen in some time. The creeks are barely flowing. The river is down. We have a real lack of moisture.


Editted to add a further remark on the SW post at KOS.

It speaks of possibly very severe problems with agriculture in the future. This I agree with. Crop insurance is used extensively. If it has big problems then ag has big problems. If credit dries up???Well start to kiss your ass goodbye hen. Credit is absolutely, absolutely essential to most all farmers. And fertilizer? If this goes haywire? We are in Big DoDoLand. Extremely bad.

So if this country has a big crop failure? The results would be most unpleasant and my feeling is that the next crash will be AG.

And what can the politicos do about it? Nothing. They can talk and carp all they want but they can't make crops come out of the ground if the externals are not there. Weather,fertilizer inputs,credit,insurance and so on.

Its tough enough to just keep the machinery running smoothly and this I know for I do a lot of the work on the electronics of this equipment. I get lots of calls to head to the fields and replace a sensor or fix this or that. A radar gun gone bad. Etc.

So the supply of parts is very essential and if many of those go out of business? We go dead in the fields. Its all very much connected.

"Its all very much connected."

Large Agriculture = Stranded assets = widespread hunger in the USA.

It looks as if Ma Nature will be forcing us to repeat the cuban/russian/etc experiences - move towards micro-agriculture within communities immediately ... or starve.

Neal makes a number of good points.

I think his observation on organic ag is right on the money.

"I've received the usual suggestions about how our large scale grain production should be done organically. I have no ideological opposition to this and in fact I'm generally vegetarian and eat organic as much as I can lay my hands on it. The problem is that none of the proponents can describe to me what it would look like to cultivate an entire square mile in that fashion, let alone defining a plan that would allow a neat conversion of all of the forty to fifty thousand square miles of the state of Iowa to such methods. It's an admirable concept, but it doesn't seem executable. I do not at all accept that it's "big agriculture" keeping the farmers down."

Dour Fir comments on organic.

From my experience in this area it would be almost impossible to convert to organic farming. First is the huge outlay in equipment.

Also the fields are really depeleted of organic material even though we do a lot of no-till. I mean really depleted. Zero earthworms. Soil microorganisms likely mostly dead to a large extent.

My buddy runs over 3,000 acres. Do it organically? We just barely have time to get the planting done with the weather windows and the harvest can be even more tricky. There is very little leeway in it.

Just to bring the soil up to the proper organic requirements would seem to be a massive effort and the payback won't be forthcoming until some time in the future. So where would all the biomass come from? How could we afford to let fields lie fallow? Or plant a lot of cover crops?

There just doesn't appear to be time with the huge population to be fed.

Sure it could work but if the infrastructure takes a big hit then how many would want to 'bet the farm'? It would have to start on a very low scale and build from there IMO.

From the outside looking inwards,yes it might appear to be doable but the economics of doing so would have to be borne by someone and farmers are just fairly conserative folks. They take a lot of risk currently and for something like that to happen?

I think the tea leaves are mixed on that issue.


Hello Airdale,

Your Quote: "My buddy runs over 3,000 acres. Do it organically? We just barely have time to get the planting done with the weather windows and the harvest can be even more tricky. There is very little leeway in it."

Hopefully the TOD engineers/imventors are working on my earlier-posted speculative idea of giant kite-powered 'manure surfboards' that would easily move I/O-NPK to the inner most acres from the road or Spiderweb track outer boundaries. As the surfboard is pulled along by the kite, tacking back and forth: the bottom strakes, or discs, or sharp rollers, which act similarly as the keel on a sailboat, could mulch in the leftover previous crop residue and new manure. Sure beats having to postPeak wheelbarrow a load a mile to the innermost acre.

From a hopeless city-boy trying to spur postPeak alternative thinking and methods to farmers. :(

Airdale, as a small scale Organic farmer, I totally agree with you. Organic farming is not going to feed the World as people imagine it will.

I don't think people realise that any energy savings made from dumping Industrial Agricultural methods is lost again plus some when moving to Organic Farming methods. Not that I believe industrial agriculture is the saviour, it is not, it will destroy the soil to the point where food production crashes precipitously.

I think we are going to have to face the consequences of over-shoot.

Worker dies at Long Island Wal-Mart after being trampled in Black Friday stampede

A worker died after being trampled and a woman miscarried when hundreds of shoppers smashed through the doors of a Long Island Wal-Mart Friday morning, witnesses said.

The unidentified worker, employed as an overnight stock clerk, tried to hold back the unruly crowds just after the Valley Stream store opened at 5 a.m.

Witnesses said the surging throngs of shoppers knocked the man down. He fell and was stepped on. As he gasped for air, shoppers ran over and around him.

"He was bum-rushed by 200 people," said Jimmy Overby, 43, a co-worker. "They took the doors off the hinges. He was trampled and killed in front of me. They took me down too...I literally had to fight people off my back."

Yet another reason to stay out of WalMart. As if you need any more.

Really, I hear there are "to die for" bargains at Walmart?

There is no hope.

It didn't say what caused the stampede. I thought that American malls were becoming like ghost towns. Now people are fighting to get in. what gives?

It's Black Friday. The day when stores like Wal-Mart offer "door-buster" deals. Ridiculously cheap prices on popular items to get people in the stores. Usually in very limited quantities, for only a few hours early in the morning.

Last year, the traffic was heavy on Black Friday, but light the rest of the holiday season. Seems obvious to me: people are willing camp out all night to get bargains, but aren't spending a lot otherwise.

I hope Wal Mart gets sued big time. The doors were literally busted open. My plan for black Friday. Buy nothing. The best deal of all.

Shoppers Fight At Wal-Mart. No fatalities, just primordial aggression.

I avoid the malls altogether from Black Friday to Epiphany. It's just too crazy. One Saturday there was gridlock in the mall parking lot that had people trapped for literally hours. Some abandoned their cars and hiked out (which only make the problem worse). That was when I decided it was time to opt out of the annual holiday madness.

I can recall getting caught in a beany baby rush some years back. I had just gone for a routien item, but there was a large mob trying to get ahold of a limited supply hot-present of the year. Pretty crazy crowd behavior. And this was at least twenty years ago.

i had to go to target to get some milk(and test out the heated bike jacket). the entire merchandise section of target was packed but if you went into the grocery section it was deserted. though whats bad about this day is not that, it's the traffic and how people seem to ignore you. more then once i had people jump out in front of my bike..

We tried this here in Oz back in the last Recession. huge discounts on white goods etc. Quite a few injuries to both workers and customers in the New Year sales. We still have the regular NY sales, but nowehre near the same sacle of frenzy (all bets are off this year, though. Comrade Rudd has decreed that the pump-priming he's doing atm is to be spent, not hoarded, and despite 2% off the interest rate for home loans, and reduced petrol prices, Working Families (take a drink) whinging about 'doing it tough').

It's coming true already, again.

Merrill Lynch's forcast for the future dominance of "micro grids supplying local homes and factories, etc " with power. They are right, it is the wave of the future.

Get Your personal microgrid up and running ... before your local government begins "austerity programmes" like those from the article on top:

Energy Fears as Kyrgyz Winter Approaches

Kyrgyzstan faces uncertain times as winter approaches and electricity generation is so low that the government has been unable to honour a pledge to end power cuts....

Since August, the country has suffered rotating power cuts as part of an austerity programme ...and the power cuts continue, albeit in changed form.

Instead of blacking out whole areas for hours at a time, they are designed to kick in if a district gets through the “quota” of electricity assigned to it.

Of course, this has been happening in Africa for some time. Wealthier enclaves all have their own backup generators. When the power goes down, which happens frequently, the backup generators kick in.

Nice pairing between Greer's comment on fate of plans and the CoC posting above.
With same people (so called elite) in power......

I would like to present an alternate opinion to most of the history mentioned above about the great depression. Since all 'brains' want to have a reason, most of information about the great depression has been created like virtual data.

We have all heard "For lack of a nail a shoe was lost ..." I believe the great depression was all luck (good or bad) ... fates ... whatever you want to call it. The Greeks 2500 years ago knew that the fates even controlled the gods let alone Wall Street, you and I.

It could very well be that the one fellow who could have stopped the great depression tripped over his kids tricycle and didn't get to the market in time. Historians think; "Geeze, that's not a very good reason for a great depression so we will have to create a better one(s) so everyone will think we are very intelligent(ego)." Thus we have the reasons for the Great Depression. Not one historian has considered simple bad (for some) luck.

Having to do with today's situation. There are millions of independant variables of which we have no control and only a couple that we do. Further, we do not know if the variables we have control over have any meaning. Call it randomness or 'the fickle finger of fate' or a Black Swan. Which way they (the variables) move is simply a matter of luck. Taleb goes into this in detail in "Fooled by Randomness", "The Black Swan" and his web site. Nothing really new there either ... Robert Burns ~ 1780 to a mouse, "The best-laid plans of mice and men often go awry" ... Poor Mousey poor men.

Can anything be done without a plan? Nope, you got to have a plan before you can deviate. Planning success depends on your willingness to deviate. In woodworking, which I know a little about, if you strictly follow the plan, you guarantee ugly. At minimum, it looks like 'assembly line ugly', even if you do a good job. The best pieces come from a sketch and the artistry and engineering of a master woodworker take over but each piece will be a little different.

IMHO planning other than a sketch is worthless. Action and doing will create a solution. Luck will determine if the solution will be satisfactory because while you are acting and doing, the requirement variables will change ... i.e. the fates.

Now you may say, "What a waste of effort." And I ask, where are the plans that were created in the 70's as per Greer (above).

My next door neighbor gave me an old 36 Volt golf cart. The batteries are shot but the rest seems in pretty good shape. I don't know but I think a solar powered 7 kilowatt power source might come in handy. It will be an expensive project. The EROEI might suck but running my well pump a few minutes a day after the grid goes TU will be priceless.

I'm a doomer since the early 60's and I have seen nothing so far to change my mind. BHO = BAU

I agree with your comments on planning in woodworking.

As a newlywed married man I attempted my first project since high school
woodworking classes.

I had a few newly purchased tools and built a small desk. I sanded it to a high finish and put a coating on it. It looked like something one purchased at Target(this type of store was just getting started in 1962)

so I took it out to the yard and beat it with a chain,punched holes in it with an icepick and hit some edges with a rasp.

It now looked used and worth keeping. I still have it as a matter of fact.

I now am tearing down an old barn of a neighbors. I take these very ancient oak plankz to a friends shop and plane it. The results are astounding. I then put one coat of tung oil on it and make something with it. Like a vanity for my bathroom.

Its rough,its not well jointed,it has nail holes. It fits in with what I am like. My wife , if she lived with me ,would raise hell since it wouldn't garner many oohhhs and aaahhhhs from the smary folken she would wish to impress.

I simply recycled the wood. I only cut up downed trees. I don't think I could force myself to fell a large oak or any standing timber at this age and time. Instead I plant white oaks around me. Quit mowing grass and instead turn it into compost piles scattered here and yon.
Let the moles run rampant thru it. Let it all rot down. Let it bring forth food. Let it look 'worn'. Let it look 'real'.


Things are tough all over...

Even sex can't sell in this economy: Brothels feel the pinch in Nevada

Arnold's staff clips coupons to slash the $3,300 monthly grocery bill. He brainstorms other cost-cutting measures. He owns 33 acres in Wells - enough room, by his calculation, for five to 10 cows that could feed his workers.

"That's what we've come to," he said, chuckling at the idea. "Donna's Ranch could be a real ranch."

When this business is down he could lay (sic) off employees. And if things get even worse, Donna might have to go back to work.

Looks like Eliot Spritzer might have a place in Obama's administration.

You heard that Spritzer was kicked out of his synagogue not for his indiscretion but for paying retail. I shouldn't repeat a rumor like that, but an upright Jewish friend told me he got it off the internet so it must be true.

Fifty-eight?!? Oh well, whatever floats their boat.

Tough economic times will be luring more women (and men) into jobs as strippers and sex workers at exactly the same time as potential profits go down the tubes.

I can't think of any other business as good as a brothel, except for a doctor's office - they're equally profitable."

He should invest in a Funeral Parlour as well, then he's got The Circle of Life sewn up! :D

Hello TODers,

Tiger Woods really should hire me as his postPeak financial advisor. :)

Some more thinking on Nike-brand 'Tiger Tools' for postPeak Permaculture, home gardening, and home repair:

1. As evidenced by an earlier weblink: golfing is now flat or shrinking, plus golf clubs basically last forever [unless the player gets angry after a poor shot, then busts his club by wrapping it around a tree; throwing it into a lake or ocean, etc]. Since golf is a highly discretionary-income expenditure: for Nike/Tiger to expect continued growth is akin to pushing on a string.

2. What are the sales volumes of manual work tools compared to golf clubs? I don't have any stats, but I would guess it is easily 1,000:1 and these tools wear out much faster than a set of clubs. If you work a hoe, shovel, or axe every day, all day-- compare this level of wear & tear to a set of clubs.

3. This tool:club ratio might be 10,000:1 if one includes in this list other manual tools such as a 1/2 inch wrench or socket. Professional mechanics wear out common tool sizes frequently; they seek to replace these tools before they become the dreaded 'knucklebusters' where the sizing gap causes instantly rounded off nuts & bolts and/or bleeding fingers from a torquing slippage. Anyone who has previously experienced this maddening result from very cheap 'pot metal' tools thus understands why a quality wrench, socket, screwdriver, knifeblade, etc, is money very well spent for high quality tool steel.

4. Thus, a Peak Aware Nike & Tiger Woods combo doing an early marketing paradigm shift away from golf to promoting postPeak tools could easily grab a sizable market share. In his golfing attire: Tiger is quite the physical specimen now. Picture him in a future series of TV commercials, even more muscularly ripped, shirtless, and sweating: demonstrating a Tiger Axe, Tiger Scythe, Tiger Wheelbarrow, Tiger Shovel, and so on.

5. I have no idea how much money Tiger currently makes per club or other endorsed item, but lets say $1/club. Thus, he could at the 1,000:1 ratio charge a tenth of cent per Tiger tool and not have his income reduced. But if Tiger plowed the White House lawn for Obama plus Augusta National: his international hero status would be so high that he could easily charge much, much more than this for the sales of Tiger tools. He could easily double his net worth again very quickly, or give huge sums to charities that further accelerate postPeak change [plus further accentuate and accelerate the Nike/Tiger brand].

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Hi Bob,

How about getting Tiger to endorse my Easy Digging tools? I'll be happy to give you a share :-)

This reversing economy is not being kind to garden tool dealers. Even being on the front page of Google for terms like garden hoe, grub hoe, mattock, pick axe, grape hoe, and fork hoe - I still keep seeing the daily site visits and sales slumping hard.

I agree that there is a whole lot of unrealized potential for good tools - but it may be quite awhile before it becomes realized action. And it will take some time for people to re-learn the difference between a poor tool and a good one.

But I'm going to hang in there. Maybe if Tiger isn't available just yet we could get George Clooney?

Hello Greg in MO,

Thxs for your reply. Until I get a lot more people to bombard Tiger's website with Peak Outreach--try a different tack:

1. Super-rich Peakers Richard Rainwater and Matthew R. Simmons own farms--maybe you could email them to try your products, then endorse them, with the proceeds funding their favorite charities [TOD & EB?]. :)

2. Or try to get an endorsement from Heinberg, Megan Quinn, Sharon Astyk, or some other Permaculturist whose influence is growing. Even JHK has a garden now --try to get him to plug your products!

3. Former NCAA wrestling champ & TV fake-wrestling champion, but now newly crowned UFC Champion Brock Lesnar grew up on a farm, so he knows the value of very long and hard, daily physical labor [He is a physical monster]. I am sure he is now seeking endorsements. Picture him screaming into the camera: buy Greg's handtools or I will kill you postPeak!

4. Maybe prominent scientists like David Suzuki or James Hansen might endorse your tools. Good luck!

3. Former NCAA wrestling champ & TV fake-wrestling champion, but now newly crowned UFC Champion Brock Lesnar grew up on a farm, so he knows the value of very long and hard, daily physical labor [He is a physical monster]. I am sure he is now seeking endorsements. Picture him screaming into the camera: buy Greg's handtools or I will kill you postPeak!

absolutely ROTFLMAO! Thanks bob!


can definitely see him screaming an endorsment for handtools

I have the "easy digging" grub hoe and 3 tined how. They look just like the tools in a Kurosawa film. The 3 tine hoe's been great, but the strange flanges on the grub hoe tears up the handle and it has never fit the handle well. I have ground and filed it quite a bit, but am unable to get it to match the handle. I've managed to wedge it in place for small jobs, but on a big job I'd probably go back to a mattock when the head starts flopping around. Maybe if I just sawed off those flanges it would be better. Many of the Japanese tools have a square hole.


Sorry for the trouble you had with the grub hoe. Fortunately it is a problem with a solution. Get ahold of me through the EasyDigging website and I will get you fixed up.


Some more [delusional?] thinking on Tiger Tools:

Picture postPeak school curriculums shifting full bore to permaculture and shop classes: new manual-tool sales would vastly increase and/or used tools would become instant Unobtainium.

In Peak Aware culture: the very last thing you would see up for sale at a yard-sale would be quality handtools. HDTVs and other crap would be a dime a dozen, but expect to pay a high price for a 1/2 inch wrench or socket, steel jerry can, crosscut saw, quality pots & pans, etc.

IMO: postPeak burglars quickly thieving just some cash maybe less harmful to a family's future propects than if the burglars took the family's wheelbarrows, loaded them up with all the tools, then carted these away. Imagine a home seamstress losing her pedal sewing machine, a home bicycle mechanic losing his toolset, or a gunsmith having his metal-working tools stolen. Could the loss of the last precision micrometer spell doom for a postPeak village?

I hope the person who downrated me will reply. My guess is he is an ardent golfer and/or has never spun a wrench. I hope that person will consider that high-end tool catalogs like Snap-On is equivalent to Playboy magazine for a beginning mechanic, or someone building his own home toolset with very limited funds--Pure Unobtainium!

I remember as a kid, many years ago, trying to repair my bicycle with very few, junky tools [cheap pliers instead of a properly sized wrench-->Arrrgggh!]. "Heaven-On-Earth" was my neighbor's Sears Craftman's Tool Tower,with smooth, sliding drawers, and gleaming chrome 500 piece [metric & standard] handtools carefully arranged within...

Cruise this website for an hour or so-->boggles the mind...


Viewpoint: Plug-in technology for cars has limits

The linked article rings true to me. Just look out at the highway and see $20k cars that can travel interstate over mountain passes carrying luggage. No major parts may need replacing for 10 years. Is it believable they will be replaced by $40k cars with batteries that may need charging after an hour? The undersized motor will then scream its head off to get more range. Lousy economics for the first hour followed by lousy performance.

I heard a long verbal rant yesterday from someone trying to get a relative to ditch a Toyota Prius for a VW Jetta. The article backs that person up. If this is right we are heading for another re-think a la ethanol. It could also mean General Motors is heading for the biggest corporate blunder in history.

The first article in the drumbeat, Whatever happened to the Hydrogen Economy describes the plug-in technology from the point of view of the hydrogen debacle. It's the 2nd half of the article where the best info is.

What scares me the most is the majority of the general public and our politicians have no grasp of the basic problems with hydrogen. Wouldn't it be great if a law was passed that required all politicians running for office and all appointed government employees to pass a written test on the key energy facts and issues? Palin would have not made the cut (her study skills were no match for her ego). That alone is justification for the law:)

The thought of our future being determined by politicians and government employees whose energy education is optional and often incorrect makes me cringe. Actually, it scares the hell out of me.

Know your isotopes!

H is for Hypedrogen
The unreality of the "Hydrogen Economy"

D is for Deteriorium
The prospects of the "Hydrogen Economy"

T is for Trivium
The impact of the "Hydrogen Economy"

Excellent suggestion on requiring an energy test.

What requirements are there of politicians today...other than garnering the most votes?

Re. energy test:

If it were ever to become law, the enabling legislation would include answers to the questions that are approved by the legislature, not by scientists or engineers. Be careful what you wish for.

Viewpoint: Plug-in technology for cars has limits

The article strikes me as bunk. The author assumes that only the thermodynamic efficiency of the ICE matters. The reality is that whenever the engine and transmission is engaged, a large amount of energy is dissapated just keeping them rotating. I.E. at a cruising speed, a lot of energy/fuel must be expended before any torque is transmitted to the wheels. This is what engine braking is about, using the vehicles transmission/engine to dissapate energy. It is this fact, rather than regenerative braking which allows hybrids to get substantially bettter milage than pure ICE cars. This happens despite the fact that charging/discharging loses for the battery are substanitial. So in electric mode, considerably less energy is needed to move the vehicle. Then he takes the energy content of the gasoline as the unit to compare against. But transporting oil, and refining it consume considerable energy as well.

Unfortunately he is right about the current economic case for plug ins. Until some combination of the price of fuel versus the price of battery storage changes significantly, they are basically a fell good solution. I do however believe that the option to convert a hybrid into a plug-in, should be considered as a kind of insurance against potential future runaway fuel costs. At least you already have electric drive, and simply need to add in an upgrade if/when it makes sense to do so.

Exactly. The ICE itself may be, say 35% efficient, but once you add in losses from the gearbox (not strictly necessary on an EV) and such, the efficiency becomes woeful. If more than 5% of the energy in fuel was used to actually move the car, I'd be surprised.

EVs are not suited for open-road driving, however. But since most cars do 60km (40 Miles) or less a day, this isn't a big issue (even old-tech lead-acid EVs can hit this range). If you need to go out of town, the second family car can be a Hybrid, or you can catch the train and rent a car at your destination, or if there is no train service, rent a car full stop.

Is it possible to buy into PO without partaking of the climate change hyteria?

Just asking.

It seems that the two are interlinked, at least on this site.

Hysteria is in the eye of the beholder:) PO and climate change are a package deal. You can decide which to be your primary focus but you still need to keep the other as a secondary focus. I would argue it is best that people decide to focus more on one than the other, it increases the amount of overall education and progress.

The impact of climate change is already happening and it's not difficult to project current trend lines and see how much worse it can get.

In my view, people who don't see the difficulty climate change brings haven't done enough research. It's all quite available online.

Just focusing on PO simplifies the problem as it then just boils down to obtaining sufficient liquid carbon. Ignoring climate change, while simplifying the problem, creates other problems. Taking the whole system into account requires moving beyond just worrying about oil, but thinking of all the alternative energy sources, their viability and their impact on climate change. To ignore all the relevant linkages, not just climate change, would be a disservice to the systemic and global nature of our problems.

We could also ignore economics, as well, which would put the issue of peak oil even more in a vacuum.

Is it possible to buy into PO without partaking of the climate change hyteria?

I think the answer is yes! Although they are linked because of issues like resource depletion, and many of the solutions are common to both issues. I believe that Matt Simmons, and T.Boone Pickens are both pretty skeptical of CC, but are still struggling mightily for teh realiztion of peak oil solutions.

Now that doesn't mean you won't be considered to be posseess lessor intellectual qualities. If you deny CC on this site. But you can still participate in PO preparations.

An important difference between the two is that most of the truly devastating impacts of climate change will develop medium- to long-term, whereas many of the devastating impacts of peak oil are already happening, and more will be coming down the pike very short-term.

If peak oil is so short term, then it is really too late to do much about it. Peak oil cannot be solved; it will just happen and we will have less and less oil. So, therefore, we are back to alternatives, both in the kind of fuel we consume and the kind of lifestyle we choose in the process of consuming the alternative. We then have to seriously consider coal, in both its solid and liquid form. And then we are back to the climate change implications of coal versus wind, solar, geothermal, natural gas, etc. We can choose to heavily discount the future, but then that is the approach that got us in this mess in the first place. We have been talking about energy independence since at least the 70s, but basically chose to do nothing about it because the real problems would not occur until well into the future. Well, the future is now.

It would appear that most people here believe in AGW. One can choose to ignore AGW in any discussion of energy but don't get pissed if most people here find your discussion largely irrelevant.

Yes, just ask Matt Simmons and Kenneth Deffeyes.

Many of us see the cacophony over climate change as a dangerous distraction at best, and an enormous hinderance at worst, for peak oil mitigation.

But, on this site, it's best to just keep those kinds of opinions to yourself.

Your question is really 'Is Hysteria necessary?', right? It then adds the assumption that any public concern over Climate Change is automatically hysterical. There are hysterics on all sides, and reasonable voices as well.

I'm a couple rooms away from a brother-in-law who is a Tenured Prof of Climatology/Paleoclimatology in Madison, WI. He would lay out the issues for you in a very unemotional and open-minded way.

Would you like to suggest that the two issues are NOT connected, both promising to offer great difficulties to many or most human communities, and both requiring a great deal of time and energy to properly face off against?


"Is it possible to buy into PO without partaking of the climate change hysteria?"

There are lots of hysterias to think about; PO and CC are just two. Total financial collapse is another. One may also contemplate growing large mushrooms all over the world for NPK a hysteria, which will make both PO and CC trivial. Another one is an incoming massive asteroid. God (or randomness) made all people different, the asteroid made them all the same. IMHO: One should really think about the winter solstice of 2012 when the Mayan calendar ends. One of the prophecies is that there will be spider webs in the sky. Look up on a cold clear winter day and what do you see?

Lots of hysterias to partake in, your call.


What? Do you think science is hysterical?

I think Peak Oil is much more likely to lead to panic than would concerns over AGW. That panic may lead to decisions which make AGW happen faster such as a switch to coal or oil shale which will guarantee that CO2 emissions will increase faster than they have in the recent past years when oil was the main energy source. Knowing what we know about the scientific facts, that would be hysterical, in a macabre sense...

E. Swanson

Whether or not climate change is happening, I think there is a real issue about whether there is anything we as humans can do about it. Carbon dioxide is definitely not the whole issue. I know Euan had one article that touched on the subject not long ago, and has another article coming up, as part of the IEA series.

If you were to poll those who write for The Oil Drum, you would get a wide range of climate change opinions. Euan Mearns, Luis de Susa, and Heading Out are all strongly in the anti side. (Euan and Luis believe we are entering a cooling period now.) There are probably several in the middle, and several who believe that there is something we can do. I would think that Leanan is in the latter group--hence, all of the climate change articles on Drumbeat.

Hello Gail the Actuary,

As posted before: IMO, the general public will never understand climate change whether it finally turns drastically warmer or colder: their eyes simply glaze over way too fast from innumeracy.

It is far better to promote public visceral awareness of endangered species & habitats, and extinctions far in excess of historical rates. Examples: the recent weblinks of oceanic plankton decline and top predator sportfish, or the bushmeat of our cousins the gorillas, chimps, and orangutans. Continue the climate change research, but the Outreach effort needs to strongly emphasize the creatures we can all relate to:

List of the Most Recently Extinct Animals

..Humans have been the main cause of extinction since 1500 AD with invasive alien species, habitat loss, and over-exploitation being the main causal factors (Baillie et al. 2004).
Will a child want a cuddly-bear or other stuffed toy-animal if there are none left in the wild? If I had the power: it will be illegal to profitably manufacture a stuffed toy of an endangered or recently extinct lifeform; all sales and profits would go directly to habitat preservation.

Or we can just start 'counting down the digits'....

Is it possible to buy into PO without partaking of the climate change hyteria?

There is a larger, more dangerous hysteria. PO and AGW are both derive from it; it is the rational thinking hysteria. Why do so many people here insist on rational thought? Why rational? Other modes of thought give much nicer answers. Answers that are bright, shiny, warm and fuzzy. Once one has succumbed to rational thought, both PO and AGW are easy to accept. Try it.

Help me lord.

Charts Predict: Oil on its Way to $20


Crude oil prices will rally in the near-term, but then investors will see another sharp selloff that will take crude back down to seven-year lows, according to one technical analyst.

Looking at the chart for light, sweet crude, prices will rise to $76 to $80 in the next two months, Dick Otto from Matrix Asset Management said Friday. But then another slide is expected.

"What we seen when we look at the move down from $130 to $50 is an impulsive wave," Otto said.

Hello Peak_a_Boo,

Thxs for this weblink. I am not an economist, but I would like to see some kind of metric ratio invented that compares the price of crude to maybe human labor expended or some other non-FF measure [or a combo of metrics]. Thus, we could possibly prove that a high inflationary period and $200/barrel:labor ratio is exactly the same as $20/barrel:labor ratio during a deflationary period with massive unemployment and no money for most. In other words: some kind of measurement that can essentially nullify the shock [high $] or joy [low $] of the actual price.

EDIT: if this metric was really effective in its design: a non-Peak aware person would thus be even more dismayed paying $2/gal for gasoline today than when they were paying $4/gallon back in midsummer.

there is no limit to human greed and folly(tm).
the man enslaved to wealth can never be honest.
change one thing you change everything. everything is interconnected.
one direct cause of the financial meltdown was the amount of money spent in the last 8 years on two wars in iraq and afghanistan. one billion rounds of small arms ammo was discharged in iraq, for example. The u.s.a could have put 10 kilowatt PV grid tied systems on every roof top in the country. there was even a graph posted on TOD showing the cost of doing so compared to the cost of war. regressive property taxes are preventing me from upgrading my drafty windows. directly from taking my
income for doing so and increasing my taxes if i do so. point of fact, the tax assessor in my town won a $60,000 (yes, $60,000) workman's comp award because, get this, HE WORKED IN A BASEMENT!!!!! whereas, i, your humble narrator, get covered in machine coolant and metal chips every day. stick a fork in uhmerika's buttocks. turn it over. we is done.

Hello TODers,

Poverty spreading in suburbs: study

WASHINGTON (Reuters) - Poverty in the United States is spreading from rural and inner-city areas to the suburbs, according to a study, a situation that can worsen as the economy confronts what may be a protracted recession.

"Poverty is spreading and may be re-clustering in suburbs, where a majority of America's metropolitan poor now live."

The study was released ahead of next week's conference on concentrated poverty at the Fed. It shied away from explaining the causes of poverty, but past research have linked the phenomenon to loss of jobs in manufacturing, agriculture and mining.

With the U.S. economic outlook rapidly deteriorating, poverty could get worse.
You would think that the authors would at least mention JHK's "The Long Emergency", or provide a link to TOD, EB, LATOC so the reader could learn more.

If we have truly entered the Last Meltdown, it will feel just like being an old, arthritic, cataract-clouded cheetah: feebly spotting, then weakly chasing gazelles far too late while the predator-prey distance gap grows ever larger.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Hello TODers,

Chavez asks military, backers to prepare for fight

CARACAS, Venezuela (AP) — President Hugo Chavez is asking the military and his supporters to prepare for a showdown with his newly elected political opponents, telling his backers that they must be "prepared to die for the revolution."

Chavez called on Venezuela's military to "prepare to defend the revolution" and said "we won't show them mercy."
If this eventually evolves into full blown, protracted civil war: the lack of FF-exports will drive everyone further off the Hubbert Cliff.

An Analysis from 2003:

Impacts of the Venezuelan Crude Oil Production Loss

The loss of almost 3 million barrels per day of crude oil production in Venezuela following a strike in December 2002 resulted in an increase in the world price of crude oil. However, in the short term, the volume loss probably affected the United States more than most other areas. This country receives more than half of Venezuela's crude and product exports, and replacing the lost volumes proved difficult.
Currently about 10% of our imports come from Chavez [1.15 mmbpd avg, 2007 EIA]

Hugo has been elected with highest electoral majority in the Western Hemisphere (much larger than Obama), so I would not be holding my breath on a internal revolution.
This is not to rule out outside interference for former client states who wish control over Venezuela's resources, and the media propaganda campaigns in those client counties.
Venezuela has a problems with crime and corruption, and still needs more wealth distribution.
I say let them have their revolution. Some of the upper class may need to sell the second Mercedes to help this along, or maybe a few golf courses could be put into food production.