Even if it is true, 0.55 mb/d across 10 nations is noise IMO.

Noise, when instead they should use their spare capacity to increase exports to stop oilprices from rising ? If in reality they don't have spare capacity or much less than they claim, then 0.55 mbd isn't noise.

That is because net oil imports into the US are running at less than a replacement level.

What does that mean? Net imports are down about 35%. Domestic consumption is at 1997 levels. We could have a vigorous year economically and, horrors, be at Y2K demand.

Tanker rates have been dismal for a couple of years now, at levels not seen in over three decades, so this is relief for them.

Canuckistani - I appreciate your "smaller footprint" sense. The idea behind sustainability is appealing however I take the opposite tack. I think that we should keep our foot on the accelerator until we "hit the wall". Any efforts at imposing "rationing" will be vulnerable to political trickery.

Joe

Canuckistani, you might enjoy the book The Carbon Diaries 2015

It is about energy (carbon) rationing in the UK. Here's a quote from the review:

It is difficult to imagine a world where we can’t just plug stuff in or drive wherever we want or boil the kettle for a cup of tea, but The Carbon Diaries brings this situation into such sharp focus that it’s very frightening. And yet the chatty style, the humour and the ‘normality’ that the diarised format brings to the piece, although lifting the immediate angst, for me made it all the more real. This isn’t some dry report by a scientist full of technical jargon and mind-numbing complications, this is real people and real lives.

The main character is a teenage girl, so the book often gets categorized as Young Adult fiction. But it is really a great read for an adult - especially one who wonders what things might look a feel like a few years down the road...

The European cap and trade scheme has been undermined by over-issuing free permits and by allowing too many questionable offsets. You'd think other countries would learn from that.

The same political pressures that yielded such compromises exist elsewhere. It is much easier to design a consistent system, than it is to get one through the democratic political process. We've seen the same with with economics this recession, elite economists may know what to do, but the same political forces that existed in the thirties, are forcing us to repeat some of the same mistakes. Homo Politicus is very adept at gumming things up, and is nearly immune to learning from past mistakes.

I think you are missing the main point. To actually do something about CO2 emissions implies cutting global emissions to a small fraction of today's emissions. Cap-and-Trade would not/could not accomplish that in a single step. Many years of fractional cuts would be required, else the world's economic system would cease to function were the full cut to be imposed in a single step. The periodic cuts would each have an inflationary impact, as each cut would result in increased costs to the consumer in response to the continuing "shortage". Baring some breakthrough in physics to another source of energy, one might expect this process to play out over 40 years.

From the perspective of the man-on-the-street "final" consumer, the effect of cap-and-trade as proposed in the US would be increases in the cost of energy. Cap-and-trade would be what's called "rationing by price", that being the mechanism by which the consumer would be "encouraged" to reduce his/her emissions. That would easily be seen as a "tax", as the denialist camp would continue to spread that perception amongst the public. Unless, of course, the public could actually receive those allocations, which would make cap-and-trade a rationing system, perhaps as I have described.

E. Swanson

It is not valid to treat all currencies and debt as the same. Clearly the dollar and a few other currencies have special status. Japanese debt as a percent of GDP is nearly twice that of the U.S. and interest rates are near zero there also. Yet Japan goes on and the world does not come to an end. The currency the debt is denominated in matters.

Some sovereign debt never has to be repaid and some has to be repaid. The Japanese debt can grow forever since the Japanese are great savers even at near zero rates. And Americans are in a similar situation except that the Chinese and the Japanese do the saving for us. They are forced to or else they have to allow their currencies to rise which will adversely affect their export based economies.

The only thing that matters for the U.S. and Japan is that the debt can be rolled over perpetually. We often hear that this game will come to an end some day, but it is hard to see how.

Greece, Latvia, Ireland and some other countries are indeed in a fix. There debt is denominated in Euros and the European central bank is independent of European government pressure. The Euro countries that are in debt trouble are more like the states in that they have to balance their budgets or find outside lenders to keep the game going. They can not create more Euros just as American states can not conjure up more electronic dollars out of nothing.

So the debt/payment game clearly has at least two sets of rules depending on who you are.

This is often the case in many situations in life and should come as no surprise.

The ever increasing debt game can go on until the players do not want it anymore and change the rules. Since those benefiting from the rules as they are (China, Japan and other exportors) benefit as much or perhaps more than the United States likely little will actually change.

The system is at the crux of how the Empire is financed. Should it fail and the United States have to pay out of its real GDP for all the escapades of Wars for Oil Security and living the high life off imports paid for with funny money, the whole shebang collapses.

Until then we pretend to pay with electronic funny money and exportors accept the system because they can quickly change that funny money into oil which they need to keep it all going.

Hi all,

I've been working on an article that is geared towards the layperson. My goal is to show the links between Debt based monetary systems and problems such as peak oil/energy delpletion.

A rough draft of my article is below in the blockquote below. I'd appreciate any feedback on my facts and assumptions about the energy specifics. I didn't want to get too technical, but I need to be factually correct.

An Economic discussion of Energy
-Why our energy “problems” are really symptoms of debt based money

Summary
This article is written for those of you who have recognized the increasing importance of energy in our daily lives. Many of you might be aware of peak oil. When gas prices spiked two years ago, energy was constantly on the minds of everyone. The reason that energy is a “problem” is because our economy must grow in order to remain “healthy.” Because the bulk of our energy use comes from fossil fuels, growth in perpetuity is impossible. The availability of fossil fuels is governed by natural, geological, and scientific principles. So ask yourself this, “Would our energy need be such a huge problem if we weren’t striving for perpetual growth?”

What Fuels the Growth Imperative
Our monetary supply fuels the growth imperative. It really is that simple! The only money (save for coins) that gets added to the money supply is that money which someone goes into debt for. When you repay a loan, you have to pay back interest on top of principle. The interest that must be paid was NEVER created! There is always a shortage of money in the system. You will always have bankruptcy. The only way to maintain the illusion of a functioning system is to continually add more debt. Then, in the short-term, there are enough dollars in the money supply for people to access and make their payments but this “solvency” is fleeting. THIS is why the economy is only "healthy" if it's growing. (This is also provides insight into why decisions are made for short-term gains versus long-term benefits.)

Energy and the Economy
Energy is a need of human existence. In the most basic sense, food provides the energy that our bodies need to continue living. In some climates, other forms of energy are needed to provide heat so we don’t freeze to death.

Energy is also a need of our economy. You can’t have ANY economy without using energy. Even if you use human labor exclusively to run an economy, you need to feed those humans so your energy inputs would be in the form of food. In simpler terms, the economy uses energy to produce goods and services. If you “need” your economy to grow, then you need the goods and services produced to grow as well. There are two ways to increase the results of energy use. You can either use more energy inputs, or you can be more efficient with the energy you use, or both.

As evidence, we have steadily increased our energy consumption in pursuit of economic growth. However, energy is governed by laws of science and nature. There’s only a certain amount of energy available for use at any given time. Once we reach the point where we cannot increase our energy inputs, we’re just left with increasing our efficiency. Let’s just assume that we can be 100% efficient with our energy use. Where does that leave us then? We won’t be able to increase the fruits of our energy use through either method! At BEST, we’ll only be able to maintain a steady output, not grow our output. This assumes that our energy supply maintains itself at our current levels. What if we’re 100% efficient and our energy supply drops? There’s no choice left but to use less energy and that necessarily means that our economy will shrink. Where does that put us in a system which REQUIRES perpetual growth to remain “healthy?” I guess it puts us in a perpetual state of “unhealthiness.” Is that how you want to live? Is that how you want your children to live, your loved ones, your friends?

Different Ways Humans Access Available Energy
The only steady and sustainable supply of energy we have access to is the sun. “Wait a minute,” you might say, “what about wind, geothermal, oil, natural gas, coal, hydroelectric, nuclear, bio-diesel, ethanol, and hydrogen?”

Fossil Fuels
Oil, natural gas, and coal are all fossil fuels. They are the remains of living organisms from our planet’s past that were stored and converted into certain forms which we exploit as energy. If those organisms were plants, they relied on sun energy. If they were animals, they relied on eating those plants, or on eating animals that ate those plants. Ultimately, every bit of fossil fuel on this planet is an energy savings that built up over millions of years. Once humans use it up, it’s effectively gone forever. So relying on fossil fuels is not sustainable. It’s just like draining your savings account at the bank to pay your bills. Eventually your balance will be zero and won’t be able to make any payments.

Wind
What about wind? What does that have to do with the sun? Simply put, the energy from the sun, heats up areas of the planet. As those areas heat up, so does the atmosphere in those areas. Half of our planet is always dark, and half is always light. Some parts of our planet get more direct rays of sunlight than others. This uneven heating results in hot pockets and colder pockets of air. The hotter areas have increased pressure. High pressures of air will always flow toward areas of lower pressure, that is, warm air will move into colder areas. Thus you have wind. So the wind is caused by the sun.

Hydroelectric
The rivers flow because of gravity you might argue. Well that’s true but in order for a constant flow of water from a higher elevation to a lower elevation, you’ve got to constantly replenish the supply of water at higher elevations. You can’t do that without energy. That energy comes in the form of sunlight, which evaporates water and carries the moisture in the warm air to those colder pockets of air where it condenses and falls as rain and snow. Some of the rainy and snowy areas are in higher elevations. So you can’t have hydroelectric without sunlight.

The Bio-Fuels
Bio-diesel and ethanol are made from plants or animals that rely on plants. You can’t use the plant matter to get the bio-diesel or ethanol until the plants exist. In order for them to exist, they must grow and they need sunlight to grow.

Geothermal
Geothermal energy doesn’t rely on daily inputs of sunlight, true. But it’s just not available in the sheer volume of energy available for exploitation that we need to continually grow our economy. It’s a fixed source of energy and relatively small compared to the needs of our current economic system. It’s also location specific and the usable energy is not easily transferred from place to place like oil, coal, and natural gas are.

Hydrogen
So let us look at hydrogen, which really isn’t a source of energy at all. It’s an energy carrier, and an explosive one at that. Hydrogen gas in its usable form is two molecules of hydrogen bonded together. The reason it’s not an energy source is because we don’t find reserves of H2 gas anywhere on the planet in the volumes that we need to economically grow or even sustain our present economy. The vast majority of Earth’s hydrogen atoms are in the form of water. H20. We can make hydrogen gas by splitting apart the water molecule into H2 and O2 gasses, but that takes an enormous amount of energy to do. So where will the energy to split all the water molecules apart come from? The energy comes from either fossil fuels or the sun. And fossil fuels are from the sun so the energy would have to come from the sun. Here’s the problem though, the earth has a limit to how much energy it receives from the sun on a daily basis. Even if we were 100% efficient in our solar energy usage, we cannot grow the sunlight energy we receive.

The other thing to remember is that when H2 gas is utilized you end up with water. The laws of thermodynamics state that you can’t create or destroy energy. You can only convert it from one form to another. So our car engines would convert the energy in H2 gas into kinetic energy…motion. The by product of that energy usage is water. Well since you have to start with water, you need to use at least as much energy to create the H2 gas as you’ll get by burning the H2 gas. Even if we were 100% efficient with our conversion of water to H2 and then our burning of H2 to create motion, we still only have the amount of energy equal to what we began with which is the amount that the sun gave us. Since we know that we’ll never be 100% efficient, then Hydrogen is an energy loser over the long run.

Nuclear
Well then I guess the only option is nuclear energy. That doesn’t utilize the sun. But it does need radioactive elements in sufficient quantity to keep the nuclear reaction going. Furthermore, you have a lot of radioactive waste that needs to go somewhere. Any volunteer for storing that waste in your neighborhood, county, state, country? Even if waste wasn’t a problem, there just aren’t enough radioactive elements to fuel the reactions in all the power plants that we’d need just to replace our declining fossil fuel supplies, much less to keep our economy growing at an exponential rate.

Final Thought to Ponder
If we can’t control the amount of energy available for us to use, then why do we accept an economy that is only “healthy” if it’s growing? You’ve learned that the growth imperative is fueled by debt based money. So I’ll restate that question. Why do we allow the continued existence of a monetary system that gives us no other option but perpetual growth?

"It's the DEBT!"
We're Doing Something About it!Come Join the Swarm!

TS

So what does this mean for US ability to attract further foreign investment? The OilDrum has shown the link between GDP and oil? US expenditures on oil are in the scale of 4% of its GDP (14.2 trillion GDP, 20.8 M bbl/day, $82 / bbl). Wikipedia suggests that foreign holdings of US Treasury Securities are $3.9 trillion (http://en.wikipedia.org/wiki/United_States_public_debt#Foreign_ownership). US Government revenues are in the scale of $4.5 trillion /year (http://www.usgovernmentrevenue.com/ ). If oil consumption and GDP are closely correlated, then as US oil consumption goes down, its GDP will shrink. As a first order estimate, that reduction would be something like $40 less GDP per $1 less oil consumed. With focus on higher value uses and efficiencies, perhaps the marginal reduction in GDP might be half that (i.e., $20 less GDP per $1 less oil consumed) – however the price of oil has demonstrated it can double current levels. So how much oil could the US import in 2018 when Chindia consume 60% of oil exports (15 M bbl/day). Let’s say (half of the implied) remaining production or 7.5 M bbl/day. Current levels are 13.15 M bbl/day. This would mean a reduction of 5.6 M bbl/day in consumption, and implies a reduction in the scale of $4.4 trillion of GDP. What will bankers think about the prospects of getting loans repaid, let alone lending more to a country with 30% less GDP, and continue likely hood for GDP reductions?

With Mexico (#6 in exports) showing no prospects for increases, Venzuela (#7) becoming less functional, and Canada (#10) only growing slowly; it is easy to see the calculus that led Cheney et al to think that deposing an oil-rich despot was strategically important. If the US can capture most of IRAQ’s increase in production (current estimated at something like 6 M bbl/day) perhaps the US can stave off calls on its foreign debt.

Is modeling impacts of reduced consumption on GDP something that TheOilDrum collectively can contribute to?

Ya...thought he had to be to have written such an thorough article. Congrats, Chris.

I understand the concept alright, I just want to know the name that they have given this modeling effect. The reason it is given a name in the first place is then you don't have to spend 3 paragraphs explaining it everytime you need to refer to the effect.

What do use as a short-hand name? Perhaps the "arbitage and efficient market model cancellation effect"?

This is exactly my point for X with my 'Saturday night psychology class'-reply here under.

This small Norwegian island named Smola, population 2,248 has the largest onshore wind farm in Europe with a maximum production capacity of 150 MW

What value has this info anyway? Did I just win a trophy?

On a windy late night/early morning, I would not be surprised if Iowa supplied 100+% (i.e. exported) wind generated electricity. That is what PEI does.

And I think x's points are valid, especially with land area. If Texas broke itself into 5 states (allowed under treaty between the Republic of Texas and the United States of America), then West Texas would be a bigger player by any measure than Iowa (per capita or per mile2), but East Texas, South Texas, Central Texas and Dallas-Ft. Worth would be also rans.

Best Hopes for More Competition (Texas is building transmission lines for 10 to 12 GW more wind),

Alan

EOS -- You miss the most important factor that puts Texas way ahead of the rest of the states: excessive amounts of hot air. With the possibile exception of DC we have more blow hards here per capita.

The word is "cement"

and this Wiki link might shed more light on --or cement it it in as to-- why it consumes so much energy:

Cement kiln