If we fix congress, we can fix the rest of it.

Will - Fixing Congress? Please tell me something that is possible. Going after Dick Fuld and his confederates however is something that can create a shit-storm that will go all the way back to Washington.

Joe

Of course depletion reshuffles the deck.

But our deteriorating economy is a lot more complicated than depletion.

We can live without cars. We can live without salad greens from California, wine from Chile, or goods from China.

But how much more mal-investment can we absorb?

WHT,

Recently I've been thinking that some of what we hear about in financial circles seem like the eddies and whorls that form during turbulent flows. Something in the business environment today seems to be preventing the spreading of risk -- vehicles that at one time successfully mitigated individual risk (while raising overall costs modestly) seem to now be increasing systemic risk while maximizing third-party cash-out.

For example, in Florida the traditional insurers lost money in 2004/5, and pulled back. Rules were loosened to spur new investment in the insurance community, but the new companies are more like ponzi vehicles for investors than risk-spreading insurance. Small insurance companies spin out premium cash to shell companies, while their new re-insurance companies have no real assets to provide the supposed back-up. While the pseudo-insurance supports overly-expensive loans for housing, and all parties seem to be happy pretending that risk has been mitigated, if a hurricane hits it will all collapse. While it is obviously impossible to spread risk far enough in an overall risky environment, where there is more aggregate risk than aggregate mitigation funds, might such a situation be reached 'early' if the insurance process and industry becomes part of the risk itself?

Retirement funds (in Soc Sec or private funds) are likely in similar jeopardy. While an individual can plan for retirement, might the opportunities for everyone in aggregate be limited such that it's impossible for all who think they can retire to actually do so?

Is there a way to model such risk in a entropic manner? Is it piece and parcel of the same phenomena -- without continued specific effort nature (or human nature) creeps in and risk and losses/gains distribute themselves according to your heuristics?

We'd all have to become much more familiar with Joe Jenkins and humanure.

Do you think that the world could be fed without fertilizers, using purely organic methods.

Unless you mean "natural-gas-and-nitrogen-based fertilizers," the idea that "organic" methods are fertilizer-free, i. e. "pure," is a myth.

Certified organic farmers regularly use mined materials, such as rock phosphate, lime, and greensand (and kaolin as a crop protectorant).

"Composting," if that's what you mean, does not require organic certification and is practiced by many farmers who have no interest in "organics."

I suspect even that is unsustainable. The materials in compost come largely from conventional farms.

Do you think that the world could be fed without fertilizers, using purely organic methods?

We're not feeding 'the world' today even with fertilizers.

Distribution of food calories is highly inhomogeneous -- just look at the impoverished classes in India, Brazil, Central America, etc. or the entire nation of North Korea.

I believe that organic agriculture will be sufficient in many areas of the globe but not in others. I would be paying close attention to areas with the following characteristics:

1. current overcrowding
2. current food importers
3. insufficient rainfall
4. high birth rates
5. authoritarian rule

However, I think it is important to realize that any shortages of phosphate or potash will appear as increasing commodity prices over several years or decades. We may be hearing increasing news about food riots from time to time as we did in 2008 but I'm not expecting any 'crash' in supplies of fertilizers or any severe food shortages in current food exporting nations.

Best Hopes for a compassionate distribution of food resources.

-- Jon

If we started with a world like our own that looked like ours from say 1,000 BC. Without all the damage that people have bought on by clear cutting and what not. I would say if you limited the way people lived on the land, no over grazing, limited growth, parceling out about 5,000,000 square miles of land into 1/4 arce lots and giving them a lot of edible plants that would grow on each lot, not all of them native to their region, but able to grow in the climate of the plot of land. You could feed all the current world's population.

But that can't happen here on Earth, we have greed and hate for our fellow man to contend with. We have no known society that will allow itself to be limited in the fashion listed above.

With what we have have now, we can grow a lot of plants that are edible, using some animals to fill into the mix, Chickens, sheep, goats, rabbits, ducks, and several other small animals can be grown on small plots with some limitations. The problem is transtioning from what we do now to a new lifestyle is not as easy as people want it to be.

There are methods to grow food without mining rocks or FF to feed the plants, but you have to work closely with the Natural systems that are already there. Man has this nasty habit of trying to tame nature, beat it into the form we want, and that has been our down fall.

We took productive land that grew forests, or plains and tilled it until all we were growing was one kind of plant, or maybe several, but still the numbers of plants that were there before we arrived was a 100 fold or more. Farming even before the Green Revolution was hard on the land.

There are dozens of people out there that have proven you can live off the land a lot better than we do now. Methods of setting up growing systems that use what nature normally does, without us doing a lot beating nature into our ideals of monoculture. These methods don't allow for factory food production though, and we would need to change a lot of how we get our food to feed our tummies.

What you ask is possible, but what you point out is that politics and BAU will not allow it to happen in any way besides on a small scale within a small number of people.

People did feed themselves long before FF were part of the mix, but all that we have gained since their use does not have to be lost. We have a lot more knowledge about how the world works than we did even 50 years ago, we don't have to lose that knowledge base.

TOD does have a lot of Doomers reading and posting here, but as someone else said a lot of people read that don't post. So to those I say, look into growing food on your bit of world, look at the methods of Forest Gardening, Permaculture, Edible Landscapes, BioWebScape designs, and others that show you how to live within the means of the land you have working with nature and not trying to tame it.

It is true that plants need NPK but they got it just fine before we showed up on the scene, going back to that way of life is possible. Maybe not an easy trip from here to there, but a possible one.

Charles,
BioWebScape designs for a better fed future.

progress!!!

Just wait till the dioxins kick in when we burn the rubbish tips for heat..

Paul,

Your comments are always a joy to read!

-- Jon

Hi Walt,

I have three of those Honeywell classic round thermostats in our home and each reportedly contains some 3,000 mg of Hg (see: http://www.purdue.edu/envirosoft/mercbuild/src/devicepage.htm). In hindsight, I should have installed electronic/programmable units as I can't guarantee they'll be properly disposed after this home changes hands.

Also, many older homes are fitted with light switches that contain Hg (they were popular years ago because they're completely silent). Apparently, each contain approximately 2,000 mg of Hg.

Addendum: To put this into context, a 20-watt Philips SLS Marathon CFL contains 2.64 mg of Hg, so the mercury found inside just one of these silent wall switches would roughly equal 750 of these CFLs and a Honeywell round thermostat would exceed 1,100.

Cheers,
Paul

Why should there be a limit ?

As I mentioned before and as you state the highest price you can pay is your life however thats not the limit on the price. What if we end up with nuclear war or biological war whats the price of that I'd argue greater than the loss of human life alone. Next of course you have to consider not only potential lives lost now but the effects on future generations of humans and of course the planet itself depending on what lengths we go to.

Consider Iraq sure there has been tremendous loss of life to date but what are the difficult to measure effects from both previous war and political jocking for oil and current issues one the future. Indeed Iraq itself exists because of meddling in the region for oil in preceding decades.

If this concept of a top price for oil was true then we would not be in Iraq right now. If one spend even a few moments considering simply the cost of maintaining the military industrial complex required to partly ensure oil supplies then what are we paying right now. Far more than the nominal price on a barrel thats for sure.

So I stand by what I say there is no top price for oil only the collapse of our oil based civilization will stop our insatiable demand for oil at any price no matter how great.

Like any drug addict we can certainly kill ourselves in our attempt to fulfill our needs and also like any drug addict we will continue to do whatever it takes to meet our needs until we eventually die trying.

If there was some real limit then we have had plenty of opportunities to kick the oil addiction and plenty of warning signs that suggest it could well prove fatal we have not therefore we won't. You have 100 years of history backing this and thousands of years of previous history of how humans have acted in the face of dwindling resources suggesting that the chances of change are slim and the chances of collapse almost certain.

Against this we have a period of less than one year of falling prices and a huge number of simplistic crackpot theories explaining why oil prices cannot go higher.
Most variants of the peak demand argument.

And whats really funny is the holders of these theories are so certain of their validity they don't even feel the need to justify them if someone points out that history suggests otherwise.

While my own theory suggests that this fanatical blindness is indeed one of the main reasons why there is no limit to the price of oil. This practically mass delusion with I swear only a hand full of people capable of recognizing it for what it is happens to be one of the critical factors ensuring that oil prices can rise without limit or to the point that the entire system self destructs.

All it is is the junkie rationalizing why he can get just one more fix and theres sure to be more drugs he can afford.

I think the tipping point would be somewhere between $100 and $200 a barrel. A price that high would throw the economy into a much deeper recession that would, within a few months, tip us right into another Great Depression.

Prove it.

I'll make my argument.

Now again back to my own analysis I'd argue that as prices rose over 80 that recognition that the economy could no longer grow happened and as they rose higher this recognition turned to fear. This fear has nothing to do with oil itself but recognition that the massive amounts of outstanding debts we have would never be repayable in a high priced oil economy. Certain doom for our current banking system not necessarily unaffordable oil. Next the shutting down of Bear Stearns and Lehman was a deliberate act on the part of the US Government that obviously sparked the financial crisis. I'm not going to go into all the other facets but this alone is sufficient to question the chain of events. Regardless given the price of oil fell substantially as the world stood on the brink of collapse. One has to assume that a real oil surplus had to play a role in this also. Otherwise even this financial move could not have contained it. So during the price fall we have two reasonable facts. One that the financial crisis we deliberately started next that at the same time a physical oversupply of oil had to have developed or existed my full theory suggests that the required oil was probably stored up before the US made its financial move. The point is not the details of my theory but the claim its reasonable to assume that we managed to ensure the world was briefly well supplied with oil and that the initiation of the financial crisis was premeditated.

Now I suspect that although it was started on purpose that events did not unfold as expected I'd have to imagine that the original goal was simply to tame the economy tone it down a bit and let oil prices back off. I'd argue that initially one has to imagine that at worst most people expected this to simply slow the rate of growth not escalate as it did. I assume the reasoning was that the price was more than high enough for oil to spur further development and it was approaching dangerous levels.

Indeed we have seen the Saudi's repeatedly suggest that 70-80 was a fair price for oil and more than high enough to spur expansion of production and it fits well with everything I've seen concerning development costs. Fine I have no problem with that.

However I see no reason to not believe that the low prices where not the result of a chain of events which resulted in a brief surplus of oil. Indeed once oil hit its lows a massive contango existed and prices have risen steadily till now.

Certainly its fascinating and I have studied the time period extensively and come to my own conclusions. The most important to repeat myself is there is no indication that it was a fundamental event. Indeed the more I dug the more I become convinced it was and orchestrated event that got well out of hand.

In many ways a lot like the Japanese attack on Pearl Harbor. It succeeded far better than I suspect the Japanese thought it would and also history shows turned out to be a really really bad idea and it did not take long for this to become clear. And just like Pearl Harbor pundits claiming it was a fundamental event and ignoring the real basics will miss the truth.

Now although I did not give my full theory its rather obvious that underlying it are some fairly extraordinary claims. However my basic thesis is we are oil addicts and will do anything to keep our addiction going. If so then given this baseline the claims are not only not extraordinary they are fairly mild and represent the tip of the iceberg so to speak of what we could possibly do or more likely have already done if you bother to read up on some of the changes to US law.

Thus if I'm right the sad part is not that your wrong but that the horror's we will face in the future are difficult to imagine as we go to ever greater lengths to meet our addiction. But this utter revulsion is a common response when one views a drug addled addict mired in his own filth and delusion.

I hope I'm wrong but I see nothing that to justify a different conclusion.
Chilling yes but the human wreckage of addiction can readily be found on most downtown street corners the scale does not change the outcome.

At some point its difficult to predict as the system itself comes unhinged and its like trying to measure using a ruler that on fire.

I think we both see this. Now as far as a US recession goes as oil prices go over 100 almost certainly indeed outside of dubious government numbers its not clear we even left the last recession. Certainly the rate of economic contraction slowed but other than believing the Chinese and US governments there is little to indicate we have not steadily seen the overall economy drift downward.

Next I seriously question the magnitude of the drop in US consumption secondary measures such as VMT and rail and truck data do not point to as large a sustained drop. I don't like the averages because they are very misleading we had a very intense negative spike in demand not just in the US but world wide at the hight of the financial crises followed by a fairly robust rebound as deferred demand returned.

I don't agree with averaging across such and event. In any case if one takes the negative demand spike from financial crisis and hurricanes as a one time event that generally resulted in deferred demand then the real demand drop is probably much closer to 0.5-1% with the collapse of housing construction making up the bulk of this. As far as data goes the EIA data is in general in my opinion not to be trusted especially claimed storage levels. Refinery utilization for example is suspicious not in its rate of change but in its basic level because the amount of capacity thats realistically usable is very questionable.

Assuming we are significantly post peak for production it makes sense that we will have a large amount of refining capacity that will never be used simply because the oil is not there to refine. As far as I can tell refinery capacity is overstated for a long time after it peaks. Real capacity is actually much lower.
So although I don't disagree with the changes reported by the EIA in refining levels I think the precentage of true usable capacity is much higher closer to 85-90% with 5% of claimed refining capacity remaining permanently shut in.

This is capacity that will never make sense to fire up in a world of high oil prices and overcapacity and thin refining margins. Its at best theoretically available if that consisting of inefficient units that will never be turned back on.

So yes we still have a refining capacity surpluses and a healthy or unhealthy one depending on your view point but its not as dire as claimed. Recognize that as oil prices rose our refineries made significant investments in optimizing some of our capacity so your comparison basis is apples to oranges over the last few years. The introduction of ULSD also played a role in parts of our refining capacity receiving significant upgrades along with large gains in product efficiency and ability to produce the most valuable products diesel and gasoline at the expense of lesser products while some was relegated to effectively emergency status even though it was not officially dismantled. Its complex but well worth reviewing.

Next I see no intrinsic reason for imports to be falsified indeed it seems given that the loading information is fairly public I think it would be hard to hide the truth about imports. I could prove wrong but so far I've seen no real reason to distrust them.

Next as a check on oil consumption I prefer VMT as being far more reliable esp now given I suspect massive fraud in the EIA data overall to show a large storage level which is probably simply a fraud.

If we look at VMT then we see that indeed after a sharp drop fitting my spike argument its rebounded and remained surprisingly flat. This is exactly what I predicted would happen if we hit our inelastic demand levels. Now I also predicted we had hit them but that was far less assured better than and educated guess but far from certain.

Now that last little part is probably the most important part is if we are indeed at our inelastic levels then demand from here on out will be very price insensitive. This means we basically cannot use much less oil than we do today without falling not into a recession but into the start of a breakdown of the economy itself. Sure we can use less I'm not saying that I am saying that to use less parts of our economy will begin to outright fail. And obvious one is whatever is left of the leisure industry will collapse Las Vegas and all over the US. This failure on non-essential parts of the economy does not mean lower prices it simply means for demand to meet supply even as prices rise parts of the economy will collapse.

Now we can begin to discuss a recession or more correctly the continued crumbling of our economy and oil prices. If demand is indeed starting to hit its fundamental level and has become inelastic then other parts of the economy will have to give as oil prices rise. I mentioned one already which is the leisure industry. In general however as I've said a zillion times whats probably going to happen is consumers will choose to default on credit in order to continue their daily existance. Thus the next leg down is a massive increase in the rate of defaults on mortages and revolving credit card debt. Indeed despite the change in oil prices it seems that this trend barely had a blip in it. Thus all thats going to happen as oil prices increase is that this trend will simply accelerate even faster. With oil prices driving the default rates even higher.

One new trend that I've been predicting for a while is the real silent spring when house purchases effectively stop we are seeing initial signs that this may well indeed already be happening again rising oil prices will simply enforce this trend even more. As people start getting ever higher gasoline bills the will become reluctant and increasingly unable to purchase a house as they increasingly find it difficult to simply pay their current bills. Rising oil prices will steadily erode the amount of money people can spend on a mortgage even if they are crazy enough to still want to buy. As this happens they are forced to downsize their dreams and housing prices tend not to fall rapidly as its illiquid market thus people will see their dream home slip away as bill mount.

And here you get a bit of a paradox as of course these insane people that are eager to buy a home now will be the same ones that also believe that we are just seeing a price spike that will end soon. Both the reality of simply not having the cash flow as more goes to oil and the expectation that they are simply deferring the purchase of the dream home until the spike clears will serve to keep them from purchasing now. Of course if I'm right then its a game of receeding horizons with ever spiraling oil prices coupled with sticky housing prices ensuring that homes are unaffordable pretty much all the way down with people purchasing power pretty much always falling faster than home prices.

So overall our recession will intensify again I'd not call it a double dip simply a sort of change in slope. However from now on out the brunt of the losses will be increasingly focused in the debt economy and surplus based sectors.

This is obviously housing, hospitality, and my FIREM which adds the medical industry to the list. And I need a catchy one for this also state and local governments should reach their breaking point and be forced to layoff and cut back.

Mish Shedlock is of course all over the resulting friction with the Unions but misses that its just one part of a bigger picture. Its no small surprise that Universal Health Care is now on the agenda give we face the imminent collapse of our medical industry in the very near future. Its not about protecting people.

I don't see any magic price point as there was really no recovery all my predictions are already well established trends that have been visible for some time now. Oil prices should simply continue to rise and the "fluff" parts of our economy FIREM and Gov simply continue to contract as the consumer becomes increasingly worried about simply living day to day then eventually surviving.

Economically at least as far as oil is concerned I don't see any sharp breaking point really just a relentless squeeze. If I'm right about us being at inelastic demand levels for oil this will not only be relentless but also increasing at a ever more rapid rate.

Now looking outside of oil the Government has already made some almost insane moves to try to slow down this certain change I expect them to continue to do so with ever more desperate measures. Not only will this not solve the problem as our new society simply cannot afford the expense of FIREM and G it will make matters worse by slowing the rate of collapse and keeping oil demand artificially high putting even more pressure on oil prices.

Next of course this rapidly mounting government debt cannot continue forever and eventually it will force interest rates higher damaging the very industries they where trying to save in the first place. Such is the nature of a moral hazard once its embarked upon. Not only are we going to see rising interest rates but finally we should see the value of the dollar decline as recognition of the certain default or hyperinflation required to offset the debt spreads.

This monetary event itself forces oil and all commodities higher vs all fiat currencies as their future value becomes ever more doubtful.

Obviously this is a impossible situation its exact outcome is also impossible to predict however I seriously doubt it will be something as benign as a recession or depression. Thus everything I'm "predicting" is already in the past and its result is not what others are predicting because it does not end in a depression. We are thus already on the path to the eventual even more fatal result whatever it is and its a fairly smooth continuation of the current trends. I do expect things to accelerate i.e begin to unfold at a even faster pace but other than that no real changes until it finally simply explodes. Even the trend towards higher interest rates has shown some fairly signs of happening and its the last one that activates and its start is to me obvious.

The end of the world as we know it is now BAU as far as I can tell.

So we are all members of the Rubin book club here.

I'm inclined to agree with most of his conclusions. For much of the modern manufacturing, where it is highly mechanised, the cheap labour advantage diminishes. American steel can be made as cheaply as Chinese steel. Plus, much of it can be made from scrap, of which there are HUGE amounts in the US, but china must smelt from ore. Aluminium production is cheaper in Canada (hydro electric) than China - (coal powered). Add in a carbon tax and the differrence gets even greater.

Things like electronics will continue to be made there of course, as these are more labour intensive.

BUt if you take a close look at what gets imported from China, there are a lot of non-necessary items (e.g. consumer electronics). SO adding a carbon tax will raise prices in the short term, but the things you REALLy need to live, food, housing, fuel, health care, cellphone/internet plan, will change much, as none of them come from China, and (except fuel) energy is not a big component of their cost.

So those "discretionary" items will increase in price a bit, which should be offset by a carbon tax "dividend", or bay raising the income tax threshold, or something.

His example of furniture made there, from wood imported from Canada, and then shipped back is a good one. That is a lot of carbon per $ value of cabinet.

But best of all, a carbon tax, combined with country of origin labelling for everything, will highlight to people where stuff comes from, and how much energy was used to make and ship it. It then becomes like the mileage readout on a car computer - once you can see the number, you start to change your habits to lower it - right now, most people have no idea. That, people being "carbon aware", would, I think, be the single biggest benefit of a carbon tax. It doesn't have to be very high to work, it just has to be there to make a difference.

On a more fundamental level, consider what we currently do and don;t tax. We tax labour very heavily (income tax) and energy very lightly, or not at all. Not suprisingly, every business has used energy to replace labour whenever possible (though not for that reason alone). A reversal of tax policy, where we tax energy and not labour (or less on labour) would have very interesting results.

The 2-year comm college is currently FREE to residents on certain course paths.

what state is that ?

The original conspiracy theory started with the smarty-pants penning the Declaration of Independence:

"We hold these truths to be self-evident .."

J'accuse!

I thought the real conspiracy was by all these right wing politicians "tickling" themselves silly in the back rooms of power.

1. Most climate scientists are part of [the commie oriented] academia.

Well score one point for you here, PaulS.

But of course! All those for-profit private enterprises (oil, coal, steel, cement companies) are just begging to hire climate scientists of their own to do 'independent' research.

However, it's those commie oriented academic institutions that lure away the good scientists with promises of tenure, So there are none left in the market for private enterprise to hire. That's it. That's the problem.

2. People like James Hansen have become quite shrill

But your long screed is not shrill. Right?

3. ... They merely built themselves an echo chamber, listened exclusively to whatever rubbish and nonsense resonated, then appointed themselves and each other as (self-)righteous world saviors.

Than goodness the righteous right wingers don't have echo chamber music radio stations. Glen Beck and Lush Limbaugh are just there to speak truth to science.

4. ... try to scare the bejeezus out of people and hope they stampede in the direction you prefer.

Hold on. Wasn't that play right out of the right wing play book? Be all you can be and die for your country in Iraq. We need the oil. Only cowards cut and run?

(P.S. Glorious leader GW Bush went AWOL only because he was answering the call of the higher father. Otherwise he too would have made the 'ultimate sacrifice' for the 'noble cause'. Yeah right.)

6. ... Go to any "conference" and watch [most] scientists or engineers fail to communicate effectively or competently or sometimes even audibly in a relatively benign environment.

Sad to say, this is true.

Most scientists and engineers are not trained in the dark arts of fooling most of the people most of the time.

Bloody hell... what a ranting fart you've produced here.

Listen, ya little whatever-the-heck-can-be-made-brainless-by-drivel, the effect of GHGs was discovered some 100+ years ago.

How's that fit into yer crap above?

It was confirmed something on the order of half a century ago, if not more.

How's that fit into yer crap above?

Shaddap!

An amusing read Paul, while I'm not sure about whether the air is fit to breathe or the food fit to eat (http://www.youtube.com/watch?v=dib2-HBsF08)I can say that I enjoyed reading your comment.

Yesterday, I was just reading the synopsis of a book I read as a kid called Tintin : Land of Black Gold. What a good read.

Simulations at different scales are solving different problems. Forecasting weather is not the same as forecasting climate.

There may be variations in solar output that we don't understand, or climate drivers we have yet to model, but that does not alleviate the need to deal with the output of the models we do have today. It is intelligently precautionary to mitigate potential threats that have at least a moderate probability of happening, or that have massive consequences. It is folly to believe that mankind can significantly change the content of the atmosphere without some unexpected consequences.

But then, I'm in the camp who believes we're incapable of addressing climate change in a meaningful way, and that energy, food, and water are nearer-term issues. I do think those actions which obviously address a number of issues, such as shifting from fossil fuels to renewables, and increasing efficiency of homes, businesses, and transportation, should be done first and best. It is possible at an individual level to make many such changes.....which is good since that is all I expect to see anytime soon.

While your sources state what you claim, I'm having great difficulty finding the sources for their claims. The reason I have doubts is because commercial use of these vast stores of hydrates is almost zero, although I found two places, one in the U.S and the other in Russia, that are commercially producing small amounts of nat gas from these methane hydrate sources.