Tipping Point: Near-Term Systemic Implications of a Peak in Global Oil Production -- Collapse Dynamics
Posted by Gail the Actuary on April 14, 2010 - 10:33am
Recently, a 55 page paper called Tipping Point: Near-Term Implications of a Peak in Global Oil Production (PDF warning) was published as the joint effort of two organizations: Feasta and The Risk/Resilience Network, with lead author David Korowicz. We have recently published two excerpts from that paper, which can be found at this link. This is a third excerpt.
4. Collapse Dynamics
4.1 The Dynamical State of Globalised Civilisation
The period since the end of the last ice age provided the large-scale stability in which human civilisation emerged. Climatic stability provided the opportunity for diverse human settlements to 'bed' down over generations. This formed the basis upon which knowledge, cultures, institutions, and infrastructures could build complexity and capability over generations without, by and large, having it shattered by extreme drought or flooding outside their capacity to adapt.
Within this macro-climatic stability, is the medium-term stability that we referred to above, the period of globalising economic growth over the last century and a half. We tend to see the growth of this economy in terms of change. We can observe it through increasing energy and resource flows, population, material wealth, and as a general proxy, GWP [Gross World Product]. We could view this from another angle. We could say that the globalizing growth economy for the last one hundred and fifty years has been remarkably stable. It could have grown linearly by any percentage rate, declined exponentially, oscillated periodically, or swung chaotically, for example. What we see is a tendency to compound growth of a few percent per annum. And at this growth rate the system could evolve, unsurprisingly, at a rate we could adapt to.
This does not mean that there is not unpredictable fluctuations in the economy. However, the fluctuations are around a small additional percentage on the previous year's gross output. By magnitude we are roughly referring to |∆GWP/GWP|. Angus Maddison has estimated that GWP grew 0.32% per annum between 1500 and 1820; 0.94% (1820-1870); 2.12% (1870-1913); 1.82% (1913-1950); 4.9% (1950-1973); 3.17% (1973-2003), and 2.25% (1820-2003)[i]. Even through two world wars and the Great Depression in the most economically developed countries (1913-1950) growth remained positive and in a relatively narrow band. Figure 4 shows growth rates of the global economy in frequency bands over the last four decades, again the narrow band indicates system stability. Of course small differences in aggregate exponential growth can have major effects over time, but here we are concentrating upon the stability issue only.
Governments and populations are highly sensitive to even minor negative changes in growth. The constraints felt by governments and society in general arising from only a very small change in GDP growth should emphasize to us that our systems have adapted to this narrow range of stability, and the impact of moving outside it can provoke major stresses.
4.2 Tipping Points in Complex Systems
Despite the diversity of complex systems, from markets to ecosystems to crowd behavior- there are remarkable similarities. For most of the time such systems are stable. However, many complex systems have critical thresholds, called tipping points, when the system shifts abruptly from one state to another. This has been studied in many systems including market crashes, abrupt climate change, fisheries collapse, and asthma attacks. Despite the complexity and number of parameters within such systems, the meta-state of the system may often be dependent on just one or two key state variables[ii].
Recent research has indicated that as systems approach a tipping point they begin to share common behavioral features, irrespective of the particular type of system[iii]. This unity between the dynamics of disparate systems gives us a formalism through which to describe the dynamical state of globalised civilisation, via its proxy measure of GWP, and its major state variable, energy flow.
We are particularly interested in the class of transitions called catastrophic bifurcations where once the tipping point has been passed, a series of positive feedbacks drive the system to a contrasting state. Such ideas have become popularised in discussions of climate change. For example, as the climate warms it drives up emissions of methane from the arctic tundra, which drives further climate change, which leads to further exponential growth in emissions. This could trigger other tipping points such as a die-off in the Amazon, itself driving further emissions. Such positive feedbacks could mean that whatever humanity does would no longer matter as its impact would be swamped by the acceleration of much larger scale processes.
Figure 5 shows how the system state responds to a change in conditions. The state of a system could represent the size of a fish population, or the level of biodiversity in a forest, while the conditions could represent nutrient loading or temperature (both effectively energy vectors). The continuous line represents a stable equilibrium, the dotted one an unstable one. In a stable equilibrium, the state of the system can be maintained once the condition is maintained. In Figures a) and b) we see two different responses of a stable system under changing conditions. In the first, a given change in conditions has a proportional effect on the system state; in the latter, the state is highly sensitive to a change in conditions. In c) and d) the system is said to be close to a catastrophic bifurcation. In both of these cases there is an unstable region, where there is a range of system states that cannot be maintained. If a system state is in an unstable regime, it is dynamically driven to another available stable state. If one is close to a tipping point at a catastrophic bifurcation, the slightest change in the condition can cause a collapse to a new state as in c), or a small perturbation can drive the system over the boundary as in d).
5. Three Peak Energy-Economy Models
5.1 Introduction
While discussions of peak oil have begun to enter the policy arena, and while it is generally acknowledged that it would have a major impact upon the economy, the discussion is often fragmented and lacking in a broad system synthesis. In general, discussion tends to focus on the direct uses of oil, and sometimes its effect on a country's balance of payments. Where economic impact studies of peak oil have been done, they are based upon the direct decline curve assumption such as the 4see model by Arup for the UK Peak Oil Task Force Report[v]. Nel and Cooper have used the decline curve assumption and accounted for EROI and peak coal and gas to look at the economic implications[vi]. The latter authors show a smooth decline in GDP but acknowledge that their modelling assumptions include that the financial markets must remain functional, state legitimacy remains intact, and international law prevails.
In most cases there is an intuitive assumption or mental model of what the effects of peaking oil production will mean economically and socially. In order to clarify our discussion, and introduce some working concepts, we will look at three models.
These should not be considered in isolation. In a very broad and general fashion we might consider that the linear decline model is valid for small energy constraints that have a very small effect on the overall magnitude of real GWP and level of complexity. This merges into a oscillating decline phase which cause larger perturbations in GWP/Complexity level. Finally, tipping points are crossed that rapidly cause a severe collapse in GWP/Complexity.
Finally, we note that what we are trying to do is clarify peak energy-civilisation dynamics and identify the major structural drivers in the process. The real world is more unknowable than can ever be engaged with here.
5.2 Linear Decline
Intuitively we tend to assume that most phenomena respond proportionately to some causation. This is mostly true. A change in price proportionately changes demand; an increase in population proportionately increases food demand; and increase in cars leads to a proportional increase in emissions.
Most commonly, there are two associated assumptions relating to the energy-economy relationship post-peak. The first is the Decline Curve Assumption. Thus oil production is withdrawn from the economy at between 2 and 3% p.a. The second element is that there is an approximately linear relationship between the oil production decline and economic decline. The combination of these assumptions is that the global economy declines in the form of the slope of the downward projection curve.
Thus we see the price of oil rise as oil becomes scarcer. Having less energy constrains economic activity. Bit by bit we become poorer; there is less and less discretionary consumption. The rising prices force more localized production and consumption, and there is growing de-globalisation. Jobs lost in the areas serving today's discretionary needs are over time deployed in food and agriculture, producing with more direct human effort and skill many of the essentials of life.
In such a case a longish period of adaptation is assumed in which gradually declining oil production and resulting oil price increases cause recession, hardship and cause some shocks, but also initiate a major move into renewable energy, efficiency investments, and societal adaptation. New energy production that was once too expensive becomes viable. The general operability of familiar systems and institutions is assumed, or they change slowly.
Even where the linear decline model is valid, it would be difficult to adapt. Consider a country's budget in energy terms, with some amount for health, business operations, agriculture, operations, education, and investment. As total energy available declined, less and less energy would be available in each sector. Because we discount the future (we favour short-term benefits), and the discount rate rises in economic stress, the ability to maintain investment in renewable energy would become increasingly difficult. In essence, there would be a choice between keeping some functionality in a crumbling health service, and stalling rising employment a little; or accepting job losses and a health crisis in return for a small energy return per annum in the future.
5.3 Oscillating Decline
In this model, constrained or declining oil production leads to an escalation in oil (plus other energy and food) prices. But economies cannot pay this price for a number of reasons. Firstly, it adds to energy and food price inflation, which are the most non-discretionary purchases. This means discretionary spending declines, from which follows job losses, business closures, and reduced purchasing power. The decline in economic activity leads to a fall in energy demand and a fall in its price. Secondly, for a country that is a net importer of energy, the money sent abroad to pay for energy is lost to the economy, unless that country exports goods of equivalent value. This will drive deflation, cut production, and reduce energy demand and prices. Thirdly, it would increase the trade deficits of a country already struggling with growing indebtedness, and add to the cost of new debt and debt servicing.
Falling and volatile energy prices mean new production is harder to bring on stream, while the marginal cost of new energy rises and credit financing becomes more difficult. It would also mean that the cost of maintaining existing energy infrastructure (gas pipelines, refineries etc) would be higher, thus laying the foundations for further reductions in production capability.
In such an energy constrained environment, one would also expect a rise in geo-political risks to supply. This could be bi-lateral arrangements between countries to secure oil (or food). Such agreements would tend to reduce the amount of oil available on the open market. Energy constraints would also increase the inherent vulnerability to highly asymmetric price/supply shocks from state/non-state military action, extreme weather events, or other so-called black swan events.
When oil prices fall below what can be supplied above the marginal cost of production and delivery, and oil price is what can be afforded in the context of decreased purchasing power, then energy for growth is again available. Of course local and national differences (for example energy import dependence, export of key production such as food) can be expected to shift how regions fare in the recession and in their general ability to pick up again. Growth then might be assumed to kick off again, focusing maybe on more ‘sustainable’ production and consumption.
However, as growth returns, the purchasing power of the economy will not be able to return to where it was before. Oil production will be limited by natural decline and lack of investment, and entropic decay of infrastructure will reduce the supply-demand price point further. Again higher oil, food and energy prices would then drive another recession.
In the oscillating decline model: economic activity increases→energy prices rise→a recession occurs→energy prices fall→economic activity picks up again but to a lower bound set by declining oil production. In this model the economy oscillates to a lower and lower level of activity. From our discussion about the origins of the current recession, we see this process has already begun.
5.4 Systemic Collapse
This model draws on ideas from the general dynamics of complex systems and networks, and tends to see our civilisation as a single complex adaptive system by virtue of its connectedness and integration. Indeed the concept of globalization is about integration with a common singular network.
We associate systemic collapse of civilisation with a catastrophic bifurcation. The state of civilisation at a time is by necessity dependent upon the state of the globalised economy. The state of the global economy is dependent on the infrastructure that integrates the operational fabric. The state of the globalised economy may be parameterized by GWP, which implies a level of complexity. And GWP (and complexity) is absolutely dependent upon energy flows.
To argue that civilisation is on the cusp of a collapse, we need to be able to show that there are tipping points that, once passed, drive the system rapidly towards another contrasting state through a process of positive feedback that may in turn drive other feedback processes. We need to also demonstrate that it is a catastrophic bifurcation in which the state of the globalised economy is driven through an unstable regime where the strength of the feedback processes is greater than any stabilizing process. It acknowledges that there may be an early period of oscillating decline, but that once major structural components (international finance, techno-sphere) drop or ‘freeze’ out, irreversible collapse must occur.
In the new post-collapse equilibrium state we would expect a collapse in material wealth and productivity, enforced localization/ de-globalisation, and collapse in the complexity as compared with before, as an expression of the reduced energy flows.
The collapses in the Roman Empire occurred over centuries; collapse of the Greenland Viking settlements in decades. We suggest a hypothesis here that the speed of collapse is a function of the level of integration, coupling, and the key operational speeds of the systems that support the stability of the pre-collapse state. For us, that includes the behavioral change in financial markets, food flow rates, and replacement lifetime of key components in infrastructure. In discussing the feedback processes in the next chapter we will see processes are indeed fast.
References
[i]Maddison A (2007) Contours of the World Economy 1-2030AD. Page 81 Oxford Univ. Press.
[ii]Scheffer, M. (2009) Critical Transitions in Nature and Society. Princeton Univ. Press.
[iii]Scheffer, M et al.(2009) Early-warning signals for critical transitions. Nature Vol 461 3 Sept.
[iv] http://www.stockholmresilience.org/download/18.1fe8f33123572b59ab8000166...
[v]The Oil Crunch: A Wake-up Call for the UK Economy.(2010) Second Report of the UK Industry Taskforce on Peak Oil and Energy Security. http://peakoiltaskforce.net/wp-content/uploads/2010/02/final-report-uk-i...
[vi]Nel, W, and Cooper, C. (2009) Implications of Fossil Fuel Constraints on Economic Growth and Global Warming. Energy Policy 37 166-180.
Tipping Point: Near-Term Systemic Implications of a Peak in Global Oil Production -- Collapse Dynamics
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Tipping Point: Near-Term Systemic Implications of a Peak in Global Oil Production -- Collapse Dynamics
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Thanks, David!
I have never studied the systems theory underlying tipping point, but it seems fairly intuitive that in a complex networked system, a not-so-little thing going wrong can affect the whole system, and that multiple things can work together go cause bigger problems.
For example, we know that loss of electricity in our homes can be very disruptive. This can happen through something as simple as a falling branch during a storm. If repair equipment for some reason is not available, this loss could be long lasting.
We are very dependent on our international trade system. If at some little thing causes a disruption (say a Greece type problem x 10), it could be very difficult to work around the problems.
I'd suggest that maybe international trade is one of the least likely to be a tipping point - purely because of the time constant. While trade needs to keep happening, the rate with which things happens is slow enough that people can find fixes to 'patch it up'.
Something like the power grid is much more immediate and destructive. If there is disruption there, then lots of systems get stressed, coherently. People can pick up from a day or so, but as times stretch longer the changes ripple through all the connected systems, with their own interconnections. In addition electricity is used to mediate communication, slowing down potential response.
Obviously the connections between fossil fuels (particularly gas) and electricity are many, making it an ideal route for fossil fuel tipping points to couple into the wider economy. Given that real problems usually arise from the interplay of TWO system cockups, what we are probably looking at is a fossil fuel SNAFU coupled with an electricity related one.
Finance, as usual, has the characteristic of magnifying the base problem and spreading it through its unstable (and inherently risky) setup. However I suggest its time constant is again too slow for tipping pointness in its own right.
Food, trade, politics. People can get worried very quickly if food runs low and if it is moved from a distance then politics come into play.
The effects you mention can happen well into the decline process.
There might be all three types of decline that are evident, either at different times or in different sectors of the economy (or both). Oscillating Decline seems the most likely to me, as we lurch from one crisis to the next, without really looking at the long term view and tightening the belt (voters are spoiled by over-indulgences, setting up unrealistic expectations). Differing political parties will bounce in and out of office, as each successive cure doesn't completely take, and recessions continue to make the GDP curve look like a descending porpoise trail (or sine wave). New ways of measuring the economy (or even quality of life) would be needed to redirect governments into setting policy that makes sense, not overnight millionaires.
Eventually, it may simply get to the point that bandaids no longer work, and we experience Systemic Collapse. Welcome to global Somalia...
As complex systems collapse, don't they also simplify and revert to smaller isolated systems? I would imagine that if the electricty grid failed catastrophically nd the outgage became semi permanent, people in that are would ahveno choice but to adapt in place. This couldmean radically restricting use of water by ditching daily bathing and regular washing of clothes, a shake up of the local diet and a halt to most industry and daily activities. New distribution systems would instantly spring up and after a while would seem normal even though they are radically different from the more complex systems they replaced.
If we think back to Katrina, after a while the people reaming in New Orleans started to self organise and solve problems. I remember seeing the story of a doctor who went to the convention centre and just started treating people. There was no complex bureacracy to check the status of your insurance and the sterilization of equipment was non existent but the people recieved the highest quality care avaialable and were grateful for it. They fed the guy so he could keep working. In a complex world that sort of spontaneous exchange is quickly monetised and subordinated to the needs of the system for control and growth to further complexity.
The most recent thread on TOD EROEI examined a particular tipping point in transportation as being 3:1 EROEI. There was much debate about if this meant the total collapse of industrial civilization or just adaptation on a linear scale. Personally I think linear decline is unlikley, but I also think that we could collapse back to more simplified local systems that become less complex with each collapse phase. Being able to anticipate the collapse and position yourself or community to prepare for it is going to be the real challenge. After speniding too much time here in 2007, I moved all my retirement savings into gold and have done pretty well out of the GFC. That strategy however won't work for the next colllapse phase which will be different to 2008. I really have no idea how the next collapse will manifest but I'm pretty sure that oil prices will herald it's coming.
I am not an expert but just my gut intuition tells me that the level of simplification correlates to the degree of dependencies. In the 1930s and 40s, the TVA undertook a rural electrification project in the US. Had your grand-parents or great grand parents experienced the changes introduced, then experienced a power outage, they probably would have simplified their lives and adjusted less than we would have to. It is easy to imagine they may still have a wood burning stove, axe, kerosene lanterns (not just for decoration) and even a local well on their property. The same location today, now part of a McMansion suburb, with all electric central AC/heating, and community water, etc, would not be equipped to manage the same disruption.
Respectfully,
ej
I've added numbers above to make it easier to reference. We could say we are in stage 5, but it specifies declining oil production, when in fact we have been experiencing a plateau of oil production since mid 04. I suppose the question is; Will the economy continue to oscillate to a lower level with a plateau of production vs. declining production? Does it make much of a difference? I would think they are one in the same, except the latter would cause faster oscillations.
Earl, Hi
Maybe Oil Production may not necessarily infer Total Oil Production but Relative Oil Production.
So relative to either Global Population or GWP, then "Oil Production" indeed has been declining now for many years.
In which case as you say yes, we could be in Stage 5. And the economy sure as hell could be oscillating to a lower level.
Got that feelin' to it don't it?
From The Automatic Earth 4-12-10 this link on The Future of American Jobs
http://robertreich.org/post/515783472/the-future-of-american-jobs
"So relative to either Global Population or GWP, then "Oil Production" indeed has been declining now for many years."
I believe this is a (if not THE) key. And it jumped out at me way up top when the periodic GWP growth rates were given, and shown to have risen through industrialization, then peaked in the late-mid 20th century, falling off since. This correlates reasonably well with the rise and decline in net per capita global energy.
My crunching of the numbers (population, gross oil extraction, and declining EROEI from 100:1 about 1930 to perhaps 12:1 today) yields net per capita oil availability of less than 1 barrel per person prior to WWII, quickly rising to 3 bpp in 1960 (as the automotive and suburban lifestyle began to explode), peaking at about 5 bpp in 1980 (having fueled the 'green revolution, rapid population growth, huge buildout of infrastructure...) and having now declined to about 4 bpp.
I believe this relative availability of surplus energy underlies what we are seeing in the response of 'the economy'.
Given UN population projections, ASPO projections for gross oil extraction, and my assumed 3.5% per annum decline in the EROEI of oil, we will be back to 3 bpp by 2020, and down to 2 bpp by 2030. I do suspect these 'changing conditions' will provide for ample tipping points along the way.
I put together a graph of US consumption per capita consumption of energy products, using recent EIA data (Table 1.3).
The information leaves out energy imbedded in imported products, and as is of course not on a net energy point of view. The high point (at least for the period shown) was between 1996 and 2000. US per capita energy consumption in 2009 is about 11.5% below its high in 2000, and lower than at any other point in the 1985 to 2009 period. Oil and coal use are down especially, but even natural gas and nuclear are down.
It seems to me that the financial system is the system that telegraphs problems in one sector to other sectors, and that is a big part of what we are seeing. We are not producing enough with the energy we use to justify our high level of imports.
The world energy situation seems to be fairly different. Energy use through 2008 continues to ramp up because of increased coal use, even on a per capita basis (this graph isn't per capita, but population isn't growing at 2.9% per year). Most of the growth in coal use is outside of OEDC, but it has affected imports available to the rest of the world.
I can certainly relate to it, even though I work in the oil industry and so, one would expect, benefiting from high oil prices.
I'm now working full time for about 70% (in unadjusted dollars) of what I earned in 1985, and with no benefits instead of a very nice benefits package. Meanwhile, the consumer price index has approximately doubled, and instead of paying 7.05% FICA on less than half my salary, I'm paying 15.3% on all of it (the self-employed gotcha).
Of course, the company I worked for in 1985 went out of business in 1988 after a severe attack of Pickens.
My daughter, in her late 20s with a graduate degree and a secure job, has a salary very close to the median for a woman with a graduate degree. But she has a large student loan debt, and after payroll deductions for taxes and health insurance, and loan payments, she has only about 40% of her nominal income to live on. Of course, that's a lot more than most people have, but she is certainly feeling "oscillating to a lower level".
It's interesting to see how her financial situation has affected her political views: she has become almost libertarian, seeing nothing but confiscatory taxes in the future, combined with runaway profits for financial institutions such as banks. She does not see government at any level providing value for her taxes: from ineffective local law enforcement to massive waste at the federal level. She has contempt for the mayor (a Democrat), the county judge (a Republican), the governor (a Republican) and the President (a Democrat), as well as for numerous other elected officials.
Fascinating how that works. My son also, works as the manager of QA in a machining company, now at significantly lower income than early 2000's, became a fan of Ayn Rand, Fox Network and staunch libertarian. Since rehabilitated. My own income has been stagnant since 1991. It still bugs me to hear CNBC -BNN commentators demanding "higher productivity" of Canadian workers (code words for "lower wages").
Our country is broken. It is a victim of neglect. This is a list of problems, many of which are not part of the public conversation. In some cases, policy makes the problems worse.
The media suggests the country's economy - and the world's as well - is on the mend. I suggest that until the following problems are fixed, there will be no recovery. Any single one of these problems is sufficient to derail the ambitions of a state. Here are eighty- eight!
POLITICS AND POLICY MAKING
- Public corruption and the purchasing of influence by corporations and special interests.
- The 'revolving door' of officials taking jobs with companies that they formerly regulated.
- Unprincipled partisanship.
- Undisciplined populist- style pandering to extremists
- Concentration: 'Too Big To Fail', support for monopolies and cartels.
- Accelerating concentration of wealth and resources in the hands of the (inept) few: the widening gap between rich and poor and the erosion of the middle class.
- Corporate welfare.
- Uneducated policy makers.
- Bottomless conflicts of interest.
- Election processes corrupted by private funds and advertising.
- Erosion of Constitutional protections limiting intrusions of state power into the lives of the citizens.
- The rise of 'Shadow' states- within- the- state such as private militias and security departments.
- A wasteful and incompetent military establishment which is rewarded for failure after failure.
- The shift from a public military to a mercenary military.
- 'The Untouchables': unquestioning support for the defense/security industrial complex and its excesses.
- Unaccountable intelligence services and opaque intelligence gathering activities, including torture, domestic spying and detention- without trial.
This is just the beginning of the list. The rest is here.
These are old problems, all relate to the desire of Americans to live larger than their energy and finance balance sheets. That these problems began so long ago suggests that energy availability hasn't kept up with the Jones's for quite some time.
It is hard to predict the day- to- day movements in markets. It looks like the finance bubble is picking gaining momentum. One outcom is a price spike in crude oil as central bank funds are forced into the economy to create inflation. What will the outcome be?
Just like the last time! A fuel price spike leading to a downturn with thousands of business bankruptcies and more millions unemployed, followed by a fuel price crash, another 'green shoots' period and the subsequent rise in fuel prices again as demand revives.
None of the problems will be addressed.
Your being inconvenient Steve. That will get you nowhere.
This forum is more about self gratification through the process of level discussion and debate.
Get with the program.
Your being inconvenient Steve. That will get you nowhere.
This forum is more about self gratification through the process of level discussion and debate.
Get with the program.
Her taxes will go up from here. She's got to live on less than that 40%.
I've been psychologically preparing myself the last couple of years by lowering my living standard before I have to. Having cut out lots of types of purchases I'm currently working toward cutting out cable TV. I'm reducing the number of days I turn on the TV. I'm cutting down on what I watch and looking for more entertainment on the internet. Plus, I've upped my book reading.
The government has become more of a parasite. US federal government salaries are going up while many of the rest of us have experienced big cuts (e.g. 401(k) match cuts, salary freezes, bonus cuts or elimination, higher medical co-pays). I am very unsympathetic toward the government. They too should experience pay cuts, benefits cuts, and lay-offs.
Maybe it looks something like this...until it hits a bigger step, (see aangel's charts) all of a sudden, at which point all bets are off and the economy just sits there writhing in a vibrating tangle until it stops completely.
Ten to one that "biggest step" is when the CARS no longer are able to be driven around.
What a nightmare for almost everyone! Yes, even for people like me and my family, who have no car, and dislike them.
We are all going to find out the hard way what a local economy looks like and it won`t be a pretty sight for those in a cement jungle. Where I live is almost a cement jungle.....
Fmagyar,
I know you didn't mean the moving slinky to be distracting, but it is.
In general... do you think we all might refrain from moving graphics here?
The internet is full of dancing widgets, dancing doodads, and other visual violators. Hate to see them here too.
Will, I apologize for causing you such irritation with my graphic.
You are right, it was not my intention to distract you or anyone else.
I posted that particular animation only because I found it to be a very good representation (IMHO) of how I think the economy will descend in step like fashion combined with the whiplashing effect as it is thrown to lower and lower levels with no chance of recovery.
While I agree with you that The internet is full of dancing widgets, dancing doodads, and other visual violators. It also has animations that convey perfectly valid information that can not be as easily conveyed in static form or in text.
A picture can be worth a thousand words and if you multiply that by frames per second you might be able to convey information in a way that can not be accomplished otherwise.
Whether or not this particular animation that I happened to choose does or does not accomplish that can be up for debate. However it does not invalidate the use of moving images in general.
Furthermore if it is so offensive or distracting as to cause distress to a particular viewer then it shouldn't be very difficult for said viewer to scroll away from the distraction.
If I had posted an animation of say a lewd sex act I'm sure the moderators of this site would have been very quick to remove it and ban me as well. Obviously I think that the animation I posted was both relevant to my point and innocous.
So I guess we will just have to agree to disagree with regards posting animations at least until the moderators decide that they are completely without merit.
Cheers!
Magyar, I loved the graphic - it said it all. Still, I was hoping it would have contained aangel's long step down and we would have seen it writhing on the floor.
Good work.
Antoinetta III
Thanks for the vote of confidence! Maybe I'll actually create some animations like that. This one isn't mine.
It would be instructive to show how a bifurcation diagram leads to an oscillating activity pattern. I suggest that we have had one rapidly damped oscillation, namely the global stimulus packages in response to the 2008 meltdown. For now there seems to be a reluctance to repeat that so perhaps linear decline is on the cards. That is we will accept 10%, 15%, 20%... unemployment under business-as-usual until the BAU model is revised. Thus previously fully employed people will have their mortgages largely forgiven and they will work part time on urban farms. That will be the new normal so economic activity will have to be rescaled.
In Australia things are a bit different because other countries keep buying shiploads of crushed rock. However when those countries cut back I think we might see scenario b) of steep or exponential decline. That is we'll do it later but tougher than the rest of the world.
Government will try to control the movements in the economy by reacting to events as they happen. This will only accentuate the oscillations as they occur bringing the tipping point fowards in time. The only way to avoid this is to have a paradigm shift in state policy thinking, which is not likely to happen any time soon.
Well it might happen soon or not, but it has to happen all at the same time. The collapse has to be simultaneous. (Tainter explains why)
I think people will readily understand what happened and be mentally prepared for the new paradigm.
Found myself in the local shiny new, way oversize Centrelink office today wondering exactly the same thing. There was the regular line up of ordinary folk waiting for there moneywhich is now largely provided by the mining industry. If that goes caphut, how is the government going to support all these people? By creating such a generous welfare state, these people have effectively been rendered helpless and deskilled in basic survival techniques. Mos of them it looked to me barely new how to open a can (of food that is, beer is different story), let alone grow something.
Hi All,
Thanks Gail.
Two things.
1) A friend sent me the following:
"
Thousands of freight train wagons and locomotives shunted into sidings
during last year's economic slump have developed rust in their brake
cylinders and need to be repaired just as demand for freight transport
is picking up in line with Germany's economic recovery.
Germany faces a shortage of usable freight locomotives and goods
wagons as the economy picks up steam following the worst recession
since World War II. Schenker, the freight logistics unit of railway
operator Deutsche Bahn, put up to 50,000 wagons in sidings last year
as the demand for goods transport slumped during the crisis.
http://www.spiegel.de/international/business/0,1518,687291,00.html"
Once things fail for any significant period-it becomes more and more difficult to re-boot, one of the reasons is entrophic decay as above. Another is you may no longer have the supply-chain coordination to re-supply.
2) Boof
Try and get a hold of the Scheffer Nature reference above-it discusses general tell-tale signs that a critical transition is approching. I've no doubt there are people on TOD who could make good use of it.
D
What does "entrophic" decay mean? Do you mean "eutrophic" decay as in the description of habitat succession? Or do you mean "entropic" decay as in increase in entropy or in general disorder?
You may have invented a useful new word that describes something. What that something is I am not too sure of.
Here is one of the Scheffer papers:
http://vtcite.info/~cems/complexsystems/tri/pdf/TippingPointsnature08227...
It's not a very good paper. Differential equations such as they show hardly ever describe the actual situation. Instead they describe the artifacts of the mathematics involved as the solution passes through different dynamic ranges of numerical accuracy. That's a well known problem with these approaches. IMO, it keeps people from making any progress on the problems, i.e the Verhulst equations revisited.
WebHubbleT,
You've go me there-spelling I do not do well. But entropic is what I meant, though the amalgam does sound promising!
http://www.youtube.com/watch?v=PFcGiMLwjeY
Entropy is a measure of how organized or disorganized a system is:
When a living system either an organism or an ecosystems dies or decays
it becomes disordered and less complex and tends to break down into it's component chemistry.
Trophos, is Greek for nourishment.
Eutrophication is an increase in the concentration of chemical nutrients in an ecosystem
I guess a good use of "entrophic" would be to mean that a previously complex organized system has now been simplified and broken down into its basic building blocks and is therefore available for a new system to organize it into something different.
I imagine one could even quantify and graph the delta "entrophy" of a system which might be able to give us some insight as to where in the progress of a system from complex and ordered to simple and disordered it might be. I think it would be much harder to imagine what kinds of new systems might self organize out of the remaining chemical soup.
Perhaps we would get abiotic oil ;-)
I am game to this strategy and will try to incorporate the word where I can. I sense what you are getting at since eutrophication has a very specific definition whereas entrophication would be more general.
Yes, though I imagine a lot of people would think it was a typo.
I have to wonder if one could find a correlation between the increasing or decreasing amounts of plastic detritus floating in the ocean and the increasing or decreasing "Enthrophy" of our economic systems.
They've found a new patch, this time in the Atlantic...not pretty.
A 2nd garbage patch: Plastic soup seen in Atlantic
http://news.yahoo.com/s/ap/20100415/ap_on_re_la_am_ca/cb_atlantic_ocean_...
Scheffer's book isn't in the local library and the smallest pdf seems to be the one cited by WHT. The differential equation models are thought provoking because we see everyday examples of those behaviours in real life. It appears that patterns such as 'the calm before the storm', 'shifting to a new level' and 'fizzling out' can all be modelled by DEs. However the real world has many more independent variables and unknown parameters. It would be a brave or foolish person who would interpret certain signs as leading to a particular outcome in a large system.
Boof,
It takes a degree of insight not available to Scheffer to make sense of a large system. If you want to get your mind boggled, take a look at this post that I just finished up tonight. http://mobjectivist.blogspot.com/2010/04/business-as-entropic-warfare.html
The post is titled "Business as Entropic Warfare" and I think I did the impossible and modeled the entire Japanese labor productivity sector in terms of entropic dispersion, with only a hint of differential equations involved. This was what Volterra had said all along: the stochastic elements are much more important than the deterministic components.
Here are a couple of figures with model fits:
The key to the agreement with my model fit is that 15 million data points are available in which case the noise completely disappears and we are left with a pure econophysics picture of what is going on.
The fact is that humans may amount to mere statistical billiard balls in the entropic universe. All the individual game-playing relationships constituting the micro-economics of productivity get swept into a bigger econophysics picture that fit better than anything I have so far seen describing the statistical mechanics of economics. The warfare of business acts precisely like an entropic swarm of ants filling in all of space. Mind boggling.
In economic terms i would assume that in the long run most of the developed world (US, EU, etc) would end up with a Japan model to cope with the problems of lower and lower energy input to the economy:
* Government and public debt evaluation would be degraded and the interest requested (on the bonds) would be much higher than today. That would put a big constraint on the ability of governments and banks to service that debt.
* Eventually, central banks would drop basic interest rates close to zero.
* Government debt would be bought by the central bank and other government/state organizations (pension funds etc) with low or almost zero interest rates. Foreign debt would gradually disappear.
* The amount of this government debt would be of no importance, as long as the FED could finance it with new, zero interest rate money.
* This government debt would be the placeholder for any bank bad debt created by falling prices and economy. Obviously, the banks would also lower their loan interest rates along with their profits. In the long run, most of the banking/financing economy would end up being state owned and giving out almost interest free loans.
* The problem of course would be inflation, due to increased money available with diminishing quantity of goods.
As for the energy input gap, transportation, tourism and commerce would be the first to suffer the most, as there's really no alternative to oil for moving ships, planes and large trucks. One thing that we should have in mind when evaluating alternative energy sources (renewables, bio-fuel etc) is that we don't just have to find an energy source with the same EROI, but with the same EROI PER YEAR.
Today, we may be wasting 1 barrel of oil for every 15 barrels extracted. That does not mean that we can replace it with a Wind turbine with an EROI of 15:1. In the case of the wind turbine (as far as i understand things), we ''ll have to invest 1 barrel of oil on year one for manufacturing and setting up the energy plant and get 15 barrels back during the total *life-cycle* (30 years). That means that we 're gonna get an energy return of 0,5 barrels of oil per year. In other words, if we 're pass peak oil and our oil input falls every year, we 'll just not have the energy surplus in order to install those wind turbines (unless we sacrifice other parts of the economy).
Personally, i 'd give a closer look to coal and some form of high energy surplus algae-based oil production mechanism (which would not compete for agricultural land).
the experience of major crises in the past (for example, WW2) suggests that even our very complex modern civiization can be greatly stressed and greatly simplified without actual collapse.
many actions that we could easily take, are resisted because they are inconvenient or personally unwelcome. we could reduce gasoline useage massively almost overnight with mandatory car-pooling. we don't do it because we don't WANT to, it would violate our privacy and make us late to work etc etc.
but in a true emergency such concerns would be seen at their true (very small) value. I perfectly accept that a long period of economic adjustment and decline is now likely. but don't expect it to lead to James Kunstler's fantasy of a "World Made by Hand". there will be enough energy so that we can live at least at the level of our parents or grandparents, and in those days the trains still ran, people had enough to eat, and the government could function.
There was an incredible abundance of fuel in the US during WWII (Gas rationing was actually to conserve tires and vehicles by limiting total mileage.) Any coming crisis won't have that benefit.
Why, then we should be building locomotives and passenger cars...oh, and public transit to feed into the stations...and making people work closer to home...
I want to know just how you think mandatory car pooling could be instituted and enforced ('cause there's no "mandatory" without enforcement.) I drive a 2001 Swift. A 2 person carpool with the driver of an SUV would result in a net loss of fuel efficiency for me on the days we went in his car. Would I have to take the ride? Would we be required to use my car? What about financial compensation, in such a case? (this is actually complex and interesting, because in such a situation, my Swift would be worth more than the SUV, despite original cost, and using it more would result in the more rapid devaluation of the more valuable asset...I would be pissed if I had to support some inconsiderate bastard who didn't prepare or consider the environment in his vehicle choices.) What about shopping trips, and visits to relatives? What if I couldn't find someone who wanted to go to the grocery store for 35 minutes at 2:47pm? Would I not be allowed to go? Would a black helicopter (fueled with algael biodiesel, perhaps) swoop down and block the driveway? A gps and phone-enabled starter interlock that would check the passenger seats for occupants before allowing me to move?
Your "true emergency" will be a dollar short and a day late. People tied to the car culture (and unless you live in a major transit-served city, that's you) will not give up driving without being forced to. And the most likely scenario is that they will change their minds too late to deal with the problems.
A more structured critique of carpooling is here: www.ptua.org.au/myths/carpool.shtml.
While the report referenced looks interesting, I've got to say that I think it probably wrong.
For a start it ignores the context of most car pooling - commuting to and from work. That means that the end point is determined, and give suburban architecture the start point is fairly closely defined too. Compare that to public transport. First the public vehicle never starts from where you are; never goes where you want; and usually seems to require at least one change to make the entire journey. And you have to pay the driver's wages.
Upshot is the time taken for the journey is usually much higher, the cost is higher, and the fuel economy is worse because the actual miles travelled are many more than the car would take.
Thus car pooling for commuter journeys comes down to one main problem: start times of journeys. Well, maybe the second of not wanting to share a car with people you don't like, but public transport has that too.
So the fix is fairly obvious, no flexitime means no issues with start and end times of the journey. Reasonable targets would be 2/3rds of staff car pooling, and average pool numbers of 3, resulting in an overall halving in fuel used across the workforce. The only way you are going to beat that is with a 'work bus' shifting large numbers of people on simple journeys.
I once worked eight-hour rotating shifts. No one I worked with lived close enough to make a car pool viable. No other plants in the area worked rotating shifts, let alone finding someone on the same rotation. Flextime impossible in this case. I could do the same analysis for almost every job I have had, but I'll cut to the chase.
The reason for this is the because the longer the allowable commute, the larger the geographical area you can draw from. Many jobs are in small and medium-sized businesses; flex time is harder for them (phone coverage, etc.) and the employees from a 20 person company may be from 20 different neighborhoods, which, in the greater Toronto area, can be anywhere in a 2,750.6 sq mi area (and yes, I once did a 60 mile commute(one way!), and have known others who did.) A distance commute usually requires using an expressway; getting on and off (say, to pick up a passenger)adds a huge time penalty. Going as little as 2 miles out of your way in Toronto's core or inner suburbs can easily add 15 minutes to a commute (because it's two miles out and 2 miles back through traffic and stoplights.)
From the study:
This is the schedule for the streetcar that runs 24 hours a day in front of my house: http://www3.ttc.ca/Routes/506/Westbound.jsp (I hadn't looked at it in a while; the feature showing the estimated time for the next three cars is new, and cool; probably based on GPS.) It costs far less than to park in the downtown core(my usual destination) and times are comparable, especially if you are likely to walk to several locations (say the Central Reference Library, a shop, a movie and a restaurant.) Did I mention that it was right in front of my house? (The TTC mandates a maximum walk of 15 minutes to a transit stop; house prices in Toronto are affected by public transit availability.) If commuting to work, the cost and time savings are probably greater.
My point? There is nothing inherently wrong with public transit, if it is done correctly. The problem here is bad choices on the part of about 90% of American homeowners and politicians.
Do 2 of your co-workers live next door to you? Otherwise, it's a huge pain in the butt, and effectively, an unreasonable target. And once again, that ol' devil relative fuel efficiency comes into it. If people drove small cars (Honda Fit and Suzuki Swift size) they would also halve the fuel usage, without the rigamarole of car pooling. And a system that banned cars and provided public transit (which is at least as reasonable as the mandatory car pooling you originally posited) would cut the fuel usage by an even greater percentage.
And I notice that you have ignored that I think the de facto nationalization of the private car fleet (which is what forced car pooling is) would place a disproportionate cost on drivers of efficient vehicles, and would be difficult to administer (as well as being anti-democratic.)
_____
So why do I allow myself to be drawn into this topic? Because people think that they will be able to turn on a dime and continue forward after a fuel shock by car pooling or some similar magic solution, and so don't consider where they live, what they drive, or who they elect. My opinion? There is no low-hanging fruit: wholesale transportation change is wrenchingly hard. To avoid having to do it, move closer to work, fight for population density and the transit it allows, and buy smaller vehicles. Don't depend on others to share the cost of your folly. Prepare for the new normal. If you want to take public transit in the future, you've got to fight for it now.
But I've been through this before.
(http://www.theoildrum.com/node/5954/563564)I'll just quote my first response in the stream; (look it up before you comment on anything below this line, please.) The block quotes are from a response from Nick to an "attaboy!" comment from oldfarmermac to me re: my thoughts on how collapse might happen in stages.
Canuckistani on November 25, 2009 - 1:49am
Nah, not hard at all. Carpooling! It's the answer! Just change the average North American's inbred sense of entitlement, educate him as to why he should change, convince him that this is the best way to deal with peak oil, and make him not feel like a sucker if the majority of his peers don't do it. And Mike Vandenbergh, director of Vanderbilt University's Climate Change Research Network (http://www.nytimes.com/gwire/2009/11/
10/10greenwire-your-neighbors-saving-energy-why-arent-
you-4546.html)agrees with me and has a heap of technical reasons as to why carpooling is not easy, and is, in fact, really, really hard: "Carpooling, it turns out, is frustrating. Vandenbergh was part of a research team that examined 17 environment-saving behaviors, finding carpooling the second most effective in potential energy savings but dead last in potential consumer uptake."
Uh, I don't know how to break this to you, but that's not "carpooling, enforced by compulsory WWII style rationing". It's gas rationing. If you've got some magic way to get this accepted by the American public, you should share it with us.
My opinion remains the same: Widespread carpooling is a sign of the apocalypse. It means people are really suffering and are out of options. Because that is the only way you're going to get Americans to share cars.
OK, I get it - you're afraid of complacency. Well, let me reassure you - I don't see the availability of carpooling as a reason to forget about the problem - I just see it as a clear indication that PO won't cause the collapse of society. No, I see a lot of good reasons to be urgent about getting rid of oil before we're at the point of needing to carpool.
Does that help? Now, read the rest of this note, which I wrote previoiusly, in that light.
-------------------------------------------------
Boy, we've had this conversation before.
The fact remains: should fuel for personal transportation become scarce, we could get everyone to work using 1/3 the fuel with carpooling. Those are the physics of the situation.
Yes, carpooling is currently very inconvenient. It doesn't have economies of scale, or any serious kind of organization. If there really were serious demand for it, it could be made much, much easier.
People wouldn't have to work together to be matched online - heck, you could design a system that matched people on an ad-hoc basis. A form of this used to be common in the US - it was called "hitchhiking". Another form of this, called "slugging" is in use in some places where people show up at bus stops, and drivers pick them up in order to drive in the HOV lane (bus drivers, of course, aren't excited about this system - that's why they called those who used it slugs, as in fake coins).
I agree - carpooling is inconvenient, and it may not be accepted unless there's an emergency of some sort.
OTOH, that's what you were talking about, right? Some dramatic event that convinces people there's an emergency, like Pearl Harbor, or 9/11?
My point: "the apocalypse", or the Plague, suggest something terrifying and fundamentally hard to fix: a disaster, that kills many people and can't be solved even after we get people's attention
Carpooling is very, very annoying. It's inconvenient. But it's millions of miles from social collapse. How can we describe something as "the apocalypse" when it can be fixed by something as trivial as carpooling (combined with other slightly longer-term options, like ramping up PHEV production)?
10% of commuting in the US is done via carpooling. A lot of people who complain about fuel costs just haven't tried it. That may not apply to you, yet it's stil true.
It means people are really suffering and are out of options.
Uhmm...you mean options besides carpooling...
There is no low-hanging fruit: wholesale transportation change is wrenchingly hard.
Not on a personal level. Buy a Prius, Leaf or Volt. If you want to avoid a long wait, do it now. If you wait until everyone wants to, then you might have to carpool for the interim.
On a national level, of course, it's harder only because we haven't decided to do it yet. It's just a choice.
how you think mandatory car pooling could be instituted and enforced
Make most, or all highway lanes HOV. Also, fuel taxes. Besides, why does it have to be mandatory?
There's enormous potential in online matching services, perhaps augmented by cell phones.
The U.S. will not do mandatory carpooling because the plan for the last 30 years has been the US DOE's Standby Gasoline Rationing Plan. The government would issue freely transferable ration tickets to the people based on state automobile registration records and who would have to adapt to using a lessor amount of fuel. Certain categories of users would be given priority. There is no need to compel a particular method, such as carpooling, to reduce consumption.
The Japan model worked because Japan used exports to maintain some low level of growth...also oil prices were still low from 1990 (bubble burst) until 2008.
The Japan model won`t work when the global economy falls apart.
And one point about Japan that many people overlook is that while their oil consumption has fallen in recent years, their total primary energy consumption has been slowly increasing (at least through 2006). EIA total primary energy consumption for Japan:
Versus oil consumption through 2008:
Looks like Japan's management has seen the realities of oil production.
You are right on that. Imports imply lowering your money supply by sending the money abroad (to the manufacturer). The best thing to do next is to persuade the exporter to buy equal amount of bonds. If you 'create' the money exported with new zero-interest debt, the total supply of your currency (including the one maintained by the exporting countries) will increase and the dollar value will decrease. Well, you can't have it all in life, you 'll have to stick with US (EU etc) made products. That's a monetary explanation for localization of economies due to peak oil.
What exactly are the elements of the Japan model?
What I have found is that the Japanese government provides a huge amount of statistics concerning labour productivity, etc.
As I said elsewhere on this thread, the amount of deep understanding that one can get from this data is mind boggling. It really illuminates the underlying simplicity/complexity dichotomy of large scale systems that I have written about before.
Keep these important TOD posts coming! We actually may figure out something.
@WebHubbleTelescope
1) Exports larger than imports. Means that you do not end up sending your money abroad (and your currency devalued)
2) Zero interest rates from the central bank.
3) Really large debt compared to the GDP (around 200%) but it is not foreign debt. State and Japanese people own the bonds. So the country can ultimately service it by making new loans with almost zero interest rate.
Should be interesting understanding the statistics in the context of the new econophysics models coming out.
Ah yes algae, like fusion, the energy source of the future and it always will be. Read some of Robert Rapiers blogs to get an idea of the realistic problems with algae. It is good at sucking money out of the Government though. Kind of like hydrogen was, and fuel cells were and, and.
treeman
I 'd totally agree, i 'm just (like everyone else) trying to look into the feasible alternatives to the oil energy output and ease of use. Biomass is the only truly renewable type of energy source, which also does not demand a huge energy investment upfront. All the oil alternatives clearly show the finite boundaries of energy. You need land for PV or biomass, you only have so many high production wind sites, uranium will be depleted in the not too distant future and so on.
I don't see algae as a primary source for gasoline for our cars. Oil will still be needed though for planes, ships and heavy transport. Something along the lines of:
* Really efficient hybrid/electric cars.
* High use of mass transport and electric trains.
* Much heavier use of coal, nuclear etc.
* Probably stronger use of renewable energy sources (especially wind) in the places where the output will be high enough (so the EROI is enough to have a net energy gain from year one).
* A sustainable and steady output of oil will be needed for heavy transportation, agriculture etc, probably coming from biomass.
* I don't know if and how much tar sands and oil shale can help.
This intro is interesting enough to give a cautious thumbs up.
Greenland hardly qualifies as a good example. According to the Sagas, the colony faced extremely cold weather and attacks by skraelings(Inuit).
Historically, war is far more dangerous than 'depletion'.
Easter Island was devestated by internecine war for centuries.
http://archaeology.about.com/od/skthroughsp/qt/skraelings.htm
So a better question is, 'does depletion lead to war?' and even 'How can we face depletion without resorting to war.'
I think Greenland is a very good example as the Colony expended much time and energy building worship structures and refused to adapt to the climate, as well as the attacks, etc. Generated wealth was transferred back home in trade.
Our Province has just spent billions on new road infrastructure, a winter olympic party, and now plans to build a 1/2 billion dollar retractable roof on a stadium for the CFL and soccer, which needs a 25,000 venue vrs the 60,000 seat albatross. It is beyond belief. (All on borrowed money, of course.)
When an industry fails in BC they say, "nevermind, the future is......"
The Vancouver rail yard was touted to become silicone valley north, forestry was to be replaced by tourism, declining tourism is now 'the gateway to the Pacific' (read increasing global trade), and the once thriving fishing industry remains only as fish farming. Day by day the pinch is on and our way of life declines into a failed middle class.
Our skraelings are represented by declining civility, the rise of gangs, mass media entertainment for the entitled, and if I had to guess, ever accelerating decline in direct relation to a loss of economic opportunity.
It seems that the report by US Joint Forces Command regarding peak oil and the possibility of oil shortages (which was already discussed on the Oildrum some time ago) is making the news around. Today there was a nice post on Zerohedge.com, the most important financial blog around:
http://www.zerohedge.com/article/us-military-warns-oil-shortages-2015-si...
Well, is this finally the good time for the message to start reaching also the general mass media (from the blogosphere) and the general public? Frankly speaking, I am not so optministic, but never say never!
As long as our political Price System runs things and controls the societal template we are doomed http://www.facebook.com/group.php?gid=2205039391
The problem, restated, is:
All economies on Earth are Price Systems (money systems), which are essentially an elaboration of the barter system, based on exchange values of commodities and services among individuals, communities, nations, and continents. Deferred exchanges became debts and debts became tradable substitutes for real wealth (resources). The virtual world of debt has now grown to such a size that its validation is the focus of national and world emergency measures, which, if unsuccessful, will bring us to confrontation with the survival of modern civilization itself
This is an unprecedented crisis, manifested in a variety of problems which the Price System has been unable to manage http://www.eoearth.org/article/Biophysical_economics in a non market economy and non political government is a viable way out. Investigate the Technocracy technate design.
This is interesting, from a very preliminary point of view, but it's disappointing that the authors appear to believe that they have sufficient information to suggest that collapse is likely.
There's really very little evidence to suggest that the world economy will decline significantly because of Peak Oil.
Robert Hirsch is perhaps the most visible advocate of this idea.
He has published several studies. The last one suggests that oil consumption is related to GDP in a 1:1 ratio - in other words, if oil consumption drops by 10%, GDP will as well. Here is what he said recently: "So then if one calculates a range of 2 to 5 percent, some people think the number may be larger, 2 to 5 percent per year increase in oil shortage, one comes up with a rather disastrous indication world GDP will decline by 2 to 5 percent a year in tandem with increasing oil shortages."
Is this realistic?
No. We can see this from economic history: in the US, oil consumption fell by 19% from 1978 to 1983, and yet GDP grew slightly. Similarly, world oil consumption was flat 2004-2008, but GDP growth was been quite strong, stronger than for the US (which itself grew 8% 2005-2008, with flat oil consumption).
Hirsch seems to have looked at the relationship between oil and GDP over the last 20 years, noticed that the ratio of oil increase to GDP increase has dropped from the previous 1:1 to roughly 1:2.5 (an analysis which he attributes to the DeutcheBank, but which can be derived straightforwardly from IEA statistics). In other words, in previous decades as the economy grew, oil consumption grew as quickly, while lately less oil has been needed. Hirsch drew the very strange inference that GDP has become more dependent on oil, rather than less.
An important and relevant researcher here is Robert Ayers . We see that he showed that GDP is related to applied energy (exergy), and only very loosely linked to energy, let alone to oil consumption. The research indicates that BTU's only explain 14% of GDP,and that the source of those BTU's can change (coal to oil to wind, for instance). Both energy efficiency and energy intensity can change. Further, oil is only one source of BTU's. Oddly enough, many energy commentators seem to misunderstand Ayre's research, and think that it supports the idea of a strong causal connection between oil consumption and GDP.
US (and world) GDP could grow much more quickly than it's energy consumption (even including electricity). The best example of this is California, which has kept per capita electricity consumption flat over the last 25 years, while growing it's GDP relatively quickly.
Ayres used "exergy services", which are not "very close to BTU parity". Exergy services are work performed. So, for instance, a Prius performs the same work as a similar vehicle with half the MPG, but uses half the BTU's. Strictly speaking, a Prius can perform the same work as a Hummer (transporting people), and use 20% of the BTU's. An EV also does the same work as a Hummer, and uses about 1/3 of the BTU's as the Prius, and 1/15 of the Hummer's...and so on.
Another source for this argument is here: http://www.postpeakliving.com/downloads/Sill-MacroeconomicsOfOilShocks.pdf from the Philadelphia Fed. It concludes that a 10% decline in oil availability would reduce GDP, on a temporary basis, by about a cumulative 2%. This means that GDP growth would be 2% lower than otherwise in very roughly the 2 years following the oil shock, then go back to it's historical growth rate. Interestingly, it finds no impact on inflation.
I would argue that the paper exaggerates the short-term effect, due to an over-emphasis on the 1980 oil shock (which was made much worse by a simultaneous change in Federal Reserve policy under Volcker), and underestimates the long-term effect of a permanent price/supply change due to the cost of imports, but the overall magnitude of the effect would be roughly the same.
----------------------
One might ask, does this blog post add helpful information on this subject?
This strongly advocates for the idea that peak oil will "crash" the economy. However, it provides very little support. The discussion simply accepts Hirsch's arguments. It discusses both Hirsch's findings as well 4 other reports. Oddly, three of those other reports actually disagree with Hirsch's thesis of a strong causal connection between oil and GDP - like others, the post seems to misunderstand Ayres in the manner that is discussed above.
Here is an example of an unrealistically pessimistic perspective: "oil is peaking or will soon peak. I don't quibble over 2012 or 2020 — either date is a disaster for humanity because we can't get ready in time." source: http://thefraserdomain.typepad.com/energy/2008/02/yergin-climate.html .
On the contrary, a difference in timing of 8 years makes an enormous difference - an additional 8 years would dramatically reduce the cost and disruptions of the transition away from oil, allowing many car owners, for instance, to smoothly replace their old vehicles with ErEV's. This may explain the blog author's perspective - there seems to a confusion about short-term vs. longterm effects: he assumes a large short-term effect predicts an even larger long-term effect, whereas, as shown in the Philadelphia Fed paper, the reverse is the case: a large short-term effect will generally be followed by adaptation which will eliminate continuing impacts on the economy.
In one place there is a request for proof that the US economy can survive a 20% reduction in oil supply. Here are two: the Fed paper above, which shows that a 10% reduction would only reduce GDP by 2%, and the 5 year reduction of 19% discussed above, where GDP managed to grow slightly.
One might ask about imports - hasn't the US out-sourced it's high-energy-consumption manufacturing to China?
Germany is a good counter-example to the argument that OECD countries are showing a higher ratio of GDP to energy because of out-sourcing, given that's it generally understood that Germany hasn't out-sourced it's manufacturing.
We can see it easily in energy use vs. GDP graphs. Till around 1970 it was linked very closely, after 1970 not so closely anymore and after 1990 not at all.
A chart of oil vs GDP would be even more dramatic, given Germany's fast declining oil consumption.
US oil consumption is falling quite sharply, but growth is continuing. From 2005 to today, world GDP grew strongly even as oil production plateaued. US oil consumption today is lower than it was in 1978, but the economy (including domestic manufacturing) is much larger.
---------------
I'm willing to believe that a dramatic decline in energy availability would over-stress our economy, but that would require decline rates much, much higher than we're seeing. Unfortunately, we have plenty of coal for the next 30 years; and ASPO projections are for only a 11% decline in all-liquids by 2030.
That's not nearly dramatic enough to cause anything to collapse outside of the very poorest countries.
Your funny.
Our entire present industrial civilization is built on oil and peak oil/fossil fuel,, shreds our current debt token based Price System into a cascading death spiral.... or didn't you know? http://www.youtube.com/user/TBonePickensetc#p/f/33/ImV1voi41YY
You can't burn it, because it destroys the climate... and you can't burn it, if there is not enough to go around.
Google Hubbert Peak. It applies to a lot more than oil.
John Carter said:
I try not to read or respond to Nick's stuff, because life's too short to waste on those whose opinions are so steeped in pollyanna-ish dogma and so resistant to fact ...your response, however, sets a tone I like.
Lloyd
I try not to read...resistant to fact
Heck, you might learn something. You may have noticed I always respond to replies: I listen carefully, give specific answers, and provide statistics and sources.
pollyanna-ish dogma
Nothing pollyanna-ish about it. For instance, I think AGW is an enormous problem - much bigger than PO.
Our entire present industrial civilization is built on oil
Not really. Oil is only about 40% of our energy.
You can't burn it, because it destroys the climate
We shouldn't..but we will if we need to. Which means that climate change is a bigger problem than peak energy.
Google Hubbert Peak. It applies to a lot more than oil.
Actually, it doesn't. It doesn't apply to coal, or natural gas (Hubbert tried to forecast gas in the late 70's, and his forecasts were completely wrong). We may have problems with a few minerals - copper is probably the biggest problem. Fortunately, there are a lot of substitutes for copper.
Peak Oil, itself probably won't "crash" the economy. But it will put the lid on growth. And without growth, the inherent design of the economy will likely cause it to crash.
Antoinetta III
And that, Antoinetta III, is a very wise insight that cannot be repeated often enough on this web site.
Although a free enterprise economy can exist in a steady state world, or even an age of declining net energy, capitalism is addicted to growth, for without growth interest becomes a vampire that drains the vital juices out of an economy, concentrating wealth and unbalancing a society. This is why the old solar based economies were so hawkish against what they called “usury.” It is also why the modern capitalist apologists get so apoplectic when this simple truth (now a heresy) from yesteryear is raised, and why economists refuse to “get” the concepts of how net energy and EROEI negate their eternal cornucopia.
Capn Daddy
interest becomes a vampire that drains the vital juices out of an economy, concentrating wealth and unbalancing a society
Could you given some examples?
Why couldn't a zero growth society have zero interest rates?
Finally, regarding energy: see http://energyfaq.blogspot.com/2008/09/can-everything-be-electrified.html
A zero growth economy could have zero interest rates. Or even tiny interest rates. But over the long haul that is not capitalism. It can be free enterprise but not capitalism, which requires growth and interest.
But over the long haul that is not capitalism. It can be free enterprise but not capitalism, which requires growth and interest.
Could you expand on that? Why does capitalism require growth and interest?
You are being a bit of a casuist, Nick. If you don't understand the reliance of the "ism" of capital on interest and growth you slept through your Econ 101 course. The old solar based economies (most of human history)enjoyed free enterprise in steady-state economies. Bursts of rough early capitalism sometimes came with the discovery and harnessing of new sources of energy. Even in solar societies there were warm decades of growth and prosperity, followed by cold periods of want and desperation. See David Hackett Fischer's "The Long Wave." Or read the multi-volumned research into early capitalism and economies done by Fernand Braudel.
It is an old debating trick to constantly ask people to explain this or that. Makes you look inquisitorial, and if they continue to "bite," they look defensive. Do you use "free enterprise" and "capitalism" interchangeably?
The fun thing about economics is that you can throw all the Econ 101 textbooks out the window. I remember taking an econ class and watching the TA write a long equation on the board and then promptly erase it, explaining that we will likely never see another equation in econ again.
That attitude has been turned upside down based on the ideas of econophysics that have gained some steam recently. This is related to but not the same as the math quants do on wall street; valid econophysics deals with macroeconomics to justify the approximations of dealing with large ensembles of economic measures.
Everyone slept through econ courses. Now it is getting interesting.
Abstract http://www.jstage.jst.go.jp/article/eier/4/1/143/_pdf
Econo-physics.
This article marks some potentially fruitful dimensions of economic research based on principles of economic theory but using more analogies with physics. Molecular structure of society with its different states, principles generating spontaneous order different from “invisible hand”, social analogies of the concepts of temperature and pressure in physics are investigated.
Some analogies between phase transitions in physics and transition between different social regimes can reveal the areas of stability of liberal regimes as well as possibility of spontaneous emergence of different social orders.
I am in this deep. It turns out the physics analogies are not what's important about econophysics, its the statistics and randomness and how we leverage the smart thinking of scientists over the years.
I didn't sleep through the econ courses, and I didn't take Econ 101 because we did all the "100" level courses in high school in my school system. We started with the "200" level courses, which is why they didn't let Americans into our university without taking the "100" level prerequisites in an American university first.
I recall listening when the professor in Econ 201 started the classic explanation of marginal cost. I thought, "That's just a bass-ackwards method of calculating the first derivative." If he had just dropped the bafflegab and done a few differential equations, he could have gotten through several weeks of lectures in about 15 minutes.
Economics was considered an "Arts" course, and we had a certain mandatory minimum number of Arts courses to take, so I took them in Economics. I thought it was quite funny. However, they were certainly light on math, and if you used a little advanced calculus, everything made more sense. Starting from a basic curve that someone had calculated, you could derive all kinds of interesting conclusions from it, many of which were useful for making money.
That wasn't part of the curriculum, though. Despite the simple nature of the calculations, I soon learned not to use calculus on the exams because it just baffled the heck out of the Econ instructors.
The tricky part is that you can't do the supply & demand class of problems easily because these are all implicit equations. That is why the economists always end up drawing the diagrams with the intersecting slopes.
When I took Econ 101 in an American university my similar reaction each week was that the equation we were learning was the integral or derivative of the previous equation we had been taught. Econ was very easy if you had first learned calculus.
You are being a bit of a casuist, Nick....It is an old debating trick
And that's ad hominem. You're assuming I don't really mean the question, and I do.
. If you don't understand the reliance of the "ism" of capital on interest and growth you slept through your Econ 101 course.
There's nothing in Econ 101 about capitalism needing interest and growth. Be serious.
The old solar based economies (most of human history)enjoyed free enterprise in steady-state economies. Bursts of rough early capitalism sometimes came with the discovery and harnessing of new sources of energy. Even in solar societies there were warm decades of growth and prosperity, followed by cold periods of want and desperation. See David Hackett Fischer's "The Long Wave." Or read the multi-volumned research into early capitalism and economies done by Fernand Braudel.
I'll try, when I have time. If you have the time and interest to briefly explain how you're distinguishing between capitalism and free enterprise, why you believe what we call capitalism requires growth, and why that would imply that a zero-growth society would necessarily be unstable (which is really the question at hand here), I would appreciate it.
*Edit
You were referring to "The great wave: price revolutions and the rhythm of history By David Hackett Fischer", right?
I'm not sure what lesson you're suggesting we take from the book. He shows that there have been several times in relatively recent history when there were periods of relative affluence which ended when they ran into limits, right? I can see how that book would suggest that the ending of a bubble of growth could easily end in social unrest.
But, how does that apply to capitalism vs. free enterprise, or capitalism requiring growth?
Give this a read Nick. It explains how the Price System works http://docs.google.com/Doc?docid=dfx7rfr2_70cmz88f&hl=en
I Am The Price System!
Give this a read Nick. It explains how the Price System works http://docs.google.com/Doc?docid=dfx7rfr2_70cmz88f&hl=en I Am The Price System!
Thanks - I'll give it a try, and reply as I can.
Yes sir, Capn! And welcome aboard.
it will put the lid on growth
No question it will slow things down a bit. OTOH, look at world GDP growth between 2004 and 2008: oil consumption was flat, but economic growth was strong.
without growth, the inherent design of the economy will likely cause it to crash.
I'm puzzled by that idea. Japan went more than a decade without growth, and survived. A debt-based economy doesn't have to grow - you could have effectively zero interest rates.
Nick, we are only "at or nearing Peak Oil." We shall see what unfolds. However, the continuance of short-term "economic growth" in the '04-'08 bubble proves nothing.
And, yes oil is only 40% of energy consumption. but it is the life blood of our global transportation system, and transportation is the key to a global economy. As transport tightens, the economy will tighten. Can we adjust? We will have to. Will it crimp "growth." You bet. "Crash" is a quick-term thing. "Crunch down" as transport becomes more expensive is more likely the pattern. And it is most likely to assume a descending wave pattern, with deeper downs and shallower ups. It may not be "doom," but it's likely to be the beginning of hard times.
the continuance of short-term "economic growth" in the '04-'08 bubble proves nothing.
Why not? Doesn't it prove there's no direct cause and effect relationship between oil consumption and economic growth?
As transport tightens, the economy will tighten.
Can we replace oil for shipping?
Sure - long distance land shipping can go by electrified rail, local can go by plug-in hybrid truck ( http://www.greencarcongress.com/2009/10/mule150-20091001.html#more ), and water shipping can find substitutes for oil.
Substitutes for oil for water shipping? Pshaw, you say.
No, really. Substitutes include greater efficiency, wind, solar, battery power and renewably generated hydrogen.
Efficiency: Fuel consumption per mile is roughly the square of speed, so slowing down saves fuel: in 2008, with high fuel costs, most container shipping slowed down 20%, and reduced fuel consumption by roughly a third. For example, Kennebec Captain's ship carries 5,000 cars from Japan to Europe (12,000 miles) and burns 8.5 miles/ton of fuel at 18.5knots, for a total of about 1,400 tons of fuel. At a 10% lower speed of 16.6 kts, the ship burns 21% less fuel (about 300 tons).
Size brings efficiency: the Emma Maersk uses about 320 tons of fuel per day to carry 220,000 tons of cargo, while Kennebec Captain's ship uses about 60 tons to carry about 23,000 tons (see http://www.ships-info.info/label-car-carriers.htm ), so the Emma Maersk uses roughly 60% as much fuel per ton.
Continued here: http://energyfaq.blogspot.com/2008/09/can-shipping-survive-peak-oil.html
the continuance of short-term "economic growth" in the '04-'08 bubble proves nothing.
Why not? Doesn't it prove there's no direct cause and effect relationship between oil consumption and economic growth?
You can't be serious. '04-'08 was a Bubble that burst in '08 and continued to unravel in '09 and will be with us for a long time. If anything it disproves your thesis.
But you are right that we can, (and are) with ships and trains at least, improving the energy efficiency of our transport. We will have to. We should have been doing it for the past two decades, which is why I am not sanguine about our wise use of the eight years that we may have in this decade. I hope we do.
Our very particular vulnerability as we all know is the ICE automobile. Now the Chinese are buying them faster than us. I am not hopeful that as individuals or as a society humanity will begin the long process of transitions until they begin prying our cold dead fingers from the steering wheel.
You can't be serious. '04-'08 was a Bubble that burst in '08 and continued to unravel in '09 and will be with us for a long time. If anything it disproves your thesis.
It may have been a bubble, but it was stil productive economic activity. What was the biggest part of the bubble? Construction. It may not have been needed, it may have been build on spec assuming inflated prices and "a greater fool", but it was real economic activity. We were able to keep on building more and bigger homes, condo's and commercial real estate despite flat oil production. What does that tell us? That it wasn't that hard for markets to allocate the remaining oil to productive uses.
The bubble popped not because there weren't enough BTU's to power the economy, but because the financial "superstructure" misdirected economic activity into buildings that weren't needed, or for the minority of people who couldn't afford to pay their mortgages. If the US had borrowed with sovereign debt instead of CDO's, and the US had properly regulated the mortgage market to prevent the bubble, we might have avoided that crash entirely.
Our very particular vulnerability as we all know is the ICE automobile.
Yes, that's the big kahuna. I agree - I hope we make the move to EREV/EVs ASAP.
Of course there's a direct cause and effect between oil consumption and economic growth.
Imagine a world like ours but starting in 2000 the marginal cost of an additional barrel of oil was only $10 and where increased demand resulted in increased supply. Would world GDP be A) smaller, B) the same, or C) larger than it is today? I think it is clear that the answer is C. We have a smaller world economy today because more resources must go into extracting oil at a lower EROEI.
Substitutes only are displacing oil because oil costs more.
I guess I wasn't clear. I agree that there is a direct cause and effect between oil consumption and economic growth. Obviously, there will be some additional costs caused by increasingly expensive oil drilling, and by investments in efficiency and substitutes. Where I disagree:
1) how strong that relationship is,
2) how the strength of the relationship compares to other drivers,
3) how the strength of the causal relationship of oil -> GDP compares to the strength of the causal relationship of GDP -> oil, and
4) how much the US experience can be extrapolated to the rest of the world.
PO pessimists suggest that oil consumption is a very strong driver of and predictor of GDP growth - I believe that's incorrect.
PO pessimists suggest that oil consumption is the most important causative agent and predictor of GDP growth - I believe that's incorrect.
PO pessimists suggest that the strong historical correlation of oil consumption with GDP suggests that oil consumption variation strongly causes GDP variation - I believe that's incorrect.
Instead, it seems clear to me that historically GDP growth caused oil consumption growth. Historically, oil has almost always been in excess supply: producers, like OPEC and the Texas Railroad Commission before it, were primarily concerned with limiting supply in order to support prices. This meant that oil consumption could be not only whatever was needed, but whatever was convenient: efficiency (or the use of substitutes) on the part of consumers, especially in the US, was a very low priority. Oil consumption fluctuated on a 1:1 ratio (and even higher ratio, as oil consumption displaced other FFs) as a result of GDP fluctuations, just as many other commodities did.
Occasionally we've had oil shocks, in which oil supplies were limited. That caused inflation problems, and uncertainty on the part of consumers, which hurt GDP. Uncertainty on the part of consumers was an important factor. Reduced capex on the part of consumers to buy light vehicles had a strong multiplier effect: in previous recessions a large part of this was uncertainty as to what to buy in the middle of gas prices that were suddenly unpredictable; even in the recent recession most consumers still had the money to buy, they just chose not to due to economic fear. This is not a change due to a physical supply limit, it's psychology. Also it's important to remember: it's temporary. PO pessimists incorrectly extrapolate from short-term effects to long-term.
Recently we had a slow-motion oil price increase, and we saw that it had very little impact on economic growth until the housing bubble collapsed, and we had a credit-crunch and bank panic - a classic business cycle, only indirectly and secondarily caused by oil supply problems. Thus, we saw that the oil -> GDP causal relationship is relatively weak.
PO pessimists assume that the US experience of oil-shock induced recession can be extrapolated to the rest of the world. I believe that's incorrect. Instead, higher oil prices redistribute income and wealth from the US and other oil importers to oil exporters (KSA, Russia, etc). US and OECD GDP is reduced, OPEC (and Russian) GDP is increased, but world GDP is relatively unaffected.
It is a bit narrow-minded to think "oil shocks cause recession", just because it has been true for the US. It is important to remember that much of the literature (such as Hamilton's work) examining the effects of oil-price shocks has been limited to an analysis of the economy of the US - it can't be extrapolated to the whole world.
Nick, I try to see things from an energy point of view, since that is much simpler and straight-forward.
1) The economic machine needs energy, both for production and for maintaining it's structures.
2) After we hit peak oil we 'll have oil supply declining with some rate. That would mean that the energy input to economy will fall... EVERY year.
3) Oil has an EROI per year. We use 1 barrel of energy to extract 11 or 18 barrels of oil.. today. Renewable energy sources have an EROI of production lifetime. We invest 1 barrel of energy today, to get 10 or 20 barrels of energy within 20-30 years. Unless you have really high energy output, your EROI per year will be smaller than 1. But, since you have decreasing energy input, you need an EROI larger than the energy decline AND the energy invested to move to another energy source EVERY year.
4) So you 're actually basing your strategy to energy efficiency providing net energy gains EVERY year. But if you create a crush program to change your cars to hubrids/EV then you will need even more energy in order to produce them, plus you 'll be moving income from the economy to buying new cars, instead of doing real work.
5) The fact is that the world population is still growing with about 1% every year (and you consume 10 times more energy to create food than the energy it provides) and you now have China and India moving to a western way of life, replacing bicycles with cars and so on. So, any gains through energy efficiency might be lost by Chinese people buying even more cars (if your energy efficiency plan drops oil prices momentarily, that will increase the demand by car buyers). Plus, your energy efficiency plan must provide real results every year.
Obviously, it's really difficult to do any realistic projections, but the general idea is that in pure energy terms it will be very hard to keep your GDP steady. Without an ever increasing GDP, debt (with interest) cannot be paid and that's the basic problem that the paper outlines.
1) The economic machine needs energy, both for production and for maintaining it's structures.
Yes. It needs a minimum amount of "exergy" or work done. That may be much smaller than the current primary energy inputs, but it must be there.
2) After we hit peak oil we 'll have oil supply declining with some rate. That would mean that the energy input to economy will fall... EVERY year.
No, the oil input will fall every year. Other sources can easily make up the difference. Further, we waste most of our energy inputs, so the exergy could easily continue to rise for a very long time, even while primary energy inputs were falling.
Oil has an EROI per year. We use 1 barrel of energy to extract 11 or 18 barrels of oil.. today.
True.
Renewable energy sources have an EROI of production lifetime.
Yes, it's a good point. OTOH, current wind turbines return the energy invested in less than a year. More importantly, we have an enormous supply of coal to get us through a transition (for better or worse). Most importantly, we have an enormous cushion of wasted energy to get us through a transition.
if you create a crush program to change your cars to hubrids/EV then you will need even more energy in order to produce them.
Hybrids/EVs don't take any more energy than current cars. And, the existing car fleet is only about 1% utilized (driven only about 5% of the time, with about 20% passenger capacity utilization = 1%). We could cut oil consumption for personal transportation by 2/3 in well below a year, if we chose to.
Does that help?
2)
No it would mean that you have an energy input decreasing. You must INVEST energy to get more energy from other sources. Waste is really something hard to measure and with diminishing returns. Furthermore, waste is quite a personal taste. I find it convenient to set my house temperature to 20C and move around dressed heavily, while someone else will set it to 25C even if that means paying a larger heating bill. You realy cannot order the economy and it's people to start being more energy efficient, apart from setting some form of energy taxation.
As for EROI: You don't just have to get back the energy invested within a year, you have to have a net energy gain at least as large as the loss due to less oil input (unless you get that through energy efficiency). Coal is not of enormous supply and you need energy to setup new mining and burning. Furthermore, coal is a mining business, it's EROI will fall rapidly once you start to try increasing production.
Eventually, your arguments evaluate to 'perpetual growth of energy efficiency and waste decrease'. I cannot think of a way that would work.
No it would mean that you have an energy input decreasing.
True - one of many.
You must INVEST energy to get more energy from other sources.
We can ramp up coal and nat gas with relatively little investment.
As far as replacing oil with electricity: that doesn't require more investments than we are making now: HEV/EREV/EVs don't take any more energy to manufacture than ICE vehicles.
Waste is really something hard to measure and with diminishing returns. Furthermore, waste is quite a personal taste. I find it convenient to set my house temperature to 20C and move around dressed heavily, while someone else will set it to 25C even if that means paying a larger heating bill.
True. OTOH, we are assuming that oil prices will go up, right? And eventually other FF prices, as we start charging for carbon?
More importantly, these are forms of energy useage which have value to them, but not enormous value. If we have to wear sweaters, drive smaller cars and carpool, we'll lose some convenience, but society won't collapse.
You realy cannot order the economy and it's people to start being more energy efficient, apart from setting some form of energy taxation.
Sure you can: it's called CAFE, appliance efficiency regulation, building codes, etc, etc.
Coal is not of enormous supply...Furthermore, coal is a mining business, it's EROI will fall rapidly once you start to try increasing production.
For better or worse, we have enormous supplies of cheap, readily mined coal - see http://energyfaq.blogspot.com/2008/06/are-we-running-out-of-coal.html and http://energyfaq.blogspot.com/2009/02/are-we-running-out-of-coal-part-2.... .
you need energy to setup new mining and burning.
Not really. The mines are there and expansion isn't very energy-consuming; the coal generation plants are there now, and underutilized: expanding burning at the plant is pretty much just a matter of turning a dial. You might have to expand rail capacity a little, but not much.
Eventually, your arguments evaluate to 'perpetual growth of energy efficiency and waste decrease'. I cannot think of a way that would work.
No, that's just for a relatively short transition: wind power is already more than 40% of new electrical generation in the US, and more than 30% for the world, and doubling about every 3 years. Solar is growing even faster: doubling about every 2 years.
Ok, let's assume that energy efficiency by itself returns a GDP growth (enough to pay interest rates) with the same energy input. I will agree that coal is the most viable source of energy (for electricity) and oil replacement (with CTL).
Assume we have a 1% decrease in oil supply each year. Let's also say that on year one we also increase coal energy supply by the same ammount (in raw energy input) in order to invest in energy replacements. As long as our replacements have a yearly EROI of 1:1 then we can sustain our current energy input. Such an EROI is viable only through advanced wind turbines (solar is already out of the question). If yearly EROI is less than 1:1, then we have to invest in more and more coal generated energy. Also, at some point in the near future we 'll have to use coal to create fuel by using CTL (for aviation, ship transports etc).
The above scenario is not impossible: As long as we have coal in sufficient quantity and with good enough EROI, the economy will not go into a downwards spiral. Obviously, we cannot afford for the EROI of coal to drop.
I don't think we'll do CTL in a big way. I think it's much more likely we'll reduce vehicle fuel consumption dramatically, through greater efficiency (a Prius reduces fuel consumption by 60%), EREVs ( the Volt reduces fuel consumption by 90%) and EVs.
I mention coal because it's available as a backup, and it will be used if necessary. I actually think that coal consumption will gradually fall in the US and OECD, replaced by wind power.
China and India will probably use both.
Nick? How is it that you are constantly promoting cars?
''(a Prius reduces fuel consumption by 60%),'' end quote Nick.
Apparently the Prius is a kind of self accelerating death trap.
Are you spamming for Japanese car companies and G.M. Nick?
They are pretty much worthless vehicles.
Why would anyone buy a car from Nissan or Toyota or G.M.? ... unless they want to promote and cultivate empty green technology that really is in the business of only making money and not real change?
How is it that you are constantly promoting cars?
I find them convenient for getting around. I mostly use electric trains for commuting, but trains & buses don't work well for other travel.
I think our main environmental problem these days is getting rid of fossil fuels - electric vehicles (hybrids, extended range EVs, pure EVs) all do that. They reduce or eliminate liquid fuel, and plug-ins support wind power by raising night-time consumption, and providing a demand-response buffer.
Nick,
As usual you have presented a well reasoned arguement refuting the collapse or doomer mentality. It would be refressing if those that do not agree with your arguments would also provide good counter arguments, rather than name calling.
I looked back on the Hirsh report a few weeks ago, interesting how much has changed with respect to EV and PHEV in just 5 years!
As usual you have presented a well reasoned arguement
Thanks! I haven't seen you lately - I hope you haven't gotten discouraged with the TOD pessimism.
It would be refressing if those that do not agree with your arguments would also provide good counter arguments, rather than name calling.
Yeah! And...they might learn something. Heck, I might learn something.
interesting how much has changed with respect to EV and PHEV in just 5 years!
Absolutely! I've been into EVs for a long time. Anyone who has been into EVs for a long time has gotten afraid that they would never happen - and now they have!!!
http://en.wikipedia.org/wiki/Hubbert_peak_theory
Is there some part of 'we are totally dependent on fossil fuels to maintain the present industrial civilization' that you can not relate to Nick?
http://mkinghubbert-technocracy.blogspot.com/
And in relation to a collapsing Price System, that collapses because it does not forgive debt and must also play by the rules of the game which... = growth, in a Price System.
http://technocracy-technate.blogspot.com/2008/12/beyond-price-system.html
No jobs.. no economy. Jobs are an antique concept now from the days of yore... in a contract society, class, caste society.
Now the big question is if current society emerges... or not, into a viable science based design.
That means a switch to resource, non monetary ecological economics, using natural capital, and the elimination of the abstract concept measurement of resources (money), and switching to an energy accounting system as proposed by the Technical Alliance.
http://www.eoearth.org/article/Ecological_Economics_%28collection%29
Is there some part of 'we are totally dependent on fossil fuels to maintain the present industrial civilization' that you can not relate
Well, yes - pretty much all of it.
And in relation to a collapsing Price System, that collapses because it does not forgive debt and must also play by the rules of the game which... = growth, in a Price System.
http://technocracy-technate.blogspot.com/2008/12/beyond-price-system.html No jobs.. no economy. Jobs are an antique concept now from the days of yore... in a contract society, class, caste society.
I'll try to read your Price material as I have time.
an energy accounting system
That's highly unrealistic. Energy is far too easy to harvest to make a good basis for a sound currency. Look what the Spaniards did with colonial gold - people with wind and sun power would be able to mint far more money than was needed, and devalue the currency quite quickly.
Energy Accounting is NOT a Price System Nick. Not even close.
https://docs.google.com/View?docid=dfx7rfr2_93dqt642&revision=_latest
Energy Accounting.. Fezer.
This idea is NOT a replacement for a 'currency'. It is a different concept.
Nick, Just interested in what you think the percentage of GDP is, which is comprised of wall street moving money around as opposed to actually making something. The rapid growth of mortgage backed securities and derivatives of various flavors, has created a huge world wide GDP which is nothing but a legalized ponzi. It continues today. Even the rapid rise in oil prices from 2004 to 2008 increased GDP. Think that was good for the economy? Get some reality, or at least a better metric. The roughly 20% of the US population which is unemployed could give a rat's a** what the GDP was last year, or whether the talking heads think all is roses now.
Also, how do you propose getting all these changes made in short order. Will you wave a magic wand and get the companies to change what they produce overnight, will you hypnotize the politicians so they will actually do something constructive? And where is the money going to come from for all these changes, electric cars, electric trains, windmills, solar panels, etc, etc. I just spent 4 years getting a small hydro system running in a ditch system, permitted and built. The water Dept took 8 months to review the building permit because we did not need any water from them. Planning took over a year. A major project would be longer. How are you going to shorten these delays when the local govt's are now strapped for cash and are in slowdown mode. Reality is a bitch. Face it.
wall street moving money around as opposed to actually making something.
If you believe that only farming and manufacturing have real value, I can understand your pessimism. For me, a wide variety of services have value, including education, health care, entertainment, travel, etc, etc.
The rapid growth of mortgage backed securities and derivatives of various flavors, has created a huge world wide GDP which is nothing but a legalized ponzi.
Not really. Sure, the Finance, Insurance, Real Estate (FIRE) sector is a bit too large, but only by a few percentage points of the overall economy. The recent bubble was a construction bubble - real, live buildings were built.
The roughly 20% of the US population which is unemployed
You're thinking of the unemployed, underemployed and discouraged stat, which is about 17%, I believe. They include a lot of construction workers, carpenters, etc, who were working hard during that bubble.
I agree - things should change faster. OTOH, they are changing - look at the Nissan Leaf and Chevy Volt.
Nick, I see one problem with your argument: The marginal impact of each reduction in available oil isn't linear. Sure, we have lots of optional activities that we can stop doing to cut our oil consumption 10-20-30%. But available oil isn't just going down by 10-20-30%. What happens once oil production has dropped so far that it isn't even available for purposes that generate the most wealth and for which substitutes are far more expensive?
Oil has quadrupled in price in the last 10 years and yet the amount of substitution away from it has been much smaller than was the case in the early to mid 1980s. Why is that? My guess: Applications that do not need oil's special qualities were the first to get shifted to other energy sources. The remaining applications of oil are harder to shift to other energy sources.
Technological advances (e.g. in batteries for electric vehicles) will make the substitution easier than it is now. But how fast will that happen? The answer is not clear to me.
available oil isn't just going down by 10-20-30%.
For all liquids for the world as a whole, Kjell Aleklett, President of ASPO International projects only an 11% decline by 2030: page 40 of the presentation: http://www.aspo-australia.org.au/References/Aleklett/20090611%20Sydney4.pdf
On page 42 of the presentation - we see that this projection is precisely in the middle - between the "Standard Case High End" and "Standard Case Low End".
You might ask, what about net imports? Well, first, I would argue that oil is fungible: KSA and Russia aren't going to hoard their oil for domestic production, when they can make far more by exporting it. 2nd, the US would be ok if it had to eliminate imports in 20 years: domestic production is rising (the US has the highest oil prices in the world, because we buy in weak dollars, so domestic producers have a much larger incentive) and consumption is falling. Heck, we'd be much healthier without imports.
What happens once oil production has dropped so far that it isn't even available for purposes that generate the most wealth and for which substitutes are far more expensive?
I'd estimate that's only roughly 15% of current consumption. It includes maybe 5% of current oil-fired home heating; 5% of personal transportation; 20% of current oil-fired electrical generation; a minority of petrochemicals; perhaps 15% of freight transportation; perhaps 30% of aviation. World oil production will be able to sustain 15% of current production levels far longer than we'll need them.
Oil has quadrupled in price in the last 10 years and yet the amount of substitution away from it has been much smaller than was the case in the early to mid 1980s.
US consumption fell by 19% from 1978-1982. US consumption fell by 10% from 2005 to 2009, so the change was 53% as large. That's smaller, but not tiny.
Why is that? My guess: Applications that do not need oil's special qualities were the first to get shifted to other energy sources. The remaining applications of oil are harder to shift to other energy sources.
The single largest piece of the change around 1980 was the shift away from oil generation, mostly to coal. Yes, I think that was relatively easy. Nuclear helped, but less, and of course, nuclear is a very slow thing to ramp up. The 2nd largest was a shift from home-heating with oil. Well, we can do more of that today.
Other differences: the oil embargo was sudden, and a real shock. The current squeeze was much slower. Our experience with 1979, as well as Katrina, reduced people's long-term response, as many people assumed prices would fall again. Finally, even at $147 oil never reached the same % of GDP and incomes as was reached in 1979, so it didn't have the same impact.
The two biggest substitutes: EVs for personal transportation, and rail for freight now taken by long-haul trucking. Both of these are cost competitive at current oil prices. Heck, rail for freight is cost competitive at prices well below current oil prices. Other low-hanging fruit: oil for home heating, electrical generation, some air freight, asphalt.
Capital Expenditure Delay (aka capex lag) is the big barrier, not cost competitiveness. The Chevy Volt and the Nissan Leaf will be cost competitive, but it took 4 years to bring them to market. It will take several years to ramp them up to really large volumes, and vehicle turnover takes 6 years to replace 50% of VMT.
Wow! You are really dreaming a real Price System dream.
Sorry, but you are such a victim of brainwashing that it is comical.
Who wants to buy a piece of crap car from another corporate fascist like Nissan or G.M.?... In case you did not know they are not even in the car business... they are in the Price System business (making a profit and growing at any 'cost'.
No doubt their cars are pieces of junk.
Fundamental problem is this in a crashing Price System.
No purchasing power.
Hello?
No purchasing power because human labor as an idea is OVER.
Understand?
No... I guess not.
Robotics and A.I. and energy conversion has made Adam Smith and Sumer contract society an embarrassing antique that is out of step with the time we are living in ... but still being used because corporate fascism controls the template... and we know what they want... Money http://docs.google.com/View?id=dfx7rfr2_348gjnjp6gp
Technocracy Master Article Archive.
Watching people chase their tails is comical but anyone that takes the current political Price System seriously and thinks there is a future using it is really out of the loop.
http://www.technocracytechnate.org/index.php?PHPSESSID=699d9fa70fe9df419...
Pretty obviously technology destroys the price system by eliminating purchasing power, through energy conversion, replacing human labor.
Viable alternative?
Only one that is known... a non market energy accounting system based on resource protection and sustainability.
The technate design.
Nick, Petroleum usage in the United States:
71% Transportation
23% Industrial
5% Residential and Commercial
1% Electric Power
We can't do that much more shifting away from oil in the home because little of the oil now used is used in the home.
So we can shift all remaining oil heated houses to natural gas or ground sink heat pumps to save 300k bpd. Out of about 19 mill bpd currently consumed that's 1.6% potential savings.
Again, we did the easy shifting already. The decline in oil consumption from 2005 to 2009 was not a time of economic growth. Rather, we had the worst economic downturn since WWII.
What's next: Much smaller and fuel efficient cars and EVs. We've got to make way for the cars of China and India. GM just said they see the shift of China to first place in car production to be permanent. They are going to grow far more than another US in total cars on the road.
What I want to know:
- How much oil is used per year by long haul trucks?
- How much oil is used per year by trains?
Good questions.
I'd note that wikipedia article needs improvement. I added some things to it just now, which makes this a good example of wikipedia's weaknesses and strengths: it's weak because articles are often written by "amateurs" with incomplete info or biases; it's strong because it's constantly getting peer-reviewed and improved by others.
U.S. residential household heating oil ...By 2008, demand had come down to average 309,000 bpd
That's interesting. I'd like to see what happened in the last two years - I couldn't find that easily.
Again, we did the easy shifting already.
The low-hanging fruit change with time. The Prius, or Volt or Leaf, didn't exist 30 years ago.
The decline in oil consumption from 2005 to 2009 was not a time of economic growth.
The economy grew a couple of percentage points from 78-82. It grew strongly from 04-08, and the decline since hasn't been enough to make the net for the period go negative: the recession only took us back to the GDP of 2nd quarter 2006. So, growth from 05-09 has been rather stronger than 78-82.
Rather, we had the worst economic downturn since WWII.
We shouldn't exaggerate the size of this recent recession. By 19th century and pre-WWII standards, it was pretty small. We've gotten used to much better management of the economy. I know - that's hard to believe, isn't it? There wer a lot of horrific crashes and deflations, caused in part by the gold standard.
- How much oil is used per year by long haul trucks?
- How much oil is used per year by trains?
Good questions. I know that heavy vehicles use 27% of overall road vehicle consumption - that would sugggest that long-haul trucking is about 2M bpd.
Rail is about 3x as efficient, and IIRC carries about the same amount of freight as trucks, so that would suggest about 600 bpd...but somehow that feels high. Probably Alan Drake knows...
Wikipedia is a joke and an all around crime against humanity. It is not peer reviewed in any sense, and is controlled by special interest groups/gangs..., in regard especially to economics and energy related articles. Encyclopedia of Earth puts it to shame completely http://www.eoearth.org/article/Industrial_ecology and really Nick you are the perfect example of an editor on Wikipedia.... mostly the people with axes to grind and a point of view, are involved there.
It is pathetic.
And if that is not bad enough, reality is that Wikipedia is financed by some really nasty corporate fascist pimps for the current political Price System
'''Who sponsors Wikipedia? Price System analysis http://docs.google.com/Doc?docid=0AUfLP5xuRGeqZGZ4N3JmcjJfMzQwbm13M3dwY2... '''
You're falling into the trap of ad hominem arguments, John.
Now, what does Price System analysis tell us about our energy future??
end quote from many times quoted information about promoting corporate fascist car companies by Nick in multiple threads.
I assume now that you are actually here spamming these fake alternative solutions. Do you get paid for doing that?
end quote Nick.
Not so much Nick. This is a typical response from someone that does not want the basis of the arguments looked at and feels precious about nonsense they believe in maybe though. You are a traditional person that has no idea of the actual dynamic of what is going on... but a believer in the 'markets'... Adam Smith, and out of touch Keynesian economic ideas that are choking the life out of the world.
Apparently you have no conception of energy economics (energy accounting) and what a Price System is or how it actually operates, by your own admission you have no knowledge of that. That is how it is that you make a perfect Wikipedia person http://docs.google.com/Doc?docid=0AUfLP5xuRGeqZGZ4N3JmcjJfMzQwbm13M3dwY2... in fact comically so. You also do not understand the history of the system we use and how it is currently dysfunctional http://docs.google.com/View?docid=dfx7rfr2_211crx6c26k Money, History and Energy Accounting.
Are you really here to promote car companies?? Sure seems that way. I would not take one of those pieces of junk if someone gave it to me.
Have a nice day.
That there is no future in a monetized energy system using the Price System. The Price System no longer works for a lot of reasons, not just that it is impossible to find sustainability with it now. It does not value resources, only money.
Money can no longer drive choice in the future or we destroy the world for the desultory idea of 'making' debt tokens. Understand Nick?
I made that point a long time ago.
You like going in circles though.
Purchasing power is annulled because of energy conversion.
Peoples amount of energy contribution... the way work was formerly 'quantified' is no longer applicable.
Energy appliances ... unlike humans... do not complain, try to run away, and are not 'paid' wages... and cost a few pennies in kilowatt hours... and there is no 'man-hours' cost.
But that is not plain enough for you is it?
http://mkinghubbert-technocracy.blogspot.com/
I don't think you are going to get this.
Turns out Alan Drake has previously posted info on oil consumption by trucks and trains:
That number for truck freight seems too high and I wonder if it includes local delivery vehicles that could not possibly be substituted for by rail.
This is a complex question. First, a lot of rail is very dense commodities: something like 1/3 of rail freight, by weight, is coal. 2nd, truck efficiency can be increased a lot:
"MPG obscures the value of small MPG improvements on inefficient vehicles.
Long haul trucks are a perfect example of the benefits of small MPG improvements. As this Greenbiz article notes, long haul trucks are low hanging fruit. The average truck gets 6 miles to the gallon; according to the article, technology exists that can double this number. A 6 MPG improvement may not sound impressive. A little reflection makes it obvious that this cuts gas consumption in half for a given distance of driving. And a little more math quantifies the gain:
6 MPG = 16 Gallons per 100 miles
12 MPG = 8 Gallons per 100 miles
The improvement saves 8 gallons per 100 miles of driving.
Compare that gas savings to the amount saved under currently planned CAFE improvements. Between now and 2016, CAFE standards will be increased from 25 MPG to 36 MPG. This 11 MPG improvement saves a little over 1 gallon per 100 miles of driving.
Policy should focus on improving the most inefficient vehicles because that's where the big savings are ripe for the plucking.
Here is a short excerpt from the article:
For 50 years, long haul tractor-trailer designs have remained fundamentally unchanged. Basically a giant box hurtling down the highway at 55 miles per hour, most trucks average only six miles to the gallon.
Their ubiquity in America is undeniable. Today the trucking industry transports about 70 percent of all the goods in the county, moving nearly $24 billion in value in 2008, according to the U.S. Department of Transportation.
....
But the time is ripe for change. According to recent analysis by Rocky Mountain Institute the technology already exists to double the energy efficiency of long-haul trucks in the nation's fleet. Their size, speed and poor aerodynamics mean they are laden with "low-hanging fruit" in terms of cost-effective efficiency and retrofitting opportunities."
http://www.mpgillusion.com/2009/10/trucks-and-low-hanging-fruit.html
Average rail MPG is 440 ton-miles per gallon. Well, if a 30 ton (75% of 40 ton gross weight?) cargo capacity truck gets 12 MPG, that's 360 ton-miles per gallon.
I'm not sure rail's advantage is as large as it appears.
Here's a claim that 38 billion gallons of road diesel were sold in the US in 2009. That's consistent with Drake's figure (38 billion gallons per year is 104 million gallons per day which works out to near 2.5 million barrels per day). I wonder how much of that diesel goes to trucks. Probably little of it goes to cars.
Can truck efficiency be doubled?
What is missing from this article, but has been hinted at in the comments is that complex systems stagnate and fall apart, but no-one notices because other parts of the system take up the slack. You don't fix public transport for instance, you just have everyone drive.
When the system is shaken the rotten parts can't handle the change, so the collapse is far worse and frankly our economy is nothing more now than a fashionably attired corpse.
Any collapse scenario which assigns any validity to the seriousness of Anthropogenic Global Warming/Climate Changes is immediately suspect and can be regarded as not worth the paper it's written on. LOL with this piece.
Funny, I'd say NOT taking into account damage to the environment in all it's forms when discussing limits to growth and possible collapse would be incredibly naieve.
Serious AGW effects are too far off for any P.O. related scenario.
Unless one is bothered by the fact that our actions now will affect how the future plays out for humans and other species into the future.
PO is a relatively near-term aspect of an impressive but temporary self-generated human predicament which will play out over a few hundred years max. AGW is about what is still possible on earth long after fossil-fueled civilization is history, for hundreds of millions of years.
I agree. PO is a human problem that humans could fix quite quickly, if they chose to, pretty much whenever they choose to. AGW, once it really gets going, will be a much, much harder problem.