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Does Peak Oil Even Matter?
Posted by David Murphy on December 17, 2010 - 12:52pm
It is easy to become befuddled by the current discourse on peak oil. Peak oil is defined generally as the point at which the flow rate of oil to society has reached a maximum. But this simple definition has issues too, such as what should be considered "oil." Take, for example, the following sentences from the executive summary of the International Energy Agency’s recent publication of the World Energy Outlook (WEO) 2010[1]:
…[In 2035] Global oil production reaches 96 mb/d, the balance of 3 mb/d coming from processing gains. Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains its all-time peak of 70 mb/d reached in 2006, while production of natural gas liquids (NGLs) and unconventional oil grows strongly.
According to this data, a peak in the production of conventional crude oil occurred in 2006, but a peak in total “oil” production (including unconventional resources such as tar sands, natural gas liquids, etc.) may not occur for some time. So, should we consider this a confirmation of peak oil or not?
Radetzki, the author of a recent paper condemning the prophets of peak oil as “chimeras without substance,” would argue no.[2] He asked in his paper: “…but are there any technical or economic reasons to distinguish between conventional and non-conventional resources in an analysis of what is ultimately recoverable?” Radetzki notes in his article that the production of conventional crude may begin to decline soon but total oil production could increase (given proper economic investments, etc.) as unconventional resources are brought on-line, and the WEO seems to confirm this.
Radetzki’s argument is based on the conventional economic idea of resource depletion, put forth by numerous authors but maybe most famously by Barnett and Morse in 1963.[3] They wrote: “as resources become scarce and relative costs change, substitutions will occur to ameliorate effects of diminishing returns.” With respect to oil, this statement is understood to mean that technology will offset depletion by either helping to discover new resources, by bringing other known resources into production that were previously too expensive, or by developing a suitable substitute.
And indeed the evolution of oil production seems to verify these sentiments, as technology now exists to exploit oil from tar sand resources or to convert coal and gas to various oil derivatives. Considering that all of these resources can produce oil, and that there are decades (according to the WEO) of these resources remaining, does peak conventional oil even matter?
In short, yes.
Peak oil is important because it marks the peak of production of “cheap” oil, generally considered to be conventional crude oil. Do not be confused; transitioning from conventional crude oil to NGLs or oil derived from other unconventional resources should be thought of as an indication of peak oil, not the opposite—that technology has enabled the production of oil from NGLs and other unconventional resources, thus disproving peak oil theory.
If we are to consider NGLs and other unconventional resources of oil as substitutes for oil, than we should also consider conventional oil a substitute for whale oil. After all, whale oil and the oil sands are both chemically similar to crude oil, and crude oil production offset the decline in whale oil production due to depletion of whales just like NGLs and unconventional oil may offset the decline in crude oil production due to the depletion of conventional crude. Thus, by this transitive property of economics, we are really still waiting for a peak in whale oil production!
The economists’ argument—that resource constraints will be abated by technology and substitution—confuses substitution for increasing supply. The usual way that substitution occurs in a market is that the substitute has some sort of competitive advantage (i.e. better product, cheaper, etc.) compared to the item that it is replacing; think supplanting human labor with robots in the construction of cars, or replacing vacuum tubes with integrated circuits. It is difficult to think if there are any advantages in producing oil from oil sands in northern Alberta when compared to production of oil from either East Texas or Ghawar. For example, the cost of production in Saudi Arabia is roughly $20 per barrel while it is over $80 per barrel in the tar sands (Figure 1). But prices are set at the margin for oil (at least in theory), so that if demand for oil increases enough, the price may increase to a point at which unconventional oil production becomes profitable. If this occurs, then oil will be produced from unconventional resources because they are profitable too, not because they are a “substitute,” in the economic sense, for conventional oil.
Figure 1. Estimates of the cost of production for oil production form various locations. Data from Cera.[4]
Arguing that unconventional oil will be a good substitute for the depletion of conventional crude is like saying that human labor will serve as a good substitute for robotics, or that a depletion of MacBooks will be offset by an increase in UNIVAC production.” Though these are both technically feasible, they do not provide any competitive advantage, ceteris paribus. The point is that oil production from the tar sands and other unconventional resources occurred in response to increasing demand which in turn elevated prices, not because they offer some competitive advantage when compared to conventional crude oil.
What does this mean?
It means that to grow the economy for the next few decades on an oil energy base would require very high prices. But if the recessions of 1973, 1980, and 2008 have taught us anything, it is that high energy prices cause problems for the economy. Noting the inevitable transition to unconventional resources, the IEA reports that: “the average IEA crude oil price reaches $113 per barrel (in year-2009 dollars) in 2035 — up from just over $60 in 2009. In practice, short-term price volatility is likely to remain high.” Other data from the BP statistical review support this upward trajectory in prices: the average price of a barrel of oil from 1861-1969 was $23, $40 from 1970 – 1999, and $53 from 2000 – 2008 (all in real 2008 dollars).[5]
Clearly demand destruction (and a financial crisis) has the ability to lower oil prices, as prices plummeted from 140 to 30 dollars per barrel during the fall of 2008 and winter of 2009. But now, two years later, oil price is again back in the range of $90 per barrel. In a society like ours, where economic growth is touted as the solution to almost every societal problem (see more or less any op-ed on how to fund the U.S. deficit), peak oil presents a paradox: the growth of the economy requires an increasing oil supply, but increasing the oil supply, due mainly to a peak in conventional crude oil production, will require high prices which tend to undermine that growth. The billion dollar question is: at what price of oil does the economy stop growing?
Over the past 40 years, when petroleum expenditures as a percent of GDP increased much beyond 5.5%, the economy tended towards recessions (Figure 2). This tendency is due mainly to the fact that oil infiltrates almost every facet of an industrial economy, from personal disposable income, to manufacturing, to service sectors. Therefore higher oil prices restrain growth via declining discretionary consumption as individuals allocate more money towards gasoline and home heating, or as the cost of producing a good increases, etc.[6] Chris Nelder of getREALlisthas described this situation succinctly, writing: “The true import of peak oil, therefore, may not be sustained high prices, but economic shrinkage. Demand will be destroyed long before oil gets to $200 a barrel…”
Figure 2. Petroleum expenditures as a percent of GDP. Figure created by Steve Balogh and published here.
In sum, although it is technically feasible to increase the production of “oil,” peak conventional oil, as it was first envisioned by Hubbert in 1956, has manifested itself almost exactly as predicted.[7] As Campbell described, peak oil will bring about short bouts of economic growth and contraction as oil demand and prices play tug-of-war, creating what has been referred to as an undulating plateau.[8] We seem to be experiencing these economic conditions right now. So the question is no longer "when will peak oil occur," but "how long will the effects of peak oil last?"
References
1. IEA. 2010. World Energy Outlook 2010. International Energy Agency.
2. Radetzki, M. 2010. Peak Oil and other threatening peaks - Chimeras without substance. Energy Policy, 38:6566-6569.
3. Barnett, H. and C. Morse. 1963. Scarcity and Growth: The Economics of Natural Resource Availability. Johns Hopkins University Press.
4. CERA. 2008. Ratcheting Down: Oil and the Global Credit Crisis. Cambridge Energy Research Associates.
5. Hayward, T. 2010. BP Statistical Review of World Energy. British Petroleum.
6. Hall, C. A. S., R. Powers and W. Schoenberg. 2008. Peak Oil, EROI, Investments and the Economy in an Uncertain Future. In Biofuels, Solar and Wind as Renewable Energy Systems: Benefits and Risks. Pimentel, Ed. Netherlands, Springer Netherlands.
7. Hubbert, M. K. 1956. Nuclear Energy and the Fossil Fuels. Spring Meeting of the Southern District Division of Production, San Antonio, Texas. 1956.
8. Campbell, C. 2009. Why dawn may be breaking for the second half of the age of oil. First Break, 27:53-62.
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License
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I've taken the liberty of superimposing oil prices in red onto this graph of US GDP.
http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=USD
complexity of demand and its feedbacks is the problem
the correlation has lags
..hard to see any simplistic matching. The econ 101 guys can argue there is no connection.
until the lags and feedbacks are understood this argument is pretty fruitless from the POV of perception management. Even something as simple as regulating the temperature of the water in your shower is often too complex to understand even by the end user fiddling with the taps.
You turn on the shower.. its too cold so you up the hot water but nothing happens.. the hot water is on its way but you are not receiving the benefit of it so you up it some more... BAMM the shower is suddenly too hot so you back adjust with less hot more cold... nothing then too cold..and so on.
Economics. someone comes up with an explanation of history and then tries to project that into the future as a "plan".
then it all goes wrong.
Precisely!
Funny thing you should mention that. I had a similar problem in a 100-year-old Victorian house I owned in Calgary. The water heater was in the basement, and it took forever to get hot water to the shower on the top floor at the far end of the house.
The solution was simple. I just snaked a PEX (cross-linked polyethylene) recirculation line through the walls from the hot-water tap on the shower to the drain on the water heater. It created a convection loop, and hot water continuously circulated from the water heater to the tap and back to the water heater, driven by the temperature differential between the water heater and the tap. It reduce the temperature differential between the water heater and the tap to near-zero, and the result was instantaneous hot water at the shower tap all the time.
So, when you have trouble with a feedback loop, don't keep fiddling with the taps, just fix the underlying problem. Otherwise it will be like British plumbing, it will never work right.
Of course there's some kind of law in Britain against having plumbing that works right. But that's their problem.
Sounds good to me. The only question I have is where do you stick the PEX (cross-linked polyethylene) recirculation line so that the cheap crude keeps bubbling up to the surface?
http://www.youtube.com/watch?v=0_XAPku7SgE&feature=related
The Ballad Of Jed Clampett - Lester Flatt ,Earl Scruggs (1962)
It seems to me that world economy is slowly but surely decoupling form US/OECD economy, so I´m not sure up to which point this kind of analysis (correlating oil price with the US economy only) is still valid.
For example, an article referenced in today's Drumbeat claims that Bahrain is subsidizing gasoline because of the low price at the pump in that country.
However, the graph in the OP shows Bahrain's cost of producing oil is about 1/4 of the world price of oil.
Therefore, the low price of gasoline in Bahrain may not be due to a subsidy, but is simply a result of Bahrain's natural competitive advantage due to the low cost of producing oil in that country. What it is foregoing is the opportunity to make a profit on the difference between the cost in Bahrain and the world price of the oil, but such "opportunity costs" are different from subsidies.
Thats the sort of sophistry that those recieving the subsidy use to justify it. As you admit the country (or national oil company) is paying a very substantial opportunity cost for every barrel of oil consumed.
It's not sophistry at all. There is a big difference between a country being able to produce something cheaply by itself and having to import it and pay the difference between the world price and the national price out of taxation, e.g. as India does.
OTOH, it would be wiser for Bahrain to use the cheap oil as feedstock to industries which sell value added petrochemical and manufactured products. This best exploits their comparative advantage.
Cheap FF might provide a comparative advantage, but it won't be the best comparative advantage. Far better to charge the world market price, and find the best thing.
It would be far wiser for Bahrain to charge their domestic industries the market price, and use the money in other ways to invest in their future. I'm not sure what that might be: it might be as simple as a Norway-style investment fund. Perhaps it would be investments in CSP in the desert, to free up oil & gas now used to generate very expensive electricity.
It's the usual self-centered tunnel vision you have every similar situation. XXX comes from near where I live, I should get XXX for much much less than the world price! Whether you call it a subsidy, or just a very poor economic decision, it still causes significant net harm (which I don't think anyone is disputing). Its best to use the word subsidy precisely bacause it makes the practice less defendable.
With 3,851 km of roads (3,121 km paved) they could probably set the price of gas to zero without the "harm" becoming "significant".
Bahrain is a country with 800 K population and a $30 billion GDP.
Underinflated SUV tires in a country with 300 M population and a $14 trillion GDP probably do more harm.
I bought a load of oranges yesterday, 4 pesos a kilo because they are relatively local. Are you suggesting that I should have paid 40 - 80 pesos to match world prices? If all commodities followed your reasoning there would be mass starvation as many would not be able to afford the profit centric, what can the market stand, over priced goods on the shelves of Walmart and their ilk world wide.
NAOM
OTOH, one can hardly argue that Bahrainis on the whole are among the world's poor. And one might argue that even for the poor, oranges are more of a luxury than a staple food. One might also observe that oranges, being perishable, are somewhat expensive to transport intact over long distances, which is not as true for crude oil. So the analogy seems weak; it seems likely that Bahrain would be better off not to incur the opportunity cost of giving away gasoline.
Bahrain is relatively small, less than 300 sq. miles (~750 sq km) and last I was there (mid 80s) it was pretty much built out. Not a lot of room for additional industry there. Expanded infrastucture would likely replace or convert that which already exists. Also, the island is skirted by sub-ocean freshwater springs that limit expansion in some areas. The Suk (markets) are great places to shop, especially for gold and pearls, though there is not much else to see there. Quite an energetic place (NPI).
Today economists would call a nations oil as "natural capital" which accounting aystems do not take into consideration. Because the U.S. consumed almost all of its naural capital the trade deficit is half or more for oil imports and the UK will also be in that situation soon.
I'm sure it will eventually. Though not this week!
http://finance.yahoo.com/news/Stores-push-gimmicks-for-apf-103114055.htm...
On your mark, get ready, set, shop til you F'n drop!
With the help of the credit card companies we want you to buy, buy, buy, all those extremely valuable, (to China at least) consumer goods.
Me, I think I'm going to the liquor store so I can drown my sorrows. At least I don't think they're selling malt from China yet, though they might be bottling Chinese ethylene glycol in scotch bottles...
Decoupling implies that the U.S. economy becomes even more vulnerable to oil prices. When U.S. demand is no longer the primary force driving oil prices up, then U.S. economic contraction will no longer be a guarantee of lower oil prices. Sluggish U.S. growth, yet oil prices being driven higher by demand elsewhere, high enough to cause another recessionary dip for the U.S. without actually bringing down oil prices, this is all part of our relative decline and becoming only the world's second biggest economy.
And from our perspective China's number one job as the world's number one economy will be to help the U.S. achieve energy independence by pricing us out of the market for imported oil.
That's correct, although I wouldn't say it changes our vulnerability to the price, rather (as you state) it reduces our abilty to reduce the price via using less ourselves. To the extent that the overall level of the world economy is governed by a finite supply of one or more critical resources the world economy starts to resemble a zerosum game.
IEA estimated that each $10 per barrel in the increase of oil prices reduces OECD GDP by 0.4%. Thus, the increase of crude oil prices from $25/bbl to $85 per barrel is about $60/bbl increase in crude oil prices which would translate into a 2.4% decrease in GDP. Clearly this is a huge impact.
It is not hard to understand how this impact is estimated. US imports around 12MMbbl/day of crude oil. Multiplying $60/bbl times 12 MMbbl/day and times 365 days per year results in a transfer payment of $260 billion dollars, which represents 2.4% of a 11 trillion per year economy. Thus, we need blistering growth in our economy to counter the very large transfer payments which is occuring when crude oil prices are high.
This calculation, however, does not consider the retransfer of wealth of those oil exporting countries back to the US if the people there purchase US goods. It seems that at least some of their wealth would be returned back to the US if they are taking in such a large winfall. This calculation also does not consider the short term improvements in efficiency that occur when crude oil prices are higher. However, because our use of crude oil is very inelastic, this impact is pretty small. This impact is much higher when crude oil prices remain high for a while and it can affect the purchases of motor vehicle types and driving behavior in the longer term.
Some petrodollars are recycled back to the US in the form of purchases of US exports. Some are deposited in banks in London and elsewhere to add to the volume of offshore currency. Some come back to the US in the form of purchases of US securities, formerly such things as mortgage backed securities, commercial asset backed securities, etc., but now not so much unless they are guaranteed by the US taxpayer via Fannie, Freddie and the US Treasury.
Thanks Dave
I think the issue of ethanol, NGL, CTL etc being included as 'oil' is a relevant (and problematic) one. The BTU content of 'non-oils' is considerably less. Analysis of oil depletion becomes confusing, especially to those unaware of energy quality differences. (I know Rune Likvern is working on a post dealing with the different components and heat values in NGLs)
Too true Nate
Not inly are there qualitative differences, but price conflates much else besides. Economists do not accept the relevance of EROEI or Net Energy. However all energy sources are only important because of their contribution of Net Energy to Scoiety/The Economy. Tar Sands, Biofuels etc contribute significantly less energy and this fact is represented in their price (subsidies notwithstanding). Economics as a discipline is missing a foundation - Energy is a key input along with capital and labour; and until mainstream economists accept this; and reevaluate their theories they will continue to not understand their chosen field.
One way I try to illustrate this concept for folks is to ask them to imagine they've been commissioned to build some large infrastructure project - say Hoover Dam. They have at their disposal an infinte supply of labor, an infinite supply of material, an infinite supply of money, and an infinite supply of energy. Without which could they still complete the project? It ain't energy...
Here in the US, perhaps the hardest thing to impart to folks is that developing countries will be able to afford oil and they (in the US) won't. It doesn't compute that India, China, et. al. will be able to grow their economies on $100+ oil while most developed countries will suffer decline. Peak affordability will vary, providing huge advantages to some (at least for a while). It's easier to adapt on the way up.
The OP mixes together both global and national numbers and arguments. The analysis would be clearer if it dealt either with global aggregates only (a top-down analysis) or in terms of national numbers only (a bottom-up analysis).
In the latter case, the impact of Peak Oil is determined by global price in dollars, but also by exchange rates, international trade and finance positions, the extent and purpose of oil usage in the national economy, etc., which are different for differently situated national economies.
Don't forget that more than half of the population in developing countries still live in villages. In india, pakistan and bengladesh its 67%, in china its 75% and so on. These countries can literally very well have working economies in absence of all fossil fuels. There have to be changes in food crops, rice requires 5 times more water per kg as compare to wheat for example while both have the same amount of calories per kg. Without fossil fuels what suffers in farming is basically water supply and little other than that. Labor is extremely cheap, machinization (tractors etc) are almost non-existent, wastes can be recycled (especially when majority of wastes is from farm animals and in the rest majority of people live at farm) etc. Climate change can contribute in increased water supply as we are observing here in Pakistan a general rise in annual water fall. The dams can last for some more time (30 to 50 years) in which time population is expected to decline anyway (due to decline in medical facilities).
Its just the industrial sector that lives on fossil fuels. More than half of the industrial labor in china hasn't been in cities since more than 20 years and know where to go back to. Usa in comparsion was fully industralized (only 25% in farming) even in 1930 and japan and europe were industralized even before. Today in all developed countries less than 2% of population is involved in agriculture. Without agriculture providing majority of employment the economy is inherently very unstable, very receptive to cycles and very volatile.
Most of the industrial output of developing countries are consumed by developed countries anyways, in return of paper. Massive decline in industralization is not much a loss from the point of view of an average citizen in any developing country.
I think this is a very astute assessment and one that I whole-heartedly agree with.
The only thing that worries me about the complete loss of industrialisation is the realisation that there may never be another industrial age if a 'critical mass' of energy is unobtainable by pre-industrial methods, i.e. if the oil is deep underground/water.
My fundamental fear would be that humanity would be trapped on earth forever - I hope it's not the case, but this era could be our best shot at leaving the planet for good.
So, from that point of view peak-oil can be viewed as critical for both developing and developed nations. Although it may be true that not everyone shares my desire to vacate the planet.
Exactly the point I have made from time to time. While some may wonder why anyone would want to leave their planet, it is not the individuals but the species that should aim so high.
The other point I make is that, perhaps the reason we do not hear from ET is that ET did what we are doing and ended up trapped until their sun ended all life on their planet. Or are in the process of that today.
Also, once all that nice easy energy is gone, we are back to natural sources; how will that impact our evolution? Not that any species, including the hubristic homo sapiens, is able to determine how they will look, act, etc., in 1 million or so years. For our species to truly survive, it will need to leave home, however, Of course, this is all a bit academic since the Earth is probably good for about 250 million years before it is simply too hot for life.
Craig
I loved star wars too; but , alas, a light year is a really, really, really big distance--an unimaginably big distance that we can only represent to ourselves with numbers. And people would have to traverse a lot of light years in order to get anywhere that didn't make our hottest, most inhospitable deserts seem like paradise.
I have a solution, though: stop thinking of the earth as a trap and start thinking of it as a home!
Kind of a global version of Jared Diamond's Easter Island description ... (Collapse:How Society's Choose to Fail or Succeed)
"Not that any species, including the hubristic homo sapiens, is able to determine how they will look, act, etc., in 1 million or so years."
we have been trying to do just that by taking our destiny out of the hands of chance(god) into are own hands bit by bit, tools, medicine, agriculture, science. yea hubristic but its too late we're all in now we will succeed or die . . . probably die
I've seen our species, and it is better for the wider galaxy, if we DON'T leave our planet. Perhaps the difficulty of interplanetary/interstellar travel is the universe's way of limiting the damage any particular rogue species can cause.
I'm not convinced there's enough water in usable form or any food whatsoever "out there" in the solar system to enable us to colonize other planets.
Why are you fearful that humanity would be trapped on earth forever? Existential angst much?
Or are you allowing our brief, fossil fuel powered sojourn to the moon to let your imagination run wild?
Limits are hard to understand, whether in oil, money, population, or even sci-fi fantasy.
It just seems that the natural next step is to expand out into space. I know it would probably only delay the inevitable, but perhaps it's just the unfulfilled explorer in me :-)
Anyway, best stop here as don't want to go too off topic..
No, it would not delay anything but it might speed up the collapse a bit. There is no place in space we could go that we would not have to take everything with us. We would have to take all the food we might eat, all the water we would need for everything, and even the air we breathe would have to be exported with us from earth. And if we needed more we would have to send back to earth to get it. How in heavens name would this delay anything?
No planet in our solar system, or satellite of a planet, has any of the things that are absolutely necessary for the support of human life. Therefore we would have to take everything with us.
But if you are talking about migrating to another another solar system around another star... then I am wasting my time in even responding to your post because you haven't a clue as to anything you are talking about.
Ron P.
The question is can humanity achieve stasis with its environment or must we grow or die? the latter is the rational for space. just need to warm mars up a little get some global warming going on over there.
Really? And how would we warm Mars up? Mars has virtually no atmosphere. The atmosphere there is about 2 percent of what it is here and it's all carbon dioxide. No oxygen or anything else. You would have as much luck warming up the Moon.
There is not rationality for trying to inhabit Mars or the Moon. Antarctica is thousands of times more hospitable than Mars. At least there is plenty of air there, and it is far warmer in Antarctica than on Mars. than Mars.
Ron P.
Of course this is precisely what I am suggesting. I think it is a tad short-sighted to rule out interstellar travel altogether. Given sufficient energy / benevolent circumstances then I can not see why technology would not progress to the point that would allow us to do this. It's the bottleneck in energy occurring at this point in time that frightens me.
If you consider the, admittedly still very hypothetical, situation in which fusion becomes a reality can you truly claim to be able to predict the ensuing fate of mankind? The abundance of energy would fundamentally alter our way of life. Things that seem science fiction could become commonplace. With enough research into genetic engineering, perhaps humans would eventually transplant themselves into metal shells that no longer require oxygen?
Consider even 50-odd years ago, the internet would have seemed straight out of science fiction! I don't see why you should consider this conversation a waste of time.
"I don't see why you should consider this conversation a waste of time."
I think recipes for rat would be more useful.
Don in Maine
I think I saw that squirrel is being touted as the new dish of the day...
But in all seriousness now, the last few posts have highlighted the two basic attitudes with which one can approach Peak Oil:
1) Firstly, the view that the energy bottleneck can be weathered, albeit perhaps uncomfortably, and that post-PO society will again begin rapid growth in the sense of utilising energy sources / technological advances.
2) The contrasting view is that Peak Oil will necessitate a complete regression to pre-Industrial times and that we should be concentrating on basic survival techniques.
Both views have their merits IMHO. If we were successful in converting the entire population into investing all their efforts towards survival / low-level sustainability then I'm sure that a semblance of a feudal-type society could quite happily exist for many thousands of years. Which is all fine and dandy, and call me cynical but I think that would also likely occur even if we went all out bust trying to use up fossil fuels as fast as we could and crashed with an almighty bump.
I'm not as literally able as I would like to be and am struggling to find words to describe my dissatisfaction at the utterly dismissive attitude some present to possible future scenarios, especially when no-one can lay claim to truly know what's around the corner.
I grew up on that fantasy as well. I'm not sure if you ever totally get over it.
Heavens to Murgatroyd!
Is the Oil Drum still alive? I thought they were commiting sepuku.
I have been out in the wilderness talking to economists.
I have even paid economists to explain things to me. (Hint: Take Quantum Physics, it is a harmonious doddle compared to economics. Economics is all about assertion and presumption, smoke and mirrors.)
Why do we have to leave the Planet? Because of the exponential function.
When I first expressed my displeasure at the way things were turning out there were 3.2 billion something souls on this planet. Now there are double that amount.
My guess is that the planet is capable of supporting 1 Billion souls on starvation rations, given that the soils are virgin and that the climate catastrophe is all hooey.
Humorous I know. How about a few breeding pairs in the high Arctic? Prof James Lovelock.
I clearly remember people asking "What use is the Sputnic? It just goes around the globe going beep beep beep."
Once we are building our homes in space and harvesting the infinite bounty of God's creation it will be blindingly obvious why we had to get into the third dimension.
But why am I arguing? Start Here
Please people, don't see the world as it is, see it as it will be in 100 years.
Aww forgdaboudit.
Humans will have to replaced, if Gaia is to have a brain.
Arthur,
For some reason when I click on any of the links you have in your post nothing happens.
I clicked on links in other posts in this thread and they do work.
You mention the exponential function, yet either you think the Universe is infinite in extent or you do not understand the issue.
Even if humanity could expand into space at will (no technological barriers, let's hand-wave those away for this discussion), Issac Asimov, in his article 'Fecundity Unlimited', demonstrated with some easy math that, given some more hand-waving technology capabilities, Humanity would convert all the Carbon in the known Universe to human flesh by the year 11,000 CE, given a rather low rate of population increase.
(I forget what rate he used and I lost track of the book with this article)
Issac Asimov purposefully ignored P as the true rate-limiting element and went with Carbon, and assumed that humanity could conquer all of known space as fast as they wanted.
If you assumed that humanity could transmute every atom of matter into human flesh, the time by which humanity would have exhausted the known Universe's resources would be a little later.
But, I do see that you said:
It is hard to have a serious discussion given this extreme amount of hand-waving.
I used to believe in techno-fairy tales, and if that is what floats your boat, peace be with you.
I no longer believe population growth is an issue. I used to think that, similar to Professor Bartlett, our population would follow an exponential path and experience the inevitable unwanted consequences.
However, I now realise that the situation is far more complicated than I previously thought. I tend to agree with the UN's prediction that, even if Peak Oil were not to occur, population will peak at around 9 billion around 2040 and stabilise or decline. You can easily see the strong societal / psychological influences that we have on our population when you realise that nowadays nearly all of the developed countries (plus China) have a sub-replacement fertility rate. Africa is the last major challenge when it comes to population control.
However, this does not mean that we will never have a reason to expand into space. After all, the planet does only have finite resources and there is a lot of matter out there. Never say never!
Thanks Nickagreer.
I do hope that the United Nations projections are correct.
One hopes for the best and plans for the worst.
People who insist that this old pioneer has to stay at the bottom of this gravity well are fascists.
Sorry about the broken links.
Try again. Although there is a lot of information about the consequences of the exponential function.
http://www.chrismartenson.com/crashcourse/chapter-3-exponential-growth
I have read most of Asimov's work. I do remember the expanding ball of humanity whose rate of expansion reached the speed of light.
My comment. "We are not there yet."
Let us not hand wave anything away.
O'Neill and a lot of others have done the hard work for you.
http://en.wikipedia.org/wiki/National_Space_Society
These things are feasible.
Let us not hand wave anything away.
Especially the consequence of the exponential function on the population. How are you going to keep all these people alive without cheap energy. Perhaps we should just hand wave them away?
I agree.
Let us base our discussion on facts. God's creation is infinite.
From
http://www.physorg.com/news/2010-12-scientists-evidence-universes.html
But I know what the real problem is.
The Left (logical) hemisphere of the brain has a dirty little secret.
It cannot handle information that it does not know are "facts" therefore it is hermetically sealed in circular logic.
From The Master and His Emissary
Arthur,
If you wish to make plans for you and others to escape our gravity well and build O'Neil habitats and then equip them with some kind of high sub-light or FTL drives, I won't stand in your way, as long as you use private capital.
A couple of points, though:
The technological challenges to colonizing the known Universe (let alone multiple Universes) are utterly out of our reach. This is not equivalent to the challenge Columbus et al faced wrt sailing across the uncharted seas to the 'New World'.
If we (humanity) cannot get our sustainability act together here on Earth, including a slow population decrease to some sustainable level (~1B?), then zero population growth, also including greatly reduced resource use, greatly increased resource re-use and recycling, and greatly increased use of renewable energy production, then the odds of us colonizing the Universe (let alone multiple Universes) are nil.
However (here is the hand waving), if we could develop the magic to colonize all of the Multi-Verse, and we had not yet learned and implemented sustainable living, then humanity would expand like a speed-of-light malignancy and fill all of known space...Universe-wide slums if you will.
I surmise that you think that the Universe is infinite, so, therefore, humanity's spread at the speed-of-light (or any non-infinite speed) can continue indefinitely, and this is your vision of utopia or heaven. This is from the mindset that humanity is the best thing ever, and that the greatest amount of humanity over time and space is the acme of perfection.
Meanwhile, back on Earth, we have a civilization to make sustainable and a planetary ecosystem to keep from being ruined.
Lookit, I personally would support increased robotic exploration of the Solar System...rovers on Venus, a new set of very-hi-res radar mappers orbiting Venus, cryostat-submarine melting through Europa's ice to see what if anything is in that ocean, balloon/glider probes in Titan's atmosphere...all that and much more is do-able with conceivable extensions of current technology.
As are advanced, very large space telescopes capable of imaging exoplanets within ~ 20 LY radius (my guess) of earth (at ~ a 25-pixel resolution)...
http://en.wikipedia.org/wiki/New_Worlds_Mission
We might even be able to send probes to Alpha Centauri at up to 10% C if we put a huge amount of resources into the project...but that is on the edge of possibly attainable.
However, there is a gargantuan leap between what I just described and your vision of thousands (millions? more?) of O'Neil-type space colonies/habitats wheeling around the Sun, let alone the Universe.
I would be supportive of Space=based solar power sats beaming power down to Earth, with a robust Earth-orbital and near-asteroid mining operation to support that, but that is likely a bridge too far.
How about we demonstrate that we have the brains and resolve to put solar PV on top of most of our roofs and over most of our parking lots (and a considerable amount of our desert scrub land) first...and increase our wind generation capacity to ~ 20% of our needs, and increase our energy efficiency, and institute a smart grid...
If we can't do that, we can't pull off Space-Based Power systems either.
or colonizing the Multi-verse.
Gosh, I thought your first post was satire. Apparently it wasn't! It seems that you actually believe us leaving the planet is a) feasible b) going to help matters.
I'm really impressed how shortsighted and allready apathetic you guys here on the OilDrum are.
Of course the ultimate coal of any higer form of life is to figh agains the overall trend towards more an more entropy - that's all (i know we produce entropy, but we build nice stuff wich doesen't show up naturally on a rock). And if we are smart enough we will need even no more water one day, because all we need is:
a) Artificial Intelligence, AI
b) abundant energy + stuff (Fe,...)
Than we have really fullfield our coal. I guess i will never happen but it's our ultimative goal!
Off course this means that some (maybe we, but the possibility is of course not very likely) higher form of life (or something which evolved from it - real AI/smart robots) has to leave there homeplanet and spread over the universe(s) some day, and it will happen somewhere i'm shure.
Like i sayed allready before - around 200 million years and Earth is finished anway. That's not so long - isen't it.
I am very pesimistic about aur one species now:
-Peak Resources
-Dysgenetics worldwide
-FIAT-Money system
-uncontrolled Global Warming
But this
is really nonsense. "The universe" is burning stuff fast - lock at the Sun, what shes's doing? Burning around 564 million tons of hydrogen per second to 560 million tons of helium (4 million tons is mass difference = energy). That i call a entropy gain and stuff burning for shure. Mankind is a joke against this.
Survive our home planete or go extinct very soon - i guess b) happens!
"Although it may be true that not everyone shares my desire to vacate the planet."
BTW, shut the door on your way out. Thanks.
I wasn't born in a barn ;-)
I don't believe this is true. According to Earthtrends Database China has about double the consumption of agricultural fertilizers as the US and India is fast catching up the the US. These are synthetic fertilizers that take Natural Gas for their production. I believe that almost all developing countries have adapted 'modern' agricultural methods to feed their growing populations and these methods are heavily dependent on fossil fuels.
Quite so. So called "developing" countries are going to have mass famines when the price of natural gas and diesel oil go to double or triple current levels. Not only fertilizer, but also pesticides are based on fossil fuel. The outlook for overpopulated countries such as China and India is bleak to catestrophic. They just do not have enough arable land to feed their populations in the absence of cheap fossil fuels.
By way of contrast, the U.S. has plenty of arable land to feed its current population using organic farming methods and manure fertilizer. As the Green Revolution goes into reverse, the "developing" countries are going to be hit hardest, due to their inadequate amounts of arable land.
Absolutely agree with that. But unfortunately the situation in Western Europe and Japan is not better than developing countries and possible is even worse in terms of population density and arable lands:
http://en.wikipedia.org/wiki/File:Countries_by_population_density.svg
http://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_terr...
http://en.wikipedia.org/wiki/Land_use_statistics_by_country
For example in Italy the situation is quite tough in perspective, due to real estate speculation (legal and not legal). During fascism, they even cultivated wheat close to the Vatican with mixed success in what is known as the Battle of Grain:
http://en.wikipedia.org/wiki/Battle_for_Grain
Today, if a crisis takes place, Italy and all western Europe would be in a much worse conditions given the lower arable lands and the reduced number of fertilizer and pesticides and a much higehr population to feed
That might make an interesting TOD future article: "Modern Farming methods - fertilizer consumption, and fossil fuels required to create the fertilizer."
I tried a quick sketch of some basics in How Might We Be Fed, Parts I & II, TOD, March 2009.
Yes, Asian agriculture now uses large and increasing amounts of N fertilizer, but globally 'only' about 5% of present production of Natural Gas is used in N production. In China the majority of N fertilizer has been manufactured as urea from coal. Wisdom from Pakistan is correct though that significant re-cycling of soil nutrients continues in the villages, and that mechanization is mostly not a big issue. Most of the food produced is still consumed in the villages, but, as has been noted, rapid urbanization changes the equation considerably. Countries like China and India still have vast rural hinterlands that are often still densely populated. But while they have the very significant imperative of feeding the growing urban populations that now live wholly in a cash economy, they must not destroy the livelihoods of the populations remaining in the villages. There seems no way to urbanize these countries wholesale on the western model, and it seems to me that they must retain the buffer (as W from P might describe it) of an in situ agricultural population living on land that has supported them for 2000 years at rural population densities we could not contemplate in the West, past, present or future.
How the above plays in the future alongside industrialization is a very big question. Most of the world lives in these places, and the future seems to be happening very fast.
I wonder how it is, for the rural Chinese - surely they yearn to be urbanized, see for themselves what this internet thing is all about, etc. Or are they so much in the dark they're completely unaware of what great things exist just over the hill yonder? Sort of like the Afghanis, many of whom haven't yet learned of 9/11 (according to some recent report) - as eye-opening as the stories of the fall of the WTC would seem, it's still just something that happened in what might as well be another world.
Regardless Phil, it's an interesting comment.
Matt, thanks for your comment.
India and Pakistan, and Indonesia, are not the same as China, though especially India and China share very rapid industrial growth as well as a rural hinterland. Something like half a billion in rural India have no access to electricity. In China a lot of rural youngsters become remittance workers along usual lines; the more gentle souls by some report weep in their barrack cots for their mothers and from the loneliness of endless work. The drive for education is enormous and I read an estimate that China must grow the economy at 8% just to keep smart educated engineers etc. in work, and that is after a successful 'one-child' enforced birth rate reduction policy. (In UK we even see illegal sweatshops that rely on a very small fraction of these young Chinese and etc., etc. getting as far as here.)
Big migrations associated with industrialization were commonplace in the West, but 150 to 200 millions over a decade or so?
Seems there is a lot of stick involved rather than so much carrot. Recent factory downturns in China last year, or year before, saw the enforced return of youngsters to villages. Then look at unemployment even in UK, Ireland etc. A lot, by our standards, of unemployed graduates living with their parents.
The USA provides, IMHO, a distorted fantasy model, but the billions will live elsewhere.
best
phil
For those interested in this topic, I highly recommend Vaclav Smil's book:
Enriching the Earth: Fritz Haber, Carl Bosch, and the Transformation of World Food Production
Don't forget that more than half of the population in developing countries still live in villages. In india, pakistan and bengladesh its 67%, in china its 75% and so on.
China is one of the most rapidly urbanizing countries in the world. As of 2010, the population of China is 46% urban, 54% rural. By 2015 the urban population will exceed the rural population, and by 2030 China is expected to be 65% urban.
China's urban population is already twice the total population of the United States. There are over 160 cities in China with populations of more than one million.
Note that Chinese birth rates in rural areas are much higher than Chinese urban birth rates. The great problem of China is that they have way too many rural people in grinding poverty trying to farm way too little arable land. Except for some river water, coal, and rare earths, China is relatively poor in resources and depends ever more on imports of resources and food. China is not in a good position when it comes to declining production of fossil fuels. Also, China may well be the most polluted country in the world, and so long as coal is their main source of energy it will continue to have very high levels of toxic pollutants.
Two questions on your comparison. Firstly, can rice and wheat thrive in the same climate zones? I have always thought of rice as needing a warm climate while wheat requires a cooler climate. I am willing to be corrected and learn. Second does the need for water with rice depend on variety and are there varieties being developed that require much less water?
NAOM
wild rice is not directly related to the Asian rice http://en.wikipedia.org/wiki/Wild_rice
Yes wild rice can grow in cold weather as it does in the US and I have been wondering if it could be grown in Northern Europe. However, it would then probably be used in the few remaining wetlands present in Europe, so it is better not to do it.
Asian rice do need quite warm weather and is grown in California and southern Europe.
Also, much Asian rice is grown in Texas, which also produces a great deal of wheat.
The U.S. is uniquely blessed with agricultural resources.
Nothing like link farming. Beats farming the government.
Comparing these two plants is like comparing fescue and wheat. They are not near related. Taste is not close, consumer substitution nonexistent. Much less protein and chemical composition. Even priced as a boutique product, it hardly gets near $2.50 wheat. It requires 3-4 harvests over 6 wks+ to get adequate yields, prefers an acid soil. Also shatters from the pannicle when ripening, further decreasing yields.
My apologies Christo, Don and Doug. I saw NOAM's question, "can rice and wheat thrive in the same climate zones" and just responded with our regions native plants in mind.
I really didn't mean to compare the wild rice to wheat, or asian rice. I just posted the growing season for our region's wild rice, and an anecdote showing its historic importance to the "local" economy.
I personally am interested in wild rice, mostly for local production and consumption, not for commercial production and consumption.
Again, my apologies for the tangent.
This originally came from the point about how much more water is used by rice than wheat. Now, I have always thought of wheat as a temperate crop and rice as a tropical or sub tropical crop.It is all very well replacing rice with wheat to save water but if the wheat does not thrive in the climate that saving does not help. Likewise, would growing rice in cooler climes where there is adequate water produce a sufficient yield. Also rice growing regions are often fed by monsoon rains. The rice paddies are an excellent method for catching that rain. If wheat is substituted would the land be drained to support it causing run-off that will create floods and reduce the amount of water entering the aquifers. I am trying to get a feel if just comparing water needs of the two crops is an over simplification of the issues.
NAOM
Wheat is not particularly a temperate crop since it originated in the Middle East, and rice is not particularly a tropical crop since wild rice is also known as Canada rice.
I think it is true that wheat does grow better in dry climates and rice grows better in wet climates, although their ranges overlap. Wheat has a much better tolerance for drought than rice does (in fact it reaches the best quality under dry conditions), while rice will grow in flooded fields whereas wheat will not.
Wheat production is complementary to rice production because weather conditions that cause an increase in wheat production cause a decrease in rice production, and vice versa.
In many countries they grow wheat and rice on the same land at different times of year. They grow wheat during the dry season and rice during the wet season. This gives them two crops a year, whereas with a monoculture they would only have one.
However, if they can fit legumes such as peas, beans, or lentils into the rotation it helps considerably because they get a full set of proteins. Many grains are low in lysine, but beans are high in lysine. On the other hand, beans are low in the sulfur-containing amino acids, while grains like wheat contain much of these. Also, legumes recharge the nitrogen in the soil, which wheat and rice need to grow.
SA,
It seems that many are confused by the common name rice. Wild rice, sometimes called Canada rice, is of the genus Zizania, usually aquatica. Cultivated rice is of the genus Oryza. Originally, US Zizania was mostly in Minnesota and the Great Lakes, but since WW2, it has been transplanted through much of the northern part of the country, mostly by waterfowl groups. It is VASTLY different from cultivated Oryza spp, as I stated above. In the US, Gibbs took over much of the Minnesota production and have some production in CA. Other small time, regional growers have tried to make a go of it, but it is dicey. In the PNW, St Maries Wild Rice combined with a Oregon outfit, but I'm not sure if they still are operational. I have messed around with it for many decades.
The grain itself is usually roasted, then eaten whole. It is fairly astringent, quite nutty in texture. One of the difficulties is the nature of the seed production. Each grain is produced at the end of a long stem, which itself is part of the larger pannicle. That pannicle may grow to 18 inches or more in length. As each grain on the pannicle matures separately from the others, it makes harvesting difficult and spreads it over a large time interval. This nature does ensure self seeding in a regular lake or "paddy", but is frowned upon in most commercial cultivation. The fact that it is in an aquatic environment makes traditional combine harvest hard. Gibbs has modified some machinery for Minnesota, but now the push is drain the growing area dry so conventional machinery can harvest. As imagined, this loses much of the crop yield potential, and many are looking at breeding varieties that mature at once. With smaller outfits, harvest is performed via airboats with just the header portion of older combines afixed to the bow. This "basket" collects the grain as it shatters off the pannicle, and as a relatively nondestructive harvest, leaves the plant intact for later harvest when other grains have matured. Still, yields per acre are quite low, esp compared with other grains.
Comparinng to wheat is a misnomer. Though some land in CA is doubled cropped for Oryza and wheat, wheat itself has the moniker "Desert Rose". It is a dryland crop, flourishing in 10 to 15 inches ppt. Irrigating wheat rockets the yield, if other inputs are sufficient. But still, it's not "normal". It's claim to fame as a grain revolves on its parsimonious use of water. And nothing gets a dryland grower going faster than folks doing wheat with Federal water.
Since we have several definitions of "oil" and all different definitions will peak at different times, we need to settle on one and say this is the definition of "oil" that carries the most impact. I think that should be anything that you can just run through a refinery and turn it into gasoline, diesel or jet fuel. Or transportation fuel in general.
That would be crude oil, tar sands oil, deep water oil and condensate. Luckily we already have such a measure. It is what the EIA calls Crude + Condensate. And it can be priced in barrels, unlike NGLs and some other oil substitutes.
So peak oil will be when Crude + Condensate peaks. That is the measure that Hubbert used, and Deffeyes used and what many others use... but not everyone. But that is the closest definition of oil that I think most people will agree with.
And yes, it definitely matters when C+C peaks. In my opinion we are at that peak right now and have been for almost six years now. Everything since 2005 has been noise well within the margin of error. Of course world C+C production could turn up and leave the 2005 to 2101 plateau in the dust. But I think that is highly unlikely. In my opinion it is far more likely that it will turn down within the next two or three years and never look back. But we shall see.
Ron P.
I agree with Nate's take above. Barrel counts are subordinate to the net energy that those "barrels" provide. If 85 million barrels today provide only 80% of the net energy benefit they did 20 years ago, then the peak moves (backwards). Calculating the net energy available to economies is problematic, though IMO critical.
I heat with wood. I filled my shed with nice oak this year. If next year I fill my shed with soft maple and pine, I'll need to burn more next year to get the same heat output, though it took me the same time and energy to fill my shed. Simplistic, I know, though oil works the same way. If I have to drive farther up the mountain to fill my shed with nice oak, same result.
Why go to all that trouble, just burn your shed >;^)
It's all pressure treated; illegal to burn :-(
Hi Ghung,
You are THE MAN today-gross production doesn't really matter, it's NET after all internal usage within the industry is subtracted that counts.
Of course defining the limits of the industry is a tough nut;do we stop with the steel and machinery and diesel used to lay pipelines and build refineries, or only after adding in the oil component of the smaller industries that support the larger parts of the industry?
Unfortunately while the average Oil Drummer can understand this concept, it adds one more layer of complexity to the problem insofar as the public is concerned.
Even within this forum , we will find many regulars, probably, who for reasons of historical consistency, will argue that the focus should be on gross barrels, rather than net barrels, so far as the debate is concerned.
Incidentally, my personal opinion is that Darwinian is right-we should begin defining oil as crude plus condensate, and hope this catches on within the peak oil community.
Now you have given me a thought. The ME concentrates on exporting oil. I wonder how much per barrel equivalent they would get if they exported oil products, plastics, chemicals etc, even diesel and gasoline. Barrel equivalent being the amount of oil product produced per barrel of oil.
NAOM
There is a problem with condensate. In Australia, for example, only 5% of condensate can be used in local refineries. Therefore, most of it is exported. That really matters because when the global crunch arrives I expect the oil markets to become more or less dysfunctional, possibly transitioning to some sort of bartering with different types of oil. What real value condensate then has, we don't know. Similar problems exist with heavy, sour crude which has to go to special refineries.
There is a problem with condensate. In Australia, for example, only 5% of condensate can be used in local refineries. Therefore, most of it is exported.
That seems unlikely. The chemical composition of condensate is nearly identical to that of gasoline, and in the old days of low-compression, fuel quality insensitive engines some people used to fill their cars with condensate, and drive around on it.
More likely they get a better price for it on the export market than in Australia. There are a lot of offshore refineries that will pay a better price for condensate than for crude oil.
I agree with you Ron. What really matters is what the world can burn, no matter where it comes from. The plateau already includes - and hides - several peaks: Conventional peak in 2005, I think - though the EIA claims 2006 - and the peak of exports in the same year. All the added unconventional oil since then only sirved to satisfy the growing consumption of the producers. In fact the available amount of oil on the market shrunk since then and shrunk dramatically discounting the consumtion of Chindia. (If memory serves from about 40mb to 35mb) So for importers Peak Oil is a reality for quite a while already.
Though it's tecnically feasible to produce more "oil" if the price goes up it is feasible in the same way as a mission to mars would be if NASA would receive enough funding. It's jutst hypotetically possible but in reality it will never happen IMO.
Agreed the only thing that matters is what can be turned into fuel our current fleet of vehicles... and how much it costs. In this economic sense a cheap way of making oil from coal or gas would have more in common with conventional crude oil than tar sands or hard to reach deepwater oil, for instance.
The only issue is that this would create a potential shortage in coal or gas, which could in turn be replaced by nuclear energy.
In some ways the most important fuel is diesel. This is required for all the equipment that makes the world go round. You need diesel to eat food basically.
I think keeping tabs on diesel stocks will be key when shortages occur.
I bet the industry is already thinking about how to keep diesel stocks relatively higher than typical in the past in case of a serious production disruption.
Will it be harder to make diesel from coal or gas, than petrol?
20/9/2010
IEA corrects oil statistics containing bio fuels
http://www.crudeoilpeak.com/?p=1876
13/4/2010
Natural gas liquids and other liquids mitigate crude oil peak
http://www.crudeoilpeak.com/?p=1352
Does peak oil matter: it already matters when sub systems peak. The oil price went out of the 20-30 dollar band after the North Sea peaked. Oil importing countries then took on more debt to finance those higher oil prices, thus accelerating the underlying problem of accumulated debt, which finally triggered the GFC.
An earlier example was:
4/10/2010
Russia's oil peak and the German reunification
http://www.crudeoilpeak.com/?p=1912
The Iranian revolution was preceded by the peaking of Iran's oil production. There are always several feed back factors coming together to make the peaking a dramatic process.
The 1973 OPEC oil embargo was only successful because the US peaked 3 years earlier.
David asks the question "at what price of oil does the economy stop growing?"
A couple of weeks ago I put together an analysis of peak oil-induced demand destruction and found that the key "tipping point" seems to be when the S&P/Oil ratio goes below 12:1
Complete analysis here: http://www.peakoilproof.com/2010/11/demand-destruction-from-peak-oil.html
Nice analysis....I positioning some shorts now. We are now in the saw-tooth phase of world growth
The paper from Radetzki is quite bad. It has little facts, although he accuses peak-oilers of that himself. It is written a little like an opinion-piece, less so then an peer-reviewd article.
I have followed Radetzki for 2-3 years and he is consistently repeating his core beliefs. One scientist analyzed a piece by him, saying he is stuck in his topic of economics will find a solution through price since 40 years. And cant get out of the box. The guy should be around 75 years old.
He has written in sweden against climate change science. Got heavily criticized.
Currently he: "Work on a book manuscript of essays, to be published in December 2010 in Swedish. The lead theme of the book is that human creativity makes natural and environmental resources inexhaustible for all practical purposes, and that the threat of depletion is a chimera." fom his webpage: http://www.radetzki.biz/academic_history.html.
My judgement is that he must have great stories to tell, but he is shaped by what he has observed the last decades, and cant imagine that the next decade might change.
A couple of points:
As each recession forces economies of consumption (efficiency and conservation), the tipping point as % of GDP moves up. Similarly, if price ratchets up in small steps, with pauses for adjustment, the economically affordable price moves up. Expect the next oil price induced economic downturn at petroleum use maybe 10% of GDP.
As oil price causes Americans to make choices of how they spend their money, the prices will disproportionately hit China's economy, because a great deal of what we import from China is the first things that can and will be foregone.
Regardless of the technical or economic substitutability of non-conventional "oils", we still have the issue of stocks and flows. Tar sand/NGL production will not be cranked up as fast as conventional oil declines, so we still have a peak, aggravated, as noted above, by the net energy/b decline.
Maybe peak oil should be redefined as peak liquid hydrocarbon net energy.
Murray
I recommend peak fossil liquid hydrocarbon net energy.
What is important to society is the end product. That is liquid, easy to transport, burn and store, high energy density fuel.
Not the hole in the ground it came out of. It is reasonable to include coal to liquids and other technologies, provided that the
coal used is additional production, and not coal diverted from other end uses.
However, biofuels are a completely different. They result in double counting as fossil fuels are used in their production, they use agricultural land which definitely has other end uses, they are lower energy content, and they are not a finite energy source.
Including them in a calculation for the peak of fossil fuels is to inevitably skew the result.
What is the difference between ethanol and oil sands?
They both use a lot of land area and a lot of natural gas to make liquid fuels.
Not sure how easy it is to not count the biofuels in the mix.
I personally think peak conventional crude is still a very important graph.
I think that peak light sweet crude is equally important.
I think peak oil per capita is also important.
Laying these graphs on top of one another would show the transition from say conventional to higher tech refining gains to heavier/sourer crude to biobuels and to shale and sands oil and coal to liquids and so on.
Light sweet crude, conventional crude etc. is only a valuable graph from the point of view that its cheap to extract.
There is not significant difference in spending vast ammounts of money to mine deepwater conventional oil reserves, and spending less money mining heavy sour crudes and then spending extra money refining them into conventional petroleum products.
This is a good view for World Peak. There are a couple of reasons for a region to peak:
1. The region can import lower cost fossil energy than it can locally produce. This moves up the peak date as the inexpensive imported oil blocks expensive new developments.
2. The region cannot increase net energy no matter how high costs go or how much effort is put into drilling. I think this is likely to first appear in the natural gas markets (because imports/exports are much more limited and expensive compared to oil).
Case 2 is how the world will peak in oil. Essentially the oil industry will need so much energy (in the form of labor, steel, fuel, electronics, etc) per barrel of oil that net energy delivered to society will start to fall.
Society has 2 options at that point:
A. Get efficient faster than net energy is falling. (Very unlikely as I have seen energy usage for drilling rise from 1% of gross to 7% of gross in less than 10 years. That is a very huge efficiency change to make in society as a whole for reasons explained below.)
B. Curtail in usage via demand destruction, rationing, etc. This is how world peak oil is most likely to appear.
This has some interesting implications. First, if the fossil fuel industry does not want to contract rapidly as net energy declines, it must promote more efficiency usage in society. It *needs* an economy that can pay higher and higher prices for the same amount of energy. And only a society getting more efficient can do that. Secondly, the wider economy needs to understand that the recession that follows a price spike is the signal to be investing more heavily in efficiency not less. Any society that misses this signal will be out competed by a society that does not miss the signal.
Efficiency gains have a limited reach. It costs energy to replace cars, build trains, etc. So that cuts into the savings. The faster society tries to change, the higher the cost (because the cost is paid at the time of construction, but the efficiency pays back slowly over usage) and that puts a limit on how fast change can be made.
Everything outside of that limit must be made up by curtailment. And so it is very likely that once a peak in net energy is reached, the economy as a whole will peak very soon. Thus "peak oil" will appear as peak demand. Net energy will be falling and so society will not be able to invest enough to keep production up. The IEA will claim the problem is "lack of investment", while instead it is that energy production is competing for so much steel, labor and energy that society as a whole has been driven into contraction.
A study of fossil energy sources in regions without good trade connections is likely to give us the clearest view of what a peak in world energy will bring.
Is the net energy of various resources constant?
For example the energy input for tar sands I guess would be building the lorries, running the lorries, boiling the sands, etc., but surely if more efficient lorries were purchased with longer lifespans, or if the boiling water where the oil is stripped from the sands, is better insulated so that it loses energy more slowly to its environment or if the pipes are manufactured with more corrosion resistant material, surely all these things would act to increase the net energy available from tar sands over time?
Its not peak energy or net peak exergy even! But peak utility.. if we have half the exergy but twice the functioning efficiency in using that exergy the economy is static.... IMO
its the net amount of things you can do irrespective of their energy cost.
Its as if the GDP is the total amount of things going on if you like?
Trouble is that the beancounters work with the costs NOW NOW NOW. they are not looking at amortising the costs over many years. (okay, bit of license with that. They only look at recovering cost ASAP rather than take a long range view).
NAOM
JonFriese -
+10
This is the most lucid reasoning I've come across on this topic in some time. You've made a compelling case how analysts can discuss a peak in net energy and a peak in demand and be talking about the SAME THING.
You have also squared the role of energy efficiency against declining net energy with Jeavons Paradox. The bottom line there being: we don't become more efficient to preserve resources, we become more efficient to accommodate as many people (users/consumers) as we can. There is no special reason efficiency will reduce prices, and if net energy is declining prices will often rise.
A region with a self-contained fossil energy rise and fall? There has to be one but nothing comes to mind...
Yes, if net energy is declining then prices rise, even in a down economy. Natural gas is $4.00 Mcf right now. The NG industry is suffering but that is 100% higher than prices 10 years back. And this despite the worst recession since the 30's.
Efficiency can cause temporary low prices, but it really allows high prices. Another interesting thought is that the most efficient wins the bidding war for fuel, but the most efficient is not protected from the bidding war. Meaning that cutting your use 50% is great, but as others do the same prices will still rise to take the same % of your wealth. Efficiency is necessary, but not sufficient.
The only thing that protects against economic decline is a domestic energy source of high EROeI. So in the US, we have to develop renewable energy supplies with high EROeI, such as wind. Or as a homeowner, install some form of energy collection / generation. Save the fuel for backup. Buy during the price slumps and skimp during the spikes (a slump will always follow).
Very interesting, this.
As for your question, "how long will the effects of peak oil last?" my husband recently said 100 years until people will no longer feel the effects. He is such an optimist!
Coal started to be seriously used about 500 years ago, so I think we could even say 500 years until fossil fuel effects wear off, if we want to make a nice even slope up and slope down. Making a perfect 1000 year slice of fossil fuel-mankind partnership....or bondage, or servitude or enslavement or addiction.....or whatever you want to call it.
Don't post that correlation-is-causation chart of oil against the economy without also posting THIS chart, a much more significant factor in our recession than oil briefly touching $147/bbl (largely speculator-driven).
One of things I think your graph shows (in conjunction with oil prices, whether speculative or not) is that people or a large segment of the economy simply "ran out of money" against a 40-year real flat income. All the tricks to extract money from assets to continue consumption simply ran out.
wait, the reason the loans failed was that people could not pay their bills as oil costs in all things in the economy including their gas tanks went up preventing the monthly payment toward the house from being made, thus leading to the crisis which occurred some months following the extended period of high oil prices.
Sure we are handwaving, but money is money. Why couldnt people pay the bills?
The coincident trend for oil price was just a coincidence then? OK.
Despite being devils advocate on the oil price vs growth thing earlier in the thread I think there is a connection between PEAK oil and the sub prime crash.
The question is why did they run out of money then? .. they were always borrowing money they never had or realistically any hope of paying back.
Was the ability to expand levels of consumer debt and cyclically expanding the economy[service sector ] constrained because industry could not expand production due to resource constraints? As long as well all kept borrowing what's the problem?
The overall levels of consumption could not drive credit because the ability to make things and services in the organizational patterns of that day couldn't keep up with the debt demanded new wealth creation (2008, seems like a million yrs ago now). The price of oil indicated a desire for the oil ..it was not in itself a the reason the economy tanked it was just a CONTEXTUALLY meaningful indicator for that specific moment in time. $147 dollar oil now would not mean the same thing as it did then or perhaps it would but thats not my point if you get my drift. The notion of the price or any other indicator being a historically contextual marker rather than some generic "fits all of history indicator" is an important concept.
the problem of economic metrics is they tend to be viewed a simple isolated variables with fixed meanings based on scale rather than properties with changing meaning. That is my big thought for this thread
I think what your looking at there is exponential rates of interest VS resource utilization.. sure there were additional issues like the resetting of mortgage rates but if you stop for a second and thunk about it that actually supports the argument.
I think you've got some valid points in there but your grammar is so bad its hard to follow. Please try proof reading before posting.
its a common complaint
Despite being devils advocate on the oil price vs growth thing earlier in the thread I think there is a connection between PEAK oil and the sub prime crash.
The question is why did they run out of money then? .. they were always borrowing money they never had and/or realistically any hope of paying back.
Was the ability to expand levels of consumer debt and cyclically expanding the economy, the service sector in the main, foiled because of resource constraints? As long as we all kept borrowing what's the problem? The problem is the rate of new wealth production vs rate of debt repayment. which is function of exergy consumption.
The overall levels of consumption could not drive new credit because the ability to make things and provide new services in the organizational patterns of that day couldn't keep up with the debt demands (2008, seems like a million yrs ago now). The price of oil indicated a desire for the oil ..it was not in itself a the reason the economy tanked it was just a CONTEXTUALLY meaningful indicator for that specific moment in time. $147 oil today would not mean the same thing as it did then. The notion of the price or any other indicator being a historically contextual marker rather than some generic "fits all of history indicator" is an important concept.
One problem of economic metrics is they tend to be viewed as simple isolated variables with fixed meanings based on scale rather than properties with changing meaning. That is my big thought for this thread
I think what your looking at there is exponential rates of interest VS resource utilization.. sure there were additional issues like the resetting of mortgage rates but if you stop for a second and thunk about it that actually supports the argument.
I think that the issue is clouded because there are 2 effects going on. While there are certainly effects due to the oil/energy situation there is another, simpler, factor in play. Many people got greedy and simply created imaginative ways to create a false economic system. The latter goes from individuals right up to governments. Simply put, spending more than income. The mechanisms don't really matter, the result does. Lots of imaginary money got moved around until the merry go round stopped. This has clouded the waters for true oil issues. Personally, I feel this has been more behind the recent recession rather than oil. It is the next few years where we will start to see this coming into play and we have seen the first few signs in the declaration of oil prices.
NAOM
before the crash the debate put forward by TOD opinion makers was dominated by a more simplistic model of energy's relation to the economy than we now have. Especially oils importance with in that argument, due to the difficulty of substituting liquid fuels.
this idea was even in ascendance leading up to the crash . The price hikes seemed unstoppable faced with the plateauing production.. once Lehmans fell over and the price dropped in a non liner fashion compared to production this simplistic view came under attack from with in TOD.
Over time a new world view formed where oil's (and energy's) primacy in the crash was downgraded and the economic organizational structure was upgraded to top of the list.
I have followed this train of thought being a lurker/hanger on here but have come 360º to a more equivalent understanding where the relative importance of energy vs economic system is largely the same or even not relevant!
The size or importance of one over the other is in a way a false dichotomy. the delusion of quasi exponential growth in wealth is only supported by increasing [ exergy] utility. If the system is too blame why did it function for so long? ..what determines the lag? its not a question of why bubbles occur and we get trapped in repeating boom and bust cycles but why did they occur in a specific fashion or last that specific length of time? These specific questions must be related to the physical world in some way even if that physicality is the number of times individuals can negotiate new trades in a set time frame. The gross utility of human beings doing things even if its pressing "buy now" on Amazon.com is an energy constraint.
I am swayed by the notion of declining EROEI the plateau MUST represent as a driver in changing the economic environment.
The way I view it, the global economy was walking up a narrowing mountain ledge track - eventually it was going to fall off as oil demand rose higher than supply, spiking prices and collapsing the economy in the west.
All the subprime fraud did was to ensure there was a massive chasm to fall into when footing was eventually lost.
Problem is the reaction (or more accurately, inaction) to this fraud and collapse has meant their now a rift valley filled with lava, ready for us to fall into.
Subprime lending is the riskiest lending (besides the mafia racket in your hometown). Subprime was used recently to actually super-prime a deadbeat economy though providing housing to everyone through building, refinancing and all kinds of fun. The system was exploited by others trying to speculate on homes in various markets, and by banks, and by paper pushers making fees and the like, et al.
Why then did we do subprime lending? Well to juice the economy, and for others to make money via speculation on the US housing market since other investments were not yielding enough return -- due to the previously weak economy. Why does the economy need juice? Maybe energy supplies are not flowing so well. <-- Somewhat circular logic -- but multiple systems are feeding back to pump the bubble up since normal investment growth is bad -- revealing the ugly truth that oil is constrained as hell
So while juicing the economy helped, oil demand shot up while supplies were constrained -- contractors and Home Depot were redoing the paint on houses (flipping), trucks running all over town everywhere. China wanted to stock up diesel in those generators before the Olympics since their coal plants were running at high capacity and they didnt want blackouts and that embarrassment.
So it all led up to high oil and it is so interconnected: subprime finance, global econ, China, US oil consumption dominance (which is highly inefficient), and all kinds of real estate speculation in Europe and the US.
BOOM! It all blew up.
So it is impossible to put your finger on the root cause, but primary energy sources are hard to deny -- OIL -- being a majority of the BTUs used to run our economy.
I am not fully sold on this theory but it is fairly credible.
You need oil -- like you need dollars -- without oil you basically have no energy currency -- so less happens which in not the idea of growth.
8
I think one of the things to bear in mind about exergy in all this debate is that debt laden consumers still went out and stoked the fire
why leading up to of the crisis did energy demand go up? as people took on more debt they didn't compensate by reducing consumption
almost the opposite? certainly encouraged to.
thats actually one of the simplest causal insights there is in all this.....
Yes, consumers were encouraged to spend more and more, since they thought there housing were doubling in value every decade !!!
What a terrible feedback loop.
It took me some time to believe/understand this model but now I have come around to it.
You are both missing what the chart says. The chart is not of defaults, but of resets. Resets were typically to much higher interest rates, so would have been unaffordable to some large percentage, regardless. The higher cost of fuel and other things via the cost of oil simply pushed more people into the unaffordable reset range. They were separate, but mutually reinforcing, events.
Resets were part of the cause, but why should the banks have ever loaned people ten or more times their income to pay for a piece of land ($1,000,000 in San Francisco and LA with the lot was worth 80% of the home price) when there were places all over the country where land was cheap, like Atlanta. The banks would never have loaned the money if they had to keep the loans instead of securitizing and selling them to pension funds and other suckers.
Bidding up land prices perpetuates the money-raising scheme of the banks and real estate interests. If land prices were 90% lower it would greatly lower bank revenues on future loan originations and mortgage interest. A mean reversion of prices will occur, just like in Japan. The sooner it does the better for the rest of the economy and especially for the young would-be homeowners who will have to bear the tax burden of the aftermath.
The financial industry has no business being 5 to 7.5% of GDP and land rents (economic) should not be a major factor in cost of living. We need to drastically shrink these blooduckers.
Henry George had the right idea 125 years ago in Progress and Poverty. Because the U.S. and other governments will be the default owners of the foreclosed land, maybe it should stay in government ownership and the government can raise revenue through rent instead of taxes.
http://en.wikipedia.org/wiki/Henry_George
The scale on the figure relating oil price to %GDP is illusive, even if the scale is expanded for more recent times to see the effects more clearly.
I suggest that it isn't the actual percentage that's important, but the rate of change. The 1973 oil shock never reached the magical number of 5.5% but the rate of change was rapid. And as the 1980 shows (as would the 2008 if place on the same compressed scale as the previous historical values). While the relative values might be important, the sudden "shockwave" effect from the rate of change is probably more important.
Brings a new definition to "shock and awe!"
Just a thought.
Starship Trooper
I agree - it is not as simple as the graph indicates. There are asymmetric demand responses based on whether the price increase is to an "all time high" or a smaller increase- as outlined by many including Gately. I think the speed, magnitude, and duration of the increase are all important factors.
$200 just happens to be the same amount I used as a ceiling for oil prices just a few weeks back, based on the reasons described above. The response from several posters was the more adament the prediction the more often it is wrong, etc., but it seems Chris Nelder sees it exactly the same way. Price is always going to provide a feedback system for demand. One could argue that we need oil no matter what, but if the price gets too high the energy received to do work is nullified, and again acts as another form of feedback.
"peak oil presents a paradox: the growth of the economy requires an increasing oil supply" - No, it doesn't. That's part of the thinking that makes economists laugh at the concept of Peak Oil, and rightly. Europe seems to grow well, most of the time, using far less oil than we do. We can certainly do what we do now with much less oil. And please, don't pull the Jeavon's paradox nonsense. That applies in a situation where the supply can increase, not when prices are generally rising due to a shortage of supply. It's better to say "It's difficult for the economy to grow when supplies of key resources, like oil, are shrinking."
"The true import of peak oil, therefore, may not be sustained high prices, but economic shrinkage. Demand will be destroyed long before oil gets to $200 a barrel…" - Yes, and this is part of the point the economists make. Demand destruction is a perfectly reasonable way to deal with price increases. Over time, more changes will happen, but in the short run, high prices may well crash things or help to crash things.
"The economists' argument—that resource constraints will be abated by technology and substitution" - and demand destruction. Don't leave that out. That's economics 101 too. Resource constraints result in higher prices in the short term, which result in a combination of demand destruction, additional resources being produced (where possible), and substitution (where possible). Additional production and substitution may take time. Really, the time part is the issue. If we keep up the current game of grow -> hit energy constraint -> recession -> improve efficiency -> grow -> hit energy constraint ..., then we'll be fine as long as the energy constraints don't happen too fast. The key thing, as Stuart pointed out ages ago, is whether we can improve efficiency/substitution as fast as the resource constraint happens. That's the $60 trillion question.
Yes it does. It is foolish to look at Europe and say that because they get by with less oil per capita than the US that we can grow by just doing what they do. It would take us many years to downsize our automobile fleet and increase mass transit to their level. Sure GDP can have short term swings up without the oil supply increasing. But there can be no long term trend upward unless the oil supply does likewise.
And I am aware that some economist believe it is possible to grow without an increase in oil supply. But most have not examined the issue very closely as this article points out.
Energy and Economic Growth
Get that? Energy and economic activity are found to be tightly couple! Energy is what drives industry. Sure there are other forms of energy, like coal, but oil is the most important input of all.
Anyway this article completely destroys the silly idea that we can have economic growth all the while the oil supply is declining.
Ron P.
No, it doesn't. As Stern (your source) puts it:
As they point out, higher quality fuels include natural gas and electricity. Yes, yes, I know, as things currently stand, electricity is primarily produced by burning coal. Would you say that's the only way to produce electricity? Are you saying that oil is our only source of energy?
What's foolish is to ignore what other countries are able to do and say we're not capable of that. Of course we are, and $30,000 of investment in electric rail produces the same GDP benefits as a $30,000 22mpg SUV does, while drastically reducing oil use. Sure it would take us many years to make that switch. Last I checked every report, including Hirsch's reports, say mitigation will take time. If you'll reread what I wrote, I pointed out that the time involved is the big question.
So are you saying that as the fuel source that makes up a full one-third of our primary energy supply (and almost all the energy used for transportation) declines the world economy will continue to grow?
I realize we have examples on the upslope of oil production that show what's possible. I'm asking about the downslope of production when everyone is hoarding absolutely everything because we collectively realize that we've overpopulated the planet and the resources are running low.
Paraphrasing Lester Brown of the Earth Policy Institute: we lived in an era when I could buy a barrel of oil and you could buy a barrel of oil — if we each had the money. However, we are moving into a period where if I buy a barrel of oil, there isn't another barrel for you to buy thus you don't get one.
That changes everything.
"However, we are moving into a period where if I buy a barrel of oil, there isn't another barrel for you to buy thus you don't get one."
war is most likely at this point. . . or massive global demand destruction.
pick a side, flip a coin, it matters little, this next war is not about winning its about downsizing.
hope im wrong but i have a hard time imagining the great nations of the world uniting to
cooperatively mitigate net energy decline. wars are historically fought for resources and humans are
not historically reasonable. i dont think the majority are going to understand the fundamental
reasons for the worsening economic conditions. most likely they will break into factions according
to who they blame (tea party retards anyone?) and political chaos will ensue.
the folks on this site ,the level of understanding/intelligence are a severe minority.
only if the energy decline is slow enough could adaptation happen and war be avoided.
as someone else here said time is crucial.
@KjmClark
As I wrote in the [much] longer version of the paper from which this article is culled, if the US is able to decrease its consumption of oil then it will be less vulnerable to oil prices. That is pretty simple, right.
BUT, as Aangel points out, decreasing our oil consumption will be increasingly difficult the longer we wait - and that is the point. We are at peak oil right now - we are at the point where growing the economy pushes oil prices higher and higher. Time is zero, we are there.
I didn't say "will continue to grow", but I'm not convinced, yet, that it *won't* be able to grow either. Sure, oil is one third of our BTUs, but we currently waste about 3/4 of those BTUs. And who says we really need to use all of those BTUs in the first place?
I bike to work. I think the vast majority of the motoring in the US is superfluous. We don't need long-haul trucking; we can do that with trains. We don't need personal driving to work; we can do that with commuter rail, buses, telecommuting, carpooling, biking, and walking. We don't need people driving to grocery stores; we can do that with deliveries or people buying in quantities they can transport without a car. And we don't really need oil for car fuel. If we're doing a lot less driving, we can make the remainder use a lot less oil through greater efficiency, particularly plug-in hybrids, or switch to natural gas in plug-in hybrids.
The trains can run on electricity and are a lot more efficient than the trucks anyway. The buses and commuter rail can mostly run on electricity too, and on hybrid diesel powertrains beyond that. I think my bike will run pretty well without oil, just as it does now. There's really no reason we couldn't be more like Europe, with vastly less oil use per person. There's no reason Europe couldn't reduce their oil usage as well.
And we don't have to get there tomorrow. We have decades to switch from the oil that used to come out of the ground as a liquid in copious quantities. Tar sand may be nasty, polluting stuff, but it is hydrocarbons that can be converted to an oil substitute. And there's lots of tar sand.
Really, I think Hirsch had it right; 20 years of economic pain to make the transition. But the world economy pretty much sucks right now, and the world economy is currently growing.
aangel has pointed out elsewhere that this is a systemic issue, not just oil. This is why you are able to keep repeating this argument.
1. Hirsch said 20 years pre-peak. They also said if mitigation waited until peak, or after, we'd be in very dire straights.
2. There are a number of things depleting: plankton, fish, phosphorus, oil, NG, coal, uranium, soil, water...
You are being far too simplistic, and are not at all including climate issues in using all that FF.
"I didn't say "will continue to grow", but I'm not convinced, yet, that it *won't* be able to grow either. Sure, oil is one third of our BTUs, but we currently waste about 3/4 of those BTUs. And who says we really need to use all of those BTUs in the first place?
I bike to work. I think the vast majority of the motoring in the US is superfluous. We don't need long-haul trucking; we can do that with trains. We don't need personal driving to work; we can do that with commuter rail, buses, telecommuting, carpooling, biking, and walking. We don't need people driving to grocery stores; we can do that with deliveries or people buying in quantities they can transport without a car. And we don't really need oil for car fuel. If we're doing a lot less driving, we can make the remainder use a lot less oil through greater efficiency, particularly plug-in hybrids, or switch to natural gas in plug-in hybrids.
The trains can run on electricity and are a lot more efficient than the trucks anyway. The buses and commuter rail can mostly run on electricity too, and on hybrid diesel powertrains beyond that. I think my bike will run pretty well without oil, just as it does now. There's really no reason we couldn't be more like Europe, with vastly less oil use per person. There's no reason Europe couldn't reduce their oil usage as well."
I mostly agree with all this in theory. But there are, of course, real world problems.
I'm a big proponent of things we can do right away--bike, walk, bus, and carpool. These could dramatically reduce our oil use without much new infrastructure.
But doing this successfully would mean greatly reducing the number of people who, for example, buy cars. We just spent hundreds of billions of dollars bailing out the auto industry so that it wouldn't melt down and take the rest of the economy with it.
And much of the rest of our economy--from housing, to fast foods, to huge suburban malls...--has been built around happy, cheap motoring. So cutting back on motoring will send shock waves, probably lethal ones, through the whole economy--lots and lots of people out of work that used to depend on this system of car based everything.
So we are in a conundrum. We have to move away from our car-based economy (for many reasons), but doing so will destroy our economy and send yet more millions into the unemployment lines.
I would like to think that enough 'green' jobs (or even 'green' make-jobs) could be created to take up the slack. But that doesn't seem to be happening very fast in the private sector, and gov seems loath to step into this kind of a role in any kind of big way.
And as the tea party takes over congress and maybe the presidency in a couple years, I find it hard to believe that anything of any value will come out of washington (not that much has lately anyway).
From 1965 to the present day oil has been the largest single provider of BTU to the global industrial economy. Moreover, the energy density of oil exceeds that of all our other energy sources. Given that the global industrial economy adapted to this master resource over many decades, and, grew to its current proportions as measured by both the built environment and economic/energy flows, it is axiomatic that growth of the current system is either unlikley, or impossible.
That said, I personally believe that the 5 billion people in the developing world, who are running their economies on coal, will grow for some time yet. OECD economies are effectively halted, however. That is not the same as a cessation of economic activity. There will be much economic activity. Just not net, new economic activity and output in the OECD.
We are free of course to measure growth in other terms. Social growth, incremental advances in health, or perhaps just the growth of free time. However, industrial growth of the kind seen in the last two centuries--again, net new additions to output, net new construction and so on--that's not going to happen now in the OECD. OECD economies will use less, and produce less. In the best of all possible worlds, that in itself is a potential definition of conservation and sustainability.
G
Actually, the OECD itself says that the OECD is growing at a 2.7% rate, and projects continued growth in 2011 at 2.7% and 1.1% in 2012. Go here, look down the left side to "Economic Projections", click through to "OECD Economic Outlook", then "OECD Economic Outlook Current and Recent Editions", then drill down twice on "Economic Outlook 88", and look on the right for the line, "GDPV_ANNPCT: Gross domestic product, volume, market prices, annualised rate", and the last line in that series, the "OECD Total".
I think your first paragraph is akin to saying "I have eaten beef products all my life. I have grown strong on beef products. Beef fat is the most energy dense food known to man. It is axiomatic that my growth without beef is either unlikely, or impossible." The first three sentences may well be true, but the conclusion doesn't necessarily follow.
"OECD is growing at a 2.7% rate, and projects continued growth in 2011 at 2.7% and 1.1% in 2012"
So, by the figures you yourself are providing, increase in the growth rate has in fact halted and is projected to start to fall away toward zero.
Really what we need is an economics of shrinkage instead of growth. Or maybe just rename shrinkage as growth and call it a success as we slip down the far--now near--slope of Hubbert's curve.
Yes it does. Economic growth matches exactly the growth in fossil fuel use, or so says Richard Douthwaite.
What impact will oil depletion have on the economy?
This is a seven minute video and Richard Douthwaite tells it like it is.
Ron P.
Well whadaya know, an economist who actually gets it.
Economic growth matches exactly the growth in fossil fuel use
Of course it does. As long as fuel is cheap, freight and people will move with low efficiency vehicles. As the economy grows, they'll use proportionally more fuel.
But, if fuel gets more expensive, vehicles will get more efficient. Eventually liquid fueled vehicles will be replaced by EVs, and the economy will decouple from oil.
That is fantasyland type thinking. For one thing electricity is a conveyor of energy, not a source. For another, oil isn't just something purchased at the pumps, its embedded in a whole host of products. For example for every calorie of food, it took 8-10 calories of FF energy to get that food to your frig. 34.3% of all energy used in the US is derived from oil. But you think we can get that much energy usage from other sources? Have you taken a look at the size of vehicles out on the road? Their massive suv's and trucks. Ford just came out with a new one being advertised on TV that is enormous with a huge chrome grill in front.
Even if you had a small passenger EV, but you wanted to say drive from SF to LA - how would you do that? Stop off every 40 miles to get a charge? How long would that drive take? Remember, at the end of the day whatever changes are made to move away from oil, they must be realistic to an economy that needs to move fast.
electricity is a conveyor of energy, not a source.
Yes. Fortunately, we have high E-ROI, scalable sources of electricity: wind, solar, nuclear. For better or worse, we have a lot of things to burn, as well.
For another, oil isn't just something purchased at the pumps, its embedded in a whole host of products.
Not as much as you might think.
it took 8-10 calories of FF energy to get that food to your frig.
Actually, the single largest component of overall food energy consumption is the frig, which is electric. The 2nd is the trip home from the local market, which could be in an EV.
Even if you had a small passenger EV, but you wanted to say drive from SF to LA - how would you do that?
In an Extended Range EV like the Volt. Only 20% of driving is long range. Make that in a high MPG vehicle, and it only requires 10% of current fuel consumption. Ethanol could provide that.
We can and should kick the oil habit ASAP.
You know, you're right. The more I look at the numbers the more I think that the electric vehicle is not going to be economically viable for more than a small segment of the population. Still, some people keep saying it is the wave of the future. I think it is a denial of reality. People don't want to change their lifestyle, so they come up with a solution that allows them to continue on as always without having to seriously rethink their lives. They will never admit that it is a solution that they, personally, will never be able to afford.
I know, I think they're crazy. I thought they were crazy in 2007 when oil prices were rising and they said, "There is no price high enough to stop me driving." Right away I knew we were in trouble, because there is obviously such a price, and we obviously were going to find out what it was. It was $147 per barrel in 2008.
I wonder what the price is that will stop people driving these behemoths because we are probably going to find out what that price is, again, in 2011.
"Insanity is doing the same thing over and over again and expecting different results" - Albert Einstein.
You know, you're right. The more I look at the numbers the more I think that the electric vehicle is not going to be economically viable for more than a small segment of the population.
You needed to look at the numbers? I'm surprised by that. You have always seemed to have a sharp eye for nonsense. Since I started looking at all things through the lens of sustainability, the number of things that pass the sniff test has plummeted. Cars, regardless of type, don't pass the sniff test of sustainability. Can the world produce 1 billion cars every few years and still be sustainable?
No.
Test completed. Result: Fail.
. The more I look at the numbers the more I think that the electric vehicle is not going to be economically viable for more than a small segment of the population.
I've given you numbers in the past that suggest that they will.
Could you show your numbers?
Point me to them, please, for you are suggesting an impossibility.
Nick has a few impossibilities up his sleeve ready for you ;-)
No, I'm just not feeling apocalyptic.
I guess it's understandable that people would tend towards the apocalyptic, given we live in a society in which roughly 1/3 of the population expects the Book of Revelations to be acted out in their lifetime.
Still, we can do better...
I suspect there is some religious component to all this
Could be, however, I'm an avowed atheist. I have Bertrand Russell to thank for that.
Besides, what Nick calls apocalypse is simple collapse. He seems incapable of seeing the trends and says things like "Yes, bank panics make credit difficult. You'll notice things have eased up since then."
It's difficult to discuss reality with someone who is so disconnected from it. So I find it quite funny that he brings up the Book of Revelations.
He seems incapable of seeing the trends
When someone says the economy is declining, and I look at the numbers and see growth, I believe the numbers.
I find it quite funny that he brings up the Book of Revelations.
Hey, you're the one who likes to bring up psychological explanations for disagreements. I'm content to stick to discussing the facts.
I looked at your numbers and found them unconvincing. They're just not playing in the right ballpark. They fail the sniff test.
The most important number is 250 million. That is the number of registered vehicles in the US. The number of electric vehicles is in the thousands, or approximately 0.000% of the market.
What are the chances that the auto industry can ramp up to replace 250 million vehicles in any short period of time (i.e. less than decades?) Probably 0% after they all go bankrupt because nobody will buy their vehicles at $6/gallon. What are the chances that Americans will be able to afford them after gasoline goes to $6 per gallon? Not very good, considering that 98% of the batteries are made in Asia. And then there's the problem that the American electric grid is close to 100% of capacity already, without adding electric cars.
The fact is, American car companies will not be able to scale up production to build any significant number of electric cars in any reasonable length of time, and most American consumers will not be able to afford to buy them. The government subsidy system that makes them look semi-affordable will blow up because US federal and state governments don't actually have the money to subsidize electric cars. They're borrowing it all from the Asians (in addition to buying the batteries from them).
Actually, they're starting to fund the government subsidies by printing money, since the Asians are starting to have doubts about lending money to them. That's not what the US government calls it, they call it "Qualitative Easing", but it looks like that is what is happening.
Exactly. 90% of vehicles are purchased via credit. When credit is no longer easy to obtain car sales of all sorts will plummet.
Yes, people almost always buy cars on credit, and when the credit system self-destructs, they have no other options.
When I bought a car, I always used to pay cash. They would ask, "What kind of financing would you like?" and I would say, "Could I get a discount if I paid cash?" Of course the answer was always "NO!" because they made most of their money from interest charges and the profit margin on the car was close to zero. So, I completely screwed up the system for them, but that was their problem, not mine.
However, for the American automobile manufacturers, the whole thing is a house of cards. If gasoline is $6/gallon, the value of existing vehicles will approach zero, and anyone who is trying to buy an EV, and works at Wal-Mart where the average wage is $11.25 per hour, is not going to have a chance. His paycheck will not pay for his EV. This is going to be the reality for many Americans.
So, the American automobile manufacturers will not be able to sell cars, and Americans will not be able to buy them. I personally will continue to pay cash, but probably not for an American-built car, especially not an EV.
The most important number is 250 million. That is the number of registered vehicles in the US.
IIRC, there are about 230M light vehicles, and about 15M motorcycles. More importantly, we don't really need to replace all of them. Perhaps half of them are really necessary. Many cars get little use.
The number of electric vehicles is in the thousands, or approximately 0.000% of the market.
There are about 30k hobbyist vehicles on the road. There are 10's of millions of non-highway legal EVs in service. GM is planning volumes of 45k in 2012, and Nissan is planning much more.
Probably 0% after they all go bankrupt
Well, if we assume collapse, then things will get difficult. OTOH, collapse won't happen as a result of too few BTU's...
98% of the batteries are made in Asia
Production for both Nissan and GM's batteries is moving to the US.
the problem that the American electric grid is close to 100% of capacity already
No, it's really not. The current grid could handle 150M EVs.
the Asians are starting to have doubts about lending money to them.
Not really. China has to lend, in order to sell.
they call it "Qualitative Easing"
Are you referring to the Quantitative Easing being done by the Fed? Have you noticed that QE is actually working? Long-term interest rates are rising, which was the purpose.
Yes Nick, they are rising, except the Fed's intent was the opposite. Better stick to something you "might" know about...
Yes, I find that puzzling - the Fed is buying longer-term t-bills, which should cause rates to fall, and yet long-term rates are rising.
The latest explanation I see in the financial press is that there's a paradox: long-term rates are rising because investors think the Fed will succeed in stimulating the economy, so we have rising expectations of higher growth and inflation.
Nick,
For once, the financial press is correct. Increased expectations of inflation cause higher nominal interest rates; this is known as the Fisher effect.
Thanks.
From your own figures, if GM and Nissan ran out 100K between them it would take 1,500 years to get to your 150M EVs without taking replacements into account and I think a few replacements may well be needed over that time scale.
NAOM
Well, that's just the beginning. Both Nissan and GM expect to sell a lot more than 100k per year.
As Bartlett says, it's hard to understand the power of exponential growth...
10X takes 150 years, 20X takes 75 years. Again not counting replacements. Define 'a lot more'.
NAOM
The US makes about 10 million vehicles a year. So to replace all 230 million cars will only take 23 years.
Absolutely.
And about 100M of them provide 50% of the miles driven.
And, car sales in the US could easily return to their 2006 levels of 17M - at that pace it would only take 6 years to replace 50% of miles driven.
Gee, you mean we only have to sell 17 million EVs a year! Wow, and I thought this was going to be a problem.
For better or worse, the resources (plants, suppliers, assemblyworkers, etc) are sitting idle, waiting for the demand.
Yeah, about that demand...
Yeah, that's the problem: people are afraid to spend and invest.
Or maybe EVs don't make any economic sense to the average consumer (see your flawed price analysis above).
Using your logic you can postulate just about any solution and claim the problem is people are afraid.
We should build lots of rail, but people are afraid to spend and invest.
We should rebuild walkable cities but people are afraid to spend and invest.
We should build thousands of thorium reactors but people are afraid to spend and invest.
All of those are technically feasible. When you understand why they will never happen you will understand why 17 million EVs a year will never happen.
Oh, I was talking about overall demand. See Aangels comment below.
As to EVs and the average consumer - heck, the average consumer doesn't know that much about them. And, I would agree, pure EVs will be a niche product for a while - EREVs and PHEVs will be the main thing for a while.
pure EVs will be a niche product for a while - EREVs and PHEVs will be the main thing for a while.
Except the Volt is a $40k+ vehicle. Its an even worse economic buy than the Leaf. Again, see your flawed price analysis above.
Except the Volt is a $40k+ vehicle.
Except that it won't be for long. Remember the price of DVD players 10 years ago?
An EREV like the Volt won't cost any more than a plugin Prius with a larger battery. A Prius goes for about $25k, so that might put the Volt in the range of $30k. That's maybe $2k more than the average new US car. $1,500 in annual savings over the average new US car makes it mighty cost effective: in the range of the smallest of vehicles.
Now, even if an EREV were $500 per year more expensive than a comparable ICE vehicle, is that enough to cause TEOTWAWKI? Not really. Perhaps people might have to keep their cars a little longer before trading them in, and used cars wouldn't be thrown away quite so early in their lifecycle.
And, of course, if EREVs weren't competitive at $3 gas, they would be at $4 gas.
Remember the price of DVD players 10 years ago?
Cars are not like electronic equipment. They don't follow Moore's Law.
If they did, you would be able to buy a car for $5 that went 100,000 miles per hour and got 1000 miles per gallon.
Of course, it would also crash twice a day, and would often get infected with viruses that allowed someone else to control it. You'd have to replace it every three years because it no longer ran on the latest gasoline, and to legally drive with more than one person in it you'd have to buy a multi-user license. But other than that it would be great.
It was about the price. A recent DVD player doesn't play more time or use less electricity. Of course after mass production an EV will be much cheaper (though not with a factor like with DVD players), the question is IF that will happen somewhere in the future, regarding the economic mess that is in front of us.
Cars are not like electronic equipment. They don't follow Moore's Law.
Ah, but the changes we're making to cars is electronic: power electronics, electric accessories that are now being produced in small volumes, batteries...
Now, those things won't get cheaper in the same way as chips did, but they will get cheaper relatively fast.
Which is exactly what we've been saying would happen and continue to get worse.
Ah, so you're arguing that we're in a largely psychological trap? Not that physics will do us in (as in, a lack of BTU's to power society)?
Well, yes, that could happen. Tainter argues that the Greenland Vikings simply refused to embrace fishing, at the price of starvation. That could happen - we could refuse to transition away from oil. Or, we could suffer like the Japanese, in a long-term stagnation from fear of change. Or, we put ourselves into a vicious deflationary spiral.
The problem: there really isn't much evidence for that. We are moving pretty decisively to EVs, albeit rather later and slower than we should have (better later than never); and, we aren't seeing deflation or stagnation (not like the Japanese, anyway).
I have always said that there are many forces conspiring against us, some psychological, some financial and many, many physical ones. There is no single cause for what is happening.
many, many physical ones.
That's mostly what I try to address. The fact that we really aren't facing resource limits that threaten our economy (assuming, of course, a modestly intelligent response to sub-limits, like peak oil) is an important element to the analysis.
some psychological, some financial
As best I can tell, the primary argument here is that people will panic when they realize that we face critical resource limits. Maybe they would panic (and maybe they wouldn't), but if we don't really face such fundamental resource limits, that changes the analysis...
Until you take into account all the forces at work I think your view of the future is fatally flawed.
(Am I allowed to say that?)
Until you take into account all the forces at work I think your view of the future is fatally flawed.
I agree - we need to take a systems point of view. OTOH, we need to get the components of the analysis right, first. Another part is looking at the interactions and feedbacks in an integrated system. Another part is putting it all together, and actually modeling such a complex system, as economists do. We're still at the first stage - agreeing on the basic components.
Am I allowed to say that?
Uhhmm, yeah. You referred to "your view of the future" - IOW, my model, not me, personally. It might help to depersonalize it further, by saying "that view of the future", but it basically gets it right.
Agreed. So when are you going to stop cherry picking evidence for what's happening now with the financial system and begin to look into the future with a modicum of foresight?
Very few people deny the world is headed for a real mess due to its mountains of debt (and they are usually trying to get reelected). Plus, even the ones who see that there is a problem typically have no clue about the additional problem of the imminent decline of oil.
Yet you have the benefit of the knowledge of both of them and keep attempting to make the argument that somehow we are going to replace a sizable portion of our vehicle fleet so that the problem of oil is greatly lessened or even goes away entirely.
When you start including other systems in your thinking in a realistic way then I for one will stop viewing you as completely blinded by technology and incapable of seeing the whole picture.
Until then, I will continue to think you are making the problem worse rather than better with your grossly flawed view of the world.
Very few people deny the world is headed for a real mess due to its mountains of debt
That depends on your definition of "a real mess". You're defining that as meaning a decline in world GDP of more than 50%, right?
If you're suggesting that there's a consensus on that, I'd have to sharply disagree. The IMF and World Bank, for instance, project continued growth indefinitely. Ratings agencies project that the great majority of national governments will continue to be solvent. The UK, for instance, is still rated AAA.
the ones who deny there is a problem typically have no clue about the imminent decline of oil.
Well, we still disagree on the impact of PO. I see it as a real problem, perhaps reducing world growth rates by as much as 1% per year, with a disproportionate impact on oil importers. The fact that Germany can grow strongly while reducing it's oil consumption tells us something. The fact that the US is currently growing in the face of historically very high oil prices, while not increasing it's net imports, tells us something.
I'm done. See you in another thread.
I actually do hope that you change your world view and start preparing for an extraordinarily difficult future.
P.S. The major institutions will be the last ones to see what's happening for various reasons, just as they were the last to see the GFC and failed completely in predicting it.
hmmm. I hope that you change your world view, as I think it's getting in the way of the best preparations.
The major institutions will be the last ones to see what's happening
Perhaps. But you can't suggest that everyone sees the problem the way you do. They really don't.
Yes, even if 'they' think different (0 or negative growth) they can't say that. Like IEA and EIA cannot say that oilproduction will decline soon.
Nick, we discussed that before and I still think Germany and the U.S. can do that because of the strong growth in, above all, China. If oilproduction declines a few procent yearly it must be felt as a shock for all the countries. If oil-exporters like Iran raise sharply tax on gasoline it could make unstable countries even more unstable.
Germany and the U.S. can do that because of the strong growth in, above all, China.
The evidence against that is that world growth continued even after world oil production flattened out in 2004. It dipped by .9% during the recession, and has resumed growth.
If oilproduction declines a few procent yearly it must be felt as a shock for all the countries.
It will certainly create a head-wind for growth.
If oil-exporters like Iran raise sharply tax on gasoline it could make unstable countries even more unstable.
Iranians are actually pretty sensible. I think a new government would make it a much more stable place.
Nick, growth in China happens with growing oilconsumption there. Since the economy from Germany and the U.S. is connected with the one in China, it could (can) take advantage from China. If China doesn't grow anymore because of 0 or negative growth in oilimports it becomes a different story, as products exports from and to China will diminish. I think you could counter by saying that industries don't use a lot of oil but that's only the production part, not the whole transport chain. Ok, that 'essential' transport is only a fraction of total oil use, but for economic activity everything counts, also the spillage, as dohboi pointed out in one of his comments. So, with less oil, the price of oil will rise until spending of most people goes down so much (because essentials like food become more expensive) that it will damage the economy in the 2008-2009 way.
growth in China happens with growing oilconsumption there. Since the economy from Germany and the U.S. is connected with the one in China, it could (can) take advantage from China.
Han,
That's why I stress that world economic growth has continued despite flat oil production/consumption. That makes it clear that outsourcing of oil consumption is not the reason that economies can grow while reducing oil consumption.
Nick, doesn't Germany's and the U.S. economy partly depend on exports from their products to China ? Suppose there is head-wind now for the world economy, then I could see China as a biker going in front and Germany and the U.S. biking in the wheel of China. Germany and the U.S can only hold on because China is doing most of the work and they can do that because of rising oilconsumption. And one could see India (and Brazil and a few others) doing some of the work in front too.
I confess I don't really understand what you mean.
The question at hand is energy intensity of GDP (EIOG): the ratio of oil to GDP. Some argue that the US and Germany can pretend to decrease their EIOG because they've actually pushed off their really energy intense industries to China.
The answer is to look at the whole world's EIOG -that eliminates boundary problems, like outsourcing. World EIOG has been falling steadily. That makes it clear that EIOG really can decrease, and very sharply, too.
That's not surprising. Any manufacturing engineer will tell you that manufacturing doesn't use that much oil. The big kahuna is really ground transportation. That can move from truck to rail (reducing energy intensity by about 70%), and from diesel rail to electric rail (eliminating oil entirely).
I understand it. I was thinking when China (and India) stop growing that fast then for example Germany will export a lot less machinery, motor vehicles, mechanical and chemical products, iron and steel products, foodstuffs, electronic goods and telecommunication devices to China (and India). Even if EIOG can decrease a lot I think it will be very difficult for China and India to keep on growing that fast or even grow 2-3% yearly when oilproduction start to decline with a few procent yearly.
when China (and India) stop growing that fast then for example Germany will export a lot less machinery...
Yes, at some point markets for hard capital goods will slow down. At that point hard-good export economies will have to concentrate on domestic markets, move to services, and eventually figure out what to with more leisure time.
Even if EIOG can decrease a lot I think it will be very difficult for China and India to keep on growing that fast or even grow 2-3% yearly when oilproduction start to decline with a few procent yearly.
It will make it somewhat harder: they'll have to divert some of their R&D to improving energy efficiency. OTOH, China and India use oil much less efficiently, so there's a lot of room for easy improvements - "low hanging fruit".
They'll have to move to EVs aggressively. OTOH, E-bikes are already out-selling cars 2:1.
Aggressively making/selling EV's works only with force on factories, local governments (installing fast charging and/or battery replacement points) and public.
After commenting I was thinking of memmel's reaction from a few days ago, which seems to make sense:
He also wrote:
Aggressively making/selling EV's works only with force on factories, local governments (installing fast charging and/or battery replacement points) and public.
China is quite willing to mandate things. Heck, their CAFE standards are much higher than ours.
This is false imports esp from China grew by leaps in bounds. We simply exports our oil usage to other countries.
I don't know what to say. I've already addressed this above by discussing the world figures, and the boundary problem. This idea that the US has exported it's oil consumption is mostly just false.
the problem is not peak oil its peak oil plus and infinite growth fiat based economy.
That's what we might call a "straw man". No one, including conventional economists, thinks that the "hard" economy (agriculture,manufacturing, etc which use commodity resources like oil) will expand forever. The OECD's consumption of such things has leveled off: google "mature industry".
Let me guess, you track Santa Claus' trip around the world every Christmas eve on NORAD
http://www.noradsanta.org/en/index.html
Sweet dreams Nick! I wish to hell I could be as cockeyed and gullible an optimist as you seem to be.
I'm not trying to be condescending here I truly wish you the best. Unfortunately I have a real flesh and blood relative, an Economist at that who actually worked for a long time at the IMF. Hint, projecting continued indefinite growth is part of their 'Raison d'être' regardless of whether or not that growth can, will or even should happen...
Let me guess, you track Santa Claus' trip around the world every Christmas eve on NORAD
Andre suggested that there was a consensus. If the IMF and World Bank disagree, then there isn't a consensus.
be as cockeyed and gullible an optimist as you seem to be.
I just follow the evidence. For instance, I see no reason to disagree with Hansen on Climate Change.
Whatever else you do, please, please don't equate economic 'science' with real, actual science. If astronomers failed to predict that a major asteroid was going to hit the planet, and then it did, no one would trust astronomers anymore.
But somehow, after nearly every major economist and economic institution failed to predict an economic asteroid hitting the world economy, people go on trusting economists and their institutions.
When 98% of the top climate scientists agree that AGW is real and a real threat, I have little problem agreeing with them.
When 99% of mainstream economists say that there is no possibility of a major economic downturn in the near future, it is almost a certainty that there will be one.
I didn't. I just said that clearly, there is not a consensus. You agree that the idea that PO will cause TEOTWAWKI is very far from being a mainstream consensus idea, right?
If astronomers failed to predict that a major asteroid was going to hit the planet, and then it did, no one would trust astronomers anymore.
That kind of thing happens all of the time. Major asteroids sail by very closely in astronomical terms - everyone just agrees that we need to devote more resources to spotting and tracking such things.
Heck, we have earthquakes all of the time - no one suggests that geology isn't a real science because it can't predict them.
When 99% of mainstream economists say that there is no possibility of a major economic downturn in the near future, it is almost a certainty that there will be one.
No mainstream economists are saying that. None.
The point: economic predictions are very hard. Human society is very, very complex. Anyone who suggests that they can predict what it will do should back it up with their investment track record. When someone like Buffet or Rainwater talks about the economic future, I listen. When someone like Stoneleigh said two years ago that the economy would plummet and people should sell all of their securities, they demonstrated their lack of ability to make predictions.
In 2009 she said the Dow would crash that year, and reach 1,000 in 2010: instead, the US stock market is up up for the year. She predicted sharp, dramatic price deflation - as of December 2010 all measures of prices showed growth.
Here's a prediction from November 2008: "We appear to be beginning a market rally at the moment, which should lead to precisely this set of trend reversals. Such a rally is only temporary relief however. It may last for a couple of months, but then the decline should resume with a vengeance." http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-29-20... . That was 25 months ago...
Earthquake prediction is a tiny sliver of geology, an area that every geologist would admit is not very advanced. I don't reject all of social science (or even all of economics) just because most of mainstream economics has most of its basic assumptions wrong.
I think the point is that IMF and World bank have to disagree.
What happens with the stockmarkets if they are pessimistic for some reason. If they understand the Peak oil problem they wouldn't spread it.
Maybe. But, clearly, there is not a consensus.
You agree that the idea that PO will cause TEOTWAWKI is very far from being a mainstream consensus idea, right?
I agree, but first of all PO is something that not a lot of people understand, in contrary to the meaning of the words 'global warming' or 'climate change'. So without understanding what PO means you get nowhere. If people think that PO means 'end of oil' they stop listening and thinking.
I agree
Great. ok, on to other questions:
first of all PO is something that not a lot of people understand
Actually, I think a lot of people understand PO. I've seen articles in all of the major media, like The Economist. Heck, it was one of the causes of the Iraq war: Cheney clearly understood it. I think most economists understand it.
Nick, I meant the general public don't now about or understand PO.
If Cheney let the U.S. go to war in Iraq then he clearly sees a threat in PO, maybe he even sees 'the end of the world as we know it'. Probably a few journalists, like Monbiot, see it or think seriously about that possibility. I think it is possible that a lot of MSM journalists understand PO but don't think hard enough about the possible consequences, taken into account also the denial about PO for many years to come making a difficult situation worse.
the general public don't now about or understand PO.
Well, I'm not really concerned with the general public, or journalists. I'm thinking about "experts" - economists, public policy makers, etc. This discussion began when Andre above said: "when are you going to stop cherry picking evidence for what's happening now with the financial system and begin to look into the future with a modicum of foresight? Very few people deny the world is headed for a real mess due to its mountains of debt (and they are usually trying to get reelected)."
He seemed to be arguing that this was evidence that the "the world is headed for a real mess ".
I replied that I disagreed with that idea. In fact, economists know about PO, and yet they don't agree.
Then you don't agree with Don's comment a few days ago:
What counts then must be not only knowing about PO, but also understanding its consequences regarding the inadequate actions of politicians.
you don't agree with Don's comment a few days ago
Yes, I mostly disagree with Don's perspective on PO. Don is a good economist, which makes his approach to PO really puzzling.
I agree with him that we're not moving quickly enough away from oil and FFs. "the power of the market to adapt to change and to find or develop good substitutes for increasingly scarce natural resources." is very powerful, but it does need guidance from government.
OTOH, he just assumes that there are no good substitutes for oil, and that PO will cause severe economic decline. I've asked him several times for evidence for this idea, and he hasn't provided any. Instead, he pointed to Greer's ideas, which, sadly, are highly unrealistic (Greer is a druid/popular writer, not an engineer).
The fact is that governments around the world are acting to deal with PO, albeit not as quickly as would be ideal. Look at the push for EVs - EVs are developing reasonably quickly. Every car maker is coming out with one (or EREVs or PHEVs), and they're really being serious about it.
Clearly there are more factors or variables than engineering that play a role in the post peak world. I think Greer also considered Peak gas (and Peak coal). Like with climate change it is difficult to predict what will happen and that is why there are so many different opinions.
First of all the market must get the right signals, which is difficult as long as the EIA and IEA are over-optimistic about future oilproduction. High oilprices for a few months is not enough, as proven by the fact that for example SUV sales have risen again.
Clearly there are more factors or variables than engineering that play a role in the post peak world.
Well, I agree with Don that the physics/engineering questions have to be answered first, and answered right. You can't just dismiss EVs and renewable power as not being adequate, with no basis and no analysis.
I think Greer also considered Peak gas (and Peak coal).
But not in any kind of detail.
Like with climate change it is difficult to predict what will happen and that is why there are so many different opinions.
I agree. But, some things can be figured out.
First of all the market must get the right signals
Absolutely. I agree that the markets aren't getting enough guidance, and not moving as fast as they should. But, they are moving.
You see, EVs are already competitive at $80 oil. The transition is already happening, just not fast enough.
How much of the 17M will be ICE cars ?
Nick, in one of the above comments dohboi writes a lot of things that
you see as solutions (though I agree with aangel and memmel that peak oil (the transportation sector) is not the only problem), but then he comments:
Car factories will face big problems if there are far less buyers than today. EREV's and PHEV's don't have to be only a little more expensive than most ICE's but cheaper I guess and even then those factories have little to expect from those who are unemployed.
How much of the 17M will be ICE cars ?
I was oversimplifying a little. Of course, we'd have to build up to that point. My point: cars turnover pretty quickly, faster than is commonly understood.
Car factories will face big problems if there are far less buyers than today.
Sure - if the economy does badly, then investment in transitional tech will be harder. Of course, that's in part a public policy choice: if we choose to invest more in such things, there's an investment multiplier that will help the economy.
Yes. Here's a Leaf price comparison:
First, you have to decide whether you're looking at out of pocket costs, or trying to look at underlying "real" costs. If we look at market prices paid by buyers, we have to include the credit. If we want to look at actual system-wide costs, we have to include external costs like pollution, supply security, etc. For our purposes today, let's look at out of pocket prices.
2nd, you have to decide what vehicle to compare it to. Here's what Wired magazine says:
"A nicely appointed five-door, five-passenger compact—equivalent to, say, a Honda Civic or Toyota Corolla. But it’s electric, so it’s fairly torquey—the measly 107-horsepower motor hustles like it’s got double the ponies up to 40 mph. The ride is soft but surprisingly sure-footed thanks to a 600-pound air-cooled battery under the floorboard."
http://www.wired.com/magazine/2010/09/ff_electriccars/all/1
So, a comparable vehicle would be a Corolla at minimum. Other useful analyses might be: comparison with a Prius, which Consumer Reports tells us is cost competitive with a comparable car; and overall affordability, which might need a comparison with the average US vehicle.
3rd, you have to do your cost calculations.
Now, the average driver drives about 13,000 miles per year in the US. Total Vehicle Miles Traveled is 2,982,532,000 http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.cfm and total number of vehicles is 238,314,692 http://www.bts.gov/publications/national_transportation_statistics/html/... for an average of 12,515 miles per year. The current price is before taxes is $2.29 - with taxes, that's about $2.80 http://tonto.eia.doe.gov/dnav/pet/PET_PRI_ALLMG_A_EPM0_PTC_CPGAL_A.htm . The Corolla gets about 30 MPG per http://www.toyota.com/corolla/trims-prices.html , so the Corolla costs about $1,168 per year for fuel.
The Leaf should use about .25kWh per mile, and night time power should cost about $.055/kWh ( The average retail rate for power in the US is $.11 (the coasts have more expensive power), and night time rates should be about 50% of that (often it is much lower, occasionally wholesale rates even go negative)), for an annual cost of $172.
Other factors: less maintenance, due to a much simpler drive train and the elimination of many support systems, fluids, belts, etc, etc. An important example: brake costs will be much lower, due to regenerative braking.
Insurance costs? Insurance costs are based on many things, including theft rates, collision rates, repair costs, anti-theft system and owner behavior. A taxi owner I just interviewed told me that a Prius would cost him 40% more than the usual Crown Vic-type workhorse, but that insurance would cost no more. BTW, the extra cost of the Prius is paid for in 10 months by the fuel savings... The Prius might be a guide: anyone seen a good source?
A Corolla, financed over 10 years, would cost $23,991 ($16,850 XLE, 7% interest) + 11,680 gas costs for $35,671.
A Leaf, financed over 10 years, would cost $35,993 ($32,780 minus $7,500 rebate, 7% interest) + 1,720 gas costs for $35,714.
So, a conservative comparison gives out of pocket costs which are almost identical. Other comparisons would look even better: including state rebates (CA-$5K, TN-$2K, GA-$5k?); comparing to a more expensive Corolla; to the average US vehicle; to a Prius; or using real costs (eliminating the rebate and including the external cost of oil).
In countries like Israel or Denmark, the Leaf will be a 1st car, supported by Better Place. OTOH, I don't expect Better Place to have a big impact on the US soon. On the 3rd hand, it's worth noting that: they are trying, in places like San Francisco; many places (e.g., Tennessee!) are installing charging stations on critical paths, and that a relatively small number can make a disproportionate difference; and the Leaf has a clever built-in app that finds efficient routes and charging stations.
Except those tax rebates are going to sunset.
And you didn't include the cost of replacing the battery on the EV.
And if I can afford a $30k with a <100mile range I'm not too concerned about gas costs.
Those are just three things off the top of my head. I agree with Rocky, this doesn't pass the sniff test.
Except those tax rebates are going to sunset.
And by then, economies of scale will be kicking in.
you didn't include the cost of replacing the battery on the EV.
No, that would be for the next 10 year cost cycle.
if I can afford a $30k with a <100mile range I'm not too concerned about gas costs.
The average care sells for 28.5K. If you save in the range of $1,500 per year, you can justify spending a little more.
OTOH, I agree - I think most people will be interested in EREVs and PHEVs over pure EVs. Pure EVs are a relatively small niche market, especially with $3 gas.
And by then, economies of scale will be kicking in.
Not at the volumes currently predicted.
No, that would be for the next 10 year cost cycle.
Not at all. It seems it'll be very unlikely for a Leaf Battery to go that long. Even Nissan is predicting a 5-10 year battery lifespan. So lets say you need a new battery after 7.5 years. It'll cost you $9k (half the current cost of $18k, I'm feeling generous). That's $1200/year to for a battery.
The average care sells for 28.5K. If you save in the range of $1,500 per year, you can justify spending a little more.
Only if you ignore battery costs. But lets say you do, cause you did. $30k+ (or $40k+ for the Volt) is getting into the luxury car range or what those big SUVs and Pickups cost. Obviously gas costs are not dissuading people away from those vehicles.
But lets say I'm a frugal person. I'm going to buy a much cheaper Corolla if it takes me 10+ years to make up for the higher costs of a Leaf.
I think most people will be interested in EREVs and PHEVs over pure EVs.
At $40k+ for a Volt it'll take 15-20 years to make up the price difference. Sorry, its a no sale.
Not at the volumes currently predicted
What predictions have you seen? Both GM and Nissan are talking about 100's of thousands of EVs/year in several years.
It'll cost you $9k (half the current cost of $18k, I'm feeling generous).
Nissan says the current cost is $10k so 50% is $5k.
That's $1200/year to for a battery.
Which gas savings would pay for, even at $3 per gallon. At $4, the Leaf wins easily. Not to mention the lower maintenance costs: perhaps $500 per year.
I'm going to buy a much cheaper Corolla if it takes me 10+ years to make up for the higher costs of a Leaf.
Sure. I agree: in current conditions, EV sales won't take over the ICE market any time soon. OTOH, I'd guess you're thinking that "current conditions" won't last that long, right??
At $40k+ for a Volt
Except that it won't be for long. Remember the price of DVD players 10 years ago?
An EREV like the Volt won't cost any more than a plugin Prius with a larger battery. A Prius goes for about $25k, so that might put the Volt in the range of $30k. That's maybe $2k more than the average new US car. $1,500 in annual savings over the average new US car makes it mighty cost effective: in the range of the smallest of vehicles.
Now, even if an EREV were $500 per year more expensive than a comparable ICE vehicle, is that enough to cause TEOTWAWKI? Not really. Perhaps people might have to keep their cars a little longer before trading them in, and used cars wouldn't be thrown away quite so early in their lifecycle.
And, of course, if EREVs weren't competitive at $3 gas, they would be at $4 gas.
Now you are double counting the cost of gas savings for both the initial price differential and the cost of the battery.
Your numbers are bad. You need to try again.
You were looking at the cost at point of battery replacement. At that point, the overall cost of the car is a sunk cost.
Basically, an EV is cheaper to build and maintain than an ICE vehicle. The only thing that makes it a contest at all is 1) the cost of the battery, and 2) economies of scale, which currently favor ICE vehicles.
If you figure in external costs, EVs (and EREV/PHEVs) win easily. If you figure rising oil costs and falling battery costs, same thing.
And, even if we don't agree on those points, surely we can agree that the premium for an EV would be pretty small, over it's lifetime.
Do you really expect anyone to take you seriously anymore?
You try to claim a Leaf is cost competitive with a Corolla. You do this by showing the gas savings over 10 years offset the higher initial cost minus the tax rebate.
Fine, but you forgot the battery costs.
So you then claim the battery is paid for by the gas savings.
Not only does this not pass the sniff test, it reeks of bullshiat.
Give it a rest. Nobody is that stupid.
you forgot the battery costs.
No, that's in the initial purchase price.
you then claim the battery is paid for by the gas savings.
Conceptually, yeah. Of course, we got confused, because the discussion moved to what happens 7.5 years out, when you have to replace the battery. Remember, the initial discussion was over the first 7.5-10 years of the vehicle's life. At that point, in my original analysis we depreciated the vehicle over the first 10 years. At that point, you have a free car, and your costs are maintenance (including the battery replacement) and fuel.
Give it a rest. Nobody is that stupid.
Go back over the discussion - it got a bit confusing, but if you follow it through, it will make more sense.
You left out the cost of the replacement battery after 7.5 years. That's $1200/year in cost that accrue over the initial period.
Or if you want to not count the battery cost in that period you now have to drive the car another 10 years to pay off the replacement battery.
Look, however you want to run the numbers the bottom line is its going to take a lot more than the 10 years you claim for the Leaf to be cost competitive with Corolla.
Your disassembling is doing you no service. This is exactly why people say your numbers don't pass the sniff test.
You left out the cost of the replacement battery after 7.5 years. That's $1200/year in cost that accrue over the initial period.
No, that applies to the later period. We've already cost justified the car. It's fully depreciated in the first cycle.
Now, if we want to look at a longer life for the car, that's a good idea. I tried to simplify the initial analysis by using a 10 year life, instead of including a present value adjustment for the stream of annual costs.
Ok, let's use an annual financial model, and use a 21 year life for the vehicle (which is conservative). We'll assume 33k for the initial price, $250 per year in maintenance savings, and $1,000 per year in fuel savings.
Now, $33k amortized over 21 years is about $3,000 per year (at 7%).
Here are the payments:
Payment Op Savings Battery
1 $3,003.55 -1250
2 $3,003.55 -1250
3 $3,003.55 -1250
4 $3,003.55 -1250
5 $3,003.55 -1250
6 $3,003.55 -1250
7 $3,003.55 -1250 ($5,000)
8 $3,003.55 -1250
9 $3,003.55 -1250
10 $3,003.55 -1250
11 $3,003.55 -1250
12 $3,003.55 -1250
13 $3,003.55 -1250
14 $3,003.55 -1250 ($5,000)
15 $3,003.55 -1250
16 $3,003.55 -1250
17 $3,003.55 -1250
18 $3,003.55 -1250
19 $3,003.55 -1250
20 $3,003.55 -1250
21 $3,003.55 -1250
$63,074.51 -26250 -10000
Here are the net annual costs:
Net
1 1,754
2 1,754
3 1,754
4 1,754
5 1,754
6 1,754
7 (3,246)
8 1,754
9 1,754
10 1,754
11 1,754
12 1,754
13 1,754
14 (3,246)
15 1,754
16 1,754
17 1,754
18 1,754
19 1,754
20 1,754
21 1,754
Total 26,825
Here are the payments for a $18k Corolla:
1 $1,638.30
2 $1,638.30
3 $1,638.30
4 $1,638.30
5 $1,638.30
6 $1,638.30
7 $1,638.30
8 $1,638.30
9 $1,638.30
10 $1,638.30
11 $1,638.30
12 $1,638.30
13 $1,638.30
14 $1,638.30
15 $1,638.30
16 $1,638.30
17 $1,638.30
18 $1,638.30
19 $1,638.30
20 $1,638.30
21 $1,638.30
Total 34,404
So, we save $7,580 over the life of the vehicle.
Does that make sense? I could do it over 14 years, if that would help. Or, I could turn the stream of annual savings into a present value lump sum, and do the same for the future battery costs. Whatever helps.
Did you just finance a car over 20 years?
I did a financial analysis over 21 years (21 years makes it easy to divide into 3 equal parts). If you want to do a valid analysis, you have to spread the costs properly.
Of course, most car loans are much shorter than the life of the car. That doesn't make an analysis that just figures in car payments valid. You have to include depreciation.
This simplifies things. Sure, I could make it more complicated: I could separate financing costs and depreciation. Hey, if that's the only way that it would make sense to you, just let me know.
And you think its normal for someone to pay $34k for a Corolla?
???
I'm assuming $18k for a Corolla.
$1,638/year x 21years = $34,398
Ah, I see your concern. Yes, spreading payments over a long time does increase your interest payments. In effect, it captures the value of time.
Well, perhaps separating the two will help:
Leaf annual costs:
Interest
1 $2,310.00
2 $1,848.00
3 $1,386.00
4 $924.00
5 $462.00
6 0
7 0
8 0
9 0
10 0
11 0
12 0
13 0
14 0
15 0
16 0
17 0
18 0
19 0
20 0
21 0
$6,930
Depreciation Op Savings Battery
1 1,571 -1250
2 1,571 -1250
3 1,571 -1250
4 1,571 -1250
5 1,571 -1250
6 1,571 -1250
7 1,571 -1250 $5,000
8 1,571 -1250
9 1,571 -1250
10 1,571 -1250
11 1,571 -1250
12 1,571 -1250
13 1,571 -1250
14 1,571 -1250 $5,000
15 1,571 -1250
16 1,571 -1250
17 1,571 -1250
18 1,571 -1250
19 1,571 -1250
20 1,571 -1250
21 1,571 -1250
$33,000 ($26,250) $10,000
Leaf total costs:
Net
1 2,631
2 2,169
3 1,707
4 1,245
5 783
6 321
7 5,321
8 321
9 321
10 321
11 321
12 321
13 321
14 5,321
15 321
16 321
17 321
18 321
19 321
20 321
21 321
$23,680
Corolla costs
Interest Depreciation Total
1 2,310 857 3,167
2 1,848 857 2,705
3 1,386 857 2,243
4 924 857 1,781
5 462 857 1,319
6 0 857 857
7 0 857 857
8 0 857 857
9 0 857 857
10 0 857 857
11 0 857 857
12 0 857 857
13 0 857 857
14 0 857 857
15 0 857 857
16 0 857 857
17 0 857 857
18 0 857 857
19 0 857 857
20 0 857 857
21 0 857 857
$24,930
And, this was a good exercise, as we picked up a mistake in the earlier tables.
Savings: $1,250
Your battery costs are way off.
http://green.autoblog.com/2010/05/15/nissan-leaf-profitable-
by-year-three-battery-cost-closer-to-18/
Your interest is wrong
http://autos.msn.com/loancalc/newloan.aspx?calc=monthly&dp=2000&trm=3&in...
And some other minor quibbles. But the battery costs and interest really warp the numbers here.
But the bottom line is you have to keep replacing the batteries every 7 years, if not you have a worthless hulk.
For example, by your numbers above, if I don't ever replace the battery and let the car go at 7 years I'll lose $22k worth of value out of the car. So I have to replace the battery.
And you don't catch up to the corolla for 20 years. This was all I was trying to say earlier.
edit: and as you are always so fond of pointing out, most of a vehicles miles are in the first 5 years of its life. Your numbers are assuming people are using a 20 year old car the same as a brand new car. So with that in mind, I doubt you'd ever catch up with the price of a Corolla.
Your battery costs are way off.
I think the WSJ reporter got it wrong (sadly, standards have been slipping under Rupert Murdoch, as feared, and the WSJ has been getting more conservative - I no longer trust them on things like this). Nissan's battery subsidiary has said explicitly that the batter costs about $10k (I'll try to find the link). That's consistent with GM's supplier, which has quoted $350/kWh. http://gm-volt.com/2009/10/02/compact-power-ceo-on-the-cost-of-lithium-i...
Heck, you can get li-ion batteries online for $350/kWh. here are some retail costs: http://www.evcomponents.com/SearchResults.asp?Cat=34
We see that current Lithium cells are about $350/kWh for individual purchases. We can expect that an OEM can get them for around 50% of that (no more than $200/kWh), which places GM's wholesale cost for the these batteries in the neighborhood of $3,200. GM's are probably higher quality. OTOH, they're at much higher volumes....
Your interest is wrong
Lower interest costs would help the Leaf slightly.
But the bottom line is you have to keep replacing the batteries every 7 years
Probably not. Nissan isn't saying it will last the length of the car, but they obviously hoping it will. Remember, the common standard for end of life is 80% battery capacity. A lot of people will be perfectly happy with that much.
you don't catch up to the corolla for 20 years
No, that value will be inherent in the car. If you don't keep it for 20 years, you'll see it in the resale value.
most of a vehicles miles are in the first 5 years of its life.
That just front loads the savings. That helps the EV case. OTOH, I think we can expect that EVs will get more use than the average ICE, and stay in use far longer.
Now, what if gas goes to $6? You seem to be taking a rather BAU approach here???
No, that value will be inherent in the car. If you don't keep it for 20 years, you'll see it in the resale value.
Nick, I'm only going by the numbers you wrote above (your battery costs etc). What I wrote is according to your analysis. The Leaf won't make up the extra costs for 20 years.
That just front loads the savings.
No, just the opposite, it cuts off the long tail.
The Leaf won't make up the extra costs for 20 years.
Resale values account for value late in life. EVs will have more value late in life.
, it cuts off the long tail.
It doesn't cut it off, it moves it up front. The lifetime mileage is front-loaded. OTOH, EVs will probably have higher mileage both up front and later.
Resale values account for value late in life. EVs will have more value late in life
Look at the numbers you posted above. They have to. They are still depreciating. They still haven't caught up to the Corolla yet. You can transfer that negative value by selling the car but then the next guy just inherits it. It doesn't go away. How can it, you are still paying off the last battery replacement.
It doesn't cut it off, it moves it up front. The lifetime mileage is front-loaded. OTOH, EVs will probably have higher mileage both up front and later.
Bogus. You are not going to front load the milage on an EV. You can't. You're limited to <100 miles a charge. Its a commuter car.
I assumed flat depreciation over 21 years. Actually, EVs will probably have substantial value even at that point. At that point you have a vehicle with almost no maintenance, almost no fuel costs, and a battery cost of roughly $725 per year. That's an incredibly good deal. If gas costs $6, that EV will be worth quite a bit.
Isn't it pretty clear that an EV is perfectly affordable? That's the bottom line. No one will have to abandon their home because they can't afford to commute. Even if battery costs don't decline, their monthly travel costs might go up by $50. Not a big deal.
You are not going to front load the milage on an EV. You can't. You're limited to <100 miles a charge. Its a commuter car.
The average daily mileage in the US is about 35 miles per day. So, you can easily drive 2x the average, and it will make the most sense for people who do drive that much. Further, you can drive 4x as much as the average by charging once per day, say at work during the day.
I suspect some fleets will use it that way. Also, Better Place is planning to install a network of battery changing stations to allow unlimited mileage.
You might like this article:
http://gm-volt.com/2010/12/22/calcars-plug-in-campaign-victory-after-8-y...
Nick, I'll leave all the dissembling to you.
My point was, and still is the numbers you originally presented are bogus. I think you have quite conclusively proven it takes close to 20 years (if ever) for a Leaf to reach cost equality to a Corolla.
The average daily mileage in the US is about 35 miles per day.
Thank you for proving my point. A Leaf's milage will be no more front loaded then a Corolla's. Subsequently a Leaf will never have a long enough tail to pay off the higher upfront costs.
you have quite conclusively proven it takes close to 20 years (if ever) for a Leaf to reach cost equality
No, I've simply shown a lifetime cost analysis. The value of the car is there at the beginning.
I don't understand. You're concerned about Peak Oil, right? You think that oil prices are likely to rise, or oil become scarce in some way? Why wouldn't you think that a car that is cost competitive at $3 oil was a good idea? It's costs will stay the same, as the Corolla becomes more expensive.
If oil becomes more expensive, EVs will not only stop depreciating, they will actually become more valuable.
A Leaf's milage will be no more front loaded then a Corolla's.
Good point: all cars tend to be driven more than average at the beginning: that will frontload the EVs savings. Further, high-mileage drivers will be the ones to buy EVs.
These are good points: I've been far too conservative in my analysis. I should have used higher mileage for both cars, and lower depreciation for the Leaf.
Just curious, Nick--Do you own an EV?
No, I live in a dense city, and do most of my travel on electric trains. Definitely the best way to travel.
I own an ICE, but I only drive it about 2,000 miles per year. Plus, it's relatively new: only 7 years old - I tend to drive cars 20-25 years..
I do own an electric scooter, though I use it much less since I had a fall.
I expect to use EVs and PHEVs through car-sharing services like zipcar.com - I think electric trains and car-sharing are the way to go, where possible.
It sounds like our travel patterns are similar, except I mostly walk and bike.
But I do have an EV. I got it for my wife.
I am obviously not anti-EV. But may I suggest that you be open to the possibility that someone who has actually put their money where their mouth is may have a perspective worth considering?
may I suggest that you be open to the possibility that someone who has actually put their money where their mouth is may have a perspective worth considering?
A couple of thoughts:
I've put my money where my mouth is in a lot of ways, like insulating my home to the point that the heat doesn't go on until the temps outside are below freezing; and living in a high-cost urban area with electric trains.
and,
Yes, I'm very open to your perspective. I think very carefully about the Posts and comments I read. Heck, that's a big part of why I'm here, to learn from others.
Just because I disagree with people doesn't mean I haven't considered their ideas. I have, and I'm responding to them.
No, I've simply shown a lifetime cost analysis. The value of the car is there at the beginning.
The value of the car might be there, but it takes 20 years of driving it to unlock that value. That is if you ever drive it that heavily for that long. And you've made some convincing arguments in the past that that doesn't happen.
The value of the car might be there, but it takes 20 years of driving it to unlock that value.
That's true for all cars. And, again, that's a BAU approach. You don't expect BAU, right?
That is if you ever drive it that heavily for that long.
Yes, the average is 13k per year, but new cars drive perhaps 16k, and olders ones drive less than the average.
You're right - I should modify my analysis. I will when I get the chance.
That's true for all cars
No, its only true for EVs since you get the higher initial costs back only by driving them without paying for gas.
And, again, that's a BAU approach. You don't expect BAU, right?
I'm only going by the numbers you presented here. If you have non-BAU numbers and want to make a case with them, then do so.
its only true for EVs
You buy a car expecting it to last for it's lifetime. You would understand that your car would be a much lesser value if it lasted a much shorter time.
If you have non-BAU numbers and want to make a case with them, then do so.
You really want to assume that oil prices will never go up? Really? That's there no need to prepare for PO??
If I have time, I'll redo the analysis...
You buy a car expecting it to last for it's lifetime. You would understand that your car would be a much lesser value if it lasted a much shorter time.
The whole point of this exercise was to compare a Corolla to a Leaf. If you stop driving your Leaf before 20 years you would have never achieved cost equivalence with the Corolla. After all, until you hit the 20 year, 300k mile mark you are still paying off (via gas savings) that last battery replacement. My ICE will have depreciated to zero long before that.
You really want to assume that oil prices will never go up? Really? That's there no need to prepare for PO??
Like I said, I'm going off of your numbers. If you think oil prices are going to go up, and that is going to make a significant difference with your analysis then you need to make that case.
If I have time, I'll redo the analysis...
Don't forget, the more you drive the Leaf, the more often you are going to have to replace those batteries.
If you stop driving your Leaf before 20 years you would have never achieved cost equivalence with the Corolla.
Well, you would, because that value would still be there in the resale value of the car.
My ICE will have depreciated to zero long before that.
True. We throw away ICE cars long before they truly die. EV's won't be that way for quite a while, I'd guess.
Like I said, I'm going off of your numbers.
Aren't you being a bit stubborn? Oh well, I just have to redo the numbers.
I'll put the new analysis at the bottom, where there's width enough to see it.
the more you drive the Leaf, the more often you are going to have to replace those batteries.
Good point: that's already built in. That's part of why my analysis is too conservative, and needs to be redone. A BAU kind've driving pattern of 35 miles per day would allow the battery to last the life of the car. That may be part of what Nissan is relying on.
Ok, go to the bottom comment...
Well, you would, because that value would still be there in the resale value of the car.
No, that would be still driving the car. You are just transferring the negative value (in relation to the corolla) to someone else. Someone else will have to drive the car and continue to get the gas savings out of it.
When I say stop driving, I mean junk it. Maybe you wreck it. Maybe you stop buying replacement batteries. Whatever the reason you, or anybody else, are no longer driving the car.
Somebody has to drive the car for 20 years/300k miles before the Leaf catches up the the Corolla in terms of total cost of ownership.
A BAU kind've driving pattern of 35 miles per day would allow the battery to last the life of the car.
Nissan give an upper limit to the lifespan of the battery, 10 years. If the average daily milage is, as you say, 35 miles a day than 35 miles a day will get you an average 7.5 years out of your battery. Less than that will get you closer to the 10 year mark, more than that will get you closer to the 5 year mark. If you are going to front load the milage in your analysis you'll have to assume a battery life closer to the 5 year mark during those heavy driving periods.
However I have to object with that approach. The Leaf is a commuter vehicle. Its intended to do a 35 mile commute 5 days a week. (Only a very small segment of the market will drive it more, ie specialized fleet applications.) A 35 mile commute, five days a week for 50 weeks a year gives you roughly 9k miles a year. Other driving, outside of that commute, will most probably be done by a secondary ICE vehicle. I don't forsee the average consumer front loading milage on the Leaf. I so see however the long tail being cut short for all sorts of reasons. 20 year old cars are typically garage queens.
dupe
Someone else will have to drive the car and continue to get the gas savings out of it.
See the new analysis. You'll see that the Leaf pays for itself well before 20 years, and then "it's gravy".
Nissan give an upper limit to the lifespan of the battery, 10 years. If the average daily milage is, as you say, 35 miles a day than 35 miles a day will get you an average 7.5 years out of your battery.
There's no reason to think Nissan is thinking that way. Nissan knows that many EV buyers won't be average. I think they're being more conservative than that.
The Leaf is a commuter vehicle. Its intended to do a 35 mile commute 5 days a week.
Who ever said that? In any household it will be the preferred vehicle to drive, because of it's low cost and low emissions. It's the ICE cars in the house that will be gathering dust and awaiting the driving vacation.
Remember, that 35 miles per day includes a lot of drivers like me, who only drive 5 miles per day. There are a lot of drivers who drive 70 miles per day.
I recommend that you save your mental energy, Nick, and deploy it where it can make a difference.
Given that 90% of vehicles are purchased with credit and we saw how difficult it was to obtain vehicle credit in 2009, not many of these vehicles will be sold even if everything you say made EVs the most wonderful machines ever made by man. No financing, no sales.
It's really that simple.
I recommend that you save your mental energy, Nick, and deploy it where it can make a difference.
Oh, I'm going to get through to you a little. And, others can use realistic info. Plus, I enjoy thinking these things through. It's only when you have a good debate with sharp people who are really advocating in the other direction that you really think things through.
we saw how difficult it was to obtain vehicle credit in 2009
Yes, bank panics make credit difficult. You'll notice things have eased up since then.
You're too funny, Nick.
The big recurring cost for EV's is the battery. On the other hand, car bodies can last a very long time, perhaps a lifetime in a climate with no road salt. Electric motors are similarly long lasting and a lot of expensive mechanical maintenance is done away with, like starters, radiators, fuel pumps and injectors, spark plugs, water pumps and hoses, timing belts, valve cover gaskets and perhaps automatic transmissions. My guess is that one could buy an EV and never have to buy another car. The lifetime cost of the EV would then definitely be lower.
Also, basing the economics on today's oil price ignores rising oil prices and the accelerated depreciation of internal combustion vehicles, especially under heavy new taxes or fuel rationing.
Oh, I doubt it. They will make sure it and its parts break so you keep feeding them spending tokens.
NAOM
Believe it or not if things last long enough I'll probably buy and EV.
But it would be second hand with a shot battery pack for 500 bucks. Spend 2-3k and I have a good car for around town.
Obviously I expect a steep discount in the used EV market if it makes it.
It the front wheel drive CV joint on steroids.
I'm planning on buying one, too.
I just have no illusions that there are going to be millions and millions of them on the road (unless they are in the form of electric bicycles, scooters and motorcycles). We may get millions of electric golf carts, I suppose. But highway capable electric cars are going to be a rare thing in relative terms.
I keep getting the sense that your substitution argument is perhaps overly simplistic in that the degree FF tasks and utility is replaced insitu on a case by case basis?
trucks are replaced by EV trucks etc etc... I am not saying we can not get by on a EV centric economy but I suspect organizational restructuring mandated by new technologies may be more complicated than you portray(i am not a doomer).
especially when dealing with price mechanisms. price readjustments from "here" to "there" are not simple if the present paradigm is optimised around cheap oil... the supply chain is already optimised to such a degree that complicating and recessionary forces WE DO NOT REALLY UNDERSTAND kick in when you meddle with the price. the oil accordion being a fairly obvious effect.
the substitution as opposed to the infrastructure investment price is a case in point.
when "they" built the railways where they substituting wagons? Answer is more no than yes... they invested in a new way of living and a new economy. they were not replacing a failing system that was running out of horses and wagon wheels? the thinking they had was to embrace a totally new progressive leap not some invisible move spurred on by the market.
concerted political power was brought to bear on creating the industrial age's infrastructure through social planning.. in a way this great age of industrial capitalists/entrepreneurs building a new world is a myth because the reality was a social enterprise.
Now are you talking about some shift that is not perceived as a grand social enterprise but as a gradual substitution almost transparent in execution?
heres the problem the base cost of this new infrastructure (not its on paper feasibility) is an ask because the low density energy sources just don't like moving into a more concentrated domain... which is what one to one substitution by task demands.. everybody wants a EV that is as good as the old ICE one. range and refueling still being real sore points. They do not want to cahnge the world they want to sustain the one they are in. an unadventurous and static mindset.
the fundamental underpinnings of the situation has no real parallel in history and I think are stymied by a very strange mindset that views the problem as one of substitution to maintain a lifestyle rather than a more GRAND VISION of transforming society. Which is odd given that many market fundamentalists portray themselves as torch bearers of the golden age of capitalism where heroic barons built a new world. The austrian school of economics is not really some traditional view of how market forces created the modern world because that history of individualistic automatic market forces never really happened.
what happened was actors, many in private enterprise but in concert with those in public life imposed visionary thinking onto the world. the closest modern parallel is the "Pickens plan" ihe sets out his store with not just market forces but also a manifesto for a form of social union with politics in support of that plan. Now whether the plan is any good or not is not my point... thats the interesting thing about all this. The almost pedestrian lack of ambition by the barons of new age capitalism. They seem to express no faith in anyones ability to actively change the world ...not even there own!
now no doubt you may respond you do not identify with the austrian school or the current paradigm but that is not the point. the point is that grand redesigns of our economy are just that GRAND and this requires coherent vision that embraces political thought. many advocates of the market are suppressing new ideas without being aware of what they are doing. its a paradox.. you can not impose some new political vision on the world that could change society and in so the way we access energy because it implies mandated change at a societal level... yet hold a view this change will occur automatically somehow...
stepping back its a very odd state of affairs with some of the most wealthy individuals in the world with real power to transform society are completely unwilling to use that power in anyway more than a narrow manipulation of market forces to increase their wealth.. it is not the mindset of the great industrialists at all. The lack of ambition is STARTLING.
think of our best examples(Bill Gates etc) ... LAME. talk about peripheral.
I agree - we're not moving away from oil in the organized way that we should.
It's a real failure of vision.
Yet the debate is often polarized on what i would call technical grounds?
AND note a visionary move may to be to somewhere that has quite a different take on consumption and utility.
which low density energy sources may favour.
the counter argument to your detractors is not technical IMO but political. ..if not this way then how?
How do you[they] see the economy being reorganized to fit your[their] world view?
I think the actual debate doesn't make sense because a lot of posting isn't actually in favour of anything other than world view security. All those arguing on either side are in reality creating a static debate that never goes anywhere.
OK Ron, listen to your own source. The key point comes from 4:57 to about 5:09. I get this as:
"You can't, in fact, get growth without increased fossil fuel use, under our system, because as I said, that's exactly what we've been doing." [Emphases mine.]
So you're basically saying that there's no other way to do it? But Mr. Douthwaite says "under our system", and around 1:51 in the same video, he talks about the other system we should be moving to:
"We ought to be using what fossil energy is remaining to us to look at the way we do things and see how we can produce a society that runs on very, very much less, and ultimately zero, fossil fuel."
Notice that he's talking about all fossil fuels, not just oil, and he seems to think we should be planning to have a society that runs on zero fossil fuel.
So the one economist you found, whom I agree with BTW, who says this will be a problem, isn't really saying much different from what other economists would say. If it's a problem, we'll need to move to something else. What he doesn't say, in the whole 7 minute video, is that growth requires an increasing oil supply. I repeat: "peak oil presents a paradox: the growth of the economy requires an increasing oil supply" - No, it doesn't.
i happen to have attended the recent 2010 Conference on Sustainability: Energy, Economy & Environment which David Korowicz of and Mr. Douthwaite of FEASTA spoke at. According to their comments in presentations and informal conversations, your assumptions of what Mr. Douthwaite says are not supported. FEASTA is very much among those saying all lights are flashing red. He is not implymg substitution, but transition to non-fossil fuels.
I repeat: "peak oil presents a paradox: the growth of the economy requires an increasing oil supply" - No, it doesn't.
Yes, it does, as long as renewables cannot 1. provide the jules necessary and 2. cannot provide all the services of the very fungible oil. But, really, this is all academic. A sustainable civilization must use much less energy in order to keep the ecological footprint down and the climate stable.
We really have no choice at present.
Energy*efficiency drives industry.
...((Energy*efficiency)*sales), drives industry.
I don't this this is quite right. It turns out the correct relationship is that world energy consumption is proportional to the cumulative world wealth, as proxied by the integral over time of GDP. Thus world wealth has increased 1.82%/yr over the last 40 years, while energy consumption has increased 1.87%/yr. Now that is a tight coupling.
This fundamental result was recently discovered by Tim Garrett at the University of Utah. (http://arxiv.org/PS_cache/arxiv/pdf/0811/0811.1855v2.pdf)
It makes sense too. As societies accumulate wealth they are more able to afford the long-term financing of energy infrastructure. Looked at this way, it becomes possible to see that economic growth is more dependent on productivity gains than raw energy use.
Of course, what this means for GDP and energy depletion is unclear as we will be in uncharted territory. It doesn't look good! But it implies to me that we now need to shift accumulated wealth to renewable energy infrastructure.
Another thing I'm not sure about is which is more important, growth or the perception of growth? If governments are sneaky and print a load of money and then lie about the inflation rate and keep people focussed on goods like computers which are getting cheaper while telling people to ignore "volatile" classes of consumer goods that are heavily dependent on resources, I really don't see why we can't just continue with business as usual.
What is growth anyway?
Sure people say that growth is being able to get more goods and services for your wages, but which goods and which services? If governments keep us focussed on the increased level of services that we can get that involve a low intensity of resource utilization while distracting us from the fact we are less able to afford goods and services with a high level of resource utilization, maybe eople will just carry on as normal in an economy they percieve to be growing even if it could also be interpreted as shrink by another metric.
Slow or no economic growth means the unemployment rate rises. You can fool some of the people some of the time, and you can fool some people all of the time, but you cannot fool all of the people all of the time.
Until the U.S. has a dictatoship, I think the inflation and unemployment numbers will be as true and valid as they are now. For the U.S. we have pretty good numbers now. Of course you have to look at a LOT of numbers to make sense out of messy economic reality.
I don't buy the argument that high energy price = unemployment.
I buy the argument it leads to lower wages.
But if combine harvesters grind to a halt due to lack of oil that will provide more jobs in the fields. The same applies with industry, as energy prices rise machinery will be displaced by human labour creating jobs. And in addition to that there are hundreds of non-resource related jobs tat people can engage in:
Travelling actor, juggler, painter, masseuse, prostitute, rickshaw, hairdresser....
Albeit the goods they will be able to afford to buy in exchange for a days wages will be reduced.
High energy prices stop economic growth. In the absence of growth in real GDP the unemployment rate always increases. In other words or symbols, High Energy Prices (say over $100 per barrel of oil)=>zero or negative real GDP growth=>increasing rates of unemployment.
The main reason most economists harp on economic growth is that a rate of real economic growth of about 3.5% per year is required in the U.S. to keep the unemployment rate from increasing. Recessions or stagnations in economic growth have ALWAYS increased the unemployment rate.
As John Maynard Keynes pointed out, falling wages will not eliminate unemployment (except in some imaginary long run) because as wages fall, incomes fall. As income falls, consumption falls. And when consumption falls, then real GDP also falls--thereby creating more unemployment.
Consumption can fall without creating unemployment providing the labour input required for a giving level of production increases and wages correspondingly go down (ofcourse everyone's still left poorer)
Real GDP growth = ((growth in GDP+100%)/(inflation+100%)) - 100%
I wouldn't be surprised if historical data prove this to be the case, but I wonder to what extent the historical data has been fudged.
Overall inflation afterall is a highly subjective concept (although obviously inflation in a particular class of goods isn't), which opens the possibility for a lot of creative accounting. Have you ever heard of Hedonics? I think the government is well capable of printing a bit more money year on year and then subtly massaging the inflation figures to make it look like there's less inflation than there actually is thereby giving the impression of real growth.
My personal definition of a recession, is not two quarters of negative growth, but rather a period where things get so bad that even the government can't spin things to make it look like they've got better.
People's houses have been steadily getting smaller for a long while, at the same time more and more people are moving into flats, yet all this went on during periods of "economic growth".
John
The best projection I have found so far of what happens when growth stops is Peter Victor's work examining the case in which he slows then entirely stops growth in the Canadian economy by 2015. This is what happens:
Unemployment skyrockets.
Notice also what happens to debt. This sets up another systemic fracture later on when the debt can't be paid back and must be defaulted or otherwise repudiated.
This looks like a computer simulation.
Is this just garbage in garbage out?
Is this just using software to give credence to an elaborate fantasy?
What kind of assumptions did he put into this?
It is a computer simulation. Those things can be useful sometimes. I hear they even use them when they want to send things into outer space.
Here is the book if you are interested in the details:
http://books.google.com/books?id=VDz0DB-PtIcC&printsec=frontcover&dq=pet...
Google "peter victor managing without growth" to find various presentations he's given on the topic.
Two things. India has had quite a run of growth, but that has done very little to lift the quality of life of its poorest farmers and workers.
So growth does not insure rising boats for all.
Another thing is that lowering the number of work hours can greatly increase the employment rate (or lessen the increase in unemployment).
We have to start thinking creatively about how to manage local, regional, national...economies that are shrinking, because that is what they are going to be doing for a long time. Denying that this is what we are facing is not going to help anything (well, it might postpone for a while the sad feeling you get when you look reality in the face).
You will find Steve Keen's work of interest. Contact him directly and he may be willing to send you his model of a balanced system. I'd not have thought it possible in a system that keeps banks and any kind of finance, but his work shows it might be done.
Thanks. I've watched the video of his simulation for a steady state system. I think that's what you are referring to, yes?
best post on the thread
what is growth?
Where is this thread?
Moreover, there is also the problem of energy embedded in imported goods and energy consumed in a country. Wagner (2010),shows that rich countries use less energy in their industrial production, whereas they still consume relatively large amounts of energy indirectly by importing energy-intensive goods from poor countries where energy and pollution-intensive production have migrated. This allows rich nations to consume less energy while not changing their consumption habits:
"While energy and pollution-intensive production migrates to poorer countries, rich societies do not alter their tastes accordingly. Trade enables richer economies to consume less energy yet still benefit from energy and pollutionintensive production...."
http://www.gwagner.com/research/energy_trade/Energy_Trade.pdf
Basically , a rich country would be able to sustain economic growth and decrease energy consumption insofar as it can outsource the “dirty job” of energy and pollution-intensive production to developing and/or poor countries. No surprise that 16 out of the 20 most polluted cities are Chinese.
How long this outsourcing can last is difficult to say.
Kjmclark
Most writing from economists has taken the same tone as that presented by Radetzki. Note: there is very little (if any) discussion of demand destruction as being part of resource depletion. The only discussion is that technology will mitigate resource depletion. If it is truly economics 101, then why isn't it discussed by them? Have you read the paper by Radetzki?
I agree with Darwinian's comments.
-Dave
Dave, Radetzki isn't talking, at all, about what happens after peak. Feel free to go back and check, I did. That whole paper is calling bunk on the idea that we need to worry about it anytime soon. I suspect he's wrong, but that's my opinion.
As to what I was talking about, look up *any* discussion of supply and demand. The one at Wikipedia is good enough. The initial response to a reduction in supply is an increase in price. The results are some combination of demand destruction, increased production, and substitution. If we can't have increased production, which will at some point be the case, then we're left with demand destruction and substitution. That's 101 market economics. (And let's not forget, Yergin is *not* an economist.)
"If we can't have increased production, which will at some point be the case"
If you're talking about conventional oil, that was already the case in '05/'06. What we've seen since is further price rise, some substitutions (tar sands, deep water, heavy sour crude, NGL...) and then a very powerful bout of 'demand destruction' i.e. world wide Greater Recession, with some food riots...along the way.
Two points--before the crash, very few main stream economists were predicting that it could or would happen or that oil prices could ever spike up as high as they could.
Pretty much all the pundits around here predicted both.
So much for economics as a predictive 'science.'
On the other hand, few around here anticipated that the economic chaos that ensued 'demand destruction' would batter down prices the way they had. So, in their typically dismal way, the economists could be seen as technically getting that one right. But in this case, the rather bland sounding 'demand destruction' was mostly not about people doing things more efficiently, but about people doing without--it was economic destruction of peoples lives and livelihood.
So, if you want to keep some kind of score, I guess you could say each side was wrong once and right once.
So what? Big deal.
http://www.youtube.com/watch?v=3WzB1Rtr7Q0
BTW, elsewhere in your excellent post (I'm only disagreeing with the idea that it's not possible to have growth without increasing oil supply), you asked:
James Hamilton, an economist, is something of an authority on that question. He co-writes the Econbrowser blog. In the short-term, he's concerned that the current price of oil is getting high enough again to put the kibosh on growth, http://www.econbrowser.com/archives/2010/12/worrying_about.html. And in a $14 trillion economy, it's more than a billion dollar question :-)
Please note that Hamilton is writing about the US economy, not the world economy. There is a large zero-sum effect here, as rising oil prices raise costs to importers, and raise revenues for exporters.
@KJMclark
Radetzki only talks about how substitution/increased production (through reserve growth/new discoveries) will mitigate peak oil - he does not talk about demand destruction being a part of that - which is what my point was and you seem to agree.
I have read James Hamilton - he does good work. My work also indicates that we are in for sluggish/zero growth in 2011.
The 14 trillion dollar question indeed - and that doesn't include debt!!!!
To qualify: at least in this post, I am talking about long term, business as usual growth (I should have made this clearer). I do not think it is possible for the U.S. economy to grow in the next 40 years the way it grew over the past 40 years, considering that substitution, as you indicate, will take decades and we are already at peak oil.
-Dave
I don't think we're talking about the same Radetzki paper. I'm referring to the one you linked to at the top of your post. He sums up his case as:
"In contrast,the oil resource base is adequately large and growing, with little prospect that its depletion could cause a supply crisis in any foreseeable future."
As I said before, he is not talking about mitigating peak oil at all. His thesis is that peak oil is a long time from now, and worries about it anytime soon are bogus. (Let me repeat, I don't personally think he's right.) He's not talking about demand destruction because he sees no reason for there to be any demand destruction, since from his perspective there's no reason to believe peak production is coming soon.
And I haven't, in the five years I've been here, seen many posts that make it clear that growth over the next 40 years will be that bad in the US, based on oil production. It seems to me that our current trade policy is just as likely to make economic growth bad for the next 40 years, and in 2050 it's not clear to me that they'll say oil production had all that much to do with it. We can do a lot of substituting, improving efficiency, and altering lifestyles in 40 years, and it isn't clear that those changes won't cover the problem. I expect us to have serious problems, but we haven't really had stellar growth since 1970, so it's hard to say how bad that would be, or how well we can change.
You clearly haven't been reading the same site I have.
Actually, I think I'm talking about GDP, and you're talking about something else. I think for a lot of people, their lives will be completely up-ended, and there's a good chance that we'll end up in a major energy war that *will* drastically reduce US energy use. But it's not clear that GDP growth is gone, or that at the end of the 40 years, the US GDP won't be higher than it is today. It may not be much higher, maybe even only 1 'new' dollar higher, but it isn't clear that it won't be legitimately slightly higher than today.
We've just had a near Depression-level credit crash, and GDP is higher now than the previous peak. The US economy sucks, but GDP is growing. I expect a Long Emergency-style series of waves of this kind of economic crash. But just as GDP is growing now, it isn't clear that it won't be growing then. We'll just be spending the money on rail systems (like the one pictured at your website, BTW - very nice!), iPhone 12s, and more expensive food and energy. It all still counts toward GDP and growth.
Sure, if you completely ignore the following facts, everything is just peachy:
* 43 million people now on food stamps in the U.S.
* we just found out that the Fed bailed out everyone with a pulse in 08 to keep the system going a little longer
* the banks are insolvent but extend and pretend is keeping them alive
* we have very high and long-term unemployment (likely at the 20% level; the official numbers are bogus)
* European nations are getting bailed out one at a time (again, temporarily)
* oil production is about to fall off the plateau
* the states and municipalities are preparing to lay off millions of workers; sovereign states are beginning to do the same thing
Here is where we are:
Except that if you look at a chart of GDP, it doesn't match that chart at all. It shows a classic economic cycle, with a dip and now a return to growth.
The US economy is 2.5x larger than 1979, while using the same amount of oil. US manufacturing is 50% larger: oil is not necessary to a robust economy, and the sooner we "ditch it", the better.
Long term economic comparisons have to consider structural change, such as the rise of the financial economy that financed the speculative boom and the aging population that is part of the reason for rising heath care costs. Health care has gone from 6% of GDP to 16% in about three decades.
Of course we are all expecting to buy more "stuff" and not have to pay back all we borrowed, especially to buy houses that are worth less than the loan balance or to save for care in old age.
the rise of the financial economy
I'd be interested in seeing a good analysis of exactly how much FIRE has grown in the US over the last 30 years. I don't think the increase is quite as large as sometimes thought.
the aging population
The demographic structure of the US hasn't changed all that much, in great contrast to Europe and Japan. The US has a fertility rate about equal to replacement, and large immigration.
Health care has gone from 6% of GDP to 16%
Well, agriculture and manufacturing have shrunken, due to growth in labor productivity and mature markets (flat sales). Something has to grow to replace it. I think health care is a better candidate than gambling...
The U.S. financial economy grew from 5% to 7.5% of GDP during the bubble. (If I can find the link to the recent video that this info came from I'll post it.)
The large financial sector is insane. All they have accomplished is destroying wealth and have not created any except for the people at the top. People should be outraged that FIRE wrecked the economy and transferred the mess to the taxpayer. It's time that financial sector shrinks to 2% of GDP, or less!
I agree that the FIRE sector is a bit too large. OTOH, a lot of people seem to think that it's grown to 30% of the economy. A change of 2 and half percentage points over several decades isn't overwhelming.
The financial industry was providing 30% of the profit of the stock market.
hmmm. Yes, there was a period there when GE's and GM's finance arms were providing a majority of the profits.
Not good.
Nick mostly has it right. Like I said, I'm talking about GDP and growth measured in GDP, and you're talking about something else. To be complete (and annoyingly pedantic - sorry), look up "define economic growth" in your favorite search engine. Dictionary.com says,
Since GDP is how we measure the value of the goods and services the economy produces, growth means growth in GDP.
I agree with you that the current economy stinks, but that's because there isn't enough growth to make it not stink. It may stink continuously for the next 40 years, but that doesn't mean it won't have grown. Actually *I expect* the economy to largely stink for the next 40 years. I mostly agree with the facts you list above, and that they show the economy stinks. (I'll even one-up you - if we measured unemployment the way they did in the Depression - counting unemployment among 14 & 15 year-olds, everyone who says they want to work full time but can't find a full-time job counts - I think our unemployment rate would be around the 25% listed at the peak for the Depression.) I also agree that it may be this bad or worse for the next 40 years. But that doesn't mean that there "clearly" won't have been growth. If you use the standard definition of growth, it isn't clear from all I've read that GDP will be lower in 40 years, or even 20 years, than it is today.
Yes, not everyone is able to see how declining oil production will bring contraction. They will have to experience it firsthand.
That seems to be the case for a lot of phenomena. Some people just aren't able to connect the dots, for whatever reason. You and Nick appear to be two such people.
Andre, isn't it time to stop making ad hominem comments about people who disagree with you?
As far as declining oil consumption: I notice that Germany's oil consumption is declining, while they're economy is growing strongly. The US grew by 2.5x with flat oil consumption from 79-present. It even managed to grow from 1978 to 1982, while reducing it's oil consumption by 19%!!
The world economy is continuing to grow with flat oil production - it only dipped slightly into contraction for one year due to the recession.
The facts are there to see.
You seem also to have a thing for thinking that assessments are ad hominem comments. You did the same thing a few weeks back. If I recall, not many other people (if anyone) thought it was ad hominem. You seem to be especially sensitive to this. Is that an ad hominem comment, too?
Others felt quite strongly that you were being ad hominem. They found it quite annoying.
Yes, "assessments" of other people's judgement are aimed at the person, not the argument.
That's the definition of ad hominem.
You seem to be especially sensitive to this. Is that an ad hominem comment, too?
Absolutely. Notice the word "you" in the sentence. Also the word "sensitive" which applies to a state of mind.
I must have missed those comments. Can you point them out?
I'll take a look and see if I can find them.
OTOH, does it matter? Isn't it obvious that these are personal comments that are directed at people, not at ideas or supporting evidence?
I have to say that, my monkier aside for the minute, I do agree with Nick on this.
I was quite surprised by your personal judgement on my character in this recent post:
http://www.theoildrum.com/node/7246#comment-752867
It got me on the defensive :-(
Sorry, there is a comment about your character in what I said? I think it more likely that you are both very sensitive...
Again with the personal criticism.
Sigh.
Well, I believe you are making an assertion that isn't true, so I'm asking for your evidence. My recollection of the matter is the exact opposite of yours. I recall that several people thought my comments weren't ad hominem and no one agreed with your interpretation. I am open to being wrong though if you show me.
In any case, saying someone isn't connecting the dots is not a character judgement. It's no different than saying they haven't solved an equation.
But truly you are correct. You and I have other matters to attend to.
. I recall that several people thought my comments weren't ad hominem and no one agreed with your interpretation.
There was another who felt directly insulted. It might have been Jokuhl. Unfortunately, a quick search didn't find it.
OTOH, I'd note that four people objected to this personal approach today.
Yes, well, I suppose I could dismiss you with an insult as well, but that's not very productive. I'll note that ad hominem attacks violate rule 5 of the TOD commenting guidelines:
"5. Ad hominem attacks are not acceptable. If you disagree with someone, refute their statements rather than insulting them."
And I can assure you that I've had ample time to connect the dots, and you'll find few people who are better prepared for the possibility of contraction. But it's still not clear that will be what happens, even though it is fairly clear that there will be significant, maybe even drastic, change.
Please. Saying that someone is not connecting the dots is no different than saying they are failing to see the big picture, can't see the forest through the trees or any number of other innocuous metaphors.
If you think that is an insult I suggest the issue lies more with you than the comment.
Andre, do you start to see a pattern? That's 3 people who've objected today. And, that's the 2nd time you've responded with another personal criticism (of being too sensitive, or some such).
There's an enormous difference between "someone is not connecting the dots" and " Some people just aren't able to connect the dots". One relates to an act of "connecting" and one relates to the person.
Although, I'd probably drop the reference to "someone not connecting the dots" as well. There's no reason to make it personal in any way at all.
I realize this is important stuff, and you have strong feelings. Nevertheless, making it personal won't persuade anyone.
I'm actually pretty careful not to insult people but I truly believe that some people are "insulted waiting to happen." In fact I would go so far as to say that most human beings are "insulted waiting to happen" — they are tuned and ready to feel insulted at the smallest comment. Then they get to be all dramatic about it. There is a reason the phrase "he has a thin skin" exists.
If you want to see what insults really are, just spend some time reading how Mish Shedlock relates to people who disagree with him:
"Just who were the morons negotiating these terms on behalf of Ireland? "
"Today I am attempting to step inside the minds of a collective group of idiots."
"No fewer than 6 industry economists defended housing today with a stunning display of stupid comments"
"Public employee unions have pretty much become leaches on productive society. "
My favorite was when Don earnestly suggested that I seek psychiatric advice.
Then there are the flame wars that erupts quite regularly on the Net, which is completely another level of invective.
Again, I assert that if someone thinks me saying that they "aren't connecting or are unable to connect the dots" is an insult, the issue lies more with them than my phrasing.
I understand that you disagree. That's fine.
the issue lies more with them
And, yet again with the personal approach.
That others are worse isn't a justification (although I'd note that Mish doesn't seem to be directing his insults towards anyone actually talking to him - it looks directed at public figures, which is a different thing entirely).
Don earnestly suggested that I seek psychiatric advice.
So, yet another person who's objecting to this kind of comment. That's four just today. Again, see a pattern here?
It's just a bad idea to push someone to agree by saying they, or anyone who agrees with them, has something wrong with them. It isn't necessary, and it doesn't work.
Why create such a distraction?
BTW, you seem to be interpreting this incorrectly:
Don wasn't suggesting that I seek psychiatric advice because I had insulted someone. He disagreed with one of my assessments and out of the blue suggested that I seek psychiatric advice. I had been very cordial in the conversation to that point but he apparently thinks that doubting the conventionally accepted story on a topic means that I should see a psychiatrist.
If that were the case, everyone here who doesn't believe the commonly accepted view of the future should seek a psychiatrist. This is, of course, nonsense. What we have uncovered here over the last five years will soon become common knowledge (or as common as it can get considering people will blame scapegoats) — despite what you say.
He disagreed with one of my assessments and out of the blue suggested that I seek psychiatric advice.
Now you've piqued my interest. Do you happen to have a link?
What we have uncovered here over the last five years will soon become common knowledge
I agree - PO will become a bigger story. Of course, the economic implications of that are really outside the core expertise of TOD - something that the editors of TOD seemed to have concluded recently.
Well, please respond to people's points and avoid discussing the people themselves. Right, all of the things you're saying are innocuous metaphors are ad hominem attacks. Certainly there are weak insults and strong insults. So what?
If you don't want people pointing out that you're using dismissive, ad hominem attacks, go back to what I wrote and respond to it. It's not that hard.
I've said everything I want to say in this conversation — on both topics. There are over 40 meaty comments that I have left on the topic at hand, complete with graphs. They do a fine job of explaining our predicament. Perhaps someone else wants to pick up from here but I'm moving on.
There are over 40 meaty comments that I have left on the topic at hand, complete with graphs.
You do understand that the comments and graphs don't have actually have any quantitative, real-world meat behind them, right? They're descriptions of hypotheses, not yet supported by any evidence.
I'm guessing that few here want to waste any more time on Nick and his kindred spirits. He is just an aggressively 'glass-half-full' kind of guy and most of us find this tiring after a while. Thanks for trying, aang.
With the aggressive part certainly I have to disagree. He patiently explains his point of view. If TOD was only filled with pessimism regarding the consequences of Peak oil I wouldn't read it so much. I'm looking for different views, not that it changes my mind a lot but to read the foundation of all the pessimism. How could one better understand the matter without the Nick's on TOD ? Not only by reading Savinar's 'lifeaftertheoilcrash' because he doesn't have all the numbers and facts right so I found out later. Savinar understands the psychological problems though, and I think they are at least as important as the numbers.
This I doubt, because there is not much to search on TOD if everything is so clear.
Thanks.
That's a big part of why I stick with TOD - I want more good, quantitative, substantive info, and so do a lot of other readers.
For instance, see my discussion with Paul_the_engineer - very interesting.
Saw it. Remembers me of the book 'the next economy' (from mass economy to information economy) from Paul Hawken. I find it difficult to imagine how 'computer-driven growth' (increasing amount of jobs for an increasing world population) works other than by selling products on ebay and amazon, etc.
Well, think of the economy as separated into goods and services. Think of goods as things that are grown or manufactured, and work that is directly related to that as physical work - "blue collar" work. Then think of work that is not physical as information related work - "white collar": management, accounting, sales, law, engineering, health, etc, etc.
Then consider that the tipping point between physical work and information related work was passed in the US in the 1950's. Now, only about 15% of work in the US is physical - the rest is all information related.
So, if 85% of the work in the economy is handling information: how could computerization not affect it?
I was quite surprised that the Radetzki paper was accepted as a "paper." It is truly nothing more than a social critique of various figures who have done work on peak oil. Moreover, it makes the classic analytical mistake of converting an anomalous, temporal phase of human history into something eternal. I guess it's fitting that most of the other writer's he cites also offer nothing more than this same type of work--which is really just philosophy.
G
Actually, economic growth has relied on increasing energy conversion efficiency to useful work, the subject of Ayres-Warr (2009) The Economic Growth Engine: How Energy and Work Drive Material Prosperity
Economic history clearly shows the rebound effect. However, there are some cases, such as air travel, that do not strictly fit this reasoning. Air travel uses 10% of oil while railroads use 1% and shipping uses 2.5%. When oil is rationed, by price or government decree, which do you think will get cut?
Economic growth stalled around the time of the 1973 embargo, but that was partly coincidence. The bigger reason was the exhaustion of the productivity drivers. There is only so much labor that can be cut by the mass production, agricultural mechanization and mass distribution paradigm, and that process was fairly complete by the 1960s. It took 100 years to reduce agricultural labor from 75% of the population to 3%, but it will take a lot longer to get rid of those last couple of percent. Railroads reduced over land freight cost 95% by 1890, and diesel engines slightly more by 1960, but since then we hit a limit. Turbine blade metallurgy has not significantly improved in 50 years. Crop yields had a constant increase from 1940-2000, declining on a percentage basis from over 5% to around 1% and headed to zero.
An example that illustrates structural change in the economy is the comparison of the last 50 years to the previous 50. An interesting finding of a survey in which participants were paid to watch 1950s television programs was the comments that life in the 1950s was little different from life ca. 2005. However, life in 1905 was nothing like life in 1955. Life in 1905 had almost no household electricity, no radios, few residential telephones, few automobiles, no airplanes, little running water and lots of horse manure in the streets and 50 plus hour work weeks.
So the last 50 years is when we burnt most of the ff, caused most of the GW, and got basically nothing for it.
Wendel Berry:
"We weren't getting something for nothing;
We were getting nothing
for everything."
Logically there are only 10 types of people:
0: Those who work for others aka labor.
1: Those for whom others work aka business owners.
For the second kind, the peak matters as it means losses, unavailability of bank loans, technology stagnation etc but for the first kind peak don't matter much as long as they have enough skills. The business owners usually lack labor skills so working for others is not a very available option for them.
For the first kind, the point that matters is not the peak point but the edge point. The point when decline starts. As long as plateau is going on, logically speaking there would still be enough jobs to hire bulk (say 80%) of labor but when the energy production actually starts irreversible decline that is when the real avalanche of unemployment strike. Whats happening now is just a rehearsal / preparation / demo / premier. Hopefully by the time decline starts govts would be the biggest employer so most labor class would have some type of job to depend on. Standard of living will fall, have to fall but if there is a job, especially a govt job (aka secure job) the decline is relatively easier to handle.
Given that 98% of population is labor class, no, the peak don't matter. What matter is edge / end of plateau / decline / downfall.
Empires take decades, even centuries to fall, guess what the entire world would take to fall when its almost a given that everybody in power is willing to throw off almost anything at the energy problem, everything that is shale oil, nuclear, coal and similar.
@wisdom
Your logic is IMHO based upon false assumptions.
In fact there are 11 types of people.
In a Partnership you don't work for me, and I don't work for you: instead I work WITH you.
In my view, it is emerging partnership enterprise models which are already changing the game - in fact, even the 'Economist' (never cutting edge) recently picked up on the increasingly widespread US use of LLCs and so on.....
The dividing line is between people who work and people who plan. If n number of people work for themselves in a small business having no hired employees then they are labor, they are actually working. For example a hair dresser, a shop-keeper, a doctor etc are labor. Also traders are workers. Pure business men are those people who are basically "sleeping partners", for eg shareholders, property investors etc. These people are not doing any labor, they are not producing any good or service.
Let's not forget this view, since it's probably closest to what most policymakers hear most of the time:
The graph depicting recessions as a direct result of oil prices is really simplistic, there were other factors which were far more important at those times.
http://mortgage-x.com/trends.htm
As you can see high interest rates preceeded these recessions also
When interest rates went up in UK people with variable mortgages found their mortgage repayments going up by 40% or so. Millions of people were paying three, four hundred pounds a month and more on their mortgage. Whereas the additional cost of petrol was perhaps £20 or £30 a month more. I would argue that the governments increasing interest rates will do more damage than the increase in fuel prices.
Ofcourse oil production peaking is important, but demand increasing faster than production can will have the same result. Which will mean much higher prices, but countries with very good public transport will not be so badly hit. I fear the United States will fair far worse than most.
There weren't any graphs at what I linked, but with respect to the public transport, we shall see. It's potentially helpful, but it doesn't exist in a vacuum. The countries and places where it is very good, i.e. where there commonly are trainloads of people going to the same places at the same time, are often the most wildly overpopulated, which will cause other problems.
Most economists are stuck in the absurdity that infinite growth on a finite planet is possible. All mineral resources are getting harder to extract while the number of people competing for these resources is still growing. The increase in the number of potential workers is driving down real wages per capita thereby making the affordability of resources more difficult. In addition to higher economic costs there are also higher environmental costs associated with the use of these materials with fossil carbon leading the pack. Since economists are blind to these truths the politicians of all the parties that currently matter who rely on their advice are also blind. We have the blind leading those who refuse to open their eyes who are voted in by those too stupid to understand these new economic conditions. What worked in the 20th century will not work in the 21st.
I am VERY happy with the new Oil Drum, and expect to be commenting here on a frequent basis again.
I do hope we can still get into some freewheeling debates occasionally, at least late in the day-without the mud slinging of course.
This said, I have been doing some hard thinking about this issue of eternal growth on a finite planet.
Let me say right up front that as a practical matter, I believe the days of growth are numbered.
And any realistic analysis from a business or engineering standpoint must , as I see it, predict a huge contraction or collapse of the bau economy as the more critical minerals deplete along with the supply of fossil fuels.
I cannot see however that growth cannot continue IN THEORY-I simply haven't seen anything that looks like mathematically or logically airtight arguments to this effect to me.
I an not a fan, but there is no reason, in logic or science, why the Yankees for example cannot continue to win the World Series year after year, indefinitely, so long as they have the fan base and the money to buy the very best talent.
Of course sooner or later,the odds will catch up with them, since they cannot be but SO MUCH better than all the other teams-the rules would be changed for the good of the game to equalize the teams again, or simple bad luck would break their streak.
As I see it, the economists are these days like the Yankees when they were on a roll- the economists have been winning overall, at least until the last couple of years.
It is not impossible, theoretically at least,that they might be right;some whiz kid might discover a way to manufacture dirt cheap photovoltiac cells, or some team of genetic engineers might actually manage to come up with a crop that can really and truly be used to make cheap alcohol on a grand scale.
I don't actually believe in this happening, at and certainly not within a time frame that means anything to most of us personally, of course.
But I do believe this matters, and that it matters a lot, just as WHT's models matter, at the theoretical level.
Insisting that we have proven the economists wrong theoretically may be a big mistake, in terms of public perceptions.
Not all economists are wrong, because there is great variation in the theories, models, ideas, values, beliefs, and opinions among economists. Economics as a discipline has done a poor job of assimilating information such as in THE LIMITS TO GROWTH.
If you go back to the two-term introduction to economics textbooks of the mid to late seventies, you will see they all have good chapters on energy. Then, when oil prices crashed in the eighties, the chapters were deleted and have not yet returned, so far as I know.
When I wrote my economics textbook in the nineties I wanted to have a concluding chapter on energy and the environment. The editor nixed that idea on the grounds that none of the competing textbooks had such a chapter. Sigh.
Hi, ofm.
You know my take: growth is over...knowledge of that just isn't evenly distributed yet.
Here is where we are according to Hirsch's keynote summation at the last ASPO conference in October (I have no reason to disagree with it; all graphs are clickable for larger versions):
Here is our near-term future according to Hirsch's crash mitigation program (i.e. see his various papers on how this is achieved):
Note that this is the absolute best case scenario and he seemed rather doubtful that it would occur. Hang on to your hats! Contraction dead ahead!
The larger context is that we are in gross overshoot, gobbling up resources at an astounding rate. One of them is hydrocarbon energy. Here is one estimate of what that has meant for human population:
Naturally, losing all that energy is going to impact food production both on a physical level (i.e. actual conversion of hydrocarbon energy into suitable human energy -> food) and on the organizational level (we're having enough trouble now getting food to be distributed evenly today).
And all this leads to a future of 7 billion people scrambling for ever-decreasing resources:
Note the cross-hatched periods when we humans don't like one bit the notion of our futures being taken away from us.
And, in my considered non-economist opinion, most economists are completely out to lunch. If their job is to ensure a workable, sustainable economy for the world's population, they have failed miserably. They don't get that growth can't continue forever and everything that entails, but they will tell you to mind your own business if you dare question them. [Tweaks Don's nose ;-). ]
Not sure I buy that population graph completely.
Coal and oil freed a tremendous quantity of the serfs in the field to engage in other activities, such as studying medicine etc. this increased knowledge reaped from all those freed labourers enabled us to fight diseases and the like causing our populations to boom.
I agree that if energy ran out we would have to retun to the fields as serfs. But the legac knowledge in medicine, sanitation and agriculture would allow us to sustain a higher population than was sustained before the industrial revolution.
I'm not sure I buy the population graph either but it can be off by half and we still have a big problem on our hands.
Here is the original paper if you are curious how he derives it:
http://www.energybulletin.net/node/48677
I read the paper, on the whole it just seemed like a rather subjective interpretation of human history. I.e. a series of statements along the lines of historical fact X happened because of hypothesis Y. I didn't get the impression he created anything like an irontight justification for hypothesis Y. (Maybe a bit of circumstantial evidence here and there)
Then he issues the statement "Nuclear Power is not the answer" without any justification as to why. Indeed there's no reason why breeder reactors couldn't be the answer.
He also ignore the enlightment and the start of the modern scientific method speaking instead as if all these fossil fuel fell down from heaven.
Also in terms of renewables, while the rate of economic growth they can sustain compared with fossil fueld maybe lower, I don't see any reason why they must be accompanied b a population decline, especially if the existing energy of our fossil fuel infrastructure was dedicated in its death throws to giving the rapid deployment of renewables an initial kickstart.
Hopefully you will read my longer post down thread. I'd argue your viewpoint is around the spiral of how our system is moving not in the direction of its overall winding. That will make sense vs this post.
http://www.theoildrum.com/node/7246#comment-752814
I'm not sure I explained it clearly but hopefully it comes through that you can view the situation from two viewpoints which can literally be 90 degrees out of phase and still both be valid over a time interval. Using the tree analogy and assuming up is better I'd say your seeing the path around the tree with it probably climbing upwards. Your viewpoint is focused on the direction of winding if you will and its current slope. Doomers are looking at it a different way. For us we would take the top of the tree as the bottom and we are looking at the fact that each winding regardless of how tightly the rope is wound inevitably brings you to the tip or bottom. And probably within a well defined time i.e the maximum length of rope is fixed.
Doomers don't think counting turns in the winding is important people that don't have a doomerish outlook don't believe that and overall direction actually exists and if it does in the long run its upwards or better anyway. Winding down if you will for a little bit is no big deal and will be followed but a reversal of direction. Some sort of overall meta constraint is senseless.
I'd respond by urging you to look at overall quality of life sorts of measurements and also perhaps future opportunities. I think the future opportunity aspect. We know now that someone born during 1940-1950 benefited from and era of both cheap resources and major technological advances. I'd argue someone born in 2010 simply wont have the same opportunities. The advancements have been made and the resources consumed. I'd argue that you should find it difficult to prove someone born this year will have more than someone born back during this period. Thus a downward if you will overall direction of travel despite how we spiral is not absurd.
If you agree with that conclusion then its simply a matter of if this vector is reversible i.e do we simply travel downward for a bit longer and thence up again ?
If this makes sense then hopefully you can see that its really a matter of perspective and probably a lot of miscommunication its not really a matter of who is wrong or who is right simply if our current course is survivable and if so exactly how painful will it be before a generation finally faces a brighter future than its preceding one again.
Certainly plenty to debate but I don't see "spiral" thinkers ever understanding doomers unless they grok our own directional thinking.
I think I have a pretty good understanding of how you think. I could be wrong but I don't think so. So its really a matter of if you think its worth your while to even consider the doomer argument. Given that I feel its simply one of the possible extension arguments to how I think your seeing things I don't think it should simply be discarded. Indeed the very nature of the doomer argument is what you have used to suggest its wrong. Using my doomer spiraling concept your argument is simply one of spiraling down then up again.
So I can write your argument using my lingo but to understand where the doomers are coming from I think you have to understand our lingo.
In fact for me at least the most frustrating issue is not my viewpoint nor yours its that most people simply are unwilling to even consider the doomer viewpoint as valid in the first place. Its rejected out of hand often for "technical" reasons. For example I've never once seen the EV crowd even consider that EV's might not solve anything. Every now and then we get and ethanol advocate on the board that similarly narrow minded. Robert Rapier can crush them though :)
Although you did not say it explicitly I'd argue that your statements could easily fit a move to rail esp electrified rail. In fact its one of the few alternatives to outright collapse that I think is very viable. I'm not 100% doomer :) The problem of course if it is rail thats the real solution and we agree its the answer. Just when will it finally be deployed ? Remember us super doomers also claim that the rope we have left is finite not just the direction its winding. At some point I think you would agree if we continue to do nothing substantial we could easily simply run out of time to do anything at all. If you do so then your at least implicitly accepting that the rope could be finite.
I don't think your in the EV crowd but I'd like to use it as and example. In a world of constrained energy supplies suburbia does not make a lot of sense because of the fundamentals. Denser living is simply natural. EV's are really a solution that allows suburbia to perhaps live for a time beyond peak oil but suburban living is in my opinion extinct regardless. Thus they are not even relevant to our society as oil supplies dwindle. Our investment in suburban infrastructure will be relentlessly discounted regardless of if EV's become prevalent or not. At best they might prove popular and useful enough to slow this discounting but thats about it.
I bring this up because its I think a perfect example of one view point looking in the direction of winding and claiming a solution vs another that looks in the overall direction of multiple windings. The problem is obviously not intrinsic in the arguments made for EV's but in the rejection of this concept of and overall direction if you will. Of course right now the overall is distinctly doomerish.
For some reason why I don't know it seems impossible to get people to even acknowledge that such and overall path exists much less argue the merits of its potential direction using any sort of common ground.
Hi I think one important correction should be made to Greer's stages of technic societies.
First the graph looks like a shark fin as your aware :)
However I'm now convinced that the top is more complex you don't fall immediately into the asymmetric down curve.
First there is a plateau period albeit relatively short. This is when growth of resources stalls yet the society has not perceived it as anything but a temporary slowdown. My best guess is its less than five years.
Next all the technical innovations that allowed the latter stages of growth from advances in extraction technology to final manufacturing are still in place and continue to grow. So instead of heading rapidly downward you have and initial linear decline phase thats relatively shallow say a few percent per year. Increasingly troublesome but something that at first is not considered a huge problem. In the case of oil moves to complex refining and more control over product distributions help a lot. For metals recycling say expands etc.
This phase could last as long as ten years probably not longer. Indeed through most of the plateau period and initial decline period the economy is in general still growing.
The importance of these two periods lies in the response they certainly create problems but the problems can in general be dealt with by relatively small changes to the BAU paradigm.
This is important because its during this slow initial decline that inferior substitution aka the tar sands is viable. The financial demand exists and prices are rising and conventional production is already in decline but yet not dramatic enough to cripple the system itself.
Effectively all the things we have seen recently from ethanol to the tar sands are temporary substitutes for falling oil production.
They only work during the plateau and initial linear decline phase when the system is basically intact. Indeed if your willing you can deduce the true situation from this. In other words if you accept that they are temporary substitutes then you know the real underlying situation.
The reason that they are temporary is that they helped offset price increases to some extent i.e as alternatives became marginally profitable often with questionable economic policies and discounting of cost i.e government subsidies either blatant or hidden they allowed consumption to remain high. Even though existing production is declining production costs are relatively low while prices are high. What this means is that lifting costs for the majority of the worlds current oil production is well below the current prices.
Profit margins explode.
The problem is of course the temporary substitutes are very expensive to produce and cannot offer the volume to offset conventional decline.
Indeed its a bit of a Goldilocks situation everything continues to work pretty much as it has in the past as this article points out.
The problem is of course that all thats really happened is we effectively had one final overshoot technical moment. A good bit of our remaining cheap energy supplies where simply burned at relatively low prices but resulting in extreme relative profitability.
And this relentless extraction set the stage for the final steep drop in production. It did not go away it was simply delayed.
Indeed in my opinion this period of very high prices vs historical prices has a strong synchronization effect. As it happens oil fields which can be expanded are expanded infield drilling programs become very aggressive and use the latest technology.
Depletion rates of most of the worlds oil fields approach maximum. Esp for any field that can increase or sustain production via application of technical upgrades. This is what both holds the overall decline rate to a relatively mild linear decline and also eventually ensures that the overall production moves increasingly to resemble a single field with a sharp fall from peak.
I'm talking specifically about oil but its very general and thus hopefully you can see how important the initial plateau and shallow linear decline period is since it both allows and forces the system to reach a sort of synchronized maximum exploitation rate.
The money made during this phase is simply mind blowing.
Finally you enter the descent phase most oil fields in the world start to enter rapid decline effectively simultaneously probably over a period of a few years my best guess is less than five. Indeed if you believe that this is whats happening you only need to know for certain that a single large field has declined dramatically while oil prices where high. We have this from Mexico. This may or may not be the first field but others should by definition decline rapidly a few years before or afterwards.
And last but not least the onset of rapid decline could well result in a series of financial panics. In our case if it did occur obviously the information was hidden but just as obvious its impossible to hide completely. Although financial panics are not a perfect indicator they are alarming. Extreme volatility in various stock markets and other markets would not be surprising in the least even if the information was hidden. One would expect all kinds of moves which resulted in short term gain over any hope of long term stability as you simply no longer care. At the top the expectation shifts to assume the entire system will collapse in a fairly short time anyway.
The emphasis shifts from transforming the current system to one that can handle a slow decline to maneuvering to remain or expand your power as the system undergoes a revolutionary collapse. Basically you want to be the top dog after all hell breaks loose.
So now I think that this linear decline phase is both real and critical to the eventual collapse of the society it is effectively a sort of capacitor allowing the entire system to charge up if you will for the final sharp fall.
Only near the end does the fact that inferior substitution and other games become clearly temporary as the underlying system begins to fall apart rapidly. They never really worked in the first place and as the baseline finally falls rapidly they are left as failed solutions. Regardless it seems that this linear decline phase plays a huge role in causing the eventual overall highly asymmetric decline. Not so much in the incremental resource extraction that takes place during the period but in how it seems to allow extreme synchronization and coupling to take place ensuring that now certain rapid decline can and will collapse the system.
I don't have any serious trouble with your short-term analysis. Just two additional points to make:
* financial collapse followed by production decline could happen all on its own. Seems to be a horse race between the world economy collapsing due to declining oil production, as some German military analysts (and I) believe, or if it happens "all on its own."
* the system acts more "switch like" than I believe most people realize i.e. it will not be a gradual decline it will be more like someone turned off a switch virtually overnight (more like a decade but certainly not a century). This is because the whole edifice is supported by cheap energy. Once that goes, I think the system has to reset to lower level of activity across the entire economy.
Yes I agree one of the aspects of the initial linear decline period is that it results in extreme coupling.
Basically near the end of this period it becomes effectively impossible to elucidate cause and effect. Is it oil is it financial ?
Well its neither both have become so coupled that you can no longer split primary drivers from coupled feedback loops.
In essence everything starts to break down causing everything to break down. Collapse begins to bootstrap its own demise if you will.
Financial issues effect oil production which effects finances etc. Although its not clear what this means I think extreme volatility becomes the norm not the exception as feedbacks become as important as the primary underlying reasons for collapse.
The system becomes so entangled all changes are simply failure modes of one form or another. Its like and airplane crashing. Perhaps it loses and engine and manages to limp along for a bit on another engine but the lost engine cut the hydraulic lines ensuring the second engine would fail. Or it cause airframe damage and a wing falls off. You really don't know until after the fact how everything happened but in the big picture it does not really matter.
At the moment although everyone should realize we lost and engine I don't think people really understand that we are in a sort of complex systems failure crash mode. Our inability to fully understand the now tightly intertwined system does not mean its not crashing.
Indeed trying to forecast future events using data from the recent past is a really a complete waste of time.
For example the probability of oil prices spiking and crashing again simply because they recently did so tell you nothing about how future events will unfold. What happens next is absolutely entirely unpredictable. Its effectively random as to what damage from the loss of the first engine will eventually cause the next failure.
I have no problem trying to guess its a fascinating problem Indeed my conjectures have lead me to believe that the damage if you will is far more serious than most believe. But that does not ensure I have guessed right about whats going to fail next to many critical components are damaged and indeed in our case its even crazier. Not only did our airplane lose and engine but the pilots have done their best to hide the fact the engine was lost and the real extent of the damage and are pushing the remaining engine as hard as possible so they can land the plane on schedule as if nothing happened. Worse they are also putting on their own parachutes at the same time so at some point they have no intention of going down with the plane even if they could stay and keep it flying a bit longer.
I'm convinced that regardless of the details of the next failure mode current actions will ensure that the system will destabilize rapidly once it again falls apart. If its the big one is yet to be determined but I'm pretty sure that two years from now the world will be dramatically worse off than it is now.
Given this even the worlds super doomers might want to enjoy the relative stability we have right now its probably going to be a short interlude.
Or perhaps Greer's wrong perhaps the system is actually rapidly decoupling right now and the stress is leaving and collapse is well out into the future. I don't think so but the long period where the Roman Empire reached the brink of collapse then retreated with the final collapse occurring with no dramatic change in conditions shows that such a bounce along the top is possible.
Once could describe this as the skipping stone collapse model and it can last for a surprisingly long time.
Thats another variant of collapse that Greer missed and I think the one people support. For normal people the expectation is a bumpy ride for a bit then finally soaring in smooth air. I.e the skipping stone does not sink but manages to some how boost itself higher.
Indeed I think most people seem to have mistaken the loss of and engine for a bit of turbulence. Thats why its so hard to raise the alarm if you will. I think the American Tea Party is a shining example of how deluded quite a few people are. Perhaps this is why we are simply gunning our remaining engine so it looks like a patch of turbulence which will soon be behind us if we simply return to our roots or basics.
I dunno the truth is probably now so hidden by lies and false perceptions that things like how people act based on a set of beliefs which have no basis in reality actually influence what happens next more than reality itself.
Sort of a Jim Jones Kool-Aid party happening globally that causes its own crazy distortions on top of whatever the truth is.
Obviously eventually suicidal but things get pretty weird right before its clear what the result is.
I think a lot of our markets like the stock market and gold market have become effectively decoupled from any semblance of reality.
Not that gold won't be valuable eventually simply that there is no intrinsic reason to assign a value for it using fiat currencies which are already toast. Golds real eventual value has literally nothing to do with fiat currencies as they will soon collapse to nothing and its real value vs them is infinity. Market gyrations in the interim valuing gold vs fiat simply have no long term intrinsic meaning. Indeed the same applies to oil and food. The stock and bond markets simply have zero real value and are irrelevant.
Indeed this makes me wonder how markets will move over the next few years as intrinsically they have no basis in reality they can pretty much move however our mass psychosis wants them to move its 100% sentiment. Only food and oil and commodities in general have some back coupling to reality. Problem is that since fiat currencies themselves are already dead your effectively buying and selling true goods and services using a dead standard.
Perhaps akin to using American confederate bank notes to buy some gasoline.
At the moment the value attached to everything is purely based on its sentimental value and has effectively nothing to do with its real value. Given most are delusional and believe that nothing has changed or things will get better sentiment alone is keeping the system similar to its previous values. In essence the current valuation of our fiat currencies is itself purely sentimental with no fundamental support.
Obviously the big crash is probably going to be caused by our inability to hide some very ugly truths forever and the realization that the entire system of value is now purely sentimental.
We shall eventually see what the truth is and if my guesses are correct but I think the observation that we are now a world driven simply by sentiment with no fundamental basis in reality stands regardless of what truths eventually cause sentiment to collapse.
Mike,
you assert that events are completely random and I don't think so. There is clearly a great deal of randomness in the timing of certain events but there is a class of events that can predicted, I think. There is a sort of hidden order that we can deduce in collapse. Not a lot but some. The physical metaphor that I have come up with is that of a tree. (I first explained my idea a few years ago here on TOD but can't find the comment now.)
Picture a tree. Here is a handy one:
The growth of our recent civilization with abundant and cheap energy is like the growth of that tree. Over time more complexity is added to the civilization in the form of regulations, institutions, and sheer physical footprint. This is like branches being added to the tree. Once it has reached maturity the tree is full of leaves and is healthy and presumably happy.
A tree has a peculiar quality to it that can be seen by attempting to find a pathway from the base to the topmost leaf. To see this quality, imagine yourself as an ant and thus you don't have the benefit of seeing the whole tree like we do in the picture above.
If the ant starts at the bottom it is very, very difficult for it to find the topmost leaf. At each branch there is a choice to stay on the current line or follow the new branch and there is no way of knowing which set of the thousands of choices is going to get the ant to the top. It's a devilishly difficult task for the ant.
But place the ant at the top most leaf and ask it to find a pathway down. This is almost infinitely easier because there are now some rules that can be used to make branch choices. One rule might be "follow the thicker branch when two branches meet" or "when in doubt, go 'down' (i.e. use gravity as a guide)".
There will be some mistakes but on the whole the ant should be able in vastly less time to trace a path from the topmost leaf to the base of the trunk.
(Perhaps someone knows the name of this property?)
So it is with the collapse of our civilization. Of course there will be completely random events but there is a class of events will occur that are predictable within certain bounds.
For instance, it's easy to see that there will be 1/10 the current number of institutions of higher learning by 2020 or so (plus or minus a few years). In a contracting economy, the last thing we will be short of is educated people. The combination of there being no jobs for graduates (thus vastly less students and their tuition fees) plus lack of tax dollars and shrunken endowments means that the bloodbath in higher education has just begun.
Take a look around and make a guess when each element of society disappears or mostly disappears. What will the corners of our cities look like as the gas stations close down?
Will pensions last much longer? (That's an easy one: of course not. In a contracting economy the so called "wealth" stored in pensions evaporates.)
And so on.
All that is to say that I think we can do a lot better than just saying "collapse will be completely random."
Fantastic analogy !!!!
I like your top down approach. In a lot of ways thats what I try and do. Work backwards from and obviously collapsed civilization towards our own and this gives you a path. Assume for example that collapse is 30 years away i.e the top leaf is way off in the distance then work your way back to today indeed work your way back into the past to the start of the oil age.
Obviously such a path requires a variety of things to happen. Indeed its difficult to conceive of without some major breakthrough say cheap fusion and phenomenal batteries. Indeed to make it even more realistic these breakthroughs themselves would need to be in the past.
Yet these same breakthroughs make it difficult to collapse in even 30 years. Perhaps production line advanced fission nuclear reactors but again it becomes difficult to pin a collapse in 30 years. My point is by simply assuming 30 years out you generally need some major changes to get that far and these same changes make collapse in 30 years dubious.
So for all intents and purposes there simply is no collapse in 30 years or at best a very low probability. You could cut it to 20 years but this again requires some events. Even if you assumed another Ghawar or three it does not help much as the new cheaper oil would simply displace expensive production like deep water or the tar sands. If you make it 20 why not 30 ? Again its still difficult to take current events and project them to a end point 20 years distant as you have to assume some sort of intervention event. Indeed many people assume EV's and alternative energy are the answer if you will and they correctly don't see collapse.
Just its difficult to convince them that EV's might not actually be a solution.
Eventually your forced to place your tip leaf or top of the tree ten years out or less. Once you do that you can find a wide number of trails back to the present and indeed into the past that are consistent. In general they only differ in the order of some of the events.
Indeed you can easily construct these tips as soon as five years into the future. Thus you have and enormous number of fast routes from the tip of the tree back in time in a window 5-10 years into the future. Indeed you have a large number that go back into our past.
All of these scenarios are consistent and if collapse is going to happen then it could have already happened. Perhaps the last price spike had lead to war. Perhaps the financial panic was not contained. Perhaps the epidemic that has health care workers worried had happened. Two or three back to back years of crop failure. My point is that if you use your tip of tree logic you find a virtual continuum of collapse scenarios that basically start sometime in 2005 with quite a few further back into 2002-2003.
This is the trunk of the tree if you will. And of course although we don't know for sure how tall the tree is indeed its a 50% range if you think about it 5 years or 10 is not that important. People that don't see collapse see the tree with a fork in it with a effectively infinitely tall branch with the collapses doomers worry about simply being a side branch.
I think the problem that anti-doomers have is they make the mistake of assuming since doomers can't get their timing correct that they are wrong. Yet obviously if we are on the verge of collapse one has to think that governments will take ever more extreme actions to try and kick the can down the road hoping time will work its magic and heal our problems. These same actions more often then not ensure that collapse will be even more difficult to avoid in the future.
I think you see the same things. In the end I think what matters is oil. My own conclusion is that its all that matters everything else is secondary. As the oil goes everything must go down. As long as the oil flows then we can create short term rescue packages regardless of their eventual long term damage. If it is all about the oil and thats the real problem then my crazy assertions about the US doing secret SPR releases or similar games to keep prices low are not crazy at all. All the financial stuff we are so familiar with is just a side show to the real game.
I'll give you one example courtesy of wiki leaks ...
Venezuela.
http://english.eluniversal.com/2010/12/17/en_ing_esp_new-reports-about-v...
And in particular this one.
http://blogs.wsj.com/chinarealtime/2010/12/15/wikileaks-china-profits-of...
And here.
And theres more.
http://laht.com/article.asp?ArticleId=358058&CategoryId=10717
A number of things are very important in these series of quotes. One one way or another the Chinese are lying about their imports.
Exactly what the truth is is difficult but clearly the Chinese are simply not telling the truth. Next despite this they are deeply involved in securing "cheap" oil by any means available clearly its important to them. They are going well beyond open market purchases to obtain oil esp cheap oil.
Next it seems the EIA is quite capable of analyzing a countries production and rejecting the official numbers. If they can do it for Venezuela they can do it for any country. It just happens that because of the political situation that they are willing to not accept the countries official numbers without question. This plus some leaks from inside the agency suggest that its very probable that the EIA maintains two sets of books what people claim and what they think is true. A very good chance that whats presented to the public is probably not the real set of books. My point is its very doubtful that Venezuela is the only country lying about its reserves and production numbers yet for political reasons this is the only one thats public.
In this particular case what we have with a bit of truth thanks to wikileaks is the exposure of a web of lies and intrigue surrounding oil. Way to much is happening with this single country to believe that oil supply is not and issue.
Heck my SPR speculation pales in comparison the truth might well be even stranger. Obviously we have and influx of very cheap oil low quality but cheap and just as obvious it seems that the Chinese and the US played some serious games with this oil. It should be clear that 5 dollar a barrel oil regardless of quality could readily be part of a larger plan to keep oil prices contained.
Something akin to iran-contra no one would have ever guessed such a convoluted situation.
This is by no means proof that its all about of oil and basically only about oil but I'd argue it supports my position.
Thanks to wiki-leaks we have have some information which suggests that reality is not quite what it seems to be.
I suspect that some of the officials involved also are a bit in the dark. I.e what they are seeing is not even the truth even as it differs from what the public is lead to believe.
So if the conjecture is correct that its all about oil then its also probable that the real path of collapse via lack of oil is already in motion and we can discard most of the probable routes and focus only on ones where oil is the critical factor.
Given the above and plenty of other information and probable hidden motives we are then probably much closer to the end than the start.
The chances of 10 more years before collapse is then probably remote yet 5 year scenarios require oil production or more correctly exports to be a problem that worsens rapidly on a yearly basis.
I doubt seriously you would have these sorts of games going on if oil supply was ample. This is just one part of the path we have plenty of other info. But hopefully you see how things tend to reinforce the central thesis that its both all about oil and further more the situation seems to be degrading over the span of a year i.e we have the root problem and a timescale for it. And your tip of the tree backwards approach is in my opinion consistent with at most a 5-7 year time evolution window. As I said it could easily be shorter and could have collapsed already simply I think with a few assumption you can get things pinned fairly well.
And last but not least if the oil situation is such that our current economic system probably won't make it ten years then the recent financial moves but the US have some perspective. They don't really care about very far out into the future. Perhaps the only constraint is what we can get away with over the short term without collapsing the system from the games themselves. They are not going to give every American a million dollars but surprisingly little beyond that extreme is impossible. If we somehow manage to make it through this current situation well they can always inflate the current currency away and replace it so if we do have a future the current actions can eventually be fixed via hyperinflation and a single world currency. And of course this financial viewpoint itself wraps all the way back around to the price of oil. If you have no future then controlling the oil price by any means possible for as long as possible is certainly no longer far-fetched. The almost certain destruction of the dollar and our current fiat currencies is a small price to pay if they manage to avert a oil based collapse since the fiat currencies are dead either way.
Thus you end in a sort of circular line of reasoning but its really a matter of circling the drain if you will. Or using the tree concept your taking a sort of corkscrew path downwards. The vast majority of people are looking along the direction of travel around the tree not the net downward corkscrew real motion. Some might even see that their particular view of the path is heading upwards not downwards. So using your tree analogy we have a number of numbers we can deduce.
Our path towards collapse can be mapped to a corkscrew pattern. The rate at which oil exports falls determines how fast we move up the trunk to the tip. That motion has a total length of about 5-7 years. The winding number seems to be less than a year in general. Or perhaps better to say it was about a year and perhaps its tightening to 3-6 months or the winding is getting less dense. The spiral is opening up and becoming more linear over time. Most people are incorrectly looking along the direction of the winding not the overall trajectory but this is slowly correcting itself as the winding widens and increasingly aligns with our real net direction of travel.
In fact using your approach and the conjecture of a winding path it becomes easy to explain why I've tried to say whats important is to look at all the various major pieces of data at 3-6-12 month intervals. I'd argue most are clearly worse now than in the past. They are steadily moving towards values similar to when we last collapsed yet we are already past the first collapse and infusion of trillions in stimulus. And finally obviously if its a sort of winding path small wonder timing the end is exceedingly difficult. Adding a few more spirals is trivial and does not change the over all time evolution yet it effectively makes it impossible to time. How are you going to tell for sure when a spiraling path with a variable winding rate hits the end ?
It literally is impossible to time with any certainty no more than you could time a airplane with failed engines falling towards the ground in a variable spiral. You can of course readily constrain how long it takes for such a plane to hit the ground that a matter of gravity and aerodynamics. Obviously although maneuvering to change the short term rate of descent make the time spent at various altitudes variable it does nothing to change the final outcome.
This relentless downward collapse is indeed actually a result of being driven by geologic declines in oil production. Its the gravitational force and we are the stalled plane. The intermediate financial escapades creating the spiral pattern can then be seen as irrelevant and useless. They are indeed simply games being played out more because you can not because they change anything. In fact they probably simply hasten the process resulting in and even faster collapse than if we had glided on the best glide ratio.
Diving and climbing briefly is not a good approach :)
Um, how about:
"One rule might be "follow the thicker branch when two branches meet" or "when in doubt, go 'up' (i.e. use gravity as a guide)"."
Seems like this barely modified version of your rules for getting down would work for getting to the top. Maybe you should go climb a tree to see that your premise is actually wrong? In most normal trees, you can get to the top by following the thicker "branch", also known as the trunk, and by generally heading up. It's pretty rare to have a lateral branch thicker than the trunk. That usually only happens due to some damage, and one of the branches near the top will soon outgrow the damaged trunk and take over as trunk.
No. Think about it some more. I'm pointing out a sort of directionality. Time has the same property.
I suggest *you* think about it some more, and actually go and work with some trees. I heat my house with wood, cut up and split most of the trees myself, put tree stands in them, prune them, and plant over a hundred trees a year. I assure you, I'm pretty intimately aware of tree morphology. It has to do with the need to supply the greatest volume of water and nutrients to the largest and highest growth, structural needs to support the largest and highest growth, and phototropism. You should consider a different analogy, though I'll concede that most people don't work with trees enough these days to realize that your analogy doesn't really work.
[Edit] I should clarify that I'm not questioning your analogy of a tree with complexity of society, just the ant trying to get to the top part. A tree might be a perfectly good analogy to the complexity of a society. Don't know about that.
Oi, vey. I give up. Someone else try. Mike got it right way. Maybe he is willing to explain it to you.
x
I still think the problem is not about proving anyone wrong "theoretically". It should be clear that exponential growth at any rate greater than zero eventually has the mass of human flesh on the planet exceeding the mass of the planet, which seems unworkable. Or it eventually requires the flow of physical resources to move faster than light, which also seems unworkable.
The real problem is that one can not, for the time being, prove that continued growth is impossible at rates customarily encountered, and within a time frame that would get most people's attention. 'Forever' simply doesn't matter: after all, the Sun itself is "unsustainable" in that it cannot go on shining literally forever.
Here is a run of Human population growth between 2011 and 4011 CE, starting with today's population:
Using a 1/2 of one percent per year growth rate:
Population December 17, 2010: 6,888,485,163
Population in 4011 = 14,799,506,723,500
______________________________________________________
Using a 1/10 of one percent population growth rate:
Population in 4011 = 50,848,563,217
________________________________________________________
Using a one percent growth rate:
Population in 2040: 9,192,710,153
Population in 4011 = 302,601,650,580,000,000
______________________________________________________________
Sources:
http://www.census.gov/main/www/popclock.html
http://www.metamorphosisalpha.com/ias/population.php
__________________________________________________________________
I think most people who don't know any better would consider these growth rates as 'reasonable' and perhaps lower than what they regard as 'customary'.
Most people can relate to a 2000 year span, as many seem comfortable thinking in terms of the time period of the Bible's stories.
2000 years is certainly not 'forever', and it is not even anywhere near the time frame for when the Sun to brighten sufficiently to sterilize the Earth (perhaps no more than 1B years from now).
The real problem is the attitude of: 'IBG,YBG' (I'll be gone, You'll be gone).
We can say with some certainty that more than 7,000,000,000 people will die before the year 2100. How many more and roughly when are the open issues.
In many ways I wish I did not agree with you.
NAOM
All living organisms have "predators", for wild chicken its fox, for rabbits its dogs, for finches its eagles and so on. By "predators" I mean any natural force that keep the number of that organism in check in long term. Microscopic organisms are kept in check directly by environment.
For humans the "predator" is diseases. Its always diseases that keep number of humans in check in long term. Even early humans were skilled enough to survive against wolves, lions etc. All through human history humans have technologically advanced themselves in medicines and food management resulting in containing of diseases. Ancient science of medication is older than written history. Even simple acts like cooking food (vs eating raw meat) have long term health benefits.
By 1500 A.D. humans have developed a very wealthy and sustainable economic system. Population was in check. Large empires flourish. Trade was higher than anytime in history. There were no usage of any fossil fuels.
By 1600 A.D. a new kind of science start developing. Its science of engines, anesthesia, antibiotics, fast transportation, food freezing etc. Still in 1800 A.D. a lot of the 1500 A.D. era economic system was intact. From 1800 A.D. onwards the medical field developed so fast and so much that diseases were pressed and therefore population growth rate increased.
Let me give an example. In 1000 A.D., all over the world it was norm to marry a woman when she have passed 2 to 4 years after puberty, that is reached age of 13, 14 years. It was the norm and a girl reaching age 17 unmarried was an unusual thing. There were wars but 90% of deaths in wars were of men, so women population stayed intact. It was common for men to have multiple women (in form of wives, concubines, mistresses, whores whatever). Still world population was stabilized. The only logical reason is that its not the birth rate that matters, its the death rate.
For anyone interested in life expectancy, malnutrition and disease I recommend Fogel's book:
http://www.amazon.com/Escape-Hunger-Premature-Death-1700-2100/dp/0521808...
Basically, people lived very short lives because they were malnourished which made them susceptible to disease. Of course, there was no understanding of the germ theory of disease either, or of vitqmins. In poor countries today many children die of zinc deficiency, which also aggravates diarrhea. ( Half of world soils are deficient in zinc.) By the way, the death rate from cholera can be decreased to 3% by oral re-hydration therapy, which is as simple as drinking sugar water with sodium and potassium chlorides (Gatorade).
The battle of Towton - Nasty, brutish and not that short
For more on the archaeological project, see The Towton Mass Grave Project The battle was in 1461 during the War of the Roses.
Fogel won a Nobel Prize for his work, so I trust his analysis of the last three centuries.
Food was probably still more available in the mid 1400s than a half century or more later because Europe had been depopulated by the great famine of 1315-17 and the Black Death.
http://en.wikipedia.org/wiki/Great_Famine_of_1315%E2%80%931317
http://en.wikipedia.org/wiki/Black_Death
The Black Death reduced the population by from 30 to 60%. The population took about 150 years to recover.
By the way, the only ancient account of common people told in their own words was found in the Vatican archives in the 1960s. It contained detailed interviews from the Cathar heresy inquisition of ca. 1310-20 from the area around Montaillou on the north slopes of the Pyrenees in the south of France. Montaillou escaped the famine.
See: Montaillou: The Promised Land of Error
You mean that because the current population is about 7B, and 2100 is 90 years away, we can assume 7b deaths just from normal old age, right?
I've noticed that irony and other forms of subtle humor often don't communicate well on the internet.
Sure, but if population growth were only 0.1%, people could deal with it when they needed to; it wouldn't require urgent attention now or anytime soon. Nor need we think should or even can, right now, plan out the trajectory of humanity forever, or for 2000 years, or maybe even for 200 years. (Even the supposed Iroquois law is only about the seventh generation, not 2000 years.)
So the question remains, what gets people's attention, what are they persuaded (or what can they be persuaded) needs acting on in some time frame that concerns them.
We seem to agree on your main point, expressed in your last sentence: IGB, YBG.
Party on, and let our decedents deal with it.
Leaving growth in resource consumption and energy to one side for the minute, it seems that the belief that our population will increase exponentially ad infinitum is flawed.
While it may be true that the population is currently on the increase this is due to factors other than a higher than replacement fertility rate (with the notable exception of Africa). I used to fear the 'exponential population crash' but nowadays I tend to agree with the UN's forecast of a peak at around 9 billion occurring in 2040 (assuming no major upsets such as Peak Oil etc). The key is to grasp the fact that the majority of the developed world (plus China) now has a sub-replacement fertility rate (See: http://en.wikipedia.org/wiki/Sub-replacement_fertility). The increase in population in these countries is soley due to immigration from e.g. Africa, increased life expectancy etc. Once those factors stabilise population would actually begin to decline. So things aren't as gloomy as might first appear.
So, perhaps one less thing to worry about. Happy festive season!
Sorta a moot point since the human population has exceeded the carrying capacity of the earth quite some time ago.
And the other thing to remember is population growth slows due to demographic transition. That is populations becoming industrialized and wealthy. And that means consuming many times more resources per capita than they did before.
Don't get me wrong - I agree that our energy/resource consumption is absolutely unsustainable. But I'm trying to make the point that it's not a given that humans will seek to expand their own population as rapidly as possible as opposed to, say, bacteria. So you can't apply the simplistic functions that have been banded about above.
Sure. Human pop is no longer growing exponentially. No quarrel there.
However fossil fuels sure did allow some rather stupendous exponential growth.
But I think your "one less thing to worry about" is more than a tad bit misleading. But maybe you meant it more along the lines of The damage is done, no point in crying over spilt milk.
The world can't handle 9 billion people. Not even a small fraction of that. And there's going to be a correction.
Its a done deal. So I guess one less thing to worry about.
Well, you're quite right, the world couldn't handle 9 billion without the aid of an energy input equal to the one currently provided by fossil fuels.
What I meant about the 'one thing less to worry about' was in terms of considering the impending 'perfect storm' energy crisis as a whole. If crucial markers such as food / health services start to decline then it's unlikely that humans will strive to pour every ounce of effort into expanding their population against the available resources available to them.
I think it's equally misleading, or perhaps counter-productive is a better word, to repeatedly tout that the human population is going to explode and consume everything in sight like a swarm of locusts. Especially when this is factually not what is currently being observed. It's been said time and time again (and often on TOD by some astute individuals) that this kind of alarmist attitude just doesn't help to get the public onside with regards to the upcoming societal problems. I forget who said it, but Peak Oil really does need some decent PR.
iagreewithnick,
Just to clear the air, my initial response to Arthur does NOT mean that I think that humanity will increase to 50, 200, 0r thousands of billions of people by some future date.
Since Arthur was musing about humanity expanding through all of the Universe, I mentioned an article where Issac Asimov used simple math to show that we would simply fill the Universe with human flesh.
I offered a thought experiment not meant to represent reality, to counter a vision that was purely academic and not related to reality. The point of Asimov's example was to show people that the exponential function, if allowed to flower unchecked wrt population growth, would rapidly exhaust any size of Universe (save for infinite).
I am well aware of the UN's population projections, of the Demographic Transition, of http://en.wikipedia.org/wiki/Liebig%27s_law_of_the_minimum, and so forth.
I hope that the UN population prediction is the highest our population will go...however, like many others here, I fear that our population is already beyond sustainable, and that some kind of adjustment may occur in the next 50 years.
Thanks Heisenberg,
Apologies if I put words into your mouth!
N.
No worries!
I am neither a cornucopian nor a hard-core/fast-crash doomer...
TOD is a great place to hear a variety of views and facts from a variety of interesting folks.
Good stuff, same here actually. I just know that I don't know much, and I don't even know how much I don't know!
All I can say is that, for good or for worse, it looks like we're heading for interesting times.. :-)
I'll keep asserting that anyone who isn't alarmed by our current situation doesn't actually understand our current situation. Based on your comments so far, I am inclined to include you in this group.
Most people start with perhaps an inkling that something may not be right but stop researching when they find a comfortable "lullaby" (Greer's excellent term) so that they can go back to sleep. It takes effort and persistence to understand how all the systems work (and fail) together.
The popular lullabies today are:
- high prices will take care of everything (the economists' lullaby)
- technology will solve our problems (a favorite of everyone but especially here in Silicon Valley)
- EV's will solve the problem (Nick's favorite lullaby and a variant of technology will solve our problems; EVs are of course simply a side show as we collapse)
- Arthur's lullaby is that we'll branch out into space
So you should say publicly whatever you think is appropriate, as is your right. I, on the other hand, will continue to tell the whole story as I have pieced it together in my public talks and on my website so that people have a full appreciation of what is happening and thus can plan accordingly.
Believe you me, I've lost countless sleepless nights over the near future and am very concerned for the fate of humanity. Please do not deign to lump me in the BAU category.
What I am trying to say is that if you stop a random in the street and explain to them that the human population is inextricably following an exponential function and that soon we'll reach the stage where we're procreating in the streets, despite not having enough energy to gather food, they'll simply direct you to the facts - that population is not following this trend.
Now this doesn't help our cause one bit when we come to trying to convince them about the other crucial issues that we do need to face, such as an impending energy crisis, pollution and climate change etc.
It's fine to have these thought experiments but we need to understand that when conveying the message to where it's needed (i.e. the public) we're just shooting ourselves in the foot if we go all-out attack. It will have the opposite effect to the one intended.
Edit: and I've just realised you may be reading a little too much into my moniker - I haven't read any of the posts by Nick yet and didn't realise there was someone on the TOD by that name until now. So you can at least excuse me on that account :-)
For some people that is true, but not for all. I recently gave my latest presentation to the Transition Mill Valley group and after 90 minutes of relentless reality I received hearty and extended applause and thanks for connecting the dots for the audience. There is a recording of it floating around. No matter, I am preparing version 3.0 of the video on my website for the new year that will be this latest version.
My view is the following. Of any audience 1/3 are completely unreachable. Their current worldview actively prevents new information from bursting their bubble. They are the ones that angrily tell me in the middle of my presentation that there is more oil in the tar sands that we just have to go get (this actually occurred in my Mill Valley talk). This audience member came late (thus missing the distinction between oil flows and stocks) and walked out before listening to all the implications of declining oil production. Without the base I present in the first third of my talk, the conclusions I draw occured to him as "whacko" or "absurd."
The next third will allow new information to alter their worldview somewhat. They will at least leave thinking about what was said.
The last third get it and see the value of beginning preparations now.
I'm interested in reaching the second two-thirds of the audience. My view is that the audience members are capable intelligent adults and if I can handle this reality, they can, too.
I will not ever baby the audience and think they are less capable than they are. This has been my view since the first public talk I gave to eBay and Sun in January 2008 (there is also a recording floating around somewhere of that talk; formerly on Sun's site).
We must reach the people who are reachable while there is still some time for them to prepare themselves, their families and their communities.
I agree that we would be much wiser to err on the side of caution and prepare now than to risk losing all.
In fact I'm much in agreement with most of what you've said.
The only thing that I worry about is using hyperbole when it's really not needed - the truth is shocking enough. It just comes back to the population thing I guess - instead of banding about theoretical exponential growth we should be explaining that even 9 billion people is a step too far.
But this is just a personal preference, perhaps a multi-pronged approach will reach the most audience after all. What works for one doesn't always work for all..
OK, now the suspense is unbearable. Who, then (or what?) is the nick you agree with in that moniker?
Well, unfortunately I'm now ruing the choice! It was originally Nick Clegg - I got swept up in Cleggmania during the UK elections in May. I thought he could be different, but it seems I may have been duped after all :-)
EV's will solve the problem (Nick's favorite lullaby and a variant of technology will solve our problems; EVs are of course simply a side show as we collapse)
That misrepresents my approach, as I've told you several times.
I think we have serious problems, including unnecessary wars, large trade deficits, and climate change.
I think we need to take action to transition away from FFs ASAP.
I just disagree that economic collapse is likely.
Fair enough, you have. You just seem to have this thing for electric vehicles as though they matter one whit with what we're facing. The very few people who will be driving them will be lucky indeed. The rest of car-driving humanity will watch their current vehicles rust away, too cash poor to purchase one of these fancy new EVs and unable to obtain credit to do so, either. Now, I've always maintained that electric bikes, scooters and motorcycles have a high likelihood of widespread adoption.
Yes, I know :-)
Some people will never see the connection between all the systems, perhaps you are one of those people. In my view (not the truth, just an opinion), they fail to see it not because they lack intelligence or anything of the sort but because the mind rebels and refuses to contemplate such a future.
I know this has been raised to you before but I repeat it here not for you but for others who may be open to the idea that economic collapse is the likely future we face. From Implications of Resource Scarcity on National Security, the German military think tank report uncovered earlier this year by der Spiegel:
What allows for trade today is faith in the various currencies we use. When that faith disappears (the inevitable future of all paper currencies with absolutely no exceptions), global trade will be enormously challenged.
Note that I distinguish between social collapse and economic collapse, as distinguished by Orlov:
Essential Dmitri Orlov
http://www.postpeakliving.com/content/essential-dmitri-orlov
You just seem to have this thing for electric vehicles as though they matter one whit with what we're facing.
Well, if oil can be replaced, then economic collapse will not be caused by physics.
German military think tank report uncovered earlier this year
That was a draft - it wasn't released because it was only half baked. It's just a compilation of PO concerns from places like TOD. There's nothing new there - no independent new research.
Nick the problem is not peak oil its peak oil plus and infinite growth fiat based economy.
Your problem is you reduce it to simply a transportation issue. Its not by a long shot.
I'm actuatlly in agreement with you in the sense that the transportation problem is solvable.
I don't think EV's are the solution they are part rail makes a lot more sense. Regardless I think the technical details of peak oil are solvable.
As far as EV's go if you have ever spent time outside the US then you know reliable electricity is very uncommon.
Heck its not clear that fast charging services are viable in the US.
Sometimes people get off work and party till 2 in the morning and go to work at 8. I know it does not fit your
mold of available charge times but it happens. And of course often they drive home a tad drunk and forget to charge the car.
And from your name I take it your not a women do you want to run out of juice in a ghetto ?
My point is that there is a lot to a pure EV that you have not really taken into account.
A couple of women raped and murdered because their EV ran out of juice would create a bit of a problem.
You probably think thats trivial but Americas love affair with the car is not just transportation its the feeling of safety
and isolation from the masses. I could go on and on about EV's. Not that I'm against them simply that over time the quirks of our current EV's require giving up something even if its simply peace of mind.
You make numerous claims that are simply false.
1.) We grew our GDP without expanding oil usage.
This is false imports esp from China grew by leaps in bounds. We simply exports our oil usage to other countries.
If the US has retained the jobs here I'd argue the oil usage would also be higher. Ours real oil demand is us plus whats
needed to consume goods and services from other countries in excess of what we produce. Its called a trade deficit and it
represent oil effectively consumed but the US not China and India.
This makes export land interesting because some of their purchasing power result from them excepting our debt to make things for us.
Its really US demand for oil competing against US demand for goods and services.
Next our oiless recovery even if you correct it for import imbalances has resulted in a huge overhang of debt.
Bottom line is we have not paid for the oil we consumed either directly or via proxy.
You just cannot split oil from the debt it does not work that way.
If you really want to dig into the real situation Chinese coal went a long way to offset oil for many years.
Without Chinese coal we would have been in deep doodoo 15-20 years ago.
And of course Natural Gas. This get into partial substitution of one non-renewable resource for another.
All it did was buy us some time.
The point is that BAU even with fossil fuels is way beyond normal the leverage is extreme.
Even if we had the fuel the system is intrinsically unstable and other resource constraints would have caught us.
Water, Global Warming, Collapsing Fisheries, Eroded farmland the list is endless and your free to forget about fossil fuels.
Any constraint would have eventually caused "the problem". Each one is in and of itself technically solvable over the short term.
What your really claiming even though I don't think you realize it is that humanity is capable of infinite growth via application of technology as needed. We now can always simply apply a techno fix to any problem.
My own experience is that technology simply changes how things work generally creating a crisis later down the line.
The one exception is communication which is fairly close to a "pure" shuffling of electrons. Even here server farms create real issues.
So not even something as simply as technical communications is possible without eventually creating issues. Much less more resource intensive technologies.
The reality is every time you deploy a technology on a grand scale it has real costs and real effects.
Nothing is free in the long run. Technology creates as many problems as it solves. More often than not the extent of the problem is past the working life of the engineers and scientists that created the initial technologies. Often a matter of scale.
My point is that technical silver bullets have this nasty habit of tarnishing after a bit. Ignoring this is simply wrong.
Indeed what your really claiming and I'm pretty sure I know what your thinking is that EV's would allow suburban living to continue pretty much unchanged for a while. Obviously I question this but ok fine then what ?
If your really good with technology then you should know as I said its not a free lunch there is a cost what is it ?
If you claim nothing well I disagree you simply have not thought through the problem enough.
Even a society base on renewable energy and EV's and rail eventually has a down side or dark backside. And as often as not its a matter of scale. Thus even if EV's work over the short term something about scaling it up to handle and expanding population will eventually create a critical problem.
In fact we actually have some inkling of what it might be in the fight over rare earths. Which are not esp rare.
Although science fiction Avatar nailed it. Either you live in harmony with your surroundings or you don't.
Sooner or later humanity has to become a good steward of the earth. Techno fixes to allow growth are not the answer.
Not that technology is wrong simply that eventually it needs to be applied in harmony with the natural order.
We need to quit breeding and pillaging the planet of resources.
Now on this note I've radical to the extreme and I'll freely admit I home that oil forces us to change. Better now than later after we have stripped the planet of even more resources. The problemh is our "shit" has reached the point its capable of effecting our planetary ecosystem. If your right and techno silver bullets can offset this for decades or more to come well it just means eventually we probably will face a collapsing biosphere not a simply economic collapse.
I personally hope that infinite growth fails now not later. I think it will because its caught and your wrong. But I hope I'm right because if I'm really right i.e eventually if we stay on our current course we will collapse our biosphere then its a hell of a lot worse.
So yes I do hope we fall short I hope EV's are not the answer and I pray I'm right that infinite growth fails now not later.
We have done a tremendous amount of damage but given time it can be healed. If your even close to being right and I'm really right about the long term then eventually we may get ourselves in the situation where it cannot be healed.
Back to debt the debt burden alone actually makes me confident and indeed hopeful I'm right. The techno fixes did not result in any long term infinite growth we simply played some very fancy book keeping to make it look like they worked.
If you do understand debt and fiat then you will realize that technical fixes like EV's can't solve anything because the system we created already failed even with cheap oil. Our current economic system was going to fail regardless.
Mike,
I'm sorry, I don't have the time to try to parse your comments. If you'd like to present a single thesis in an organized way, I'd be happy to respond.
All I can say is: physics rules. We have more than enough energy to run an advanced civilization. Yes, psychology and sociology can screw things up. Yes, a modern market society is inherently unstable, and always runs the risk of various positive feedbacks that can create problems. So far, we seem to be managing ok, but we could screw up. OTOH...
The underlying resources and productive assets are there.
Mike's comments were entirely cogent.
But for you I'll summarize: his bottom line is that the way we are running our society is setting us up for a collapse of the biosphere. Better to have an economic collapse now than a biosphere collapse later.
There were other good points in there, too.
Better to have an economic collapse now than a biosphere collapse later.
That sounds like a public policy prescription. You're suggesting that we should try to collapse? I would suggest rather that we reduce our ecological footprint.
The chaos of a collapse will cause humanity to consume the biosphere, and leave the earth a cue-ball. Far better to stop emitting CO2, stop overfishing, etc.
I'm merely summarizing Mike's points, not making a policy prescription.
Personally, I think economic collapse is currently unavoidable and has been unavoidable for at least the last two decades given the trajectory we were on and the inability for people to see how all the systems work (and fail) together.
In my view, at this point we need to prepare people for an incredibly tough time instead of discussing how to save an unsalvageable car culture, like you seem to want to do. We lost the game completely and utterly but you (and others) haven't figured that out yet and apparently won't until there are 100 million people on food stamps instead of just 43 million, as there are now.
You'll keep talking about EVs somehow saving the day while we actually need to discuss how to keep civil society together as best we can.
It's increasingly becoming an inane waste of time.
I'm merely summarizing Mike's points, not making a policy prescription. Personally, I think economic collapse is currently unavoidable
OK, you understand that Mike is saying collapse is good, and you're just saying it's inevitable.
The point of EVs, etc: the underlying physics of the situation, the physical reality, is that we're not facing resource limits that will cause collapse. I see other big problems, like climate change, though it seems unlikely that CC will cause collapse. Big suffering, sure, but not collapse.
If you feel that we're facing economic collapse due to problems not related to resource limits, that's different. Of course, I don't see really good evidence for that...
Yes, you see the difference between a value judgement (what Mike said) and a prediction (what I said), no?
I know. I've tried and others have tried to show you but you seem to be stuck. Oh, well, everyone has to make up their own mind.
you seem to be stuck
Yes, facts are a stubborn thing.
lol. So are delusions :-)
Edit: Sorry, I don't actually think you are delusional. Now the expand into space folks are another story... ;-)
Don't forget the Cold Fusion folks...
Sorry it was late and honestly I was a bit perturbed. Aangel nailed it below.
Now finally we get beyond EV's I figured that your real premise was this. EV's and other technical fixes are needed simply because although we have plenty of resources a particular replaceable one can run out. I'd argue this is not physics simply a belief in the market economy and substitution.
In fact its more general than that we are so technically advanced now we cannot be "defeated".
I simply disagree. But that gets into how I see technology really working. Word Star vs MS Word 10000. This gets into values. To take a different tact. Is a technically advanced deep water well aka Deep Water horizon and advancement or not ? Whats really happening as technology progresses ?
I think I need to try and make my thoughts about technology coherent and present them.
And I'm not anti technology simply I think we have seriously mis-valued what technology gives us and what it takes away.
In fact its more general than that we are so technically advanced now we cannot be "defeated".
No, not at all. In fact, I think we're likely to cause great harm to our environment, which will eventually cause us great misery. But:
1) it won't be due to a lack of resources, it will be due to our abusing our environment, and
2) it's avoidable. It's a choice.
Well, you're quite right, the world couldn't handle 9 billion without the aid of an energy input equal to the one currently provided by fossil fuels.
I have a quibble with that sentence. I'll try to reword it a bit.
Well, you're quite right, the world couldn't handle 9 billion even with the aid of an energy input equal to the one currently provided by fossil fuels.
Energy is just one of the many constraints facing humankind now that we've blown past the carrying capacity of the world.
I think it's equally misleading, or perhaps counter-productive is a better word, to repeatedly tout that the human population is going to explode and consume everything in sight like a swarm of locusts.
We already have.
I wonder what sources you read to come to this conclusion? My own reading leads me to believe that 'consuming everything in sight' is exactly what the human race is doing, i.e. is factually what is being observed.
Well, look, if you want to be pedantic, we're not consuming everything in sight - I look out of my window and I can't see anyone consuming that rock's energy and converting into human flesh. Equally, from this point onwards all indications show that our population is not going to explode out of control in an exponential manner. Yes it will increase and yes it will likely place an untenable strain on the planet and our society, but why not say it how it is rather than resort to hyperbole? Especially when trying to convince a sceptical audience (i.e. the majority of our contempories) of our plight?
You obviously don't know how to see, or don't understand what exactly it is that you are seeing.
Because I can! Everything that I see outside my window has been extracted in some way shape or form from the earth, planet, ecosystem, what have you... You can see the minerals, rare earths, ores, fertilizers, fossil fuels, plants etc.. that have all been transformed into tools, implements and even many completely superfluous luxuries. All of it is used daily to provide the infrastructure of our civilization and ultimately the means of our sustenance.
On this point we agree, because we are already far into overshoot and past the point of rapid exponential growth. If you understand population dynamics you must conclude that this means a correction will occur, more than likely in the form of a rapid population decline or crash. Rapid as I see it could be a hundred years or so.
We have indeed, for all practical purposes, eaten the even rocks.
Ok, look I concede. This is a pretty ridiculous argument. I was originally trying to show that, like Heisenberg's Asimov quote earlier, that we haven't converted every last atom into human matter and are not on a course to do so - perhaps the locust analogy was a bad choice as it refers to easily consumable resources.
But, I still maintain that we are different to mindless locusts / bacteria etc. - there comes a point when we do hold back and plan for the future. Of course it could be that the current case will be too little too late due to delay mechanisms but it's not really fair to strictly compare human growth to a simple mathematical function such as exponential growth. It has feedback mechanisms which are far more complicated than 'see and consume'.
I don't know why I'm still arguing this point as it's not one of my fundamental gripes and I agree with the vast amount of information on TOD, I just worry that some people have an approach that is counter-productive to helping to convey the urgency of the message to the masses - there's a reason that people have coined the derogatory term 'doomers' and tend to tune them out!
This actually isn't an easy point to resolve and it's been discussed ad infinitum for decades. There really are valid arguments on either side. Should we tell people how bad we truly think things are? Or should we sugar-coat it?
I think more and more people are coming to the side that we have to talk straight to people. Hirsch just wrote a book with straight talk in it. Hansen (the climate scientist) just wrote a book with straight talk in it. The climate scientists have just agreed to discuss in 2015 keeping the temperature down to 1.5 degrees Celsius above preindustrial times instead of the 2 degrees because the consequences are that bad.
Everyone is clearly entitled to their view on how we should proceed. You should say what you think will motivate people and others will do the same.
We don't actually have to agree on this to keep moving forward.
Personally, I think we are headed for an epic crash with unemployment soaring by 2020 and hundreds of millions of people with no skills to operate in the coming environment and an economy that has no use for them (how are they going to buy food and keep a roof over their head?).
If you don't think this is an emergency, there just isn't that much any of us can say at this point to have you see it, is there?
I think that's a valid point you've made - that there needn't be a binary solution. Some probably respond to hyperbole better and some to sugar-coating.
For the record I do believe there is an emergency, I'm just firmly stuck in the straight-talking category (hopefully somewhere between hyperbole and sugar-coating!).
I don't buy this whole inflation-adjusted-$75-dollar-a-barrel-or-so oil always has and always will cause a recession. The economy is highly correlated to trade, yes if the price of oil goes up goods-miles mut go down, but if the efficiency of the transport vehicles increase then the same oil can transport the same amount of goods.
$75 dollars a gallon when cars can do 10 miles to the gallon is equivalent to $150 dollars a gallon when cars can do 20 miles to the gallon and equivalent to $300 dollars a barrel oil when cars can do 40 miles to the gallon.
If you want to argue that there is a critical rate of increase in the oil price that cause recessions, that I can buy, but the price at which oil causes recessions is a strong function of technological efficiency.
I believe there are even cars available today that can do 70 miles to the gallon.
http://www.ksl.com/index.php?hl=3&sid=3854278
(And there's nothing super fancy about this 4 seater car.)
jmc1, thanks for the link.
Quoting Jeff Rubin, I also "believe in prices", and don´t buy the high-price-will-kill-demand logic. Higher prices will kill inefficient demand, that´s for sure. But there's only one way oil prices can go as fields deplete, and that way is up. And as they go up, many of the binary thinkers will realize there are infinite middle-ways between using our feet and using a Hummer.
There are a couple of problems with the story contained in the link. It probably is more a problem of the writer than anything else because I would not expect a non-engineer (or someone who did not have a pretty strong grounding in how reciprocating compression engines work) to know the differences.
First, diesel engines (also known as compression ignited engines) operate operate somewhat more efficiently than gasoline (spark-ignited) engines. Part of that is the difference in the compression ratios (you cannot operate a gasoline engine with the same compression ratio as a diesel). Another part of that is the heating value of the fuel (diesel fuel has roughly 12% more energy per gallon than gasoline) and how that is "recovered" through the power-stroke of the engine. Note there is a theoretical maximum amount of power that can be recovered that is governed by the cylinder stroke. The rest is waste heat.
The VW diesel engine is a 1.9L TDI powerplant. The standard curb weight of the New Beetle is a little over 2700 lbs, roughly 3/4's the weight of many American autos. The presence (or absence) of the "wing" is a matter of aerodynamic drag and how it helps (or hinders) the unmodifed vehicle and the work the engine must do to move the vehicle over a range of speeds.
For most vehicles, its not a matter of changing efficiency at a flip of a switch or the changeout of an engine (though it would help if you took your foot off the brakes while simultaneously pushing the throttle). For those who remember your thermo, the highest efficiencies are seen when the processes are operated reversibly and dS/dt is zero or nearly so. Unfortunately, a dS/dt near zero means your engine could not work (or would have to be infinitesimally small) and your speeds could only be fractions of a furlong/fortnight.
A term used for this is sunken costs and we have sunk a great deal of cost into the system we currently have. It does not turn on a dime.
Yes, but peak oil does not mean the end of oil, so we won't have to 'unsink' those costs in an instant. The world's car fleet has a turnover of about a decade, so all that's really required is for people to sell their petrol cars and buy small efficient diesel ones, for about a decade and you've doubled or trebled the average efficiency of human transportation. I believe there is sufficient production capacity to ramp up the number of diesel cars on the road quite rapidly.
Its a bit nit picking, but diesels are not compression ignited (as compressing a mixture of fuel/air until it reaches ignition temperature). But rather the air is compressed to beyond ignition temperature, than the fuel is sprayed into it. This makes it difficult to get a clean burn, as the fuel and air cannot be well mixed befre it starts burning. The holy grail is Homogeneous Charge Compression Ignition, where a fuel/air mixture is compressed until it ignites. These would have
the fuel eficiency of diesel engines, and the cleanliness of gasoline engines. But, avoiding premature ignition is a big deal!
Regardless, the Diesel is commonly called a "compression ignition" engine as it is not spark or flame ignited, though it may have a "glow plug" heater for cold starting.
You might want to take a look at historical growth rates of transport fuel consumption, in BTU terms, here in these United States. There is no question that growth rates fall out of trend, notably, starting last decade. Moreover, on an inflation adjusted basis, the price of oil was roughly stable for nearly 25 years in the boom period of the US economy. Most of our current built environment and transport infrastructure was created during that time. In other words, we are leveraged historically to an oil-oriented system here in the US. We're locked in, and small changes at the margin like high mileage vehicles will not change that quickly. A system built out on 14 dollar oil over decades has, shall we say, certain "assumptions" built into it.
Yes, it's true that once we started including the output of the FIRE (finance, insurance, real estate) in GDP, it appeared that the amount of energy inputs into GDP fell quite alot. However, as many predicted for years, it is not the FIRE economy which is experiencing a revival in the post crisis economy. Instead, it's the agriculture, resource, transport, and export sectors that are returning to the US. In other words, the type of economic activity that requires the labor performed only by energy.
It's impressive, to be sure, how many years the credit bubble allowed for a reduced exposure to oil prices as the nature of work in the US was redfined. However, the 1980-2000 period was not exactly marked by high oil prices. Once this decade hit, however, we found out once again--using various measures like expenditures vs GDP and so on--that the US economy like every economy was liable to be cracked by prices.
I guess what I'm saying is, it appears you think this question is unresolved in a general sense. My view is that the work on the issue has already been done.
G
Innovation takes times, while in the 1970's there were oil price spikes that caused brief signals to increase efficiency (and BTW during the decade or so that followed vehicle efficiency doubled) There has never really been steady high oil prices.
Such steady, high oil prices will lead to innovations in efficiency that unprecedented since the beginning of the oil age.
To deploy those changes will initially divert capital that is currently used for other purposes, true, and this will impede economic growth in the short term possibly even resulting in a prolonged recession. Since politicians think short-term, this is why they've been putting it off for so long, instead try to secure suffiient imports to keep the price cheap.
But in the long term, the new infrastructure will be deployed.
I don't think pointing to a few recessions caused by a few sudden spikes in oil price in the last 50 years, is proof that $75 dollar a barrel all means "the end of growth" although it may imply a 5-10 year recession while the new infrastructure is put in place.
Where I'm coming from is that I believe it is the gradient in the increase in oil price that shocks economies into recession and there is not a critical oil price itself that does it. There is no precedent for a high decade long plateau of oil prices above $70 dollars a barrel so don't know why everyone is so sure that societies cannot adapt to grow under those conditions.
In my view, the current system is cracking apart now, whether you think it is due to high oil prices or not. You may not be sure that we can adapt but I've already made up my mind: this system is in the process of going away.
In this brief period of scrambling to keep it running (bailouts, etc.) some people will fool themselves into thinking that fundamental adaptation will occur and growth from the current size will resume. In ten years it will be obvious to everyone that the forces at work right now were unstoppable (oil's decline, too much debt, etc.).
There's a solution to to much debt: Inflation and lots of it.
The solution to peak oil is: use less oil.
I think people will find this somewhat uncomfortable but it won't be the end of the world, you won't have people starving in the suburbs because they can't drive to the shops, they'll just have to cycle for a few hours with a backpack for the groceries (like I do anyway) uncomfortable and awkward? Yes. The end of civilisation? No.
BTW the delivery truck to the local shop will still run on oil because peak oil is not the end of oil but simply a reduction in supply.
Regarding the system collapsing, I guess it depends where you draw the line between things getting a bit worse and collapse.
The problem is that fiat currencies themselves fundamentally fail with growth is no longer possible.
You simply cannot create the excess wealth to cover interest. To understand this its probably better to take a deep look at gold based monetary systems in economies that where relatively stagnant. Inflation/Interest games lead to rapid collapse.
You can of course try but no matter what you have no hope of balancing the books.
For example couple inflation with rapid expansion of government debt and falling real productivity from rising oil prices and eventually you simply don't have the tax revenue period to cover the debt. No matter what currency games you play your in default.
History has plenty of examples of this its not exactly and unknown concept. Heck Zimbabwe anyone.
Thats not to say that what your claiming won't work in the short term indeed the short term could last for a while indeed Zimbabwe lasted far longer than many thought possible. But that does not change the intrinsics indeed in general it makes the eventual collapse worse.
In the case of Zimbabwe they simply adopted and external currency for the major world currencies we don't have such a solution.
Does it mean the collapse won't be bad well I suspect that all depends on where you are what you do and simply how lucky you are.
I can assure you that quite a few people in the world will not share your viewpoint.
Enough panic and insolvence and we get the equivalent to hitting the financial
systems reset button. The easiest path from that is to restart with new currencies
and the least unballanced institutions since we already have all the legal and
technical infrastructure for such a system. Speed is essential to get it moving
and utilizing the bankrupt physical infrastructure to get people jobs, goods,
making adaptive investments possible and to pay a lot of taxes to save bankrupt
people and old people with no pensions.
I expect that a well funtioning and respected governments will be absolutely
essential to get a society thru a global financial crash with minimised damages
by clearing bad debt from the books and swiftly get things moving again.
Some very nice summaries there by memmel and aangel, so I don’t have every much to add. As far as financial structures go, there may be a very small amount of time to move away from fiat type currency systems. But since there is no movement in that direction, in fact QE is in the opposite direction, the financial structure looks like it will probably go down the drain in the post peak oil world. The final fall, or crash if you like that term better, may not come for a few years more but will be severe when it comes. That will be a big step down on the economic scale, and without going into great detail since it was explained elsewhere, the fall in the financial system will bring about a fall in oil output.
As far as prices go, well I’ve mentioned several times over the years here that many ‘deflationists’ have a blind spot to the brisk inflation of the US in the mid 1930s. Yes I am talking about inflation in the middle of the great depression – and not deflation. This occurred after a 75% devaluation in the dollar vs. gold. Hey didn’t we just have another 75% devaluation of the dollar vs. gold? So as far as a price of $80 or $100 stopping the US economy, well maybe it will slow the economy, but that doesn’t mean the price couldn’t just keep rising. There was much debate early in the year here about the effect of $80 oil and US economy. Well the price is above $80 and economic growth is accelerating. I don’t remember many here predicting that. If we can’t predict the economy six months ahead here, well I don’t think we can have a good idea of what will happen even as little as two years ahead.
Anyway, well of course $200 oil would not go down easily today in the US, but with the rapid and ongoing devaluation of the dollar, in a few years the price of $200 may look rather tame.
Some nice concepts. I'd like to make it clear that I'm a debt deflationist. That does not exclude extreme price inflation or even expansion of the money in circulation. It simply means that outstanding debt will continue to be defaulted on far faster than money can be created. The amount of debt dwarfs the amount of cash in circulation in the general economy by several orders of magnitude.
If one takes debt to include a wider range of future promises like pensions and social security then its even larger.
You basically cannot inflate your way out of this situation. If you tried you would simply hyperinflate rapidly into collapse.
Next I believe that fewer more expensive basic resources esp commodities and of course especially oil ensure that no matter what you do to the money supply the net available to pay debt will be lower. Attempts at monetary inflation simply leads to additional price inflation for the basics.
Next monetary inflation simply fails if it cannot incite wage inflation globalization and high unemployment rates ensure that regardless of what happens with price inflation for commodities wage inflation will not keep up. Indeed its difficult for me to even see any inflation in wages they should continue to fall.
Next he recent housing bubble is very nasty. Obviously decreasing what we pay for housing will free wages to pay debt but just as obviously it result in debt deflation via default and loss of cash investments. Sure you can play games hiding these losses but that does not really change the situation. If prices for essentials are not going up and wages are stagnant to falling then housing has to go down.
So in the end regardless of what happens to the dollar vs commodities the much larger issue of continued debt defaults cannot be solved without destroying the currency via hyperinflation.
Next I'd argue that this means that interest rates will eventually be forced higher to account for persistent defaults. Attempts to expand the money supply and cause inflation fears will simply inflame this new intrinsic force behind interest rates. Indeed I think default risk and to some extent inflation fears will overwhelm any attempt to keep interest rates low. As interest rates rise against a back drop of falling ability to pay in the first place defaults will increase and force interest rates higher. Interventions to provide liquidity will simply make matters worse as they keep potential overall inflation in the picture.
The problem is pretty simple no matter what you do the debt levels are so extreme now that expanding them is impossible. Debt deflation via default is now a fundamental part of the monetary system.
Fractional reserve lending and fiat money in a world that can pay less and less each year to service debt in absolute terms regardless of attempts at inflation of the money supply has failed. I could well be wrong but no monetary policy on the planet can subsume the debt loads we have now without simply crashing into a fast hyper-inflationary collapse. Remember wages won't keep up so the onset of hyperinflation would quickly reduce real wages to effectively nothing. Indeed I'd argue any sort of general inflation or even commodity price inflation like we are seeing is working against a backdrop of falling wages.
Thus because the real financial problem is one of debt deflation with debt far in excess of the ability of the daily or yearly economy to service that debt I don't think a traditional wage price spiral is possible. Esp with high unemployment and globalization.
In fact one of the few ways out seems to be a massive increase in tariffs to drive internal employment before you can even begin to get real wage inflation and reduce the rate of debt default. What funny is this is exactly what happened back in the 1930's and modern financial policy loves to claim these guys where idiots back then. Now I think they had their backs to the wall and had no choice.
I don't think we will either and also even if we did the policy would fail. It simply that without the tariffs you can't even try anything else. Obviously a return of tariffs would strain international relations.
And of course last but not least the fact that the last bubble was in housing will come back to haunt us. Demographically we are passing the baby boomer peak this coupled with the bubble ensures a fundamental oversupply of homes. In general these homes are still priced well over historical rent/own ratios. Much less anything close to what they should fetch in whats for all intents and purposed a depression along with rising commodity prices which cannot be easily deferred esp food.
This is important simply because your average person who bought a home any time in the last ten years is probably going to see its value fall no matter what happens. I've figured it a few times and in my opinion if somehow we don't collapse soon then the bottom for housing is something like 50-75% below current values. Even if I've over estimated the decline it does not matter. What matters for the US is that this continued decline will be socially explosive. On top of this you will have rising demand for and end to immigration and protection or tariffs.
The key is that Joe 6pk will be squeezed mercilessly he/she will see their home valuations steadily erode. Their wages fall and the cost of key essentials rising steadily. Most also have extensive revolving credit balances many have ARM's that will be affected by rising interest rates. The majority will probably start missing a few payments and see their credit ratings drop and cost of debt rise.
Defaults will make it virtually impossible for most to expand their credit if they exhaust their current lines. Indeed I suspect we will see credit begin to get pulled even faster. And of course unemployment lower pay or simply the fear of future financial problems will make matters worse.
So for the US at least in my opinion we are looking at a powder keg of a social problem brewing right now. This will eclipse the financial issues and even commodity prices in the near future. I think a lot of people have been lulled into disregarding the importance of this simply because so far at least nothing major has happened in the US. I'd argue that this was primarily because most people expected to get their handout. At almost all levels our society is now based on entitlements. Everyone believes they deserve a certain standard of living. Whats kept things in check until now was simply people patiently waiting to receive what they know the deserve. No reason to riot since it was simply a matter of time before they got what was their absolute right. This lull as the entitlement society waited was simply the quite before the storm. Pretty soon most of these people will realize not only are they not going to get what they think they deserve they will stand of losing most of what they have.
I think it will take a lot of people by surprise just how fast things go from being relatively peaceful to rioting. Once it starts it will I think spread fast. Although its impossible to know what will set things off If I had to guess It would be anti hispanic/illegal immigrant friction getting out of control fast and turning into widespread rioting. Probably setting off a sort of three way white/black/hispanic racial rioting. One obvious trigger would be the collapse of Mexico and the natural influx of refugee's.
Anyway I think that the net of all the financial stuff eventually leads directly to this as the real problem. I think the financial problems will thus soon be eclipsed by internal instability. And of course obviously as the US starts to experience major internal riots and increasingly widespread martial law this will in turn have a serious negative impact on the financial markets and the price of oil in dollars.
And of course once the world sees riots in the US one has to imagine that the populations of Ireland, Greece, Spain etc will become even more violent.
And last but not least the end of benefits for the 99er's sets the stage for things to get bad fast. I'd give it at best three months before we start to see all kinds of crap start to happen. At first from desperate individuals but then from increasingly vocal groups.
And finally sadly enough I think our own government is well aware of this issue indeed they will probably encourage the transition to martial law. Clearly it would give any new military government a clean way to default on whatever debt they wished and also pay some of the debt. A few bankers win and the rest lose. A military takeover is probably the only real way out as it ensures some of the financial system wins big while allowing a much needed reset.
And of course a newly militarized US and the resulting defaults primarily on foreign debt along with spiraling oil prices has to be the backdrop for widespread warfare. If anything the US military will get stronger under such conditions so the crazy bastards that got us into this would probably see a real chance to literally rule the world. Sure we might see a few cities nuked but that would do nothing but cement the power structure.
Damn I alway end on a bad note anyway social unrest is in my opinion the big thing over the next several years.
The developed economies began economic decline in the 1970s when productivity increases almost disappeared. Total debt/GDP in the U.S. was 160% in 1980 and is now over 360%, essentially meaning we borrowed 6% per year which we have no realistic possibility of repaying.
Much of the economic growth was in the FIRE (finance, insurance and real estate) economy. The marginal productivity of debt declined from $1.53 debt per $ GDP in the 1950s to $6 debt per $ GDP. The money went into financial assets and real estate (land more so than structures). This has tremendously distorted land values across the U.S. and in Europe. Land and structure values for the U.S. can be found at:
http://www.lincolninst.edu/subcenters/land-values/metro-area-land-prices...
A 6% real estate sales commission on the land portion of a house in the high priced California metro areas is more than the total land value of a house in Atlanta. Inexpensive land is why the Atlanta area was one of the fastest growing areas of the U.S. for the last two decades. Job growth will end in the high priced markets as employers make mass exits, leaving homeowners hopelessly underwater and the banking system too upside down even for the government to keep bailing out. That is why the Federal Reserve is monetizing the debt. The other option is to let the banking system fail and send real estate prices in the high priced markets back to 1980 prices very quickly.
None of what happened in the last decade should have been a surprise. We have seen this movie before: Japan Financial asset bubble (check), crash (check), low interest rates (check), real estate mania (check), a continuing depression during which real estate returns to level of 20 years earlier (watch the movie)
The Japan sotry does not have a bad ending, so far. A horror movie that started in the early 1920s was much worse.
Cheers,
Paul
I am in agreement that we are already in some type of debt collapse, and it probably cannot be resolved without a crisis where debt investors will take some massive valuation losses voluntarily - which seems very unlikely. This even though recent disclosures by the Fed indicate that the financial system would have already collapsed in 2008 had not the Fed basically provided as much money and direct guarantees as needed basically to bail most everyone out.
Sure there were some large financial and industrial bankruptcies in 2008/2009, but in relationship to the scale of the potential problem, they were not greatly significant.
With debt already unpayable, and post peak oil making debt even more unpayable as time goes on, where does that lead? To a lower standard of living and probably an eventual transition to another type of financial system. But if riots in Europe are any indication, people don't intend to take the end of BAU lying down. I don't look forward to what a well-armed American public may do when food doesn't show up at the supermarket because of diesel shortages, or maybe they will just protest the price of food eventually running out of the reach of the middle class.
Not that I know exactly how this will work out, but it appears the rich as well as the public what BAU as long as possible. It appears that the Pentagon is already making plans for how to deal with these types of riots. Hopefully they will keep order by giving food trucks a high priority for energy use, and they will come up with some rationing system that worked as well as the one during WWII, but back then people were more careful using their personal gun power.
Until then, inflation will be accelerating. I don't see much evidence that we will make the necessary adjustments widely accepted in the US to guide us to a lower standard of living. It won't be long before those huge increases in wholesale grain prices start showing up at the market, at the same time the 99ers unemployed can't find jobs. As much as Bernanke and QE will ruin the dollar in the long run, it actually works in the short run as trillions of new US$s are basically accepted at face value by other countries in the world for US purchases of needed oil, etc.
When those dollars are no longer accepted one day, life in the US will change forever.
You nailed it basically none of the debt that exists today and will be created over the next several years will be paid back.
And it will be a long time before we can pay back debts at anywhere near the current scale if ever.
Surprisingly I've never felt that peak oil was and intrinsic problem even if we had geared our infrastructure towards automobiles.
If everyone owned their own cars and had paid 70% down on their houses then why would peak oil be a problem ?
Indeed in such a society denser living for most would be the norm not the exception. Don't buy a car till after you have saved for a house for example make use of public transport etc. Demand for oil would not have resulted in extreme technical innovation for a long time. Many fields would be found and determined to be uneconomical by peak discovery would have been clearly in the past and we would have been going through our inventory of increasingly marginal fields and prices would have been rising.
When production actually peaked under such conditions would have been hard to determine more of a very long period of stagnant production.
And one has to imagine such a society with ample warning probably decades that cheap oil was gone and overall production would fall would readily move towards alternatives.
In many ways it would in one sense be a poorer society but I think thats looking only at one generation. Each generation would effectively own all its needed durable goods outright. And if they wished each could probably upgrade their homes or more likely make the existing structures nicer and more energy efficient.
Its not all that hard to see how peak oil could have been a non-event. But we did not live this way we chose a different route. Some like to claim that peak oil is a non-event but if you dig into what they are saying you will see that they effectively claim a society not so different from the above. For them debt does not matter i.e the above frugal society gained nothing real over us.
Well I'm sorry it does matter indeed its everything not nothing. Peak oil matters because it ensures these debts won't be paid.
We messed up big time indeed the most extreme excess has been over the last 15 years. Thats really sad since one has to imagine that our leaders had access to decent information about reserves and production to see that peak oil was on the horizon.
Not only have we taken the wrong road we turned it into a super highway.
To understand what's happening to us requires understanding how several systems impact each other. I don't think you are looking at the big picture. Mike above describes some of the problems with the financial system when growth stops.
Here is another way to look at it:
I don't know how you earn your money but if the market for your services goes away, unless you have a good amount of savings (and an intact fiat currency system that allows you to spend it), you will, in fact, have trouble bringing food from the supermarket into your home.
As for the end of civilization, it's certainly the beginning of the end of this one. How long did you expect this one to last, anyway? All civilizations have expiry dates.
I have watched a lot of businesses close down here in the past 2 years since the LEhman shock. They never reopen, nothing else replaces them (well, hardly ever), it is over and people I know in other cities tell me the same thing is happening where they live.
But, congratulations, the oil that was being used to service those businesses is freed up to go elsewhere, down the street or around the world.
Why cannot the process just continue until the whole darn thing is just one huge ghost town and somewhere, who knows where, there is a place still functioning (it could be the govt, they have the power) and they start issuing orders and using their oil, not so much, but some...."ship some grains around, keep people functioning at a basic level".
And everyone waits for the grain truck to come around, but while they are waiting, they start knocking down their garages and setting up gardens and trading old clothes with neighbors...until voila, a new type of economy is born. This could happen...a rebirth, a second chance.
Bottom line, if the production of oil or oil substitutes can be increased at the ~$100 per barrel level, then I don't see why economic growth should not be able to resume, albeit, perhaps with some temporary growing pains as efficiency increases.
@jmc1
Our economy has not grown, over the long term, on an expensive energy base. $100 per barrel would constitute an expensive energy base. I cannot say that growth is impossible, but, as my article indicates, i find it hard to believe that we can continue to grow, as you posit, on an energy supply that is roughly 2-3 times as expensive as the long term average. Why do you think we can grow just the same with an average barrel cost of $100 instead of $40?
-Dave
David,
US hasn't grown; the world has, although I don´t think this is necessarily a good thing.
Why this obsession for "growth"? The whole economic system should (and eventually may be forced to) change this basic premise. And since this is a premise for the existance of fiat currencies, then so be it: back to the real world of commodities-based currencies. That should help us focus more on the efficiency part of the equation.
@Dave
I don't believe we can grow as fast now on $100 as we could if oil was $40 today, but I do believe that we can grow as fast on $100 today as we could on $40 dollars during, say, the early 80's simply because engines are more efficient now. I can also agree that a sudden increase in oil price will definitely cause a recession. But as long as it plateaus out at some point, then the market will naturally respond with a great push towards efficiency, both technologically and infrastructurally, until at some point in the future the efficiency and utility we can get out of $100 oil is equivalent to the utility we could get out of $40 oil today, at that point our economy would resume growth.
So while I could agree that $100 oil could cause a recession during the period of adaptation, I don't believe it would mark a permanent end to growth. (Though perhaps $300 would if it came on too quickly)
@JMC1
But how long would those efficiency improvement take? How much financing will be needed - and will it be available in a stagnant economy? I agree that the economy can adjust to higher prices - but how much will that cost and how long will it take? The effects of peak oil are being felt now.
-Dave
Unfortunately while a few scientist working in labs think long term, when it comes to deploying sufficient production capacity to replace our petroleum infrastructure the hassle and pain of doing so is so great as well as the concentrations of capital required that everyone starts thinking short term.
You say the effect of peak oil are being felt now.
I say the effect of peak oil have to be felt now, for politicians, investors and consumers to decide to divert the capital required to solve them, in terms of efficiency and substitution.
If there was an innovative cheaper path than conventional oil, then we wouldn't have waited to the last moment, but when the substitute is inferior, people put off the switch until they have to.
I'd say the improvement and efficiency could take between 5-15 years before robust economic growth can resume.
If there was an innovative cheaper path than conventional oil, then we wouldn't have waited to the last moment, but when the substitute is inferior, people put off the switch until they have to.
It would be nice if the world worked that way. Unfortunately, EVs have been cheaper than ICE vehicles for quite some time (when you include all of the costs, such as the $500B the US is spending on security post-9/11).
No, change is blocked by a relatively small minority: those whose careers and investments would be hurt.
"The billionaire brothers Charles and David Koch are waging a war against Obama. He and his brother are lifelong libertarians and have quietly given more than a hundred million dollars to right-wing causes."
http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer?curren...
Truck freight efficiency can be improved in months - things like adding covers to cabs and changing surfaces to improve aerodynamics. Batteries can be expanded to reduce idling to power "hotel" loads: fridges, A/C, etc. Other changes take longer: Walmart announced a couple of years ago they planned to double their truck efficiency over a period of roughly 5 years.
Rail can be expanded in a period of a year of two, and is 3x as efficient as long-haul trucking.
Water freight can double efficiency in minutes, by reducing speed.
Personal transportation can double efficiency overnight with carpooling.
The personal light vehicle fleet is much larger than is needed, so efficiency can improve overnight just through vehicle switching: Dad gives his SUV to the teenager, takes back the Corolla for commuting. When gas prices peaked, used-car dealers had their lots full of SUVs they couldn't sell.
Efficiency really isn't that hard to improve quickly, though it may have some costs or inconvenience.
@jmc1
I believe your optimism is based on the assumption that the response to the price signals resulting from declining production will be fast enough to allow for growth to resume/continue.
I don't know how long you've been aware of Peak Oil or how long you've been reading TOD but, I see you've only been a member for 3 months or so. You're either at the bargaining or in the denial stage (see stages of grief). If you stick around here long enough you will probably come to the conclusion that many of us here have already come to. That is, the scale of the problem is so huge, the real repercussions are so unpleasant and the forces of denial are so great that, it is going to get a lot worse before the public at large really sees the need to make any drastic changes to unsustainable lifestyles.
The point is that, by the time the market "naturally responds", decline will have reached the point where the response is insufficient for growth to resume/continue requiring an additional response. Rinse and repeat. I'm not saying that "the markets" are totally incapable of reacting fast enough. It's just that many TOD members do not think it is likely without radical changes to the status quo.
I have come to accept that many of the things I take for granted now may not be possible in the future so, I am seeking to make changes that may make things less unpleasant in the (post peak) future and enjoying things as much as possible while I still can.
Alan from the islands
It could be another 1930's type situation, I agree, but in another way, the more our ecomony contracts, the less infrastructure will have to be replaced to stabilize it (albeit at a lower level). And the higher the percentage the oil efficient/ oil indepedent infrastructure will be as a fraction of the total working infrastructure, the other question is how much infrastructure do we have to replace to get to the point where we can "get by"? Maybe we don't have to replace all the cars that run on petrol, maybe we just have to refit the cars that run on petrol with diesel engines, how much time would that take? If there was a real push I imagine not too long.
I agree it would take a long time to manufacture an electric car for everyone, but what about a motorbike? And what if people stopped flying and got the boat?
I think the mistake a lot of the doomers make is the lack of appreciation for the ammount of energy that goes into producing what are effectively luxuries, when compared to the ammount of energy that goes into producing more energy. As time goes by there'll be a lower fraction of energy from the total energy available for luxuries, but if sufficient energy is reinvested in releasing more energy, then the total ammount of energy available could still go up.
An EROE of 5 for tar sands is good enough to remain sustainable, when you get down to 2 or 3 then its time to start talking about civilsation collapsing. But even then we have to remember that 5 for tar sands is just as transport fuel, it may well be possible to manufacture transport fuel at a lower EROE than that, provided some other source of energy (coal, gas, nuclear) with a higher EROE can be used to drive the process.
I think the problem with a lot of the doomers is that they confuse "peak oil" with "the end of oil" and neglect the fact that decades after the peak our petroleum infrastructure will still be viable, and if its used to deploy a petroleum independent infrastructure growth can resume after a finite period of decline (~ 1 decade)
Scooters...
Put in an order for a Volt or Leaf, carpool in the meantime.
Carpooling..the horror.
I think your assumptions about infrastructure are grossly incorrect. I studied as a civil engineer and have done some looking into this.
I think the infrastructure that we mostly built since World War II is coming to the end of its design life, whether you are looking at transformers, bridges, sewers, water pipelines or oil pipelines. There have been a few posts on TOD over the past few years on infrastructure and I've posted comments with some of the research I've done.
The bottom line is that in a deflationary spiral there isn't the money even to repair the infrastructure much less replace it. Implicit in our civilizational build out was the assumption that at some point in the future there would be the money to replace the infrastructure as required. But when the money goes, this replacement will not occur.
We're already seeing the beginning of this process as we start turning paved roads back to much cheaper gravel.
No it won't. It takes lots of money to maintain this infrastructure. BP is even now being accused of spending insufficient money to keep its pipelines in good repair — and we are in the abundant money era.
Matt Simmons would mention as often as he could that "rust never sleeps." See this presentation "At Risk: The Sustainability of Oil and Gas" to the Annual Energy Insurance Symposium for more but here is one slide:
Notice his point at the bottom "No one has a vague blueprint for how these twin cancers are to be addressed."
I expect infrastructure to be a complete mess by 2025. It takes just one interstate bridge that can no longer carry trucks to drastically reduce the utility of the highway.
Read the Civil Engineering Report Card if you haven't already to get a sense of the job in front of us or Matt's presentations to get a feel for the infrastructure problems we face. I just can't believe you've looked into this in any depth to make the assertions you have.
http://www.infrastructurereportcard.org
The bottom line is that in a deflationary spiral there isn't the money even to repair the infrastructure much less replace it.
Yes, a steep deflationary spiral would cause a lot of problems. Of course, Peak Oil is more likely to create inflation than deflation.
I'm in the "deflation first, then inflation" camp. Either way, whichever poison you pick the result is the same. Only a fraction of the absolutely astounding amount of infrastructure we have built will be replaced or repaired on the downslope of oil production.
Well, we don't seem to be in major danger of deflation at the moment. Core inflation in the US has declined, but it's still positive.
Long-term interest rates are picking up, indicating that financial markets expect that the Fed's QE2 will succeed in raising growth and inflation rates in the longterm.
Overall inflation is above 1%, mostly due to....oil.
Disagree the risk of default by the US is increasing. Obviously it can result in printing but nothing remotely related to traditional economic wage/price inflation.
Its no different from the PIIGS.
Hold onto your hat, we are just at the beginning of this ride. Currently we are shifting the private debt onto the public ledger, but this will only go on for so long. Eventually this mountain of debt will implode:
I read that the primary reason for the decline in private debt is default, bankruptcy and foreclosure. Debt is not being paid down by any considerable extent.
Yes, and a large amount of it has been transferred to the public ledger, as you can see in the graph above.
Andre,
Note that when the Minneapolis bridge over the Mississipi collapsed that a new and stronger bridge was built in less than one year. I question the assertion that we are no longer able to maintain infrastructure, because the evididence goes against this assertion.
I'm talking about the near future. Much infrastructure maintenance is being done now, though nothing near what is required to keep up with the rate it is falling into disrepair. See the report by the American Society of Civil Engineers to see how much work there is in the backlog.
You could of course think all this debt we've piled up combined with declining oil won't be a very big problem in in the near future.
By my calculations, the combination of the Export Land Model with normal depletion is going to present a Very Big Problem to every oil importing nation:
I believe the 2% decline from geology may be conservative. Kjell Aleklett certainly thinks it is. On the other hand, the 2% less from ELM might be too high (though I don't think so).
nevertheless, you must expalain how Minneaopolis was so quickly abel to remedy an infrastructure deficiency.
Ok, this is weird.
I'll try to be more explicit.
You are looking at current conditions. I'm looking at future conditions. We are not talking about the same time period.
"nevertheless, you must expalain how Minneaopolis was so quickly abel to remedy an infrastructure deficiency."
Robbing Peter to pay Paul. The most critical (i.e. Interstate bridges that have already fallen into rivers, killing people) will continue to be replaced (for a while), though at the expense of 'less critical' projects. We are at the triage point.
The question is: "Why did this important, major structure fail at all?" Answer: "Defered maintenance."
A small but important bridge near me was condemed in 1985 by the Federal Govt. It has been (re)scheduled for replacement five times since. It has been patched, reduced to a single lane, and soon to be made one vehicle at a time. There are many examples of such defered projects nationwide.
Triage.
NTSB Expected to Adopt Final Report on I-35W Bridge Collapse;
Agency Probe Cites Gusset Plate Design Flaw
I understand the final causitive event of this particular collapse. These deficiencies could (should) have been identified well before they became so fatally evident. Ongoing evaluation of these critical structures, including flaws in their original designs isn't optional if we wish to avoid these disasters. There must have been an evaluation of the bridge's condition prior to the repair/upgrade project being approved. That these flaws weren't revealed/addressed and that the repair process wasn't properly supervised and monitored is self-evident. The idea that sh@t happens is unacceptable. It can almost always be traced back to budgets and time constraints.
The fact that we are falling behind on infrastucture maintenance has been well established and has been directly attributed to an inability to invest the money required. No secret here.
Don you should spend some time reading about road maintenance.
First why did the bridge collapse in the first place ?
Next read about roads going back to gravel etc.
Tons of stuff you need to read about the subject.
The Minneapolis bridged collapsed because of a serious engineering mistake when it was built--NOT DUE TO INADEQUATE MAINTENANCE. This mistake was not recognized until months after the collapse.
I daresay many roads will go back to gravel, which is not the end of the world.
In 1900 St. Paul roads were cleared of snow by horse-drawn plows and men with shovels. If necessary, such technology could be used again.
The ancient Romans built and maintained some of the finest roads ever made. If necessary, we can go back to Roman methods of building and maintaining roads. By the way, the Roman roads were not built nor maintained by slaves; it was the Roman army that built, used, and maintained the road system for hundreds of years. A Roman soldier typically did a lot more road building than fighting in battles.
I have little problem with it being an engineering flaw...although lately I have serious suspicions about formal reports. They increasingly seem designed to cover someone's derriere or perhaps I'm just noticing it more now and it's always been that way.
In any case, I think the stronger points are that:
a) we are waaaaay behind in infrastructure maintenance in the U.S. and Canada (I don't know about Europe); if you don't believe it, go argue with the American Society of Civil Engineers, not me
b) we are heading into a very austere financial environment, most likely a crash on the order of the Great Depression (doesn't matter if it's deflation or hyperinflation; either way the middle class is wiped out along with their tax contributions that would fund the repair and replacement of this infrastructure)
During the Great Depression, new infrastructure was built (e.g. the TVA or the WPA sidewalks in many, many places) and existing infrastructure was maintained at least as well as it was during the 1920s. In a Greater Depression to come there will be great pressures to expand the labor force dedicated to construction and maintenance of infrastructure, especially roads. Policy makers are always looking for "shovel-ready" projects.
Overwhelmingly, these "shovel-ready" projects are to create or improve or maintain infrastructure. When unemployment goes above 20% there will be irresistible political pressures for the Federal Government to be the employer of last resort. Maybe we'll get a revival of many of the New Deal agencies such as the CCC.
I've driven on American roads since 1956: Roads are much better now than then; not only are there more and better roads than in 1956, but the quality of road maintenance is at least as good as it was then. The water supply is more reliable in most places today compared to 1956, and power outages are far fewer now.
We do have genuine infrastructure problems, but even with oil consumption reduced to a third or a quarter of current levels we have plenty of labor and machines to keep up our infrastructure. Building up roads, bridges, rails, electrical infrastructure, water and sewer systems are all things that can be done labor intensively. There will be plenty of labor to weild shovels, picks, axes, sledge hammers, and other infrastructure tools. Maybe the gandy dancers will come back to fix curves in rail systems; that would not surprise me.
From what I've heard, everyone at the MN DOT knew that bridge would fall--when the word came through, all they had to say in the DOT offices was--"It fell"--everyone knew exactly which bridge they were talking about.
This was a result of decades of mis-management, but it most certainly didn't help that the governor had picked a political hack whose moto was:
Don't spend any money on anything no matter how small the price of the fix of how enormous or imminent the disaster to be averted.
Every other governor had chosen an engineer to head the DOT. Only this one chose a political hack. It was exactly the same as Bush's choice of a political hack to head FEMA--in both cases the really really great irony is that these right wing ideologues chose complete and total idiots to entrust the lives of citizens in, and when the very predictable catastrophe ensued, right wingers all chimed in with their obligatory chant, one they had been very carefully trained by their very skilled handelers to mime, that these failures proved that government doesn't work.
What a sad, pathetic state we are in on every level.
Just in case people think I am being unduly partisan here--
The newly elected Dem governor of our beloved state is about to follow exactly in his benighted predecessors path an raise taxes to build--wait for it--a Foot Ball Stadium.
Even though anyone with a tenth of a wit could see that we were headed for economic catastrophe as we planned for the last stadium a few years ago, there was some political cover there, since the MSM was all rosy about economic prospects then.
But now we know we are in the depths of a deep recession and not likely to crawl out any time soon, but still there is rosy talk about yet another boondoggle at taxpayers expense.
There must be some kinda way outa here,
said the joker to the thief....
And the Romans increased their empire and complexity and built the Colosseum...
Collapse of Complex Societies by Dr. Joseph Tainter 2010 (Part 1 of 5)
http://www.youtube.com/watch?v=ddmQhIiVM48
It's enormously frustrating to see politicians sabotage government.
For instance, all of these local governments that pretend that they have no money, when the problem is that taxes are too low. Case in point, Illinois: everyone knows that income taxes should be raised, but corporate interests just want to keep their taxes low and "starve the beast".
a - I'll point out a less obvious factor re: maintaining/expanding the energy related infrastructure: the relatively short boom/bust cycles that have developed the last decade or two. Drilling for oil/NG requires a relatively short payout period to be justified...1 to 3 years is typical. But major projects, such as regional pipelies and refineries, can take 6+ years to payout. And payout requires a confident projection of prices for the payout period and beyond. The boom/bust cycles used to be 10 to 15 years...now we're down to just several years the last few rollercoaster rdies we've had. A perfect example was the expansion of NG pipelines to gather the surge in shale gas drilling in Texas and La. Boom to bust in less than 5 years. The pipeliners are making public statements but I doubt any any of the 100's of millions spent on capex wil show a positive rate of return. Granted the pipelines can charge higher rates but at the end of the day they can't chrarge for NG that isn't being produced and sent down the line. Pipeline/refinery economics alway depended upon volume more than price. NG selling below $4/mcf has crippled much of the SG potential. Sweet spots still being drilled but most of the ealy wells that encouraged p/l expansion have now depleted to just a tiny fraction of their initial rates.
Bottom line for most oil patch projects: when cash flow drops you only spend capex that gets you a quick turn around. Maintenance is very easy to put off. And sometimes put off too long.
Rockman,
thanks for pointing this out. Mismatched investment horizons are a very big deal but they aren't as easy, I think, for people to grasp exactly how much of a problem they can be. (But your explanation is clear, at least to me.) We've been able to operate based on short term thinking because we've made enough good long term choices from which we are still benefiting. Plus, even now 20- and 30-year projects are still getting funded because most people haven't a clue about the imminent decline of oil — otherwise there is just no way they would be risking money for those long periods.
However, in a contacting economy investment horizons dramatically shrink and with few exceptions only short term investments are made.
Private investment shrivels during contraction because people and companies want to preserve their wealth. They focus on survival rather than expansion. Thus, the mismatch between investment horizons you describe becomes even more important.
Only governments are left with sufficient capital and will to construct projects for the long term good of the society (see the projects undertaken during the Great Depression).
As Greer pointed out at the ASPO conference, "In a contracting economy, on average all investments lose money."
a - "Private investment shrivels during contraction because people and companies want to preserve their wealth. They focus on survival rather than expansion". Let me add to that what might surprise most folks: today the oil patch is obsessed with "survival". With oil prices where they are that probably seems very strange. But as one of the few companies out there actively buying drilling deals it's very easy to see. Companies with a lot of oil production are seeing great cash flow. But every day these wells go down that depletion road and need to be replaced. And that's where the panic begins: more difficult than ever to find that next oil discovery. One of the hottest plays in the country today is the Eagleford Shale in south Texas. It has nothing to do with NG...it's all about the oil yield from these wells. And like all fractured shale plays they have a relatively short life. But this is what's left. For a time NG drilling helped relieve the stress but not much help today with prices below $4/mcf. My company is drilling very deep expensive wells for relatively small reserves because those are the best opportunities left. Every company, large and small, is wondering how they can go forward given the capex crunch and price uncertainty. Though $80+ oil is great few are counting on it lasting. And even if it does it will only matter if you can replace your depeleting oil reserves. And none of us have much confidence that NG prices will move up anytime soon. My company has no long term game plan: spend around $300 million over the next few years and sell out when prices are right. And then me and my gray-haired cohorts/owner go away...forever
Very interesting that those companies are already in survival mode. Makes sense, though.
a - Maybe it's partly the nature of a business that naturally consumes itself thru depletion. No matter how big a field a company discovers (Arco and the N. Slope for instance) the date of the initial discovery also marks the beginning of the deathwatch: all fields, even the great Saudi reservoirs, will stop producing some day.
That's why when I started with Mobil Oil in 1975 my first mentor explained "the reservoir replacement problem". Today we call it PO. Not the oil patch but everyone else. So there was some level of panic when I started but we still had a fairly large domestic hunting ground just beginning to develop: the offshore GOM shelf. But today it's old news with little potential left...especially for oil. That's why for 25+ years companies, small and large, have been moving overseas. I'll make a bold statement: the US oil industry has accepted that the end is near. Folks should not be misled by the statements flowing from the public oil companies. All they have to sell potential stock buyers (who establish the value of such companies) is a rosey future. Other than day traders whose going to buy stock in a shrinking industry?
Oil/NG will be very expensive from time to time in the future. But that's because there will be fewer and fewer drilling opportunities. And that equates to fewer companies/oil patch hands.
People who think that an EROE of 5 represents some kind of crisis need to realize that it is a multiplier. What the oil sands producers are taking natural gas and multiplying it into 5 times as much energy by using it to create synthetic oil rather than burning it directly.
And since the natural gas itself has an EROE of 20 or so (assuming it's shale gas), the energy multiplier of the system as a whole is really on the order of 5 x 20 = 100. You're really taking one unit of energy used to produce the gas as input and turning it into 100 times as much energy in the form of synthetic crude oil.
It's not really the "free energy" we used to get from conventional oil (which had an EROE on the order of 40), but as part of an integrated energy production strategy it's pretty good.
Economic growth is a function of:
1. Availability of natural resources
2. Productivity including output per hour
3. Hours worked
4. Environmental impacts (costs of correcting or ignoring)
The best way to see the impact of the transformation of the economy is to read David Ames Wells' Recent Economic Changes and Their Effect on the Distribution of Wealth and Well Being on Society (1891) http://books.google.com/books?id=2V3qF4MWh_wC&printsec=frontcover&dq=REC...
This is the story of the Second Industrial Revolution during which prices of commodities fell due to increases in productivity. The development of compound (multi stage) steam engines increased the efficiency of shipping, allowing ships to carry more freight than coal and tremendously increasing trade. Also, increasing seam engine efficiency caused the number of steam engines to quadruple from 1850 to 1870. The Kelly-Bessemer process lowered the cost of steel and caused a great expansion of reilroads, which lowered the cost of transport by over 95% compared to wagon.
Wells' book is full of similar examples.
By the time of mass production productivity increased to the point that work hours were cut during the 1930s. Today we probably need no more than 50% of the workforce to supply all essential goods and services. (10% in manufacturing currently, 2% work in agriculture). The only way we can increase hours worked is to have some fantastic new product or service that people absolutely want to have, like the recent cell phone and hand held wireless gadget boom. But it will have to be much bigger than electronics and cable or satellite communication to keep the economy growing.
Productivity is suffering from declining marginal returns from technology. I would argue that horse and mule powered reapers and threshing machines had a bigger impact on the standard of living than computers and information technology.
Economic growth is no longer occurring. It was artificial growth in speculative areas like real estate. It is also health care to take care of an aging population, which is economic growth, but not the kind most people have in mind.
We can never increase efficiency of energy conversion by 50 or more times as happened since the days of Newcomen’s engine. We are approaching thermodynamic limits. Although a few percentage points of gain will be achieved, the gains will not happen faster than resource depletion.
Thank you for the reference to Ames' book. The period 1873 to 1914 is of particular interest, since it is the most apt historical parallel to the present economic cycle. The Long Depression of 1873-1896 was only part way through at the time of Ames' writing. It was partly alleviated by the increase of money supply following the production of gold in South Africa and Alaska. But that set the stage for an even more intense imperial economic competition in the runup to WW I.
David Ames Wells argues aainst the "scarcity of official money" theory and shows that money (real gold and silver) in the U.S. increased signifiantly during the period. See:
http://en.wikipedia.org/wiki/Deflation#Scarcity_of_official_money
The so called"Long Depression" was nothing of the sort. It was called a "depression of profits and trade" which it was in nominal dollars, but because of the deflation, real wages rose and living standards increased dramatically, probably more so than any other comparable time period in history.
See see: http://en.wikipedia.org/wiki/Long_depression#A_profit_depression_with_re...
The changes Wells wrote of were Schumpeter's "creative destruction" of the old economy that brought us into the modern world.
Vaclav Smil's Creating the Twentieth Century: Technical Innovations of 1867-1914 and Their Lasting Impact is another excellent book covering the period more from the technical than economic perspective.
The wiki article on the Long Depression is too US centric. In the runup to WW I, the Great Powers did not include the United States, which at that time was a nouveau riche upstart (sort of like China or Brazil today).
The most relevant parallel to the United States' current situation is Great Britain, the leading Great Power of the late 19th Century, where there was a general depression of British agriculture (which could not compete with imports from Argentina, Canada, the US, etc which were made possible by rail and refrigerated shipping) and British manufactures (which could not compete with manufactures from upstart Germany, a resurgent France, and the US).
Prices of agricultural products, steel, and other manufactured goods fell during the period, even though actual physical volumes increased. This is exactly what you would expect as deflation during a period of increasing physical volumes and a constrained monetary supply.
David,
A good article, slightly marred by a mischaracterisation of substitution.
"The usual way that substitution occurs in a market is that the substitute has some sort of competitive advantage (i.e. better product, cheaper, etc.) compared to the item that it is replacing;"
The substitute's advantage consists entirely of lower price. In most cases the substitute is considered inferior in quality (at the normal price), or it would be the main product, not the substitute. The traditional nineteenth-century European example is wheat versus rye or oats. People prefer wheat to other grains. but if the wheat crop is poor, so wheat's price rises, people use more rye and oats.
Substitution does indeed ameliorate the situation -- compared to not having anything to eat at all, not compared to having plenty of wheat to eat.
There are close substitutes and more distant ones. When conventional crude is selling for $90, Canadian tar sands syncrude can substitute for it. When running a car is unaffordable, public transport substitutes for private.
Substitution is an immediate-term or short-term phenomenon. In the long term, innovation can produce replacements. Electric cars could replace IC-powered cars, and electrified rail freight can replace road freight.
Replacement happens if the price of the original good remains high long enough for the innovation cycle to operate, and innovation manages to produce something. (As Robert Rapier pointed out about cellulosic ethanol, wanting a thing doesn't mean it's going to appear.) To date, replacements have nearly all been qualitatively better than the products they replaced, as well as cheaper. But they don't have to be either.
Peak conventional oil matters precisely because it means that the cost of transport must rise in the medium term. As you say, close substitutes are significantly more expensive, both in direct terms and in the proportion of industrial output that is used to obtain them.
This rise in cost is significant because ever since capitalism got going in the fifteenth century, it has spread and developed by continuously driving down transport costs. We're about to see in the next few decades whether it can either keep doing this (i.e. find replacements for conventional oil), or alternatively survive in a new regime of increasing transport costs.
That's what's happening right now with EVs. The Nissan Leaf and Chevy Volt will, in 2-3 years, have lifecycle costs comparable to a similar small ICE car.
EVs and EREVS have better performance than ICE vehicles: they're much more fun to drive. Pretty soon EVs and EREVS will have lower lifecycle costs than ICE vehicles, and then we're off to the races!
Hi Nick
I agree that electric cars, along with a massive increase in public transport could help mitigate the effects of peak oil. There is however a real problem with production numbers.
In UK there are some 33 million vehicles and about 2.5 million cars are sold each year. Taking into account declining north sea production, how many of those new cars would have to be electric in order for UK to not have to buy very expensive and limited supplies of oil on the open market?
Very roughly a million cars use 50,000 barrels a day, so we would have to sell around 2 million electric cars each year just to match our production decline rate. I do not see that happening, not with the problems with recharging a limited range.
Even getting to one hundred thousand electric cars sold each year will take a few years and peak oil exports may well be upon us if not in next couple of years.
Jaz,
New vehicles account for a much higher proportion of VMT, so a million EV's per yar could result in 100,000 barrels per day savings. With higher prices would expect the other 1.5million vehicles sold would be higher fuel efficiency, and existing poor fuel efficient vehicles would be used less than presently.
What is the evidence that it would not be possible to be producing 1million Ev's in the UK in a few years? Possibly demand for 1million EV's may take longer unless petrol is in such short supply that extreme rationing is required, then the only vehicles sold may be EV or PHEV. Total retooling of vehicle production plants for new models takes about 2 years so this may be the time required unless we are in an emergency situation, such as a war economy, where 6 months would be adequate.
Neil1947
I suppose there is a difference between what car manufacturers could do and what they are planning to do at the moment.
http://www.egmcartech.com/2010/03/04/nissan-plans-leaf-production-capaci...
Perhaps the three or four models will sell 3 million worldwide in total by 2013, but at the moment people I have talked to say that a car that can only travel a hundred miles is not good enough.
I am sure range will improve and many more public charging points will be added but these things are putting people off who may otherwise think of buying one.
For myself I probably will buy one when I scrap my car in 5 years or so, but I would not sell my car which I may get £8,000 for to buy an Electric for £22,000. I can buy all the diesel I use and my tax for 6 years with that money and that is taking to account rising diesel prices.
As for new vehicles being much more fuel efficient, there are alot of big mercs and BMW's being sold at the moment and not many do over 40mpg
Nissan's claim of 100 miles is the marketing number. Which engineer on this board ever believes the marketing specs for a piece of equipment? They could be right but usually they are under conditions that don't ever occur on this planet (only in the manufacturer's labs with the marketing folks trying to get the engineers to sign off on "stretch" numbers — or ignoring the engineers more or less completely).
My prediction is that Nissan's real range will be around 50-60 miles if the owner is an Earthling living on Earth who wants his/her battery to last an appreciable length of time.
The 100 mile range is based on a specific driving test, which isn't especially realistic for most people. The EPA rates the Leaf at 73 miles.
On the other hand, the 100 mile number is easily achievable with very careful driving, which means that someone with a commute over 70 miles or so will be able to achieve their target range by choosing the necessary driving style.
The Leaf's battery life is a bit of an unknown: the Volt has a real warranty, the Leaf doesn't. A lot of people are choosing to lease the Leaf until the battery is better understood.
Right, so let's stop repeating 100 miles as though it were the general case because it's not even close. It's a marketing number.
Here in San Francisco that 100 miles is not achievable via careful driving (we have lots of battery-draining hills here). And it's only achievable if one wants to drain the battery completely. That's a very good way to shorten the life of the battery.
Does the 73 miles from the EPA bring the battery completely to empty?
So back to my original assertion: 50-60 miles is what the initial owners will get, maybe a bit more if they don't turn on the heater in the winter or the air conditioner in the summer (if it has one; I don't know).
EVs have a long way to go before they can service the "sweet spot" of the market as it exists now. By the time they are able to service it, that market will have disappeared.
aangel,
I think the US car and light truck fleet averages 35-40miles per day. If this fleet was entirely replaced by PHEV's most driving would be possible using battery power recharged overnight using surplus existing capacity. That's not 100% of driving but it doesnt have to be, the balance can be supplied by oil or CNG, bio-gas and ethanol or some daytime fast recharging.
Similarly, not all road freight has to be moved to rail,just long haul with all local short distance capable of being moved by battery powered electric trucks or CNG vehicles.
Yes, I agree that some of the current travel can be replaced by EVs, but I don't think nearly as much as the proponents of this line of thinking say.
To have the whole of our economy working off of vehicles that have a 40 mile range just wouldn't work the way we are currently running things.
For EVs to work with their current capabilities means the economy has to be organized dramatically differently.
Here is just one example: all those communities that depend on people taking their car out of the city for weekend jaunts suddenly won't have those visitors anymore.
"Just rent a vehicle that uses gasoline for longer trips."
Sure, some people will do that but not enough to save those communities that depend on tourist dollars. They are going to see 1/20th the visitors they have now if we were to overnight switch to 40 or 50 mile EVs. Jumping in the car because it's there is very different from going out of one's way to rent a vehicle. Now it becomes a special event and those just won't happen very often.
There are all sorts of sectors that have come to depend on long-range and powerful vehicles, like trucks that have high towing capacity.
We built a civilization that assumed people would have vehicles that can travel 300 miles, pause for 10 minutes to take on more fuel, then travel another 300 miles, and keep doing this. Short range vehicles are a completely different paradigm. Will we get there? Sure, but the economy will look very different from the one today — and will definitely be much, much poorer.
Tourism is about 2.5% of United States GDP. Tourism in OECD Countries 2008: Trends and Policies does not give percent employment figures for the US, but it is probably similar to Canada, where tourism accounts for 5% of employment.
A significant decline in tourism will be a drag on the US economy, but it will happen due to higher energy prices even without a shift to shorter range light vehicles. All the major RV manufacturers have been through bankruptcy, and the power boat manufacturers have been having hard times. My boating enthusiast relatives now regard theirs as a "floating patio", since filling the 100+ gallon tank with marine gasoline is pretty expensive.
Thanks for digging up that stat, Merrill. And I agree about your point about higher energy prices impacting tourism. I was making another point to address the range of EVs specifically and how we are set up for vehicles with longer ranges.
As for 2.5% of the GDP, I think in terms of real dollars making a difference to people living on Main Street it is actually much more of the economy. The 2.5% you cite is based on the FIRE economy, which is mostly inflated asset values and "money making money." Tourism dollars go directly into restaurants, hotels, entertainment activities, etc. and thus are turned into paychecks (that then get spent more or less immediately) more directly.
let's stop repeating 100 miles as though it were the general case because it's not even close. It's a marketing number.
Yes, but it is achievable. In fact, it can be exceeded with careful driving: Nissan asserts a range of 40-140 miles.
Here in San Francisco that 100 miles is not achievable via careful driving (we have lots of battery-draining hills here).
Regenerative braking will help with that, so I wouldn't assume that. Low speed driving doesn't have much wind drag. High speed driving is the larger challenge.
Does the 73 miles from the EPA bring the battery completely to empty?
No, though the depth of discharge is higher than the Volt - perhaps 85%.
Here's a good discussion:
http://www.plugincars.com/nissan-leaf-finally-gets-official-epa-label-10...
EVs have a long way to go before they can service the "sweet spot" of the market as it exists now.
Actually, I agree. I think that EREVs like the Volt, and plugins like the plugin Prius will dominate for quite some time.
Is that you?
http://www.plugincars.com/user/nick-chambers
He looks well informed, so thanks for the compliment, but no, that's not me.
jaz,
Car manufactures plans and consumers plans are based on present oil prices and expected availability. If diesel becomes much more expensive and or rationed, you would probably change your evaluation of an EV, even if you had to wait a year for delivery.
The private vehicle fleet has a very rapid turnover(10-12years), much faster than most appliances. I think we are underestimating the longer term consumer response to much higher prices and much lower availability. Think of prices X10 higher and rationing of 5liters petrol/diesel /week. Car pooling, mass transit and EV/PHEV all look a lot easier under that scenario, than commuting to work, daily, alone, in 40mpg vehicle. If things get really bad school children may actually have to walk/bicycle to school and parents have to walk or bicycle to buy food and smaller sized clothing.
Neil - An aside for the moment with re: how many e-vehcles might be produced for England and just say "a lot". A question for our Brit friends: does England have an existing e-capacity to accomodate such a huge increase demand? An ability to ramp up e-production to meet this demand surge? Just from the bits I've read on TOD seems like you folks are quickly reaching limits in those aspects as well.
If we assume the 33M vehicles are EV and PHEV's and consume about 8kWh/day, the UK would need an additional 11GW average power, a 20% increase in present production. If this was to come entirely from wind energy would need 40GW of additional wind capacity about ten times present UK wind capacity mainly located in Scotland and off-shore. Allowing a ten year period to replace present ICE vehicles this would appear to be very achievable without going to a war economy, or requiring major economic hardships. Alternatively building one major nuclear power station per year could also supply the necessary electrical energy.
Thanks Neil. I would have guessed (for no good reason) that y'all would have been much shorter on the supply side. Given the time it would take to replace much of your fleet an expansion of e capacity could be doable. of course, y'all would need an increase in a fuel supply but perhaps that's where imported LNG with whatever level of alts you might develop would do the trick.
That doesn't take into account the expansion required to support increasing demand or the replacement generating capacity to replace capacity that will be coming off-line in the near future. Much more capacity needs to come on line than your projection.
NAOM
Neil1947
Your calculation on how much wind power is needed is based on wind power advocates who misrepresent wind power. The common mantra they repeat is wind turbines produce about a third of the rated capacity and wind is always blowing somewhere.
A study which was done on wind speeds in the UK, data gathered from weather stations on the extreme points of the country. This was translated into electricty production and it found that there would be a average of 20 days a years when total wind power would be less than 5% of installed capacity. This simply means you need to build something else to make up the other 95% when the wind conditions are that low.
I am not against wind power but if we are to go that way then proper backup needs to be priced in, such as pumped storage. Otherwise you just spend alot of money on something you can never rely on.
It is no good several million people plugging in their EV's and crashing the grid because the wind is not blowing. So backing up 20% wind will need nearly 20% something else.
Why speculate when we know what the replacement rate is now? As I explained in 195 Californias or 74 Texases to Replace Offshore Oil:
As for EVs, the replacement rate today is so low that we can call it effectively zero.
Further, the demand for SUVs and other guzzlers has actually recovered sharply in 2010. If there is some big shift to high efficiency vehicles afoot, I don't see it in the data yet.
In fact, in the depths of a recession with high unemployment, it should be no surprise that most people aren't replacing their vehicles every couple of years anymore. Instead, people are trying to keep their old clunkers going just a little longer. If you doubt that, just look at the stock chart of Autozone.
If conventional oil declines at 4% per year, then world supply will decline by about 3 mbpd each year. If that decline begins in the next two to five years, as Hirsch believes (as do I), then these kinds of replacement rates get you nowhere. If we had another 20 years or more of modestly priced oil and ample supply, then I would be more bullish on the effects of upgrading America's 240 million cars and light trucks.
But I don't believe we have that kind of time, and since supply stopped increasing in 2005, the oil market has effectively become a zero sum equation: Asia's gain is the OECD's loss.
I believe there are still transitional strategies available: faster replacement rates with much more efficient vehicles; transition to rail; people moving to walkable communities and cutting back sharply on miles driven; and so on. But at this time, I just don't see those strategies having nearly enough momentum to manage a smooth transition. Looks to me like the vast majority of America intends to simply keep on doing what they're doing until they can't do it anymore.
@ gregvp
"The substitute's advantage consists entirely of lower price."
This is not correct. Substitution can occur because one product is superior than another. The mustard industry is a good example. French's used to have a monopoly on the mustard industry, until Grey Poupon became popular because of its taste, even though it was over 2x as expensive as French's. The popularity of Macbooks is a good example as well- they are very popular yet tend to cost more than comparable PCs. Price is important, but not the only factor.
"When conventional crude is selling for $90, Canadian tar sands syncrude can substitute for it." - I would like you to show me what conventional oil wells are being shut in as the oil industry substitutes from conventional crude to syncrude. Syncrude is not a substitute in this situation - it is simply more oil being produced to meet demand - different from substitution.
"Substitution is an immediate-term or short-term phenomenon. In the long term, innovation can produce replacements. Electric cars could replace IC-powered cars, and electrified rail freight can replace road freight."
Agreed - but how long will that take. The impacts of peak oil are being felt on the economy now. In addition, for efficiency improvements to occur, producers need to think that oil prices will remain high, but the actual cycle is more like boom and busts, which make it difficult for long term funding.
Dave
It is difficult to think if there are any advantages in producing oil from oil sands in northern Alberta when compared to production of oil from either East Texas or Ghawar. For example, the cost of production in Saudi Arabia is roughly $20 per barrel while it is over $80 per barrel in the tar sands
You're grossly overestimating the costs of oil sands production. It's less than half of what you think it is. From the Suncor Energy web site:
Economic Performance
The result of this falls out on the bottom line:
So, when oil prices are high they make $3 billion, and when they are low they only make $1 billion. Oil prices are now $88/barrel and rising, while natural gas prices are $4/Mcf and falling, and their production is up substantially, so I think 2011 will probably be an exceptionally good year for them.
Curious, RMG, what would the SynCrude profit be if NG went from $4 to $12 ?
I don't think an increase in NG prices would have much effect on Suncor's profits because it produces its own natural gas, and in fact produces more gas than it consumes. That works as a built-in hedge. If the price of gas goes up, the company makes more money on the gas and less on the syncrude, and vice versa.
In other words, if the price of gas gets too high, the overall output of tar sands oil goes down.
Higher nat. gas price means less profit for the tar sands producer like Syncrude that does not have its own natural gas, thus less oil produced?
Either way it looks to me like a doubling or tripling of nat. gas prices would cause a decrease (in the long run) of tar sands oil production, barring a rise in world oil prices.
... in other words, if the price of gas gets too high, the overall output of tar sands oil goes down.
Did you read what I said? I said that the price of natural gas didn't make much difference to Suncor's profits because it produces its own gas to burn in its oil sands facilities. It only makes a difference to which part of the company makes the profits.
At this point in time Suncor is selling gas properties and building new oil sands facilities because it believes that in future, most of the profits will come from the oil sands.
There is a vast amount of unconventional gas overhanging the market as the result of the big increase in US shale gas production, so it is likely that gas prices will remain low. However, the bulk of the unconventional oil reserves are in Canada and Venezuela, and production in Venezuela is declining due to political problems, which appear to be getting worse.
...barring a rise in world oil prices.
You mean like the one that is happening now?
I read your post twice, but I don't think you understand my view of the opportunity cost.
If market price for nat. gas rises, say from 4/mm BTU to 12/mm BTU, and Suncor uses this gas to produce oil that sells for a price of $40/bbl, then they have foregone the opportunity to make a nice profit on selling nat. gas that they instead use to make oil at a break even price.
What I am saying is that the price of producing the tar sands oil really does depend on the price of nat. gas, even if Suncor is producing that gas. Suncor profits for oil production depend on the price of gas and if gas doubles or triples in price and oil does not, they will sell the gas to produce higher profit. If they use the gas to make low priced oil, their profits decline. The wise choice is to not make tar sands oil in a high priced market for gas unless the profit margin for tar sands oil is higher.
Very likely gas prices will rise significantly in the next two or three years as the number of shale gas rigs has declined due to lack of profits for dry gas wells. Because of 30 to 50% decline rate in these wells the lower active rig count soon translates to lower gas production.
Now I hope you understand my arguement.
Just to add my 2c worth; if the NG available to Suncor is stranded (no pipeline to the wider market), which I understand is the case, at least with parts of their operation, this puts a different twist on the issue. With no convenient market for the NG, there wouldn't be this opportunity cost.
In Canada natural gas is priced in $CDN/GJ - nobody uses BTUs any more. 1 Mcf of gas contains about 1 GJ of energy, so the conversion is rather easy. In Canada, oil is priced in $CDN/m3, but let's gloss over than point and use barrels (BBL) and American prices just to make it more meaningful to the non-Canadian readership.
At this point in time natural gas is about $4/GJ, and oil is $88/BBL. It takes about 1 GJ of gas to produce 1 BBL of oil from the oil sands, so it takes $4 worth of gas to produce $88 worth of oil - a 22:1 ratio. This makes oil sands something of a license to print money for the companies who have existing oil sands operations.
Now, you are assuming gas goes up to $12/GJ and oil down to $40/BBL. I don't know why it would do that (we've never had anything like that happen before), but let's assume it does. In that case, it would take $12 worth of gas to produce $40 worth of oil. It's not as lucrative, but it's not exactly a crisis either. The existing oil sands producers would continue to make money, just not as much of it.
You have been assuming gas prices will rise and oil prices will go down. I'm expecting oil prices to hit new records as global oil production starts to decline and China starts to get buy up more of world production, while gas prices continue to stay relatively low because there is really quite a large amount of shale gas out there and people can't resist the urge to drill for it.
Yes, I understand it, but I don't buy it.
Suncor is reporting the cost of their current barrel of production. The new barrel of production from a newly developed deposit, from this point forward, would of course be significantly higher. To be sure, some of SU's reported cost contains the amortized cost of their previous development (I assume). This is why "the steel in the ground" in Alberta is in many ways rising in value. SU, CNQ, and COS.UN are all in very sweet positions in this regard. Disclosure: I own most of these indirectly via ETFs and Funds.
In KSA, I would expect some of their current production is coming out of the ground at near-zero cost. These calculations are difficult. No question however that if KSA keeps building more projects like Khurais, their costs for current production will rise quickly.
I see a new bifurcation appearing in the Alberta Tar Sands. Existing steel in the ground, plus the cost of maintenance, is viable whereas the prospect of creating the new barrel in Albera from scratch is looking prohibitive. Of course, many of the SWFs (sovereign wealth funds) and other NOLs that have taken pieces of Canadian oil are really looking for strategic positioning as surely they must know that these are very slow, and expensive barrels.
I could see this cost spread in the next few years blowing out to a couple of hundred percent, with names like SU still reporting say 40/bbl to extract while the new extractors must live in the domain of 80-100/bbl just to get started. This may be the case already.
G
Suncor is reporting its operating costs, which are distinct from capital costs. Suncor has the advantage that it has been operating in the oil sands for over 40 years, and most of its capital costs have been fully paid for - it doesn't have to endure the startup costs that a new entry would have.
The dynamics of oil sands are quite different from conventional oil. In conventional oil you are always on a treadmill. Your existing oil fields are constantly depleting, so you always have to be drilling to find new oil to replace the oil you have produced. If you find less oil than you produce, you start falling behind. If you fall behind too far, you fall off the treadmill and go out of business.
Oil sands companies have the advantage that their assets aren't depleting at any great rate. You can operate a mine for 40 years before you need to "find" new oil, and then you don't really have to find it, you just move over to a new mine location and start digging. Once your capital costs are paid for, it becomes a license to print money. And if you decide to grow, it's just a matter of spending money to make your mine bigger.
This is why Suncor is the biggest oil company in Canada now. The conventional oil producers are on a treadmill which is running faster than they can, but Suncor and the other oil sands producers are not. When they want to get bigger, it's just a matter of spending more money to make their mines bigger and bigger. It's expensive, but it's a sure thing.
Suncor expects to be producing a million barrels per day of oil by 2020, which is twice what the total convention oil production of the entire province of Alberta is today, and by 2020 Alberta's conventional oil production will be down to half what it is today. Most of the conventional oil producers will have fallen off the treadmill.
Saudi Arabia is on a treadmill, too, and one wonders how long they can run fast enough to keep up. Sooner or later they'll start falling behind, and eventually they'll fall off.
I'd argue that deep water drilling also has problems. They have the infrastructure costs of the tar sands with the depletion model of conventional oil. Actually often much worse with extreme depletion rates.
Current deep water players that have paid off their capitol costs will do well. Expansion or new entries will be prohibitive.
This is why I claim that they are a temporary substitute. There was a window of opportunity where unconventional production could leverage the cheap money era and relatively high oil prices to capture some market share and grow. But unconventional oil can't grow itself off and unconventional oil supply. It can't bootstrap operating costs will rise just as fast as oil prices. And of course the early players have the best positions either by developing the best fields or the best parts of the tar sands.
The growth rate will slow and stall and the ability of unconventional oil to offset further conventional declines wane.
Pretty much a one shot and fairly temporary stop gap fix. I think that rising costs will ensure that expansion will be slow regardless of oil price and of course as the price gets higher the economy will become less stable making any long term serious expansion difficult.
Volatility kills.
Sooner or later the tar sands will have their own deep water horizon moment and this will cause a lot of problems.
I do see unconventional oil providing oil that can be used in for price insensitive customers aka the military.
But other than that in the big picture I think their impact is already behind us and further declines in conventional production will not be offset by unconventional production.
For that matter and this was brought up up thread I expect that natural gas will also go through a similar transition. I don't expect UNG plays esp the shale plays to provide any real expansion indeed overall UNG production is probably already in decline. Conventional production will continue to decline. This is important because I really believe that fossil fuels will become close in price on a BTU basis minus a quality discount. I.e Natural Gas will be discounted by a fairly fixed amount vs oil and not much of a discount say less than 30%.
This is important because almost all the alternative crude streams not just the tar sands need substantial amounts of NG to process.
The sands are extreme but not alone. The value add of burning NG and other light hydrocarbons to get more liquid fuels from heavy oils will be marginalized as simply selling the NG would be more profitable. This in my opinion means yields for liquid products from the heavy oils will actually fall as simpler less resource intensive refining methods become more profitable.
As always you have some exceptions esp if a refinery has access to otherwise stranded gas. However the amount of stranded gas will lesson. For example I don't think it would ever be possible to use LNG supplies to process any heavy oil. Heck in a lot of cases simple refining and selling the residual oil would probably be highly competitive with NG if I'm right about prices.
Also of course historically the North American NG market has been highly volatile I'd not put too much faith in the current glut all others have ended naturally in the past.
Later I also expect coal to steadily approach the price of oil with a fixed if larger quality discount. I think this will make CTL processes perpetually unprofitable. Same for GTL processes. Perhaps I could be wrong but then in some cases GTL might be favored over using NG in oil refining. Either way no matter what happens as NG becomes more expensive its utility in processing heavier crude drops rapidly. Heck rising final product prices could well expand NG demand either to power EV's or directly as a fuel. This brings it utility closer to oil it it seems sensible that prices would probably follow assuming that NG supplies cannot be expanded significantly and my well peak regionally then globally in the near future.
The same capitol cost arguments hold for LNG as for all other alternative approaches. I suspect that in the future putting in new LNG trains will rise dramatically in cost as for all other unconventional sources we cannot bootstrap expansion of LNG facilities using LNG as the primary resource base. Cost will always lead price. And of course volatility is always lurking.
And last but not least real EROEI costs are the underlying factor I just don't think any of the unconventional sources offer enough return to justify rapid expansion. If they did then they would have been conventional :)
The reasons they where not exploited for a long time stand and the window where the initial investments made sense is in my opinion finite. Thus my claim that they are temporary substitutes with no long term viability. At least for our current oil based economic system. Thats not to say they won't be important in the future simply not for the same reasons we use them today i.e production of fairly cheap readily available fuel on the open market.
If any of this is even reasonably close to correct I think watching how the NG market unfolds over the next year or so will be interesting. I have my suspicions that we might see a spike in NG prices as early as this winter. Don't forget the decline in conventional NG production has not stopped and if Simmons projections about conventional production are correct we should already see conventional production starting to fall off rapidly. And as I said I suspect overall UNG production is probably in a net decline.
This suggest people might be surprised at just how fast production falls off or perhaps is already falling.
http://europe.theoildrum.com/story/2006/11/27/61031/618
Regardless of when it happens I think we will get a chance to see how the UNG shale market responds to rising prices. I suspect you will find little if any real expansion thus the net ability of UNG to offset falling conventional production will prove to be finite aka a temporary substitute.
Yes, deepwater drilling is extremely expensive - in the same league as oil sands, and when a field goes on production they have an extremely steep decline rate. They try to produce the field as rapidly as possible to recover their enormous capital costs as soon as possible.
In oil sands you can't recover the resource rapidly, but on the flip side, the reserves are so enormous that production won't decline at any significant rate. At current production rates and current reserve estimates, it would take about 400 years before production started to decline. If they increased production to 5 million bpd, it would take about 100 years.
The rising price of oil primarily impacts transportation. The transportation sector share of liquid fuels is 72 percent in 2009 – EIA
So electrifying transportation is the order of the day, and we are slowly moving that way. E.g. An electric Audi A2, powered only by batteries from DBM Energy, recently drove 375 Miles at 55 mph. They claim the car batteries can be recharged in 6 minutes.
Increasing our global electric power generation, however will speed our use of coal and gas and exacerbate climate change unless clean electric baseload power is implemented. The only technology on the horizon that can do that without further degrading our global environment, increasing competition for clean water, increasing nuclear proliferation, etc., is Space Solar Power. A photovoltaic panel at GEO generates about 9 times as much power as the same panel on the ground. More importantly, it is 24/7 baseload power not intermittent --
Transforming our Energy, Economy and Environment
Cheers,
Darel Preble
P.S. Drought-stricken Lake Mead falls to a level not seen since 1937
Oct. 19, 2010 - Lake Mead on the Colorado River hasn't been this low since 1937, when it was being filled for the first time behind the newly completed Hoover Dam.
Since drought took hold on the Colorado and its tributaries in 1999, the surface of Lake Mead has plunged almost 130 feet and caused fits for the National Park Service and its marina operators who must extend roads, utilities and other services to reach the shrinking shoreline.
The lake's decline poses major problems for the Southern Nevada Water Authority, which draws 90 percent of the Las Vegas Valley's drinking water from intake pipes that will start to shut down should the lake fall another 33 feet.
"I'm worried," authority General Manager Pat Mulroy said. "We're trying everything we can to keep as much water in Mead as we can."
The prognosis looks bleak. Mulroy said federal climate forecasters are predicting abnormally dry conditions during the next two winters in the mountains that feed the Colorado.
If the lake drops another 8 feet, federal officials will declare a shortage on the river, an unprecedented move that would cut Nevada's river share by about 6 percent.
The best Colorado River users can hope for at this point, Mulroy said, is to push that shortage declaration off for a year or two "and then hope the hydrology turns around..."
Just imagine if every suburbanite came home from their evening commute and plugged their 6 minute rechargeable car into the grid. Not that a residential house has that level of electricity service but even if they maxed out their electricity draw, I bet it would be too much for the neighborhood grid to handle.
Install 'smart meters' in every electrical utility user's home/office/factory.
Combine with a smart grid to allocate only the power available and no more; implement a queuing system.
People wait in order that they plugged in, or, perhaps, people who are willing to pay higher rates pay more to get their juice first.
Easy to do? No.
Inexpensive to implement? Absolutely not.
Requires breakthrough physics? Not at all.
"Install 'smart meters' in every electrical utility user's home/office/factory."
hmmmm lots of nice copper and other parts for the hordes of unemployed to steal while you are driving your EV home from work.
Yup. This is a core problem that MANY folks working on a "Smart Grid" are racing to fix. The "simple" fix is timing access to your local transformer from heavy loads like cars so that it doesn't get overloaded. Faster charging is need at work than at home.
In neighborhoods that get more than 1 electric car on a transformer, transformers are going to become more likely to burn out early depending on the thermal load at the time. This can start happening soon in a few states with high electric car penetration and utilities that have not been proactive. The NISSAN LEAF, for example, is only available in one state east of the Mississippi - TN. ECOtality is installing electric vehicle (EV) charging stations at Vanderbilt University Medical Center, for example, - part of the largest deployment of EV charging infrastructure in history. Installing 15,000 charging stations by June 2011 in six states. Most of these will be Level 2 commercial charging stations, which use 240 volts and take four to six hours to charge a vehicle.
Many jobs will be created to enable the slow transformation away from fossil fuels, especially in transportation required as we continue to shift toward a clean electric economy. Space Solar Power would add another strong competitor to the energy mix. Competition among energy providers is good.
The electric power companies have been wrestling with that energy source equation for many years, but they are prohibited by law from engaging in high risk research, since they are a public trust. They can only buy generation "off the shelf".
Electric power has been the key to clean growth for a century and that, hopefully, will continue.
Ultimately, SSP will lead to enabling people to live off this planet, because they could sell products competitively to SSP and other off-Earth companies that had been manufactured on the Moon, for example. (Shipping a product from the Moon to GEO is twenty times less costly than shipping the same product from the Earth to GEO - but that is far outside the financial purview of SSP and any aerospace company I know off. Many nations are still considering lunar developments. See for example the twenty international teams competing for the Google Lunar XPrize.
That's only because they have no clue what's about to happen with oil and the world financial system.
Judging by your comments, you seem to lack that knowledge, too, which is odd since you seem to have joined well over two years ago. Plenty of time to have learned exactly how precarious our financial system is and its imminent petrocollapse
Many here may disagree but I would say that, in general, no, peak oil doesn't matter.
It's really, really interesting and eventful, of course, otherwise I wouldn't be here. But does it matter? Probably not too much.
Evolutionary psychology, anthropology, tribalism, warfare, ethnic/national/class/religious/linguistic differences, etc. - that's the stuff that matters.
I agree. The actual peak oil date or production acme does not matter. To quote Colin Campbell; "What matters, and matters gravely, is the vision of the long, remorseless and relentless decline that comes into sight on the other side of the peak."
Yes, it's painfully obvious than humans as a species don't appear to have the mental make-up to adapt to such a long, remorseless and relentless decline in a rational manner. We seem destined to use up all of nature's bounty, suffer die-off and restart in a very humble way, on a trashed planet.
I absolutely agree it will not be rational. As the decline gains momentum with millions of people living markedly lower standards of living, pressure will mount on political leaders to do something, anything. What that something ends up being is what concerns me, because most likely it will take the form of war. People are good at outwardly seeking blame and answers for difficult questions. If the Vietnam war could be started with a lie (the Bay of Tonkin incident), the first Iraq war started via another lie (killing of babies in incabators), and the 2nd Iraq war started with a lie (WMD), then I'm certain a war can be started via a lie to gain access to more FF.
Not really, because there are so many peaks, it is impossible to call any single one of them a 'marker'.
You are correct tho, that the issue is NOT one of playing 'spot the peak', but the more important one of 'finite affordable fuel'.
This move was interesting, and underlines the shifting nature of 'affordable fuel' :
Pickens is now lobbying Congress to pass legislation which would offer incentives for companies to convert light and heavy truck fleets to run on compressed natural gas. Pickens says having just 8 million of these vehicles would cut the United States' oil imports in half.
I agree with Pickens. Not only that I think it's bleedin' obvious that natural gas is the replacement for oil based fuels. I'm surprised other people can't see it. Note a kilo (ie any pressure) of NG has energy close to a kilo (say 1.2 litres) of diesel. Yesterday I watched a diesel mechanic doing a rebore on a bus engine and I asked him what he thought of CNG. He said it will be mainstream in 5 years.
The big problem as I see it is not power loss and bulky cylinders so much as lack of filling stations. Small towns, bus depots and farms that are off the gas grid might have to get large mother tanks such as we now see with LPG/propane. Instead of 15 bar/ 230 psi cylinders they will be 220 bar / 3300 psi so maybe will need to be in shock proof enclosures.
Governments should think about a rebate program for refits of late model diesels. Right now the US seems confident it has plenty of shale gas and Australia thinks it has plenty of coal seam gas. I'm not so sure when you are talking millions of truck and buses converted to CNG. I suggest using less NG in electrical generation.
I have a love/hate relationship with the idea of natural gas use in transportation:
I think the technology is ready and the economic impact could be mind bending. Picture a hybrid auto such as the fantastic Lincoln hybrid, already a stunning piece of work getting 41 miles per gallon in a full luxury car (technically impossible only a handful of years ago) as a plug hybrid but using a natural gas turbine as the fossil fuel engine, or the Chevy Volt using a nat gas turbine for recharge...the efficiencies could be very high.
But...I also picture the rebirth of land barge SUV's the size of which we have never seen, with 500 horsepower V-10 engines, the ultimate status mobiles blasting through natural gas reserves at an idiotic rate. Cheap natural gas could mean the waste of one of the most valuable natural resources in the world, burning out the tailpipe a natural wonder, putting transportation directly into competition with home heating, fertilizer production, plastics production and electrical production.
If we use natural gas for transportation, we should do so very carefully and with grave concern for how we are using it, and frankly, with grave misgivings. Frankly, that has not been the nature of human beings, who's motto could be said to be "if it is cheap, BURN IT."
RC
The trend in Sweden is to use mostly biogas as wehicle gas.
A few days ago I sat in the Linköping town councillor and voted for an investment in a garbage sorting station for colour coded bags and increased biogas production. People will volontairily sort organic waste in green bags, everything will then be transported in the present logistical chain with biogas powered garbage trucks and then will the garbage stream be split into burnable for the CHP plant and digestable for the biogas plant accoring to bag colour. This investment will cost about one dollar per person and month and the value of it will increase with the oil price untill food eventually gets extremely expensive.
This also means that the minerals in this waste stream will get returned to the farmers as fertilizing digester glop instead of ending up in the CHP ash.
All of the town busses run on biogas and soon will also all the regional busses run biogas too. This feels quite nice from a peak oil perspecitive and it is also good for the climate issues. We are on the third generation of biogas busses and +30 to -20 C is no problem.
My new car would have been a biogas one if I were drivig a lot and had more money. Now I got a standard about 50 mpg petrol Skoda since I anticipate expensive diesel and diesel cars cost a little more. This car passes the CO2 emissions for a tax reduced environmental car, few thought standard petrol cars would do that a few years ago and the bar is being raised again to stimulate more technology development.
I would like to see an estimate of how much biogas could be produced. I suspect not enough. I understand in Sweden some of the gas is used to keep the digesters warm. Biogas, nat gas, coal seam gas and synthetic methane could all be blended subject to allowances for content of CO2, N2, H2S and so on. The great advantage of compressed methane as a fuel is that it works with slight modification in existing engines and can use the gas grid as a distribution network.
On the question of squandering gas I suggest a re-ordering of priorities. Unfortunately the combination of talk of CO2 penalties, the need to balance green appearing windpower and fast construction times means that gas fired generation is surging ahead. Perhaps that gas should be reserved for transport instead. Gas generated electricity should be confined to peak load, not base load.
I'm not religious but I think somewhere the Bible says 'thou cannot serve two masters'. This is the problem with gas - it cannot be a replacement for both coal and oil.