Drumbeat: July 30, 2011

Iran conducting seismic scans in Kuwaiti waters

KUWAIT: Iranian geologists have been trespassing into Kuwait's territorial waters to conduct seismic scans in the Durra and Lulu offshore oil fields, according to a senior Kuwaiti oil sector official.

Speaking on condition of anonymity, the official said that Kuwaiti authorities are aware of the Iranian scientists' intrusion into Kuwaiti waters, "which happen at least once a month," suggesting that the scans aim to assess the oilfields' reserves.

Explosion at Mexican oil refinery kills two

(Reuters) - An explosion ripped through Mexico's second-largest oil refinery on Saturday, causing a massive fire and killing two workers, though production was not affected, state oil monopoly Pemex said.

The explosion occurred at the 315,000 barrel-per-day Tula refinery in central Mexico while the company was running a trial of its visbreaker, a processing unit used in the distillation of crude oil, a Pemex spokesman said.

Mexico's Pemex To Award Its First Incentive Contracts Aug 18

Carlos Morales, head of Pemex's exploration and production division, said during a conference call Friday that the re-opening of mature fields with new technology has great potential to compensate for the natural decline at other fields such as the super-giant Cantarell offshore complex.

Cantarell has fallen from a peak of about 2 million barrels a day in 2004 to about 460,000 barrels a day, according to Pemex figures. Morales said Cantarell has stabilized and will have significant production levels for a prolonged period of time.

U.S. Gulf oil patch restores operations after Don

HOUSTON (Reuters) - U.S. offshore oil and natural gas producers re-staffed their production platforms in the Gulf of Mexico on Saturday, the day after Tropical Storm Don made landfall on the south Texas coast.

Chinese help to be sought for fighting energy crisis

ISLAMABAD: As part of efforts to ease the energy crisis in the country, Pakistani authorities will discuss with the Chinese officials the Pak-Iran gas pipeline project during the first meeting of the Pak-China Joint Energy Working Group (JEWG) to be held in Beijing on Aug 1-2.

Gunmen kill 11 in sectarian attack

QUETTA: Ten Shiite Muslims and another man were killed yesterday when gunmen opened fire in an apparent sectarian attack in southwestern Pakistan, police said. The shooting took place on the outskirts of Quetta, the capital of oil and gas-rich Baluchistan province, which borders Afghanistan and Iran. "Gunmen opened fire on a passenger van carrying Shiite Muslims. Ten Shiites and a passer-by were killed and four injured in the attack," senior police officer Jamil Ahmad Kakar said by telephone.

Pakistan puts travel curbs on U.S. diplomats

ISLAMABAD (AP) — Pakistan has placed new travel restrictions on American diplomats living in the country, a U.S. official said Saturday, in the latest sign of the breakdown in ties between Islamabad and Washington since the U.S. raid that killed Osama bin Laden.

Five Workers For Occidental Oil Kidnapped In Colombia

BOGOTA -(Dow Jones)- Five people doing contract work for Occidental Petroleum Corp. (OXY) were kidnapped in northeastern Colombia, an army official said Saturday.

The kidnapping occurred after the work day ended Friday while the workers were driving home on a rural highway in the oil-rich state of Arauca, said Gen. Jaime Reyes, commander of the Army's 18th Brigade.

Can BP's investors give oil giant the time to learn from Shell's mistakes?

Now powering ahead of BP with profits of $8bn in the past three months alone, Shell is the largest oil company in Europe with an enviable pipeline of new oil and gas projects due to boost production this year. Lauded by investors and analysts, these are the same City faces who were back then pressing for the company to be taken over or split up – much like for BP today.

Although BP's accident is a completely different, more expensive problem, there are still parallels with Shell's historic corporate scandal – most notably its probable longevity. Herein lies the tale of how Shell regrouped from one scandal, to transform itself into a company that is today worth twice as much as BP, even though the pair are often mentioned in the same breath.

Shikoku utility also urged to sway N-meet

Shikoku Electric Power Co. has become the second utility to admit it was asked by the government's nuclear safety agency to sway opinion at public meetings on "pluthermal" nuclear power generation, a revelation that raises further questions about the watchdog's impartiality.

The bright future of solar powered factories

Most of the talk about renewable energy is aimed at electricity production. However, most of the energy we need is heat, which solar panels and wind turbines cannot produce efficiently. To power industrial processes like the making of chemicals, the smelting of metals or the production of microchips, we need a renewable source of thermal energy. Direct use of solar energy can be the solution, and it creates the possibility to produce renewable energy plants using only renewable energy plants, paving the way for a truly sustainable industrial civilization.

Time for the Cairo Option?

It’s a perfect storm of both circumstance and social dysfunction really. A combination of extraordinary circumstances that have created a number very complex and threatening situation for the state, the nation and the world. I’m not just talking about the global debt crisis either, though that is the Sword of Damocles du jour. It’s everything; the crazy historical revolutions in the Middle East, our involvement in the basket case that is Afghanistan and nuclear-armed Pakistan, the two-headed snake of peak oil and global climate change, the whole ball of wax.

Chavez wants higher OPEC quota for Venezuela

(Reuters) - Venezuela's President Hugo Chavez urged the OPEC producer group on Friday to raise its quota for the South American nation given its vast reserves in the Orinoco heavy crude belt.

Venezuela's quota is around 3 million barrels per day, but it aspires to produce far more than that in the coming years through ambitious joint venture projects in the Orinoco.

OPEC recently said Venezuela leapfrogged Saudi Arabia to become the world's No. 1 holder of crude reserves, with more than 296.5 billion barrels, albeit much of that tar-like extra heavy oil.

Oil drops near $96 after weak US GDP report

Oil fell nearly 2 percent Friday as investors grew uneasy about the U.S. economy's ability to grow significantly and the Congress' ability to act decisively to prevent a default on the nation's debt.

This morning the U.S. government said the economy expanded at a meager 1.3 percent annual rate in the second quarter after barely growing at all the first three months of the year.

The data raised questions about the strength of oil demand in the months ahead. At the same time, the clock continues to tick as Congress argues about raising the government debt limit before Tuesday's deadline to avoid a default.

Washington unlikely to default

Turning to energy, the price of NYMEX crude is currently trading around $97 per barrel and only a global recession will cause it to decline significantly. As long as the world's nominal GDP continues to grow, the oil price will stay firm and when QE3 is unleashed, we can expect some fireworks. There is no way to sugarcoat it; the world's demand for liquid fuels has surpassed available supply and 'Peak Oil' is at our front door. Unfortunately, we have left it too late and all of us will have to deal with incredible price spikes and volatility.

The U.S. economy is indeed shrinking

It has been a constant theme in these columns that the global oil supply is under real threat. The facts to confirm this are everywhere if one were interested in pursuing the topic. (Google “Peak Oil” and see what comes up). A clear indication of a shift in supply is that Saudi Arabia, while it increased its output by 700,000 barrels per day, has kept more of its oil at home to benefit its own citizens with air-conditioning and desalinization projects.

So how do we confront a shrinking economy at work and at home? Brutal assessments will be the order of the day. Even though the top 10 percent of the population will manage to keep luxury businesses going for a time, the economy must shift away from businesses that feed the public’s desires to those that address what people need to survive. Small enterprises will fare better. All businesses should start wondering whether their employees could get to work if they couldn’t afford to fill the gas tank. Is your business near a transit network? These are tough questions.

Russia's Game of Paper-Scissors-Rock...and Fuel

Bulgaria is in the grip of a new fuel supply crisis.

Unsurprisingly, Russia plays a prominent role in the new episode of the energy game of nerves.

Bulgarian Regional Minister Assuages Fears of Hwy Price Hike over Lukoil Crisis

The halted production of bitumen by Lukoil Bulgaria will not lead to an increase of the construction cost of Trakiya highway in southern Bulgaria.

The statement was made Saturday by the Minister of Regional Development and Public Works, Rosen Plevneliev, who said there are large producers of bitumen in neighboring Greece and Romania.

Bulgaria unblocks state jet fuel reserves

(Reuters) - Bulgaria will release 1,800 tonnes of jet fuel from its state reserves to help the country's Black Sea airports after their supplier, oil refinery LUKOIL Neftochim, was forced to stop sales, the economy and energy minister said on Saturday.

Iran resumes gas exports to Turkey after blast

TEHERAN — The flow of Iranian gas is to resume to neighbouring Turkey on Saturday a day after a pipeline explosion, a spokesman for the national gas company was quoted by the Fars news agency as saying.

‘This pipeline is going through the final stages of repair and the flow of gas will resume on Saturday at noon,’ the National Iranian Gas Co’s (NIGC) Majid Boujarzadeh said.

U.S. review: Iraq deadlier now than a year ago

(AP) BAGHDAD - Frequent bombings, assassinations and a resurgence in violence by Shiite militias have made Iraq more dangerous now than it was just a year ago, a U.S. government watchdog concludes in a report released Saturday.

The findings come during what U.S. Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr. called "a summer of uncertainty" in Baghdad over whether American forces will stay past a year-end withdrawal deadline and continue military aid for the unstable nation.

Increasing oil demand in India, China leading to price rise: US president Barack Obama

WASHINGTON: US President Barack Obama on Friday said that the increasing demand of oil in countries like India and China is leading to the rise in oil prices.

Obama hails deal on increasing auto fuel-economy standards

Reporting from Washington— Set against the stalemate of the debt-ceiling debate, President Obama on Friday hailed agreement on an ambitious increase in auto fuel-economy standards as evidence that compromise and progress are still possible.

The agreement, which Obama called "the single-most important step we've ever taken as a nation to reduce our dependence on foreign oil," was hammered out in weeks of negotiations involving automakers, environmentalists, unions, White House officials and the state of California.

Fuel efficiency: Will new rules cure US addiction to foreign oil?

Energy-security experts praised the new agreement as key to reducing America's reliance on foreign oil.

"This is a big deal," Andrew Holland, senior fellow with the American Security Project, a bipartisan public-policy and research organization, wrote on his blog. "It is important that the United States as a whole uses less oil because the sheer volume of oil imports harms American competitiveness and drives down the value of the dollar."

Obama Fuel-Efficiency Goals Put Automakers Ahead of 100-Year Pace

When President Barack Obama proposed new fuel-economy standards today, he set a pace that’s more aggressive than the industry has managed in the past four years -- or for any sustained period in the last 100.

New vehicle fuel-efficiency standards make sense

The new standards represent the Obama administration's most significant step toward cleaning the air, cutting greenhouse gases and reducing oil consumption since the president took office.

Some Good News for the Planet

There is at least some positive news from Washington: a major agreement to bring American consumers cleaner cars — dramatically cutting greenhouse gas pollution, raising fuel economy standards and increasing Detroit’s ability to compete in world markets.

Farewell to OPEC

Here's a bit of good news - too late for Libya, but maybe in time for Iran. Regimes we don't feel obliged to buy oil from today, we may not feel obliged to fire missiles into tomorrow. The reason is simple. They can't use their oil revenue against us, against our friends, or against their own people.

Japan Ending Nuclear Age Risks $5 Trillion Economy as Komatsu, Sharp Walk

Japan’s Fukui prefecture helps Sharp Corp. make solar cells, generates cash for BHP Billiton Ltd. and keeps the lights on in the Kansai area, which has an economy the size of Mexico’s and is home to Panasonic Corp.

What makes Fukui key to production of global brands is the reason it got the nickname “Nuclear Ginza.” The prefecture on the Japan Sea coast north of Osaka is home to 14 reactors in atomic plants, the highest concentration in the world.

N.R.C. Lowers Estimate of How Many Would Die in Meltdown

ROCKVILLE, Md. — The Nuclear Regulatory Commission is approaching completion of an ambitious study that concludes that a meltdown at a typical American reactor would lead to far fewer deaths than previously assumed.

The conclusion, to be published in April after six years of work, is based largely on a radical revision of projections of how much and how quickly cesium 137, a radioactive material that is created when uranium is split, could escape from a nuclear plant after a core meltdown. In past studies, researchers estimated that 60 percent of a reactor core’s cesium inventory could escape; the new estimate is only 1 to 2 percent.

How to Pick a Site for a Nuclear Waste Dump

The United States can find a way to dispose of its nuclear waste, even if the current program is at an impasse, according to the blue-ribbon commission established by President Obama after he ended the government’s planning for making Yucca Mountain in Nevada the nation’s nuclear waste repository.

Volunteer Towns Sought for Nuclear Waste Sites, Panel Says

U.S. communities should be encouraged to vie for a federal nuclear-waste site as a way to end a decades-long dilemma over disposing of spent radioactive fuel, a commission established by President Barack Obama said.

Clean-tech funding disappears into a cloud of IPOs

Fast short-term profits are driving investment in social networking companies, while green-tech firms that have a longer slog to profitability are suffering.

Robert Bryce: T. Boone’s Windy Misadventure And the Global Backlash Against Wind Energy

Three years ago this month, T. Boone Pickens launched a multi-million dollar crusade to bring more wind energy to the US. “Building new wind generation facilities,” along with energy efficiency and more consumption of domestic natural gas, the Dallas billionaire claimed, would allow the US to “replace more than one-third of our foreign oil imports in 10 years.”

Those were halcyon times for the wind industry. These days, Pickens never talks about wind. He’s focused instead on getting a fat chunk of federal subsidies so he can sell more natural gas to long-haul truckers through his company, Clean Energy Fuels.

Green energy: California poll finds overwhelming support

A new statewide survey of environment issues conducted by the Public Policy Institute of California found more residents favor climate change policy, want to cut greenhouse gas emissions and believe they are already experiencing the effects of global warming.

“This is a clear mandate that people want to move beyond dirty energy,” said David Graham-Caso, Los Angeles Sierra Club spokesman.

BMW unveils stunning i8 plug-in supercar

The BMW i8 four-seat sports car concept goes from 0 to 62 mph in less than five seconds and only sips from its backup gas engine. It can drive up to 18 miles on electric power alone before the three-cylinder gas engine kicks in.

Its top-end performance should be breathtaking considering it's a "green" car. It will be electronically governed at more than almost 140 mph.

Removing Barriers to Salmon Migration

OLYMPIC NATIONAL PARK, Wash. — Beginning late this summer, one of the most promising and pure acts of environmental restoration the region and the nation have ever seen will get under way here, experts say, in the form of the largest dam removal project in American history.

It will demolish two massive hydroelectric dams, one of them 210 feet high, that block the otherwise pristine flow of the Elwha River, nearly all of which is within the boundaries of this remote national park.

The suspicious suspension of a climate scientist

"You have to wonder: this is the guy in charge of all the science in the Arctic and he is being suspended just now as an arm of the interior department is getting ready to make its decision on offshore drilling in the Arctic seas," Jeff Ruch, president of the group Public Employees for Environmental Responsibility, told the Guardian. "This is a cautionary tale with a deeply chilling message for any federal scientist who dares to publish groundbreaking research on conditions in the Arctic."

Laura Tyson wrote a post which appeared on the NYT Economix Blog yesterday, presenting a rather bleak picture of the US economic situation. One wonders whether the situation was also related to the oil price shocks of the 1970's, leading up to the more recent price spikes in 2008 and again this year. Her presentation includes lots of historical economic data...

E. Swanson

Excellent article and thanks for the link.

The comparison to Germany and Germany's economic strategy is a very common theme. It may also be unfair. America is just too diverse....in all things....to be compared to a country that is the size of a state, shares a similar climate (pretty much), and is centered on the continent for east/west trade, or overseas. Plus, the people better take to state control. I have read you cannot even wash your car on Sundays in some cities. What makes America great, is also its weakness. Hugely broad and diverse, spanning a continent, variations in climate and regions; all of these things are now making it impossible to come together and fight the downturn. Instead, the country and people are fighting each other, casting blame, and looking for scapegoats. USA is not a CAD program for change where it is possible to take an action and scale it up by 10 or twenty....and voila, we have solution. In fact, many have predicted the collapse to regionalism as times toughen. Germany is already there, for the most part. USA is still crabbing about states rights and chaffing at 'that dern Federal Govment telling us what to do, or that black man in office" i.e. immigration, EPA, whatever. yes, there are immigrants from all over the world in Germany, but it has not touted itself as a melting pot. I submit that the US pot is solidifying into factions and to vast numbers of 'disenfranchised'. It would take an act of war to bring the country together at this point. Or, a demagogue.


What does make America great and how is it great? At what point will people and politicians quit calling America great? Especially lately, when people call America great, they fail to specify in what way it is great. If one defines greatness by listing areas like health care,infant mortality, welfare, employment, equality, wages, energy consumption, life expectancy, transit, biking infrastructure, walkability of cities, cleanliness,vacation time, obesity, and other quality of life indicators, it is not great relative to many countries, especially in Europe.

At the end of the day, people are left with the nebulous concept of "freedom" as the only indicator of greatness. Well, that needs to be defined more precisely as well and I think the erosion of civil liberties in the last ten years makes even that area questionable.

Oh, but we have the greatest military in the world, for now. If that is the measure of greatness, well, yeh, we are the greatest country in the world. But the size and expense of our military and its need to have bases everywhere contributes significantly to our lack of greatness in the other areas I mentioned above.

At the end of the day, the concept of greatness is pretty subjective. Calling America great is just silly unless one be specific about how it is great.

And look at what is being cut as part of these budget deals to get the debt ceiling raise. It is all about domestic spending with a wish and a prayer that we will somehow get out of Iraq and Afghanistan. But no mention of the other areas of the Defense budget.

I have begun to think that the only way for the Democrats to avoid a default is for them to capitulate to the Tea Party crowd and give them what they want--and then basically have a referendum on it next year during the 2012 elections. Of course, I suspect that many liberal Democrats would spontaneously combust if they voted for the kind of program cuts that the Tea Party folks are advocating.

For Republican Freshmen, the Power of No

The Republican freshmen of the 112th Congress may never see the legislation of their dreams become law, but the scope of their victory in reshaping the debt ceiling bill to reflect the fiscal hawkishness of the most conservative House members cannot be overstated.

While they think no one is looking, the Tea Party uses the debt distraction to gut environmental regulations. Everything the Tea Party represents is bad for our country. Capitulation would be a damn shame.


I actually think that the Tea Party crowd is right about spending, but for the wrong reasons. Their position is that we need to maintain or reduce taxes, and reduce spending, in order to boost economic growth, as we maintain an infinite rate of increase in our consumption of finite fossil fuels. My view is that we will be forced to cut spending because we don't have the resources necessary to maintain infinite growth--especially as we are gradually being shut out of the global oil export market.

If I could dictate policy changes, I would abolish the highly regressive Payroll (Social Security + Medicare) Tax and replace it with a tax on energy consumption at the retail level, but this would force the country to acknowledge that we are constrained by resource limits.

WT, I think you'll recognise the photo at the bottom of this article:


The mainstream media acts as if not raising the debt ceiling by next Tuesday will result in America defaulting. This is a crock. America chose to proceed on a path to default decades ago. We are just finally reaching our destination. Below are the choices we made as a people and a country to default on our obligations and eventually destroy our country:...

Conspicuously absent from his list is the concept of finite resources. Most folks still don't get it.

The Chinese rating agency says the US is already in default.

If I could dictate policy changes, I would abolish the highly regressive Payroll (Social Security + Medicare) Tax and replace it with a tax on energy consumption at the retail level, but this would force the country to acknowledge that we are constrained by resource limits.

Wow, that is a great idea! Direct feedback in the pocketbook regarding cost of energy. If only that was politically possible.

He's going to replace one highly regressive tax with another?

An energy tax need not be regressive, if it is coupled with money and programs for the poor that it pays for.

Yeah, but I'm bummed that the amount of money we are talking about for debt reduction, $4 trillion over a decade, is exactly the amount of the cost of the extension of the Bush tax cuts for the wealthy that Obama capitulated to last December, before the Tea Party members even took office. An energy tax would be awesome...but is certainly not something the political right is at all considering.

Stephen Hren

I'm right there with you on that one themudranch. Isn't it ironic that Obama didn't have to do anything to avoid this situation, just let the Bush jr. tax cuts expire. And is it any wonder after he capitulated on extending those cuts, the Repubs push policy like he's gonna fold at any second? They probably cannot believe he's played chicken this long.

Energy tax on oil would be great, about 25 or 30 years ago! Now it is placing your bets on a sick dog!

I think it's far too late to help that way... don't know if there is an answer. We don't have a problem any more, since there is no real solution that I have seen (one reason, IMO, that to politicians are acting as they are - they have no clue what to do, and they know it). What we have is a condition. We need to figure out how to live with it. Collaps of sovereign debt is just a matter of time. Greece first, then the rest of the PIIGS, then us, I suppose. Maybe we fall later, or maybe sooner.

Welcome to the new paradigm.


There is an answer.

Pay off the debt with Treasury Notes.

Many will protest that this is "inflationary" because it is creating more money. Not so. The money was already created, and the inflation incurred, when the debt was issued.

By paying off the debt with Treasury Notes, all that happens is that bondholders are no longer entitled to a stream of interest payments. They still have the same amount of money as they had before, and the US Treasury has the same amount of money as before. As bonds are fungible as money, no new money is created, because for every Treasury Note printed up, or paid out as electrons in the computer banking system, a bond is retired.

All Congress has to do is authorize more Treasury Notes to be issued to retire the debt.

I really really want a carbon tax. As a consumer, I really don't know what activity of mine leaders to increased GHG production. A carbon tax would make this really clear and encourage both fuel consumption and carbon emissions.

I really really want a carbon tax.

And when 70% of the spending on Carbon reduction projects is "overhead" with a ratio of 1:1 of the effective spending goes to the likes of the Goldman Sachs your "wish" is nothing more than forced enrichment of the Banking class at the hands of the underclass.


BrownBear did say carbon tax, not carbon offsets.

And this "tax" - what are the funds going for?

If its just into the "general fund" - then how is it no better than the old Catholic "indulgence" payments?

Consumer behavior is modified regardless of where the money goes.

I agree.

It's amazing, the zeal with which the left in this country goes along with the right to encourage regressive taxation, not just the payroll tax, but also the income tax, which falls directly on the middle and upper middle classes, and leaves the poor and rich unscathed.

America is in a sort of existential crisis, in which the rich and politically connected have a sort of death wish, but instead of committing suicide, they will proceed to destroy the nation, taking everybody down with them.

Irrespective of one's political stance, there's one bit of American exceptionalism that seems factually undeniable; it is outlined in, say, It Didn't Happen Here: Why Socialism Failed in the United States. IMO that book, like others, actually fails to clarify the "why" - but all the same, the US has never had, on any appreciable scale, a "left" matching up with the traditional "left" in Europe. This phenomenon might be somewhat aligned with the old joke that in the US there are basically two main economic classes: those who are rich and those who would like to be rich.

there's one bit of American exceptionalism that seems factually undeniable; it is outlined in, say, It Didn't Happen Here: Why Socialism Failed in the United States.

And yet one can claim the 10 planks of the Communist manifesto are in action in the US of A.
That view has some backing - back when the Worker Rights parties were gaining ground on what was called the Democratic Party the Democrats said 'hey, those things wanted by the Communists - they are now part of our platform' That is why old time right wingers called the Democrats "Communists".

And with Citizens United - the melding of Government and Business becomes evermore solid.

Thus factually undeniable looks less like standing on solid ground but more like standing on shifting sands.

That's a rather long reach.

gut environmental regulations.

EPA is 'bout 1/5 of the government regs (if the web post 2 days ago is to be believed) 25,000 pages.

Everything the Tea Party represents is bad for our country.

Including the desire to spend within the means of the Government?

I don't believe they care about the gov spending within its means. They wish to shrink it at any cost.

And the parts they most want to damage are the most important parts such as the EPA, Medicare and Social SEcurity.

1st of all one has to define what the "tea party" is if one is gonna claim what "they" want.

Is the term no better than Fascist - something I don't like so that what I don't like is Fascist? Or do you have a better definition?

Tea Party -

A bunch of suddenly outraged citizens, whose organization, events, and talking points are dictated and bankrolled by the Koch brothers and Faux News. After the Bush administration inherited a budget surplus, drove it into the ground with needless and illegal wars and at the same time cut taxes on the wealthiest, he left Obama with a huge financial crisis and deficit and 2 wars to deal with. Two TRILLION dollar wars. NOW they are outraged, because a black Democrat is president (and they've been told to be outraged). Mix in some good old John Birch stuff, evangelical wack-jobbery, and racism and you have the Tea Party.

Everybody knows it - don't be coy.

That'll do if you add that they are also a bunch of sheep who are hypnotized by Grover Norquest and his "no new taxes" pledge.

Just as the Koch brothers are the funding source that initially created the tea party, Norquest's notion of "drowning the government in the bath tub" is pretty close to their rallying cry.

Perhaps you should review the "Rules of Hostage Negotiation" before capitulating...


"At the beginning of a hostage crisis, the hostage-takers' demands are often unreasonable. They might ask for huge sums of money or for the release of thousands of fellow terrorists from jails. Of course, the negotiator can't just give them anything they ask for, even if it would mean safety for the hostages. The policies of any nations involved, the ability to actually acquire the items being demanded and the need to consult with the situation commander and high-ranking political officials all limit what a negotiator can offer to the hostage-takers. Plus, if anyone who took hostages immediately had all of his or her demands granted, the world would face one hostage crisis after another."

Not entirely in jest...

The Tea Party will declare by referendum that ice is not melting. Ok, well that was easy, problem solved right?

Now, how to convince nature of this new 'fact'...

Now, how to convince nature of this new 'fact'...

I can just about imagine it. Lots and lots of floating styrofoam. It would (at a distance) look like sea ice. It would even reflect sunlight.....

Default? Need to learn what that means - the US will not default no matter what bill is passed or if no bill is passed. All bonds and notes will be paid and there is more than enough cash to cover that and over 40-50% of other expenses. Sorry, but default is a made up issue.
That said, not paying workers and some other funded mandates is not good but not default.

That said, not paying workers and some other funded mandates is not good but not default.

Oh, nicely played! Unless of course YOU happen to be one of the workers not getting paid. If you borrow my expertise or labor for a particular purpose and we have mutually agreed that you will repay that loan by some mutually agreed upon means and you do not hold up your side of the bargain what exactly would you call it?

It is default as far as the unpaid workers and unfunded mandates are concerned.

Try not paying your mortgage and paying credit cards instead.

There is no such thing as partial default. It is like being partially pregnant.

The made up issue is the debt ceiling itself. It is an unconstitutional law that violates the 14th Amendment.

Congress should vote to abolish the debt ceiling and get back to debating issues that matter.

Such as the end of the universe:


It appears there is another option..

Can a giant platinum coin save our credit?

But failing that, Obama could always just solve the crisis with a pair of magical platinum coins. Sure, that sounds preposterous, but Yale’s Jack Balkin argues that this is actually a perfectly legal strategy. Here’s the logic: Under law, there’s a limit to how much paper money the United States can circulate at any one time, and there are rules that limit how many gold, silver and copper coins the Treasury can mint. But the Treasury is explicitly allowed to mint however many platinum coins it wants and can assign them whatever value it pleases.

So the Mint makes a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Federal Reserve moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations in the near term without issuing new debt. If the Fed was worried about all that newly created money being pumped into circulation, it could always counteract the inflationary effects by selling off the $2 trillion in securities it owns from quantitative easing (thereby taking an equivalent amount of money back out of the economy). Problem solved. Right?

While it does sound preposterous, I haven't seen any legal reason why they couldn't go down this road, and they wouldn't have the nasty questions about the constitutionality of using the 14th amendment to tell the Congress to stuff it. The downsides are really more political than anything - as long as the Congress is held hostage by the "Tea-Fraggers", there would probably be political blow-back.

Just idly wondering... what happens if some clever criminal steals the two trillion-dollar coins? Sounds like a good movie plot. They'd be hard to spend, though.

Since we are a totally irresponsible nation, and we are never going to pay the debt back anyway, a better strategy would be to "accidently" lose them irretriveably. 2 Trillion in debt goes *poof*...

If you are looking to loose and then not look for 2 trillion - I suggest Rumsfield is your man.

It's the same as turning on the presses at high speed. inflate the debt away.

Cermets - Good point. I didn't discover the actual numbers until yesterday. You think the MSM might have told everyone worried about defaulting on the Treasury debt: August interest payment = $32 billion. August govt revenue = $172 billion. Not only would the govt have enough income to pay the debt interest but also cover all the SS, Medicare and military benefits/salaries. So zero chance of default or anyone not getting their SS check.

But it would still be a very painful nightmare for many: can't pay all the govt workers and pension benefits for former govt workers. But all the MSM hype about debt default and no one loaning us money was 100% BS. Either very ignorant or had their own agenda to push the propaganda. Lets be brutaly honest about the American people: higher interest rates and no SS checks: a big problem. Laying off govt workes: not that big of a problem. Except for the workers, of course.

There are interesting calculators that one can use to play with this and see exactly what you can and can't pay out to keep the expenditures under 172bn$.

You choose: who gets paid (and who doesn’t)

Unfortunately there is a "misc" pot of "other spending" which runs about 50bn$. I suppose that since we don't really know what is in there, it would be easy to say that we should cut it, but in reality you have no clue what it is that you would be cutting. Kind of like trying to saw off your arm with a rusty hacksaw..

From what I've read, each department builds its own payment files and then sends them to Treasury's Financial Managment Service. I doubt that FMS will prioritize payments by department, so each department will have to modify its own payments stream into whatever priorities it plans to implement. All departments probably have essential and non-essential functions.

For example, DFAS may have to insure that the Afghan locals are paid for guarding truck convoys of fuel into Afghanistan, while not making progress payments on the F-35.

There is about $467 billion in Treasury bills (most of it), notes, and bonds maturing August. So Treasury has to convince investors to buy the new paper to replace the old and manage the cash flow.

Putting the payments other than interest and principal on a prioritized pay as revenue arrives basis takes about 9% out of GDP. A decrease of 10% on GDP is the definition of a depression. A lot of government was outsourced to contractors during the Bush II administration and they will be laying off workers. Hospitals and doctors are unlikely to be paid for medicare services.

Merrill - How does that work on the books: are the maturing notes, etc, come off the books and can thus be refinanced by sellin new debt So there's no actual debt increase per se. Correct?

There has to be a certain amount of "Fuzz" built into the August 2nd deadline. There is no way that the actuarial estimates, done by career professionals, at the Treasury Dept can be 100% accurate. There is no way they can know within a few $Bn what the cash-on-hand will be at midnight on a specific date. I would hope that Secretary Geitner padded the estimate by at least a week, but then he's made other mistakes in the past.

Anticipating monthly revenues can only be estimated using rolling averages. As unemployment increases, revenues from withholding and payroll taxes decrease. There is also no way to know how many people, or corporations, making monthly or quarterly payments will make them on time.

I retired from the defense industry, after 33 years, and am very familiar with how major contractors bill the government. Some progress payments on major development or production programs are paid periodically, by schedule. Milestone payments are paid based on completion of a contractually specified event, timing of which can never be accurately forecast. Then there is the matter of when the contractor finally submits the bill and the DoD approves the payment, before the Treasury pays the bill. Considering the magnitude of expenditures by defense contractors, variable monthly demand upon the US Treasury is difficult to forecast accurately.

Your previous post that the Treasury will have over $170Bn to pay most of the $300 due during the month of August, is technically correct. However, it will result in almost immediate lay-offs of non-essential government employees and suspension of work by support contractors to the Federal government. This will result in reduced revenue to the Federal Government, within weeks. It will also place an immediate financial burden on individual states with additional claims for unemployment insurance.

Any significant reduction of support contractors to any Federal Agency, will result in further delays, in what is already a painfully slow bureaucratic process to approve payments. Therefore, contractors will not be paid, or given IOUs, on a timely basis. Large contractors can survive this situation for an extended period of time, however their ratio of Accounts Receivable to Cash-on-Hand will eventually cause the corporation to be de-valued by Wall Street. Small contractors will be forced to either borrow money, at increasing interest rates, or lay-off more employees.

If this debt ceiling debate is not resolved within the next few days, multiple events will begin to occur exponentially. Monthly revenues to the Federal Government will decline. Demands upon local and state governments will increase. Unemployment will increase drammatically.

Do we really want to risk this at this time?

Your post explains why prioritizing payments, as well as even estimating cash balances, will be very difficult.

At this time I am not aware of any measure taken or notice given that the federal government will stop making payments due on August 2. Therefore it appears at this time the government will continue paying for all previously appropriated expenses.

My conclusion then is there is a Plan B, probably invoking the 14th amendment, but there may be other as yet unknown plans.

In the back of my mind, I'm wondering two things:
1. Is the GOP forcing Obama to invoke the constitutionally risky 14th Ammendment to gain grounds for a potential impeachment proceeding?

2. Has the Administration quietly ordered every Secretariate to prepare a plan, to be implemented immediateley, to reduce expenditures?

I'm almost certain that the Secretary of the Treasury and the FederalReserve have worked out some "Plan B."

Personally, I would have no problem if President Obama called, for a Joint Session of Congress, declared a national emergency (IT IS!) and invoked the 14th Ammendment, along with measures to reduce federal spending.

"Is the GOP forcing Obama to invoke the constitutionally risky 14th Amendment"

Will you actually read the 14th amendment? It arguably gives Obama the requirement to pay the interest on the debt first. It does not give him authority to issue new debt on his own.

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. "

The "authorized by law" section requires Congress to, well, authorize by law, the debt in question, which is what the current argument is about.

Article 1, Section 8 of the Constitution specifically gives Congress the authority to issue debt.

More precisely it is the Congress that is responsible upholding the 14th amendment. Technically then it may be that Obama would call a Joint Session of Congress to advise them of their obligation, or that he was - to put it simply - just following the law by paying all expenses. The Supreme Court previously ruled on the 14th amendment and made it very clear that Congress can not make rules to bypass legitimate debts of the US:

PERRY V. UNITED STATES, 294 U. S. 330 (1935)

To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. This Court has given no sanction to such a conception of the obligations of our government.


Paying debts and paying all expenses are two different things, right? I don't see that the 14th amendment in any way authorizes new debt.

Personally, I hope the Tea Party is successful in at least stopping gov't growth, and in getting some immediate cuts.

It doesn't authorize new debt. Keep in mind that the debt limit only refers to existing debt covered by the debt limit. Debts of US agencies are not subject to the debt limit, such as Fannie Mae, but there are many more examples.

The 14th amendment makes Congress responsible for paying all existing debts and obligations. The intent of the act was clearly that all debts and contractual obligations incurred by the US must be paid.

There has been more than one Supreme Court ruling on the 14th amendment and they all clearly indicate that indicate Congress can not change the intent of this amendment or nor in any way neglect existing US contractual obligations.

Since the debt ceiling law has never been tested in Court, its constitutionally in view of the 14th amendment is at best unclear. In a court decision involving President Nixon, it was concluded that the President must spend the funds already budgeted by Congress. So in this case the President has no choice but to spend budgeted amounts.

Risky indeed. Most people who quote from the 14th Amendment leave out those three pesky words "authorized by law" that describe the debt that must not be questioned. Only Congress can make law, and only Congress can authorize borrowing. Given that, and the fact that the amendment says "debt incurred for the payment of pensions" rather than simply "pensions", it seems likely to me that the current SCOTUS would interpret the Amendment as meaning that money borrowed up to the limits authorized by Congress gets repaid on time and in full. And that other obligations get paid as revenues allow.

Certainly that seems to be what Obama and Geithner are setting up. I suspect that they have already spoken with Ben Bernanke, and he has assured them that the Federal Reserve stands prepared to purchase as many Treasuries as necessary to finance the turnover of principal. Revenues are sufficient to cover interest payments. But payment on a lot of other bills is going to be delayed.

Your explanation is a very narrow interpretation and not supported by precedent. Please explain where in the case I mentioned that payments are limited to existing debts authorized by Congress. The Supreme Court was very clear that the 14th amendment applied to all contractual obligations of the Government. Can you point to where in the Perry v US, or some other Supreme Court decision, where the law authorizes this hierarchy of payments you are describing? Please explain why pensions are not a public and contractual obligation. It's going to come as a big surprise to all those collecting Social Security and government pensions that the government is under no obligation to pay them.

6. When the United States, with constitutional authority, makes contracts, it has rights and incurs responsibilities similar to those of individuals who are parties to such instruments. P. 294 U. S. 352.

11. Section 4 of the Fourteenth Amendment, declaring that "The validity of the public debt of the United States, authorized by law, . . . shall not be questioned," is confirmatory of a fundamental principle, applying as well to bonds issued after, as to those issued before, the adoption of the Amendment, and the expression "validity of the public debt " embraces whatever concerns the integrity of the public obligations. P. 294 U. S. 354.


In case it wasn't clear, PERRY V. UNITED STATES is one of four key Supreme Court cases settling the issue of whether a 'gold clause' in business contracts and debts - plus government debt - could be upheld. These cases were brought to the SC just after a major devaluation in the US dollar vs. gold in the early 1930s.

To put it simply, the Court decided (among other issues) that business dealings originally made in terms of gold would be settled in dollars rather than gold subsequent to the dollar devaluation. Keep in mind this applied to all business dealings, and not just debts. Since then, it has been unlawful to make contracts for goods and services in the US in terms of gold.

The SC went on to say that "The United States are as much bound by their contracts as are individuals". Therefore contractual obligations of the US, in what ever form, can not be changed, for example, by debt limits.

Correct, if you rolled over %10 billion in bonds or notes, you would pay out $10 to retire the bonds or note and take in $10 billion on the sale of new bonds or notes.

However, if you rolled over $10 billion in T-bills, you would pay out $10 to retire the bills and take in less than $10 billion, since bills are sold at a discount rather than paying an interest coupon. But interest rates are so low that the discount isn't much.

Merrill et al - Thanks...that's what I guessed. And Nick...yes...that's what I sad...potentially very painful for many folks. And not even their fault. OTOH isn’t that how the system is suppose to work? In my career I've been let go more than once by companies that became insolvent. One company had a $100 million bond come due and couldn't pay a single $. So what did they do? Laid of the majority of the employees. Wasn't their fault either, was it? Don't like to see anyone lose their job. OTOH I've never had a job in 36 years where it was guaranteed I would never be laid off. If the govt can't not afford to keep spending as it has then there should be a cut back in programs. Everyone can pick their favorite for the chopping block. But whatever you pick some folks are going to lose their jobs...period. The US govt has over extended itself. Hard for anyone to deny that IMHO. The painful solution: contraction of the govt. It should have happened long ago. But the govt has an ability private companies don't: a nearly limitless charge account that would have to be paid by future generations.

And please don’t tell me how inflation will eat away at the debt: that $32 billion in interest payments in August is your tax dollars today. Do you dollars feel deflated to you today? IOW not really worth that much to you. Or as Dr. Phil would ask: How’s that working for ya? Maybe folks should give the rest of their savings of those devalued dollars to the feds to help pay off that debt of the future generations. I’m sure they would greatly appreciate it.

You think the MSM might have told everyone worried about defaulting on the Treasury debt: August interest payment = $32 billion. August govt revenue = $172 billion. Not only would the govt have enough income to pay the debt interest but also cover all the SS, Medicare and military benefits/salaries. So zero chance of default or anyone not getting their SS check

You can only pay those things if the money is in the Treeasury when the checks are due to go out. It doesn't help if the money coming 15 days later in the month.

How about prisons? Are you going to release all the prisoners or feed and house them? FBI, DEA, TSA? Border Patrol? US Marshalls? Embassies? Customs? Fuel costs? Electric bills? FDA food inspectors? Air Traffic Control? You like the taxes coming in to pay for what is left??? Tough to get them without a functioning IRS and US Treasury. The GSA would also be useful if you want to run a payroll. How about judges and courts, or do you prefer to release everyone under arrest?

Cutting off welfare, WIC, rent subsidies, unemployment checks, disability checks, and food stamp payments should make things interesting in poor urban neighborhoods. Who are you going to call on to surpress the riots and looting when people have no money to get something to eat?

Its a much more complicated problem than you are making out. The sort of stupid assertions being floated such as what you wrote really underestimate the problem.

Its really easy to come up with first few tens of billions not to pay - you suspend payment and work on USDOT activities, stop farm subsidies and foreign aid paymenets, suspend Dept. of Education and HUD grants in aid to states, cities, schools, shut down the national parks and national forests and the like, etc. After that it is much more difficult, and you are looking at either a partial stand down of the military, chopping welfare transfer payments, or cutting Medicare/Medicaid payments off. And then you still are not there, unless you want to start gutting the law enforcement and safety activities I listed above.

Andrew - As I clearly said: very painful for many folks who are not responsible for the situation. Just as it was very painful for the millions of folks who have been laid off from companies. So should over extended/failed companies be given unlimited credit to keep their efforts going? It would be great if it could be done. The auto industry got a huge helping hand recently. But the hole the govt has dug (and continues to dig deeper) is magnitudes bigger. The obvious difference: increased capital to private enterprises might allow a return to profitability and cashflow but an expanded govt doesn't. Increasing govt size requires an even greater drain on the rest of society. Had it not been for the govt's ability to borrow us into the hole we're in today it would have never grown to where it is today. Unsustainable is just that: unsustainable. The only question is when do you begin adjusting to the reality of the situation? IMHO had we started to do so a couple of decades ago it would have been much less painful/disruptive. But no politician wanted to be the one to say the party was over. And they were rewarded by being re-elected by the public.

Think about the big picture. How often is there consensus here on TOD that PO will not allow BAU and continous expanasion of the economy? If you accept that premise how can the economy fund a continuely expanding govt? Only two ways AFAIK: increase taxes and borrow money. Neither is a sustainable approach IMHO. Increased debt/interest payments reduce net income to the govt. Increasing taxe works fine until the reduction of capital in the private reduces economic activity.

Now if you accept unlimited economic growth inspite of PO/other peak resources you may have a different opinion. But IMHO it's more critical now then every that the US govt needs to shrink. As I said earlier: pick your cuts. But no matter what goes on the chopping many folks will suffer as a result. Folks who are not individually at fault. But collecively we've ended up with an unsustainable govt we deserve: the one we've collecively voted for. The beginning of the PO nightmare has just accelerated the situation IMHO.

This mess has attracted a lot of commentary in other countries because it couldn't happen elsewhere. The only other country with a debt ceiling is Denmark, and its taxes are twice as high as the US, so it has no trouble keeping the debt under the ceiling.

Debt-ceiling chicken and the end of empire

I used to think America would solve its problems, after all else failed. Now I’m not so sure. The political class is looking more dysfunctional than ever. This is a manufactured crisis in which hardly anyone can understand or explain the ins and outs.

In Parliamentary systems (Britain, Canada, Australia, etc.) a budgetary impasse would force the government to resign, the House would be dissolved, and an election would follow within a month or two. Politicians try to avoid that kind of thing because if the voters are sufficiently P.O.d by the political maneuvering, there is a real chance that most of them would lose their seats and a third party would win the election.


The solution is simple, but the Republicans are unwilling to embrace it:

1) Higher taxes - tax revenues are about the same today as they were in 2001 - as an example, I am in the top 10% by earnings, and pay a combined Federal tax (Income tax, Social Security, Medicare) of 9% of my income.

2) Massive cuts to defense spending. The US spends 40-50% of world defense spending, and the US and our allies spend around 85%. At least the Ancient Egyptians built Pyramids that have lasted to today when they wanted to waste money. We spend it on bombs and shipping soldiers around the world to dusty hellholes.

3) Government run health care. Everywhere else in the developed world spends half of what we do on health care and manages to achieve better results - lower infant mortality, people live a couple of years more to around 80, no one going around with unsolved medical problems from lack of insurance.

4) A targeted goal of increasing American efficiency in petroleum use by 50%. We have now sustained 33 years of growth consuming a steady 19 million barrels of oil per day. We could certainly sustain more by making a targetted attempt to transform our transportation system and development patterns and adopt renewable energy and move towards the type of efficiency of use seen in Europe and Japan so that we can withstand our petroleum supply shrinking by 50% in the future.

5) Population control - obviously the most controversial, but wouldn't we be better off as a society without a rapidly multiplying lower class of drones and welfare recipients? Its tough to see what people living off a government check bring to the table economically. "Let him who will not work, neither shall he eat."

IMHO, the Republicans really have no answer to any of this, which is why they are so prone to sticking their heads in the sand in denial and indulging in various fantasies.

If we fail to regulate ourselves, nature will see to it for us via some catastrophe for us like the Black Death was for Justinians Roman Empire or Eurasia in the Middle Ages.

I read an interesting idea on another website that I hadn't seen elsewhere.

The ability to cut expenses and raise revenues, with constraints, would be given to an independent entity such as the Federal Reserve. Spending cuts and tax increases would be triggered on a quarterly basis and specific to industry sector or government agency. The mandate would be to reach balanced budget as quickly as possible without a recession.

I saw this idea as a way to regulate those with the power of the purse.

Andrew - When the Democrats had complete control of the govt they could have done any or all of your suggestons. And they did none. The situation is not a result of failures by the Repubs or Dems. It's a result of our politicians always chosing a course that could lead to re-election.

As I said: pick your cuts. And so you did. But you didn't talley the employment that woud result from your plans. Would be nice if you had that balance to your position.


You know as well as I do that the Republicans were perfectly willing to filibuster any tax increase or any step towards a European style health care system and in fact did precisely that. So there was hardly complete control.

I will note that after a 100% increase in spending under Bush, government spending has flatlined since June 2009 under Obama at around $3.5 trillion.

But all we hear is how Obama is such a "big spender" and the Republicans are frugal and austere.

I don't believe that employment is greatly affected by any plan. People need to eat, and eventually desperation drives them to take a job even if it pays less than they wanted. The plans simply set up incentives as to where capital is invested to create employment opportunities. Right now, our plans create opportunities in FIRE industries, Chinese manufacturing, Walmart, and defense related contracting.

People need to eat, and eventually desperation drives them to take a job even if it pays less than they wanted.

I think you completely understand the nature of unemployment. It is not about making the unemployed so desperate they'll take whatever is on offer. Is is about having a job on offer. All the will in the world on the part of an unemployed person, won't make someone hire him.

Unforunately what government does, does matter for the economy. We supposedly now have some sort of "deal", details aren't out yet (plus I don't want to look at my chickens when they are only eggs that might not hatch). But, you can bet there will be serious spending cuts, which will remove another few percentage points off GDP, leading to millions more unemployed. Austerity doesn't produce properity. It produces desperate people who can't find a job.

The solution is simple ... 1) Higher taxes

Magicians apparently know (but hey, I'm no magician) that certain maneuvers will absolutely force the "free will" human mind to focus over there instead of right here.

So it is by these so-called slights of manipulation that they pull your attention over in that direction while the guy in the gorilla suit walks out in plain sight and re-arranges the furniture while you are not --because you can't be-- looking over here.

The framing of our predicament in terms of "taxes" is one of those magician tricks.

The word "taxes" inflames everyone's minds and shuts off all rational thought.

The word "taxes" forces you to flip on your economics mode of thinking even though that has nothing to do with what is really (in physical reality) going on.

Running out of oil? No.

It's the taxes, stupid. Code red. It's the taxes, stupid. Code red.

Eeeee whoop. Eeeee whoop. (Sound of shock doctrine siren distracting your brain into code red mode.)

They've got others distractions to throw into the mix. Some undeserving welfare mom, whose skin is a different color then yours will get tour tax dollars... Immediate amygdala hijack. No cross checking of what tiny portion of spending goes to welfare...
Eeeee whoop.... They are always doing "research" on focus groups to determine which distractions are most effective. And they never retire a distraction because its been thougholy refuted. So the terms of debate becomes, one side can make up outrageous stuff out of whole cloth, and never be called on it, while the other side will have any inconsistencies immediately pointed out.

So soon, we will have no middle class programs left. But, we won't need them, cause the middle class won't be around anymore.

The discussion here illustrates exactly why an impasse is likely. Half think that cuts should happen first, and the others that taxes should go up. When there is agreement on the need to cut, the target programs are diametrically opposed.

In reality, I'd say ALL of it needs to happen -- taxes up, more money printing, modestly debt ceiling rise, heavy cuts in military and social spending, and probably a recession. The current path of having GDP growth with declining employment is likely to get worse before it gets better, but a debt-ridden economy clearly benefits those who hold the purse-strings and penalizes those who can least afford it.

As for the gov't employees, I'm with Rock. I've been, and I've known plenty of others who had jobs one day and not the next. It really, really sucks, but you get through it. Most likely most such cuts would be temporary, and the most dire predictions of prisons with open doors and SS pensioners starving would only come to pass if the bureaucracy decided to be purposefully evil. If they paid the grunts and laid off paper-pushers I doubt most people would notice for a few weeks, until their passport didn't show up or they showed up at a national park with chained gates.

Maybe that is the gov'ts real fear -- that half of the jobs could go undone and nobody would notice.

Half think that cuts should happen first,
and the others that taxes should go up.

That leaves 0% of the population doing a real kind of "thinking"
as opposed to thinking they are thinking.

There is much "real" work to be done in transitioning our civilization into one that can land softly as oil production plateaus out rather than experiencing a hard crash.

But that is not happening.
Instead we have shock doctrine kabuki dancing and political "impasses".

Eeeee whoop. Eeeee whoop. (Sound of shock doctrine siren distracting your brain into code red mode.)
It will "feel" so good when the all clear is sounded.

But then again, we are always fooled by our Flashdance "feelings".

All bonds and notes will be paid and there is more than enough cash to cover that and over 40-50% of other expenses.

Don't count on it. Over a month, the money might be there, but that is not what matters. What matters is if the money is there when the checks to pay interest are due to go out in mid-August.

Think of it like the biweekly paychecks you probably get. If your mortgage is due on August 15, but your paycheck from August 5 has been spent, and you don't get paid again until August 19, can you pay your mortgage on time and not default? Obviosuly not, even though you can afford to pay your mortgage later in the month.

Later in the month is not good enough for Treasury Bonds.

When the money is gone, its gone. Its irrelevant if there will be more at the end of August.

Don't count on government sticking to what you consider to be the rules. For instance, you might get your government check for August, and find it's postdated to September. You get your check for September and it's postdated to November. You get your check for January, 2012 and it's postdated to December, 2013.

Watch for it coming to a post office near you, where you can pick it up yourself. Open Mondays and Thursdays only.

In the paper payment world, governments can use something called a "warrant". http://en.wikipedia.org/wiki/Warrant_of_payment

They look like a check, and banks often accept them as checks, but they should really be treated as a collection item. The way they work is that the clearing bank settles with the bank of deposit when/if there are available funds in the account on which the warrant is drawn. The bank of deposit should not credit the depositors account with available funds until the clearing bank settles. State and local governments often pay with warrants instead of checks.

I don't know whether the electronic equivalent of a warrant is implemented.

I now think there is a considerable possibility there will be no debt limit agreement in time. While current negotiations have some aspects of game theory, as mentioned here in the last few days, apparently in this game of chicken some don’t really think they are going to get hurt too badly in the upcoming head-on crash.

Anyway the Washington Post has a balanced article about how the 14th amendment may be used by the President in the event there is no agreement reached. I might add that in general the Constitution would usually be given higher legal authority than a federal law, such as the debt limit law. If the President used the 14th amendment, it could take years to determine the legality of such a move – if ever. No doubt that could possibly even further polarize political debate.


program cuts that the Tea Party folks are advocating.

To get the 'budget' "under control" means an end to the Military spending. Given over 50% of the budget is military and 25% or so of employment is tied to military spending (per various infographics/news reporting) if that all came to an end tomarrow - what would the Nation do with the 30+% unemployment?

While the Tea Party may be hobbits and too many in Congress are ringwraiths the repercussions to going cold turkey look to be scary also.

eric - And ain't that the hell of it: when a large portion of the population is dependent upon getting a check (DOD contract worker or SS bneficiary) generated by the govt someone has to be hurt if the govt is forced to cut spending. We are well beyond a little bit of pain as the adjustment to the new reality sets in IMHO. Just a question of who gets hurt most. We might want to keep delaying that pain on future generations as we have been for decades. But some of the current voter base is beginning to understand it may be about to start falling on them. From my own personal perspective the govt can carry on BAU. I'll be long gone before the serious SHTF. And if it hits in August still no problem for me...just coast. But just doesn't seem fair to all those who are just about at their limit.

Again, like many problems confroning us today, there's no solution. Just better and worse responses.

At what point will people and politicians quit calling America great?

Yeah, at what point is my question too. It's starting to seem like a tired old line. Finally it stopped but for several years this kid across the street would vandalize us, and finally I had piece of evidence. He killed two of our biggest trees and left the root kill container. I got the Sheriff out to our house and asked their staff to dust for prints, and he told me it would never happen. He said they only have so much money for testing evidence and property damage situations are not one of them. He said they don't even write up reports on property damage, its the propery owners responsibility now.

I was agitated to say the least, and his retort was, "America is still the greatest country in the world."

My wife recently had some heart health issues and the cost of the medical tests, etc. were 60k. Without health insurance it would have been a big setback for us. The relatives I left in the UK would not get a 36,000 dollar bill for a single MRI exam! I'm not even sure it was a good idea for our family to have immigrated to the US.

It use to be great. I remember a different US. But with the political hatred that pervades, and denial of AGW, peak oil and all that seems to matter is finding new and better ways to transfer wealth to the top 1%, I'm not of that mind any longer. Still great to some degree, but on the way down in a real big hurry.

I'm not even sure it was a good idea for our family to have immigrated to the US

Not sure it would have been any better for you to stay in the U.K. The very name, "Great Britain", is more and more of an oxymoron as the economy shudders through contractions.

Europe 'living in fantasy' over crisis

Terry Smith: "We will all be significantly poorer than we thought we were in the last 20 years... we simply won't have the same standard of living."

To go back to the earlier question, what made the U.S great? The short answer is, since WWII, the "almighty dollar." Being the de facto world currency (the preferred medium of exchange for international trade and commerce) meant that everybody traded with the United States and everybody held US dollars on reserve. Now that the U.S. is resembling a Latin American country in its inability to work out its debt problem the US dollar is losing credibility fast. Gold continues to rise into the stratosphere b/c fiat paper currencies are now worth so little.

Energy constraints, it has been argued here, has been a factor in recent economic contractions. Human nature is even bigger factor. Nobody wants the party to end and nobody wants to pay the bill. It was nice while it lasted, but I suspect we're in for one nasty hangover regardless where we live.

It was nice while it lasted, but I suspect we're in for one nasty hangover regardless where we live.

Yes, agreed. A post peak oil hangover for one and all.

Especially that term "post peak oil hangover" rings true here in Japan. So many people I know are shaking their heads and looking sad....it's Fukushima, of course, it has rattled everyone and made everyone regret the euphoric economic expansion of the past....looks like a silly drunken carnival now, looking back....a bunch of fools in suits (and access to big machines and the wherewithal to operate them) clowning around the countryside leaving death in their wake.

"Sadder but wiser" is what comes to mind.

Until Americans act they will be increasingly oppressed. The action can be as simple as leaving the country.

Relax....maybe the greatness has been sullied of late, but this is what I meant.

Hugely broad and diverse, spanning a continent, variations in climate, people and regions; etc etc etc.

The people, the innovations, the wondrous beauty of the country. The greatest in all things?, of course not, but one has to appreciate the contributions to what we now take for granted. It depends on whether or not you have a glass half full or half empty. I think it was once a great country, and I think it is a denial of history to state otherwise. I guess on this forum if we mention the mega projects such as the Grand coulee or the Hoover dam it is only wrong because rivers were affected....Or, the interstate systems but now they are crumbling, or the ww2 contributions, but now it is simply imperialism. I just think of settlers striking out, or the new immigrants arriving from class-bound and hopeless Europe. I think of my American relatives who are from all walks of life, but are generous and good to a fault.

Personally, I am thankful to live in a great country called Canada. Don't get me started listing my subjective reasons....and I believe that we are ahead of the States in many many things. But I would like to say that we enjoy our place only because the US is our neighbour, and the US would be first to step in if we were subjugated by another country or region. Self interest on the US part?, perhaps and probably, but Canada needs to only have a token self defense or coast guard because we have big brother at our back. It is only with the arctic melt and ice free possibilities that Canada is beefing up its' coast guard and presence in the north. If Russia and/or China were to occupy an artic region in Canada, we would be the first to ask for help from our southern neighbour.

Many things wrong with the States....to be sure. However, it would still be my third or fourth choice to be my home if I had to leave. Homeland Security and the rise of our new fascists are very scary, but we can still say what we want publicly without fear of imprisonment. Hell, the prisons are too full to go after any more folks :-) Try it in Russia or China. For all that is wrong with the States there has been much right. I think it is premature to give up on it at this point.

I have often thought that the rhetorical conceit of "America's greatness" is a cynical ploy by business-politicians to get Americans to accept horrible conditions and policies (you need a car to go anywhere, you can't have national healthcare, etc) that people in other countries would be quick to reject. You give up livability, gun control, etc., but you get "greatness".

That is a vague and imperialistic sounding term that has no real benefit to almost all, except the arms suppliers who use the conceit freely to imply that they should get more money for their weapons. Hopefully after a few more years of the oil depletion treatment (now underway!) people in America will stare at each other in amazement when anyone tries to speak of American "greatness". That will be a healthy step to change.

The whole "we are great" thing is an appeal to identity politics. This sort of appeal is not uniquely American, most struggling empires resort to such. It has high emotional resonance, especially with the lower information voters -and even with consumers, ever look at Chrysler advertising, it an appeal to Americans percieved past greatness... Its tough to resist, try to dispute it, and you can easily to be painted as disloyal and unappreciative.

US politics has been descending into "pllied Agnotology" -the science of exploiting ignorance. Add in a poor education system, and a population used to nonthinking emotional entertainment, and you have enough sheeple to lead around.

...ever look at Chrysler advertising, it an appeal to Americans percieved past greatness...

I couldn't help myself:

Dodge Commercial

What incredible, delusional horse crap...I suppose it goes with dinosaur saddles though.

They might as well have taken a dump on a portrait of Hubbert in that commercial while they were at it.

Hi EoS,

Chrysler's recent advertising may be an appeal to American pride, but it has a gritty realism that sets it apart from the rest.

See: http://www.youtube.com/user/chrysler#p/c/EDEBA1B8CCEC61EE/5/ZwU4fJpXcJ8

These commercials resonate deeply with me and help me identify with the brand. To that end, they're brilliant.


appeal to American pride,

Yup, wanting a Government bailout (One can't find the lyrics to a song sung on the Prairie Home Companion back during the bailouts "Oh yes I'll change my name to Chrysler and be part of that great receiving line And when they hand out a quarter of a million dollars, I'll get mine")

Then being bought by Germans.

Yup, great American pride.

I'm Changing My Name to Chrysler (Arlo Guthrie)


As you may recall, the original Chrysler bailout of 1979 was a federal loan guarantee and that obligation was retired four years later, and for its troubles the U.S. Treasury earned $350 million ($793 million in today's dollars). With respect to the 2009 bailout, Chrysler has repaid in full the $7.6 billion that it borrowed from the US and Canadian governments following its bankruptcy (the Treasury is, however, out of pocket the $1.3 billion that it had loaned the company prior to its bankruptcy).


The much hated GM bailout was really a bargain. Got a chunk of detroit through the crisis and apparently viable. And the treasury gets its money back. But the usual suspect who hate the government to do anything are howling about it.

This is a good explanation.

Yes a great article. And she is correct our huge jobs deficit is a real problem but she doesn't seem to realize exactly why we have a jobs deficit.

the jobs gap warrants additional fiscal measures to increase private-sector demand and promote job creation.

Sadly, current signals from Washington indicate that such measures will not be taken.

Fisical measures to increase private-sector demand and promote job creation might help, but not very much or for very long.

The link up top: The U.S. economy is indeed shrinking does understand what the problem is. The author, Maureen Morgan clearly understands that a shrinking oil supply is the culprit. But alas her article only appears in a local small town blog that no one outside Fairfield county, wherever that is, and those who link to it from TOD, will ever read it.

It is just so frustrating to read about, and see on TV everyday, the problems plaguing our economy. Everyone thinks they know what the problem is and how to fix it. But no one mentions the declining oil supply, the very lifeblood of our economy. And I do mean declining, not plateauing. Though world production has been on a plateau for over six years, the oil supply available to all developed nations has been declining since 2005.

But no one makes the connection to to the oil supply and the economy. Occasionally someone points the crooked finger of blame to oil prices. Then they complain about OPEC, or government regulations or something else just as silly. Few, except a tiny minority, ever mentions peak oil. And I wonder if they ever will?

Ron P.

Fairfield county is the southwest corner of Connecticut... Outer suburbs of New York City. Very wealthy area.

A lot of Manhattan finance types have homes there...

Fairfield County is (was?) the second wealthiest county in the USA, second only to Marin County. Paul Newman lived there. It is interesting that an article like this one is appearing in the suburbs of Wall street.

For the record, I live in what's euphemistically called 'The Other Connecticut', 'The Quiet Corner', or sometimes ‘The Appalachia of the North.’


There is really not much reason for hedge fund managers to commute from Fairfield County to Wall Street anymore.

I am amused that Morgan says that the economy is shrinking, but the government says that "the economy expanded at a meager 1.3 percent annual rate in the second quarter" (see the reference to Oil drops near $96 after weak US GDP report, above). Just wait until the economy is actually shrinking, as opposed to just "barely growing" (where by "barely growing" they mean doubling in a paltry 54 years). Then the ostriches will really start squawking in the sand.

Oh, and isn't two successive quarters of growth below 3% the accepted definition of a recession, these days?

The 1.3 "growth" will just cover the illegal immigration. If on the other hand inflation is higher than the government says by as little as 2% then we are negative and with illegal immigration we are negative about 2%.

Illegal immigration has pretty much ended and is now going in reverse in net.

Why in the world would you want to come to the US during the past three years?

To compete against the 20% of the labor force that is out of work in California?

Oh, and isn't two successive quarters of growth below 3% the accepted definition of a recession, these days?

Haven't they always used two quarters below 0%. With 3% we would be in recession much of the time. Of course anything under roughly 3% and employment per capita doesn't grow, which is where the human effect comes in.

Officially, the recession start and end dates are what the NBER Business Cycle Dating Committee says they are. Two consecutive quarters of negative growth are a pretty good rule of thumb, but the NBER considers other factors as well. For example, the NBER Committee said there was a recession in 2001, even though there were not (after all revisions) two consecutive quarters of negative growth.

There is another reason for job losses and that is globalization. In the 80's and 90's most of Asia was still behind closed doors of regulatory web, with liberalization that huge workforce of 2 billion+ is out in the market looking for work, and they are willing to work for far less than what the average westerner will take as minimum wage.
Here in India an annual salary of 20k $ will provide you with a good life. I am not sure the same would apply to US though. In essence what you are seeing is the great equalization as world's income is scaled up or down to a median level, same applies to energy usage.

The only way for US to get jobs back is to take a technological leap in their industries which will give it a breathing space of about 10-15 years before others catch up or setup barriers in the form of tariffs and regulation. But I am not sure barriers would work as intended since it would shut US out the Asian markets in a quid pro quo retaliation and technological leaps are by essence rare and don't happen frequently, Germany has mastered this art by specializing in high-tech engineering which gives them the edge in competing against low cost labor. Although I am not sure that can be replicated on a large scale as is the case with US.

One way or the other we are witnessing a flattening of the exponential curve.

WiseIndian, yes I as well as many others on this list have, many times in the past, made the point that outsourcing jobs to Asia is largely responsible for the demise of American manufacturing jobs.

But you are dead wrong about a technological leap bringing jobs back. Technology basically delivers labor saving devices. New technology costs jobs in ICT - union. This article tells how technology costs jobs in the Communications industry. But new technology has cost jobs in every industry since the Luddites complained that the invention of the flying shuttle was putting hand weavers out of business.

That is one of the reasons that economies must grow or collapse. New technology is always being developed putting more and more people out of work. The economy must grow in order to give these people new jobs. And of course there is always population growth. There are other reasons also but those two will suffice for today. The point is better technology will cost us jobs, not bring them back.

Ron P.

Well you're right as well as wrong on this count, technology does indeed deliver labor saving devices but it doesn't lessen labor in any sense, we just end up having more work, in some other manner. If technology indeed saved labor by that much we'd all be working 5 hour work days and unemployment would have risen in lockstep with technology. But that's not the case here is it, there are massive feedback loops here that we simply don't understand.

Moreover I think no matter what technology you invent the resulting complexity overwhelms you in the end. So when I was talking about technological leap I meant that you try and stay ahead in the game, does not amount to winning it. Computers were supposed to free us from the task of clerical jobs, yet we just ended up replacing clerks with programmers. Yes there are efficiency gains in the process but they also follow the law of marginal returns.

Well you're right as well as wrong on this count, technology does indeed deliver labor saving devices but it doesn't lessen labor in any sense, we just end up having more work, in some other manner.

Of course we do. It is called growth in the economy. Growth creates more jobs for those new technology put out of work. That was the flipping point! If we had no growth there would be no more work in some other manner.

If technology indeed saved labor by that much we'd all be working 5 hour work days and unemployment would have risen in lockstep with technology.

WiseIndian, you could not be more wrong here. The employers that use those labor saving devices would never pay workers full pay for five hours work. They would, and do, simply lay people off and make the remaining workers work 8 hours a day. But those labor saving devices saved far more than 3 hours out of 8, they saved more like 99 hours out of 100.

Nothing works in lockstep. There are too many variables in every form of labor and in every labor saving device for anything to work in lockstep. Yes labor saving devices do save that much labor! Just imagine how much labor the cotton gin saved, or the automatic thrasher, or the ten row tractor, or even the flying shuttle that the Luddites rioted about. They put people out of work and it took time for those put out of work to find new employment.

I grew up on a farm in the days when cotton was picked by hand. One cotton picker today can pick far more cotton than one hundred hand pickers. The cotton gin was invented way before my time but I have tried to pull the seeds out of cotton by hand. I would bet one cotton gin today could gin more cotton than several thousand people picking the seeds out by hand. Of course one large gin would have about five people employed at once.

Had it not been for growth in the economy those people put out of work would have just starved had they lived before the days of the dole. The Luddites did live before the days of the dole. That's why they took sledgehammers to the looms that put them out of work.

Computers were supposed to free us from the task of clerical jobs, yet we just ended up replacing clerks with programmers.

Hey, I spent my entire career, some 40 years in the computer industry. I know first hand what computers are and can do. Just as one farmer today can grow as much food as 100 farmers one hundred years ago, one programmer can write a program that will allow the computer to do the work that took 100 clerks to do in 1950.

Ron P.

Got the point you are trying to make, we are arguing the same thing I guess. But do you think technology is a function of population pressures and complexity issues or the need to maximize returns ?

Technological progress is the result of people and organizations having the free time and the resources to engage in such activity. Early, in Da Vinci's time it was done mostly by the very intelligent and the very well to do mostly out of a simple desire to do such things. Later, in the days of Edison and Tesla it was done mostly for profit. It is still done almost entirely for profit.

But the point to take away from all this is that technology saves labor and therefore takes jobs. And if those jobs are not replaced by economic growth then unemployment keeps increasing.

When you hear people say that peak oil is not a problem because we have technology, what they don't realize is that technology is part of the problem, not the solution.

Ron P.

But the point to take away from all this is that technology saves labor and therefore takes jobs. And if those jobs are not replaced by economic growth then unemployment keeps increasing.

I find it hard using you logic to understand why the USA as technologically advanced as it is has an employment rate of half the population. We should all be working 3 day weeks with 3 hour days if what you say is true given the technological advances we've made in the last century.

Not all technology saves labor but in fact can multiply the need for it.

Not all technology saves labor but in fact can multiply the need for it.

Nonsense! Hank, you have missed the whole argument. Did you not read a word of what was written above? Technology does put people out of work and no company would pay employees full salary to work 3 hours a day 3 days a week. They would make them work 40 hours a week and lay off all the employees that the new technology put out of work.

The whole flipping argument is that economic growth is required to put those people back to work. Technology makes economic growth necessary. Labor saving devices replaces human labor. That is just plain common sense. Growth is required to give those people new work. Damn! Is it that hard to understand?

If you find that logic hard to understand then you simply do not understand that the United States has had an average growth rate of about 3 percent per year, give or take depending on the time frame. Growth is necessary because of population growth and technological advance.

Ron P.

Technology makes economic growth necessary.

It also makes it possible. Of course possible doesn't automatically mean it will happen. Economists refer to Ron's argument as the "lump of labor fallacy", i.e. they believe enough new demand will be created to absorb the displaced workers. If we were still in an era where resource constraints were not affecting the economy, I'd agree with the economists. But now we are entering into an era with real physical constraints, and its going to require changes in both our way of thinking and our institutions. There is no law of physics which says we can't create jobs in the immaterial part of the economy (say services and entertainment...), but the degree of change needed to do that would be daunting.

From Wikipedia: Lump of Labor Fallacy

In economics, the lump of labour fallacy (or lump of jobs fallacy) is the contention that the amount of work available to labourers is fixed. It is considered a fallacy by most economists,[citation needed] who hold that the amount of work is not static.

Apparently Enemy, you did not read my posts at all. Nowhere do I even suggest that the amount of work available to laborers is fixed. In fact I suggested the exact opposite! I clearly suggested that the amount of work is constantly changing by the growth in the economy.

There is no law of physics which says we can't create jobs in the immaterial part of the economy (say services and entertainment...), but the degree of change needed to do that would be daunting.

Okay, now here we have a very serious problem. I have heard people discuss such an economy, even some economist, and all dismiss such a society out of hand. They call it an economy where everyone makes their living taking in each other's washing and ironing. Clearly there is a law of physics that makes such a society impossible. Clearly a world where everyone works in the service and entertainment industry is impossible.

Economic growth requires growth in production of goods and services, not just services alone. That would be only pseudo growth where the growth is just people exchanging money, paying each other for their services. Taking in each other's washing and ironing is the perfect example. That would not be growth at all.

Ron P.

Yair...was Egypt in "growth" while they were building those big thingy's?

Hey, if the government could get everyone to work for nothing but their food and a tent to sleep in at night, then everyone would be employed and there would be no need for growth. And when they got sick they could just ignored until they died.

Hell that might work Shrub. Why don't you recommend that to your Senator. You could be the first "volunteer slave".

Ron P.

The pyramid builders were not slaves who lived in tents. They were solidly middle-class, judging from studies of what's left of their homes.

Some of them were likely full-time government employees, so to speak. But the less-skilled labor was likely farmers during the off-season. Their way of paying taxes - with labor, at a time of year when they had nothing else to do.

I could see that catching on, for people who don't have cash.

I know, they were not slaves but conscripts. That is a slightly better position than that of a slave.

Who Built the Pyramids?

These "peasant conscripts" were divided into teams and divisions and were provided with the basic necessities of life during their term of duty. Skilled builders and craftsmen were in the permanent employ of pharaoh and lived together in villages near the pyramid site. Slavery was rare in Egypt before the Ptolemaic Period. The class usually referred to as serfs existed throughout Egypt's history of course.

Ron P.

It's a lot better than being a slave. Conscription was for a limited time. Kind of like being drafted. You did your duty to the pharoah, then went back to your life.

Well exactly... To some degree if we wish to separte economic activity into activities consuming fundamental planetary resources, and those consuming only human resources (time and effort), then there is not need for the ratio to remain fixed. Of course it is hard to imagine the ration going to zero, so there is still a limit to even this sort of immaterial psuedogrowth. But if we have enough physical production for the population, and we still wish to have high levels of employment, then it is better to employ the excess labour in non-material consuming activities.
Of course few (no?) activities are purely in one category or another, but the concept of creating demand and supply for stuff that consumes few resources sounds promising to me. Again it doesn't allow exponential psuedogrowth to go on forever. But, perhaps it can point a way forward from our current situation.

Darwinian you skipped over the rest of the text:

Historically, the term "lump of labour" originated to rebut the idea that reducing the number of hours employees are allowed to labour during the working day would lead to a reduction in unemployment. In modern times, economists often use the term in other contexts – often to highlight errors of reasoning when ceteris paribus assumptions are counterfactual. The term has also been used to describe the commonly held beliefs that increasing labour productivity and immigration cause unemployment.

So, all of these are economic fallacies - that increasing productivity, and immigration will cause more unemployment, and that reducing employee hours will reduce it. They are basically a zero sum game, and changes in unemployment rates will have to come from elsewhere. To reduce unemployment, you have to find a non-zero-sum game to play.

Economic growth does not necessarily require an increase in the quantity of goods. It's just that the growth in services must be larger to offset the lack of growth in goods.

OTOH, in the former Soviet Union, they proved that growth in goods does not necessarily mean growth in wealth. That's why the Soviet Union collapsed - it became obvious that everybody was getting poorer despite increased industrial output.

They call it an economy where everyone makes their living taking in each other's washing and ironing. Clearly there is a law of physics that makes such a society impossible. Clearly a world where everyone works in the service and entertainment industry is impossible.

It's actually an economists joke: Have you heard the one about the two Chinese families who both opened laundries and got rich by taking in each other's laundry? It's sufficiently true to be funny.

However, the economic principle involves economic efficiency. If I am twice as efficient at doing laundry as you, and you are twice as efficient at shining shoes than I am, I should take in your laundry and you should shine my shoes because we will both be better off. Generalize this to the whole economy, and if everybody does what they are best at, and outsources what they are bad at to someone else, everybody will be better off.

Monetarize it by having everybody charge for their services, and at the end of the day everybody is richer. It's Economics 101. Or maybe 201. I don't know, I never took Econ 101, we started in second year at my university.

"Growth is required to give those people new work. Damn! Is it that hard to understand?"

You have it completely backwards. Putting people back to work creates growth.

Okay I will try again. Employers build new plants then they hire new workers. Merchants open new stores then they hire new workers. People spend more money on cars and other things. This is growth in the GDP. Then manufacturers must hire new workers to supply this new demand.

Growth creates jobs. It is that simple!

Ron P.

I would like to add to this as a business owner, because it has a feed back loop.

I will hire people to produce things when I think or know people will buy those products. In this market I try to keep inventory to an absolute minimum. Inventory has most of it's costs 'upfront' and I only get my original cash back and my paycheck when it sells. I want to protect my self in case it doesn't sell, or sells slower than it used to. My caution cuts into my employee's paychecks and reduces their spending at other business's, multiplied by other owners this leads to contraction, this is just a fact. Only a fool keeps spending money when there is no chance of recovering that money. This idea that jobs should be created so that they are created does not lead to a healthy economy if they are not stable enough to count on.

Ron is correct demand must be there or it must be 'sensed' that it will be there. I see neither at this time.

I'm starting to believe the idea of a stable state is a pipe dream. Life is more like the changing tide.

A stable state does not mean a stable amount of demand or growth.
What it means is a constant state of boom and bust with very little if any way you can determine if you will be on top. You might rise during one of the boom times and then loose it all on the bust.

Delusional gives a good description of how a demand collapse is self-reinforcing. Keynesianism says we need an economic player that works against the tide, that is willing to spend money, when there isn't much prospect foe making it back. That is the government sector. But folk economics, which envisages government deficits in the same way as a family deficit, opposes the very concept as somehow immoral. And so we have lost one tool for limiting the business cycle. And economics truly becomes the dismal science.

I am fine with the counter spending in a downturn, as long as there is counter cutbacks during boomtimes, but there has rarely been such. When times are good we spend like drunken sailors, and when they are hard we borrow more to carry us through. I am certainly one who believes that debt presumes upon an uncertain future, and that it is immoral to saddle our children with the residuals of our decisions.

Debt to Americans would act as a wealth-centralization tool. Debt to foreign nations would act to preserve a stronger dollar at the expense of jobs, which is what we've seen. Printing money would seem to be another option, with a different set of effects. The US is in a unique situation where our debt is in dollars -- if ever our debt were in another currency, the situation would be far worse.

Conflating this part of the thread with Darwinian's thread above, the gov't spending is mostly for washing laundry, or buying baubles, plus some infrastructure development. Lasting infrastructure is perhaps a valid gov't spending target, as it contributes to real wealth over the long term. Except perhaps for roads, which have downsides as well as upsides.

In the end, you need raw resources, energy, and durable produced capital to grow the standard of living over time, and a service economy is simply a mechanism to redistribute those produced capital goods in an efficient society where not much labor is needed to handle production.

Probably the gov't could pay most people to sit around and eat what the few farmers produce and consume what the few manufacturers produce; or everybody could "work" as musicians, philosophers, artists, authors, scholars, junk men, repairmen, recyclers, and so forth. Instead we choose a middle-ground of soldiers, TSA agents, bureaucrats, and taxmen. Or probably more a combination of all of the above.

Some seem to rely first on the gov't to do all things; I think that should be an avenue of last resort, and be expected to be done poorly.

I'm starting to believe the idea of a stable state is a pipe dream.

Few active biological systems are steady state. Trying to have a steady state economy may not be possible.

Ron, here's a question: has a technological economy like the USA had, over time, an excess of jobs or and excess of people to fill the jobs?

It oscillates over time. It all depends on the growth index. When growth is very high there is always an excess of jobs. But when growth is very slow, or virtually no growth at all like right now, there is an excess of people wanting jobs.

That is really what the debate is all about. If indeed growth has stopped, then the excess of people will keep growing and growing. Nothing is static in this economy, or any other economy for that matter. But if growth ever stops for good, and of course it must sooner or later, then...

The end of growth is the beginning of collapse.

Ron P.

Technology does put people out of work
and no company would pay employees full salary to work 3 days a week.


Technology makes economic growth necessary.

Money lent at interest create the need for growth.

Its why the old time religions banned interest.

I found an article on the web discussing the same and ways to counter it



Today, capital in the developed world is abundant; the saving ratio declines as people consume more; and production shifts increasingly to services, where productivity gains are limited. So economic growth – the rise in real incomes – slows. This was already happening before the Great Recession, so generating full-time jobs that pay decent wages was becoming ever more difficult. Hence the growth of casual, discontinuous, part-time jobs.

The other aspect of the problem is the long-term increase in technology-driven unemployment, largely owing to automation. In one way, this is a sign of economic progress: the output of each unit of labor is constantly rising. But it also means that fewer units of labor are needed to produce the same quantity of goods.

The market’s solution is to re-deploy displaced labor to services. But many branches of the service sector are a sink of dead-end, no-hope jobs.

Respectfully, I believe that careful study of time-on-task for end-users yields far more mixed and uncertain results.

That's why this is such a difficult argument. It's not as if technology either does or doesn't save labor. Sometimes it does, and sometimes it doesn't.

For example, I don't think anyone can reasonably argue that it's easier or faster for most people to write a business letter in a contemporary version of Word than it did to write the same letter on a 1986 Wang stand-alone word processor. Because it isn't. And the amount of lost time is not at all trivial.

Another example: Six-year-old Nikon D40s are prized cameras by professional photographers-- the wise end-use knows the newer technology is often more unwieldy, harder to use, wastes time and, ultimately, money. If you're doing a job where you have to get the shot right and get it fast, go with the D40.

Good implementations of technology do, indeed, save labor, but poor implementations of technology waste labor, and IMHO, the latter trend is what we've been seeing in the last quarter century or so. We cannot pretend that the market will weed out crap products-- particularly software-- because it hasn't done that in a long time.

There are many reason why this may be so, but here's my theory: Perhaps once we entered the cornucopian philosophical mind-set, and began pretending we would never run out of resources that were finite, it led to a kind of logical decay, a pattern of sloppy thinking that spread slowly and insidiously. We started believing that payment on debt could be postponed indefinitely, that things could always be fixed later, that we could hide our reefer by throwing it way, way up high in the air.

And so, when we design a new operating system and install it on a new PC at Best Buy, hey... go ahead, add a little more bloatware. So what if it takes longer to boot than a 1989 Toshiba 1000SE. It's still better than last year's model. Really it is.

Again, I'm not claiming that technology never saves labor, or that it might not again. I do, however, believe there are terrible false economies and hidden costs. Until we change our way of thinking, until sanity returns to design philosophy, technology could very well dig us into a deeper rut.

For example, I don't think anyone can reasonably argue that it's easier or faster for most people to write a business letter in a contemporary version of Word than it did to write the same letter on a 1986 Wang stand-alone word processor.

Oh for goodness sake, give me a break. You are nitpicking here about "different kinds of word processors". If it does not provide an advantage over what it replaced then it is not a technological advance. It is just more of the same. Is Firefox an advantage over Internet Explorer? If that is what you think technology is all about then you are seriously mistaken. Was the McCormick Thresher an advantage over hand thrashing? Is the computer an advantage over the Friden Calculator? Or was the Friden Calculator an advantage over the pencil and paper? That is what technology is all about.

To be a technological advance then it must be an advance over the old, it must save labor, time or money. That is the whole concept of technology.

Ron P.

P.S. If you are too young to remember the Friden Calculator then Google it. I remember them well.

I think you are assuming that it is a relatively simple matter to determine whether or not technology saves you labor, time, or money.

I am not so sure. Most company officers I have worked for have serious problems understanding these issues. These are common complaints for production and operations managers; I know I'm not the first guy to start waving this flag.

I also feel that the loss of productivity from Microsoft Word is not trivial, any more than the loss of productivity from dropped cell phone calls, or unstable operating systems that are vulnerable to viruses and trivial user error. How could it be? Everyone has to use word processors, cell phones, and operating systems. The workers absorb some of the cost, but it also artificially inflates the cost of labor. Everybody pays, Ron.

I certainly take your point about cheaper labor overseas. But there, too, the broad, sweeping generalizations are dangerous, and exceptions to the rule frequent. On paper, these deals always look like you're getting your product at 60% of cost.

But by the time you've factored in time-zone and language problems, maybe some format incompatibility, learning curve... a lot of these deals wind up being dogs. You can probably think of half a dozen businesses that used to out-source their call centers, but brought them back because it just wasn't a profitable way to go.

Data centers, too. I'm not hearing such great things about Tata these days. Just sayin'.

I wish I had metrics to demonstrate my point, but alas, the costs I am discussing are hidden-- that's my point. You don't see them unless you're on the floor with the guys until 10 at night, and taking their calls at 2:00 in the morning. They don't show up in a quarterly report.

Thank you for indulging my rant. I'm certainly not arguing with your original point, which was that technology will not provide a solution for PO. I'll stay out of the way for the rest of the thread.

I think you are assuming that it is a relatively simple matter to determine whether or not technology saves you labor, time, or money.

Why yes that is exactly what I am assuming. Is it relatively easy to understand that the automobile saves walking time? Did the airplane save covered wagon time when traveling out west? Did the tractor save horse plowing time? Did farming technology put 99% of farmers and their descendents out of the farming business? I could give you at least a million other examples but if you do not understand that simple fact now then you never will.

Obviously you cannot see the forest for the trees. You are wrapped up in office work and assume that is the entire technological world. I have given you one undenyable examples but you keep coming back to whether or not some example of office equipment and how some people just don't understand how it works.

Groodness Catalyzt, it is just so simple, so very very simple and you keep thinking about office equipment. Technology is not just about office equipment. Technology runs the world today! While it put the Luddites out of work and billions of farmers out of work along with billions of others, economic growth has given them new jobs. Economic growth has absorbed those new workers into even newer technology.

And it will continue... until economic growth stops. Then all hell breaks out.

Ron P.

It is very telling, Ron, that you are talking about airplanes, cars and tractors. All those inventions are over 50 years old.

We haven't invented a game-changer like that anytime in the last quarter century-- nothing that created vast economies of scale, or increased productivity so dramatically. We've got a few new good drugs for HIV, some faster processors, and... and what, precisely?

Forget office equipment if you like-- even though, like, every employee in America has to use it every day. Forget the VAST sums of money that are being flushed down the toilet while people all over the world stare at screens that say: "Loading..."

How is that shale-oil extraction coming along? Deepwater drilling techniques? What about the Westinghouse AP-1000? How are biofuels working out? How is the EROEI on all that looking? I don't pretend to understand these technologies, but from what I'm reading here, most of you guys aren't happy campers. Of course, there are many reasons none of the above looks very profitable.

Many reasons. It's not simple, Ron. Nothing is. Screaming 'it's so simple!" over and over again and talking about airplanes? Not your most convincing line of argument here. And I respect your posts here enormously, even though it seems like you have utter contempt for mine.

I would never dispute that technology historically has served the function you describe. But now it doesn't. It changed. You can't expect the development of technology to follow fixed rules like physics and chemistry. It's mediated by human culture, for one thing. For another, the low-hanging fruit has been picked. Every advance will take longer now.

Again, many reasons. Not simple.

I would never dispute that technology historically has served the function you describe. But now it doesn't. It changed.

No it hasn't changed. The primary purpose of technology is still to save either money, labor or both. Of course not all technology saves money or labor, just as all trucks do not deliver cargo. Also some technology has a military use and actually cost the taxpayers money. Then there are also video games that provide nothing but entertainment.

But that is not the point. The point is that new technology still puts people out of work! Computers answer phones and play recorded messages. These jobs used to be held by people. Computers check your prescription to see if it needs to be refilled and faxes your doctor if that is needed.

Computer manufacturers are constantly thinking up ways to save manufacturers money and fewer employees save them a lot of money.

I just retired from the forty years in the computer industry in 2004. I was a computer field service engineer for most of that time. That meant I took care of customer's computers. I know just how much money and labor they saved.

Ron P.

In my view, the development of both PC's and cell phones were both enormous game changers.

I do architectural design. We used to draw on paper, by hand. Sure I get tired of sitting in front of a computer screen, but I used to get tired of sitting at a drafting table, and there is simply no reasonable comparison between what I can do with a computer with what I could do on a board. I can't imagine going back.

I can produce a much better document much more quickly using a PC and current software than I ever could by hand, on a typewriter, on a word processor, or using Word Perfect.

Sure it was a big advance when airplanes (and Fed-Ex) made it possible for me to ship drawings overnight which would have previously taken a week to ground ship, but the internet has now made it possible for me to ship them instantly. Neither myself or my clients have to leave our homes or offices to meet. We can work through design issues in real time, and they, and all interested parties can have an updated copy of all documents within minutes of the work being completed.

I'm no cornucopian, but I do think there is still an enormous amount of decoupling of energy consumption from economic activity to be had. My brother's smart phone has a more powerful processor, higher screen resolution, and more memory than my CAD station did in 1993 when I first migrated to computer based design, and it runs on a very small battery! In fact, it has more memory than I could even buy in 1993. My 22" monitor weighs a mere 8.5 pounds, is only an inch thick, and runs on just 21 watts. My only computer is now a laptop, which draws 75 watts. So my entire work station uses less power than a single 100w incandescent bulb.

Interesting times.

Riban, fair points with a few caveats.

First of all, note that both PCs and even cell phones are both more than 25 years old. I remember tooling around DC in my father's Peugeot 505 turbo diesel in 1983 or so, showing off by calling girls on the phone.

I realize the software you use is more modern. I am glad your business has achieved such productivity gains by using these tools, and I'm sure they are enormous in your industry.

However, I still feel that within the last 25 years, for every application which has achieved huge gains in productivity as a result of technology, there's another which has realized catastrophic losses.

Let's also remember that it was complex software models which allowed different types of debt to be bundled together so no one could understand what they were really worth. I remember when one of my best friends, who was a programmer for a major banking institution on Wall Street, almost had a nervous breakdown because he realized that the programs he was writing were ushering in a new era when it would become impossible to value debt properly.

Ron, I worked as a tech writer for a long time, and I remember the good old days, too. I wrote system specs and end user documentation for one of the first fiber-optic telemetry systems on the northeast corridor. The system increased bandwidth enormously, made possible huge leaps in productivity.

But I believe the seeds of something very, very bad started happening sometime in the mid to late '80s. A lot of bad things, actually.

And in terms of engineering. Boeing puts together a new airliner, basically a bet-the-farm project, and the first time it see's aerodynamics (not scale models in wind tunnels), is the test flight. Couldn't have done that without computers. And couldn't have done it with the computers that existed 25years ago. Or the software that existed 25years ago.

Crash analysis was very primative as well. Now they model the whole vehicle, including the mess of parts under the hood. They discover nasty stuff like intrusions (during a crash a rod pushes through the passenger compartment skewering some poor schlock). Now they are found out about and corrected before they start bending metal. Sometimes quantitative improvemment -speed memory capacity, the buildup of decent softward has a quality all its own. Heck the military had a statement like "overwhelming numbers has a quality of its own".

too young to remember the Friden Calculator?

I remember the "Chad-wicker: [ i.mage.+]

Does that count?

[i]= image, [+]= more info

Is Firefox an advantage over Internet Explorer?

Consdering Internet Explorer does not run on FreeBSD, NetBSD, OpenBSD, GNU/Linux - Firefox does have an advantage in that it works.

To be a technological advance then it must be an advance over the old, it must save labor, time or money.

Interesting. Things can be claimed as saving labor, time or money. Like bundling your cable TV with your internet and phone. Such does result in lower overall cost (save money) writing one check instead of 3 does 'save' labor and time so I guess bundling is a technological advance.

I don't think anyone can reasonably argue that it's easier or faster for most people to write a business letter in a contemporary version of Word than it did to write the same letter on a 1986 Wang stand-alone word processor. Because it isn't.

I think you're missing the fundamental efficiencies here.

Sure, I can take my laptop to work, compose a business letter in Word, print it off on the laser printer, go to stationary, get an envelope, put the letter in the envelope, and put it in the company mail knowing they will put a stamp on it, mail it, and with a bit of luck I will get a reply back in less than a week.

Or, I can sit down at the kitchen table with my morning cup of coffee in hand, and with the other hand, attach it to an email and click on SEND.

And by the time the dog is ready for his morning walk the reply comes back, "We have decided to accept your bid, can you get a detailed project plan and a preliminary schedule to us by noon, tomorrow?" Sure, after the dog has had his walk, I'll get right on it.

technology does indeed deliver labor saving devices but it doesn't lessen labor in any sense, we just end up having more work, in some other manner.

That works, to the extent that we have the physical resources to employ the surplus labor with. I think limits to growth (physical resources of the planet) are going to be a limiting factor far far more strongly than has been the case during the brief industrial era. So the economic sledding has gotten a lot tougher. But, few peoples worldview incorporates this fact. Instead I fear, in their frustration and anger they may turn on scapecoats.

think limits to growth

That's just the tip of the iceberg, but yes a good point.

Think 50 million Lawn-mower men.

Let's say that we (in our infinite capitalistic wisdom) decide to deploy (= "employ" = jobs, jonb, jobs!) that many men with gasoline powered lawn mowing machines to trim our front lawn farms.

Then yes, of course we have to supply them with the gasoline, the lawnmowers, the pickup trucks that transport their mowers, uniforms, many cans of that cerveza stuff so they can rehydrate, garbage trucks to come back later and pick up the cerveza cans; and so and so on.

And add to that, 50 million more side-kick men otherwise known as Leaf-blower men: [ i.mage.+]
Each one gets a gasoline powered noise maker so that he can blow some leaves from here to there and back again.

So that is mucho grande in terms of number of technology-enabled jobs, jonb, jobs!
But are we increasing our well-being (our wealth) in any meaningful way be following this deployment plan?

I imagine that James Kunstler must have ranted about that jobs-creating part of our Cluster-f***ed economy sometime in the past, but I missed the memo.

Yair...real world example.I have an aquaintance just back from Laos where the Chinese are apparently financing industrial development to utilise power from the Mekong projects...this aquaintance is in the small excavation business...Bobcats, three ton excavators, single drive tippers that sort of gear.

What he saw in Laos were two philosophys working in the same market.

On the one hand were conventional contractors installing pipe and sevices with gear much like his and then there were the other guys who rocked up with twenty workers in the back of a shiny new six ton Mitsubishi tipper with their shovels and mattocks and their lunch pails and cellphones...and the 5Kva gen.set to run the Makita rock breaker if the digging got too hard.

Both got the job done but with a vastly different cost structure...the manual workers did a far better job.

"Both got the job done but with a vastly different cost structure...the manual workers did a far better job."
There's something here that deserves some pondering.

The existing WTO agreement allows each member state to impose tariffs (as high as needed) to balance their trade. If the thieves in Washington D.C. wanted to help Americans they could balance trade.

Lately I've convinced myself that environmental laws and worker safety legislation have also been a big factors in moving manufacturing jobs overseas. Since the late 1960s the U.S. has enacted a virtual tsunami of regulations that companies, large and small, must comply with to manufacture goods. The cost of compliance, in turn, has created some really elaborate behaviors on the part of many large companies with costs over and above simple compliance. At some point these issues have raised not only the direct cost of labor in the country but significant distraction of management. Empires have been created. As these costs are imposed the federal government has an obligation to either require compliance of offshore vendors or to impose cost matching tariffs.

Sorry, nope.

Manufacturing jobs have moved because its cheaper overseas. Environmental laws and worker safety legislation get dealt with all the time and although they are generally not very well constructed, they are much less hassle to deal with than the issues with manufacturing on the other side of the world (timelines, quality, fraud, IP theft, trade tariffs, etc.)

You could zero the legislation (as the far right would love to do) and the jobs wouldn't return.

The fix has to be far more root and branch than that, and to the adherents of the 'free' market, far more unpalatable.

Garyp, you are correct. The reason manufacturing jobs have moved overseas is the cost of labor there verses the cost of labor here. Over there, in China, in India, in Bangladesh or wherever, they can pay a tiny fraction of the hourly wage they would have to pay in the US, and they don't have to worry about health insurance, pension plans or anything like that.

Once globalization started on its merry way it spelled the death knell for western civilization as we know it. It would likely end, eventually in about one hundred years, with the (near) equalization of wages all over the world. But the current world economy will not last nearly that long, so it will really never happen. The decline of fossil fuel, primarily oil, will lead to the collapse of all the world's economies long before that.

Ron P.

Also the cost of capital. Its easier to raise capital to build a factory in China, you'll get the money faster and pay lower interest. For soem high tech areas, such as manufacturing solar panels, the price of labor only has a small effect of competitiveness. For these capital intensive industries the cost of capital is a greater factor than the cost of labor.

Which came first, the cheap capital; or the burgeoning economy from cheap labour costs that was then available to fund growth?

Well actually in china it was the democracy protests that ensured that those in power had to offer the masses cake - coupled with a clarity of long term vision that saw how to play it - but that's another story.

I don't know if cheap labor creates cheap capital. But from the prospect of a business manager choosing where to locate production, both matter. For some industries the weighting of those factors is diferent than for others. Also transport of costs of needed inputs, and of product also matters. And with the example I choose, PV panels, as the product price lowers, transport costs become a more important factor. Perhaps there is some hope for distributed manufacturing, for as transport costs increase, dispersal of global production is favored.

Actually, JJhman's point is still valid - there are many cases where the lower environmental and/or safety standards in other countries make it advantageous to operate there - in addition to the cheap labour.

A company I know of was considering setting up a factory in California to make - toilets. A small, highly mechanised factory, that would employ about 20 people. But, to do this in Ca, the the environmental permitting process, the amount of consultants/lawyers needed to guide you through it, defened and against frivoulus/delaying lawsuits etc etc, made the project a non starter.
Even if they could have had labour in Ca for free, the project would have taken so long to get going - and still have a non -zero chance of rejection, that it would have been uneconmic.

Instead, they decided on China, had all their approvals and broke ground in three months.

Also, the air emissions requirements on the casting kilns were minimal compared to Ca.

AS production in China becomes as mechanised as everywhere else, the labour cost advantage diminishes, but energy, transport, environment, safety "costs", gov red tape, etc, become more important.

For another example - if you want to "manufacture" nuclear power plants, which country has more favourable laws on that - US or China?

Another (more local) one - time to get approvals to build a wind farm in Ca - about three years, and even then you might still get rejected. In Texas - four months, and, as long as you follow the rules, you won't get rejected.

Business not only goes to where labour is cheap, it also goes to where it is possible to do the business in the first place - the US generally, and California especially, have made it so hard that many just give up and go elsewhere.

Never said the red tape overload was sensible, or particular fit for purpose, but if you want somewhere where you can stink up the place and pollute as you wish, there are many other alternatives to china.

Investment follows return, and there is return in china because their is growth (nice little feedback loop), which means it tends to self-sustain and is resilient to cutting through sensible US protections.

Interestingly, the best way to cut red tape is not to nit pick over government actions - since officials will take more time and effort to prove they are doing things right, and so it takes even longer. Better to get a strategic plan and all work together towards a common goal. If you want the missing factor, that would be my vote for the common problem, driven by the rush for the loony fringe by the US far right that disdains such consensus, which is itself a symptom of end of empire disease.

but if you want somewhere where you can stink up the place and pollute as you wish, there are many other alternatives to china.

Sure, but my point is, you can't do that here (Canada/US), but you can import the products of that effort to here.

there is return in china because their is growth

Not necessarily. If you are setting up a venture there purely for export to Western markets (and this is often the case) then there is no local growth, but it doesn't matter.

Better to get a strategic plan and all work together towards a common goal.

As good as that sounds, how does a small company do that? You will go broke trying to change the direction of government (I have!) and in the meantime, miss your market opportunity. For the small company, you just have to make your decision based on the cards you have at that time - you can try to guess what future developments might be, but likely, you can't afford to wait to see what plays out -only larger companies can do that.

The government entrenched nimbyism in California has driven lots of business away from there.

PN, when did your identity merge with that of PaulS?

Well, aside from the name coincidence, I guess we see this issue the same way.

When companies I have been involved with are looking to do a new venture, the second question is usually "is this place an easy or complex place to do business?" (first question is "is there a market for this?) "Potential gov/env/legal hurdles are a far bigger risk than labour costs/.

For a mfr, outsourcing to existing factories somewhere else avoids these risks. Cheap labour is a bonus.

The government entrenched nimbyism in California

Is is the government causing the NIMBYism, or it it that we have structured our government and courts so that any two-bit activist who wants to feel powerful can create serious delay and cost for his target.

That is a bit of a chicken and egg question - and I don;t know the answer.

All I do know is that doing anything in California involves lots of red tape, lawyers, delays, probably lawsuits and possibly a change of rules once you are up and running.

One water utility in CA has been in a ten year permitting process for a desal plant. In Sydney, Australia, a desal plant went from announcement to first water produced in four years. If you are looking to do business build/own/operate desal plants, and sell the water - where would you go?

There has been a lot of "Marin thinking" in Ca - that somehow we can all have a a great life in a green economy where nothing nasty gets done/produced - here.

That is why where I live here in BC is four miles from the gravel pit that supplied all the gravel for the new Bay Bridge - shipped down in Panamax freighters. If the bridge project was relying on someone setting up a new operation in Ca they probably wouldn't have poured any concrete yet!

One water utility in CA has been in a ten year permitting process for a desal plant. In Sydney, Australia, a desal plant went from announcement to first water produced in four years. If you are looking to do business build/own/operate desal plants, and sell the water - where would you go?


It is a shame that is seems all the shonky deals go through quickly, but the ideas with merit always get held up. Sydney was in a drought, the govt stated if the dam level goes below 30%, then a desal plant would be required. There was a fair bit of discussion about the need eg possible recycle waste waster, conserve more, Shoalhaven River dam (not popular)etc. Anyway the dam level got down to the low 30%, then the unthinkable happened, it rained, and basically has not stopped.

Our wonderful politicians, had jumped the gun and had signed a secret contract to build a desal plant which some how had a clause that the plant was to run for the first 2 years flat out whether it ws required or not. So we are currently sitting here with the dams at +80% producing desal water with electricity that had gone up something like 50% in the last 18 months.

I love it when a plan come together.

Push, there is no question that the pols do a lot of dodgy deals, and the desal one is not immune. That aside, my point was that something was able to be done in short order - that doesn't happen in Ca - regardless of how important the project is.

Having worked in water conservation for the least decade, I have seen the attitude of most municipalities (In Aust, Canada and US) change from favouring conservation to favouring more supply, at any cost.

Sydney now as reliable supply, but at what cost? Same for Brisbane. And, always trying to keep up with Sydney, now Melbourne is getting in on the act too.

The problem with desal plants is that they are the "peaker" plant - the most expensive water, so you only run them when you need to. Get a wet season or three, and you don;t need it, and it starts to look like a white elephant. For the Sydney plant, they colonised my home area of Lake George with wind turbines to power it. So people there lose the view, and get the noise, so that Sydney can waste more water!

In the case of the Sydney plant, I think it should have been under control of the Syd water board (or whatever it is called these days) to avoid precisely the situation that you describe. For the SWB, it is their most expensive source, and they will only operate it when needed. For a third party - it is their entire business, and they will want to operate it it, and get paid, all the time.

The real funny thing is that the "price of electricity" - at the wholesale level - has not changed much.
Have look at this chart of nsw prices - http://www.aemo.com.au/data/GRAPH_30NSW1.html

There is always a floor at around 2.6c/kWh, and long term, averages are 3c/kWh. Yet the residential price is in the order of 23c/kWh - there is a lot of overhead in there somewhere!

Here in the Pacific NW, wholesale prices are around the same level,

But the residential prices are 7-11c/kWh.

I am amazed at the overhead in the Australia electricity prices. A renewable generator is trying to compete with 2.6c coal fired electricity, but the consumer is getting dinged at 23c - it is time for a shakeup there!

Automation has eliminated far more jobs (in manufacturing originally, and increasingly in service jobs) than anything else. A trend that is likely to continue, so long as there is energy to power the machines.

What about farming? Once almost all were farmers. Now it's what, 1%? The curious thing is that we have still always had close to full employment, except in the few cases where government policies has hindered it.

Jeppen, it is really not all that curious. In fact that is the very thing I have been trying very hard to explain this whole thread, with very little success unfortunately. Advance in farming technology, tractors, combines, fertilizer, pesticides, herbicides and all that went with the green revolution put farmers out of business. It put them out of business because one farmer today can produce far more than 100 farmers could produce in 1900. Errr... I think I said that exact same thing yesterday.

Economic growth gave those ex farmers, and children of ex farmers like me, jobs in the city. Technology generates labor saving devices and therefore the economy must grow or else people are out of work.

Constant improvement in technology is one of the reasons that the economy must grow or collapse. If half the world has no means of support other than begging or stealing from the other half, then the world is well on the way to collapse.

Actually there are places in the world where this can be observed today:

The Coming Anarchy How scarcity, crime, overpopulation, tribalism, and disease are rapidly destroying the social fabric of our planet By Robert D. Kaplan

Ron P.

For the US, if productivity increases by 1%, that means that about 1.5 million jobs are removed from the employment workforce per year if the economy is in steady state. This, more than interest and dividends on investment, is the real reason that a steady state is infeasible for our existing economic system.

To achieve a steady state economy requires that some other means than employment be devised to provide incomes to the millions of excess workers.

Exactly Merrill, and thanks for a great post. I am glad someone really understands how and why new technology requires economic growth and is able to explain it better than I can. And you are probably correct, increased productivity, due to new technology, is likely the largest of the three main reasons growth is required in our current economy. The three are:

1. Increased productivity due to new technology costs jobs. Growth is required for new jobs.
2. Interest and dividends require growth to pay.
3. Population growth requires new growth in the economy.

Ron P.

I think that you are making a flawed assumption, which is, that employment is the only mechanism which can provide the survival needs of individuals. Perhaps that's the result of our society's evolution to a system which now takes it as a given that most people must work within the economic system in order to meet their survival needs. Or, more simply, BAU must continue, or else society falls apart.

I think that those who have proposed a steady state system understand that limiting the available resources to those which are sustainable over the long term implies that there will be much less consumption of material goods and thus less need to interact in a money economy and trade to provide those material goods. That's not to say that there will be less work, just there won't be money changing hands in the way we do now to balance the global economic system.

A steady state system isn't likely to function at high population densities, such as cities like NYC or Hong Kong, which not function because it's still possible to transport resources from great distances into these areas. In the US, we have evolved suburban areas of lower densities surrounding the high density core areas. Both areas exist as a symbiotic relationship, one in which both collapse if the central core fails. The present conditions in Detroit is clearly an example of this process at work. Other examples can be found in the numerous small towns which grew up to exploit some resource, such as timber or mineral mining, then became ghost towns and slowly vanished after the resource was exhausted.

Once Peak Oil kicks in, areas with high population densities can not be supplied with the previously high flows of materials. The result can only be a society with much lower population densities. Obviously, the problem is going to be the transition to what ever works in the new "steady state" economy, a transition which could well result in many fewer humans than are now alive...

E. Swanson

I think that you are making a flawed assumption, which is, that employment is the only mechanism which can provide the survival needs of individuals.

Well I don't think Merrill was talking about what some individuals need or don't need. He is talking about the economy as a whole. Sure there are some individuals who can live for years grubbing in the woods. But the vast, vast majority can do no such thing. And even if they could, there is just not enough woods for everyone.

Anyway, grubbing in the woods is a form of employment. I am reminded of the beggar who was before the judge. (This really happened). The judge told him to get a job. To which the beggar replied: "But I have a job. I am a beggar. That's hard work!"

But I suppose you were replying to this statement by Merrill:

To achieve a steady state economy requires that some other means than employment be devised to provide incomes to the millions of excess workers.

Well there you have a point. I think, though I am not sure, but I think he was implying that there could never be a steady state economy because there is just no such thing as "some other means than employment be devised to provide incomes to the millions of excess workers."

Actually I think we are all three mostly in agreement here, especially with your statement:

Once Peak Oil kicks in, areas with high population densities can not be supplied with the previously high flows of materials. The result can only be a society with much lower population densities.

Ron P.

It obviously would require some other support mechanism other than letting indiduals grub in the woods. Currently anything other than everyone on their own is out-of-favor. But, it is hard to imagine a society with declining employment (for REAL jobs), being sustainable without a very substantial welfare state. Perhaps we can disquise it with make work, instead of welfare it is payment for the indiduals striving to produce great poetry -or street art (graffiti), or whatever. But it requires a societal willingness to provide support, which is seriously lacking today.

I don't think you have to just have artistic make-jobs.

If we had a good universal health care system and a housing system that wasn't primarily focused on getting as many people as possible into houses they will never reasonably afford, we could have a lot fewer people employed in the cash economy and still have adequate, even improved lifestyles.

After all, during the fifties and sixties, relatively few married women were in the cash economy (ie had paying jobs), but most of them contributed significantly to the society by raising kids, helping to create vibrant communities, raising backyard gardens...That about half of the population was unemployed was not seen as a great tragedy.

I'm not calling for a return to a gender-based split in employment. But having more people primarily 'occupied' with creating resilient communities may not be the worst thing that could happen. The question is whether society will come to value such contributions or disparage them as shiftless, useless or worse.

Of course, most instead will spend most of their time either looking for a job, watching TV, playing video games, or having idiotic discussions about employment with a bunch of nitwits on blogs about peak oil---oops!
'- )

"A steady state system isn't likely to function at high population densities, such as cities like NYC or Hong Kong, which not function because it's still possible to transport resources from great distances into these areas."

I think densities in cities will actually increase. Although the cities obviously won't function in the same way as they do now.

The loss of government credibility and legitimacy will ultimately usher in a boom in unregulated grey market business and commerce. People will adapt the best they can and a different way of living will emerge, albeit very different from the present. They really have no choice, they'll have no resources to do differently. In a sense its already happening with urban agriculture, fab shops, hacker spaces, open source innovations, etc. No go areas for modern commerce and finance as existing channels become increasingly bypassed and made redundant. A social quicksand which becomes impenetrable to outside onlookers with a comprehensive irreverence and disobedience towards the authority of the State.

The trend is already building and as time goes on more and more people will be swept up by it as they fall from the shrinking world of BAU. New loyalties will probably come into being, based on new and different survival strategies. I think density will be essential for the efficient use of dwindling resources. It may not be pretty, but likely to be sufficiently functional for people to live.

I wrote an opinion piece and submitted it to the NYTs. It was too long for them. But I suspect they simply don't want to touch the subject.

If anyone is interested it can be downloaded from here. Of course most of you already know the story.

Charles Hugh Smith (http://www.oftwominds.com/blog.html) refers to people's mental conceptions as a self-referential “box.” A box constructed by society through herding behavior, generic uninspired education, magical thinking and the peer pressure of beliefs. Those relatively comfortable boxes will disintegrate in the coming decades as the true nature of things becomes more evident. Fossil fuels allow us to immerse ourselves in an unprecedented fantasy and actively destroying those boxes do not make for happy news consumers or electorates. The media and government do all they can to slap tape on the box, staple it, glue it, whatever they can do to maintain the illusion of normalcy.

I don't think it's easy to change the box, it must collapse, and when it does so, people will fall back to the inner God box and reinforce it. Magical thinking will meet reality head-on as a coping mechanism in a new society stripped of its technological magic. Maybe this is already underway.

At least you can say you tried to warn them – although most, possessed of indominatable egos will simply say “Wow, who could have seen that coming.”


Few, except a tiny minority, ever mentions peak oil. And I wonder if they ever will?

Don't you know we can solve all our problems by chanting "Dill Baby Drill"? (/snark)

The idiocy of it almost makes you want to have President Palin inherit the sh*t sandwich in 2012.

Oh boy!

History suggests that recovery from a debt-fueled asset bubble and ensuing balance-sheet recession is long and painful, with significantly slower growth in gross domestic product and significantly higher unemployment for a least a decade. Right now it looks as though the United States is following this pattern.

It seems that Professor Tyson, though apparently more aware of the root causes of our economic troubles than most MSM pundits, still fails to grasp the simple concept that 'GROWTH', economic or otherwise, is simply no longer physically possible!

See: Tom Murphy's recent Galactic Scale Energy posts.

Yet almost every single self proclaimed IDIOT genius economist, is still beating the dead horse, already quite stiff with rigor mortis, of economic growth.

US Oil Consumption in 1978 - 18.9 million.
US Oil Consumption in 2010 - 19.3 million.

Real US GDP in 1978 - $5.7 trillion
Real US GDP in 2010 - $13.3 trillion

Economic growth can take place versus flat oil consumption provided that rational decisions are made to wring out inefficient uses of crude oil. In the early 1980's, that was ridding our dependence on No. 6 bunker oil and changing refining processes to get more gasoline, jet fuel, diesel and LPG instead.

As the US is still using twice the oil per capita of the rest of the OECD, it is obvious that transformations in our transportation system to make it more like those of Europe, Russia, Canada, Australia, and Japan would help tremendously in sourcing fuel for continued growth.

What would those changes be? More use of trains. We like to brag about our rail system, but it is mostly use to haul coal to power plants, and we neglect to use it for passengers to get people out of their car. More use and availability of mass transit. That is a no brainer and very popular politically. An increase in coastwise and Great Lakes shipping. Water transport is CHEAP. More taxes on cars and fuel. Can't use cars you cannot afford to own, and if you can't use a car you can't burn oil the economy needs for other reasons. Unfortunately, American's believe Mr. Goodwrench, that their car = freedom, even as they live in a creeping police state.

US Oil Consumption in 1978 - 18.9 million.
US Oil Consumption in 2010 - 19.3 million.

US Crude Oil production in 1978 - 8.6 million b/d
US Crude Oil production in 2010 - 5.5 million b/d

This is the fundamental source of the problem: As global oil production peaks and starts to decline (As US oil production did starting in 1970) you can't simply import more from elsewhere (e.g. Titan, the sixth moon of Saturn, often cited by abiogenic oil proponents). You have to deal directly with the problem of declining oil production.

US politicians seem to be unable to deal with the consequences of a completely artificial debt ceiling, so I don't hold out much hope for them dealing with a substantial problem which is much more difficult to solve.

Fortunately, I live in Canada which seems to have the situation covered, although not necessarily to the advantage of the US. China is also bidding on our oil and we tend to think their money is just as good as US money. They're holding $2 trillion in US dollars at the moment but they're beginning to think Canadian oil sands might be a better investment.

They're holding $2 trillion in US dollars at the moment but they're beginning to think Canadian oil sands might be a better investment.

And as long as their is any tar left either the oil or the dollars will flow their way.


Increasing oil demand in India, China leading to price rise: Us president Barack Obama
Economic Times / July 30, 2011

WASHINGTON: US President Barack Obama on Friday said that the increasing demand of oil in countries like India and China is leading to the rise in oil prices.

Help is on the way:

Chinese Economy: Inflation On The Rise And Manufacturing On The Wane – Analysis
By Teshu Singh / IPCS / Eurasia Review / July 29, 2011

... It is worth highlighting that with so many global multinational companies looking to their China operations to drive growth, a material slow down in China would have a negative impact on earnings and cash flows generated by these multinational companies from their operations.

Moreover, the slow down has been quite comprehensive, as apart from manufacturing even the automobile and housing sector have witnessed weaknesses in recent months. The value of land sales in Beijing this year has dropped 75 per cent as has the value of car sales owing to the withdrawal of incentives by the government. Retail sales have tapered off somewhat since the pre-holiday peak. This is an important indicator because domestic private consumption has become an increasingly important part of the Chinese economy. ...

I want to show to you a few results of my custom software implementation of Jeffrey Brown's Export Land Model (with KSA). The results are shown in the form of screenshots of my program. You can check out larger versions of the images when you click on the thumbnail images below.

You can download the newest version of my software over here: http://sokath.sourceforge.net/

It's completely free.

Why are you still using subversion instead of git?

UPDATE: wait a minute, you put tarballs in you svn too? LOL

2nd UPDATE: not only tarballs but when I check out HEAD I get tarballs of old versions?

Dude, you just don't understand source code version control at all do you?

I don't really care about the revision control software as long as it doesn't bother me. It's easy to use (for me) and I don't have any real problems with it.

EDIT: I'll change the layout of my repository when more developers are going to work on my project. The older versions of my software are there just for historical reasons (just to keep an archive). If the older releases bother me too much then I remove them.

Just downloaded the Linux version to try it out. For some reason I was offered the Linux 64 variant by default (only noticed after I downloaded) and had to manually download the 32 bit. It seems to work (Puppy Linux 5.2).


Thanks. I'm struggling with making the switch, partly due to my 64 bit system, and I have several critical aps that only run on MS platforms. Not sure I want to put myself through the hassle/time involved. I've been using an old system for a data repository, running an early version, but it doesn't do much but store files.

Have you tried running the Windows apps under Wine or on a virtual machine?


Also, CodeWeavers stuff works quite well - it's basically Wine fine-tuned for a variety of common Windows apps. Their "Crossover" product allows Office 2007 (along with dozens of other apps) to work perfectly, for a very nominal cost.

Thanks for the ideas. Hopefully some of the virtual mach stuff has improved. My main problems in the past have been hardware-software errors with my data logging stuff (weather stations, PV, contoller and inverter control, RS-232 stuff) I'll get things working and some event will lock it down. I use old laptops but most didn't have serial ports, just early USB, and need to use USB to Serial dongles. I think you can see my problem: drivers that aren't compatible in a virtual environment, and that most vendors don't/can't support linux, etc. Some of the new hardware does, but that means $$$, and my old stuff is tried and true. Most of this stuff is on a closed network, so security isn't an issue.

I set my old system up for dual boot, but that became inconvenient. Back in the day, I used an OS2/Warp system that I could make to do just about anything, especially with hardware (loved it), but, alas, that was then. I just don't geek out as much these days....

My main problems in the past have been hardware-software errors with my data logging stuff (weather stations, PV, contoller and inverter control, RS-232 stuff) I'll get things working and some event will lock it down. I use old laptops but most didn't have serial ports, just early USB, and need to use USB to Serial dongles.

I'll suggest VirtualPC with the USB extensions.

It does work - 4.0 is far better than 3.X. You should be able to take an image of what you have as a working system and run with that.

several critical aps that only run on MS platforms

Make this a real Drumbeat - list what these apps are and let us see if the collective TOD mindshare can't tell you some open source tools that will get you close to the same functionality.

(unless by critical apps you mean games. For yor kids of course)

Thank you for mentioning this. I have changed the default Linux download to the 32 bit version.

Hi to you all,

I am a rookie here, although I have been lurking on TOD for about a year now. I just registered because a thought came to my mind while looking at these curves, and I wanted to ask a likely naive question. Please by advance pardon my English for I am French and above all not a specialist in the fields discussed on this board, thus I will certainly not use the adequate jargon words.

But let's try to be clear. I think I digested the ELM in the recent days, seems to me quite "simple" to understand. In the above graphes, the export capacity curve is given by production minus national demand. I well grasped the fact that this model explains why the net oil export by producing countries should decline faster than previously forecast.

But here's my point : does this consider the fact that reduced export (through contracting oil price-based income)could curb the capacity to maintain all the facilities required to ensure proper delivery of oil ? (I mean local transport and shipping). If so, the decline would be even faster ?

I strictly have no clue about whether this is something to be included in the ELM, for if I understand the overall picture of peak oil, I am not at all expert in all the underlying more subtle notions, which I get when reading posts here or on other sites but have difficulty to discuss and to think about in English.

I hope though I managed to explain my concern with these curves (from a general point of view of the ELM, not arguing on the data or methodology).

One point to keep in mind is to think in terms of cash flow from export sales, because of generally rising oil prices. I suspect that the vast majority of oil exporters showing lower net oil exports in the post-2005 time frame are experiencing flat to increasing nominal cash flow in 2011 relative to 2005.

I have suggested that we will see Phase One and Phase Two declines in oil exporting countries showing production declines (assuming generally rising oil prices). In Phase One, the country experiences stable to rising cash flow from export sales, even as export volumes decline. In Phase Two, the country experiences declining cash flow from export sales, as generally rising oil prices can't offset the decline in the volume of net oil exports.

No, the model does not consider those facts. They require additional code next to the code for the model.

(I mean local transport and shipping). If so, the decline would be even faster ?

Local (internal) transport is mostly by pipeline. That should not be adversely affected by increased internal consumption. Shipping is by third party shippers, not by the national oil companies themselves and would not be affected by increased internal consumption other than having less oil to ship. So no, neither pipeline movements or shipping should cause exports to decline faster. It all comes down to how much oil they have to ship.

Ron P.

ship. So no, neither pipeline movements or shipping should cause exports to decline faster. It all comes down to how much oil they have to ship.

I would think that less oil to transport by sea, would translate into slightly more of the oil reaching the end market. The reason, tankers could slow down, and consume less of their cargo in travelling to their destination. This is probably a very minor effect.

Re: Chavez wants higher OPEC quota for Venezuela (uptop)

Following is a link to my 7/18/11 comments about Venezuela & Saudi Arabia, and an excerpt from said comments.


Chavez has not had a particularly beneficial impact on Venezuelan oil production, and Venezuela has large unconventional bitumen resources, but Canada is a case history of virtually unrestricted exploitation of bitumen resources, by private companies. Canada's average volumetric increase in annual net oil exports from 2005 to 2010 was about 50,000 bpd per year (BP). In contrast, the combined average annual volumetric decline in combined net oil exports from Venezuela & Saudi Arabia from 2005 to 2010 was about 500,000 bpd per year. So, we would have needed 10 (Ten) Canadas to offset the recent five year decline in combined net oil exports from Venezuela & Saudi Arabia.

I am once again reminded of the Bloomberg column about Brazil--a net importer of petroleum liquids--taking market share away from OPEC.

Why does he need a bigger quota? I doubt he can really get more production going since he keeps underinvesting, but even if he does manage to bump up production then what is to stop him from selling his extra production? They all cheat. I think he is just grandstanding with this request.

One could almost hear a giant sucking sound as TS Don made landfall in TX last night. It was swallowed whole by the huge, hot, dry high pressure dome over much of Texas. Poof!

My condolences to the folks down there who prayed for rain; try a rain dance next time :-/


As Elmer Kelton said, "West Texas* is in a state of permanent drought, broken occasionally by rainfall."

*Really true of entire American Southwest.

The mountain southwest has a few islands that are not normally arid. Mostly monutaintops, and other areas where the topography favors precipiation. Of course those downhill may have a claim on the water.....

The two times I lived in New Mexico, on lived on such green-islands.

Something I ran across this morning :-

Food Day - October 24, 2011

"October 24, 2011, marks the first annual Food Day celebration. Food Day is sponsored by the Center for Science in the Public Interest with the goal of bringing people together "to push for healthy, affordable food produced in a sustainable, humane way."

Food Day operates on the following 5 Principles:

1.Reduce diet-related disease by promoting safe, healthy foods
2.Support sustainable farms & cut subsidies to big agribusiness
3.Expand access to food and alleviate hunger
4.Protect the environment & animals by reforming factory farms
5.Promote health by curbing junk-food marketing to kids"

Local events are being planned - if you have a chance to attend or run an event, this is an opportunity to channel some anger into local action (apropos of the recent discussion on vegetable gardens).

5.Promote health by curbing junk-food marketing to kids"

I challenge all the TODers to join me in personally not marketing junk foods to kids!

Each and every day. Like I've not functioned as a marketer of junk food to kids for years before and odds are years after the 1st annual thing-a-ma-jig.

Re: the following linked articles,

Obama hails deal on increasing auto fuel-economy standards

Fuel efficiency: Will new rules cure US addiction to foreign oil?

Obama Fuel-Efficiency Goals Put Automakers Ahead of 100-Year Pace

New vehicle fuel-efficiency standards make sense

Some Good News for the Planet

Are we all stupid or what?!

Fred, I could understand your point if you only posted the second linked article: Fuel efficiency: Will new rules cure US addiction to foreign oil? Of course only the very stupid will think fuel efficiency will cure our addiction to foreign oil. But the other four links make perfect sense. Of course they will not fix anything but they just delay the coming crash for a year or so... well perhaps a month or two anyway. ;-)

Anyway, I cannot see calling those four links stupid.

Ron P.

IMHO the American government is incapable of implementing any new fuel economy regulations until well after they no longer matter.

The proposed regulation might actually cause a drop in fuel consumption, if prices were to remain stable over the next twenty years. But, a more likely outcome is that rising fuel prices will cause fuel consumption to drop much faster than would be required by the new efficiency rules, making the fuel efficiency rules irrelevant.

making the fuel efficiency rules irrelevant.

I understand your argument. But, I think they will still matter. they tell detroit to start designing for higher milage, so that the pipeline of products will be better suited to the fuelscarce times. I don't think they would do this without being forced. Of course fuel consumption will be determined by supply, a better fleet probably means a slightly lower price of oil, and lower cost to the consumer per trip, but if we are truly going to be supply constrained, then what is affected is not total demand, but the total benefit from using X amount of fuel will be greater.

Chevy Cruze and Ford Focus are both in high demand and short supply, despite the Big 3 continually saying that people don't want small, efficient cars. Legislation might prod them along, but sales will too.

Of course, small, cheap cars don't carry much profit, so don't expect the marketing machine to change gears anytime soon.

What the gov't could actually help with is to work with the EU and Asia to devise uniform crash protection and emissions guidelines. Businesses and their lobbyists tend to like fractious rules with high step-in costs that provide barriers to entry, though.

According to the "Obama hails..." article, the real effect of the new standards will be a fleet average of ~42 mpg, after exemptions and whatnot are counted. This would be up from ~28 mpg now. So the new rules should increase fuel efficiency by roughly 50%.

According to this chart, 72% of US oil consumption goes to transportation, and of that, 61% goes to gasoline fuel. So let's round it down and say that (.7 x .6 =) 42% of US oil consumption goes to gasoline use. If fuel efficiency in this sector is increased by 50%, then, it would mean that consumption in that sector would be reduced by one-third. In short, all things being equal the effect of this rule would be a 14% reduction in US oil demand, or about 3 million b/d.

This is a ceteris paribus calculation, and I realize it ignores other variables, including population growth and car ownership rates especially. But otherwise does the math check out?

It takes full effect in 2025. So 14 years of 1% per year population growth gives 14% not taking into account compounding. So -14% plus +14% leaves us about flat.

It looks like new cars that meet this standard will begun to be sold in 2025. But the entire vehicle fleet needs to be replaced by these more fuel efficient cars in order to get the full effect. That will take some number of additional years (10?). So you're really looking at something like 25 years out for the full effect, and by then we will have significantly more population and the production from existing oil fields will have declined even further. The new standards are by no means a panacea.

Typical figures for effective total fleet turnover time are 18-20 years, at least for cars and light-duty trucks. In 2007, the median age for passenger vehicles in the US was 9.2 years, and the median age has been getting steadily higher since at least 1969.

A part of the increase in the median is due to increasing numbers of vehicle per capita -- that is, the household adds a third vehicle rather than replacing one of the two existing vehicles. Truly higher fuel prices would probably force many of those older vehicles to be abandoned, which would speed the fleet turnover somewhat.

The added cost per vehicle to meet these standards is estimated at $2000 to $8000 per vehicle. That means fewer likely buyers of these new fuel efficent cars/trucks and more people keeping the less efficient cars longer.

So, the effect of the standard will not be 50% increase in fuel efficeincy. I would predict more like 20% increase. As the economic malaise reduces personal income (after inflation) the decline in new car sales will be greater. Look at Cuba where the dpressed economy meant citizens kept 40 year old US cars running because they could not afford a new German, Italian or Japanese made car, all of which could have saved them huge amounts on fuel costs.

The bottom line is that in the next 20 years the US will be capital starved for consumer purchases and auto sales will likely decline, although car ownership will not decline by much. Thus, the new MPG standards will be less effective in reducing gas usage than the promoters claim.

I think if gas prices go up, the impact could be larger, not smaller. As prices rise, people with multiple cars gravitate to the car with better mileage, and those with poor mileage will be driven much less.

Such cars will help the savvy to insulate themselves from continuing price rises, but won't do much for the poor and ignorant who have to make do with whatever they have. Those will simply have no choice but to drive less.

Automotive Design is not my field but can we reasonably expect an increase of this size in average fuel efficiency?

Just passing a law or enacting an EPA regulation does not make it so. If someone thinks so let me ask: How much cellulosic ethanol did the industry in the US produce in the last 12 months?

My conclusion is that some of us in the US are stupid.

My car is one of the most efficient cars on the UK market. It is diesel, but already meets this target.
All you need to do is relax a few safety and emissions regulations to Eropean levels and retool your factories.

GM's Vauxhall Corsa gets 88.1 mpg (UK). That's 73.4 mpg (US).


Why the UK/US difference?

US gallons are smaller.

Yes, the US gal is actually the Queen Anne Wine Gallon of 1706 - defined as a volume of 231 cu.inches (3x7x11) - coincidentally, very close to five bottles of wine.
The modern "imperial" gallon, or UK gallon (since they don't have an Empire anymore) is 277.5 cu.in, or exactly the volume of ten pounds of water at 62F - coincidentally very close to six bottles of wine.

In times past, savvy traders in Britain selling to the US would sell in British gallons, but deliver in US gallons - saving 1/6 the volume!

Of course both units are hopelessly outdated by the modern metric system, but that seems to go with the current US obsession of clinging to it's "great" past.

All the history of the gallon here;

Of course, the obvious solution for the difference between the US and UK gallons would be to create the "metric gallon" - four litres.

Of course, that would never happen. The Americans and British could never get together on anything, particularly not anything the French might agree to.


My short answer to the difference between the 2 gallons is:

"A bottle whisky",

as the Americans understand a 26oz bottle as a Fifth, and always seem disappointed to hear those damn imperialist get 6 bottles in their gallon.


Diesel. More aggressive hybrids. Smaller. Lighter.

My 2008 Honda Fit gets 33.5 MPG in all-around driving. The estimates for the new Fit Hybrid are that it would get (not going to be sold in the US, rats) around 45 MPG in the US test. Use a smaller gas engine, bigger electric motor, lithium battery pack in place of nickel-metal-hydride, and a plug-in charging capability probably gets it up close to 54 MPG using technology that's available today. Expensive batteries today, but available.

I think there's little question that the vehicles can be built. The bigger question is whether people will buy them. Based on Europe's experience, it seems fairly safe to say that $8/gal gasoline (today's dollars) will take care of that.

GM has confirmed that it will bring the diesel version of its top selling Cruze tio the US in 2013 - their first diesel car in three decades!

I have a guest post about this up at Robert Rapier's R-Squared Energy Blog

For the 3.5% annual increase for PU trucks, they could get ten years of this if they simply brought in the diesel version of the Chevy Colorado that is sold in Australia - gets 30mpg compared to 21 for the smallest engined gasoline model they sell here, and 19 &16,mpg for the larger engined ones.

There is so much low hanging fruit, if the carmakers want to bring in what they sell everywhere else...

How does a possible ramp up of use of diesel in the US scale? My understanding is that the chemistry of petroleum lends it to being able to produce more gasoline per barrel than diesel.

Is it possible to adjust cracking to make more diesel than gasoline? Because Europe uses more diesel, does that mean Europe ends up with an excess of gasoline, which they ship elsewhere?

I asked exactly that question of Robert Rapier - his answer is here

Basically - it is hard to tweak existing refineries, but you can purpose build to get a very high diesel cut - obviously, there was no point in doing this in the US.

It is not just the refineries, it is also the grade of oil (or substitute) used as feedstock which matters.

It is very hard to make diesel from tarsands or NGL. Diesel is the middle distillate, the carbon chains are of medium length. It is possible to break longer chains (from heavy oils and tar) to shorter ones, with an input of hydrogen from natural gas or elsewhere), the process gives out heat (is exothermic) which means some of the energy in the fuel is lost in the process,

It is chemically harder to combine shorter carbon chains (eg. as found in petrol) to form the medium sized chains for diesel. It requires het input, the process is endothermic, and you are fighting entropy.

The best feedstock is light, sweet crude. Is is already well past peak in supply.

Globally, diesel will (is) becoming scarce before petrol. Diesel is more critical to social infrastructure, and will ultimately be rationed to key users like road haulage and agriculture, and water pumping. Diesel engines are slightly more thermodynamically efficient that petrol, but the last private car on the road will be powered by petrol.

Sounds like an opportunity for FT GTL or CTL. The FT process puts out a very high percentage of very low sulfur diesel. I know a lot of people don't like the idea of the CO2, but when it comes to no fuel or no CO2, I feel the CO2 argument will lose out, for right or for wrong.


I asked Robert Rapier the question about making diesel from heavy oils, his answer is here

Yes, most heavy oils favor diesel production. It is all about the assay. I wrote up an essay explaining how different assays impact what the refinery produces: Refining 101: The Assay Essay.
But the refinery also has to choose crudes that it can run. A heavy crude will produce more diesel, but a refinery may not be equipped to handle it.

So, if the refinery is purpose built for producing diesel from heavy oil, you can get lots of it. It is just that most refineries are not set up for this. Light crude has a substantial portion of fractions that are lighter than diesel - having to put these together to make diesel is more expensive than breaking the longer chains in heavy oil.

Yeah, I've always been under the impression that there's more diesel in heavier grades of petroleum than gasoline. After all, light means lighter, more volatile fractions, and gasoline contains the lighter fractions.

So actually, tar sands oil can provide more diesel than light sweet, no?

There is a new upgrader under construction that will upgrade oil sands bitumen directly to diesel fuel, with a nearly 50% cut of ultra-low-sulfur diesel fuel from the bitumen.

NWR Upgrader - Value Added Products

All of today’s Canadian upgraders process bitumen, the heavy crude oil product extracted from the oil sands, into synthetic crude oil. That high value oil is usually shipped to the United States for further refining, denying the province of tax revenues and jobs that could come from refining it here.

North West Redwater Partnership’s solution is to convert the raw bitumen directly into the ultra low sulphur diesel and diluents that are in critically short supply and high demand in Canada.

It is more the financial risk that discourages this from being done, rather than the technological difficulties. The NWR upgrader is backstopped by the Alberta government, which will be taking its royalties from the oil sands companies in kind rather than in cash, and sending it to the upgrader to be turned into products for a fee.

The upgrader will make money regardless of markets, and the Alberta government will make more or less money depending on the price of diesel fuel. It is betting the price will be high.

Enjoy Park Greenery, City Says, but Not as Salad

Maybe it is the spiraling cost of food in a tough economy or the logical next step in the movement to eat locally. Whatever the reason, New Yorkers are increasingly fanning out across the city’s parks to hunt and gather edible wild plants, like mushrooms, American ginger and elderberries.

Now parks officials want them to stop. New York’s public lands are not a communal pantry, they say.

Proving once again that what we really need is food, and that in order to obtain food, what we really need is access to the land.

Of course it is sad to see yet another example of the powerful usurping the land from the poor, but if those same powerful wanted to do things differently, this could be an opportunity. The city could use this trend to encourage people to garden more, if possible as a community in order to share the bounty, and aid them in doing it. Some forms of aid might include work on setting up community garden spaces; relaxed or ideally repealed laws restricting gardening in lawns and public spaces; education; composting programs; and more. Instead of taking away more land, lead people to renew their relationship with the land.

Of course, that was the original purpose of parks: places where game animals and the plants they depended on could be protected from the "tragedy of the commons."


Central Park was the first landscaped public park in the United States. Advocates of creating the park--primarily wealthy merchants and landowners--admired the public grounds of London and Paris and urged that New York needed a comparable facility to establish its international reputation. A public park, they argued, would offer their own families an attractive setting for carriage rides and provide working-class New Yorkers with a healthy alternative to the saloon. After three years of debate over the park site and cost, in 1853 the state legislature authorized the City of New York to use the power of eminent domain to acquire more than 700 acres of land in the center of Manhattan.

Central Park is a largely artificial creation, as were the public spaces, and parks surrounding the palaces and great houses of Europe. Nature was to be tamed and improved upon, not preserved.

Leanan was, of course, referring to the term popularized by Garrett Hardin to describe the effect of population pressure and over consumption on finite resources.

What is generally mis-understood is that Hardin was describing an un-managed commons, and it is interesting to note that he is often reviled by Marxist and other commune-ists for the misplaced perception that he advocated private property, and by extension free market capitalism, as one way to manage limited resources.

Anyone familiar with his work knows that he was actually much more inclined towards reducing the population side of the equation.

He was both brilliant and merciless in his ability to deconstruct "isms" of all kinds, and he had a clear understanding of the depravity that is modern free market economics. I highly recommend the chapter "Growth: Real and Spurious" from his book "Living Within Limits" for a remarkably prescient look at our current economic predicament (pdf):


As to the matter of parks and recreation, a more nuanced reading of history reveals another "tragedy of the commons", this one perpetrated by the conquests of industrial civilization. From Encyclopedia Britannica:

In Anglo-American property law, an area of land for use by the public. The term originated in feudal England, where the "waste", or uncultivated land, of a lord's manor could be used for pasture and firewood by his tenants. For centuries this right of commons conflicted with the lord's right to "approve" (i.e. appropriate for his own use) any of his waste, provided he left enough land to support the commoners livestock.

In the 19th century the right of approvement was in effect assumed by the government. Under modern agriculture, common pasturing became obsolete, and commons became public land used mostly for recreation.

The key phrase there is "for centuries", a term that should be the envy of anyone blithely bandying about the much tortured and over-used word "sustainable".

Truly one of the great tragedies of the last two centuries of hyper-growth that the right of the so-called "commoners" to enough public land to support themselves was destroyed by industrialization and modern agriculture.

No one is suggesting we voluntarily return to feudalism (although one could argue we may not have a choice in the matter), but either way, isn't it interesting that as people on our increasingly over-crowded spaceship become ever more desperate and hungry the much maligned commons is rapidly looking far less recreational in nature.


You have to differentiate between 'City Parks' and State and National Parks.. they have fairly different roles to play.

My reference was a little further back in history - to deer parks (the first parks) and royal forests.

Of course the point was not habitat preservation as a modern-day ecologist would see it, but there was an understanding that everyone couldn't hunt animals, harvest wood, etc., or there would be nothing left.

I think the main reason medieval kings and nobles created parks and protected forests was to have the sole right to hunt there. Poachers were not well-tolerated.

Of course.

Not everyone could hunt or harvest wood, or there would be nothing left. The ones who could were the elite.

Hawaii's "kapu" system had the same effect. Certain foods were only for the elite. Certain areas were sacred, and peasants were not allowed to harvest fish, animals or plants there. The point was not environmental conservation, but it had that effect.

Not everyone could hunt or harvest wood, or there would be nothing left.

Interesting. The explicit assumption being that human ecological overshoot of the Earth's carrying capacity is a normal state of affairs. I won't bother asking how many humans can hunt and harvest wood, um, "sustainably" (for lack of a better word).

Any realistic number would probably be meaningless in the context of the grossly inflated population we currently enjoy.


A rough guess is one person per five acres of woodlot for firewood in the northeast US. Yes in a zero energy house this would be near zero. Keep in mind wood gets you about 0.1% of the sunlight energy that fell on it. Corn gets you about 1% and PV gets you 12-18% of the energy that falls on it but is not store-able.

If you wanted a significant part of your diet to be meat then maybe 400 acres per person. New England current has 200 people per 640 acres so 3+ acres per person. It is that high from Maine which is mostly empty (and cold). New York state 408 people per 640 people per 640 acres. About 1.5 acres per person.

If you wanted a significant part of your diet to be meat then maybe 400 acres per person.

Hey... Let us not get reee-diculous. I am usually on the other side of this argument because people are constantly underestimating the amount of acreage it takes to support one person. But 400 acres per person even if you ate nothing but meat is way, way over the top. Well, that is unless you are grazing West Texas scrub land with nothing but the occasional tumble weed here and there.

Good grassland can carry one cow and one calf on about 2 acres. 400 acres would give you about 200 cows and 200 calves or about one cow per day, counting veal. I really don't think one person could possibly eat that much meat.

Ron P.

400 acres could supply a small village with meat if you farmed in the traditional way of using the cows and sheep to fertilize your off fields and pigs to eat left overs and scraps.

My dad raised a family of 9 kids on 45 acres. About two thirds was pasture, corn and hay for the cattle and pigs. The other third was cotton which was our cash crop. Of course he also sold some of the pigs and cows for money. Our garden, which included potatoes, was usually about one acre. We were poor but we never went hungry.

Ron P.

It is certainly possible to grow much more food per acre than current mechanised broadacre farming does. However, for most farmers the objective is to make the most $ per acre for the least cost/employees - quite a different equation.

If the farmer has lots of free labour available - like 9 kids, then you can produce a lot of food per acre - though it still might not be as profitable as broadacre grain farming...

I do not mean farming I mean wild animals.

I live on 400 acres of forested appalachian foothills. We and our paying hunters harvest about 30 deer a year. My family eats about 1.25 deer per person-year. We eat about half that more in chickens. We do not buy any meat.

The deer population has been stable or increasing slightly over the last decade.

Yes, but are you shooting deer that may have wondered in from neighboring parcels of woodland that are being less aggressively harvested? If you collect 30, but your neighbor 10, and the carrying capacity is 20, then you are enjoying his excess.

wimbi - You have many wild pigs there about? Down in Texas lots of folks save the deer permits for city hunters. Lots of areas are over run with feral pigs...lots of crop damage. Catch them in rebar traps, hit with antibiotics/worm med for a few weeks and then slaughter. Some of the biguns dress out over 150#. Just the right size to hang in a standup freezer. Tough but the sausage grinder takes care of that. After adding the suet easy to put out over 100# of eats. Typically runs less that $1/lb. Between sausage and chili meat one pig can take care of a mall family for a year. With some geese, ducks and a bunch of dove, of course. And a wild tirkey around Thanksgiving isn't too difficult to stumble across. Except I fear this dry summer may be problem with that possibility.

Rockman. First, thanks for all your good info on stuff I know nothing about.

Pigs? I asked my wife if she had heard of any around here, and she went on a tear on how she couldn't even keep the rabbits, coons, possums and big sassy crows out of her garden, and pigs would be just way too much. So, no, we don't have any wild pigs that I hear of.

I allowed that since I have now got back pretty near my boyhood skills with a 22, after my second cataract operation, that I could zap all those other varments even easier than that rabbit yesterday. Then I said we eat too much meat anyway.

Big mistake- I got a real small cut of tonight's chicken. Had to politely suggest that "eat too much meat" doesn't mean "don't want too much meat".

Us hill folk do eat all those things you mention, and yes, a lot of them do seep over the fence from other places, but that's ok with us, if the city dudes gag at eating their deer, then so many more for us.

The point about maybe they are seeping over the fence from elsewhere, wasn't meant as criticism. But the original question concerned how many deer per acre per year can be sustainably harvested? There you need to use a study area large enough, that animals migrating in from elsewhere don't invalidate the data. For you all it means, is if your neighbors start doing as you do, you may find you run out of deer.

"Do as you would have others do". I would be delighted if my neighbors did as I do. Instead they kill their deer with their SUVs and leave 'em to the vultures and Ki-Oats. They slide around the world on a streak of kerosene, spend any raise they might have got (as a result of my ideas at last going into production) on obese pickup trucks, and otherwise burden the universe offensively.

And they eat too much meat, but it's store-bought, full of fat, and has come by a long ride in a truck.

I guess I have lapsed into my father's sin- love humanity and hate people. I might feel better after a cuppa tea, but it's too early. Go back to bed and think about Kenneth Boulding and Farrington Daniels. I have got to be as old as they were, but am nowhere near as good.

My family eats about 1.25 deer per person-year

Even if you are rendering the tallow and eating the marrow - that is not the 100% caloric value of your eating.

400 acres can provide more than you can harvest of Raspberries/blackcaps/blueberries/sunchokes/acorns/cattail roots/garlic mustard/thistles and even choyrfil cakes from Alfila.

But the 400 acres quote is about a "bush meat" diet. How many rabbits/squrirlles/deer can the 400 acres support and how many can humans take without destroying the bunny/tree rat/rose munchers population?

But 400 acres per person even if you ate nothing but meat is way, way over the top.

Do show that this is unreasonable for 'bush meat' in the location given.

If "we" were discussing grass fed beef where the grass got watered and weed control, yes. But that was not the original discussion position.

one person per five acres of woodlot for firewood in the northeast US.

That is a very low estimate for firewood production.

From the Maine Forest Service Assessment of
Sustainable Biomass Availability

July 17, 2008

Currently, Maine's timberlands grow approximately 1 green ton (0.4 cords) per acre of merchantable material per year. The University of Maine and others (e.g., Seymour, Greenwood) have conducted studies that estimate the potential increased productivity which could be realized through intensive forest management (site preparation, planting, competition control, thinning). Projected increases range from 88% to 273% (depending on the level of intensification practiced).

"Merchantable material" in this case meant lumber. Total material would be 50% greater - 0,6 cords, and if you are managing for firewood you do not need to let the trees grow as big as for sawlogs - the younger trees produce more tons/ac, up to about age 7-15yrs depending on the tree.

so you could certainly get one cord/acre/yr and with good management get this up to 2. So a three person house, built reasonably efficiently, and with an efficient wood burning device, would use about 4 cords/yr, or 1-2 acres, which is less than one acre per person.

Be sure to put the ashes back onto the wood lot to keep the nutrient cycle going, and you will get good production indefinitely.

With a good woodstove most homes burn between 10 and 30 face cords of wood in a year. Given the above numbers, it looks like a 10 acre wood lot may just squeak by if you had a really good forest, a really small well insulated house, and were very careful. In general, I think a 25 acre woodlot is a good size and a 50 acre is even better.

from http://affluentpeasant.barkie.net/forest/susyield.htm

Interesting link.

I will say again that their number is a very low productivity woodlot, commercial forests in Maine obviously do much better (as do forests here on the Wet Coast). They do note (in your link) that managing the forest will improve yields over time - the key thing is to keep (most of) the trees relatively young. Like people, old trees are not that productive.

Planting highly productive trees like Black Locust - which is fast growing and produces the highest heat value firewood - can make a big difference

10 to 30 face cords is 3.3 to 10 full cords - that is a LOT of wood.

Using an average value of 20m btu's per cord (more info here: http://www.engineeringtoolbox.com/wood-combustion-heat-d_372.html), that is 66 to 200m btu's per season. Or, in kWh, and assuming 70% device efficiency, that 12,500 to 38,000 kWh - or, in heating oil, that is 400 to 1200 gal per season - either way that is a LOT of heat.

If you want to see the results of superinsulating the house to minimise wood use, check this one out;


Purchased Space Heating:

Over this one year period, total space heating consisted of 2784 lbs of wood (or 0.8 bush cord), 25.1 litres of propane, and 36.3 kWh of electricity for a total gross site consumption of 18.17 M Btu. The resulting effective net space heating requirement was 13.13 M Btu (or 3848 kWh). With the dwelling being 2506 sq ft (interior net) and the winter 7152 DD F., the first year net space heating requirement was 0.73 Btu per sq ft per DD64F (or 4.28 W per m2a per DD17.8C).

Get it right to start with, and you need a much smaller woodlot!

Hi Paul - I burn about 6.5 cord in a cold winter here in Maine - about a cord a month av., I use a modern stove.I like it warm, my home is an average split level ranch, about 2000 ft2. Some people around here with outdoor wood boilers burn about 10 cord a year, that's lot of extra work handling wood, even if they get it free. They also need to go outside in the am when it's 25 below to load the boiler. The salesmen never mention that.
I figure my lot produces 1/2 - 1 cord/year/acre perpetually.

Thanks Sea,

I have never understood the desire for the outdoor boilers - less efficient, plus, as you say, go out there in the weather to keep it going.

I prefer to see my flames, and be warmed by their radiant heat ( I have a wood burning fireplace insert).

Evaluating the energy efficiency of your house is the hard one - clearly, a new house built to Passive House standards will need much less fuel, but retrofitting you existing house to anything even close to that level is a lot of work.

The build it solar link is interesting because it shows that it can be done, but you have to get very serious about it, and be prepared for some real change to the house - which most of us aren't.

One of the things with a woodlot is whether it is actively managed/optimised as a woodlot, or simply gathering the excess production from what is there. The analogy I use is a vegetable garden compared to gathering food from the forest. If you are prepared to change things and actively manage, and plant species best fit for that purpose, you can greatly increase yields, either food or firewood, but the tradeoff is you don't have a "native" ecosystem anymore.

If you have enough woodlot that you don;t need to manage it then that is great. At my family farm in Australia, they have not cut down a tree for firewood in 20 yrs - the odd natural blowdown, and driftwood from the creek, has kept them in good supply. However, we are planting trees ( a woodlot and a series of windbreaks) for future lumber production. The $/acre/yr is actually better than farming, if you can wait till the trees are ready.

Interesting example of that approach here - check out the before and after photos of the farm.


I would agree that they are underestimating the productivity of woodlots, as well as the efficiency of modern insulation and wood-burning fireplaces.

I was looking at my own small lot, where the trees are getting seriously out of control. If one of them fell down, it could crush my house or one of the neighbors. If a tree died, which one might well do since they are Lodgepole Pines - not a long-lived species - I would have to get a tree removal company with a crane to deal with it.

My relatives in BC have even bigger problems. One in Vancouver had a Douglas Fir that he couldn't afford to hire a company to remove because it was so big. It was 100 feet high, and at that height a Douglas Fir is just starting to get serious and is growing six feet a year. You could build three houses out of a tree that size. Fortunately, it scared BC Hydro too, so they asked politely if they could remove it themselves before it wiped out their power lines. All it took was a few experienced loggers, and a heavy-lift helicopter.

Anyhow, anecdotes aside, I would estimate that with proper woodlot management, a 5-acre woodlot should be enough to heat a well-insulated house. And by well-insulated, I mean to Canadian standards, not to crappy US we'll-never-run-out-of-oil standards.

I have two 42" fir rounds set in a pathway at my house that came from just such a tree that BC HYdro removed from a property - the property was right on the ocean front, and this tall, lone tree by the road and power lines was just a blowdown waiting to happen...

My neighbour across the road has supplied themselves with firewood from their 1/2 acre property for the last ten years. The "house" is all of 650 sf, which they thoroughly re-insulated and draft sealed, but that's all the heated space they need (storage in basement, out bldg for workshop, etc) They heat it with a little one Jotul cast iron stove, and has an elec baseboard in the bathroom, and that's it.

They use about 1 1/2 cords/yr, and have never had to buy any, and their lot as more tree coverage than when they bought place 10yrs ago - it is a favourite hang out for the deer.

Yes, I don't think these Americans understand how to heat with wood. The most significant give-away is these New Yorkers buying wood in "face cords". Only citified suckers buy face cords. A full cord is 4'x'4'x8' (1.2m x 1.2m x 2.4m) and completely fills the back of a pickup truck. Don't accept any less. And, with proper Canadian-style wood management, a couple of them should heat your house for a year. If it doesn't, you didn't insulate your house well enough, you're not wearing enough wool, and your down comforters are too thin.

Another anecdote which I can't resist sharing. I was driving up a highway relatively near to you, and a huge BC Douglas Fir (okay, maybe it was a cedar or hemlock, I didn't check) had fallen down across it. Should we call 911, bring in heavy equipment from the highways department, get a helicopter to survey it?

No, this is rural BC. Four bearded and broad-shouldered men stepped out of their individual 4x4s, fired up their personal chainsaws (with the 4' long cutting bars), and started to work. In 15 minutes the highway was open again, and the four guys were driving home with their winter's supply of firewood. Full cords, not "face cords", again.

How would productivity compare between felling and coppicing? The area of the UK I used to live in used to produce a lot of charcoal, at one time, and provided the wood by coppicing.


Coppicing is the ability for the tree to regrow from the stump - which only some species do.
Studies I have seen regarding managing plantations for pulpwood production all show that the mean annual increment of dry biomass peaks at tree age of 7-15yrs, usually around 10. So even if you are talking about removing material by limb removal, you can do this, but the old trees are still less productive.

The highest productivity pulpwood plantations in Tasmania, Australia get 40 tons of dry biomass per year on 10yr rotations - that is a LOT of wood!

PV gets you 12-18% of the energy that falls on it but is not store-able.

PV is store able via batteries.

And solar via evacuated tubes and hot water is "storable" depending on the volume of water and the delta T. (and photon to heat is better than PV)

Of course it is sad to see yet another example of the powerful usurping the land from the poor

The poor don't cook, even though healthy, filling meals from scratch are cheaper than processed crap. If they're not willing to cook, are they really going to be willing to forage?

No, this is about hipsters, locavores, freegans, and other such folks.

Up until about the mid 80s, iirc, the poor on average ate healthier than the rich. But the rich started to eat better, and the poor started to work so much that they had no time to prep meals, and at the same time, aggressive marketing and cheap prices for bad processed foods pushed more and more of them to McDonalds and other sources of lethal food.

See the Land Party in England. http://landparty.org.uk/

The Land Party is a new political party representing the views and aspirations of people who want fundamental changes to our politics, economy and lifestyle. The mission of the Land Party UK is to bring about Landocracy – A political and economic system based on equal rights and responsibilities to land. The Land Party is not like other political parties. We have no ideology for how you should live. Instead we campaign for the right of all people to have what they need to live – Land! Free people with their own land need not fear recession, unemployment or the collapse of private banks. People with land can better look after themselves, their needs and security. Self reliant people and communities relieve the nanny state or consumer culture of the need to provide for them.

And this is why an old poster who's moved on from TOD was wrong when he was claiming that he'd survive 'cuz he knew how to pick food like these ppl were doing.

I know that locally there is complaints over Garlic Mustard. And yet, removal of material from the public parks is forbidden. Thus I can't use garlic mustard as green manure from the public land in my private space.

Their loss.

Faux News' take on The suspicious suspension of a climate scientist, above:

Global Warming Industry Rocked by Polar Bear Fraud

Junk Science Unravels

The scientist who claimed that global warming threatens polar bears is under investigation. There's a hole in Earth's greenhouse. A cooler era lies ahead. That hiss is the hot air coming out of alarmists' balloon.

The global warming fraud is coming apart faster than the alarmists can repackage and rebrand their fairy tale. Their elaborately constructed yarn can't hold together much longer. There are just too many loose ends.

...all evidence to the contrary. Maybe these fools should get out of their cubicles and go outside.

Also note that the Faux News article points to an editorial comment, which uses the latest "scientific creation" from Roy Spencer as "proof" that there's no problem with AGW. The author also uses the old "it's solar variation" claim, as another excuse to ignore AGW, stating that we are due for another period with a quiet sun, such as happened during the Maunder Minimum. As the old saying goes, a lie repeated often enough becomes the truth...

E. Swanson

...all evidence to the contrary. Maybe these fools should get out of their cubicles and go outside.

It would be fun to cut the power going to their AC units on one of these 100-109f days and see if their still laughing at the end of the day.

"It would be fun to cut the power going to their AC units on one of these 100-109f days"

Actually, I have yet to use my AC this year. Or more accurately, I have yet to switch the heat pump to AC mode. The Pacific NW is barely up to normal after having been way below normal so far this year. Even the early corn is not ripe yet. No tomatoes yet. Raspberries did really well, and still going.

And they were still spilling water over Grand Coulee a week ago.

So you might want to check where "they" live before cutting the AC. There is a definite possibility they won't notice until they need heat in September.



Also perhaps check the tab water databases for all the latest data.

That was a wet winter.

I'm duly impressed.

Cold and wet here in New York State this year (except for the last two weeks which have been HOT).

I am tired of the "there is snow in my backyard so no AGW" argument, what were the deniers looking for ? A doomsday event overnight ?? People in cities have lost all skills of perception, they can't tell the difference between two species of fish let alone grasp the slow change in climate.
I get the chance to talk to the Aborigines every now and then and anywhere you go they keep telling you that they can no longer hunt or forage the way their ancestors taught them. That the changes are too massive and too rapid, but hey what do they know, they are stupid people who have no college education.
They don't even listen to the scientists, I don't think the others even stand a chance.

I get the chance to talk to the Aborigines every now and then and anywhere you go they keep telling you that they can no longer hunt or forage the way their ancestors taught them. That the changes are too massive and too rapid, but hey what do they know, they are stupid people who have no college education.

Yeah, and of course who will listen to the Inuit that say its definitely getting warmer, permafrost melting, a higher sea level with less ice?

One of the problems facing humankind is the lack of respect for change occurring over time. Our specie is so sped up by TV and other modern tech toys, if it can't happen overnight, then it must not be a problem. Yeah, and forget about that slow leak in the hull folks.

Yeah, and of course who will listen to the Inuit that say its definitely getting warmer, permafrost melting, a higher sea level with less ice?

I guess they'll all have to adapt and become pipeline welders and heavy equipment operators.

I'm not kidding, there are hundreds of jobs available for aboriginal people with the appropriate skills. They're there where they need to be, and the resource companies need workers. I remember an interview with an Inuit who was driving a 400-tonne truck in a diamond mine. She said, "This is much easier than hunting seals".

Of course, I get the Aboriginal People's Television Network on cable, and you probably don't, so I get a different picture than you. People saying, "I've never seen so many polar bears in my life!"

well of course they have never seen so many polar bears around - the bears are not where they usually are - out on the ice. Their usual haunts are not available so they are foraging where they can and garbage dumps and human settlements offer some pickings


One of the problems is that people call it 'Global Warming'. At the moment there is ice, a lot of ice, being melted and that is absorbing energy while holding back warming. Once the ice is gone THEN people will know what Global Warming really is.


Islamist militia 'shot Libya rebel Abdel Fattah Younes'

Libyan rebel commander Gen Abdel Fattah Younes was shot dead by a militia linked to his own side, a rebel minister has said.

Ali Tarhouni said Gen Younes was killed by members of the Obaida Ibn Jarrah Brigade, which is an Islamist group.

Gen Younes defected to the rebels in February after serving in the Libyan leadership since the 1969 coup which brought Col Muammar Gaddafi to power.

Meanwhile Nato says it bombed Libyan state TV transmitters overnight.

The Libyan Broadcasting Authority said three of its technicians were killed and 15 other people injured in the attack in the capital, Tripoli.

Libyan rebel soldiers killed Younis

Efforts by insurgents to topple Muammar Gaddafi are in disarray after a senior Libyan opposition figure admitted that rebel soldiers were responsible for the murder of their most senior army commander.

The transitional government's oil minister said that General Abdel Fatah Younis had been shot dead by Islamist-linked militia within the anti-Gaddafi forces, provoking fears of future unrest and instability among those fighting the old regime. The revelation will raise doubts over the wisdom of the British government's decision last week officially to recognise the rebel transitional government, declaring that it had proved its democratic credentials.

Only a day later, the bullet-riddled and burnt bodies of Younis and two of his aides were found dumped on the outskirts of Benghazi, the rebel capital.

Labour's former defence secretary Bob Ainsworth said that the murder and the identities of the killers were evidence that the government had not thought through its policy in Libya.

"One of the biggest risk factors in this was our lack of understanding of the people we were working with and I think that lack of understanding still stands," he said.

Bob Stewart, the Tory MP and former British United Nations Commander in Bosnia, said he feared the Libyan conflict would end with "a government we don't like and us getting the blame".

Grow Our Way Out

Posted 07/29/2011 06:54 PM ET

Energy Policy:
A new study documents a mini-boom caused by the development of the Marcellus Shale formations in Pennsylvania, creating jobs and revenue. Maybe the second rule of holes is that when you're in one, start drilling....

While Washington unravels over hitting the debt ceiling, fretting over a stagnant economy, a shortage of revenues and an abundance of spending, a quiet economic boom is occurring in Pennsylvania that shows much of our economic wounds are self-inflicted....

"Large-scale development of the Marcellus is reshaping the economic landscape of Pennsylvania," concluded authors Timothy J. Considine, Robert Watson and Seth Blumsack. They note that in 2010 alone, the Marcellus Shale natural gas industry triggered $11.2 billion in economic activity, generated $1.1 billion in state and local taxes, and supported nearly 140,000 jobs.

[bold added]

No link to the study in the article, so let's go find it:

The Economic Impacts of the
Pennsylvania Marcellus Shale Natural
Gas Play: An Update

May 24, 2010..... (a new study??)

The authors of this study acknowledge that the Marcellus Shale Gas Coalition provided the funding for this study.

This report was prepared as an account of work sponsored by the Marcellus Shale Coalition. Neither the Department of Energy and Mineral Engineering at Penn State nor the Marcellus Shale Coalition, nor any person acting on behalf thereof, makes any warranty or representation, express or implied, with respect to the accuracy, completeness or usefulness of the information contained in the report...

VI. Summary and Conclusions

....Looking beyond the planning horizon and employing some conservative assumptions about drilling and production profiles, the outlook for Marcellus production is remarkable. By 2015, the Pennsylvania Marcellus could be producing over 7 billion cubic feet per day, substantially exceeding all gas output from offshore federal waters.

Drill it baby!


Washington and Riyadh signed a tentative agreement on developing civilian nuclear technologies in 2008.


Furthermore, Saudi Arabia has also been pursuing nuclear cooperation agreements with South Korea, Japan, France and Russia.

There's a show on the National Geographic Channel now called Doomsday Preppers. Yes, it's what it sounds like.

No!! Does it really have to be like rock and roll-- it all gets commercialized and exploited in the end?!

What next?! Doomer Barbie and Ken? Buy their rolling solar eco-habitat for $14.95, including stealth rooftop garden! Or maybe Post Peak Perfume?

Do they come with the flip-flops made from old tires?

Maybe there's an opportunity here for our Todd, Ghung and a few others to get their fifteen minutes of fame!

I don't know about the other guys, but I wouldn't touch that sort of thing with a ten foot pole even if they paid me. There are too many risks ranging from a negative editorial bias to personal security.

Interestingly, I was seriously considering doing a day-long seminar at my place entitled Self-Reliance in a Tough World. I had prepared a program and even discussed it in my weekly Update newsletter. However, I eventually felt that security issues, among others, were too great. I still quite haven't given up and am working on a series for our local newspaper; assuming they'll be interested. I did write a gardening column for them for a couple of years - Garden For Joy. But, I don't have any time right now with the garden, firewood and house projects.

People interested in self-reliance and the psychology of survival might enjoy watching The Edge with Anthony Hopkins and Alec Baldwin.


"I don't know about the other guys, but I wouldn't touch that sort of thing with a ten foot pole even if they paid me."

Yeah, Todd, fame would be my worst mightmare realized. A good friend was on the first "Big Brother". She made her living tending bar and managing a restaurant prior to her fame. It totaly f'ed her life up. People she never met thought they knew her and were entitled to a piece of her life, all because they saw her on some dumb TV show. I work hard trying to avoid crazy people, so why go on a show watched by alot of crazy people.

My solitude is perhaps my most valued asset. It frees me up to do things....

Wow, I had that backwards. I was thinkin' they were making tires out of old flip-flops, NO?

I watched it, it's barely watchable. It continues the trend of painting people in negative light.

Yes, it made them all look a bit nuts. Don't know what was edited out, but it was funny that one family was so worried about their neighbors stealing their food that they had it delivered at night, under the cover of darkness. But they allowed the TV cameras there to film it. They appeared on national TV, along with their preps. So much for secrecy.

Nobody seemed to be worried about peak oil. Instead, they were worried about economic collapse due to massive inflation, nuclear war, and coronal mass ejection.

Couple of things I did find interesting... The show claimed that "prepping" has become so popular that some restaurant supply stores have shifted from supplying restaurants to supplying preppers.

After each family was featured, a panel of "experts" made suggestions on how they could improve their preps. Three out of four did not take the suggestions. It reminded me of something Greer has said about peak oil preparation: it's usually just an excuse to do what you wanted to do anyway.

They also never explained who the experts 'were' too.

The M.O. of those shows usually seems to be to hold up the participants, whatever their particular preoccupation might be, to as much scorn and ridicule as possible.

"...something Greer has said about peak oil preparation: it's usually just an excuse to do what you wanted to do anyway."

Yeah, Leanan, that's pretty much it. It's more about living in the now in a way that makes sense; not really 'preping' for some unknowable future, at least in my case. It's a bit like defensive driving....it's not that everyone else on the road is out to get you, it's just that sh@t happens. No sense in being part of the madness any more than you have to.

Just one show or a series?

Cuz the one show was "meh". "Our experts found problems with their plans" - duh.

With infinite resources a plan can have no problems. But who has infinite resources?

(and not a one of 'em was "Oh hey - the end of cheap oil is here")

When the World’s Population Took Off: The Springboard of the Neolithic Demographic Transition

During the economic transition from foraging to farming, the signal of a major demographic shift can be observed in cemetery data of world archaeological sequences. This signal is characterized by an abrupt increase in the proportion of juvenile skeletons and is interpreted as the signature of a major demographic shift in human history, known as the Neolithic Demographic Transition (NDT). This expresses an increase in the input into the age pyramids of the corresponding living populations with an estimated increase in the total fertility rate of two births per woman. The unprecedented demographic masses that the NDT rapidly brought into play make this one of the fundamental structural processes of human history.

Unfortunately this is behind Science Magazines paywall. But the invention of agriculture is where humans went wrong, as told mythologically by being driven from the garden of Eden.

But the invention of agriculture is where humans went wrong, as told mythologically by being driven from the garden of Eden.

I have doubts. I find preparing a nice meal of organically-grown vegetables and barbecued free-range chicken for dinner more enjoyable than having to sneak up behind a mammoth and stick a flint-tipped spear into it.

There's quite a lot of evidence for it, RMG.

As Merrill's excerpt notes, there was a great increase in childhood death. Therefore a great increase in disease and famine.

Other studies noted evidence of chronic malnutrition: reduced stature, weakened bones, etc. Yet other studies synthesising observation of modern neolithic cultures with archaeological evidence suggest that people only worked about 15 to 20 hours per week to meet all their needs, year-round. And the work was relatively light. Compare that to farming with its seasonal demands for 100-hour weeks during planting and harvest.

Sure, 10,000 years after the switch-over, a few people can farm in a relaxed way as you do, but the vast majority of the world's farmers, in Africa and Asia, are still putting in long hours of heavy labour.

And I bet RMG considers some of the best times of his life when he was out hunting and fishing--the primary occupations (along with other forms of foraging) of *hunter*-gatherers. So why the disparaging tone?

I can recall having a discussion with some anthropoly/agriculture types on a different blog. They concur. The amount of labour needed per unit of output goes way up as density increases. So this stuff was done because population pressure forced it. It wasn't a lifestyle change they would have made willingly.

I have seen only one tv documentary mention this. and only in passing by saying 'once the people's of Europe went to agriculture the increase in population meant going back was impossible.

I suspect it's a little more complicated than that. Population pressure didn't lead to agriculture for everyone. Rather, groups with higher population density were able to force out those with lower population density. That created an arms race of sorts, where the selective pressure was toward denser population. Even though that denser population came with a lot of very undesirable baggage.

Politically active Koch Brothers buy a pieces of Iowa:

Charles and David Koch, the billionaire brothers whose oil and chemical fortune has helped bankroll a free-market ideology in Washington, D.C., have expanded their financial and political footprint in Iowa, a Des Moines Register analysis has found.

Land records on file in 20 Iowa counties reveal that Koch Industries or its subsidiaries now own 18 commercial and industrial facilities valued at nearly $90 million, including four ethanol plants purchased earlier this year.


Koch uncloaked:


Charles and David Koch, the billionaire brothers whose oil and chemical fortune has helped bankroll a free-market ideology in Washington, D.C.,

I've always wanted to ask . . . If their free-market ideology ideas were so great then why do they have to endlessly subsidize them with millions of dollars?

India Iran payment crisis resolved


The Iranian Oil Ministry’s website, SHANA, quoted National Iranian Oil Co (NIOC) Managing Director Ahmad Qalebani as saying that “the problem of India payments for imported oil from Iran has been solved.”

Refiners like Mangalore Refinery and Petrochemicals Ltd (MRPL) have opened rupee accounts in the New Delhi branch of Union Bank of India, which will route euro payments to state—owned Turkiye Halk Bankasi (Halkbank) in Istanbul.

Halkbank will then transfer that money to the account of NIOC, sources involved in the process said here.

Important point to be noted is that it's a Euro-Rupee account.

LulzSec: Shetland teen charged over computer hacking claims

A man from the Shetland Islands has been charged with computer offences by police investigating hacking attacks.

Jake Davis, 18, was charged with unauthorised computer access and conspiracy to carry out a distributed denial of service attack on the Serious and Organised Crime Agency's website.

He faces five charges and is due to appear at Westminster Magistrates' Court on Monday, police said.

Police are investigating hacking groups known as Anonymous and LulzSec.

He was arrested on the island of Yell (population just under 1000).

There a quite a few stories suggesting it was a sting operation by Lulzsec and it's not the real 'Topiary'. The location, at the outer edges of nowhere, gives credence to that story; it's just the kind of thing that group would do, sending PC Plod out to an island in the middle of the sea for the lulz.

They seem very, very confident they have the real topiary. It's not the Swedish Daniel Akerman guy some claim as the voice is clearly not the same if you listen to them. Topiary's own twitter and the LulzSec twitter remain silent. I think the Shetland topiary perhaps tried to divert attention and setup the idea that someone in Scotland had stolen his identity (but he was elsewhere) because he may have suspected the police were closing in.

As he has been charged there must be what the police think is hard evidence against him. No telling how long he'd been monitored for before they went in. They have multiple voice samples of LulzSec's topiary from interviews he has given to media over Skype and now they have their suspect to compare. And they've charged him. Highly unlikely it's the wrong person I think.

It's the Met.

Finding something illegal in a computer vein to charge him with, rather than admitting they got taken, would be quite within the scope of their past performance.

Not sure the voice that has been heard before on Skype interviews would be something that could be classified as a Shetland accent, or even a Scottish one. Sounds London to me. Yet Jake Davis is reported as being a native of the islands.

I don't know, it smells wrong to me.

As a Scot myself I can believe the voice belongs to this Jake Davis. I think it's the right person. It just smells wrong because someone's tossing stink bombs. We'll see though.

The "ringleader" Sabu however remains free and tweeting.

He is probably one of the people that used the ddos software that anonymous released recently to help with attacking amazon and the like.

And I think it's likely they've caught the real topiary from everything I've read. That is, one of the organisers of the ddos attacks.

The charges against him for now relate specifically to the attack on the UK Serious and Oraganised Crime Agency (SOCA) website.

Jamaica's energy inertia

Explore coal option

LNG prices and supplies have been relatively volatile. Since the Japanese nuclear disaster, its price has doubled, and is now even less economical than coal. Coal prices, on the other hand, have remained reliable and predictable over many decades. In addition, the fact that a dollar of coal has consistently generated over four times more energy than a dollar of oil would explain why more than 40 per cent of the world's electricity is produced with coal.

It follows that for Jamaica to be sure of achieving competitively priced electricity on a sustainable basis, coal, with its proven record of supply and price stability, would be the most prudent choice. Even with anthracite, the highest-priced but most environmentally friendly type of coal, our electricity-generating costs could be lowered by 75 per cent.

This newspaper seems to be on a campaign to get some coal fired electricity plants built in Jamaica. I managed to get a comment in under the moniker P.O.B. after some guy using the moniker "Peak Oil Believer" seemed to have worn out his welcome ;-) I'm a little surprised that a comment pushing for energy conservation and efficiency, questioning the much vaunted price stability of their hallowed coal and slipping a little limits to growth meme in at the end, was actually allowed in their moderated comments. At any rate a small victory for an alternative viewpoint is a victory nonetheless. I wish I could continue using the moniker "Peak Oil Believer" since, I believe that it would lead inquiring minds to do an Internet search for the term Peak Oil and we all know where that rabbit hole can lead to.

Alan from the islands

edited to correct grammar