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WT: Just read your paper-good work-I think everyone is waiting with baited breath for the projected numbers. On a related subject, one thing I never see on TOD is a comparison of GDP/oil consumption. I think it is informative for two reasons: 1. it shows how much GDP it is possible to squeeze out of a barrel of oil consumption 2. it implies which countries/economies will survive/thrive in an oil-deprived future. Having said this, I realize there are complicating factors such as overrealiance on coal consumption (China) but anyways here are some quick numbers from CIA Factbook (GDP-PPP/oil consumption-ignore # of zeros)
1. India 1699
2. China 1563
3. UK 1055
4. Germany 993
5. Italy 933
6. Japan 756
7. Russia 698
8. USA 630
9. Mexico 583
10.Canada 515
11.KSA 201
India is producing 8.4 dollars of wealth for every barrel consumed compared to KSA, 3.3 compared to Canada. I think this indicates that the future bidding war for declining exports is going to slam middle class consumers hard in Canada, USA and Japan. It appears that India, China, and some parts of Europe are well positioned for the bidding war.
I don't know if there is any way to do it, but it would be interesting to look at Essential, or non-discretionary, GDP relative to energy consumption. Of course, "essential" is a slippery concept. What is "essential" in the US is a luxury in most of the world.
But I have read, and it seems reasonable, that the majority of Americans live off the discretionary income of other Americans. As American consumers have to pay more for food and energy--and as their access to credit dries up--their discretionary spending will collapse.
One flaw: If my country is too poor to import any oil, and we have none to start with, our GDP-PPP/oil consumption number is going to be infinite. This doesn't mean we are well positioned for the bidding war-- it means we are out of it. And bidding wars for natural resources only work as long as the results of the market equal or better than the results that can be obtained by other means, in some famous German's phrase. In that regard, Chinese armies can walk everywhere in the Middle East. American armies will have to fly in on synfuel.
Ole: Good point-it depends how it plays out. In reality, globalization is about making the world more fun for wealthy Americans, wealthy Chinese, wealthy Indians. If the forces behind increased globalization can hold it together for a while, the wealthy in all these countries will bid against the working and middle class. Globalization wants the oil to flow towards the highest return (India and China)-other interests might work against this "free market globalization" drive.
These numbers are deceptive. China 'squeezes' most of its GDP out of coal.
Alan: To a certain extent. China consumes 24% more coal than the USA. The USA consumes 217% more oil than China. The USA economy is 28% larger (PPP).
Shouldn't that be 280% larger?
Last time I checked the Chinese GDP wasn't 10 trillion.
That being the case, do explain how 1 billion Chinese (and their PPP), who make less than 3000 USD on average, can be expected to outbid those that make 15 times as much on average?
Numbers alone wont matter (IF) there is mass starvation.
Party: Don't complain to me-complain to the CIA Factbook-your taxes pay to keep it updated, not mine.
I'm just pointing out how silly we at TOD can be sometimes.
TOD is great in that it attracts a myriad of people with different ides that all share some common ground 'peak oil'. It's really entertaining to see the various opinions (expressed as facts) that get thrown around. Yet the common denominator of all the 'doomerbation' talks centers on one thing: The USA will be screwed.
Yet magically, places like China will succeed.
The last time I checked, China can not even feed their own population anymore. One of the most common 'facts' expressed here is that in a PO world, the world will not be able to feed its people and 4+ billion will die. Yet this magically won't affect any of those countries that we deem 'better' than the USA.
The same goes for various economies. China and the USA are dependent upon each other. If one goes down, so does the other, as there isn't a consumer bloc large enough to 'absorb' the loss of 300 million happy consumers. Chinas own population doesn't make enough for them to sustain their current production, much less thrive. This also ignores the fact that we repeatedly state that economic growth is directly tied to oil consumption (this trend has vanished in the past 30 years), yet these same countries are expected to outperform the fat old USA, despite this dwindling resource.
Now this isn't an attack on you, BrianT. I'm merely expressing my bemusement at the whole doomer-train.
Excellent right on post PG. Plus china will need to use a significant amount of money to buy imported food (which would be much more expensive in this scenario.
I don't think any "doomer" think China will "succeed."
Beating us in a short-term bidding war for oil is does not mean they will avoid dieoff and other unpleasantness.
But there is a significant group that seems to think that the rich will take the main hit and therefore maybe a powerdown is not such a bad thing. Whereas a more realistic assessment is that the rich will be the least effected and the poor will go to hell.
Maybe so, but they ain't doomers.
To paraphrase from Fight Club, "the rich" need "the poor" to cook their meals, haul their trash, connect their calls, drive their ambulances, and guard them while they sleep.
"The rich" will feel this just as much as anyone else. It will just take longer for the effects to kick in.
By which time the poor will have starved to death after trashing what remained of their natural environments.
Removed
PartyGuy, you draw so much fire here because you keep misrepresenting what people say. "The doomers" have not said that "China will succeed." They say that all oil-dependent countries are screwed. If they tend to focus on the USA being screwed, it's because they're American.
To put it short: they're saying "Oh no, EVEN America is screwed!" not "Oh no, ONLY America is screwed!"
Party: Don't know why you label me a "doomer". I don't have a horse in this race-the numbers are what they are. If the numbers favor the USA, that is just as good. Reality doesn't care what you want or what I want. Flag waving only makes you money when you are selling something.
China can't feed its own population, nitwit??
China's growth in per capita meat, fish, fruit consumption has been greater than anywhere else in the history of the world. Check out historical stats at fao.org.
And think before you open your mouth in future.
10.21 trillion at purchasing power parity ("PPP"), which is of course an estimate. But oil is priced in actual currency, so China doesn't (yet) outbid others for oil, which may be why they use so much coal. However, a huge number of poor people can conceivably outbid a smaller number of richer people up to a point, because some uses for resources are of very high value, while others are not. For example, even fairly poor people will pay, in effect, several dollars per kWH to get their cell phone charged by the guy in their village who owns a couple of solar panels and a rack with some wires and plugs. You'd have to be quite rich to afford that rate for the far larger quantity of electricity required to air-condition the typical incompetently designed American or European building that's still a stifling hotbox even when it's only 65F/18C and cloudy outside.
PG--
I think if you look at per capita oil usage, it might explain why they will be able to outbid us. High cost oil doesn't affect individuals there nearly as much as it does here so a 5:1 income ratio may be insignificant if their per capita oil usage is 10:1 (merely numbers I am inventing--hey, I should work for the government or CERA). I would guess most of their oil usage goes into industry (at least until they become the car economy they are trying to achieve). They also have a tremendous number of dollars to use to buy oil right now (and into the foreseeable future) and can use those to outbid us. We, on the other hand, have a tremendous amount of debt which, when we stop getting access to additional debt, will make it very difficult to buy oil products.
I think if you look at per capita oil usage, it might explain why they will be able to outbid us.
Does any of this matter considering the fact that by 2020 not much oil will be exported anyway (according to WT's ELM)?
Yes, because it means we crash more quickly.
And 700 million Chinese that die form starvation wont matter at all.
just my opinion,, FWIW
The 700,000,000 Chinese will not sit idly as their children die from starvation
they may be killed as they invade neighboring countries seeking food and resources,,but I don't think they will starve to death
I don't know. They are quite used to it.
Being starved that is.
I wonder if the american is used to it.
One thing lacking in the equation is that it is not the singular chinese that will buy the oil, but china as a whole communist country.
Alan and Brian T,
Also, both China and India have substantial proportions of their populations that are still in the pre-fossil fuel village economy. Their actual cash income in the pre-industrialised areas is equivalent to the Village economies of Africa, Latin America and non-industrial parts of the middle east, places like rural Afganistan, the tribal areas of Pakistan, and North and South Yemen.
Brian T., I think this is a very relevant metric, and one that truly needs to be researched and documented. Because, I doubt many people want the economy to collapse to a village economy-the convulsions from that collapse would be the "die off".
The bottom end though would give us a figure of what has to be replaced with renewables to have a prosperous and healthy standard of living. The US and Canada right now use about 25 bbl/year per capita for a wasteful and unsustainable lifestyle. The Europeans are vey comfortable on about 12.5 bbl/year. And somewhere below that, but likely above the Indian or Chinese consumption is a figure where we can all prosper without killing the earth. And thats what we need to shoot for with solar, wind, hydroelectric and nuclear plants.
I also question "no growth" assumptions. We can have all the growth we want in areas that don't use non-renewable resources. How many houses can a person live in at once, how many pair of pants can I wear comfortably? There's already a level of diminishing utility, and we're past that in many areas in the OECD nations. But there's no limit to art or music or even financial analsis.
Bob Ebersole
I don't have correlations by country worked up yet, but I have found good GDP data to do it with, at the site of Angus Maddison, Professor Emeritus of Economics at Groningen University. The GDP numbers (from year 1 to 2003!) are in an Excel spreadsheet, and are all standardized to 1990 International Geary-Khamis dollars (???). It's easy to correlate the GDP figures with consumption numbers from BP's Statistical Review Workbook.
I've worked up four global correlations:
The oil/GDP correlation clearly shows the dogleg in 1980-83 when the world figured out how to do more with less.
The most interesting thing to me is how tight the correlation is between total energy use, GDP and population, as shown by the R-sqared values of the linear trendline. I'm pretty sure there's a message in there.
I also have a correlation graph at home that looks at population growth and per capita GDP, and it shows the same tight correlation since 1820. The implication seems to be that increasing per capita GDP (and by extension, per-capita energy use) is the driver behind population growth.
Yes, there is a message in there that many are afraid to see. But that doesn't mean the message is any less real or valid.
"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone
Paul - could you put *year* beside select data points on your graphs, and I'm interested mostly in the first. This must have been graphed before, anyone know sources of comparable graphs?
Here's a slightly more interesting graph of total energy vs. world GDP. You can follow along the years very easily because the rise in both energy and GDP in each series is monotonic.
You can see that before and after the inflection point of the Iran-Iraq war the correlations are very tight, but the slope changes dramatically. I show the calculated GDP energy intensity for each time period - the world made an impressive improvement, virtually doubling the energy efficiency over the four years from 1980 to 1983.
Can we do that again over the time period from Peak Oil until Peak Energy? How much of the available efficiency have we already extracted from the global system? There is without doubt a lot that can be done in the OECD, but the world-wide picture may not be quite so rosy.
BTW - my assumption is that since the GDP figures are given in constant 1990 dollars, inflationary effects have been factored out.
You could just as easily plot 'number of computers' compared to 'prosperity' and get similar graphs. Statistics are there for the statistician to manipulate to fit is case. Apparently even the MSM knows that the US gets more out of a barrel of oil now than we did back in 1970s. As that trend continues, oil will continue to 'decouple' from economic growth.
So fool you once, shame on the statisticians, fool you twice ... shame on the statisticians? That's not how that goes.
Should you take the time to study statistics, you could then make a comment about the above graphs, like:
"After doing a straight-line fit on a time series, you must check for autocorrelation in the residuals. Often, a time series is better estimated by an auto-regressive model (AR), a moving average model (MA), or an integrated model (ARIMA)."
Instead, you take potshots and then run away, all the while ignoring the one thing that might save you from getting bamboozled in the future: thinking. How's that strategy working out for you, by the way?
I have seen this graph for USA on various occasions, showing a decoupling of US GDP growth vs US total energy consumption:
Geary-Khamis method is explained at:
http://unstats.un.org/unsd/methods/icp/ipc7_htm.htm
I'm unsure whether inflatory effects (over time) were considered in the data aggregates used.