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The lead today on peak oil producing famine and it's link:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/07/cnoil1...
make it abundantly clear to me at least that those who argue that the growing of biomass for fuel and current high food prices are disassociated are mistaken.
The reason for this is simple - prices are always determined by demand at the margin.
For instance, an an area with 100 people living there if there is no net change in the number then house prices are likely to be pretty static.
If one person extra a year wanted to move to the area, then house prices would shift upwards.
If two people wanted to move in then the rate would increase.
Exactly the same situation applies to food prices and ethanol, it has boosted demand and so has had a disproportionate affect on prices.
It is not operating alone as greater demand in India and China are also important, but it is grievously harming the world's poor.
I liked the quotefrom th article:
The whole article looks like they took it from TOD.
I liked that bit, too.
The thing is, with the energy resources at the base of the economy flat or declining, it is a zero sum game. Or worse.
Ahh, "Zero-sum game" a phrase I remember from 1970s writings, from Buckminster Fuller to those whacky space colony people. And that's what it is, too. The North Sea oil discoveries saved us from that, for 20 years. Now it's back to normal - a zero-sum game.
'The world is looking like the 17th century under the mercantilism when countries saw economics as a zero-sum game. They exported as much as they could to get gold, and erected enormous [trade] barriers.'
This is nothing but a return to nationalisim...which I have been predicting for some years. Nationalisim and trade barriers have led to many wars. Now, with peak everything in our faces, the odds of wars caused by trade barriers are sharply increased. Empires have used wars to pry open and exploit foreign markets forever.
Nationalism and trade barriers will arise again, no doubt, and possibly new empires. But with less and less energy from "fossil" sources, the damage that can be done will decrease and the size of empires will shrink back. Is that the best we can come up with-- less worse? Are human beings any smarter than yeast -- or is the human race itself fundamentally a zero-sum game?
Looks like we need a new paradigm! Cascading Empires has led us to where we are now, but previous empires were based on unrenewable resources -- first on forests, then coal, now oil -- all "fossil" fuels compared to the lifetime of human beings. (Trees can be planted, of course, but forests cannot be renewed with the relentless pressure applied by human civilization).
The Oil Drum frequently has well-thought out posts that point to the possibility of a less dismal future, but it seems so hard to translate thought into action.
"...but it seems so hard to translate thought into action" which is why many of us are not counting on some governement entity to save the day. Although it might futile, the three other families on my rural road have taken indivdual action and have discussed what we have to do as a group when TSHTF. It's far, far from perfect. However, it is "something" and far better than waiting.
Todd
The same thing is happening among my neighbors.
Dmitri Orlov describes something similar during the breakdown of the Soviet Union--solutions springing from the bottom, rather than imposed from the top.
Look at this cool site the State of Minnesota put together to help people plan for disasters. It lists disaster by type and helps you put together survival kits.
http://www.codeready.org/getinformed.cfm
I saw Matt Simmons speak before the MN Legislature. One point that he made was that we don't really know the minimum operating level of our fuel system. In a panic situation it could go dry very quickly. That has prompted me to start a long term food storage plan.
Dried foods in combination with a water purification system are ideal in many ways. TVP (Textured Vegetable Protein,) if stored correctly, has a shelf life of dozens of years, and in my opinion, isn't all that bad. I keep a large supply of it on hand and use in my day to day cooking. If you use this stuff in Hamburger Helper or similar, you don't notice as much that you're not using real ground beef but a vegetable protein.
~Durandal (http://www.wtdwtshtf.com)
According to Tainter, the top will be cut off from the bottom due to collapse of the complex interactions of empire. Solutions arising from the bottom historically are pretty brutal -- that would appear to be the case in the Former Soviet Union -- though the only thing I know about that is what I read. The 13th - 15th centuries in Europe seem to have been characterized by the kind of banditry we associate with failure of central governments.
The population of North America supposedly lived in a peaceful Eden, undisturbed for millennia, until the Europeans arrived. Seems unlikely. Is something like that actually possible?
I forsee interesting challenges ahead.
There needs to be both. Survival efforts in the FSU were just that, and many didn't. You have better models in Cuba and Venezuela. Whatever complaints you might have about these gov'ts, they have both have tried hard to prevent the worst. The complaints against Cuba are that it hasn't succeeded in providing much more that a minimum material existence. But its accomplishments in health and education are considerable.
A hostile gov't will defeat the efforts of even the most skillful survivalists -- if nothing else, they'll tax and repossess your little tract in the woods. But getting together with neighbors is certainly a very good idea no matter what.
While I need to brush up on my understanding of the characteristics of mercantilism, I don't think a return to nationalism and a return to mercantilism are the same thing. The idea that there is underway a shift in thinking to a notion that 'economics [is] a zero-sum game' is very interesting. This has not been the line used to quell dissatisfaction among the unwashed. It appears to me as the antithesis of the ruling dogma (whatever ideas some or all rulers have kept close to their hearts) and as such represents a shift with revolutionary potential. If I see your wealth as a guarantee of my poverty, then I may undertake a different course of action from that I would probably accept if instead I see you as an example to follow.
Mercantilism was, as I recall, born of an era, in which privilege was historically supported by the idea of divine right. Today, privilege is supported by a regime of property rights, among other things. Will anything be sacred if the prevailing wisdom shifts to the idea that economics is a zero-sum game?
I agree. And the system of private property rights is justified to the masses by the promise of economic growth for everyone (even if some get a LOT more economic growth than others...) So what incentive do people have to stick with this system if we only can look forward to declining standards of living and attacks on our existing wealth so as to maintain economic growth for the powerful?
Are economic direct democracy (workplace councils) and political direct democracy possible outcomes of peak oil and the dilemma between clinging to the old system of imperialism, resource wars, exploitation, etc., and taking direct (and often local) power over the resources that we control (instead of sending our taxes off to the vampire-like Maloch that is the corporate welfare state and its ethanol/automobile-philia subsidies) to instead create a sustainable and wealthy "eco-technic" society for all?
Your outlook is very 18th century. Do you want to tell the masses they should have no rights on their property?
In times of chaos and scarcity, mankind has always fallen into brigandage. The post peak oil world will be no different. First the current illusion of control and 'authority'(i.e. police protection) will fall away. When it becomes obvious to the less law abiding types, as they are able to 'get away with' more and more, the developed world will once again be subject to brigands. Most of the less developed world has never been without them. Nearly all of our major cities already have them in poorer areas.
http://en.wikipedia.org/wiki/Brigandage
Before "Judge Dredd" was ever a movie, it was a comic strip in the British magazine 2000 A.D. The Dredd strips were great - they were about a hypothetical future, not better, not worse, just different. Crowded, so a lot of people were housed in huge buildings, like Twin Towers big, and of course these blocks would have "block wars". And people'd do things to try to feel like they mattered, like Chopper did, first as a notorious graffitti artist then as a hoverboard champ. It was off to the juve-cubes for him for a while! Judges were human too, although Dredd was a pretty hard case. Fascinating stuff, and I doubt any but a few of us hardcore-ex-fans remember those strips now. One of the topics touched on was that there'd be "wreckers" who'd take some old vehicle(s) and wreck 'em at some pinch point in the road out at the edge of the city, and then plunder those stopped by the wreck. And the Judges would go in and mop them up, but it was not a problem that would go away, merely be controlled to some degree.
This was all written/drawn about in the 1980s.
As Matt Simmons said, Jim Kunstler may have been an optimist
I don't think Jim realized how right he was going to be. Basically, I don't see how the US could have been more poorly prepared for expensive food & energy.
We are at the end of decades of massive debt financed “investment” in consumption in the US, especially “investment” in a massive suburban infrastructure which is dependent on an ever expanding supply of cheap energy.
In my opinion, oil prices are caught in a tug of war between slowing demand (at least in some areas) and declining net oil exports. I do think that it is a mistake to overestimate the possible decline in demand. Consider the Great Depression. Oil consumption worldwide was significantly higher in 1939 than in 1929, partly because millions of people wanted to drive a car for the first time. The key difference between now and then is that today billions of people want to drive a car for the first time.
On the supply side, there is continuing evidence that the annual decline rate in net oil exports by the top five net oil exporters is accelerating. Russia, for the first time in years, is currently reporting a monthly year over year decline in crude oil production, after a period of essentially flat production since October, 2006, and domestic petroleum consumption is exploding.
Meanwhile, the Yerginites are offering the worst possible advice at the worst possible time--basically "Party On Dude!"
I think we're starting to see exposed the fallacy of projected demand curves that continue to proceed linearly or exponentially upward without regard to a projected flatening or downturn of the supply curve. Anyone that has taken Econ 101 should have been able to see through that fallacy.
This does not mean that the decline of demand to adjust of flat or declining supplies eliminates any problem. It just means that less oil equals less oil. We ARE going to have to transition to an economy that uses progressively less oil, and that is going to present a multitude of problems for a multitude of people.
That's why I am always talking about declining refinery utilization in importing countries. IMO, it is not if, but when, refineries in importing countries start shutting down.
As you know, there are two parts to demand--being able and being willing to buy. That is also true of net exporters. They have to be able and willing to export. So, price--for the time being--is where able and willing buyers meet able and willing net oil exporters.
I usually talk about a hypothetical geometric progression in gasoline prices, but we have basically seen a geometric progression in oil prices since early 1999 to between $80 and $100 currently:
$10, $20, $40, $80. . . $160, $320, $640. . . .
Currently, we are between the third and fourth doubling.
As we have discussed, one other aspect is the perceived quality of the buyer, i.e., what things of value does the buyer have to offer the net oil exporter?
I believe it is more accurate to see the $10 price as an anomaly. We are then currently between the 2nd and 3rd doubling from the 'historic average'.
By the way, thanks for recently providing the link to http://www.upstreamonline.com/market_data/?id=markets_crude
Just so that I am sure, can you verify that the prices indicated for the one week, four week, etc., periods are average prices? It might seem silly to ask this, but I have been burnt by my misunderstanding of data in the past (i.e. what I thought was the average price was in fact the hightest price during a given period.)
Thanks.
Of course, the Economist Magazine in 1999 suggested that a long term price of $5 was quite likely.
Regarding Upstream, someone else found it before me, and I don't know about the average data.
It certainly is worth reminding people how wrong the Economist and, probably, the majority of economists were.
I wonder if you or someone else can direct me to information regarding the disposition by country (or region) of the oils listed on the chart: Brent Blend, Tapis, Louisana Sweet, Ural, Minas, etc..
http://www.prime-tass.com/news/show.asp?topicid=65&id=433364
Interviews & Opinions
OPINION: Big picture Russia: Oil production & taxes
Contributed by Chris Weafer, chief strategist at UralSib
Increasing threat to production is likely to force tax concessions
In exchange it looks like it's time the U.S. export only value-added products such as corn chips, wheat thins and cheezy puffs.
It especially illustrates the phenomenon of substitution. As the supply commodity A becomes more scarce and rises in price, the demand for A does go down, just as the law of supply and demand suggests. But some of that demand doesn't just go away, it searches for alternatives. If commodity B can work as a substitute, then the demand for B will go up, driving up its price.
Biofuels may be bad and wrong-headed for all sorts of reasons. But if they CAN be made to work as substitutes for motor fuels, at least in part, then they WILL be. Thus the diversion of agriculture from supplying food to supplying fuel, at least in part, with all the catastrophic consequences that implies.
I should also point out that this is the problem with projections that imply that we have hundreds of years of coal left. They forget that as the supply of oil and NG declines, there will inevitably be a major move toward CTL and coal gassification; this will drive up demand and depletion rates for coal substantially, and thus shorten the expected lifetime that remains for this resource.
We have seen this same phenomenon play out with many other resources as well. I can remember people being almost in a panic over the impending depletion of chromium in the 1960s and 1970s. We decided that we could do without shiny chrome-plated car bumpers, substituted plastic, and learned to live with less chromium. Of course, the petroleum feedstocks to make the plastics are peaking now, which means that we're going to have to come up with a different substitute. But what is left to work as a substitute? That is the ultimate problem we are facing: peak everything, the exhaustion of substitution possibilities. When there are no more substitution possibilities, then we are indeed left with nothing but demand destruction, and learning to live with less.
Only about 4% of oil use goes to making plastics, so we are unlikely to have a problem with that anytime soon, although that does not mean prices won't rise:
http://www.i-sis.org.uk/RFTPW.php
I've just come across this on a technology called JTEC, which could conceivably reduce costs of energy generation and stretch resources:
http://www.theregister.co.uk/2008/01/10/super_soaker_nasa_boffin_heat_en...
Super Soaker inventor touts solid state heat-2-leccy | The Register
It is basically a closed system where a heat source pushes hydrogen through a membrane to a lower temperature areas.
The efficiency should be up to 60%, way better than we do at the moment.
Good news for gas, coal, nuclear, and solar thermal in that order.
Not so good for solar PV and wind as it would make other sources more competitive but not help them.
Not that it will be available anytime soon, if it works at all.
There is an assumption that higher grain prices (floored by renewable fuels) is leading to or driving increased poverty or famine for much of the world. Correlation is not causation.
I would submit to people to check the reverse. That is, when there was enormous grain surplus over the last 25 years did world hunger go down? This clearly led to cheap food in the U.S. but did it impact world hunger?
I think if you check the past you will find that hunger and famine are much more tied to economic status, energy availability and functional society than to commodity prices. High energy prices are causing both high commodity prices and lower standard of living (hunger for some) more than the use of some grains for fuel.
It certainly went down in Bangladesh, Biafra, and other places that suffered mass death by starvation prior to the green revolution's spread to the third world. It certainly went down in rural India and China. However, it was not "grain surplus" that caused it. It was the green revolution that caused the grain surplus.
Food prices today are being driven up by much more than biofuels. The world is losing 1% of its topsoil per annum. Water is in increasingly short supply, and higher-yield crops require increased water. Energy prices, of course, have driven up the cost of production.
And then there's the small matter of the couple billion extra people we've added, courtesy of that same green revolution. Humans will expand to meet the available food supply. This causes perpetual demand-based upward pressures on food prices, at least until population overshoot causes a reduction in food supply and a corresponding destruction of demand.
I agree that the issue is more than price. I know I have read Scientific American articles talking about the importance of having adequate income distribution to purchase food, to prevent poverty.
At the same time, I don't think we can get too complacent. The poorer people are already spending a high proportion of their income on food. They aren't going to be able to spend a lot more.
Also, there were real famines in the 1960s. I think these are a real possibility again. Theoretically, if everyone cut back on meat, and if income were evenly distributed, this would not be a problem. But we don't live in an ideal world!
Point
Counter point
At TOD you do not have to go far. The real problem is lies above the knees and below the belly button. Rewards should be given for those that do not reproduce. I know - All people get to eat meat until they reproduce!
I sure remember times being rough in the 1970s in the US. We were undersized, and very thin, due to not enough food. I think nowadays children in our shape are regularly removed from the home and placed in foster care and into the Army etc ASAP - I loved the food in the Army. It was the first time in my life I'd had a really good diet.