199 comments on Energy/Credit/Currency Crisis Open Thread
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GAIA Host Collective
Perhaps we see world wide competition for growth at what will prove a zenith - and we witness an interim phase before decline?
Investment, such as it has been in the energy industries, has neither called forth significant energy growth, except perhaps coal, nor a uniform economic (industrial) growth world-wide. China and Russia and India have 'grown' but alongside some very dodgy (consequent?) financial arithmetic in N America and Europe.
My guess is that on a world plateau we are seeing competition for growth,with winners and losers - beginning to approach zero sum. This 'competition for growth' phase anticipates any overall decline, and will see fewer countries achieving growth, before the next phase of overall decline?
We ain't seen anything yet.
I think there is a lot of room for growth, at least world-wide. We can all be more like Japan, and Japan isn't optimal by any means.
The problem I have with stats like these is that $/kWh, or kWh/$ have not to my mind been shown to be constant across different sectors of the economy. They probably vary a lot for different activities. And dollars probably embody more than energy, although energy is probably a significant component.
To a large extent then, what we see on graphs like this will depend on what mix of economic activities are conducted domestically in each country, and what is imported. Japan, for instance, does not do a lot of primary energy extraction domestically.
Well, in the US, transportation is 28% of energy consumption, and in Japan it is only 23%, even though Japan make do with half the energy consumption per capita. There are similar figures for residential use, where 68% of US consumption is devoted to lightning or area heating/cooling, and where ditto for commercial is 48%. These consumption patterns and differences are inherently domestic - it is not stuff you import or export where lots of energy has been sunk.
If anything, I think Japan's industry is quite heavy. Ship-building, automobiles, steel... Sure, they do not do a lot of energy extraction domestically, but such extraction's energy consumption hardly seems to show up in a total energy breakdown of US consumption either. (The main item may be oil refining at 16% of industry's 33% of total.) For Canada, though, I think you have a point, as they have unconventional oil and uranium ore and actually export a lot.
Thanks for your response. It's good to know that the effect is minor - I had wondered about the extent to which economies apparently becoming more energy efficient was due to "off-shoring" the more energy intensive parts of the economic chain.
Bingo!
China oil usage is up but how much of that is just transfer from economies like the US?
I cannot agree more.
I'll stay out of the discussion started by mistermarko regarding the importation of raw materials and export of finished products. But regarding Japan's lower energy use for transportation and heating/cooling, we must bear in mind the differences between Japan, which is a bit smaller than California and the US regarding size (and therefore travel distance) and climate. Using Kansas City and Tokyo as representative of the national average, Japan has a seasonal temp range of 50F (85-35) whereas the US has a range of 75F (90-15) Much more cooling and especially heating is required in the US continental climate vs. Japan's maritime climate.
We cannot all be more like Japan. Japan functions by importing commodities and exporting finished products. In a global economic downturn demand for such produce (which does not include food or energy) decreases, so one countries export gain is necessarily another's export loss. Japan will be keen to hold on to their share. Any other countries trying to emulate them will face a battle (so to speak).
Mistermarko,
Japan imports a lot of commodities from Australia, but that hasn't pushed down out GDP/kW. This graph shows that its possible to have a high GDP/capita without being an energy glutton. Europe and Japan have high energy prices and high efficiency standards. Australia, Canada and US have a lot of room for further improvement.
Then again we could try to become more like KSA, Russia, S Africa, by keeping energy prices low and "waste baby waste". Who are those poor sods below S Africa? ( Iraq?).
Mistermarko, the downturn is temporary, whatever you may believe. Think like this instead: When it is too expensive to buy extreme gas guzzlers, what do you do? Well, you probably pimp your small car more instead!
Growth is a function of technical progress and sound economic policies. Energy plays a role, of course, but there is a lot of room to rearrange current energy consumption to allow for added growth. We need not even force it - markets will take care of this by themselves. (Of course, it would help if the US slowly introduced European gas taxes, but I realize this won't happen.)
Jeppen, the first Great Depression was temporary - it ended with the Japanese invasion of China in 1937 and the German invasion of Poland in 1939. You say 'there is a lot of room to rearrange current energy consumption to allow for added growth.' This does not contradict my point, the economic problem is not rearranging current energy consumption, it is coping with falling energy consumption. And energy consumption is falling because energy has become too expensive. Economic growth could only take place in this situation if society and industry became more energy efficient and at the moment this is not happening enough. However, I agree with you that growth is (sometimes) a function of technical progress; but nothing short of molecular engineering will get us out of this predicament. On that note: www.myidea.net/ideas/node/326
Mistermarko, oil use per capita has actually fallen 10% since 1980, so we are already coping with falling energy consumption in some sense. During this time, average world GDP per capita has risen around 50% in constant prices.
Granted, the fossil oil per capita will decline faster after peak oil, but as I have argued in other comments, I believe we will cope quite well.
(Sorry, but I don't understand the relevance of your reference to molecular engineering.)
The Global Footprint Network gives the 2003 global biocapacity per capita at 1.8 hectares, the global footprint per capita at 2.2 hectares (the deficit representing resource depletion) ... Japan's 2003 footprint at 4.4 hectares, and biocapacity at 0.7.
By contrast the US 2003 footprint is estimated at 9.6 hectares, and biocapacity at 4.7 hectares.
So while Japan can't live on the current footprint of Japan's economy without importing most of its commodity or embedded resources per capita, on the GFN estimates (and the caution is needed that footprint estimates are intrinsically rough estimates), the US could do, and have resource to export, unfinished or embedded, on top.
I think very few folks will want to be like Japan once oil scarcity becomes an issue. Unless Japan finds a real way to transport goods by sail that economy is in a horrible position.
Coal did the job for some time, I believe.
Room for growth?
Well, maybe.
The slices might still depend on the size of the cake.
Japan hit some kind of 'growth' ceiling for over a decade (also involved dodgy financial arithmetic) but has nudged up somewhat recently. Is Japan's ability to engage with recent China something to do with this recent bit of growth? China is now Japan's biggest trading partner, overtaking USA. Also Japan's relationship with China seems to have turned on a sixpence (dime) this year - agreement on exploration and development of previously disputed gas offshore.
http://www.iht.com/articles/2008/06/18/asia/gas.php
Global competition and the ability (the race) to command resources?
(We used to talk about limiting factors analysis in process control but it gets difficult on the global scene, what with changing balances between manufacturing and services within GDP - also, how much competitive 'advantage' [sic] does USA get from its presumably larger allocation of GDP to non-discretionary petroleum transport kWh?)
The "growth ceiling" was mostly a drought in domestic investment in productive capacity, as Japanese industry shifted from roughly 90% domestic content of production to roughly 60%.
However that shift was largely outsourcing production stages that could be handled well in a labor intensive way in South East Asia and China ... the "outsourcing of material and energy" was the foundation of Japanese heavy industry for its initial post-WWII growth industries of steel and ship building, continuing into the second stage with motor vehicles.