Temporary Recession or the End of Growth?

This is a guest post by Richard Heinberg. Richard is a Senior Fellow of the Post Carbon Institute and author of five books on resource depletion and societal responses to the energy problem. He can be found on the web at www.richardheinberg.com and www.postcarbon.org.

Everyone agrees: our economy is sick. The inescapable symptoms include declines in consumer spending and consumer confidence, together with a contraction of international trade and available credit. Add a collapse in real estate values and carnage in the automotive and airline industries and the picture looks grim indeed.

But why are both the U.S. economy and the larger global economy ailing? Among the mainstream media, world leaders, and America’s economists-in-chief (Treasury Secretary Geithner and Federal Reserve Chairman Bernanke) there is near-unanimity of opinion: these recent troubles are primarily due to a combination of bad real estate loans and poor regulation of financial derivatives.

This is the Conventional Diagnosis. If it is correct, then the treatment for our economic malady might logically include heavy doses of bailout money for beleaguered financial institutions, mortgage lenders, and car companies; better regulation of derivatives and futures markets; and stimulus programs to jumpstart consumer spending.

But what if this diagnosis is fundamentally flawed? The metaphor needs no belaboring: we all know that tragedy can result from a doctor’s misreading of symptoms, mistaking one disease for another.

Something similar holds for our national and global economic infirmity. If we don’t understand why the world’s industrial and financial metabolism is seizing up, we are unlikely to apply the right medicine and could end up making matters much worse than they would otherwise be.

To be sure: the Conventional Diagnosis is clearly at least partly right. The causal connections between subprime mortgage loans and the crises at Fannie Mae, Freddie Mac, and Lehman Brothers have been thoroughly explored and are well known. Clearly, over the past few years, speculative bubbles in real estate and the financial industry were blown up to colossal dimensions, and their bursting was inevitable. It is hard to disagree with the words of Australian Prime Minister Kevin Rudd, in his July 25 essay in the Sydney Morning Herald: “The roots of the crisis lie in the preceding decade of excess. In it the world enjoyed an extraordinary boom…. However, as we later learnt, the global boom was built in large part on a … house of cards. First, in many Western countries the boom was created on a pile of debt held by consumers, corporations and some governments. As the global financier George Soros put it: ‘For 25 years [the West] has been consuming more than we have been producing … living beyond our means.’” (1)

But is this as far as we need look to get to the root of the continuing global economic meltdown?
A case can be made that dire events having to do with real estate, the derivatives markets, and the auto and airline industries were themselves merely symptoms of an even deeper, systemic dysfunction that spells the end of economic growth as we have known it.

In short, I am suggesting an Alternative Diagnosis. This explanation for the economic crisis is not for the faint of heart because, if correct, it implies that the patient is far sicker than even the most pessimistic economists are telling us. But if it is correct, then by ignoring it we risk even greater peril.

Economic Growth, The Financial Crisis, and Peak Oil

For several years, a swelling subculture of commentators (which includes the present author) has been forecasting a financial crash, basing this prognosis on the assessment that global oil production was about to peak. (2) Our reasoning went like this:

Continual increases in population and consumption cannot continue forever on a finite planet. This is an axiomatic observation with which everyone familiar with the mathematics of compounded arithmetic growth must agree, even if they hedge their agreement with vague references to “substitutability” and “demographic transitions.” (3)

This axiomatic limit to growth means that the rapid expansion in both population and per-capita consumption of resources that has occurred over the past century or two must cease at some particular time. But when is this likely to occur?

The unfairly maligned Limits to Growth studies, published first in 1972 with periodic updates since, have attempted to answer the question with analysis of resource availability and depletion, and multiple scenarios for future population growth and consumption rates. The most pessimistic scenario in 1972 suggested an end of world economic growth around 2015. (4)

But there may be a simpler way of forecasting growth’s demise.

Energy is the ultimate enabler of growth (again, this is axiomatic: physics and biology both tell us that without energy nothing happens). Industrial expansion throughout the past two centuries has in every instance been based on increased energy consumption. (5) More specifically, industrialism has been inextricably tied to the availability and consumption of cheap energy from coal and oil (and more recently, natural gas). However, fossil fuels are by their very nature depleting, non-renewable resources. Therefore (according to the Peak Oil thesis), the eventual inability to continue increasing supplies of cheap fossil energy will likely lead to a cessation of economic growth in general, unless alternative energy sources and efficiency of energy use can be deployed rapidly and to a sufficient degree. (6)

Of the three conventional fossil fuels, oil is arguably the most economically vital, since it supplies 95 percent of all transport energy. Further, petroleum is the fuel with which we are likely to encounter supply problems soonest, because global petroleum discoveries have been declining for decades, and most oil producing countries are already seeing production declines. (7)

So, by this logic, the end of economic growth (as conventionally defined) is inevitable, and Peak Oil is the likely trigger.

Why would Peak Oil lead not just to problems for the transport industry, but a more general economic and financial crisis? During the past century growth has become institutionalized in the very sinews of our economic system. Every city and business wants to grow. This is understandable merely in terms of human nature: nearly everyone wants a competitive advantage over someone else, and growth provides the opportunity to achieve it. But there is also a financial survival motive at work: without growth, businesses and governments are unable to service their debt. And debt has become endemic to the industrial system. During the past couple of decades, the financial services industry has grown faster than any other sector of the American economy, even outpacing the rise in health care expenditures, accounting for a third of all growth in the U.S. economy. From 1990 to the present, the ratio of debt-to-GDP expanded from 165 percent to over 350 percent. In essence, the present welfare of the economy rests on debt, and the collateral for that debt consists of a wager that next year’s levels of production and consumption will be higher than this year’s.
Given that growth cannot continue on a finite planet, this wager, and its embodiment in the institutions of finance, can be said to constitute history’s greatest Ponzi scheme. We have justified present borrowing with the irrational belief that perpetual growth is possible, necessary, and inevitable. In effect we have borrowed from future generations so that we could gamble away their capital today.

Until recently, the Peak Oil argument has been framed as a forecast: the inevitable decline in world petroleum production, whenever it occurs, will kill growth. But here is where forecast becomes diagnosis: during the period from 2005 to 2008, energy stopped growing and oil prices rose to record levels. By July of 2008, the price of a barrel of oil was nudging close to $150—half again higher than any previous petroleum price in inflation-adjusted terms—and the global economy was beginning to topple. The auto and airline industries shuddered; ordinary consumers had trouble for buying gasoline for their commute to work while still paying their mortgages. Consumer spending began to decline. By September the economic crisis was also a financial crisis, as banks trembled and imploded. (8)

Given how much is at stake, it is important to evaluate the two diagnoses on the basis of facts, not preconceptions.

It is unnecessary to examine evidence supporting or refuting the Conventional Diagnosis, because its validity is not in doubt—as a partial explanation for what is occurring. The question is whether it is a sufficient explanation, and hence an adequate basis for designing a successful response.

What’s the evidence favoring the Alternative? A good place to begin is with a recent paper by economist James Hamilton of the University of California, San Diego, titled “Causes and Consequences of the Oil Shock of 2007-08,” which discusses oil prices and economic impacts with clarity, logic, and numbers, explaining how and why the economic crash is related to the oil price shock of 2008. (9)

Hamilton starts by citing previous studies showing a tight correlation between oil price spikes and recessions. On the basis of this correlation, every attentive economist should have forecast a steep recession for 2008. “Indeed,” writes Hamilton, “the relation could account for the entire downturn of 2007-08…. If one could have known in advance what happened to oil prices during 2007-08, and if one had used the historically estimated relation [between price rise and economic impact]… one would have been able to predict the level of real GDP for both of 2008:Q3 and 2008:Q4 quite accurately.”

Again, this is not to ignore the role of the financial and real estate sectors in the ongoing global economic meltdown. But in the Alternative Diagnosis the collapse of the housing and derivatives markets is seen as amplifying a signal ultimately emanating from a failure to increase the rate of supply of depleting resources. Hamilton again: “At a minimum it is clear that something other than housing deteriorated to turn slow growth into a recession. That something, in my mind, includes the collapse in automobile purchases, slowdown in overall consumption spending, and deteriorating consumer sentiment, in which the oil shock was indisputably a contributing factor.”

Moreover, Hamilton notes that there was “an interaction effect between the oil shock and the problems in housing.” That is, in many metropolitan areas, house prices in 2007 were still rising in the zip codes closest to urban centers but already falling fast in zip codes where commutes were long. (10)

Why Did the Oil Price Spike?

Those who espouse the Conventional Diagnosis for our ongoing economic collapse might agree that there was some element of causal correlation between the oil price spike and the recession, but they would deny that the price spike itself had anything to do with resource limits, because (they say) it was caused mostly by speculation in the oil futures market, and had little to do with fundamentals of supply and demand.

In this, the Conventional Diagnosis once again has some basis in reality. Speculation in oil futures during the period in question almost certainly helped drive oil prices higher than was justified by fundamentals. But why were investors buying oil futures? Was the mania for oil contracts just another bubble, like the dot.com stock frenzy of the late ’90s or the real estate boom of 2003 to 2006?

During the period from 2005 to mid-2008, demand for oil was growing, especially in China (which went from being self-sufficient in oil in 1995 to being the world’s second-foremost importer, after the U.S., by 2006). But the global supply of oil was essentially stagnant: monthly production figures for crude oil bounced around within a fairly narrow band between 72 and 75 million barrels per day. As prices rose, production figures barely budged in response. There was every indication that all oil producers were pumping flat-out: even the Saudis appeared to be rushing to capitalize on the price bonanza.

Thus a good argument can be made that speculation in oil futures was merely magnifying price moves that were inevitable on the basis of the fundamentals of supply and demand. James Hamilton (in his publication previously cited) puts it this way: “With hindsight, it is hard to deny that the price rose too high in July 2008, and that this miscalculation was influenced in part by the flow of investment dollars into commodity futures contracts. It is worth emphasizing, however, that the two key ingredients needed to make such a story coherent—a low price elasticity of demand, and the failure of physical production to increase—are the same key elements of a fundamentals-based explanation of the same phenomenon. I therefore conclude that these two factors, rather than speculation per se, should be construed as the primary cause of the oil shock of 2007-08.”

Aftermath of the Peak

There is also controversy over to what degree troubles in the automobile, trucking, and airline industries should be attributed to the oil price spike or the economic crash. Of course, if the Alternative Diagnosis is correct, the latter two events are causally related in any case. However, it may be helpful to review the situation.

Everyone knows that GM and Chrysler went bankrupt this year because U.S. car sales cratered. The current forecast is for sales of about 10.3 million vehicles in the U.S. for 2009, down from last year’s 13.2 million and 16.1 million in 2007. U.S. car sales have not been this low since the 1970s. Sales of light trucks, the most profitable vehicles, took the biggest hit during 2008, as fuel prices soared and car buyers avoided gas-guzzlers. It was at this point that the auto companies really began feeling the pain.

The airline industry’s ills are summarized in a recent GAO document: “After 2 years of profits, the U.S. passenger airline industry lost $4.3 billion in the first 3 quarters of 2008 [as jet fuel prices climbed]. Collectively, U.S. airlines reduced domestic capacity, as measured by the number of seats flown, by about 9 percent from the fourth quarter of 2007 to the fourth quarter of 2008…. To reduce capacity, airlines reduced the overall number of active aircraft in their fleets by 18 percent…. Airlines also collectively reduced their workforces by about 28,000, or nearly 7 percent, from the end of 2007 to the end of 2008…. The contraction of the U.S. airline industry in 2008 reduced airport revenues, passengers’ access to the national aviation system, and revenues for the Trust Fund.” (11)

For the trucking industry, fuel accounts for nearly 40 percent of total operational costs. In 2007, as diesel prices rose, carriers began losing money and added fuel price surcharges; meanwhile the volume of freight began falling. After July 2008, as oil prices crashed, tonnage continued to decline. Overall, the cumulative decrease in loads for flatbed, tanker, and dry vans ranged between 15 percent and 20 percent just in the period from June to December 2008. (12)

This last set of statistics raises a couple of questions crucial to understanding the Alternative Diagnosis: Why, if global oil production had just peaked, did petroleum prices fall in the last five months of 2008? And, if oil prices were a major factor in the economic crisis, why didn’t the economy begin to turn around after the prices softened?

Why Did Oil Prices Fall? And Why Didn’t Lower Oil Prices Lead to a Quick Recovery?

The Peak Oil thesis predicts that, as world oil production reaches its maximum level and begins to decline, the price of oil will rise dramatically. But it also forecasts a dramatic increase in the volatility of prices.

The argument goes as follows. As oil becomes scarce, its price will rise until it begins to undermine economic activity in general. Economic contraction will then result in substantially reduced demand for oil, which will in turn cause its price to fall temporarily. Then one of two things will happen: either (a) the economy will begin to recover, stoking renewed oil demand, leading again to high prices which will again undermine economic activity; or (b), if the economy does not quickly recover, petroleum production will gradually fall due to depletion until spare production capacity (created by lower demand) is wiped out, leading again to higher prices and even more economic contraction. In both cases, oil prices remain volatile and the economy contracts. (13)

This scenario corresponds very closely with the reality that is unfolding, though it remains to be seen whether situation (a) or (b) will ensue.

Over the past three years, oil prices rose and fell more dramatically than would have been the case if it had not been for widespread speculation in oil futures. Nevertheless, the general direction of prices—way up, then way down, then part-way back up—is entirely consistent with the Peak Oil thesis and the Alternative Diagnosis.

Why has the economy not quickly recovered, given that oil prices are now only half what they were in July 2008? Again, Peak Oil is not the only cause of the current economic crisis. Enormous bubbles in the real estate and finance sectors constituted accidents waiting to happen, and the implosion of those bubbles has created a serious credit crisis (as well as solvency and looming currency crises) that will likely take several years to resolve even if energy supplies don’t pose a problem.

But now the potential for renewed high oil prices acts as a ceiling for economic recovery. Whenever the economy does appear to show renewed signs of life (as has happened in May-July this year, with stock values rebounding and the general pace of economic contraction slowing somewhat), oil prices will take off again as oil speculators anticipate a recovery of demand. Indeed, oil prices have rebounded from $30 in January to nearly $70 currently, provoking widespread concern that high energy prices could nip recovery in the bud. (14)

A barrel of oil from newly developed sources costs in the neighborhood of $60 to produce, now that all of the cheaper prospects have been exploited: finding new oilfields today usually means drilling under miles of ocean water, or in politically unstable nations where equipment and personnel are at high risk. (15) So as soon as consumers demand more oil, the price will have to stay noticeably above that figure in order to provide the incentive for producers to drill.

Volatile oil prices hurt on the upside, but they also hurt on the downside. The oil price collapse of August-December 2008, plus the worsening credit crisis, caused a dramatic contraction in oil industry investment, leading to the cancellation of about $150 billion worth of new oil production projects—whose potential productive capacity will be required to offset declines in existing oilfields if world oil production is to remain stable. (16) This means that even if demand remains low, production capacity will almost certainly decline to meet those demand levels, causing oil prices to rise again in real terms at some point, perhaps two or three years from now. Volatile petroleum prices also hurt the development of alternative energy, as was shown during the past few months when falling oil prices led to financial troubles for ethanol manufacturers. (17)

One way or another, growth will be highly problematic if not unachievable.

Big Picture Diagnosis: Continuing the Trail of Logic

At this point in the discussion many readers will be wondering why alternative energy sources and efficiency measures cannot be deployed to solve the Peak Oil crisis. After all, as petroleum becomes more expensive, ethanol, biodiesel, and electric cars all start to look more attractive both to producers and consumers. Won’t the magic of the market intervene to render oil shortages irrelevant to future growth?

It is impossible in the context of this discussion to provide a detailed explanation of why the market probably cannot solve the Peak Oil problem. Such an explanation requires a discussion of energy evaluation criteria, and an analysis of many individual energy alternatives on the basis of those criteria. I have offered brief overviews of this subject previously and a much longer one is in press. (18)

My summary conclusions in this regard are as follows.

About 85 percent of our current energy is derived from three primary sources—oil, natural gas, and coal—that are non-renewable, whose price is likely to trend sharply higher over the next years and decades leading to severe shortages, and whose environmental impacts are unacceptable. While these sources historically have had very high economic value, we cannot rely on them in the future; indeed, the longer the transition to alternative energy sources is delayed, the more difficult that transition will be unless some practical mix of alternative energy systems can be identified that will have superior economic and environmental characteristics.

But identifying such a mix is harder than one might initially think. Each energy source has highly specific characteristics. In fact, it has been the characteristics of our present energy sources (principally oil, coal, and natural gas) that have enabled the building of an urbanized society with high mobility, large population, and high economic growth rates. Surveying the available alternative energy sources for criteria such as energy density, environmental impacts, reliance on depleting raw materials, intermittency versus constancy of supply, and the percentage of energy returned on the energy invested in energy production, none currently appears capable of perpetuating this kind of society.

Moreover, national energy systems are expensive and slow to develop. Energy efficiency likewise requires investment, and further incremental investments in efficiency tend to yield diminishing returns over time, since it is impossible to perform work with zero energy input. Where is there the will or ability to muster sufficient investment capital for deployment of alternative energy sources and efficiency measures on the scale needed?

While there are many successful alternative energy production installations around the world (ranging from small home-scale photovoltaic systems to large “farms” of three-megawatt wind turbines), there are very few modern industrial nations that now get the bulk of their energy from sources other than oil, coal, and natural gas. One example is Sweden, which obtains most of its energy from nuclear and hydropower. Another is Iceland, which benefits from unusually large domestic geothermal resources not found in most other countries. Even for these two nations, the situation is complex: the construction of the infrastructure for their power plants mostly relied on fossil fuels for the mining of the ores and raw materials, for materials processing, for transportation, for the manufacturing of components, for the mining of uranium, for construction energy, and so on. Thus a meaningful energy transition away from fossil fuels is still a matter of theory and wishful thinking, not reality.

My conclusion from a careful survey of energy alternatives, then, is that there is little likelihood that either conventional fossil fuels or alternative energy sources can be counted on to provide the amount and quality of energy that will be needed to sustain economic growth—or even current levels of economic activity—during the remainder of this century. (19)

But the problem extends beyond oil and other fossil fuels: the world’s fresh water resources are strained to the point that billions of people may soon find themselves with only precarious access to water for drinking and irrigation. Biodiversity is declining rapidly. We are losing 24 billion tons of topsoil each year to erosion. And many economically significant minerals—from antimony to zinc—are depleting quickly, requiring the mining of ever lower-grade ores in ever more remote locations. Thus the Peak Oil crisis is really just the leading edge of a broader Peak Everything dilemma.

In essence, humanity faces an entirely predictable peril: our population has been growing dramatically for the past 200 years (expanding from under one billion to nearly seven billion), while our per-capita consumption of resources has also grown. For any species, this is virtually the definition of biological success. And yet all of this has taken place in the context of a finite planet with fixed stores of non-renewable resources (fossil fuels and minerals), a limited ability to regenerate renewable resources (forests, fish, fresh water, and topsoil), and a limited ability to absorb industrial wastes (including carbon dioxide). If we step back and look at the industrial period from a broad historical perspective that is informed by an appreciation of ecological limits, it is hard to avoid the conclusion that we are today living at the end of a relatively brief pulse—a 200-year rapid expansionary phase enabled by a temporary energy subsidy (in the form of cheap fossil fuels) that will inevitably be followed by an even more rapid and dramatic contraction as those fuels deplete.

The winding down of this historic growth-contraction pulse doesn’t necessarily mean the end of the world, but it does mean the end of a certain kind of economy. One way or another, humanity must return to a more normal pattern of existence characterized by reliance on immediate solar income (via crops, wind, or the direct conversion of sunlight to electricity) rather than stored ancient sunlight.

This is not to say that the remainder of the 21st century must consist of a collapse of industrialism, a die-off of most of the human population, and a return by the survivors to a way of life essentially identical to that of 16th century peasants or indigenous hunter-gatherers. It is possible instead to imagine acceptable and even inviting ways in which humanity could adapt to ecological limits while further developing cultural richness, scientific understanding, and quality of life (more of this below).

But however it is negotiated, the transition will spell an end to economic growth in the conventional sense. And that transition appears to have begun.

How Do We Know Which Diagnosis Is Correct?

If the patient is an individual human and the cause of distress is uncertain, more diagnostic tests can be prescribed. But to what sorts of blood tests, x-rays, and CAT scans can we subject the national or global economy?

In a sense, the tests have already been done. During the past few decades thousands of scientific surveys of natural resources, biodiversity, and ecosystems have showed increasing rates of depletion and decline. (20) The continuing increase in human population, pollution, and consumption are likewise well documented. This information formed the basis for the Limits to Growth studies, previously mentioned, which use computer modeling to show how current trends are likely to play out—and most resulting scenarios show them leading to an end of economic growth and a collapse of industrial output some time in the early 21st century.

Why are the results of such diagnostic tests not universally accepted as a challenge to expectations of continued growth? Primarily because their conclusion runs counter to the beliefs and proclamations of most economists, who maintain that there are no practical limits to growth. They deny that resource constraints provide an eventual cap on production and consumption. And so their diagnostic efforts tend to ignore environmental factors in favor of easily measured internal features of the human economy such as money supply, consumer confidence, interest rates, and price indices.

Ecologist Charles Hall, among many others, has argued that the discipline of economics, as currently practiced, does not constitute a science, since it proceeds primarily on the basis of correlative logic rather than through the building of knowledge by a continuous, rigorous process of proposing and testing hypotheses. (21) While economics uses complex terminology and mathematics, as science does, its basic assertions about the world—such as the principle of infinite substitutability, which holds that for any resource that becomes scarce, the market will find a substitute—are not subjected to careful experimental examination. (It is worth noting that Hall and others have made the effort to lay the conceptual foundations for a new economics based on scientific principles and methods, which they call “biophysical economics.” (22)

Moreover, mainstream economists failed on the whole to foresee the current crash. There was no consistent or concerted effort on the part of Secretaries of the Treasury, Federal Reserve Chairmen, or “Nobel” prize-winning economists to warn policy makers or the general public that, sometime in the early 21st century, the global economy would begin to come apart at the seams. (23) One might think that this predictive failure—the inability to foresee so historically significant an event as the rapid contraction of nearly the entire global economy, entailing the failure of some of the world’s largest banks and manufacturing companies—would cause mainstream economists to stop and re-examine their fundamental premises. But there is little evidence to suggest that this is occurring.

At the risk of repetition: physical scientists from several disciplines have indeed foreseen an end to economic growth in the early 21st century, and have warned policy makers and the general public on many occasions.

Whom should we believe?

The specifics of the Alternative Diagnosis are falsifiable. If economic activity were to rebound above 2007 levels, or if oil production were to rise above the July 2008 high-water mark, then the attribution of the current economic crisis to resource-tied limits to growth may be considered at least partly disproven. However, even if these things were to occur, the underlying reasoning behind the Alternative Diagnosis might still be correct. If the world oil production peak is delayed until, let us say, 2015 or 2020, and if another—this time bottomless—global economic crash results then, the ultimate outcome will be essentially the same. But if, meanwhile, the Alternative Diagnosis were to be taken seriously and acted upon, the consequences of doing so would be beneficial: a decade would have been spent preparing for the event.

Could the Alternative Diagnosis be altogether wrong? That is, might conventional economists be right in thinking that growth can continue forever? It is often said that anything is possible, but some things are clearly much more possible than others. The perpetual growth of human population and consumption within the confines of a finite planet seems like a very long shot indeed, especially since warning signs are everywhere apparent that ecological limits are already being reached and surpassed. (24)

What Not to Do: Prescribe Punishingly Expensive Placebos

If the physical scientists who warn about limits to growth are right, confronting the global economic meltdown implies far more than merely getting the banks and mortgage lenders back on their feet. Indeed, in that case we face a fundamental change in our economy as significant as the advent of the industrial revolution. We are at a historic inflection point—the ending of decades of expansion and the beginning of an inevitable period of contraction that will continue until humanity is once again living within the limits of Earth’s regenerative systems.

But there are few signs that policy makers understand any of this. Their thinking appears to be shaped primarily by mainstream economists’ assurances that growth can and must continue into the indefinite future, and that the economic contraction the world is currently experiencing is only temporary--a problem that can and must be solved.

Still, the problem is not a minor one in the eyes of economists and policy makers. Consider the gargantuan size of the Treasury and Federal Reserve bailouts and stimulus packages that have been deployed in the possibly futile attempt to end contraction and restart growth. According to the special inspector general of the U.S. government’s Troubled Asset Relief Program (TARP), in remarks submitted to the House Committee on Oversight and Government Reform on July 21, $23.7 trillion have been committed in “total potential federal government support.” This is expensive medicine indeed. It takes a moment to even begin to comprehend the enormity of the figure. It represents about half of annual world GDP, and is over three times the total amount spent by the U.S. government, in inflation-adjusted dollars, on all wars combined, from 1776 to the present. It is nearly fifty times the cost of the New Deal.

Other nations, including Britain, China, and Germany have committed to paying for stimulus packages and bailouts that, while much smaller in absolute terms, represent an impressive (or should we say frightful?) share of national GDP.

If the Alternative Diagnosis is valid, none of this will work in the end, because existing financial institutions—with their basis in debt and interest and their requirements for constant expansion—cannot be made to function in a context where energy and resource constraints impose effective caps on manufacturing and transport.

Are the bailouts and stimulus packages working? Much evidence suggests that they are not, except in limited ways. In the U.S., unemployment continues to increase, while real estate values continue to fall. And most of the reputed “green shoots” in the economy so far sighted amount merely to an arguably temporary decline in the rate of contraction. For example, the home price index released July 28 of this year showed that in May, seasonally adjusted prices fell just 0.16 percent from the previous month. That represents an annual rate of decline of a little under 2 percent, which is a substantial improvement over the annualized rate of more than 20 percent that prevailed from September 2008 through March of 2009. Many commentators seized upon this news as a sign of an imminent turnaround. Nevertheless, new home sales are down from 1.4 million per year in 2005 to 350,000 per year today, and house prices are down 50 percent from the bubble peak and still declining in most places. Moreover, manufacturing is still shrinking, small businesses are in trouble, there are still significant danger signs on the horizon, including a new round of mortgage resets, a likely dive in commercial real estate values, and the looming reality that toxic assets at the center of the banking crisis have yet to be dealt with. (25)

President Obama has made the argument that bailouts are justified to stabilize the system long enough so that leaders can make fundamental changes to institutions and regulations, enabling the economy to then go forward healthier and more immune to similar crises in the future. But there is little to suggest that the kinds of systemic changes that are actually needed (ones that would enable the economy to function during a prolonged period of contraction) are under way or even contemplated. Meanwhile, as growth-based institutions are temporarily propped up, the ultimate scale of the damage is likely only to increase: when the inevitable collapse of those institutions does come, the consequences will likely be even worse because so much capital will have been squandered in attempting to salvage them.

In using up non-renewable resources like metals, minerals, and fossil fuels, we have stolen from future generations. Now in effect we are stealing from those generations the financial wherewithal that could have been used to build a bridge to a sustainable economy. The construction of a renewable energy infrastructure (including not only generating capacity, but distribution and storage systems, as well as post-petroleum transport and agriculture systems) will require enormous investments and decades of work. Where will the investment capital come from if governments are already buried in debt? If we have committed nearly $24 trillion to propping up an old economy with no real survival prospects, what’s left with which to finance the new one?

If the current prescription for our economic malady is wrong-headed, the same is true of many proposed cures for our energy problems. According to the Conventional Diagnosis, today’s high oil prices are due to speculation; the cure must therefore lie in the tighter regulation of oil futures trading (which may be a good idea, though it doesn’t get to the heart of the problem), while providing more opportunities to oil companies to explore for domestic oil (even though the likely production rates from currently off-limits reserves would be relatively paltry, and would have a negligible effect on oil prices). In fact, though, investing further in fossil fuel energy systems (including “clean coal” technology) will yield declining returns, given that the highest quality resources have already been used up; meanwhile, doing so takes investment capital away from the development of renewable energy, which we will have to rely on increasingly as fossil fuels deplete. (26)

What is required but is still utterly lacking is a fundamental recognition that circumstances have changed: what worked decades ago will not work now.

What To Do: Adapt to the New Reality

If the Alternative Diagnosis is correct, there will be no easy fix for the current economic breakdown. Some illnesses are not curable; they require that we simply adapt and make the best of our new situation.

If humanity has indeed embarked upon the contraction phase of the industrial pulse, we should assume that ahead of us lie much lower average income levels (for nearly everyone in the wealthy nations, and for high wage earners in poorer nations); different employment opportunities (fewer jobs in sales, marketing, and finance; more in basic production); and more costly energy, transport, and food. Further, we should assume that key aspects of our economic system that are inextricably tied to the need for future growth will cease to work in this new context.

What can we do to adapt most rapidly and successfully?

Rather than attempting to prop up banks and insurance companies with trillions in bailouts, it would probably be better simply to let them fail, however nasty the short-term consequences, since they will fail anyway sooner or later. The sooner they are replaced with institutions that serve essential functions within a contracting economy, the better off we will all be. (27)

Meanwhile the thought-leaders in society, especially the President, must begin breaking the news—in understandable and measured ways—that growth isn’t returning and that the world has entered a new and unprecedented economic phase, but that we can all survive and thrive in this challenging transitional period if we apply ourselves and work together. At the heart of this general re-education must be a public and institutional acknowledgment of three basic rules of sustainability: growth in population cannot be sustained; the ongoing extraction of non-renewable resources cannot be sustained; and the use of renewable resources is sustainable only if it proceeds at rates below those of natural replenishment.

Without cheap energy, global trade cannot increase. This doesn’t mean that trade will disappear, only that economic incentives will inexorably shift as transport costs rise, favoring local production for local consumption. But this may be a nice way of putting it: if and when fuel shortages arise, fragile globe-spanning systems of provisioning could be disrupted, with dire effects for consumers cut off from sources of necessary products. Thus a high priority must be placed on the building of community resilience through the preferential local sourcing of necessities and the maintenance of larger regional inventories—especially of food and fuel. (28)

It currently takes an average of 8.5 calories of energy from oil and natural gas to produce each calorie of food energy. Without cheap fuel for agriculture, farm production will plummet and farmers will go bankrupt—unless proactive efforts are undertaken to reform agriculture to reduce its reliance on fossil fuels. (29)

Obviously, alternative energy sources and energy efficiency strategies must be high priorities, and must be subjects of intensive research using a carefully chosen spectrum of criteria. The best candidates will have to be funded robustly even while fossil fuels are still relatively cheap: the build-out time for the renewable energy infrastructure will inevitably be measured in decades and so we must begin the process now rather than waiting for market forces to lead the way.

In the face of credit and (potential) currency crises, new ways of financing such projects will be needed. Given that our current monetary and financial systems are founded on the need for growth, we will require new ways of creating money and new ways of issuing credit. Considerable thought has gone into finding solutions to this problem, and some communities are already experimenting with local capital co-ops, alternative currencies, and no-interest banks. (30)

With oil becoming increasingly expensive in real terms, we will need more efficient ways of getting people and goods around. Our first priority in this regard must be to reduce the need for transport with better urban planning and re-localized production systems. But where transport is needed, rail and light rail will probably be preferable to cars and trucks. (31)

We will also need a revolution in the built environment to minimize the requirement for heating, cooling, and artificial lighting in all our homes and public buildings. This revolution is already under way, but is currently moving far too slowly due to the inertia of established interests in the construction industry. (32)

These projects will need more than local credit and money; they will also require skilled workers. There will be a call not just for installers of solar panels and home insulation: millions of new food producers and builders of low-energy infrastructure will be needed as well. A broad range of new opportunities could open up to replace vanishing jobs in marketing and finance—if there is cheap training available at local community colleges.

It is worth noting that the $23.7 trillion recently committed for U.S. bailouts and loan guarantees represents about $80,000 for each man, woman, and child in America. A level of investment even a substantial fraction that size could pay for all needed job training while ensuring universal provision of basic necessities during the transition. What would we be getting for our money? A collective sense that, in a time of crisis, no one is being left behind. Without the feeling of cooperative buy-in that such a safety net would help engender, similar to what was achieved with the New Deal but on an even larger scale, economic contraction could devolve into a horrific fight over the scraps of the waning industrial period.

However contentious, the population question must be addressed. All problems that have to do with resources are harder to solve when there are more people needing those resources. The U.S. must encourage smaller families and must establish an immigration policy consistent with a no-growth population target. This has foreign policy implications: we must help other nations succeed with their own economic transitions so that their citizens do not have to emigrate to survive. (33)
If economic growth ceases to be an achievable goal, society will have to find better ways of measuring success. Economists must shift from assessing well-being with the blunt instrument of GDP, and begin paying more attention to indices of human and social capital in areas such as education, health, and cultural achievements. This redefinition of growth and progress has already begun in some quarters, but for the most part has yet to be taken up by governments. (34)

A case can be made that after all this is done the end result will be a more satisfying way of life for the vast majority of citizens—offering more of a sense of community, more of a connection with the natural world, more satisfying work, and a healthier environment. Studies have repeatedly shown that higher levels of consumption do not translate to elevated levels of satisfaction with life. (35) This means that if “progress” can be thought of in terms of happiness, rather than a constantly accelerating process of extracting raw materials and turning them into products that themselves quickly become waste, then progress can certainly continue. In any case, “selling” this enormous and unprecedented project to the general public will require emphasizing its benefits. Several organizations are already exploring the messaging and public relations aspects of the transition. (36) But those in charge need to understand that looking on the bright side doesn’t mean promising what can’t be delivered—such as a return to the days of growth and thoughtless consumption.

Can We? Will We?

It is important to state the implications of all this as plainly as possible. If the Alternative Diagnosis is correct, there will be no full economic “recovery”—not this year, or the next, or five or ten years from now. There may be temporary rebounds that take us back to some fraction of peak economic activity, but these will be only brief respites.

We have entered a new economic era in which the former rules no longer apply. Low interest rates and government spending no longer translate to incentives for borrowing and job production. Cheap energy won’t appear just because there is demand for it. Substitutes for essential resources will in most cases not be found. Over all, the economy will continue to shrink in fits and starts until it can be maintained by the energy and material resources that Earth can supply on ongoing basis.

This is of course very difficult news. It is analogous to being told by your physician that you have contracted a systemic, potentially fatal disease that cannot be cured, but only managed; and managing it means you must make profound lifestyle changes.

Some readers may note that climate change has not figured prominently in this discussion. It is clearly, after all, the worst environmental catastrophe in human history. Indeed, its consequences could be far worse than the mere destruction of national economies: hundreds of millions of people and millions of other species could be imperiled. The reason for the relatively limited discussion of climate here is that (assuming the Alternative Diagnosis is correct) it is not climate change that has proven to be the most immediate limit to economic growth, but resource depletion. However, while there is not as yet general agreement on the point, climate change itself and the needed steps to minimize it both constitute limits to growth, just as resource depletion does. Moreover, if we fail to successfully manage the inevitable process of economic contraction that will characterize the coming decades, there will be no hope of mounting an organized and coherent response to climate change—a response consisting of efforts both to reduce climate impacts and to adapt to them. It is important to note, though, that the measures advocated here (including the development of renewable energy sources and energy efficiency, a rapid reduction of reliance on fossil fuels in transport and agriculture, and the stabilization of population levels) are among the steps that will help most to reduce carbon emissions.

Is this essay likely to change the thinking and actions of policy makers? Unfortunately, that is unlikely. Their belief in the possibility and necessity of continued growth is pervasive, and the notion that growth may no longer be possible is unthinkable. But the Alternative Diagnosis must be a matter of record. This essay, composed by a mere journalist, in many ways represents the thinking of thousands of physical scientists working over the past several decades on issues having to do with population, resources, pollution, and biodiversity. Ignoring the diagnosis itself—whether as articulated here or as implied in tens of thousands of scientific papers—may waste our last chance to avert a complete collapse, not just of the economy, but of civility and organized human existence. It may risk a historic discontinuity with qualitative antecedents in the fall of the Roman and Mayan civilizations. (37) But there is no true precedent for what may be in store, because those earlier examples of collapse affected geographically bounded societies whose influence on their environments was also bounded. Today’s civilization is global, and its fate, Earth’s fate, and humanity’s fate are inextricably tied.

But even if policy makers continue to ignore warnings such as this, individuals and communities can take heed and begin the process of building resilience, and of detaching themselves from reliance on fossil fuels and institutions that are inextricably tied to the perpetual growth machine. We cannot sit passively by as world leaders squander opportunites to awaken and adapt to growth limits. We can make changes in our own lives, and we can join with our neighbors. And we can let policy makers know we disapprove of their allegiance to the status quo, but that there are other options.

Is it too late to begin a managed transition to a post-fossil fuel society? Perhaps. But we will not know unless we try. And if we are to make that effort, we must begin by acknowledging one simple, stark reality: growth as we have known it can no longer be our goal.

Notes

1. “Pain on the Road to Recovery” (http://www.smh.com.au/national/pain-on-the-road-to-recovery-20090724-dw6...).
2. Here, for example, are a few relevant excerpts from the present author’s book The Party’s Over: Oil, War and the Fate of Industrial Societies (Gabriola Island, BC: New Society, 2003): “Our current financial system was designed during a period of consistent growth in available energy, with its designers operating under the assumption that continued economic growth was both inevitable and desirable. This ideology of growth has become embodied in systemic financial structures requiring growth…. Until now, this loose linkage between a financial system predicated upon the perpetual growth of the money supply, and an economy growing year by year because of an increasing availability of energy and other resources, has worked reasonably well—with a few notable exceptions, such as the Great Depression…. However, [when global oil production peaks] the financial system may not respond so rationally…. This might predictably trigger a financial crisis….”
3. See Albert Bartlett, “Arithmetic, Population and Energy” (lecture transcript), (http://www.globalpublicmedia.com/transcripts/645).
4. Donella H. Meadows, Dennis L. Meadows, Jorgen Randers, and William W. Behrens III, Limits to Growth (New York: Universe Books, 1972); Donella H. Meadows, Dennis L. Meadows, and Jorgen Randers, Beyond the Limits (Post Mills, VT: Chelsea Green, 1992); Donella H. Meadows, Dennis L. Meadows, and Jorgen Randers, Limits to Growth: The 30 Year Update (White River Junction, VT: Chelsea Green, 2003). See also the recent CSIRO study, “A Comparison of the Limits to Growth with Thirty Years of Reality” (2009) (www.csiro.au/files/files/plje.pdf).
5. See, for example, Robert U. Ayers and Benjamin Warr, The Economic Growth Engine: How Energy and Work Drive Material Prosperity (Cambridge, UK: Edward Elgar Publishing, 2005); and Robert Barro and Xavier Sala-i-Martin, Economic Growth (Cambridge, MA: MIT Press, 2003) (http://www.bookrags.com/research/economic-growth-and-energy-consumpt-mee...).
6. See Richard Heinberg, The Party’s Over: Oil, War and the Fate of Industrial Societies (2003, 2005); Powerdown: Options and Actions for a PostCarbon World (2004); and The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism, and Economic Collapse (2006); as well as books by Kenneth Deffeyes, Colin Campbell, and Matthew Simmons; and websites www.theoildrum.com and www.energybulletin.net. The Association for the Study of Peak Oil organizes international conferences to study issues related to oil and gas depletion (www.peakoil.net and www.aspo-usa.com), and the U.S. chapter of ASPO publishes a weekly survey of relevant news, “Peak Oil Review,” compiled by former CIA analyst Tom Whipple. At the annual Association for the Study of Peak Oil conference in Cork, Ireland, in September 2007, former U.S. Energy Secretary, James Schlesinger, said: “Conceptually the battle is over. The peakists have won. We’re all peakists now.” See also Steve Connor, “Warning: Oil supplies are running out fast,” The Independent, August 3, 2009 (http://www.independent.co.uk/news/science/warning-oil-supplies-are-runni...).
7. The declining rate of discovery of new oilfields, and the list of past-peak oil producing countries, are widely documented; e.g.: Roger D. Blanchard, The Future of Global Oil Production: Facts, Figures, Trends and Projections by Region (Jefferson, NC: McFarlane and Co., 2005).
8. A May 4, 2009 report from Raymond James Associates (“Stat of the Week”) argued that world oil production peaked in July 2008 (http://blogs.wsj.com/environmentalcapital/2009/05/04/peak-oil-global-oil...). In a subsequent interview, Marshall Adkins, author of the report, suggested that most knowledgeable players within the petroleum industry now accept the Peak Oil thesis in some form, whether or not they acknowledge it publicly (www.aspousa.org/index.php/2009/07/interview-with-marshall-adkins/).
9. Brookings Papers on Economic Activity, March 2009. www.brookings.edu/economics/bpea/~/media/Files/Programs/ES/BPEA/2009_spr...
10. See Joe Cortright, “Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs,” Discussion paper, CEOs for Cities, 2008 (http://www.ceosforcities.org).
11. U.S. Government Accountability Office, “Commercial Aviation: Airline Industry Contraction Due to Volatile Fuel Prices and Falling Demand Affects Airports, Passengers, and Federal Government Revenues ,” April 21, 2009 (www.gao.gov/products/GAO-09-393). For a detailed discussion of the likely future impacts of high oil prices and oil shortages on the airline industry, see Charles Schlumberger, “The Oil Price Spike of 2008: The Result of Speculation or an Early Indicator of a Major and Growing Future Challenge to the Airline Industry?” Annals of Air and Space Law, Vol. XXXIV, [2009], McGill University (http://www.globalpublicmedia.com/the_oil_price_spike_of_2008).
12. American Trucking Association (www.truckline.com/Pages/Home.aspx).
13. This scenario is implied in Robert L. Hirsch, Roger Bezdek, and Robert Wendling, “Peaking of World Oil Production: Impacts, Mitigatin and Risk Management” (U.S. Department of Energy: 2005): “As peaking is approached, liquid fuel prices and price volatility will increase dramatically….” (http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).
14. See, for example, “Troubling Signs That Oil Prices Could Hamper Recovery,” Wall Street 24/7, May 8, 2009 (http://247wallst.com/2009/05/08/troubling-signs-that-oil-prices-could-ha...)
15. See, for example, James Herron, “Low Oil Prices, Credit Woes Could Spell Trouble for UK North Sea,” Rigzone, November 14, 2008 (www.rigzone.com/news/article.asp?a_id=69507).
16. Jad Mouawad, “Big Oil Projects Put in Jeopardy by Fall in Prices,” New York Times, December 15, 2008 (www.nytimes.com/2008/12/16/business/16oil.html)
17. See David R. Baker, “Low oil prices take wind out of renewable fuels,” San Francisco Chronicle, October 27, 2008 (www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/26/MNSK13NNK4.DTL).
18. See The Party’s Over, Chapter 4; Powerdown, Chapter 4; The Oil Depletion Protocol, pages 23-31. A longer treatment of the subject, tentatively titled Energy Limits to Growth, will be published by International Forum on Globalization and Post Carbon Institute in September.
19. This conclusion is echoed in, for example, Ted Trainer, Renewable Energy Cannot Sustain a Consumer Society (Dordrecht, The Netherlands: Springer, 2007); and (with some reservations), David J. C. McKay, Sustainable Energy Without the Hot Air (Cambridge, UK: UIK Cambridge, 2008), (www.withouthotair.com).
20. Just one example, from a press release April 20, 1998 describing the results of a poll commissioned by the American Museum of Natural History: “The American Museum of Natural History announced today results of a nationwide survey titled Biodiversity in the Next Millennium, developed by the Museum in conjunction with Louis Harris and Associates, Inc. The survey reveals that seven out of ten biologists believe that we are in the midst of a mass extinction of living things, and that this loss of species will pose a major threat to human existence in the next century.”
21. Charles A. S. Hall and Kent A. Klitgaard, “The Need for a New, Bioplysical-Based Paradigm in Economics for the Second Half of the Age of Oil,” International Journal of Transdisciplinary Research, Vo. 1, NO. 1 (2006), (http://74.125.155.132/search?q=cache:DtdKR2ZWgNoJ:www.peakoil.net/files/...); Charles A. S. Hall, D. Lindenberger, R. Kummell, T. Kroeger and W. Eichorn, “The Need to Reintegrate the Natural Sciences with Economics.” Bioscience 51:663-673, 2001.
22. Cutler J. Cleveland, “Biophysical Economics,” The Encyclopedia of Earth (www.eoearth.org/article/Biophysical_economics). See also the related field of Ecological Economics, especially the books of Herman Daly, including Toward a Steady State Economy (New York: Freeman, 1973); and, with Joshua Farley, Ecological Economics: Principles and Applications (Washington: Island Press, 2004).
23. The quotation marks around the Nobel name are justified because the Nobel family has never acknowledged economics as a science: the so-called “Nobel prize in economics” is awarded by a Swedish Bank.
24. See The Millennium Ecosystem Assessment (www.millenniumassessment.org/en/index.aspx).
25. See, for example, J. S. Kim, “Irrational Exuberance of the Green Shoots,” July 24, 2009 (http://seekingalpha.com/article/151101-irrational-exuberance-of-the-gree...).
26. See Richard Heinberg, Blackout: Coal, Climate and the Last Energy Crisis (Gabiola Island, BC: New Society, 2009), pages 137-143, 145-168.
27. The opinion that banks and insurance companies should be allowed to fail rather than being bailed out was voiced by many knowledgeable observers throughout late 2008 and early 2009. See for example Ambrose Evans-Pritchard, “Let banks fail, says Nobel economist Joseph Stiglitz,” London Daily Telegraph, Feb. 2, 2009 (www.telegraph.co.uk/finance/newsbysector/banksandfinance/4424418/Let-ban...).
28. See Jeff Rubin, Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization. (New York: Random House, 2009).
29. See Richard Heinberg and Michael Bomford, “The Food and Farming Transition” (Sebastopol, CA: Post Carbon Institute, 2009), (http://postcarbon.org/food).
30. See Bernard Lietaer, “White Paper on All the Options for Managing a Systemic Bank Crisis” (www.lietaer.com/images/White_Paper_on_Systemic_Banking_Crises_final.pdf). JAK in Sweden is a cooperative, member-owned bank that operates without interest (http://en.wikipedia.org/wiki/JAK_members_bank).
31. See Richard Gilbert and Anthony Perl, Transport Revolutions: Moving People and Freight Without Oil (Gabriola Island, BC: New Society, 2009).
32. The Passivhaus Institute pioneers construction methods that reduce energy input to buildings in many cases to zero (www.passivehouse.us). Roughly 20,000 Passivhauses have been built in Europe, only about 12 in the U.S.
33. See websites of Population Media Center (www.populationmedia.org/issues/), and SUSPS (www.susps.org/overview/immigration.html).
34. The organization Redefining Progress has developed a Genuine Progress Indicator (GPI) that incorporates many such indices (www.rprogress.org/sustainability_indicators/genuine_progress_indicator.htm).
35. See, for example, “Understanding Human Happiness and Well-Being,” The Sustainable Scale Project (http://www.sustainablescale.org/AttractiveSolutions/UnderstandingHumanHa...).
36. The burgeoning Transition Town movement (www.transitiontowns.org) proceeds from the premise that “life can be better without fossil fuels.” YES! Magazine (www.yesmagazine.org) is a publication of the Positive Futures Network and highlights examples of low-impact ways of living that bring personal and social benefits. And the Simple Living Network (www.simpleliving.net) provides “resources, tools, examples and contacts for conscious, simple, healthy and restorative living.”
37. See Jared Diamond, Collapse How Societies Choose to Fail or Succeed (New York: Viking, 2005); Joseph Tainter, The Collapse of Complex Societies (Cambridge, UK: Cambridge University Press, 1988); and John Michael Greer, The Long Descent (Gabriola Island, BC: New Society, 2008).

Thanks, Richard, for your vision of a way to a sustainable future. I agree with you on the causes of where we are, and the need to cut back. I think your suggestions as to how we can solve our dilemma may be somewhat on the optimistic side, though.

You seem to suggest that we will be able to successfully live within the limits of renewable resources. Have you done any calculations regarding what percentage of the world's population might be supported within the limits of renewables? If we were to transition to renewables on the scale you are describing, how much investment in infrastructure would be required? How many years would be required for build-out?

You say growth can no longer be a goal. I wonder, though, if we shouldn't have a new goal of preventing die-off, at least to the extent we can. It seems to me that if our goal is to minimize die-off, we somehow will need to keep fossil fuels production going as long as possible. Distribution of available fossil fuels may need to be different--perhaps more for the less developed countries.

You say, "Investing further in fossil fuel energy systems (including “clean coal” technology) will yield declining returns". While these returns are declining, I think that if we look closely, we will find that energy returns on fossil fuels are still higher than returns on renewables. We have more EROEI articles coming up, examining this more closely. There are other issues as well. Are renewables really only fossil fuel extenders, that will not outlast the fossil fuels they are extending? Do we have the resources to really scale up renewables to the extent required to make a difference for the world's huge population?

It seems to me that someone needs to calculate how the numbers come out, if we intentionally reduce fossil use to prevent climate change, or just because we think that is the "right thing to do".

1. How many deaths will be caused, as the result of the planned lower fossil fuel use in, say, the next 20 years? Could it be billions?

2. How many future deaths will be prevented, if we succeed in preventing climate change?

There really is a trade off involved. To make matters more confusing, it is not entirely clear that if OECD countries do reduce fossil fuel use, we will in fact prevent climate change. There are several possible reasons for this--non-OECD countries not reducing their fossil fuel use; too little impact on CO2 in the atmosphere; or climate change factors outside our control.

I don't like to see a big push for so-called sustainability/reduced fossil fuel use, without a clear evaluation what is involved. Perhaps we need better stewardship of the resources we have, and a strong push toward reduced family size.

Gail,
You make good points. In reducing reliance on fossil fuels, we develop other ways of taking care of basic human needs. As far as I can tell, we need to proceed with that project as fast as possible. I assume that, as we do so, we will be tapering off actual fossil fuel consumption, rather than going cold turkey. If it's going to be successful, all of this will take planning, and, as you say, some careful evaluation of what is actually possible, and at what rate.
Richard

What about efficiency and alternatives?

A vast amount of energy is wasted. Efficiency gains will occur as prices rise. Increased efficiency and economic growth are not mutually exclusive.

Alternatives are also available. These alternative will require the structure of transportation in the economy to change. We will use more natural gas, coal, nuclear, wind, and solar energy for transportation. Changing to these alternatives will require infrastructure investments which will create economic growth.

Billions are not going to die as a result of oil production falling. Think of all the food and energy that is wasted every day. Think of the energy available in alternatives.

We can and will change and adapt. Energy and growth will come from efficiency gains and alternatives.

Who is to say that a particular type of "change and adapt" doesn't involve WWIII and billions dead...

It's mighty easy to come in with some hand waving and just proclaim that we'll do all the things you list - but quite another to actually get them accomplished - especially as time to implement these "adaptations" grows short. We may even implement a fair number of these things but I certainly don't think that's mutually exclusive from having billions die...

Given the completely dysfunctional "top down" leadership so far displayed re: this topic and a largely apathetic public I think it is much more likely that we are completely blind-sided. I give this scenario at least even odds with your set of remedies being implemented - nothing I've observed about how humans operate would indicate otherwise to me.

Fortunately and unfortunately, I agree with you Catskill. Fortunately for the biosphere we need to, and will, die-off. Unfortunately for us that this is the stark ecological truth.

Outside the U.S and the Western Economic Bloc, there is most of the seething humanity that inhabits the Earth. A large portion of this humanity is in South, East and Southeast Asia (including Indonesia) I have lived, worked and traveled in the Far East for a long time. I now live in the political corrupt chaos of Thailand (9 years just to train and prepare for the post oil world). Visioning a smooth, meaningful energy transition/transformation here is like flying pigs on the wing (thanks Roger).

Further, Thailand is what I would deem moderate on the corruption scale comparing it with it's regional neighbours. Why, earlier this week there was a report on BBC News that Chinese people trusted prostitutes ahead of politicians and teachers! And the Chinese are inheriting world economic power!!(whatever that may manifest itself in) And they already have a food problem.

The point I am making here is that without realistically factoring in the vast number of already impoverished people living in unstable, unsustainable and corrupt circumstances is missing the point altogether. If the author is considering 'Fortress America' then I think this is a delusion.

I will quote again: "A hungry man is an angry man" Bob Marley

So snap out of it. Billions of people will die. For those of you in the USA, keep a watchful eye on the southern border. The Canadians will have the sense to stay at home to ride out the storm.

.

Yes, billions may die before their time. A further misfortune is that almost all of those deaths will do almost nothing to reduce CO2 emissions and global reliance on oil.

Almost all of the billions will come from the poorest who use hardly any or no fossil fuels and hardly any other resources. The poorest billion are chronically undernourished and the poorest two billion don't have reliable access to clean water. Food shortages and huge food price increases will hit these the hardest, as will the major effects of climate chaos--flooding, drought and other extremes an disruptions.

From the articel:

"What would we be getting for our money? A collective sense that, in a time of crisis, no one is being left behind. Without the feeling of cooperative buy-in that such a safety net would help engender, similar to what was achieved with the New Deal but on an even larger scale, economic contraction could devolve into a horrific fight over the scraps of the waning industrial period."

When there is a sense that growth is happening and that anyone who is clever enough can catch the right economic updrafts and become very rich, people are more tolerant of extreme, even absurd wealth accumulation. Too may people think (however unrealistically) that they will be the next to roll in the lucre.

But when people realize that economic growth is over, that mostly everyone will be getting economically poorer from now on, seeing some with massive accumulations of wealth while most suffer and die horribly will tend to rankle.

I don't think we're there yet, but the anger at Goldman Sachs and others that continue to make enormous bonuses while helping to cause global economic collapse may be a beginning of a new view of hyper-wealth.

We can and will change and adapt. Energy and growth will come from efficiency gains and alternatives.

Hi Drake, this is a fine thesis, but to take it from assertion and move it toward proof, you need to show that alternatives and efficiency can outrun depletion of fossil fuels.

It is an issue of rates of decline vs rates of scaling up efficiency and alternative energy. I suggest picking one set of fuels and one type of mitigation and seeing if you can prove it will happen. Then publish it here for discussion.

Efficiency and eliminating waste alone could reduce energy consumption by more than half.

Someone posted a chart here recently showing that 75% of people get to and from work driving alone. Oil will become expensive and these pople will car pool, use motorcycles, walk, bicycle, or work from home.

Flying on vacation or for business will become too expensive and will be replaced by local vacations and videoconferencing.

People will move closer to public transportation. Public transportation can be electrified with the electricty generated by wind and solar.

Farm machinery will run on electricity generated by nuclear power.

People will eat much less meat, reducing the amount of grains wasted feeding livestock.

And many other changes.

Spending on oil will go down and spending on localization and other fuels will go up. Economic growth will not end because of oil. The economy will transform.

Richard Heinberg's analysis extrapolates the current transportation system and fuel use to an extreme of billions dieing. This is old-school scaremongering and logically wrong. People adapt. Known efficiencies and alternatives will be used. Who cares is political leaders are unaware or peak oil? Big government involvement may slow adaptation.

Farm machinery will run on electricity generated by nuclear power.

I don't believe you have any experience or knowledge of the mobile energy required for operation of farm machinery.
Farm machinery (current and future) will operate on home grown/made biodiesel fuel after petroleum fuel/fertilizer becomes too expensive or hard to get, but this will decrease food production be roughly half or less of current production.

Thank you for your judgement of experience and knowledge required to understand the complexity of modern day farm machinery.

The exotic "mobile energy" device you are referring to is the diesel engine.

Seriously, surprisingly little oil is used in farming in the US (under 2% of total oil use is by farm machinery). Of all the industries in which alternatives can completely replace oil as fuel, farm-fuel is easy.

The killer is distribution and modern prepared foods including packaging.

I don't think its correct to focus only on the energy used on the farm itself given the large infrastructure supporting modern grocery stores and restaurants. In fact the farm is a very small part of the overall modern food system.

We can convert one (or more) lane of each highway to an electric train/tram to replace distribution of farm (and other) products using diesel.

Easier said than done. Real physical issues as well as tax, legal & ownership.

For example:

Line and grade incompatibilities between train & auto.
Horizontal/vertical clearances constraints
Bridge capacity constraints (e.g. 286k+ design train vs. 80k+ design truck)

None of these are show stoppers.

- Trains go up the Swiss Alps and many other steep grades around the world.
- Dig down and build the trains narrow enough.
- Limit loads on individual train cars and build longer trains. Put structural reinforcements on the bridges.
- If it is important enough and there is money in it, government red tape will never be an issue.

If we electrify the existing rail lines, reroute them around some cities to increase speed, localize production and reduce population, then we just might be able to avoid an expensive and energy intensive modification to the U.S. interstate highway system.

Thank you. Nice to see realistic adaptors rather than doomers such as Heinberg on theoildrum. Heinberg would have been your ancestors' annoyance saying don't bother growing crops, animals/insects will eat them; don't bother cooking your meat, it will burn your mouth; don't bother thinking about math, humans cannot comprehend numbers beyond Pi or negative numbers.

Nice army of strawmen there. So I guess vague notions of "Hey, let's just electrify everything!" are more acceptable, if deluded and overly simplistic, while an actual look at the problems finding no easy answer is doom doom doom.

Of course, if any of what was proposed was going to happen, it would've (and should've) started by now. It's too bad appeals to technology don't actually change jack with respect to the resource crises. Energy is just the more immediate one, and I'd sure love to see how we all pay for these fantastic rail networks and EV fleets.

Of course, if any of what was proposed was going to happen, it would've (and should've) started by now.

Uh... nuclear power started sixty years ago. Hydro before that.

More recently: Wind farms are expanding at record rates. You can now buy electric vehicles ranging from the Tesla down to an electric scoorter from Best Buy. Portland and other Transition Town communities have been planning for years. Sites like the Oil Drum have been discussing solutions for years. India is looking into Thorium. We have a thorium bill here. Candu reactors. VMT in US are down. SUVs dropped in price and small cars went up. More work places, from business to universities, are allowing telecommuting. Organic farming is growing. Gardening in US seeing a resurgence. Public debate about a Smart Grid. Fast breeding started decades ago and is being perfected (almost is with the LFTR?) More and more people know what Peak Oil is.

You may not agree with these things as solutions... but don't tell me they aren't happening now and then say I am sticking my head in the sand, when, it seems to me, you are.

I have to agree with Andrew. A couple years ago I was thinking we were toast due to rapidly decreasing energy supplies, but the huge change in unconventional natural gas availability has changed my thinking. Natural gas can be used in trucks, farm equipment, power plants, etc. Sure there will be transition costs and time, but nothing that is a deal killer. It could buy us time to construct more wind power, thorium breeder reactors, and electrified transportation with maybe only moderate economic malaise in the meantime. I now think the greatest danger has become climate change, because it is too easy to give it lip service rather than making the deep fundamental changes that are needed worldwide.

None of those are anywhere near the level needed to alter this course we're on. The Hirsch report still stands. Saying we've mastered the art of nuclear and hydro =! replaced all fossil fuels (I also echo the sentiments darwinsdog has against hydro killing off ecologies and nuclear having many pitfalls despite thorium and modular breeders being concepts around for years). Organic farming still requires petrochemicals, as has been debated here time and again. For every PO aware community, there are a dozen that are still stuck in '50s Americana suburbia, and those people won't be happy about changing, no matter how adaptable people on here may be.

What you have to realise is the scale and human nature. So you solve the energy crisis, that doesn't solve the problem, as I have stated. There are too many people, period. And giving them all even more abundant energy exacerbates the issue.

I agree and disagree. Most of the world is tapped directly into the natural supply house and doesn't rely on fossil fuels. What keeps that human population expanding?

... good question! I don't think Myanmar or Haiti have much in the way of modernism to support population growth. There are clearly other factors.

This population nevertheless destroys their parts of the ecosphere while the developed populations destroy the ecosphere in other, more profound ways. The scale is the problem. Getting rid of ICE cars and replacing them will EV's will not alter the level of overall ecosystem loss, in fact would accelerate it.

Ditto with more nuclears, more natgas production, more petroleum subsidies, etc. There is no supply- side solution only conservation.

Otherwise, chaos.

I am aware of the scale of the problem (meaning the scale of net energy use) and also the shit-nature of human nature that has brought you capitalism.

My remarks were simply pointing out that it is in fact very incorrect to say that no response has started, as the above poster said.

I also left off natural gas (as it isn't really a response to FF transition), which as far as I can tell, has huge potential as a bridge resource.

Also, as said above, conservation. Oil is 40% of our energy mix, but that is almost all transportation, most of it discretionary.

Check your attitude at the door. There is no need to respond by getting personal.

Drake, I have read most of what Heinberg has written and I have not seen him make anything resembling these statements. If you can direct our attention to relevant passages, it would be appreciated. Otherwise, it would be even more appreciated if you would refrain from grossly mis-characterizing Heinberg's (or anyone else's) position.

On electrifying the entire transportation system, will that not require quite a bit of copper. Is copper endlessly available?

And on carpooling, yes, it is a good idea. But it has nothing to do with growth. If everyone carpooled, probably fewer people would buy cars, so we would have less growth of GDP.

We may or may not be able to create a sustainable society, and efficiency and alternatives would obviously be a big part of that. But why should continued growth be the goal? The need for limitless growth seems more to be axiomatic for economists. They sometimes claim that it is necessary for human well being, but that is not supported by reality.

And on carpooling, yes, it is a good idea. But it has nothing to do with growth. If everyone carpooled, probably fewer people would buy cars, so we would have less growth of GDP.

I disagree. The economy doesn't, literally, care about oil. It doesn't care about kilowatt hours or BTUs. It cares about what gets done. We have a lot of room to do more with less, especially less oil, as there are so many work arounds.

If everyone carpooled, yes, we would not need as many cars, and would have money/resources freed up to buy something else, like bikes, or TVs, or entertainment or whatever. Net effect on GDP: zero.

If anything, GDP might, in the longterm, go up after a major transportation conversion... selling cars is a pretty energy intensive way to make a profit.

Trolley wire can be made from a variety of metals including stainless steel and copper clad steel. Of course copper trolley wire wears down causing copper to be lost to increasing entropy making electric rail ultimately unsustainable. Localizing production and reducing population reduce the scale of the problem making the techno fix more plausible. Some day it might be more important to use copper in transportation than in plumbing.

Actually..., I thought Heinberg was holding back.

Me too. Doomers foresee a lower standard of living with population collapse. I am advocating for a high standard of living with a reduced population. A full-blown cornucopian foresees a higher standard of living while population stagnates or increases. In this post Richard Heinberg advocates against population growth and for sustained population with statements like:

This is not to say that the remainder of the 21st century must consist of a collapse of industrialism, a die-off of most of the human population, and a return by the survivors to a way of life essentially identical to that of 16th century peasants or indigenous hunter-gatherers.

... growth in population cannot be sustained;

The U.S. must encourage smaller families and must establish an immigration policy consistent with a no-growth population target.

... the measures advocated here (including... the stabilization of population levels)....

He is being gentle on population which is probably not sustainable.

I guess he expects a wide audience to read this and therfore needs to be a bit politicaly correct.

But resource depletion (peak oil) and enviromental degridation (climate change) are two clear indicators of a species in overshoot with inevitable consequences.

I suspect you are correct at some level. We do what we must when our backs are to the wall. Most however think we're on the verge of a return to GDP growth [ Cohen - Goldman Sachs]. Wish I'd loaded up on stocks in April.

And you apparently haven't spent much time in city hall or town meetings. Virtually no one is responding to climate change and even fewer think there is a resource issue at all. It's grow-grow-grow. They're bailing out the auto industry and AIG stock is up 400%!!! Jesus Christ man, there is no concept that any serious change of course is required - at all.

That is the worst news. No problems at all in the collective consciousness that require the expensive changes you suggest. Building more roads is what we're doing. Take a drive and see. Sometimes reading TOD I feel like this has to be a bad dream, and want to wake up in 1959. Big fins on all the cars and the birth of rock n roll. I'm hip to that.

It is one thing to ask "How much of total oil use is by Farm machinery?".

What you need to really ask is: How much of the energy needed and negentropy to produce fertilizers and pesticides, manage the farm (plough,sow,harvest,etc.,), run the pumps that irrigate the farms, transport the produce to the remaining 90% of the world where food is not produced, cook it at every person's house, etc., - how much of these needs are met by Oil?

Needless to mention the runaway phenomenon of decreasing soil fertility due to use of excess nitrogen fertilizer.

The allowed error margin is decreasing as we run out of time and so are quality resources needed to 'fix' things. Unfortunately nature works only at it's own pace.

Adapt or Perish.

Again, I ask that such Heinberg scaremongering be put in perspective. What percentage of total global natural gas use is consumed in fertilizer production? A minor amount.

The more I read about this guy, the more I get the feeling that Heinberg is a charlatan trying to be radical so that no person would be willing to descend to his level and show him up.

Being a "peak oiler" is reasonable as it is backed by reasonable data. But a big die off by simply extrapolating the present? Surely many have challenged his ridiculous claim?

Drake,

I'm mostly with you as far as being able to feed most of the population goes but the energy that goes into processing,distribution ,shopping ,etc, is huge and the man has a point -both the commenter above and Hienhurg(?sp).

There will be some real fireworks when people with money want the ng needed for cheap fretilizer to heat thier houses or drive thier ng 4by 4 down to the corner for a six pack.

And the time frame you are thinking thru may be shorter than the authors.

Another inapporpriate comment.

The more I read about this guy, the more I get the feeling that Heinberg is a charlatan

Drake, wait until the oilexports are starting to drop fast, something like 5% or more each year. A collapse could follow ugly fast. Maybe you don't know the work of westexas on TOD.

"What percentage of total global natural gas use is consumed in fertilizer production? A minor amount."

What percentage of total body blood use is needed to keep the heart pumping? A minor amount.

So don't worry about it if your heart blood runs out.

Written by Drake:
What percentage of total global natural gas use is consumed in fertilizer production? A minor amount.

What happens to the economy if there is not enough natural gas to go around for heating, cooking, making plastics, making electricity, making fertilizer and all of the myriad other uses in industry?

The Haber Process is used to fix nitrogen from air to make ammonia for fertilizer. Natural gas provides a cheap source of hydrogen for the reaction. Electrolyzing water to make hydrogen is energy intensive and expensive. If natural gas is expensive or unavailable or no cheap substitute is found while world population remains high, maintaining the food supply is in doubt. The availability of food made possible in part by the Haber Process allowed the human population to expand. If the natural resources needed for this reaction become expensive or scarce, then it is reasonable to question whether the human population can continue increasing or even be maintained.

A Primer on Ammonia, Nitrogen Fertilizers, and Natural Gas Markets {1.4 MB PDF warnimg) Aleksander Abram and D. Lynn Forster, Department of AED Economics, The Ohio State University, Sept. 30, 2005:

The fundamental ingredient necessary for production of ammonia is natural gas, which accounts for ninety percent or more, depending on its price, of the production cost of ammonia.

Natural gas is also highly correlated with oil, thus if petroleum stays expensive, even higher supply may not influence substantially the price of natural gas.

This naturally may have consequences on agriculture, and eventually food prices, as about 6% of all farm costs are fertilizer costs and another 6% are fuel, oil, and electricity costs.

"The more I read about this guy, the more I get the feeling that Heinberg is a charlatan trying to be radical so that no person would be willing to descend to his level and show him up."

Amazingly ignorant and illogical remark. Makes me think: Discount 'Drake'; don't waste any more time on his/her posts; just pass over them.

And that's exactly what I'll do, including any response to this post. Byeeee!

As for my "Amazingly ignorant and illogical remark."

Heinberg is wrong because he doesn't account for adaptation. Point out the chapter and pages in his book and we will look them up and challenge or agree.

Are you Heinberg? If so, sorry if this criticism hurts.

Theoildrum is a cruel tough place. But is it also the place where intellectual steel on matters of energy is hardened.

Heinberg is to be admired for posting, but he ran for the hills and was nowhere to be seen when challenged. Why? Becuase he has nothing to defend.

Posters should stand and defend their position when challenged.

Otherwise, what is the point of his submitting to theoildrum? He has his own blog and doomer Koolaid drinkers there fawning on his cultish (doom based on unscientific speculation) words.

Heinberg is to be admired for posting, but he ran for the hills and was nowhere to be seen when challenged. Why? Because he has nothing to defend.

LOL. Maybe because his time is too precious to him to waste it on replying to rude comments, comments that were made to make the commenter "look good" in his own eyes by being able to "challenge" a Richard Heinberg.

Richard was asked by Gail whether he would contribute a post to TOD, and he kindly agreed to do so. Thanks, Richard, for taking the time. Your effort is highly appreciated.

Posters should stand and defend their position when challenged.

I agree ... especially when the comments are made in good faith and politely, but this is a problem that we always have with high-visibility posters. For example, Jim Hanson has witten a good number of (excellent) stories for TOD, but he never stuck around during the discussion.

We do what we can, and I much rather have stories written by good and informed writers, such as Richard Heinberg and Jim Hanson, without them staying around for the discussion, than not having these stories in the first place.

Heinberg is wrong because he doesn't account for adaptation.

Drake,

Adaptation to what ? The Road to Olduvai ? Increasing numbers of people without work ? Social unrest, energy-wars ? Use your imagination: how much time there is to adapt when oil-exports are going down. Read the Hirsch rapport and the book from Hawken 'from mass-industry to information economy' about the effect of high oilprices on economy and agriculture.

Posters should stand and defend their position when challenged.

Can you defend how the world will adapt when happens what I wrote in my post above (fast dropping oil-exports) ?

Henri,
The Hirsch report dismisses EV and PHEV's on the basis of the EV-1 experience(page 43?). This was in 2005, a lot has changed since then,every major car manufacturer has plants to bring out EV or PHEV's in next 2years, could say that EV's are going to be the game changers.
If the drop is faster than electric replaces oil, will need gasoline rationing for a few years. It's happened before, not exactly on the road to economic collapse. No one need starve because diesel is rationed or is $10/gallon

For more serious an issue is fossil fuel reliance for fertilizer and crop drying. Even transport could get quite a long way if we electrify STRACNET.

I agree that farm machinery is most likely to run on bio diesel for the forseeable future if petro diesel is unavailable.

But there is a distinct possibility that somewhere down the road batteries may be cheap enough-in relative terms- to use for farm work-especially if charged by wind or off peak nuclear.Tractors don't have to go very far or very fast,and the dead wieght of batteries is not a big a concern, it is in automotive applications.

Even lead acid batteries might work;a lot of the expense involved in replacing worn out batteries would be offset by a lower purchase price of an electric tractor-once in mass production.

But diesel owns the farm for now and for next ten years at least.A tractor with dead batteries is next to useless to a farmer who needs a machine capable of twenty three hours a day availability.
(The odd hour is for daily maintainence.)

Of course an extra set or two of batteries could solve this problem.

From an energy/reliability stand point ,if enough wind,etc, is available,the ideal would be to use existing diesel equipment sparingly as new electric equipment becomes available.

Then the diesel machine would be there as backup when needed to do some critical work work in a hurry.

Things often need to happen in a hurry on farms.

I agree that farm machinery is most likely to run on bio diesel

And I'll offer up the techno-fix....small robots that work 'continually' in the weed suppression, application of small amounts of water/nutriants, and even pest management via either toxins, physical removal, or luring via insect communication paths to their doom.

Things often need to happen in a hurry on farms.

And oil can provide that energy density. But large machines means large 'stranded' capital costs. Large electric motors are a bitch to keep powered VS how simple oil is to keep an ICE powered.

Eric,

The robots don't exist.

The tractors and combines do.

There are sheds full and driveways full all over farm country,and lots full at dealerships too.

Agreed ,they will not be left to rust.The last few drops of petroleum not used by the police and military will feed them,and long before that they will "feed" themselves out of local biodiesel production,just as horses and mules fed themselves.

The newly minted peasants stoop jobs will be safe for quite some time-probably forever,almost,given the fact that there may lots of political reasons to keep them in the fields.

The robots don't exist.

Not commerically. But home cobblers like myself have 'em.

The simple 'go down this row and mow' robot exists. Uses 1 'bot to shuttle power/water/compressed air to the other bot that then goes down the row doing weed supression inbetween the plant rows. I'm not happy with the water/vinegar mix that was supposed to kill weeds and keep the corn intact - but it does an fine job of what the rototiller used to do between rows....so long as the weeds aren't quackgrass or other 'root' weeds. The resurected rotating clipper version doesn't like stones or mulch. And I'm still working out the folar feeding of the crops. And I'm unhappy with the short rows due to the dragging umbilical cord. And I'm unhappy with the dirt/dust VS my motors and the heat of the sun VS the control electonics. I'd like better dust supression - I get to watch soil leave in the wind :-( - but mulch for a large plot is not a sustainable model.

Problem is - there are a bunch of patents in this space - so commericalization is not gonna happen w/o paying people who've never done a lick of work on the project because they happened to document the idea with the patent office VS actual work. And visual inspection for weeds to then target is also "hard" - but there is work in that field and it seems one US maker of farm EQ keeps picking up those grads.....

Eric,

As I said,they don't exist.;-)

But with a few HUNDRED million in R AND D money,and a few hotshot programmers,and some engineers,and a lot of faith,and a few more decades.....ROBOTS! maybe.

As I said,they don't exist

Here are some pictures of non existant robots.
http://www.unibots.com/Agricultural_Robotics_Portal.htm
And even more non-existants here:
http://www.fieldrobot.nl/competitors/09/competitor_index.html
(with not much hope examples like http://www.fieldrobot.nl/competitors/09/BooZer.html )

Now, if I were a betting man.....guess who'd I pick for "a leader" in the field...

http://www.deere.com/en_US/careers/midcareer_jobs/field_robotics.html
http://techcollaborative.org/default.aspx?id=John_Deere

Alas - this is what gets the funding....

http://botropolis.com/tag/john-deere/

This is nuts. Efficiency drops as decline sets in. Mac, you know better than this.

Food prices are going down. Consumers stop eating meat, farmers and meat producers go bankrupt. Who can afford an expensive switch to alternatives? Only rich farmers can play with pretty boy toys.

Pay attention to the oil industry. Producers are eating their own tail. Futures at $90 are not enough. Consumers need $50, producers need $90. Alternatives need a margin and the margin is gone. Production is dropping, just as predicted.

You want to win at oil production? Find an elephant. You want to win at farming? Find a new Iowa. Neither tar sands nor biodiesel will make you rich when consumers are broke.

The farmer that does best will save profits for a bad year. Money spent on biodiesel doesn't protect against low margin years. The switch from horses to tractors was a no-brainer and made financial sense. Biodiesel has never made financial sense, not even to farmers. No profits, no biodiesel.

Pay attention to Airdale. He knows horse and tractor based farming, and high tech. You don't see him raving about his electric/biodiesel tractor. He's going backwards.

Artificial stimulation may juices consumption and delay the inevitable decline, or cause early collapse leaving us with a chance of a stable economy above zero. Both are scary.

I have a bit of run-down farmland and some spare cash. I'm spending it on soil fertility and sod. With a still or press I could fuel and run a tractor for 20 years post-collapse. Or I can go to horses. Setting up for an electric farm seems counterproductive, but no matter what I do, I won't be able to earn income because commodity prices will be so low. Starving people can't pay.

The gist of my argument is that we can set ourselves up for a comfortable life post-peak/collapse, but not for a comfortable income. Those who go for income post-peak are still in the old paradigm. Of course most of us will fail, but that's life.

Cold Camel

Camel,

You just aren't making any sense tonight.

There is no connection between anything I've posted,beyond the POSSIBILITY that tractors may be battery operated at some future time,and what you are saying,which makes no SENSE to me.

You just aren't making any sense tonight.

The below seems sensible:

The gist of my argument is that we can set ourselves up for a comfortable life post-peak/collapse, but not for a comfortable income. Those who go for income post-peak are still in the old paradigm. Of course most of us will fail, but that's life.

Cold Camel,

Airdale is not posting here. I gave my adieu some days back in a lone DB that was already stale at the time.

I have too much to do on the homeplace.

In my spare time I will devote to bringing my blog(wordpress) back to running order and IF I have anything to create towards the topic of sustainability or survival then I will create in on my blog and simply paste a link on TOD as appropriate but I expect it to be rather bare until this winter comes.

That will result in less whitespace used on TOD and allow me to create at will and without endless debating and defending followups.

As I said earlier. My garden is trashed now by Climate Change. We have been deluged by huge amounts of rain and very high winds(has been happening for some time and many other extreme events previously)...and many record low temperatures set as we saw temperature ranges mostly in the mid 70s and sometimes down to 55 at night.

Result is huge weed and grass growth coupled with very little growth of food plants. Almost zero tomatoes, corn gone, all the rest non-productive. No ability to work the garden soil due to excess moisture.

And there are far too many new members who are re-digging old ground here on TOD. They refuse to acknowledge what most older members understood long long ago and so revisit ad infinitum. A real waste of time to re-read what is wasteful and covered many many times in the past.

So the cornucopians get a new breath and its deja vu all over again. As Yogi sez.

Goodbye. When I have something I think worthy I will post a link, otherwise I am now going silent,(as I already was).

Airdale-thanks for the intro Cold Camel,I had been wanting to say this anyway.I learned much here. I still cruise by as time permits as TOD is still of great value but the impetus is over for me. I see the future clearly now. I really have nothing to add to the comments anymore.

Aw. I enjoyed your posts.

Good luck with the wet weather - it was really wet up here, too. I only have a modest suburban garden, but found it challenging to maximize food output. The one thing that is doing well are the tomatoes: red zebra, an heirloom variety that supposedly thrive in cool, wet summers. My first year growing them seems to confirm that claim.

One thing I find about TOD is that there's now too much speculation on things like climate change, or what public transit in some city-or-other will look like in twenty years. I really enjoyed those technical posts by posters like westexas and rockman and others that were not easy to follow (for laypeople like me) but very well worth the time and concentration because I learned lots.

I was once an acolyte of Richard's, reading his books and blogs etc; but as an energy investor I have been preoccupied with pure research -trying to find new technology that would allow a glimmer of hope.

I came to the conclusion that I disagreed with the writing of Heinberg, Klare, Kunstler et al when I started to find real evidence of major technological breakthroughs coming down the line.

Sure, I agree that we are past "peak supply". Fortunately we have a little Saudi swing facility for a year or two. So my primary investment in oil and gas seems to have a good future. Farmers will continue to use their ICE vehicles and equipment fo the foreseeable future. But every major auto manufacturer has an electric car programme. The only potential downside to that is energy storage - and when that is overcome, the power supply has a few wrinkles to be ironed out - but that too is under way.

By the end of this year, a Canadian microcap says they will introduce their electric car offering to change the game - or at least to show how our lives can be changed in a myriad of other applications. If they are right, it will change the grid, it will change farming practice, it will change the freedom with which we can roam in our RVs or in our cruising yachts.

If they are right, my investment in them (as a hedge against falling oil demand/prices) will pay off. If they are wrong, Richard Heinberg and Jim Kunstler will be right. And you will continue to use ICE vehicles well into the future. Ian Clifford of ZENN Motor Co spells out what he expects in the attached clip:

http://gm-volt.com/2009/07/20/qa-with-ian-clifford-ceo-of-zenn-motors-ee...

It is to have a 52kwhr ultracapacitor EESU that will power a standard saloon 400kms with a max speed of 125kms/hr and recharge in 3-5minutes. The EESU is made of readily available materials and has hugely extended life. It weights 280lbs.

Dick Weir of EEStor (a stealth developer from Austin, Texas) who supplies this "battery" he calls an EESU, says that he is working on applications of this ultra cap technology to suit everything from power tools to 16,000kwhr grid storage units.

This is a development that many SMEs believe is scientifically impossible (as with all revolutionary new technology :-))but if so, we won't have long to wait, before we find out. Year end, we hear.

ZENN/EEStor are not the only ones with fantastic new inovations in the energy storage, smart grid and fast charging business area. The flood of new funding from Steven Chu is ensuring that.

But you should check out the raft of new inovations and come to your own conclusion. I reckon in ten years you could be looking at having your own local grid on the farm, powered by wind and solar and with your own energy storage. Not just vehicles powered by electricity.

I hope I am right for all our futures.

I think that there will be LOTS of technological innovation coming down the pike, and some of it will be game changers.

However, there are still at least two major problems with any new technology:
1. it has to get into the market first in appreciable numbers to make a difference and
2. it is showing up inside the growth paradigm.

As long as people still think that growth is the way out of our problems (many of which are the result of growth in the first place), the ending to this story is already written.

If it is Zenn VS Richard Heinberg and Jim Kunstler , and seeing what Zenn has done ,I'll chose the latter.

Slightly tongue (and money) in cheek :-)

Zenn have sold more than 500 electric cars and bought into the EEStor opportunity. They both have the opportunity to participate in the next quantum change to affect mankind. EEStor claim to have the single most influential product to assist with the energy storage needs of a wide awathe of products and applications(or not depending on the proof of their pudding - wait two months and hold your breath)

Kunstler and Heinberg have written books and created a lot of CO2 during their lecture tours. Ok they have alerted the world to a problem that many of us knew anyway, but powering down and negative growth will hardly help struggling humantity unless they get off their backsides and find a way to stop the world's poverty stricken from breeding.

So I know who I back and I have put my money where my mouth is - only two more months to wait?.

Zenn/EEStor are building the better world (or hoping to) Kunstler and Heinberg just cry out that it can't be done. They try to warn us to change our wicked ways. But no-one is listening to them, or if they are there is no action other than people heading for the hills and packing heat and cans of beans.

But let's get back to reality. There is no energy more useful than that we can obtain by flicking a switch. If things go the way I expect, then ultracap energy storage allied to renewables is the way of the future through localised grid networks.

The power of the sun and the power of the wind are there already. With EEStor's technology (if it works:-)) this energy can be harnessed. But if the EEStor technology doesn't work there are plenty of other systems under trial - yet to come.

So I know who I back and I have put my money where my mouth is - only two more months to wait?.

Is this a "firm" 2 months or is this a blacklight power battery the size of a briefcase that can power an electric car 1000 miles on a charge by 2007/Dean Kamen will ship a stirling engine/Energy innovations will ship the 250 watt stirling sunflower in volume in 2004 firm?

Do you have some links you want to share showing this 2 month ship date?

Given the government ties of EEstor
http://search.yahoo.com/search?p=eestor&vs=cryptogon.com&fr=yscpb
and if it was 2 months close why:
http://www.greenbiz.com/news/2009/08/05/billions-stimulus-batteries-evs
President Barack Obama opened a $2.4 billion war chest aimed at catapulting the U.S. forward in the race to develop and mass-produce electric vehicles and batteries.

I look forward to such a product working, along with the youtube videos of people shooting the charged caps with .22 rounds or short circuting a pack - they ought to be pretty explosions.

Hi Eric,

Please see my response to Dohboi below.

I suggest you check the zenncars.com website mentioned for the timing and other info.

Yup, everyone should be skeptical of new technology. There is little point in me explaining the level of research I put in before buying, or saying that the issue of 3,500 volts breaking loose in an "accident" is out of the realms of possibility. That latter has been covered off by the inventor's explanation of a fusible link to isolate a malfunction - but this is irrelevant. In all things new there will be elevated risk. The DOE is funding many competing technologies without choosing which will succeed - only which have a good chance of making the grade.

It is no longer possible for people to replicate my investment research within the time frame within which, we are told, all will be revealed. We are only talking two months not years before we know the outcome on the ZENN/EESU saga. If you are that interested in the outcome, there is very little time now to wait before you can discredit my opinion - poor old Marion King Hubbert had many years to wait for his predictions to come true.

I am also looking at many other potential investments in a similar space to try to pick which are the winners and which the losers. The way I posted here is to say I think we may find these guys could be winners. If so they will change the world. It doesn't mean I don't have investments in other competing technologies - because I do.

I rate ZENN as highly as a 50% chance of doing what they say they will.

But please feel free to reject my opinion:-)

"powering down and negative growth will hardly help struggling humantity [sic] unless they get off their backsides and find a way to stop the world's poverty stricken from breeding."

This proved to me that you have no idea what you are talking about. The poorest third of the world's population consumes somewhere in the single digits of the world's resources. They are, after all, as you say, "poverty stricken."

On Zenn, I have actually put my money where your mouth is. I have one of these cars. Based on it's rather poor engineering, I am not optimistic about anything else that this company promises.

But you are clearly here to promote your investment. Good luck with that.

And by the way, they have been saying that the EEStor technology was "just about to come out" for years now. The technical shortcomings have been discussed on other threads here. Do a search to find them.

Hi Dohboi,

Hmm, just because I don't post on this site, doesn't meant I am unacquainted with the last several years of debate on the subject.

Yes, as to demographics, you are correct up to a point, but in all Western countries it is the poorest section of the community who are having the children and the demographics show that this is where their increased resource consumption is coming from. Check your facts. Of 6.5bn global population, only about 1bn are in developed countries. There are another 2bn struggling to catch up. In countries like Saudi Arabia, the percentage of oil being exported is dropping as a result of their increase in live births. It is the same in Iran and some of the others. TOD regularly chronicles articles about reductions in oil exports from the major producing countries and ascribes these reasons - among others.

Yes, as to the quality of the tinny little vehicles ZENN started off with, I have been aware of issues and watched the interplay. The issue with ZENN is that once they have an EESU and (if) it works, they still have to commercialise their "ZENNergy Inside" materials successfully. That is a whole new avenue of risk.

And Yes, the EESU was due in 2007, 2008 and now 2009. They are in the hands of EEStor. They can only wait in line. But they now say that they expect production unit(s) this year and in that they are supported by EEStor. Where is Boeing's Dreamliner? Does the delay make their statements unreliable too? Well it does up to a point, and even I won't deny that :-)

Compared with my investments in Oil, my investment in ZENN is very small and nothing I could say in any forum would be likely to promote the ZENN share value.

Perhaps I did not explain myself too well. My position is that on the balance of probability, ZENN and the EESU will soon take the market by the throat. If they cannot do so, I now know there are plenty of other electric car programmes and energy storage systems that will. It is those other companies that are in the public arena - so why mention them?

I am an investor, not a gambler. I also have no interest in the judgements that people have over the adequacy of my research.

Anyone who wants to participate in the debate over the EESU and their mythological energy storage can probably use one of these links:

www.theeestory.com
www.zenncars.com

If they do so they will find that things are coming to a simmer, if not to the boil.

Well, you've made up your mind, so Good Luck With That.

For other new readers: it's worth mulling Magnus Redin's observation that there are many applications for ultracapacitors in which the technology can be proved and improved besides the high-visibility, high-risk one of electric vehicles. The fact that EEStor hasn't used any of these "proving grounds" is cause for considerable skepticism.

JoulesBurns's post on the EEStor and EESU (same page, press "Home")is worth reading also.

In countries like Saudi Arabia, the percentage of oil being exported is dropping as a result of their increase in live births.

From earthtrends database
http://earthtrends.wri.org/index.php

SA_TFR

SABirthrate

That same data source projects KSA total population to nearly double between 2002 and 2025. Declining fertility RATES playing out on a growing population still means more growth; I may be wrong, but any fertility rate above 4 seems high. Half of the country's population is under age 25 today.

I agree that farm machinery is most likely to run on bio diesel for the forseeable future if petro diesel is unavailable.

My estimate, FWIW, is that farm machinery will run on a combination of bio-fuels produced close to teh source and point of consumpion, along with CNG. I ama lot less optimistic that electric tractors will be rolling outof the factorys anytime soon. Maybe small tractors might get converted in backyard sheds but certainly not the very large ones used for big broadacre grain production.

Transportation of produce to markets might be where it all comes unstuck but I suspect that in the future, the intermediate processors will be cut out and things like grain, vegetables and livestock will be deleivered to samll local vendors to process into bread, fresh fruit and veg and meat that gets slaughtered in the back of the butcher shop. Maybe some of the livestock could even walk themselves into town with a couple of cowboys herding them in.

The sea food industry might become mcuh samller and only available on the coast for the same reasons. You could see sail driven trawlers, but they will catch much less of course and won't have the juice to power on board freezers fro very long. on teh upside, fish stocks might improve giving coastal anglers a better cahnce at catching something worthwhile for their own dinner tables.

There are many ways to adapt and i beleive that a new calss of local entrepeneurs will seize the opportunitys that will emerge when the transport that makes dirt cheap mass production of food disappears with the cheap oil. The big corporate behemoths will just seize up and die one day, but before that happens, local producers will ahve been chopping them off at the knees.

Efficiency and eliminating waste alone could reduce energy consumption by more than half.

That may be true but the sticking point has always been how to get there from here without going through an incredibly wrenching experience first.

On one end of the spectrum is a gentle transformation of the economy in which services operate as they do now just more efficiently or using different technology. On this end of the spectrum there is plenty of time and abundant energy to perform the transition.

On the other end of the spectrum is the energy disappears entirely and instantaneously — no more oil from any source on earth. That would obviously be catastrophic.

Clearly we're not going to be directly on either end of the spectrum so the question remains: where will we end up on the spectrum of transition? Will it be closer to the gentle transition as the economists would have us believe? Or will it be closer to the other end? Where we land on the spectrum is exactly what has been discussed here since the site's inception.

I assert that the speed of the loss of oil (particularly due to the Export Land Model but also due to the feedback effects of a crumbling fiat currency system) will place us closer to the 'catastrophic' end of the spectrum. It doesn't mean all is lost, but it does mean that this particular version of human economy is toast.

Here is one way to show it:

World Crude OIl and GDP

Right now the majority of the evidence seems to say that we are certainly not experiencing a gentle transition. For instance, another 1/3 of a million people lost their jobs last month. In just a few more months, millions of previously unemployed will lose their unemployment benefits and will have exhausted their savings. Trillions of $'s of "wealth" still needs to be destroyed to account for the popping global bubble we've been fortunate to live in for the last hundred years or so. And so on.

So, yes, we will do all those things you say. AND it will be extremely unpleasant for many people as our high energy economy transitions to a low energy one. The question then left is: how does one get ready for this transition best?

-André
www.PostPeakLiving.com

Efficiency gains will not continue post-peak. Do you consider the enormous bailout plans to be efficient in any measure? It's going to get worse. Efficiency losses make the rest of your argument more significant.

As far as a solution, set yourself up to live a happy life without income. People throughout history have done so. The less you need, the better off you'll be. In the meanwhile, maximize your margin until it turns negative, then pull the plug (whatever that means to you.)

Assuming you have a positive margin, where do you invest your excess funds? Put them towards your post-income life, whatever will make you most comfortable. Focus on simplicity and resiliency over efficiency.

Cold Camel

Oil will become expensive and these pople will car pool, use motorcycles, walk, bicycle, or work from home.

So what happens with the car-industry ?

Flying on vacation or for business will become too expensive and will be replaced by local vacations and videoconferencing.

So what happens with the aviation industry ? Have you read how much the losses are only this year ?

Farm machinery will run on electricity generated by nuclear power.

Time-frame: 10-20 years ?

Spending on oil will go down and spending on localization and other fuels will go up. Economic growth will not end because of oil. The economy will transform.

Transformation should have started long time ago. If oil-exports start to drop economic downturn is inevitable.

Exactly right. Many of Drakes points are right on for building a more sustainable society, but they have nothing to do with growing the economy/increasing GDP. The waste he points out IS much of the economy. Get rid of the waste and you get rid of the economy. We should still get rid of the waste, but not because it can keep us on our mythical path of endless growth.

I've read books and articles from Heinberg before so I know he was holding back. But when it comes to peak oil, I like "Hubbert's Peak, Impending World Oil Shortage," from Kenneth Deffeyes the most.

The reason I believe Heinberg was holding back is because there's little or no mention of one of the main reasons peak will be a problem -- urban sprawl. If our population were lower and there was no urban sprawl, then peak oil might be more of an inconvience rather then a potential disaster (this may be over simplisitic). but...,

Main problems:
1. liquid fuels transport
2. too amny people
3. urban sprawl
etc..., I'm sure there's more....

How do we get were we need to go?
I believe we need more light rail (European or Japanese style), and denser cities. Obviously there will be a smaller middle class and more farmers. But how do we get there gracefully? Technically Peak Oil can be a crises or a disaster. It's up to us to decide which road to take.

Drake

Jarvon's paradox - improved efficiency ultimately will lead to greater consumption, not less. If we did have a silver bullet to improve the efficiency let's say of automobiles, and if this lead to a significant reduction in demand, the price of gasoline would fall, thereby removing the impetus to change our ways of living. Suburbs would continue to sprawl even further, the financial incentives to take public transportation would be reduced. Most probably folks would see that technology had solved the problem, rather than postponing the inevitable. In the meantime, the overall consumption would remain the same or increase.

Slightly off topic, but back in the 1980s, we were so sure that the introduction of PCs etc, all this new technology would liberate us, allow us to be more efficient in our work. Faster Processors, more RAM, bigger hard disks, faster networks. All I see is that while some tasks became more efficient, we were quickly inundated with even more, often meaningless tasks.

ej

Hang on -reduced demand only leads to lower prices if supply is constant. Peak Oil implies lower supply therefore lower demand does not necessarily imply reduced prices -it all depends on which is winning out demand destruction or supply destruction, over a long term decline any blips will smooth out and efficiency will be seen as key to maintaining price (if both dd and supply decline match)

Marketing / adverts will have slogans like:

"Toyota EfficiencyDrive(TM) -Keeping your gas bills at yesteryears prices..."

-even as per-gallon rates rise. Of course this may only be possible for so long and airlines for instance will hit certain limits sooner.

Nick.

Rising efficiency implies better ability to afford higher prices, which could increase demand even with higher prices. But it won't happen. If you traded in your old Suburban for a Prius you are much less likely to ride your bike. If you do ride your bike, you have REDUCED your efficiency, since your parked Suburban consumes less energy than your junked Suburban and a parked Prius.

This assumption of higher efficiency in the face of decline is just nuts. Wishing and wanting doesn't make it different.

Cold Camel

This is a really important point, that has been very badly muffed so far. The Jevon's paradox only applies to the "micro-economic" rebound effect. Efficiency improvement is the main price competition method for business world wide and has a "macro-economic" multiplier effect.

Efficiency is growth stimulus.

Believe me, there is much worse than this level of major error in professional sustanability thinking to come. I have never been a joking person about any of the blunt statements I have made on these subjects, well except for having a laugh at how ridiculous the situation is. There are numerous highly consequential conceptual errors being made because people almost universally ignore the responses of the system they are part of as effects of their actions.

Maybe the simplest way to understand that is in terms of one's personal footprint on the earth. Say you reduce your consumption by buying less, but the money goes to the bank. The bank's response to your consuming less is to use the money to multiply businesses. Your choice to reduce your impact on the earth actually had quite the opposite effect... because it's a property of the system we live in to use part of any surplus to multiply more surplus.

Even simpler, if plants and animals followed capitalist principles every creature in nature would be Kudzu, just endless rampant growth. Nature's systems mostly work differently.

Natures systems are endless rampant growth -it's just that they (lower order animals) have a negative feedback mechanism to prevent any runaway- it's called "Being Eaten" ! :o)

Nick.

Starvation and disease limit a great many cyclical population explosions. Predation doesn't keep pace. Of course this might be in what you would be considering higher order animals. Higher/lower nature leaves species to the same fate once they have eaten themselves out of house and home.

Good points. But note that many footprint assessments that I've read say that the best indicator is simply your income.

There are some investments you can make with your money that will be carbon neutral (paying off your house mortgage) or further lower your footprint--insulating your house, some retrofits such as improving passive solar, probably solar hot water and PV (but probably not small wind turbines in most cases).

But ultimately, we need to decouple as much as possible from the money economy, and more fundamentally change the nature of the entire economy and civilization.

Not to mention that we have people in the highest office of the land looking out for the welfare of our society by creating programs that will certainly solve many of these problems...

*CASH FOR CLUNKERS*

!@#$%^&*!!!!

Richard: have you read Prof MacKay's book: http://www.withouthotair.com/?

Given that we are discussing wrong prescriptions I urge all believers in renewables to consider the possibility that they won't do the job. They are not lovely green things: they are vast country-scale industrial plants with significant environmental impact, apart from the fact that they won't do the (total) job, given that we need much more electric energy than current total energy to make up for the loss of quality.

Since e=mc2, there is no shortage of energy. Also I think that, now we see the value of it and don't just flare it off, there is more natural gas than has been estimated. There is enough to let us limp through to a nuclear future. That will mean giving back to humanity the power to preserve or destroy the environment. Not an unalloyed blessing. But Gail is right: the alternative is billions of deaths.

Well I class myself as an "Energy Crisis Socialist" but still I think the existing economy can be made to work during contraction. The trick is to realize that, since contraction is negative growth and deflation is negative inflation, the following two sentences are identical:

  • A money economy will work if the deflation rate is less than the growth rate (otherwise people do better hanging onto capital rather than deploying it usefully).
  • A money economy will work if the contraction rate is less than the inflation rate (ditto).

Robert,

Most importantly the real effect of developing alternative resources is to sustain the growth system, not the earth.

It's actually because no one seems to pay attention to the operating processes of the natural system we are part of, or to do whole system accounting that includes asking how the system will react to what we do. We just sort of wing it on faith that because we have good faith we must be doing the right thing. When our main way to end grow impacts turns out to be to provide more growth stimulus, you gotta know something is up.

Until we learn to what would alter the way the whole economic system responds to being given more resources, and no longer uses them to pump the use of more resources, we're just fiddling around and furthering the main problem we say we're stopping. It's not really "stupidity" even if it makes us look tragically stupid... It's not failure to follow our best rules that's really happening here. It's not having any rules at all for situations like this so the "smart" thing to do is entirely missing.

These are not normal misconceptions. They clearly seem to have to do with this being the first time ever that humans have needed to learn how to think the way nature does it. We're off to a very slow start, and the time is quite late.

Maybe if we looked at it as hysterically funny, that we would all be misconceiving the most critical choices for our own survival in these ways... maybe that would get a little more traction.

"Most importantly the real effect of developing alternative resources is to sustain the growth system, not the earth."

Very good and very important point. What we do or don't develop is not as important as what story we are telling ourselves about why we are doing it. If we get the story right, we will mostly get the rest right. If the story is wrong (as it has been for much of humanity for millennia), we are sure to get everything else wrong, even things that seem benign.

Yes, but "getting the story right" seems in this case to upset common wisdoms that were somewhat true for hundreds of years, and that our society is built around, but that stopped being true as our growth system started to run out of its seed resources. The basic assumption of capitalism amounts to "the seed" is never exhausted... but here we are, and we now need a whole new way of thinking.

I think the way to do that is for people to start talking and referring to the same subject, and the obvious one for us to pick is the common 'wilderness' and experience of our all being part of the same global system. It has a lot of mysterious behaviors as a whole that are quite unlike our behaviors as parts.

You'd probably think it ridiculous to walk down the street by steps that get twice as big every block, right? Our global system thinks that's the only possible way to get anyplace, being sort of fixated on the past.

Would you care to elaborate on what you see as the primary elements needed in the "whole new way of thinking"?

It strikes me that we have to replace the peak of Maslow's hierarchy with "self minimization" rather than self actualization.

Dohboi,

Self actualization does not necessarily require a high standard of living,or a high energy life style,but I know(very slightly)a few women who see thier personal self actualization as being fulfilled by raising anmd training show horses.

They will probably have to be sedated if thier hubbies go broke.

It's -I can't remember the name of term-one of those cases where a colloquialism or a truism meant to apply to different situation in a different way actually states the case for some other phenomenon perfectly.

If you have a personal problem and a friend tells you "it's all in your head" meaning you are worrying over nothing,this remark describes self actualization perfectly.Som ebody please post the word or it it will nag at me all night.

The concept itself is very useful in understanding the mind as part of a MODEL of the mind but it is just as I see it a part of a model,albeit a very good model that has stood the test of time.

But I am not sure it means any thing,unless in contrast to Thoreau's (paraphrased)"the vast mass of men lead lives of quiet desperation". Now THAT is one of the most profound things I have ever read.Defined as achieving some sort of internal peace or ESCAPE form the desperation..

Since e=mc2, there is no shortage of energy.

I'm sorry -- it's me, not you. That statement sends me into orbit every time I see it.

OF COURSE THERE IS NO SHORTAGE OF ENERGY, since that's what the universe is made as is implied by the equation. Which is precisely why it is totally irrelevant and should never be utter in any discussion of the energy crisis.

This issue is accessibility of energy -- how much is available to us by what means? If it were too easy to get we wouldn't be here -- and were we here we would have already blown ourselves up. Oil and coal were easy early on and getting harder. Nuclear (fission) turned out to be possible, fusion not, so far and probably never etc. Blah, blah, blah. We live in a tightly constrained world, the details of which we must acquaint ourselves with.

Don't ever, anyone here, or anyone there, ever, EVER utter that sentence again -- OR I'll go off again -- you hear me? :)

My favorite (or I should say least favorite) version of this is the claim I have seen repeated many places that "Most of the universe is made of hydrogen" with the implication that we will have plenty of it readily available to us in forms we need.

No doubt some techno-cornies believe we will send space ships out to the vast, diffuse clouds of hydrogen millions of light years away to mine these bounteous resources. But most people don't even think that far, and unconsciously just think that there are lots of easy supply-side solutions available if people were just more reasonable.

Robert,

Thanks for the link to the MacKay book - just glanced at it, but seems to be a very worthwhile read.

I think you give the Humans too much credit.

1. There will be NO, planned reduction in the use of Fossil Fuels. Humans will burn everything, til there "ain't no mo". Survival of the fittest will be the name of the game. Planning, will have nothing to do with it.

2. Again, Humans cannot "prevent" Climate change. It is already too late. The deal is done. How many die, is of no importance any longer. Billions will....don't think any will keep counting after the first Billion go. So what really is the difference?

It's easy to armchair, but survival is a nasty game that will be, must be played. Ever been hunted, as in a Fire Fight situation? That's the idea.

Gail,there is going to be a die off regardless of which way we jump(or are pushed).

My thanks to Richard for a succinct essay.The best I have come across on this issue.

Gail,

I might come across as a somewhat hard core conservative let- people- take- care- of- thier-own problems guy sometimes but I whole heartedly agree with you that if we can,we should prevent a die off.I just can't see myself ever enjpying a good night's sleep again if I advocate not helping the people who can't grow enough food to incease thier production enough that thier kids don't starve.

I would be in favor of tieing any aid to a birth control program as tough and mean as necessary to stop the growth of population of the groups getting aid,if such a program can be devised.

Doing anything less is to deny that we and the people starving are humans.

I don't mind mother nature thinning out my chickens that run semi wild,but I'm a lot closer kin to some little kid in Zimbawbe or Bangladesh than I am to my chickens.

We SHOULD do what we can and what is right,individually and as a society,each and every generation.

But as I have said before,I expect Malthus to have the last laugh in many places over the next few years.

The cornucopians don't seem to realize it,but he has been laughing his ass off ,somewhere,more or less continiously.

If we figure out a way to stabilize our economies in the rich countries where birth rates are low,we might deny him his laugh indefinitely in such places as are already wealthy.

Hi Mac,

There is a UN slogan something to the effect: Whatever your cause, it is a lost cause if you can't control population growth.

Several times I've seen the math that brings human population by the end of the century back to a one to two billion level if there was a strong one-child principal world-wide. So, it is not impossible for rationality to make a very positive contribution to the problem.

The question then is why does collective humanity generally refuse to consider a rational and humane approach to reducing the planet's human population? Any sane person should see this as the most obvious first priority in dealing with PO, GW, etc. Birth control is not rocket science and mass communication is one tool we are very good at exploiting for selling something like Coke.

My guess is that this is all about power and greed on the part of those folks who benefit from the current model: CEOs, bankers, politicans, religious leaders, etc. But how do they manipulate the masses of people to buy into their schemes? Simple - exploit the concept of "faith". Use the delusion of god, afterlife, prayer, etc as a counter weight to science and reason. Use slogans, fear, emotion, etc to obscure the wizard behind the curtain.

Dave 'good to see you posting!

Most people won't agree with me as to WHY people won't cooperate,but to me it's just a question of biology.

Biology's a hard science and you cannot argue with it,any more than you can the hard science of geology or chemistry.

It's absolutely amazing to me to consider the number of engineers,business managers,presidents of universities ,etc,who can't seem to grasp the fact that you can't argue with Darwin-unless you can prove him wrong!

So they IGNORE him.Cognitive dissonance is the descriptive term,and I've only ever met or talked to a very small handful of people who truly appreciate just how big a problem it is.

An engineer who will waste no time on impossible schemes expects us to understand the basic laws of physics well enough to either see for ourselves that some things just can't be-or else to take his word for it that "some things just can't be".

That same engineer either is ignorant of the basic science of biology,or else he FORGETS ,when he engages in a debate about humans cooperating in very large and diverse groups,especially when they remember past troubles associated with the other groups.

Biologists are much easier to ignore than engineers,as they have little power and are few in numbers.But that does'nt mean thier work is invalid.

Not too many engineers take biology classes to start,apparently,and those who do apparently don't pay much attention.Or maybe the problem is that the exposure to the subject is just too limited to for the implications to sink in.

WE ARE EVOLVED OR ADAPTED TO LIFE IN SMALL GROUPS.

This does not mean that it is impossible for us to cooperate in big groups but it does explain why it is so HARD for us.Bears and dogs can walk on thier hind legs-to a certain extent.

We can go against the grain and cooperate with strangers and former enemies-to a certain extent.I pray that the extent is adequate,but I'm not sure it is.

There are ways around this problem,we think in terms of "us and them".We once hated the Brits as redcoated "them"occupiers of our country, but nowadays they are old buddies.

But getting from "them"to "us" is, as an Englishman might say, "a bit of a problem".

Most of the worlds leaders positions depend on the us/them paradigm.They got into power in large part by playing on it,and playing on it contribiutes mightily to thier staying in power.

ps The recreational cyclists on my local roads just up and vanished-no idea why,unless they found a place they like better.??

ps The recreational cyclists on my local roads just up and vanished-no idea why,unless they found a place they like better.??

Geez, that's pretty scary - hope one of those freeway snipers has not found your roads!

I just finished riding the Wisconsin MS150 fundraiser (150 miles in 2 days)- my reward was to get a minor case of stomach flu. Gives me a little more time away from summer fun here in WI to read TOD :-(

Most of the worlds leaders positions depend on the us/them paradigm.They got into power in large part by playing on it,and playing on it contribiutes mightily to thier staying in power.

And, I will submit that religion is the perfect ingredient to lubricate the "us/them paradigm". How many times in last presidential election did we learn about the threats posed by those islamic folks who don't like the christian and jewish folks.

Dave,

No snipers,no accidents.It is possible that maybe some body might have starting breaking into thier cars,which were often parked on road shoulders in some isolated spots,etc, but I haven't heard anything along those lines either.

Maybe they are all at the country club hanging around the pool now that it's hot and muggy.

I will add to your lube job that it just blows me away to hear earnest Baptist young mothers talk about giving thier babies god Christian names out of the Bible.

Several times I've seen the math that brings human population by the end of the century back to a one to two billion level if there was a strong one-child principal world-wide.

Dave I don't think that estimate is realistic. The CIA Factbook lists the crude death rate as 56 million per year world
wide. If no children -i.e. zero - were to be born for the next 90 years the world population would decrease by roughly 5 billion (56m x 90 yr), leaving about 1.8 billion still alive.

Presently the crude birth rate is about 135 million per year and the average world total fertility rate is 2.8 children per woman. A birth rate of 1 per woman would lower the annual birth rate to 48 million per year. Assuming this would decline to zero in about 35 years when all women now alive have completed their child bearing years (WAG assumption), another 2.2 billion people will have been added to the 1.8 billion from the paragraph above.

Therefore I think that a one child per woman worldwide policy would at best result, ceteris paribus, in a population of 4 billion by 2100.

Of course this figure would change radically if pandemics, wars, mass starvation etc. were considered.

I certainly agree with the rest of your post.

[I haven't a lot of confidence in my WAG above so if someone with some knowledge or expertise can chime in and correct my mistake(s) it would be good. (Kindly show your reasoning/math.)]

Dave Howard

WTF???

The CIA Factbook lists the crude death rate as 56 million per year world
wide. If no children -i.e. zero - were to be born for the next 90 years the world population would decrease by roughly 5 billion (56m x 90 yr), leaving about 1.8 billion still alive.

Uh, you're making a projection for the population in 90 years based on the current crude death rate? You realize, don't you, that the average age of those living at the end of that 90 years would be about 110?

It might well be that advances in medicine over the next 90 years -- if we're still around -- will extend the average lifespan to 110 years. But that's a completely different argument.

The current age distribution for world population is heavily skewed toward the young side as a result of population growth. The cohort in which the mortality rate starts to get high was born 70 years ago, when world population was a third of its current level. So even with zero births and a declining population base, the death rate would rise to double or triple its current level (if per capita mortality rates as a function of age remained unchanged).

WTF???

Uh, you're making a projection for the population in 90 years based on the current crude death rate?

I said 'ceteris paribus'.

It might well be that advances in medicine over the next 90 years -- if we're still around -- will extend the average lifespan to 110 years. But that's a completely different argument.

Yes it is.

The current age distribution for world population is heavily skewed toward the young side as a result of population growth. The cohort in which the mortality rate starts to get high was born 70 years ago, when world population was a third of its current level. So even with zero births and a declining population base, the death rate would rise to double or triple its current level (if per capita mortality rates as a function of age remained unchanged).

Good point: Exactly the kind of input I was looking for.

The question then is why does collective humanity generally refuse to consider a rational and humane approach to reducing the planet's human population? Any sane person should see this as the most obvious first priority in dealing with PO, GW, etc.

We will assume here that we are guaranteed to have a huge die off due to population overshoot.

The rational decision (for all of humanity) is to reduce the population down as much as possible, as you pointed out.

However, what's the rational strategy for an individual?

If 1/2 of your kids are going to die... your best strategy is to have twice as many kids!

Imagine a country that does reduce its population, while a neighbor continues to grow. Eventually the neighboring country is overcrowded, and with a larger economy and larger army (vs the young men who weren't born in the sustainable country) starts to think about invading that sparsely populated, poorly defended country next door.

Global problems like population control and climate change are basically prisoner's dilemma but with 6.8 billion other players. Do you trust them all not to defect?

We will assume here that we are guaranteed to have a huge die off due to population overshoot.

Enter error one.

The first thing to do is to stop over consumption, which is consuming far far above the average level of consumption where the diminishing in returns in happiness per unit wealth has reached to the point that another unit of wealth add near-negligible happiness. Think for example a multi billionaire already owning 25 50,000 sq ft castles, what happiness can add in his life if he buy another such castle? Almost nothing. In times of crisis, especially crisis of this level and even more especially when almost entire wealth creation and consumption is based on utilizing once-ever resources govts should place an upper limit on consumption to ensure more wealth distribution. Anti-trust laws are kind of such thing but still far off. I am not saying that govts put a progressive rate of taxes that still leaves some percentage for the highest earner. Govts can flatly put an upper limit of wealth and income per person or per household, for example 1000 times the average income of society, I would suggest a lower number like 400. To make things simpler it can be in non-monetary sense to avoid inflation and culture-specific issues. Govts can for example put an upper limit on area of a house occupied by a family which includes areas of upper stories, size of employees in a company that is owned by a single person that is not have shares in stock market. Govts can also put an upper limit on amount of fossil fuel energy a person or family consume in a year for example by limiting kilowatt-hours of electricity, liters of petrol, cubic meters of natural gas and so on. These things may help make life easier for an average person in a decline situation where the overall energy, wealth and income is reducing and population is increasing forcing towards a more level and uniform distribution of energy, wealth and income. If this not happen and if the elites resist then a societal breakdown would be unavoidable. Its like the owner of up hill castle closing doors for refugees from down the hill village who work to make him rich when a flood is expected. The villagers would work together to burn down the castle long before the flood come with guards of the castle joining them.

Pakistan's population:

1951: 34 Million
1981: 84 Million
2008: 172.8 Million

2.2% growth rate (2008)

Ages 0-14 years comprise 43% of the population.

Fertility rates have been dropping, though:

2006 - 4.0
2007 - 3.77
2008 - 3.58

Keep up that trend towards one child per woman.

http://en.wikipedia.org/wiki/Demographics_of_Pakistan

The problem though is that oil will not last at any useful rate of consumption. Ultimately the goal must be to get oil usage to zero. It's not a question of one thing or the other, but of all these things. Yes, we should control our breeding, too, but not to the exclusion of other things. It's all these things, done together, not one or the other, that is necessary.

For those wanting a little less eye strain... 12 A4 pages, margins maxed out (notes not included). Cheers.

I just spent about 45 minutes reformatting this so that it's at least readable. Hope it helps.

I think that what we are beginning to experience is analogous to an organism freezing. Cells rely mostly upon Brownian motion to make chemical contacts and this requires a certain basal body temperature, 98.6 for humans. They are shuffled around without much extra energy except that the metabolic activity itself will contribute to the Brownian motion.

Humans, on the other hand, require significant exogenous energy to complete the reactions that constitute the metabolic activity of their societies. As energy levels fall for transportation the number of reactions will diminish and freezing will commence. At first the extremities will be affected (non-essential economic activity) and will die. The remaining blood flow and heat will be concentrated on vital organs like food, heat and essential transportation to the cities and government (and Halliburton refuge camps).

If the brain (government) gets a chill it will become delusional and start seeing things like green shoots and before the end it may even become euphoric and spend money as though it had no concern for the future. If energy is cut off from vital services, the cities and patient will die.

In the current political context, if Iran imports 40% of its gasoline and we decide to remove their motive energy, then wouldn't this be an act of war. Did we do this to the Japanese during WWII and they were forced to take the oil of the Dutch East Indies. Why is U.S. military GDP headed for the sky while the remainder of the economy deflates. Will future generations be saying "remember Ras Tanura" instead of "remember Pearl Harbor". Sure will be interesting to see how things turn out, politicians certainly won't want to take the blame for their own ignorance and greed. Just about as soon as they can't sell any more treasuries we should see a scapegoat brought on stage. Collapse is under way.

Brilliant analogy Dopamine, and excellent analysis, Richard.
Can we? Will we? All evidence points to highly unlikely without unprecedented raising of consciousness and long-term thinking for the former, and because of that, not a chance in hell for the latter. Powerdown, batten down, localize as much as you can, for this storm is just beginning.

Dopamine said:

In the current political context, if Iran imports 40% of its gasoline and we decide to remove their motive energy, then wouldn't this be an act of war.

So true... Whoever said "War is continuation of politics by other means"...? von Clausewitz?

I was actually in favor of Gulf War II... not because I was worried about Iraqi Ws of MD, but because the sactions in place in the aftermath of GW I was starving the Iraqi population and hurting the regime barely, if at all. I figured an invasion would be only a short-term pain that would break the circle of oppression...

So much for that.

Yes, good analogy. A doctor posted a similar comparison (can't remember if it was here or in PO forums) where he pointed out that the dying human body slowly deteriorates until it reaches a crucial point--then the body undergoes what he called cascading organ failure, the failure of one organ leading to the failure of the next...till the whole thing quite suddenly shuts down.

We have seen one some economic "organ failures"-- real estate, investment banks, auto companies. I have a sense that we have many more to come.

This essay, composed by a mere journalist, in many ways represents the thinking of thousands of physical scientists working over the past several decades on issues having to do with population, resources, pollution, and biodiversity. Ignoring the diagnosis itself—whether as articulated here or as implied in tens of thousands of scientific papers—may waste our last chance to avert a complete collapse, not just of the economy, but of civility and organized human existence. It may risk a historic discontinuity with qualitative antecedents in the fall of the Roman and Mayan civilizations. (37) But there is no true precedent for what may be in store, because those earlier examples of collapse affected geographically bounded societies whose influence on their environments was also bounded. Today’s civilization is global, and its fate, Earth’s fate, and humanity’s fate are inextricably tied.

But even if policy makers continue to ignore warnings such as this, individuals and communities can take heed and begin the process of building resilience, and of detaching themselves from reliance on fossil fuels and institutions that are inextricably tied to the perpetual growth machine. We cannot sit passively by as world leaders squander opportunities to awaken and adapt to growth limits. We can make changes in our own lives, and we can join with our neighbors. And we can let policy makers know we disapprove of their allegiance to the status quo, but that there are other options

Is it too late to begin a managed transition to a post-fossil fuel society? Perhaps. But we will not know unless we try. And if we are to make that effort, we must begin by acknowledging one simple, stark reality: growth as we have known it can no longer be our goal.

Thanks mr. Heinberg. Humanity already lost over 3 decades since "Limits to growth" was published. Those who care about the future of organised society better get this show on the road now. The transition town initiative comes close to a workable scenario. Now how to get this snowball rolling and growing? We need the aid of the current policy makers!

Perrin,
We need it,but I think the chances of getting it are essentally zero for the time being.

Maybe later thing swill be BAD ENOUGH to get the right kind of leaders into power,but not so bad that all hope is lost.

My hope is that the gradual power down scenario will work for most of us,at least here in the states and in other fairly wealthy countries.

But my intuition is telling me that name calling,blame slinging,stonewalling, blustering,and fighting are the name of the game now.

Although to my knowledge he is not a professional historian,it is possible that some day in the very far future copies of his work will hoarded and gaurded in high stone towers and pored over by would be kings.

Certainly he will be one of the more often quoted figures of his time for the next few centuries.

One thing I find both amusing but yet encouraging is the speed with whuich the mainstrean economists are hurrying to get on board the peak oil peak every thing wagon -doubtless so they will be able to say later I was one of the first-

It's a DAMN PITY SO FEW have the courage to explore and publish any thing contrary to the welfare of entrenched big biz.

They TELL US THAT THAT'S THE PURPOSE OF TENURE.Why has it worked so poorly in econ?

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http://www.reddit.com/r/environment/comments/9852a/temporary_recession_o...
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Agriculture is going to change, but it is NOT going to return to the way things were done before fossil fuel use.
When petroleum fuels for agriculture become excessively expensive or in short supply, farmers will once again begin to produce their own fuels on farm. In the old days they produced hay and oats to feed draft animals and used about 1/3 or more of their crop acres to produce the energy necessary to work the fields. Today, farmers will use 10% to 20% of their fields to produce oil seed crops to make biodiesel fuels right on the farm to power existing equipment. To supply the manure for fertilizing their fields they will have to use about another 30% of their fields for hay and pasture for raising animals. So only about 50% of current crop land is going to be available in the petroleum constrained future for the production of food. This change will all but wipe out the large commercial alcohol production facilities currently utilizing corn for their alcohol production. (I think you will see a dramatic collapse of the large commercial alcohol production industry in 5-7 years from now)
This reduction by half or more (reducing the fertilizer input amounts may reduce crop yields) of the production of staple food products will result in large numbers of starvation deaths in North America and massive deaths by starvation in those countries requiring massive importation of food stuffs.
Environmental changes in rain fall, water shortages, temperature and growing seasons will exacerbate the decline in food production world wide adding to the deaths by starvation.
As a WAG (wild ass guess), I will go out on a limb and state that population reduction due to starvation (and attendant riot control?) in the next 40 years will exceed 4 billion people world wide. It is going to be really ugly!

Take a deep breath, Jon.

We cannot afford not to go 'organic'. Only organic methods can help small family farms survive, increase farm productivity, repair decades of environmental damage and knit communities into smaller, more sustainable distribution networks — all leading to improved food security around the world.

That doesn't mean a return to 15th century farming, we have a lot more knowledge and technology now to aid us with the coming transition.

Can Organic Farming "Feed the World"?

From the studies mentioned above and from an increasing body of case studies, it is becoming evident that organic farming does not result in neither catastrophic crop losses due to pests nor in dramatically reduced yields as many critics from agribusiness and in academia would have us believe. A report from UC Davis predicted a 36% reduction in tomato yields in California if conventional insecticides and fungicides were eliminated (Agricultural Issues Center 1988).

On the contrary, organic farming systems have proven that they can prevent crop loss to pests without any synthetic pesticides. They are able to maintain high yields, comparable to conventional agriculture without any of the associated external costs to society. Furthermore, organic and agroecological farming methods continually increase soil fertility and prevent loss of topsoil to erosion, while conventional methods have the opposite effect. In the end, only a conversion to organic farming will allow us to maintain and even increase current crop yields.

Perrin,

I just don't have the time to go into it in a way that will convince the organic utopians but organic won't scale (in the real world we live in today)well enough to shoulder the load for the time being.

And it will not produce in the real world on real farms nearly as well as the current system.Of COURSE there are EXAMPLES to prove me wrong.Not enough.

Organics work - but with increased labor inputs and reduced net yields after allowing for on farm consumption.

Organics are the future,but that future includes more labor,less variety,and eating way down the chain.

Farms aren't ecosystems,and ecosystem science cannot replace nutrients shipped of the farm.

Yield produced using sustainable methods in the real world will gradually rise of course as the the research is done and the methods are refined.

But our only real hope short term is to maintain bau ag and push as hard and as fast as possible towards a sustainable system.

If we are lucky we can all eat,farther down the food chain,by rationing fuel and energy preferentially to existing working farms for the next decade or two.

A change to a new model in agriculture is going to be just as hard as it is in other parts of the economy,and take quite a while.

It might be a pretty rough ride for quite a while,but if oil doesn't deplete too fast,we can manage it in the rich countries.

I'm afraid it's too late for food importing countries with nothing to export but junk,unless they have plenty of available arable land.Right off the top of my head I can think of only a couple that might meet this criteria.

If things go to hell in a hand basket in a hurry,the people who think they are going to grow thier food in thier back yards are going to get slapped upside the head FATALLY by Mother Nature WITHIN A YEAR OR TWO ,probably faster-enless thier yard is HUGE.Some are of course.

They can grow a LOT of food.They will be ok if they have a source of income adequate to purchase the rest-maybe only a little or none if they have a good year.Most or all of it a bad year.

"Organics are the future,but that future includes more labor,less variety,and eating way down the chain."

"More labor" probably.

"Eating way down the [food] chain," yes. And it's a good idea for health reasons anyway.

"Less variety." I don't follow you here. Maybe if we go exclusively with super big organic farms. But most people's vision of organic are smaller more diverse farms an urban farming, which greatly increases diversity. Unless you mean that there won't be fifty different brands of twinkies on store shelves?

According to Sharon Astyk's new book, American's have less diversity of vegetables in their diets than most people in the developing world.

But again, maybe I am mis-understanding how you are using "variety."

Dohboi,

The loss of variety will be due to first,prohibitive shipping costs-no more winter strawberries from the other end of the world.

Maybe not so many oranges from Florida if you live in Minnesota or BC,although I expect rail transportation to be affordable.

Second ,to the fact that many foods(which can be produced locally and will remain available) are
seasonal,and therefore available only part of the year fresh.They probably will continue to be available dried,canned,or frozen,depending on the state of the economy.

And lastly,some foods just aren't easily grown in many places without plenty of fertilizers and pesticides.

We will continue to be able to grow apples,but the trees that are in the orchards nowadays are "hot house flowers" and will have to be replaced with the older varieties that we cut down because nobody would buy the apples they produced.Growing the new trees,once the decision is made,will take a decade to get even ten or fifteen percent of a normal crop-those old time trees are slow to bear.

We grow a few grapes for our own use,about five varieties.

Only one of them will grow produce edible grapes in useful quantities w/o tlc in the form of fungicides due to the humidity and heat.We are not in "grape country".

We grow peaches for market.I doubt if I could grow enough to sell on our place,given the local microclimate,w/o fungicides to control rot.Of course over time ,varieties that might work for us will be developed,but that hasn't happened.

You have caught me in an error-the fact that we will eventually go organic is less important than the fact that shipping and cold storage,etc will become very expensive is just as important maybe more so,than the facts of organics per se.Blogging is not conducive to careful thought-you let things like that slip in sometimes,even though a second is time enough to catch the error.

Grapes will still grow in places better suited to grapes,and peaches likewise.They may be prohibitively expensive in other locales.

We can hope that eventually organic methods will improve to the point that once again I can have five kinds of grapes-that extends the season nicely.

As to the number of varieties of veggies,etc that can be grown in any given locale,we could be growing them now if we wanted to ,so that is pretty much of a "wash".

Nutrient replacement is not a major issue. The amount of nutrients removed from the soil are minimal when natural farming methods are employed, such as Fukuoka's:
http://en.wikipedia.org/wiki/Masanobu_Fukuoka

Not only that, but this kind of farming is not as energy intensive as modern farming, nor as labour intensive, although still requiring plenty of work.

If the crops are shipped off the farm,nutrient replacement is ALWAYS AN ISSUE.PERIOD.

I don't care whether you go "organic" or not organic. You will still need mechanized farm equipment to operate commercial size farms. And that can be anything from 10 acres to 10,000 acres depending on the crop and the location.
"Organic" does NOT mean non-mechanized.

What are the relative economics of running farm equipment on ethanol versus bartering for manual labor with alcohol? Don't forget fuel must be distilled but drink does not.

Dwcal,

If I had time I could have some fun with this problem.

My wag is that you would be a lot better off running the ethanol thru a tractor engine.

You would certainly have a lot less employee management issues that way!Plus tractors don't need the hair of the dog that bit'em the next day,etc.

Jon

You are dead on concerning large acreages and machinery.Even an acre is a lot to work by hand.

And we will need to grow large acreages of monoculture crops for the forseeable future.

Let us pray that we are never again so energy poor that we need to harvest wheat with cradles or horse drawn mowers,or plant it by hand.

But going organic will necessarily involve more labor-a lot of it skilled labor-in the production of fruits,vegetables,nuts,and various specialty crops.

It will also take more labor to produce organic meats.

I may not always say so specifically but when I talk about farming by hand,it is within the context of a near total collapse,such that money and trade are only fond memories for newly minted subsistence farmers.

I don't think it will come to that but who can say for sure?

Well, with the depression dis-employing more and more people, the countries main new need will be some way to employ vast numbers of people. So huge labor needs may be a plus.

Most all of the "Organic" foods in the store are from "commercial" growers who have a piece of registered or certified ground. They all use diesel machinery.

Whether it's organic or permaculture, or whatever, there is no choice about a return to the soil. Certainly experiment onvarious scales is what is desperately needed, and it is far more important to the fate of humanity than just about anything else I can think. Millions of people are being thrown on the slag heap, and the only way they can hope to rebuild their lives is by reconnecting with the soil. The more we can learn about what's possible, the better.

We cannot afford not to go 'organic'. Only organic methods can help small family farms survive, increase farm productivity, repair decades of environmental damage and knit communities into smaller, more sustainable distribution networks — all leading to improved food security around the world.

Perrin, thank you for the nice laugh.

Today, I sprayed ineffectual "organic" Pyganic spray on some half-dead eggplants at the farm where I work. It's certified organic, and sure to cause the Colorado Potato Beetle a little discomfort. The crop is a total loss.

Back at home, I have a nice stock of carbaryl, malathion, and rotenone. My eggplants are perfect.

There is no such thing as "organic methods." In spite of what certifying boards may dictate, there's little agreement among farmers about what constitutes "organic."

When people ask me if my garden is "organic," I say, "Sure. It's carbon-based."

Even if the farm you buy from is certified "organic," how do you know they haven't done what I do at home and gone out and sprayed sevin on the eggplants? Fact is, you DON'T. It's all FAITH-BASED.

I'm not some advocate of commercial industrial ag, either. As I said, I work at an "organic" farm for summer $$. I see first-hand the intense labor, the crop losses, the reliance on plastics and diesel fuel that allow "organic" farmers to jack up their prices 100%.

You need to read a little Jared Diamond. ALL farming is unsustainable. Farming, is, in fact, a MISTAKE.

If you want to survive the coming shitstorm, I suggest you get off your organic high-hog and stock the barn with some I-NPK and a load of pesticides.

If you want to eat, that is.

farmers will once again begin to produce their own fuels on farm.

Some already do. The big wind turbines are the expression of this new fuel.

In the old days they produced hay and oats to feed draft animals and used about 1/3 or more of their crop acres to

And the new version will be small 1-20 HP electric motors. PV panels do a FAR better conversion of photons to work then crops to animals to work as you are suggesting.

Eric,

Maybe some day there will be pv cheap enough to get the job done,But for the time being it costs about ten to twenty times more than the alternatives.Do you have any IDEA how big a set of panels are required to put out twenty thousand watts-the approximate power draw of a twenty horsepower motor?

And it won't suffice even then unless grid tied so the motor can run at night and on cloudt stormy days.

it costs about ten to twenty times more than the alternatives.

The alternative (oil) is WAY underpriced for the value we get. Not to mention almost all of the present EQ is built around oil.

.Do you have any IDEA how big a set of panels are required to put out twenty thousand watts-the approximate power draw of a twenty horsepower motor?

The cabling/battery needs for a 20 horse motor make that model cost prohibitive for mobile applications. Think of the acres of cable - #2 awg. And its got to have some flex - $1,261 for a 50 footer from marineboatsupply.com. Welding cable (one conductor - you'll need 3 for 3 phase, 4 if you want an earthground) is $110 for 25 foot and weighs 12 lbs from grainger iin #2 awg or $400 for 100 foot of #1 awg weighing 40 lbs. But at 240 volts and 20 amps you have a 6 HP motor. 6 HP is a 'home' sized rototiller HP. The 80+ lbs of the motor is a bit of a problem. Yet if you only want to disturb less than an inch of topsoil, then you don't need the 6 HP, you can go with a smaller HP. Leeson 5 HP unit is sub $600. (but then you have to beef up the motor enclosure at that price.) Now if you can get the robo thing down to a 1 HP budget, now you have a simple extension cord grade umbilical. A 1 HP budget is tight, but you can move and operate a 'whack the heads off the weeds' model, and should be able to operate a simple capacitor driven chisel under the soil weed killer model (if you crack the machine vision/rules for weed kill'n nut).

Smaller discrete units allow you to deploy based on what you are generating. I see them as a dump load - the grid should pay FAR better than the increased yield in some ag crop. You have to have some level of weed control and some level of water/folar feeding for yield.....

That is why I'm thinking the future is smaller devices that can work 24/7 in an automonous fashion. Said smaller devices allow a few to be in for repair while others are out working. More units allows for scaling of more land - modular design.

Managing machines doing the between row tilling in the hot noonday sun beats me under that same sun walking behind some damn noisy tiller having me fight it. Barreto showed me the no-fight way in small tillers - but not having to walk behind one is EVEN better!

In fact, for weed selection, nighttime lighting under different wavelenghts makes some weeds light up and make it easy to determine what is the weed. For yucks, go look at the plants under "white" LED lighting or UV.

For the ambitious (read not me at this time....one would need to have some form of adjustment of the individual mirrors and be able to control 'em all in sync to be able to reflect 'em to the MOVING row unit *AND* avoid the failure modes of roasting your crops, the row-bot, or the human eyes. )
One could also try a helostat focusing to the row unit to achieve the infrared heating of the ground to kill the weeds. Alas, the surface area of a fresnel lens would act like a sail in the wind.....
http://attra.ncat.org/attra-pub/flameweedveg.html
http://www.patnsteph.net/weblog/2006/03/weed-burner/
and via http://www.redrok.com
http://www.sohara.org/
http://www.eskimo.com/~billb/amateur/mirror.html
Somewhere on the redrok site was a link to a design for driving a 1 foot by 1 foot mirror. I'd link to that one - but I don't remember it. :-(
But for this to pay, one would have to have a use for the helostat when you are not trying to burn out retenas, err kill weeds. Alas, stirling engines are not mass produced - so I don't see a reasonable other-target.

Well Eric,you are the guy that mentioned twenty horse motors and solar on a farm in the same breath.

And when I point out just how impractical that is,you post all over the place about how it is IMPRACTICAL to use a twenty horse because of the CABLE PROBLEMS?

Why didn't you just post the price of 20k watts of pv? Because it would show just how little thought you have given to your comments?

And then you roll merrily along,talking FARMING with all sorts of machines that don't exist at all,except in cartoon shows and sci fi novels.

This discussion is about surviving the next decade or two.

I personally have read enough of both sci fi and science to tell the two apart.

I won't waste my time on your comments again unless I forget.My mental clutch slips sometimes too!

Well Eric,you are the guy that mentioned twenty horse motors and solar on a farm in the same breath.

Yes, because 20 HP was the size of some of the 1st tractors AND 20 hp does a VERY respectable job of breaking up the soil. That size provides reference, in the same way the word SMALL provides reference when one compares say a John Deere 8030 series with its 360 HP

And when I point out just how impractical that is,you post all over the place about how it is IMPRACTICAL to use a twenty horse because of the CABLE PROBLEMS?

And if you notice I said 1-20 hp.

And the new version will be small 1-20 HP electric motors.

You picked the high end to discuss. 20/40 HP is going to be a problem to handle that kind of mobile power for hours at a time, given present tech. If you go with standard batteries, the weight will add to soil compaction. Batteries (or mobile power plant to cover things like EEstore) MIGHT be able to be used in the off season for cars or perhaps load leveling for the grid. If you go with cable umbilicals, the cost will be a killer for something that isn't deployed all that often. Now perhaps the cables can be deployed for running water pumps - but when the sunlight and weathering effects are added into that expensive cable.....

And then you roll merrily along,talking FARMING with all sorts of machines that don't exist at all,except in cartoon shows and sci fi novels.

Or in the links I posted. If you choose not to believe or follow the links....

This discussion is about surviving the next decade or two.

Given that ICE will still be useable and less than 10% of oil consumption is for farm.....why would all the ICE equipment "go away"? The money/energy has been spent to make 'em and deploy 'em.

I personally have read enough of both sci fi and science to tell the two apart.

Yet you can't be bothered to spend some time in the ag robot space and take a gander at the pHD papers.

Why didn't you just post the price of 20k watts of pv?

Because you did not ask? (20 HP is about 15KWs - so its nice to see you want overage....)

Per
http://www.ecobusinesslinks.com/solar_power_kits.htm
24.00 KW Grid-Tie System 24000 $78,748.00 Per watt cost $3.28

But at least you get 20KW's outta that money. For a wind turbine (northwind) costing almost 1/2 a million to put it up in the air - just so darwinsdog can shoot at it.
http://energyconcepts.us/?page_id=206
you need a 13.5 MPH wind. (13-18 mph, Moderate wind. Numerous whitecaps, Dust, leaves and loose paper raised. Small branches move.)

When the system isn't powering your EQ - you have grid payments as an income stream.
http://www.solarbuzz.com/Consumer/Payback.htm

Because it would show just how little thought you have given to your comments?

VS your claims that *NO* ag robots exist?

Or my pointing out that the model that'll end up working is many small robots for the reasons mentioned?

Or my past statments about how photons -> electrical -> work is FAR more efficent use of photons than photons -> plant mass -> animal -> work. (now the photon -> plant -> oil has a storability and ability to concentrate energy that could provide a higher "value" - debating that is a whole lotta how many angels dance on the head of a pin tho)

Or how the PV can be mounted to the buildings you already have occupying land that doesn't grow crops.

Or how if you use things like standing seam metal roof + the roll on style of panel you can capture the heat from the roof to dry crop or force air ventilation if you build the building that way. (the labor to move crop into drying racks is likely to be a killer tho)

Or how links are some of the same I've posted in other threads - thus showing this is not the result of just now searching on the topic.

Yea - you just keep thinking how I've put no thought or research into the matter - all because my POV doesn't match your POV.

eric,sorry !
i was feeling pretty crabby last night.

Of course some robots are in very limited use as the gp tractor for example but I was "wound up " with backyard robots on my mind.

I'm down to the local Deere dealer once or twice a month and I can assure you that there are no robots on his sales floor.

When small robots are good enough to look after themselves on smooth hard dry floors inside out of the rain and the mud,and do some useful work w/o crashing into corners and so forth,AND CHEAP ENOUGH TO SELL SOME OF THEM,then maybe after another decade there will be a good robotic weeder.and keep in mind that the job that indoor robot will do is probably a day in day out job-that makes justifying the purchase much easier.

I made a proposal -suggestion- concerning battery operated tractors that depends on zero technical change-cheap electric power,big batteries of a kind in common use,expensive liquid fuel, that might come about and I am called ? implied to be "out of it."

Just about every farm in the country is grid tied and grid supplied wind power is a reality,one that is growing exponentially,and off peak nuclear is here and now,today.

In the long run ,if our industrial society survives,the stuff you are talking about may become realities.

If you are in the habit of keeping up with politics and history,I think you will HAVE to agree ,given current conditions,that robots ,etc,will be sorta scarce on the farm for quite some time-most likely longer than either of us will live.

The last paragraph of Camels comment that you mentioned does indeed make sense.But the rest of what he had to say - I cannot see that he makes any point.A line at a time it's not so bad but as a whole ????

I can assure you that there are no robots on his sales floor.

But that does not mean that machine vision based robo weeders do not exist, which is what you claimed. 2 plants a second is a rather fast rate - unemploying humans is what the whole farming with powertools has been about. I'm looking at the same unemployment idea - but from a different angle.

I made a proposal -suggestion- concerning battery operated tractors

The problem with any kind of battery operated tractor of any size is going to be soil compaction.

The trend is to try to avoid compaction and use plant roots/worms to break up the compacted soil that's 10 inches or so down due to years of heavy tractors moving about.

A 50 to even 200 lbs robot should be able to work FAR wetter fields than you could ever do with any normal human-directed tractor, so yet another advantage.

I think you will HAVE to agree ,given current conditions,that robots ,etc,will be sorta scarce on the farm for quite some time

If humanity is still able to make VLSI chips and have computers with gigs of memory for sub $500 - A robo water-fertilizer/pesticide-herbicide applier/weeder will be cheaper than trying to power a human or animal to do the same job. So long as the unit is in good working order and its not raining - said robot could do 24/7 work.

If humans loose the ability to make sub micron lines in silicon - then any robo future won't happen (At least with what we know today about robotics/electronics)

For row 'tilln - you need to have laid down a straight row (doable via a laser and a 2 machine system with a seed drill) then a simple go up and down the row moving about the soil so weeds can't get a root establishment is not hard. Adding a LOT of instant energy ala a rotating tiller is rather simple VS other slower lower energy - but then you kick up some soil to be lost to the wind. Simple sensors can 'ride' your low power laser. In between plant weeding will be the "hard" part.

And the people who'd "like to have a garden" but "don't like the work/have the time" could very well be the 1st market for a small HP slow moving weeding unit where one could get a premium price.

Do you have any IDEA how big a set of panels are required to put out twenty thousand watts-the approximate power draw of a twenty horsepower motor?

Yep, I just quoted a 25KW PV installation yesterday to a mid sized business, depending on which panel manufacturer you go with roughly speaking you will need about 100, 15 sq.ft. panels for a total installed price (to Cat 5 hurricane specs,I'm in South Florida) of roughly 200K.

That isn't a very large area now, is it? ;-)

F maygar,
acreage= no problem . cash at current prices= heap big problem.maybe in ten to twenty years...

I am trying to stay in that time frame in regard to my comments in this thread.

Point out an off-the-grid farm that uses wind power or PV to harvest grain without diesel input. Just one. They should refuel their off-farm vehicles from the same source. They can sell the excess juice. I imagine there are millions of farmers around the world without grid connection. Why don't any of them have windmills and electric tractors?

I have land and no grid connection. I need a practical how-to guide on how to set up a solar farm. Please provide. What's his name with the solar tractor doesn't count. That's a joke.

Cold Camel

put me on the list also ... there are soo many myths on the internet.

Point out an off-the-grid farm that uses wind power

Considering the model for wind turbines on farm land is selling that power TO the grid - there are not any "off the grid wind farms"

harvest grain without diesel input.

Plenty of grain was harvested before diesel input.
http://chla.library.cornell.edu/ would be a good starting point for ya.

I have land and no grid connection.

Good for you.

I need a practical how-to guide on how to set up a solar farm.

Sounds like you need to hire a consultant as you seem to be adrift.

Please provide.

And your budget to fund this is?

(Hint - all farms are a solar farm. Sometimes your farm operation is steps seperated from the photonic input like animals or mushrooms, sometimes its more direct like a annual plant crop.)

Eric, you avoided my issues. Without the grid, wind farms wouldn't exist, that's my point. It doesn't make sense for a farmer to put up a windmill and install electrical tractors. Instead, around the world in every jurisdiction, farmers rely on diesel, animals or hand. Pick a place, any place, with good wind, good soil, and a poor road system. Do the farmers use electricity to grow crops anywhere?

Of course you can harvest grain w/o diesel by using animals or by hand. But how do we go forward? How do we harvest without liquid fuel, animals, or by hand? People say we can't go backwards, and I tend to agree, but my view of the future is a dismal one, using diesel, animals, hand, and best practices. Where is the new system that makes diesel go the way of the mule? It doesn't exist. Since it doesn't, life is going to get miserable.

Name a consultant that has designed farms that run exclusively on solar power.

Yes my budget to fund this. I will spend good money on a good plan. Show me a plan and I'll pay for the details.

Hint - all farms are a solar farm.

Huh? Solar diesel? Solar metal? Solar Inorganic fertilizer? Solar transportation?

For all the rest of you reading this exchange, sorry for stealing your bandwidth. If I don't expect to learn or teach anything, I shouldn't be posting.

Cold Camel

farmer to put up a windmill and install electrical tractors.

The tractor model requires a whole lotta horsepower VS a smaller lower wattage, slower moving, but self directing robot model.

There is some base formula of "you need X watts of power added to crop land to result in Y yeild" small low wattage robots moving slower than the roboweeder that does 2 plants a second when mounted to a tractor may end up being less wattage "investment" - but until there is mass production and not just ppl screwing 'round in their back 40 - we don't know these numbers.

Oh yes! This is a technological fix with no real practical application. Just because it is technically possible does not mean it is going to happen. Ideas like this are like the moles in whack-a-mole. They just keep coming back. This one is new, but it is no different from the others in my 1980 Epcot book.

Eric, put the pieces together and get totally sopping rich. Use your money for whatever you deem most important. Solve this problem please.

But realize that these ideas were easier to fund pre-peak. The longer you wait, the harder to fund. So don't dilly dally. Solving the problem after 2/3 of the world starves is a bit late.

And I'm not being sarcastic. Too many people sit around dreaming up these ideas and too few actually put the rubber on the road. I am not a giant, nobody will stand on my shoulders. But if you can bring your dream to reality, please do it. Unlike most, who scoff at giants, I have no dog in this hunt. I want you to succeed. Go, Eric, go!

Cold Camel

Eric, put the pieces together and get totally sopping rich. Use your money for whatever you deem most important. Solve this problem please.

The ppl who'll get rich are the ones who hold the patents.

The field is "locked up" with respect to intellectual property.

You seem to exist in a world where work == reward. With patent law in force, the rewards go to the group who's willing to litigate.

Solving the problem after 2/3 of the world starves is a bit late.

2/3 of the world starving is the goal, is it not? The yields humans are used to is due to taking fossil fuels and making chemicals to kill bugs or energy to take Nitrogen and tie it to hydrogen.

Low wattage 'bots don't address either - the best they could do is to use short lasting soaps on plants for the bugs, and try to feed the Nitrogen to the plant leaves. Someplace along a resource use curve having 'bots do on 40 acres what humans do in their 1/2 acre raised beds with weeding/watering/pest management

Camel,I apologize for my remarks over the last day or so.Looking at what you write one paragraph at a time you make pretty good sense.But some of your posts do tend to ramble around like a kid on a tricycle.

I believe that most our our problem consists of the fact that we are not only on different pages but also different chapters,but we are mostly in the same book.

You are talking what if's-show you a farm using wind and solar,etc

I'm talking what IS-just about every farm in the US and the rest of the richer parts of the world IS ON THE GRID.Wind power is on the grid.A tiny little bit of pv and csp is on the grid and will grow because the political decision has been made to grow it.Hopefully it will eventually be cheap enough to be of some real use,and plentiful enough likewise. ergo there is a real possibility that farms,which already are for the most part using electricity for some purposes,may use a lot more in the future-assuming no collapse.

I have seen big machines-very large forklifts- that run on batteries,and the people who maintain them will tell you that between the low cost of charging a lead acid battery and buying fuel the battery is not that bad a deal,considering the fact that an electric motor will last several times as long as even the best built diesel,and requires next to no routine maintainence.

If batteries get cheaper-relative to the price of fuel- batteries in farm machines may be here within my lifetime-and my time grows short.

If a car can run on a battery...the case for the tractor is actually better,because dead wieght is a much smaller part of the equation .
Intelligent people need not waste any time discussing what the peasants still doing it by hand are going to do in the near future.They will soldier on bau thier way,unless by some miracle a lot of money appears to buy ff inputs for them.

Mac, my disagreements with you are details, but we're in the same book. Lots of non-farmers think they can do things better than farmers. I'm an odd duck, a non-farmer with land. The more I learn, the more I trust farmers. You're a farmer, so I learn from you even when we disagree.

there is a real possibility that farms,which already are for the most part using electricity for some purposes,may use a lot more in the future-assuming no collapse.

I simply disagree. That's a nonsensical argument. As decline sets in, farms will use less of everything, by and large. Less input, less output. Maybe you believe that ammonia will be sourced from electricity, I don't. Instead, farmers will do with less. The price farmers can pay will be less than what electrical producers must charge.

Forklifts vs. tractors are apples and oranges. Forklifts need huge power for short periods. Tractors need sustained high power. Forklifts and yard trucks and batteries are a natural fit. Did you see the design of the electrical tractor for olive farms? It's tiny. It couldn't haul out a stump, pick up a dead cow, or harvest acres of grain in an hour. It's a gimmick. The olive farmer wasn't using much oil in the first place. Dead weight is not the issue.

We are going to sow less and eat less. Farmers are going to be poor along with everyone else. The efficient farmers are going to stay in business. Those are the ones growing corn in Iowa where input costs are the lowest.

Farmers, people who make their money from the land, must count their pennies. Mickey Mouse arithmetic doesn't work. Academics and intellectuals live in la-la land. I pay attention to farmers, unfortunately, they are painted into a corner. Big tractors make money, small ones don't. As demand for food drops (at least the ability to pay), big farmers will put hobby farmers out of business. So how do I survive on my hobby farm in the meanwhile? I don't. I assume no income. Cheers.

Cold Camel

Big tractors make money, small ones don't. As demand for food drops (at least the ability to pay), big farmers will put hobby farmers out of business.

And without the crop payments from FedGov - do the "big boys" make money?

Good point. Government intervention muddles the picture. What do you see happening?

Cold Camel

As the economic part bits, the ppl who HAVE to have loans will feel the squeeze of the margin call.

Yields will drop over less fertlizer, less water being pumped - all variations on energy being more expensive thus making raw materials more expensive.

Camel,
I made all the same arguments you are making diesel versus electric about a month ago on this same site.

But I qualify my comments with "for the time being" or "the next ten years at least",etc in this particular debate.

Robots may work the fields one day- within my lifetime.Or we could be doing the subsistence thing that I have posted about frequently-if we live thru the collapse.If the collapse arrives.

I try to stick mostly to the next decade or two when I predict and as Yogi sez,that's hard enough.

Soil compaction and a lot of other stuff you hear about is a real problem,but the costs and consequences are gererally not nearly as bad in a practical context as most writers make them out to be.

It's sort of like the price of diesel-everybody has to have it and pays about the same price,and every body passes the cost along,devil take the hindmost.You just have to be sure you aren't the hindmost.Soil compaction is not going to be very high on your list of must solve problems if you start farming your land.

You seem to think that the world is headed to hell in a handbasket.I myself believe that there is a distinct and significant possibility that you are right,and have been -just in case-getting ready for that very thing for some time.

But I think that it is much more likely that we will skinny by,here in the states at least,and that a small farmer will be in pretty good shape for a change,as compared to other small biz and crafts and trades type guysif he is located where he has direct access to plenty of customers.

If things really do go rock bottom you are doubtless right,finding a paying customer is going to be tough.But not imo as tough as keeping your "nonpaying customers" from finding you.You may want to think about that for awhile.

Differences of opinion-thats what keeps the horse tracks in business.

Mac, I agree except for the small farmer thing. Small farmers are going to lose their shirt just like everybody else. The only thing they got going for them is that they can feed their family until the tax man comes to take the land away. If they time it right, this will be a big benefit, but timing is a bugger. So please don't suggest that others quit their day job to become a small farmer. That's a quick route to the poor house.

Keep the day job and prepare for the worst. That's my advice. If you day job is as a farmer, then fine, keep farming. I'm one of the idjuts that kinda sorta thought about switching to farming. It don't work for us city boys.

Keep posting. It don't take many kernels to keep me reading.

Cold Camel

Camel,
Anybody who has been following my comments on this site for a while will know that I have done everything I can to convince people that farming-other than hobby farming- is just about thehardest and toughest way to make a living that you can find.

Most small farmers are still in business due to a combination of factors including off farm income-the JOByou mention-,the fact that they bought land many years ago or inherited it,willing to work long hours for peanut income,and excellent hands on/managerial skills as a result of long term experience as result of years of experience ,etc,etc

And if the collapse does come,imo only those with considerable some hands on experience gardening, etc, and who are young and tough and well located have any real shot at survival-physical,not financial.

Richard, thanks for taking the time to put together this cogent overview of the situation.

I've put together some graphs, mostly based on the thinking I've learned from you and others doing the hard work. They may be useful to people as an aid to understanding some of the fundamental concepts you describe.

The first graph appears in Hirsch's paper Mitigation of maximum world oil production: Shortage scenarios, 2008 and is originally from Deutche Bank. In his paper he constructs a framework for understanding the relationship between oil and the economy. Despite the move away from oil after the first oil spike, the still existing correlation between economic growth and oil consumption is clear.

Photobucket

In the graph below I show that the price of oil must stay within a certain band: too low and there is insufficient reason to move to alternatives, too high and the damage to the economy occurs as you describe early in the essay. That damage slows the move away from oil.

Steve from Virginia accurately points out that it is merely an assumption that the lower price line will actually do the job of moving us to alternatives without damaging the economy. It's entirely possible that even that low prices starts invoking the principle of receding horizons (the notion that the day we get mostly off oil is moving further into the future rather than closer, in other words, that we never get off oil with anything like the current economy intact).

Magic Price Incentive Band

For Gail's points on dieoff, it's useful to visualize how much of our food comes from fossil sources. This graph, from Graham Zabel, uses one methodology to attempt to quantify it. It will be a challenge feeding everyone. We now live on a very, very crowded planet.

Fossil Fuels and Population

Next is the original graph of Scenario 1 of the Limits to Growth team. My understanding is that they did not explicity model oil depletion and yet their curves (in this scenario) indicate a definite point when growth stops. Dr. Graham Turner from CSIRO Sustainable Ecosystems has collected data that shows we have been following the curves with remarkable accuracy.

Scenario 1

As the economy shrinks, what will that look like? I too think the shape of the curve will be governed by the price of oil occasionally increasing and destroying any recovery.

Staircase Model 2009

If it is the end of growth (I think it is), how steep will that curve be? Will it be a crash as depicted in the orange line below? Or will we make choices and take actions that give us the green line?

Possible Future Scenarios

Finally, I think it's useful to consider Maslow's Hierarchy of Needs to understand how our lives (and in particular our livelihoods) will be different on the downslope of oil and all fossil fuels. As you point out, entire job categories are likely to disappear or shrink radically as we (i.e. the world economy) become poorer. The jobs most vulnerable will be those at the top, but it's wise to remember that during a general downturn like we are facing there will be plenty of people available with any sort of skill one could possibly want from now on. Downward wage pressure will be immense as people scramble to bring in money.

Photobucket

As you point out, there is much preparation to do and I believe that people can — if they are nimble and start now — get themselves set up to have a satisfying life filled with love and family and community and all the important things in life.

They just may not have an iPod.

-André

Here's a graph I just cooked up, percentage growth/contraction in world oil production YOY:

Like discoveries, this is something else that has been trending down since the 60s. Can't recall this simple phenomenon being charted before, undoubtedly it's been done though.

To The Dude,

Your simple graph may be one of the more useful of the day for putting things in a longer term perspective. It makes one ask the question, how did we ever survive the 1970's? Ah, those were the "good old day"...:-)

RC

The past falls in oil production relate nicely to falls in global GDP growth. We survived because the oil shortages were temporary.

TheDude, nice graph.

Thanks guys. Here's another one I threw together today that took me by surprise: US production + major imports - i.e., crude, gasoline + distillates:

Just looking at bare production (as has been done in a million other graphs) doesn't tell the whole story. The message this one has to tell is far from reassuring though; it looks as if the industry response in the 70s was to go absolutely hog wild building out the tanker fleet to import anything they could get their hands on - falling over one honkin' cliff at the beginning of the 80s. Is that recession we see, less oil to electrical generation, or CAFE standards...and will we have even one out of three this time around?

This graph says to me that even if the oil is "out there" somewhere in the world, it won't matter...we will run out of money to buy it before the world runs out of oil. "Peak money" is a real short term threat...oh, that's right, we have noticed that little problem in the recent financial problem...

RC

Wow! What a great summary, Richard, totally clear and compelling to anybody (Yes???). And aangel, what great graphs! I love graphs, with all those rates of change and stuff you can eyeball off of them immediately.

I am sending this whole pile of super good thinking to all my friends and enemies right a-way.

But I have a little worry in the back of my mind, of the good-news-bad-news category. What if people did what I and many others have long argued is possible:
1) recognize the problem
2) get together and agree to do what is needed to solve it
3) Quit all the stupid, wasteful, not happy, things we all do today ( which is most of what we do, actually-- even I myself do do a few things not needing done!)
4) Use the thus-saved talent, material, energy planning, wisdom, etc etc, to get off fossil fuels NOW. And go to solar in all its forms, which we all know is plenty plentiful if we just went for it.
5) end up with a nice safe nest for homo-sapiens

So, is this bad news? Yes, if us-uns keep destroying the rest of all of it, by stupid use of our nice new clean energy, just like we are now doing with our old dirty energy.

But, then, not to worry, we aren't going to do !, 2, etc., are we? So we are safely doomed.

In my view, you are correct.

Without a wholesale appreciation of the whole system we've constructed and the commitment to alter it (i.e. the growth paradigm), any new energy source will simply delay the collapse as we bump into other limits.

Since I see no widespread evidence that people are waking up in sufficient numbers, I believe we can safely begin holding eulogies for this economy (or perhaps we should have wakes, they seem more fun).

aangel,
Or, talk to people who offer other well founded answers.

True, there's a point where doing anything requires Wimbi's first 4 improbable events, but if someone were to realize that "we're f'd" if we don't, and the consensus to "do something" materializes, we're going to need something better than entirely self-contradictory solutions.

I've been mentioning the curious unstudied solution of copying how nature stabilizes the growth systems she produces, getting them to mature at the prime of their lives, even... It's an actual systems strategy, for anyone who believes in a physical world that is. A number of fairly clear boundary conditions can be sketched for it, and then we'd have to struggle with the new set of moral and practical issues.

It wouldn't necessarily be completely smooth, of course, but I think it would produce the time and the money to do the transition to sustainabiliy that it is becoming increasingly apparent won't materialize while barreling ahead with the perpetual growth scheme.

Aangel,
The main thing to be added is what we might formally call "the energy trap". We might not have the affordable energy to make the transition to new energy sources at all. The affordability part is raised by the example of the commodities bubble of the past decade that seems to have been largely due to natural resources being sluggish in responding to demand, compounded by speculators. Without vigorous growth (assuming our present growth imperative) there won't be any money to invest, since all the investment funds will just withdraw to safe havens. There won't, however, be vigorous growth. That's because we're already hitting the price wall of natural limits, as the natural system seem now likely to produce price spikes and economic collapses in response to high demand rather than more resources at lower cost as was the case before ~1950. See also "Profiting from Scarcity", the post I did on the subject.

Without vigorous growth (assuming our present growth imperative) there won't be any money to invest, since all the investment funds will just withdraw to safe havens.

If you consider money to be valued in the Ricardian sense, as a proxy fr human labour, then why should this be so. We still have a population of mostly able bodied humans. In your scenario they sit around on their hands doing nothing of value -simply because an artificial human invention called money has vanished. But, money is simply printed IOUs, so I think future governments will just make sure their is enough "money" flowing around to usefully employ most of the population. Of course the real kicker is we must be wise enough to recognize the problem, and to agree on a reasonable program for working within it. Then we must have the will to make it happen. So the real problem is sociological and political. And I think different countries and regions will have different levels of success in dealing with the challenges.

IMHO, the Scandinavian countries appear to be getting it, and seem able to make the transition. At the opposite end of the spectrum I would put the USA. Here we have an ongoing culture war, and rather than analyze to determine causes and solutions, the difficulties are likely to be used to scapecoat the other side. Unchecked this will lead to civilwar. Hopefully we won't be that stupid. But current portents are not good.

Unchecked this will lead to civilwar. Hopefully we won't be that stupid. But current portents are not good.

Modern firepower will make short work of most 'insurgents'. "civil war" as a change option is the change from living to dead for most of the participants on the 'want change' side.

An excellent essay but I have a significant disagreement (or, perhaps, misunderstanding):

What I read is just another iteration of BAU, e.g., relocalization of "production." I don't see the dramatic rethinking of society's purpose or function necessary for true sustainability.

I said my piece a long time ago (June 6,2007 to be exact). http://www.theoildrum.com/node/2598#comment/198259

My post is about 1/3 the way down and headed Post-Peak Education

Todd

Ilargi stated the contrary viewpoint for his editorial yesterday, for those interested: The Automatic Earth: August 5 2009: Millions long for immortality

And where's the alleged connection here with oil prices? Many people will argue that it's at the pump that oil becomes a real issue, and they DO notice the price changes. But it’s in the increasing job losses, the foreclosures and the soon to be raised tax bills that they will feel what the financial crisis means. And where they really hurt, much more than at any gas station. A $30 trillion loss of wealth is $100.000 per capita, since the crisis started. It’ll take you years to put that sort of money into your tank. So many years, in fact, that we may indeed run out of oil before you ever get close.

For now, going into this fall and further into next year and beyond, the one tale that matters far more than anything else for "ordinary people" is that of unwinding and disappearing credit, accumulated debt deteriorating services, vanishing jobs and boarded up homes. The cost of oil is but a bit player on that stage.

This is far from "mainstream" economic dogma, btw.

Given all the comments about debt requiring growth, why doesn't someone do an article looking at what kind of implicit growth rate was required for repayment of the debt accumulated prior to the "crisis?" If the figure wildly exceeds BAU growth figures, it seems to me that would cast considerable doubt on oil prices as a driver. I can't help but feel the old adage "if all you have is a hammer..." holds on TOD.

You are assuming that the credit bubble was legitimate. I think it was rife with fraud and things are much worse than if it was just malinvestment based on assumptions of future economic growth. We just lived through the biggest most pervasive swindle in the history of the human race and it is going to crash like any other scheme.

I do believe that the bubble was a result of fraud. My prior in suggesting the exercise is that the lending activities leading up to the present were not based on any reasonable forecast of the future.

My point is that there is no way of accounting for any of it since no one was even thinking about recovering the "capital". All they were doing was trying to figure out ways of dumping the crap paper by bundling and securitizing and lying and spinning off the books. If there is no basis for this mess in business analysis then it can't really be measured.
If you want a guess then I bet the required growth rates would be on the order of 25% or higher which is insane and illustrative of how effed up things really are.

Given all the comments about debt requiring growth...

But, I think we can fake "growth" by substituting inflation for growth. That way past debts get inflated away just at with reag growth. The problem then becomes convincing current and future potential investors that it pays to invest or loan money. If they think they will be paid back in inflated currency, that might be a pretty tough sell.

I too have struggled with the "debt-plus-interest-requires-growth" assertion.

I first encountered it, I think, as an in-the-process-of-disillusionment closet cornucopian watching Chris Martenson's Crash Course, and found it instantly obvious.

Then it occured to me, as enemy of state states, that inflation can substitute for growth.

But now I am not at all certain that is correct.

The explanation I now find most compelling and succinct is this one from Denninger:

Debt is inherently deflationary. The inflationary impact of additional credit creation is temporary; in the longer run debt always has a deflationary impact. This is obvious and inescapable if you use your head; since debt must be repaid with interest, it therefore must deflate (decrease) the monetary base since interest is a non-productive "charge" against income and (thus) earnings. This, by the way, is the fatal flaw in Bernanke's Doctoral Thesis; by refusing to recognize that all modern monetary systems (including ours) are debt-based he also fails to recognize that there are limits to being able to "print" your way out of a deflation since what you are printing is in fact debt and eventually you reach an "inflection point" where the spiral tightens - that is, the more "printing" you do the worse the problem gets!

Two takeaways:

One, Denninger is obviously(?) using "inflation" and "deflation" in the strict, monetary, "expansion/contraction of money supply" sense (recently advocated as much more useful than the MSM "price increase/decrease" by Stoneleigh and Ilargi in a recent discussion here). I have a hunch this is the easiest framework to use if we want to understand this phenomenon.

Two, and this is what I think is the clue: Denninger's inflection point is probably dependent on the growth rate. In general, I expect the inflection point to be further out the greater the growth rate and the lower the interest rate and vice versa, but don't know how to prove it...

So there are at least three factors at (inter)play here, growth rate, interest rate, and inflation rate.

The first and third can clearly be negative - but does negative interest rates (as a fundamental quantity) make sense?

Can the inflection point be negative, and what would that mean?

I am trying to work out a series of idealised examples to play around with...

But yes, I would really appreciate if someone conversant in these matters would write up an essay on it, explaining it in detail.

The explanation I now find most compelling and succinct is this one from Denninger:

Debt is inherently deflationary.

Excapt when it's inflationary!

(Man walks away from bar, "Inflation, deflation, who cares!!!???" Man passes out and lies down on sidewalk in rain.)

It's funny ... Denninger, Ilargi and Heinberg are ALL right, both are wrong about the time frame(s).

Peak oil really started in 1973, when the US - which had reached peak domestic production a couple years earlier - was waylaid by an OPEC production cut. US inflation was strong - bcause of the Vietnam war which was both expensive and unpopular. Not only was the US but Japan and Europe stranded without gas! This was with a much stronger dollar, individual Euro- Yen currencies and no China ... and measly a 10% OPEC production cut.

Shapes of things to come!

What happened? The Europeans cooked up a European Monetary System that would delever them from the non- gold, non- Bretton Woods dollar. The Japanese started inflating asset bubbles in stocks and real estate. (1973- 75)

Meanwhile, back @ the ranch, the USA people derived Mr. Jimmy Carter, who wore sweaters and established the (infamous) 55mph speed limit. He also called for conservation, increase in nuclear power (he was a Navy nuclear engineer) and improved efficiency. (1976- 78)

In 1979, the Iranians overthrew the US- created Shah regime and an outcome was both the Iran- Iraq war and the 'tanker war' in the Persian Gulf. Oil prices lurched again, US inflation roared and Carter named Paul Volcker as Chairman of the Federal Reserve system. Volcker worked hand in hand with OPEC to drive prices for both credit and energy through the roof the result being - up to now - the deepest and most painful recession since the Great Depression. (1980- 81)

The Iranians forced the US citizens' hands by holding Americans for ransom in Tehran, instead of declaring war on Iran Carter muddled and lost the 1980 election to the union- busting Ronald Reagan. Reagan's Disney- World vision intitially lost traction while the economy soured but oil prices started to decline in the early 80's and interest rates fell as well. Both paved the way for US asset price bubbles - inflation directed toward 'investments' rather than general spending. Ronald Reagan was now in the sunshine of his presidency.

By the mid- 80's Japan was on its way to huge bubbles; a Nikkei spike and another in real estate - these were the years of 'Japanese superiority' in all things, especially business. The Europeans were on their way to the Exchange Rate Mechanism. The USSR was starting to crack, and was pumping oil for all it was worth. Oil was also flowing from Alaska and the North Sea. OPEC was on the run and prices were falling. The USA had nascent bubbles in real estate and stocks. Reagan had tossed both Carter's solar panels and Volcker overboard, it was 'Morning in America' again.

Morning for bubbles, again.

By 1989, the USSR had collapsed, Japan was @ the height of bubble mania - the Nikkei @ 40,000 and the grounds of the Imperial Palace worth more than all the real estate in California. The Euro was a couple of years from birth. Low interest rates in the US had unleashed speculative furies in markets and in the growth of financials and derivatives. Bubbles could now get much, much larger.

By 1998, the Japanese bubbles had deflated leaving Japan on the rocks of deflation. Every trick in the book was tried, the same book that the US authorities are using now. Oil was @ $12 a barrel. The Russian economy had collapsed - nobody wanted the Ruble and its oil was worth only ... $12 a barrel! China was a growing capitalist force set to overtake Japan as an exporter. American bubbles were still modest but ready to inflate dramatically. There ware nascent property bubbles in the Eurozone as well - in Spain, UK and Ireland.

Post- 2003, the American real estate and dervative bubbles inflated stupendously. Financial wizardry made down-to-Earth reality something for sore losers. The winners - those with credit and collateral in housing and stocks - could afford to buy anything they wanted, cars, more houses, vacations, luxury goods and as much gas and oil as a Croesus could burn in a lifetime. This mirrored the steady rise in oil prices from the low in 1998 to over $80 a barrel in 2007.

Shortly after, the bubbles reached their maximum, we are living the consequences. Oil now costs $70 a barrel. The bubbles in stocks, real estate and financials are deflating while the government frantically attempts to puff up a replacement bubble - to start the bubble machine again.

China is in the 'Nova' expansion phase of its (final) bubble.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

First of all, there are two strategies that are obvious. One is the strategy of currency reconfiguration. This was the Euro approach; move from dollar hegemony, create an economic improvement zone with clear rules on money supply and inflation and create a reserve currency that can fairly price energy.

The second strategy is to inflate asset bubbles that would serve to 'hedge' energy costs; whatever those costs would be, they would be less than the money- value of the hedging assets. Theoretically, the asset inflation mechanism would continue to create enough 'money' to support the bubbles indefinately. The final innovations were the derivatives; these would allow further hedges to be placed against the usual mechanisms that ordinarily deflate bubbles. Losses would be hedged and eventually, risk managed to nothingness.

At the bottom of both strategies is the price of energy. As is the case with life on this planet, there are ranges within which economic systems can exist. Too much heat or too little water and life vanishes. Too high interest rates or too high oil prices and economies vanish, too.

What Denninger and Ilargi are looking at - as well as Mr. Heinberg - are different parts of the economic ecosphere. From all viewpoints, the economic ecosystem - the econsystem - is on life support. Why? Because the $70 is too high for normal manufacturing and commerce. Regardless of the pump price - Euro gasoline pump prices are higher - the costs that are embedded in the REST of the economy are too high to allow businesses to make a profit. No profit, no business.

So, when Denninger and Ilargi talk about debt, he talks about the response of the system in the US and Japan - and soon in China - to embedded energy costs. The strategy has been to use debt to inflate asset prices, the prices couldn't support the debt and now the remains of the asset strategy cannot support the still increasing energy prices.

Heinberg talks about more directly about input prices, but these are more manifestations of the same situation.

It's as if a house is on fire and the fire department is shooting water at the house. One person discusses the water damage and the other is noting the fire damage (and the third the smoke damage.)

The best strategy to date seems to have been the Euro strategy, which focuses on having a relatively high- valued currency v. the dollar and oil. A high value reserve currency gives the holder something of value to trade for energy. Since the value of energy and the value of any currency are at bottom abstract - humans are valuing both, unfortunately - a stable and reasonably yielding currency can be persuasive as a trade factor to an oil supplier. Unfortunately, this may not be the case much longer as there are structural aspects to the overall econsystem that money value cannot address. While there is no absolure shortage of energy, there is a shift from the widespread consumption model that allowed all to partake of resources without limits other than extraction ability. We have now fallen into an allocation system where more and more possess the capacity to extract but only a few - those who can afford to - will be able to do so.

The difference in strategies gives us a way to examine what happens as the crieis unfolds. If the crisis continues unabated in the US while it begins to subside in Europe, the conclusion would be that the problem is with money and credit, the US having more difficulties with its deflating bubbles than Europe which has managed to avoid them to some extent.

If the situation deteriorates in Europe along side the US or if America starts functioning again while the Eurozone fails the problem transcends money and credit, the only other culprit left is oil price and availability.

Right now it looks as if the the general trend in economies will be downward both in Europe as well as in other regions. Not only is there not much difference in indicators in both areas, but there are singular dangers in Eastern Europe and UK that are relatable directly to energy constraints; the situation with gas in particular.

In all things of this sort where there is wager to be made between a human folly and nature, it is always wise to bet on nature.

Thanks for answering, Steve.

(going away so must be short and no further replies from me in this thread, sorry)

I still don't understand though... grappling with the basic mechanics of this.

What I think I follows from what Denninger says is that if you can sustain an exponential growth of debt, then you can use that debt to sustain inflation, too.

and from that follows that if exp growth of debt stops, you're in trouble.

If growth (of economy) slows, you'd have to accelereate the debth uptake to maintain its beneficient effect?

Asset prices are clearly influenced by debt levels, but are they critical to understanding the mechanics of this?

Investing money and loaning money are 2 different things entirely.
Investment implies trading the fixed amount of money for a stake in equity which is open ended and will increase to reflect any inflation apart from the stakes ability to produce increased value.
Loaning money is just giving up control of the money in return for some arbitrary fixed rate of return that has no direct link to the economic conditions of the period that it is lent. Lending requires the lender to guess about the future value of the money itself because once lent he is trapped with the fixed rate.

I believe I'm with most people here on the End of Growth side. The only question in my mind is whether we can unwind this mountain of debt in an orderly fashion, this money that was lent out in expectation of future growth fueled by extraction and fossil fuels.

What I found interesting about Russia was how people kept going to work when they weren't getting paid, so basic services didn't collapse, and people weren't left homeless without an income stream. I don't foresee the same thing happening here. Nothing gets done without payment.

Nothing gets done without payment.

*points at the open source software that runs this place*
*points at timebanking* http://www.timebanks.org/

* You can't copy physical objects for free the way you can with information.

* Time banking sounds like barter which to me counts as "getting paid".

The Free Software Movement has its roots in academia and the tradition of freely sharing knowledge. It's also a product of the so-called Information Age, the fruits of which are rather high up in Maslow's Hierarchy of Needs.

* You can't copy physical objects for free the way you can with information.

Ergo the "nothing gets done without payment" is incorrect.

(the love of a parent for a child and what they'll do for said child would be another example)

In today's world, nothing gets done without payment.

Regarding what a parent would do for a child. Well, before the parent attempts to do anything for the child, is the parent naked? No, presumably they're clothed. Did they buy the clothes? Or did they steal them from someone who bought them? And the food. Bought or stolen from someone who bought it?

Copying information isn't free. The computer and the energy have to be paid for. The Internet connection has to be paid for. The server. The administrator's time. The guy who donates time to create free software has to eat.

Of course some things in life are free, like a parent's love, but you can't generalize that. I shouldn't have said "nothing", but I can make the general case that:
Workers generally expect to get paid (barter counts too), and when workers don't get paid, things stop working.

As Orlov noted, Russia is the exception. It helped that they had rent-free housing.

As I said, the Free Software movement has its roots in academia and the free sharing of knowledge. There's a long tradition of this; Oxford was founded in 1167. However, it takes a lot of surplus wealth to supply a university, and you can generalize free information to the economy of physical goods and labor to provide for basic needs.

Dwcal,
The Russians had a saying:They pretend to pay us,we pretend to work.

A soviet AF officer who defected said that the only way he could secure the loyalty and cooperation of his men was to let them drink and sell the straight ethanol used to juice the engines on his squadron of interceptors.

That way he could count on them,as they were counting on him.

They just faked the flight hours-which helped with maintainence expenses too.

Diagnosis: Temporary Recession: probably a few decades
Prescription: Nuclear

From 1984 to 1994, scientists at Argonne National Laboratories developed an inherently safe and cheap nuclear technology unlimited by fuel supplies that contributes nothing to weapons proliferation, with a waste product sharply reduced in both radioactive lifetime and amount. Known as the integral fast reactor, the project was cancelled suddenly by Clinton during the final stages of testing, since anti-nuclear Clinton thought it was "unnecessary" (state of the union speech, 1994).

"In 2001, as part of the Generation IV roadmap, the DOE tasked a 242 person team of scientists from the DOE, UC Berkeley, MIT, Stanford, ANL, Lawrence Livermore National Laboratories, Toshiba, Westinghouse, Duke, ERPI, and other institutions to evaluate 19 of the best reactor designs on 27 different criteria. The IFR ranked #1 in their study which was released April 9, 2002.

The IFR uses a pyrometallurgical fuel cycle with electrorefining that segregates and consumes plutonium at a faster, slower, or equal rate as it is created, and mixes fission products and actinides in such a way that the fuel form is incompatible with bomb production. The reactor has a modular design that could quickly and cheaply replace the boiler of existing coal plants, and use the existing grid infrastructure. The IFR utilizes uranium resources more efficiently by a factor of 160. In fact, uranium exists in granite at 5ppm, which if used in the IFR would make granite have 15 times the energy density of coal!

http://en.wikipedia.org/wiki/Integral_Fast_Reactor

http://www.computare.org/Support%20documents/Fora%20Input/CCC2006/Nuclea...

http://blogs.reuters.com/felix-salmon/2009/06/23/nuclear-power-going-fast/

What we need is an environment conducive to unleasing entrepreneurial energy in the nuclear sphere.

Just imagine where computer technology would be if Silicon Valley was snuffed out because, by government decree, it would take $50-100M and 4-5 years for the government to decide if its OK for you to *begin* to sell product. No new high-tech companies would have ever gotten off the ground. The PC and the Internet probably would never have been invented, and we'd still be using huge room-filling monster mainframes running on vacuum tubes!

We need to tap entrepreneurial energy and creativity to unleash the incredible potential of nuclear to reshape our economy, especially small-scale nuclear reactors. The NRC should be staffed up, licensing fees reduced by orders of magnitude, and the regulatory system overhauled from top to bottom with the objective of maintaining reasonable public protection without breaking the backs of innovators and start-up companies. It should be possible, for example, for a VC firm to back development of a factory-manufactured Liquid Fluoride Thorium Reactor and for units (<< 100MWt) mass-produced in the thousands for process heat, district heating, and electricity generation here and around the world. But, that just won't happen without systemic changes.

The biggest barriers stopping nuclear technology from vanquishing fossil fuels and solving our twin energy and environmental crises are political and regulatory.

Just imagine where computer technology would be if Silicon Valley was snuffed out .... We need to tap entrepreneurial energy and creativity

Oh yes, all the creativity of Silicon Valley.

Pets.com. Webvan.com. Kibu.com. Zap.com. Enron's internet bandwidth trading system.

The government regulation exists for a reason in the Nuclear space.

And even WITH all these regulations, firms STILL have fines for violation of the safety rules. Not to mention sleeping security guards.

Thank you Richard! A very interesting read.

I am half way through reading your latest book "Black Out". I finished "The Party is Over" at the weekend. May I take this opportunity to thank you for these books. "Black Out" is fascinating (all be it morbidly so!). One thing I can't figure out is what "short ton coal" is?

I am going to send "The Party is Over" to my MP and tell him that if he wants my vote at our forth-coming general election then he must sit a short quiz on the contents of your book! (Some how I doubt I will hear back from him...)

Thanks again,
Hugh (UK)

A 'short' ton is 2000 pounds while a long ton is 2240 pounds and sometimes called Imperial ton.

Thanks Lynford, appreciated

An excellent post, Mr Heinberg.
Having read your books and seen your videos, this is an example of the insight we really need around Peak Oil. I have been asking around for the real reason for the so-called financial crisis, and in discussions I have postulated that the peaking of oil is behind this, but without being capable of providing proof, let alone viable arguments.

This may be the ammo one needs for that.

Still, also having read books like this: http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212, from a likewise serious and thorough author, one may get the feeling that it is possible to trigger a financial crises in order to disguise peak oil. Also impossible to prove, but one may always wonder.

I do like, however, what Ron Paul says about it:
http://www.youtube.com/watch?v=KX9r-L1gKQc&feature=player_embedded

Thanks for the post.

IMHO the idea of a soft landing is almost impossible.

None of the above considers the possibility of a very negative black swan (except mentions of nuclear or biological war in which case KYAG). I do not know where it will come from but it will come and be blamed for the fall of this culture. "No one could have ever seen this xxx coming" will be the mantra from TPTB and no actions will be to solve the problem but only to deny any complicity and maintain power.

Most of the people I know are clueless or in complete denial so nothing to address the above problems will happen before it's way too late.

Most people write off the 'Mad Max' scenario but I believe armed gangs will not starve as long as there is anything to eat anywhere around and the risk is not too great. As hunger increases the risk becomes less important.

We will live in interesting times.

BTW: I am building a solar stove and solar food dryer. Interesting projects to go along with the solar powered golf cart with 7000 watts of 110 and 220 power just in case we need them for a while.

One must also remember that as number of ills facing society increase, e.g. climate change, ocean desertification, fresh water decline, etc. the size of the black swan needed to start a catabolic cascade of collapse (the dreaded CCC) shrinks.

In a robust society, that black swam must be huge, an enormous earthquake, a world war, or a pandemic. We are teetering on the edge, awaiting that black swan. We are like a world of builders who built into the sky a fantastic web of skywalks and airy buildings using the earth beneath that building to form the thing itself. Over the years the stability of the edifice went from strength to fragility. At first, the foundation was sound. It was still a largely un-mined earth. But, as we dug and dug and dug away at the raw materials, we essentially created this fragile spongiform supporting structure beneath our city of industry. Now all it will take is a black cygnet bumping up against one of its thin supports to bring it down.

I don't know when it will come down, or if it will be fast or slow, but I do know that it will not fall up.

The black swan will come in one of two ways: as an accident or as a deliberate act. That it has not yet come implies that it is not yet desired. Yet it may be desired. And desired or not it will come.

Lynford,
Yes, the "very negative black swan" probability, to me, is rather more like a certainty. The way nature has been responding to our throwing our impacts at her at exponentially increasing scales, is with giving us exponentially increasing problems.

The black comedy is that with every single one we assume that's over, and we can go on unfettered as before. Up till now we've been saying "we can handle it" and trying to take them in stride, without connecting them. The IPCC and everyone else's economic models all assume that nature is over and done with objecting to our plan to limitlessly increase the scale of our impacts and the complexity of or own changing adaptations to them, just by not asking what next bigger response she'll throw at us.

In this discussion we have been looking at some of the "next" problems that are larger in scale and much more urgent than global warming. There are various others not yet mentioned here that might well trump those. It's another amazing example of how crazy humans are. We have a plan to multiply our impacts on our own life support system exponentially forever, and use the analogy of "rare and unpredicatable" black swans, to explain the problems we seem to run into...

The negative consequences of global warming are already huge and will be growing non-linearly. Any year now we will have a completely icefree Arctic, an entire new open ocean on the planet. Nobody seems to have much of an idea how this will affect the climate of the northern hemisphere, but the effects are not likely to be minor, and only a truly myopic optimist would assume that the affects will all be benign.

We are now at the point that nearly all of the major issues are urgent. We can't put off one to deal with another that seems less urgent.

"We have a plan to multiply our impacts on our own life support system exponentially forever, and use the analogy of "rare and unpredicatable" black swans, to explain the problems we seem to run into..."

Well put.

Perhaps I am optimistic but I tend to focus on solutions. I think we could have economic growth but it will require different ways than the present. It may be growth from mostly finding new efficiencies.

In my own life I have experienced some great successes. I have cut my energy usage by 75% and I would like to do that again so that I am down to about 7% of original usage. Doing this has not required a lot of money or training. It is within the realm of average people who can read and take action and aren’t afraid to make and correct mistakes.

I have been super-insulating my house. Cellulose is quite inexpensive. It’s not even a petroleum product. I should get close to a passivehaus

I live close to work. I have been playing around with an electric motorcycle. I have not bought any gas since March. The electricity comes from a hydro dam but I could also get the energy from adding a small solar collector. The charger only requires 180 watts and I use less than two kilowatt hrs a day to commute. The efficiency of a small electric motorcycle in comparison to car is quite staggering and we are starting to add fuller fairings, which should give us an idea how good these will get:

http://www.evfr.net/coppermine/albums/egrandprix/IMG_1110.jpg

I have been working with water capture and cisterns. I know it’s vain but I have the greenest lawn for blocks, all done with compost and waste water. Next year I will move on to significant food production.

My question is this:

If we could all drastically cut our heating and transportation energy requirements without using a lot of money, could we not extend our petroleum for fertilizers by many decades?

Sounds good! I would be interested to read the whole story. Please write it up and post it somewhere. I am curious what climate you live in etc. How your 75% reduction compares to US average and so forth. We need more success stories.

I have been super-insulating my house. Cellulose is quite inexpensive. It’s not even a petroleum product. I should get close to a passivehaus

I would be very interested to hear how you've done it. Discussion of practical and affordable ways to bring up the level on insulation of existing structures would make a very good topic. I've been adding insulation to the attic. But that is only a part of the houses heat loss, and short of knocking down walls, or spending thousands replacing windows, some of these other weaknesses in our insulation don't have abvious practical fixes. But, perhaps some of the problems have solutions people on TOD know about.

In addition to taking my attic insulation up to R100, I have dense-packed the walls of my house with cellulose. I lifted a cedar shingle on the top half of the wall and and on the bottom half of the wall every 16 inches and drilled a hole and blew in cellulose at high pressure, sealed it up and put the shingles back in place. I painted the inside walls with a special primer that meets all the specs of a vapour barrier. The result is a very tight thermal envelope with a good vapour barrier. Dense-pack cellulose not only insulates but it dramatically reduces any air leaks that may be present.

In my move toward creating a something like a passivehaus, I will begin reconstucting more walls from the inside so that the insulation cavity is twice or three times as thick, which will then be filled.

Who knows, I may start playing with aerogels:

http://adzoe.8m.com/Aerogelsa.htm

I have already made some low cost storm windows with a multiwall-polycarbonate, tripling the efficiency of current windows. That's also what I use on my solar collectors.

Yes, please do consider submitting a main post here. All your initiatives are very important, and things we all need to be doing.

But keep in mind that they are about conservation, not growth. Why say you are doing these things for growth? Have we become so brainwashed by years of neo-classical economic ideology that we can only see good in terms of growth?

Again, great work, and do present a full, informative post, please. But do reconsider your (blind?) devotion to growth.

It's not really a devotion to growth, but fear of economic collapse without growth. Our systems have growth assumptions built into them, too long without growth and simple things like a pension plan no longer function. If enough things no longer work, perhaps society breaks down, as it appears to be doing, and the violence on a much larger scale begins. I don't want that to happen.

In the past, humans have committed genocides in times of relative prosperity based on race, religion, or tribal affiliation. We know the most about the ones in recent history. Many in the more distant past are only hinted at in ancient texts of chronicles. Read this text from Homer's Iliad

"We are not going to leave a single one of them alive, down to the babies in their mothers' wombs—not even they must live. The whole people must be wiped out of existence, and none be let to think of them and shed a tear."

I am fearful of what humans will do in a time of real scarcity. The horrors of Auschwitz or the gas ovens might be replaced by something far, far worse.

With some real radical gains in efficiency of 75% or 90%, we may be able to support small amount of economic growth and even very small amounts of popultion growth for many decades, even hundreds of years. I am hoping by then that the human race will have evolved into a kinder, gentler thing that's in harmony with the earth and each other and not so prone to corruption, violence, and blood letting.

All too true, but there are also societies (I believe Colin Renfrew has discussed them) that lived for many centuries with no signs of warfare and no economic growth.

I think economists have us all convinced that the only alternative to limitless growth is the most horrific kinds of war and privation. But that is just not supported. As you point out, humans become violent for all sorts of reasons, for nearly any excuse. It is the violence that is the problem, not the lack of growth.

Growth always has to grow at the expense of something else. These days most of world economic growth has been at the expense of the living systems of the planet and at the expense of future generations. Perpetuating it will continue to destroy the living world.

Again, great ideas on conservation. But we have to set up a system that isn't based on the insanity of limitless growth.

It is not true that growth must take from something else. The whole story of technology is improvements in efficiency. There is no logical reason that technology has to be used to rape the environment.

But, in fact, it has.

That's user error not the fault of the tool.

Riiiight.

And guns don't kill people....

Machetes do.

You may as well add that you want a pony.

Bringing up the average crap built U.S. house is quite easy. First you need to get over the general attitude in this country of "4 squares and a roof". If the outside is not leaking in water, don't touch it. You build from the inside, superinsulate as you go, start with the most used room in the house and build IN. Adding 4 to 8 inches of new Superinsulated wall, in what I will assume is an over sized room anyway, will be hardly noticed. Look up....How much wasted space do you have over your head, that sucks up energy? Lower the room height a foot or two if possible, Super insulate as you go. Downsize your foot print. Install the new windows on the inside of the room as you sub the walls, leave the old windows on the outside as additional thermal breaks.

Get the idea? Build in, not out. Smaller footprint. Superinsulation. Simplify. Close off the rooms not used or needed......Get underground if you can.

Check out PASSIVHAUS on the net, lots of info....just lose the MERKIN atitudes and you will do well.

"Adding 4 to 8 inches of new Superinsulated wall, in what I will assume is an over sized room anyway, will be hardly noticed."

The changes up to this point have been more than noticible. Change somethings and sometimes you can feel the differnce in hours. I once did some work with venting a roof crawl space that was getting too hot in the 35C sun and you could feel it was much better the next day. The insultaion was now more than adequate to cope with the average temperatures

I like to work with the idea of taking the worst part of the house and making it among the best. I have a big old window that faces northeast into a bush. It gets little light. It is probably R3 and I will replace it with a solid wall of R50. The day I do that, you will notice it.

I do like this:

"Install the new windows on the inside of the room as you sub the walls, leave the old windows on the outside as additional thermal breaks."

I hate the idea of not making some use of the old windows and this seems the best way to use them.

Hi Heinberg, I'm on vacation seeing a rare glimpse of the Sun, eating lots of fruit, boosting my vit C levels in preparation for for 11.5 months cold and miserable weather. Thanks very much for putting this together, but alas after 7000 words on nuclear yesterday I've just skim read your piece - but it seems to frame things as they are.

I read Hamilton's paper a few weeks back and had the feeling that he had a good grasp of what was going on.

My simplistic take is that the Keynsian's had got their sums and models worked out for perpetual growth based on freeing the banking system to lend ever higher multiples of their capital (savers and share holders). This was working grand until the global growth this generated hit a resource barrier - mainly oil, and escalating energy prices (and escalating prices of other commodities that use energy to be mined) spoiled the party, since individuals spending too much on energy could not spend on other stuff and the economy cratered.

http://europe.theoildrum.com/node/5495

So I increasingly firmly believe the crash was caused by energy constraints. Not necessarily peak oil, which still has a reducing probability of lying in the future, but more definitely because energy growth and energy efficiency measures could not keep up with and sustain economic growth at the pace it was moving at.

As for speculation - so much written on this in the MSM and emanating from government. The futures market is zero sum - on average no one makes money - just those that do get reported. Very little evidence for speculators moving the market form the actual supply - demand data. But its convenient to blame the oil spike on speculation rather than supply / demand fundamental problems related to growing demand rooted in growing population and stagnating supply rooted in peak oil (gas and coal).

http://europe.theoildrum.com/node/5574

I've been fairly impressed with how our market system is coping with the crisis selecting air lines and automative industries for downsizing whilst the energy industries are in a correction from their first true bull run for 150 years (no doubt some one will bury me for that). The main hazard we face are governments miss allocating resources to try and keep the old ways going. I'm in France right now running on nuclear electricity, solar power, bicycles and ethanol - the French I believe have gotten things worked out.

Adaptation and adaptive cycles are to play a major role going forward. I believe we are in a "terminal" bear market - but one that will have substantial rallies. Once everyone learn that their pensions are being used to fund extravegant lifestyles of city wide boys then there may be a revolt of the middle classes.

"Party's Over" was the first PO book I ever read - thoroughly recommend this to all TOD readers.

All the best, Euan

seeing a rare glimpse of the Sun boosting my vit C levels in preparation for for 11.5 months cold and miserable weather

*Raises eyebrows*

Vit C?

Perhaps Vit D?

http://www.orthomolecular.org/resources/omns/v04n04.shtml
http://www.eurekalert.org/pub_releases/2009-07/uoc--vdc071509.php
http://www.dailymail.co.uk/health/article-1189684/A-vitamin-sun-provide-...

Eyebrows rightly raised - I added a few words.

Euan
I hope bicycles and ethanol in right order whatever the French do?
best
Phil

Euan,can you post links to some (any) French energy sites that have English language versions?

Don't know of any, but browsing the BP stat review will give you a feel for what energy France produces and what it consumes. The highlights are that France produces virtually no fossil fuel, it all has to be imported (from memory), hence they planned to produce most of their electricity from nuclear + hydro.

They have an extensive and growing electric rail network, both intercity, international and light rail within all major towns. Its is a big country, low population density for W Europe, and exports food. Many good credentials for the future.

Many of the main roads are toll roads, which are well maintained.

Richard,
"Energy is the ultimate enabler of growth (again, this is axiomatic: physics and biology both tell us that without energy nothing happens)." True,
"Industrial expansion throughout the past two centuries has in every instance been based on increased energy consumption." True
But next sentence:
" More specifically, industrialism has been inextricably tied to the availability and consumption of cheap energy from coal and oil (and more recently, natural gas)"
NOT TRUE, early industrialization was driven by water powering grain milling, wool felting, weaving mills and later cheaper transport using canals and later railroads, eventually enabling all manufactured goods and coal used for heating to become cheaper. Cheap hydro power fuel electrification in the early 20th century, coal only became cheap when large open cut mines were developed that used very little labor and cheap transportation became available. Oil has only been used in the last 100 years of industrialization. Oil replaced coal used in rail and ship transportation not because it was cheaper but because less labor was required to operate and maintain diesel powered trains and oil fired ships.

"Without cheap energy, global trade cannot increase"
NOT TRUE, global trade has increased as oil prices have increased. Reduced tariff barriers, allowing low wage countries to export high labor goods and services has been responsible for expansion of world trade. Shipping costs have declined over last 40 years due to containerization, larger ships, even though oil prices have risen.

"My conclusion from a careful survey of energy alternatives, then, is that there is little likelihood that either conventional fossil fuels or alternative energy sources can be counted on to provide the amount and quality of energy that will be needed to sustain economic growth—or even current levels of economic activity—during the remainder of this century(19)."
You cite David MacKay "Sustainable energy without hot air" But this book gives several different scenarios where all FF energy is replaced by a mixture of renewable and /or nuclear energy. What he says it that the world would need to "use solar energy or nuclear energy or both".
Trainer says that the entire world's population could not use as much energy per capita AS OECD COUNTRIES ARE EXPECTED TO USE BY 2050( ie ten times present per capita energy) derived from renewable resources.
Nether are saying it would be impossible to maintain today's energy consumption, let alone the issue of whether growth is possible without energy growth.

This article is based on the false premise that A) CHEAP energy is required for growth B) renewable and nuclear cannot be built to replace existing FF energy use in next 90 years.
You seem to not understand that:
TECHNICAL ADVANCES HAVE GIVEN GROWTH NOT CHEAP ENERGY.

That's great and all, so what about the climatological and other natural resource limits? Solving the energy issue is but one problem, one which is not guaranteed to be solved when the global economic system is in meltdown. It's all very well to tell us what is possible, but I only care about probable. And the probable isn't happening anywhere near the rate it should be, if at all.

We still need abundant, relatively cheap energy that grows with our population and economy to keep the game going. As that is unlikely to occur, the game changes. Just look at the issues we're having with efficiency in the West when using the threat of global climatic shift as the incentive to change. If people aren't going to fork out the cash at the best of times to help in change our lifestyles when threatened with the end of our way of life, then I sure as hell don't see it happening when their paycheques are cut off and their concerns turn to paying for groceries, not fancy PHEVs and home power generation kits.

"More specifically, industrialism has been inextricably tied to the availability and consumption of cheap energy from coal and oil (and more recently, natural gas)."

"Has been" is another way of saying "has become". True.

"Without cheap energy, global trade cannot increase." This sentence needs to change to "Without increasing amounts of cheap energy, global trade cannot increase." Now true.

"TECHNICAL ADVANCES HAVE GIVEN GROWTH NOT CHEAP ENERGY."

Don't shout, it's rude.

You seem to not understand that cheap energy gave rise to technical advances. The first cheap energy that gave rise to technical advances was grain. Check out "Guns, Germs, and Steel", by Jared Diamond. Available as a book and a three hour documentary.

Neil1947:

This article is based on the false premise that A) CHEAP energy is required for growth B) renewable and nuclear cannot be built to replace existing FF energy use in next 90 years.
You seem to not understand that:
TECHNICAL ADVANCES HAVE GIVEN GROWTH NOT CHEAP ENERGY.

I cannot help for supporting Richard in his assessments. It would help your case, Neil, if you could name any tecnical advances that do not rely on extensive usage og energy, including the development and production process of said technologies.

Cars, Planes, satellites all need vast amounts of energy every day and during their creation in order to function. I might tend to support you if your statement was this:

TECHNICAL ADVANCES, BASED UPON CHEAP ENERGY, HAVE GIVEN GROWTH.

Tor,
"It would help your case, Neil, if you could name any tecnical advances that do not rely on extensive usage og energy, including the development and production process of said technologies."
The premise was; cheap energy is required for growth.

1) Plant breeding leading to maize yields about 400% higher than in 1930( grown on same soil side by side old non-hybrid varieties). High nitrogen from ammonia or legumes(soy bean) inoculated with N fixing microbes help to give even higher yields.
2) Telecommunications certainly don't depend on cheap energy
3) Antibiotics and anti-viral drugs don't depend on cheap energy
4)Building wind turbines; EROEI of 30-40:1 high capital cost but low energy cost.
5)Canal and Rail transport; made energy cheaper by reducing cost of coal transport but definitely does not depend on cheap energy. If fact cheap diesel has allowed road transport to take away a lot of rail and canal business.

About the only things that depend upon cheap energy are gas guzzling cars, truck transport, poorly insulated homes and air transport. These account for about 75% of US energy consumption.
Electric cars for example use about 20% the energy per mile as ICE vehicles, electric train transport about 5%, well insulated homes about 10% of the energy of poorly insulated, truck transport about X10 more energy than rail.
Food only accounts for about 10% of US energy. Everything else about 15% of energy consumption.

The premise was; cheap energy is required for growth.

1) Plant breeding leading to maize yields about 400% higher than in 1930( grown on same soil side by side old non-hybrid varieties). High nitrogen from ammonia or legumes(soy bean) inoculated with N fixing microbes help to give even higher yields.

Production of fertilizers depend on cheap energy

2) Telecommunications certainly don't depend on cheap energy

Then on what ? Expensive electricity ?

3) Antibiotics and anti-viral drugs don't depend on cheap energy

You have to produce and transport them. Same as with food. And both are very energy-intensive

4)Building wind turbines; EROEI of 30-40:1 high capital cost but low energy cost.

Steelproduction is low energy cost ? Windturbines-energy needs back-up, maintenance.

NEW TECHNOLOGY DEPENDS ON CHEAP ENERGY. Without cheap energy, industry profits drop, consumer spending drops, unemployment rises.

Henri,
All of those example use some energy BUT do not depend on cheap energy.
Wind turbines require steel about 115tonnes /MW capacity but that sized turbine will return 52,000MWh in 20years. Alternatively the coal used to produce that steel(60tonnes) could produce 120MWh of electricity if burnt in a coal-fired generator. The energy used to mine iron ore and coal, transport across world and make 115 tonnes steel is less than 1% of the energy returned by a wind turbine.
Looking at it another way, a 1MW turbine costs $2,000,000, but has <$10,000 of steel(calc $800/tonne).

Transportation of wind turbines (even ones imported from Europe) is <5% of the energy used in construction.

What would happen if energy prices were 5 times higher? Wind turbines would be slightly more expensive, but would produce X5 the value of electrical energy.

Never mind making and transporting them, just the R&D of pharma and biologics is expensive in energy and money. Everything else is spot on. I sure don't see how anyone can talk about telecoms today without the enormous amount of energy required to sustain the networks.

Neil, OK I do not have a lot of statistics in my head, but let me try and comment on these:

1) Plant breeding leading to maize yields about 400% higher than in 1930( grown on same soil side by side old non-hybrid varieties). High nitrogen from ammonia or legumes(soy bean) inoculated with N fixing microbes help to give even higher yields.

And how much cheap energy is used to produce the fertilizers and to work the fields?

2) Telecommunications certainly don't depend on cheap energy

They do require satellites, overseas cables and a functioning electric supply network all over for it to function. The amount of barrels per day this adds up to I do not know, though. But, if the Peak-Oil squeeze is here, as I believe, the price of all this will go up-up.

3) Antibiotics and anti-viral drugs don't depend on cheap energy

These are all developed by companies that rely on a status-quo economic regime. I doubt these will survive the squeeze.

4)Building wind turbines; EROEI of 30-40:1 high capital cost but low energy cost.

Wind turbines must be buildt in such large numbers in order to replace oil, that they will cover substantial land areas. The same applies for solar generated power. None of these are cheap. You need oil prices in the $100/barrel area to make it viable. And, in order to transfer this to fuel viable for transport, you need to replace the car park. Have you read the Hirsch report? See also: http://www.theoildrum.com/node/3084

5)Canal and Rail transport; made energy cheaper by reducing cost of coal transport but definitely does not depend on cheap energy. If fact cheap diesel has allowed road transport to take away a lot of rail and canal business.

Rail transport is way-to-go, I agree. Maybe canals also (Rode the Cesar canal in China this spring, it is 1000 years old, and was based upon the barges being pulled by humans along the canal when it was built). The US (and Norwegian) rail system is worse than Rumania's rail system, they say, and Peak Oil will lead to increased costs even here. If most transport shall be moved over to rail, what is required of infrastructure investments, do you think? How and when can it be done?

Robert Hirsch has demonstrated in one of his slides the direct correlation between world GDP growth and the growth in oil production. I cannot display the picture, not being an html freak myself, but it has been shown several times here on TOD.

We may quarrel over this, or just wait and see. If Richard is right, and I believe so, the evidence of the correlation btw energy and economy will build over time.

The specifics of the Alternative Diagnosis are falsifiable. If economic activity were to rebound above 2007 levels, or if oil production were to rise above the July 2008 high-water mark, then the attribution of the current economic crisis to resource-tied limits to growth may be considered at least partly disproven.

For the sake of completeness, there are other reasons why the economy may not rebound to 2007 levels. At the peak, about 70% of GDP was driven by household consumption. That level of spending had been reached by a combination of declining household savings, home equity withdrawal, and increased consumer debt. I find it quite likely that the "recovery" will be to a level 5-6% smaller even without consideration of peak energy supplies. One of the things that concerns me about the stimulus activities the federal government is undertaking is that they smack of "If you consumers won't take on more debt, then the government will do it for you."

Daily report from our energy analyst today...one of the first times I have seen the supply-side probems mentioned.

The investment community is definitely becoming more aware of the looming crunch.

(Dow Jones) -- Crude futures held steady Thursday, as investors adopted a cautious outlook ahead of key unemployment data. Light, sweet crude for September delivery settled down 3 cents at $71.94 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled 68 cents, or 0.9%, lower at $74.83 a barrel. Crude prices have barely moved since Monday, holding above $70 a barrel amid growing confidence that the world economy is beginning to recover, but limited by the status quo of weak demand and bulging inventories. The spell could break Friday, when the U.S. Labor Department is due to release its employment and nonfarm payroll report for July. Economists who were surveyed expect the report to show unemployment reaching an overall rate of 9.7%, with nonfarm payrolls contracting 275,000. Rising unemployment has direct implications for gasoline demand, as fuel use falls when fewer commuters and vacationers hit the road. U.S. gasoline consumption makes up more than 10% of global oil demand. "The market is taking a breather before Friday's important job report, but is still maintaining its strength," said Mike Fitzpatrick, vice president of energy at MF Global.

Any sign of recovery will play into a scenario, reiterated by Goldman Sachs analysts in a report Wednesday, where growing economies begin to consume more oil than can easily be produced.

That fear sent oil prices soaring to a record high above $145 a barrel last summer. But with oil and refined product inventories extremely high, and with Saudi Arabia and other producers able to produce far more than they are now, the supply crunch may still be far off. "If people didn't pay attention to the dollar and the stocks and trade on supply and demand we could easily make an argument that prices belong to $40-$50 not $70 a barrel," said Peter Beutel, president of the trading advisory firm Cameron Hanover. "We have plenty of supply, and demand is lower." The market may also see an exodus of speculators if federal regulators make good on ambitious plans to increase oversight over commodities trading. The Federal Trade Commission introduced a new rule Thursday aimed at preventing manipulation in the physical market, though the agency would also receive authority to pursue fraud in the futures market as well. The Commodity Futures Trading Commission is also moving toward setting new position limits in energy trading. Front-month September reformulated gasoline blendstock, or RBOB, settled up 95 points, or 0.5%, at $2.0607 a gallon. September heating oil settled 2.02 cents, or 1%, lower at $1.9367 a gallon.

Richard,
I noticed these quotes in your article
"According to the special inspector general of the U.S. government’s Troubled Asset Relief Program (TARP), in remarks submitted to the House Committee on Oversight and Government Reform on July 21, $23.7 trillion have been committed in total POTENTIAL federal government support"
ie if every financial institution in US goes broke and no funds are recovered, and the government has to replace all bank accounts insured.

Later on becomes:
"It is worth noting that the $23.7 trillion recently committed for U.S. bailouts and loan guarantees represents about $80,000 for each man, woman, and child in America."
In actual fact I think the amount committed for bailouts has been 1.2Billion, and some of that has already be repaid with 25% interest. The "potential" seems to have been lost.
Any insurance company has "potential losses" 100 times grater than actual losses, because all homes are not flooded or catch on fire in the same year.

'In actual fact I think the amount committed for bailouts has been 1.2Billion,'

Don't you mean $1.2 trillion?

(Treasury Secretary Geithner and Federal Reserve Chairman Bernanke) there is near-unanimity of opinion: these recent troubles are primarily due to a combination of bad real estate loans and poor regulation of financial derivatives.

Bad loans are just a symptom. You have to look at why consumers aren't paying their loans. The real problem with western economies is their moves toward socialism. This is especially noticeable in the decline of the US economy since Obama (a socialist) was elected. Extending unemployment and welfare benefits only rewards unproductive behavior.

China still has growth because the government is "pro-business". Western "anti-business" countries are losing manufacturing jobs to Asian countries.

The Earth has almost limitless energy and other resources. The problem is that the liberals now in charge of America are beholden to the anti-development eco-nazi elitists. They want all of America on welfare while they fly around in new Lear Jets.

http://www.rollcall.com/issues/55_19/news/37552-1.html

It's all about power and control.

The problem is globalized slave labor.
China has growth because the chinese will work as slaves they don't know any better.
It is all about money.

You have to look at why consumers aren't paying their loans.

Oh, lets hear why!

I'm going to vote for they lost an income stream and can't. My back up vote is they listen to James Marteniz http://www.achieveradio.com/cash-flow

The real problem with western economies is their moves toward socialism.

Darn. My votes were wrong.

Oh and exactly how long as this move been going on? Because George says its been years. http://library.georgegordon.com/communist

This is especially noticeable in the decline of the US economy since Obama (a socialist) was elected.

Oh, well then. I'm sure it would be better if he wasn't in charge. Wait, no. That can't be true as you said yourself "especially noticeable" which means that the trend of 'socialism' was already there.

But hey, if *YOU* want to believe that somehow it would be all better with peaches and cream under the other option that was given, then by all means live in that world of self-delusion.

Last time *I* checked both major parties are going forward with the same overspending and government protection for corporations. But I'm using actual numbers and laws written by congress and signed by el presidente', not just tossing out a label like "socialism".

Lets look at your use of emo language:
eco-nazi elitists all of America on welfare pro-business anti-business (a socialist) socialism
Not a bit of actual "proof" - just handwaving and emo.

Extending unemployment and welfare benefits only rewards unproductive behavior.

No. An attempt to buy off what will end up becoming angry mobs - I'd give you that.

China still has growth because the government is "pro-business".

Would that 'pro business' include allowing melenine into food?

The Earth has almost limitless energy and other resources.

Bullshit.

It's all about power and control.

And this is somehow different with the new kids in charge? Seems the last group had the same issue. And the group before them. And the group before them, And ....

You are acting like what's going on is something new. Or that this new group has blinders on, whereas the last group had clarity of vision.

"It's all about power and control." conservationist

The most dysfunctional member of a group exerts the greatest level of control. AKA: Trolling

Hello TODers,

My thxs to Richard Heinberg for this terrific essay. Do I need to mention again my speculative proposals in the TOD archives? As usual, I hope the vaunted TOD engineers & scientists can more fully develop the concepts below:

1. Full-on Peak Outreach [which includes birth controls] jumpstarted by the Google Search Homepage 'Unlucky button' and by Tiger Woods & Justin Timberlake [love those eco-names!] plowing defunct golf courses by Presidential Decree to speed Kunstlerization and induce relocalized permaculture; to vastly accelerate the Transition Town Movement.

2. Universal Recognition of the Periodic Table's Ecosystem Constraints-->Full implementation of Asimov's Bio-Element List [P is #1, S is #2], plus Asimov's Foundations of Predictive Collapse & Directed Decline, Porridge Principle of Metered Decline, and further combined with Frank Herbert's Dune strategies. Non-BAU Webb/Pomerene financial structure for hoarding recovered-S, thus forcefully driving S-price/ton upward to induce full-on O-NPK recycling [plus this high S-price simultaneously eliminating the industrial manufacture of non-vital consumer goods] for Optimal Overshoot Decline. Detailed in my recent posting series entitled: "She comes down from Yellow Mountain..".

3. Huge, multi-year storage in Federal Reserve Banks of I-NPKS & seeds strategically geo-located across the country close to farmgates and permaculture critical areas? Recall that we will do anything & everything for these Elements to leverage photosynthesis above a Liebig Minimum. IMO, we need a I-NPKS 'bridge' until O-NPK recycling is routinely done everywhere. Recall that the shelf-life of properly stored NPKS Elements far exceeds the shelf-life of most foodstuffs.

4. Narrow gauge SpiderWebRiding as the localized, bi-directional, big dispersive-radius 'ribcage' to augment the 'spine & limbs' of Alan Drake's standard gauge RR & TOD. Much better than a quick reversion back to the previous emulation of the short-radius, highly in-efficient Tlameme backpacking scheme.

5. Triple System [patent rights reserved] of garden brick design to efficiently disperse water, retain topsoil, plus provide a convenient railbed for non-rubber-tire farm implements & SpiderBikes. Additionally, it vastly reduces human exertion levels and stoop labor hours.

6. Political Orgs to be logically and environmentally geo-based on natural watershed mountain boundaries, not arbitrarily drawn lines on a map, especially Not demarcation lines insanely drawn down the middle of a river. Gradual elimination of the stupid policy of making water flow uphill to money which vastly distorts natural ecosystem sustainability levels.

7. Initialization and gradual enlargement of many biosolar habitats, with ruthless Earthmarines, for biodiversity protection to somewhat reduce our vastly elevated specie extinction rate.

8. We are evolved for the nightly darkness, but not dehydration or starvation-->thus, we need to encourage abolition of outside lighting; it is nonsense trying to get black asphalt to reflect photons.

9. Build-out of solar-powered community baths and/or brief showers, laundrys, and kitchens, plus other minimal water usage strategies. A person can be dirt-poor, but no reason for them not to enjoy periodic cleanliness.

Plus much more...but alas, I am time-limited.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

As I read it Heinberg's argument is that cause of the economic collapse is 'shortages' of energy rather than a financial 'age of excess'.

IMO, that is putting the cart before the horse.

This is a case of Say's Law.

"Supply creates its own demand."

http://en.wikipedia.org/wiki/Jean-Baptiste_Say

The supply is there.
I see on TV gas pumps serving car drivers all over the world.
The system is working and everyone knows it.

The process of globalization opened up world energy markets and unleashed Third World and speculator expectations. The globalization genie, the God of the freemarket fundamentalists, increased demand beyond the expected supply creating a perceived 'shortage'.

Unfortunately the converse of Say's law (Demand creates its own supply) isn't true.

Instead you have demand destruction.

I certainly agree that we are quickly depleting the worlds resources. The world will respond by economizing--switching away from fossil fuels where possible and raising efficiency.

But the idea that we were suffering the effects of a real energy shortage (in 2007-2008) causing the crash looks silly.

However in the future when supplies really do dip, that will be a different problem.

In the short term, liquid fuel supplies should be adequate to meet demand because demand will be suppressed during the depression. I expect a long, lingering depression - the causes seem to me more related to the bursting of a 30 year debt bubble than to energy supply per se.

Some time in the next 5 years I expect oil supply to become an constraining influence that impedes economic recovery and drags out the depression indefinitely.

However it is important to distinguish between oil, gas and coal. Refering to a shortage of "fossil fuels" is misleading as we will have to deal with declining oil supply in the near future, while a gas and coal peak is still a couple of decades away. When coal does peak, it will be China that feels the effects of supply shortage first, with countries such as the USA and Australia still having ample supply.

So it is NOT an energy or fossil fuel crisis in the medium term - it is a liquid fuel crisis. By the time coal peaks, we will have already been forced to adapt to oil shortages for several decades.

So between now and 2030, substitute liquid fuels made from gas and coal will be an available option ( I don't think greenhouse gas concerns will take this option off the table, certainly not for China), and electrification will be an option as there will still be plenty of coal for power plants.

So much of the discussion here (how will we fuel our tractors) won't be relevant til after the coal peak. We'll fuel tractors with CTL if we have to. Climate change concerns will be trampled on by the voters when the situation is dire enough.

And, crucial point, the coal peak will not lead to coal shortages in the USA. China will drive the production peak, China will have supply problems, but given the impossibility of shipping a billion tonnes per year across the Pacific, they will just have to become more energy efficient - they can't possibly get the USA to make up the difference.

So coal shortages in the USA will happen decades after Peak Oil is universally recognised as fact, decades after a Natural Gas peak, and decades after a global coal peak.

At THIS point we have to worry about how we power the tractors. But we'll be several decades into a nuclear and solar buildout by then.

As for growth - I expect 20 years of little or no global growth, and I certainly hope world population stablises by 2040 ( Possibly after famines in Asia and Africa kill many millions).
But by mid century, it will be possible to see a return to a rising standard of living IF the population has stabilised and IF there is widespread adoption of nuclear power. It would be based on increasing productivity and efficiency (robotics, minaturisation etc) using a static amount of energy, with a static population. Learning to do progressively more with the same amount of energy.

Fantastic essay. Can't wait to get the new book!

I think it's super crucial to point out that realism is indeed unthinkable to our socio-economic elite, who will fight us (and fling placebos at us) every step of the way. Removing their hands from the levers of power at the commanding heights is going to be damned tough, but absolutely necessary, since they are literally addicted to pursuing endless growth, even when it's a pipedream.

Thank you, Richard.

Calling on Hfat, hfat, wherever you are:

Remember our discussion yesterday when I was saying that my observation is that when the DOW rises so does oil or vice versa and you said it was merely a temporary occurance? Well, in this article, 'Temporary Recession or End of Growth' here is some text perfectly mirroring my comments.

"Whenever the economy does appear to show renewed signs of life (as has happened in May-July this year, with stock values rebounding and the general pace of economic contraction slowing somewhat), oil prices will take off again as oil speculators anticipate a recovery of demand. Indeed, oil prices have rebounded from $30 in January to nearly $70 currently, provoking widespread concern that high energy prices could nip recovery in the bud."

Any questions?

To be fair, the marginal barrels are being controlled by OPEC, for the time being, so it's hard to say that the current price isn't engineered.

The funny thing is, however, that oil prices need to go higher still or we won't have the supply we need in five years. The oil companies need to be sure that the price of oil will be high enough to warrant their multi-billion dollar projects. I don't recall where this graph comes from (McKinsey?).

Photobucket

A quick question...

I believe around two barrels of oil (equivalent) need to be consumed to produce three from Canadian tar sands. What's the in and out for deepwater, roughly? 1:5?

Thanks, Matt B

That sounds wrong as it takes <1000 cfh of natural gas--not oil-- (equal to 1/5 of a barrel of oil) to turn a barrel of bitumen into to a barrel of syncrude and natural gas is by far the largest fossil fuel input into syncrude.

What's more interesting is the fact that you seem to believe that bit of truthiness.

To be honest, I'm still not sure what to believe...

Well, I consulted the experts at this eminent site (in absentia, of course):

By our admittedly incomplete calculations the EROI depends mostly upon the direct energy used and which alone suggests an EROI of about 5.8:1(Figure 1). Including indirect energy decreases the EROI to about 5.2:1, and adding in labor and environmental costs have little effect. A comparison with the limited other data out there indicates that our analysis generates a somewhat higher EROI than others (Table 1). Nevertheless it appears that tar sands mining yields a significantly positive EROI.

from Unconventional Oil: Tar Sands and Shale Oil - EROI on the Web, Part 3 of 6

There is a bit of disagreement on how to calculate the numbers though:

The highest estimate of the EROI of the production process using THAI is 56:1, while the lowest estimate is 3.3:1. This is clearly a large range, but it is up to the reader to decide which number is most appropriate. We believe that even though the oil burned in situ is “free” in the financial sense, it is a required energy input to the THAI process and, from this perspective, this energy should be included in the estimation of EROI from THAI – resulting in an EROI of 8.9:1, which is an improvement over other tar sand extraction processes, such as SAGD. We welcome additional data and contrarian or other comments.

(from EROI Update: Preliminary Results using Toe-to-Heel Air Injection)

The energy gain seems significant but not huge.

Source: apparently Cera, as can be seen in this version of the graph:

http://www.theoildrum.com/files/CERA_Oil_Supply_Cost.png

Peter.

Thanks.

I certainly agree with Richard on all main points, and in fact would say the case is, if anything, understated. I am less cautious and willing to say the the end of the industrial era is sight. Oil and hydrocarbons are needed to extractand refine all the other underground resources needed to keep the industrial economy going, as well as continue their own continued production.

It doesn't really matter to what extent the current meltdown was caused by peaking oil -- peaking oil will in any case block an exit from it. There can be no sustained recovery and growth as there was in the 40s after the Depression, as Richard argues, because there resource base is no longer there. That's what matters.

I somewhat disagree with the point about job training. The money should be directed at helping people build localized and as-self-sufficient as possible communities as possible. Tent cities are sprouting up all over the country. Millions more will be joining them. There needs to a big program of helping these people gracefully exit (well, in good part) the global market economy. The jobs will never return. They will need to learn a great deal in building these communities, and will need a lot of help, including all kinds of training, but will and must start with skills many already have. Agricultural know how in particular. I'm almost certain that Richard will agree with much of this from what I've read of his elsewhere. I instinctively recoil from the job training pitch because of its horrendous history of misuse.

Certainly the most destructive delusion gripping the species right now is that growth can continue. Industrialism itself is in decline. Can we build a new relationship to the planet, based on integrating ourselves into the surface ecology, and restoring it to health?

Even the the population question can only be answered this way: a return to the soil and local and regional self-sufficency will put people up against resource limits, which are entirely masked from us now by the market. People will see that their own numbers much be matched against resources. There will be no centralized entity to enforce such things.

We'll be lucky to retain global communication and science. There'll be no more bomber fleets possible. Many good things can come out of all this if we can but get throught the transition.

A couple of EDITS made above.

All of this analysis of farming and technology ignores the social structure. The current pattern of nuclear families and singles living by themselves is enormously wasteful of energy and resources. Many cultures in the past had complex family groups including relatives of all ages, retainers, servants, and satellite households, whether farmers, blacksmiths, villagers, etc. Monastic communities also functioned as large families, taking in the poor and sick, educating the young, and often serving as a large employer of farm and construction labor.

There will most certainly be a demise of 'modern independence'; people will need to reorganize into groups, one way or the other. Unwillingness to face this is one of the main forms of denial. "Not have my own tv/bedroom/ipod/bathroom/car/office/trip??? NO WAY!"

I learned the lesson during the run-up to Y2K-: most people are afraid of or do not know their physical neighbors, regarding as their real neighbors their co-workers or contacts from mutual groups, such as yoga, gym, etc.

One solution, which we have taken, is to live in a town where we can know a lot of the people, and have work/family/church/activity connections with the majority of people we don't know, if we need them. About 10,000 to 15,000 people is the max for this, is my guess and experience.

The point of all this, in relation to the above discussions, is that re-forming social ties and relationships will be a strong way to meet the coming changes. Now is a good time to start.

This is an excellent post, Mr. Heinberg. One question. When writing this, whom did you consider your intended audience to be? The Oil Drum readership? Policy makers? Informed citizens? Or other?

Actually this was not written with TOD in mind. Policy makers and general public.

Thanks to Richard for writing this and Gail for posting it. Thanks to all the TOD regulars and guests who, IMO, have contributed to one of the best posts I have read. Lots of luck to you all. We are going to need it.

Essentially we are caught in a pickle. Call 3rd base economic recession and home plate expansion. As our economy moves towards (home plate) to score an expansion, the price of (the depleting resource) oil will rise in price, which will send the economy back towards 3rd. As the economy moves into recession the price of oil will go back down, the economy will build momentum and we will move towards home plate, only to be sent hurtling back towards 3rd base in a pickle which we cannot escape. As this pickle moves forward in time the distance between 3rd and home plate will lessen to reflect the reduction in the overall world economy. The final chapter will be stagnation.

The question is: How will different countries, big and small, respond to finally realizing they are in pickle from which there is no escape, while the overall world economy contracts towards stagnation?

The patient is indeed suffering from attacks of petrolitis. The condition is not yet continuous but periodically recurring, with a prognosis of future collapse and death as the attacks intensify and their frequency increases.

The unthinkable, unsayable Decline pushed to the back of their minds. All that can be conceived is Less Growth, No Growth, or perhaps even Degrowth.

Down the Memory Hole has been flushed the unwanted items of a former language, namely the Vocabulary of Reality: Decline, Decay, Decrepitude, Deadly, Decrease, and for the adventurous - Doom.

Richard,
I guess the question is when is a fact too contrary to past assumptions to believe it possible to be true, despite the ample substantiation?

I’m sure you get that about growth a lot. I also get that response, 90% of the time, regarding the fact that efficiency improvement generally stimulates growth and increases impacts on the earth. How the whole system responds is as to the removal of bottlenecks from its continual search for growth opportunities.

I tried to detail that in my comments above and in comments Jul 28 and on Jul 29, as well as elsewhere for years now. The topic just doesn’t seem to sink in, though.

I know that energy efficiency is the main strategy that everyone is relying on to reduce our impacts on the earth. The evidence is unequivocal, though, that it generally has the opposite effect. That sort of thing should raise some questions, no? What would you do?

Ecologist Charles Hall, among many others, has argued that the discipline of economics, as currently practiced, does not constitute a science, since it proceeds primarily on the basis of correlative logic rather than through the building of knowledge by a continuous, rigorous process of proposing and testing hypotheses

Yet most oil depletion models are just this, correlative via heuristics. Heuristics is not science. my usual $0.02, and Heinberg does not reference the work done on TOD for first principles depletion modeling work.

Economic growth is achieved by lowering the cost of production of goods and services by decreasing the manpower, materials and energy inputs. This is accomplished by employing new technologies, better business and manufacturing methods, improved machines and better skilled workers.

The primary driver of economic growth in the 20th Century was energy replacing animal power. The internal combustion engine and the high pressure boiler and steam turbine were the key innovations. This led to farm mechanization, mass transportation and cheap electricity.

The economic drivers of the 19th Century were railroads and Bessemer process steel. Electrification began in the 1880’s with crowds gathering at town squares to see the first displays of street lighting. The effects of electric lighting were seen as miraculous to people who could now work later and easily read at night. It also allowed stores to be open after dark.

Economic growth in the USA peaked around the first decade of the 20th Century. This was the time of investment in electrification. Electric street railways allowed the first mass transit. Electrification of factories led to dramatic reductions in labor and increases in output. Electric motors, both large and small allowed machines to be controlled in a more precise manner and move heavy materials without human labor by using conveyors and overhead cranes.

Public water systems began to supply water to homes, which became treated with chlorine after about 1908, almost eliminating cholera, typhoid and dysentery. This also allowed indoor plumbing.

With cars and trucks came the development of the highway system, allowing goods to move anywhere. Before this time goods could be moved hundreds to a thousand miles by rail cheaper than they could be moved 15 miles by wagon.

The US economy benefited greatly from WW1, with selling supplies to the Allies causing 1916 to be the most profitable year ever in the history of the US.

Tractors began to displace horses and mules in the 1920’s and 1930’s, followed by powered harvesting machines. Farm mechanization added greatly to unemployment in the 1930’s.

Chemical fertilizers greatly increased crop yields, especially synthetic nitrogen from natural gas.

Telephones were mainly in businesses and the wealthy households in the late 19th Century but became more common by the 1930’s. Electronic amplifiers made possible by vacuum tube triodes allowed long distance telephones, radios and later televisions in the early 20th Century.

Commercial refrigeration made a great impact on the cost and availability of fresh food, and household refrigeration helped home economics. Appliances such as washing machines, vacuum cleaners, electric and gas stoves and ovens were great labor saving devices that increased leisure time and reduced household expenses.

Middle and late 20th Century innovations include chemicals and plastics, high performance materials, nuclear energy, jet airplanes, computers, transistors, laser and fiber optics and finally the internet.

The late 20th Century was a period of stagnating economic growth. There was continuous improvement in cost reduction of many basic commodities such as nitrogen fertilizers, steel, paper and plastics; however, the modern innovations did not have the impact of the earlier ones. Also, both oil and gas production peaked in the US around 1970 and the difference had to be made up with imports.

Alternate energy will not do anything to reduce the costs of goods and services and therefore will not create growth. Also, much of the economy now is health care, which does contribute to GDP but does not create growth as I define it. Vaccinations, antibiotics, improved sanitation, better nutrition, antibiotics, x-rays and other healthcare advances reduced the death rate and increased longevity, which along with lower birth rates contributed, to an ageing population. Note that Japan has a similar industrial profile to the US but is ahead in ageing and has been in a 20 year depression. Japan's dependency ratio will eventually be unsupportable.

I am looking for drivers of growth in the 21st Century, but do not see any. Innovations like electrification and farm mechanization are tough acts to follow.

China is able to achieve growth rates of multiples of any the year the US ever experienced by implementing a century of innovations in a couple of decades while skipping some of the obsolesce involved in the long evolution of technologies.

Paul,
I agree with your opening sentence;
"Economic growth is achieved by lowering the cost of production of goods and services by decreasing the manpower, materials and energy inputs."

but not with your conclusion;
"Alternate energy will not do anything to reduce the costs of goods and services and therefore will not create growth"
for starters, electric vehicles are going to be much cheaper to operate and will not result in $500Billion leaving the country each year as oil imports. Some of those $$ are going to be spent in the US building wind and solar energy infrastructure. Even if this renewable energy is more expensive, a much smaller proportion of the GDP will be spent on energy(presently about 9% of GDP) perhaps only 5-6% of GDP.
Electricity became cheap in the early 20thC because of the major use of hydro electric power. One of the biggest drivers of growth was trade stimulated by falling costs of transporting goods, not due to falling energy costs but due to lower labor and greater efficiency. Compare steam engines and diesel, container ships versus general cargo.

"I am looking for drivers of growth in the 21st Century, but do not see any."
How about advances in plant biotechnology, functional foods, all plants hosting nitrogen fixing bacteria? Considering that the internet, mobile phones and PC really only started in the last 10 years of the 20thC, it would be surprising that we don't continue to see further advances, perhaps drastically reducing health care costs with a "chip doc" implant or pharmaceutical foods or ......?

We should be confident that the trend of using energy more efficiently ( about 1.3% gain per year over last 50 years) will continue and perhaps accelerate. The US GDP per capita could be X4 higher in 2100 with no increase in energy use per capita, so energy may only represent 2.5% of GDP, or energy may be twice as expensive bur still only 5% of GDP.

Neil:

Electricity did become cheaper in the 20th Century, as is best described by Ayres, Ayres &Warr:

http://www.iea.org/textbase/work/2004/eewp/Ayres-paper3.pdf

Hydro power helped but hydro is only a small fraction of overall electricity.

Most of the efficiency gain was due to the factors of steam turbines and high pressure steam replacing the old reciprocating steam engines. Fuel to power efficiency increased from around 4% in 1900 to the high 30% range by 2000. Combined cycle can operate at 60% efficiency using natural gas and considerably lower using coal or gassified coal, we will not see a doubling of efficiency in the future due to thermodynamic cycle limitations. Ceramic combustion turbines may add another few percent efficiency.

The efficiency curved changed to a lower slope in the mid 1960’s (Fig. 16 from the above paper).

Container shipping is a productivity factor I did not mention. It is important, but much of international trade is in bulk commodities, particularly fuels and grain, which are not containerized. Also I should have mentioned forklifts and mobile construction equipment, particularly earth moving. More recently we implemented asembly line robots which weld and paint cars and assemble electronic equipment.

For all the hype of computers, biotechnology, cell phones, I-pods, Blackberries, etc., there will continue to be innovation but it is pale in comparison to what happened over one hundred years ago. My guess is that these innovations will not even offset declining resource quality and EROEI and increasing dependency ratio due to the ageing population. During the 1930’s depression people gave up their telephone service but did whatever possible to keep the couple of incandescent light burning. We will eventually give up our cars and eliminate either our land lines or cell phones.

As I have stated, I applaud advances in health care that promote longevity, especially since I am ageing; however, having people live well beyond their productive years is economically counterproductive. We need to find ways that elderly can be more productive.

Electric cars indeed have a place, if we can afford them. Electric street railways would be cheaper and more realistic and are proven technology.

The percentage GDP devoted to health care has doubled in recent decades and is now one dollar in six and headed to 25% of GDP. Energy cost going to zero would not be enough to offset health care.

My educated guess is that growth, ex-healthcare and net of excess debt, personal, business and government, went negative in the previous decade. The desperate attempt to prop up the economy through the easy money real estate bubble destroyed the banking system and bankrupted the government.

Neil,

I suspect you are the same age as I am (the 1947?).

Lack of understanding of the exponential function. View the Prof Al Bartlett video on the subject. The pint bottle is three quarters full. I was taught about this in school way back in the 1960s. Just sort of put it to the back of the mind until the relevance of Peak Oil kicked in.

Electric vehicles still need to be manufactured, and OK fine for personal transportation. What will you do when the big diesel semi-trailers can no longer haul the stuff to your local WalMart, Tescos, Lidls [insert supermarket of choice here]?

How about advances in plant biotechnology, functional foods, all plants hosting nitrogen fixing bacteria?

Pie in the sky, or playing God - take your choice.

"The Party's Over", as Richard would say.

Cheers,
Steve

Plant breeding has improved the yield potential of crops like maize by >400% in last 80 years. Nitrogen fertilizer is needed to reach that potential but we have had synthetic fertilizers for >50 years and yields have doubled in US in that period( and more than doubled world-wide) wile diesel use/acre has halved, and energy to grow food decreased by 1/3. It's not "pie in the sky" to expect further advances.

What will you do when the big diesel semi-trailers can no longer haul the stuff to your local Wal Mart,

Where diesel is no longer available 4 options are; 1) replace diesel motors with electric 2) replace diesel with CNG 3)replace long haul with electric rail and short haul electric trucks 4) manufacture more Wal MArt items locally. Probably some of each.

"The Party's Over", as Richard would say.
It's unlikely that I will be shopping or driving in 30 years time, but if so I am fairly sure I will be doing it in the same electric vehicle I buy in the next 5 years. Probably not using the same battery packs.
I am fairly sure I will be able to afford to replace my present ICE vehicle with a $20-$40,000 electric within 5 years. Many others are going to suffer with gasoline rationing but not really suffer that much. I car pooled in the US in the 1970's not really too bad, still enjoyed life.

It's not "pie in the sky" to expect further advances.

Creaming curve

+5 for a well thought out comment.

However, GDP and well-being (wealth) are not one and the same.

GDP is measured in dollars, which is a man-made artifice.

One can easily imagine an economy that is "growing" and yet well-being is not increasing.

The following may not be the best of thought experiments and TOD readers can probably think of better ones. Imagine you are in the religion business, basically selling prayers and prayer books and religious artifacts. Suddenly a pandemic strikes and demand for your goods and services is booming. People are hurting, but for you, the GDP is rising (you are your own country in this example). War is another example where GDP rises but well-being does not for those who are getting bombed. (It is good times for the bomb makers though. Like EROI, it's all a matter of where you arbitrarily draw your system boundaries before you start doing the number crunching.)

_________________
P.S. Saw an intense movie over the weekend: "Hurt Locker" --we're all locked and loaded into inflicting major hurt on others

You nailed the big idea.
Money and numbers based on money are not the same as well being.
By reduction, the problem is money itself being an artificial device and nothing will ever change for the better until we use a different value measure.

the problem is money itself

Here is where we probably need to agree to disagree.
My position is that there is nothing wrong with "money" per se (on its own).
However, money represents a "promise" or a set of promises.
And it is when those promises are reneged upon, or made without ability to fulfill them, that we run into problems.

I think its rather straightforward to explain why the market cannot "solve the problem of Peak Oil", contra:

It is impossible in the context of this discussion to provide a detailed explanation of why the market probably cannot solve the Peak Oil problem.

Markets cannot design complex systems. "Solving the problem" of peak oil will require physical infrastructure and social institutions capable of supporting sustainable energy harvesting with substantially lower EROI than the energy returns that supported the expansion of the successive fossil fuel energy economies.

That infrastructure and those institutions are complex systems. Therefore, they cannot be designed by markets.

The market would call this a "head and shoulders" chart pattern:
http://tonto.eia.doe.gov/dnav/pet/hist/wttntus24.htm

How do markets usually handle this problem?

With a WTI price below Brent, the world is willing to pay more for oil than we are, where do you think the oil is going to go?

BruceMcF
You're making an error of supposition here, while being technically correct about why the markets are not solving the problem at present. It's an error to say "markets can not design complex systems". The main job of markets, of course, is to propagate the complex system design using the economic principles presently being followed, and many people would consider that a complex system design function. That same function can solve the problem, is the point, using a different set of principles.

Natural system economies display a great many different kinds of complex system evolution principles and experiences. The most basic choice is between ones that blow up and destroy themselves and those that blow up and stabilize themselves. We're presently stuck in the first type, I think I don't need to prove here. It's partly because of the fixation of the leadership institutions on blowing themselves up as their own source of wealth.

Switching to the other type of growth system, the type that reaches climax at the prime of its life, would take 1) recognizing the necessity and 2)finding good questions for discovering how. The biggest hurdle seems to be that complex systems are themselves things of nature, and not theoretical constructs. Learning what questions are more help than others in relating to "things of nature" is something like the experience of pre-teens realizing their dance partners are not a rag dolls, like "OH NOOOOOooooo... now were in trouble".

It's fun trouble in the end, but the path feels treacherous.

I teach 9th grade English in a public high school. One thinking tool I teach is called "Concept Mapping."

http://cmap.ihmc.us/Publications/ResearchPapers/TheoryCmaps/TheoryUnderl...

On the final assessment for this topic, I ask students to translate short prose passages into concept maps. Here is one of the passages I use:

Problem 3:
"Our economy is based upon oil. Oil is one of the limited resources. Resources are necessary for growth, and our economy "requires" growth. Therefore, growth depends upon the supply of oil."

This passage looks stranglely familiar--it's the thesis of Heinberg's article!

I've absorbed much from TOD. Thanks!

How about
"Our economy was based upon wood. Wood is one of the limited resources. Resources are necessary for growth, and our economy "requires" growth. Therefore, our economy must have stopped growing in 1900 when we used up all of the wood."

No wait a minute, we use much less wood per $GDP than we did in 1900, so we still have growth and some wood. I guess less wood is needed for growth than it was 100 years ago, even horseless carriages are not made of wood anymore, something to do with technology?

The railroads opened up the logging of old growth timber in many regions such as the South. Old photographs on the walls of my clients in the paper industry show flatcars with a single huge tree.

By 1900 all of the old growth was gone. By the late 1920's the kraft (meaning strong) process, which used alkali and sulfur, the chemicals which could be recovered in newly invented boilers, led to the building of a huge pulp and paper industry. Eventually timber and pulpwood supplies became tight and wood was seen as a limiting factor for many mills. Timberlands were the best performing asset class since from 1950 th the end of the century.

Plastics replaced paper in many packaging applications, especially liquids, grocery and multiwall shipping bags. Shrink wrap of palletized goods is a relatively unappreciated productivity factor.

The paper industry would have trouble producing enough paper to compensate for a shortage of plastics feed stocks.

What is the cycle time from replanting to the growth per year or quality starts to decline and its time to harvest the woods agaian?

I am not a forester but I understand there is a thinning cycle in the southeast with pine at something like 10-12 years, where harvested trees are used for pulpwood. After about 30 years the trees are more valuable as timber.

The fiber length and density of wood increases with age, making older wood higher quality for paper and lumber. Many commercial species can live 100 years or more while maintaining good health, except for droughts, which promote beetles and diseases, and lightning strikes, ice storms and other weather hazards. Growth of wood per acre/hectare decreases as trees mature so there is little chance of trees getting too old.

The paper industry would have trouble producing enough paper to compensate for a shortage of plastics feed stocks.

Which is why it will (probably) not happen.

But what might happen is that we use more reusable wood/ceramics/metal whatever in place of disposables. What might happen is we burn less oil in cars.

What might happen is that essential plastic (medical, industry, food packing, etc...) will then have plenty of oil freed up for their rather minor percent of current usage.

Oil can be extracted and/or created synthetically at negative EROI if we are not using it for energy. This opens up vast oil shales and uneconomic tar sands as a source of feedstocks in the future.

My point is this: people will use their imagination, and self interest, if not always their better judgement, in the future as they do now.

Yes, the diagnosis is wrong. But then the social sciences, including economics, are stuck in the dark ages because they do not test their causal hypotheses with controlled experiments.

So who has the right dark-ages diagnosis?

Here's mine:

Centralization of control of assets is a feature of any society that taxes economic activity rather than net assets. This subsidy corrupts the decision-makers as surely as any welfare system can corrupt the recipients.

End of Story

End of Civilization

The question of whether "growth" can continue is meaningless
until the neoclassical conception of what "growth" itself means is
pinned to the board for a thorough dissection.

Since conventional measures of economic output and GDP reflect
primarily the economic value of inputs consumed, they are largely
irrelevant. The GDP consists largely of the cost of Bastiat's "broken
windows" and of the cost of waste. The more superfluous steps are
added to the Rube Goldberg mechanism of material production, and the
more tribute we have to pay for proprietary design and content, the
higher the GDP--even if we're working longer hours to pay for the same
stuff.

A drastic reduction in inputs required per unit of output, and the
disappearance of the price mechanism altogether for much of what we
consume, would register in conventional econometric statistics as a
catastrophic economic collapse. But it would be entirely compatible
with a radical increase in actual material standard of living.

Well written Gail!!!

It seems we did agree on most issues.

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