Articles tagged with "growth"
This is the fifth post in the series following the oil price, markets and general health of the global economy, examining the simple theory that OECD recession may result from annual average oil price exceeding $100 / bbl.
The annual average price (AAP) of Brent went through $100 on around 16th August 2011 and the AAP stood at $108 on 22nd November. The AAP high point in the 2008 price spike was $104.8 on 9th October that year, and so $108 expensive dollars sets a new record. This is a short post updating readers with developments including speculation about why a weak world economy can now sustain record high oil prices.
Figure 1 Data for Brent from the EIA, 1 year moving average roughly equals 5 trading days per week divided by 7 days per week = 261 days. FTSE 100 data from Yahoo. Back in 2007 – 09, the top of the London FTSE 100 index was 6731 on 12th October 2007 (1). The top of the oil price spike was $143.95 on 3rd July 2008, 8 months after the market top (2). Both oil price and markets had declined substantially by the time the Lehman induced crash came in October 2008. The recent high in the FTSE 100 was 6091 on 8th February 2011 (3). The top of the recent oil price spike was $126.64 on 2nd May 2011, 3 months after the market top (4). Data at 22nd November.
Posted by JoulesBurn on October 28, 2011 - 10:45am
Tags: behavior, energy, energy scale, eroei, growth, models, sustainability, technofix, transportation and tagged economics [list all tags]
Many Do the Math posts have touched on the inevitable cessation of growth and on the challenge we will face in developing a replacement energy infrastructure once our fossil fuel inheritance is spent. The focus has been on long-term physical constraints, and not on the messy details of our response in the short-term. But our reaction to a diminishing flow of fossil fuel energy in the short-term will determine whether we transition to a sustainable but technological existence or allow ourselves to collapse. One stumbling block in particular has me worried. I call it The Energy Trap.
In brief, the idea is that once we enter a decline phase in fossil fuel availability—first in petroleum—our growth-based economic system will struggle to cope with a contraction of its very lifeblood. Fuel prices will skyrocket, some individuals and exporting nations will react by hoarding, and energy scarcity will quickly become the new norm. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but…energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term—effectively steepening the decline—for a long-term energy plan? It’s a trap!
Posted by David Murphy on October 25, 2010 - 10:45am in The Oil Drum: Net Energy
Tags: american, american petroleum institute, david murphy, economics, eroi, growth, institute, m. king hubbert, oil, peak oil, petroleum [list all tags]
After the conference, Jane Van Ryan from the American Petroleum Institute (API) asked to interview me for her weekly podcast for the Energy Tomorrow blog. You can listen to the interview by clicking below, or alternatively, I have copied the transcript of the interview below the fold. The interview is 15 minutes long for those who would like to listen.
The Oil Drum recognizes that API (and hence Energy Tomorrow) is funded by the oil and gas industry. But the interview here relates to my research, which is not funded by such interests. I think the interview serves a useful purpose, because it makes my work accessible to a wider audience.
Steve Sorrel, Senior Fellow, Sussex Energy Group, University of Sussex in the UK has recently published a 25 page paper called Energy, Growth and Sustainability which can be downloaded at this link. This post provides some excerpts from the paper, which summarize its findings. Readers are encouraged to read the entire paper.
According to the introduction to the paper:
This paper questions the conventional wisdom underlying climate policy and argues that some long-standing and fundamental questions regarding energy, growth, and sustainability need to be reopened. It does so by advancing the following propositions:
1. The rebound effects from energy efficiency improvements are significant and limit the potential for decoupling energy consumption from economic growth.
2. The contribution of energy to productivity improvements and economic growth has been greatly underestimated.
3. The pursuit of improved efficiency needs to be complemented by an ethic of ‘sufficiency’.
4. Sustainability is incompatible with continued economic growth in rich countries.
5. A zero-growth economy is incompatible with a debt-based monetary system.
These propositions run counter to conventional wisdom and highlight either blind spots or taboo subjects that deserve closer scrutiny. While accepting one proposition reinforces the case for accepting the next, the former is neither necessary nor sufficient for the latter.
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.
This is a guest post by Rob Dietz and Brian Czech. Rob Dietz is the executive director of the Center for the Advancement of the Steady State Economy (CASSE). He received a master of science degree in environmental science and engineering from Virginia Tech and an undergraduate degree in economics and environmental studies from the University of Pennsylvania. Brian Czech, the founder of CASSE, is also a professional biologist in civil service and an adjunct professor of Ecological Economics at Virginia Tech. Czech has a Ph.D. in Renewable Natural Resources ( University of Arizona, 1998) and is the author of "Shoveling Fuel for a Runaway Train". (note: Herman Daly, who helped me choose my Phd path, first wrote about the steady state economy in 1977 - he is on CASSE's board)
When pundits, talking heads, and government officials debate policies related to oil consumption (e.g., gasoline taxes), they invariably ask, “Will it hurt economic growth?” This statement could be broadened to a whole range of policy debates on the environment, from climate change to endangered species. But since this is the Oil Drum, let’s stick with the topic of oil and economic growth.
Stuart Staniford proposed a “way forward” for humanity in his article Powering Civilization to 2050. This article proposes an alternative vision: instead of trying to create continual, technological stop-gaps to the demands of growth, we must address the problem of growth head on. Infinite growth is impossible in a finite world--a great deal of economic growth may be possible without a growth in resource consumption, but eventually the notion of perpetual growth is predicated on perpetual increase in resource consumption. This growth in resource consumption causes problems: it brings civilization into direct conflict with our environmental support system. Growth is also one way of improving the standard of living for humanity by creating more economic produce, more material consumption per human. Growth, however, produces very unevenly distributed benefits, and there is little convincing evidence that the poorest, most abused 10% of humanity is actually better off today than the poorest, most abused 10% of past eras. Furthermore, if you accept my statement above that infinite growth is impossible in a finite world, then employing growth today to “solve” our immediate problems incurs the significant moral hazard of pushing the problem—perhaps the greatly exacerbated problem—of addressing growth itself on future generations.
With that in mind, my intent here is to propose one possible means for humanity to directly address the problem of growth itself. I am attempting to take what I see as an inherently pragmatic approach—one that does not rely on the universal cooperation of humanity, nor on the assumption of yet-to-be-developed technologies. My approach to the problem of growth is to stop trying to address its symptoms—overpopulation, pollution, global warming, peak oil—and attempt instead to identify and address the underlying source of the problem.
· We are on the eve of a new world energy order.
· On the supply side, we have oil production outside the core OPEC countries reaching a peak, which is not good news for the International Oil Companies (IOCs). The National Oil Companies (NOCs) will determine future oil supply.
· On the demand side, China and India are transforming global energy markets through their sheer size and rate of economic growth.
· Between now and 2030, China and India will account for 70% of new global oil demand, and 80% of new coal demand.