Stories tagged with "Robert Ayres"

Implications of the Ayres Warr Model of Economic Production: An Introduction

Posted by Gail the Actuary on May 24, 2009 - 9:12am
Topic: Economics/Finance
Tags: benjamin warr, robert ayres [list all tags]

This is a guest post by Ian Schindler, known on The Oil Drum as Schinzy. Ian teaches math at the University of Toulouse in France.

The Ayres Warr Model

Implications of the Ayres Warr Model of Economic Production: An Introduction

Schinzy

Many Oil Drum readers are familiar with the Ayres Warr model of economic production, as discussed in "Accounting for Growth: The Role of Physical Work" by Robert Ayres and Benjamin Warr. As a mathematician, with an interest in economics, I wrote a fairly mathematical paper, extending some of the work done by Ayres and Warr. My paper can be found at this link.

The purpose of this post is to give an overview of the paper I wrote, explained in more elementary terms. Some readers with a more mathematical bent may choose to read my original paper as well. For those readers unfamiliar with the Ayres Warr model, a short introductory piece can be found in point 5 of this post by Gail the Actuary.

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An Overlooked Detail - Finite Resources Explain the Financial Crisis

Posted by Gail the Actuary on November 21, 2008 - 9:43am
Topic: Economics/Finance
Tags: benjamin warr, financial crisis, monetary system, original, peak oil, robert ayres [list all tags]

Recently, two major actuarial organizations asked members to submit essays on the financial crisis. The only limitation was that the papers had to be very short--they should fit on two typewritten sheets of paper.

Since I have written in the past on the financial crisis, I took the opportunity to respond. This was my summary of the current financial situation, its connection to our limited resources, and what we need to do to solve the crisis. I never actually use the words "peak oil" and, in fact, the precise timing of peak oil is irrelevant. The issue is really the financial squeeze that occurs when resources starts to become expensive to deliver, and that doesn't really require peak oil.

Our World Is Finite

We all know the world isn’t flat. Any of us would be laughed out of the room if we built a model with a flat earth as one of its major assumptions.

We also know that the world isn’t infinite. There are a finite number of atoms in the earth and its atmosphere. The ability of our atmosphere to absorb pollutants is limited. The ability of our soil to withstand repeated mistreatment is limited. The amount of our non-renewable resources is limited.

Fossil fuels, especially oil, are a particular problem. Even though the amount of resources seems huge, the cost of extraction (in terms of fossil fuel resources, man-hours, and fresh water) increases greatly after we have extracted the easy-to-extract oil, natural gas, and even coal. Substitutes (such as ethanol and solar voltaic) are expensive in terms of fossil fuel use, man-hours, and fresh water. It is also difficult to ramp up quantities to the level needed to substitute for fossil fuels.

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Science 1101 Part 2: Oil as a Liquid Fuel and Expected Peak Oil Impacts

Posted by Gail the Actuary on February 8, 2008 - 11:00am
Topic: Economics/Finance
Tags: battery operated car, conservation, corn ethanol, curriculum, economists, ethanol, food prices, hydrogen, oil prices, peak oil, robert ayres [list all tags]

This is Part 2 of my post relating to curriculum for a science peak oil course. It incorporates changes based on many of the comments made below. Part 1 can be found here. A PDF version which contains both Part 1 and Part 2 can be found at this link.

One theme of Part 2 is energy, and why energy is important to our standard of living. I try to compare the energy in oil to the energy in food. To make the comparison more understandable, I convert energy to kilocalories, since most people are familiar with calories in food. I also point out the errors of economists, both in the text and in the discussion questions at the end.

Another theme is the special characteristics of oil, and why oil is valued as a liquid fuel. I think we are sometimes kind of fuzzy in our thinking about substitutes for liquid fuel. We don't think about our built infrastructure, and just assume electricity can be substituted for oil when it really is at best a very long-term alternative. I discuss various alternatives including battery-operated cars, hydrogen, and conservation. The two sections relating to corn ethanol could probably be a post of their own.

I also talk about the impact of oil on prices. I make the point that big increases in petroleum prices are likely, with only a small shortage of oil. I also point our that food prices are likely to increase, partly because of the use of petroleum for food production, and partly because corn for ethanol competes with food for land use.

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Economic Impact of Peak Oil Part 1: A Flashback

Posted by Gail the Actuary on September 23, 2007 - 11:00am
Topic: Economics/Finance
Tags: debt, industrial revolution, robert ayres, robert solow [list all tags]

This is the first part of a three-part series providing my ideas on the economic impact of peak oil.

What happens when peak oil collides with our economic system? It seems to me that there is a high probability of a major discontinuity of some type. What exactly happens after the discontinuity is likely to vary from country to country. It seems to me that the United States is especially vulnerable to a drastic drop in the amount of oil available for import because of the large amount of oil we import and the relatively small amount of goods we export.

Many people when analyzing the world oil situation focus on the relatively small drop in overall world supply in the first few years. From this, they conclude that peak oil will primarily raise the price of oil and some related goods, but not have a huge effect otherwise. If the decrease in oil products is severe, some rationing may be required. I think this analysis misses the big part of the problem – the impact of peak oil on the overall economic system, particularly in the United States.

The world is very different now than it was before the industrial revolution, which began about 1800 when fossil fuels were first used extensively. It seems to me that there is a significant chance that over the long term there will be just as big a change as we leave the age of fossil fuels. To start the discussion, let's start with where we are, and then take a look back.

1. What is our current economic system like?

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