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PeakOil is You

PeakOil is You

The Myth of energy and GDP

Discussions about the economic and financial ramifications of PEAK OIL

Unread postby MonteQuest » Sat 16 Apr 2005, 19:50:59

smiley wrote:
Montequest wrote:It makes no difference whether it is wasted or not, if it gets used it benefits those who sold it, i.e., the gas companies and electricity companies. Millions of people have their entire livelyhood based upon this wanton consumption. You are not looking at the Big Picture.


I'm sorry to say Monte, but you're wrong here.

Let's say I use one gallon of fuel to make product A and I manage to increase the efficiency to half a gallon per product.

Now this enables me to make twice the amount of product A. The energy consumption is the same as before so for the supplier it doesn't make a difference. However my economic output has doubled.

It is a temporary fix, to that I must agree, but it is a fix nevertheless.


That was not the point being made. Wildwell was saying that it makes a difference whether energy is wasted or consumed. I say it make s no difference as even wasted energy provides a profit and a job for someone. If it doesn't, then much of the energy we waste doesn't belong to anyone or is free, which is obviously not the case.
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Unread postby MonteQuest » Sat 16 Apr 2005, 19:54:40

DamianB wrote:If we assume that economic growth does require energy input then surely our long-term growth rate is going to revert to the rate at which we can capture the planet's flow of energy from renewable sources. This will obviously be much lower than the past but it will still be growth.


This assumes that renewables will be able to replace our energy needs completely, and provide an excess for growth. There will be no growth until the demand is less than the supply.
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Unread postby JohnDenver » Sat 16 Apr 2005, 20:20:15

MonteQuest wrote:There has never been a growth in GDP without an increase in electrical energy consumption, period.


This is incorrect. Here's an obvious counterexample:

Suppose I have lost my job, and I'm living on savings and unemployment checks. I'm sitting around the house everyday, surfing the Internet and wondering about my options. That's my baseline energy use.

Now, I decide to take an online course in computer programming. I pay for the course, and that itself adds to GDP without increasing energy use. When I have completed the course, I begin to do freelance programming over the internet, and I make good money at it. That money is growth in GDP which required no increase in energy consumption.
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Unread postby Wildwell » Sat 16 Apr 2005, 20:41:45

MonteQuest wrote:
Wildwell wrote: You call it a temporary fix as far as the UK and Sweden (and others) are concerned, but you have no evidence for that other than by the ideas of a slightly mad economist who lived a very long time ago. I don’t wish to be rude, but you know, he might just have been wrong.


The evidence is not Jevon, the evidence is that our society and civilization is based upon a temporary phantom energy source (fossil fuels) and it is unsustainable. Conservation and efficiency only go so far. Forget about Jevon's Paradox, that is another factor altogether. And Jevon's has been 100% right so far. Will he be wrong this time? Doubt it.

I am not saying Peak oil is not a problem, it clearly is. But I've yet to see any real evidence of phantom carrying capacity, which would assume that we would never figure out a way to create other agricultural products among other things.


Then you don't have enough basic understanding of ecology. Read my thread on Liebig's Law. I have 30 years of background on the subject.

Don't keep telling me I'm wrong, prove it with facts, figures and scientific input. And even then I doubt you would be able to because the opinions of the so-called experts differ so much.


I have: 2nd Law, and the fact that no GDP growth has ever occurred without an increase in electrical consumption. My god man, to assume that you can have growth without consuming energy is beyond reason. You must consume energy to be able to do work. That is basic science.


The discussions over Liebig’s law have been going on since the early 19th century and the woks of Liebig were of great interest to Marx, the father of socialism. Much argument went on about over population even then. Most of this was class based war, the hate of the bourgeois in the towns and this dismissal of the works of Adam Smith.

Marx wrote ‘Capitalist production ... disturbs the metabolic interaction between man and the earth, i.e. it prevents the return to the soil of its constituent elements consumed by man in the form of food and clothing; hence it hinders the operation of the eternal natural condition for the fertility of the soil.... All progress in capitalist agriculture is a progress in the art, not only of robbing the worker, but of robbing the soil; all progress in increasing the fertility of the soil for a given time is a progress towards ruining the more long-lasting sources of that fertility.... Capitalist production, therefore, only develops the techniques and degree of combination of the social process of production by simultaneously undermining the original sources of all wealth - the soil and the worker.’

There is a lot wrong modern faming methods and nitrogen fertilizers are very energy intensive, However, we have enough energy to produce those for the foreseeable future and there are many other methods of more sustainable farming.

The 2nd law of Thermodynamics only occurs in a closed system as such, the earth is not a closed. It’s not even especially relevant as it relates to entropy (usually defined as BTUs) absorbed by a system or heat, divided by the absolute temperature of the system at the time the heat is absorbed divided by the absolute temperature of the system at the time the heat is absorbed. What on earth has this go to do with oil as a single finite energy source? The system can be reversed, providing the system interacts with its surroundings in such a manner that the entropy increase in the surroundings is more than enough to reverse the system's original entropy increase.

You’ve said it again about GDP and electricity. This is nonsense, prove it. The current economic system is based on worth not work. It does does not assume Bill Gates gets paid at the some hourly rate as his house cleaner.

The 11% energy increase in the UK was mostly down to an increase in the ownership of cars. This probably meant more train and bus since being empty (less energy efficiency), a joy ride or two, someone talking the car instead of walking and making a few Japanese car makers and Arabs rich in the process.
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Unread postby Wildwell » Sat 16 Apr 2005, 20:47:31

MonteQuest wrote:
DamianB wrote:If we assume that economic growth does require energy input then surely our long-term growth rate is going to revert to the rate at which we can capture the planet's flow of energy from renewable sources. This will obviously be much lower than the past but it will still be growth.


This assumes that renewables will be able to replace our energy needs completely, and provide an excess for growth. There will be no growth until the demand is less than the supply.


Nonsense that assumes all waste creates money and every transport journey and ton of freight moved created wealth. I've never once argued that renewable can replace what we're running now, but I dismiss sudden die off and a permanent crash.
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Unread postby Wildwell » Sat 16 Apr 2005, 20:58:26

MonteQuest wrote:
smiley wrote:
Montequest wrote:It makes no difference whether it is wasted or not, if it gets used it benefits those who sold it, i.e., the gas companies and electricity companies. Millions of people have their entire livelyhood based upon this wanton consumption. You are not looking at the Big Picture.


I'm sorry to say Monte, but you're wrong here.

Let's say I use one gallon of fuel to make product A and I manage to increase the efficiency to half a gallon per product.

Now this enables me to make twice the amount of product A. The energy consumption is the same as before so for the supplier it doesn't make a difference. However my economic output has doubled.

It is a temporary fix, to that I must agree, but it is a fix nevertheless.


That was not the point being made. Wildwell was saying that it makes a difference whether energy is wasted or consumed. I say it make s no difference as even wasted energy provides a profit and a job for someone. If it doesn't, then much of the energy we waste doesn't belong to anyone or is free, which is obviously not the case.


Wasted energy doesn't necessarily provide a job - a lot of energy is subsidised in the case of a hydro dam or solar panel free to a degree after a tine, depending on how you calculate it. Since money is a man made entity, the subsidy might at some stage mean less economic input somewhere else or increase in confidence in another part of the economy.

Of course energy can be free. Do people charge for all the currents of the oceans or wind in the sky? Do people charge for the energy in each of their farts? Of course not.

Again, this is back to worth. Some strange arguments were made at the time of water privatisation in Britain, some arguing that water should never be put into private hands because if was a natural resource. The point was, money was being charged for the capture, cleaning, distribution and marketing of the water. Sea water is free. Spring water is also free, unless someone decides to capture it, bottle it and sell it as a matter of convenience. The same is true for energy.

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Unread postby MonteQuest » Sat 16 Apr 2005, 21:35:11

Wildwell,

I started to answer your posts and then decided I am wasting my time here. You just go on believing what you think.
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Unread postby JohnDenver » Sat 16 Apr 2005, 22:21:46

Wildwell wrote:Of course energy can be free.


The free lunch... Yes! I love it!
A very important point point, Wildwell. If you invest in an energy generator, like a microhydro or solar unit, and you pay it off, all the energy after that is free. How cheap can electricity get? $0.00/kilowatt-hour! :o
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Unread postby Wildwell » Sat 16 Apr 2005, 22:42:34

MonteQuest wrote:Wildwell,

I started to answer your posts and then decided I am wasting my time here. You just go on believing what you think.


I’m open to having my mind changed, but some of these peak oil arguments do not make sense and I have challenged them in order to create clarity and discussion.

Arguments can me made in any way in order to suit purpose and statistics and theory can be skewed – we see it all the time, not just here but in all areas of life: From advertising, to media reporting, from what politicians say to websites and passages in books.

I don’t think we have ‘zero’ problems, far from it, but I do think elements of this site have become a cult and people are taking too much at face value when this subject is full of unknowns.
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Unread postby Licho » Sat 16 Apr 2005, 23:07:15

I was pointing out numerous time, that this is indeed a myth..
Is simple counter example good enough for you?

Ok .. just check countries of former eastern bloc in 90's.
There was solid growth in GDP and production in central european countries along the rapid decline in energy use.

Economies were simply restructuralized to different one, and remained in growth mode despite energy consumption decline..


Money are currently NOT directly related to energy, but rather to value.. And society can value things despite the fact that they require almost no energy to produce (knowledge/software for example). Thats why society can increase production (measured in money) despite falling energy inputs and even efficiency.
There is no reason why economies should permanently stop growing post peak ...
Some energy intensive sectors of economy might crash hard, but others will certainly flourish.
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Unread postby MonteQuest » Sun 17 Apr 2005, 00:13:23

Wildwell wrote:
MonteQuest wrote:Wildwell,

I started to answer your posts and then decided I am wasting my time here. You just go on believing what you think.


I’m open to having my mind changed, but some of these peak oil arguments do not make sense and I have challenged them in order to create clarity and discussion.


Ok, one last time.

Image

http://www.eia.doe.gov/emeu/25opec/sld019.htm
• U.S. energy consumption has increased by more than 28 percent-about 21 quadrillion Btu-during the last 25 years.
• Energy growth has occurred during periods of relatively low or stable prices, and also during periods of healthy economic growth.
• Significant declines in energy consumption occurred following major increases in energy prices, as well as during periods of sluggish economic activity.
• Total energy use declined four consecutive years-from 1980 to 1983.


This is classic Jevon's Paradox at work. Note the years in decline when conservation, demand destruction and efficiency gains were at work. Then look at the increase in consumption that followed.

As to Sweden, this pdf file gives a whole lot of explanations for their success, but there was still an increase in energy consumption primarily by the industrial sector. And they too are concerned about being able to supply electricity in the future which is required for economic growth.

In 2000, Sweden consumed 11.0 Mtoe of electricity (128.4 TWh), accounting for 30.9% of the country’s TFC. Since 1990, absolute electricity demand has risen by 6.6% and its share of TFC has fallen from 32.2% to 30.9%. Demand from the industrial sector is highest, accounting for 44.1% of the electricity TFC in 2000, followed by the residential sector,which consumed 32.8% of the power in the same year.

Gas use has increased by 32% from 1990 to 2000. The majority of gas demand in the country comes from industry (64%) and residences (22%).

In April 2002, the association of Scandinavian transmission operators, Nordel, published their Nordic Grid Master Plan. The plan noted that Sweden, Norway and Finland may face a combined shortage of electricity in the years ahead. Specifically, the plan analysed the period 2002–4 and found risks of power shortages in unfavourable conditions, particularly during years of low hydropower production.

In view of the crucial role energy plays in the development of society, in 2001 the Royal Swedish Academy of Engineering Sciences (IVA) initiated a special Energy Foresight project, which will examine the Swedish energy system in both a European and a global perspective.


http://www.iea.org/textbase/nppdf/free/ ... comp02.pdf

Growth of any GDP economy must be accompanied by either an increase in energy consumption or an increase in efficiency, or an outsourcing of the energy consumption to another country. Increases in efficiency are limited due the the law of diminishing returns, not to mention newcomers who have no waste to conserve. Where will the energy for their consumption come from? From everyone else's piece of the pie?

If it is "value added" it is from money generated by an increase in energy consumption somewhere or by debt which is predicated upon future economic growth and the resultant energy consumption. It works no other way.
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Unread postby Wildwell » Sun 17 Apr 2005, 05:41:10

So you say, please show me an economist that agrees with you. Its likely growth creates energy use by increased purchasing and travel, not necessarily the other way round.

This is a very US idea energy = growth, which was one of the reasons Bush didn’t sign Kyoto, yet in the long term environmental damage may cost the economy through external costs, loss of production and rises in insurance. One of the biggest holders of shares are insurance companies.
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Unread postby MonteQuest » Sun 17 Apr 2005, 09:59:46

Wildwell wrote:So you say, please show me an economist that agrees with you. Its likely growth creates energy use by increased purchasing and travel, not necessarily the other way round.

This is a very US idea energy = growth, which was one of the reasons Bush didn’t sign Kyoto, yet in the long term environmental damage may cost the economy through external costs, loss of production and rises in insurance. One of the biggest holders of shares are insurance companies.


I don't know one economist who disagrees with me. It is the way things work. Since you are the one questioning the status quo, show me an economist who believes that work can be done without an expenditure of energy. Energy is the ability to do work.

And if it is GDP growth that creates the need for energy consumption, then you have been hoisted by your own petard. It becomes a demand situation that must be meet by supply. And how much demand is not anticipated and planned for?
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Unread postby MonteQuest » Sun 17 Apr 2005, 10:21:14

As to that "value added" GDP growth, here is one economist that agrees with me.

The Greenspan/Bernanke Reflationary Bubble Period (the fall of 2002 to present) will go down as the most unsound boom in history. That it has been so misinterpreted by many only undermines already tenuous system underpinnings. Somehow the optimists were willing to ignore the explosion of non-productive Credit, unprecedented leveraged speculation, a conspicuous Mortgage Finance Bubble, and unparalleled Current Account Deficits. They instead put their trust in inflating asset prices and abundant liquidity.

It has always been a case of when this unhealthy boom would face the reality of a faltering Financial Sphere. Credit and speculative excess fostered a widening gap between inflating market valuations and true underlying sustainable (post liquidity boom) economic value.

http://www.prudentbear.com/creditbubblebulletin.asp
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Unread postby RdSnt » Sun 17 Apr 2005, 11:02:10

My apologies I'm coming to this late, but what the hell is the argument? How simple can this get?

You have two people in a closed system (a room), they require a certain amount of energy to sustain them. You add one more person and the energy required to sustain all three increases.
For those who won't extend the analogy, or miss it, the room is the Earth (a closed system). You increase the human population and the required energy to sustain the human population goes up.
And I'm just talking about sustaining life, I haven't included the complexities of various levels of sophistication in the societies, who'se energy requirements increase on a logarithmic scale.

Why are you wasting time arguing with someone who obviously believes in perpetual motion machines?
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Unread postby smiley » Sun 17 Apr 2005, 11:51:41

RDsnt wrote:My apologies I'm coming to this late, but what the hell is the argument? How simple can this get?

You have two people in a closed system (a room), they require a certain amount of energy to sustain them. You add one more person and the energy required to sustain all three increases.
For those who won't extend the analogy, or miss it, the room is the Earth (a closed system). You increase the human population and the required energy to sustain the human population goes up.
And I'm just talking about sustaining life, I haven't included the complexities of various levels of sophistication in the societies, who'se energy requirements increase on a logarithmic scale.


The argument is not that simple.

Do you need an electric wall plug deodorant to sustain life? Does civilization collapse without electric knifes, lavalamps, electric toothbrushes, electric razors, electric hedge trimmers, electric screwdrivers, electric fly catchers, car port lights, ultrasonic office humidifiers etc. etc.

Obviously our energy consumption grew with the economy but I can draw many graphs which correlate to the GDP. Heart diseases for instance are linearly correlated to the GDP.

Do we need more heart diseases in order to grow the economy?

This is called causality. The question you have to ask is: Is the increased energy consumption the cause for the economic growth or is it a result of the economic growth?

When you look closely you will find that much of our energy consumption is a byproduct of our prosperity. Our prosperity allows us to waste so much energy. It is not our wastefulness which caused our prosperity.

That's what it is, waste, and it can be eradicated without negatively affecting our life or the economy.
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Unread postby Wildwell » Sun 17 Apr 2005, 12:45:20

RdSnt wrote:My apologies I'm coming to this late, but what the hell is the argument? How simple can this get?

You have two people in a closed system (a room), they require a certain amount of energy to sustain them. You add one more person and the energy required to sustain all three increases.
For those who won't extend the analogy, or miss it, the room is the Earth (a closed system). You increase the human population and the required energy to sustain the human population goes up.
And I'm just talking about sustaining life, I haven't included the complexities of various levels of sophistication in the societies, who'se energy requirements increase on a logarithmic scale.

Why are you wasting time arguing with someone who obviously believes in perpetual motion machines?


Since when was the Earth a closed system? In addition, have you any idea how much energy is in rivers, streams, the wind, sun and oceans? We are taking issues of scalability and practicality.

A lot of this nonsense is this Marxist / creationalist crap, which doesn't wash however you paint it.

There's plenty of Economists that don't agree energy = growth. In fact if anything too much energy is less productivity and less growth.
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Unread postby MonteQuest » Sun 17 Apr 2005, 12:55:48

Wildwell wrote:
Since when was the Earth a closed system?


Since the beginning of time. Perhaps you have your terminology wrong. Obviously you haven't read any of the threads here on it.

Entropy within an isolated system inevitably increases over time. Since it takes work to create and maintain order within a system, the entropy law tells us that, in the battle between order and chaos, it is chaos that ultimately wins. Look at a child's bedroom and the chaotic disarray that happens overnight. It takes more energy to put that room back in order than it did to mess it up. The only truly isolated system we know of is the universe. But there are two other system types: open and closed. The earth is an example of a closed system. It exchanges energy with the universe, but not matter, save the occasional meteorite. Since it is a closed system it's environment is always being degraded by entropy, but the thermodynamic equilibrium with space is maintained by the input of solar radiation.



There's plenty of Economists that don't agree energy = growth. In fact if anything too much energy is less productivity and less growth.


Name a credible one, or any one. Provide a link. So why don't we just ban energy use since we don't need it? 8)
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Unread postby MonteQuest » Sun 17 Apr 2005, 13:19:47

Wildwell wrote:The 2nd law of Thermodynamics only occurs in a closed system as such, the earth is not a closed. It’s not even especially relevant as it relates to entropy (usually defined as BTUs) absorbed by a system or heat, divided by the absolute temperature of the system at the time the heat is absorbed divided by the absolute temperature of the system at the time the heat is absorbed. What on earth has this go to do with oil as a single finite energy source?


I see a "google" cut and paste rather than your own understanding in this post.

2nd Law applies to every single physical activity on earth whether in an open, closed or isolated system. Since you cannot transfer energy from one form to another without a loss of usable energy, how can you say this law doesn't apply to a finite energy source?

And since our economy is based upon ancient received solar rather than current received solar, the ability to hold entropy at bay is predicated upon the use of fossil fuels and not received solar. This is the phantom carrying capcity. Forget about maintaining thermodynamic equillibrium with space with regard to earth as a closed system. That is not being questioned, as I have pointed out to everybody who tries to refute this fact--which tells me that they do not read my posts or do any research for themselves. They read just far enough to disagree, and not far enough to understand. Their world paradigm prevents them from considering anything outside of that mindset. Think about the transfer of energy within an induction motor system, or a refrigerator system, etc. 2nd law applies to these as well. You can't decrease entropy in any of these systems without creating more entropy within the environment around these systems.

Increasing efficiency through technology increases entropy due to it's complexity of energy transfers. Bottom line, we are always playing catch up because you can't win.

  • The First Law states that energy can neither be created nor destroyed; only transformed from one form to another. This is also known as the Conservation Law.
  • The Second Law states that whenever energy is converted from one form to another, there is an energy loss in the form of heat. It is also known as the Law of Entropy. Entropy is a measure of this loss in usable energy. No evidence has ever been shown to contradict the Second Law and it is the most scientifically backed and proven statement ever made.
  • The Third Law states that the entropy of a system at zero absolute temperature is a well-defined constant. This is because a system at zero temperature exists in its ground (lowest energy) state, so that its entropy is determined only by the degeneracy of the ground state. Or, in simpler terms, as this minimum temperature is approached, the further extraction of energy becomes more and more difficult.

The British scientist and author C.P. Snow had an excellent way of remembering the three laws:
1. You cannot win (that is, you cannot get something for nothing, because matter and energy are conserved).
2. You cannot break even (you cannot return to the same energy state, because there is always an increase in disorder; entropy always increases).
3. You cannot get out of the game (because absolute zero is unattainable).

There will be those who will stubbornly refuse to accept the fact that the Entropy Law reigns supreme over all physical reality in the world. They will insist that the entropy process only applies in selective instances and that any attempt to apply it more broadly to society is to engage in the use of metaphor. They will be wrong. The laws of thermodynamics provide the overarching scientific frame for the unfolding of all physical activity in this world.
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Unread postby Wildwell » Sun 17 Apr 2005, 13:41:41

The point has been made that there has been an internationalisation of environmental externalities and cost shifting production to other parts of the world – The de-linking phase. I think this is a fair enough point. There is some evidence for that. However, economies are also capable of reorganisation and efficiency. IE the Relationship of energy and economic growth is non-linear not as closely related as you suggest. I have given proof of this in other charts above.

http://www.rrojasdatabank.info/thermo/PS35p.pdf

The Earth is not a closed system - the well being and resources on the earth are dependent on the sun. Therefore we can conclude there is an energy input beyond the bounds of this finite planet.

In final conclusion this energy/growth relationship in non-linear and the earth is not finite in terms of energy resource in itself. .Your theories therefore hold no water, not because of the laws themselves, but because of the way you apply them.
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