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Gail Tverberg on Peak Oil

Gail Tverberg on Peak Oil thumbnail

A few years ago, especially in the 2005-2008 period, many people were concerned that the oil supply would run out. They were concerned about high oil prices and a possible need for rationing. The story was often called “Peak Oil.” Peak Oil theorists have also branched out into providing calculations that might be used to determine which substitutes for fossil fuels seem to have the most promise. What is right about the Peak Oil story, and what is misleading or wrong? Let’s look at a few of the pieces.

[1] What Is the Role of Energy in the Economy?

The real story is that the operation of the economy depends on the supply of  affordable energy. Without this energy supply, we could not make goods and services of any kind. The world’s GDP would be zero. Everything we have, from the food on our dinner table, to the pixels on our computer, to the roads we drive on is only possible because the economy “dissipates” energy. Even our jobs depend on energy dissipation. Some of this energy is human energy. The vast majority of it is the energy of fossil fuels and of other supplements to human energy.

Peak Oilers generally have gotten this story right, but they often miss the “affordable” part of the story. Economists have been in denial of this story. A big part of the problem is that it would be problematic to admit that the economy is tied to fossil fuels and to other energy sources whose supply seems to be limited. It would be impossible to talk about growth forever, if economic growth were directly tied to the consumption of limited energy resources.

[2] What Happens When Oil and Other Energy Supplies Become Increasingly Difficult to Extract?

Fossil fuel producers tend to extract the fuels that are easiest to extract first. Over time, even with technology changes, this tends to lead to higher extraction costs for the remaining fuels. Peak Oilers have been quick to notice this relationship.

al gas. This is a much worse situation than the high price situation because the high price situation tends to lead to more supply; low prices tend to collapse the production system.

The

The question that then arises is, “Can these higher extraction costs be passed on to the consumer as higher prices?” Peak Oil theorists, as well as many others, have tended to say, “Of course, the higher cost of oil extraction will lead to higher oil prices. Energy is essential to the economy.” In fact, we did see very high oil prices in the 1974-1981 period, in the 2004-2008 period, and in the 2011-2013 period.

Unfortunately, it is not true that higher extraction costs always can be passed on to consumers as higher prices. Many energy costs are very well “buried” in finished goods, such as food, cars, air conditioners, and trucks. After a point, energy prices “top out” at what is affordable for citizens, considering current wage levels and interest rate levels. This level of the affordable energy price will vary over time, with lower interest rates and higher debt amounts generally allowing higher energy prices. Greater wage disparity will tend to reduce the affordable price level, because fewer workers can afford these finished goods.

The underlying problem is that, from the consumer’s perspective, high oil prices look like inefficiency on the part of the oil company. Normally, being inefficient leads to costs that can’t be passed along to the consumer. We should not be surprised if, at some point, it is no longer possible to pass these higher costs on as higher prices.

If higher extraction costs cannot be passed on to consumers, this is a terrible situation for energy producers. After not too many years, this situation tends to lead to peak energy output because producers and their governments tend to go bankrupt. This seems to be the situation we are reaching for oil, coal and natur

underlying problem is that low prices, even if they are satisfactory to the consumer, tend to be too low for the companies producing energy products. Peak Oilers miss the fact that a two-way tug of war is taking place. Low prices look like a great outcome from the perspective of consumers, but they are a disaster from the perspective of producers.

[3] How Important Is Hubbert’s Curve for Determining the Shape of Future Oil (or Coal or Natural Gas) Extraction?

Figure 1. M. King Hubbert symmetric curve from Nuclear Energy and the Fossil Fuels. Total quantity of resources that will ultimately be extracted is Q.

Most Peak Oilers seem to believe that if we see Hubbert shaped curves in individual fields, we should expect to see a similar shaped curve for total oil supply or for the supply of other fossil fuels. They think that production patterns to date plus outstanding reserves can give realistic views of the future extraction patterns. Frequently, Peak Oilers will assume that once production of oil, coal or natural gas starts to fall, we will still have about 50% of the beginning amount left. Thus, we can plan on a fairly long, slow decline in fossil fuel production.

However, many Peak Oilers will agree that if the energy used to extract energy is subtracted, the result will be more of a Seneca Cliff (Figure 2). Seneca is known for saying, “Increases are of sluggish growth, but the way to ruin is rapid.”

Figure 2. Seneca Cliff by Ugo Bardi.

Peak Oilers also tend to limit the amount of resources that they consider extractible, to exclude those that are particularly high in cost.

Even with these adjustments, it seems to me that the situation is likely to be even worse than most Peak Oil analyses suggest because of the interconnected nature of the economy and the fact that world population continues to grow. The economy cannot get along with a sharp reduction in energy consumption per capita. Some governments may collapse; many debtors may default; some banks may be forced to close. The situation may resemble the “societal collapse” situation experienced by many early economies.

One concern I have is that the Hubbert model, once it became the standard model for what energy supply might be available in the future, could easily be distorted. With enough assumptions about ever-rising energy prices and ever-improving technology, it became possible to claim that any fossil fuel resource in the ground could be extracted at some point in the future. Such outrageous assumptions can be used to claim that our biggest future problem will be climate change. After hearing enough climate change forecasts, people tend to forget about our immediate energy problems, since current problems are mostly hidden from consumers by low energy prices.

[4] Is Running Out of Oil Our Biggest Energy Problem?

The story told by Peak Oilers is based on the assumption that oil is our big problem and that we have plenty of other fuels. Oil is indeed our highest cost fuel and is very energy dense. Nevertheless, I think this is an incorrect assessment of our situation; the real issue is keeping the average cost of energy consumption low enough so that goods and services made from energy products will be affordable by consumers. Even factory workers need to be able to buy goods made by the economy.

Figure 2. Historical oil, natural gas, and oil production, based on Statistical Review of World Energy, 2017.

The way the cost of energy consumption can be kept low is mostly a “mix” issue. If the mix of energy products is heavily weighted toward low cost energy-related products, such as coal and labor from low wage countries, then the overall cost of energy can be kept low. This is a major reason why the economies of China and India have been able to grow rapidly in recent years.

If underlying costs of production are rising, mix changes cannot be expected to keep the problem hidden indefinitely. A recession is a likely outcome if the average price of energy, even with the mix changes, isn’t kept low enough for consumers. Energy producers, on the other hand, depend on energy prices that are high enough that they can make adequate reinvestment. If they cannot make adequate reinvestment, the whole system will tend to collapse.

A collapse based on prices that are too low for producers will not occur immediately, however. The problem can be hidden for a while by a variety of techniques, including additional debt for producers and lower interest rates for consumers. We seem to be in the period during which the problems of producers can be temporarily hidden. Once this grace period has passed, the economy is in danger of collapsing, with oil not necessarily singled out first.

Following collapse, large amounts oil, coal and natural gas are likely to be left in the ground. Some of it may even cease to be available before the 50% point of the Hubbert curve is reached. Electricity may very well collapse at the same time as fossil fuels.

[5] How Should We Measure Whether an Energy-Producing Device Is Actually Providing a Worthwhile Service to the Economy?

The answer that some energy researchers have come up with is, “We need to compare energy output with energy input” in a calculation called Energy Return on Energy Invested (EROI). This approach looks like a simple ratio of (Energy Output)/(Energy Input), but “the devil is in the details.”

As I looked through the workings of the Limits to Growth model, it occurred to me that the EROI calculation needs to line up with how the economy really operates. If this is the case, we really need a very rapid return of the energy output, relative to the energy input. Also, in the aggregate, the energy output needs to scale up very rapidly. Furthermore, the energy output needs to match the types of energy needed for the devices the economy is currently using. If the output is different (such as electricity instead of fossil fuels), the EROI calculation needs to be adjusted to reflect the expected energy cost and time delay associated with a changeover in devices to match the new type of energy output.

In a footnote, I have attached a list of what I see as requirements that seem to be needed for EROI calculations, based on the LTG model, as well as other considerations.1

Of course, in a setting of many researchers working on a subject and many peer reviewed papers, a concept such as EROI is gradually modified and enhanced by different researchers. For example, EROI is turned around to become the Energy Payback Period. This is used to show prospective buyers of a device how helpful a particular device supposedly is. Researchers who are trying to “push” a type of energy product will find ways to perform the EROI calculation that are as helpful as possible to their cause.

The problem, though, is that if more stringent EROI requirements are put into effect, wind and solar can be expected to do much less well in EROI calculations. They very likely drop below the threshold of being useful to the economy as energy producers. This is especially the case if they are added to the economy in great numbers to try to significantly replace fossil fuels.

Regardless of their value as energy producers, there might still be a reason for building wind and solar. Building them probably does help the economy in the same sense that building unneeded roads and apartment buildings does. In theory, all of these things might someday be somewhat useful. They are helpful now in that they add jobs. Also, the building of wind and solar devices adds “demand,” which helps keep the price of coal in China high enough to encourage additional extraction. But in terms of truly keeping the world economy operating over the long haul, or in terms of scaling up to the quantity of energy supply that is really needed to operate the economy, wind and solar do very little.

[6] How Should Net Energy Be Defined?

Net Energy is defined by EROI researchers as (Energy Output) minus (Energy Input). Unfortunately, as far as I can see, this calculation provides virtually no valid information. Instead, it promotes the belief that the benefit of a device can be defined in terms of (Energy Output) minus (Energy Input). In practice, it is very difficult to measure more than a small fraction of the Energy Inputs needed to produce an Energy Output, while Energy Output does tend to be easily measurable. This imbalance leads to a situation where the calculation of (Energy Output) minus (Energy Input) provides a gross overestimate of how helpful an energy device really is.

If we are dealing with a fish or some other animal, the amount of energy that the animal can expend on gathering food is not very high because it needs to use the vast majority of its energy for other purposes, such as respiration, reproduction, and digestion. In general, a fish can only use about 10% of its energy from food for gathering food. Limits to Growth modeling seems to suggest a similar maximum energy-gathering usage percentage of 10%. In this case, this percentage would apply to the resources needed for capturing, processing, and distributing energy to the world economy.

Perhaps there is a need for a substitute for Net Energy, calculated compared to the budgeted maximum expenditure for the function of “Energy gathering, processing and distribution.” For example, the term Surplus Energy might be used instead, calculated as (10% x Energy Output) minus (Energy Input), where Energy Inputs are subject to suitably wide boundaries. If an energy product has a very favorable evaluation on this basis, it will be inexpensive to produce, making it affordable to buyers. At the same time, the cost of production will be low, leaving plenty of funds with which to pay taxes.

Alternately, Surplus Energy might be calculated in terms of the tax revenue that governments are able to collect, relative to the new energy type. Tax revenue based on fossil fuel production and/or consumption is very signification today. Oil exporting nations often rely primarily on oil-based tax revenue to support their programs. Many countries tax gasoline consumption highly. Another type of fossil fuel tax is a carbon tax. Any replacement for fossil fuels will need to replace the loss of tax revenue associated with fossil fuels, because taxation is the way Surplus Energy is captured for the good of the economy as a whole.

When we consider the tax aspect, we find that any replacement for fossil fuels has three conflicting demands on its pricing:

(a) Prices to the consumer must be low enough to prevent recession.

(b) Prices must be high enough that the producer of the replacement energy supply can earn adequate after-tax revenue to support its operations.

(c) The mark-up between the cost of production and the sales price must be high enough that governments can take a very significant share of gross receipts as tax revenue.

The only way that it is possible to meet these three demands simultaneously is if the unsubsidized cost of energy production is extremely low. Wind and solar clearly come nowhere near being able to meet this very low price threshold; they still rely on subsidies. One of the biggest subsidies is being allowed to “go first” when their energy supply is available. The greater the share of intermittent wind and solar that is added to the electric grid, the more disruptive this subsidy becomes.

Afterword: Is this a criticism of Peak Oil energy researchers?

No. I know many of these researchers quite well. They are hard working individuals who have tried to figure out what is happening in the energy arena with very little funding. Some of them are aware of the collapse issue, but it is not something that they can discuss in the journals they usually write in. The 1972 The Limits to Growth modeling that I mentioned in my last post was ridiculed by a large number of people. It was not possible to believe that the world economy could collapse, certainly not in the near term.

Early researchers were not aware that the physics of energy extraction extends to the economy as a whole, rather than ending at the wellhead. Because of this, they tended to overlook the importance of affordability. Affordability is important because there is a pricing conflict between the low prices needed by buyers of energy products and the high prices needed by producers. This conflict becomes especially apparent as the world approaches energy limits; this conflict was not easily seen in the data reviewed by Hubbert. Once Hubbert missed the affordability issue, his followers tended to go follow the same path.

Researchers needed to start from somewhere. The start that Peak Oil researchers made was as reasonable as any. They were convinced that there was an energy problem, and they wanted to convince others of the problem. But this was difficult to do. When they would develop an approach that they thought would make the energy problem clear to everyone, other researchers would modify it. They would take whatever aspect of the research seemed to be helpful to them and would tweak it to support whatever view they wanted to encourage–often with precisely the opposite intent to what the original researchers had expected.

Thus, the approaches that Peak Oil researchers thought would show that there was a likely energy shortage ahead ended up being used to “prove” that we have an almost unlimited amount of fossil fuel energy available. It seems as though the world has such a strong need for happily-ever-after endings that self-organization pushes research in the direction of showing outcomes people want to see, even if they are untrue.

Our Finite World



44 Comments on "Gail Tverberg on Peak Oil"

  1. I AM THE MOB on Sat, 2nd Feb 2019 2:13 pm 

    Gail Tverberg has a new article that begins thus:

    “A few years ago, especially in the 2005-2008 period, many people were concerned that the oil supply would run out. ”

    Isn’t that fucking stupid? That’s a huge straw man

    She’s obviously writing the same thing to the same audience for the Nth time, understanding that what she is repeating will maximize the retention of her (likely declining) blog audience. Her niche is that she’s supposedly an independent thinker on these matters, (cringe).

  2. Uncle Bill on Sat, 2nd Feb 2019 2:33 pm 

    Perhaps…..but she does attempt to mix it up and provides a comment section for us there to post info and articles and opinions.
    Since Fast Eddie has disappeared from the scene there, it’s been much more civil and cordial. I think Fast Eddie may be suffering from the extreme heat that has surged Down Under and may be incapacitated…ahhh, that’s too bad…really!

  3. makati1 on Sat, 2nd Feb 2019 5:50 pm 

    No FFs? A world population of about 600 to 700 million as in the 1700s. Pre coal, oil, etc.

    https://en.wikipedia.org/wiki/World_population_estimates

    “It seems as though the (Western) world has such a strong need for happily-ever-after endings that self-organization pushes research in the direction of showing outcomes people want to see, even if they are untrue.”

    It’s OK. Soon there will be no humans left to care. We’ve already cut the Jet Stream lose on the world. And, Antarctica is melting faster every day. Ditto Greenland. Temps continue to rise…even if humans don’t want to acknowledge it. Denial changes nothing.

  4. Sunspot on Sat, 2nd Feb 2019 6:04 pm 

    Here’s what really happened: Peak oil was ALWAYS about the peaking of conventional oil, which happened right on schedule in 2006. Then fracking was given exemptions from clean air and clean water regulations at the urging of Dick Cheney, an obvious sign of desperation in the fossil fuel industry, and the whole fracking industry took off with funding from all the major banks. Objective evidence is that fracking has never produced one penny of actual profit, much the reverse, but money is just a number in a computer these days so who actually knows?
    The Peak Oil alarms going off in 2004-2008 or so alerted me to the folly of fossil fuels, not just for the short-lived nature of the fossil fuel sugar high, but the damage we do to the atmosphere by burning the stuff. I have long been watching to see what will get us first, energy starvation or Climate Change. Looks like the devastation that Mother Nature can bring is going to win out – just watch and see what the atmosphere is capable of producing. Gonna be a helluva show until it hits your house.

  5. Theedrich on Sun, 3rd Feb 2019 2:54 am 

    Another insightful and prescient article by Gail.  Our world is clearly dancing on thin and thawing ice.

    Just in case anyone is interested, Seneca’s original Latin — with a slight modification of the orthography and punctuation by me) is:  « Esset aliquod imbecillitatis nostræ solacium rerumque nostrarum, si tam tarde perirent cuncta quam fiunt;  nunc, incrementa lente exeunt, festinatur in damnum. »
    My own slightly free translation is:  “It would be some solace for our weakness and our affairs if everything were to perish as slowly as it comes about.  (As it is) now, growth proceeds slowly, (whereas) collapse happens in a rush.”

    There is also Tacitus (in his Agricola, A.D. 98): « Natura infirmitatis humanæ, tardiora sunt remedia quam mala; et ut corpora lente augescunt, cito extinguuntur:  sic ingenia facilius oppresseris, quam recreaveris. » — “That remedies are slower than evils is the nature of human infirmity;  and while bodies grow slowly, they are destroyed with rapidity.  Thus you may crush genius more easily than you can generate it.”

  6. Davy on Sun, 3rd Feb 2019 4:59 am 

    Currently many systematic dynamics are pressuring the efficiency of our civilization to provide for 7BIL people. Peak oil dynamics are alive and well in the form of economic affordability issues but also social and political issues with failing states and warring parties. The environmental issues are just now showing up meaningfully with disruptive events of hot, cold, drought, and floods. How can these issues be denied just because we are not having a peaker collapse many of us thought we would have just a few years ago? An important point lost is how leveraged these other collapse dynamics are by peak oil dynamics. We need high quality energy to combat the many problems and predicaments that are converging negatively but overall the best easy to get at oil is in decline and what is left is more expensive. So energy does have an oversized effect when it is declining in quality to a civilization that is declining.

    Renewables are coming on strong and may yet make up for some or all of this peak oil decline. It can do this by lowering the relentless growth of oil demand. It has not made a huge dent yet but maybe one day electrified transport will lower the pressure on the need to grow oil consumption to grow the world economy. We are a growth based economy. I am not seeing how we can degrowth or become a circular economy except at the individual and local level. At the macro level the nature of the economy is growth and debt based. What is going to happen when peak oil dynamics stunts supply? How high can total yearly oil consumption continue to grow? Renewables are making huge strides with the grid and this is slowing coal and allowing the others like NUK, hydro, and biomass to decline. Imagine how quickly renewables could come on if oil was more affordable and policy was there that required us to leave fossil fuels. Governments would have more room to push the renewable transition. As it stands now it may only be a transformation. Renewables may only mitigate and slow energy decline because we don’t have the resources to do otherwise.

    The other issue with the affordability of peak oil dynamics is social. We have an economy that is in a wealth transfer phase. It is late stage capitalism when capitalism is bumping up at the ceiling of growth. Growth is now debt based and suffering diminishing returns. As more and more debt is applied it is less effective. Past debts are increasingly non-preforming or could not hold up under rate normalization. This means for growth to happen the chairs are just moved around and some pulled away in a slow steady decline. Disenfranchisement is occurring. Growth and decline are evident now but with forces of decline more prominent all the time. Disenfranchisement is happening for a variety of reasons from overpopulation to basic corruption of the fabric of civilization but the fact that affordability issues of energy are happening this makes the process worse. Oil in quality decline in regards to net energy affecting the vital cost of transport of everything and the growing of food and providing water is pressuring this destruction of the social fabric. Dangerous debt levels, unfunded pension and safety net liabilities, declining affordability of large segments of the population to live is made worse by net energy decline which peak oil is part of.

    Technology has saved us so far. Renewables are a bright spot. Maybe a hydrogen economy will bud up. Fracking has unlocked vast stores of previously unusable oil but remember this happened because of the economy too. Vast sums of money were thrown at both fracking and renewables at a time when the economy could do it. How long can this seemingly endless support all these expensive efforts last? The affordability of energy and the condition of net energy decline might be argued away as a low threat but I say their effects are oversized and growing. Stay tuned because it may only get worse unless renewables has a breakthrough. From what I see the transition process has such a long way to go and a huge bill to pay peak oil dynamics and net energy decline may swallow this effort up.

  7. Davy on Sun, 3rd Feb 2019 5:31 am 

    Looks like EV’s need to come with a garage too. LOL

    “Tesla Model 3 Owners Vent About Polar Vortex Affecting Cars”
    https://tinyurl.com/yahd4993

    “Model 3 owners have taken to social media and online forums to air issues they’ve had with their sedans due to the frigid weather of the last week. Cold conditions are a drain on battery range, no matter the car brand. But other predicaments are particular to Tesla.”

    “It’s Panasonic that manufactures Tesla batteries,” said Salim Morsy, an analyst with Bloomberg New Energy Finance. “It’s not something specific to Tesla. It happens to Chevy with the Bolt and Nissan with the Leaf.”

    “What’s specific to Tesla is the quality of manufacturing,” Morsy said. Tesla made a door design decision that is coming back to bite some buyers. The Model 3’s handles are flush with the exterior of the car and require customers to push on one side, then pull on the other to open them. Ice is making that maneuver difficult for drivers who’ve posted pictures online of their frozen handles.”

  8. Davy on Sun, 3rd Feb 2019 5:40 am 

    I wonder if we had another die down if this same effect would occur? Apparently land changes are more prominent than we thought

    “European Genocide of Indigenous Peoples in the Americas Cooled Earth’s Climate”
    https://tinyurl.com/y9wjc6or

    “Some 50 million Indigenous peoples died during the 16th century, a collapse that caused atmospheric carbon dioxide levels to drop. The mass deaths of Indigenous American peoples 500 years ago—caused by disease and violence spread by European colonizers—was so extreme that it cooled Earth’s climate, according to a new study in Quaternary Science Reviews. Led by Alexander Koch, a graduate student in geography at University College London, the authors said that a period of global cooling that lasted from the 16th to 19th centuries was partly caused by epidemics and warfare that killed 90 percent of the Indigenous population in just 100 years.”

    The devastating loss, known as the Great Dying, left 56 million hectares of farmland unattended, enabling forests and other vegetation to grow over agricultural terrains. The rewilded landscapes drank in much more carbon dioxide than the preceding farms, which reduced levels of the greenhouse gas in the atmosphere by 7-10 parts per million. With fewer CO2 molecules to trap heat on Earth, global temperatures dropped by 0.15°C in an event called the Little Ice Age. “We conclude that the Great Dying of the Indigenous Peoples of the Americas led to the abandonment of enough cleared land in the Americas that the resulting terrestrial carbon uptake had a detectable impact on both atmospheric CO2 and global surface air temperatures in the two centuries prior to the Industrial Revolution,” Koch’s team said in the paper. The researchers came to this conclusion by modeling the amount of carbon that would be stored by vegetative regrowth on fallow land. Using over 100 regional estimates, they calculated that the pre-Columbian Indigenous population totaled around 60.5 million people, mostly concentrated in Central and South America. These communities farmed crops like maize, beans, squash, and quinoa, often in irrigated terraces built on mountain slopes.

  9. Cloggie on Sun, 3rd Feb 2019 5:49 am 

    ““Model 3 owners have taken to social media and online forums to air issues they’ve had with their sedans due to the frigid weather of the last week. Cold conditions are a drain on battery range, no matter the car brand. But other predicaments are particular to Tesla.””

    Hydrogen/fuel cells, no heavy batteries.

    https://deepresource.wordpress.com/2019/01/27/nabh4-the-vice-admiral-has-a-message-for-dutch-parliament/

  10. Sissyfuss on Sun, 3rd Feb 2019 8:38 am 

    Sunspot, thanks for shining some light on the subject. Agree with your observations. Gaia is fast at work to restore the balance of a working biosphere. The denouement will be a show stopper.

  11. Sunspot on Sun, 3rd Feb 2019 4:52 pm 

    Sissyfus, here’s another oil nugget for ya: In the 90’s it was almost certain that the Caspian Basin in the Balkans held what was estimated to be upwards of 200 billion barrels of primo oil. I think this was a primary motivator in the overthrow… er…”collapse” of the Soviet Union, so the west could get our hands on it. Anyway, by around 1998-99 they realized the whole thing was a bust, the 200 billion turned into about 10 billion barrels of high-sulfur crap. Shell had invested over $5 Billion, they called their people home and just abandoned the equipment.
    Looking around the world at that time, the only major oil reserves left in the world were in the Middle East. After 911, we had the justification to send troops into the ME. Jus sayin’…

  12. Sissyfuss on Sun, 3rd Feb 2019 4:55 pm 

    And Trump is the most lizardbrained president since Millard Fillmore.

  13. makati1 on Sun, 3rd Feb 2019 5:11 pm 

    The West is ruled by greedy billionaires and Trump is one of the team. Two years into his term and he has not fulfilled one of his lies…er…campaign promises. Never will. Instead he is breaking every trade agreement and arms treaty of the last 50+ years. Isolating the US one day at a time. Destroying the US dollar in the process. Third world America just ahead.

    These next two years, leading up to the next voting farce, is going to be hilarious. All of the psychos and weirdos are coming out of the closet to run for the title of President. Better than any TV series or movie. And America will get just what it deserves. LOL

  14. Antius on Sun, 3rd Feb 2019 5:12 pm 

    Imminent peak liquids was averted in 2008 through zero interest rate policy and quantitative easing. It became easier to borrow money (bond rates went down as well) and central banks expanded the balance sheet, basically buying corporate and government debt at close to zero rates. One of the beneficiaries was US tight oil, which reversed the declining trend of US oil production; albeit at an unsustainable cost.

    Capital intensive renewable energy now looks artificially cheap, thanks to a combination of Chinese manufactured solar panels sold at ridiculously low prices; zero effective interest rates and vendors selling beneath cost.

    But this policy effectively steals from the future. Debt burdens have soared; pension liabilities are now so far out of wack with real pension funds that many people will be working until they die. When people finally realize that, the political shit storm will be unprecedented.

    ZIRP has gone on for so long, that the real economy can no longer tolerate interest rates above inflation. Companies and consumers alike, are now structurally dependent on cheap debt.

    Historically, the two big things that put the brakes on economic growth were high interest rates and high energy prices, especially oil. With conventional oil production past peak and prices at levels some three times what they were in the 90s; ZIRP is the only way the economy can avoid outright contraction. But it is maintaining the present by burning the future.

  15. makati1 on Sun, 3rd Feb 2019 5:54 pm 

    Everyone, not already retired, or retiring soon, will work for the rest of their lives. When the current financial system crashes, many thing will change and retirement will be one of the major things to go. If you are not prepared for that, you will work until you die.

    The rich elite think they will be ok, but they will not. Too many changes they are not considering. What good is owning a factory if it is no longer needed? What good is owning an oil field if it is shut down? Only things done with muscle power will be common. Think about it and prepare for your future.

  16. makati1 on Sun, 3rd Feb 2019 8:16 pm 

    “The gloves are off now when it comes to fraudulent data manipulation, as the powers that be will do flat-out anything to disguise the gangrenous cadaver that is the U.S. economy. Sadly, the rot is concentrated among young people. who are now taking on huge amounts of educational debt—debt that cannot be discharged in bankruptcy—that would more properly be called welfare. This situation cannot sustain itself for very long, and won’t.

    Basically all of our country’s ills are due to a monetary system predicated on fraudulent interest-bearing debt.”

    https://www.theburningplatform.com/2019/02/03/there-are-lies-damned-lies-statistics-and-the-employment-report/#more-191221

    Pointing a finger at China is just more US hypocrisy. The US is going down. The rot is becoming odorous and visible. It is only a matter of time…

  17. Cloggie on Mon, 4th Feb 2019 2:46 am 

    A barrel of oil contains 1700 kWh. At a modest price of $68 that would be 4 cent per kWh, which comes in the form of heat.

    A solar panel in good sunny areas like Arabis or Africa will give high grade electricity for 2 cent per kWh.

    Solutions for storage, many actually, are in sight.

    Once you realize that, you stop worrying about energy or peak oil superstition.

    Questions?

  18. Davy on Mon, 4th Feb 2019 5:48 am 

    KW = KW does not work in the real world. Scale becomes the issue. A small system running a light for a child in Africa doing homework compared to a large system running a city in a marginal renewable energy gathering location is extremes of scale. I am pro renewables but the reality of their energy profile and footprint is low net energy gathering subject to localized unpredictability of intermittency and a huge physical footprint. There are many sweet spots but many marginal ones. There is the manufacturing cost, maintenance, replacement cost, and scrapping cost that are not cheap when taken together. I am not seeing evidence renewables will replace renewables yet. This is not because theoretically they can’t, it is because of the sheer size of the undertaking. There is the storage and the grid issue that are not perfected and commercialized yet. There is the scale of the footprint of a transition of the gathering devices along with the scrapping of our fossil fuel world. There is the huge reshaping of civilization in a transition which includes more than grid electricity but also all primary power. Most of all there is the behavioral issues of on demand and discretionary of today’s wasteful mobile consumer society compared to the needed frugality of a wise demand managed society living within seasons, intermittency, and lower performance. It is unclear if our debt based global system can adapt to renewables. Renewables may be vital but they are also a dangerous undertaking because failure is possible. Once society passes a certain point of renewable penetration failure points are going to appear that were not part of our fossil fuel world. We are not fully aware of those yet. Can we change out or civilization and still avoid crashing the climate? I say we have no choice but to try but I am in no way joyful about the task ahead.

  19. makati1 on Mon, 4th Feb 2019 6:18 am 

    Cloggie, but there will be no money to do the build out. You ignore the dinosaur sitting at the table. It’s like replacing a billion plus autos on the road today with Teslas at $60K each. Not gonna happen. Not in a million years, not to mention before the current BAU system goes down forever.

    Renewables have their niche, but that is all they have or will have. They have no real future. You can read all the bullshit about great plans, and then on the next day you can read about commercial systems being abandoned because they are worn out and no money to replace them. (Not profitable) In a capitalist world, THAT is the bottom line.

  20. Martin T. on Mon, 4th Feb 2019 6:36 am 

    One thing I am missing in this read and in the debate about it, is the following.

    People don’t need Oil, they even don’t need Gas, no they need transportation services, or warm homes. So people need energy services.

    So lets take an example:
    Take one person sitting in his big – truck like – car driving into the city.

    Now take a small electrified bus doing the same route with 9 persons.

    What would be the difference in oil demand?

    Second example, look at the energy consumption for home heating and compare the different housing standards?

    I just made a rough calculation comparing our 7 year old home with the 50 year old of my parents, per capita the difference is more than 10 fold!

    So there is plenty of room doing the same with less.
    So you can substitute a lot of energy by brain. (Intelligent design.)

    Take a look at the books “factor for” and “factor five”.

  21. Davy on Mon, 4th Feb 2019 7:02 am 

    “Meet Rutger Bregman, The New Champagne-Socialism Poster-Child From Davos”
    https://tinyurl.com/y8euxruk

    “The latest sensation from the yearly rally of global elites in Davos is Rutger Bergman, 30 years old Dutch historian and first time attendee. He’s the perfect character: a cosmopolitan, globally mobile, upper class, white progressive berating (fellow) like-minded Davos attendees for polluting the world with their private jets and not spreading their wealth around. His rant went viral: ‘’Start talking about taxes! Taxes, taxes, taxes. (…) Michael Dell asked a question: ‘’Name me one country where a top marginal tax rate of 70% has actually worked?’’ And… you know… I’m actually a historian.. the United States, that’s where it has actually worked, in the 1950s, during Republican President Eisenhower (…) the top marginal tax rate was 91% for people like Michael Dell (….) I mean this is not ROCKET SCIENCE’’.”

    “So, what does exactly history teach us? That high marginal tax rates work? Only if you have a war economy requiring the elite willing to subsidize the war effort and capital controls. Unfortunately, that’s apparently a too complex analysis for a history Phd that attends Davos. According to his Wikipedia page, Bregman is also an advocate of a fifteen hours workweek, universal basic income paid to everybody and open borders as a migration policy. Pretty ironic because if UBI may ever succeed anywhere, it’d require the strictest border controls. Bregman’s popularity highlights a humongous problem within the Western world: the intellectual class. He’s not an expert in economics (and those often don’t do too well either), but even when it comes to his discipline of choice, something is clearly lacking. Whether it’s competence or intellectual integrity it doesn’t matter: he’s being already hailed as a hero by many liberal-leaning media and we’ll likely hear from him more. Among polluters that lecture the world about pollution, tax evaders that discuss inequality and elitist politicians that warn us about the danger of people voting in a democracy, a historian that doesn’t know or doesn’t understand history fits perfectly at Davos.”

  22. Davy on Mon, 4th Feb 2019 7:02 am 

    I am an independent who is liberal leaning. I believe in social justice and measured equality. We were all more or less created equal but in the real world that ends as micro and macro roles are assumed. I am now against open borders and excesses of globalism. Sustainable development is just a repackaged status quo. Fences make good neighbors. The world is full so there is no room for a superpower. A multipolar regional world is called for. I am a proponent of real green not fake green. Fake green of the so called educated liberal left conveniently ignores consequences of past bad behavior and calls for more of the same in regards to affluence. Fake green says we can have what we have if we do it green. Real green says we will have to pay for the consequences of our actions with lower affluence. We will have to leave consumerism and a discretionary mobile society in relative sacrifice.

    I see wealth transfer as the inevitable product of decline. It is human nature and is the historic norm for all late term civilizations. We are not in a world of better option, we are in a world of trade offs and all are painful. So the fake green socialistic package the new age liberals are peddling is snake oil when they approach redistribution. The current regime of decadence of the elite ruling class gutting the middle class and raping the natural world in late stage capitalistic gluttony is likewise wrong. But be careful what you which for. Our ambitious disenfranchised revolutionary’s desires are dangerous now because change in these times can be much more destructive than constructive. This means dangerous drops in economic activity potential per policy change. Our planet and civilization does not have a second chance. There is no “get out of jail free card. We are going to still have to manage a dying planet and feed billions in overshoot. You do not kill the goose to get the egg. The prophetic warning of this is that destructive change is ahead regardless and built into the equation. The systematic condition of violent change when included into the human elements of political and economic changes may tip us into bifurcation. We may end up at a much lower activity level or collapsed. People will starve and needed technology will not be built to help reduce our human footprint on the planetary web of life and climate.

    This current administration has been careless and extreme with good regulatory policy. The “sugar high” tax cuts benefited the rich and only perpetuate the process started 10 years ago. The last administration was little better. The central bank management of the system was wrong post 08 once stability was found. We are now stuck with what we have with debt and economic dislocation. Socialism is not going to cure these ills. Some redistribution of wealth the other way is called for. Managed behavior is needed in regards to planetary constraints. Social problems are not going to be helped by open borders. What we need is a time out not a power grab. In a sense self-organizing forces will prevail. The complexity of our civilization has its own forces out of reach of policy. Let’s be aware of what cannot be changed but change what we can.

    All this sounds dreamy but at this point when the stakes are as high as collapse we must be sober about what is ahead. We must acknowledge the consequences of years of bad behavior with the environment, economy, and social fabric. If all parties realize a mistake on all sides and stop the phony “make America great again” BS then we can humbly and realistically make some small steps in the right direction that will make the coming decay of the status quo more manageable.

    I have no illusion anything I said above matters to most people. We are in a world of extremes without consensus. Extremist always reject moderation so this means we are trapped by circumstances that are systematic, human, and planetary. This is why my real green movement calls on the individual to disengage and operate locally within this systematic trap of a late term civilization that cannot be fixed. Its eventual end appears inevitable don’t fight it. As an individual find your niche like the small mammals did when the dinosaurs were meeting their ends.

  23. Davy on Mon, 4th Feb 2019 7:19 am 

    Hydrogen Energy Gains Steam
    https://tinyurl.com/ycxjn353

    “Hydrogen Batteries for Spanish Port.
    Fuel Cell Forklifts Make a Buzz.
    Vehicle Maker to Pour Billions into Fuel Cell Production.
    Fuel Cells for Trains, Planes, and Ships.
    Leaps for Hydrogen Infrastructure.
    Hydrogen Production for Energy Gains Steam.”

  24. Davy on Mon, 4th Feb 2019 7:26 am 

    I am more optimistic these days about renewable penetration potential because of hydrogen as a storage vector for wind and solar as well as new technologies for hydrogen in transport. The big issues with hydrogen is the same for renewables in general. We discuss them here daily. Anyway the referenced article is a great review of the problem.

    “Challenges to the Integration of Renewable Resources at High System Penetration”
    https://tinyurl.com/yczyhczj

    “Preface. This overview of challenges for wind and solar written in 2010 is still true today. We are far from being able to reach even a 50% renewable grid (excluding hydropower from the total) given the lack of storage, the problem that the best wind and solar are far from towns and cities – too far to justify extending transmission lines, we lack a “smart grid” system due to the many challenges of processing huge amounts of data, and so on. California is up to 29% renewable power, but it is terribly seasonal, and not dependable for more than half of the year, when the majority of power needs to come from fossil fuels, mainly natural gas. I liked this paper because it is less technical than most papers on this topic, probably because it was written for policymakers.”

    “Alice Friedemann”

  25. Davy on Mon, 4th Feb 2019 7:38 am 

    “Sodium Sulfur Battery In Abu Dhabi Is World’s Largest Storage Device”
    https://tinyurl.com/y8nbcyes

    “Abu Dhabi now boasts the world’s largest storage battery — a 108 MW/648 MWh behemoth that is five times larger than the Hornsdale battery installed in Australia by Tesla a year ago. There is one other important difference between the battery in Australia and the one in Abu Dhabi. The Tesla unit used lithium-ion battery cells. The one in Abu Dhabi uses sodium sulfur battery cells. Sodium sulfur technology was first explored by Ford as a possible source for electric trucks in the 1960s. But the sodium and the sulfur have to be heated to 300º Celsius to function properly, an issue for wheeled vehicles. Ford sold the technology to Japan’s NGK, which has continued to develop the technology in conjunction with Tokyo Electric Power ever since, according to Wikipedia. Compared to lithium-ion batteries, sodium sulfur batteries typically have a much longer useful life. 15 years or 4500 cycles is typical, according to Science Direct. Their efficiency is around 85% and they have a response time of 1 millisecond. Other advantages are that they use no lithium or cobalt, two elements that are in relatively short supply. Instead they use sodium and sulfur, both of which are abundant in nature and inexpensive.”

  26. Cloggie on Mon, 4th Feb 2019 7:43 am 

    LOL

    Next year Davy will be a renewable energy cornucopian.

  27. Darrell Cloud on Mon, 4th Feb 2019 7:57 am 

    Gail is talking to the remnant. This is a great read on the fact that the masses cannot be saved because they will not pay attention to those things that do not fit the popular narrative. https://mises.org/library/isaiahs-job

    Forget about the popular consensus. Look to your own security and your own larder. The rest will be sorted out in the fullness of time.

    Based on the calculations of the above essay, roughly seven tenths of one percent is awake.

  28. I AM THE MOB on Mon, 4th Feb 2019 8:29 am 

    Ocasio-Cortez holds call with UK Labour leader Jeremy Corbyn

    https://thehill.com/homenews/house/428287-ocasio-cortez-holds-call-with-uk-labour-leader-jeremy-corbyn

  29. Mitch on Mon, 4th Feb 2019 11:53 am 

    “LOL Next year Davy will be a renewable energy cornucopian.”

    and a 1%er card carrying socialist

  30. Davy on Mon, 4th Feb 2019 12:23 pm 

    juan, stick your mitch sock up your ass and cry you friggin lunatic

  31. Free Speech Message Board on Mon, 4th Feb 2019 12:32 pm 

    Some Americans may have felt uneasy 35 years ago when DUI laws, DWI checkpoints, seatbelt laws, and car liability insurance laws were started, but most people felt that the experts must be right.

    Pro-police state shows like “COPS” and “America’s Most Wanted” were then aired, neighborhood watch groups were formed, “get tough on crime” candidates were elected, and laws allowing mandatory minimums, IMBRA, 3 strikes laws, curfews, police militarization, teen boot camps, school metal detectors, private prisons, and chain gangs were enacted.

    Nanny state smoking laws then started appearing.

    When 9/11 happened, the Patriot Act was passed, NSA wiretapping, no knock raids, take down notices, no fly lists, terror watch lists, Constitution free zones, stop and frisk, kill switches, National Security Letters, DNA databases, kill lists, FBAR, FATCA, Operation Chokepoint, TSA groping, civil forfeiture, CIA torture, NDAA indefinite detention, secret FISA courts, FEMA camps, laws requiring passports for domestic travel, IRS laws denying passports for tax debts, gun and ammo stockpiles, laws outlawing protesting, Jade Helm, sneak and peek warrants, policing for profit, no refusal blood checkpoints, license plate readers, redlight cameras, speed cameras, FBI facial and voice recognition, tattoo databases, gun bans, the end to the right to silence, free speech bans, searches without warrants, CISPA, SOPA, private prison quotas, supermax prisons, FOSTA, sex offender registration laws, and sex offender restriction laws were allowed.

    Now that the USA is a total police state, Americans are finding out that changing anything is impossible and that freedom is lost forever.

  32. Mitch on Mon, 4th Feb 2019 1:49 pm 

    Whatever floats your boat Davy.

  33. JuanP on Mon, 4th Feb 2019 3:57 pm 

    Delusional Davy “juan, stick your mitch sock up your ass and cry you friggin lunatic”

    Why am I not surprised when I come here, after working 10 hours and not posting a comment since yesterday, and find Davy lying, insulting me, and making false accusations again? Well, maybe it has somethings to do with the fact that he has been doing the same shit every single fucking day for over five years.

    You are the most pathetic, mother fucking, son of a whore, piece of shit of a human being I have come across in my whole life, Davy. And he claims he works as a farmer when it is quite obvious to everyone that this fool is unemployed because he is wasting his life here all the fucking time. Get a life pussy! You are a sad, sad fuck!

  34. intellectual nematode Alert! on Mon, 4th Feb 2019 3:59 pm 

    Davy on Mon, 4th Feb 2019 5:48 am
    Davy on Mon, 4th Feb 2019 7:02 am
    Davy on Mon, 4th Feb 2019 7:19 am
    Davy on Mon, 4th Feb 2019 7:26 am
    Davy on Mon, 4th Feb 2019 7:38 am
    I AM THE MOB on Mon, 4th Feb 2019 8:29 am
    Cloggie on Mon, 4th Feb 2019 7:43 am
    Davy on Mon, 4th Feb 2019 12:23 pm

  35. makati1 on Mon, 4th Feb 2019 5:37 pm 

    “Now that the USA is a total police state, Americans are finding out that changing anything is impossible and that freedom is lost forever.”

    Free Speech, so right. Their only option is to emigrate, but soon, that too will be impossible. The laws are closing in on the ability to take their money out of the country. $10,000 per flight now. No limits not too long ago.

    If you live in a foreign country and need to take your money at an ATM, because of the US law that forces foreign banks to close all American accounts, you will feel the police state regularly. I know. My SS is only available thru my US bank account and it is limited to $500 per day here. Also, foreign credit/debit cards are not honored in most places. Cash only. All because the US police state wants to control its serfs…er…citizens everywhere in the world. You have to renounce your US citizenship to get free of the IRS. And on and on.

    I travel to the US to visit family and friends most every summer, but that too will soon stop as I do not want to be there when they close the borders. That “wall” works both ways. “Papers please!”

  36. Davy on Mon, 4th Feb 2019 6:31 pm 

    Mitch, you sound just like the kind of extremist asswipe sock-puppet idendity-stealing liberal immigrant I have been entrusted to neuter and moderate here at PO.com. Clearly, you do not subscribe to the principles of fairness and balance that I embody, and thus, I am going to be forced to castrate your extremism from the board. It is not something I want to do, NM, on second thought, yes, that is something I want to do. I live for neutering gang-bangers like you. I have successfully neutered countless extremist pricks like you and your fate will no different than the rest of gang-bangers.

    So, prepare to be castrated.

    And last thing I need clarification on before your neutering commences.

    What country are you from friend?

  37. makati1 on Mon, 4th Feb 2019 6:32 pm 

    A good article describing the US serf who wants to emigrate: “Runaway Slaves”

    https://www.theburningplatform.com/2019/02/04/runaway-slaves/#more-191274

    “Those folks were essentially the same as you or I. Their only shortcoming was that they failed to anticipate the fact that the historical economic and political warnings were occurring all around them, and they failed to vote with their feet.” “Vote”now!

  38. makati1 on Mon, 4th Feb 2019 7:01 pm 

    “…entrusted to neuter and moderate…”

    Wow! Davy’s delusions get even more delusional! He assumes he is the moderator of this blog when he is nothing more than a goatherd in some backwoods part of Missouri.

    “So, prepare to be castrated.” As if Davy can do more than hurl immature, arrogant putdowns that everyone laughs at. LOL

  39. I AM THE MOB on Mon, 4th Feb 2019 11:40 pm 

    makatoo, while I may not have been officially appointed to monitor things, there was a widespread and unspoken consensus, that I, being the beacon of fairness, moderation and balance I am, was best suited to neuter all the extremism here.

    Now, why dont you go back to your fantasy farm and play pretend farmer. I have work to do.

  40. makati1 on Tue, 5th Feb 2019 12:33 am 

    Davy, are you losing it? You signed in as MOB. How much more obvious is your mental problem than such an obvious skitzo slip?

    “…a widespread and unspoken consensus…” Only in your deluded mind Davy. You are a nobody, MOB/Davy. A Zero. A huge laugh to the rest of us sane people on here.

    BTW: You are aware that it was almost 10PM where you hang out when you posted that bullshit? A bit late for you isn’t it? You goats must feel lonely…if you actually have a farm and goats. I doubt it. There have been no signs of that fact here other than goatshit….er…bullshit.

  41. JuanP on Tue, 5th Feb 2019 1:59 am 

    Mak, Just when one thinks the Exceptionalist couldn’t possibly get any worse he pulls shit like that. I couldn’t make it up! I think he is completely unhinged! Only in the USA do they let people like that be free! In other places they would put him in a lunatic asylum. Little wonder they have more murders than any other place in the world. It gives a whole new meaning to “Land of the free”. ROFLMFAO! I had a big party tonight and got home to find out that here some things never change. Enjoy your day!

  42. JuanP identity theft on Tue, 5th Feb 2019 3:12 am 

    “Davy on Mon, 4th Feb 2019 6:31 pm”

  43. Davy on Tue, 5th Feb 2019 4:00 am 

    “Davy, are you losing it? You signed in as MOB. How much more obvious is your mental problem than such an obvious skitzo slip?”

    You games are boring me makato. I would rather debate your nonsense.

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