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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 Aaron » Tue 19 Apr 2005, 12:41:58

From your link

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The problem is, of course, that not only is economics bankrupt, but it has always been nothing more than politics in disguise... economics is a form of brain damage.

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Unread postby Wildwell » Tue 19 Apr 2005, 13:29:30

Yep, that's all I've been raging all along - they are linked…but.. efficiency can improve...which bit didn't you understand in the last 12 pages? Never mentioned doing anything with NO energy, I just talked about using less for particular tasks.

How many times have I said non-linear?

How many times have I talked about alternatives?

How many times have I said you can get growth and use less energy?

*shakes head*
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Unread postby MonteQuest » Tue 19 Apr 2005, 14:49:11

Ludi wrote:
MonteQuest wrote: According to IEA.org, Sweden's GDP growth from 1980 to 2001 was 2.7%. while total energy use rose at .36%


I think I'm having a semantic problem. To me that looks like an increase of .36%.


Yes, I was meaning that in some areas energy use declined, while in others it increased. Mainly due to efficiency and conservation and shift ing to other energy sources, but overall, there was still a net increase in energy consumption, and especially in oil use for transportation and also electricity which is absolutely necessary to increase production and overall GDP.
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Unread postby Aaron » Tue 19 Apr 2005, 14:54:45

Well let's travel back in time and see how this measures up to realty.

growth creates energy

Of course energy can be free.

It’s all perceived worth.

the money system is based on confidence, nothing to do with energy

You CAN get something for nothing

too much energy is less productivity and less growth

the Relationship of energy and economic growth is non-linear

it might be possible to send machines into other areas of the universe for resources

it is clear that economies can grow using the same or less energy


How many times have I said you can get growth and use less energy


Many... but your Exxon graph says otherwise.

Because it clearly shows increases in energy use.

I agree that technology made the energy more useful, and less expensive.

And that's the point.
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Unread postby MonteQuest » Tue 19 Apr 2005, 14:56:10

Wildwell wrote:Yep, that's all I've been raging all along - they are linked…but.. efficiency can improve...which bit didn't you understand in the last 12 pages? Never mentioned doing anything with NO energy, I just talked about using less for particular tasks.


Bullshit! You have said from the beginning that you can increase GDP without increasing energy use. The efficiency improvements and their limitations were discussed. You maintained that by value adding or price inflation you could grow overall GDP without using more energy.

Wildwell wrote:As it’s already been proved, the question of energy and economic growth is not directly related.


Talk about a classic case of backpedaling to get out of hot water. :P

What a hoot! :lol:
Last edited by MonteQuest on Tue 19 Apr 2005, 15:17:09, edited 2 times in total.
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Unread postby MonteQuest » Tue 19 Apr 2005, 15:00:39

Wildwell wrote:
Ludi wrote:
MonteQuest wrote:
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.



Wildwell - you said Sweden decreased it's energy consumption! How do you explain this evidence for an increase in energy consumption? I was ready to believe what you were saying - did you deliberately misrepresent the facts? Which is it, a decrease, or an increase? It can't be both!


No I didn't. I said you can increase GDP without increasing energy for given tasks.


Huh? Perhaps you can increase some aspects of GDP without increasing energy use to some extent, but not overall GDP. If that was what you were trying to assert, I doubt anyone would have disagreed. Backpedal time, eh?
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Unread postby JoeW » Tue 19 Apr 2005, 15:27:55

MonteQuest wrote:
Wildwell wrote:
Ludi wrote:
MonteQuest wrote:
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.



Wildwell - you said Sweden decreased it's energy consumption! How do you explain this evidence for an increase in energy consumption? I was ready to believe what you were saying - did you deliberately misrepresent the facts? Which is it, a decrease, or an increase? It can't be both!


No I didn't. I said you can increase GDP without increasing energy for given tasks.


Huh? Perhaps you can increase some aspects of GDP without increasing energy use to some extent, but not overall GDP. If that was what you were trying to assert, I doubt anyone would have disagreed. Backpedal time, eh?


GDP is over-rated. Let me show you why. A doctor pays an accountant $100 to do his taxes. The accountant pays $100 for a massage. The masseuse pays a salon $100 to paint her fingernails and do her hair.
$300 was just added to GDP, but was anything really produced? How much energy was used? Not a whole helluva lot. Although we could change it to say " A doctor drives 20 miles to see his accountant..."
In any event, the connection between energy and GDP is not strong enough (in my opinion) to definitively state that more GDP requires more energy. However, the past indicates that it is the general trend.
The future may be different.
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Unread postby Wildwell » Tue 19 Apr 2005, 16:04:58

MonteQuest wrote:
Wildwell wrote:
Ludi wrote:
MonteQuest wrote:
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.



Wildwell - you said Sweden decreased it's energy consumption! How do you explain this evidence for an increase in energy consumption? I was ready to believe what you were saying - did you deliberately misrepresent the facts? Which is it, a decrease, or an increase? It can't be both!


No I didn't. I said you can increase GDP without increasing energy for given tasks.


Huh? Perhaps you can increase some aspects of GDP without increasing energy use to some extent, but not overall GDP. If that was what you were trying to assert, I doubt anyone would have disagreed. Backpedal time, eh?


Well you could in certain circumstances, but there's not much need now, energy is cheap The main thing is the relationship is not linear, I never implied anything else, if you thought I did then you miss read what I said.

You could replace a lot of those cars with bikes, trains and buses and still get growth that’s the bottom line. you would drop overall fuel use and still get growth..you see? People don't do that now because fuel is cheap and cars are convenient.

Oil creates a headwind for what we are doing now, because that's the way we are set up, we can see the effects of high prices now...we need to get off the stuff.
Last edited by Wildwell on Tue 19 Apr 2005, 16:20:18, edited 1 time in total.
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Unread postby johnmarkos » Tue 19 Apr 2005, 16:18:30

JoeW wrote:GDP is over-rated. Let me show you why. A doctor pays an accountant $100 to do his taxes. The accountant pays $100 for a massage. The masseuse pays a salon $100 to paint her fingernails and do her hair.
$300 was just added to GDP, but was anything really produced? How much energy was used? Not a whole helluva lot.


My wife is a massage therapist, although she isn't doing massage right now because of pregnancy. Getting her fingernails done is a business expense (for obvious reasons).

Massage has health benefits, relieving tension, alleviating stress, and decreasing soreness, among other things. Having one's hair done provides an aesthetic benefit and a feeling of well being.

The accountant does a better job on the doctor's taxes than he would have done on his own. He saves money, files on time, and the government receives the money that it is legally owed.

Sounds to me like quite a bit has been produced.

It seems to me that folks on this site sometimes have a bias towards heavy industry and farming: they do not fully acknowledge the benefits of occupations that don't produce a physical thing.
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Unread postby Wildwell » Tue 19 Apr 2005, 16:35:15

Aaron wrote:I agree that technology made the energy more useful, and less expensive.
.


Now, post peak, with declining energy, if you use less, then the price adjusts accordingly...another thing I was getting at.

The reason energy is shooting up is globalisation and car use....excess disposable income and expensive labour at home, but that's all set to change as the price rises...there will be a few bumps and spurts along the way though.
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Unread postby Ludi » Tue 19 Apr 2005, 16:55:55

Wildwell wrote: I have challenged them in order to create clarity and discussion.


You've failed miserably. You said GDP can increase without an increase in energy use, and then later said that's not what you were saying. Far from being clear, you have been deliberately misleading, in my opinion.

At least admit you were unclear in presenting your ideas, or admit you were misrepresenting the facts.
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Unread postby Wildwell » Tue 19 Apr 2005, 17:04:20

Ludi wrote:
Wildwell wrote: I have challenged them in order to create clarity and discussion.


You've failed miserably. You said GDP can increase without an increase in energy use, and then later said that's not what you were saying. Far from being clear, you have been deliberately misleading, in my opinion.

At least admit you were unclear in presenting your ideas, or admit you were misrepresenting the facts.


Not misleading at all, I spent 12 pages explaining it. People are too fixed with the current technology and ideas of consumption because energy is cheap.

It can in certain circumstances (see above)... if you made all light bulbs 3 times as efficient, all computers twice as efficient, used electric motors instead of combustion engines and priced unnecessary journeys off the roads you might find you have an energy drop and GDP rise. There’s not much need at the moment, because energy is cheap.

The whole thread was about a non-linear relationship and I got told I was talking rubbish (sorry garbage) because people argued things were being shifted somewhere else and it was all a big fiddle.
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Unread postby Ludi » Tue 19 Apr 2005, 17:09:37

Wildwell, you said it had been done, not that it might be done. Good lord! The example you gave of Sweden - completely misleading! But you are apparently too full of yourself to do the decent thing and admit you're unclear and misleading.


You won't even accept a little constructive criticism here.
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Unread postby Wildwell » Tue 19 Apr 2005, 17:12:52

Ludi wrote:Wildwell, you said it had been done, not that it might be done. Good lord! The example you gave of Sweden - completely misleading! But you are apparently too full of yourself to do the decent thing and admit you're unclear and misleading.


You won't even accept a little constructive criticism here.


I will. I apologise if I was unclear. Not sure if it has been done or not, something somebody could look into. But, in essence, the potential is there - although not proven. Feel free to disagree.

The UK and Swedish example was used to give an illustration of the non linear relationship.

And just for the hard of understanding - I don't believe, for example, the United States could not run at half the energy intensity and still grow. Japan and Europe run at much less energy intensity. In which case you are much nearer to replacing oil with other forms of energy and prevent meltdown over maybe 20 years. And this is the crux of why I do not believe in die off. It may be birth and immigration need to be controlled, but there is a fair amount of slack in the system and a finite amount of land and wish to breed. Once you get to renewable your home, you can control the rest by government and price.
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Unread postby Ludi » Tue 19 Apr 2005, 18:05:38

Wildwell wrote:I will. I apologise if I was unclear.


Thank you, that earns you big points in my book. [smilie=love3.gif]
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Unread postby jato » Tue 19 Apr 2005, 18:11:04

Moving along…

Future scenario: The energy curve is declining due to peak oil & natural gas. GDP will go down in the long term even if efficiency goes up:

Once the fossil fuel age is over, even with %100 efficiency (an impossibility BTW), energy use will be at miniscule levels when compared to today's energy use. Efficiency dose not create energy, it only allows energy that would otherwise be wasted to perform another task. Efficiency has limits. GDP must go down with a continuously declining energy curve.

Since the original premise of this thread is hypothetical and not based in reality I would submit the following food for thought:

A hypothetical ending point of zero energy would leave us with zero efficiency and zero GDP.
Last edited by jato on Tue 19 Apr 2005, 18:20:51, edited 4 times in total.
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Unread postby johnmarkos » Tue 19 Apr 2005, 18:13:21

Wildwell analyzes the same data as Monte and Aaron, coming to an opposing conclusion.

For Wildwell, the fact that GDP grew faster than energy use indicates that it is possible to decouple economic growth from energy use.

For Monte and Aaron, the fact that total energy use grew despite efficiency gains indicates that GDP and energy use are correlated.

I look at the same data and conclude . . . insufficient data. Is there an example of decreasing energy and increasing GDP? Possibly Eastern or Central Europe provides examples of this phenomenon. I am not ready to conclude that such a condition is impossible.

I do see some evidence that energy use and economic growth (or at least growth in standard of living) can be decoupled. JohnDenver provides an example of how he can produce more while consuming no more. He was already surfing the Internet before he took the classes so the computer doesn't count as increased energy.

We waste a lot. We have a lot of room for efficiency gains: the same benefit, less energy.
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Unread postby sjn » Tue 19 Apr 2005, 19:16:58

johnmarkos wrote:I do see some evidence that energy use and economic growth (or at least growth in standard of living) can be decoupled. JohnDenver provides an example of how he can produce more while consuming no more. He was already surfing the Internet before he took the classes so the computer doesn't count as increased energy.

We waste a lot. We have a lot of room for efficiency gains: the same benefit, less energy.


JohnDenver was being "non-productive" with his computer use (energy consumption) until he took the classes and put that energy to productive use.
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Unread postby MonteQuest » Tue 19 Apr 2005, 19:30:22

johnmarkos wrote:
For Wildwell, the fact that GDP grew faster than energy use indicates that it is possible to decouple economic growth from energy use.


No, it means that through efficiency gains you can produce more product with less energy and achieve growth in GDP because of waste. If we were 100% efficient, or had maximized efficiency, then you would have to increase energy use to grow GDP.

This isn't a decoupling, just a short-term fix. In the future, do you think the only economy we will have is people producing services that require no energy? The number one consumer of energy is the military. 8O Can we improve efficiency by roughly 8% every year (5% for decline and 3% for growth) every year during the transition to renewables? Get real!

Once efficiency gains are maxed out, you are back to to square one. And most of the low-hanging fruit with regard to efficiency gains has already been picked.

Nothing grows without an input of energy, never has, never will. 1st law of thermodynamics, the conservation law; there are no free lunches.
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Unread postby JohnDenver » Tue 19 Apr 2005, 20:20:18

MonteQuest wrote:The number one consumer of energy is the military.


That's an interesting fact. Do you have a cite for it?

Can we improve efficiency by roughly 8% every year (5% for decline and 3% for growth) every year during the transition to renewables? Get real!


In terms of oil use per capita in the US, I think efficiency gains as large as 50% could be achieved in a period of 5 years if people set their minds to it. Could you reduce your gasoline consumption by 50% over 5 years? I've already reduced my gasoline consumption by 100%, and I did it in one day, simply by moving. gg3, who is an expert on the subject, says there are massive potential gains in telecommuting. Moving, telecommuting, temporary Hoovervilles near high-density work locations, electric vehicles for local delivery, shifting freight to rail, shifting to hybrids and higher mileage cars... I think there is still a ton of low-hanging fruit out there.

Remember, Monte: Liebig's Law leads to succession, not collapse. Localities, systems and business models which are too dependent on oil will be punished, and those which are less dependent will flourish and grow, taking over the niches of the dying species.

Once efficiency gains are maxed out, you are back to to square one.


Not at all. This is Liebig's Law in action. The organisms which are too dependent on the limiting resource will be succeeded by organisms which use it efficiently. Growth can then resume on another axis.

So you're not back at square one. If you can use oil more efficiently than your competitor, you can steal his niche, and you've made a real gain.
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