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Collapse of What?

General discussions of the systemic, societal and civilisational effects of depletion.

Collapse of What?

Unread postby Quinny » Wed 07 Dec 2016, 19:15:43

I was just posting this in the ETP thread, and I thought rather than diverting attention away from ETP my further thought might warrant a seperate thread.


"The split between the "real economy" that delivers real things for us to use and real services that help us to improve our lives and the "financial economy" that delivers what? is IMO a real symptom of Peak Oil.

Unlike some here who thought the 2008 crash was the result of the housing crisis and NINJA loans and MBS and had nothing to with Peak Oil, it has always been my belief that the housing crisis and NINJA loans and MBS were a result of Peak Oil and the increasing difficulties in finding ways to make real profits delivering real goods and services.

The decline in Energy density per unit of GDP has many reasons not the least being the outsourcing of the real economy to the far east and eastern europe. It's also linked to the growth in the services sector which is often superfluous to real human needs.

The problem is that the real economy is what delivers things that people need to survive stuff like food and shelter and water and transport and that's the stuff that needs energy.

Can the financial sector continue to grow without the real economy delivering the stuff that people need? I really don't know. I don't think it can, but I didn't foresee a recovery following the last crash, if it can be called a recovery. What I do know is that the real economy has to continue to support life and for that it needs an energy source. I also see a rise in poverty with poor housing, foodbanks, health cuts despite debt levels continuing to increase.

The ETP model helps to explain what's happening and is admittedly counter intuitive to conventional economic theory. It does however seem to fit in with whats been happening in the Oil industry and the overall economy. "

Could it be that the collapse that the ETP predicts due to it just not being worth extracting might be the collapse of Global Capitalism.

I still believe that Oil has a utility value that makes it worth extracting because of its Energy density. I realise there would be massive consequences which might well result in massive population decline, but might it be that post PO might actually be a more localised set of economies that use existing infrastructure and resources to prolong some kind of semblance of civilisation.

I asked a similar question previously, but didn't really get a response that clarified the situation in my mind. Could we end up with a series of competing command economies fighting to squeeze the last drops of oil out of the Earths crust to help sustain their local populations. A sort of nation state level Mad Max?
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Re: Collapse of What?

Unread postby Pops » Thu 08 Dec 2016, 10:19:01

Quinny wrote:I thought rather than diverting attention away from ETP my further thought might warrant a seperate thread.
The ETP model helps to explain ...
Could it be that the collapse that the ETP predicts...

Kinda looks like another ept thread.

The decline in Energy density per unit of GDP has many reasons not the least being the outsourcing of the real economy to the far east and eastern europe. It's also linked to the growth in the services sector which is often superfluous to real human needs.

If you look at global gdp, trading lower labor costs in emerging markets for higher energy cost to transport would increase energy intensity not lower it.

And the whole bit about "superfluous" service jobs really rankles. What would you have those superfluous people do?

As for the increase in finance I agree completely. It was increasing for a long time as capitalism matured but with the change to a float, then deregulation in the '80s, then Clinton/Grinch it really cut loose. When you argue that the recession was about energy, you ignore the fact that the bubble was about finance.

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Can the financial sector continue to grow...


I don't doubt that in some places, like the San Fran Bay area where people were commuting 2-3 hours a day that high oil prices didn't trigger some BKs, but a far far higher number went tits up due to adjustable loans.

But looking at those charts, it does seem we're in a real trap now. People who make money regardless of the direction of the economy by definition don't care about the direction of the economy and pretty well run the economy.


I still believe that Oil has a utility value that makes it worth extracting because of its Energy density. I realise there would be massive consequences which might well result in massive population decline,


Oil is very flexible and has been so abundant we could afford to waste 85%. We're very accustomed to it, we've have built a world around wasting it, so we'll spend a large amount of whatever energy is available to get it for as long as we can.

Most Peakers make the mistake of thinking themselves the realists and the sheeple will just sit in the barcalounger and die. But they won't. In the near term, they'll give up other necessities; kids shoes, Cheetos, etc in order to drive to work. But longer term they adapt, they just need a signal. We've really not received a good long signal yet.

Crazy energy waste permeates every corner of our little rich world. We don't realize how much cheaper we could live because we are blinded by expectations. The problem is not the living cheaper, its the getting there.

The problem is not the standing on the railroad platform, it's the stepping off the speeding train
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Re: Collapse of What?

Unread postby GHung » Thu 08 Dec 2016, 10:46:47

Pops wrote;

..... And the whole bit about "superfluous" service jobs really rankles. What would you have those superfluous people do?


From a purely physical/reality-based standpoint, it doesn't matter. They and their lifestyles require resources to support, and when our rates/costs of extraction can no longer support them, they become disposable lifestyles; discretionary from a purely survival-based perspective. Just as high levels of energy and resource injections into economies increased populations and "superfluous" occupations, declining resources will create declining discretionary opportunities. People in society may think they need a lot of those things, but they don't. Starbucks and the people they employ are, indeed, 'superfluous' resource sinks with long waste streams. Reality doesn't care who gets "rankled", or what your values are. Demand destruction is a bitch.
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Re: Collapse of What?

Unread postby Pops » Thu 08 Dec 2016, 11:15:53

It is a bitch because they won't just roll over and die.
The self styled necessary are just a different flavor of disposable.
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Re: Collapse of What?

Unread postby Quinny » Thu 08 Dec 2016, 12:21:21

The point about superfluous service jobs - opening doors for each other isn't exactly productive, but post collapse there would be plenty of work available.

I don't disagree, but the question is I suppose. If the financial system collapses - could a new form of society pick up the pieces and extract for utility value?
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Re: Collapse of What?

Unread postby GHung » Thu 08 Dec 2016, 12:31:03

Pops wrote:It is a bitch because they won't just roll over and die.
The self styled necessary are just a different flavor of disposable.


Are you positing that certain trades and occupations aren't far more necessary and valuable than others? As for "they won't just roll over and die", nobody I know of has said they will, but history is full of situations where those who have been disenfranchised, displaced, or who's livelihoods have gone POOF, reacted in ways that weren't exactly constructive or reasonable. I'll suggest that we are at "peak entitlement", and a huge segment of our society doesn't give a damn that everything that they have invested their lives in, no matter how unnecessary those things are, or how unaffordable they become in terms of economic and physical resources, won't react well at all. Indeed, this is one of my greatest concerns. It's the simple nature of overshoot. Plenty of metaphors for that (Titanic, musical chairs, all that).

Too many people. Not enough stuff.
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Re: Collapse of What?

Unread postby Pops » Thu 08 Dec 2016, 13:53:56

Quinny wrote:The point about superfluous service jobs - opening doors for each other isn't exactly productive, but post collapse there would be plenty of work available.

I don't disagree, but the question is I suppose. If the financial system collapses - could a new form of society pick up the pieces and extract for utility value?

You mean extract oil?
If you're still talking about the etp collapse, isn't the appeal of the whole thing that physics says there is no energy left to use and we're all gonna die? If lack of energy kills the economy, how will the economy being dead change extraction?

Personally I think oil extraction will continue for quite a while, ever less, at ever higher price, for ever more important use. There are a wide variety of sources with a range of eri and $ costs. Ditto the endless uses for oil, some rather more important than driving to the quiksac.

PO in my mind takes the variety of sources and uses into account. Today after a globalization boom led to an oil crunch and in turn to overdevelopment of low return sources, we're oversupplied. Not much new. Little replacement is being developed now, least of which are those with the highest cost either dollar or eri. And even though prices aren't low historically, there aren't many uses that are unaffordable, relative to other times. OTOH in a few years after the big cut in investment reduces both the surplus and ability to match higher demand, the price will rise and new supply will come online, cheapest first, then the more expensive ($ & eri -wise). Just like always.

One day, in one of these cycles, I don't know, maybe this one, those highest cost sources won't come back, because they cost too much. At that point production won't increase, depletion will take over and supply will actually fall. Price will increase, but not enough. That's peak oil.*

At that point I think all bets are off. Could be a huge collapse, could be bigtime resource war or wholesale moves to authoritarianism, or Balkanism or... maybe we'll not notice because we've already transitioned - LOL could happen! But really, I have no idea.

But yeah, if it a surprise, financials will go down exactly as they did in '29 & '99 & '09— but I can't see how it won't extend to any type of equity or asset. The broader economy could lose the ability to function for a time—typical armageddon type stuff. But it will continue at some level, and I'd expect reemerge with the realisation that it transition to much lower energy consumption. I have no idea how that works out either, depends on rate of decline I guess.


*I don't think that's right this minute tho.
LTO can resume drilling just as soon as price puts it in the black (unless as doc says they can't get credit)
The big change since the last glut is that each LTO well is like a whole new field, really, a discovery in itself.
The fact there is a well the next block over is all the exploring you need to do. So development is months not years.
Could be that price doesn't get above $60 for some time because I think lots of those wells are profitable there. Don't know.
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Re: Collapse of What?

Unread postby Pops » Thu 08 Dec 2016, 14:22:11

GHung wrote:Are you positing that certain trades and occupations aren't far more necessary and valuable than others?

I said way back, probably 5 Rules thread,
Diversify your income, easy to know your job will go, hard to know it won't.

In a neighborhood of doctors is the brain surgeon more valuable than the internist who got through college working for a remodeler?

Aside from simple empathy and respect, to me the idea that the safest neighbor is one that's well fed should be kind of a mantra for anyone who thinks the end is nigh. Makes me think of a song Johnny Cash did about a guy's 30 years of resentment and getting payback when the shackle comes off

Hey Oney...
hahaha...
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Re: Collapse of What?

Unread postby Quinny » Thu 08 Dec 2016, 16:46:57

Yes Pops, but if the reasons behind Economic Collapse are as proposed by ETP then all the debt and the need for profit could potentially be eradicated post collapse in a command economy with a more local market.

The cost in such circumstances would be much higher, but based on utility value to the local market rather than a global economy. EROEI would be important, but utility value would trump it.

As an example, on my place I could run my chainsaw on ethanol that I could produce from my own plant waste, but it's not worth it whilst I can buy petrol cheaper. Post collapse would be a different world, and I'd spend a hell of a lot of time to keep access to my chainsaw! In a similar way, a community with a shore based stripper well might actually be relatively rich if they worked together to keep the facility going.

Maybe I'm just bargaining, but I'm just trying to get my head round things.

Pops wrote:You mean extract oil?
If you're still talking about the etp collapse, isn't the appeal of the whole thing that physics says there is no energy left to use and we're all gonna die? If lack of energy kills the economy, how will the economy being dead change extraction?

Personally I think oil extraction will continue for quite a while, ever less, at ever higher price, for ever more important use. There are a wide variety of sources with a range of eri and $ costs. Ditto the endless uses for oil, some rather more important than driving to the quiksac.

PO in my mind takes the variety of sources and uses into account. Today after a globalization boom led to an oil crunch and in turn to overdevelopment of low return sources, we're oversupplied. Not much new. Little replacement is being developed now, least of which are those with the highest cost either dollar or eri. And even though prices aren't low historically, there aren't many uses that are unaffordable, relative to other times. OTOH in a few years after the big cut in investment reduces both the surplus and ability to match higher demand, the price will rise and new supply will come online, cheapest first, then the more expensive ($ & eri -wise). Just like always.

One day, in one of these cycles, I don't know, maybe this one, those highest cost sources won't come back, because they cost too much. At that point production won't increase, depletion will take over and supply will actually fall. Price will increase, but not enough. That's peak oil.*

At that point I think all bets are off. Could be a huge collapse, could be bigtime resource war or wholesale moves to authoritarianism, or Balkanism or... maybe we'll not notice because we've already transitioned - LOL could happen! But really, I have no idea.

But yeah, if it a surprise, financials will go down exactly as they did in '29 & '99 & '09— but I can't see how it won't extend to any type of equity or asset. The broader economy could lose the ability to function for a time—typical armageddon type stuff. But it will continue at some level, and I'd expect reemerge with the realisation that it transition to much lower energy consumption. I have no idea how that works out either, depends on rate of decline I guess.


*I don't think that's right this minute tho.
LTO can resume drilling just as soon as price puts it in the black (unless as doc says they can't get credit)
The big change since the last glut is that each LTO well is like a whole new field, really, a discovery in itself.
The fact there is a well the next block over is all the exploring you need to do. So development is months not years.
Could be that price doesn't get above $60 for some time because I think lots of those wells are profitable there. Don't know.
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Re: Collapse of What?

Unread postby ROCKMAN » Thu 08 Dec 2016, 17:20:19

Q - "...a community with a shore based stripper well might actually be relatively rich..." True story: many years ago I dealt with a husband and with that owned a number of shallow wells producing heavy sour oil. When aWTI was selling for $22/bbl they were getting $6/bbl. But they did all the work and repairs themselves. They got the wells for free: the previous owner, who had to pay someone to handle the wells, was missing money. So he saved a lot of money by giving them the wells instead of paying to plug them.

When I dealt was them they had owned those wells for 23 years. But they lived on the lease in a nice paidup cottage and lived comfortably with the income from those wells that each produced 1/2 to 1 BBL PER DAY OF THAT CRAP. But then oil prices boomed and they were netting over $200,000 per year. And it required the husband to spend less then 2 hours per day to take care of business. BTW these wells (which will never produce water) can keep going for at least the next 50 to 60 years.

Which explains exactly why the average US oil well, making less then 15 bopd, is still profitable at the current price: small independents with little or no debt applying sweat equity. And also explains why heavily indebted companies whose wells are each averaging hundreds of bopd are filing bankruptcy.
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Re: Collapse of What?

Unread postby Pops » Thu 08 Dec 2016, 17:37:02

Quinny wrote:Yes Pops, but if the reasons behind Economic Collapse are as proposed by ETP

I knew this was just another rpt thread
the model says it is impossible to use oil because oil uses too much oil to use so the amount left over is useless. doesn't matter if it squirts up out of your bidet.
Oil is dead. It is worthless as a white crayon. You're just dead. The economy is dead. Mad Maxx is dead. The only thing on the road is you and your squeaky wheel QuikSac shopping cart.
And the beauty of it is that it's coming in like 18 months!

Come on. We all know that bad as this and that are, there are no independent signs that short is anywhere near right, as someone just said, "if we wanted objective measures we wouldn't be in the etp thread" Things are plenty bad without struggling to scare yourself.

What you're talking about is just plain old peak oil. There is plenty of energy left to be useful (again, the most there ever was was 15%-20% WtW in an ICE) and so when peak occurs, appears to occur or gets enough people thinking its gonna occur, the problem will be high price, then econodoom. You're right that lots of companies will go BK but most oil is owned by governments anyway. Repeat a couple times and eventually scarcity sets in.
As we stairstep down the backside of production, the price will rise with each step down, and what you are able to waste it on will be less and less.

I'd think a little nat gas well would be peachy!

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Re: Collapse of What?

Unread postby sparky » Fri 09 Dec 2016, 01:16:18

.
There is this conflict between the working people , those creating value
and the governance people managing this value

The governance grow and remove more value from the people for its own maintenance
more management systems appears to cope with increasing needs
it become ever more sophisticated at managing and removing ever more this value
but loose efficiency by create bullsh.t "needs " and make its functioning ever more opaque and inaccessible
the less necessary , the more complicated and impossible to comprehend for the average citizen

In olden days it would take the form of thousands of priests discussing how many angels dance on a pin
or making the common law impossible to use without an army of lawyers .

those days it is the financial markets , any non specialist can scarcely make head or tail from its working
while the message people or main stream media feed you fear and sugar .

this above follows the theory of a middle age thinker ibm Kallddun
he saw the growth of kingdom as a conflict between the city and the country
"the build and the sown " a village become powerful and take over others ,
the new state set up a capital , an administration , a tax system and , for ideology an official church

eventually , all the effort of the state are to extract value from its people to maintain itself
some serie of shocks collapse the whole ........and the circle start again .
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