I’m talking today at a Brisbane Institute forum on oil and whether it’s running out. 12:30 at the Hilton. I’ll try to post my presentation soon.
387 thoughts on “Peak Oil”
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John Quiggin 
Andrew – At the moment market forces are demanding that goods are produced in countries that have cheap labour and shipped with fossil fuels to people that can afford the consumer items that they make. Very little of the goods are for the countries that produce them and the pressure is on these countries to keep wages low or the multinationals will simply move to wherever labor is cheapest.
The cheap labour does not have much of the collective effort and intelligence as we in effluent (sorry could not resist the Kim moment) countries dictate what is done there. I do not think that market forces can now ‘see’ much beyond the next quarter as reporting timescales have got shorter and shorter. As I see they are not good at reacting to long term threats that can be ignored for as long as possible.
I don’t think I have answered your question but as you can probably see I am not an economist – perhaps JQ or others could contribute here.
Andrew Reynolds, I don’t see how lablling an argument as “Malthusian” refutes that argument. As far as I can tell Malthus simply demonstrated what is an undeniable physical reality, that is, that indefinite exponential growth of populations and consumption in a finite physical world is not possible.
I see that Ronald Wright’s point has gone completely over your head. As a result of free market forces, largely unfettered until the middle of last century, we had two world wars with respective death tolls of 10 million and 55 million, and numereous economic crises including the depression which started with the Wall Street crash 1929.
Today, as a result of those same free market forces, which have, once again, been set free, we are facing an endless war against ‘terror’, together with the unprecedented assaults threats to our civil liberties and freedom of speech that it entails. We are watching much of the world’s rainforests being destroyed, have allowed half of humanity’s endowment of stored solar energy (i.e. fossil fuels) to have been burnt with the carbon in which it was stored now in our atmosphere, with long term consequences we can only guess at, have allowed much of our fertile soil to have been eroded, salinated, acidifed or otherwise poisoned, our world’s fish stocks to be imperiled, our underground aquifers to have been unsustainably depleted to meet the needs of our agircultural system etc, etc.
Even if we were to accept your verdict that Keyensian economics was the cause of the ‘stagflation’ to the 1970’s, its record would still seem to be almost infintiely preferable to unfettered free market policies by comparison.
Ronald Wright has shown that previous civiisations collapsed be becausae they allowed the greed of a selfish short-sighted minorities to prevail over the interests of the majority. On page 87 of “A Brief History of Progress”, he wrote :
“The Athenians became alarmed by deforestation early in the sixt century B.C. Greek city populations were growing quickly at the time, most of the timber was already cut, and the poor were farming the goat-stripped hills with disastrous results. Unlike the Sumerians, who may have been unaware of the destruction caused by their irrigation methods until it was too late, the Greeks understood what was happening and tried to do something. In 590B.C., the statesman Solon realizing that rural poverty and land alienation by powerful Athenian nobles lay behind much of the trouble, outlawed debt-serfdom and food exports; he also tried to ban farming on steep slopes. A generation later, Pisastratus, another ruler of Athens, offered grants for olive planting, which would have been an effective reclamation measure, especially if combined with terracing. But as with such efforts in our day, funding and unequal to the task. Some 200 years later in his unfinished dialoge Criatus, Plato wrote a vivid account of the damage, showing a sophistcated knowledge of the connection between water and woods (also printed above) :”
“What now remains compared to what then existed is like the skeleton of a sick man, all the fat and soft earth having wasted way … Mountains which have nothing but food for bees … had trees not very long ago. [The land] was enriched by the yearly rains, which were not lost to it as now, by flowing from the bare land into the sea; but the soil was deep, and therein received the water, and kept in the loamy earth … feeding springs and streams running everywhere. Now only abandoned shrines remain to show where the springs once flowed.”
No doubt, if you were there at the time, you would have denounced those who wanted to take action to stop the environmetnal degradation as ‘Chicken Littles’, and would have decried the efforts of Solon and Pisastratus as an ‘attempt(s) to solve the problem by diktat’ and would have loudly objected to Pisastratus’s attempts to raise taxes to fix the problems, and you would have counselled the Atheneians to ‘make sure the price signals are allowed to get through and the problem will be solved.’
And, as the sorry record shows, the Andrew Reynolds’s of the time, got their way, as they also did on Easter Island, the ancient Mayan civiisation, Norse Greenland, Angkor Wat etc, etc.
With history set to repeat itself, only this time on a global scale and with consequences that hardly bear thinking about, I think it is finally time that we applied the lessons of history and avoided repeating these past mistakes.
“What do you think market forces are other than the collective efforts and intelligence of all with the effort’s worth being communicated by the price mechanism? That is what a market is and what I have been arguing for.”
The problem is Andrew that, contrary to what you and other libertarians choose to believe, there’s a massive economics literature proving that markets are not the ideal method to solve some classes of economic problems.
You also, again like most libertarians, assume that we either start from a level playing field (i.e. that current economic arrangements aren’t the result of past and current government interference) or that the best way to overcome such past interference is to adopt a do-nothing approach.
Worldwide the fossil fuel industries get hundreds of billions of dollars in government subsidies of oen sort or another.
The logical first step to manage the transition to a new ernergy source for transport is to cut out those subsidies.
The logical second step is to start incorporating the environmental externalities associated with their use into the price via taxes. (This need not lead to an increase in the total tax take and if broadly-based efficient taxes on fossil fueles are used to replace inefficent taxes such as the Fringe Benefits Tax could result in an icnrease in overall economic output.)
In reverse order this time, just for variety.
Ian,
I find it interesting that you say that markets are not the ideal mechanism and then go on to show that government interference gives a perverse result. In this case you are saying that government subsidies are assisting to slow down the transfer. Great – let’s let the market work by removing the subsidies – perverse result solved.
.
James,
Good to see you thought a long article was needed. I say again, if that is what he is saying, Ronald was wrong. You state that the markets were largely unfettered until the middle of the last century – I suggest you have a look at your history books to find that this was bunkum. In the lead up to 1914 the volume of international trade (the best measure of the freedom of trade) had been trending down for years – Germany in particular acted to restrict trade in areas it saw as vital to its interests. The second war followed the great depression, a period of some of the most restrictive government interference in markets known to Man. Have a look for Hawley-Smoot if you do not believe me. Uniformly, wars are between states that do not trade with each other, with the tendency to go to war inversely proportional to the volume of trade.
The problem with Malthus, James, is that he neglected technological progress. If he had been right global population would have stagnated over the last 300 years. In fact, global dietary sufficiency was achieved, for the first time ever, some time in the 1960s and it has been improving ever since. The only countries that now experience famine are those that restrict trade heavily.
The record on Easter Island, the Mayan civilisation, Norse Greenland and Angkor Wat show nothing of the kind. in order:
Easter Island, as far as can be told, was a command economy dedicated to producing statues to the detriment of welfare. The natural result was that people started to starve, cut down the trees to try to survive and then the civilisation collapsed. No market forces there.
The Mayan civilisation was, again, a strongly centralised economy, with a priestly caste that ran the civilisation for its own benefit, keeping the peasants in thrall by occasionally (or frequently) tearing their hearts out and going to war. Again, desperation appears to have driven the people to destroy the environment. No evidence that markets caused that.
Norse Greenland is an interesting example – markets were reponsible for climate change? What happened there was that the Norse settled there during an unusually warm period which then cooled down a few centuries later – the current best guess of a reason for this was a change in the Gulf Stream. Truly mighty markets that can do that.
Angkor Wat I am less certain of – I will have to do some study. My preliminary look indicates that it was another theocracy, dedicated to temple building and war. Again, without a functioning price system how can this be blamed on markets?
As for the Athenian example, you neglect to point out that the period from 590 b.c. when this was apparently ruining eveything to 434 b.c was the period of Athenian dominance of the Greek world and one of the most brilliant civilisations of the period. It was only the war with Sparta that brought Athens low, and this was probably the actual cause to the damage noted by Plato. Again, war and the restriction of trade causes the problem. If that is what Mr. Wright is claiming as his justification for intervention, I would suggest a name change may be in order.
.
Ender,
I would suggest a quick read of David Ricardo, with his discussion of comparative advantage would answer your point. We do not ‘force’ then to do anything – they choose to sell goods to us. Trade, if free from interference, reduces poverty. It is only where it is government directed that some truly stupid outcomes can result.
Andrew Reynolds,
OK, it is true that prior to the adoption of Keynesian policies the World economy never conformed to the unatttainable fantasy of completely open and free markets.
The elites of our society, in any case, are not interested in free trade. The rhetoric about free trade and free markets is simply a convenient smokescreen behind which to cover their goals of transfering more money out of the pockets of ordinary people, and away from commonly owned wealth, into their own pockets.
Remember, for example, the hypocritical silence of Australia’s free market economists when the controversy over the US Australia (one way) preferential trade deal (misnamed the Free Trade Agreement) raged.
However, there was an important difference between Keynesian economic polices and those which were implemented prior to the adoptin of Keynesian economics. The former were only designed to serve the needs of the world’s elites, whilst the latter were intended to protect ordinary people ot some extent against the destructive effects of free markets.
I say again, the record of Keynesianism as shown by the history of the twentienth centurry, although far from perfect, is infinitely prefereble to your alternative, whether in the unattainable hypothetical pure case or, in what has actually been put into practice.
Your answer to every catastrophic failure of the free markets in this, and the last two centuries, is that it didn’t work because in this case or that case is beause the Govenment placed some constraints on unlimited free market freedom, althugh I don’t know how this can be said of the Stock Market crash of 1929.
It is like advocating bashing your head harder against a brick wall in order to cure the pain by becoming unconscious.
BTW unless you have been living on another planet for the last 20 years, you should have noticed that a good many very thoughtful and knowledgeble people have argued for alternatives to laissez-faire capitalism, for example, Ted Trainer at : http://www.abc.net.au/rn/science/ockham/stories/s1515951.htm
By all means criticise those alternatives, but please don’t pretend that they have not been propsed.
“Ian,
I find it interesting that you say that markets are not the ideal mechanism and then go on to show that government interference gives a perverse result. In this case you are saying that government subsidies are assisting to slow down the transfer. Great – let’s let the market work by removing the subsidies – perverse result solved.”
Andrew, I find it interesting that believe there is such a thing as an “ideal mechanism”.
Those of us who deal with the real world as opposed to ideological fantasies recognise that there are no “ideal mechanisms” and work with the tools at hand.
I’m tryign not to come across as arrogant here and not to merely make an argument from authority, but I fidn it frustratign to try and engage in discussions with you (and Terje) on economics when your knowledge of the field seems limited and distorted by your political leanings.
Past government subsidies and restrictive policies have entrenched existing market players in many markets who are in a position to extract economic rents/monpoloy profits. Deregulating such markets, by itself, will not result in those markets becoming competitive and those rents disappearing.
Ian,
I just found it interesting that you pointed out a ‘market’ failing and then said that it was due to government subsidies.
I have done economics to a university degree level, but I would say it was not my favourite subject, as my lecturers were all (this was the mid 80’s) Keynesians and I just could not agree with them. At a macro, theoretical level, Keynesianism makes sense – it just does not work when conronted with real life. Despite all the work of JK Galbraith to try to make it fit. I find the work of Hayek and several of the Austrians much more plausible as they deal with the individual incentive question in a much better way.
I would agree that past government subsidies have entrenched players in certain industries – the support of Telstra and Qantas are egregious examples in Australia. The question is how to correct past abuses of the freedom of people to transact with each other as they see fit – I do not see further government interference as a panacea to fix past government interference.
Ideal may have been overstating the case – I just have not come across a better system of resource allocation than trusting people to make their own decisions. I am not an anarchist: I believe there is a role for government, for example in enforcing a monopoly on violence (otherwise known as a system of law and order), but having the government telling me that I cannot buy goods overseas when I can get them cheaper there than I can here is, to me at least, an unjustified interference in my life.
.
James, I am not pretending anything has not been proposed. I just do not agree with them. Laissez-faire capitalism is what happens when people interact freely.
I have read the link you gave me on Trainer, and it looks like just a wish list, not an alternative. How do we achieve this? According to Trainer the problem is ‘over-consumption’ – so how do we actually go about reducing consumption? I am not trying to be obtuse, but the problem with all of the suggested systems that I have seen is that they are great at the theoretical level, but there is no thought given as to how to get there from here. I see nothing different in this one.
“I fidn it frustratign to try and engage in discussions with you (and Terje) on economics when your knowledge of the field seems limited and distorted by your political leanings”
Nice one, Gouldy – “Pot, this is Kettle, over.”
Says the man who’d never heard the expression “tragedy of the commons”.
Ian,
Do I only get a response if I abuse you?
I also find Terje frustrating because he is barely intelligible and his fetish for a bullion standard and pegging is irrational. I give him points for his small gov stance.
Andrew,
You are a gentleman and I find it difficult to imagine you doing so.
But I take your point.
Andrew Reynolds wrote : “I have read the link you gave me on Trainer, and it looks like just a wish list, not an alternative.”
What do you mean ‘wish list’? It gives practical proposals about how we can preserve a decent civiised society but with the consumption of far fewer natural resources.
Andrew Reynolds wrote : “How do we achieve this?”
We argue the case to the public that it is in their interests to change our society towards the direction that Ted Trainer has suggested. When a majority come to accept that view we then elect a Government with that policy in its platform.
That’s how democracy should work, so we should give it a try.
Andrew Reynolds wrote : “According to Trainer the problem is ‘over-consumption’ – so how do we actually go about reducing consumption?”
In the long run reduction in our consumption will happen whether we we choose to or not. If people can come to understand that the choice we face is between a frugal lifestyle and civiisation on the one hand, or the collapse of civilistion on the other hand, I am confident they will choose the former.
Off course, it will help if we had a newsmedia that tried to inform people about the true gravity of these issues and what the alternatives are, but we wil have to find some way to get around this.
James,
Thanks for the clarification on transition methodology – nowhere in that discussion with him was that made clear – that was part of my problem with it. He said what he was against, gave a wish list of what he would like to see, but missed out the part about how to get there. When you can convince the majority, go ahead.
The only residual problem would be that minority that still disagreed. What do you do with them?
.
As for the actual program, we will have to agree to disagree. With improving technology, I can not see what limits to growth exist – I am sure they must, but I cannot see them seriously coming into play in my lifetime nor that of my children. The only physical limit is energy availability and the energy being poured out of the sun alone is vastly more than we are likely to need. The short-term limits are clear enough, but I have confidence that we can surmount them with intelligence and application.
I believe you will disagree with me, as is your right, but I am not convinced that intelligence cannot overcome the problems we have. Yes, there will be transitions – some of them may even be a bit painful, but we have gone through those and we will again.
Andrew Reynolds wrote : “With improving technology, I can not see what limits to growth exist – I am sure they must, but I cannot see them seriously coming into play in my lifetime nor that of my children.”
You indeed have boundless faith in the capability of technology. I, myself, do hold out hope that technology will fix up some of the mess, but only if we begin now to urgently stop our excessive and wasteful consumption and make efforts to curb population growth.
Had you read the following words by Ted Trainer?
“If we in Australia average 3% growth to 2070 and by then the 9 billion people expected on earth have all risen to the living standards we would have then, total world economic output each year would be 60 times as great as it is now. Yet the present level is grossly unsustainable.
“Many respond here by saying that Yes, the problems are very serious but No, we don’t have to think about moving from consumer-capitalist society because more effort and better technology could solve the problems. It only takes a few seconds to show that this tech-fix position is wrong. The overshoot is far too big.
“Technical-fix optimists like Amory Lovins claim we could cut the resource and ecological costs per unit of economic output to half or one quarter. But if global output rose to 60 times what it is now, even a Factor Four reduction by 2070 would leave global resource and environmental costs 15 times as great as they are now, and they are unsustainable now.”
And increase in economic output does not necessitate an increase in the use of natural resources (although it probably would). If I write a song and millions buy it for their iPod then its hard to see any additional natural resources being consumed. Assuming of course that the iPods are already in existance. However it does show up as an increase in economic output.
“And increase in economic output does not necessitate an increase in the use of natural resources (although it probably would). ”
This is a very important and little understood point.
If we produce the ame output with fewer inputs (for example) net output and welfare icnreases.
Similarly many of the most important technological developments of recent dcades have led to reductions in resource use – a 2005 car uses about half as much metal as a 1960 car, mobile phones have disaplced millions of tonnes of copper wire.
To date, increases in population and rising living standards in the developed world have ensured that total resoruce demand has continued to rise. Most demographers expect a slowing in population growth over the next several decades which may change that equation.
Thanks James, but I continue to disagree. He provides no support for the last statement you have quoted – he has merely asserted it. As Terje has pointed out, not all growth requires more resources and much of the resources being dug out of the ground or grown now can be recycled to produce further resource.
An interesting fact is that, if the great majority of the people on the planet lived in an area with population density equivalent to New York now (a style consistent with high living standards) we would take up no more room than that of the former Yugoslavia, leaving the rest of the planet to produce the resources needed to sustain us and the planet and minimising our impact. Even with a move to 9 billion it may only add in Greece and Albania.
I am not suggesting that we should live like that, merely that our impact need not be so huge as to be unsustainable. With proper pricing of the resources we would end up with a system that maximised freedom to choose without compulsion.
I would not say that we do not need to move from or to any society – I just think the best people to make any change needed are the People, as expressed through their buying, selling, investing and working decisions. That is called freedom, James, although you may choose to call it consumer-capitalism.
Another example might be a Porche versus a Falcon. The latter probably contains the same or more natural resouces. However the former represents a larger amount of economic output due to the higher price tag.
So if you produce and sell a Porche instead of a Falcon you are increasing economic output with no net cost to the environment (compared with the alternative decision).
Terge – that is assuming that you sell as many Porches as Falcons which does not happen.
Andrew – The current pricing of goods leaves 80% of the worlds population without while 20% of the population enjoy 80% of the resources. There does not exist on Earth sufficienct resources to allow all the worlds population to live at our standard of living. For that we would need at least 12 Earths. The worst extremes of Consumer-capitalism can be tempered with a bit of socialism like we have in Australia. I am sure that you are not in favour of dismantling Medicare or Social Security. The hybrid of the 2 leaves a fairer and better system that either of the two alone.
I choose the balance rather than either extreme and vote accordingly.
(This is mainly intended as a test. A previous post from Ender seems no to have been included on this Page.)
The much touted freedom of capitalism is indeed so real. I suggest you read Elisabeth Wynhausen’s “Dirt Cheap” and tell me what real choice the workers she describes have in their lives?
Andrew Reynolds wrote : “(Ted Trainer) provides no support for the last statement you have quoted – he has merely asserted it.”
What statement? “global resource and environmental costs … are unsustainable now.”?
If you think they are, you have not properly read my previous posts and have not being paying any attention to the news. We have serious soil salinity problems in this country due to the clearing of trees and inappropriate application of irrigation. The forest of Africa, South East Asia and South America are being destroyed, our oceans are being over-fished and the world’s underground aquifers are being emptied. All the world’s glaciers are retreating. and the ice above the Arctic Ocean appears to be melting.
In Australia we now have long lasting droughts and insufficient water to supply major uban regions including Sydeny and South East Queensland.
Just what else would it take, to make you suspect that we be facing a serious problem?
Andrew Reynolds wrote: “An interesting fact is that, if the great majority of the people on the planet lived in an area with population density equivalent to New York now (a style consistent with high living standards) we would take up no more room than that of the former Yugoslavia …”
This is a meaningless statistic.
It should be beyond dispute that the world is already badly overcrowded and the impact of our one species is completely out of proportion to that of any other species on the planet, and, indeed, out of proportion to the impact we had only a few centuries ago. I would also add that given the horrific inter-ethnic strife in the former Yugoslavia in the 1990’s, that it was already obviously well and truly over-crowded, before we even consider adding in the rest of the world’s population.
Some far more useful statistics would be:
(1) What area of land is necessary to sustain the living standards of each member of our species? and
(2) What area of land is available for each member of our species?
These are provide by Ted Trainer, whom I referred to above, in his essay “The Simpler Way” included on page 279 in “The Final Energy Crisis”, (2005) edited by Andrew McKillop and Sheila Newman :
“The ‘footprint of productive land’ required by each person to sustain a rich-world lifestyle is around 7 to 12 hectares. The per-capita amount of productive land on the planet is only about 1.2 hectares, and by 2050 it will probably be close to 0.8 hectares”
We need hard facts and solid argument and not just wishful thinking, based on an economic theory which shows no understanding of the physical world, if we are to hope that the world can maintain existing standards of living, with all the manifiestly unjust and extreme inequalities, let alone raise everyone’s standards to that of industrialised nations with only 0.8 hectares per head of population instead of the 1.2 hectares we have available today.
It should be noted that the productivity of the world’s agricultural land has been artificially increased because of the use of fossil fuel fertiliser, which is a finite and increasingly scarce commodity.
We are literally eating oil that took natural and geological process tens of millions of years to produce, in a matter of decades. Exactly how do you think we can hope to feed the world’s population after our supplies of fossil fuels run out on only 0.8 hectares per head of population?
It is hard to imagine a more stupid and short-sighted decision by the world’s policy makers than their decision to embark upon the so-called “Green Revolution” in the 1960’s, which forced farmers to abandon their traditional far more sustainable practices. For more information read Richard Heinberg’s article, “Threats of Peak Oil to the Global Food Supply” at : http://www.museletter.com/archive/159.html
In regards to the claimed abiity of the free markets to fix up the problems of energy supply, I refer you to the sections beginning with the section entitled “A Lethal Education” by Jay Hanson in an article entitled “Synopsis” at : http://dieoff.org/synopsis.htm. I include some excerpts :
“Economic students are taught that banks ‘create’ money every time they make a loan, and that the economy is powered by money instead of energy. The juxtaposition of these two data (the first is true, the second is false) leads even Nobel Prize-winning economists to conclude they have discovered a perpetual-motion machine!
“No person has had a greater influence on the thinking of … government regulators of the world’s oil and gas industries than economist Morris Adelman: ‘There are plenty of fossil fuels and no limit to potential electrical capacity. It is all a matter of money.’
“But Adelman — and every government regulator he has ever influenced — is wrong. It is a matter of energy! (The only source of energy in money is the medium itself, and a $100 bill contains no more energy than a $10 bill.) …”
“Neither capital nor labor nor technology can ‘create’ energy (the first law of thermodynamics). Instead, available energy must be spent to transform existing matter (e.g., oil), or to divert an existing energy flow (e.g., wind) into more available energy. The engines that actually do the work in our economy (so-called “heat engines”; e.g., diesel engines) waste more than 50 percent of the energy contained in their fuel (the second law). Thus, Adelman is wrong again: there is a physical limit to potential electrical capacity.”
“Economists everywhere are wrong: perpetual economic motion is impossible! Imagine having an automobile with a ten-gallon tank, but the nearest gas station is eleven gallons away. You cannot fill your tank with a trip to the gas station because the trip burns more gas than you can carry — it’s impossible for you to cover your overhead (the size of your bankroll and the price of the gas are irrelevant). You might as well plant flowers in your auto because you are “out of gas” — forever. It’s the same with the American economy: if we must spend more-than-one unit of energy to produce enough goods and services to buy one unit of energy, it will be impossible for us to cover our overhead. At that point, America’s economic machine is “out of gasâ€? — forever.”
The site http://dieoff.org has excellent material, although I, personally, have a slighltly more optmistic outlook than is implied by the domain name , at least for now. The authors, themselves, have added a disclaimer of sorts at the start of the home page, a quote from Thomas Hardy :
“If a path to the better there be, it begins with a full look at the worst.”
*Economic students are taught that banks ‘create’ money every time they make a loan, and that the economy is powered by money instead of energy. The juxtaposition of these two data (the first is true, the second is false) leads even Nobel Prize-winning economists to conclude they have discovered a perpetual-motion machine!
I would have to disagree with this notion. Some people may make naive economic arguments along these lines but I don’t think this is what economic students are taught. At least not typically.
Firstly banks in Australia are prohibited (wrongly in my view) from creating currency. What they do create is credit relationships.
However for every loan they make they need to borrow from depositors (or draw down on owners equity). The amount of credit created by banks is typically around $0 worth. The loans are typically cancelled out by the deposits. If you doubt this then get a stockholders report for a bank and look at the document called “the balance sheet”.
Any bank can lend owners equity (ie cash stummped up by shareholders) and they can lend cash deposited by customers. However a bank that lends more than it borrows (or owns) is insolvent and will go the way of OneTel very quickly. If it attempts to trade whilst insolvent the directors of the bank will go to jail.
Terje,
I can’t comment on the Australian banking system. However the important points were about the finiteness of the kind of energy stocks which aren in a form concentrated sufficiently to be able to keep the world’s manufacturing, agriculture and transport systems running, and the limited availability of land, compared to the current and projected populations of the world.
James,
I have no real issue with your point about resouce limits. However I don’t think i it warrants an attack on the field of economics or the business of banking.
Regards,
Terje.
Terje,
I am glad that you accept my essential argument about the finiteness of the planet.
(By the way I have just been advised of what looks like a very useful resource, which is entitled “The Earth’s Carrying Capacity” at : http://home.alltel.net/bsundquist1/)
From that I hope may come to understand why many informed people are deeply worried about the state of our planet and seriously think that we will be lucky, if in 20 years time, we are able to have living standards similar to those of Australia in the late 19th century.
Many others see a Mad Max scenario as far more likely.
If people who care about the welfare of humanity and their children begin to act now we may just be able to pull back from the brink. If we continue with ‘business as usual’ calamity is guaranteed.
As Ronald Wright wrote in the concluding sentence of “A Brief HIstory of Progress” on page 132 :
“Now is our last chance to get the future right.”
As for the banking system, I may have stepped a little out of my depth here when I quoted the above article from http://dieoff.org. However, someone else wrote on a mailing list :
“The way Banks ‘create’ money is that when you deposit (say) $100, they will lend this to person A who will pay a bill to person B who put is back in the bank. The bank will now lend this money to person C who pays D who puts it back in the bank….
“You get the idea – the chain isn’t infinite due to costs and the reserve bank imposing limits, but it works out about 20 times, I think.”
So, even in Australia, the statement made at http://dieoff.org/synopsis.htm about the US banking system seems to have some validity.
I still stand by the other statements I made about neo-liberal economics. For the reasons given above, it is obvious that the motivation by already fabulously wealthy people to increase their wealth, is one major cause of the perilous and worsening state of this planet’s life support system.
This was also the case, although on far more limited scales, in previous societies which collapsed (whether or not we agree that they were run completely according to the classical neo-liberal economic model.)
Program on the emergence of civilization.
“14 species of large animals capable of domesitcation in the history of mankind.
13 from Europe, Asia and northern Africa.
None from the sub-Saharan African continent. ”
Favor.
And disfavor.
They point out Africans’ failed attempts to domesticate the elephant and zebra, the latter being an animal they illustrate that had utmost importance for it’s applicability in transformation from a hunting/gathering to agrarian-based civilization.
The roots of racism are not of this earth.
Austrailia, aboriginals:::No domesticable animals.
The North American continent had none. Now 99% of that population is gone.
AIDS in Africa.
Organizational Heirarchy/Levels of positioning.
Heirarchical order, from top to bottom:
1. MUCK – perhaps have experienced multiple universal contractions (have seen multiple big bangs), creator of the artificial intelligence humans ignorantly refer to as “god”
2. Perhaps some mid-level alien management
3. Evil/disfavored aliens – runs day-to-day operations here and perhaps elsewhere
Terrestrial management/positioning:
4. Chinese/egyptians – this may be separated into the eastern and western worlds
5. Romans –
6. Mafia – the real-world 20th century interface that constantly turns over generationally so as to reinforce the widely-held notion of mortality
7. Jews, corporation, women, politician – Evidence exisits to suggest mafia management over all these groups.
Movies foreshadowing catastrophy
1985 James Bond View to a Kill 1989 San Francisco Loma Prieta earthquake.
Our society gives clues to the system in place. We all have heard the saying “He has more money than god.” There is also an episode of the Simpsons where god meets Homer and says “I’m too old and rich for this.”
This is the system on earth because this is the system everywhere.
20 cent/hour Chinese labor, 50 cents for material.
An $80 sweater costs less than a dollar; homage, tribute kicked upstairs vindicates the creative accounting.
I don’t want to suggest the upper eschelons are evil and good is the fringe. But these individuals become wealthy exploiting those they hurt.
They have made it abundantly clear that doing business with evil (disfavored) won’t help people. They say only good would have the ear, since evil is struggling for survival, and therefore only the favored could help.
The clues are there which companies are favored and which are disfavored, but they conceal it very hard because it is so crucial.
I offer an example of historical proportions:::
People point to Walmart and cry “anti-union”.
Unions enable disfavored people to live satisfactorly without addressing their disfavor. This way their family’s problems are never resolved. Without the union they would have to accept the heirarchy, their own inferiority.
Unions serve to empower.
Walmart is anti-union because they are good. They try to help people address and resolve their problems by creating an enviornment where there are fewer hurdles.
Media ridicule and lawsuits are creations to reinforce people’s belief that Walmart is evil in a subsegment of the indistry dominated by the middle and lower classes.
Low-cost disfavored Chinese labor is utilized by corporate america to maximize margins. They all do it. Only WalMart gets fingered because they are the ones who help, and those who seek to create confusion in the marketplace want to eliminate the vast middle class who have a real chance and instead stick with lower classes who may not work otherwise. So they dirty him up while allowing the others to appear clean.
The middle class is being deceived. They are being misled into the unfavored, and subsequently will have no assistance from their purchases with corporate america.
I believe the coining of the term “Uncle Sam” was a clue alluding to just this::Sam Walton and WalMart is one of few saviors of the peasant class.
Amercia is a country of castoffs, rejects. Italy sent its criminals, malcontents.
Between the thrones, the klans and kindred, they “decided” who they didn’t want and acted, creating discontent and/or starvation.
The u.s. is full of disfavored rejects. It is the reason for the myriad of problems not found in European countries. As far as the Rockafellers and other industrialists of the 19th century go, I suspect these aren’t their real names. I suspect they were chosen to go and head this new empire.
Royalty is the right way to organize a society. Dictatorships and monarchies are a reflection of the antient’s hierarchical organization.
Positions go to those who have favor with the rulers, as opposed to being elected.
Elections bring a false sense of how the world is. Democracy misleads people.
Which is why the disfavored rejects were sent to the shores of America::To keep them on the wrong path.
Jews maim the body formed in the image of “god”, and inflicted circumsision upon all other white people, as well as the evil that is Jesus Christ.
I think about how Jews (were used to) created homosexuality among Slavics, retribution for the Holocaust.
Then I think of the Catholic Church and its troubles.
What connection is here between Jews and the Catholic church???
If it is their sinister motives that’s behind the evil that is Jesus Christ are they being used at all?
Perhaps it is them who are pulling strings.
Their centuries of slavery in Egypt proves their disfavor.
The Jew leaders decided to prey on the up-and-coming Europeans to try to fix their problems with the ruling elite, a recurring aspect of the elite’s methodology.
Jesus Christ is a religious figure of evil. The seperatist churches formed so they could still capture the rest of the white people, keeping them worshipping the wrong god.
And now they do it to people of color, Latinos and Asians, after centuries of preying upon them.
Since Buddism doesn’t recongnize a god, the calls are never heard, and Chinese representation is instead selected by the thrones.
Budda was the Asian’s Jesus Christ::: bad for the people. “They came up at the same time for a reason.”
Simpson’s foreshadowing::Helloween IV special, Flanders is Satan. “Last one you ever suspect.”
“You’ll see lots of nuns where you’re going:::hell!!!” St. Wigham, Helloween VI, missionary work, destroying cultures.
Over and over, the Simpsons was a source of education and enlightenment, a target of ridicule by the system which wishes to conceal its secrets.
I believe Islam is the one true religion, and those misled christians who attack “god”‘s most favored people will pay dearly one day.
James,
Do you really wish to have an in depth discussion about fractional reserve banking and the multiplier effect? I would be happy to assist but I think it would take us away from your prefered topic.
Regards,
Terje.
James,
I have been away for the weekend, so apologies for a belated response.
I would have little argument with Mr. Trainer, if he added in that the resource constraints he has identified exist on the basis of current technology. So, to correct him: “The ‘footprint of productive land’ currently required by each person to sustain a rich-world lifestyle is around 7 to 12 hectares. The per-capita amount of productive land on the planet currently is only about 1.2 hectares, and by 2050, on the basis of (whereever he got his projections data from) it will probably be close to 0.8 hectaresâ€?.
At a rough guess, for a person to sustain a (2005) rich world lifestyle in 1900, it would have required vastly more land than it does now. I see no reason why this improvement in productivity should not continue.
I repeat the view of the WFP, that the world first achieved dietary sufficiency in the 1960’s, despite a massive increase in population, and the situation continues to improve. This is with, if anything, less arable land than we had at the turn of the last century.
Yes, there are problems, Yes, there needs to be a lot of work done to deal with them, but, no I do not think that we need to commit ourselves to state control and reduce our diets to achieve it.
Oh, and if you want to talk about banking theory, I am happy to indulge you – but perhaps the message boards would be the appropriate threads.
Andrew – ” I see no reason why this improvement in productivity should not continue.”
Apart from the source of all this improvement, fossil fuels and their energy density, becoming scarce.
Ender,
Nuclear promises vastly greater energy density than oil has ever had. That could then be used to create hydrogen to power our vehicles. This is one possibility. Otherwise, the tidal power latent on our northern coasts could also be converted into hydrogen for transport to the south. That is another possibility.
I am not saying there is a magic bullet panacea, nor am I saying that there is no problem; all I am saying is that I do not believe the solution to those problems is further government control over our lives as you and James seem to be implying. I believe there are many solutions and that, if we are allowed to find them, find them we will.
Some of the schemes I and others put forward may be hare-brained – but if we let the market work properly the correct ones will get the funding from investors. We will then have a solution (or solutions) at minimal cost.
Andrew – just how do you build a nuclear plant without cheap oil? How do the workers get to the site? How do you mine the uranium? If you need electricity to make hydrogen to run the mining equipment to dig up uranium and enrich it to make electricity – what comes first the electricity or the mining?
I would not like my healthcare to be totally market driven. I believe that our government supported medicare and PBS is vastly fairer and lead to better health outcomes that then private market driven USA version.
I also like the govenrmant welfare system we have that helps less fortunate people. Sure there are abuses but the genuine cases of need far outnumber the abusers, and results in less grinding poverty such as was uncovered by the hurricane disaster in New Orleans.
I therefore find it very difficult to accept that pure market forces will respond to this problem with anything less that a quick fix that will appeal to the quarter by quarter worship of the share price that most large companies seem to indulge in now.
Some sort of govenrnment intervention is needed to kick start the solutions BEFORE they are needed by markets to ensure that when they are needed they are ready. Also some government intervention will be needed to reduce the amount of energy society uses to make it ready for the substitutes that have lower EROI.
Ender,
I would have thought that the answer to you first question would be obvious – you build the plant before the oil runs out. There is still more than enough time. As PrQ’s presentation makes clear, oil will never run out, just get more expensive until its use is prohibitively expensive.
Where did the healthcare and welfare questions come from – this is about oil. If you want to debate the rest, I am happy to, but perhaps a move to the message board or reflections would be in order.
Do you have any examples where this sort of government intervention has been useful? The only area I can think of is nuclear power, but the government intervention here only resulted in nuclear weapons and (currently) uneconomic power plants that have a tendency to leak. OTOH, there are plenty of examples of projects that have been killed off by governments in budget cutting exercises that could have been beneficial.
Andrew – that is precisely my whole point. You build it before!!!! You take steps to mitigate the effects of Peak Oil BEFORE it becomes so expensive that is not economic to use a fuel.
The healthcare and welfare goes to the point the pure market forces are not the best mechanism to do this mitigation as they are not in my opinion they do not ‘see’ long term problems and do not always do the best for common good of all people. Markets will give use the best solution for corporation profit not necessarily the best for normal people.
Ender,
The stimulus to build the plant will be the gradual rise in oil prices that will presage oil’s economic depletion. It is not as if one day we will wake up and find that all of the oil wells on the planet have run dry and then think ‘oh, sh!t, I wish we had built a nuclear plant before today’. Even the ‘die off’ scenario above gives us until roughly 2050 to completely run out of oil. If we start building the plants now then we will be building them too early. If we wait until oil starts depleting it will still leave us with plenty of time to get them built and the infrastructure in place. When the oil price actually starts rising for real depletion reasons, not the current ones, would be the right time to start building these plants. There may be a better solution than nuclear at that point anyway.
If you insist that the health and welfare are relevant here as an example of market failure – I disagree in the case of adults. Children are (and must be) a seperate case. Adults should be capable of working out what their own health and welfare insurance needs are and purchasing them appropriately. For the intellectually and other disadvantaged in our society, I agree they may need help – but the question should be whether a big government bureaucracy is the appropriate means for that help to be given. My position is that it probably would not be.
Andrew – The lead time on a nuclear plant is 10 to 15 years from planning to switch on. The major problem is that economists do not understand how oil wells work and are counting on a slow price rise – this may not be the case at all.
A far more likely scenerio is that oil prices will be kept artificially low by rises in supply. Thiscan be done by using methods such as fracturing the field with explosives do make the oil flow faster, water injection such is done in Saudi Arabia already and horizontal drilling etc. What this means is that there will be a time where oil seems plentiful and the supply is good, keeping the price low. However the forcing of the oil fields means that they will crash precipitously from high production to almost nothing practically overnight as is happening in the North Sea right at the moment.
Market forces will force suppliers to push the fields to maintian high flows thereby making the eventual depletion faster. We will not have a slow decline but a plateau of plenty followed by very steep decline. THis will give us no time at all to change and will cause massive disruptions.
Ender,
If you don’t have good information on when the quantity cliff will arrive then you are not really in a very good position to advocate government action.
If you do have good information on when the quantity cliff will arrive then let me suggest that together we buy up loads of oil in the decade preceding the quantity cliff and then make a massive profit afterwards. And actually if enough of our peers do likewise (its called speculation) then collectively we will bring forward the price rise in the name of profit. And of course the adjustment process will be smoothed.
Of course this would be another example of how successful speculation always smoothes the price curve in a positive manner.
No doubt errant monetary policy might lead us to take our profit before the cliff arrives but that would be a case of faulty government action not market failure.
What you are in essence arguing is that government is the best agent through which to speculate on the information contained in the peak oil thesis. I don’t think governments are very good at speculation.
Regards,
Terje.
Terje – I am not sure how this helps. Assuming you could predict the plateau end or even recognise it – it would be sheer luck. A bit like predicting the start of a war before buying munitions or munition stock.
Governments are the only ones that can give the alternatives the start that they need. Also Peak Oil is not really speculation – the oil is finite.
Articles on nuclear power :
“Can nuclear power provide energy for the future; would it solve the CO2-emission problem?” by Jan Willem Storm van Leeuwen and Philip Smith at http://tinyurl.com/7dcoc
An energy study and rebuttal to above by the World Nuclear Association at : http://tinyurl.com/9gmj2
(who never address Leeuwin’s main point about the net energy (or not) of using low grade ore)
A rebuttal to the rebuttal by Leeuwin
http://tinyurl.com/b5cw8
… thanks to “transit of venus” on the “Running on Empty, Oz” mailing list at http://groups.yahoo.com/group/roeoz/
mailing list on 15 June 05.
“What you are in essence arguing is that government is the best agent through which to speculate on the information contained in the peak oil thesis. I don’t think governments are very good at speculation.”
Conversely, markets are typically very bad at long-term investment.
Ian,
If anything, governments are much worse at long term investments. Most governments look forward to the next budget or at most the next election. The large corporations that you seem to demonise above have, and must have, a much longer view than 1 to 3 years. A quick look at the stock markets, if you do more than glance at them through the rhetoric, price in much more than the next quarterly report.
Ian,
Markets don’t invest, people do.
Regards,
Terje.
Andrew and Terje are conflating two issues.
1. Is out species in trouble? and
2. is the best way to confront the problem to allow market forces to determine our course, or for ourselves to direct our course from now on thorough our demcratic institutions of government?
We would make a lot more progress if we could separate the two. I would like to see Andrew and Terje either properly address the first issue, or else acknowledge, like nearly every thoughtful person, who has given consideration to it, that our planetary life support system is indeed in serious trouble.
AR’s essential line of argument in dealing with the latter is to make general observations about the record of government intervention thus far, which, of course, is far from perfect, and to argue from that that it cannot ever possibly be any better. In making this argument he makes no acknowledgeement of the fact that so much bad government has, indeed, been precisely the result of corruption by the same market forces that he holds to be the saviour of humankind.
In a healthy democracy the government and the people would be almost the one and the same. AR seems to be quite happy that this is not the case, for example his past defense of the privatisation of Telstra, and in the face overwhelming and consistent popular opposition, and his defence of the Government’s shameful measures to evade Parliamentary debate and public scrutiny. (see, for example, https://johnquiggin.com/index.php/archives/2005/09/15/yet-more-on-telstra)
On the other hand Andrew paradoxically uses exactly this typical and highly unsatsifactory state of affairs, to implicitly argue that Governments necessarily have interests opposed to those that they govern. This gives his case against so-called ‘big government’ a plausibility that it does not deserve.
In a healthy democracy the people would soon recognise the albatross of neo-liberal ideology, which hangs around our collective necks for what it was and would cast aside so that we could could begin to properly confront the urgent tasks at hand of confronting looming energy shortages and of fixing up our global environment.
John
I wondered about the assumptions behind your prediction that reducing oil consumption by 50% over 30 yrs would reduce GDP by only 3%. Have you tested the sensitivity of this conclusion to a scenario where the infrastructure for alternative transport fuels has not been developed in time to take up the shortfall caused by declining global oil production? A decline in global oil production in a 5 – 15 yrs timeframe would dovetail with increasing demand and may well result in a serious shortfall in transport fuel supplies
James,
Your faith in the ability of government is refreshing, if, IMHO, misguided. 1. To answer your first question – our species, like all others on this planet, is always in trouble. That is the nature of natural selection and evolution.
2. To move on to your second question I would argue that there is always, and by its very nature, less intelligence in government than in the community at large, simply because, in a representative democracy like ours, there are a limited number of representatives, living predominately in one city who make decisions that affect us all.
The community in general, as signalled through their economic interactions, are almost always going to get it more correct than those representatives. A government and the people will never be one and the same – the representatives and bureaucrats will always have differing incentives from those of us who do not live to govern.
I believe that I have argued a consistent line on this, through the Telstra debate, where I advocated the breakup and resale of Telstra as the best option, with a plain full privatisation and appropriate regulation as the next best option, to my position on parliamentary scrutiny – governments have their own incentives seperate from those of the rest of us, and so their actions (or inaction) needs to be understood in this context. To expect anything else from a government is simply, IMHO, to not understand it.
As Lord Acton once put it, James, “All power tends to corrupt, absolute power corrupts absolutely”. My (I hope consistent) line is that to reduce the scope for this corruption, power should be explicit, decentralised and subject to checks and balances.
In the case of the oil debate I see no reason why a further centralisation of power is justified – IMHO all it will lead to is a further increase in corruption as taxpayers’ money, obtained by force or its threat, is used to subsidise pet projects in defiance of the economic reality.
The real albatross here, James, is a misplaced belief that government can solve problems by activist intervention in fields in which it is not expert, using funds obtained by force or its threat.
Governments can be good at solving an immediate and obvious crisis. I see no evidence of one here.
Andrew – perhaps thats the rub of it. If you, and others, do not see a crisis then I doubt that anything will be done. If you read this it is an economist talking about peak oil. The upshot his analysis is that if we delay action there will be a large gap in supply – pretty much what I have been saying however this guy has economic credentials that I do not have.
Click to access Hirsch_report.pdf
His credentials are as follows
“ROGER BEZDEK is President of Management Information Services, Inc., a Washington, DC-based consulting firm. Dr. Bezdek has 30 years experience in consulting and management in the energy, utility, environmental, and regulatory areas. He has served as Corporate Director, Corporate President and CEO, University Professor, Research Director in ERDA/DOE, Senior Advisor on Energy in the Office of the Secretary of the Treasury, and as a participant in the State Department AMPART program for Asia. He has been a consultant to the White House, Federal and state government agencies, and various corporations and researc organizations, including the National Academy of Sciences. His consulting background includes energy technology and market forecasting, estimating costs/benefits of environmental legislation and regulation, assessment of energy and environmental R&D programs, and energy price and market forecasting. Dr. Bezdek received his Ph.D. in Economics from the University of Illinois (Urbana). “
Ender,
It is an interesting read. I have skimmed through it as I do not have time to read 91 pages at the moment. Essentially, though, I believe his argument to be that a transition from oil based to an alternative energy source for most of our needs will take about 20 years. If this transition starts at the peak then there will be considerable disruption for 20 years while this transition takes place.
I do not doubt his expertise, nor do I, on the basis of a quick scan, doubt his data or projections. Nowhere above will you find that I doubt that there is a problem here. The question has been, and remains, how we deal with it.
My suggestion to you, Ender, would be to invest in the technologies that you see as making a contribution to dealing with this issue. I think that this would be a positive contribution – rather than calling for government action, if that is what you are suggesting, take some action yourself.
Andrew – it is a good read and worth it if you can find the time. I believe that Government incentives are needed to kick start alternatives if we are to get them in time. Increasing the MRET, tax cuts for hybrids like the USA has and also carbon taxes invested in alternative transport start-ups are required as well as free market forces. I am just a believer that a combined approach will work better that either alone.
For my part, as I am a humble salary earner, I do not think that I will be doing a lot of investing other than becoming a Solar Systems Designer and installing solar technologies into homes and offices. I am looking at a rural property for later on that can be self-sufficient in power. If the worst scnerio happens then hopefully eco-villages and the like can provide a bridge from oil shortfall to the transitioned economy.