My unpublished (100,000 word) book “The Financial Jigsaw”, is being serialised here weekly in 100 Issues by Peter J Underwood, author
Quote of the Week: “Two wrongs don’t make a right, but they make a good excuse.” – Thomas Szasz
This week we continue speculation about the ongoing collapse of growth and how it will affect the oil industry in particular. The following article by Chris Martenson shows how conversion to renewables is physically and politically impossible. He says:
“I’m often asked where I stand on wind, solar and other alternative energy sources. My answer is: I love them. But they’re incapable of enabling our society to smoothly slip over to powering itself by other means. They’re not going to “save us”. Some people are convinced otherwise. If we can just fight off the evil oil companies, get our act together, and install a national alternative energy system infrastructure, we’ll be just fine; meaning that we’ll be able to continue to live as we do today, but powered fully by clean renewable energy. That’s just not going to happen, at least, not without a lot of painful disruption and sacrifice. The top three reasons why are:
Math
Human behaviour
Time, scale, & cost
I walk through the detail below. I’m doing so to debunk the magical thinking behind the current “Green Revolution” because I fear it offers a false promise.”
https://www.peakprosperity.com/getting-real-about-green-energy/
Here is the link to last week: Issue 72
Now that Brexit will not be coming to a final conclusion yet, I will continue to provide weekly updates as events progress:
Brexit Update – 11th October 2019
The Brexit deadline remains 31st October 2019 and stays in place unless Boris can get Parliament to agree a new exit plan or he is forced to apply to the EU for an extension of Art 50 yet again. Everything continues in flux at present and we can only sit patiently and await the outcome as events progress. ZeroHedge has a short explanation:
Details of Parliament’s deliberations when sitting can be found here:
CHAPTER 13
The New Emergent Economy
“Winning is a habit. Watch your thoughts, they become your beliefs. Watch your beliefs, they become your words. Watch your words, they become your actions. Watch your actions, they become your habits. Watch your habits, they become your character.” – Vince Lombardi
“Everything is determined, the beginning as well as the end, by forces over which we have no control. It is determined for the insect as well as the star. Human beings, vegetables, or cosmic dust, we all dance to a mysterious tune, intoned in the distance by an invisible piper.” – Albert Einstein
“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger — but recognize the opportunity.” ― John F. Kennedy
Maintaining production of essentials in the New Economy
What prevents the expansion of the production and the utilization of idle resources is the lack of credit or more specifically, productive credit, backed by real wealth. This category of credit is scarce due to the expansionary monetary policies (QE) pursued by central banks. This has diverted real wealth from wealth producers to non-wealth producers.
The expansion in unbacked credit not only cannot revitalize the economy but, on the contrary, will set in motion a further weakening of the process of wealth generation. As long as the pool of real wealth is large enough this type of policy has ‘worked’ but only for those in the top 1% of the populations and the more aggressive the central banks’ attempts to revive the economy becomes the lesser economic growth will be achieved.
Without an increase in real savings (i.e. the pool of real wealth) there will not be sufficient means to activate the employment of idled resources. Thus gradually, as the New Economy emerges, there will be a great deal of automated production tools and equipment which become redundant through the lack of finance to restart the complex 21st century interconnected global machinery.
Communities will need to revert to methods used in yesteryear utilising a lower grade of tool and equipment. Given that limited electricity will be at a premium and oil will be rationed to one degree or another, manual tools which our forefathers knew will become the norm.
Those artisans who have retained traditional skills will be in demand to not only provide for basic needs but also to teach others how to employ the limited local resources to best effect.
It is not possible to say how far national economies will revert to pre-industrial conditions; different areas and regions will react in their own way based on their innate resilience both geographical and topographical.
Some places will have abundant mineral supplies; water and energy resources others will have and eventually transitions will occur as trading will take place much as humans have engaged with each other over millennia.
Suffice to say that we will all be called upon to adapt and change not only our behaviours but also our aspirations of what life will be like in the future. It is inevitable that some form of central control will be established eventually offering the basics in health care, electricity supply and common transport systems.
The collapse of the oil industry, transport and related enterprises
Stanford University economist Tony Seba has issued a detailed report recently on the future of oil and transport. Fortunately Tony comes from the real world, having spent decades successfully building, running, and managing businesses and has a lot of practical knowledge and understanding of our present world. He says:
“Oil demand will peak at 100 million barrels per day by 2020, dropping to 70 million barrels per day by 2030. That represents a drop of 30 million barrels in real terms and 40 million barrels below the Energy Information Administration’s current ‘business as usual’ case. This will have a catastrophic effect on the oil industry through price collapse (an equilibrium cost of $25 per barrel), disproportionately impacting different companies, countries, oil and infrastructure depending on their exposure to high-cost oil.”
His report continues saying that the impact of the collapse of oil prices throughout the oil industry value chain will be felt as early as 2021. In the U.S.A, an estimated 65% of shale oil and tight oil, which under a ‘business as usual’ scenario could make up over 70% of the U.S. supply in 2030, would no longer be commercially viable.
Approximately 70% of the potential 2030 production of US Bakken shale oil would be stranded by fewer than 70 million barrels per day demand assumption. Infrastructure such as the Keystone XL and Dakota Access pipelines would be stranded as well.
Other areas facing volume collapse include offshore sites in the United Kingdom, Norway and Nigeria; Venezuelan heavy-crude and the Canadian tar sands. Conventional energy and transportation industries will suffer substantial job loss. Policies will be needed to mitigate these adverse effects.
These are very substantial claims and it is easy to dismiss them as yet another ‘academic’ report which will be lost beneath volumes of oil industry propaganda. It might be worth remembering some quotes from similar claims in the past:
“What can be more palpably absurd than the prospect held out of locomotives traveling twice as fast as stagecoaches?” – The Quarterly Review, March, 1825
“There’s no chance that the iPhone is going to get any significant market share.” – Steve Ballmer, USA Today, April 30, 2007
However what Tony makes clear in his report is that immense changes are already in place to adversely affect the smooth operation of our integrated energy infrastructure. The economics of ‘transport-as-a-service’ (TaaS) offers a much lower cost transport alternative; about four to ten times cheaper per mile than buying a new car and two to four times cheaper than operating an existing vehicle in 2021.
This beats even electric vehicles as the main economic driver because this is Uber and any transportation-on-demand service. If we look at how readily and rapidly internet users have adapted to using the cloud then we can see the same process potentially unfold in personalised transport. We might be seeing the demise of the personalised motor car in the New Economy.
We will always need a supply of fossil fuels to energise our economies in the foreseeable future but the quantities required and the uses to which it will be put is subject to enormous change as events unfold towards the prospect of a world less focused on consumption and bread & circuses, rather towards a sustainable environment which allows not only humans to prosper but also the fauna and flora upon which we all depend for our survival. I trust and hope that the New Emergent Economy will be ecologically friendly and evolve to sustain all living things as we go forward in the 21st century.
One example of a new economy model is described by Charles Hugh Smith in his blog: OfTwoMinds. He says: “it seems obvious to me that we need a new organizational structure to enable *‘high-touch’ transactions and connections that aren’t necessarily for-profit or personal (friends/family).
This is the foundation of my proposed CLIME system: community labour integrated money economy and is outlined in my book: “A Radically Beneficial World: Automation, Technology & Creating Jobs for All.” CLIME is a non-corporate, non-state platform for a *‘high-touch’, high-value-creating community economy. This might well be worth reading as a possible solution to creating new types of jobs in The New Economy to come.
*Low-touch transactions / interactions don’t offer much value, connectedness or cooperation. A common example is ordering a fast-food meal or checking out at a market. Our interaction with the human being behind the counter is brief and not something valuable enough that the company can charge extra for being served by a human rather than a machine. If ordering a fast-food meal is low-touch, dining at a swank bistro is high-touch. Most people would hesitate to pay a lot of money for food delivered by a robot to a bland sound-proof booth. In other words, we’re paying not just for the food but for a high-touch environment: a knowledgeable wait-person, a sommelier, an atmosphere of conversation, people-watching, etc.
To be continued next Saturday
An entire article based on crystal ball gazing.
That the world’s economies are going to feel a severe shock soon is not that far fetched. The cyclical coming of a Grand Solar Minimum alone could result in famine and major dislocations. Suffice to say that the future holds the possibility of some terrible narratives.
However, it is in everyone’s interests to shed the ridiculous ideas of the present ( LGBTLMNOP, CO2 nonsense, etc) when confronted with REAL issues (hunger, lack of fuel for heating, etc) and it will focus all minds on solutions, many of which are currently ignored.
Take, for example, Liquid Fluoride Thorium Reactors (LFTR). This tech has been around for over 50 years. The Chinese, Indians and a few others are working on implementing the tech because they see the potential. The US has laws against anything connected with Thorium, including the mining of rare earth minerals that the US desperately needs. There are shipping containers full of barrels of already mined Thorium buried in the Nevada desert that alone could power the entire country for a century.
This type of stupidity will end when stark reality finally makes its impact felt.
Excellent observations Solutions – thank you. I had no idea about Thorium and will do some reasearch. Yes, I am afraid that this final Chapter is futuristic and it is of course always risky engaging in predictions; but I felt that conclusions expolated from the foregoing Chapters was worth a shot. All I do know is that the way we live now is not sustainable and solutions need to be considered urgently.
Brother, did you ever stop to think that maybe, just maybe, you have way too much fucking time on your hands?
This is very true, Bob, thank you, but I do try to use it productively, if only to challenge established thought.