#202. The shape of things to come

SCENARIO PLANNING AND THE ENERGY ECONOMY

As, when and if the coronavirus pandemic recedes into the past, there’s a widespread assumption that we’ll see the welcome return of a ‘normality’ defined to include “growth” in the economy. The big change looking forward will, we’re assured, be the replacement of climate-harming oil, gas and coal with renewable energy sources, primarily solar- and wind-power.

This aside, almost everything else is going to be ‘more of the same’.

In reality, this consensus narrative of the future is based on the big two fallacies of our age. One of these is that the economy is a financial system, such that we’re assured of growth in perpetuity by our control of the human artefact of money.

The other is that there are no limits to the capabilities of technology, potentialities often extrapolated to and beyond the constraints of physics.        

We cannot know quite how much of this is believed by governments, or whether they ‘know, but don’t say’, that most of it is implausible. Businesses and the general public seem to have bought into this narrative.

Energy reality

The facts of the situation, as we understand them here, are that the supply and the ECoE-cost of energy determine material prosperity, and that this equation has been turning against us over an extended period.

ECoEs – the Energy Costs of Energy – have been rising relentlessly, passing (during the late 1990s and early 2000s) levels at which Western prosperity ceases to grow, and then starts to contract. The EM (emerging market) economies have now reached the ECoE thresholds at which their prosperity, too, turns downwards. 

The factor driving ECoEs upwards has been the effects of depletion on the fossil fuels which continue to supply four-fifths of the energy used in the economy. It might or might not be possible to replace fossil fuel energy quantities with dramatically increased supplies of renewables (REs), but it certainly cannot be assumed (and is indeed implausible) that these can reverse, or even stabilize, trends in ECoEs.

Thus stated, the challenge is enormous. Prior growth in Western prosperity per person went into reverse at ECoEs of between 3.5% and 5.0%, with the same seemingly happening to EM countries at ECoEs between 8% and 10%. Prosperity per capita has already turned down in Mexico, South Africa, Argentina, Brazil, Chile, Saudi Arabia and Turkey.

The SEEDS model puts the ECoEs of fossil fuels today at 11.9%, up from just 2.6% as comparatively recently as 1990. The modern economy was built on fossil fuels with ECoEs at or below 2%. The ECoEs of REs, now close to parity with fossil fuels, are continuing to decrease, but may never fall much below 10%.

Financial fiction

The history of the past quarter-century has been one of trying to use financial tools to overcome the non-financial consequences of energy deterioration.

From the mid-1990s, the authorities adopted ‘credit adventurism’. After this failed in 2008-09, they doubled down with ‘monetary adventurism’, which has now reached its culminating point of failure.

Without a doubt, the search is now on for ‘gimmick 3.0’. Beyond a few shrewd guesses, we cannot know what form this latest ‘fix’ is going to take – but we can be sure that it won’t work.

We can’t ‘fix’ an energy economy with financial tools, any more than we can ‘fix’ an ailing house-plant with a spanner.

When setting out scenarios for the future, we start with two unfortunate inevitabilities. The first is that we’re going to get poorer, a trend that is by no means new, but that has been disguised thus far by financial manipulation, which has masked – whilst it hasn’t ‘fixed’ – an economy drawing rapidly towards the end of an era of growth made possible by low-cost fossil fuels.

The second is that, empowered by the hubris of assumed ‘economic expansion in perpetuity’, we have built a financial system wholly predicated on growth. It takes no great leap of the imagination to see that the financial system, as currently configured, cannot survive.

The authorities are now faced with the alternatives of prolonging financial stimulus to the point of the hyperinflationary destruction of the value of money, or reining-in stimulus, such that asset prices crash and defaults cascade through the system.

It’s by no means clear that the authorities even have the power of selection over which of these outcomes transpires. The idea that they can finesse this situation using policies which are neither too loose nor too tight does not merit serious consideration.

The household predicament

Ultimately, what happens to individuals and households is of greater fundamental significance than what happens to other sectors of the economy. After all, governments, whether democratic or not, are answerable to the public, whilst businesses are wholly dependent on the willingness and the ability of consumers to carry on buying their products.

The obvious conclusion is that households will get poorer, a trend that is already firmly established in the West. Thus far, this process has been gradual. As of 2019, the average American was 6.6% poorer than he or she had been back in 2000, whilst British prosperity per person had fallen by 10.6% since 2003.

Unfortunately, comparatively modest rates of deterioration in top-line prosperity have been leveraged by continuing increases in the cost of essentials, such that, at the discretionary (ex-essentials) level, prosperity fell by 31% (rather than 6.6%) in the United States, and by 29% (rather than 10.6%) in Britain. As discretionary prosperity has fallen, discretionary consumption has continued to increase, but only because of the huge amounts of credit poured into economies around the world.           

From these observations, we can infer that discretionary consumption will fall sharply, as soon as the credit-based, growth-predicated financial system falls apart. This is going to be extremely unpopular, and can be expected to shift the basis of political debate towards economic issues and away from all non-economic topics of debate.

At the very least, we should anticipate increasing demands for redistribution, combined with a shrill insistence that governments should “do something” about the rising costs of essentials. The latter may be taken to mean calls either for regulation and subsidy, or for the outright nationalization of a string of industries.

Taking ‘from the rich’ is a panacea of very limited practical value. Apart from anything else, the wealth of ‘the elites’ is largely paper in nature, and is likely to fall rapidly as asset prices correct downwards in response to belated recognition of economic reality.

A particular concern must be that, as Westerners’ discretionary prosperity fades away, people in the world’s poorer and middle-income countries will find it increasingly difficult to afford even basic necessities. An indicator to watch here will be the global cost of commodity foodstuffs including grains and rice, costs which are closely connected to ECoEs through the energy-intensive nature of food production. Tellingly, the UN FAO’s Food Price Index was 39.7% higher in May 2021 than it had been a year earlier. The same energy connection applies to the cost and availability of water.

If conditions worsen in many of the world’s less affluent countries, one consequence is likely to be an increase in migration flows.

The need for knowledge

As remarked earlier, it’s far from clear how far any of this is understood by governments. Thus far, and conditioned in part by the coronavirus crisis, we can only observe an apparently increasing tendency to stifle dissent, and to strengthen governments’ powers of control. 

An optimistic reading would be that governments will come to terms with the reality of a world economy shaped by energy (and shrinking), rather than governed by money (and growing). A big concern here has to be continued reliance on failing methods of economic interpretation, which in turn means that conventional economic models are losing credibility.

An implicit responsibility falls on those of us who understand the economy as an energy system, particularly where, as here, we can use models to quantify developing trends.

To inform debate here, the following tables set out the critical economic and financial parameters for the economies of America, Britain and China. All are drawn from the SEEDS economic model (the Surplus Energy Economics Data System).

Factors common to each include the rise of trend ECoEs, the slowing (and the subsequent deterioration) in aggregate prosperity, and the ongoing decline in prosperity at the per capita level.

In each case – even in China – discretionary prosperity per person is falling, a factor that will be of critical importance once the subsidy of financial manipulation reaches its point of failure.

As of 2019 – that is, before the covid crisis – aggregate debt already stood at 358% of prosperity in America, 349% in Britain and 513% in China. Greater concern should be prompted by even more extended ratios applying to broader commitments represented by financial assets (which, to a very large extent, are the liabilities of the government, corporate and household sectors).

Both sets of parameters show every sign of soaring to levels at which the financial system implodes. Not included in the tables here are levels of public expenditures which are becoming unsustainable, when measured, not against the increasingly misleading metric of credit-inflated GDP, but against prosperity.

Space dictates that these tables, like the interpretations suggested here, can be no more than summaries, but it is surely clear that decision-makers, in particular, need to ditch false perceptions of how the economy actually works, and adopt techniques which quantify the true scale of the challenges now looming.

137 thoughts on “#202. The shape of things to come

  1. Scary times indeed, we really are running out of road. Throughout history people have longed for a magic bullet to save them from problems (often of their own making) and today’s most popular version is ‘technology’. Even intelligent people I have spoken to, explain using say the example of industrialisation, by stating ”a new technology allowed a whole new range of activities to exist and massive productivity gains resulted”. When I point out that they could only work if a concentrated energy source was available, they say well the tech found or refined the fuel, it becomes a circular disagreement, they wont see it because they’re wedded to the hope of a similar future salvation.

    Well, here’s one technology you predicted would be a false dawn on the basis of the energy fail and govt. intolerance alone, perhaps showing China leads these days, so may already be top dog:

    https://www.theguardian.com/world/2021/jun/07/china-blocks-cryptocurrency-weibo-accounts-in-judgment-day-for-bitcoin

    • there is a magic bullet actually, simplification and delayering sufficient to fit within the boundary of the 10% ECoE provided by renewable energy harvesting,

      we have an energy budget that we need to learn to live within,

    • @ Matt, I totally agree with going back to the simple living that most of the world’s population still does today, it would at least buy us time for a non-lethal descent, I’d call that pragmatism though rather than a ‘magic bullet’. But most people in the neoliberal zone of the planet (practising Cake-ists) want to continue mindless consumption and a system designed to waste, with no penalty for doing so.

      In an intriguing article, CHS makes the case that this might be changing though after people have had a forced taste of slower living during the lockdown period(s) https://www.oftwominds.com/blog.html

    • In a sensible world, we’d be cutting back on some forms of consumption, channelling legacy energy from fossil fuels into developing REs, and trying to work out how to ensure that the necessities are available and affordable for all.

      CHS is a very astute observer, and I always read his articles.

  2. Dr Tim, thank you for some very clear pointers. I like the phrase ‘Gimmick 3.0’, which captures perfectly the political modus operandi. In relation to the UK, and I’d be interested in Mark Meldon’s view here, I cannot help but think – and I may be wrong – that the decline in household prosperity was cushioned – has been masked – considerably by redress for the mis-selling of PPI (Payment Protection Insurance). I suspect that PPI redress lays behind the surge in new car registrations of recent years, and the consumption of other high-value items.

    • I think you’ll find all the new vehicles are sold using finance packages utilising the very low interest rates,
      cars are advertised as a monthly payment, not a total price,

      this is why people living pay check to pay check can still appear affluent so long as they can keep up their monthly payments,

    • Indeed. It might be possible for some to believe that we can live indefinitely on ever-expanding, subsidised credit, never paying it back, and periodically replacing at-risk debt with newly-created money, and that none of this risks destroying the value of money. Or one can face the reality that money is a potentially-infinite claim on a finite economy, with pricing (i.e. inflation) the interface between the two.

    • Matt, sorry, I should have made the point that most cars are funded by way of PCP, but I believe these schemes require a deposit. I wonder to what extent PPI-redress facilitated trading-up to SUVs etc. etc? It amazes me that around Colne, where the average wage is well below the county, regional and national average, the sheer number of SUVs etc. and recent registrations. I run a second-hand 10-years old Ford Focus that does the job just fine, and I walk into town as much as possible, but I feel like an anomaly. Last week we saw a friend who has just ‘bought’ a new car, and yet with retirement on the horizon they were wondering how they could manage! The co-existence of apparent ‘wealth’ and looming impoverishment was striking.

    • Kevin, the “PPI Bonanza” has pretty much petered out. Oddly enough, I bought two replacement cars on Friday. They are small, 3-year old Fiat’s with low capacity petrol engines and we bought for cash, which we have saved for this very purpose over some years, having owned our current, pretty much worthless, current cars for ten years. The car salesman, who was most sincere(!), said that 80%+ of all new and used car sales this year have been based on credit, mainly “PCP”, which he thinks is nuts. The dealership sells several brands, and the point was made that individuals just look at the “monthly cost”, not the overall cost of the finance package based upon a fast-depreciating “asset”.

      He understood the difference between nominal and real returns/costs, unlike the vast majority of the UK population.

      The salesman was honest enough to say that many customers were “renting” vehicles far beyond their “normal means” and don’t consider the costs of consumables, like tyres and service bills when they look at the gleaming SUV’s and pick-up trucks in the showroom. Indeed, one of the cars we have purchased was a “PCP Repossession”, apparently. He also had quite a lot to say about the ever-increasing costs of EV’s and the lack of supply, because of the global microchip shortage.

      Living in a rural area, we pretty much have to run two (small) cars, as there is little in the way of useable public transport.

      I feel rather boringly sensible about this matter.

    • @Kevin, you’re onto something there, I remember saying something like that to a friend a few years ago, who made out it was a ridiculous thought, then I saw this from the BBC website: https://www.bbc.co.uk/news/business-25635819

      Another question that follows is how much of an effect it had and for how long, I think it would really help at the personal individual and local levels at least and nationally for a while, no matter how fleeting the period. (It also shows what people might do if gifted helicopter money)

    • Mark, thank you for your observations. When I bought our current limousine from a dealership I was shocked by the immense pressure to take a PCP, and all the associated ‘add-ons’ in the form of specific insurances etc. The salesman had learned his lines well, and he worked the Powerpoint presentation on his laptop with real style, but eventually I had to say to him: “Forgive me, but what part of the word ‘No’ do you not understand”.
      We had saved-up a car fund and that did just fine, and he couldn’t understand why I didn’t wish to borrow money against a depreciating asset. Eventually, he gave-up, but not before I had to sign a document that effectively admitted that I was a simpleton, and too thick and stupid to know what I was doing in rejecting their wonderful financing offers. To be fair, on the Customer Feedback I awarded him top marks for effort!

  3. “As discretionary prosperity has fallen, discretionary consumption has continued to increase” – can you explain this more? Are you measuring “financial prosperity” or “material prosperity”? Surely if consumption increases, this is the very definition of material prosperity?

    As a one-time physicist, I don’t doubt your modelling or your base assumptions, but I wonder if we have to tighten up on language. A lot of these statements or conclusions seem somewhat ambiguously worded, and I wonder if there is enough “play” in the wording to allow people to read into your conclusions whatever they want (i.e. to justify to themselves the continuation of the status quo). But technical language is no good either because it switches people off…

    I also think its important to be more clear in differentiating between commentary and analysis of what has happened up to now, and predictions and expectations of what will happen next.

    • On the first point, “discretionary prosperity” is calculated by deducting ‘essentials’ from ‘prosperity per capita’. What it reflects is the ability of the average person to make non-essential purchases without using credit. As I’ve made clear in earlier articles, the cost of “essentials” is a development project.

      “Discretionary consumption”, on the other hand, is a measure of how much people actually spend on non-essential purchases. The difference between this and discretionary prosperity is credit. This isn’t just household borrowing but aggregate, including government and business borrowing.

      On language, my self-chosen guideline is that something should be comprehensible to a person who is ‘intelligent, but not a specialist’. It can be a tricky call between baffling some people and seeming to talk down to others. My method is to write as though it’s a conversation with an intelligent but non-specialist person. I dislike jargon.

      I hope that the distinction between past and current observation, and future projection, is usually clear. The tables in this article, and charts often used in others, should help.

  4. Hi Dr Tim,

    Many bloggers aware of the enegy issue seem to see a crash in the incoming months (one of the most convincing argument I’ve seen is the guy counting oil rigs in production…) and people seem to be looking right and left how to hedge their bets.
    I know you cannot give financial advice as you pointed many times here that this is something quite regulated. But can you still give some general guidelines as how to frame one’s thinking on the subject of investment?
    Thanks
    Best regards,

    • This is a tricky one. Personally, I’d really like to write something about investment principles, and i think it’s fair to say that I’m probably reasonable equipped, by way of experience, to do this.

      But it’s really a question of time & resources, with so much that needs to be done.

      On your broader point, I’ve noticed that some people are talking more about collapse – this might be becoming more widespread, though there have always been some who are wholly persuaded on this point.

      Where the authorities are concerned, there seems to be an assumption that, if we put post-covid recovery, plus technology, plus ‘green’ growth’ together, we have a formula for rapid growth. My question would have to be, though, if they believe this, why are some (notably the US) so keen to carry on with high levels of stimulus?

      All I can do is follow the logic and the evidence. What we need to look out for now are compounding effects, where underperformance in some countries affects others, and the same happens between industries.

      Everything tells me that we’re living in a never-never land in which monetary stimulus, at gargantuan levels, somehow fuels “growth”, and where highly inflated asset prices make people relaxed about taking on yet more debt.

      If there really had been solid, genuine, organic growth at anywhere near the claimed levels since 2000, far from going ever further into debt, we’d probably have reduced it. In other words, the “growth” narrative and the extent of credit dependency do not match.

  5. also I was wondering if you had the graph in bottom for France too?

    Thx very much.

    • Would you mind adding it like you did in a previous post the NZ chart?
      I think it would be interesting to see the French trend in comparison with others. Like you stated in other posts, it is the advanced country with the largest drop in prosperity when taking into account taxation increase. Thus I was curious if conditions in France were going to still be more prone to spark yellow vest type of revolts (relatively to other advanced countries)

  6. From the above: “The authorities are now faced with the alternatives of prolonging financial stimulus to the point of the hyperinflationary destruction of the value of money, or reining-in stimulus, such that asset prices crash and defaults cascade through the system. ….. It’s by no means clear that the authorities even have the power of selection over which of these outcomes transpires.”

    Dr. Morgan, I think you have made it clear in past comments that the authorities will try to prolong financial stimulus until they cannot. My interpretation then is that the central banks cannot allow an economic recession in the traditional sense to ever happen again, and that central banks liquidity measures will continue until the current western dominated financial system breaks catastrophically in some way. (And subsequently a geopolitical and financial reset. )
    Have I got this roughly right?

    It is interesting then to contemplate what forces might be beyond the central banks to control. Ultimately of course, it will be geological forces. For proximate more causes, some possibilities: oil “repricing” for the west and sustained higher price levels, geopolitical black swans, threats to fiat currencies from cryptocurrencies, Food price rises around the world, social instability in countries in the periphery of the system from diminishing prosperity, exacerbated from western central bank money creation.

    This morning, I saw this headline: “Three dozen candidates in Mexico executed during recent national elections”

    But, for now here in the U.S., the U.S. S&P 500 Index continues to trade pretty much in tandem w/global liquidity. Both are trading near record high levels. If you can ignore the headlines on certain social issues, and the fact that we are living borrowed money, life seems pretty good.

  7. Dear Tim,

    Thank you very much for your most interesting analysis.

    I would appreciate if you could explain how China can have an Energy Cost of Energy lower than the US in 2020 and in subsequent years.

    Best regards,

    John

    • I don’t know what answer Dr Morgan will give, but I would expect China’s ECoE to be lower because they use so much coal, which still has the best energy return of the fossil fuels.

      The US has gradually converted a lot of coal use to natural gas, which is far cleaner and more flexible for many uses, from electrical generation to home heating, but has a lower energy return than coal.

  8. Thanks as always for a coherent essay. I notice in your tables of US/UK/China that prosperity( both aggregate and p/capita) rises from 2020 to 2025 before beginning to decline. Does that indicate that the brick wall we’re going to hit is half a decade away? Hard to believe…

    • As things stand, aggregate prosperity is still growing, slightly, but by less than population numbers.

      Of course, we’re only getting full 2020 data now – more surprises etc than usual to be factored in – so revisions are always possible

      And, obviously, 2020 was a distorted year, which is why I also included 2019 as a more useful basis for future comparison.

    • And, I assume, these numbers represent a situation without disruptions such as a collapse of the financial system? In other words, they reflect a smooth progression on the current trajectory without the impacts of a systemic breakdown.

  9. Thanks Dr. Morgan. I’ve been following your posts for a while now and your analysis makes good sense to me. BTW, I am a retired environmental geologist who at one time did wellsite geology in oil & gas exploration.

  10. Thanks for another coherent piece. I take seriously your stating the implicit responsibility we all have to spread this message. When I’ve approached my political representatives they have asked for a brief (1 page) paper. The content of such a paper is contained within your writings. But we might each craft it differently and maybe not how you’d like it written. This is my long way of wondering if you have created such a one-pager?

    Related is the need for brief talking point we can each use in different conversations. Again, these are here and there in your posts (i.e., economies are energy systems not financial systems, what EcoE is and that it’s relentlessly rising, implausible that RE can assume the role of fossil fuels at the latters current throughput). But if you have a consise set that you use, then I know that I’d benefit having access.

    If not – I know you’re busy- then perhaps we readers can begin sharing out our own collected text?

    • Hi raymond,
      have you looked on the Resources tab at the top of the page?

      the report TPSI 009 Perfect Storm is a comprehensive primer,

      I must say I’m a bit crestfallen to hear politicians want single page summaries,

    • Hi Matt,
      Thanks. I have used the Resources tab. The material there is great and I have my students read some pieces as an introduction.

      But decision-makers usually ask for a “briefing” (or, actually, if they are high enough up the system then a member of their staff does the asking). I’ve found that the longer the brief, the less likely it gets read. Once introduced to the issue(s) then they sometimes ask for more.

      I think this is the nature of their business: many requests/demands for action and too little time/attention to get up-to-speed. I’ve thought that the notion here parallels how Tim explains why SEEDS is presented in monetary term (rather than say in BTUs or Joules); As much as we may wish otherwise, the dollar/pound is the language of the current decision-makers. Likewise, the briefing paper is their way of learning what’s what.

    • Being a natural pessimist (!), I wonder if there is any point. When I studied a Geographic Information Systems course some years ago, we had a guest lecturer talking about a large project he had been involved in. A very expensive GIS project using satellite imagery, funded by UK government. It purpose was to back up the government’s position on something to do with hedgerows, the environment, agriculture – and subsidies. I don’t remember the details as it was a while ago.
      After huge amounts of money the department was up and running and the first data came out. The real life data did not support the government position. In fact quite the opposite. The GIS department was immediately closed down. The government position did not change.
      I don’t think politicians, economists etc have any interest in anything that does not agree with their preconceptions.

  11. Dr Tim,
    A superb “essay” yet again.
    I cannot believe any of the recipients of the Nobel prize for economics presented superior work.
    I assume government advisers have been following the “science” of these laureates.
    Hence the erroneous path which has been followed for far too long.
    I have begun reading “Bright Green Lies” a recently published tome on the renewables scenario.
    Do not know yet whether it contains any useful ideas. Certainly it is useful for rinsing the greenwash.

  12. We tend to think that wind farms, heat pumps and solar panels will, in the future, be the main substitutes for fossil fuels and that nuclear fusion is an impossible future source of energy.

    However, Governments are spending huge amounts on such prospects.

    I wonder if there is anyone on the forum, with a good knowledge of physics, who can explain that their efforts may be futile?

    • I’m not up to date with this area but my understanding is that we know how to do fusion, in practice as well as in theory but the “ECoE” is well over 100%. So the challenge is how to reduce the energy inputs and increase the energy outputs. People concentrate on the question of whether the ECoE will ever dip below 100% – (though of course they don’t frame it like that, its framed as “getting useable energy out of the system”). We can see from Dr. Tim Morgan’s work here that merely getting below 100 would not be sufficient if it is to be of any use.

      I would also say that the plant and equipment is by its very nature extremely complex and sophisticated, requiring a huge amount of raw materials, metals, magnets, etc. etc. none of which is factored into the “whole life” ECoE considered above. This does not bode well given the analyses presented here that technological and social complexity arises out of abundant (fossil fuel) energy

      And then there’s the whole question (assuming we have developed our materials handling to get the ECoE down to something useful) of how to scale it up to make enough plants big enough to have a meaningful impact on world energy demands. What unexpected side effects would there be in terms of waste stream from decomissioned plants, or any other unexpected kind of pollution or resource depletion? Compare with fusion, which is a mature technology with a lot of experience in practically using it, yet no-one seriously thinks that enough new fission plants can be built to supply the majority of global electricity requirements, let alone non-electric energy requirements.

      And finally a question – how much of the spending on fusion is “pure research”? Cosmologists and particle physicists can learn a huge amount about the nature of matter from running controlled fusion experiments. Maybe energy production is good for headlines and getting public money but irrelevant to the actual work?

    • %wally
      I do not have a great knowledge of physics but having read more of the book “Bright Green Lies” ( Jensen,Keith & Wilbert) many of the myths of green energy are well and truly debunked. The data they quote to back up their case is remarkable in its extent and relevance.
      As Dr Morgan has exposed the weaknesses of the current “financial “ economic model these authors have similarly exposed the weaknesses of the current “environmental “ economic model.

  13. As always an interesting analysis. Post 2000 governments have become ever more ingenious in devising new financial ‘gimmicks’ to avoid a perceived crash even when one is occurring. Keeping the housing market buoyant and house process going ever upwards seems to have been key to this and when 66% of the population are home owners (including both outright owners and those with mortgages) this is not surprising, especially as the older you are the more likely you are to own your own home and vote. The 33% who rent have been squeezed by ever higher rents and stagnant wages whilst those with property have been able to offset deckling real terms prosperity by borrowing against their inflated property prices, releasing equity in various ways and though rental incomes from extra properties, Air b & b and so on. A reset in house prices would severely restrict the access of the 66% to cash and credit to support their life styles. Governments could devise various new gimmicks such as backing mortgages in ways which would effectively mean the state owned a significantly portion of the housing stock, but whilst this would smooth a decrease in house prices it would limit the ability of many to ‘profit’ from home ownership. The 66% at this point would start to get very grumpy.

  14. Thank you Simon for your detailed analysis.

    Human invention is a tremendous asset, as we have seen with the vaccine projects, but some tasks may be impossible.

  15. Dear Tim,

    May I then suggest that you post revised Energy Cost of Energy numbers for China and the US.

    Net energy being the basic source of long term prosperity, those revised numbers are likely to have an impact on the rest of the data.

    It might also be useful to post ECoE figures for all the countries where you have data on a single tableau so that one could readily visualise data on a comparative basis and comment,

    Best regards,

    John

    • Thanks John, certainly something worth considering.

      Yesterday the global debt numbers for end-2020 were pubished, so I’m a bit ‘up to my ears in work’ right now.

  16. Richard Heinberg and Janine Benyus
    I have too many books to read, and too little time to do it. But during a lull this AM, I dipped into this relatively short interview with Richard Heinberg about the themes in his new book, Power:
    https://www.resilience.org/stories/2021-06-08/what-could-possibly-go-right-episode-43-richard-heinberg/

    And Dave Pollard’s current post reminded me of my long-standing appreciation of Janine Benyus work on Biomimicry…doing things with simple, non-toxic atoms to create conditions conducive to life.

    So I pre-ordered Heinberg’s new book, and began to read the downloaded chapters. I’ll be brief. Heinberg pursues in novel ways the whole idea of Power. His thesis is that power manifests in different ways, which are both complementary and also competitive. That is, if we pursue physical power to its ultimate limits, we are likely to destroy social power and beauty. So the trick for an individual human, a family, and a society is to balance the various pursuits of power. Benyus gives us a lesson in pursuing the beauty of economy that Nature exhibits if we pay attention. Which also generates physical power without the repercussions of the use of fossil fuels. So, for example, figuring out how to actually achieve renewable agriculture would go a long way toward redressing the problems we have made for ourselves with the profligate use of power in the last couple of hundred years.

    Fortunately or unfortunately, I believe that modern financial capitalism simply cannot survive the raw limits being imposed by resources, and is inconsistent with the balanced pursuits that Heinberg recommends.

    The news this morning in the US is that Democrats and Republicans have joined together to agree to put more government money into research…trying to close the gap with China. Yet I will guarantee that whatever they fund will have nothing to do with Biomimicry, and everything to do with continuation of BAU. Somehow, we Americans have become enamored of ‘top down’. The supermarket check out magazines are gushing about the British royals, and everyone seems to want to shovel more money at Bezos and Musk. It ain’t the democracy I grew up with. The future will be very different, but whether we get their willingly or in the form of disastrous collapse remains to be seen.

    Don Stewart

    • It ain’t the democracy I grew up with.

      Yes it is, but we are of an age where the bad parts have receded into the mists. Remember the assassinations, the Cold War, Vietnam, McCarthy, Korea, Goldwater, Reagan, stagflation (and Volker crushing it with recession), Eisenhower’s interstate highway system, and on and on?

      The democracy we grew up with had some bright spots, but was generally about the same as today. As today, the US never took the lead in turning away from economic growth and living within the earth’s natural limits. And when we were growing up it would have been so much easier to do. I do get nostalgic for things like the atmospheric CO2 concentration of 317 ppm (1960). What a waste.

      In terms of opportunity cost, the post-WW2 years were some of the most expensive in history. Even then plenty of people were shouting warnings. As today, the US democracy didn’t listen. The more things change …

    • As you’d expect, I come at this from an economic point of view.

      In some ways, 1945-70 was a ‘golden age’. Globally, ECoEs seem to have been at or below 2%, and big oil discoveries in the Middle East were now on stream. At times in the ’60s, global oil and gasoline consumption was growing at annual rates as high as 6-8%. Car ownership was spreading rapidly, and all sorts of new domestic appliances were becoming available. In 1950, having a TV was still pretty unusual, and they were B & W, and they had to ‘warm up’ – by 1970, colour TV was becoming mass-market. All of this was a very far cry from the Depression era.

      As of 1945, the US was roughly 50% of the World economy, and was the World’s biggest creditor. There seem to have been ‘can do’ attitudes, and a feeling that the industrial power which won the war could now ‘win the peace’. For all the other problems, “good” was seen to have triumphed over “evil” in 1945.

      There seems to have been a similar kind of optimism in the early 1990s, after the collapse of the USSR. In the background, though, ECoEs were rising and “secular stagnation” was starting.

      To say that economic fundamentals were good at any particular time isn’t to say that these benefits were used wisely, of course.

    • “COINTELPRO (syllabic abbreviation derived from Counter Intelligence Program) (1956–1971) was a series of covert and illegal[1][2] projects conducted by the United States Federal Bureau of Investigation (FBI) aimed at surveilling, infiltrating, discrediting, and disrupting domestic American political organizations.[3][4] FBI records show COINTELPRO resources targeted groups and individuals the FBI deemed subversive,[5] including feminist organizations,[6] the Communist Party USA,[7] anti–Vietnam War organizers, activists of the civil rights movement or Black Power movement (e.g. Martin Luther King Jr., the Nation of Islam, and the Black Panther Party), environmentalist and animal rights organizations, the American Indian Movement (AIM), independence movements (such as Puerto Rican independence groups like the Young Lords and the Puerto Rican Socialist Party), and a variety of organizations that were part of the broader New Left, and unrelated groups such as the Ku Klux Klan.[8]”
      https://en.wikipedia.org/wiki/COINTELPRO
      From 1945 the United States attempted to overthrow at least 50 governments, many of them democracies, and to crush 30 popular movements fighting tyrannical regimes. In the process, 25 countries were bombed, causing the loss of several million lives and the despair of millions more. (Thanks to William Blum’s Rogue State, Common Courage Press, 2005).
      The US also set up torture school in Panama City before moving it to Fort Benning, Georgia.

  17. Pingback: #202. The shape of things to come – Olduvai.ca

  18. @Joe Clarkson
    I think that the kind of Midwestern populism I grew up in, and has been represented by Thomas Frank in recent years, WAS very different from what we see now. That populism was without doubt racist and nationalist. The solution to the ‘black problem’ was Liberia…send them back to Africa from whence they came. Of course, we didn’t have any ‘black problem’ where I lived simply because it was still dominated by the European stock who came in during the land rush late in the 19th century and early in the 20th century. The response to the previous overlords in Britain was Andrew Jackson and New Orleans, 54-40 or fight, and opposition to Lend-Lease. Deep suspicion of Wall Street and the Railroad monopoly by local business leaders. Small farms everywhere with cussedly independent farmers but deep lessons learned from the Dust Bowl. Frugality and deep suspicion of debt. That was the world that the generation born before WWII grew up in. I left that world to move to a different social climate in 1958, in a much larger town in Texas and a very significant population of Mexican-Americans…many of whose families were as old as European settlement in the US. In 1965 it was on to Greenwich Village in Manhattan and discovering the polyglot culture of Washington Square where you were whatever it was you wanted to be. But political power manifested when I was almost run down by a police horse while eating an ice cream cone on a corner, with John Lindsay (a ‘liberal’) apparently trying to drive certain people (like me?) out of the city. It became clear to me that the populist democracy with lateral equality wasn’t going to work in a place like NYC. So my ‘solution’ which I thought worked very well in my childhood seemed more and more remote. I found it again working on a small farm in the early 2000s, with a remarkable group of kids 50 years younger than me. What counted was what you could do with the crops and the tools and how you worked together, which was consistent with the long ago of northern Oklahoma. But the disconnect was how to exist in the commercial environment of 2005, which became a slam dunk in 2007 and 2008, and then was again marginalized by the ‘courage to act’ delusion. I think that the survivors of whatever comes next are going to rediscover the virtues of that long lost world, without the racism… but probably with a healthy dose of localism… and I hope without the military adventurism.
    Don Stewart

  19. I find the Propublic Tax report to seemingly confirm that part of the middle class prosperity/wealth is being eaten up by taxes.

    “While Bezos’ wealth has grown astronomically over the last decade and he’s paid a minuscule fraction of it in taxes, a typical American household paid more in taxes than it accumulated in wealth.”

    https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax

  20. UPDATE

    Now that we have full global debt data for 2020, it’s possible to calibrate underlying or ‘clean’ (C-GDP) economic output for 2020.

    Most countries numbers come in largely as expected.

    – China’s numbers are markedly better than projected (if countries were stocks, this would rate as an ‘analyst upgrade’………)

    – UK numbers are even worse than forecast (a ‘downgrade’).

    The sharpest falls in C-GDP were 1. Spain, 2. Britain, 3. Argentina and 4. India.

    I’ll hope to elaborate on this in a future article.

  21. Taxes and the Rich
    From the New York Times, today, thanks to the leak:
    To take one example, Bezos’s wealth soared by $120 billion from 2006 to 2018, and his federal taxes during that time amounted to only 1.09 percent of the wealth gain. The situation for the average household was radically different: Its taxes amounted to more than 100 percent of its wealth increase.

    A central reason that very wealthy people can avoid taxes is that the U.S. system taxes only so-called realized gains — like wages or stock sales. But the wealthy often live off unrealized gains — in the form of stocks and other assets that grow more valuable over time. The wealthy borrow against these assets to pay for houses, islands and private planes and then use a variety of strategies to avoid paying taxes on the debt repayment.

    One such strategy is waiting until after death to repay the loan — or what Edward McCaffery, a tax expert at the University of Southern California, calls “buy, borrow, die.” Robert McClelland of the Tax Policy Center called it the main revelation of the ProPublica story.

    The story also notes that Bezos, in one year, reported so little income that he was entitled, and claimed, a 4K child tax credit.

    Don Stewart

    • I remember when a certain well-known lady in NY said that “only fools and poor people pay taxes”, or words to that effect.

      The revelations are unpleasant. In fairness, though, the supposedly enormous gains over the past year are paper gains, not cash, and are quite capable of reversing if markets slump.

  22. Fed…the apparent wealth gains by the super-rich while the rest of us lost ground is simply a mirage created by the bubble we blew…because it seemed like a good idea at the time???

    • The Fed is obsessed with pushing stock prices up, and the UK does much the same with property prices. Neither policy makes any sense at all. Why the Fed does this is a matter of opinion, though the much-vaunted “wealth effect” isn’t persuasive.

    • Fed comments (several members) the past year indicate that they realize that they have created a monster. Yet they are between a rock and a hard place. They will taper purchases at some point, and eventually raise overnight rates. Much depends on the extent of defaults and on global economic performance. Viagra doesn’t last forever I’m told…

    • Indeed so. If they raise rates, markets slump, collateral is impaired and defaults cascade through the system. Has anyone asked whether, given the sheer size of the debt mountain, it’s even possible to raise rates?

    • I expect it will be by 1/8th% to test the waters. Should cause a correction in equities, but maybe not a crash.

    • Tim Watkins is very good – I’ve only had time to skim-read this one yet, but it makes a lot of sense.

      I still can’t see how inflation can be avoided, in the UK or globally. SEEDS interpretation, reinforced by the latest data inputs, is that the UK economy is remarkably weak. This ought to be deflationary, but other trends more than offset this.

    • Just heard on the radio an advert which suggested working from home has higher energy and other costs . The company in question cannhelp you with settling your bills.
      Is this Greensill (the despicable bankrupt supply chain financier) for the masses?
      When you think of it , we have all been kicking the ball (containing the ECOE )
      down the road since the 70’s.

  23. Tim Watson on how those of us who cautioned for intelligence-led responses before just knee-jerk locking down the population and setting off a cascade of problems in the real economy (that could only snowball with added time) were shouted down as uncaring:

    https://consciousnessofsheep.co.uk/2021/06/08/how-to-ruin-your-economy/

    So, 15 months on, with the economy staggering and gutshot, there is still no indication that we will ever be governed by anything other than continued media poll reactivity and opportunities for the generation of unregulated, lucrative state tenders to the politically connected. And as usual, some are quietly getting even richer: https://www.theguardian.com/world/2021/jun/11/us-health-agency-gives-innova-lateral-flow-covid-tests-scathing-review

  24. Thanks Tim, you are on a roll.
    One question I have is as we all get poorer how are we going to buy all these electric cars. My last car cost 4000 and hopefully will last a good few years. I can buy a car for 1000 and it will last a while. How many electric cars will I be able to buy in say 5 years for 4000? See BBC article about death of petrol stations.

    On another point. It has been asked if the politicians know or how much they know. Well if they do know but don’t say they are the best actors ever. Our Fin Min (Ireland) certainly gives no hint that he has a clue. I cannot believe he would be able to hide this as well as he does. So my take is they do not know or want too.
    Thanks again Richard

    • Thanks Richard.

      These two issues are linked – if decision-makers really understood the issues as we discuss them here, they wouldn’t be pushing the case for EVs as strongly as they are. There are serious questions about quite how environment-friendly EVs really are; about whether (and how) we can supply enough power; and about whether we can resource the transition with the required material inputs. A better solution might be to mandate smaller, all-hybrid cars whilst pushing for public transport in general, and electric trams and rail in particular, as steps towards reducing reliance on cars.

      It’s perfectly possible, in theory, for politicians to ‘know, but not say’ that the economy is a decelerating energy system, but there’s scant evidence for this proposition. Investment decisions make it clear that big business either doesn’t get, or doesn’t believe, the conclusions that we reach here about economic deteriorating caused by a weakening energy dynamic.

    • Danielle Dimartino Booth Interview

      Danielle was pretty close to the Fed inner sanctum for a while. You will have to draw your own conclusions, but I think ‘clueless about the big picture’, but ‘perceptive about a lot of mechanisms I don’t really understand’. At any rate, she is alarmed….Don Stewart

    • Don:

      Latest numbers from the Bureau of Labor Statistics show American CPI inflation over the past year at 5.0%. Together, the figures for March, April and May give an annualized rate of 8.1%. There are solid, long-standing reasons – hedonic adjustment, substitution, geometric weighting, etc – for thinking that CPI, not just in the US but elsewhere too, understates consumer price inflation. In any case, CPI and similar measures ignore asset price inflation, which is soaring.

      With US inflation at 5.0%, ultra-high risk ‘junk bonds are the only investments giving yields that are positive in real terms.

      The official line is that inflation is “transitory”, but the official line also described ZIRP and QE as “temporary”, and they’re still with us, thirteen years on.

      My RRCI measure is still at the development stage, so I use it tentatively. But it puts US comprehensive inflation at 5.2% in 2020, and indicates 6.6% for 2021. (It also shows a dramatic surge in UK inflation in 2020, but seems to be postulating very severe deflationary pressure this year. Even the official GDP deflator for 2020 is 5.7%).

      I always try to give other interpretations, including official ones, due consideration. There are some transitory elements in the current situation, but these are at least offset by pressures elsewhere. The administration seems bent on full-bore stimulus, and I doubt the Fed can stand out against demands for cheap money, as and when markets start falling.

      In short, I’m convinced inflation is real, here and now. If monetary GDP rises far ahead of underlying prosperity, with ultra-loose monetary policy accounting for the difference between the two, then inflation is a logical outcome. Additionally, if we recalibrate velocity by using prosperity instead of GDP, far less comforting results are produced.

  25. “No energy store holds enough energy to extract, collect and utilise an amount of energy equal to the energy it stores.
    No energy system can produce sum useful energy in excess of the total energy put into constructing it.
    This universal truth applies to all energy systems.
    Energy, like time, flows from past to future”.

    • @Rumalai @Dr Tim

      I think the following quote from the Economist shows how the march of the ‘energy blind’ has been kicking the ball down the road (or up the garden path ) as it slowly deflates with decreasing surplus energy.

      “THE GREEN REVOLUTION RISKS RUNNING SHORT OF MATERIALS, MONEY AND PLACES TO BUILD”

      It is not a “risk” . It is an inevitability .
      Nowhere is running short of surplus energy mentioned in the statement.

  26. while politicians pay lip service to concerns about the economy, finance, the environment and transition away from fossil fuels, I get the impression that what concerns them most is the rise of China, the Sino-Russian co-operation and the possibility of the trans Atlantic partners losing overall global dominance, geo-politically and within global institutions,

    we seem to be building to some sort of showdown where the West feels it is obliged to defy China otherwise it will have to acknowledge it,

    it’s neccessary to keep juicing up our flagging economies and financial systems with funny money to maintain a facade of geo-political dominance,
    economic power usually equates to the ability to project military power,

    we seem to be in a situation very similar to the 80’s where the US was ramping up pressure on a hollowed out USSR, whilst China was sidelined,
    but this time the situation is reversed, a hollowed out US is ramping up pressure on a pretty solid and resurgent Russia and a China that seems to be reaching it’s zenith,

    the G7 group is comprised of the countries that are all in a bit of a sticky position,
    all the action seems to be within the G20 group where the G7 members are losing influence,

    I’m afraid the current wrestling for overall control and reluctance for dialogue and mutual co-operation is pushing all other issues to the sidelines and contaminating their considerations with tawdry politics,

    I don’t think ‘backing down’ is in Washington’s vocabulary and we won’t be able to move on with important matters until this penis waving contest is concluded definatively,

    the one advantage of a collapse of the Western financial system and all of it’s economic ramifications is that it would undermine the US position sufficiently to force it to the bargaining table,
    I’ve no wish for collapse or desire to live through it, but pride and hubris seems to be driving us in that direction,

    we are in a bizarre Cold War 2.0, it is currently overriding all other considerations.
    we are all pawns trapped in a Great Game.

    • I’ve no wish for collapse or desire to live through it

      I do. I think collapse is essential for the living planet and generations of humans to come. And I do wish for me and my family to live through it (survive it).

      I have no desire to experience collapse because it’s going to be horrible. But putting off the absolutely necessary because it will be uncomfortable or even dangerous is something we learn to avoid on the way to becoming responsible adults. Don’t we?

      Some things can’t be avoided and just have to be endured.

    • “while politicians pay lip service to concerns about the economy, finance, the environment and transition away from fossil fuels”

      Let me dismantle that for a moment.

      – I think Western politicians really don’t understand the economy, and still think it’s a money-powered perpetual motion machine, with which all problems can be ‘fixed’ with monetary intervention.

      – They may or may not recognize that the financial sysem has become dysfunctional, but are unable, politically, to do anything about it, and hope that the aforesaid ‘perpetual growth’ will resolve it.

      – I think they do understand the environmental issue and the fossil fuels problem, but come at both problems from the mistaken standpoint of perpetual expansion. Environmental awareness has seemed both belated and reluctant – otherwise, obvious measures (such as smaller cars, hybrids and some constraint of air travel) would surely have been put in place at least fifteen years ago.

      On the question of collapse, the better alternative might be ‘managed decline’, but this can’t be adopted unless de-growth is recognized, and the public prepared for what this means.

    • I’m in favour of a managed decline,
      I suppose growing up in the 1970’s and living through those oil shocks, seeing Jimmy Carter on the TV,
      having a father who would put the car into neutral and coast down the hills to save a bit of petrol,
      I may have lived in times when slowing down and backing off on the accelerator were seen as common sense,

      I don’t think a managed decline would be hard to sell if the rationale was explained properly,
      I’ve known all my life that fossil fuels were finite and oil would eventually run out,
      I can’t see it being a shocking revelation for the general public.

    • “I don’t think a managed decline would be hard to sell if the rationale was explained properly,
      I’ve known all my life that fossil fuels were finite and oil would eventually run out,
      I can’t see it being a shocking revelation for the general public.”

      I think the problem with getting most people to understand lies in the subtlety of ECoE and the knowledge of physics which, while not hard, still exceeds most people’s interest.
      Managing the future will (eventually) require strong and informed leadership.

    • I’m not sure whether it’s a problem of comprehension or a reluctance to face facts.

      For instance, we’ve known about environmental challenges for a long time now. Why aren’t all cars hybrids, of no more than 1.5 litre, and where’s the investment in public transport to reduce car use? None of this is even difficult.

      The principles of the surplus energy economy are simple enough – ‘all economic output is energy’; the role of ECoE; and ‘money as claim’. The evidence for the failure of the current interpretation is surely overwhelming, in the sheer scale of the financial gimmickry required to make it look viable.

    • I can’t counter that, Tim. Very succinct.

      And the reluctance to face facts (a.k.a. Heads in the Sand) explains why people will not understand what they don’t want to understand.

      So even the most important decisions in the world are made with emotions rather than with reasoning backed by hard science.

      It could be interesting to hear from any readers who were BAU-believers but have come to SEE: there must have been an emotional process in the change.

    • Thanks Martyn

      Apart from how obvious this surely is, the frustrating thing is that we’re still making decisions based on the wrong precepts.

      Here are just two examples.

      First, if we understood the energy reality about the economy, we’d be investing in public transport, not conversion to EVs.

      Second, political leaders woud be working out how, in the future, we could ensure that the essentials – household necessities and vital public services – can be made accessible and affordable for all.

  27. @Matt
    Half a cup of oil
    Richard Heinberg makes a statement in his book about a dollar being equivalent to a claim of a future half cup of oil (don’t quote me on the details).
    Now the thought occurs to me that the surplus energy producing countries (e.g., OPEC Plus) and those with positive energy electricity systems (e.g., maybe France and Russia if it gets its closed cycle nuclear plants working) could issue future claims on oil and electricity. So one could, for example, buy a portfolio of future claims on oil and electricity from companies in the business of creating usable surplus energy. That is not about collecting interest of financial speculation…it is about storing value for future use. Very useful in a Degrowth Economy. I doubt that it is feasible for wind and solar, but I could be proven wrong.
    Don Stewart

    • I do not believe in “positive” electricity,much as I would like to.Not only are there energy losses in any system but we don’t yet have everlasting materials for construction of whatever forms of electrical generator you can envisage.
      I do think that Russia with it’s relatively large oil/gas reserves is in a very strong position. China which has extracted and very effectively utilized tech knowhow together with it’s commodity harvesting in many geographic zones is also in a very strong position.

    • @Jomelco…then we are back to the Physiocrats…land is the store of value….Don Stewart

  28. @Dr. Morgan
    In the US, I would add the government’s cynicism that, through the mechanism of the reserve currency, we can always make the rest of the world pay for our needed infrastructure…fuels, materials, labor, etc. So Biden’s goal at the moment is to stop the momentum of China and Russia. China is a particular threat because the Belt and Road initiative is being paid for by the Chinese trade surplus with the US. Real assets are, in effect, flowing from the US to the Belt and Road recipients, by way of China. That is intolerable to Washington.

    Don Stewart

  29. @Dr. Morgan
    @Dr. Morgan
    One more additional comment on the environmental issues. Obama’s science advisor recently wrote an op-ed (I think it was the Wall Street Journal) which said that ‘climate science is far from settled’. So the advice Obama was getting was probably something along the lines of:
    “It may be a threat, so relatively modest goals like the California car mileage standards and some subsidies to wind and solar are fine, but don’t bet the farm on it”
    And:
    “Make noises about CO2 but support fracking”

    A very recent event in the climate science space illuminates the uncertainties. There has been some press about the ‘models showing increased sensitivity of the ecosystem in terms of higher projections of warming’. That turns out to be a recalibration of the effect of clouds. We’ve known for a long time that high thin clouds with ice in them reflect sunlight back into space, but that low, wet clouds hold heat close to the surface of Earth. By fiddling with cloud projections one can make the models more or less sensitive. Somebody decided, with how much justification I don’t know, to fiddle with the models. Which probably was a factor in Obama’s advisor writing his op-ed.

    From official Washington’s standpoint, the central point of everything has to be ‘Washington Number One’. So the Pentagon will warn about rising seas flooding naval bases (e.g., Norfolk, VA) and destroying assets but also talk about the opportunity to go to war with Russia to claim the oil under the Arctic ice. In both scenarios, they get more money.

    I don’t know about the EU or Britain, but I don’t see too many adults in the room in the US.

    Don Stewart

    • ” I don’t see too many adults in the room in the US.”
      I agree, Don. But I add that dishonesty is required by many to get to high places in DC. (political and bureaucratic-appointees.) Corruption runs deep. Simply look at Obama, an organizer for the downtrodden in his formative years. Immediately after leaving office, he began living the life of a multimillionaire.

    • Hi Steven,
      Obama’s sudden apparent wealth did surprise me,
      but it seems to be down to rather generous book deals,
      The Audacity of Hope and Dreams of my Father provided handsome advances,

      now Penguin Random House are giving him a $65 million advance for his Presidential memoirs,
      I’m not sure who would want to read them though?

  30. More sobering numbers Dr Tim, thanks very much.

    It seems most folks are fooled by appearances and their ability to go below the surface of what they happily call the “real world” is almost non-existent. I find the vehicle of the riddle to be very effective in encouraging greater understanding.

    So who is up for a good old-fashioned riddle?

    In terms of capital, I am in the top 0.1%.
    Now I have never stolen any money nor won any.
    I have never married into wealth nor been left any.
    And I have never done a days work in my life, so what gives?

    I have posed this question to 1000’s of people face-to-face over the last 40-odd years and no one has ever “got it”.

    The answer, as with all riddles is so simple. I’m using the word “work” in a scientific way as taught to me at the age of 14 or so and to understand the riddle you simply have to remember that appearances are often deceptive. For instance, in the late 60’s when I started work my boss would have said I was a typical hard-working member of his team of engineers because that is what it looked like to him, the other members of the team, my family, friends, girlfriend, but below the level of appearances is another world which I like to call the real world.

    You see in the real world for each ft.lb. of work I did in the office I needed 10,000,000 ft. lb. of work in order to support my lifestyle. So I was in fact only supplying 0.00001% of the work needed to support my self and yet that 0.00001% paid me enough to buy the other 99.99999% of what I needed, almost all of the rest of the work was of course done for me by fossil fuels. So when asked what work I do for a living I have replied for over 50 years now that I have never done a stroke of work my whole life long. It invariably leads to some “interesting” conversations!

    [I should say at this point that my 1:10,000,000 ratio was down to the fact that I’m an outlier. My job involved almost no physical work combined with the fact that I was in training to be selected for the UK orienteering team so each w/e I would be at a regional event anywhere from Bodmin Moor in the SW, to the Highlands of Scotland, to Co. Down involving lots and lots of 4 star (petrol/gas). At the other end of the scale the man digging a hole in the road with pick and shovel and spending his w/e shopping with the wife or watching some football would still be only putting in only 1% of the work needed to support himself, he too could be said to be doing no work.]

    The trick here is to never be fooled by appearances or indeed what anyone tells you about “the economy” but always take refuge in your schoolboy physics. I have found it to be the only safe and secure refuge in a vast ocean of opinions. My own economic model (circa 1968) which I called the “Meccano Clockwork Motor No.1” model came about because I had noticed how all my Meccano models ran slower and slower as the clockwork motor ran down and I assumed the world economy would run slower and slower as cheap fossil fuels started to run out at the turn of the new century. My model pointed to total societal collapse around 2010. Not bad modelling for a 21-year-old right?
    I think we all have to take our hats off to all the clever people who have kept it going for so long while at the same time bringing to mind the next 10,000 generations to who we are leaving absolutely nothing.

    [1:10,000,000 is fairly incredible right? Why not work out your own ratio and maybe find you did even less work than me?]

  31. I think we’re all saved. I tripped over this https://xlinks.co/ on LinkedIn. Shipping DC power from photovoltaic arrays in the Sahara to Blighty is the obvious answer to our energy needs (and zero carbon too) .. what could go wrong? Nothing complex here Joseph Tainter: no vast tonnage of materials and minerals to be mined across the surface of the planet, no fossil fuels needed to build it and maintain it, no new factories needed to manufacture all of the panels, inverter systems, storage systems, cables. No fossil fuels needed to string the cables across the sea bed. All self sustaining: enough energy created to create new panels, new inverter systems, new storage systems new cable and enough to recycle (100% of course in the brave new circular economy) all of the end of life components which will all last no less that 25 years in some of the harshest conditions on the planet .. and then lots of surplus energy left over to power a growing economy. Not one more ounce of carbon turned into Co2. Upside is that there will be lots of local jobs, e.g. wiping sand off of the panels. And there was me thinking we might be screwed.

    • Gee, I’m surprised that they didn’t add “organic” to the spin.;-)

    • What could possible go wrong? A nice target for ISIS or any government that decides the solar panels on its territory belong to that country and up the prices.

    • I assume there’s a hefty dose of sarcasm in your commentary? I’m all in favour of CSP in appropriate locations, even though results thus far aren’t all that encouraging. But the resource and fossil fuel requirements involved in building and maintaining this kind of project would be enormous.

    • can I draw a distinction, PV is photovoltaics, using sheets of semiconductor to convert sunlight into electricity,
      making the semiconductor is the really high energy, high resource, hi tech expensive bit,
      they’re really developed for space programmes,

      CSP is concentrated solar power, my preferred method is to use a parabolic reflector and focus the concentrated solar heat on the hot cylinder head of a Stirling Engine, this then drives a generator for electricity or a water pump for irrigation,
      the whole thing tracks the sun from dawn till dusk like a radio telescope dish,
      Dish Stirling has proven as efficient as the best PV available,
      it’s a lot cheaper and simpler to build, the Stirling Engines are about as complex as a modern motorcycle engine to make, have very long service lives because they are an external combustion engine, they are refurbishable and recyclable as are the parabolic reflectors and their frames,
      you could build units that would run for 50 years,

      and it’s hardly new technology;

      the Stirling Engine was conceived is 1816 and rivalled steam power in certain applications for a century,
      Philips of Belgium were making a Sirling generator set in the 1950’s.

      you can also build solar updraft towers, a permanent structure with the wind turbines at the inlets in the base being the only moving parts,

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

      again, hardly new technology considering Leonardo da Vinci envisioned and illustrated an example 500 years ago, several experimental projects were built over the 20th century,

      for some reason all the investment goes into sexy looking Star Trek stuff and the simple practical stuff gets underfunded.

    • My point was meant seriously, but I guess couched in terms which made it look flippant. My fear is that some solutions to our predicament are likely to make it worse. If we throw some of what remains of our FF resources at solutions that have negative energy returns, then we surely are in a worse situation. I think Tim Watkins uses a term along the lines of ‘Non-Renewable Renewable Energy Harvesting machines’ to describe wind and PV; which sounds about right to me. Much of what I have read over at Alice Friedman’s Energy Skeptic blog leads me to believe that these are sinks not sources. Regards

  32. For all interested or requiring further convincing , Tim Watkins ( Consciousness of Sheep ) has issued a further commentary on the inflation situation.

    • Yes, very good indeed.

      His final line – “the collapse of almost all non-essential mass consumption is inevitable” – chimes with what, based on SEEDS analysis, I’ve been saying for a long time. My view is that discretionary (non-essential) *prosperity* has slumped, and that discretionary *consumption*, now far in excess of prosperity, has become hostage to the continuity of credit expansion.

      This raises an interesting question, though. If Tim and I are right about this, the future for businesses supplying discretionary goods and services is grim. So why haven’t their share prices slumped?

    • It is very sobering to see most people have now dropped into the precariat. Some of my formerly middle-class acquaintances already qualify, they just don’t realise it, thinking it’s just temporary until they get a better job again or are ignoring the mounting debt they carry to hold onto the same standard of living. Ditto those doing bullsh*t or otherwise meaningless jobs, like working for companies who do vile things to society and not admitting it in public.

      I’m guessing that the price of shares in companies selling unecessary products whatever those may be, is being maintained by institutional buyers in an automated fashion, like pension funds, QE programs, insurance companies. They would just buy according to a formula, but even money-managers from funds or down to individual financial advisers probably don’t see this end stage scenario. Many intelligent people I know throw a comfort blanket on the whole subject if I bring it up, saying every generation has it’s fears and is convinced the world might end, like the nuclear war scare back in the day.

    • @Dr. Tim – “Why haven’t their share prices slumped?”

      I think the answer is one of the ironies of thinking in terms of valuations as compared to thinking in terms of prices. Higher valuations imply lower long term returns. So as real global returns approach zero I’d not be surprised to see prices approach infinity.

      This relates to thinking of money as claims or promises.

      The economy can coast in denial, believing future goods and services will exist to satisfy expanding claims to infinity until such point at which real goods and services are not available in the present. This same point coincides with the realization that money is essentially worthless in the future.

      I think political decisions will determine whether it ends in a whisper or a bang. I’m personally predicting first the former, then the latter, due mainly to ignorance and social collapse preventing cooperation.

      I think surplus energy reaches terminality when there is nothing to produce which is worth more than the cost of the inputs of production. To land, labor and capital we have to add energy. Labor can be shorted a long time in the face of increasing energy costs, but eventually either (a) labor will accept austerity willingly, (b) be forced to accept austerity, or (c) collapse the system through political action which could look like voting for doomed policies, or rebellion – both with the misguided notion of better tomorrows.

    • @theblondebeast
      Your summary of the situation is credible.
      I tend to think of the analogy of kicking a ball down the road.The ball is full of surplus energy (not money as some seem to believe) and obviously through time
      the ball is steadily deflating . Maybe a little simplistic. Certainly Tim Watkins phrase non-renewable renewable energy says the same in words.

    • It remains remarkable to me that decision-makers simply *assume* – no ifs, no buts – that REs must be a quantitative and qualitative, like-for-like replacement for FFs. Where’s ‘plan B’?

    • I think that an important factor here is that most people have no idea of the sheer amount of energy that the global economy/society is consuming. It is all very abstract to most people, they have never seen an open-pit coal mine or the oil tankers in Saudi Arabia or the tar sand sites in Canada. Almost nobody really knows that the global daily oil consumption is 100 million barrels – daily, not monthly or yearly. And the amount of 100 million barrels is so huge that it is almost impossible to grasp it. And then people see some solar panels here and there and think that this will do it. A fundamental lack of education in the areas of physics and engineering. And then there is the recent observation that over the last 15 or so years the fraction of FF has remained constant at 80%, which is an increase in absolute terms. Very surprising to many people that all the RE sources deployed are just additive and do not replace any FFs (but, rather, make FFs cheaper and more easily available for other uses). Perhaps REs should only be allowed to go online if at the same time a corresponding amount of FFs is removed?

    • Well said, Martin. It would be feasible if births matched deaths. Unfortunately overshoot of population continues, and technology is additive to demand as well. Techno-optimists think that increased efficiency lowers demand for energy. in individual operations that happens (like higher MPG in cars the past half century). But more cars were driven more miles, and people bought more gizmos, ate out more, travelled more… Jevons observed that a long time ago.

  33. For the same reason…
    https://wolfstreet.com/2020/11/11/my-pickup-truck-car-price-index-for-2021-models-crushes-official-cpi-for-new-vehicles/

    Luxury goods such as SUVs can be bought on credit which obscures the inflation in the prices. Meanwhile, the aggressive hedonic adjustments to the Consumer Price Index suppress social security payments and other payments tied to the CPI (formally or informally). The makers of the luxury cars thrive while anybody foolish enough to make ‘basic transportation’ will fight for their life. Meanwhile, people living paycheck to paycheck can feel good about themselves for having an enormous truck to drive around in.

    The volume of vehicles is declining, and the average age of the fleet is increasing, but the price per vehicle is still increasing rapidly and profits per vehicle sold are high.

    What might stop this trend and reverse it? Rising interest rates would do the trick, I think.
    Don Stewart

  34. Why Don’t Boards Get It?
    Bloomberg surveyed directors of Fortune 100 companies and found that 1.2 percent had any credentials in terms of energy or conservation. Other specialties such as water were much lower. So is it any wonder that Exxon Mobil is alarmed that non-traditional directors have been elected to its Board, and is it any wonder that few Boards ‘get’ ECoE?
    Don Stewart

    • As far as I can see, virtually nobody ‘gets it’ about ECoE. Conventional, money-based economics has failed, but hardly anybody ‘gets’ that, either.

      From c 1997 to 2007, the ‘fix’ for faltering growth was cheap and abundant credit. After that failed, it was cheap and abundant money. That’s failing now, and I’m certain the search is on for what I’ve called “gimmick 3.0”. ‘Stimulus’ remains ‘the solution’, especially in the US.

      There somehow (a) ‘must’ be a solution, (b) it ‘must’ be financial, (c) it ‘must’ deliver ‘growth’, and (d) it ‘must’ preserve the status quo. Unfortunately, there’s no ‘must’ about thermodynamics, or about the loss of the fossil fuel dynamic which has driven economic expansion.

      Energy is an important issue (and rightly) in environmental terms, but not in economic terms. Businesses keep developing new ways of *consuming* energy. Investors keep backing companies supplying discretionary goods and services.

      Since the 1990s, outcomes – as attested by recourse to credit and monetary “adventurism”, and by the lack of ‘gimmick-free’ growth – keep proving that the economy is an energy system, not a financial one. Business, the media, financial markets and governments still think that conventional economics works, with its promise of growth in perpetuity.

    • I have been and continue to be surprised at the slow “diffusion” of the vital insights of energy economics into the cognizance of our elites, in business, government, and academia. I remember back in the early 2000’s There were two representatives in the U.S. congress who constituted the “peak oil” caucus. They were Rep’s Roscoe Bartlett of Maryland and Tom Udall of New Mexico. I even heard my own Senator Evan Bayh late one night on C-span, talking about the perils of resource and energy depletion. Then it seems that everyone was seduced by the charms of fracking and “endless” supplies of shale oil, and the false promises of renewables. And even this small group of resource-aware politicians went silent. I understand that there is no appetite for bad news among modern citizens in the U.S., but will any leaders emerge with real insights and persuasion talents? Or will we just blindly descend into conflicts and wars without ever really knowing why?

    • This is a subject to which I’ve been giving a lot of thought – I can’t comment on individual politicians, of course, but I think the story has ‘moved on’, and that there might be an explanation in that. Your’re right, of course, “that everyone was seduced by the charms of fracking and “endless” supplies of shale oil, and the false promises of renewables”. But let’s also look at how things have changed.

      Think back to, say, the period 2000 to 2005. There’s emerging recognition both of environmental risk and, for want of a better term, of “peak oil”. Back then, this meant fewer cars, more public transport, but not a lot else changing.

      Now carry this forward to 2021. In the interim, we’ve had QE, ZIRP, and such massive increases in debt, other obligations and asset prices that we’re no longer talking about a bit of inconvenience (like fewer cars), but about the fate of the financial system.

      Over that same period, infusions of cheap credit and cheaper money have powered huge expansion in credit-funded discretionary consumption. Whole sectors and fortunes have been built on that. “De-growth” puts all of this at risk. It’s hard to remember that, back in 2000, the terms ‘oligarch’ and ‘billionaire’ were new, and largely confined to Russia.

      Then there’s politics. Economic debate has largely disappeared from politics in recent times. Economic policy failed in the GFC, with politicians largely abdicating from the economic arena, and putting the conduct of economic affairs into the hands of central bankers. Political debate now centres on a gamut of non-economic issues. The system is stacked against any advocacy of socialism, whilst capitalism, in any meaningful sense, has ceased to exist since returns on capital collapsed.

      We’re now very deeply into “extend and pretend”. Both “credit adventurism” and “monetary adventurism” have failed, but both bought time. During that time, a lot has changed, and the stakes have been raised. This is why I’m so sure that the search is on for “gimmick 3.0”, essentially a way of preserving the financial system and buying some more time.

      It’s said that, when the first European ships appeared off the coast of central America, the locals “couldn’t see them”. Their eyes were working fine, but their minds couldn’t process what they were seeing. This may or may not be true, but it’s a good analogy for a political – and public – inability to “see” the implications of the deteriorating energy economy.

    • I agree there has been credit adventurism and when this wasn’t enough they started on monetary adventurism,
      but there always has been credit and the ability to print more money, it’s the adventurism bit which is the gimmick, pushing an existing thing to the extreme,

      if that is valid then the next gimmick is likely to be an already existing factor that is pushed to the extreme,

      can I suggest perception management,
      where at a background level everyone is strategically economical with the truth but now we are seeing the truth being stretched to the extreme, large scale media management and dissenters being smeared or shut down,

      all along the perception management has been increased but now the credit and monetary adventurism is running out of road all that’s left is telling increasingly unrealistic stories in as convincing a manner as is humanly possible?

      the final gimmick is denial of reality and disappearing into a world of sheer fantasy?

    • @Matt
      What might be the ‘punch in the face’ that Mike Tyson referred to? Dmitry Orlov thinks it is loss of the dollar reserve currency. He asks ‘why did Biden ask for a meeting with Putin?’ Whatever Biden may think privately, the extreme anti-Russia rhetoric and legal maneuvering in the US cannot be undone, particularly with Trump beating his drum in the background…e.g., the US would be fine if Biden would just blow up Nord Stream 2 and force Europe to buy US fracked gas. According to Dmitry, those European countries most adamantly opposed to the use of Russian gas are lining up to get some from Germany. The Russian finance minister said in the St. Petersburg Economic Forum:
      “We are not moving away [from the dollar] voluntarily, we are being forced to do it. But when we do so, a certain system of international relations with our partners takes shape—outside the dollar zone.”
      Dmitry thinks the US standard of living will fall to 10 percent of its current level if the petro-dollar system fails. So his theory is that Biden came to Geneva to suggest that he will use the powers of his presidency to get out of the way in Europe…in return for some sympathy from Russia in terms of the reserve currency.

      I think two things:
      *The loss of the reserve currency would be equivalent to the fall of the USSR and the resulting death from suicides and alcoholism. Maybe worse.
      *I don’t pretend to know what Saudi Arabia thinks, but it seems to me that so long as they accept the dollar, and bring along the rest of the Gulf states, the reserve currency may be leaky but it won’t collapse.

      There are undoubtedly people better equipped to make guesses about the reserve currency than I, but it may be worth keeping an eye on the issue as having the potential for the ‘punch in the face’.

      Don Stewart

    • Hi Don,
      I don’t think it’ll be a punch in the face,
      it’ll be more like the last straw that broke the camels back.

    • @Matt
      The Last Straw scenario would be like Britain losing control of Middle Eastern oil to the US during WWII. The Punch in the Face scenario would be like the failure of the Ghost Dances for the Plains Indians in the US. It took Britain a long time to accept that their world had irrevocably changed. The Plains Indians were deeply demoralized and, arguably, never recovered.

      The parallels with the Ghost Dances is intriguing. The dance was supposed to make one invulnerable to the bullets of the Cavalry and bring back the bison. Sort of like the Federal Reserve???
      Don Stewart

  35. I have a few questions about how ECoE is calculated for RE. Presumably, it must be based on ERoEI. Does it account for Solar PV ERoEI being <1 in high latitude countries? Does it account for the need for backup power supply for a wind farm, say? I.e. the need for fossil fuel backup when the wind is low? Do you assess the ERoEI of RE when energy storage is included? An ECoE of 11.9% is a bit meaningless without knowing what is included and what is not. Comparing the ERoEI of a wind turbine to the ERoEI of a coal powerplant, is comparing apples to oranges. The later will generate power that matches demand. The former will not.

    • Charles Hall has written on the topic of the EROI of PV. His books can be found here https://www.esf.edu/EFB/hall/ . The conclusion seems to be that they are at least positive, but unlikely to be adequate to maintain modern industrial civilization. I have seen a comment on Amazon that says the data used in the book about the Spanish PV ‘experimen’t are dated, but even accounting for incremental improvements in PV efficiency it’s unlikely that his conclusions on EROI are way off the mark.

    • It seems that there is no need for a backup electricity supply when the wind is not blowing as there will be ‘demand management’ which will ‘optimise’ the system. Also known as variable pricing, which will make electricity so expensive you cannot afford to use it and if that doesn’t work – cut off your supply. If there is no demand there is no shortfall. Problem solved.

  36. I’m on a journey and my thoughts are continuing to develop through the writings of Dr. Tim and the many erudite commentors to this site, and I would like to express my gratitude and thanks to all of them for helping me along the way.
    I think there are four things that I have come to accept and appreciate:
    First, the economy as an energy system.
    Second, the huge amount of energy that is required to power the complexity of that system.
    Third, the concentration of energy in FF is just incredible.
    Fourthly, RE will not replace FF on a like-for-like basis of input-output and will not restore ERoEI to anywhere approaching a level that can support BAU.
    It’s tempting to say that something will have to ‘give’ – I think the process is already well underway, and quite a few things are already ‘giving’.

    • @
      I am also on this Journey KevinC, and as a Physicist/Engineer, I lay claim to having a good understanding of the Energy aspect of things. It is the ‘Economy’ aspect which can be puzzling, but I put that down to that being a human construct which is not governed by the laws of Physics.
      As you point out, something “will have to give”, I think that is evident to most of us here. It is the dynamics of what and how this something is going to give that intrigues me, and which I must confess I do hold a sort of morbid fascination for.
      Taking your points just a step forward, I can see how RE can “replace” FF in the first round. However, these RE sources have a finite lifetime, so what is going to produce the second generation RE’s once they reach End of Life, and when there is no more FF to ( economically ) make RE’s with ?

    • Johan,

      It is pretty much agreed on this list and by all but extreme techno-optimists that RE cannot replace FFs. 80% of exosomatic energy is still by FFs, with RE’s just being additive. Demand keeps rising even faster than population. Globalized economies will cease growing as FFs decline in availability. Trade will slow.

      Nuclear is being ramped up in Iraq which has plenty of oil:

      https://newsrnd.com/business/2021-06-18-because-of-blackouts–iraq-is-building-eight-new-nuclear-power-plants.SJXGBlcjO.html

    • @Don Stewart,
      Had a brief look at the link.
      Certainly some suggestions that the ECOE is understood by the author.

      May I raise the subject again of the book “Bright Green Lies”. It is such an amazing source of data relating to the interface of energy and environment.
      One of a myriad of points raised by the author is related to the quantity of sand required in constructional activity. Dubai , which one might assume had limitless amounts of sand “locally” , imports sand with huge energy costs , since they do not have the CORRECT type of sand.
      Mind you , the UK is about to import beef from Australia ( under a new trade deal) because we apparently do not have enough locally produced . That is when you realise the PTB are totally ignorant of the energy basis of any economy even as they spout about Net Zero.

  37. A Few Thoughts About Gail Tverberg, Jorgen Randers, Emeren Meyer, Albert Bates, and ECoE
    Gails’ current post gives us the data on how badly Randers’ forecast of oil consumption missed the mark. Gail’s theory, in my estimation is:
    *the economic system is inflexible..pull out one of the sticks and the house collapses
    *depletion is reducing the amount of oil that the inflexible economic system can produce
    *consequently, power is declining (energy per unit of time)

    Randers and many others assume that because of the energy density of oil (and coal), we will use them to exhaustion, which is far in the future. Oil and coal are, any way one looks at it, very attractive compared to a horse or a human. Consequently, emissions and global warming and air pollution will continue to rise indefinitely. Not to mention the Maximum Power Principle so beloved of militaries.

    Meyer tells us that, for our own health and the solvency of countries trying to pay the medical bills, we must renounce much of that which fossil fuels have enabled. We now understand the underpinnings of true health, as we did not in Meyer’s childhood, and we need to learn from the good parts of his childhood while renouncing the bad parts (e.g., castles made out of sugar). Meyer’s program greatly reduces the use of fossil fuels throughout the food cycle, and increases health, thus greatly reducing much of the complexity currently being funded with fossil fuel energy.

    Albert Bates understands the necessity for living on solar energy, and agrees with much of Alice Friedemann’s ‘wood world’ scenario. Albert promotes ways of using wood which both provide for human necessities (but not 10 billion humans) while also generating modest amounts of electricity and producing bio-char (which sequesters carbon) as a by-product which increases agricultural productivity.

    The correct way to formulate our mathematical model is to consider how rapidly we might move in the direction of Meyer and Bates, given the enormous resistance which would inevitably come from the military, the civilian governments, and 99 percent of the businesses. A rapid reduction in the wasted overhead (all those expenses incurred needlessly, according to Meyer) which puts a lid on the ECoE which we can tolerate. And how rapidly could we implement a ‘one child’ policy globally? And how can we form villages which are based on a wood world while sequestering carbon? Avoiding small-brained calculations of how many horsepower are in a barrel of oil and projecting historical trends.

    Don Stewart

    • Don,

      Odds are extremely slim that simplicity will be voluntary. I’ve ben researching this for over three decades. Experts such as William(Bill) Rees -Ecological Footprint, member of The Club of Rome, Rex Wyler-physicist and co Founder of Greenpeace, are members of a small list I co-own. Ugo Bardi -Chemistry prof., member of Club of Rome, ASPO member, and dozens of that caliber also agree with me on this.

      MPP is not primarily about about military power. It is about the natural drive in all life forms to replicate, increase energy throughput, and expand niches. Dee:

      https://www.ecologycenter.us/ecosystem-theory/the-maximum-power-principle.html

  38. Guys, nobody was trying to ‘get it’ and sort it.
    It comes upon us.
    All those temples, and some are drive thru coffee lanes now,
    all that scheming, we got report-level rise.
    Curiously no culture solution – way to go!
    Each day has its motives, for each our dissipations lead us forth..
    Strange to think we could manage the future when the past is so fraught…..

    • The people who do “get it”, and there are many, should always keep in mind the fate of a certain daughter of King Priam, ruler of Troy.

  39. Solar Energy
    The current weather forecast for Raleigh, North Carolina, is 3 days of partly cloudy and 5 days of cloudy over the next 8 days. This is not unusual. We have recently had forecasts of 8 straight days of cloudy. This is the peak insolation time of the year. How many solar panels would you estimate that it will take to replace the aging nuclear power plant that supplies our electricity?

    It’s not that our ‘solar capacity’ is low. It’s that the temperature today is supposed to peak at 94F (34.4C) with periods of sun and periods of clouds. A living arrangement which depends on solar (e.g., a house not designed for passive thermal control, no mountain stream to cool off in, foods requiring refrigeration, etc.) will die and go to Heaven during a period of time like this. Plenty of native Americans lived here without benefit of electricity. The early colonists from England and Scotland also made do…the King’s Governor had a mansion…but no electricity. My strong suspicion is that we should be helping our children learn how to live well ‘without’.

    Don Stewart

  40. Hello Mr Morgan
    Heard your interview by James Howard Kunstler on his podcast. Very good, I would say even better than your writing, which is hard to beat. I’m going to listen to the podcast a couple of more times to get every bit of your distilled wisdom about what’s coming. Keep putting the message out!

    Best regards Philip

  41. Who’d fund some work on the EROEI of relatively ambitious energy efficiency measures? Probably higher than wind or solar and justifying more policies to favour deployment as fast as possible. I did some rough calculations for a particular thermal insulation measure about 8 years ago. It looked to be over 30. However,

    The problem with implementing renewables with EROEI ~8-10 at a rapid rate is that the net energy output of the programme is zero or negative for quite a long time. Chapman at the OU did similar work on nuclear 45 years ago – when everyone was concerned about what happened after oil and gas – and showed that these problems were serious.

    People then stopped proposing large nuclear power programmes. Mainly though I think this was because they were so uneconomic. It was not because a rapid rate of deployment used up all the energy output of the first few plants in building the next plants; most people didn’t understand energy any better then than they do now.

    Decades later, the problem has returned and is much more acute. We didn’t use the period when the EROEI of our fossil fuels was ~50 to build up the technologies we need after fossil fuels.

  42. Pingback: The shape of things to come, I'm afraid - Radix Think Tank

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