#223. Trading with the (common) enemy


The tragedy unfolding in Ukraine, as well as being horrific in itself, has brought us face-to-face with a brutal fact whose reality we’ve always, hitherto, managed to ignore.

This fact is that the world has become accustomed to a standard of living that its energy resources can no longer support.

This is as true of, for example, China as it is, more obviously, of Western Europe. Indeed, once forward trajectories – and the all-important matter of ECoE – are taken into account, the United States has the self-same problem.

Neither can we assume that countries favoured with extensive indigenous energy resources are insulated from this problem. It simply isn’t possible for Russia – or, for that matter, for the oil-rich states of the Middle East – to pull up the drawbridge and let the rest of the world ‘freeze in the dark’.

The people of Ukraine are the obvious victims of this crisis, but the hardship being inflicted by the underlying issue stretches, in varying degrees, into most corners of the world.

Westerners – hit by rising living costs, and fearing that their trinket-laden lifestyles and their penchant for foreign holidays may be receding into the past – might spare a thought for citizens of the world’s poor and poorest nations, where the harsh realities of energy constraint are already showing up in the worsening unaffordability of food and other necessities.   

The current crisis is bringing us ‘up close and personal’ with a string of fundamental issues.

First, the emergence of energy constraints is destroying the long-favoured illusion that we can enjoy ‘growth in perpetuity’.

To paraphrase Kenneth Boulding, idiots and orthodox economists might continue to believe in the tarradiddle of infinite growth on a finite planet, but the rest of us have to face facts.  

Second, our efforts to pretend otherwise have inflated the global financial system to a point of extreme vulnerability.

Third, we can’t use the magic of money, or the alchemy of technology, to resolve the twin challenges of resource scarcity and environmental degradation. 

This time IS different

Many might be tempted to think that ‘we’ve been here before’.

Back in the 1970s, the Oil Embargo and the Iranian Revolution starved much of the world of petroleum, setting off sympathetic rises in the prices of other fuels, and triggering a severe combination of economic stagnation and soaring inflation.

Some observers now seem to think that, just as the Western world survived the oil crises, we can similarly brush off the effects of this latest threat to the reliability of affordable energy supplies.

The fundamental difference is that global ECoEs – the Energy Costs of Energy – are drastically higher now than they were back in the 1970s.

Superficially, at least, the effects of the oil-induced stagflationary crisis of the 70s are reasonably well-understood.   

First, it put an end to the super-rapid rates of oil consumption growth that had characterised the post-1945 world. Remarkable though this may now seem, there were times in that post-war period in which consumption of petroleum grew at annual rates as high as 8%. 

Second, the crises created the incentives for the development of new sources of oil in non-OPEC regions, most importantly in Alaska and the North Sea.

By the early 1980s, a new generation of far more fuel-efficient cars had reached global markets. Oil had become recognised as a premium fuel, and was ceasing to be used for substitutable activities such as the generation of electricity.

The oil market was subject to transitional (though lasting) over-supply from new sources. Arguably, OPEC over-played its hand by propping up prices in the first half of the 1980s.

Oil markets crashed at the end of 1985.

This, coincidentally or not, was also a period of significant political change. The doctrines variously described as “Thatcherism” and “Reaganomics” claimed, and for the most part were given, credit for an economic revival which, in reality, was the product, not of market ‘liberalization’, but of the downwards leg of an artificially-distorted long-cycle in energy supply.

The critical point, though, was that the ECoEs, both of oil and of energy generally, remained at levels low enough to facilitate continued economic expansion. The resource backdrop to the oil crises of the 1970s was that ECoEs remained at or below 2%.

The new reality

Today, global all-sources ECoEs are over 9%, far beyond levels at which further growth in aggregate material prosperity remains possible.

In the West, rising ECoEs have already put prior growth into reverse, a trend temporarily disguised (though not, of course, overcome) by successive exercises in financial legerdemain.

As ECoEs have continued to rise, much the same combination of deteriorating prosperity, financial gimmickry and worsening self-delusion has started to emerge in less complex, more ECoE-tolerant EM (emerging market) economies.    

Faced with the stark reality of what the Ukraine crisis has crystalized in global energy markets, it’s natural for us to hope that we can side-step the implications of resource scarcity.

Some think that a switch to EVs can replicate the increased fuel efficiency of the 1970s, and that wind and solar power can act as latter-day successors to the supply-side solution provided back then by the North Sea and Alaska.  

All of these hopes miss the fundamental point, which is that ECoEs are very much higher now (above 9%) than they were in the 1970s (at or below 2%).

Between these data-points lies a climacteric which, once crossed, sees the assumed continuity of growth replaced by an inevitability of contraction.

Moreover, ECoEs are continuing to rise, and this trend cannot be countered, either by technology or by financial innovation.

In this situation, prosperity deterioration is inescapable, though the chaos of a disorderly economic ‘collapse’ remains avoidable, at least in theory, if the right choices are made.

Creative involvement

For those of us who understand the economy as an energy system, the most useful thing that any of us can do is to describe, model and project the situation as accurately as possible, and to delineate the choices that others, on our behalf, will have to make.   

Given our inability to influence tragic events in Ukraine, the most constructive action that we can take here is to intensify and develop our interpretation of the economy as an energy system,

This urgency – the need to ‘up our game’ – existed before Russian tanks moved into Ukraine. This is why the previous article broke new ground for this site by publishing specific forecasts informed by the SEEDS economic model.

Essentially, at least three dynamics are now in operation.

First, trend ECoEs are continuing to rise, pushing prior growth in economic prosperity into reverse. This trend cannot be stemmed (though it might to a limited extent be moderated) by an enhanced recourse to alternatives, including both REs (renewable energy sources) and nuclear.

Second, increases in the real costs of essentials are combining with deteriorating top-line prosperity to undercut the affordability of discretionary (non-essential) goods and services.

Much the same is happening to the scope for capital investment in new and replacement productive capacity.

To a certain extent, the definition of “essential” is imprecise, and certainly varies both geographically and over time. If we had a hard-and-fast definition of essentials – and therefore of discretionaries – planning, both for government policy and for investment, would be a great deal easier.

Efficiency could thereby be enhanced, because governments could set an agenda for debate around the prioritizing of services, whilst markets could start to redirect capital from discretionary into essential activities.

As it is, the fluid character of ‘necessities’ means that we need to use more nuanced appraisal, both of those services that governments must prioritize and of those sectors in which investment should be concentrated.

Third, so accustomed has the world become, both to growth itself and to its benefits, that there are major intellectual and psychological obstacles to reasoned acceptance and effective management of post-growth societies.

De-growth, in turn, creates the probability of increasing political and geopolitical instability, and this instability is likely to prompt, not just increasing conflict, but worsening hardship and consequent migration flows.  

It seems reasonable to assume that most of us lament the hardship being suffered within and beyond Ukraine, and are hoping against hope that wiser counsels will prevail.

Likewise, we must hope that decision-makers, and the public generally, can respond realistically and effectively to the challenges of a post-growth economy. 

To go beyond hoping for the best, we need to explore, discuss and quantify a world in which the assumption of ‘growth in perpetuity’ looks ever more likely to go the way of the Dodo.  

130 thoughts on “#223. Trading with the (common) enemy

  1. Great posting Dr. Tim. One thing that I would add is to expect strange and otherwise inexplicable political and social disorder as resource constraints kick in.

    For example, otherwise well behaved Canadians recently scarred the bewillies out of our ruling class in a protest that featured such dangerous things as bouncy castles and hot tubs. Makes you wonder sometimes about the level of frustration simmering out there among ordinary people.

    Thanks again for your insights

    • Thanks Raymond.

      The question of popular discontent was addressed in the previous article. i think much of this is economic, where those suffering hardship and insecurity are frustrated – and made suspicious – by claims that the economy is “growing”.

      I tend to avoid politics but, as you’ve raised this issue, i thought the response to protests in Canada was OTT. I distrust any government which resorts to censorship and coercion in an effort to enforce a conformity of view.

  2. Tim, You say and have said before many times that.
    “All of these hopes miss the fundamental point, which is that ECoEs are very much higher now (above 9%) than they were in the 1970s (at or below 2%).”

    Russian and Saudi Lifting costs account for a very large part of core world supply and also proved reserves for future supply, as the proved reserves are using enhanced recovery methods but not the more expensive heat-based recovery of non-conventional heavy oils. I think the simple claim that a substantial proportion of world oil production and continuing supply from those reserves are still at High ECOEs, can you prove otherwise?
    Accessible data available in admittedly partial data sets, contradict the very stark claim you make that up to the 1990’s it cost 2 barrels of oil to extract 100 barrels giving a net 98 surplus energy barrels. and that now the energy cost is 9 barrels of every 100 giving 91 surplus barrels.
    Adjusted lifting costs on a per-dollar basis have if anything fallen, it is also possible that for Giant fields that lifting costs have actually fallen in Energy terms.
    Are your 2% and 9% figures theoretically or empirically derived and if empirically could you please provide the data source from which you derive such a bold claim?
    It is also unsatisfactory not to provide adjusted figures for the different souces be they, conventional Land, off shore, deep sea and shallow and deeper conventional sources.
    At this point I think it is reasonable to put the End of cheap oil in energy terms theorists to proof.
    This paper tackles the question in energy terms and not assumptions drawn from monetary/price assumptions.
    The net energy return ratios (NERs) examined in this study for global oilfields range from approximately 2:1 to 100:1, with a production-weighted mean of 33:1. These results are most sensitive to changes when the gas processing configuration is unknown (as discussed above) or where the properties of injected steam are unknown. The implications of these relative magnitudes of energy returns are robust to explored uncertainties. A resource with an small energy return ratio may face challenges in scaling output, will consume large amounts of energy for production, and likely cause large environmental and climate impacts per unit of energy produced. This range of observed NER ratios is within the range suggested in prior literature. This agreement is a sign of convergence between methodologies: while the method used here is much more specific than prior methods, in that it models the engineering processes in oil extraction in greater detail, it provides similar order of magnitude results as methods used elsewhere.

    Here is another comprehensive report

    Click to access 60999-EROI_of_Global_Energy_Resources.pdf

    What I am getting at is that at best you are in making the claims you do for ECOE that they are Stylised and such not fit for policy prescriptions.
    Giant field production properties and behavior
    Comprehensive analysis of the production from the majority of the world’s giant oil fields has shown their enormous importance for global oil production.[10] For instance, the 20 largest oil fields in the world alone account for roughly 25% of the total oil production.

    Further analysis shows that giant oil fields typically reach their maximum production before 50% of the ultimate recoverable volume has been extracted.[11] A strong correlation between depletion and the rate of decline was also found in that study, indicating that much new technology has only been able to temporarily decrease depletion at the expense of rapid future decline. This is exactly the case in the Cantarell Field.

    • A simple way to look at ECoE is to look at its effect on oil prices (the same for gas and coal). Marginal prices for oil are very volatile, but when averaged over twenty years or so prices should be indicative of the cost/energy cost of production.

      Average inflation-adjusted crude oil prices from the mid 1980s to about 2000 were about $25 per bbl. The average since then has been around $70 per bbl. This indicates a near tripling in the ECoE for crude oil extraction, which is in the ballpark of Dr Morgan’s assessment of ECoE. Except for the recent depression of prices by money-losing fracked oil production, the average oil price over the last couple of decades would have been even higher. I don’t know the methodology used by Dr Morgan to calculate ECoE, but his published values seem quite reasonable to me.

      The giant fields in the Middle East and Russia do tend to have relatively stable costs of production right up until the very end. Those fields are gradually becoming a smaller proportion of total oil production, though. ECoE will go through the roof when Ghawar, Burgan, the Permian and others like them start their rapid declines.

    • Hi Joe,
      I am asking for empirical evidence and not proxies for ECOE , EROI is a financial proxy the first study I cited is based on actual lifting costs it suggests that the average actual Energy cost is 1 barrel now to get 33 barrels, a hard number publishes in 2015. Tim is saying that it is 1 barrel gets 9 barrels on average as of now, is this a stylized theoretical claim or empirically based as the Brandt paper is or based upon a differently constituted sampling group?.
      The second publication is from 2013 and is based upon EROI measures I must say I think it is more logically consistent and also more empirically robust to consider Mega Joules rather than Dollar ammounts.

      the Super Giants will be less than either Tims ECOE average or the brandt paper average I linked to. That the depletion rates of Giant fields have been speculated upon since Hotelling was writing in the 1930’s is a fact I was interested to note that the Brea Olinda field still has the highest ECOE at over 100 and that although it dates from the 1880’s recently consolidation of and sale of wells has been taking place.
      Peak production on the field was in 1953
      Unocal operated most of the field until March 1996, at which time it sold off all of its California assets to Nuevo Energy.[14] Nuevo operated the field for seven years, finally selling its portion of the field in 2003 for $59 million to BlackSand Partners, L.P., prior to themselves being acquired by Plains Exploration & Production.[15] At that time the field was producing 2,269 barrels per day. BlackSand ran operations on the field for a little over three years, and in 2006 Linn Energy bought it from BlackSand for $291 million.[16] In February 2007 Aera Energy LLC transferred its 654 wells on the field to Linn Energy, leaving Linn as the largest operator on the field.[

      from fig 2 of Brandt, you will see that Ghwar is given a return of between 35-40 barrels for each barrel expended for lifting costs.
      This sort of breakdown of detail is very important when considering realistic policies for the pace and priorities of implementing degrowth policies, or perhaps steady-state policies if one defines the problem slightly more optimistically as I do personally.

  3. Very good new article, Tim!

    Let’s check this morning’s headlines to see how well our governments are managing degrowth so far:

    1) World’s Financial System: Courtesy of Zerohedge, “FRA-OIS Explodes”
    “Some were quick to mock repo guru and former NY Fed staffer Zoltan Pozsar when he warned that the unexpected western blockade of Russia had the feel of a Lehman weekend, because virtually nobody had any idea what the forced exclusion of a G-20 economy from the global financial system would lead to. In fact, just yesterday Jerome Powell admitted that he had not been consulted, suggesting that arguably the most momentous financial decision in modern history has made without consulting the single most important financial person in the world.

    However, it appears that while Pozsar may have been ahead of the curve, as usual, he was not wrong, and today the all important FRA-OIS indicator of interbank funding stress (and money-market risk) is surging, and at last check was above 37bps, up a whopping 12 pts… amid relentless selling in March 2022 eurodollar futures with the contract off session lows but remains cheaper by around 10bp on the day, with some speculating that at least some funding markets are starting to grind to a halt.”

    2) Essentials: Courtesy of Zerohedge, “Russia “Recommends” Fertilizer Makers To Halt All Exports.”
    “This morning we listed some of the countries that are dangerously (and almost exclusively) reliant on Russia and Ukraine for their wheat imports, highlighting Turkey, Egypt, Tunisia and others…which are facing an “Arab Spring” style food crisis (and potential uprising) in the coming weeks unless the Ukraine conflict is resolved. . . unfortunately, we can now confidently predict that the coming food crisis will strike every country that is using food fertilizer – which is all – because moments ago, Russian Interfax reported that as part of Moscow’s countersanctions, Russia has recommended fertilizer makers to halt exports, a move which will sent not only fertilizer prices orbitally higher, but all food prices will soon follow.”

    3? Essentials: Courtesy of Michael Every, Rabobank, via Zerohedge: “This Will be Shocking.”
    “Here we are again as Freight Waves, the global supply chain magazine, states “The second Cold War is here — and supply chains will be the front lines”:

    “We are witnessing the remaking of the world order in front of our eyes – and this will impact global supply chains in unforeseen ways. We are about to experience the most dramatic and unpredictable supply chain map we’ve experienced since WW2. If the Russia-Ukraine conflict’s international ramifications keep spreading, we face a real possibility of a bifurcating global economy, in which geopolitical alliances, energy and food flows, currency systems, and trade lanes could split.

    During the first Cold War, the world was anything but flat. There were two worlds – the East and the West. That world is being recreated as we speak, and with it, Western companies will start to shift sourcing away from the East and more toward Western and neutral states. North American economic integration will become a new priority. Surface transportation across the Eurasian continent will become more complex, and possibly contested.

    Entire supply chains will be rewritten, with new sources and partners – all in the interest of corporate and national security. This will create massive volatility and unpredictability. Companies will prioritize vendors that can provide consistent and dependable supplies, likely paying a premium. In the end, those costs will be passed on to consumers in the form of higher prices.”

  4. Dr. Tim,

    Your clarity and style continue to be top notch. A short essay like this would make an excellent op-ed. Given the “high life” many in the developed world enjoyed for most of their lives, and the dream of most who are striving to “keep up with the Joneses”, I expect major discord when this message becomes common knowledge. Rude awakening is an apt term, and politicians face a daunting task communicating it. Lastly, populations are still growing in many places (~80 M/yr), with average slices of the natural pie getting smaller. Double whammy, as the pie itself looks like it has stopped growing. New term: peak pie.

    • Thank you Steven.

      I’d be happy to write op-eds, but I’m not sure if the mainstream world is ‘ready for’ the kind of interpretation that we discuss here!

      I kept this one short-ish because I’m affected by what’s happening in Ukraine. I wanted to say someting about the fundamentals, mentioning Ukraine whilst avoiding the politics.

  5. Dear Tim,

    Thank you for your latest post.

    Are the latest developments in Ukraine not an indication of the importance of taking into account geopolitics in trying to assess the trajectory that might take our collective future on Gaia?

    Is it not more and more obvious that the « big players » are not going to accept a simple collective uniform sliding down the net energy cliff and that they are going to put up a fight in a « last man standing » scenario?

    Hence, does SEE include a geopolitical data set that might enlighten us on how this global sceenplay is likely to unfold?

    Best regards,


    • Thanks, you are welcome.

      Where SEEDS is concerned, the material used here is a tiny part of the total, rather like the tip of an iceberg. In addition to the world economy, the model actually covers 30 countries (effectively 29, as I can’t get all the data needed for Iran).

      This reveals a lot of divergent trends. It would be fascinating to discuss here, for instance, the situation in Turkey, or Poland, or South Africa.

      There are indeed geopolitical trends discernible in the data, but the question I face is how to present this material.

      We probably need some kind of data synopsis product drawn from SEEDS. The question is how to make this available to readers.

  6. @rogerglewis – It’s been my experience that getting accurate and current numbers to calculate energy efficiency on extraction of fossil fuels, and some of the “green” alternatives, is very difficult. You provided links in your response above from documents produced in 2013 and 2015. Surely those estimates can be questioned as well?

    It’s beneficial to have the data for justification of conclusions and recommendations related to the world’s energy predicament, and it seems difficult to move the discussion forward without recognizing the limitations of the data. This process needs a more rigorous approach by all.

    • I agree , hard data is difficult to come by in many cases I think the actual information is protected as State Secrets, and certainly where private interests are concerned as highly sensitive with respect to market competitors.
      All that said there is data and whilst it should be questioned and analysed, my simple question to Tim is why has he an average ECOE of 1 in 9 out and the Brandt paper from 2015 has a figure of 1 in and 33 out as its average?
      Matthew Simmons, in his 2005 book Twilight in the Desert, suggested that production from the Ghawar field and Saudi Arabia may soon peak.[19]

      When appraised in the 1970s, the field was assessed to have 170 billion barrels (27 km3) of original oil in place (OOIP), with about 60 billion barrels (9.5 km3) recoverable (1975 Aramco estimate quoted by Matt Simmons). The second figure, at least, was understated, since that production figure has already been exceeded.[19]
      Some sources claim that Ghawar peaked in 2005, though this is denied by the field operators.[8][9]
      If you look at fig 2 in the Brandt paper there is enough information to compare the seeds ECOE , assumptions/Data against?
      some of the figures suggest that modern deep water rigs produce very competitive ECOE, Girasol in Angola Hibernian in Canada for instance both of which are operated by Oil Majors, is that perhaps a clue regarding who has proprietary technology not available perhaps to say Russia? I really do recommend people look at fig 2 if nothing else.

    • @RogerLewis, as per always, lies, dammed lies and statistics, can say whatever you want them to say if you leave out enough ‘parts’ of the system. The following is from the document you linked ….
      “This model does not currently include energy invested in building oilfield capital equipment (e.g., drilling rigs), nor does it include other indirect energy uses such as labor or services.”
      “The inclusion of embodied energy in steel and cement consumed would reduce these ERRs by an unknown amount”

      Considering the examples are the giants/super giants of the oil industry, which are in decline as a percentage of the total, and smaller fields would have much higher ’embodied energy’ content per produced barrel, then the concept of declining EROEI is very very valid, and likewise the important part of Tim’s thesis, even if the exact number can be debated. It matters not the exact number, just the trajectory, which is clearly demonstrated with things like fracking of shale wells and digging of tar sands.

      A common theme from those looking at a utopian future of clean tech is leaving out a lot of very important aspects of the real world to prove their case. For example, and this applies to modern oil fields as much as every other form of new energy, is that the new ‘stuff’ (embodied energy) is always more energy expensive than the existing as the metals used come from mines with lower grades (on average) than those of the past, that take more energy to produce. On average the mines are more remote, with lower grade, deeper and a higher ‘hardness index’ than old mines, because we used all the easy to get high grade metals first!!

      Because we are dealing with a huge complex system, going into details would require volumes running into thousands of pages of specifics, where the overall message would get buried in arguments over the detail.

    • Hi Hideaway,
      My simple question is where is the empirical data to prove a ECOE of 1 to 9 over the 1 to 33 in the Brandt Paper.
      I do not think that Brandt has a dog in the fight to claim lower than 1 to nine or indeed worse.
      Your pointing out that embodied energy was not included the calculation, a point which is very clear in the paper’s commentary, will not hugely affect the 1 to 33 ratio not by a factor of 3 in any event.
      At another level it is also clear that for the giant fields it would seem that the fixed sunk costs are spread over a longer period of time although it would also seem that Deepwater rigs are also moveable as of course are exploration rigs, there are clearly economies of scale of production that impact on ECOE in some cases and importantly in large fields which are a significant component of core supply, A reading of Stephen J Gould the Median is not the message is recommended in considering weighted sampling.

    • @Roger Lewis, the answer to your “simple question is where is the empirical data to prove a ECOE of 1 to 9 over the 1 to 33 in the Brandt Paper” is the Brandt Paper doesn’t include: “[…] energy invested in building oilfield capital equipment (e.g., drilling rigs), nor does it include other indirect energy uses such as labor or services.”

  7. Thank you, Tim, for another to-the-point and thought-provoking blog.

    Towards the end you touch on variability and boundaries regarding “essentials”, and say “As it is, the fluid character of ‘necessities’ means that we need to use more nuanced appraisal…”. I do hope it is on your radar to put forward your own take carry out such a nuanced appraisal and provide a picture on where such boundaries might lie.

    Given that the impact of increasing ECoE is so little recognised in mainstream policy (or even debate) and is generally first felt in erosion of discretionary (aka “non essential”) spending, the boundary of discretionary activities becomes central to exploration of lower-energy futures.

    Picking up on another of your statements (with which I agree wholeheartedly) that “the most useful thing that any of us can do is to describe, model and project the situation as accurately as possible…”, having an understood, even if notional, reference boundary between essential and non-essential would seem incredibly helpful to modelling and projections, and so reduce the tendency for vague distinctions to blur the discussion (and even tempt people to assume the boundary falls wherever someone wants it to).

    • Thanks.

      When I was head of research at TP (then the world’s second-largest money-broker), I created the Essentials Index for the UK, which got a lot of media coverage. This taught me the importance, but also the difficulty, of defining ‘essential’.

      Much more work is needed on the concept and quantification of essentials.

      I would add that both governments and commercial organisations could benefit from doing this, for at least three reasons:

      1. Commercially, defining essentials could help with investment allocation, a critical issue with both discretionary consumption and the scope for capital investment under tightening pressure.

      2. Governments need to clarify public services and distribution priorities as their resources become constrained.

      3. We need a tighter focus on essentials so that aid to the world’s poorer countries can be targeted as effectively as possible.

      I’ve often been struck by the lack of a definiton of essentials, surely a vital concept for governments, businesses and aid organizations.

    • Lindsay Woid.

      I can see a lot of abandoned hot tubs going forward.

      I guess it all depends on what level of energy production we end up with? When de-growth bottoms out, what will we be left with?

      If there isn’t enough energy to maintain the nation grid for example, then lots of things we think of as essentials will end up being discretionary.

      I can see a time when the internet becomes discretionary. It’s advantages not being worth the energy investment. The energy may be better used elsewhere. Good production for example.

    • Thinking of what is and isn’t an essential/discretionary may not be the only or best way to look at de-growth.

      How much sustainable energy will be available will dictate what is possible.

      There may not be enough available energy to sustain some of the world’s megacities never mind a persons personal consumption.

  8. Definition of Essentials
    Consider Health Care…essential or something to be mostly regulated or taxed or educated out of existence?

    Luigi Fontana at the University of Sydney has written a fine book on the subject of health span vs. life span…The Secrets to Living a Long, Healthy Life. He makes some astonishing observations about exactly why people who eat a Western diet and live a Western lifestyle (now a majority of people in the world), are chronically sick in the last decades of their lives and soak up money seeking patches to keep them alive. But we now know pretty well, thanks to decades of research on animals and now humans, how to make the health span almost equal to the lifespan. Around a third of us should die for no visible reason. The rest should have a rapid decline from health to death. The decades of being chronically sick before our eventual death (and causing enormous medical expenditures) is not a necessary condition for people in the industrial world, and it is not even a necessary condition for quite poor people, such as those living in immediate post-WWII Naples in Italy. In Naples, there were public hospitals for the poor that rarely ever saw a heart attack victim, while the private hospitals for the rich saw heart attack victims frequently. The pattern in the rich countries has now reversed, with the richer half being healthier than the poorer half. The reason has to do with the industrialization of the food system…an enormous fraction of the economy and, incidentally, CO2 emissions.

    It is also true that some clouds have silver linings. Energy Skeptic’s current post gives us the most likely scenario for planetary warming if we factor in the decline of fossil fuels due to depletion. It’s around 3 degrees, not the much higher numbers that the UN agency models assuming unlimited exponential increase in fossil fuel use.

    What we have is a complex system with interacting parts. Trying to sort out, based on a superficial correlation between variables (as the IPCC does), is perhaps tolerable as a first attempt, but should not be disguised as addressing the real problems. I suggest that all the Congress of the Parties meetings are just window dressing, accomplishing nothing.

    Not that I know HOW to accomplish something. Will it continue to be simply a bunch of dogs, some of them big and some of them little, fighting over the scraps? It’s almost tempting to join Gail Tverberg’s “Second Coming”, Book of Revelation, camp. But, we have to soldier on. I am grateful for the good work being done at Sydney, which I recommend people check out. It’s an attempt at making a real community of scholars rather than shills for grant money.

    Don Stewart

    • I watched some clips of Biden’s State of the Union speech and he said 1 in 10 of Americans had diabetes…
      he was talking about reducing the cost of pharmaceutricals but it was the “1 in 10” bit that grabbed me.

      it strikes me insulin has become an essential for a lot of Americans.

  9. @ Dr Tim. I wondered if you had seen this article in the FT re life expectancy. It looks at the inequalities relating to level of deprivation and whether this could be linked to austerity measures. There is one table comparing a number of countries, mostly European but also the US and Japan. It seems to me that the change in life expectancy may be related to a reduction in prosperity which has been worsened by austerity measures but not caused by these alone. Do you have any comments on the differences between the countries looking at your own SEEDS data?


    • do you remember the years after the collapse of the Soviet Union? there were some pretty grim images and stories in the media and the demographic statistics took a dive,
      the US is currently showing falling fertility, rising opiod and substance abuse deaths and I saw a Pew statistic showing that 54% of firearm related deaths are self inflicted,
      it’s not just falling prosperity, there also is a psychological factor, dis-spirited people losing the will to care for themselves.

      are you aware of the “Mouse Utopia” experiments of John B Calhoun? there’s a documentary by Mike Freedman called “Critical Mass”,

  10. @ Don Stewart, 3C of warming will trigger every last tipping point that leads to extinction. Keeping under 2C is critical and all but impossible.

    • Sissyfuss
      I won’t argue your point, because I’m really not qualified to do so. Energy Skeptic said we will be medium rare but not charred. At any rate, she thinks that things like sea level rise are already baked in. She probably also thinks that higher nighttime temperatures and the bad effects of crop yields are baked in. But if you want details, look at her copious writing.
      Don Stewart

    • I’ve read Gail’s work quite extensively since I stumbled on “When the trucks stop running” back in ’16 or so. While I find her quite informative I also see her looking at the global situation from the “USA being superior in most ways”. With the situation ongoing in the Ukraine and the sanctions proposed possibly limiting fertilizers among other things, and the drying up of the water supply in the midwest and beyond, the difference between medium rare and charred may no longer mean much. Whether the crops shrivel due to lack of water, stunted due to lack of fertilizers or suffer production losses due to high overnight low temperatures the difference between medium rare and charred will become nothing more than talking points. We will still be going hungry!

  11. Diesel price at my local garage up from £1.57 per litre to £1.69 overnight.

    Over £2.50 per litre by June – or more?

    It seems we’re not only prepared to fight Russia to the last Ukrainian but to sanction them to the death of our own economy too.

  12. Jeffrey Brown’s War
    I suggest a few points for consideration:
    *Russia has enough natural resources to prosper as a stand alone economy
    *But it would be better off partnering with the manufacturing powerhouses in SE Asia
    *Provided Middle Eastern oil and gas continue to flow to SE Asia
    *The Net Energy from Oil and Gas has begun its decline globally
    *Russia has a lot of minerals of value
    *Military power is grossly unbalanced relative to resources. The West has vast military power. Russia plus Asia have relatively little. Russia does have the ability to do immense damage with nuclear weapons, but would itself be destroyed.
    *Contrary to what Dr. Morgan thinks, I believe that the Security State in the West understands perfectly well the peril. The solution is to reduce the East to colonial status.
    *I think another doubling of US government debt to 60+ trillion is simply not going to happen.
    *So the West needs to reduce military expenditures while also acquiring colonies
    *Fortunately, there are a lot of disgruntled States surrounding Russia. Any burr under the saddle in any of them, plus ethnic strife in Russia itself, can be leveraged against Russia.
    *Jeffrey Brown foresaw this crisis a decade or so ago and called it the Export Land Model. *Exporting countries can only profit from mineral riches to the extent that they are price setters rather than price takers. It is intolerable to the Germans that the Russians propose to sell gas at the market price, which is increasing due to depletion.
    *The solution for the West is a steadily increasing military pressure on Russia, plus fomenting civil wars. (What will happen to Saudi I don’t know).
    *If this was about refugees, there would have been an outcry over the last 10 years at the millions of refugees and the tens of thousands of casualties in the struggle between the Donbass states and the government in Kiev. Civilian casualties are a way to mobilize the public, but have little to do with the actual war.

    Don Stewart

  13. We are so screwed.
    Z/H : “Coal Titan Peabody Hit With Margin Calls”

    “Pozsar points to Glencore’s iconic – if criminal – founder, whose Marc Rich’s legacy in the annals of global finance was to introduce the concept of leverage and borrowed money into commodity trading. It’s simple: a bank lends you the money to lease ships and buy commodities to deliver them sometime and someplace in the future at a locked-in price (via short futures).

    The pattern should ring a bell.

    Consider your typical, highly levered bond RV fund, such as Millennium and Citadel, is long the bond, short the future, and funds the package in the repo market. It was this bond basis trade that was behind the repo market crash of 2019 [tagio: News to me!] and then blew up just a few months later in March 2020; it’s also why hedge funds with regulatory leverage as high as 8x were begging for a Fed bailout when their RV trades blew up, similar to what happened to LTCM in 1998.

    That analogy, Pozsar argues, is the same as a commodity trader moving stuff around. But if collateral spoils, funding is impossible to come by and spot price spikes are triggering margin calls, or as he puts it “March 2020 all over again?” While it probably is not the same size, the repo guru advises readers to “be mindful of the parallels and the funding and collateral linkages.”

    “But who is getting the margin calls?” Pozsar asked, and answered: market participants that are long commodities either in the ground or in transit and want to lock in a price by shorting futures: “these include every commodity producer in the world including Russia, and every major commodity trading house, respectively.” [tagio: OMFG]

    He was right once again, because just a few hours later, none other than the largest private sector coal company in the world (which emerged from a 2016 bankruptcy in 2017) announced that it has entered into a financing arrangement with Goldman Sachs providing for a $150 million unsecured credit facility (paying 10% interest) “support the company’s potential near-term liquidity requirements” in response to what appears to have been a substantial margin call.”

    Hope you all are buying extra blankets and stocking up on some food supplies for a few months!

    • Nickel prices surge above $100,000 a tonne on a huge metal short-squeeze. The London Metal Exchange has given a unit of China Construction Bank Corp. extra time to pay $$$$ in margin calls it missed Monday.

  14. Pingback: #223. Trading with the (common) enemy – Olduvai.ca

  15. Prospects for a Reasoned Response to DeGrowth
    The largest killer of Americans is heart disease. The long-running Framingham, Massachusetts, health study gives us these statistics:
    Assessing people at age 50 for 5 health indicators: optimal levels of cholesterol, blood pressure, and glucose, a healthy body weight, and non-smokers. Meet those 5 criteria (which overwhelmingly result from lifestyle choices) and your risk of cardiovascular disease is 5 percent. If you miss on one of the measures, your risk jumps to 50 percent. Miss on two and your risk jumps to 69 percent.

    In a sane world, government policy would seem to need to focus on prevention. Yet almost the entire budget is spent on cleaning up after the crisis. One way to deal with DeGrowth is to prune out these rather idiotic expenditure priorities. However, there is obviously deeply embedded resistance to evidence-based policy.

    Don Stewart

    • On the broader point – reasoned responses to de-growth – I find myself increasingly dismayed, not to say frustrated, by the binary choices that seem to be assumed.

      There’s no reason why anyone rejecting the consensus line about continuity must necessarily believe in collapse. There’s no “either/or” about this. The general public, moreover, are entitled to answer “none of the above”, or “don’t know”, to this or any similar question.

      Let’s say, for sake of argument, that we regard incumbent governments as a pack of knaves – this doesn’t prove a conspiracy.

      By way of example, in a room of 100 people, only 3 profess admiration of Liverpool football club. The implication is that 97% do not admire Liverpool FC – pretty decisively negative!

      It transpires, though, that, of those 97 people, 96 have no interest in soccer, and have no opinion at all. Only 1 has a negative opinion of Liverpool. That’s a rather different outcome!

  16. The penny seems to be dropping for some people.
    Listened to a phone in on the BBC today.
    Lots of talk of the implications of energy price increases.
    Farmer’s in particular, calling in to talk about the huge increases in costs for producing food. Furtilizer was a key concern, with some saying that the government needed to take over the business to stabilise prices.
    A recognition, that the implications are that food for some will be unaffordable.

    Maybe, it’s the beginning of public awareness of the role of energy in all our lives.

    • In my profession, as an investment analyst, the people you admire are those who keep their cool.

      When markets are panicking – 2008, 9/11, dotcom crash and similar- these are the folks who analyze, think calmly, work things through, calculate angles, and aren’t affected by the emotions of panic (or euphoria) around them, in the dealing room and beyond.

      One character in detective fiction was called “the Thinking Machine”, and this is what you need to try to be.

      This sort of sangfroid is getting very hard now.

      The situation is looking, not just dangerous, but irrational, emotional, uncalculated. This can’t be dismissed as “a storm in a tea-cup” (well, “storm in a samovar” might be more apt).

      Some things will calm down. ‘”Can’t pay, won’t pay” might tame some price surges’. ‘The war will end, one way or another’. ‘A slump in discretionary sectors was hard-wired into the economy anyway’. ‘Self-interest will restore common sense’. ‘Don’t get swayed by the headlines’. And so on.

      Even so, staying cool and relying on rationality is harder now than I can ever remember it.

    • Dr Tim.

      I think/hope that faced with reality, then the correct decisions will happen.

      Furlough was the correct decision at the time. (That or a debt repayment amnesty) but it went against the governments instincts.

      I think the choices will be apparent as time goes on (or the only choice) I feel that we are at the start of the process of de-growth. The public discussion/realisation is beginning.

  17. I was driving by the gas station here in lower Michigan and see $4.25 a gallon just as the news came on that Slowing Joe is banning Russkie oil. This is getting g serious.

  18. @Dr. Morgan and all,

    I just learned about this application of new drilling technology. Feedback appreciated.

    Part of ongoing efforts to avoid de-growth…Will gaia will suffer to the extent this is successful?

    (MIT developed)


    First link is a short Q&A


    This is linked in the first sentence in the above, and is a detailed description of the process:


    • @Don Stewart

      I think the $US is in long term decline similar to what the Pound Sterling did last century. Empires come and go. The article you linked is not enlightening. It is more a rant.

    • @Steven Kurtz
      I agree it is a rant. I find it interesting for reasons I don’t fully understand. Maybe the way the British looked at Tom Paine in the American colonies ranting about kings and queens in Europe.
      Don Stewart

    • Fascinating – thanks Steven. As a mechanical engineer who has designed many (shallow) geothermal systems I appreciate the potential revolution of this technology – not only on oil/power generation, but even on building shallow geothermal. Drilling bore holes is still the most expensive part (last I check ~$15k each for vertical, and a typical US home requiring 3-5 of these depending on soils)

      I had in the past been familiar with the problems of laser drilling (dust/debris block the laser beam) I hadn’t heard anything about this. I’m curious how the argon gas purging would work at the depths they are talking about, as I would expect this is a limiting factor (i.e. how are you going to inject enough gas at pressure to evacuate vaporized stone several vertical kilometers?)

      As you correctly note, if this is a miracle cure for oil drilling costs, and electrical generation, and even residential efficiency – it only exacerbates the growth impacts of the superorganism and our ecological footprint. But who knows!

    • The first link didn’t work for me so I got there with

      Thanks Steve, interesting stuff.

      One Q&A:
      “Q:If this solution is deployed at scale, could it be possible for the heat released from under the surface to contribute to global warming?
      A: The Earth already leaks 40 TW from within, whether we exist or not. Humanity uses 20 TW, so no.”

      That assertion could bear more scrutiny.

    • Drilling the hole is the easy part. Getting the heat out of the hole is going to be hard. Rock thermal conductivity is low, so dry rock has to be fractured over huge volumes to enable enough heat exchange with the thermal transfer fluid. I don’t even know if really deep, really hot rock can be fractured. It may be too ductile.

      Dry rock geothermal has been talked about for decades, tested a little, but never developed commercially. As far as I know, all existing geothermal power facilities use hot groundwater extracted from permiable strata.


    • Perhaps you missed the part about glassification of the interior of the borehole. A senior cosmo-geo physicist replied that this is a high probability win. Of course peak population must accompany cheap, relatively clean energy if gaia is to avoid a faster demise.

  19. The next domino?
    I have opined that the contretemps with Russia is the first of the expected Export Land wars. But I also said that the US dollar hegemony is a very similar situations, and that the Rest of the World would be far better off without it. Savvy politicos in Washington understand that the dollar hegemony underpins what is counted as American Prosperity.

    Here, in his own acerbic, in-your-face style, is the message from Sri Lanka. BTW, he has worked in both the US and Canada.

    Don Stewart

  20. @Steven Kurtz
    Do you know if earthquakes are an issue? In the US, fracking has induced many earthquakes in areas where they were previously rare (e.g., Oklahoma). So some areas are quite stable in terms of plate tectonics while others are quite active and some have been made active by human activities. Do you know if these proposed bore holes will only stay open if they are located where the various layers are quite stable all the way down to the really hot part?

    In terms of oil, my understanding is that the high pressures at great depth destroy oil, but gas can survive.
    Don Stewart

    • @Don Stewart
      Re earthquake risk, I recall it was discussed in one of the links I posted. I’m too busy now to look it up, as I’m dealing with a family death, and I’m the executor of the will.

  21. Tim,

    You talk about a standard of living that can no longer be afforded.

    There are certainly a lot of people who have convinced themselves that they are entitled to a certain standard of living by Devine right simply by an accident or the geographical location of their birth. I fear nobody has bothered to mention this to our planetary resources.

    I know a number of people who have recently retired on comfortable final salary pensions, they seem to regard eating out regularly and multiple foreign holidays per year as inalienable human rights.

    I know people like to criticise the young for their apparent addiction to their mobile phone ‘s etc but many of my older friends face a significant wake up call in the resource and environment restricted world of degrowth. It’s not going to be pretty and for many it’s not going to be voluntary.

  22. @Tagio
    With all due respect to Hudson, I think the divide we are seeing right now is the divide between those who mine or make and those who deal with financial matters and entertainment and military might. The explosion in the prices of commodities is seen by many (including me) as a sea change. And as commodities become more precious, then those who can efficiently turn commodities into essential products become indispensable links in the chain. This who turn out “content” are still necessary but become luxuries. Those who live off financial manipulation will be viewed with increasing suspicion, particularly if there is a spectacular crash.

    What would the US sell Europe other than guns and content? One has to be extremely optimistic about the prospects for shale in the US to expect anything like the current level of imports in Western Europe to be exported. I think we might categorize the current US position as that of “NATO vs. the world”. A group of countries deeply in debt and living higher on the hog than most other countries in the world need to control the rest of the world in order to maintain their position. Russia is a big fat target sitting right next to the NATO heartland. But the history of Britain and the US in the Persian Gulf reminds us that Anglo-American interests have always seen the Gulf states as colonies of a sort. I would not be shocked to see some “provocation” from the Gulf states leading to some formal intervention by NATO. As for places like Bolivia with lots of lithium and Chile with lots of copper, we have intervened before and will continue to intervene, IMHO.

    So, according to my analysis, it is, a little oversimplified, NATO vs. the rest of the world.
    Don Stewart

  23. An extremely good article by Michael Every of Rabobank today on Z/H discussing how countries can use countertrade to avoid financial system bans. Annual settlement of outstanding trade deficits in gold, imposing discipline on not trading for more than equivalent value with minor discrepancies otherwise you lose all of your gold reserves and are screwed. .

    Biden’s executive order the other day says we need to support moves into a Federal CBDC, this on the heels of how we have just witnessed what happens when the Fed and ECB turn off Russia’s use of its reserves, making reserves worthless. Every quips: “The US, on the other hand, is to officially launch the initial stage of a potential ‘digital dollar’. Imagine the centralized power of the dollar’s global hegemony AND the power to switch access to it and off instantly, as happened with Russia’s ‘analogue’ FX reserves. And imagine how many people won’t want to be a part of that geopolitical system. (Or of a Chinese or Russian equivalent when they are rolled out.)”
    Rabobank: Imagine How Many People Won’t Want To Be Part Of A Digital Dollar System Now

    The Americans and Europeans are being subjected to a new enclosure system as regards their assets, wealth and currency. India, Russia and China are not going along with it. Japan is going to have to choose sides, if it can.

  24. Sorry to post twice on the same day, but this article about Zoltan Possar’s argument that following the current conflict money will never be the same is a great insight into the likely contours of a new financial system.

    “A crisis is unfolding. A crisis of commodities. Commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money.

    Collateral is the foundation on which the financial system is based. Collateral equals money in the realest sense. The “outside” collateral is no longer the periphery. [t has moved to center stage]

    Zoltan goes on to explain how he came to this conclusion paralleling previous crises. These include but are not limited to events like the Southeast Asian crisis of 1997; subprime, Bear Stearns, and Lehman Brothers in 2008; and secured funding against good collateral to RV hedge funds during 2020.

    In all instances a backstop was provided. Somebody had to underwrite the “put” that saved the markets from an abyss. Every time in those instances it was the US Fed that did this. Not this time. Why?

    The collateral underpinning the system is not financial this time. It is real. War, sanctions, and the ensuing chaos has split markets along spot versus derivative lines. Geographically: East vs West. Collateral: Real vs rehypothecated.

    Guess who owns the collateral that is being used to leverage western finances? Russia and China. Pozsar asks rhetorically:

    If we are right, and this is a “crisis of commodities” [EDIT/spot, not futures/Goldfix] – a 2008 of sorts thematically, if not in terms of size or severity – who will provide the backstop?

    China of course is his answer. China will backstop the Russian materials that need to find a home. China will provide capital for Russian companies to keep them afloat.”

    IOW, the financial derivatives that kept commodities undervalued are going to stop being the tail that wags the real commodities dog

    The complete article is behind a paywall.

    • @tagio
      Posting s few times in a day isn’t a crime! Perhaps the MMT fans will finally get their comeuppance when they find that electronic credits and derivative contracts are impotent in the new game of hardball played with necessary commodities.

  25. Thanks, Steve! The Polsar discussion is, I think, pertinent to this group because he is discussing a reconnection of the financial system to the real economy of goods and services, via the emergence of the centrality commodities in finance. It’s a different window into the process of eliminating the excess claims that Dr. Tim talks about, in order to realign the two. It’s not just a deflationary collapse of credit bringing about realignment or rebalancing, the mechanism by which the realignment can occur is the elimination of rehypothecation and leveraged speculative bets on commodities, as the moneyed interest finally get it into their heads that physical collateral , and not monetary constructs, rules the day.

    • Regarding a struggle for resources between NATO countries and the Rest of the World
      My wife said she heard (so this is inside intelligence of the highest quality) that the US was trying to persuade Columbia to invade Venezuela to seize the heavy oil. The spread between gasoline and diesel has quadrupled in the last few months, indicating a shortage of diesel. Who woulda known? If one shuts off the sources of heavier crude and tries to make do with only light grades, that there might be a shortage of diesel?
      Don Stewart

    • Social control based upon debt contracts is the financial technology that existing power structures rely upon. Sadly it would seem that far from saving the planet the objective of Green policies seems to preserve social control mechanisms through debt denominated in Carbon rather than looking at a form of added value accounting for combining energy inputs with resources to produce Essentials, or indeed to produce discretionary luxuries.
      As long as the Carbon books show net zero emissions the few will continue to get richer and the many will grow poorer or expire. As the quote from Richard Dimbleby below points out this is a process ” that requires oppression.”

      From 13mins 30.
      “There is another Chile, For those who accept, even enjoy dictatorship?
      This elite lives well, better than ever. Their problem is where not what to eat?
      The armed forces, the new upper class have high salaries, special schools, their own hospitals, and new housing estates. And their allies, able financiers, and obedient civil servants are equally at ease. And they have a reason, those who guide Chile’s destiny have devised a pure and precise means of keeping themselves on top forever if it works. Chile has become an accountant’s paradise
      the regime is obsessed with balancing the nation’s books and no more. They wish the law of the jungle to prevail, that the strong should destroy the weak so monopolies grow and bankruptcies and therefore the ranks of the unemployed. The carcass of the economy is left for speculators to pick at.
      Yet there is a boom in Santiago at first glance. The elite has never had it so good, the city is awash
      foreign luxuries that only they can afford, How? By the export of hunger. The elite rides the slump pays starvation wages and sells cheaply abroad, earns foreign exchange buys foreign goods and the books remain in balance. The few get richer the many poorer, a process that requires oppression.”

      “The crude oil and natural gas markets have a long colorful history. To understand
      them, one needs some economic theory. The dominant view, of a fixed mineral stock, implies that a unit produced today means one less in the future. As
      mankind approaches the limit, it must exert ever more effort per unit recovered.
      This concept is false, whether stated as common sense or as an elegant theory. Under competition, the price results from the endless struggle between depletion and
      increasing knowledge. But sellers may try to control the market in order to offer
      less and charge more. The political results may feedback upon market behavior.
      These factors—depletion, knowledge, monopoly, and politics—must be analyzed
      separately before being put together to capture a slice of a changing history”
      Maurice Adelman.

  26. Thermodynamics 2.0
    There is an upcoming conference going by the name Thermodynamics 2.0 which may interest some of you. Search on the name and you will find the speakers listed and details for how to register (it’s free).

    Terry Bristol from Portland State in Oregon is one of the speakers. Here is a teaser and a link to an article he wrote about the different definitions of thermodynamics and the irrationalities he sees at the basis of the science. Resolving the irrationalities, the same way 21st century physics is still trying to resolve quantum mechanics and relativity, may provide a way forward.

    Living beings are a thermodynamic miracle. The human being may have started contemplating the origin and evolution of the self ever since it evolved into a bipedal creature.

    Engineering Thermodynamics may provide a better framework to answer such epistemological questions challenging human knowledge in the 21st century.


  27. Another Sign of the Times

    The Zoe study uses crowd data from a large number of volunteers who simply send messages on their phones to a central processing point where the data are tabulated electronically. While the system was developed with other uses in mind, when Covid happened they quickly repurposed it for tracking Covid in Britain. It was among the best data collected anywhere in the world (as opposed, for example, to questioning hospital workers and filling out paper forms) and was cheap by any comparative measure.

    Now I will interject my opinion about the cancellation: Governments hate independent sources of information which they cannot control. They could not control Zoe results. Sometimes the government of Britain would put out statements which were not supported by Zoe data. An unforgivable sin, no matter how many lives might have been saved or how much money was not poured down the drain.

    It’s not only the US government which seems blind to opportunities to work smarter, not harder. Probably a deadly predilection given a world of DeGrowth.
    Don Stewart

  28. Maybe My Prison Grade Rumor was Wrong?
    I said I had reliable (although admittedly at least third hand) information that the US was trying to get another South American country to invade Venezuela and seize its heavy oil and give it to the US. Kurt Cobb has a different story. Since he is located in Washington, DC and has excellent contacts, his musings are probably better than mine:


    According to Kurt, the US is now trying to repair things with Venezuela and Iran in order to get more oil. (You may remember that the US withdrew recognition from the government in Venezuela and recognized a little known individual as the new head of government. That effort has gone essentially nowhere as the military has continued to support the old government. So now we are apparently negotiating with a man we no longer recognize as the head of the government.)

    We will see how all this plays out….but my rumor was not wrong until the last man is out in the bottom of the ninth.

    Don Stewart

    • I expect that US planners are keeping both options on the table🙂.
      Plan A- Negotiate.
      Plan B- Topple.

  29. Surprised at only one new comment in two days. Is there something wrong comment posting?

    • It sort of makes sense, because the war in Ukraine has become ‘the only news in town’.

      I myself am finding it a little hard to concentrate on other, slightly longer-term issues, against the background of what’s happening in Eastern Europe. Everything else seems to have receded somewhat into the background. In that way (alone), it’s a bit like the aftermath of 9/11.

    • “…because the war in Ukraine has become ‘the only news in town’” Nate Hagens added his two penn’orth yesterday. Worth watching.

  30. Reading Gail’s most recent at https://ourfiniteworld.com/ she writes the following:
    “We are living in a world today with shrinking energy resources per capita. We should be aware that we are reaching the limits of fossil fuels and other minerals that we can extract, unless we can somehow figure out a way to get the economy to tolerate higher prices.”
    Now she has written about and, I think she believes in EROEI but then promotes higher prices as a way to extract more. I find this kind of double speak in a lot of her writings. Am I reading this wrong? Or does she seem to think more money will create more of everything!

    • Red,

      I came to a similar conclusion months ago. Gail has a ‘career’ of producing voluminous reports. I’ve found that lumped together, they are sometimes muddled or internally inconsistent. It’s not rocket science to observe a decline in p/capita physical throughput including energy of course.

    • @Steven Kurtz and Red
      Gail is, IMHO, simply stating that the efficiency with which we use energy determines how much product we can afford to produce. If we use the energy inefficiently (say, in an internal combustion engine), then we will be able to afford less product than if we were able to emulate the electron transport chain which operates in microbes both in our cells and in the cells of plants,

      There are at least 5 ways to measure the probable future availability of energy:
      *The efficiency with which the energy is turned into product (e.g., Rockefeller’s use of both the light fractions of petroleum and the heavy fractions of petroleum). The most efficient process I know about is the electron transport chain which operates in microbes and keeps us all alive.
      *The scope of our harnessing of naturally existing temperature gradients or chemical gradients (e.g., tapping deep sources of energy and letting that high heat flow “into the cold”)
      *The ratio of truly useful product vs. neutral or actually harmful product (which can be approximated in a human body by measures of homeostasis and longevity)
      *The pool of specific types of flux energy and stored energy. (The sun gives us an enormous flux every day, while fossil fuels provide a large storage, and the earth’s core provides an extremely large storage.)
      *The wisdom with which we use the energy. Do we simply destroy life by using it stupidly?

      Don Stewart

    • “unless we can somehow figure out a way to get the economy to tolerate higher prices.”
      she doesn’t believe that to be possible, in fact ‘affordability’ is her big ‘schtick’.
      why is the ad wominem necessary?

  31. @rogerlewis

    I’d imagine that the background economic activity that helps realise the supply of oil beyond the actual extraction of oil would also be prone to the multiplier effect so any additional background energy costs including maintenance costs will probably be more than 0.09 as you suggest and could be anywhere between 2.0 and 0.9 depending the velocity of circulation and the stage within an economic cycle.

    Between 2.0 and 0.9 is the usual output multiplier for infrastructure in relation to fiscal policy.

    Interesting input though. Thanks.

  32. It’s at Least Worthwhile to Think About
    The energy represented by the universe is, according to E equals M time C Squared, beyond our comprehension. And the efficiency of the electron transport chain (operating at quantum scale distances and and at body temperature) is beyond anything we have managed to do….just about the opposite of the huge machinery at Geneva. About 20 years ago a couple of British biologists looked at the prospects for the human race and concluded that there was so much energy around and the potential gains in efficiency were so large that energy would likely not be a problem.

    But here we are, still using depleting fossil fuels in enormously wasteful vehicles and built environments. And we also use the fossil fuels to maintain lifestyles that humans did not evolve to use and thus create disease where there need be none.

    Maybe spend 10 minutes thinking about the reality of it all, before concluding that TINA.

    Don Stewart

    • @TonyH
      It will mean that we cannot continue, and expand, dysfunctional agricultural practices. If we are smart, we will get more efficient and more health-span promoting food production and consumption, along with reduced nitrogen, phosphorus, and CO2 pollution.
      Don Stewart

  33. From Tim Watkins
    This recent post summarizes my views of the NATO countries predicament and the colonialism they now depend upon to maintain their status.

    “The main reason that the states on this small peninsula and offshore islands at the western end of the Eurasian landmass emerged as the rulers of the world between 1500 and 1944 was because they were energy and resource rich. But those resources were finite, and Europe and the UK are now energy and resource poor – as anyone facing an energy bill or trying to fill up their car this winter can attest. And while the alchemists in the central bank and the City can use confidence tricks to bolster the apparent value of the currency in the short-term, sooner or later we are going to face a reckoning as the value of the currency falls back into line with the material – “real” – wealth of the economy which underwrites it. When that happens – either through inflation or a hard crash – we will no longer be able to rely on the exploitation of people and countries elsewhere to maintain our imperial way of life.”

    Don Stewart

    • For me, the most telling sentence in Tim Watkins’ latest is “the fake left stopped talking about social class”. This touches on something that I’ve often, including recently, thought about addressing here.

      The conventional narrative is that centrist, mixed-economy, “Keynesian” management failed in the 1970s, and ‘Thatcherism’, ‘Reaganomics’ and similar succeeded in the 1980s. Economies certainly slumped in the 70s and rebounded in the 80s – but was this really the product of a new emphasis on ‘laissez-faire’ policies?

      The alternative explanation is that oil prices soared in the 70s, plunging economies into crisis. The results included oil demand reduction, and the incentivization of new sources of supply, most obviously in the North Sea and Alaska. These longer-term effects led to sharp falls in oil prices in the 1980s.

      Thus, the big difference between the 70s and the 80s wasn’t ideology, but dramatically lower oil prices. Economic ‘liberals’ just happened to be in the right place at the right time to claim the credit.

      The fall of the USSR, in this sense, sealed the deal. The Left abandoned supposedly discredited collectivist economics – the ‘politics of class’ – and turned instead to what we might call ‘social [rather than economic] liberalism’.

      This era is drawing to an end, with energy/resource scarcity, once again, the operative process.

      Resource pressures now are material, whereas the oil crises of the 70s were political. Even so, the effects are similar.

      If I’m right about this, politics are likely to swing back to an ‘old Left’ emphasis on class and redistribition. This is overlaid by the stresses (and distributional effects) created by the divergence between the ‘real’ and the ‘financial’ economies.

    • @Dr. Morgan
      This isn’t to argue one way or the other, just to express doubt. Do you remember the old movie How Green Was My Valley about the coal mining towns in Wales? The story revolves around a strike in the mines and a mine collapse and similar concrete events. But underlaying it is the social structure of the mining village and the uneasy ways people negotiated the social and the private. Since the welfare state and the consumerism boom have both undermined social structure, and it seems that social media splinter people into small niches, how will the necessary social structure emerge?
      Don Stewart

    • Don Stewart.

      I’m not sure the Welfare State undermined social structure!!!!

      The Welfare State cleared the slums, gave people decent housing, access to health care and education.
      It was a very good means of wealth redistribution. That’s why people with money have always looked for ways to undermine it.

      IMO it’s the rolling back of the Welfare State that has caused social structures to crumble.

      Sorry, that’s my rant for the day over 🙂.

    • Don Stewart.

      I don’t see the Welfare State as undermining social structure. Quite the opposite. It cleared the slums, gave people decent housing, access to health care, education and a financial safety net.
      It was also a very good method of redistributing wealth. That’s why people with money have always tried to undermine it.

      IMO it’s the erosion of the post war welfare state that has lead to the crumbling of social structure/cohesion.

      Sorry. That’s my rant for the day over with😬!!!

    • Sorry. It got posted twice!!!!!

      I didn’t see the first one appear on the blog, so posted it again. D’oh!!!!!

      I wasn’t trying to ram home my point/rant🙂

  34. Dr Tim.

    I agree with your assessment of the 70’s 80’s but with one caveat.

    The post war Keynesian “old left” of the welfare state, good quality social housing, NHS and wealth redistribution, was also only possible because of a bonanza in cheap oil.

    (It could be argued that the NHS was built with Iranian oil stollen from Iran after the C.I.A-MI5 orchestrated coupe)

    It’s not so much the political system as it is the availability of cheap energy that determines “success” measured by personal prosperity.

    “Thatcherite economic liberalism” will falter because of a squeeze on energy but what comes after will not be able to restore anything like the levels of personal consumption that we have all become accustomed to here in the West.

    • Quite right.

      The broader picture, it seems to me, is shaped by ECoEs. The ECoE cost of energy fell steadily, from the start of the Industrial Revolution, right through to a nadir in 1945-1970. It might be said that, in this period, the West took a disproportionately large share of the global benefits of low-ECoE energy.

      The events of the 70s and 80s were the products of distortion, which made energy artifically expensive in the 1970s, and artifically cheap in the 1980s. Since then, of course, prosperity expansion has been undermined, and latterly turned negative, by rising ECoEs.

      It seems to me that the concept of ‘imperialism’ doesn’t go far enough. To be sure, the imperalist effect is there when one country exploits the resources of another. But the same, it seems to me, applies when the resources of one class are appropriated by another.

      Just as, say, ‘Europeans have exploited Africans’, can we also say that ‘rentiers have exploited workers’?

    • But how will energy and general resource decline per capita affect class differentiation? My guess is that declining resources will exacerbate class divides. It’s easier to provide more equal access to material goods when they are growing more abundant than when they are increasingly scarce. I expect that the moral imperative to “share the sacrifice” via redistribution will grow, but the natural reluctance by affluent classes to give up what they already have will grow too. Or, even if the affluent become willing to reduce their access to resources, the need for them to do so will grow faster than their willingness to sacrifice.

      The stresses from resource decline will probably result in more intra-national class conflict along with more international conflict. One result of the current war in Ukraine will be diminished wheat and food oil exports from Ukraine and Russia. This is likely to result in food price riots in lots of importing countries. Consider what it will be like when diminishing availability of food is pervasive over the whole world due to an increasing failure of industrial agriculture. A lack of food to makes everyone desperate and desperation breeds conflict, including class conflict.

    • Joe Clarkson.

      I guess everything depends on how much usable energy we will be left with at the end of de-growth? That will determine what sort of access to resources will be available and by how many people.

      If we go back to pre-industrial energy levels, then neo- feudalism is a distinct possibility. Most people engaged in farming and a ruling elite ruling over the majority.

      It would be nice to think that things would be more egalitarian but people have banded together and organise in order to control others, many times in the past.

    • Dr Tim

      You ask
      “can we also say that ‘rentiers have exploited workers’?”

      I would say most definitely YES!

      In a way, it can be framed in terms of ENERGY.

      A slave owner is appropriating someone else “energy” for their own benefit. Same with a Landlord and renter, as the renter, more often than not has to expend their own “energy” in order to earn the funds to pay the rent.

    • Seems some think that all property owners were granted ownership by a warlord, nobility, church, or via inheritance. Originally that might have been the rule in many countries. Many renters have purchased properties with mortgages, and attempt to make profits after all expenses and taxes. Comparing that to slave owners taking labor is hogwash.

    • Steve B Kurtz.


      I wasn’t really making the case that being a landlord is the same as being a slave owner🤣🤣🤣🤣.
      I’m well aware that “not all property owners were granted ownership by a warlord, nobility, church, or via inheritance”. I am one myself.

      But they both are “extracting” energy from other people.

      (Wasn’t “wage labour” seen by some in the US back in the 1800’s as one step up from slavery?)

    • @John Adams
      In the 1961 movie The Misfits, Montgomery Clift is offered a job on the family ranch. He is disgusted that it is ‘wage labor’. He has been demoted from “family” to hired hand. Written by the distinguished playwright Arthur Miller.
      Don Stewart

    • “Extracting energy from other people” seems to be your definition of receiving money. If that is the case, who isn’t doing that?

    • The debate about ‘legitimate landlords or rapacious rentiers?’ has been skewed by what happened during and since the GFC.

      Thanks to ultra-low interest rates, those with access to cheap capital can out-bid those trying to acquire assets through saved incomes.

      This is at its most visible, and perhaps most poignant and/or emotive, in tourist destinations. Locals, and especially young locals, can’t afford to buy homes, because outsiders with access to cheap capital buy up properties for tourist rental.

      One can understand the anger that this generates, even if the ‘outsiders’ are only ‘playing by the rules of the game’. The problem is that skewing the relationship between incomes and the cost of capital has changed these rules, to the benefit of some and the detriment of others.

      Given that rates (at least nominal rates) have to rise – and that tourism is pretty close to the perfect definition of a ‘discretionary’ activity, and thus has huge downside exposure – this imbalance is likely to unwind.

      The losses of the ‘outsiders’, though, won’t do much to help the ‘locals’, in economies heavily dependent on tourism.

      Whilst it persists, this problem isn’t the discontent of ‘the locals’, or the behaviour of ‘the outsiders’, but a system that has introduced such extreme imbalances between incomes and the cost of capital.

    • In the US and Canada the vast majority of homes are bought with mortgages, and have been for many decades. Price levels are a function of supply/demand, material & labor costs for new houses, and the level of interest rates. Tourist areas are a tiny % of global residential locations. Your point is true for some of those areas, but I fail to see it relating to Adams’ view of stealing labor.

    • I’m seeing a pattern emerging here and one that might be informed by Dependency Theory
      whether at national or international scales.

      I’m also beginning to see Putin’s war on Ukraine as a push back by the semi-periphery against the core with Eurasianism with a good dose of Turanism being evoked as the ideological basis for protecting Greater Russia Slav interests.

      Another aspect of Putin’s ideological rhetoric is to rebalance global economic interests away from Western core interests knowing that a war in Ukraine would invoke Western sanctions and force a global energy and a currency shift towards more semi-peripheral BRIC interests.

      The same could be said of ‘rational populism’ and ‘liberal nationalism’ in that the underlying motive is to shift economic power away from the metropolitan cores in which higher wages and higher access to capital is facilitating resource appropriation and capital extraction from semi-peripheral and peripheral regions into the core metropolitan regions.

      From this point of view, I personally don’t see how class analysis would provide a solution to this Dependency dynamic due to the juxtapositioning of inner city metropolitan émigré working class poverty and provincial indigenous working class poverty which is increasingly seen as part of the political polarisation and antagonism between Progressive elites and Conservative elites.

      From this point of view, rational populism within the UK has succeeded in reforming the European neoliberal economic model and the Treasury green book determining regional investment metrics. It has also produced the political vehicle of Levelling Up and a deeper acknowledgement of geographical inequalities.

      Similarly, 2nd homes have somewhat being targeted with higher council taxes but of course within the UK Right there is a deep antagonism between working class interests and middle class interests as there are on the UK Left.

      Thus class analysis is avoided by the Progressive elites and the Conservative elites for that very reason unless of course it is politically opportunistic to do so.

      A fair society will only occur if people don’t always put their own interests first but to even attempt to be selfless invariably means bad faith actors will take advantage.

      So I’m not sure if it is possible to create a system in which bad faith actors are entirely eliminated since it only needs one with their coterie of support to turn national or global politics on its head. This probably explains why the tribalism of old was so successful and sustainable. Bad faith actors can be easily identified and eliminated.

      Presumably this line of reasoning is what motivated eugenics, ethnic purity spirals, State hate propaganda and the machinations of war to eliminate bad faith actors.

      This for me raises the ugly prospect of Universalism as the basis of a system that enforces a consensus on what is right and what is good with the foreboding question of ‘decided by whom’?

      I actually think this same set of Dependency dynamics is playing out regarding Peak Prosperity and Peak per capita Global Growth with the fear that acknowledging the end of per capita material growth and therefore the rational need to build a fair global system will be taken advantage of by bad faith actors.

      As such, people and elites in particular would rather take up defensive positions instead and put their material interests first rather than risk the fear of bad faith actors taking them away for their own enjoyment.

      Hence the need to Defend the Peace.

      Thus if there is one thing that drives the need for growth within a Dependancy Theory World is the need to militarily defend ourselves and our material ‘way of life’.

      Not a happy conclusion I know but nevertheless trying to build a cooperative global system based on fairness and one that is informed by understanding the energy basis of the material economy is one that we can still strive for despite its apparent futility if bad faith actors are involved.

      So from this point of view, the illusion of perpetual growth is not motivated by ignorance within the political and elite classes, it is motivated by fear and in particular the fear of creating and sharing a cooperative global system due to the existence of bad faith actors who are similarly motivated by fear which all too often manifests as hate and aggression.

    • Don Stewart.

      I read somewhere that in the 1870’s, 80% of the workforce in the US, where self-employed. Sounds like a crazy number if true!!!
      The likes of Andrew Carnegie slowly eroded that number.

    • Steve B Kurtz.

      I can’t speak for the US but here in the UK we have buy-to-let mortgages.
      I could secure a buy-to-let mortgage against my existing rental property (which I inherited) and put a tenant in there. Their labour/energy would pay off the mortgage. If interest rates go up, I could just past the increased repayment cost onto my tenant. Happy Days👍!!!!!!

      This is totally exploitative. I can sit on my fat arse and get my mortgage payed off by someone else. Non of it is down to my hard work.
      Don’t you just love the “free market”!!!?????

      This, on top of a shortage of social housing, has created a housing crisis. (A lot of Council housing was sold off and is now in the private rental market at much higher rents).
      Social housing is as rare as hen’s teeth, so their is no affordable alternative.
      The largest part of the welfare budget is Housing Benefit. This is to help people on low incomes cover their rent. The high house prices feed through to the private rental market and onto the benefits system. It’s crazy.

      Regarding extraction of other people’s energy. I just thought that it was an interesting observation, as energy is a core part of the blog, that people aren’t just seeking fossil fuel energy, they are also after other people’s energy. (My son get plenty of mine🙂!!!!!).

      Slavery being this phenomenon’s its “purest” form.

    • (quotation marks missing, pls dump earlier reply)
      Steven B Kurtz
      on March 18, 2022 at 9:44 pm said:
      John Adams:

      ” in the UK we have buy-to-let mortgages. I could secure a buy-to-let mortgage against my existing rental property (which I inherited) and put a tenant in there.”


      A down payment between 15 and 25 percent of the purchase price will typically be required for a rental property.

      And you pay interest on the loan. It is your risk alone. You must pay taxes and all maintenance and repairs. Renting is a free market, and at times owners can’t find tenants.

      “Their labour/energy would pay off the mortgage. If interest rates go up, I could just past the increased repayment cost onto my tenant. Happy Days👍!!!!!!”

      Sometimes it works that way. Sometimes not. No guarantees.

      “This is totally exploitative. I can sit on my fat
      and get my mortgage payed off by someone else. Non of it is down to my hard work.”

      Property was built or purchased with the savings of someone’s hard work. No free lunch.

      “Don’t you just love the “free market”!!!?????”

      Find a better system, and try to convince the vast majority of people that you are right! History has voted you and all socialists down.

      “This, on top of a shortage of social housing, has created a housing crisis. (A lot of Council housing was sold off and is now in the private rental market at much higher rents).”

      You are looking at a tiny % of the global housing market. Voters can change policies if overwhelming support for it. In the case of England, Nobility is a disease in my view. Good luck in abolishing the House of Lords. (fat asses)

      “Social housing is as rare as hen’s teeth, so their is no affordable alternative.

      The largest part of the welfare budget is Housing Benefit. This is to help people on low incomes cover their rent. The high house prices feed through to the private rental market and onto the benefits system. It’s crazy.”

      Not in N. America, and likely not in most of the world.

      “Regarding extraction of other people’s energy. I just thought that it was an interesting observation, as energy is a core part of the blog, that people aren’t just seeking fossil fuel energy, they are also after other people’s energy. (My son get plenty of mine🙂!!!!!).

      Slavery being this phenomenon’s its “purest” form.”

      The problem in England began with Warlords->Lords of the Manor->Landlords (not a free market!)

    • I come back to the points about balances, imbalances and a soupcon of ‘moral hazard’.

      First, no form of economic extremism works very well. That’s as true of extreme ‘liberalism’ as it is of socialism. What works best is very likely to be the mixed economy of optimised private and public sector provision.

      Second, the events of 2008 introduced extreme distortions into the relationship between incomes (of all sorts) and the cost of capital. I suspect history will portray this as necessity, created by a failing system. From the late 1990s, we poured abundant credit into the system, basically to prop it up through the creation of demand. When this failed, we went for negative real interest rates, the next (and last) available expedient.

      Third, the responses to the GFC can be painted as moral hazard – ‘rescuing the reckless, punishing the prudent’. Borrowers have, since then, assumed that ultimately, if things go wrong on a big enough scale, they’ll get bailed out. Many investors assume the same thing.

      This bail-out assumption is one of two factors propping up asset markets, the other being the extreme unattractiveness of the alternative, which is cash. Even if rates are raised to, say, 3%, real returns on cash will remain at extreme negatives, quite possibly -5% to -7%.

      This seems less about principle, still less about equity, but almost entirely about pragmatism in the form of ‘doing whatever it takes’ to prop up the existing system.

      Actually, the system can’t be propped up indefinitely, because everything is predicated on growth. In reality, growth is over. ECoEs are rising, prosperity is falling, inflation is rising, increases in the real cost of essentials are cutting away the affordability of discretionary sectors, and the financial system is being undermined by the invalidation of the assumption of growth in perpetuity.

      Every proposed response lacks credibility – abundant low-cost energy from REs, the ending of “temporary” problems such as those caused by covid and war in Ukraine, extra oil from theMiddle East, the hydrogen economy, “build back better”, “levelling up”, “sustainable growth”, a billion EVs.

    • No disagreement on your points, Dr. Tim. I was responding to Adams’ blame game on rentier capitalism. Land was originally “granted” by the powerful to ‘loyal lieutenants.” Then some was later purchased by others. In the US there was homesteading in areas opened by the government after conquest from Native Americans. Theft was from the original inhabitants by the powerful. Earned income accounts for the vast majority of equity in housing stock in developed countries.

    • Dr Tim

      Totally agree with your points.

      Just to add. Regarding the housing crisis in the UK.
      Is part of the driver the need for foreign Investment to balance any trade deficit? Foreign investment in the UK housing (especially London) has been encouraged.
      This has had a domino effect in the whole of the UK housing sector. Rocketing house prices in London fuel increased prices elsewhere. I know people who have moved out of London and made a “killing”.
      House price inflation is running at 12%+ where I live. It’s funny how house price inflation isn’t included in official inflation figures!!! Hmmmm. I wonder why not🤔?????

      This in turn draws in more foreign capital as the returns on investment are so good. We are selling the “family silver”.

      All this economic activity adds to GDP. I wonder how much of GDP is accounted for by the housing market? Fueled by the banks creating almost limitless amounts of credit/mortgages made possible by low interest rates.

      The people at the bottom of this whole Ponzi scheme are the renter’s. Who, I’m afraid contrary to Steve B Kurtz opinion are being exploited to keep the who show on the road.

      It’s funny how inflation is seen as an evil by some, yet it seems to me, to be the only thing keeping the economy going.

      As you say though, this whole farce will eventually go “pop”. When it does, there is going to be a lot of “collateral damage”.

    • Adams loves the blame game. An exploiter is one who intentionally takes advantage of another person. I wonder if Adams does that to his tenants? Sometimes situations result in people or other life getting hurt through no fault of their own. As an old saying goes, life’s a bitch and then you die. Is reality the exploiter?

    • It’s the unavoidable result of population overshoot. Finite planet.

      If you think it’s a game, then perhaps you think to play is optional. Guess what? Survival isn’t. Shelter is superceded only by food and water.

    • Steve B Kurtz.

      I could rant on about the UK housing situation for hours, but will spare you and keep it brief.

      I have family members who do exactly as I have explained. Have multiple properties on buy-to-let mortgages.
      Equity from one (due to house price inflation) forming the deposit for the next. Stick a tenant in and the tenant pays off the mortgage.
      There is a chronic shortage of housing so it is never a problem to find tenants. (Rentals go so quick that people commit without even having a viewing!!!!)

      This isn’t through hard work and graft. Just luck an being in the right place at the right time. One particular relative hasn’t “worked” for 25years and lives of the rental income.

      Those on the “housing ladder” are OK (ish) but it is becoming increasingly difficult for my neices and nephews to get a “foot on the first rung”. They are stuck in a rental catch 22 where the rent is do high that they can’t afford to save for a deposit. (And it’s not because they don’t work hard)

      You say

      “The problem in England began with Warlords->Lords of the Manor->Landlords (not a free market!)”

      Indeed it did, but it ended up with the “free market”!!!!!!!!

      Rant over. Going to enjoy the sunshine.🙂

    • Arguing from the particular to the universal is fallacious. The situation in one place at one time(generation) applies to that circumstance.

      The first property your relatives bought required a down payment. Either they inherited that or saved it from their labor. (Or won a lottery!)

      You have failed to establish any free lunch that can be traced to a source other than those I’ve mentioned. Catching a rising market in house prices has occurred other places too. But declined can also occur, particularly in depressions and in declining populations which is lye case in many locales on the planet.( hundreds of examples)

  35. Dr Morgan’s quantitative analysis, over the years, has shown how correct his assessment has been regarding the importance of energy.

    My view is that early forms of human culture were formed by groups gathered around wood fires. This grouping together enabled the formation of communities and early communication and cooperative work.

    Humanity, as a consequence, has been formed by the availability of other, more convenient, sources of energy.

    Without energy we will sink back into the dark ages.

    Some form of nuclear power plant seems to be the realistic solution.

  36. What Does the DeGrowth Future Hold?
    The amazing and amazingly scary world of viruses, which we scarcely understand and which pose enormous computational problems for science:

    And a review of Richard Wrangham’s book about the peaceful/ violent life of hunter-gatherers:

    While the podcast and book delve into biology perhaps more than a financial blog wants to tolerate, they are both quite germane to the topic of DeGrowth. If we have any choices at all in determining what comes next, then the realities of “nature red in tooth and claw” and the human characteristic of aggression against outsiders but communal peace making among “us” need to be in our minds.

    Interjecting an opinion of my own. I believe that history will look back on a sort of Pax Pound and Pax Dollar similar to the Pax Romana ushered in by the Roman Empire. As long as everyone was after a universal currency, we could understand the rules and make certain legal limitations on what was acceptable behavior and what was beyond the pale. If the currency fails, as now seems likely to me, we could devolve into something like the hundred years war in Europe or the constant wars between rival war-lords in medieval Japan. When the Edo government arose in Japan, the population increased from around 9 million to something like 50 million…all without benefit of fossil fuels. Edo was repressive, but more importantly it severely repressed the power of the war lords…many Samurai took up umbrella mending as a trade.

    Don Stewart
    PS. Nuclear armed war lords are too scary to think about…so I leave that to you.

  37. Limits to Growth on a worldwide scale is something bipedal hominids have never experienced before. As we are faced with something new we must think anew and act anew.

  38. Several relevant articles included in Charles Smith’ weekend round up:

    First up is Art Berman on the impossibility of the Green Revolution as most people envision it:


    “Overshoot and climate change are not part of a morality play. This is not about good guys and bad guys.

    We are following our genetic imperative for population and economic growth. It worked pretty well for a few thousand years but now it’s killing us. Some don’t even see that yet.”

    Second up is a headline with the story behind a paywall:


    The shale boom in the US is over. Therefore, I surmise, lot’s of reshuffling of the geo-political cards. Attack or do a deal?

    Third up is the end of Haber-Bosch nitrogen:


    I see this third article through a bitter-sweet perspective. Yes, it is true that industrial cattle and industrial food are both entirely dependent on heavily fertilized and poison drenched corn. However, public health has required for a long time that we end such nonsense and eat real food. A corollary is the end of the corn ethanol which is now a mandatory ingredient in most gasoline in the US. I THINK cars will run on straight gasoline, but I am not sure. At least they won’t be optimized for straight gasoline. Trump lost the opportunity to end the mandate, because nobody in industry apparently thought this could happen.

    Don Stewart

  39. Limits to Growth on a worldwide scale???

    Some theorize that the tales of superhumans who built the temples and palaces were invented because later generations could not imagine how such structures were ever built. I guess a current analog would be that in 50 years people may look at a complicated highway interchange and have no idea what purpose it served, or how it could possibly have been built by mere humans.

    Don Stewart

  40. More from Charles
    I have now been able to skim over this report on natural gas, from Tom Murphy and Co-Conspirators

    Assessing Global Long-Term EROI of Gas: A Net-Energy Perspective on the Energy Transition


    The industrial society can be likened to a thermodynamic system that profoundly relies on abundant and cheap energy intakes such as oil or gas to thrive [90]. However, the rapid growth in use of non-renewable fossil fuels has undermined their future availability, and a shift from conventional sources to unconventional ones has started.

    Such a shift has had considerable effects on the net-energy supply of gas. For in- stance, we find that the total energy needed for the gas production continually increases, from a proportion equivalent to 6.3% of the gross energy produced from gas at present, to 23.7% in 2050. We thus foresee an important use of energy to produce gas in the future, a phenomenon relating to “energy cannibalism” [83], which bears energy security and environmental degradation risks. Low and diminishing energy returns are, therefore, not only a threat to energy security but also to the environment itself. Although our approach is subject to various uncertainties, the gaps between net and gross energy are statistically significant, to uphold the fact that our results are qualitatively and, to some extent, quanti- tatively robust. In other terms, this means that the relative trends from our results are, in all likelihood, independent of the choice of gross energy data.

    Our findings highlight the necessity to see the energy transition from a net-energy perspective, not only for energy security concerns but also for the multiplication of envi- ronmental damages that a low-energy-yield energy production is likely to drive. We thus call for the energy transition debate to adopt a net-energy analysis, and for a new wave of net energy ratios studies, including EROI and PROI, to consider wise energy consumption and its environmental impacts.”

    Don Stewart

    • Thanks for sharing all this. Just a detail: this is not Tom Murphy, but David Murphy, St. Lawrence University.

    • Martin
      Thanks for pointing out my mistake. I jumped to the conclusion that David Murphy had succeeded in putting together his group of researchers, and this was a report. I have heard of the Murphy who co-authored this. I am sorry for my mistake…Don Stewart

  41. Prospects for US???
    If you look at Exhibit 2 in the paper on Gas EROI, you will see that the current EROI estimate is about 10 and rapidly declining for tight gas. IF the Wall Street Journal article predicting the eminent demise of fracking in the US applies to both tight oil and tight gas and also the associated gas produced from fracked oil wells, then the US faces a Seneca Cliff in oil and gas production. By far the second largest producer in the world is Russia. I don’t think they have an estimate for Russia, but energy executives in Russia have warned of declining supplies

    Now, ignoring what is going on in Ukraine, what would be the most advantageous strategy for Russia to take. I suggest that it is a close partnership with China, which needs gas and is reachable with pipelines. It probably doesn’t make sense to send a lot of gas to Europe, because Europe is energy poor and likely headed downhill fast and is not really competitive with China in terms of manufacturing. China also uses far less energy per capita than the US, and considerably less than Europe. So the last of the big countries standing are likely to be China and Russia.

    That doesn’t deal with smaller countries that may fare pretty well, such as Iran and Qatar.

    I suggest that the paper should prompt us to think in terms of the Export Land model. The response of Europe and the US may very well be a military attempt to re-establish colonies for the production of energy. The alternative may well be poverty in the US and Europe. Knowing more about the US than Europe, the energy intensive infrastructure in the US is very scary. One example is the huge dependence of the food sector on energy.

    Don Stewart

  42. And Also
    G and R investment advisors have a new video out on the energy and agricultural crises and inflation. I have never successfully posted a direct link to them, but here is the title, which a search might find for you:
    In this video conference call, Managing Partners Leigh Goehring and Adam Rozencwajg (G&R) came together to discuss the outlook for different natural resources including oil, natural gas, uranium and copper as well as other factors affecting investors such as the invasion of Ukraine and inflation.

    If there is anything missing from their model, I suggest it is the thermodynamics of increasing energy COSTS. Based on thermodynamics, if energy costs too much (which definition is tricky) then less will be used and everyone will be less prosperous. I’m not smart enough to figure out exactly where someone with dollars in their bank account should put their money in such a world.

    But leaving that aside, they do a pretty good job of explaining why US shale will not grow any more and the temporary blip from the Drilled Un-Completed wells in the Permian is running down to zero. The current rig count in the shale plays in the US is below maintenance levels, so supply will fall. They place a lot of faith in the emergence of an energy consuming middle class in India and around the world continuing to expand demand for oil and gas. They believe that in 2022, for the first time in decades, oil consumption will equal pumping capacity.

    They seem to believe that increased investment in the upstream business is the solution. I will note that Tom Murphy and his co-conspirators think that there is no solution, since the ECoE’s of oil and gas (and probably other resources also) are increasing exponentially. The greyhound can chase the rabbit but it will never catch it.

    They believe that the huge investments in wind and solar have been a terrible mistake because those investments crowded out investment in upstream oil and gas.

    I do have a comment on G and R’s take on agriculture. I agree with their assessment of nitrogen in the current agricultural environment of the production of huge amounts of junk food, which is sustaining the waist lines of most all people who aren’t actually starving. I would part company with them in the sense that I do believe that what we are going to be forced to do is what goes by the label “Agro-Ecology” or some similar term. It begins with the observation that nobody ever sprayed nitrogen and phosphorus fertilizers on the Amazon…but it you cut down the forest and plant industrial corn and soybeans, then the nitrogen and phosphorus fertilizers become “necessities”. We do know how to do Agro-Ecology, but it gets very little respect in the halls of government because it doesn’t fit the top down bureaucratic Neo-Liberal model that governments know how to do. It’s a lot more like Chris Smaje’s Peasants Republic.

    In short, I think they understand the current crisis pretty well. I don’t think they (or very many other people) can actually visualize what we are going to be forced to do by circumstances.

    Don Stewart

    • Don Stuart

      Thanks for the last few posts. All interesting stuff. Kinda reinforces a lot of the discussions here.

      You say:

      “I’m not smart enough to figure out exactly where someone with dollars in their bank account should put their money in such a world.”

      If you/one have the money and space, how about investing in a lifetime’s supply of tinned food, a gun and lots of ammo?
      If you/one can’t afford that, just the gun and lots of ammo?
      If you/one can’t afford that, maybe just the gun and one round?🙂

      On a more serious note. I’m not sure that the US/Europe can go down the colonisation route again. China (and Russia) might have something to say about it, if it’s own supplies were to be effected by any US actions.
      I think a cosying up approach may be better. After all, military action uses up a lot of energy.

    • @Don Stewart

      You have posted some very interesting links above.Thanks for that.
      You seem to be able to find reports that I myself cannot.
      Another video I found quite useful was the discussion between Nate Hagens and Art Berman.

      I use this video to help educate friends who are just now beginning to see the issues at hand.
      I have followed Nate Hagens for some time, Hagens and Berman together created a very useful discussion.
      Here in Canada, it is generally difficult to get people to understand or pay attention to resource EROEI or ECoE.
      There seems to be a general acceptance that the cure for dwindling Oil and Gas reserves is to throw more money at the problem. Recent world events are beginning to highlight that the Alpha issue is one of dwindling resource EROEI, and from that datum most other issues are spawned.
      It will not be easy to insulate one’s self from the oncoming symptoms of the net energy cliff, but I now tend to focus on positioning lifestyle and assets in accordance with the trajectory laid out by Dr. Tim and others.
      I also appreciate the discipline of this forum in keeping mostly to the topic at hand, and not becoming a soap box for all world’s issues.


    • Hi Mark.

      I tried to get Richard Murphy to discuss EROI and the implications on the economy, on his blog.

      He replied saying “we don’t do de-growth here” 🤣🤣🤣🤣. It made me laugh. He might not, but the rest of the world is about to!!!!

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