No, I don’t hate “renewables”

20 07 2019

Another masterpiece from Tim who keeps churning out great stuff on his website……

During a conversation with a friend yesterday I was asked why I was so hostile toward “renewables” – or as I prefer to call them, non-renewablerenewable energy-harvesting technologies.  My answer was that I am not opposed to these technologies, but rather to the role afforded to them by the Bright Green techno-utopian crowd, who continue to churn out propaganda to the effect that humankind can continue to metastasise across the universe without stopping for breath simply by replacing the energy we derive from fossil fuels with energy we harvest with wind and tide turbines, solar panels and geothermal pumps.  These, I explained to my friend, will unquestionably play a role in our future; but to nowhere near the extent claimed by the proponents of green capitalism, ecosocialism or the green new deal.

It would seem that I was not alone in being asked why I was so disapproving of “renewables.”  On the same day, American essayist John Michael Greer addressed the same question on his Ecosophia blog:

“Don’t get me wrong, I’m wholly in favor of renewables; they’re what we’ll have left when fossil fuels are gone; but anyone who thinks that the absurdly extravagant energy use that props up a modern lifestyle can be powered by PV cells simply hasn’t done the math. Yet you’ll hear plenty of well-intentioned people these days insisting that if we only invest in solar PV we can stop using fossil fuels and still keep our current lifestyles.”

Greer also explains why so many techno-utopians have such a starry-eyed view of “renewables” like solar panels:

“The result of [decades of development] can be summed up quite readily: the only people who think that an energy-intensive modern lifestyle can be supported entirely on solar PV are those who’ve never tried it. You can get a modest amount of electrical power intermittently from PV cells; if you cover your roof with PV cells and have a grid tie-in that credits you at a subsidized rate, you can have all the benefits of fossil fuel-generated electricity and still convince yourself that you’re not dependent on fossil fuels; but if you go off-grid, you’ll quickly learn the hard limits of solar PV.”

Greer is not alone in having to spell this out.  The first article I read yesterday morning was a new post from Tim Morgan on his Surplus Energy Economics blog, where he makes the case that even if we were not facing a climate emergency, our dependence upon fossil fuels still dooms our civilisation to an imminent collapse:

“Far from ensuring ‘business as usual’, continued reliance on fossil fuel energy would have devastating economic consequences. As is explained here, the world economy is already suffering from these effects, and these have prompted the adoption of successively riskier forms of financial manipulation in a failed effort to sustain economic ‘normality’.”

The reason is what Morgan refers to as the rapidly-rising “energy cost of energy” (ECoE) – a calculation related to Net Energy and Energy Return on Energy Invested (EROI).  Put simply, industrial civilisation has devoured each fossil fuel beginning with the cheapest and easiest deposits and then falling back on ever harder and more expensive deposits as these run out.  The result is that the amount of surplus energy left over to grow the economy after we have invested in energy for the future and in the maintenance and repair of the infrastructure we have already developed gets smaller and harder to obtain with each passing month.

Morgan sets out four factors which determine the Energy Cost of Energy:

  • Geographical reach – as local deposits are exhausted, we are obliged to go further afield for replacements.
  • Economies of scale – as our infrastructure develops, we rationalise it in order to keep costs to a minimum; for example, having a handful of giant oil refineries rather than a large number of small ones. Unfortunately, this is a one-off gain, after which the cost of maintenance and repair results in diminishing returns.
  • Depletion – most of the world’s oil and coal deposits are now in decline, after providing the basis for the development of industrial civilisation. Without replacement, depletion dooms us to some form of degrowth.
  • Technology – the development of technologies that provide a greater return for the energy invested can offset some of the rising ECoE, but like economies of scale, they come with diminishing returns and are ultimately limited by the laws of thermodynamics:

“To be sure, advances in technology can mitigate the rise in ECoEs, but technology is limited by the physical properties of the resource. Advances in techniques have reduced the cost of shale liquids extraction to levels well below the past cost of extracting those same resources, but have not turned America’s tight sands into the economic equivalent of Saudi Arabia’s al Ghawar, or other giant discoveries of the past.

“Physics does tend to have the last word.”

Morgan argues that by focusing solely on financial matters, mainstream economics misses the central role of surplus energy in the economy:

“According to SEEDS – the Surplus Energy Economics Data System – world trend ECoE rose from 2.9% in 1990 to 4.1% in 2000. This increase was more than enough to stop Western prosperity growth in its tracks.

“Unfortunately, a policy establishment accustomed to seeing all economic developments in purely financial terms was at a loss to explain this phenomenon, though it did give it a name – “secular stagnation”.

“Predictably, in the absence of an understanding of the energy basis of the economy, recourse was made to financial policies in order to ‘fix’ this slowdown in growth.

“The first such initiative was credit adventurism. It involved making debt easier to obtain than ever before. This approach was congenial to a contemporary mind-set which saw ‘deregulation’ as a cure for all ills.”

The inevitable result was the financial crash in 2008, when unrepayable debt threatened to unwind the entire global financial system.  And while the financial crisis has been temporarily offset by more of the same medicine – quantitative easing and interest rate cuts – it has been the continued expansion of emerging markets that has actually kept the system limping along:

“World average prosperity per capita has declined only marginally since 2007, essentially because deterioration in the West has been offset by continued progress in the emerging market (EM) economies. This, though, is nearing its point of inflexion, with clear evidence now showing that the Chinese economy, in particular, is in very big trouble.

“As you’d expect, these trends in underlying prosperity have started showing up in ‘real world’ indicators, with trade in goods, and sales of everything from cars and smartphones to computer chips and industrial components, now turning down. As the economy of ‘stuff’ weakens, a logical consequence is likely to be a deterioration in demand for the energy and other commodities used in the supply of “stuff”.

“Simply stated, the economy has now started to shrink, and there are limits to how long we can hide this from ourselves by spending ever larger amounts of borrowed money.”

The question this raises is not simply, can we replace fossil fuels with non-renewable renewable energy-harvesting technologies (Morgan refers to them as “secondary applications of primary energy from fossil fuels”) but can we deploy them at an ECoE that allows us to avoid the collapse of industrial civilisation?  Morgan argues not.  The techno-utopian bad habit of applying Moore’s Law to every technology has allowed economists and politicians to assume that the cost of non-renewable renewable energy-harvesting technologies will keep halving even as the energy they generate continues to double.  However:

“[W]e need to guard against the extrapolatory fallacy which says that, because the ECoE of renewables has declined by x% over y number of years, it will fall by a further x% over the next y. The problem with this is that it ignores the limits imposed by the laws of physics.”

More alarming, however, is the high ECoE of non-renewable renewable energy-harvesting technologies; despite their becoming cheaper than some fossil fuel deposits:

“…there can be no assurance that the ECoE of a renewables-based energy system can ever be low enough to sustain prosperity. Back in the ‘golden age’ of prosperity growth (in the decades immediately following 1945), global ECoE was between 1% and 2%. With renewables, the best that we can hope for might be an ECoE stable at perhaps 8%, far above the levels at which prosperity deteriorates in the West, and ceases growing in the emerging economies.”

At this point, no doubt, some readers at least will be asking Morgan why he dislikes “renewables” so much.  And his answer is the same as Greer’s and my own:

“These cautions do not, it must be stressed, undermine the case for transitioning from fossil fuels to renewables. After all, once we understand the energy processes which drive the economy, we know where continued dependency on ever-costlier fossil fuels would lead.

“There can, of course, be no guarantees around a successful transition to renewable forms of energy. The slogan “sustainable development” has been adopted by the policy establishment because it seems to promise the public that we can tackle environmental risk without inflicting economic hardship, or even significant inconvenience.”

Morgan’s broad point here is that there is a false dichotomy between addressing environmental concerns and maintaining economic growth.  The economy is toast irrespective of whether we address environment crises or not.  There is not enough fossil fuel energy to prevent he system from imploding – the only real question to be answered is whether we continue with business as usual until we crash and burn or whether we take at least some mitigating actions to preserve a few of the beneficial aspects of the last 250 years of economic development.  After all, having clean drinking water, enough food to ward off starvation and some basic health care would make the coming collapse easier than it otherwise might be.

The problem, however, is that even with the Herculean efforts to deploy non-renewable renewable energy-harvesting technologies in the decades since the oil crisis in 1973, they still only account for four percent of our primary energy.  As Morgan cautions, it is too easy for westerners to assume that our total energy consumption is entirely in the gas and electricity we use at home and in the fuel we put in the tanks of our vehicles.  In reality this is but a tiny fraction of our energy use (and carbon footprint) with most of our energy embodied within all of the goods and services we consume.  Not only does fossil fuel account for more than 85 percent of the world’s primary energy, but both BP and the International Energy Agency reports for 2018 show that fossil fuel consumption is growing at a faster rate than non-renewable renewable energy-harvesting technologies are being installed.

Nor is there a green new deal route out of this problem.  As a recent letter to the UK’s Committee on Climate Change, authored by Natural History Museum Head of Earth Sciences Prof Richard Herrington et al., warns:

“To replace all UK-based vehicles today with electric vehicles (not including the LGV and HGV fleets), assuming they use the most resource-frugal next-generation NMC 811 batteries, would take 207,900 tonnes cobalt, 264,600 tonnes of lithium carbonate (LCE), at least 7,200 tonnes of neodymium and dysprosium, in addition to 2,362,500 tonnes copper. This represents, just under two times the total annual world cobalt production, nearly the entire world production of neodymium, three quarters the world’s lithium production and at least half of the world’s copper production during 2018. Even ensuring the annual supply of electric vehicles only, from 2035 as pledged, will require the UK to annually import the equivalent of the entire annual cobalt needs of European industry…

“There are serious implications for the electrical power generation in the UK needed to recharge these vehicles. Using figures published for current EVs (Nissan Leaf, Renault Zoe), driving 252.5 billion miles uses at least 63 TWh of power. This will demand a 20% increase in UK generated electricity.

“Challenges of using ‘green energy’ to power electric cars: If wind farms are chosen to generate the power for the projected two billion cars at UK average usage, this requires the equivalent of a further years’ worth of total global copper supply and 10 years’ worth of global neodymium and dysprosium production to build the windfarms.

“Solar power is also problematic – it is also resource hungry; all the photovoltaic systems currently on the market are reliant on one or more raw materials classed as “critical” or “near critical” by the EU and/ or US Department of Energy (high purity silicon, indium, tellurium, gallium) because of their natural scarcity or their recovery as minor-by-products of other commodities. With a capacity factor of only ~10%, the UK would require ~72GW of photovoltaic input to fuel the EV fleet; over five times the current installed capacity. If CdTe-type photovoltaic power is used, that would consume over thirty years of current annual tellurium supply.

“Both these wind turbine and solar generation options for the added electrical power generation capacity have substantial demands for steel, aluminium, cement and glass.”

Put simply, there is not enough Planet Earth left for us to grow our way to sustainability.  The only option open to us is to rapidly shrink our activities and our population back to something that can be sustained without further depleting the planet we depend upon.  Continue with business as usual and Mother Nature is going to do to us what we did to the dodo and the passenger pigeon.  Begin taking some radical action – which still allows the use of some resources and fossil fuels – to switch from an economy of desires to one of needs and at least a fewhumans might survive what is coming.

The final problem, though, is that very few people – including many of those who protest government inaction on the environment – are prepared to make the sacrifices required.  Nor are our corporations and institutions prepared to forego their power and profits for the greater good.  And that leaves us with political structures that will inevitably favour business as usual.

So no, I don’t hate “renewables” – I just regard those who blithely claim that we can deploy and use them to replace fossil fuels without breaking a sweat to be as morally bankrupt as any climate change denying politician you care to mention.  There is a crash on the horizon, the likes of which we haven’t seen since the fourteenth century.  When the energy cost of securing energy – whether fossil fuel, nuclear or renewable – exceeds the energy cost of sustaining the system; our ability to take mitigating action will be over.  Exactly when this is going to happen is a matter of speculation (we should avoid mistaking inevitability for imminence).  Nevertheless, the window for taking action is closing fast; and promising Bright Green utopias as we slide over the cliff edge is not helping anybody.





Towards a new operating system……

28 08 2018

Scientists Warn the UN of Capitalism’s Imminent Demise

A climate change-fueled switch away from fossil fuels means the worldwide economy will fundamentally need to change.

Image: Shutterstock

ANOTHER brilliant piece of journalism from Nafeez Ahmed. Originally sighted on MOTHERBOARD….

nafeezCapitalism as we know it is over. So suggests a new report commissioned by a group of scientists appointed by the UN Secretary-General. The main reason? We’re transitioning rapidly to a radically different global economy, due to our increasingly unsustainable exploitation of the planet’s environmental resources.

Climate change and species extinctions are accelerating even as societies are experiencing rising inequalityunemploymentslow economic growthrising debt levels, and impotent governments. Contrary to the way policymakers usually think about these problems, the new report says that these are not really separate crises at all.

Rather, these crises are part of the same fundamental transition to a new era characterized by inefficient fossil fuel production and the escalating costs of climate change. Conventional capitalist economic thinking can no longer explain, predict, or solve the workings of the global economy in this new age, the paper says.

Energy shift

Those are the stark implications of a new scientific background paper prepared by a team of Finnish biophysicists. The team from the BIOS Research Unit in Finland were asked to provide research that would feed into the drafting of the UN Global Sustainable Development Report (GSDR), which will be released in 2019.

For the “first time in human history,” the paper says, capitalist economies are “shifting to energy sources that are less energy efficient.” This applies to all forms of energy. Producing usable energy (“exergy”) to keep powering “both basic and non-basic human activities” in industrial civilisation “will require more, not less, effort.”

“Economies have used up the capacity of planetary ecosystems to handle the waste generated by energy and material use”

The amount of energy we can extract, compared to the energy we are using to extract it, is decreasing “across the spectrum—unconventional oils, nuclear and renewables return less energy in generation than conventional oils, whose production has peaked—and societies need to abandon fossil fuels because of their impact on the climate,” the paper states.

The shift to renewables might help solve the climate challenge, but for the foreseeable future will not generate the same levels of energy as cheap, conventional oil.

In the meantime, our hunger for energy is driving what the paper refers to as “sink costs.” The greater our energy and material use, the more waste we generate, and so the greater the environmental costs. Though they can be ignored for a while, eventually those environmental costs translate directly into economic costs as it becomes more difficult to ignore their impacts on our societies.

And the biggest “sink cost,” of course, is climate change:

“Sink costs are also rising; economies have used up the capacity of planetary ecosystems to handle the waste generated by energy and material use. Climate change is the most pronounced sink cost,” the paper states.

The paper’s lead author, Dr. Paavo Järvensivu, is a “biophysical economist”—an emerging type of economist exploring the role of energy and materials in fuelling economic activity.

The BIOS paper suggests that much of the political and economic volatility we have seen in recent years has a root cause in ecological crisis. As the ecological and economic costs of industrial overconsumption continue to rise, the constant economic growth we have become accustomed to is now in jeopardy. That, in turn, has exerted massive strain on our politics.

But the underlying issues are still unacknowledged and unrecognised by most policymakers.

“We live in an era of turmoil and profound change in the energetic and material underpinnings of economies. The era of cheap energy is coming to an end,” the paper says.

Conventional economic models, the Finnish scientists note, “almost completely disregard the energetic and material dimensions of the economy.”

“More expensive energy doesn’t necessarily lead to economic collapse,” Järvensivu told me. “Of course, people won’t have the same consumption opportunities, there’s not enough cheap energy available for that, but they are not automatically led to unemployment and misery either.”

The scientists refer to the pioneering work of systems ecologist Professor Charles Hall of the State University of New York with economist Professor Kent Klitgaard from Wells College. Earlier this year, Hall and Klitgaard released an updated edition of their seminal book, Energy and the Wealth of Nations: An Introduction to BioPhysical Economics.

Hall and Klitgaard are highly critical of mainstream capitalist economic theory, which they say has become divorced from some of the most fundamental principles of science. They refer to the concept of ‘Energy Return on Investment’ (EROI) as a key indicator of the shift into a new age of difficult energy. EROI is a simple ratio that measures how much energy we use to extract more energy.

“For the last century, all we had to do was to pump more and more oil out of the ground,” say Hall and Klitgaard. Decades ago, fossil fuels had very high EROI values—a little bit of energy allowed us to extract large amounts of oil, gas and coal.

“We face a form of capitalism that has hardened its focus to short-term profit maximization with little or no apparent interest in social good.”

Earlier in August, billionaire investor Jeremy Grantham—who has a track record of consistently calling financial bubbles—released an update to his April 2013 analysis, ‘The Race of Our Lives.’

The new paper, ‘The Race of Our Lives Revisited,’ provides a bruising indictment of contemporary capitalism’s complicity in the ecological crisis. Grantham’s verdict is that “capitalism and mainstream economics simply cannot deal with these problems,” namely, the systematic depletion of planetary ecosystems and environmental resources:

“The replacement cost of the copper, phosphate, oil, and soil—and so on—that we use is not even considered. If it were, it’s likely that the last 10 or 20 years (for the developed world, anyway) has seen no true profit at all, no increase in income, but the reverse,” he wrote.

Many experts believe we’re moving past capitalism, but they disagree on what the ultimate outcome will be. In his book Postcapitalism: A Guide to Our Future, British economics journalist Paul Mason theorises that information technology is paving the way for the emancipation of labour by reducing the costs of knowledge production—and potentially other kinds of production that will be transformed by AI, blockchain, and so on—to zero. Thus, he says, will emerge a utopian ‘postcapitalist’ age of mass abundance, beyond the price system and rules of capitalism.

It sounds peachy, but Mason completely ignores the colossal, exponentially increasing physical infrastructure for the ‘internet-of-things.’ His digital uprising is projected to consume evermore vast quantities of energy (as much as one-fifth of global electricity by 2025), producing 14 percent of global carbon emissions by 2040.

Toward a new economic operating system

Most observers, then, have no idea of the biophysical realities pointed out in the background paper commissioned by the UN Secretary-General’s IGS—that the driving force of the transition to postcapitalism is the decline of what made ‘endless growth capitalism’ possible in the first place: abundant, cheap energy.

The UN’s Global Sustainable Development Report is being drafted by an independent group of scientists (IGS) appointed by the UN Secretary-General. The IGS is supported by a range of UN agencies including the UN Secretariat, the UN Educational, Scientific and Cultural Organization, the UN Environment Programme, the UN Development Programme, the UN Conference on Trade and Development and the World Bank.

The paper, co-authored by Dr Järvensivu with the rest of the BIOS team, was commissioned by the UN’s IGS specifically to feed into the chapter on ‘Transformation: the Economy.’ Invited background documents are used as the basis of the GSDR, but what ends up in the final report will not be known until the final report is released next year.

“No widely applicable economic models have been developed specifically for the upcoming era”

Overall, the paper claims that we have moved into a new, unpredictable and unprecedented space in which the conventional economic toolbox has no answers. As slow economic growth simmers along, central banks have resorted to negative interest rates and buying up huge quantities of public debt to keep our economies rolling. But what happens after these measures are exhausted? Governments and bankers are running out of options.

“It can be safely said that no widely applicable economic models have been developed specifically for the upcoming era,” write the Finnish scientists.

Having identified the gap, they lay out the opportunities for transition.

In this low EROI future, we simply have to accept the hard fact that we will not be able to sustain current levels of economic growth. “Meeting current or growing levels of energy need in the next few decades with low-carbon solutions will be extremely difficult, if not impossible,” the paper finds. The economic transition must involve efforts “to lower total energy use.”

Key areas to achieve this include transport, food, and construction. City planning needs to adapt to the promotion of walking and biking, a shift toward public transport, as well as the electrification of transport. Homes and workplaces will become more connected and localised. Meanwhile, international freight transport and aviation cannot continue to grow at current rates.

As with transport, the global food system will need to be overhauled. Climate change and oil-intensive agriculture have unearthed the dangers of countries becoming dependent on food imports from a few main production areas. A shift toward food self-sufficiency across both poorer and richer countries will be essential. And ultimately, dairy and meat should make way for largely plant-based diets.

The construction industry’s focus on energy-intensive manufacturing, dominated by concrete and steel, should be replaced by alternative materials. The BIOS paper recommends a return to the use of long-lasting wood buildings, which can help to store carbon, but other options such as biochar might be effective too.

But capitalist markets will not be capable of facilitating the required changes – governments will need to step up, and institutions will need to actively shape markets to fit the goals of human survival. Right now, the prospects for this look slim. But the new paper argues that either way, change is coming.

Whether or not the system that emerges still comprises a form of capitalism is ultimately a semantic question. It depends on how you define capitalism.

“Capitalism, in that situation, is not like ours now,” said Järvensivu. “Economic activity is driven by meaning—maintaining equal possibilities for the good life while lowering emissions dramatically—rather than profit, and the meaning is politically, collectively constructed. Well, I think this is the best conceivable case in terms of modern state and market institutions. It can’t happen without considerable reframing of economic-political thinking, however.”





Areas Of The World More Vulnerable To Collapse

16 06 2018

ANOTHER great post from SRSrocco…..  this one should be of particular interest to Australians though, because we are in a more vulnerable region…. and while Australia may look not too bad on those charts, it’s only because our relatively small population means we consume way less than most of the other nations of the Asia Pacific region…

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Certain areas of the world are more vulnerable to economic and societal collapse.  While most analysts gauge the strength or weakness of an economy based on its outstanding debt or debt to GDP ratio, there is another factor that is a much better indicator.  To understand which areas and regions of the world that will suffer a larger degree of collapse than others, we need to look at their energy dynamics.

For example, while the United States is still the largest oil consumer on the planet, it is no longer the number one oil importer.  China surpassed the United States by importing a record 8.9 million barrels per day (mbd) in 2017.  This data came from the recently released BP 2018 Statistical Review.  Each year, BP publishes a report that lists each countries’ energy production and consumption figures.

BP also lists the total oil production and consumption for each area (regions and continents).  I took BP’s figures and calculated the Net Oil Exports for each area.  As we can see, the Middle East has the highest amount of net oil exports with 22.3 million barrels per day in 2017:

The figures in the chart above are shown in “thousand barrels per day.”  Russia and CIS (Commonwealth Independent States) came in second with 10 mbd of net oil exports followed by Africa with 4 mbd and Central and South America with 388,000 barrels per day.  The areas with the negative figures are net oil importers.

The area in the world with the largest net oil imports was the Asia-Pacific region at 26.6 mbd followed by Europe with 11.4 mbd and North America (Canada, USA & Mexico) at 4.1 mbd.

Now, that we understand the energy dynamics shown in the chart above, the basic rule of thumb is that the areas in the world that are more vulnerable to collapse are those with the highest amount of net oil imports.  Of course, it is true that the Middle Eastern or African countries with significant oil exports can suffer a collapse due to geopolitics and civil wars (example, Iraq, and Libya), but this was not a result of domestic oil supply and demand forces.  Rather the collapse of Iraq and Libya can be blamed on certain superpowers’ desire to control the oil market as they are strategic net oil importers.

The areas with the largest net oil imports, Asia-Pacific and Europe, have designed complex economies that are highly dependent on significant oil supplies to function.  Thus, the areas and countries with the largest net oil imports will experience a higher degree of collapse. Yes, there’s more to it than the amount of net oil imports, but that is an easy gauge to use.   I will explain the other factors shortly.  If we look at the Asia-Pacific countries with the largest net oil imports, China, India, and Japan lead the pack:

China is a net importer of nearly 9 mbd of oil, followed by India at 4 mbd and Japan with 3.9 mbd.  Thus, as these net oil imports decline, so will the degree of economic activity.  However, when net oil imports fall to a certain level, then a more sudden collapse of the economy will result… resembling the Seneca Cliff.

We must remember, a great deal of the economic infrastructure (Skyscrapers, commercial buildings, retail stores, roads, equipment, buses, trucks, automobiles, etc etc.) only function if a lot of oil continually runs throughout the system.  Once the oil supply falls to a certain level, then the economic system disintegrates.

While China is the largest net oil importer, the United States is still the largest consumer of oil in the world.  Being the largest oil consumer is another very troubling sign.  The next chart shows the countries with the highest oil consumption in the world and their percentage of net oil imports:

Due to the rapid increase in domestic shale oil production, the United States net oil imports have fallen drastically over the past decade.  At one point, the U.S. was importing nearly three-quarters (75%) of its oil but is now only importing 34%.  Unfortunately, this current situation will not last for long.  As quickly as shale oil production surged, it will decline in the same fashion… or even quicker.

You will notice that Saudi Arabia is the sixth largest oil consumer in the world followed by Russia.  Both Saudi Arabia and Russia export a much higher percentage of oil than they consume.  However, Russia will likely survive a much longer than Saudi Arabia because Russia can provide a great deal more than just oil.  Russia and the Commonwealth Independent States can produce a lot of food, goods, commodities, and metals domestically, whereas Saudi Arabia must import most of these items.

Of the largest consumers of oil in the chart above, Japan and South Korea import 100% (or nearly 100%) of their oil needs.  According to the data put out by BP 2018 Statistical Review, they did not list any individual oil production figures for Japan or South Korea.  However, the U.S. Energy Information Agency reported in 2015 that Japan produced 139,000 bd of total petroleum liquids while S. Korea supplied 97,000 bd.  Production of petroleum liquids from Japan and South Korea only account for roughly 3% of their total consumption…. peanuts.

Analysts or individuals who continue to believe the United States will become energy independent are ignorant of the impacts of Falling EROI – Energy Returned On Investment or the Thermodynamics of oil depletion.  Many analysts believe that if the price of oil gets high enough, say $100 or $150; then shale oil would be hugely profitable.  The error in their thinking is the complete failure to comprehend this simple relationship… that as oil prices rise, SO DO the COSTS… 

Do you honestly believe a trucking company that transports fracking sand, water or oil for the shale oil industry is going to provide the very same costs when the oil price doubles????  We must remember, the diesel price per gallon increases significantly as the oil price moves higher.  Does the energy analyst believe the trucking companies are just going to eat that higher cost for the benefit of the shale oil industry??  This is only one example, but as the oil price increases, inflationary costs will thunder throughout the shale oil industry.

If the oil price shoots up to $100 or higher and stays there (which I highly doubt), then costs will start to surge once again for the shale oil industry.  As costs increase, we can kiss goodbye the notion of higher shale oil profits.  But as I mentioned in the brackets, I don’t see the oil price jumping to $100 and staying there.  Yes, we could see an oil price spike, but not a long-term sustained price as the current economic cycle is getting ready to roll over.  And with it, we are going to experience one hell of a deflationary collapse.  This will take the oil price closer to $30 than $100.

Regardless, the areas and countries with the highest oil consumption and net oil imports will be more vulnerable to collapse and will fall the hardest.  Just imagine the U.S. economy consuming 5 million barrels of oil per day, rather than the current 20 mbd.  The United States just has more stuff that will become worthless and dysfunctional than other countries.

Lastly, the end game suggests that the majority of countries will experience an economic collapse due to the upcoming rapid decline in global oil production.  However, some countries will likely be able to transition better than others, as the leverage and complexity of the economies aren’t as dependent on oil as the highly advanced Western and Eastern countries.





Why the ERoEI of oil fracking is so awful…

30 05 2018

I recently listened to a podcast featuring Nate Hagens, who, as you might know, is very well connected with Wall Street from his previous life there….. Nate quoted someone who owns an oil company, and apparently they budget 30% of their total well costs on…. DIESEL!

 

 

Here is the latest Chris Martenson podcast of Art Berman that re-confirms most of the above.





Why I am a double atheist

28 11 2017

For years and years – at least 15 – I argued with Dave Kimble over his notion that solar energy production was growing far too fast to be sustainable, let alone reduce greenhouse emissions.  I eventually had to relent and agree with him, he had a keener eye for numbers than me, and he was way better with spreadsheets!

The whole green technology thing has become a religion. I know, I used to have the faith too….. but now, as you might know if you’ve been ‘here’ long enough, I neither believe in god nor green tech!

This article – to which you will have to go to for the references – landed in my newsfeed…….  and lo and behold, it says exactly the same thing Dave was saying all those years ago…….:

How Sustainable is PV solar power?

How sustainable is pv solar power

Picture: Jonathan Potts.

It’s generally assumed that it only takes a few years before solar panels have generated as much energy as it took to make them, resulting in very low greenhouse gas emissions compared to conventional grid electricity.

However, a more critical analysis shows that the cumulative energy and CO2 balance of the industry is negative, meaning that solar PV has actually increased energy use and greenhouse gas emissions instead of lowering them.

The problem is that we use and produce solar panels in the wrong places. By carefully selecting the location of both manufacturing and installation, the potential of solar power could be huge.

There’s nothing but good news about solar energy these days. The average global price of PV panels has plummeted by more than 75% since 2008, and this trend is expected to continue in the coming years, though at a lower rate. [1-2] According to the 2015 solar outlook by investment bank Deutsche Bank, solar systems will be at grid parity in up to 80% of the global market by the end of 2017, meaning that PV electricity will be cost-effective compared to electricity from the grid. [3-4]

Lower costs have spurred an increase in solar PV installments. According to the Renewables 2014 Global Status Report, a record of more than 39 gigawatt (GW) of solar PV capacity was added in 2013, which brings total (peak) capacity worldwide to 139 GW at the end of 2013. While this is not even enough to generate 1% of global electricity demand, the growth is impressive. Almost half of all PV capacity in operation today was added in the past two years (2012-2013). [5] In 2014, an estimated 45 GW was added, bringing the total to 184 GW. [6] [4].

Solar PV total global capacitySolar PV total global capacity, 2004-2013. Source: Renewables 2014 Global Status Report.

Meanwhile, solar cells are becoming more energy efficient, and the same goes for the technology used to manufacture them. For example, the polysilicon content in solar cells — the most energy-intensive component — has come down to 5.5-6.0 grams per watt peak (g/wp), a number that will further decrease to 4.5-5.0 g/wp in 2017. [2] Both trends have a positive effect on the sustainability of solar PV systems. According to the latest life cycle analyses, which measure the environmental impact of solar panels from production to decommission, greenhouse gas emissions have come down to around 30 grams of CO2-equivalents per kilwatt-hour of electricity generated (gCO2e/kWh), compared to 40-50 grams of CO2-equivalents ten years ago. [7-11] [12]

According to these numbers, electricity generated by photovoltaic systems is 15 times less carbon-intensive than electricity generated by a natural gas plant (450 gCO2e/kWh), and at least 30 times less carbon-intensive than electricity generated by a coal plant (+1,000 gCO2e/kWh). The most-cited energy payback times (EPBT) for solar PV systems are between one and two years. It seems that photovoltaic power, around since the 1970s, is finally ready to take over the role of fossil fuels.

BUT the bit that caught my eye was this…..:

A life cycle analysis that takes into account the growth rate of solar PV is called a “dynamic” life cycle analysis, as opposed to a “static” LCA, which looks only at an individual solar PV system. The two factors that determine the outcome of a dynamic life cycle analysis are the growth rate on the one hand, and the embodied energy and carbon of the PV system on the other hand. If the growth rate or the embodied energy or carbon increases, so does the “erosion” or “cannibalization” of the energy and CO2 savings made due to the production of newly installed capacity. [16]

For the deployment of solar PV systems to grow while remaining net greenhouse gas mitigators, they must grow at a rate slower than the inverse of their CO2 payback time. [19] For example, if the average energy and CO2 payback times of a solar PV system are four years and the industry grows at a rate of 25%, no net energy is produced and no greenhouse gas emissions are offset. [19] If the growth rate is higher than 25%, the aggregate of solar PV systems actually becomes a net CO2 and energy sink. In this scenario, the industry expands so fast that the energy savings and GHG emissions prevented by solar PV systems are negated to fabricate the next wave of solar PV systems. [20]

Which is precisely what Dave Kimble was saying more than ten years ago.  To see his charts and download his spreadsheet, go to this post.

His conclusions are that “We have been living in an era of expanding energy availability, but Peak Oil and the constraints of Global Warming mean we are entering a new era of energy scarcity. In the past, you could always get the energy you wanted by simply paying for it. From here on, we are going to have to be very careful about how we allocate energy, because not only is it going to be very expensive, it will mean that someone else will have to do without. For the first time, ERoEI is going to be critically important to what we choose to do. If this factor is ignored, we will end up spending our fossil energy on making solar energy, which only makes Global Warming worse in the short to medium term.”

 





Major Oil Companies Debt Explode Since The GFC

15 10 2017

WORLD’S LARGEST OIL COMPANIES: Deep Trouble As Profits Vaporize While Debts Skyrocket

The world’s largest oil companies are in serious trouble as their balance sheets deteriorate from higher costs, falling profits and skyrocketing debt.  The glory days of the highly profitable global oil companies have come to an end.  All that remains now is a mere shadow of the once mighty oil industry that will be forced to continue cannibalizing itself to produce the last bit of valuable oil.

I realize my extremely unfavorable opinion of the world’s oil industry runs counter to many mainstream energy analysts, however, their belief that business as usual, will continue for decades, is entirely unfounded.  Why?  Because, they do not understand the ramifications of the Falling EROI – Energy Returned On Invested, and its impact on the global economy.

For example, Chevron was able to make considerable profits in 1997 when the oil price was $19 a barrel.  However, the company suffered a loss in 2016 when the price was more than double at $44 last year.  And, it’s even worse than that if we compare the company’s profit to total revenues.  Chevron enjoyed a $3.2 billion net income profit on revenues of $42 billion in 1997 versus a $497 million loss on total sales of $114 billion in 2016.  Even though Chevron’s revenues nearly tripled in twenty years, its profit was decimated by the falling EROI.

Unfortunately, energy analysts, who are clueless to the amount of destruction taking place in the U.S. and global oil industry by the falling EROI, continue to mislead a public that is totally unprepared for what is coming.  To provide a more realistic view of the disintegrating energy industry, I will provide data from seven of the largest oil companies in the world.

The World’s Major Oil Companies Debt Explode Since The 2008 Financial Crisis

To save the world from falling into total collapse during the 2008 financial crisis, the Fed and Central Banks embarked on the most massive money printing scheme in history.  One side-effect of the massive money printing (and the purchasing of assets) by the central banks pushed the price of oil to a record $100+ a barrel for more than three years.  While the large oil companies reported handsome profits due to the high oil price, many of them spent a great deal of capital to produce this oil.

For instance, the seven top global oil companies that I focused on made a combined $213 billion in cash from operations in 2013. However, they also forked out $230 billion in capital expenditures.  Thus, the net free cash flow from these major oil companies was a negative $17 billion… and that doesn’t include the $44 billion they paid in dividends to their shareholders in 2013.  Even though the price of oil was $109 in 2013; these seven oil companies added $45 billion to their long-term debt:

As we can see, the total amount of long-term debt in the group (Petrobras, Shell, BP, Total, Chevron, Exxon & Statoil) increased from $227 billion in 2012 to $272 billion in 2013.  Isn’t that ironic that the debt ($45 billion) rose nearly the same amount as the group’s dividend payouts ($44 billion)?  Of course, we can’t forget about the negative $17 billion in free cash flow in 2013, but here we see evidence that the top seven global oil companies were borrowing money even in 2013, at $109 a barrel oil, to pay their dividends.

Since the 2008 global economic and financial crisis, the top seven oil companies have seen their total combined debt explode four times, from $96 billion to $379 billion currently.  You would think with these energy companies enjoying a $100+ oil price for more than three years; they would be lowering their debt, not increasing it.  Regrettably, the cost for companies to replace reserves, produce oil and share profits with shareholders was more than the $110 oil price.

There lies the rub….

One of the disadvantages of skyrocketing debt is the rising amount of interest the company has to pay to service that debt.  If we look at the chart above, Brazil’s Petrobras is the clear winner in the group by adding the most debt.  Petrobras’s debt surged from $21 billion in 2008 to $109 billion last year.  As Petrobras added debt, it also had to pay out more to service that debt.  In just eight years, the annual interest amount Petrobras paid to service its debt increased from $793 million in 2008 to $6 billion last year.  Sadly, Petrobras’s rising interest payment has caused another nasty side-effect which cut dividend payouts to its shareholders to ZERO for the past two years.

Petrobras Annual Dividend Payments:

2008 = $4.7 billion

2009 = $7.7 billion

2010 = $5.4 billion

2011 = $6.4 billion

2012 = $3.3 billion

2013 = $2.6 billion

2014 = $3.9 billion

2015 = ZERO

2016 = ZERO

You see, this is a perfect example of how the Falling EROI guts an oil company from the inside out.  The sad irony of the situation at Petrobras is this:

If you are a shareholder, you’re screwed, and if you invested funds (in company bonds, etc.) to receive a higher interest payment, you’re also screwed because you will never get back your initial investment.  So, investors are screwed either way.  This is what happens during the final stage of collapsing oil industry.

Another negative consequence of the Falling EROI on these major oil companies’ financial statements is the decline in profits as the cost to produce oil rises more than the economic price the market can afford.

Major Oil Companies’ Profits Vaporize… Even At Higher Oil Prices

To be able to understand just how bad the financial situation has become at the world’s largest oil companies, we need to go back in time and compare the industry’s profitability versus the oil price.  To find a year when the oil price was about the same as it was in 2016, we have to return to 2004, when the average oil price was $38.26 versus $43.67 last year.  Yes, the oil price was lower in 2004 than in 2016, but I can assure you, these oil companies weren’t complaining.

In 2004, the combined net income of these seven oil companies was almost $100 billion….. $99.2 billion to be exact.  Every oil company in the group made a nice profit in 2004 on a $38 oil price.  However, last year, the net profits in the group plunged to only $10.5 billion, even at a higher $43 oil price:

Even with a $5 increase in the price of oil last year compared to 2004, these oil companies combined net income profit fell nearly 90%.  How about them apples.  Of the seven companies listed in the chart above, only four made profits last year, while three lost money.  Exxon and Total enjoyed the highest profits in the group, while Petrobras and Statoil suffered the largest losses:

Again, the financial situation is in much worse shape because “net income” accounting does not factor in the companies’ capital expenditures or dividend payouts.  Regardless, the world’s top oil companies’ profitability has vaporized even at a higher oil price.

Now, another metric that provides us with more disturbing evidence of the Falling EROI in the oil industry is the collapse of  the “Return On Capital Employed.”  Basically, the Return On Capital Employed is just dividing the company’s earnings (before taxes and interest) by its total assets minus current liabilities.  In 2004, the seven companies listed above posted between 20-40% Return On Capital Employed.  However, this fell precipitously over the next decade and are now registering in the low single digits:

In 2004, we can see that BP had the lowest Return On Capital Employed of 19.68% in the group, while Statoil had the highest at 46.20%.  If we throw out the highest and lowest figures, the average for the group was 29%.  Now, compare that to the average of 2.4% for the group in 2016, and that does not including BP and Chevron’s negative returns (shown in Dark Blue & Orange).

NOTE:  I failed to include the Statoil graph line (Magenta)  when I made the chart, but I added the figures afterward.  For Statoil to experience a Return On Capital Employed decline from 46.2% in 2004 to less than 1% in 2016, suggests something is seriously wrong.

We must remember, the high Return On Capital Employed by the group in 2004, was based on a $38 price of oil, while the low single-digit returns by the oil companies in 2016 were derived from a higher price of $43.  Unfortunately, the world’s largest oil companies are no longer able to enjoy high returns on a low oil price.  This is bad news because the market can’t afford a high oil price unless the Fed and Central Banks come back in with an even larger amount of QE (Quantitative Easing) money printing.

I have one more chart that shows just how bad the Falling EROI is destroying the world’s top oil companies.  In 2004, these seven oil companies enjoyed a net Free Cash Flow minus dividends of a positive $34 billion versus a negative $39.1 billion in 2016:

Let me explain these figures.  So, after these oil companies paid their capital expenditures and dividends to shareholders, they had a net $34 billion left over.  However, last year these companies were in the HOLE for $39.1 billion after paying capital expenditures and dividends.  Thus, many of them had to borrow money just to pay dividends.

To understand how big of a change has taken place at the oil companies since 2004, here are the figures below:

Top 7 Major Oil Companies Free Cash Flow Figures

2004 Cash From Operations = …………$139.6 billion

2004 Capital Expenditures = ……………..$67.7 billion

2004 Free Cash Flow = ………………………$71.9 billion

2004 Shareholder Dividends = …………..$37.9 billion

2004 Free Cash Flow – Dividends = $34 billion

2016 Cash From Operations = ……………..$118.5 billion

2016 Capital Expenditures = ………………..$117.5 billion

2016 Free Cash Flow = …………………………..$1.0 billion

2016 Shareholder Dividends = ……………….$40.1 billion

2016 Free Cash Flow – Dividends = -$39.1 billion

Here we can see that the top seven global oil companies made more in cash from operations in 2004 ($139.6 billion) compared to 2016 ($118.5 billion).   That extra $21 billion in operating cash in 2004 versus 2016 was realized even at a lower oil price.  However, what has really hurt the group’s Free Cash Flow, is the much higher capital expenditures of $117.5 billion in 2016 compared to the $67.7 billion in 2004.  You will notice that the net combined dividends didn’t increase that much in the two periods… only by $3 billion.

So, the lower cash from operations and the higher capital expenditures have taken a BIG HIT on the balance sheets of these oil companies.  This is precisely why the long-term debt is skyrocketing, especially over the past three years as the oil price fell below $100 in 2014.  To continue making their shareholders happy, many of these companies are borrowing money to pay dividends.  Unfortunately, going further into debt to pay shareholders is not a prudent long-term business model.

The world’s major oil companies will continue to struggle with the oil price in the $50 range.  While some analysts forecast that higher oil prices are on the horizon, I disagree.  Yes, it’s true that oil prices may spike higher for a while, but the trend will be lower as the U.S. and global economies start to contract.  As oil prices fall to the $40 and below, oil companies will begin to cut capital expenditures even further.  Thus, the cycle of lower prices and the continued gutting of the global oil industry will move into high gear.

There is one option that might provide these oil companies with a buffer… and that is massive Fed and Central Bank money printing resulting in severe inflation and possibly hyperinflation.  But, that won’t be a long-term solution, instead just another lousy band-aid in a series of band-aids that have only postponed the inevitable.

The coming bankruptcy of the once mighty global oil industry will be the death-knell of the world economy.  Without oil, the global economy grinds to a halt.  Of course, this will not occur overnight.  It will take time.  However, the evidence shows that a considerable wound has already taken place in an industry that has provided the world with much-needed oil for more than a century.

Lastly, without trying to be a broken record, the peak and decline of global oil production will destroy the value of most STOCKS, BONDS and REAL ESTATE.  If you have placed most of your bests in one of these assets, you have my sympathies.

IMPORTANT UPDATE: TO MY FOLLOWERS:

I want to thank the new and existing supporters of the SRSrocco Report site.  In just the past week, I have received 11 new Patrons and several new members on the SRSrocco Report site.  Your support allows me to continue posting articles for the entire public.  I have noticed over the past few years, more analysts have decided to put their articles and content behind a subscriber paywall.  Unfortunately, that shuts off the information to many followers who do not have the funds to support that paid content.

I believe the economic and financial situation in the U.S. and world will continue to deteriorate over the next two years and will only get increasing worse going forward.  Those who understand the root cause of it all, ENERGY, will be better prepared or less shocked (or both) when the collapse picks up speed.

I want to thank everyone who participates in the comment section of the site… even those I disagree with… LOL.  We like to keep the debate open for everyone.  So, if you have been a follower of the SRSroccoReport site for a while, but haven’t participated in the comment section, please let us know what you are thinking.

HOW TO SUPPORT THE SRSROCCO REPORT SITE:

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From oilslick to tyranny

10 10 2017

A prosperous society is an orderly society.

Just found this……  says it all really.  I expect that one day Australia will also be ‘disunited’, I can see how easily Tasmania would cease to trade with the rest of Australia for starters…. republished from ExtraNewsfeed.

People with full bellies, stable homes and secure employment do not allow themselves to be involved in civil disorder. Unfortunately we are living on borrowed money in a bankrupt society. When our debts catch up with us, society will collapse, violent disorder will ensue and martial law will be inevitable. Pre-oil, despotic rule was the norm and democracies did not exist; we are going to return to that era.

The hallmark of the tyrant is already being stamped on the nation for anyone willing to recognise it. Suppression of truth is already in hand, information on climate change has been removed from government websites. It is the preparation for your future governance. No names are given here, because no-one will recognise the opportunist until he makes his grab for ultimate power. It will not be who you expect it to be.

forget Wall St., this is what world bankruptcy looks like:

Oil is our prime source of energy, ‘alternatives’ cannot power our industrial infrastructure.

Any business that continually burns through its assets at ten times the rate of replacement can be said to be bankrupt; that describes the global economy. Fossil fuels are the only asset we have, because everything else is a derivative of coal oil and gas inputs. Without heat, nothing can be manufactured. We elect politicians to lie on our behalf, because we want to be told that our resources and growth are infinite. In return for our votes, they are happy to do this. Everyone is complicit in the grand deceit, to accept the truth would destroy the existence of all of us.

So to perpetuate that lie there is a collective insistence that the global economy must continue to function to a very simple (but ultimately nonsensical) formula:

the more fuel we burn, the greater our gross domestic product. The faster we burn it, the higher our percentage growth.

Our machines and the (finite) fuels that move them now form the sinews that hold all nations together. They feed us, provide heat, light and transport, and with equal importance, stabilise international democracies and political systems.

No matter how complex or mundane your current job, whether garbage collector or brain surgeon, someone, somewhere is producing sufficient surplus energy to support it.

Prosperity is not an infinite right

Collective prosperity at the global level depends on cheap surplus fossil fuel energy. For 2 centuries we have been able to use those fossil fuels as collateral for future debt, to build ever bigger machines to extract elemental resources from the earth. This has been our great burning, because extracted materials of themselves are of no use to us unless we use heat to process them into desirable commodities.

That excess heat is altering our climate beyond human tolerance.

But heat provides our industrial growth economy: fuels must be consumed to sustain it and provide continued employment to make things that are ultimately thrown away in order to consume more to enable our debts to be continually carried forward. Our system of rolling debt depends on increasing energy input ad infinitum. So the one who asserts that climate change is a hoax gets voted into office, granting permission to burn our planet forever.

Without economic stability, democracy cannot survive.

Fuel resources have been a once-only gift of nature, and there are no viable substitutes. When they are no longer freely available, the effects will be catastrophic and force the events outlined here because the availability of surplus energy directly underpins our economic system. Without surplus energy you cannot have a modern democratic society. Be under no illusions, on current trends the events outlined here are certain. Only timing is in question by a few years either way.

Our global bank balance in oil has been falling for 70 years.

We are living on legacy oil. Oilwells cannot be refilled by votes, prayers or money.

We have created an industrial economy that is entirely predicated on a single factor: converting explosive force into rotary motion. Those six words separate us from the economics of the horsedrawn cart, windmill and sailing ship. They also separate us from the disease and deprivation that was the lot of our forebears only a century or two ago. Only fossil fuels can supply that explosive force at the rate we need.

The global industrial economy is now an interlocked progressive whole. It will not allow isolationism to function, neither will it allow a return to a previous era and downsized economic environment. We demand more, you have heard the aspiring tyrant’s words that promise more.

Political promises evaporate when there is insufficient energy to support them.

The notion of “Saudi America” is reassuring, but the facts are not.

Despite the rhetoric and posturing, reality cannot be ignored: the USA produces around 9 Million barrels of oil a day, but uses 0ver 19MBd. (2016). This imbalance is not going to change, despite collective belief to the contrary.

Price fluctuations and the ebb and flow of gluts should be ignored. If the cost of oil rises to a level that sustains the producers, users can’t afford to buy it; if it falls, oil producers can’t afford to extract it. This is the economic vice that is inexorably crushing the global industrial system as oil supplies decline.

Real wages fall in lockstep with oil depletion.

As surplus energy falls away, so does real income. We have substituted debt for income and allowed that debt to grow to mask the reality of our situation. We are stealing from our own future and from generations unborn to stay solvent. It might be called intergenerational larceny. When our great grandchildren arrive they will find nothing left for them to burn.

We are already in the phase of expending too much energy to get energy, which is why real income has been static for 30 years. We live in an energy economy, not a money economy. Wages are paid from energy surpluses, not printing presses, and that surplus has been gradually reducing.

The mirage of infinity.

The killer factor is Energy Return on Energy Invested, EROEI. Over the last 150 years civilisation has been built based on coal that returned an EROEI of 50:1, and oil that returned 100:1. Those ratios of return provided the cheap surplus energy that created our industrial infrastructure, and led to the expectation of infinite affluence.

We cannot maintain our current lifestyle using expensive fuels which give a return ratio of only 20:1 (and falling), which is what the best oilwells deliver.

Around 14:1 our society might hold together in a rudimentary sense if consumption could be balanced at that level, but 80 million new people arrive on the planet each year. They demand to be housed clothed and fed, spreading available resources even thinner. The mothers of the next 2 billion people are alive now. They will reproduce as a matter of personal survival, taking global population beyond 9 billion by mid century, guaranteeing our fall off the ‘energy cliff’.

The Energy Cliff:

There are numerous interpretations of the ‘energy cliff’, offering different return ratios that will supposedly allow our industrial society to function. 14:1, 12:1 even 8:1. The exact figure is irrelevant, right now we are entering the ‘elbow curve’ of the cliff, pinning our energy hopes on PV, wind, nuclear and tarsands; the ultimate downturn is inescapable. Wind and solar farms cannot supply sufficient concentrated energy to replace oil.

oil-gas-war-graffitiWe are 7.5 billion people on a planet that, pre-oil, supported between 1 and 2 billion. By any reckoning, 5 billion people do not have a future, let alone 2 billion more due over the next 30 years.

We must burn fuel to maintain what we have, but the act of burning destroys what we have. This is contrary to human instinct, so the only recourse will be armed conflict to take what others have. All wars are about survival and acquisition of resources. Conflict will drain what little energy we have left and finally exhaust any survivors.

When we reach the point of having only shale or tar sand oil or wind turbines returning 5:1, there will not be enough surplus energy in our industrial systems to provide the economic momentum we need, and maintain the necessary machinery to power the system.

When our wheels stop turning, we stop eating. Our situation is as brutally simple as that. Electric vehicles cannot function outside a hydrocarbon based infrastructure, and no transportation can exist beyond the extent of its purpose. A collapsed economy removes any such purpose. Battery power will not deliver fresh water and remove your wastes, and there isn’t going to be a bucolic utopia where we all become rural gardeners. We don’t know how, there isn’t enough room and probably not enough time. Hungry people will not allow a second harvest.

But the demand for answers will persist, a search for those responsible for our misfortunes, and insistence that our lives are restored to the ‘normality’ of previous times. Already the finger pointing rhetoric of the despot is being cheered on a wave of ignorance and bigotry: lock up opponents and dissenters, suppress the media, remove the unwanted, ignore the laws.

When that (and more) is done, all will be well. They are words from recent history, overlaid on our own time. We thought fascism was impossible in civilised nations; as long as prosperity held for all, that was true. As prosperity fails, it is stirring again, with an appetite easily fed but never sated.

Secession

As energy supplies deplete, the industrial economy will enter its terminal phase, still under collective denial. But no nation can hold together without the fuel sources that created it. Secession will become inevitable, into five, six, seven or more regions in the USA, along racial, religious, political and geographic lines. The faultlines are already there, with no energy base there will be nothing to stop ultimate breakup. Other conglomerations of states and provinces will also disintegrate. The EU, Russia, China, Africa will react and deny, but the end result will be the same: Energy depletion = social collapse.

As civil unrest takes hold, governments will act in the only way they know how: violent suppression to restore order. This will mean military intervention and imposition of martial law as civil breakdown becomes widespread.

At that point your elected leader will assume the role of dictator and suspend the constitution. Once established, godly certainties among those around him will cloak this in righteousness and subvert it into a theocracy of the worst kind. That will make it easier to identify the heathen and justify any form of retribution. It will be fascism cloaked in holy orders. It will not be the first time: Hitler’s army had “Gott Mitt Uns” stamped on their belt buckles.

Those who support him will become part of the new order. Those who do not will be dismissed from office, either voluntarily or by force. Police and military will fall in behind whoever pays their wages, and enforce the new regime. Totalitarian states have shown that there is never a shortage of willing hands to perform unpleasant tasks. They are always ready and waiting to be recruited.

The inevitability of regional secession will inflame regional differences, and spark civil war(s). It will be the time of petty states and tyrannies, each regime desperate to resist the decline into a different lifestyle, certain that the mess can be ‘fixed’, and only ‘they’ can fix it by enforcement of ideology. Yet without the power of fossil fuels there will be an inexorable regression to the brutalities of medievalism, with power resting only in the command of muscle.

Eventually they will be forced to accept each other’s existence, for no better reason than there will be insufficient means to do anything about it.

Welcome to the (dis) United States of America.

So what of the years to come? The dictator’s power will grow for a time, and make life unpleasant for millions, but ultimately his Reich will extend only to the door of his bunker. No doubt he will remain in his seat of imagined power for as long as possible, issuing incoherent commands that cannot be fulfilled because there will be insufficient energy to do so, just as his predecessor discovered 75 years ago.

You can follow me on twitter

or my book “The End of More” https://www.amazon.co.uk/dp/B00D0ADPFY

might give a clearer insight into how we got into the mess in the first place.