Consuming our future…….

13 03 2017

Hat tip to Sam who left the link to this “Must Hear” podcast.

From the ABC RN website….:

Only lowering our living standards will achieve sustainable growth. That’s the message from Satyajit Das, a former financier who anticipated the GFC. Debt, energy consumption, housing affordability or superannuation – it’s all based on a financial system that’s in fact a completely fictional model. This model was always doomed to fail – eventually.

Beyond growth as we know it – How can we stop consuming our future? was presented by The Rescope Project. 4 February 2017

Image result for Satyajit Das

Satyajit Das

From 1977 to 1987, Das worked in banking with the Commonwealth Bank, CitiGroup and Merrill Lynch. From 1988 to 1994, Das was Treasurer of the TNT Transport Group.

 

Das is the author of Traders, Guns & Money and Extreme Money and reference books on derivatives and risk-management. He lives in Sydney, Australia.

Extreme Money was long-listed for the Financial Times/Goldman Sachs Business Book of the Year AwardThe Economist reviewed the book, stating that “Satyajit Das is well-placed to comment, having worked both for investment banks and as a consultant advising clients on their use of complex financial products”, however, “the book could have easily been 150 pages shorter without losing its thrust.”

A Banquet of Consequences was released in Australia in 2015. It was released in the United States in 2016 as The Age of Stagnation to avoid it being confused as a cookbook.

Das is a regular commentator on LNL (Late Night Live) on RN (ABC radio’s Radio National), hosted by Phillip Adams.

https://radio.abc.net.au/search?service_guid=RN-bia-20170309-8298030

OR download the mp3 file as I did with your favorite software…..





And the oil rout continues unabated..

26 02 2017

Paul Gilding, whose work I generally admire, has published a new item on his blog after quite some time off. “It’s time to make the call – fossil fuels are finished. The rest is detail.” Sounds good, until you read the ‘detail’. Paul is still convinced that it’s renewable energy that will sink the fossil fuel industry. He writes…..:

The detail is interesting and important, as I expand on below. But unless we recognise the central proposition: that the fossil fuel age is coming to an end, and within 15 to 30 years – not 50 to 100 – we risk making serious and damaging mistakes in climate and economic policy, in investment strategy and in geopolitics and defence.

Except the fossil fuel age may be coming to an end within five years.. not 15 to 30.

The new emerging energy system of renewables and storage is a “technology” business, more akin to information and communications technology, where prices keep falling, quality keeps rising, change is rapid and market disruption is normal and constant. There is a familiar process that unfolds in markets with technology driven disruptions. I expand on that here in a 2012 piece I wrote in a contribution to Jorgen Randers book “2052 – A Global Forecast” (arguing the inevitability of the point we have now arrived at).

This shift to a “technology” has many implications for energy but the most profound one is very simple. As a technology, more demand for renewables means lower prices and higher quality constantly evolving for a long time to come. The resources they compete with – coal, oil and gas – follow a different pattern. If demand kept increasing, prices would go up because the newer reserves cost more to develop, such as deep sea oil. They may get cheaper through market shifts, as they have recently, but they can’t keep getting cheaper and they can never get any better.

In that context, consider this. Renewables are today on the verge of being price competitive with fossil fuels – and already are in many situations. So in 10 years, maybe just 5, it is a no-brainer that renewables will be significantly cheaper than fossil fuels in most places and will then just keep getting cheaper. And better.

With which economy Paul….? Come the next oil crisis, the economy will simply grind to a halt. Paul is also keen on electric cars….

Within a decade, electric cars will be more reliable, cheaper to own and more fun to drive than oil driven cars. Then it will just be a matter of turning over the fleet. Oil companies will then have their Kodak moment. Coal will already be largely gone, replaced by renewables.

When the economy crashes, no one will have any money to buy electric cars. It’s that simple….. Peak Debt is only just starting to make its presence felt…:

The carnage continues in the U.S. major oil industry as they sink further and further in the RED.  The top three U.S. oil companies, whose profits were once the envy of the energy sector, are now forced to borrow money to pay dividends or capital expenditures.  The financial situation at ExxonMobil, Chevron and ConocoPhillips has become so dreadful, their total long-term debt surged 25% in just the past year.

Unfortunately, the majority of financial analysts at CNBC, Bloomberg or Fox Business have no clue just how bad the situation will become for the United States as its energy sector continues to disintegrate.  While the Federal Government could step in and bail out BIG OIL with printed money, they cannot print barrels of oil.

Watch closely as the Thermodynamic Oil Collapse will start to pick up speed over the next five years.

According to the most recently released financial reports, the top three U.S. oil companies combined net income was the worst ever.  The results can be seen in the chart below:

Can the news on the collapse of the oil industry worsen…..? You bet……

According to James Burgess,

A total of 351,410 jobs have been slashed by oil and gas production companies worldwide, with the oilfield services sector bearing much of this burden, according to a new report released this week.

The report, based on statistical analysis by Houston-based Graves & Co., puts the number of jobs lost in the oilfield services sector at 152,015 now—or 43.2 percent of the global total since oil prices began to slump in mid-2014.

And then there are the bankruptcies……

A report published earlier this month by Haynes and Boone found that ninety gas and oil producers in the United States (US) and Canada have filed for bankruptcy from 3 January, 2015 to 1 August, 2016.

Approximately US$66.5 billion in aggregate debt has been declared in dozens of bankruptcy cases including Chapter 7, Chapter 11 and Chapter 15, based on the analysis from the international corporate law firm.

Texas leads the number of bankruptcy filings with 44 during the time period measured by Haynes and Boone, and also has the largest number of debt declared in courts with around US$29.5 billion.

Forty-two energy companies filed bankruptcy in 2015 and declared approximately US$17.85 billion in defaulted debt. The costliest bankruptcy filing last year occurred in September when Samson Resources filed for Chapter 11 protection with an accumulated debt of roughly US$4.2 billion.

Then we have Saudi Arabia’s decision to cut production to manipulate the price of oil upwards. So far, it appears to have reached a ceiling of $58 a barrel, a 16 to 36 percent increase over the plateau it had been on for months last year. But this has also come at a cost.

The world hasn’t really caught on yet, but OPEC is in serious trouble.  Last year, OPEC’s net oil export revenues collapsed.  How bad?  Well, how about 65% since the oil price peaked in 2012.  To offset falling oil prices and revenues, OPEC nations have resorted to liquidating some of their foreign exchange reserves.

The largest OPEC oil producer and exporter, Saudi Arabia, has seen its Foreign Currency reserves plummet over the past two years… and the liquidation continues.  For example, Saudi Arabia’s foreign exchange reserves declined another $2 billion in December 2016 (source: Trading Economics).

Now, why would Saudi Arabia need to liquidate another $2 billion of its foreign exchange reserves after the price of a barrel of Brent crude jumped to $53.3 in December, up from $44.7 in November??  That was a 13% surge in the price of Brent crude in one month.  Which means, even at $53 a barrel, Saudi Arabia is still hemorrhaging.

Before I get into how bad things are becoming in Saudi Arabia, let’s take a look at the collapse of OPEC net oil export revenues:

The mighty OPEC oil producers enjoyed a healthy $951 billion in net oil export revenues in 2012.  However, this continued to decline along with the rapidly falling oil price and reached a low of $334 billion in 2016.  As I mentioned before, this was a 65% collapse in OPEC oil revenues in just four years.

Last time OPEC’s net oil export revenues were this low was in 2004.  Then, OPEC oil revenues were $370 billion at an average Brent crude price of $38.3.  Compare that to $334 billion in oil revenues in 2016 at an average Brent crude price of $43.5 a barrel…….

This huge decline in OPEC oil revenues gutted these countries foreign exchange reserves.  Which means, the falling EROI- Energy Returned On Investment is taking a toll on the OPEC oil exporting countries bottom line.  A perfect example of this is taking place in Saudi Arabia.

Saudi Arabia was building its foreign exchange reserves for years until the price of oil collapsed, starting in 2014.  At its peak, Saudi Arabia held $797 billion in foreign currency reserves:

(note: figures shown in SAR- Saudi Arabia Riyal currency)

In just two and a half years, Saudi Arabia’s currency reserves have declined a staggering 27%, or roughly $258 billion (U.S. Dollars) to $538 billion currently.  Even more surprising, Saudi Arabia’s foreign currency reserves continue to collapse as the oil price rose towards the end of 2016:

The BLUE BARS represent Saudi Arabia’s foreign exchange reserves and the prices on the top show the average monthly Brent crude price.  In January 2016, Brent crude oil was $30.7 a barrel.  However, as the oil price continued to increase (yes, some months it declined a bit), Saudi’s currency reserves continued to fall.

This problem is getting bad enough that for the first time ever, the Saudi government has, shock horror,  started taxing its people….

Tax-free living will soon be a thing of the past for Saudis after its cabinet on Monday approved an IMF-backed value-added tax to be imposed across the Gulf following an oil slump.

A 5% levy will apply to certain goods following an agreement with the six-member Gulf Cooperation Council in June last year.

Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue.

How long before Saudi Arabia becomes the next Syria is anyone’s guess, but I do not see any economic scenario conducive to Paul Gilding’s “Great Disruption”. The great disruption will not be the energy take over by renewables, it will be the end of freely available energy slaves supplied by fossil fuels. I believe Paul has moved to Tasmania, in fact not very far from here….. I hope he’s started digging his garden.





Making America great again, and other bullshit……

21 01 2017

nafeezIt appears Nafeez Mosaddeq Ahmed has been making lots of waves lately…. The New York Observer has just run his warning of the probability of a converging oil, food and financial crash in or shortly after 2018 which I discussed here on DTM a few days ago. Not only that, it went viral, hitting the top 20 stories on Medium for several days (at one point hitting number one), and giving him ‘Top Writer’ status on ‘energy’ and ‘climate change’ there….. is the word finally getting out…..?

It gets better….. Nafeez then wrote this via Insurge intelligence in solidarity with the arising people’s movement in the form of the worldwide women’s marches, tying together how the Trumpian inauguration represents at once the culmination of a global war on women, while simultaneously starting a war on the planet.

Nafeez thinks “there is a deep, fundamental but little-understood connection between white supremacist patriarchy and misogyny, and the interlinked environment-economic crisis.” This piece is perhaps the most important – because it highlights the real symbolic meaning of the women’s marches: a planetary declaration of intent to build bridges, not walls.

Then yesterday, Nafeez  wrote another piece for VICE anticipating the Great Orange Face’s ‘America First Energy Plan’, bringing together cutting edge science on why Trump’s fossil fuel madness is doomed to kill the economy.

It simply won’t work, cannot work….. It will backfire. Big time. And it will backfire economically before it even has time to “backfire planetarily” as he so well puts it…… We are already hearing a lot of outrage, rightly so, about the cleansing of the Wipe House website of climate information, and the promotion of this madcap anti-science scheme to burn our planet to hell. We’ll hear less about the science of global net energy decline, which proves decisively that this scheme can simply never work – but you’ll find it here: 

Nafeez begins…..:

As President-elect Trump spearheads plans to boost oil, coal and gas, a major new study by one of the world’s foremost energy experts shows just how dangerous this path would be—not just for the planet, but for the economy.

The new study, just published in January as part of the SpringerBriefs in Energy series, suggests that as long we remain dependent on fossil fuels, economic contraction is inevitable. And while renewable energy offers the only potentially viable future, it is also unlikely to sustain the sort of mass consumerism we are accustomed to—like three or more cars per household, SUVS or massive military projects like aircraft carriers.

The bottom line is that we can’t sustain our present rate of consumption no matter what energy source we rely on. And clinging to oil, gas and coal in the hopes of keeping the endless growth machine alive will be even worse: leading to a spiral of debt and economic recession that has already begun.

Nafeez then introduces his readers to the concept of thermodynamics….. yes, really…!

It all comes down to physics: the laws of thermodynamics. Economies need energy to function. And to grow, they need extra energy to fuel that growth in production and consumption. But as more energy is required just to extract new energy from fossil fuels, there is less “energy surplus” available to continue driving economic growth—to ramp up even more production and consumption. And increasingly, more and more energy is being used just to maintain the existing infrastructure of society as it is, leaving less room for further growth.

“Of perhaps greater concern than the quantity of oil and other energy sources is their declining EROI [energy return on investment]”, writes study author Charles Hall, ESF Foundation Distinguished Professor of Environment Science at the State University of New York. Hall is the founder of the concept of EROI.

Hall’s ground-breaking methodology is now used by scientists around the world to measure the total value of energy a resource can generate. It works by comparing the quantity of energy extracted to the quantity of energy inputted to enable the extraction.

He points out that throughout the energy literature “there is widespread concern that net energy returns (e.g. EROI) for oil and gas are declining and likely to continue declining.” This has economic implications:

We (as in DTM followers) all knew that of course, but it’s interesting that this stuff is actually starting to go viral…..

wheredidgrowthgo

Yes indeed, where did all the growth go…… down the Limits to Growth plughole, that’s where…..

Charlie Hall’s study, Energy Return on Investment: A Unifying Principle for Biology, Economics halleroeibookand Sustainability, clearly shows a correlation between the declining abundance of resources, “as reflected in lower production and EROI for oil and other important fuels”, and the decline of economic growth.

And that gets to the crux of the problem. We need more energy to get more stuff to grow the economy. So what happens when we can’t get as much energy as before? Growth slows.

That’s why Hall fingers the declining EROI of fossil fuels as the key culprit in decreasing rates of production, which in turn has played a key role in the economic slowdown: “Past investments— over the past century— were made at a time when the production of high quality fossil fuels was increasing at rates as high as 5% a year. At the time of this writing they have declined to no more than 1% a year, and the US (and global) economies show similar pattern.”

Hall argues that modern developed economies, with their enormous infrastructures, roads and cities, are rapidly approaching “a stage where all of the available energy is used in ‘maintenance metabolism’ to support the infrastructure that exists.” This leaves less and less energy “available for net growth.”

As I have been saying for a very long time now, the 20th Century was built one brick at a time, as and when it was required, using very cheap and very dense fossil fuels with very high ERoEI. Now we have to replace all the old stuff, more or less all at once (it is getting old now…), and simultaneously build all the new stuff, with low ERoEI energy that is literally costing the Earth.

Make no mistake, America will never be great again………. Trump or no Trump.





Beyond the Point of No Return

4 12 2016

Imminent Carbon Feedbacks Just Made the Stakes for Global Warming a Hell of a Lot Higher

Republished from Robert Scribbler’s excellent website……..

If EVER there was a need to start soil farming, this proves it beyond doubt.

“It’s fair to say we have passed the point of no return on global warming and we can’t reverse the effects, but certainly we can dampen them,” said biodiversity expert Dr. Thomas Crowther.

“I’m an optimist and still believe that it is not too late, but we urgently need to develop a global economy driven by sustainable energy sources and start using CO2, as a substrate, instead of a waste product.” — Prof Ivan Janssens, recognized as a godfather of the global ecology field.

“…we are at the most dangerous moment in the development of humanity. We now have the technology to destroy the planet on which we live, but have not yet developed the ability to escape it… we only have one planet, and we need to work together to protect it.” — Professor Stephen Hawking yesterday in The Guardian.

*****

The pathway for preventing catastrophic climate change just got a whole hell of a lot narrower.

For according to new, conservative estimates in a scientific study led by Dr. Thomas Crowther, increasing soil respiration alone is about to add between 0.45 and 0.71 parts per million of CO2 to the atmosphere every year between now and 2050.

(Thomas Crowther explains why rapidly reducing human greenhouse gas emissions is so important. Namely, you want to do everything you can to avoid a runaway into a hothouse environment that essentially occurs over just one Century. Video source: Netherlands Institute of Ecology.)

What this means is that even if all of human fossil fuel emissions stop, the Earth environment, from this single source, will generate about the same carbon emission as all of the world’s fossil fuel industry did during the middle of the 20th Century. And that, if human emissions do not stop, then the pace of global warming of the oceans, ice sheets, and atmosphere is set to accelerate in a runaway warming event over the next 85 years.

Global Warming Activates Soil Respiration Which Produces More CO2

This happens because as the world warms, carbon is baked out of previously inactive soils through a process known as respiration. As a basic explanation, micro-organisms called heterotrophs consume carbon in the soil and produce carbon dioxide as a bi-product. Warmth is required to fuel this process. And large sections of the world that were previously too cold to support large scale respiration and CO2 production by heterotrophs and other organisms are now warming up. The result is that places like Siberian Russia, Northern Europe, Canada, and Alaska are about to contribute a whole hell of a lot more CO2 (and methane) to the atmosphere than they did during the 20th Century.

When initial warming caused by fossil fuel burning pumps more carbon out of the global environment, we call this an amplifying feedback. It’s a critical climate tipping point when the global carbon system in the natural environment starts to run away from us.

Sadly, soil respiration is just one potential feedback mechanism that can produce added greenhouse gasses as the Earth warms. Warming oceans take in less carbon and are capable of producing their own carbon sources as they acidify and as methane seeps proliferate. Forests that burn due to heat and drought produce their own carbon sources. But increasing soil respiration, which has also been called the compost bomb, represents what is probably one of the most immediate and likely large sources of carbon feedback.

increase-in-carbon-dioxide-from-soils

(A new study finds that warming of 1 to 2 C by 2050 will increase soil respiration. The result is that between 30 and 55 billion tons of additional CO2 is likely to hit the Earth’s atmosphere over the next 35 years. Image source: Nature.)

And it is also worth noting that the study categorizes its own findings as conservative estimates. That the world could, as an outside risk, see as much as four times the amount of carbon feedback (or as much as 2.7 ppm of CO2 per year) coming from soil if respiration is more efficient and wide-ranging than expected. If a larger portion of the surface soil carbon in newly warmed regions becomes a part of the climate system as microbes activate.

Amplifying Feedbacks Starting to Happen Now

The study notes that it is most likely that about 0.45 parts per million of CO2 per year will be leached from mostly northern soils from the period of 2016 to 2050 under 1 C worth of global warming during the period. To this point, it’s worth noting that the world has already warmed by more than 1 C above preindustrial levels. So this amount of carbon feedback can already be considered locked in. The study finds that if the world continues to warm to 2 C by 2050 — which is likely to happen — then an average of around 0.71 parts per million of CO2 will be leached out of soils by respiration every year through 2050.

rates-of-soil-carbon-loss

(When soils lose carbon, it ends up in the atmosphere. According to a new study, soils around the world are starting to pump carbon dioxide into the atmosphere. This is caused by increased soil respiration as the Earth warms. Over the next 35 years, the amount of carbon dioxide being pumped out by the world’s soils is expected to dramatically increase. How much is determined by how warm the world becomes over the next 35 years. Image source: Nature.)

The upshot of this study is that amplifying carbon feedbacks from the Earth environment are probably starting to happen on a large scale now. And we may be seeing some evidence for this effect during 2016 as rates of atmospheric carbon dioxide accumulation are hitting above 3 parts per million per year for the second year in a row even as global rates of human emissions plateaued.

Beyond the Point of No Return

What this means is that the stakes for cutting human carbon emissions to zero as swiftly as possible just got a whole hell of a lot higher. If we fail to do this, we will easily be on track for 5-7 C or worse warming by the end of this Century. And this level of warming happening so soon and over so short a timeframe is an event that few, if any, current human civilizations are likely to survive. Furthermore, if we are to avoid terribly harmful warming over longer periods, we must not only rapidly transition to renewable energy sources. We must also somehow learn to pull carbon, on net, out of the atmosphere in rather high volumes.

Today, Professor Ivan Janssens of the University of Antwerp noted:

“This study is very important, because the response of soil carbon stocks to the ongoing warming, is one of the largest sources of uncertainty in our climate models. I’m an optimist and still believe that it is not too late, but we urgently need to develop a global economy driven by sustainable energy sources and start using CO2, as a substrate, instead of a waste product. If this happens by 2050, then we can avoid warming above 2C. If not, we will reach a point of no return and will probably exceed 5C.”

In other words, even the optimists at this time think that we are on the cusp of runaway catastrophic global warming. That the time to urgently act is now.

Links:

Quantifying Soil Carbon Losses in Response to Warming

Netherlands Institute of Ecology

Earth Warming to Climate Tipping Point

This is the Most Dangerous Time for Our Planet

Climate Change Escalating So Fast it is Beyond the Point of No Return

NOAA ESRL

Soil Respiration





The Trouble with Permaculture

4 10 2016

With the recent passing of Bill Mollison, much has been published on the interweb about Permaculture; While Glenda was here for nine days, I didn’t spend much time at this laptop, preferring to help her set her own stamp on the Fanny Farm and using her very able gardening skills to get stuck into some planting…. and fixing the goose tractor in readiness for the acquisition of more birds, but there will be time for that some place else on this site.

Having published Samuel Alexander’s epitaph for Bill Mollison by merely copying and pasting the Conversation article, I didn’t bother following the links therein; luckily, Greg Bell did, and posted a couple in a comment he left here, many thanks Greg…. as he says in his comment, “Those two “here” links to critiques of permaculture are the two most important things I’ve read all year (and they, in turn, link to even more)……

The first link is to Resilience.org and bears the same title as this entry. Fascinating reading indeed, as are the comments below it.





No fracking, drilling or digging: it’s the only way to save life on Earth

29 09 2016

“Do they understand what they have signed? Plainly they do not. Governments such as ours, now ratifying the Paris agreement on climate change, haven’t the faintest idea what it means – either that or they have no intention of honoring it” writes George Monbiot in the Guardian…… but does George himself ‘get’ what he’s writing….?

Any regular visitor to this blog will know I entirely agree with the title of Monbiot’s thesis. But at least, I know it also means the end of civilisation as we know it.

Using the industry’s own figures, it shows that burning the oil, gas and coal in the fields and mines that is already either in production or being developed, is likely to take the global temperature rise beyond 2C. And even if all coal mining were to be shut down today, the oil and gas lined up so far would take it past 1.5C. The notion that we can open any new reserves, whether by fracking for gas, drilling for oil or digging for coal, without scuppering the Paris commitments is simply untenable.

Too right. Especially as we have pretty well already reached the 1.5°C threshold according to several sources.

on-the-edge-of-1-5-c

The only means of reconciling governments’ climate change commitments with the opening of new coal mines, oilfields and fracking sites is carbon capture and storage: extracting carbon dioxide from the exhaust gases of power stations and burying it in geological strata. But despite vast efforts to demonstrate the technology, it has not been proved at scale, and appears to be going nowhere. Our energy policies rely on vapourware.

All this nonsense is a substitute for a simple proposition: stop digging. There is only one form of carbon capture and storage that is scientifically proven, and which can be deployed immediately: leaving fossil fuels in the ground.

So far so good…..

[governments’] choices are as follows. First: a gradual, managed decline of existing production and its replacement with renewable energy and low-carbon infrastructure, which offer great potential for employment. Second: allowing fossil fuel production to continue at current rates for a while longer, followed by a sudden and severe termination of the sector, with dire consequences for both jobs and economies. Third: continuing to produce fossil fuels as we do today, followed by climate breakdown. Why is this a hard choice to make?

But George…… if we are at 1.5°C already, not even choice 1 is viable….

arcticspiral

The Arctic ice death spiral has lost no momentum, with current volumes at the lowest they have ever been recorded, and cruise ships actually being sent to the North West Passage for the filthy rich to see the product of their handy work……

Only an economic collapse can fix this ongoing insanity. At least it’s interesting to see Monbiot making no mention of nuclear power in this Guardian article. Has he changed his mind, or was it a mere omission..?

 





Fossil fuels in deep trouble…..

19 08 2016

Recently, a handful of Germany’s top scientists argued that “controlled implosion of fossil industries and explosive renewables development” might be able to deliver on the targets in the Paris agreement on climate change.

Even if we accept this notion at face value, and ignoring that many other factors might also be in play, the recent course of events does not offer much hope that “controlled” is the correct word to apply to the predicaments currently battering the energy sector. And while the renewable energy sector might be continuing to make progress, it is clearly not “exploding” as fast as some might wish……. Could it be, by any chance, that the ongoing collapse of the fossil fuel industries will happen at a much faster pace than the wishful explosive transition to ‘solutions’?

Let’s start with coal. The future for this bankruptcy-riddled industry dramatically worsened in July 2016. It increasingly looks as though the Chinese government’s recent retreat from coal is biting hard, and that Chinese coal peak coal production occurred in 2014. Prof Nick Stern, among others, including Chinese collaborators, argued that we are witnessing “a turning point in the climate change battle”. The latest Chinese announcement is a ban on the development of coal projects, until 2018. The staggering air pollution driving this change is proving difficult to beat… and the same is true of India.  NASA data showed toxic air choking huge areas of the Indian subcontinent, most of which the obvious result of fossil fuel combustion. In the face of all this, even Deutsche Bank has stopped financing the coal mining sector.

Investment continues to wane from fossil fuels as a result of divestment campaigns. Swedish pension fund AP4 made the biggest divestment move of any institution to date. The $35billion scheme will decarbonise its $14.7billion global equity portfolio by 2020, switching to passive investment tracking low carbon benchmarks.

Furthermore, the oil and gas industry’s hopes for a return to high oil prices have yet to occur, and as a result its already teetering state is deteriorating. A study of 365 oil and gas megaprojects by Ernst and Young shows 64% with cost overruns, and 73% behind schedule. This dismal record is combining with low oil prices to create a mortal squeeze on profitability.

US drillers have hit an all time high with junk bond defaults: $28.8 billion so far this year, according to Fitch Ratings. With $500 billion+ outstanding,  more bankruptcies can be expected. Some of these companies are even trying to buy time by paying debt interest with more debt. Desperate times require desperate actions I guess…….

Global oil breakeven costs have fallen by $19 to a current average of $51 since the oil price began falling in 2014. Trouble is, the oil price is still hovering around $40 and most of the industry’s targets are totally uneconomic.

“Oil giants find there’s nowhere to hide from doomsday market”, read a Bloomberg headline. “The industry cannot survive on current oil prices,” veteran analyst Fadel Gheit declared. The bankruptcy count so far this year stands at more than 80 companies.

So will the oil price rise, and offer some relief…? Not according to analysts. Morgan Stanley expects oil to fall to $35. (The price is around $40 as I write). The main concern is excessive production of petrol/gasoline by refineries (= less crude imported). As always, some of course disagree. Core Laboratories point to the net worldwide annual crude oil production decline rate of ~3.3%, and expect US production to continue dropping, which they hope will bring tighter supply, and rising prices.

Even if the oil price does indeed rise again, problems are not going away…… The industry faces a huge shortage of workers. 350,000 have apparently been laid off since the oil price began falling in 2014. 60% of the fracking workforce has been laid off, 70% of fracking equipment has been idled. It will be nigh impossible to turn the taps back on, as even some of the industry’s own bosses now point out. And if the price rises back above $90, the global economy will tank……