In a fascinating TED talk, designer Thomas Thwaites explains how he tried to build a toaster from scratch, using only preindustrial tools and methods. Even though a toaster is one of the simplest industrial products available, of course such a project is doomed to fail, because it takes an entire civilization to make a toaster. Thwaites even cheated quite a lot, using a leaf blower and microwave oven and many other tools that he couldn't possibly have made himself, and electricity was just assumed, yet he could only produce a crude imitation of a toaster. Amazingly, his homemade toaster actually worked for five seconds, but that was it.
When you consider how many things we take for granted and depend on that would go away without the operational fabric of industrial civilization, it becomes clear that it is supremely important to preserve this system if we would like to go on living comfortably or at all. We can't even make a pencil without industrial civilization. Unfortunately, peak oil is the elephant in the room which threatens the very fabric of our civilization along with our ability to make toasters and pencils and just about everything else, yet public awareness treats peak oil as a complete non-issue, or at most like just another factor in the economy which might slow down growth a little bit. Even the most pessimistic economists in the mainstream talk about temporarily slower growth and never anything worse. It is downright surreal.
Everyone understands that if you want civilization, then elementary schools and hospitals need to exist even if they can't make a profit. Energy is even more basic to our civilization, and crude oil is our most critically important energy source, yet strangely everyone (in Norway, at least) expects oil companies to be profitable or go out of business. So why is the oil industry simply allowed to collapse? I find it very strange that the market is assumed to sort things out and meet our needs in the face of rising costs and declining wages. Somehow, the law of supply and demand is supposed to solve all energy and commodity problems, and we don't need to take any action whatsoever to produce these goods ourselves if we can't make a profit on them. Demand is always assumed to materialize at any price needed to produce the things we need, even though the opposite is happening before our eyes. This model is outdated and it clearly doesn't work anymore, because the oil industry is no longer profitable. I believe mankind is losing its ability to afford the necessities of life, at least not by means of the market economy, which is in the grips of deflationary forces.
So here is what I would do in response to the current oil price crash. The Norwegian government should guarantee the price of oil from the Norwegian continental shelf at, say, $80 per barrel and back it up with our Petroleum Fund. This way we have over 800 billion dollars to throw at it, and I can't imagine a better way to use this wealth because it will be obliterated by peak oil in any event. The price guarantee would encourage petroleum companies to keep investing in the North Sea, and the sustained activity would also benefit the entire Norwegian economy as we have been accustomed to. If the price of oil goes back up above $80, nothing happens, and if it stays below, the government will pay the difference or buy the oil for $80 and put it in strategic storage or whatever. Instead of expecting profits, projects should be evaluated based on EROEI, and all projects with a sensible EROEI (at least 5, perhaps?) should be approved for this price guarantee.
The time has come to stop expecting profits from the oil industry, but rather subsidize it to the hilt. I realize Norway is one of very few countries in the world able to do this, and we only represent 2.8% of global oil production. I suppose OPEC is in a sense already doing it, since they insist on selling all they can at any price. Most oil exporters would collapse without the profits and they are in no position to subsidize oil exports for long. But we should do what we can. This remedy will not solve the problem of peak oil, but it might buy us a little more time, in which we can try to come up with more sustainable strategies. If our politicians understood the gravity of the situation, they would do it.
Saturday, December 27, 2014
Wednesday, December 03, 2014
Deflationary collapse is underway
As a reader of Gail Tverberg's blog Our Finite World, I am privy to the fact that our world is soon collapsing. This is an open secret expounded in broad daylight and even in a friendly commercial-free environment, yet most people will never grasp it. The masses will starve to death or otherwise perish in the collapse thinking it is a political problem, and if only we had voted a different party into power who would have made some better decisions, things would have worked out. That is nonsense because we are facing a physical and ecological problem, to which there is no political solution. While I would love to be proven wrong, I have almost as much confidence in Gail's prediction of imminent collapse as the Second Law of thermodynamics, to which it is closely related. People who think sustainability is possible or renewables can save us have basically no knowledge of these issues. Likewise for people who obsess over climate change, which is rather like preparing to fight World War II before World War I. Read Gail's posts and comments, check her references and especially pay attention to the way she replies to all comments and convincingly debunks any kind of optimism, and it shall be intuitive to you too that we are collapsing.
I don't expect anyone to believe this simply because I say so. The impossibility of continuing our industrial civilization cannot be expressed in a single indicator or a few sentences. Declining EROEI comes close, but as Gail often points out, EROEI is not the whole story. You have to be willing to look at the whole picture and the various ways we are running into diminishing returns, which is something very few people can be bothered with. You have to understand concepts such as Liebig's law of the minimum, White's law, Jevon's paradox, the Constructal law, the concept of dissipative structures, the Maximum Power Principle and the Seneca cliff. You have to understand that life is in the business of entropy maximization, and now doing such a fabulously good job at it that the party will inevitably be over soon.
The meaning of life (at the level of physics, which rules biology) is to produce entropy. We are dissipative structures who came into being because entropy is created faster by our existence, considering the whole system. Dissipative structures arise in response to energy differentials. Our economy is also a dissipative system, whose function is to create entropy out of fossil hydrocarbons, which represent the greatest energy differential known to man. That is the only thing our economy knows how to do at this point, and when it fails to grow anymore it will collapse. Once again, you have to learn more about all these concepts to understand why it MUST collapse. Then you will understand that we need to preserve the whole industrial system to have any of it, which requires exponential growth since the whole thing is built on debt. Growth is no longer possible due to diminishing returns, so our economy must collapse. In time, other dissipative structures will emerge, but they will not be as grand or complex because the energy available to them is much too diffuse to produce anything like our industrial civilization. And all this glory was brought down by low oil prices, which is the proximate limit that we cannot defeat. Peak oil precipitated by low oil prices is exactly what Gail predicted (in December 2013 she explained why “oil prices don’t rise high enough” is the real limit), and it is happening now!
And not just oil, but all major commodities are now subject to deflation. Coal is also critically important, of course, and it is becoming unprofitable to extract as well. Deflationary collapse is thus already underway. The oil price will not go back up to the needed level of $100 or more per barrel. Instead, it will continue to decline until we are dead. If the oil price does go back up, it will only be a brief and useless spike because the world economy can no longer sustain such high prices. This is not a matter of OPEC limiting production, because that would have been futile anyway. The financial system is the operating system that the hardware of our civilization runs on, and it is totally dependent on growth to function at all. At some point within the next few years this system will seize up, leading to broken industrial supply lines, and there will be a forced localization of our economy. Since we can produce almost nothing locally in a world dependent on globalization, there will be immense suffering and a huge die-off. Any survivors will be limited to Stone Age technology or at best manual agriculture. The number of survivors could be as low as 100 million or probably no more than 10% at best.
There is nothing we can do to save industrial civilization or the bulk of humanity. Any attempt to prepare at a societal level will run afoul of the reflexivity trap and accelerate the problem by engendering fear and desperation. Any individual coping strategy is so fraught with risks as to be meaningless. You can prepare in various ways if you feel like it, but there is no guarantee it will do you any good the day business as usual (the legendary "BAU") ends. The end of BAU also means the end of all social movements, so our work as antifeminists will be done. Peak oil will destroy our enemies as surely as it will destroys us.
The best thing we can do now is to enjoy what we have until it is gone. Be thankful for the wonderful wealth we have. Marvel at the amenities of industrial civilization and the power of your hundreds of personal energy slaves. That is arguably not a bad thing to do even if I am wrong. Most people think of civilization as a permanent state that they simply take for granted. They think they will have access to things like hot showers, dentistry, pharmaceuticals, security and plenty of food as long as they live. The Olduvai theory tells us the lifespan of industrial civilization is more like 100 years, and even if it drags out a bit longer it will have been a mere blip. We shall soon find out if this turns out to be right. I think 2015 will be the year of the peak. This prediction will fail if commodity prices go back up and stay there, but that isn't happening, is it?
I don't expect anyone to believe this simply because I say so. The impossibility of continuing our industrial civilization cannot be expressed in a single indicator or a few sentences. Declining EROEI comes close, but as Gail often points out, EROEI is not the whole story. You have to be willing to look at the whole picture and the various ways we are running into diminishing returns, which is something very few people can be bothered with. You have to understand concepts such as Liebig's law of the minimum, White's law, Jevon's paradox, the Constructal law, the concept of dissipative structures, the Maximum Power Principle and the Seneca cliff. You have to understand that life is in the business of entropy maximization, and now doing such a fabulously good job at it that the party will inevitably be over soon.
The meaning of life (at the level of physics, which rules biology) is to produce entropy. We are dissipative structures who came into being because entropy is created faster by our existence, considering the whole system. Dissipative structures arise in response to energy differentials. Our economy is also a dissipative system, whose function is to create entropy out of fossil hydrocarbons, which represent the greatest energy differential known to man. That is the only thing our economy knows how to do at this point, and when it fails to grow anymore it will collapse. Once again, you have to learn more about all these concepts to understand why it MUST collapse. Then you will understand that we need to preserve the whole industrial system to have any of it, which requires exponential growth since the whole thing is built on debt. Growth is no longer possible due to diminishing returns, so our economy must collapse. In time, other dissipative structures will emerge, but they will not be as grand or complex because the energy available to them is much too diffuse to produce anything like our industrial civilization. And all this glory was brought down by low oil prices, which is the proximate limit that we cannot defeat. Peak oil precipitated by low oil prices is exactly what Gail predicted (in December 2013 she explained why “oil prices don’t rise high enough” is the real limit), and it is happening now!
And not just oil, but all major commodities are now subject to deflation. Coal is also critically important, of course, and it is becoming unprofitable to extract as well. Deflationary collapse is thus already underway. The oil price will not go back up to the needed level of $100 or more per barrel. Instead, it will continue to decline until we are dead. If the oil price does go back up, it will only be a brief and useless spike because the world economy can no longer sustain such high prices. This is not a matter of OPEC limiting production, because that would have been futile anyway. The financial system is the operating system that the hardware of our civilization runs on, and it is totally dependent on growth to function at all. At some point within the next few years this system will seize up, leading to broken industrial supply lines, and there will be a forced localization of our economy. Since we can produce almost nothing locally in a world dependent on globalization, there will be immense suffering and a huge die-off. Any survivors will be limited to Stone Age technology or at best manual agriculture. The number of survivors could be as low as 100 million or probably no more than 10% at best.
There is nothing we can do to save industrial civilization or the bulk of humanity. Any attempt to prepare at a societal level will run afoul of the reflexivity trap and accelerate the problem by engendering fear and desperation. Any individual coping strategy is so fraught with risks as to be meaningless. You can prepare in various ways if you feel like it, but there is no guarantee it will do you any good the day business as usual (the legendary "BAU") ends. The end of BAU also means the end of all social movements, so our work as antifeminists will be done. Peak oil will destroy our enemies as surely as it will destroys us.
The best thing we can do now is to enjoy what we have until it is gone. Be thankful for the wonderful wealth we have. Marvel at the amenities of industrial civilization and the power of your hundreds of personal energy slaves. That is arguably not a bad thing to do even if I am wrong. Most people think of civilization as a permanent state that they simply take for granted. They think they will have access to things like hot showers, dentistry, pharmaceuticals, security and plenty of food as long as they live. The Olduvai theory tells us the lifespan of industrial civilization is more like 100 years, and even if it drags out a bit longer it will have been a mere blip. We shall soon find out if this turns out to be right. I think 2015 will be the year of the peak. This prediction will fail if commodity prices go back up and stay there, but that isn't happening, is it?
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