Resource Depletion

Making the Grade in Population

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Published on Peak Surfer on August 14, 2016


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"Activist saints who receive C’s on the population quiz: Ralph Borsodi, George Monbiot, Wendell Berry, David Attenborough and Jane Goodall."




Fourteen percent of all humans who have ever lived are alive today. Recent projections  of fertility momentum put global population between 9.6 and 12.3 billion by the end of the century. Of course that could no more be sustained than too many reindeer living on lichen on a small island.




A 2014 study in the Proceedings of the National Academy of Sciences (Bradshaw and Brook, "Human population reduction is not a quick fix for environmental problems." DOI: 10.1073/pnas.1410465111)  looked at a number of different scenarios to gauge how long it might take the human population to plateau and then decline. The Yale Environmental Review commented:


Many of the findings highlight the strength of this demographic momentum. For example, the study found that if every unplanned pregnancy were avoided worldwide due to reproductive education, family planning, and cultural shifts, population would peak at 8.39 billion in 2050 and then fall to 7.3 billion by 2100, a level slightly higher than today. The study also found that implementing contentious population control measures such as a worldwide one-child policy, results in a population that wouldn’t fall back to present-day size until the end of the century. Another scenario looked at a hypothetical catastrophic mortality event equal to the number of deaths from the First World War, the Second World War, and the 1918 Spanish flu epidemic combined. This event barely altered the long-term population projection.




Population tends to be the third rail for many environmental activists. They are okay talking about a one child policy for China, or lamenting the fact that Africa will more than triple its population by mid-century, but the idea of limiting their own family size seems to hold little interest.




Perhaps some role models are needed. Among the presidential candidates, Jill Stein gets a C. She has two children. Donald Trump receives a failing grade. He has 5. Hillary Clinton, with only one child, receives a B. To get an A she would have needed either none or a half child, perhaps one adopted from a one child family or acquired by marriage.




Top Marks: Leo DiCaprio (0); Rocky Mountain Institute’s Amory Lovins (0); Consumer Advocate Ralph Nader (0); Sea Shepherd Captain Paul Watson (1);’s Bill McKibben (1); Greenpeace Executive Director Annie Leonard (1); Greenpeace spokesman Kumi Naidoo (1); and “population bomb” theorists Paul and Anne Ehrlich (1).




The US’s largest and most influential grassroots environmental organization, Sierra Club, has a population mission:




The Global Population and Environment Program believes that healthy people and a healthy environment go hand in hand. We work to protect the global environment, preserve natural resources for future generations, and ensure healthy, thriving families and communities by promoting global reproductive health, reproductive rights and sustainable development initiatives.




And yet the Sierra Club’s president and his wife “attribute their ongoing passion for environmental activism in part to concern that their children (plural) inherit a healthy world.”
Pope Francis has yet to issue an encyclical urging Catholics to use birth control. Naomi Klein thinks artificial insemination should be a universal right.




Activist saints who receive C’s on the population quiz: Ralph Borsodi, George Monbiot, Wendell Berry, David Attenborough and Jane Goodall.




Top Marks: Rachel Carson (0); Henry David Thoreau (0).




Failing grades: Thomas Malthus (3), Helen Caldicott (3); Al Gore (4); David Brower (4), Jacques-Yves Cousteau (4); Garrett Hardin (4); Allan Yeomans (5); Aldo Leopold (5); and David Suzuki (5 children, 6 grandchildren).




Groucho Marx, on You Bet Your Life, questioned a female contestant who came from a family of 17 children:


Groucho: How does your father feel about this rather startling turn of events? Is he happy or just dazed?
Daughter: Oh, my daddy loves children.
Groucho: Well, I like pancakes, but I haven't got closets full of them …




Many people are familiar with the Groucho cigar story, which is similar but a bit more salacious. Apparently that is an urban legend. Judge for yourself at Snopes.

Collapse Cafe 8/6/2016

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Aired LIVE on Collapse Cafe YouTube on August 6, 2016

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Interview with Peace Writer William T. Hathaway

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Published on the Doomstead Diner on March 17, 2016


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In this interview with William T. Hathaway we discuss his evolution  from his time as a Green Beret in the jungle of Vietnam to his  succeding years as an activist for peace, William Hathaway speaks with a clear voice the Diner is proud to feature. -RE


"It took me years to overcome the warrior indoctrination I got in the Special Forces. It was very deeply ingrained. What finally brought me out of it was meditation and my wife's persistent love," says author William T. Hathaway. "Now I look back and ask, How could I have fallen for that military nonsense?"

A Special Forces combat veteran, Hathaway has answered that question in two novels about what attracts men to war and how they can be healed of the pathology of patriarchal machismo.

His first novel, A WORLD OF HURT, won a Rinehart Foundation Award for its portrayal of the blocked sexuality and the need for paternal approval that draw men to the military.

"I was trying to uncover the psychological roots of war, the forces that so persistently drive our species to slaughter," says Hathaway. "Our culture has degraded masculinity into a deadly toxin. It's poisoned us all. Men have to confront this part of themselves before men and women together can heal it."

He is active in a group offering support and shelter to soldiers who have refused to be sent to Iraq and Afghanistan. "The real heroes in the military are the deserters," says Hathaway. He wrote the introduction to AMERICA SPEAKS OUT: Collected Essays from Dissident Writers and has published numerous shorter pieces, including "Sedition, Subversion, Sabotage" in CounterCurrents.

His writing won him a Fulbright professorship at universities in Germany, where he currently lives.

Hathaway sees spirituality as an essential component of a more peaceful world. "My military experience convinced me that to prevent war we need to raise human consciousness. A look at the history of revolutions shows that switching economic and political systems isn't enough. The same aggressive personality types take over and start another army. We have to change the basic unit, the individual.

"Many of my leftist colleagues ignore this because they see the individual as the product of social and material forces. But I think the human heart is deeper than that and can be changed.

"I've found Eastern meditation to be the most effective way to change people. Unlike prayer, it works on the physiological level, altering the brain waves and metabolism. It refines the nervous system and expands the awareness so that the unity of all human beings becomes a living reality, not just an idealistic concept.

"After a while of meditation people stop wanting to consume things that increase aggression, such as meat, alcohol, and violent entertainment. They become more peaceful."


Postcard From Sweden

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Aired on the Doomstead Diner on October 15, 2015

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With this interview, we introduce the most recent in the pantheon of Diner Cross Posting Bloggers, Linda Bergqvist, aka Fenixor.

FX runs the blog Peak Resources, hails from Sweden and is one of the younger Diners, along with Monsta from the UK who cohosts the Collapse Cafe Videos & Podcasts with me usually.  This interview was done on short notice though, so it's just the Talking Heads of RE & FX in this one.

Following the Video, we'll be cross posting  recent blogs from FX under her byline.  Visit her Peak Resources blog to catch up on her previous articles.

What is Really Behind the Refugee Crisis in Europe?

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Published on Question Everything on September 11, 2015


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The Resource Crisis and Climate Change

Back in July, 2013 I wrote this post, MENA – A Model of the Future? in which I dug deeper into the then crisis transpiring in Egypt where a revolt against the Morsi government was being spurred by the fact that the dwindling natural resources per capita (especially energy) were fundamentally unsolvable by any government. The people were unhappy because they thought that by voting in a new government democratically they would solve their problems (jobs, food, water, fuel, etc.) But it didn't happen for the simple reason that the resource pie was shrinking faster than any government actions (say attracting some kind of investment in the country) could counter. Things got worse and people once again took to the streets. Today, two years later, things have gotten considerably worse under the military regime that kicked out Morsi and took over. As I claimed then and reiterate, it is a matter of plain and simple physics, not politics. You cannot legislate resources into existence.

People have gotten used to thinking that solutions come from politics – having the right officials in place means that they will solve the problems. People everywhere pretty much assume this is the case, even in the US where the freak show called the presidential campaign is off and running. No doubt many republicans in the US sincerely believe that Donald Trump will solve all the problems and everything will be right as rain once again ("Make America great again").

But politicians are not miracle workers. They cannot feed the multitudes from a few loaves of bread and a couple of fish. What they have become, however, right along side their neoclassical economics allies, are fair magicians — prestidigitators. They know how to manipulate smoke and mirrors and conjure economic spells. They are nothing more than snake oil con men (and women). The irony is that they actually believe what they say and are convinced they know how to really make good stuff happen. They are a testament to the capacity of the less-than-sapient mind's ability to double think.

The simple truth is that when you find yourself in deep resource depletion and high population no amount of financial hocus pocus or political posturing or brute force can fix anything. The Morsi government nor the military junta before and after could ever possibly satisfy the needs of the people. No government could. Nor could there be massive aid influx to ease the situation. The other nations of the world are all much poorer than they will admit. They cannot pump enough resources into the region to solve the problems. There is no scenario in which this comes out well.

Our talking heads continue to evaluate the “causes” of the mass exodus from the MENA region as due to the political unrest growing more violent by the day. For example they look at Syria and blame the problems, initially, on Asad and the rebellion/civil war that threatens so many civilians. Then the US government focuses on the ISIS threat as causing so many people to want to leave. These destructive acts are merely proximate causes. The rebels against Asad are basically repeating the story in Egypt. They claim that bad government (Asad) is the cause of the problems experienced by the people. Replace the government and problem solved! Right? Much the same story is being repeated through out the other failed states in the region.

The civil wars and lawlessness (e.g. Boko Haram) are driven by the rapid decline of resources compounded now by climate consequences, drought and severe temperatures. People are fighting for dwindling resources in increasingly unlivable conditions. The citizens of these states are responding most immediately to the violence, and claiming political asylum on that basis. But make no mistake. They are ultimately climate and resource refugees. And there is no policy or plan that will correct the situation. The lucky ones will escape (if they don't die on the journey) to Europe and possibly to the US. But that will simply cause resource strains in those areas where they settle. Nor will the flood taper off until the region is mostly emptied.

MENA is just the first example of what is happening in the world. As the climate situation worsens, and we now know that it is and will further, affecting every continent on the planet, and as resource depletions grow acute in various focused locations, we will see this same scenario played out again and again. Political upheaval based on the belief that the government's ineptitude, or corruption, or whatever, is responsible for the problems that ensue (food shortages, fuel shortages, unemployment, etc.) will give over to violence. Regimes will change, but the problems will just grow worse.

Perhaps the US and some of the remaining western “rich” nations will try to help, intervene to reduce violence, or attempt to aid relocations. But their capacity to afford such actions are growing weaker with every day that passes. At some point the wealthy nations will no longer be truly wealthy and will decline to try to help. They will, in fact, be starting to feel the same effects themselves. Already we see the discord and extreme polarizations taking place in many western polities. In the US we tend to blame the congress for its deadlocked inability to pass laws that will effect economic change (and assumed progress). Neither side gets a thumbs-up on its economic ideas. In any case both sides firmly believe that economic growth is the solution to all problems and neither recognizes that we've used up all of the resources that we need to do so. They are so blind to reality that all they can really do from now on is exacerbate the problems. In the US we are in a situation that only the most blind persons even seek political position. They are so stupid and ignorant that they cannot even conceive that problems have real physical roots. Pity.

All over the world, right now, you can find cases of pockets of affected areas where people are starting to move out seeking somewhere where they can find work and resources. Within nations like Brazil, China, Russia, and even the United States there are instances of people becoming refugees. The Dust Bowl events in the US are another model for what is happening. Right now, in each of these countries the migrations are within the borders (except in Mexico and other Latin American countries) and so don't show up in “official” statistics.

Certainly there have been relocation migrations throughout humankind's history. We've always managed to deplete local resources forcing people to abandon a region, for example areas in the Middle East were once far more productive than in recent history before ungulate grazing changed the region's climate. And there have been many cases of people simply seeking better conditions (e.g. the American West promised great possibilities, especially during the Gold Rush). What is different about the current situation is that we are looking at a global phenomenon. Resources have been depleted just about everywhere. Climate is changing everywhere and at a breath-taking rate. The regions that are experiencing the worst effects are now quite obvious. The MENA region is probably the most dramatic. For example, by contrast, island nations being threatened by sea level rise and Arctic regions being impacted by loss of ice have fewer people affected and so do not rise to the level of global-level stress. Nevertheless the people effected in these regions are beginning to plan their escapes from their situations.

Right now in China there are many local emigrations taking place due to combinations of insufficient resources and climate change consequences. There is also a fair amount of unrest brewing in various areas. These are not as dramatic (yet) as the case in the MENA region. And internal migrations, as I said, are not depicted in the same manner as the refugee flood from the MENA to Europe. In fact it might be even worse in China than we know. The country is so much larger, the populations involved so much larger, and the information flow coming out of the country is subject to so much filtering that we might not get a good idea of what is happening there until significant violence breaks out that can't be hidden. But based on China's geographical conditions, and its potential susceptibility to climate disruptions, and the distributions of its huge population, I expect to soon see a situation similar to the MENA refugees become obvious in China.

India might erupt before China. The Indian subcontinent's orientation (North-South axis), its reliance on the snow falls and ice reservoirs in the Himalayas and its proximity to the equator make it a candidate for significant climate disruptions. It is already suffering changes in its monsoon patterns at the same time the huge population is withdrawing more water from its limited resources. However, in India I would not be surprised to see a somewhat different response from the populace. The vast majority of people in the country do not have mobility resources in the same way many Chinese do. It would not surprise me if a significant portion of the Indian population simply succumbed in place rather than trying to trek out. The distances are too great and the conditions along the way are likely to not provide support. There is no other large body of land nearby for those in the costal regions to escape to.

As the MENA refugee crisis unfolds this fall we will have a good view of what to expect world-wide. Right now a fair amount of European sentiment is in support of the migrants (I know there is a technical difference between a migrant and a refugee, but as I claimed above, these refugees are really climate-escape migrants). As more and more pour into the continent we will see how long this sentiment carries. There are many anti-migrant advocates already making noises and trying to get more political purchase. A lot will depend on the economic strength of the countries taking in the migrants — will the local natives be able to get jobs? — and the behavior of the immigrants. There is a real danger of culture clash based on the religious backgrounds of Muslim immigrants and secular (or Christian) natives. I refuse to predict anything on this count. The situation is too chaotic.

What I will predict is that the phenomenon will grow and worsen over the next decade. This is a one-way street we are on and no U-turns are possible. You can't un-deplete resources, especially fossil fuel energy. Readers of my biophysical economics writings will know how dim a view I have of the prospects of alternative energies replacing fossil fuels even if we were to undertake a huge reduction in net energy use. Alternatives might ease the pain a bit, for a while, but they cannot provide the long term flows of high power energy that it takes to drive our modern technologies. Magical and wishful thinking cannot change that fact. Alternative energy capture and conversion equipment (i.e. wind towers and solar arrays) are still built, installed, and maintained using fossil fuel power. It is quite doubtful that they will ever be self-sustaining to the extent of providing adequate net energy for economic uses.

If you want to consider your own future, imagine yourself in the shoes of one of the MENA refugees right now. Many of the ones who are making the trip had some basic monetary resources to afford the passage. But look at what they were reduced to in doing so. Imagine yourself now in a situation where the local stores are no longer stocked with food and other necessaries. Imagine your electricity being intermittent, maybe only on ten percent of the day. Imagine transportation breakdowns, perhaps gas is no longer delivered to your gas station. Imagine communications breakdowns. No Internet. No telephones (cell or land lines). What will you do?

But more than that, imagine that you decide to escape. Where will you go. The MENA refugees have Europe, ostensibly, to escape to. They expect their problems to be greatly reduced in these new lands. After all, the North is rich. Where will you go? What country will you escape to? Maybe some Americans are thinking they will go to Canada! But do they actually understand what the climate changes are going to mean for all of North America?

I doubt there will be any real escape. The best a sapient being can do is find a location that looks like it will be least impacted by climate, get situated and hunker down. With luck, you might just make it.

False Signals

Off the keyboard of Ugo Bardi

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Published on Resource Crisis on February 24, 2015



Oil production (all liquids in barrels per day) in the US and Canada. (From Ron Patterson’s blog). Does this rapid growth indicate that the resources are abundant and that all the worries about peak oil are misplaced? Maybe not….

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The shale oil “miracle”: how growth may falsely signal abundance

Sometimes, we use a simple metric to evaluate complex systems. For instance, a war is a complex affair where millions of people fight, struggle. suffer, and kill each other. However, in the end, the final result is seen in terms of a yes/no question: either you win or you lose. Not for nothing, General McArthur said once that “there is no substitute for victory”.

Now, think of the economy: it is an immense and complex system where millions of people work, produce, buy, sell, and make or lose money. In the end, eventually, we think that the final result can be described in terms of a simple yes/no question: either you grow, or you don’t. And what McArthur said about war can be applied to the economy, as well: “there is no substitute for growth“.

But complex systems have ways to behave and to surprise you that can’t be reduced to a simple yes/no judgement. Both victory and growth may well create more problems than they solve. Victory may falsely signal a military might that doesn’t really exist (think of the outcome of some recent wars….), while growth may signal an abundance which is just not there.

Give a look at the figure at the beginning of this post (from Ron Patterson’s blog). It shows the oil production (barrels/day) in the US and Canada. The data are in thousand barrels per day for “crude oil + condensate” and the rapid growth for the past few years is mostly due to tight oil (also known as “shale oil”) and oil from tar sands. If you follow the debate in this field, you know that this growth trend has been hailed as a great result and as the definitive demonstration that all worries about oil depletion and peak oil were misplaced.

Fine. But let me show you another graph, the US landings of North Atlantic Cod, up to 1980 (data from Faostat).

Doesn’t it look similar to the data for oil in the US/Canada? We can imagine what was being said at the time; “new fishing technologies dispel all worries about overfishing” and things like that. It is what was said, indeed (see Hamilton et al. (2003)).

Now, look at the cod landings data up to 2012 and see what happened after the great burst of growth.

I don’t think this requires more than a couple of comments. The first is to note how overexploitation leads to collapse: people don’t realize that by pushing for growth at all costs, they are destroying the very resource that creates growth. This can happen with fisheries just as with oil fields. Then, note also that we have here another case of a “Seneca Cliff,” a production curve where the decline is much faster than growth. As the ancient Roman philosopher said, “The road to ruin is rapid”.

The collapse of oil prices: lessons from history

Off the keyboard of Ugo Bardi

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Published on Resource Crisis on December 4, 2014


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The present collapse of oil prices finds some parallel with a much older case: that of whale oil and “whale bone” in the 19th century; both being commodities which suffered depletion and a production peak. Note the very strong oscillations that occur at around the peak and seem to increase with time. Note also how the average price levels stabilized at some point: there is a limit to what people are willing to pay for any commodity. It was true for whale oil, it is true for crude oil. Hence, it is likely that oil prices will keep increasing for a while, but then will stabilize, at least as an average. Image from a 2008 post by Ugo Bardi on “The Oil Drum”

In 2008, I published a post on “The Oil Drum” (reproduced below) where I tried to predict the behavior of crude oil prices on the basis of a comparison with the historical case of whale oil. In the first half of the 19th century, whale oil was an important commodity used mainly as fuel for oil lamps. It was, theoretically, a renewable resource, but whales were killed so fast that they didn’t have enough time to reproduce and reconstitute their numbers. So, whale oil behaved as if it was a nonrenewable resource: it suffered of depletion. As I reported in the post, its production showed a symmetrical, bell shaped curve and a clear “Hubbert peak.”

In 2008, we were nearly at the end of a phase of rapid growth of oil prices; a trend that – at the time – seemed to be unstoppable. But I made the point that prices could not keep rising forever. I stated that:

the historical data for whaling tell us that an exponential rise of the prices is not the only feature of the post-peak market. The prominent feature is, rather, the presence of very strong price oscillations. We can attribute these oscillations to a general characteristic of systems dominated by feedback and time delays. Prices are supposed to mediate between offer and demand, but tend to overcorrect on one side or another. The result is a succession of demand destruction (high prices) and offer destruction (low prices)

It seems that this is exactly what we are seeing for crude oil: very strong price oscillations. Just a few months after that my post was published, oil prices did indeed collapse. Today, we are seeing something similar and we tend to interpret the present downward cycle as the result of strategic choices or conspiracies, but this is mostly an illusion (the illusion of control). Rather, it seems that the market cannot regulate production as a function of progressive depletion without these cycles of demand destruction and offer destruction which eventually lead to a decline in production. Comparing with the behavior of whale oil prices, we see that in the future we may expect further oscillation and an overall trend of growth in the years after the production peak. However, prices should eventually stabilize, at least on the average.

In this comparison, we need to take into account that there is a fundamental difference to take into account when comparing the case of whale oil and that of crude oil. Whereas whale oil was smoothly replaced by a cheaper and more abundant resource (kerosene), no such possibility is in sight for crude oil. Eventually, however, what changes is just how much people are willing to pay for something. People were still buying whale oil when kerosene was dominating the market; they were willing to pay a moderate premium for a product that was perceived as of superior quality. In the case of crude oil, people may be willing to pay a lot of money to obtain a product they desperately need. Yet, there is a limit even to desperation: prices cannot rise to infinity. After a certain point, people will simply have to consume less. This seems to be what’s happening right now in many regions of the world; for instance, in Italy, oil consumption has declined of 35% over the past 10 years.

So, in the future, oil prices may not rise as much as it could be feared, but may well rise high enough to make oil unaffordable for many of us.


Here is the article I posted on “The Oil Drum” in 2008 (I corrected a few typos present in the original version)

Crude Oil: how high can it go? (19th century whaling as a model for oil depletion and price volatility)

19th century whaling is today one of the best examples we have of a complete cycle of exploitation of a natural resource.

The production curves of whale oil and whale bone in the United States in 19th century (data from “History of the American whale fishery” by A. Starbuck, 1878). Both show a clear bell shaped Hubbert’s curve. Click to enlarge.

A few years ago, I appeared in TV for the first time in my life. Oil had just passed 38 dollars per barrel and I was invited to speak in a national financial channel as the president of the newly formed Italian section of ASPO. When I said that I expected oil to rise well over 40 $/bl soon, everyone in the TV studio looked at me as if I had just said something very funny. All the other experts there, hastened to contradict me and said that 38 $ per barrel was just a spike, speculation, and that prices would soon go back to “normal.”

Seen in retrospect, it was an easy guess that oil prices had to rise. You only had to know a little about Hubbert’s theory. As I am writing these notes, oil prices stand at around 120 dollars per barrel and may well keep rising. But for how long? The problem with Hubbert’s model is that it is good for predicting production, but it tells you nothing about prices.

There are all sorts of economic models that attempt to predict prices, but their record is very poor. So, maybe the answer can be found in historical examples. If we can find a resource that has peaked and declined to zero or near zero production in the past, then its historical prices could give us some idea of what to expect today for oil.

There are many resources that have peaked and declined at the regional level; crude oil in the United States is a good example. But the price of US oil doesn’t depend only on US production; it is affected by imports from other regions of the world. So that’s not useful for understanding price trends at the global level. What we are looking for is a global resource that has peaked worldwide or, at least, in an economically isolated region.

After much searching, the best example that I could find is not that of a mineral resource, but of a biological one: whaling in the 19th century. Whales are, of course, a renewable resource, but if they are hunted much faster than they can reproduce, they behave as a non renewable resource; just like oil. We have good data about whaling compiled in books such as Alexander Starbuck’s “History of the American whale fishery” (1878). In Starbuck’s times there was no such thing as a “global market” for whale products. But the reach of the whaling ships was worldwide and the effects of whale depletion were felt in the same way by all markets in the world. So, we can take the prices reported by Starbuck as directly affected by the behavior of the production curve.

So, here are the results for the two products of whaling; whale oil and “whale bone”. Whale oil was used as fuel for lamps, whale bone was a stiffener for ladies’ clothes, fashionable in the 19th century.

Whale oil production and prices (adjusted for inflation) according to Starbuck’s data.

Whale bone production and whale bone prices (adjusted for inflation) according to Starbuck’s data.
The results are clear: whaling did follow a Hubbert style “bell shaped curve”, approximated in the graphs with a simple Gaussian. Whales did behave like a non renewable resource and some studies say that at the end of the 19th century hunting cycle, there remained in the oceans only about 50 females of the main species being hunted: right whales.

Now, looking at the historical prices, we see an increase in the vicinity of the peak for both whale oil and whale bone. For whale oil we see a spike after the peak, for whale bone the trend is smoother. In both cases, the smoothed growth is nearly exponential. We can see this exponential trend in the smoothed data.

Smoothed whale bone and whale oil prices (adjusted for inflation).
It seems that what we are seeing now for crude oil parallels the historical data for whale oil and whale bone. There are also differences; for instance the prices of whale oil didn’t rise so much as crude oil has been doing lately. On the average, for whale oil we see a doubling of the price, followed by a plateau. For whale bone, we see a much larger increase, more than a factor of 10 from the beginning to the end of the whaling cycle. This increase is comparable to what we are seeing today for crude oil.

There is a reasonable explanation for these differences. First of all, neither whale oil nor whale bone were so crucial for life in the 19th century as crude oil is today for us. There were alternative fuels for lamps: animal fat or vegetable oil, a little more expensive and considered as inferior products; but usable. Then, starting in the 1870s, crude oil started to be commonly available as lamp fuel. It probably had an effect in keeping down the price of whale oil. For whale bone, instead, a replacement didn’t really exist except for steel, which was probably much more expensive during the period that we are considering. But stiffeners for ladies’ clothes were hardly something that people couldn’t live without.
In comparison, crude oil is such a basic commodity in our world that it is not surprising that prices have risen so steeply. Airlines, for instance, have no choice in between collapsing and buying oil at any price. For other activities, the conditions of the choice may not be so stark, but still we can’t survive without oil. If the exponential rise of oil prices were to continue unabated for a few more years, we would be seeing some kind of demand destruction, indeed.

But the historical data for whaling tell us that an exponential rise of the prices is not the only feature of the post-peak market. The prominent feature is, rather, the presence of very strong price oscillations. We can attribute these oscillations to a general characteristic of systems dominated by feedback and time delays. Prices are supposed to mediate between offer and demand, but tend to overcorrect on one side or another. The result is alternating cycles of demand destruction (high prices) and offer destruction (low prices).

What we are seeing at present with crude oil is, most likely, one of these price spikes. Eventually, it will overdo its job of curbing demand and turn into a price collapse. We can imagine how, in the collapsing phase, everyone will start screaming that the “oil crisis” of the first decades of the 21st century was just a hoax, just as it was said of the crisis of the 1970s. Then, a new upward spike will start.

Here, too, the history of whaling can teach us something in terms of the difficulty that people have in understanding depletion. In Starbuck’s book, we never find mention that whales had become scarce. On the contrary, the decline of the catch was attributed to such factors as the whales’ “shyness” and the declining “character of the men engaged”. Starbuck seems to think that the crisis of the whaling industry of his times can be solved by means of governmental subsidies. Some things never change.

In the end, the history of whaling tells us that what is happening now with crude oil shouldn’t have taken us by surprise. The future can never be exactly predicted but, at least, it can be understood from the lessons of the past. One of these lessons, however, seems to be that we never seem to be able to learn from the past.

I reported the results of this study on whaling for the first time at the ASPO conference in Lisbon in 2005. Later on, I published a complete paper in “Energy Prices and Resource Depletion: Lessons from the Case of Whaling in the Nineteenth Century” by Ugo Bardi, Energy Sources part b. Volume 2, Issue 3 July 2007, pages 297 – 304. You can find it on line here

If you like to play with Starbuck’s data, here is the complete set .

A Spaceship called Eschatology

Off the keyboard of Ugo Bardi

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Published on Resource Crisis on September 29, 2014


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This article appeared on “” on Aug 12, 2014.

Image from NASA

“Eschatology” is a Greek word meaning “the science of the end.” In ancient times, it used to be popular with theologians, but today it seems to have picked up interest to describe various kinds of catastrophes which could happen in the future. Things like giant asteroids falling on the Earth or, in the far future, the sun becoming so bright that it will cause the oceans to evaporate and wipe out all life.
Now, if eschatology means big, rapid and irreversible changes, you could argue that we’re going through a full-fledged eschatological event right now. It is a mineral eschatology caused by humans. Gigantic amounts of minerals have been extracted, processed, and dispersed in the atmosphere, in the oceans, and in the ground. It took hundreds of millions of years to create the ores we have destroyed in a few centuries. Hundreds of millions of years will be needed to recreate them – if indeed that will ever happen. The Earth is not any more what it used to be when humans first appeared on it, and it will never be the same again.It looks like we’ve built a spaceship called eschatology that’s transporting us to an alien planet on a one-way trip. A planet hotter than the one we are used to living on because of the greenhouse gases generated by the mining and the burning of fossil carbon. A planet with many characteristics we might find very unpleasant: from the flooding caused by the melting of land glaciers, to the persistent pollution caused by the heavy metals and radioactive minerals we’ve dispersed everywhere. But perhaps the greatest difference is that in this new planet we won’t find any more of the rich mineral ores which have provided us with energy and resources we used to build our industrial civilization.We may be able to adapt to a hotter planet, although that could mean enormous suffering for humankind. Within limits, we can also clean up the pollution we have generated. But how to live in a planet without cheap mineral resources?

It is true that minerals are never destroyed – so they will still be there and, in part, could be recovered from industrial waste. But, in the long run, in order to keep mining we would need to mine the undifferentiated crust, and that would be unthinkably expensive in term of the energy required. To say nothing of the disaster it would be in terms of pollution. The essence of the eschatological event we are living in is that the time of mining is almost over, at least in the form we have known it for centuries. That is, from miners with their picks and helmets in deep underground tunnels.But if eschatology means the end of something, it may also mean the beginning of something else. If mining is heading to an end, we can still have minerals if we are willing to change the wasteful and inefficient ways we’ve been using to get them. We must close the exploitation cycle, and completely recycle what we use. It is possible, but it needs energy – much more than we needed to mine pristine ores. This energy cannot come from fossil carbon: that would simply accelerate depletion and worsen the climate problem. We need clean and inexhaustible energy: mainly sun and wind.It is unlikely that this energy will ever be so cheap and abundant as the energy that was provided by fossil fuels at the beginning of their exploitation cycle; so, we’ll need to use it wisely. We’ll need to be much more efficient than we are today: we’ll need to create more durable industrial products, use energy carefully and substitute rare minerals with ones more common in the Earth’s crust.

Clean energy, recycling, and efficiency. This set of strategies is our ticket for survival in this interplanetary trip. In the end, spaceship Eschatology could give us a chance to abandon the ever-growing and never happy civilization of today and create a new civilization which could have enough wisdom to live and prosper on what is available and no more.
– Ugo Bardi is Professor of Physical Chemistry at the University of Florence and author of Extracted: How the Quest for Mineral Wealth is Plundering the Planet (Chelsea Green Publishing, 2014). 

Israel-Palestine Conflict: Modern Era Causes and Conclusions

Of the microphone of RE

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Aired on the Doomstead Diner on August 7, 2014


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…What with all the Geopolitical Doom going on in Ukraine as NATO tries to put the Thumbscrews to Vlad the Impaler, California on the verge of drying up and Blowing Away sending Californicators in the OPPOSITE direction BACK to Oklahoma (which is not doing much better really) and Ebola Virus being scare mongered throughout the MSM, one theater of collapse I have notably MISSED covering so far is the ongoing War between the Israelis and the Palestinians inhabiting the so called “Gaza Strip”, which is where after the creation of the State of Israel in the aftermath of WWII is where a lot of displaced Palestinians ended up.

As anyone who has been alive for the last half century knows, this is not a new War, just the latest flare-up in a war ongoing since Israel was created as a modern state back in 1948 or so. From 1917 after the end of WWI when the Brits clobbered the old Ottoman Empire with the modern machines of warfare, the neighborhood belonged to them as a Colony, but in 1948 the VERY dominant FSoA and the newly created United Nations basically created Israel by Fiat, and the surviving Jews from Europe and WWII migrated there en masse…

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Aimless Circling of Doom

Off the keyboard of Steve from Virginia

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Published on Economic Undertow on June 4, 2014

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Fast forward two weeks and the media obsession with Piketty has receded, he has been replaced in the public consciousness by self-driving cars and Rihanna’s see-through dress.

It wasn’t the errors found in Piketty’s spreadsheets that did him in, nor is it the ongoing compression of the international media cycle. Rather, it is the creeping awareness that Piketty’s argument for ending wealth inequality resolves into a great leveling process that does not conclude with everyone becoming tycoons. Meanwhile … in the background where no one is paying attention … the leveling process is already underway and feeding on itself. As billions of hyper-greedy wannabes maximize their rational self-interests they not only exploit whatever is within reach, they end up competing against each other = unseemly micro-tycoon fratricide:

Triangle of Doom 060114

Kill them all and let God sort them out: the Triangle of Tycoonery; WTI continuous crude futures by way of TFC Charts (click on for big). How long with the party last? Only a few more days if Russia invades Ukraine or the Vietnamese navy fires torpedoes at a Chinese ship …

Largely left out of the peak oil- and energy discussions is the consumer side of the process. Generally, petroleum analysis focuses on how much we have left; extraction and the rate of extraction. We love talking about how much we have left, it makes our private parts seem that much larger, it reinforces our sense of how clever we are, it also distracts us from how much treasure we’ve already squandered along with what little we have to show for it. As with other critical areas of our society, we set out to get rich first so that we could afford to solve wealth-related problems later. To pursue the highest level of growth we put hundreds of millions of drivers onto the roads circling between gas stations like flying Dutchmen …

This is where the self-driving cars enter the picture, billions of them can motor aimlessly around the clock whether they carry passengers or not and make more growth all by themselves = singularity.

It’s a great pretty stupid plan, I didn’t come up with it.

Recently, there is a little bit more discussion about fuel industry costs as drillers confront the near-certain prospect of bankruptcy as their only product runs out. The focus on how much we have left is silly because the consumption (waste) side is where all the action is. Customers cannot earn by driving in circles so the fuel industry is funded by the same customers reaching for the plastic. When customers are unable to borrow it means that fuel supply is ‘unsustainable’; the drillers must borrow from their own lenders, from finance or from the government (which borrows for them). Customers also borrow to buy cars, homes, freeways, office-buildings, military forces, etc. Since 2000 the price of fuel has increased five times while the return on the use of the same fuel has remained the same: squat. Over the same period credit has ballooned in a frantic effort to keep pace.

There are two interlinked problems: when one buys fuel at the higher price there is the tendency to buy fewer other ‘Brand X’ goods; driving cars competes with retail sales. The second problem is that higher fuel costs hit that plastic a lot harder than the lower variety. Debt retirement and service costs become burdensome … they increase exponentially … eventually these costs are breaking. The ‘Minsky Moment’ occurs when total borrowing capacity is insufficient to service existing debt. We aren’t quite there yet but getting close enough to hear the weeping; (Jim Quinn, Burning Platform):

Retail store results for the 1st quarter of 2014 have been rolling in over the last week. It seems the hideous government reported retail sales results over the last six months are being confirmed by the dying bricks and mortar mega-chains. In case you missed the corporate mainstream media not reporting the facts and doing their usual positive spin, here are the absolutely dreadful headlines:

  • Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%
  • Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%
  • Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%
  • JC Penney Thrilled With Loss of Only $358 Million For the Quarter
  • Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%
  • Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%
  • Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores
  • Gap Income Drops 22% as Same Store Sales Fall
  • … etc.

Beginning in the 19th century, petroleum fuel supply was intended as loss leader for auto- and retail industries which grew to become giants. High fuel prices are now cannibalizing this paradigm. The more stores that die, the fewer ex-employees are able to drive, those that can afford to will have fewer places to go and spend money. The bloodletting in retail adversely affects credit provision, the ability of the country as a whole to afford higher priced fuels is diminished.

Thomas Malthus in the 18th century observed that human population expanded geometrically while agricultural output increased arithmetically. Malthus erroneously discounted the ability of farmers to increase production, he did not live long enough to witness the effect of fossil fuels on agricultural output. His thesis turns out to be right when applied to machines: fuel-guzzling gadgets multiply much faster than industry can grow the fuel supply. The means of sustenance is outstripped and the costs multiply; the excess of machines is like every other surplus, subject to the First Law which holds that the costs associated with managing any surplus increase along with it until at some point they exceed the worth of the surplus itself.

Surplus- associated costs flow where they will; stranded machines don’t experience finance difficulties, they simply rust. The surplus of cars and other machines bankrupts the owners, exhaustion of the fuel supply is another associated cost, so is the death ride of retail.

The deathly triangle pops up in odd corners of the mainstream media where the focus is not entirely on the see-through dress, (NY Times):


America’s Highways, Running on EmptyJoshua L. SchankIF you think your commute is getting worse, it’s probably not your imagination. And no, it’s not because there are more cars on the road. The potholes, the stalled construction projects, the congestion — it’s because the highway trust fund is almost empty and, without a fix, could run out of money this summer.Federal transportation funding relies heavily on user-based fees, in the form of gas taxes. While that worked for decades, it began to break down after Congress stopped raising the tax, which has been stuck at 18.4 cents a gallon for over 20 years. Since then, people have begun driving less and using more fuel-efficient cars, which means less tax is paid. Even worse, the tax is not indexed to inflation.The only solution is to supplement the tax with dedicated federal funding — which would not only solve the money problem, but open the door to long-dreamed-of innovations in our transportation system.The obvious solution, raising the gas tax, is a political nonstarter. And even if it could pass, Congress would be tempted to direct some or all of that revenue to other purposes, like deficit reduction — it did just that in 1990 and 1993.

In any case, raising the gas tax wouldn’t help in the long run. When America planned the Interstate System in the 1950s, only half the country was urbanized and the number of cars was growing rapidly. Now more than 80 percent of Americans live in metropolitan regions, and total driving has stagnated. Even if we could raise the tax, it would only reinforce an outdated program.


If the Federal government raises the puny 18.4¢ gas tax, the higher retail price will discourage aimless circling, which will adversely affect growth. Already gas prices are in the danger zone with the 2014 Summer circling season just underway:

Screen Shot 2014-06-04 at 11.47.06 AM

Heat map from Prices are high in California because the need to formulate special gasoline blends for the state, because of higher state taxes, Californians are richer and can afford to pay … and there is a gasoline shortage otherwise gasoline would cost less than a dollar per gallon and the world would have plenty.

Because gas price increases are an incentive to reduce consumption, the government cannot afford to tax users to fix the roads. The government must borrow and fund repairs by way of the back door, the same back door that funded the roads in the first place. Debt service payments and principal retirements must be borrowed as well; in the end it does not matter about the repairs but rather how far away is the Minsky Moment?

Keep in mind, high fuel prices are a special kind of tax paid to the energy companies and their material suppliers. Highway contractors, drivers, lenders, refiners and drillers are all competing against each other for the proportionately largest slice of the credit pie. If one of them succeeds he does so at the expense of the others. At the same time, the failure of any of the others becomes the failure of all.

Policy makers are caught in a familiar trap: without repairs, the poor quality of roads will reduce driving. If the government borrows more to fix the roads, the borrowing costs are added to the fuel costs and everything becomes more expensive including driving. More driving destroys capital inviting destitution, less driving = reduces growth which also invites destitution … the end of the gangplank has very little maneuvering room.

More triangulation underway everywhere not just in California, (Nouriel Roubini, Project Syndicate):


The Great Backlash

NEW YORK – In the immediate aftermath of the 2008 global financial crisis, policymakers’ success in preventing the Great Recession from turning into Great Depression II held in check demands for protectionist and inward-looking measures. But now the backlash against globalization – and the freer movement of goods, services, capital, labor, and technology that came with it – has arrived.

This new nationalism takes different economic forms: trade barriers, asset protection, reaction against foreign direct investment, policies favoring domestic workers and firms, anti-immigration measures, state capitalism, and resource nationalism. In the political realm, populist, anti-globalization, anti-immigration, and in some cases outright racist and anti-Semitic parties are on the rise.


Globalization has done little but accelerate destruction of capital while funneling credit to a handful of tycoons. That there is a backlash isn’t surprising, neither is its form. The capital exhaustion that undermines economies in 2014 would not have arrived until 2050 had consumption been limited to Japan and the Americanized West. The development rabbit has long fled from of the hat: demand for cars, TVs, appliances, tract houses and luxury jobs is infinite, it exists everywhere there are televisions and credit money.

Popular nationalism does not provide an armature for a conservation economy, it offers instead strident demands for a ‘fair share’ of capital to consume and for ‘enemies’ to exploit. The nationalists in Greece, Egypt, Ukraine and elsewhere promise, “if the technocrats and moderate Old Guard cannot give us what we want, the Nazis will!” Countries are deprived of fuel because because the have exhausted their domestic supply; they are destitute and have nothing to offer in trade nor can they borrow. Ideology is not an economic good, it cannot be swapped for petroleum. Euro-Nazis stomping across television screens are irrelevant to the oil sheiks who want purchasing power. The Nazis have the same ability to marshal purchasing power as do pigeons who flutter in the parks of Rome, Athens or Lisbon.

A competent approach would target bankers and billionaires rather than migrants, it would include forensic audits of national debts, with the ‘odious’ variety cancelled outright. The state treasury of (any) South European country or countries would issue euros and put them into circulation, to end bank-driven money shortages and provide basic services such as sanitation and education, while making retirees whole. Fiat euros would be issued to retire those debts not judged to be odious. The countries would challenge the ECB or Brussels to do anything about it, as the alternative is continuation of current ruinous policies that fatten political cronies and banking criminals.

Borrowing would be much reduced as banks would rebel and refuse to lend to fiat-producing countries, but it would not matter. Coupled with stringent resource conservation, the South European nations would actually become more credit-worthy as debt-reduction would be certain and the need to take on more — to buy and waste fuel — would be reduced. If the Germans or others did not like ‘new euros’ appearing across the Continent they could buy them on the open market. Germans can exchange goods or finance paper for them … but not automobiles. Fiat euros courtesy of Greece, Spain, Ireland and/or the others would put the requirement on Germany to manage its own trade surplus related costs within Germany rather than distributing them to others who lack the means to bear them.

Roubini does not offer any suggestions to remedy the current situation … neither do other ‘Brand X’ economists. There are no useful suggestions in the conventional economists’ toolkit other than muddling through. The only real solution to the exhaustion of capital is to carefully husband what remains. Our current way of doing business including its blandishments, is obsolete and needs to be replaced. If nothing is done, replacement is taking place by itself; the time remaining to continue muddling is shrinking fast.

Chinese Toast: The Rant

logopodcastOff the microphone of RE

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Published on the Doomstead Diner on April 22, 2014


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…Besides that they are making Oil deals with the Ruskies, building Nuke plants, high speed rail lines and entirely New Cities from the Ground Up. Never mind that nobody lives in those cities and at the prices they sell the apartments for nobody but Hedge funds can afford them on a typical median income for a Chinaman of $10K a year. That is compared with median income in the FSoA of around $84K. HTF are Chinese supposed to buy apartments selling at $300K on an income of $10K a year? Forgetting interest and buying food and electricity to keep the lights on, the average Chinaman would have to cough up his entire paycheck for 30 years to campout in one of these White Elephants. Reality is of course that the prices will crash, and plenty of folks who invested in the building of them will lose their shirts, not to mention their underwear and socks…

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A Poem of Limits

Off the keyboard of RE

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Published on the Doomstead Diner on November 10, 2013


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A Poem of Limits

The darkness moves beneath my feet,
More endless battles always ending in defeat.
Seeking hope in a sea of sadness
Still I fight onward to find some gladness.

My heart is broken, so many reasons why
That offtime it seems it is time to die.
The endless wars, the endless strife
Why, o why do I pursue my life?

The end now so clear in the nearest distance
Perhaps it is best to go with path of  least resistance?
We live, we laugh, we love, we weep
No matter what we do, in the end we sleep.

My wings are broken, my legs are shot
Ageing takes away those things you got.
You remember well what once thought true,
but now what was false has all come due.

The will for all is to reproduce
But then, we run up against limits of what we can produce
There are real limits to what the world can give
When reached, no way there is that all can live

So some will live and more will die
No one can really pin down the reasons why
One is Gifted and another Cursed
Why is it one gets the Best,  another the Worst?

So here today I write this letter,
Because honestly, I do not know which is better.
To live now, at the expense of my brother
Or Die now, for the sake of another?

Is it better to live and make the fight?
To continue to strive and do what’s right?
Or call an end to this, and call it quits
Perhaps that it the end that best befits?

I’ve walked the Earthly Road a good long time
Now I am so far past my prime
What was important to me now long since lost
Lost forever at incalculable cost.

The petty things I thought important
Now just a memory long distant
Real now is just to live
To see what still I have left to give.

There was a time I made the grades
Future so bright I hadda wear shades
Now the future seems none too bright
But in the darkness, perchance to find some light?

So off we go as our world turns
Spectators in awe as the world we built now burns
We look now for something new to glow
A bit of Land and Food to Grow

The SUN still rises, not yet gone black
Though life now seems so desperately out of whack
Regret not though what now is lost
Such a life came at an immeasurable cost

Now comes the time to fix what’s wrong
To find that place we all belong
To find again the beauty that is on Earth
Our beloved Mother who gave us Birth.


The Legacy of the Club of Rome

Off the keyboard of Ugo Bardi

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Published on Cassandra’s Legacy on October 18,2013

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Here is a written version of the speech I gave at the meeting held in Bucharest in occasion of the 20th anniversary of the foundation of the Rumanian section of the Club of Rome (ARCoR), on Oct 17, 2013. It was a somewhat formal reunion, so my speech was a little more formal than usual. What follows is not a transcription, but a text version written from memory. Thanks to Mr. Liviu Tudor, secretary general of ARCoR, to Mr. Mugur Isarescu, president, and to all the members of ARCoR for having invited me in this occasion. (The image above is from last year’s ARCoR meeting, but the one I am reporting about was held in the same room in Bucharest)
Ladies and gentlemen, it is a privilege and a honor for me to represent the Club of Rome today. So, I can bring to you the greetings and the congratulations of the co-presidents of the Club, Mr. Anders Wijkman and Mr. Ernst Weizsacker; as well as those of the Secretary General, Mr. Ian Johnson.
We are celebrating today the 20th anniversary of the foundation of the Romanian association of the Club of Rome, ARCoR, which is a remarkable achievement. It is just as remarkable, I believe, the achievement of the Club as a global association which has already been existing for more than 40 years after it was founded by Mr. Aurelio Peccei in 1969.
What we are celebrating today, however, is not the memory of past glories. What we are celebrating, instead, is the growing realization of how important and how modern was the vision that appeared in the first report to the Club, the very famous book titled “The Limits to Growth”. Today, more than 40 years later, I had the honor to sign as the main author the 33rd report to the Club; a book titled “Plundering the Planet.” With this book, we re-examined several of the scenarios and the concept of the 1972 report. We found how consistently the ideas of the early report were on target and how closely the world’s economy has followed the scenario that was defined as “base case” and that today we would define as “business as usual”. It is a scenario that sees the growth of the world’s economy maintained up to the first decades of the 21st century, to be followed by a stasis and then by rapid decline.
Please be careful: “The Limits to Growth” was not a prophecy and never was supposed to be one. The authors clearly stated in the book that they didn’t want the future to look like their “base case” scenario. Nobody would want the world’s economy to collapse, with all the consequences involved, of course They said, correctly, that our future is something that we create with our actions and our decisions and that if we wanted to avoid decline, we had to make choices that would avoid it. But that wasn’t done and the base case scenario is becoming more and more, unfortunately, like a prophecy.
However, independently of what will be the evolution of the world’s economy in the coming years, I think that the main legacy of “The Limits to Growth” today, is to remind to us how important material resources are for our livelihood and for our prosperity. Wealth is not created by banks or other financial institutions; it is created by what we call “natural resources” that are produced, are processed by our industrial system, and finally transformed into products: it is what we call “the economy”. Without natural resources, there would be no economy, and money would be worthless because there would be nothing to buy. That should be obvious, but sometimes we are so worried – I’d say obsessed – by the vagaries of the world’s financial system! We tend to forget something that my friend and colleague, professor Giorgio Nebbia, used to tell me “Economics is the science of all material things”
So, were do we stand on these “material things” today? Well, for one thing it is clear that we are NOT running out of anything: the production of most important minerals is not declining and no major mineral commodity is missing in the market, at least if you are willing to pay for it. It was sometimes said that the message of “The Limits to Growth;” was that we would soon run out of mineral resources. But that’s not true. “The Limits to Growth” never said anything like that. It was clear from the calculations reported in the study that we wouldn’t ever run out of major mineral resources before the end of the 20th century. The point is quite a different one: much before of physically running out of resources, we’ll run out of cheap resources.
And that’s exactly what’s happening. We are not running out of anything, but we must pay more for what we need. As you surely know, oil prices have increased of about a factor five over the past 5-6 years and the average price of mineral resources has increased of a factor of about three over the same time span. This is a robust trend and it is not painless for the economies importing countries.
Let me give you some data: in 2012, the European Union countries imported about 500 billion euros worth of fossil fuels (1), that is about 4% of the European GdP. Single countries show slightly different values, for instance for Italy it was about 66 billion euros of imports, corresponding to more than 4%; of the Italian GdP. For Romania, the fraction is smaller, in part because Romania produces a relatively large amount of fossil fuels in comparison to the size of its economy.
Consider that these are just the costs of importing fossil fuels; more has to be spent for importing other mineral commodities which normally “embed” a lot of energy in the form of fossil fuels used for their extraction, processing, and transportation. But let’s remain with fossil fuels. Let’s ask ourselves a question: is 4% is a lot or a little? Well, it is one of these questions that must be answered with a classic “it depends”. If the economy could grow, then the increasing costs of fossil fuels wouldn’t be much of a burden – they would remain more or less the same fraction of the whole economy. But that has not been the case. The European economy is growing, but growth has been far from robust in the past years and in several countries the economy not growing at all. And these countries are seen their “energy bill” growing up and becoming a heavy burden. A good example is Italy; but the same kind of troubles are everywhere. As we speak of percentage points of the European economy we are speaking of hundreds of billions of euros which move from Europe – mostly an importer of mineral commodities – to producers, which are mostly outside Europe.
This gigantic transfer of wealth cannot remain without consequences and I think that it is one of the major reasons of the troubles we are experiencing today. As I said before, the main legacy of “The Limits to Growth” is to remind us that our prosperity is based on material resources and we shouldn’t forget that. I invite you to consider this element when you try to understand what’s happening.
But there is another element that we can consider as the legacy of the Club of Rome today, and it goes straight to the core of the matter. You see, the scenarios that are at the basis of the study “The Limits to Growth” were created using a technique called “system dynamics”. It has to do with solving differential equations in a computer but, in reality, it is nothing more than formalized common sense.
Let me explain: I would define “common sense” in a very simple manner: it is just thinking of consequences and, in particular, thinking of the long term consequences of what you do. Using a computer means that you can project your common sense further in the future and to consider more complicated systems than those you deal with normally. But common sense – thinking of consequences – remains a quality of human thinking that, unfortunately, at times we refuse to utilize.
Considering our present situations we are facing choices that will have profound consequences for our future. For instance, should we drill for more oil and gas? We can, of course, choose to invest large amounts of our current resources in order to exploit the so-called “non conventional” resources. But the consequence will be that we’ll become even more dependent on a resource that is becoming more and more difficult and expensive to obtain (to say nothing of the worsening of the climate problem). So, everything has consequences and we should think about that before we take these important decisions if we want to take them wisely.
To conclude, I’d like to cite a phrase that’s often attributed to Robert Luis Stevenson. It is, “Everyone of us, sooner or later, sits down at a banquet of consequences”. What will be served at the banquet will depend on the choices we are making now. In this sense, the methods and the ideas developed by the Club of Rome already in the 1970s can help us to make wise choices (if we want to). This is the legacy of the Club of Rome

Collapse Cafe 3: Limits to Growth

Off the Cams, Mics &  Laptops of Ugo Bardi, Gail Tverberg, David Korowicz, George Mobus, Monsta & RE

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Aired on the Doomstead Diner on September 30, 2013


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Featuring Ugo Bardi, Gail Tverberg, George Mobus and David Korowicz

Going back in Mr. Peabody’s WAYBAC Machine to 1972, a bunch of academic types from MIT got together to create a model they called the “Limits to Growth”.  Here from Wikipedia are the basic tenets of the model and the ideas behind it:

The Limits to Growth is a 1972 book about the computer modeling of exponential economic and population growth with finite resource supplies.[1] Funded by the Volkswagen Foundation[2] and commissioned by the Club of Rome it was first presented at the 3. St. Gallen Symposium. Its authors were Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. The book used the World3 model to simulate[3] the consequence of interactions between the Earth’s and human systems.

Five variables were examined in the original model. These variables are: world population, industrialization, pollution, food production and resource depletion. The authors intended to explore the possibility of a sustainable feedback pattern that would be achieved by altering growth trends among the five variables under three scenarios. They noted that their projections for the values of the variables in each scenario were predictions “only in the most limited sense of the word,” and were only indications of the system’s behavioral tendencies.[4] Two of the scenarios saw “overshoot and collapse” of the global system by the mid to latter part of the 21st century, while a third scenario resulted in a “stabilized world.”[5]

40 years later, Jorgen Randers and many of the same people involved in the original study produced a new model, updating with current information and looking at scenarios through to 2052.


There is a decent amount of controversy regarding this updated model and its assumptions, so we brought together 4 analysts looking at the progress of Industrial Civilization Collapse to discuss the model and what it might tell us about the future.  Joining us in this edition of the Collapse Cafe are Ugo Bardi of Cassandra’s Legacy, Gail Tverberg of Our Finite World, George Mobus of Question Everything and David Korowicz from FEASTA.

Break out the Microwave Popcorn, pour yourself a stiff one and join us as we contemplate the future through the Limits to Growth lens on the Collapse Cafe.


Reaching Limits in a Finite World

Off the keyboard of Gail Tverberg

Published on Our Finite World on May 6, 2013

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We don’t usually think about it, but we live in a finite world. In other words, in theory we can count precisely how many atoms make up the earth. We can also theoretically count how many humans live on earth and how many of any other species live on earth at a particular point in time.

At some point, in a finite world, we start reaching limits. There are now about seven billion people in the world. We could probably add some more, but how many? What is it that limits our ability to add more people to the world we live in today?

Too Much Population “Morphs” to an Energy and Financial Limit

One obvious guess as to what might limit world population is the amount fresh water that is available. If we don’t have enough fresh water available, we can’t continue to expand population.

The amount of fresh water that is available can be changed, though, by adding desalination plants. There are many other ways of getting fresh water. To give an extreme example, the amount of fresh water available could be increased by melting ice in Antarctica and importing it by ship. Either of these solutions would require energy in an appropriate form—either to run the desalination plant, or to melt the ice and transport it by ship. Thus the fresh water shortage, at least for the foreseeable future, can be worked around if there is sufficient energy available of the right type.

The other not-so-minor detail is that the cost of desalination or of importing melted ice from Antarctica needs to be inexpensive enough that users of fresh water can afford it. In order for this to be the case, the cost of the appropriate type of energy must be extremely inexpensive.

We can think of other kinds of limits to population growth as well. For example, carbon dioxide limits. In theory, there are ways around carbon dioxide limits. For example, assuming current research projects are successful, we can build carbon capture and storage facilities and change our electricity generating plants so that the carbon dioxide that is emitted can be captured and stored underground.

Here, too, there are energy limits and cost limits. Carbon has a molecular weight of 12, while carbon dioxide has a molecular weight of 44. Because of this, if we create carbon dioxide from coal, the carbon dioxide we produce is much heavier and bulkier than the coal that we burned to make the electricity. It will take a lot of energy to store this gas underground in a suitable place. Thus, we have another problem that can be handled, if there is enough cheap energy of the right type available.

Almost any kind of obstacle to increased human population that we can think of has an energy-based work-around. Will people be so crowded that disease transmission will be a problem?  There are workarounds: better water treatment plants and sewer treatment plants, especially in the poorer parts of the world; more immunizations; more and better hospitals; antibiotics for all those who need them. These solutions also require energy, as well as other inputs (which indirectly require energy as well). The difficulty is making them affordable for the people who need them.

If the problem is not enough food, perhaps because of degraded soil, there are energy-based workarounds as well. Food can be imported from a distance. More fertilizers and soil amendments (either made using fossil fuels, or transported using fossil fuels) may be used. Irrigation, which uses either diesel fuel or electricity to pump water may be used to pump water to too dry areas, to increase food production per acre. In some cases, artificial soil can be created, and plants grown in a green house—again requiring much energy.  The issue again gets to be whether consumers can afford the food produced using this more energy-intensive procedure.

The Problem With Degraded Resource Supplies

Degraded resource supplies occasionally run out—for example, an aquifer may run dry. A more common situation, though, is that resources become progressively more expensive to extract as we approach limits. We tend to extract the easiest to extract (and thus cheapest-to extract) resources first. These resources are the highest quality ones, in the easiest to access locations. We then move on to more expensive to extract resources. A similar pattern applies to many types of resources, including ore used in making metals, oil, gas, coal, and uranium.

When we analyze resources of a given type, say uranium, we find that there are always more resources available. The problem is that they are increasingly expensive to extract because the ore is of lower concentration, or is located in a harder to reach area, or there is some other problem involved.

We have illustrated this situation in Figure 1, as a triangle with a dotted line at the bottom, because of the uncertain cut-off regarding how much is available. The cut-off is really a price cut-off. At some point, the resource becomes too expensive for customers to afford products made with it.

FIGURE 1 – Triangle of Available Resources

Resource triangle, with dotted line indicating uncertain financial cut-off. Figure 1. Triangle of available resources, with dotted line indicating uncertain financial cut-off.

A company starts from the top of this triangle, extracting whatever resource is involved. A company can “see” a little way ahead, as it looks down toward the bottom of the triangle. The company will report reserves which are continually increasing because the width of the triangle keeps getting wider, even though these reserves are of lower quality and can only be extracted in a more energy-intensive way. The question then becomes whether customers can really afford products made with these expensive-to-extract resources.

The Broader Energy Picture

Energy is pretty amazing. Energy is what allows work of any kind to be done, from making a clay pot by hand, to baking a cake, to creating a carbon capture and storage facility. Humans by themselves are able to produce some energy, because of the food we eat. But we are also able to leverage the energy that our own bodies produce with energy from other sources, such as from burning biomass. We learned to burn biomass a very long time ago, over 1,000,000 year ago.

If humans were like other large primates, there would be only 100,000 or 200,000 of us, rather than 7 billion of us. We would live in an area to which we are biologically adapted, most likely a very warm part of Africa. Humans’ population is much higher, because once we learned to control fire, we were able to settle areas of the world that would otherwise be too cold or dry to live in, and we were able to increase population densities through energy-related techniques we developed.

One thing we learned to do was cook part of our food supply. This had many advantages. Unlike apes, we no longer needed to spend literally half of our day chewing. This freed up time for other activities, like tool-making, hunting, and clothing making. It also allowed the human body to evolve in a way that allowed a bigger brain and smaller digestive organs. Gradually we used our improved brain to develop other techniques such as making heat-tempered stone tools, which were sharper than other stone tools, and teaching dogs to help us with hunting for food. All of these approaches to using external energy allowed humans to leverage our own puny energy supply from food with energy supply from other sources and gain an advantage over other animals.

Human prosperity was able to increase and population was able to grow as we learned to use increasing amounts of energy from outside sources. Energy sources we gained control over included domesticated plants and animals, facilitating agriculture. World population by the year 1 C. E. reached 200 million, or over 1,000 times the population level before the leveraging impact of external energy supplies began enabling greater human world population.

Fossil fuel (coal, oil and natural gas) use became common after about 1800 C. E., and population grew very quickly. In fact, when population is graphed, it looks like it went straight up starting when fossil fuels were added.

FIGURE 2 – World Population

World population based on data from "Atlas of World History," McEvedy and Jones, Penguin Reference Books, 1978  and Wikipedia-World Population. Figure 2. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and Wikipedia-World Population.

Use of fossil fuels did not grow by themselves. Their use was facilitated by the development of improved technology, which provided the vehicle for their use. Increased debt also facilitated fossil fuel use, because it allowed potential buyers to afford the new products being developed, and provided companies doing energy extraction funds for their work.

Our ability to do physical work using human labor is quite limited. For example, if we want to dig a well for water, the depth that humans can dig without the assistance of a machine intended for this purpose is only about 20 feet. With mechanical drilling equipment, typically powered by oil, we can quickly and cheaply dig a well many hundreds of feet deep.

As another example, if we want to transport goods a long distance without external energy,  we can only push a cart at the speed at which we can walk. Oil or another other modern fuel allows inexpensive long-distance transport of goods.

Adding energy use changes costs. There is a two-way tug on costs:

1. Costs are typically reduced when fossil fuel energy or electricity from any source can be substituted for human energy. This allows greater leverage of the energy of the remaining humans doing the “work”.

2. Costs tend to increase, as the cost of the energy source in (1) increases. Such an increase in costs occurs as we approach limits of a finite world, partly because extraction is from more depleted resources (farther down in the resource triangle shown in Figure 1), and partly because we reach increased problems with pollution, such as the BP Deepwater Horizon well blowout in 2010. The cost of mitigating pollution problems also adds to energy costs.

Up until about the year 2000, this tug of war had a favorable outcome. An increased amount of fossil fuel energy was substituted for human energy, leading to lower costs. As mentioned previously, improved technology and additional debt enabling this substitution played a role as well.

In recent years, the tug of war has started to go the other direction. The cost, particularly for oil energy, has tended to rise far more rapidly than costs in general (Figure 3). This has produced many dislocations within the economy, making countries that use a lot of oil less competitive in the world marketplace and reducing economic growth rates, especially among  countries no longer able to complete. The higher cost of oil products reduces disposable income of citizen, leading to recession and to deficit spending by governments.

FIGURE 3 – World Oil Price in Current $

Figure 3. Brent-equivalent oil price in current $, based on data from BP 2012 Statistical Review of World Energy.Figure 3. Brent-equivalent oil price in current $, based on data from BP 2012 Statistical Review of World Energy.

In future years, we can expect that two way tug on costs will increasingly be lead to higher costs, because of greater impact of limits of a finite world. This will tend to send economies increasingly into recession.

Our financial system has been built assuming that economic growth will continue indefinitely. There is significant risk that the recessionary influences of high oil costs will bring down the current economy. We know from a recent analysis by Peter Turchin and Sergey Nefedov (Secular Cycles, Princeton University Press, 2009) that historically, when civilizations collapsed, they did so for financial reasons, as the cost of government became too great for citizens to fund with tax revenue. There would seem to be a significant risk that today’s economy will reach the same end.

Why didn’t others recognize this issue?

Reaching limits of a finite world is a subject that does not easily fit into any one subject area, so the subject tends to be missed by researchers concentrating on one field of study.

The closest fit came in the analysis The Limits to Growth (Donella Meadows et al, Universe books, 1972).  This analysis came very close, but did not quite hit the nail on the head because it missed the connection of debt to limits to growth. (The model was of course not expected to be complete.) More recent analyses along this line to miss the debt connection as well, pushing the likely date of collapse forward.

There is much confusion about the question of what limits, such as oil limits, mean. Many people believe that rising oil reserves (which are a given when the problem is ever-more expensive to extract oil, as illustrated in Figure 1) mean that our oil problems are solved. Our problem is not a lack of oil reserves; our problem is that the selling price needs to keep rising, to cover the rising costs of extraction and to cover government dependence on tax revenues. This increase in selling price makes oil ever less affordable, which is our real problem.

Even when oil price drops, this is not necessarily a good sign. It may mean that some oil extraction companies will no longer be able to afford to add new wells, because production will not be sufficiently profitable at the new lower price. It may also mean that some oil exporting nations will

not be able to get enough tax revenue from oil operations to fund programs (food subsidies, for example) that prevent revolt.

Reaching limits in a finite world is a scary issue. The book Limits to Growth was not well received when it was published. Governments have tried their best to avoid the issue. No president or prime minister wants to announce, “We have a problem that we have no way to solve.”

Why might I be able to shed light on the real impact of finite world limits?

My background is as a casualty actuary, doing financial forecasting for insurance companies. Thus, I started with somewhat of a financial background, but did not have the usual “brainwashing” that comes when a person has studied the economy from the perspective of today’s economists. My background gave me a great deal of experience hunting for  publicly available databases, making graphs, doing analyses, and explaining the results to lay audience.

I got interested in the issue of oil limits and what impact they might have when read the book, The Empty Tank: Oil, Gas, Hot Air, and the Coming Global Financial Catastrophe (Jeremy Leggett,  Random House, 2005). His view comes from the “peak oil” view, which is close to my view, but not quite the same.

When I read Leggett’s book, it hit a responsive chord because I had had first hand experience with the impact that high oil prices had on insurance companies in the 1973-1974 period. In 1973, I was the actuary for a small insurance company that ultimately went bankrupt, at least partly because of the indirect impact of higher oil prices. Reporting to the president of the company, I got to see up close what kind of havoc high oil prices could cause in the financial world.

After I read Leggett’s book, I started researching the issue on my own. I wrote an article for insurance executives in early 2006 and an article for actuaries in early 2007. In March 2007, I decided to take early retirement, and work on the issue full time.

I set up my blog site, in March 2007. I soon was asked to help with the website, where I wrote under the name, “Gail the Actuary,” and made many contacts with others interested in the issue of limited oil supply.

To make a long story short, over the past several years, I have made many contacts with researchers who have discovered at least part of the story of oil limits and energy limits. Through my blog posts, I also received much valuable input, including suggestions from readers regarding academic books that might be helpful.

My work is now being published in the academic world as well. I wrote a paper, “Oil Supply Limits and the Continuing Financial Crisis,” published in the journal Energy in January 2012. It has so far been cited by 10. I was also a co-author of “An analysis of China’s coal supply and its impact on China’s future economic growth” (Energy Policy, June 2013). My most recent publication is an article called, “Financial Issues Affecting Energy Security” in the soon-to-be published book, Energy Security and Development–The Changing Global Context, (B. S. Reddy and S. Ulgiati Eds., Cambridge Scholars Publishing, 2013).

Hiding in Plain Sight …



Hiding in plain sight:

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Henry Ford

Q: How would you describe the economy?

A: It is a system that allows a select few to borrow immense fortunes. The rest of us … you, me, everyone else … repay the debts.

Q: That’s it?

A: That’s it.


The face of Peak Oil. [1]

We are in the middle of a crisis that has been ongoing for almost five years now: the managers demand the economic system be bailed out. Of whom do they make demands? Entrepreneurs? Innovators? The finest minds of a generation?

A: Pensioners.

The economies must become more productive which means increasing the efficiency of output. Consequently, pensioners are called upon to sacrifice their retirements in the UK, Greece, Ireland, Portugal, in the US … in cities and states pensions everywhere are under attack.

Why not more machines? If machines are productive, wouldn’t deploying more machines solve the economic problems around the world rather than deploying pensioners? Technology is supposed to save us but raiding pensions insists otherwise: the scraping of the bottom of the barrel in real time. It’s an admission that technology won’t work, from the people who are in a position to know.

What happens after the retirements are pilfered? Who knows? Nobody has a plan.

The world is shocked to discover a shortage of capital, not for investments but to prop sagging balance sheets. Who could have guessed as capital has been shoveled into the furnaces of ‘development’ for decades? Only economists and bureaucrats believe that we never run out of inputs.

China’s Biggest Banks Are Squeezed for Capital

Neil Gough (NY Times)

China’s banks are among the biggest and most profitable financial institutions in the world. But the state-backed banks are also starved for capital after an aggressive lending spree that was encouraged by the government.

Maybe they are profitable and maybe not. “Starved for capital,” suggests not. The operating idea is that capital is money rather than material inputs. These inputs are mispriced so that the money-equations used by industrialists add up to something ‘positive’. Cheating works until it doesn’t any more: substituting debt for unaffordable inputs doesn’t produce anything. Debt isn’t capital and self-delusion isn’t capitalism. Maybe we should call our economic system ‘Delusionism’ and be done with it.

Within the last year, seven of the biggest Chinese banks tapped the markets for 323.8 billion renminbi ($51.4 billion ) in new funds, according to Citigroup estimates. Several financial firms are expected to raise another $17.7 billion in the next few months, with China’s fifth-biggest lender, the Bank of Communications, accounting for $9 billion.Banks around the world have been tapping investors for new funds as they struggle with slumping share prices and waning profits. But Chinese firms have maintained that their profit growth is strong and their balance sheets are solid, raising red flags among some analysts about the banks’ persistent capital needs.

Chinese bankers and business tycoons, each more corrupt than the last: raise that Red Flag high! The Chinese need capital because so many are stealing it and removing themselves overseas.

The problem is that paying out high dividends blows holes in their base capital. Thus, banks need to continue tapping the markets for fresh funds, often diluting minority shareholders by issuing new shares. The finance ministry, the banks’ ultimate controlling shareholder, always buys in, keeping its stakes topped up.

Somebody at the bottom always takes it in the neck. Today, it’s the minority shareholders, tomorrow it will be the senior bondholders or the pensioners or the schoolchildren forced to eat radioactive school lunches. This is part of an ongoing process, not a new feature within delusionism. It was invisible when everyone was busy getting rich: now that the abuses are visible it can only be on account that fewer are getting rich. The endgame heaves into view.

The amount of cash that is churned in the process is staggering. In 2010, China’s five biggest banks (the Big Four plus the Bank of Communications) paid more than 144 billion renminbi in dividends and raised more than 199 billion renminbi on the capital markets, according to GaveKal.“This is the nonsense of it,” says Fraser Howie, a managing director at CLSA Asia-Pacific Markets, who is based in Singapore and is a co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.” “There’s an awful lot of money just going round and round from one pocket to another, giving the appearance of strength when it’s really not there.”

Fraser Howie cannot see what is under his nose. What else is he missing? How about Peak Oil? The owners of industrial enterprises borrow (steal) their fortunes and oblige the rest of us to repay the loans. The lending-go-round is the reason for industrial economies, their purpose in the first place. “Money just going round and round from one pocket to another,” is the theatrical production that is collateral for the loans. More appearances of strength means more loans — and bigger fortunes — for the owners. The churning of the bank funds is a feature, not a bug: modern finance villainy hiding in plain sight!

The public must accept the process at face value otherwise loans to ‘entrepreneurs’ could not be justified. There would be nobody able to commit to debt-service. As it is, the public has over-bought, the cost of fuel crowds out debt service. The solution is to chop off pensions with a samurai sword.

It’s not just Chinese banks that are starved for capital and it is not just banks. The world is capital constrained.


Europe’s Capital Flight Betrays Currency’s Fragility


The euro area’s financial troubles appear to be flaring up again, as this week’s gyrations in the Spanish bond market show. In reality, they never went away. And judging from the flood of money moving across borders in the region, Europeans are increasingly losing faith that the currency union will hold together at all.

The flows are tough to quantify, but they can be estimated by parsing the balance sheets of euro-area central banks. When money moves from one country to another, the central bank of the receiving sovereign must lend an offsetting amount to its counterpart in the source country — a mechanism that keeps the currency union’s accounts in balance. The Bank of Spain, for example, ends up owing the Bundesbank when Spanish depositors move their euros to German banks. By looking at the changes in such cross-border claims, we can figure out how much money is leaving which euro nation and where it’s going.


Figure 1: Surprisingly, there is still capital in Greece and Ireland remaining to flee. Perhaps the last capital out the door in these countries will please turn out the lights.

This analysis suggests that capital flight is happening on a scale unprecedented in the euro era — mainly from Spain and Italy to Germany, the Netherlands and Luxembourg. In March alone, about 65 billion euros left Spain for other euro- zone countries.The idea that Europe’s current incremental approach has the advantage of saving money is an illusion, and not just because the disintegration of the currency union could trigger a global financial meltdown. As the capital flight figures demonstrate, the stricken nations of the euro area are bleeding private money and becoming increasingly dependent on taxpayers. In all, the debts of struggling banks and sovereigns to official creditors such as the EU, the ECB and national central banks now exceed 2 trillion euros, much of which would be lost if the debtor nations dropped out of the currency union.

What isn’t mentioned is the flight out of euros into other currencies or assets such as US equities. Wait until the euros start flowing out of France. Bloomberg will have to draw a much larger chart.


What have you … done for your car, today? [2]

Resource nationalism should be giving more billionaires reason to pause. The game has instantly become much more interesting:

Argentine government to pay Repsol ‘zero pesos’ for YPF seizure as Spanish oil company issues legal warning

Fiona Govan (Telegraph, UK)

Spain’s Repsol has threatened legal action against any company that attempts to invest in YPF following its expropriation by Argentina last week as the government expressed determination to “pay nothing at all” in compensation to the Spanish oil company.

The move would discourage external partners from providing the investment YPF needs to exploit vast shale oil deposits discovered within the Latin American country and is the latest attempt by Repsol to fight back against the illegal seizure of its subsidiary.

“We reserve the right to take legal action against any party investing in the YPF and its assets following the unlawful expropriation of the company,” Kristian Rix, a spokesman for Repsol in Madrid, told the Daily Telegraph on Monday.

The Spanish energy company believes billions of dollars are required to develop Argentina’s prospects including at least €25bn a year over the next decade to exploit the Vaca Muerta shale discovery made last year.

Resource colonialism on a foundation of paper promises and graft will prove to be worthless as the distances to overcome are too great and leverage of the colonialists insufficient. The Argentine example is appropriate for the various biofuel plantations landgrabbed in Africa and elsewhere by the Saudis, Chinese and others. When the locals decide the renege on the contracts and expropriate the ‘goods’ there will be nothing the ‘New colonialists’ — and their Blackwater-esque goons — can do about it.

Hiding in plain sight: peak oil.

Nobody mentions that the reason for the Greek economic unraveling and that of the Eurozone is caused by peak oil. The blame is fixed on Greece’s debt exceeding it GDP by a few percentage points. Ditto the other countries under siege around the world.



Figure 2: Chart by Jon Stewart/the Bonddad: Greece borrowed euros hand over fist for ten years to import fuel that increased in price 600% since the beginning of the euro. All the other countries in Europe (except Norway and Denmark) did the same thing. Why did the price increase from $20 per barrel to $120? Because of diminishing supply relative to exploding demand. Meanwhile, Greece earned absolutely nothing from burning/wasting the fuel. Greece also has little in the way of non-fuel output to pay for imports: it’s ‘Uncompetitive’.

The Greeks were conned into believing that they could live like Americans. That they could borrow as do other large debtors at very low cost. That they that sovereign privilege and could roll over their debts as they came due just like other states. They believed they could monetize pyramiding debt the way the Japanese and other large debtors do.

They would have been able to do so if the Eurozone was a country instead of a Ponzi scheme with the euro a sub-prime mortgage, if the industrial economy wasn’t a debtonomy and capitalism a delusion. Greece gulped the Kool Aid and ignored its own absence of real output and the structural deficiencies of the EU. Greece’s lenders did the same thing: once these lenders got cold feet and strangled cash flow the credit Greece depended on was cut off.

No credit and fuel is cut off, the Greek cash flow diminishes further, there is less output in a vicious, self-amplifying cycle. The outcome of peak oil process is Greece, destitute.

It’s also Ireland, Spain, Belgium, France … and Syria. Those who believe that the endgame of peak oil is Mad Max are wrong. The outcome for the unlucky is ten- times worse. The movie warriors did not have armor or heavy artillery and the willingness to turn it loose on civilians.

[1] Unidentified cinematographer, ‘The Character Humongous from the film, Road Warrior’.
[2] Unidentified photographer, ‘Syrian armor on the streets of Homs’.

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