[p2p-research] no oil crisis?

Paul D. Fernhout pdfernhout at kurtz-fernhout.com
Sun Aug 16 11:59:31 CEST 2009

Michel Bauwens wrote:
> I work more closely now wi th some people involved in the state of the world
> forum, which is a stellar collection of minds if I ever saw one,

Another pass at this. Most people will not want to read this. :-)

It starts to get pretty silly pretty fast. :-)

> I can tell you that literally 'nobody' believes that oil and food markets
> work the way you suppose they do,
> there is very very high level debate, as there is indeed panic about both
> the havoc that the seesaw in oil and food prices is doing to the system as a
> whole,

Who benefits from this panic?

> this 'market' is so dysfunction that it literally threatens the survival of
> the system itself, this is no wild leftist imaginings, but the thoughts of
> important members of the current establishment ...

Except that the market has produced solar cheaper than coal:

> the pristine functions of the market you imagine are  nothing else than myth
> and ideology,

Except that the market has produced solar cheaper than coal: :-)

> to still  belief in the power of existing markets to create 'infinite oil'
> ... I really don't know what to say ...

Except that the market has produced solar cheaper than coal: :-) :-)

> the truth is that without at least $150b in subsidies, the 'market' would
> not even in invest in renewables, and that in an age of imminent climate
> threat ... I still belong to that faction of humanity that sees moving
> billions as highly problematic and not a sign of abundance ...

Except that the market has produced solar cheaper than coal: :-) :-) :-)

> Running of out oil is not in any way an imminent danger that peak oilers
> talk about, but rather the immediate effect of the growing disparity between
> supply and demand for the current economy and the longer term consequences
> of the failure to have developed alternatives in time,

Except that the market has produced solar cheaper than coal: :-) X 4

> See the 3 pieces below for a serious treatment of these issues.

How can I take your position seriously on this when solar is now, or is 
about to be soon, cheaper than coal?

I'll say it again.

I have pointed out how we are a few years away from "grid parity" with 

Check out this graph showing grid parity in a few years, from BP, not 
exactly fringe people:
   "The Path to Grid Parity"

Consider this article:
   "Solar quickly approaching grid parity"
"Solar module prices are falling so fast that solar may be able to 
cost-effectively compete with fossil fuels within a matter of months. The 
latest bit of news confirming astounding price drops was from China’s LDK 
Solar. LDK is a producer of the main component of solar modules (wafers). 
While their second quarter guidance showed a boost in shipments, it also 
lowered their revenue expectations, translating into a cost per watt of ~$1."

Nanosolar already claims their panels are cheaper than burning coal, and 
they are sold out for eighteen months.

Are you saying all these people are either stupid or lying?

OK, so, let's say they are all stupid and lying. What about wind power? 
Surely it must takes about the same amount of engineering to make and mount 
a wind turbine as to make a car?

The USA has on the order of 250 million cars. Why is this not enough 
material to make (shared) wind turbines for everyone with roughly the same 
amount of effort as went into making the cars?
In fact, the USA has enormous car factories sitting idle right now that 
could be used to make windmills.

Big problems, but it's a big country. Same for countries in Europe.

OK, so wind is never going to take off for some reason.

Let's just burn coal and offer some relocation and remediation assistance to 
the South. We just put a few trillion into a banking bailout. Would ten 
trillion US dollars get the South to take the money and deal with the 
consequences of global climate change? :-)

OK, so they don't want the money. So, nuclear power breeder reactors, with 
one meltdown a month costing fifty thousand lives each time. Problem solved, 
even given all the solar people were lying, the wind energy people were 
windbags, and the South did not want ten trillion Northern dollars. That's 
only about half a million people killed a year from nuclear power, or less 
than the number of deaths now from coal air pollution etc.:
   "Air pollution responsible for 600 000 premature deaths worldwide"

Should I call GE to tell them to start building reactors again, or will you 
call them yourself? :-)

> You have to respond to these kind of challenges in detail, not by blanket
> statements about the infinite potential of our planet. 

Or solar PV being cheaper than coal. :-)

> It is not because the
> sun's energy is infinite, that we tomorrow have the ability to exploit it,

No, it's because Nanosolar was bankrolled by Google, and other companies by 
other investors. And many graduate students toiled away in research labs and 
got ripped off.

> it is not because 'free energy; is potentially possible, that we can today
> deploy it unproblematically, 

Except solar is cheaper than coal. :-)

> it is not because '90% percent of our brain is
> unused' that we suddenly  all become geniuses tomorrow morning. Approaches
> that continually try to jumpstart the incredibly difficult transitions and
> incremental improvements that we see occuring in human evolution, sideline
> us from the real work ahead ..

Except solar is cheaper than coal. :-)

> I find Sepp's research quite more challenging that Julian Simon's
> ideological statements,

Except, how do you explain away solar being cheaper than coal for the 
reasons  Julian Simon said?

> Michel
>  « Crisis at the Factor E
> Farm<http://blog.p2pfoundation.net/crisis-at-the-factor-e-farm/2009/08/10>

I could have told you that was going to happen. They were too much like me 
twenty years ago. :-) Except, fortunately for me, I had less charisma. :-)

> The U.S. as the New
> Argentina?<http://blog.p2pfoundation.net/the-us-as-the-new-argentina/2009/08/11
If we are lucky... But not for energy reasons. For massive unemployment in 
the face of increasing automation and limited demand reasons.

(I should not stay up this late -- I'm getting silly. :-)

> Peak Oil and the Meltdown (1): the role of oil scarcity as
> trigger<http://blog.p2pfoundation.net/peak-oil-and-the-meltdown-1-the-role-of-oil-scarcity-as-trigger/2009/08/11>
> [image: photo of Michel Bauwens] Michel Bauwens
> 11th August 2009
>  Richard Heinberg <http://www.richardheinberg.com/> has published a
> crucially important guest post <http://www.theoildrum.com/node/5638> at the
> “Peak-Oil thesis” related Oil Drum website.
> This excerpt explains how the subprime trigger was preceded by an oil price
> crisis, which should be seen as the real cause of the current meltdown.
> *Richard Heinberg:*
> *“Continual increases in population and consumption cannot continue forever
> on a finite planet. 


> This is an axiomatic observation with which everyone
> familiar with the mathematics of compounded arithmetic growth must agree,
> even if they hedge their agreement with vague references to
> “substitutability” and “demographic transitions.” *

Except we may not be close to the limit, the limit may change with culture 
and technology, and we have a space program to leave Earth.

And I outlined a plausible way we could evacuate the entire human race from 
Earth within thirty years with only hundreds of millions of casualties (or 
about another few Spanish flus), not that I would suggest doing it that way.

> *This axiomatic limit to growth 

Given all those other assumptions that are questionable, as above

> means that the rapid expansion in both
> population and per-capita consumption of resources that has occurred over
> the past century or two must cease at some particular time. 

Except people have probably been saying that for a long time. We were going 
to run out of oil in the 1930s too.

> But when is this
> likely to occur?*

We'll have other problems to worry about.

> *The unfairly maligned Limits to Growth studies, 

Maligned because they build the outcome into the assumptions? Assume you 
have non-renewable resources everyone depends on and no substitution and you 
don't have to run simulations. You know populations will crash when you run out.

> published first in 1972
> with periodic updates since, have attempted to answer the question with
> analysis of resource availability and depletion, and multiple scenarios for
> future population growth and consumption rates. The most pessimistic
> scenario in 1972 suggested an end of world economic growth around 2015. *

Except that in the absence of considering technological innovation (like 
solar PV being cheaper than coal), such forecasts are worthless.

> *But there may be a simpler way of forecasting growth’s demise.*

Like just assuming it. :-)

> *Energy is the ultimate enabler of growth (again, this is axiomatic: physics
> and biology both tell us that without energy nothing happens). Industrial
> expansion throughout the past two centuries has in every instance been based
> on increased energy consumption. *

Not every instance. Some is from increased energy efficiency.

> *More specifically, industrialism has been inextricably tied to the
> availability and consumption of cheap energy from coal and oil (and more
> recently, natural gas). 

Only by a quirk of social dynamics, with fossil fuels companies interwoven 
into political governance.

But, we've already gone from wood to coal to oil to gas and nukes, so why 
not go to solar? Lots of progressions are hidden in that statement.

 > However, fossil fuels are by their very nature
> depleting, non-renewable resources.

Even that statement is questionable.
"The abiogenic hypothesis argues that petroleum was formed from deep carbon 
deposits, perhaps dating to the formation of the Earth. The presence of 
methane on Saturn's moon Titan is cited as evidence supporting the formation 
of hydrocarbons without biology. Supporters of the abiogenic hypothesis 
suggest that a great deal more petroleum exists on Earth than commonly 
thought, and that petroleum may originate from carbon-bearing fluids that 
migrate upward from the mantle."

So, in that sense, the oil reserves under the crust may be renewing.

In any case, if solar PV is cheaper than coal, why are we talking about 
fossil fuels again?

 > Therefore (according to the Peak Oil
> thesis), the eventual inability to continue increasing supplies of cheap
> fossil energy will likely lead to a cessation of economic growth in general,
> unless alternative energy sources and efficiency of energy use can be
> deployed rapidly and to a sufficient degree. *

Except that solar is cheaper than coal, in part because a lot of people saw 
that coming. And also fossil fuels have external costs like pollution and 
the destruction of democracy.

> *Of the three conventional fossil fuels, oil is arguably the most
> economically vital, since it supplies 95 percent of all transport energy.
> Further, petroleum is the fuel with which we are likely to encounter supply
> problems soonest, because global petroleum discoveries have been declining
> for decades, and most oil producing countries are already seeing production
> declines. *

Except solar is cheaper than coal, so we can all drive electric cars, like 
the ones about to be mass produced in China.

> *So, by this logic, the end of economic growth (as conventionally defined)
> is inevitable, and Peak Oil is the likely trigger.*

Is that logic? Flawed assumptions? Ignoring obvious alternatives? Ignoring 
the social aspects of a technological infrastructure that caused it to be 
one way when perfectly fine alternatives have existed for a long time and 
were easily within the reach of concerted R&D and were essentially actively 
suppressed to maintain a social status quo?

> *Why would Peak Oil lead not just to problems for the transport industry,
> but a more general economic and financial crisis? 

Well, I'll admit, people, including myself, do stupid things for all sorts 
of stupid reasons, including group think.

 > During the past century
> growth has become institutionalized in the very sinews of our economic
> system. 

Yes, this is a flaw of modern day economics, including a debt-based money 
supply implemented using a fiat currency.

 > Every city and business wants to grow. This is understandable merely
> in terms of human nature: nearly everyone wants a competitive advantage over
> someone else, and growth provides the opportunity to achieve it. 

Human nature is a slippery subject. Especially in regards to competition:
"Actually fitness in the biological sense refers only to the capacity to 
produce surviving offspring who in turn live to reproduce. When 'survival of 
the fittest' is understood in this light, it becomes clear that the tendency 
to cooperate contributes far more to fitness than any competitive 
inclination. Raising offspring for early animal-humanity was a difficult 
undertaking, and only those who could work effectively with others were 
likely to succeed. On the other hand, endangering one's own life as well as 
the lives of one's offspring through direct physical competition was a risky 
strategy at best, and those who were genetically predisposed in that 
direction are thought to have died off millions of years ago. Thus, if we 
have inherited any predisposition for intra-species behavior, it is toward 
cooperation. Indeed cooperation is the pervasive, if unnoticed, background 
of human affairs against which we see competition in such stark relief."

 > But there
> is also a financial survival motive at work: without growth, businesses and
> governments are unable to service their debt. And debt has become endemic to
> the industrial system. 

Only because we have a messed up financial system, and so we are attacking 
an entire religion (Islam) in part because they are suggesting maybe we 
should try something different.

 > During the past couple of decades, the financial
> services industry has grown faster than any other sector of the American
> economy, 

True, especially because agriculture and now manufacturing are so highly 
mechanized that hardly anyone needs to "work" anymore.

> even outpacing the rise in health care expenditures, 

Often related to materialistic lifestyle choices, or trying to deal with the 
stress of a broken ideoligally driven economy

> accounting for
> a third of all growth in the U.S. economy. 

What economy? The virtual economy of play money? Or the real economy of 
stuff? Or the peer economy of a free commons like Wikipedia?

Oh, you mean the play money economy. OK. So, meaningless for the sake of 
analyzing a physical problem.

 > From 1990 to the present, the
> ratio of debt-to-GDP expanded from 165 percent to over 350 percent. In
> essence, the present welfare of the economy rests on debt, and the
> collateral for that debt consists of a wager that next year’s levels of
> production and consumption will be higher than this year’s.*

Well, sounds pretty correct.

> *Given that growth cannot continue on a finite planet,

Bzzt. Confusion of physical and play money economies. Actually, there is no 
reason, with lots of computer memory, that play money economies can't head 
towards infinity.

> this wager, and its
> embodiment in the institutions of finance, can be said to constitute
> history’s greatest Ponzi scheme. 

Sure. It's only really dangerous thought when the play money and physical 
economies interact though.

> We have justified present borrowing with
> the irrational belief that perpetual growth is possible, necessary, and
> inevitable. In effect we have borrowed from future generations so that we
> could gamble away their capital today.*

Borrowed what from future generations? Play money? What if they don't want 
to play? Money is a sign of poverty (Iain Banks). What if future generations 
are not poor?

> *Until recently, the Peak Oil argument has been framed as a forecast: the
> inevitable decline in world petroleum production, whenever it occurs, will
> kill growth. 

Who said that? I didn't say that. :-) I said "solar PV is cheaper than coal 
right now, or is about to be". So, if you mean physical growth, there is no 
connection. If you mean play money growth, well, do I really care what you 
do with monopoly money? Maybe I do, but it has nothing to do with real 
physical energy policy.

 > But here is where forecast becomes diagnosis: during the period
> from 2005 to 2008, energy stopped growing and oil prices rose to record
> levels. 

Excuse me? "Energy" stopped growing? Solar PV kept growing. Wind energy kept 
growing. Energy efficiency kept growing (so, more from less).

Oh, you mean oil use stopped growing. Well, great. I haven't liked the smog 
or other pollution in the oceans. It's about time, isn't it. What a lovely day.

 > By July of 2008, the price of a barrel of oil was nudging close to
> $150—half again higher than any previous petroleum price in
> inflation-adjusted terms—and the global economy was beginning to topple. 

If I had my way, I'd slap another US$200 a barrel tax on it and redistribute 
the money as a basic income.

> The
> auto and airline industries shuddered; 

Good riddance. Where is the rail system in the USA anyway? What's with all 
those SUVs rolling over or not having whiplash protection? Volvo can do it, 
why not everyone else?

Those airlines. Why are people flying so much with all these computers? 
What's so messed up about our society that families can't live closer together?

> ordinary consumers had trouble for
> buying gasoline for their commute to work while still paying their
> mortgages. 

Why can't more people work at home? In fact, why do they have to "work" at all?

And why don't they have a basic income that can easily afford basic energy 
use for transportation?

And why are they paying interest on mortgages when the banks just magicked 
the money into existence anyway?

 > Consumer spending began to decline.

Finally. So much trash being advertised on TV these days.

 > By September the economic
> crisis was also a financial crisis, as banks trembled and imploded. *

Good. Let 'em fail. Rather than backstop them with fourteen trillion dollars 
(or whatever it is by now) give that money as a basic income to the people.

> *Given how much is at stake, it is important to evaluate the two diagnoses
> on the basis of facts, not preconceptions.*

Durn right. So, show me some facts.

Fact one: Solar PV is cheaper than coals.

Fact two: Fact one is all we need to know.

That about wraps it up, doesn't it? :-)

> *It is unnecessary to examine evidence supporting or refuting the
> Conventional Diagnosis, because its validity is not in doubt—as a partial
> explanation for what is occurring. The question is whether it is a
> sufficient explanation, and hence an adequate basis for designing a
> successful response.*

Except didn't I just doubt it's relevance or accuracy or interpretation?

> *What’s the evidence favoring the Alternative? A good place to begin is with
> a recent paper by economist James Hamilton of the University of California,
> San Diego, titled “Causes and Consequences of the Oil Shock of 2007-08,”
> which discusses oil prices and economic impacts with clarity, logic, and
> numbers, explaining how and why the economic crash is related to the oil
> price shock of 2008. *

Sure, sure, economist, numbers, must be right, yawn.

Except when one is not. :-)

> *Hamilton starts by citing previous studies showing a tight correlation
> between oil price spikes and recessions. On the basis of this correlation,
> every attentive economist should have forecast a steep recession for
> 2008.“Indeed,” writes Hamilton, “the relation could account for the
> entire
> downturn of 2007-08…. If one could have known in advance what happened to
> oil prices during 2007-08, and if one had used the historically estimated
> relation [between price rise and economic impact]… one would have been able
> to predict the level of real GDP for both of 2008:Q3 and 2008:Q4 quite
> accurately.”*

Except solar PV is cheaper than coal. Was that in his report and 
predictions? No, well then why bother citing it?

> *Again, this is not to ignore the role of the financial and real estate
> sectors in the ongoing global economic meltdown. But in the Alternative
> Diagnosis the collapse of the housing and derivatives markets is seen as
> amplifying a signal ultimately emanating from a failure to increase the rate
> of supply of depleting resources. 

Does it matter if a resource is depleting if we don't need it anymore? Given 
solar PV is cheaper that coal?

> Hamilton again: “At a minimum it is clear
> that something other than housing deteriorated to turn slow growth into a
> recession. That something, in my mind, includes the collapse in automobile
> purchases, slowdown in overall consumption spending, and deteriorating
> consumer sentiment, in which the oil shock was indisputably a contributing
> factor.”*

And maybe people are fed up? Maybe real wages have not grown in thirty 
years? Maybe a huge rich-poor disparity has made the market disfunctional 
and only 94% marginal tax rates can set it right again? Maybe Capitalism has 
hit the fan?

> *Moreover, Hamilton notes that there was “an interaction effect between the
> oil shock and the problems in housing.” That is, in many metropolitan areas,
> house prices in 2007 were still rising in the zip codes closest to urban
> centers but already falling fast in zip codes where commutes were long.*

I'm sure there are other possible interpretations if I tried to think of one...

> *Why Did the Oil Price Spike?*

Because there are trillions of dollars sloshing around looking for 
speculative homes? Because a Lyme-addled president who was no great thinker 
to begin with launched a stupid war (or really, two) which is destroying the 
USA economy as well as creating huge amounts of international tension? 
Because much of this was predicted in 2003 by the alternative press?

> *Those who espouse the Conventional Diagnosis for our ongoing economic
> collapse might agree that there was some element of causal correlation
> between the oil price spike and the recession, but they would deny that the
> price spike itself had anything to do with resource limits, because (they
> say) it was caused mostly by speculation in the oil futures market, and had
> little to do with fundamentals of supply and demand.*

"Confessions of a Recovering Economist"
"Step 2: Accept that all our efforts to explain the world have failed.  The 
'market' is the holiest symbol in all of economics. It's magically automatic 
and efficient. And supply always equals demand. The whole profession of 
mainstream, 'neoclassical' economics is dedicated to the study of markets 
and how they can be perfected. The problem, however, is that in real life 
these idealized 'markets' don't explain much at all. Powerful non-market 
forces determine most of what happens in the economy - things like 
tradition, demographics, class, gender and race, geography, and 
institutions. Indeed, what we call the 'market' is itself a complex, 
historically constructed social institution - not some autonomous, inanimate 
forum. Power and position are at least as important to economics, as supply 
and demand."

Maybe speculators were trying to get all they could out of fossil fuels 
while they could, given solar PV is getting cheaper that coal and oil?

> *In this, the Conventional Diagnosis once again has some basis in reality.
> Speculation in oil futures during the period in question almost certainly
> helped drive oil prices higher than was justified by fundamentals. But why
> were investors buying oil futures? Was the mania for oil contracts just
> another bubble, like the dot.com stock frenzy of the late ’90s or the real
> estate boom of 2003 to 2006?*

Or maybe investors on that scale were crazy financially obese people with an 
addictive (to wealth) personality disorder?

> *During the period from 2005 to mid-2008, demand for oil was growing,
> especially in China (which went from being self-sufficient in oil in 1995 to
> being the world’s second-foremost importer, after the U.S., by 2006). 

Well, China is going green now, so that will change.

> But
> the global supply of oil was essentially stagnant: monthly production
> figures for crude oil bounced around within a fairly narrow band between 72
> and 75 million barrels per day. As prices rose, production figures barely
> budged in response. There was every indication that all oil producers were
> pumping flat-out: even the Saudis appeared to be rushing to capitalize on
> the price bonanza.*

Sure, why not get a last big boost given solar PV is now cheaper that coal 
and oil (or about to be)?

> *Thus a good argument can be made that speculation in oil futures was merely
> magnifying price moves that were inevitable on the basis of the fundamentals
> of supply and demand. James Hamilton (in his publication previously cited)
> puts it this way: “With hindsight, it is hard to deny that the price rose
> too high in July 2008, and that this miscalculation was influenced in part
> by the flow of investment dollars into commodity futures contracts. It is
> worth emphasizing, however, that the two key ingredients needed to make such
> a story coherent—a low price elasticity of demand, and the failure of
> physical production to increase—are the same key elements of a
> fundamentals-based explanation of the same phenomenon. I therefore conclude
> that these two factors, rather than speculation per se, should be construed
> as the primary cause of the oil shock of 2007-08.”*

Ancient history. We're in a new world where solar PV is cheaper than coal 
and oil.

>  « Trade exchange and credit clearing is not
> barter<http://blog.p2pfoundation.net/trade-exchange-and-credit-clearing-is-not-barter/2009/08/11>
> Book of the Week (2): Towards collaborative
> democracy<http://blog.p2pfoundation.net/book-of-the-week-2-towards-collaborative-democracy/2009/08/12> 
> Peak Oil and the Meltdown (2): the volatility
> trap<http://blog.p2pfoundation.net/peak-oil-and-the-meltdown-2-the-volatility-trap/2009/08/12>
> [image: photo of Michel Bauwens] Michel Bauwens
> 12th August 2009
>  We continue our processing of the essay by Richard Feinberg, which relates
> oil scarcity to the current crisis and sets clear limits on a eventual
> recovery.

Except who cares, given solar pv is cheaper now?

> In this excerpt <http://www.theoildrum.com/node/5638> he explains that the
> volatility in oil prices, which confuses people, is part and parcel of the
> Peak Oil thesis.

I'm not really interested in Peak Horseshoe theory, either. Even though some 
people still keep horses and might need horseshoes still.

> *Richard Feinberg: Why Did Oil Prices Fall? And Why Didn’t Lower Oil Prices
> Lead to a Quick Recovery?*

Because economists are out of touch with reality and live in a mathematical 
world that has no relation to real technology or real people or real 

> *“The Peak Oil thesis predicts that, as world oil production reaches its
> maximum level and begins to decline, the price of oil will rise
> dramatically. But it also forecasts a dramatic increase in the volatility of
> prices.*

Except the price of oil will fall when no one wants it because PV is cheaper 
than coal, and it puts out less smog too, and doesn't mess up the democratic 
politics of various countries.

> *The argument goes as follows. As oil becomes scarce, its price will rise
> until it begins to undermine economic activity in general. 

Except who needs oil anymore?

 > Economic
> contraction will then result in substantially reduced demand for oil, 

Good. The darn stuff is dirty and smelly and hurts fish and other wildlife.

> which
> will in turn cause its price to fall temporarily. Then one of two things
> will happen: either (a) the economy will begin to recover, stoking renewed
> oil demand, leading again to high prices which will again undermine economic
> activity; or (b), if the economy does not quickly recover, petroleum
> production will gradually fall due to depletion until spare production
> capacity (created by lower demand) is wiped out, leading again to higher
> prices and even more economic contraction. In both cases, oil prices remain
> volatile and the economy contracts. *

Except what if the physical economy starts moving to cheaper alternatives?

> *This scenario corresponds very closely with the reality that is unfolding,
> though it remains to be seen whether situation (a) or (b) will ensue.*
> *Over the past three years, oil prices rose and fell more dramatically than
> would have been the case if it had not been for widespread speculation in
> oil futures. Nevertheless, the general direction of prices—way up, then way
> down, then part-way back up—is entirely consistent with the Peak Oil thesis
> and the Alternative Diagnosis.*

What happens when all that speculative money finally flows into renewable 
alternatives in an even bigger way than it has already?

> *Why has the economy not quickly recovered, given that oil prices are now
> only half what they were in July 2008? Again, Peak Oil is not the only cause
> of the current economic crisis. Enormous bubbles in the real estate and
> finance sectors constituted accidents waiting to happen, and the implosion
> of those bubbles has created a serious credit crisis (as well as solvency
> and looming currency crises) that will likely take several years to resolve
> even if energy supplies don’t pose a problem.*

Lots of social dynamics going on. Lots of psychology.

> *But now the potential for renewed high oil prices acts as a ceiling for
> economic recovery. Whenever the economy does appear to show renewed signs of
> life (as has happened in May-July this year, with stock values rebounding
> and the general pace of economic contraction slowing somewhat), oil prices
> will take off again as oil speculators anticipate a recovery of demand.
> Indeed, oil prices have rebounded from $30 in January to nearly $70
> currently, provoking widespread concern that high energy prices could nip
> recovery in the bud. *

Except the economy will be more and more decoupling from fossil fuels now 
that PV is cheaper than coal. In fact, the only thing that will slow this is 
a continued fall in oil and coal prices because no one wants them anymore. 
But, because they still pollute and have other external costs, I suggest we 
still tax 'em heavily anyway.

> *A barrel of oil from newly developed sources costs in the neighborhood of
> $60 to produce, now that all of the cheaper prospects have been exploited:
> finding new oilfields today usually means drilling under miles of ocean
> water, or in politically unstable nations where equipment and personnel are
> at high risk. So as soon as consumers demand more oil, the price will have
> to stay noticeably above that figure in order to provide the incentive for
> producers to drill.*

I guess I don't understand why anyone would bother to do that if solar PV is 
cheaper than coal?

> *Volatile oil prices hurt on the upside, but they also hurt on the downside.
> The oil price collapse of August-December 2008, plus the worsening credit
> crisis, caused a dramatic contraction in oil industry investment, leading to
> the cancellation of about $150 billion worth of new oil production
> projects—whose potential productive capacity will be required to offset
> declines in existing oilfields if world oil production is to remain stable.
> This means that even if demand remains low, production capacity will almost
> certainly decline to meet those demand levels, causing oil prices to rise
> again in real terms at some point, perhaps two or three years from now.
> Volatile petroleum prices also hurt the development of alternative energy,
> as was shown during the past few months when falling oil prices led to
> financial troubles for ethanol manufacturers. *

And some difficulties for a more expensive subset of solar manufacturers 
too, it's true.

> *One way or another, growth will be highly problematic if not unachievable.”

Except, regarding physical growth, that solar PV is cheaper than coal. :-)
Regarding play money growth, well, if you include virtual currencies in 
virtual worlds, the sky is the limit. :-)

> **
>  « Will the Web bankrupt
> government?<http://blog.p2pfoundation.net/will-the-web-bankrupt-government/2009/08/12>
> Inaugural Conference of the Internet and P2P Research
> Group<http://blog.p2pfoundation.net/inaugural-conference-of-the-internet-and-p2p-research-group/2009/08/13
It might change the nature of government eventually. You can't bankrupt 
someone who can legally print money. You can't bankrupt a government that 
own one third or more of the land to use or rent. You can't bankrupt a 
government with guns and prisons to collect taxes or to enforce demands on 
labor time.

> Peak Oil and the Meltdown (3): the alt.energy
> transition<http://blog.p2pfoundation.net/peak-oil-and-the-meltdown-3-the-altenergy-transition/2009/08/13>
> [image: photo of Michel Bauwens] Michel Bauwens
> 13th August 2009
>  My conclusion from a careful survey of energy alternatives, then, is that
> there is little likelihood that either conventional fossil fuels or
> alternative energy sources can be counted on to provide the amount and
> quality of energy that will be needed to sustain economic growth—or even
> current levels of economic activity—during the remainder of this century.

Except that solar PV is cheaper than coal (or about to be).

And if you don't like solar PV, how about solar thermal?
   "Solar energy cheaper than coal"

> Richard Heinberg <http://www.theoildrum.com/node/5638> continues his
> treatment of the role of Peak Oil in the current meltdown.

Does he make any money out of that somehow? How can one follow the money of 
his fearmongering?

> This excerpt features a key argument, which I have seen in most people that
> have studied the issue carefully: there is no smooth transition to a
> alternative future based on renewable energies!

Except you just go to Home Depot and buy solar panels and put them up with a 
grid intertie plug you stick in a wall socket?
"The ability to do guerilla solar installations is made much easier by the 
availability of small intertie capable inverters, such as the Trace Micro 
Sine. You connect the solar panels to the inverter, and then make a plug for 
the inverter (instead of a socket) so that it can plug directly into a wall 
socket in the house. The inverter won't operate unless it sees a sine wave 
from the power company, so having a bare three prong plug hanging out won't 
electrocute you (besides, it's normally plugged in). This feature also 
protects linemen from being zapped by your solar panel when they are 
repairing the lines. "

> *Richard Heinberg:*
> *“At this point in the discussion many readers will be wondering why
> alternative energy sources and efficiency measures cannot be deployed to
> solve the Peak Oil crisis. 

Because you would lose advertising revenue?

 > After all, as petroleum becomes more expensive,
> ethanol, biodiesel, and electric cars all start to look more attractive both
> to producers and consumers. Won’t the magic of the market intervene to
> render oil shortages irrelevant to future growth?*

Absolutely, eventually. Especially because solar PV is cheaper than coal (or 
soon to be).

> *It is impossible in the context of this discussion to provide a detailed
> explanation of why the market probably cannot solve the Peak Oil problem.

Because there is no explanation.

> Such an explanation requires a discussion of energy evaluation criteria, and
> an analysis of many individual energy alternatives on the basis of those
> criteria. I have offered brief overviews of this subject previously and a
> much longer one is in press. *

In other words, it doesn't exist because, now that solar PV is cheaper than 
coal, we are just waiting on the production plants for thin film PV to expand?

> *My summary conclusions in this regard are as follows.*
> *About 85 percent of our current energy is derived from three primary
> sources—oil, natural gas, and coal—that are non-renewable, whose price is
> likely to trend sharply higher over the next years and decades leading to
> severe shortages, and whose environmental impacts are unacceptable. 

Except they will crash in price, given there will be little demand for them 
since solar is cheaper that coal (or will be soon).

> While
> these sources historically have had very high economic value, we cannot rely
> on them in the future; 

Why not? There will be plenty left for special needs (even some plastics), 
because no one would want to burn them. Still, you're right, people will 
prefer biodegradable plastics that are healthier to manufacture, use, and 
recycle. OK. So people won't want them in the future much. OK.

> indeed, the longer the transition to alternative
> energy sources is delayed, the more difficult that transition will be unless
> some practical mix of alternative energy systems can be identified that will
> have superior economic and environmental characteristics.*

Well, seems like it is happening right now. It would even happen faster 
except many people are waiting to see what even more amazing solar panels 
come out next year.

> *But identifying such a mix is harder than one might initially think. Each
> energy source has highly specific characteristics. In fact, it has been the
> characteristics of our present energy sources (principally oil, coal, and
> natural gas) that have enabled the building of an urbanized society with
> high mobility, large population, and high economic growth rates. 

But are they really happy? Are they great places to raise children compared 
to the villages of old?

Anyway, see:

For example:
Although they are having some problems from neighboring dysfunctional cities 
that have not upgraded their governance structures or economies to more 
populist models.

 > Surveying
> the available alternative energy sources for criteria such as energy
> density, environmental impacts, reliance on depleting raw materials,
> intermittency versus constancy of supply, and the percentage of energy
> returned on the energy invested in energy production, none currently appears
> capable of perpetuating this kind of society.*

Convenient, isn't it?

It's not like solar PV was cheaper than coal, is it?

It's not like we could pump water uphill or compress air or heat rocks to 
temporarily store energy, is it?

> *Moreover, national energy systems are expensive and slow to develop. 

Except when everyone can got to Home Depot and get them installed for cheap.

 > Energy
> efficiency likewise requires investment, 

Sure, and if "national security" meant anything real, that would all be paid 
for out of the "defense" budget.

> and further incremental investments
> in efficiency tend to yield diminishing returns over time, since it is
> impossible to perform work with zero energy input. 

The Earth keeps going round the Sun with no energy input to its orbit. :-)
I know, that's not accomplishing anything useful like changing our view of 
the solar system. :-)

Sure, OK, yes, thermodynamics. And if we barely need much energy do do a lot 
of stuff, then what?

The state-of-the-art in home heating in cold climates is no furnace.

It sure would make a lot of sense to divert most of the US defense budget 
for a while to intrinsically defending the country by removing a need for 
foreign oil by upgrading northern US homes to all be passive solar.

 > Where is there the will
> or ability to muster sufficient investment capital for deployment of
> alternative energy sources and efficiency measures on the scale needed?*

The US defense department?
Employees 	700,000 civilian  2,300,000 military (2004)
Annual budget 	$786 billion [1](2009 est.)

> *While there are many successful alternative energy production installations
> around the world (ranging from small home-scale photovoltaic systems to
> large “farms” of three-megawatt wind turbines), 

OK. I'll grudgingly concede that point. :-)

> there are very few modern
> industrial nations that now get the bulk of their energy from sources other
> than oil, coal, and natural gas. 

They will soon. That they have not done so sooner is because of corruption, 
legal and illegal political bribery, and a bunch of other things.
"Brittle Power: Energy Strategy for National Security is a 1982 book by 
Amory B. Lovins and L. Hunter Lovins, prepared originally as a Pentagon 
study, and re-released in 2001 following the September 11 attacks. The book 
argues that domestic energy infrastructure is very vulnerable to disruption, 
by accident or malice, often even more so than imported oil. According to 
the authors, a resilient energy system is feasible, costs less, works 
better, is favoured in the market, but is rejected by U.S. policy.[1] In the 
preface to the 2001 edition, Lovins explains that these themes are still 
very current. [2]"

 > One example is Sweden, which obtains most
> of its energy from nuclear and hydropower. 

OK. Swedes are cool. We drive one of their cars. :-)

We only have one car to save money and energy.

> Another is Iceland, which
> benefits from unusually large domestic geothermal resources not found in
> most other countries. 

Geothermal is almost everywhere, especially if you just focus on the heat 
pump aspect of it.

 > Even for these two nations, the situation is complex:
> the construction of the infrastructure for their power plants mostly relied
> on fossil fuels for the mining of the ores and raw materials, for materials
> processing, for transportation, for the manufacturing of components, for the
> mining of uranium, for construction energy, and so on. Thus a meaningful
> energy transition away from fossil fuels is still a matter of theory and
> wishful thinking, not reality.*

Except solar PV is cheaper than coal. And it will be a *lot* cheaper real 
soon now. Despite the fossil fuel industry and nuclear industry having 
fought it all the way.

Or, as is said here (fluffy):
   "Solar kicks coal's ass #2, Funny"

> *My conclusion from a careful survey of energy alternatives, then, is that
> there is little likelihood that either conventional fossil fuels or
> alternative energy sources can be counted on to provide the amount and
> quality of energy that will be needed to sustain economic growth—or even
> current levels of economic activity—during the remainder of this century. *

Except solar PV is cheaper than coal. Right now everywhere according to 
some. And in some situations already like Hawaii according to all.

> *But the problem extends beyond oil and other fossil fuels: the world’s
> fresh water resources are strained to the point that billions of people may
> soon find themselves with only precarious access to water for drinking and
> irrigation. 

Except when you have a lot of power from solar PV being cheaper than coal, 
you can distill seawater, recycle graywater, or chill water out of the air.

> Biodiversity is declining rapidly. 

True, and very sad. Part of the reason is a reliance on coal and oil.

Although digital biodiversity is rising. And we may be able to make 
synthetic creatures more and more.

> We are losing 24 billion tons
> of topsoil each year to erosion.

Grind up rocks with power from solar PV or those windmills. Problem solved.

> And many economically significant
> minerals—from antimony to zinc—are depleting quickly, 

You say minerals but list elements. The elements are still there. Recycle 
them from the landfills.

> requiring the mining
> of ever lower-grade ores in ever more remote locations. 

Or mine the landfills, probably using robots to be a bit more energy 
efficient. Problem solved.

> Thus the Peak Oil
> crisis is really just the leading edge of a broader Peak Everything dilemma.

Except, it is all baloney. And if our population decides to grow again (it 
is peaking), then we can go into space.

The real problem may be a peak population crisis. With kids staring at the 
computer so much, where is the next generation going to come from? Doesn't 
look good to me.

Industrialized society, including compulsory prison-schooling, is so 
anti-family that industrialized populations are shrinking. We desperately 
need a plan to deal with the Peak Human Population crisis.

Something like giving US$20K to each family per child per year:
   "Towards a Post-Scarcity New York State of Mind (through homeschooling)"

> *In essence, humanity faces an entirely predictable peril: our population
> has been growing dramatically for the past 200 years 

Except it has stopped in the industrialized world. Industrialization the way 
we have been doing it is, unfortunately, deadly to our species.

> (expanding from under
> one billion to nearly seven billion),

Hooray! How about fourteen billion?

We've got room for quadrillions of people in the solar system. Would coupons 
for romantic resorts in the Poconos help?

> while our per-capita consumption of
> resources has also grown. 

Terrific. Just be sure to recycle it all, have zero-emissions 
cradle-to-cradle, and use renewable energy like solar PV (cheaper than coal) 
and we are good to go. And recycling 3D printers would be nice.

 > For any species, this is virtually the definition
> of biological success. 


> And yet all of this has taken place in the context of
> a finite planet 

but huge solar system and perhaps infinite universe or infinite metaverse

> with fixed stores of non-renewable resources (fossil fuels
> and minerals), 

Any idea how large this planet is and how small people are?

But, sure, I've outline a plan to evacuate the Earth in thirty years, if you 
really want to insist on that "finite earth" point having any relevance.

> a limited ability to regenerate renewable resources (forests,
> fish, fresh water, and topsoil), 

Grind rock for soil. A lot of people like to work outdoors planting trees 
and stocking fish. In fact, the problem is just that these people who want 
to be outdoors are forced to work stupid pointless guard-duty jobs they hate 
life process health insurance claims instead of just giving everyone 
free-to-the-user health care (which will be cheaper once we stop polluting 
the air with coal).

 > and a limited ability to absorb industrial
> wastes (including carbon dioxide).

Sure. Except we can use our solar PV (cheaper than coal) to recycle the 
stuff. And this guy at TED said how to do it with fungus too:
   "Paul Stamets on 6 ways mushrooms can save the world"

> If we step back and look at the
> industrial period from a broad historical perspective that is informed by an
> appreciation of ecological limits, 

OK. I'm with you. The universe can (conservatively) hold about a million 
billion billion quadrillion people:
   "[p2p-research] Earth's carrying capacity and Catton"

And we have almost seven billion. I can see there will be a limit to growth 
someday. Unless we figure out a way to connect to other empty universes and 

Now, if we build space habitats, each with an ecology, then we could have 
quadrillions of Earths worth of ecologies in the universe.

Ok, so informed by that perspective, I'm right with you...

> it is hard to avoid the conclusion that
> we are today living at the end of a relatively brief pulse—a 200-year rapid
> expansionary phase enabled by a temporary energy subsidy (in the form of
> cheap fossil fuels) that will inevitably be followed by an even more rapid
> and dramatic contraction as those fuels deplete.*

Um. Hmmm. What happened to a million billion billion quadrillion people 
living in a quadrillion Earths worth of space habitats?

Solar PV is cheaper than coal, remember?

> *The winding down of this historic growth-contraction pulse doesn’t
> necessarily mean the end of the world, 

Which world? The one you imagine where solar PV is not cheaper than coal?

The same world that is debunked here too:

> but it does mean the end of a certain
> kind of economy. 

Good riddance.

> One way or another, humanity must return to a more normal
> pattern of existence characterized by reliance on immediate solar income
> (via crops, wind, or the direct conversion of sunlight to electricity)
> rather than stored ancient sunlight.*

Now you are talking. Hooray. We agree on something. Until we tap zero-point 
energy, we should work towards supporting a million billion billion 
quadrillion people with solar power! Yeah!! Here comes the sun!
   "The Beatles - Here comes the sun"

> *This is not to say that the remainder of the 21st century must consist of a
> collapse of industrialism, a die-off of most of the human population, and a
> return by the survivors to a way of life essentially identical to that of
> 16th century peasants or indigenous hunter-gatherers. 

What is it you don't like about hunter-gatherers? Sounds like they had more 
fun than we do. :-)
   "The Original Affluent Society" by Marshall Sahlins
"A good case can be made that hunters and gatherers work less than we do; 
and, rather than a continuous travail, the food quest is intermittent, 
leisure abundant, and there is a greater amount of sleep in the daytime per 
capita per year than in any other condition of society."

> It is possible instead
> to imagine acceptable and even inviting ways in which humanity could adapt
> to ecological limits while further developing cultural richness, scientific
> understanding, and quality of life (more of this below).*

Sure. Let's see, the limit is a million billion billion quadrillion people 
in the universe. I guess I better get to work on zero-point energy and 
inter-multiverse transportation before we reach that limit.
I'll put that on my to do list. Don't think I'll have time to get to it 
though, too many other fun things to do first. I'll leave it for someone 
else to lend a hand. :-)
   "Nowhere Man"

> *But however it is negotiated, the transition will spell an end to economic
> growth in the conventional sense. And that transition appears to have
> begun.”*

Sure, economic growth as it has been done has been stupid. I'm all for doing 
it differently. :-) Local production using 3D printers and other means 
(including to print solar panels). Peer production using a gift economy and 
a free commons. States that regulate and heavily tax the remnants of the 
market. A well educated populace who engage in learning-on-demand. Those 
kind of things.

Anyway, I don't know what the point of this was. Other than to show how a 
few bad assumptions can ripple throughout mounds of analysis. So, are the 
bad assumptions mine or others?

One random example:
   "Grid Parity" by John Quiggin
... But looking at the issue again today, I’m finding lots of claims that 
this “grid parity” will be achieved in the next few years, and even one 
company, First Solar, that claims to be already at grid parity with a 12 MW 
plant in Nevada completed last year . Obviously, Nevada is a particularly 
favorable location, and there is plenty of room for judgement in cost 
estimates. Still, looking at a lot of different reports, it seems clear 
that, with a carbon price of say $50/tonne (about 5 cents/kwh for black coal 
and 7 cents/kwh for brown coal), solar will be cost-competitive with coal 
for most places in Australia without any need for fundamental technical 
   The big question is whether the industry can ramp up from its current 
small scale (about 5 GW capacity produced last year) to meet global demands 
for growth and replace a significant part of the existing 4TW of mainly 
fossil-based capacity, with even more needed if we are to have big growth in 
electric vehicles. ...
   However, in the long run, and with no absolute resource constraints, 
costs should fall further as all elements of the manufacturing chain scale 
up. And over 20 years or so, with continued growth of 20-30 per cent a year, 
the necessary scale would be achieved If so (and assuming contributions from 
other renewable sources) the transition to a post-carbon economy could be 
faster and cheaper than most existing estimates suggest.

OK, so if this is true, why were we not planning our economy around this 
idea twenty years ago? That should be a shocking indictment of the entire 
profession of economics. But, that's not news here, is it? :-)

--Paul Fernhout

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