ONE TOWN SQUARE: at the intersection of peak oil, climate change, and land use

2010 sees new record for greenhouse gas emissions

May 31st, 2011 by Jim Just

Think the world is making any progress in tackling global warming?  Think again: 2010 set a record high for greenhouse gas emissions.

Energy-related carbon-dioxide (CO2) emissions in 2010 were the highest in history, according to the latest estimates by the International Energy Agency (IEA).

After a dip in 2009 caused by the global financial crisis, emissions are estimated to have climbed to a record 30.6 Gigatonnes (Gt), a 5% jump from the previous record year in 2008, when levels reached 29.3 Gt.

In addition, the IEA has estimated that 80% of projected emissions from the power sector in 2020 are already locked in, as they will come from power plants that are currently in place or under construction today.

44% of the estimated CO2 emissions in 2010 came from coal, 36% from oil, and 20% from natural gas.

The IEA’s 2010 World Energy Outlook set out the 450 Scenario, an energy pathway supposedly consistent with achieving the goal of limiting average global temperature increase to 2°C. The IEA believes this pathway can be achieved if global energy-related emissions in 2020 are not be greater than 32 Gt. Achieving this would require that over the next ten years, emissions would have to rise less in total than they did between 2009 and 2010.

Of course, 450 ppm CO2 is much too high to avoid catastrophic consequences.

The conclusion that limiting CO2-equivalent to 450 ppm will succeed in limiting temperature increase to 2°C is based on the assumption that no feedback loops will kick in, an assumption that is already proving unfounded – for example, Arctic amplification is already kicking in and thawing permafrost will further accelerate global warming.

If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, paleoclimate evidence and ongoing climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm. To be safe, we’ll likely have to get back to pre-industrial levels of 280 ppm, and rather quickly.

So how are we doing?

393 and counting.

Dr Fatih Birol, Chief Economist at the IEA, isn’t sounding optimistic.

Our latest estimates are another wake-up call. The world has edged incredibly close to the level of emissions that should not be reached until 2020 if the 2ºC target is to be attained. Given the shrinking room for manœuvre in 2020, unless bold and decisive decisions are made very soon, it will be extremely challenging to succeed in achieving this global goal agreed in Cancun.

The IEA sees the challenge as squaring the circle: “improving and maintaining quality of life for people in all countries while limiting CO2 emissions.” The phrase “improving and maintaining quality of life” translates as business as usual: continued economic growth, growth that depends on increased energy consumption and results in the greenhouse gas emissions which are threatening to destroy Earth as we know it. More of what got us into this mess is not going to get us out.

Rising fuel prices starting to hurt

May 19th, 2011 by Jim Just

High prices at the pump are once again starting to hurt, if indeed the hurt caused by the 2008 spike has ever ceased.

As fuel prices take a bigger slice of people’s incomes, sales at retailers including Walmart, Home Depot,  and Lowe’s are taking a hit. The housing sector has been the biggest victim of high gas prices, as home prices continue to fall. Existing home sales are again lagging, as shown in this chart from Calculated Risk.

New home sales are seeing record lows.

Jim Kunstler call of suburbia as the biggest misallocation of resources in human history is proving prescient.

As prices at the pump rise, people are again beginning to drive less. The EIA reports that demand for oil products over the last 4 weeks is down by nearly 3 percent as compared to last year, and the recent rise in vehicle miles traveled (VMT) is beginning to falter. VMT remains well below the previous peak, as seen in this chart of the rolling 12-month VMT going back to 1971, posted at Calculated Risk.

In the early ’80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months – a record that will soon be eclipsed.

High gas prices are depressing traffic on the Ohio Turnpike, which recently upped its top speed from 65 mph to 70 mph in April in an attempt to lure more traffic onto the highway. Less traffic, less income from tolls. a portion of the cost of the Columbia River Crossing is projected to be covered by user fees (i.e., tolls). That source of funds will prove fantasy if projected increases in vehicle traffic fail to materialize due to soaring gas prices, leaving taxpayers on the hook.

Planning for economic contraction

April 10th, 2011 by Jim Just

Beginning this month, Transition United States is publishing a three-part series of papers titled Economic Resilience, authored by Joanne Poyourow. The first of the series is Economic Contraction.

Poyourow sets out to confront the the “triple crisis” of global warming, peak oil, and economic collapse. Any long-term plan we come up with is futile unless we anticipate that it will unfold amidst a world of economic contraction:

We have to plan for it, and put alternative financial tools in place to weather it, or it will undermine all of our other efforts.

Poyourow says it takes “raw courage” to confront the end of growth on a personal level, and even more to violate social and political taboos by doing so in public. But in the end, we have no choice – and our options are severely constrained:

Whether it will be a full-scale collapse into chaos like Jared Diamond writes about or Stoneleigh forecasts, or whether we will be successful in creating locally-managed “surge breakers” in time, remains to be seen.  But either way, we’d better try our best to get something in place.

The “techno-fantasy” conceptualized in the chart below – continued growth, “business as usual” – is just that, a complete fantasy. And the “green-tech stability” projection is also a fantasy: it represents a form of bargaining with rather than accepting the reality that renewable .

The uncomfortable reality is, no renewable energy sources are on hand that approach the energy density of fossil fuels. That leaves us with two options. We can choose to accept and deal with reality, with all the creativity, wisdom, and grace we can muster. Or we can continue to deny and resist reality,  destroy the land, the oceans, and the atmosphere and in the end suffer collapse as a consequence of our obdurateness.

The reality is, we  can’t force or cajole a finite world to accommodate infinite growth. As available energy and other resources become more scarce and expensive, there must be a descent.  A a severe contraction in our economic systems is inevitable. And we will have to adapt, voluntarily or involuntarily.

Against the backdrop of this reality, it’s no wonder that our politics – for example, Obama’s nonspeech outlining an energy nonpolicy – are nothing less than an absurdity.

Huge Bardi observes that we can learn an important lesson from the Japaneses – the pre-modern, pre-Fukushima, Edo period Japanese, that is. Like Japan, Earth is an island. To live sustainably and successfully on that island, the winning strategy is adaptation. We need to adjust our needs to what this planet can give us.

Rising oil prices show economic system becoming unstable

March 29th, 2011 by Jim Just

Economist James Hamilton of the University of California San Diego recently published a paper titled “Causes and Consequences of the Oil Shock of 2007–08” concluding that oil prices played a fundamental role in causing the current recession (and many previous recessions as well).

The Wall Street Journal has now noticed that expensive oil is bad news for the economy. A recent article included this graph showing oil price hikes are linked to recessions:

Analyst Steven Kopits observes recession sets in when oil consumption costs 4% of GDP. Charles Hall, Steven Balogh, and David Murphy did an analysis of the connection between the price of oil and recession and concluded recession is likely when oil amounts to more than 5.5% of GDP. When their analysis was done in 2008, this corresponded to a price of about $85 barrel. Brent prices have been bouncing around $115/barrel – and U.S. GDP has, at best, barely recovered to 2008 levels.

UPDATE: GDP doesn’t tell the whole story. In 4Q 2010 real GDP rose 3.1%, while real Gross Domestic Purchases fell 0.2%. Why? Energy and other import costs rose which depressed the price indexes for GDP versus Gross Domestic Purchases. Over the long haul, the two series are close to equal, but when they diverge, they tell a story. The current story is that average consumers in the US are doing badly, while those benefiting from high corporate profits and increasing exports are doing well.

Hall’s cheese slicer model shows that there’s an insidious feedback loop that kicks in as oil gets more expensive. As long as the Energy Return on Energy Invested (EROEI) is high enough, there’s enough energy coming out the economic system to provide for both reinvestment and consumption. In the early days of oil, EROEI for oil was in the range of 100:1. In 1970, EROEI was still high enough that financial resources needed for reinvestment were modest, leaving plenty for consumption.

The U.S. economy, 1970. Discretionary consumption is robust, investment in energy relatively small..

But as EROEI declines, the proportion needed for reinvestment climbs as the proportion left over for consumption plummets.

Projection for 2030, assuming EROEI declines from 20:1 (on average) to 10:1.

When EROEI drops low enough, the financial resources needed for reinvestment to develop additional energy resources increases massively, leaving precious little as reward for all the effort.

Projection for 2050, assuming EROEI declines to 5:1.

At some point, the whole project becomes pointless.

Gail Tverberg points out the problem isn’t running out of oil. Rather, as oil gets more difficult and more expensive to extract, the resultant higher cost of oil leads to demand destruction, causing recession and financial crises and resulting in reduced ability to invest in the energy resources needed to sustain our economy:

Lack of funds for reinvestment can act to cut of future development fairly quickly, it would seem to me. If prices are not very high, say $60, much of the more expensive oil production will cease.

And then there’s the risk of political upheaval. Libya is the latest demonstration that oil production rests on the thin reed of political stability in an unstable world. Regime change is never good news for oil production in the Middle East and even less so for oil exports. Imagine riots and revolution in Saudi Arabia . . .

The situation we find ourselves in was described by Joseph Tainter in The Collapse of Complex Societies. Civilizations tend to solve problems by increasing complexity – but at some point the returns on investment in complexity diminish and even turn negative, the whole edifice comes crashing down, and society regains stability at a simpler level of organization.

The Macondo blowout in the Gulf and the catastrophe at Fukushima are sure signs that our civilization has become too complex and that the returns on investment have turned negative.

UPDATE: The energy share of personal consumption expenditures hit 6% in February (5.98%, to be exact), the highest it’s been since October 2008.

James Hamilton at Econbrowser points out a 6% expenditure share marked the point at which we started to see significant consumption responses a few years ago.

American workers: worse off than ever

March 15th, 2011 by Jim Just

Michael Panzer at Financial Armageddon posts this most telling chart:

Ain’t free market fundamentalism grand?

Life rules, humans don’t

March 9th, 2011 by Jim Just

Writer and homesteader Ellen LaConte has a new book titled Life Rules: Why so much is going wrong everywhere at once and how Life teaches us to fix it.

The book first diagnoses our condition . . .

Economic and polar meltdowns, inept, corrupt and bankrupt governments, long-term double-digit unemployment, climate instability, failing social services, collapsing ecosystems, a widening wealth-poverty gap, unprecedented species extinctions, mass migrations, peak fossil fuels, religious, ethnic and resource wars, spreading hunger, poverty, chaos and disease. . .

Why is so much going wrong everywhere at once? The global economy has gone viral. It is ravaging Earth’s immune system, triggering a Critical Mass of mutually reinforcing environmental, economic, social, cultural and political crises that are compromising the ability of Earth’s human and natural communities to provide for, protect and heal themselves.

The prognosis? If we keep doing what we’ve been doing, Life will last but Life as we know it—and a lot of us—won’t.

. . . and then offers a course of treatment:

What should we do instead? We should remember that Life rules, we don’t. The global economy operates as if it were larger than Life. It isn’t. As if it had multiple Earth’s to supply its appetites. It doesn’t. . .

Among the rules written into Life’s Economic Survival Protocol are local self-reliance, intercommunity and regional functional cooperation, non-carbon energy sourcing, resource conservation, sharing and recycling, and organically democratic methods of self-organization and governance. . .

We can learn Life’s rules and adopt lifeways that are at once authentically conservative, deeply green and profoundly liberating.

Robert Jensen interviews LaConte at Energy Bulletin. She reminds us something we seem to have forgotten – that humans are but bit players in a much bigger system.

The largest context – the largest high-functioning complex system within which we live our lives – is not the nation, nation-state system or global economic system but Life itself, the whole-earth, emergent and self-maintaining system of natural communities and ecosystems. That system, the ecosphere, teaches us the physical laws, the relationships and behaviors discovered in physics, biology and ecology and exemplified by the so-called “mystical” spiritual teachers, that we have to obey if we want to remain viable as a species.

The global economy has become pathological and is undermining the ability of human and natural communities to provide for, protect, defend and heal themselves – and here’s where LaConte invokes the analogy of AIDS/HIV:

I think we are presently at the HIV stage of the disease; it hasn’t quite yet become full-blown planetary AIDS. But I insist in the book that doing more of what we’ve been doing to exceed Earth’s physical means as well as our own fiscal ones — in other words, trying to heal and grow the very kind and scope of economy that caused this disease — is akin to injecting a patient who already has HIV with more HIV. That’s precisely what we’re doing.

Lynn Margolis argued in Symbiotic Planet that much of evolution on Earth is better explained by symbiosis – “the living together in physical contact of organisms of different species” – than by competition. LaConte similarly sees life on Earth as a cross-species, communitarian phenomenon. We’re not the “masters of the universe” we’ve come to believe we are, but rather a small part of a larger system. The most important and hardest lesson we will need to learn as a species is self-limitation. We have to stop behaving as if we were larger than or apart from Life and become constructive participants in it. If we fail to do so – if we don’t choose to transform ourselves and our lifeways – Life will force us to. Life rules, we don’t, and Life will not hesitate to rule harshly and even rule us out.

How can we possibly give up on economic growth? LaConte suggests focusing on what we need, as human beings.

Like everyone else, I need food, clean air and water, clothing, some sort of shelter, preferably warm in winter, occasional medicine or medical care, spiritual and physical exercise, colleagues, friends, family, if possible books, lots of quiet, a garden to work in, woods and wild not too far off. To love and be loved. To carry no debt. To believe there is some sort of livable, desirable future for the next seven generations. . . . To be happy, I need good work to do, work that I feel is, in my late mentor Helen Nearing’s terms, “contributory.”

We could all agree to get to work to fulfill that vision.

The Little Book of Life’s Rules for Surviving Critical Mass, a pocket version of key economic survival principles and practices culled from Life Rules, is soon to be serialized in posts at LaConte’s website.

Eating local: much more than food miles

March 9th, 2011 by Jim Just

Eating locally can do a lot to cut down on energy usage in the food system. But not for the obvious reason – savings on transportation energy. Rather, it’s mostly because you’d be eating real food. That’s the lesson to be gleaned from the report Energy Use in the US Food System, published by the United States Department of Agriculture (USDA).

Energy is used throughout the U.S. food supply chain, which is divvied up into seven stages:  farm production and agribusiness (agriculture), food processing and brand marketing (processing), food and ingredient packaging (packaging), freight services (transportation), wholesale and retail trade and marketing services (wholesale/retail), away-from-home food and marketing services (food service), and household food services (households).

The processing stage seems to be where most of the low-hanging energy-saving fruit is to be found. Michael Bomford in an article titled Beyond Food Miles at Post Carbon Institute explains:

Buying from the local farmers’ market offers great opportunities to cut down on food system energy use, but it’s not because the food there has traveled less than the food at the grocery store. It’s because the aisles of a typical grocery store are mostly filled with highly-processed and packaged food, while farmers markets offer mostly whole or minimally-processed foods.

The energy intensity of our food system keeps getting worse rather than better. During 1997-2002, per capita energy use in the United States declined 1.8%, while per capita food-related energy use in the United States actually increased by 16.4%. As a share of the national energy budget, food-related energy use grew from 12.2% in 1997 to 14.4% in 2002 and is still growing, from 14.4 percent in 2002 to an estimated 15.7% in 2007.

Transportation is a small fraction of the food system energy budget.

However, the energy intensity of food transportation in the U.S. food system is growing. Food shipments are increasing in volume, at the same time average shipping distances are increasing significantly. These food-mile increases translate into substantial growth in energy use by food-related freight services.

A big culprit in the increase in energy usage in the food system is replacing human labor with machines. About half of the growth in food-related energy use between 1997 and 2002 is explained by a shift from human labor toward a greater reliance on “energy services” across nearly all food expenditure categories. The report blames “high labor costs” in the food services and food processing industries, combined with household outsourcing of manual food preparation and cleanup efforts through increased consumption of prepared foods and more eating out. Replacing humans with machines is also responsible for the increasing energy intensity in the “agriculture” stage.

Household operations – which is defined to include energy use for major kitchen appliances, auto use for food-related trips, and related energy flows for home food preparation and serving equipment – account for the highest food-related energy use. But food processing shows the largest growth in energy use, as both households and foodservice establishments increasingly outsource manual food preparation and cleanup activities to the manufacturing sector, which rely on energy-using technologies to carry out these processes.

The obvious way to cut down on energy usage in the food system is to cut out as many of the intermediate stages between “agriculture” and “household” as possible: buy directly from the farmer, cutting out processing, packaging, transportation (remember, your trip to the farm is already included in “household”), wholesale/retail, and food service entirely, or at least as much as possible. If we want a more energy-efficient agriculture we will have to reverse the historical trend and begin to once again employ people rather than machines.

Michael Pollan sums up everything we need to know about food and health in seven words: “Eat food, not too much, mostly plants.”

“Eat food” means to eat real food – vegetables, fruits, whole grains, fish, and meat, too, as livestock are an essential component of an ecologically sustainable food system.  Eating food would not only be healthier for us. It’s the only means to a healthy economy and a healthy planet.

Cycle of instability kicks in

February 26th, 2011 by Jim Just

In January, sales at gas stations accounted for 10.34% of all retail sales, according to the Commerce Department. That’s the highest level since October 2008.

In July 2008 – just before the big crash – gasoline prices exceeded $4.15 a gallon and gas station sales accounted for 12.47% of retail sales. When gasoline prices last rose to $3.25 a gallon, in March 2008, gas station sales accounted for 11.55% of all retail sales – significantly more than now.

Fuel prices aren’t the only thing that have been soaring – food prices have been, too. The United Nations Food and Agriculture Organization reports global food prices reached an all-time high in January 2011.

Last year, unusual and extreme weather – too hot or cold, or too dry or wet, due in part to global warming-induced climate change – affected major food producers and exporters around the world, from Russia and Ukraine to Canada and the U.S., Germany, Australia, Pakistan, Argentina and the countries of Southeast Asia.

Food riots have started again. Political unrest, stoked by rising food prices, is sweeping the Middle East and North Africa, threatening the stability of the world’s oil supplies. Egypt, Tunisia, Yemen, Libya and Bahrain have seen political uprisings. There have been demonstrations in Algeria, Jordan, Iraq, Morocco, and now Oman. Were instability to spread to Saudi Arabia, the world would tremble indeed.

The world’s food supply is highly dependent on oil.  In a back-of-the-envelope calculation, Paul Chefurka estimates the operation of the world’s food supply consumes about 23% of the world’s oil.

Oil shortages mean food shortages. Food shortages lead to political upheaval, disrupting oil production. Meanwhile in the U.S., we’re burning over one-third of our corn crop – one-sixth of the world’s supply of corn – to run our cars.  This chart is via Early Warning.

Estimated fraction of the corn crop devoted to ethanol

Running our cars and trucks is once again on the verge of becoming so expensive that the cost will blow up the economy.

And oh yes, in the U.S. the disparity of wealth between the rich and the rest has never been greater.

Rising inequality in the U.S. is one measure of corruption. As the hijacking of the bailout by the banksters conclusively evidences, democracy in the U.S.  – with a big assist from the Supreme Court in Bush v. Gore and Citizens United – is nothing more than a sideshow and the U.S. is now demonstrably an oligarchy.

Unemployment? While the “official” rate is stated to have fallen to 9.0% – but that number would be over 11% were it not for millions of people allegedly dropping out of the labor force over the last year. And the more revealing U-6 rate is running at 16.1%.

And food costs? Over the 12 months, the food index has risen 1.8% with the food at home index up 2.1%t; both 12-month changes are the highest since 2009. More tellingly, there has been a dramatic increase in hunger in the United States in the last three years and a record 14+% of the population is on food stamps. Maybe the rich can still buy food, but it’s getting harder and harder for everybody else as their incomes are dropping even as food prices rise.

if food prices are not yet making Americans scream, Americans are much more sensitive to rising prices at the pump – God help anyone who would interfere with our love affair with our cars. The energy index has increased 7.3% over the last 12 months, with the gasoline index up 13.4%. Crude oil prices have been fluctuating around levels last seen just before the 2008 spike to $147/barrel. One additional geopolitical spark could set off an explosion the likes of which we’ve before seen.

How long before growing inequality in the U.S. results in riots and unrest?  Is what we’re seeing in Wisconsin a mere harbinger of more serious struggles to come?

Our politics – whether local, national, or international – is laughably incapable of confronting reality. Here in Oregon, even a “progressive” governor has abandoned his environmental roots and embraced “economic development,” a policy direction reiterated by his newly-appointed natural resources adviser saying the focus will be “on jobs, not mainstream environmental issues.”

Lives, both of humans and political entities, are now at stake. But we’re still thinking within the old paradigm of “growth.” How long can it be before we will at last drop the pretense, and acknowledge, and openly and honestly deal with the new paradigm reality has dealt us?

Emissions fall with economy

February 19th, 2011 by Jim Just

The EPA reports U.S. greenhouse gas emissions declined in 2009 for the second consecutive year, reflecting the impact of the recession on industrial production and overall energy use.

What’s notable in the report is recognition of the correlation between economic activity and greenhouse gas emissions. The lesson is, if we are to shrink emissions we’re going to have to shrink the economy.

Saving the Earth means not only saying goodbye to growth.  It means embracing economic contraction. As economic growth has historically reflected increased energy consumption, peak oil and growing constraints on other energy sources imply that the shrinking of the economy will happen whether we like it or not. It won’t require political will – it will result from bumping up against the cold, hard reality of declining energy resources.

Chaney was speaking for hundreds of millions of Americans when he stated the American way of life was not negotiable. The odds that America will gracefully let go of the idea of growth and embrace an era of limits are slim.

Squandering real wealth – or shedding the unsustainable?

January 19th, 2011 by Jim Just

David Korten has an extraordinarily perceptive and moving article in Yes! titled The Illusion of Money: real wealth or phantom assets? exploring the difference between real living wealth and phantom financial wealth – and points out that in the long run only real wealth matters and brings happiness.

Real wealth has intrinsic value. Examples include fertile land, healthful food, knowledge, productive labor, pure water and clean air, labor, and physical infrastructure. The most important forms of real wealth are beyond price and are unavailable for market purchase. These include healthy, happy children, loving families, caring communities, a beautiful, healthy, natural environment.

Real wealth also includes all the many things of intrinsic artistic, spiritual, or utilitarian value essential to maintaining the various forms of living wealth. These may or may not have a market price. They include healthful food, fertile land, pure water, clean air, caring relationships and loving parents, education, health care, fulfilling opportunities for service, and time for meditation and spiritual reflection.

The fact that in the U.S. it’s mainly phantom financial wealth that is idolized and protected by our political system is a measure of how far the U.S. empire has already fallen from the heights of its glory days.

Think of the trillions spent propping up the financial system, while the ecological and social systems that sustain us remain ignored and untended. Faced with a crisis and limited resources, our leaders threw the real economy overboard, believing that the illusory wealth of Wall Street was what really mattered.

The first hint that something was very wrong with our civilization was in the early 1970s (corresponding with peak oil in the U.S.). That crisis was dealt with by jettisoning the dollar’s link to anything real, and by selling our souls to the Saudis and Middle Eastern oil. The crisis appeared to have been averted, and was followed by 30+ years of stability. But below the surface, the economy was rotting out, and for the first time millions of Americans were growing poorer rather than richer. John Michael Greer pinpoints the beginning of the first wave of catabolic collapse at 1974:

[T]he question is simply when to place the first wave of catabolism in America – the point at which crises bring a temporary end to business as usual, access to real wealth becomes a much more challenging thing for a large fraction of the population, and significant amounts of the national infrastructure are abandoned or stripped for salvage. It’s not a difficult question to answer, either.

The date in question is 1974.

The current crisis is the beginning of the second wave of catabolic collapse.

At some point, we’ll have to let it all go: the far-flung military bases, the carrier groups, the manned space programs, the financial superstructures that girdle the globe, the freeway networks with potholed pavement and crumbling bridges, maybe even the creaking electrical grid that powers our TVs, computers, video games, and air conditioners.

But we’ve already seen who will be getting screwed. The financial bailout confirms that it won’t be any different this time around.

All-liquids hits new peak (maybe) – BAU, or the end of the growth paradigm?

January 19th, 2011 by Jim Just

According to the latest International Energy Agency (IEA) data, November 2010 saw a new high of monthly liquid fuel production.  Stuart Staniford at Early Warning has posted this graph.

The IEA revised November up by 300 kbd (thousand barrels/day), and then showed December falling by the same amount.  OPEC and EIA data do not show a new peak being reached.

The IEA’s rose-colored glasses are focused on the future as well as the past.  Its latest monthly oil market report sees production continuing to climb this year,  predicting that world oil demand would average 89.13 million b/d in 2011, 360,000 b/d higher than previously forecast a month ago and some 1.8 million b/d higher than OPEC’s forecast which was published on January 17. The IEA’s projections prompted a nasty response from OPEC secretary-general Abdalla el-Badri. Badri berated the IEA for what he called “unrealistic assumptions and forecasts,” saying these served only to cause confusion and even fear on world oil markets:

Supplying the world’s media with unrealistic assumptions and forecasts will serve only to confuse matters and create unnecessary fear in the markets. Ultimately, this is adding to volatility in the oil market and destroying the stability that OPEC works so hard to support.

While we may or may not have reached a peak in production of “all liquids”, there’s no disputing that global peak oil per capita occurred in 1979.

And as we’ve discussed before, for example here and here, “all liquids” is not at all the same as crude oil.

Kenneth Worth at Seeking Alpha reminds us that global production of crude oil and condensate has now approached the levels of production seen in 2005 and 2008, just shy of 74 million barrels per day (mbpd) on a twelve month rolling average of production. Crude production is shown in the chart below.

Worth notes:

Six years of frenzied drilling and elevated prices have not yet produced the additional barrels needed by a growing global economy.

Prices remain high despite significant unemployment in the OECD and anemic economic growth. This is very nearly unprecedented. Only in the 1970’s, after OPEC voluntarily held about 10 mbpd in production capacity off the world market to sustain oil prices at artificially high levels, have we had oil production declining over a six year period. Are we perhaps now at “Peak Oil?”

Worth warns that the stage is set for another price shock.

[T]en percent unemployment in the US, and significant unemployment in Europe, has significantly reduced OECD crude oil demand over the three years since the 2008 oil price shock. The slack created by OECD economic contraction, however, has been picked up by increasing demand from China, India, OPEC and the rest of the developing world. Now that US and other OECD demand is increasing as well, albeit anemically, due to the economic recovery, the stage has been set for a second global oil price shock. Welcome to 2011.

There isn’t any evidence that crude production can increase beyond ~74 mbpd. Production in most of the world is declining, and increases from marginal producers are most unlikely to offset production declines from the much larger producers elsewhere in the world which continue unrelenting and unabated. And if the declining EROEI on crude isn’t bad enough . . .

Crude Oil EROEI in the U.S.

. . . take a look at these U.S. government estimates of the EROEI on the stuff other than crude that make up “all liquids”:

And don’t be surprised if some of these estimates prove wildly optimistic.

Historically, economic growth has been highly correlated to the growth in energy supplies.

Bumping up against limits to growth in net energy supplies implies the end of economic growth as we have come to know it.

Fossil fuel subsidies dwarf renewable subsidies

December 14th, 2010 by Jim Just

The Environmental Law Institute recently conducted a review of U.S. government fossil fuel and renewable energy subsidies for Fiscal Years 2002-2008. The findings are presented in the paper, Estimating U.S. Government Subsidies to Energy Sources: 2002-2008 – and illustrated in the graphic “Energy Subsidies Black, Not Green.”

Key findings include:

  • The vast majority of federal subsidies for fossil fuels and renewable energy supported energy sources that emit high levels of greenhouse gases when used as fuel.
  • The federal government provided substantially larger subsidies to fossil fuels than to renewables. Subsidies to fossil fuels – approximately $72 billion over the study period, as opposed to $29 billion for renewables.
  • Almost half of the subsidies for renewables went to corn-based ethanol [which at best has a barely positive EROEI, and whose climate and environmental consequences are questionable].
  • The largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry.
  • The vast majority of subsidy dollars to fossil fuels can be attributed to just a handful of tax breaks, such as the Foreign Tax Credit ($15.3 billion) and the Credit for Production of Nonconventional Fuels ($14.1 billion, though this credit has since been phased out).

New study: growth doesn’t lead to prosperity

December 10th, 2010 by Jim Just

A new study by Eben Fodor shows that growth doesn’t pay off – communities are better off without it.

The study, titled Relationship between Growth and Prosperity in 100 Largest U.S. Metropolitan Areas, examines the relationship between growth and economic prosperity in the 100 largest U.S. metropolitan areas. finds that faster growth rates are associated with lower incomes, greater income declines, and higher poverty rates. Unemployment rates tend to be higher in faster growing areas. The 25 slowest-growing metro areas outperformed the 25 fastest growing in every category and averaged $8,455 more in per capita personal income in 2009.

Conventional urban planning and economic development strategies, which pursue growth of metro areas to supposedly advance the economic welfare of the general public, may be misguided. Our “growth is good” ideology presumes the negative impacts of growth to quality of life – such as increased traffic congestion, environmental destruction, loss of farm and forest lands, and loss of amenity values (such as tranquility, sense of community, or open space), and higher taxes to fund the cost of the new public infrastructure (roads, schools, sewer and water systems, etc.) – are outweighed by the new jobs and economic prosperity that come with growth.

But this study suggests the presumed link between growth and prosperity is nothing more than a myth. The real consequence of growth is degradation of our quality of life.

Obama and the politics of the impossible

December 9th, 2010 by Jim Just

Obama is touting his deal with the Republicans as “stimulus” – as a spur to economic growth. Leaving aside the fact that the deal is a very good deal for corporations and the rich but rotten for ordinary Americans, the gamble is this: paying off the huge debt we already have, plus the additional $1 trillion in debt that’s being taken on, will be made possible if we can just get the economy moving again, back on the growth track.

Dan Weintraub argues at The Automatic Earth that the folks in charge really know better. They’re embracing “extend and pretend” fiscal policies in the present because they are deathly afraid of the alternative. They’re kicking the fiscal can down the road for a while longer so as head off the discontent and civil strife that always accompanies increases in austerity along with its attendant human suffering. The ruling elite understands all too well that present fiscal and monetary policies will fail to fix the underlying and most fundamental and socially destructive of all economic ills – those of an ever-widening gap between rich and poor, and the absolute disaster caused by an ever-shrinking, formerly self-sustaining American middle class. According to Weintraub, Krugman advocates for, and Bernanke is pursuing, policies whose aim is to keep civil strife from destroying, in the near term, the very fabric of American society. Weintraub errs, I think, only in failing to include Obama in his circle of conspirators.

As Tom Whipple observes, what we’re experiencing isn’t a routine downturn in the business cycle which can be cured by Keynesian stimuli favored by the Democrats or tax cuts favored by the Republicans. Rather, it’s the ending of a period of 200 years of abundant energy that allowed us to build an extremely complex civilization based on dozens of interrelated systems without which we can no longer live. The most important and the most overlooked system is the global biosphere. The consequences of its devastation for humans and all life on Earth are only now, too late, beginning to become evident.  At the same time our very complex civilization has begun to exhaust the sources of energy and numerous other raw materials that built and maintained it.

In our politics, we are struggling to return to a civilization which is no longer possible – and the inevitable failure of that effort is likely to be explosive. Whipple seconds Weintraub’s warnings of impending social chaos:

If anyone thinks the employment situation is difficult, wait a few years until the very high priced motor fuels makes discretionary car travel unaffordable. Millions upon millions of jobs in the retail, travel, hospitality, recreational, and dozens of other industries will be lost.The current efforts by various levels of government to stimulate job creation or save people from home foreclosures will prove to be ridiculously inadequate. A completely new paradigm of what we do to sustain life is going to have to emerge or things will become far worse than most of us have ever known. Modern civilization simply cannot stand a situation in which a substantial share of its people is destitute. The potential for social disorder is too great.

“A completely new paradigm” – doesn’t that sound lovely? Carolyn Baker is more blunt: what we are experiencing is the collapse of industrial civilization. And while we we can wax eloquent about rebirth, we absolutely refuse to acknowledge the death that makes it possible.  We don’t dare talk about the pain and suffering that collapse will entail. Any transition to a new paradigm of resilience and self-sufficiency won’t be accomplished without great suffering and painful loss. The path leads where it will, whether we like it or not. As Baker reminds us, transition requires an internal journey as well – a journey of the human spirit, the hero’s journey. And each of us is being called.

Declining energy quality poses challenge for the human economy

December 6th, 2010 by Jim Just

Gail Tverberg at the Energy Bulletin lays out three possible scenarios for our energy and economic future. First, there’s business as usual: growth will continue practically indefinitely, as shown in the chart below.

Under this scenario, people in the U.S. would expect to be twice as wealthy in 2050 as in 2005.

Then there’s the slow decline scenario, as oil supplies and other fossil fuel sources peak and then gradually decline.

In this scenario oil production starts dropping off about now by about 2% a year. Natural gas production doesn’t drop off as quickly. The big concern is adapting to having a little less oil and gas each year.

Then there’s a third possibility – a very rapid drop off in fossil fuels of all types, resulting from a financial crash, or a major disruption of international trade, affecting world economies.

Tverberg also has another chart showing the historic correlation between oil production and GDP growth.

If history is any guide, there’s a good chance that if oil production stops growing and even starts declining, our expectations we’ll be wealthier in the future than we are today may be dashed. We could even face a systemic collapse, finding ourselves faced with having to conjure up news ways to carve out a living in the world.

Energy expert Carey King of The University of Texas at Austin thinks an overlooked cause of the economic recession in the U.S. is a decade long decline in the quality of the nation’s energy supply.  In a new study titled Energy intensity ratios as net energy measures of United States energy production and expenditures, King compares two measures of energy quality for the fossil fuel consumption and production of the United States: energy return on energy invested (EROI), and a new measure he’s developed – the energy intensity ratio (EIR). EIR is easier to calculate, is highly correlated to EROI, is in some ways more powerful than EROI – and the basic data behind the EIR calculations come out annually as opposed to every five years for EROI.

The higher EIR becomes, the higher the value of the resource to the overall economy. The corollary is that low EIR presents a higher burden to economic growth. He shows the EIR and EROI of oil and gas as well as coal were all in decline for two time periods within the last 40 years, and both time periods preceded economic recessions.

He concludes by pointing out the main challenge for new, “sustainable” sources of energy:

It is also likely insufficient to have energy resources with EROI just greater than unity, and researchers to date have given very little attention to the minimum EROI that may be required for a modern complex society.

Record greenhouse gas levels, peak oil a one-two punch

November 24th, 2010 by Jim Just

This should be no surprise: the U.N. World Meteorological Organization reports that greenhouse gas levels in the atmosphere reached record levels in 2009. Concentrations of carbon dioxide rose in 2009 by 1.6 parts per million, to 386.8 parts per million. The preindustrial carbon dioxide average was about 280 parts per million.

And emissions are set to increase again in 2010, after a 1.3% reduction in greenhouse gas emissions in 2009 due to the global financial crisis. The increase in greenhouse gas emissions is now being driven by developing countries like China and India.

The chart below shows the trend in atmospheric CO2 only, measured at the Mauna Loa Observatory.

Here’s the executive summary from the WMO Greenhouse Gas Bulletin:

The latest analysis of observations from the WMO Global Atmosphere Watch Programme shows that the globally averaged mixing ratios of carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) reached new highs in 2009, with CO2 at 386.8 ppm, CH4 at 1803 ppb and N2O at 322.5 ppb. These values are greater than those in pre-industrial times (before 1750) by 38%, 158% and 19%, respectively. Atmospheric growth rates of CO2 and N2O in 2009 are consistent with recent years, but are lower than in 2008. After nearly a decade of no growth, atmospheric CH4 has increased during the past three years. The reasons for renewed growth of atmospheric methane are not fully understood, but emissions from natural sources (from northern latitudes and the tropics) are considered potential causes. The NOAA Annual Greenhouse Gas Index shows that from 1990 to 2009, radiative forcing by all longlived greenhouse gases increased by 27.5%, with CO2 accounting for nearly 80% of this increase. The combined radiative forcing by halocarbons is nearly double that of N2O.

Permafrost, which contains organic carbon, and methane clathrates are two large northern reservoirs of carbon that are susceptible to the effects of climate change. A rapidly warming high-latitude region has the potential to release large quantities of methane into the atmosphere from these carbon reservoirs, which would provide a strong positive feedback on climate. The map below shows Arctic soil organic carbon content.

A new assessment has estimated that there are 1,650 gigatonnes – 1.65 trillion tons – of carbon stored in the northern circumpolar permafrost region. That’s more than twice the amount of carbon in the atmosphere. But this carbon is stored as methane, a greenhouse gas that is much more powerful than CO2 (~25 times more potent than CO2 over a 100 year time horizon but 72 times as potent over 20 years). Awareness of methane leaks from permafrost is so new that it was not even mentioned in the 2007 IPCC report. The U.S. National Oceanic and Atmospheric Administration, in its 2010 Arctic Report Card issued last month, said the average temperature of the permafrost has been rising for decades, but noted “a significant acceleration” in the last five years at many spots on the Arctic coast.

What’s all this mean for the world’s climate? The graph below extends the McShane and Wyner hockey stick graph, using a simple average of the IPCC’s low-end (1.1 degrees C) and high-end estimates (6.4 degrees C) for 21st century temperature increase.

Leaking methane isn’t the only bad news. As Joseph Romm points out at Climate Progress, every day seems to bring another study suggesting we’ve been too blasé about coming climate impacts.

A new paper in Journal of Climate, (subs. req’d), reconciles observed cloud variations in the tropical and subtropical eastern Pacific region with climate models — and finds that, if their results are correct, “they provide support for the high end of current estimates of global climate sensitivity.”

Romm quotes from the University of Hawaii’s press release, headlined “Study could mean greater anticipated global warming.”

A new report titled Peak Energy, Climate Change, and the Collapse of Global Civilization: The Current Peak Oil Crisis concludes the convergence of peak energy resources and dangerous anthropogenic climate and environmental change will likely have a disastrous impact in the near- and long-term on the quantity and quality of human life on the planet. Energy resource shortages post-peak oil are bad enough, likely causing a systemic collapse of global industrialized civilization in the near-term as the abundant fossil fuel energy resources used to develop and support industrialized economies become increasingly scarce. At the same time, Earth will be becoming a less friendly place to live.

Energy analyst Chris Martenson observes that the release of the World Energy Outlook 2010 has now made it official: peak oil is in the rear-view mirror, and the economy is set to starve. There will be an energy crisis in the near future that will make anything we’ve experienced so far seem like a pleasant memory. The potential knock-on effects of less energy to the complex system known as our economy are unpredictable in their exact details and timing, but the broad outline is clear: the economy will become simpler and less ordered.

On top of energy and economic crises, add land, soil, water, and biodiversity loss and degradation; climate change impacts; ocean acidification; and the ongoing mass extinction event.

There’s no nice way to put it. The human carrying capacity of the Earth will soon be significantly reduced.

Are we seeing the end of growth?

November 17th, 2010 by Jim Just

Calculated Risk has posted some charts over the past few days that raise a compelling question.

First, here’s a chart showing U.S. industrial production since 1967.

U.S. industrial production has been flat over the past decade – overall, there’s been no growth.

This one shows U.S. housing prices since 1976.

The index is down 2.8% over the last year, off 29.2% from the peak, only 3.9% above the low set in March 2009, and prices are now falling in most areas of the country. Given the huge number of foreclosures that are working their way through the system, and the growing number of homeowners who are upside down in their mortgages, the huge number of unemployed, and the growing number of people leaving the work force, there is little chance of a rebound anytime soon.

The housing sector of the economy continues to be dismal. Total housing starts in October were up just 9% from the all time record low in April 2009 – which saw the lowest level of housing starts since the Census Bureau began tracking housing starts in 1959.

The graph below shows total and single unit starts since 1968. After the huge collapse following the housing bubble, housing starts have been moving sideways for almost two years, with a slight jiggle due to the home buyer tax credit.

And the chart below shows architectural billings, which is a leading indicator for commercial real estate – commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions. Any reading below 50 indicates contraction.

Industrial production has been flat for ten years. Housing starts have been declining for five years. Non-residential construction has been falling for three years.

And according to the Bureau of Labor Statistics, employment has been flat over the last decade, too – despite a population that has increased by almost 30,000,000, from 281,422,000 to over 310,729,000.

Employment Level (Seas), thousands, 16 years and over

The question is begging to be asked: are we experiencing just a blip in the growth trend that began with the industrial revolution, or is this the beginning of an entirely new era of human experience?

It’s way too soon to know for sure – a few years does not a trend make. But if peak oil theorists are right, getting back to normal isn’t in the cards. When it comes to the economy, we’d better start thinking about Plan B.

Peak oil and politics

October 28th, 2010 by Jim Just

For the last six or seven years something has been seriously wrong with the global supply of oil. It hasn’t been increasing, as shown in this graph posted by David Cohen in a piece titled Peak oil – where do we stand.

On a yearly basis, conventional oil production (crude oil plus lease condensate) peaked in 2005. On a monthly basis, conventional oil production peaked in July 2008. That doesn’t necessarily mean these peaks will not be surpassed in the future – but it’s clear that the years of steadily rising oil production are over.

Cohen points out the world is now in the position of having put all of its future oil production eggs in one risky basket – the Saudi basket.

When push comes to shove in terms of global demand, how much oil is Saudi Arabia willing [or able] to produce? We really don’t know.

One result of constrained oil production was the great oil price spike to $147 a barrel in the summer of 2008, which was (to mix a metaphor) the straw that popped the great financial/credit bubble that had been growing in the U.S. and Europe for several decades. It didn’t take declining supplies of oil to cause incalculable damage to the world’s economy. All it took was for supplies to stop increasing.

As Tom Whipple observes in his article Peak Oil Crisis: The Midterms, politicians from both political parties are running on a platform of a return to the good times and economic growth that we in America have known for much of our lifetimes. Telling it like it is – that there will be little or no economic growth for a long time and growing impoverishment of most of the population – would be political suicide. Our politics have become completely disconnected with reality:

The unwillingness of both parties to deal with the real issue — that the fossil fuel age is coming to an end and that we must rapidly restructure our economy and lifestyles — means that sensible proposals are completely absent from the political dialogue.

The dénouement:

We are actually going to drive ourselves over a great economic cliff with banners of “growth,” “jobs,” “return to the good old days,” and “no taxes” streaming in the wind. It is going to be one hell of a train wreck – unlike anything the American people have ever known.

For decades, increases in global oil production have been accompanied by economic growth. Current economic theories take increasing energy supplies in general and oil production in particular for granted. Charles Hall cautioned, at the seventh Advances in Energy Studies Conference in Barcelona, that current economic theories are quite probably not true, going forward. We need new economic theories applicable to the downslope we are approaching.

Mark Brown at the same conference argued that we need more than just new economic theories: we need to change our way of being.

The problem is not just resource availability nor is it finding another energy source. The problem is BUSINESS AS USUAL. The environmental, social, and economic consequences of unlimited cheap energy might be even worse than limited fossil fuels. Our fascination and addiction with continued growth may have unbelievable consequences in the long run. Faced with the possibility of unlimited growth, and its coupled consequences, one can only hope that we fail in our attempts to solve this current crisis so that our focus will turn to living within the planet’s carrying capacity.

Unfortunately, political leaders, here and around the globe, are not listening, and are continuing to pursue growth even though it can no longer be denied that emissions stemming from economic growth are destroying the planet. When they work up enough courage to consider any action at all, the best they can come up with is market-based “solutions” that avoid real change, instead promoting the same economic model responsible for the crisis.

Laura Carlsen has it exactly right:

If the world that defends our current model of production and consumption prevails, the planet will edge ever closer to catastrophe.

The climate change battle is over

October 13th, 2010 by Jim Just

The fight to stop global warming is over – and we have lost.

George Monbiot faces the harsh reality in a piece in the U.K. Guardian:

But the harsh reality we have to grasp is that the process is dead. . .

In terms of real hopes for global action on climate change, we are now far behind where we were in 1997, or even 1992. It’s not just that we have lost 18 precious years. Throughout the age of good intentions and grand announcements we spiralled backwards. . . .

[N]one of [the cuts supposedly achieved so far] are real. Missing from the proposed cuts are the net greenhouse gas emissions we have outsourced to other countries and now import in the form of manufactured goods. Were these included in the UK’s accounts, alongside the aviation, shipping and tourism gases excluded from official figures, Britain’s emissions would rise by 48%. Rather than cutting our contribution to global warming by 19% since 1990, as the government boasts, we have increased it by about 29%. It’s the same story in most developed nations. Our apparent success results entirely from failures elsewhere.

Hanging over everything is the growing recognition that the United States isn’t going to play. Not this year, perhaps not in any year.

What all this means is that there is not a single effective instrument for containing man-made global warming anywhere on earth. The response to climate change, which was described by Lord Stern as “a result of the greatest market failure the world has seen”, is the greatest political failure the world has ever seen.

“The greatest market failure the world has seen” doesn’t quite get at the depth of the crisis we face. Global warming is not merely the result of a failure of the market. It’s a failure of capitalism itself: the destruction of the biosphere  is an inescapable conclusion of capitalism’s economic logic. With global warming, the time of consequences has arrived.

Frank Rotering writes at the Energy Bulletin that economics over the past five centuries has almost exclusively meant the study of production and consumption under capitalism, assuming without question a deep commitment to growth, blind to the natural world and any concept of limits. The commitment to growth spanned the political spectrum, on the right it was used to justify capital’s rule and to facilitate business and on the left to facilitate social justice. All who believe in or benefit from the gospel of growth, whether from the capitalist class or those on the left who seek only to modify the way wealth is distributed rather than to question the pursuit of wealth itself, will fiercely resist any changes that could threaten their power and privileges.

The ecological crisis is a crisis of capitalism. While we have proven incapable of even honestly confronting our predicament, Nature will solve the ecological crisis for us. Out of the ashes, if we are fortunate, we may be offered the opportunity to cobble together a new way of life based on humility and sound ecological principles.

Next time – if we’re lucky enough to get another chance – maybe we’ll get it right.

Collapse, humanity’s only hope

September 27th, 2010 by Jim Just

Conservation biologist and climate scientist Guy McPherson is guardedly optimistic:  the consequences of peak oil might, just might, bring the industrial economy to an overdue close, just in time. At least that’s what he told Kurt Cobb.

There’s no chance – zero – that humans will voluntarily do what is necessary to avoid climate catastrophe. Even Christiana Figueres, the UN’s new climate chief, admits that a comprehensive “big bang” global climate treaty is not possible.

For a graphic representation of why nothing but systemic collapse can save humans from themselves, take a look at this graph posted by Joseph Romm at Climate Progress:

While people have been flapping their lips, talking about doing something to avert climate catastrophe, their actions speak the truth: left to our own devices, we will commit planetary suicide. We are committing planetary suicide.

Update: as if increasing coal consumption isn’t bad enough, there’s this:

In a bid to shore up its precarious energy security Japan is to start commercial test drilling for controversial frozen methane gas along its coast next year.

The gas is methane hydrate, a sherbet-like substance consisting of methane trapped in water ice – sometimes called “fire ice” or MH – that is locked deep underwater or under permafrost by the cold and under pressure 23 times that of normal atmosphere. . .

Concerns had been raised that digging for frozen methane would destabilise the methane beds, which contain enough gas worldwide to snuff out most complex life on earth. Methane itself is a greenhouse gas which is 21 times as damaging as carbon dioxide and any leakage from wells could be an environmental problem. . .

Environmentalists, however, are concerned about the burning of more earth-locked hydrocarbons. Methane may be a cleaner-burning fossil fuel than coal or oil but will still release many tons of CO2.

Pray for collapse. Plan for collapse. Work for collapse. Collapse is humanity’s only hope.