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Comments by Gail Tverberg Subscribe

On Deflationary Collapse Ahead?

When oil was discovered in western Pennsylvania, the US economy was growing rapidly, thanks to the introduction of coal, the use of hydropower, and continued immigration from around the world. Oil was developed at a low price. According to BP Statistical Review of World Energy, the inflation adjusted cost per parrel of oil (in 2014$) was $12.86 in 1861 (the first year shown), and $24.80 in 1862. It would not have required subsidies, even back then, I expect.

Uses for oil were indeed found over a period of years. This was not a problem, in an economy that was already growing rapidly from the growing use of other energy sources. The availability of these energy sources allowed many technical innovations.

The situation we face now is quite different. We are reaching diminishing returns in many parts of our economy, as well as what I call "increased inefficiency" (similar to diminishing returns, but more broadly defined). Energy sources need not only to support themselves, but also our poorly performing world economy. They need to scale up rapidly and cheaply, to provide cheaper sources of energy than the high priced energy sources that currently are strangling the economy and leading to commodity price collapses. This time truly is different.

 

August 29, 2015    View Comment    

On How Economic Growth Fails

Wind, solar panels, and nuclear are all add ons to the fossil fuel world. WInd and solar increase costs, and can't be used without the fossil fuel system. They really don't solve our problems.

August 11, 2015    View Comment    

On BP Data Suggests We Are Reaching Peak Energy Demand

I started to write about the issue of where else we could go, after China, for growth, but decided the post was getting too long anyhow. 

China had several advantages over other places:

(1) A large supply of coal resources that it could easily ramp up.

(2) Willingness and ability to borrow huge amounts of money, to support its effort.

(3) A history of organized approaches to problems that allowed it to greatly upgrade its infrastructure to permit coal to get to market, new factories to be built, and workers to be moved to the places where they were needed in new factories.

The other areas you are talking about don't have these advantages. In fact, they are already reaching limits of various kinds. I don't know if you saw the WSJ article a few days ago called, Ghana's Growth Spurs Uncontrollable Trash. I have been to India, and their major cities have major pollution problems. I was having real difficulty breathing the air in Mumbai. The major cities are alreay huge. We are kidding ourselves thinking that they can grow further, without reaching the same pollution problems that China is reaching.

June 25, 2015    View Comment    

On BP Data Suggests We Are Reaching Peak Energy Demand

Renewable energies are attractive, because we would like a free lunch--effectively a perpetual motion machine that gives us all the energy we want, with virtually no inputs.

Unfortunately, in the real world, such free lunches don't exist. Using fossil fuels, we can add on devices of various kinds to our existing fossil fuel infrastructure, and call them "renewable." In fact, they may operate as long as the system itself operates, if they get an adequate supply of of spare parts and other types of maintenance, again using the fossil fuel system.

What the economy really needs is "cheap to operate" devices which extend our fossil fuel system. The use of these "cheap to operate" devices needs to help generate tax revenue for the system--something they are not doing now. Instead, they too often need subsidies--something that by themselves prove that they are a drain on the system. High priced alternative vehicles are another drain on the system, because they effectively require the poor to subsidize the rich through subsidies.

If our current system were not on the edge of "breaking," perhaps these issues would not be important. Unfortunately, we are dealing with a financial system on the edge fo collapse (young people who cannot afford to get married and buy homes; endless stimulous policies including zero interest rate policies  blowing stock market bubbles; many businesses whose best investment is buying back their own stock). "Renewables" tend to make our current collapse-prone situation worse rather than better.

If renewables can "pay their own way," I am all for them. Otherwise, they are just an excuse to use more coal and other fossil fuels to make devices that look like they are helpful for the long term.

June 25, 2015    View Comment    

On Overview of Our Energy Modeling Problem

A better question is whether we can keep the current financial system operating as we approach limits. Can we keep the price of oil and of other commodities high enough? Can we keep the return on investment high enough? Can common workers earn high enough wages to buy the goods they need? 

Researchers who do not understand the financial questions miss the important linkages. Unless we have sustitutes in the near term that replace energy products in a way that is cheaper than we currently make them, and don't require a huge transition to need types of machinery (electric cars, etc.) we are in deep financial trouble.

May 4, 2015    View Comment    

On Putting the Real Story of Energy and the Economy Together

You do not understand the enormity of the problem. I have seen solar panels (backed up by batteries) offering electrical power in the field. But this gets us a tiny way on the way to making so-called "renewables" and for that matter "EVs".

To make renewables and EVs, we first have to mine materials, around the world, and ship them to factories (which need to be built as well). Then we need huge amounts of heat, to smelt metals that are needed and to process materials like rare earth minerals. Then we have to build and ship the devices, plus the electrical transmission lines needed to make the whole system to work.

I challenge anyone to get even a little step of the way on this whole long process, using only renewable energy. There are some very flawed studies suggesting that "renewables" generate huge "net energy." This is not sufficient to solve the problem. Renewables have to pay back not only the fossil fuel energy embedded in them, but the many other costs, including human energy, and financing costs--also costs of mitigating intermittency with batteries.  

 

 

 

 

 

April 17, 2015    View Comment    

On Putting the Real Story of Energy and the Economy Together

Continued growth in a finite world doesn't work well. I am open to solutions, but we know that when local economies tried to grow for long periods in the past, they often collpased. It is hard to see how today's world economy can be confident that it can do better.

Devices that are called "modern renewables" are made using fossil fuels and limited supplies of high-grade mineral ores. Thus, they lead to exhaustion of one time supplies of fossil fuels and high grade mineral ores. They are sold as being less destructive than direct use of fossil fuels, but they are still inherently destructive.

Less modern renewables, like cutting down trees, may not directly use fossil fuels and mineral orse. But they still can be destructive to ecosystems through deforestation. Loss of topsoil often goes with deforestation.

 

 

April 17, 2015    View Comment    

On A New Theory of Energy and the Economy, Part 2: Showing the Long-Term GDP-Energy Tie

Willem--Good point:

"Many solar installations within a distribution grid (Germany, California) will upset the local grid requiring battery systems to be installed as dampers to minimize disturbances.

This has nothing to do with storage of energy for later use.

Viable storage, other than hydro, has not yet been invented, and would take many billions and many years to deploy AFTER it has been invented."

We can't expect solar PV to be a major source of power, regardless of how low the cost seems to be, unless the location seems to be next door to a hydroelectric facility with capacity to spare. I expect this is especially the case if high quality electric power is required, as might be needed for providing power for an electronic storage facility providing services to businesses.

February 10, 2015    View Comment    

On A New Theory of Energy and the Economy, Part 2: Showing the Long-Term GDP-Energy Tie

In fact, if the PV is connected to the electric grid, it is imporatant to look at the impact on the overall cost of electricity production. Many times, "net metering" is used, but this is very unfair to electric utilities. This gives the owner of the solar PV far too much credit for the intermittent electricity produced. The benefit to the electric utility of the solar PV will vary, depending on whether the the addition of solar PV can cut the need for new fossil fuel powered plants--I am wondering if the need for new fossil fuel powered plants is already going away, simply because of changing light bulbs. If there is no benefit in cutting the need for new fossil fuel powered plants, then the benefit to the utility comes out close to the amount of fuel saved. This savings is tiny relative to the net metering credit.

February 9, 2015    View Comment    

On A New Theory of Energy and the Economy, Part 2: Showing the Long-Term GDP-Energy Tie

Unfortunately, the government programs have been built on the premise that growth will continue forever. The most vulnerable if there is not enough to go around are those on social security and other public programs.

February 7, 2015    View Comment    

On A New Theory of Energy and the Economy, Part 2: Showing the Long-Term GDP-Energy Tie

It also must not create too much CO2 for the atmosphere, and must not encourage too much human population growth. 

February 6, 2015    View Comment    

On A New Theory of Energy and the Economy, Part 2: Showing the Long-Term GDP-Energy Tie

What we need is for workers' wages to go farther and farther. With the shrinking wages of many of the people who are low-skilled, this is not happening. If the part-time minimum wage person could eat pixels, everyting would be fine. If the part-time minimum wage person needs to feed herself and one or two others, it is a problem.

The wealth is not of the type that it puts food on the table for people, or magically transports them to work. That is the problem.

 

February 6, 2015    View Comment