John W Day Jr, Charles Hall, et al: Ecology in Times of Scarcity

Day, J. W. Jr., Hall, C.A., Yanez-Arancibia , A., Pimentel, D., Marti, C. I., and Mitsch, W. J. 2009. Ecology in Times of Scarcity. BioScience. 59:4, 321-331.

Abstract

In an energy-scarce future, ecosystem services will become more important in supporting the human economy. The primary role of ecology will be the sustainable management of ecosystems. Energy scarcity will affect ecology in a number of ways. Ecology will become more expensive, which will be justified by its help in solving societal problems, especially in maintaining ecosystem services. Applied research on highly productive ecosystems, including agroecosystems, will dominate ecology. Ecology may become less collegial and more competitive. Biodiversity preservation will be closely tied to preservation of productive ecosystems and provision of high ecosystem services. Restoration and management of rich natural ecosystems will be as important as protection of existing wild areas. Energy-intensive micromanagement of ecosystems will become less feasible. Ecotechnology and, more specifically, ecological engineering and self-design are appropriate bases for sustainable ecosystem management. We use the Mississippi River basin as a case study for ecology in times of scarcity.

The functioning of natural ecosystems and the health of the human economy have been intrinsically linked since our species evolved. Human society has depended on solar-based ecosystems for all of its existence. With the development of the industrial revolution, massive increases in fossil-fuel use spurred dramatic growth of the human population and the economy (Hall et al. 2003, LeClerc and Hall 2007) and widespread environmental degradation (MEA 2005). Although natural ecosystem services are still absolutely necessary for human existence (Costanza et al. 1997, De Groot et al. 2002), fossil-fuel use has distanced most humans from direct contact with nature and obscured the important role of the natural world.

Over the past several decades, it has become increasingly clear that the trajectory of rapid growth of the past two to three centuries—what many refer to as progress—cannot continue much longer, and that we are on the threshold, or tipping point, of a new age (Odum and Odum 2001, Wackernagel et al. 2002, Meadows et al. 2004). This situation stems primarily from the growing scarcity of the cheap energy that fueled the industrial and modern agricultural revolutions and the degradation of ecosystems and their services (Hall et al. 2003, Heinberg 2003).

In this article, we address these issues by first discussing the role of the biosphere and the increasing industrial use of energy in the human economy. We then review several lines of evidence for a coming transition, focusing especially on oil because of its central role in the industrial economy. We conclude by discussing how these trends will affect the science of ecology and, more important, what roles ecologists will need to play in the coming societal transition. Our thesis is that major forces in coming decades will drastically affect both the science of ecology and the role of ecology and natural systems in society. These forces include energy scarcity, climate change, resource depletion, and continued population growth. The most important roles for ecologists in this time of transition are to quantify connections between the biosphere and society and to help define sustainable future paths as natural energy flows again assume a greater importance. We define ecology broadly as the study of the functioning of the biosphere, and ecologists as those who seek to understand this functioning.

The importance of natural ecosystems to the human economy

In the preindustrial world, solar-powered ecosystems supported the human economy (figure 1). This was recognized by the earliest formal school of economics, the French physiocrats, who focused on land as the source of all wealth. Practically all materials used in preindustrial societies—including food, fiber, and fuel, as well as ecosystem services such as climate regulation, clean freshwater, fertile soils, wildlife, and assimilation of wastes—were dependent on solar-driven natural systems and agroecosystems. There was low use of nonrenewable materials, such as metals and clay. For millennia, energy flow in the human economy was a small part of that of the overall biosphere. There was low generation of pollutants and a high degree of recycling, and humans had little impact on global energy and material cycles. Early primitive farmers may have affected the climate through changes in land use (Muir 2008), but this did not have an impact on greenhouse gases. Until about three centuries ago, the regenerative and assimilative capacities of the ecosphere supported a human society that lived sustainably on Earth.

Figure 1.

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Figure 1. The economic system and the biosphere. The economic system is a subset of the biosphere and is absolutely dependent for its functioning on biosphere sources and sinks. The economic system has grown dramatically over the last two centuries. An important role of ecologists is to develop an understanding of how to sustainably manage the biosphere to maintain its support for the economic system.

This changed dramatically about two centuries ago with the advent of the industrial revolution, and the change accelerated rapidly in the 20th century (figure 1).

The human population grew from two billion in 1800 to almost seven billion in 2000. The use of fossil fuels—first coal, then oil and natural gas—burgeoned, and the great reserves of these fuels began to be drawn down, until almost half of recoverable conventional oil reserves had been used, mostly in recent decades (Campbell and Laherrère 1998, Deffeyes 2001, Meng and Bentley 2008).

A new worldview of human society and its place in the natural world arose. This new worldview, neoclassical economics, focused more directly on the immediate human economy as represented by transactions in the marketplace and far less on the natural world than had earlier physiocrats and classical economists such as Adam Smith and David Ricardo. But the value of ecosystem services remained very high even as economics began to value those services less (Costanza et al. 1997, De Groot et al. 2002). These authors and others have valued the world’s ecosystem services at trillions of dollars (bee pollination in the United States alone is worth $16 billion annually; Pimentel et al. 1997). The societal disconnect from the natural world was so large that by about 1960 the old production functions that were based on land, labor, and capital were replaced with new ones that did not even consider land—let alone energy, water, or other critical resources (Solow 1956). This new technological and philosophical worldview contrasted sharply with traditional beliefs about the place of humans in the natural world (e.g., Moyers and Campbell 1988).

The evolution of human social organization and energy use

The rapidity of change in the last several centuries becomes evident if we consider time on the scale of human generations. Our species, Homo sapiens, is about 200,000 years old. But a human-like existence is much older, and many of the characteristics we associate with the human lifestyle evolved before Homo sapiens became a distinct species. If we consider the human lifestyle to include living in bands of hunter-gatherers and using fire and tools, cognition (meaning, apprehension, perception), social behavior that is not purely instinctive, and walking upright, then human-like creatures have been in existence for about 1 million to 2 million years, or about 50,000 to 100,000 generations (assuming 20 years per generation). A time span of two million years is enough time for species evolution to occur, and indeed it did. Our distant ancestors went through a series of species before evolving into modern Homo sapiens.

And as our species evolved, so did the human lifestyle. Language began about 50,000 years ago (2500 generations), agriculture about 10,000 years ago (500 generations), and civilizations first appeared about 5000 years (250 generations) ago. Most initial civilizations began in resource-rich coastal zones and lower river valleys after the sea level stabilized, partially as a result of the subsidy of abundant resources and energy in these areas (Day et al. 2007a). The industrial revolution and intensive fossil-fuel use began about 200 years (10 generations) and a century (5 generations) ago, respectively. Intensive fossil-fuel use represents only 0.1% of the age of our species, and about 0.01% of the time over which the human lifestyle evolved. The “information age” has existed for only about two generations. But “information age” is a misnomer, as we live in a petroleum age, in which intensive energy use supported the development of most technologies, including information technology. Survival values that developed over human evolution (i.e., 2 million years) had time to make it into our DNA. But the current reigning intellectual and social worldviews, which are only a century or two old, mostly ignore these older values. Our main point is that these views that currently dominate human thinking about growth, our place in the world, and the future are extremely recent and run mostly counter to long-term sustainability. A very important societal role of ecology and ecologists in the 21st century will be to help define the environmental and ecological realities and values that foster sustainability.

Evidence for a coming transition

Humans have used much of Earth’s resources, and the resulting environmental impacts are global. There is strong evidence that society is approaching a transition and the patterns of the 20th-century consumption and growth cannot be sustained. The interconnected forces leading to this transition include energy scarcity, human impacts on the biosphere, climate change, and population growth.

Coming energy scarcity

Compelling evidence suggests that the world’s conventional oil production has already peaked, and that total oil production (all liquids) will peak within a decade (figure 2), which implies that demand will consistently exceed supply and that energy costs will increase significantly (Campbell and Laherrère 1998, Deffeyes 2001, Hall et. al. 2003, ASPO 2008, Meng and Bentley 2008). Projections of peak world oil production are generally based on the approach developed by M. King Hubbert, who became well known because he predicted in 1956 that US oil production would peak in the early 1970s, and it did. Hubbert also predicted that world oil production would peak early in the 21st century (Hubbert 1962, see also Deffeyes 2001). The Hubbert approach is based on the concept that oil discoveries in an area generally precede peak production by 30 to 40 years. Oil discovery in the United States peaked about 1940, and production about 30 years later. World oil discoveries peaked by 1970 and have been falling since; recent discovery success has been very low, despite increased drilling efforts (Campbell and Laherrère 1998, ASPO 2008), and most estimates since 1965 of ultimately recoverable conventional oil run to about two trillion barrels (Hall et al. 2003). Global production increased exponentially until about 1970, but the rate of increase has declined since. Production is now two to three times the discovery rate, and current production is mostly from reservoirs discovered 30 to 40 years ago. Four hundred or so giant and supergiant oil fields provide roughly 80% of the world’s petroleum (Skrebowski 2004). Of these, roughly one-quarter are declining in production at an average rate of at least 4% annually. World oil demand is increasing, especially in China and India. For the past few years, all drilling globally did not find enough oil even to pay for the drilling, which implies that we may be approaching the end of a positive return on energy investment for searching for new oil (e.g., Hall and Cleveland 1981, Hall et al. 2008).

Figure 2.

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Figure 2. Worldwide oil discovery and consumption from 1930 until the present, and projected future discoveries. Most major discoveries were made before 1980. World consumption is currently four to five barrels for each barrel discovered with most production coming from fields discovered three to four decades ago. Source: Printed with permission from the Association for the Study of Peak Oil (ASPO 2008).

An important factor affecting consideration of energy use is the energy return on investment (EROI). The EROI is the ratio of the energy that is produced to all the energy used to discover and produce that energy. The EROI of US petroleum declined from roughly 100 to 1 in 1930, to 30 to 1 in 1970, to 11 to 18 to 1 in 2000 (Hall and Cleveland 1981, Cleveland et al. 1984, Cleveland 2005). The EROI and potential supplies of foreseeable liquid alternatives to oil, such as oil shales, tar sand, and most biofuels, are mostly very low, generally less than 5 to 1 (Hall et al. 2008), such that it is very difficult to conceive of any substitute on the scale needed and within the time when oil shortages are likely to affect society dramatically (Hall et al. 2008).

Renewable fuels will clearly play a role in providing energy in the future, but there is simply no mix of renewables that can provide high EROI energy at current levels of use in time to offset the decline in oil discovery and production (Heinberg 2003, Hirsch et al. 2005). The thinking about the potential for renewables to replace ethanol, for example, is sloppy. There is considerable support for corn ethanol production (Shapouri et al. 2004), but all the green plants in the United States capture only about 0.1% of solar energy, or about 32 quads (33.8 exajoules). This includes all agriculture, forests, grasslands, and other ecosystems. The United States now consumes a little more than 100 quads of fossil energy annually (USCB 2007). A US federal government proposal to produce 36 billion gallons of ethanol per year would require 80% of net primary production of the 48 conterminous states (Pimentel et al. 2008), assuming 0.1% efficiency. Thus, ethanol and other biofuels will never make the United States or Europe oil independent. The 5 billion gallons of ethanol produced last year make up less than 1% of total annual gross US oil use and considerably less than if the net energy of ethanol is considered. It is questionable whether the EROI for ethanol from corn is greater than one. Pimentel and colleagues (2008) estimate that it takes more than 1.4 gallons of fossil-fuel kilocalories to produce 1 gallon of ethanol kilocalories using corn, and 1.7 gallons of fossil energy kilocalories to produce 1 gallon of ethanol kilocalories using cellulose (although some estimates are somewhat higher; Farrell et al. 2006).

Many people hold out the promise that innovative technology will find oil indefinitely into the future (e.g., Lynch 2002). We agree that modern technical innovations can make a difference in the degree to which we find oil in the future. But there is another side of the equation, one that is too often forgotten by those who enthuse over technology. Humans have always been clever, and they have been scouring the earth for oil for a century and a half. The apparent peak in oil production and the declining EROI indicates that in this case at least, depletion is trumping technological advances. The present financial meltdown is a two-edged sword with respect to oil availability. It certainly has and will most likely continue to drive down prices as demand drops, but the crisis will most likely also shut off a great deal of development of existing and potential oil fields, as capital has become very scarce and the low price of oil makes more projects uneconomic. In summary, the evidence suggests that oil will become increasingly scarce and expensive, and no replacement can be supplied at a level that will meet the projected future demand.

Human impact on the biosphere

During the 20th century, for the first time in history, humans began affecting global cycles of material and energy and biodiversity, although “wild” populations on both land and water are heavily affected by the last 10,000 years of human impacts (Pitcher 2001).

Humans dominate approximately two-thirds of the land area of Earth (Vitousek et al. 1997) and divert, directly or indirectly, from 40% (Vitousek et al. 1986; but see Haberl et al. 2002) to 50% (Pimentel 2001) of the earth’s photosynthate to their own ends.

Many fish stocks are overfished and are near collapse (Pauly et al. 1998).

Humans increased reactive nitrogen production, much of which becomes biologically available nitrogen, by over an order of magnitude from 1860 to 2000 (15 to 165 teragrams per year; Vitousek et al. 1997, Galloway et al. 2003). Much of this excessive nitrogen eventually is transported as nitrate-nitrogen to rivers and streams, leading to eutrophication and episodic and persistent hypoxia (dissolved oxygen < 2 milligrams per liter) in coastal waters worldwide (Nixon et al. 1996, NRC 2000).

An estimated 50,000 species of plants, animals, and microbes have been introduced into the United States since Columbus discovered America. Several of these species, especially our crops and livestock, are valuable introductions. However, many of these invasive species are serious pests, causing an estimated $120 billion in damage and control costs each year (Pimentel et al. 2005). Invasive species also cause an estimated 40% of all species extinctions in the United States (Pimentel et al. 2005).

The Millennium Ecosystem Assessment summarized these global impacts (MEA 2005). The ecological footprint of humans has surpassed the carrying capacity of the biosphere (Wackernagel et al. 2002). These forces will interact with energy availability to render further growth more difficult and will also make sustainable management of ecosystems more difficult.

Global climate change

There is a broad consensus in the scientific community, although not without debate, that human activity is affecting global climate (IPCC 2007). Climate change will significantly affect many of the world’s ecosystems, including agro-ecosystems. Global climate change is predicted to affect temperature; the amount, distribution, and seasonality of rainfall; sea-level rise; and the intensity and frequency of strong storms. The Intergovernmental Panel on Climate Change (IPCC) predicts that global temperatures will rise by 1 to 5 degrees Celsius in the 21st century, directly affecting biota. In general, precipitation is predicted to increase in the inter-tropical zone (about 10 degrees north and south of the equator) and at high latitudes (above about 45 degrees) and to decrease in intermediate latitudes (IPCC 2007). Eustatic sea-level rise was about 15 centimeters (cm) (1.5 millimeters [mm] per year) during the 20th century, and the IPCC predicts a rise in the 21st century of about 40 cm, although some estimates are more than twice as high (Pfeffer et al. 2008). Recent measurements indicate that sea-level rise is now about 3 mm per year, or 75% of the average rate predicted for this century by the IPCC. Although some of these predictions are uncertain, the precautionary principle suggests that management plans for ecosystems should take climate change into consideration.

There is also growing evidence that human activities may have the potential to push components of the earth system past critical states into qualitatively different modes of operation (tipping points), implying large-scale impacts on human and ecological systems (Day et al. 2008, Lenton et al. 2008). For example, as the earth warms, the vast peatland wetlands in North America and Eurasia may dry and oxidize to carbon dioxide and methane, exacerbating the climate-shift problem (Mitsch and Gosselink 2007).

World population

The current world population of 6.7 billion doubled during the last 50 years.

Based on its present yearly growth rate of 1.2% per year, world population would double to more than 13 billion within 58 years (PRB 2007).

Many countries and large world regions are experiencing rapidly expanding human populations. For example, China’s current large population of 1.4 billion is still growing at an annual rate of 0.5%, despite the governmental policy of permitting only one child per couple (PRB 2007). Recognizing its serious overpopulation problem, China has passed legislation that strengthens its one-child-per-couple policy. However, the Chinese population, with its young age structure, will continue to increase for another 50 years even if couples have no more than one child. India, with 1.1 billion people living on approximately one-third of the land of either the United States or China, has a current population growth rate of 1.6%, which translates to a doubling time of 44 years (PRB 2007). Together, the populations of China and India constitute more than one-third of the total world population. However, given the steady per-capita decline of virtually all vital natural resources, especially oil, we believe that these projections of population growth are unlikely to be fulfilled; nonetheless, the pressure on natural resources will be very strong.

Ecology and ecologists in the new world order: What will “the end of cheap oil” mean?

In an energy-scarce future, services from natural ecosystems will assume relatively greater importance in supporting the human economy. What role will ecology and ecologists play in helping society adjust in the 21st century? We believe the primary role will be to help elucidate how to sustainably manage ecosystems without causing their deterioration and destruction. What ecologists, who are involved in protection, ecosystem management, and research, do will be profoundly affected by the coming end of cheap oil, both in how we carry out studies and in what we study. Unfortunately, ecologists are generally not trained or inclined to think about oil or broader societal issues, even though these issues will greatly affect ecology in this century. Below, we list several ways in which ecology will probably be affected in coming decades.

Most scientific research is expensive in terms of dollars and thus in terms of energy. One of the main ways in which ecologists will feel the effects of oil shortages will be as everyone does: by enormous inflation in the cost of doing business—inflation-corrected financial resources will be worth less than current resources. It is common for ecologists to have far-flung research programs, but in the future, research in specific areas will most likely be performed by local scientists. Trips to distant scientific meetings by a professor and several students may become prohibitively expensive. On average, for each dollar spent today, the energy equivalent of about a cup of oil is used (Hall and Day 2009). A trip to a scientific meeting that costs $1500 consumes nearly two barrels of oil. If, over the next decade or so, the cost of oil increases by a factor of 2 or 3, then it is likely that only the professor will go to the meeting. If it increases by a factor of 10, then there will most likely be no meeting, at least in the sense we now think of meetings; electronic conferencing will probably become more common. Likewise, a large project funded by the National Science Foundation (NSF) can cost $1 million and consume the equivalent of about 1100 barrels of oil. In the future, the same amount of research done in the same way will cost significantly more. The implication is that ecologists, and scientists in general, will have to become much more efficient and inventive in their work.

Another way that scarcity will affect ecology is that societal priorities are likely to shift. Scientific research is supported because society, in one manner or another, deems it beneficial. In a time of limited resources, society will look much more carefully at how resources, especially public resources, are allocated. More than ever before, we believe science will be justified and supported on the basis of the perception of how it is helping solve societal problems. In coming decades, these problems will increasingly be related to energy and other resource scarcity and the impacts of climate change. Ecologists and ecology will play a critical role because the importance of natural ecosystems to the human economy will become much more obvious. Sustainable and efficient management and use of both natural and managed ecosystems will become key to maintaining human welfare, and a primary role of ecologists will be to help define how to do this. Because much of society is now unaware of the value of natural ecosystems to human welfare, ecologists will also have to help educate the public on this issue. And they will have to do all of this with fewer resources.

Most scientists, including the authors of this article, have encountered the dichotomy between basic and applied science. Basic science has often been considered intellectually superior and more elegant than applied science. And much NSF funding, and other country-specific national funding for biological sciences, has been for basic science. In coming decades, information will be required to preserve the functioning of ecosystems and the services they provide. Applied science will very likely become the dominant form of research, and scientists will have to clearly justify their research in terms of societal good. The dichotomy between basic and applied science is a false one; the important dichotomy is between science that is excellent and that which is less so. In coming decades, society will need the very best science, whether basic or applied, to help solve problems associated with looming resource scarcities.

Most ecological science has been carried out in an open and collegial manner. This could change in a time of energy and resource scarcity. A close colleague from a developing country described the allocation of scarce resources to support scientific research as “the land of the limited good.” Because resources to support science are so much more limited in developing countries, competition for these resources is intense. One of the ways this competition works is that groups form to garner resources and to actively exclude other individuals or groups. This balkanization often does not result in the most talented people receiving support or in scientific problems being efficiently addressed, because the success of the group, not necessarily support of the brightest scientists, becomes paramount. Will science in general move from an open and cooperative effort to one characterized by battles over resources and attempts to exclude others? We do not mean that groups of scientists working together are unnecessary for solving the problems we are discussing. To the contrary, groups of bright, creative, collaborative, socially aware scientists will have to come together to solve these problems. Groups are not the problem; the problem is the culture of competition taken to the extreme.

Rich, productive ecosystems with high provision of ecosystem services (Costanza et al. 1997) will be relatively more important in supporting the human economy as fossil fuels become scarcer. These ecosystems include coastal areas with estuaries, reefs, deltas, and intertidal wetlands; rich, alluvial river-valley floodplains and wetlands; productive forests and rain-fed grasslands. These areas are subsidized by high natural energies such as rainfall, rivers, and tides. It is not surprising that the first civilizations and most large cities in the preindustrial world were in areas with rich natural resources, such as the coastal zone or along major rivers (e.g., Day et al. 2007a).

As productive ecosystems, including agroecosystems (e.g., Boody et al. 2005), become more important in supporting the human economy, these areas should receive more attention from ecologists. More food, fuel, and fiber will have to be coaxed from nature while high ecosystem values and services are sustained. But political power is not necessarily concentrated in areas of high ecosystem services. Will politically powerful but highly unsustainable southern California, with its relatively low level of ecosystem services, support the spending of resources in places such as the lower Mississippi floodplain and delta, which are politically weak but have a very high level of ecosystem services? The same argument can be made for resource-rich areas in other countries, such as the Usumacinta and Ebro deltas in Mexico and Spain.

Loss of productivity is important because it is related, at least partially, to ecosystem services. The conversion of natural landscapes to other uses and the degradation of natural landscapes have caused a great loss of ecosystem productivity and related service provision. Both of these processes have affected the natural ecosystems of high productivity, such as river valleys and floodplains, wetlands, and deltas, to a greater extent than they have other areas (Downing et al. 1999). The degradation of productive ecosystems leads both to a reduction in biodiversity and to a loss of ecosystem services. As a result of such changes, environmental impacts include more flooding, loss of biodiversity and natural habitat, poorer water quality, and threats to human health. The conditions in the Mississippi basin described below are symptomatic of such conditions worldwide.

Much conservation effort over the past century has been directed toward preservation of biodiversity and natural habitats in areas such as national parks and wilderness zones. Much less attention, however, has been devoted to the loss of ecosystems with high primary production but low biodiversity, even though many of such ecosystems are intensively used. We believe that in this century, more emphasis will have to be placed on these highly productive systems. There is a growing realization that efforts to protect biodiversity for its own sake have not been particularly successful. In coming decades, biodiversity conservation must be tied to the preservation of productive natural ecosystems, and it must be shown that preserving biodiversity complements the provision of high ecosystem services and helps meet human needs (Kareiva and Marvier 2007).

The Wildlands Project (www.wildlandsproject.org/cms/page1090.cfm), which focuses on conservation of natural areas in North America, is one example of the effort to protect natural areas and biodiversity (figure 3). The goal of the Wildlands Project is to protect and enhance existing wild areas and provide corridors. The project area includes broad swaths of land across northern Canada, down the crest of the Rocky Mountains from Alaska through Central America, along the coastal mountains of the West Coast, and along the Appalachian Mountains from Canada to the southeastern United States. What is most striking is what is not included: all coastal zones are excluded, as well as almost the entire Mississippi River basin.

Figure 3.

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Figure 3.  Map of megalinkage areas proposed by the Wildlands Project for wildlands conservation planning. No program of comparable scale exists for highly productive natural and managed ecosystems such as coastal zones and the Mississippi alluvial valley and delta. An important role for ecologists in the 21st century is to develop such programs. Source: Printed with permission from the Wildands Project.

We realize that the Wildlands Project has specific goals, and we certainly support such efforts. Our concern is that plans of similar magnitude are not in place to protect rich, productive ecosystems with high ecosystem service provision, such as river valleys and coastal areas. One reason that most of the lands of the Wildlands Project are still relatively wild is that they were unsuitable for extensive agriculture. Projects of equal vision and magnitude are needed to restore ecosystems and their services in rich areas that have been intensively used. These include alluvial valleys, coastal zones, tropical forests, and agricultural areas. It is interesting that the Mississippi delta and other comparable areas, which still retain a largely wild character, were excluded by the Wildlands Project.

We believe that in coming decades the restoration and sustainable management of rich natural ecosystems will be equally as important as the protection of existing wild areas. It will be a different kind of conservation because restored ecosystems will exist in a mosaic of intensively used areas, such as agroecosystems.

Natural resource management sometimes tends to be energy intensive. In the future, such energy-intensive management will become less feasible because energy and resources will be scarce. Ecosystem management will have to include a large element of letting nature take its course, or self-design. The evolving Everglades restoration plan has elements that may not be possible to continue in the future (Sklar et al. 2005), such as pumping vast quantities of water. Future energy costs will limit pumping, and gravity and tides will have to do more of the work of moving water.

Restoration of natural ecosystems within a mosaic of intensively used landscapes will enhance biodiversity, and productivity and diversity may be related for individual systems (Tilman et al. 1997, Flombaum and Sala 2008). The relationship between productivity and biodiversity doesn’t seem to be global, however. Ecosystems with high productivity can be highly diverse (tropical rainforests and coral reefs) or have low diversity (salt marshes, mangroves, freshwater marshes in general, sugarcane fields), but it is clear that intelligent restoration of productive natural habitats will often result in enhanced productivity and biodiversity.

A main goal for ecology in coming decades will be to provide information on the restoration of different kinds of habitats. How much area of different habitats should be restored and how should they fit into the landscape? We will not be able to control to a great extent what species will exist in these different habitats; for the most part, we will have to let nature decide. In the next section, we present a conceptual framework for ecology in times of scarcity, and we use the Mississippi basin as an example.

There is, and has been for decades, an antagonism between environmental protection and conservation and much of the business community. It has been argued that environmental protection and conservation hurt the economy. We know now that this is not true, that a good environment is good for the economy (Meyer 1992, Templet 1995). An important role for ecologists in the coming decades will be to show the economic importance, both direct and indirect, of ecosystem services.

From a broader perspective, a major impediment to convincing society that management for ecosystem sustainability is important to the human economy is the dominance of neoclassical economics (NCE). NCE has been extensively criticized from environmental and logical points of view (e.g., Daly 1991, Hall et al. 2001, LeClerc and Hall 2007). We believe that NCE has limited ability to effectively address issues such as climate change or loss of productivity and biodiversity, and is largely disconnected from the biophysical reality upon which economics should be based. Rather than being on the margins of the economic system, sustaining rich ecosystems and biodiversity will become central to the health of the economy. If we don’t include ecological considerations in future societal decisions, the current credit crunch and other factors may result in less funding for science and a shift away from sustainable management. The global market may degrade many natural resources and make sustainable management more difficult. Or, to paraphrase Iago in Othello, “O, beware, my Lord, of globalization!! ‘Tis a red-toothed monster, which doth mock the meat it feeds on.”

The impending end of cheap oil has enormous implications for many of the things that ecologists do. But most ecologists and economists don’t discuss these issues, because over the last few decades of energy abundance, the concept of limits has disappeared from our economic thinking. In addition, because limits are intrinsic to ecology (i.e., Scheiner and Willig 2008), there will certainly be conflicts with NCE’s tenets of infinite substitutability and the lack of absolute scarcity

Conceptual basis for sustainable ecosystem management in a resource-scarce, variable world

The sustainable use of ecosystems by humans involves an understanding of how these ecosystems contribute in the broadest sense to human welfare, and how they work in the broadest and most fundamental way. It also involves an understanding of the critical management requirements for maintaining sustainability in a time of increasing resource scarcity and environmental variability.

In a time of resource scarcity, especially energy, we suggest that ecological engineering (sometimes referred to as ecotechnology), including agroecology, is an appropriate basis for sustainable ecosystem management. Probably one of the most important shifts is for ecology to become more prescriptive and less descriptive, mostly through the growth of the ecological fields of ecological engineering and ecosystem restoration (Kangas 2004, Mitsch and Jørgensen 2004, Palmer et al. 2004). Ecologists have a rich history of describing ecosystems and their functions but are less well trained in solving ecological problems. These new fields relate to solving ecological problems, borrowing approaches from engineering and landscape architecture. There are many active efforts in ecological engineering around the world, defined as “the design of sustainable ecosystems that integrate human society with its natural environment for the benefit of both” (Mitsch and Jørgensen 2004). The related field of restoration ecology, defined as “the process of assisting the recovery of an ecosystem that has been degraded, damaged, or destroyed” (SER 2004), is a subset of ecological engineering. Ecological engineering combines basic and applied science for the restoration, design, construction, and sustainable use of aquatic and terrestrial ecosystems. Because it uses mainly natural energies, it is very energy efficient. The primary tools are self-designing ecosystems (nature chooses the species from countless possibilities, with humans involved sometimes in species introduction; Mitsch and Jørgensen 2004), and the components are mostly biological species and processes. Ecological engineering is very different from environmental engineering, which is more involved with pollution control, such as conventional sewage treatment and air pollution control. The goals of ecological engineering are (a) the restoration of ecosystems that have been substantially disturbed by humans, and (b) the development of new sustainable ecosystems that have both human and ecological value (Mitsch and Jørgensen 2004).

If done properly, ecological engineering should result in solving environmental problems and resource depletion with a maximum use of natural energy and a reduction in the use of fossil energy. In times of energy shortage, these ecological solutions will be selected.

Ecological engineering and ecosystem restoration are intertwined (Mitsch and Jørgensen 2004). Ecological engineering is an amalgam of several fields dealing with ecosystem restoration and creation. Restoration ecology has many features in common with ecological engineering. In fact, Bradshaw (1997) called ecosystem restoration “ecological engineering of the best kind” because we are putting back ecosystems that used to exist, not creating new combinations of populations or systems.

Self-design and the related concept of self-organization are important properties of created and restored ecosystems (Mitsch and Jørgensen 2004). Self-organization is the property of systems to reorganize themselves in environments that are inherently highly variable and nonhomogeneous. Self-organization is a systems property that applies to ecosystems in which species are continually introduced and deleted, species interactions—for example, predation, mutualism—change in dominance, and the environment itself changes. Organization is derived not from outside forces, but from within the system. Self-design is important in times of scarcity because ecologically engineered ecosystems tend to take care of themselves and are less energy demanding. Self-organization develops flexible networks with a much higher potential for adaptation. Implicit in ecological engineering and self-design is that the functioning of the natural systems should form the basis for sustainable management; working with nature rather than against it is more energy efficient.

Case study: The Mississippi-Ohio-Missouri river basin

The Mississippi-Ohio-Missouri (MOM) river basin is an example of the issues we have been discussing (figure 4; Mitsch et al. 2001, Mitsch and Day 2006). It is a continental-scale system with high ecosystem values that has been severely impacted by human activities, and that will require sustainable management in a time of resource scarcity. The 3.2-million-square-kilometer system is the largest drainage basin in North America, and one of the largest in the world, with a mean discharge of nearly 20,000 cubic meters per second to the Gulf of Mexico. The ecosystems of the basin, which are among the most productive in the United States, include the Mississippi delta, riparian and floodplain systems, eastern deciduous forests, and rain-fed prairies. The MOM river basin also includes one of the most important agricultural areas in the world.

Figure 4.

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Figure 4. The Mississippi River basin in the United States, showing the location of major nitrogen sources, major hydrological drainage in the basin, and the hypoxic zone in the Gulf of Mexico. Source: Used with permission from Mitsch and colleagues (2001).

During the 20th century, navigation, flood control, reservoirs, and agriculture profoundly affected the basin. Dams on the Missouri reduced sediment input to the delta, and navigation and flood control activities separated the mainstream channels from most of the riparian floodplain. But the most far-reaching impacts come from agriculture. The agricultural landscape of the Midwest changed from a diverse mixture of uses such as corn, soybeans, hay, pasture, oats, forests, and wetlands to one dominated by soybeans and heavily fertilized corn (Boody et al. 2005). More than 80% of the wetlands in most midwestern states have been drained since presettlement time. An estimated 23 million hectares (ha) of wet farmland, including wetlands, were drained under the US Department of Agriculture’s Agricultural Conservation Program between 1940 and 1977, and an estimated 18.6 million ha of land, much of it wetlands, were drained in seven states in the upper Mississippi River basin alone (Mitsch and Gosselink 2007). The combination of these factors led to rapid runoff of fertilizer and the deterioration of water quality throughout the basin, from small streams draining agricultural fields to the hypoxia zone in the Gulf, covering thousands of square kilometers (Mitsch et al. 2001). In the Mississippi delta, isolation of the river from the delta is a primary cause for the dramatic loss of coastal wetlands, which has resulted in an overall reduction in productivity (Day et al. 2007b).

To develop a plan to correct these problems, it is essential to understand river basin functioning. Understanding river ecosystems has evolved from concepts of the river continuum to those of the flood pulse (Schramm and Eggleton 2006, Junk and Bayley 2008) and dynamic habitat interactions (Stanford et al. 2005). Understanding deltas evolved from physical-based models (e.g., Roberts 1997) to the concept that deltas are sustained by a hierarchy of energetic forcings (tides, storms, floods) interacting with biogeochemical processes (Day et al. 2007b). Continued good applied science and adaptive management will be an essential part of basinwide restoration.

Efficient restoration of the MOM basin in a time of resource scarcity will require energy-efficient sustainable management based on ecosystem functioning (e.g., Day et al. 2005, Mitsch and Day 2006). The massive flood-control system in the basin was built and is maintained by cheap energy. Such energy-intensive approaches simply will not work on such a large scale as fossil energy becomes very expensive. An alternative view is to work with nature, using areas such as wetlands to hold water on the landscape and reconnect the river with the floodplain and delta through pulsed introductions of river water. The creation and restoration of millions of hectares of wetlands, about 2% of the agricultural landscape, would reduce nutrient discharge and restore river, deltaic, and wetland habitats (Mitsch et al. 2001, Mitsch and Day 2006, Day et al. 2003, 2007b). Agriculture will most likely return to the diverse crop assemblages of the past, what has been called multifunctional agriculture (Boody et al. 2005). High energy costs will certainly reduce fertilizer use and make maintaining the energy-intensive current flood control system much more difficult. Controlled inundation of the floodplain could reduce flood costs and help replenish soil nutrients. Such ecotechnological approaches will improve water quality, increase biodiversity, reduce flooding, provide wildlife and fisheries habitat, reduce threats to public health, and increase the value of ecosystem services, while maintaining productive agriculture on much of the landscape. These sustainable, energy-efficient approaches will contribute to reducing climate impacts because less energy will be used to maintain the system. For example, wetland assimilation uses much less energy than conventional treatment plants (Ko et al. 2004) and produces less greenhouse gas. Efficient flood control and delta restoration can save enormous amounts of energy. The functioning of ecologically engineered projects is also less sensitive to energy disruption and environmental variability; for example, treatment systems using ponds and wetlands were much less affected by Hurricane Katrina than were conventional treatment plants. This is ecological engineering at a grand scale and it is sustainable in an energy-scarce future; the current system is not. It will require ecologists, engineers, landscape architects, and others working together. If this restoration is not implemented, water quality will continue to deteriorate and habitat will continue to be lost, with an almost complete loss of wetlands in the Mississippi delta.

Summary and conclusions

Humans will have to become more integrated into natural ecosystems in a future affected by climate change, with energy and other resources scarce. Ecologists should generally not attempt to create landscapes that require a high level of maintenance. Rather, the role of ecologists is to gain an understanding of the functioning of natural and managed ecosystems that will allow those ecosystems to be used in energy-efficient and sustainable ways to support the human economy through ecological engineering and ecosystem restoration. In this sense, landscape ecologists and landscape architects and other ecosystem experts have an opportunity to work together in ecosystem management. Ecologists have had the luxury for the last half-century or more of pursuing a wide variety of often rather esoteric pursuits. In a time of increasing resource and energy scarcity, the success of ecology will very likely be linked to the field’s ability to help society make the transition to a lower-energy, more sustainable society. This does not mean that basic research is not important, but it does mean that ecologists should think carefully about both the kind of basic research to be pursued and the management implications of this research. Many other societal changes will have to be made in the coming transition, and ecologists should take heed of the role ecology can play to help in that transition.

References cited

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Energy price increases and the 2008 financial crash: a practice run for what’s to come?

Hall, C.A.S., Groat, A. 2010. Losing Faith in Economics. Energy price increases and the 2008 financial crash: a practice run for what’s to come? The Corporate Examiner. 37: No. 4-5: 19-26.

The summer of 2008 saw the third year in a row in which oil production did not rise, leading some to say that the long predicted “peak oil,” the time of maximum global oil production, had indeed arrived. Partly as a result, that summer also saw the highest oil prices ever, as well as historically high prices for other energy and most raw materials. Wall Street was down from its historic high of the preceding fall but by the end of the first week of August, the Dow Jones Industrial average closed at 11,734. Then, a series of disasters struck the financial markets, with many of the largest, most prestigious and seemingly impervious companies declaring bankruptcy. Each week the stock market lost 5 or 10 % of its value until, by the end of November, the Dow Jones had dropped to as low as 8,000. Many investors lost from one-third to one-half of the value of their stocks.

Although the media and American lawmakers focused on many issues as the culprits of the crash — the sub-prime mortgage crisis, high foreclosure rates and Wall Street’s sale of opaque financial products known as derivatives — we believe that the root cause of the current downturn is the same one that sparked the last four out of five world recessions:
the high price of oil. Why did most economists and financial analysts not see this coming? One hypothesis, advanced by Nobel laureate in economics Paul Krugman (2009) is that the economics profession “went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth.” But, as the market debacle has shown, mathematical elegance in economics is not a substitute for scientific rigor, something that we have discussed in many previous papers (e.g. Hall et al. 1986, Hall et al. 2001).

As of this writing global oil production had been flat since 2004 and then declining for several years so that peak oil appears to have occurred – with the remaining debate only about whether there may be a subsequent peak. If indeed we have passed the global oil peak – or at least have reached the point at which an increase in annual production is no longer possible – then indeed the end of cheap oil might be soon upon us, especially if global economies return to growth. Because of the critical importance of liquid and gaseous petroleum for essentially everything we do economically, there are major concerns as to what the financial implications might be. Some (ourselves included) ask whether conventional economics and conventional economic models and tools work only when it was possible to readily expand the petroleum supply. Will our conventional economic approaches, derived during periods of expanding energy supplies, have less relevance during times of contracting supplies? In other words, are finances beholden to the laws of physics? We think yes. Thus the question becomes: can we supplement or improve upon our ability to do economics and financial analysis by using procedures that focus more on the energy available (or not) to undertake the activity in question?

The Predictors

What is the relation, if any, between the run up in oil prices and the market crash? Resource scientists have predicted such a financial crash for a long time. Any good physical or biological scientist knows that all activity in nature is associated with energy use. Consequently, many in the scientific community were not the slightest bit surprised by the financial crash or its timing. For example, Colin Campbell, a former oil geologist and co-founder of ASPO, the Association for the Study of Peak Oil, predicted serious financial responses to peak oil in his (and Jean Lahererre’s) classic Scientific American article “The End of Cheap Oil” (Campbell and Lahererre 1998). He was more explicit in the ASPO meeting in Pisa, Italy, in 2006 when he said that we are likely to see an end of year after year economic growth and a movement to an “undulating plateau” in oil production, prices and economic activity, with periodic high prices in oil generating financial stress. These financial strains would, in turn, cause a decrease in oil use and hence a price decline, with low prices then leading to new financial growth and new increases in use followed, eventually, by increases again in oil prices. In other words he foresaw very large impacts of restrictions in oil availability, and consequent price increases, on the market: “Every single company on the stock market is overvalued from the perspective of what the cost of running that company will be after peak. Value is determined by performance which has been based on cheap oil.”

Many other analysts have remarked upon, and even predicted, the probable impact of peak oil, or at least oil price increases, on the financial status of the United States and the world (e.g. Huang et al. 1996; Sauter and Auerbach 2003). A thoughtful, chilling and ultimately correct view of the implications of peak oil on the American economy was presented by Gail Tverberg in January 2008 on the energy log site “The Oil Drum”. Her predictions, which we thought impossibly pessimistic at the time, have been vindicated in great detail. Many analysts foresaw these issues as early as the 1970s, including the authors of the famous but subsequently dismissed “Limits to Growth” studies of 1972, ecologists Garrett Hardin and Howard Odum, economists Kenneth Boulding and others. The first author of this piece made his retirement decisions in 1970 based on the assumption that peak oil and a crash of stocks would occur in about 2008 (Hall 2004). The reason is that all of these people understood that — of necessity — real growth is based on growth in real resources, and that there are limits to those resources. The case for peak oil was clearly laid out 40 years ago by Hubbert (e.g. 1968; 1974) who had correctly predicted the U.S. peak in 1970, 15 years before the fact. While many economists place a great deal of faith in increasing technology, in fact technology does not operate on a static playing field but continually competes with declining resource quality. There is little or no evidence that technology is winning this game (e.g. Hall and Ko 2004, Hall et al. 2008, Gagnon and Hall 2009), and it is important to understand that at least so far, the Limits to Growth model is an almost perfect predictor (Hall and Day 2009).

Resource-based analysts understand and appreciate that the recent turmoil in much of our financial structure has many plausible causes, among them greed, the relaxation of financial controls, sub-prime mortgages, the decrease in risk premiums, excessive leverage, and overrated bundles of toxic securities. But, in the minds of resource-based analysts, energy underlies even these issues. The fundamental dilemma is this: if oil, the most important energy source to fuel the economy, goes through the inevitable path of growth, plateau, and eventual decline (i.e. peak oil) while the financial market is built on the assumption of unfettered growth, then something has to give. Eventually the aspirations and assumptions of indefinite growth in assets, production and consumption must collide with the reality of an ever-constricted source of the energy that fuels real growth. There are related, but more subtle, arguments as well.

Starting in the early 1990s until 2007, the financial system, with various forms of new financial engineering, had seen an unprecedented increase in the use of leverage. Relatively inexpensive oil, declining interest rates, and globalization all contributed to declines in risk premiums for virtually all asset classes. Capital went further out on the risk curve to make up for reduced returns and increased leverage became the new norm. As volatility seemed to disappear, even more leverage was piled on to the system. Along with the changing landscape in global credit markets came cheap financing for U.S. home buyers. The low price of energy greatly increased discretionary income which further encouraged people to take advantage of this cheap financing, all of which added to massive residential development.

This created a self-reinforcing “reflexive” system (Soros 1987), where increasing home values increased collateral, which encouraged further borrowing in the household sector and lines of credit for consumption and so on. But the U.S. reached a “tipping point” (Gladwell 2000) in 2006-2007. As the price of gasoline rose, the assumption that the suburban lifestyle would be sustainable became a question in every driver’s mind. The most audacious growth in real-estate had been in the ex-urban areas, most vulnerable to gas price spikes. The system had been built on the premise that large amounts of discretionary spending would always be available and the notion that everyone was entitled to a McMansion, a “lawyer-foyer,” and a home theater. To get it, we had to build out from the cities. However, discretionary wealth — that which is available for non-essential investments and purchases — is extremely sensitive to volatile energy prices (Hall, Powers and Schoenberg 2008).

Discretionary income dropped substantially when gasoline and other energy prices, which had been creeping up from a very low level in 1998, increased sharply in 2007-2008. This became a domino that toppled aggregate demand, particularly for ex-urban real estate. It may have been that this was the first domino that triggered the massive de-leveraging we are now experiencing globally. (A good summary of the various analyses by Rubin, Hamilton and others who argue that oil price increases were behind this, and past, recessions is given at http://netenergy.theoildrum.com/node/5304.) Massive household debt could not be supported when the value of the underlying collateral declined: a decline triggered, at least in part, by the spike in energy prices. As the collateral disappeared, huge derivative positions that had been built in the previous decade had margin-calls. The spiral down of forced selling pressured all asset classes further, and forced the banking sector to essentially freeze in September of 2008. Will this questioning of the suburban model be a preview to our ultimate response to peak-oil? Perhaps. The general pattern of oil price changes can help us understand these things better in the longer term.

At the start of 1973, oil was cheap at $3.50 a barrel. The U.S. was still the world’s largest producer. Peak oil had just occurred in the United States in 1970, but no one noticed. Oil imports and the economy kept growing. As domestic oil production in the U.S. declined from 1970 to 1973, foreign suppliers gained leverage. Political events and a bulldozer accident that severed an export oil pipe in the Middle East triggered massive price increases in oil. By 1979 the price of oil had increased by a factor of ten, to $35 a barrel. The proportion of Gross Domestic Product that went to buying energy increased from about 8% to 14%, restricting discretionary spending for all while causing stagflation. The prices of other energy and commodities more generally increased at nearly the same rate, driven in part by the price increase of the oil that was behind all economic activities.

 

 

But then, in the 1980s, all around the world oil that had been found but not developed (as it had not been worth much) suddenly became profitable to develop, and it was developed. By the 1990s the world was awash in oil and the real price fell to nearly what it was in 1973. The energy portion of GDP fell to about 5%, essentially giving everyone a sudden free extra 8 to 10% of their incomes to play with. The impact on discretionary income, perhaps a quarter of the total, was enormous. Many invested in the stock market, but the burst tech bubble of 2000 cured them of that. Real estate was considered a “safe” bet, so many invested in what was really surplus square footage. Speculation became rampant as real estate was valued for its financial returns rather than as a place to live. For a while it seemed as if investment in real estate was the best thing for everyone but, as we now recognize, most of the increase in wealth was illusory.

With energy price increases over the past 6 years (until the summer of 2008), an extra 5 to 10% “tax” from increased energy prices was added to our economy as it had been in the 1970s, and much of the surplus wealth disappeared. Speculation was no longer desirable or possible as consumers tightened their belts because of higher energy costs. While this perspective is not a sufficient explanation for all that has happened, the similar economic patterns in response to the energy price increases of both the 1970s and of the last decade give it credibility. In systems theory language, the endogenous aspects of the economy that the economists focus on (Fed rates, money supply, etc.) became beholden to the exogenous forcing functions of oil supply and pricing that are not part of economists’ usual framework.

The Relation of Oil and Energy more generally, to our economy

While economics is overwhelmingly taught as a social science, in fact, our economy is completely dependant upon the physical supply and flow of resources, including materials and energy, for the production, transport and use of goods and services. Specifically, our economy is overwhelmingly dependent upon oil, which supplied about 40% of U.S. energy use in 2007, and natural gas, which supplied about another 25%. Coal provides about 20% and nuclear a little less than 5%. Hydropower and firewood supply no more than 4% each. Wind turbines, photovoltaics and other new solar technologies together account for less than 1%. Global percentages are similar. Our economy has been and continues to be based on increased use of fossil fuels for most of its growth, so that we have in recent years added much more new capacity with fossil fuels than we have with new solar, which has only added a bit to total growth in the use of all energies rather than replaced fossil fuels.

Although we have been trained from birth to think about the economy as something run by money, from our perspective money is just our means of keeping track of the energy flows and investments. The fossil fuel-based economy has given each of us the equivalent of 60 to 80 “energy servants” and the more money you earn, the more energy servants you have. Each time you spend a dollar, roughly a coffee cup’s worth of oil (or some other energy) has to be pulled out of the ground, refined, transported and burned to provide the energy for that economic activity. For example, if you buy a bagel for a dollar, natural gas is used to make fertilizer, diesel is used to drive a tractor to plant and harvest the wheat, electricity is used to grind the wheat and more diesel is used to ship the flour from Kansas to wherever the bagel will be made, using, of course, more energy during baking. Food eaten in the United States, on average, requires about 10 times more calories of fossil fuel for its production than is found in the food itself (Hall et al. 1986).

Because of the enormous interdependency of our economy, there is not a huge difference in the energy requirements for the various goods and services that we produce. Thus a dollar spent for most final demand goods and services uses roughly the same amount of energy no matter what the good or service is. An exception is money spent for energy itself, which includes the chemical energy plus another 10 or so percent which is the energy needed to get it. For 2005 an average dollar spent in the economy required about 8 or 9 megajoules (1 MJ equals 240 Kilocalories) for that activity. For heavy construction the estimate is about 14 MJs per dollar and for very heavy industry such as obtaining oil and gas about 20 MJs per dollar; Gagnon et al. 2009). As time and inflation proceed you have less and less energy to do work in the economy per dollar spent. There continues to be decreasing energy return on energy invested (EROI) for our major fuels as we must go after ever more difficult resources (e.g. Hall and Cleveland 1981, Gagnon et al. 2009).

Making Investment Decisions

There is an implicit assumption, probably believed by most market analysts, that if they (collectively) make good financial decisions, based on market information, market projections and good hunches, then we collectively (i.e., society) will make the best investments possible. Although there are certainly good rationales that such financial analyses make considerable sense, in many cases it is not so clear that they are an effective guide to the future of energy supplies. This is because: 1) current prices of energy in the U.S. are greatly influenced by various subsidies; 2) few understand the degree to which most technologies today are principally a means of subsidizing whatever it is we do with still-cheap petroleum; 3) today’s price signals are unlikely to be influenced by the future conditions when today’s most abundant and cheapest fuels may be scarcer, for either geological (depletion) or political reasons; and 4) there is painfully little transfer of information from the (rather limited) scientific community that has examined the large picture of energy to the financial communities.

We include here some preliminary analyses that we think show the importance of energy to Wall Street and the economy more generally. First, Wall Street prices reflect not only a portion of the real operation of the economy but also a large psychological factor often called “confidence”. Our hypothesis is that the energy used by the economy is in some sense a proxy for the amount of real work done, and that over time the Dow Jones should “snake” around the real amount of work done, reflecting issues of speculation, confidence and so on, but that over sufficient time it must return approximately to the real energy use line. To test this hypothesis we have plotted the prices of the Dow Jones index (corrected for inflation) from 1915 until 2008 along with the actual use of energy by the United States economy.

In fact the inflation-corrected Dow Jones Index has snaked around the use of energy (Figure 2). We think it will be interesting to plot this relation in the future. We hypothesize that the Dow Jones will over the long run continue to snake about the total energy use in response to periods of irrational exuberance and the converse. If U.S. total energy use continues to decrease, as it has for the last 18 months, this hypothesis implies no sustained real growth for the Dow Jones. We also hypothesize that in a general sense the amount of wealth generated by the U.S. economy should be closely related to fuel energy use. Cleveland et al. (1983) found that the Gross National Product of the United States was highly correlated with quality-corrected energy use from 1904 to 1984 (R2 = 0.94). This high correlation appeared to be much poorer for the period 1984 until 2008. It is possible that the divergence is due not to increasing efficiency but rather an increasing proclivity of governments to “cook the books” on inflation (see the online group shadowstatistics.com). Correcting for this, if indeed that is needed, would make the relation of energy use and GDP growth much tighter through the 1990s and 2000s.

A Financial Analyst Concurs

Jeff Rubin, Chief Economist at CIBC World Markets, wrote in a recent report that defaulting mortgages are only a symptom of the high oil prices. Higher oil prices caused Japan and the European Nations to enter into a recession even before the most recent financial problems hit. According to Rubin:

Oil shocks create global recessions by transferring billions of dollars of income from economies where consumers spend every cent they have, and then some, to economies that sport the highest savings rates in the world. While those petro-dollars may get recycled back to Wall Street by sovereign wealth fund investments, they don’t all get recycled back into world demand. The leakage, as income is transferred to countries with savings rates as high as 50%, is what makes this income transfer far from demand neutral. […] By any benchmark the economic cost of the recent rise in oil prices is nothing short of staggering. A lot more staggering than the impact of plunging housing prices on housing starts and construction jobs, which has been the most obvious brake on economic growth from the housing market crash. And those energy costs, unlike the massive asset writedowns associated with the housing market crash, were borne largely by Main Street, not Wall Street, in both America and throughout the world.

This big increase in oil prices has caused the annual fuel bill of OECD countries to increase by more than $700 billion a year, with $400 billion of this going to OPEC countries. Rubin asks: “Transfers a fraction of today’s size caused world recessions in the past. Why shouldn’t they today?”

We and others believe that there is ample evidence that our economy is beholden to energy supplies and prices, and that good investors and good economists need to learn a great deal more about energy. We are attempting to tackle this problem head on through the development of a new approach to economics called biophysical economics (e.g. Hall et al. 2001, Hall and Klitgaard 2006, Hall et al. 2008, Hall and Klitgaard in preparation). It is based on the simple premise that since economics is about the production and transfer of physical things or services that require energy, why should it be considered a uniquely social, rather than equally a biophysical science? Probably most readers of this article understand in their day-to-day work that the economy doesn’t work the way economics textbooks say, if indeed it ever did. But getting the economists to re-think their training will be a tough job, no matter how much that is needed.

References

Colin Campbell: http://www.youtube.com/watch?v=lDNMjV6sumQ&feature=related

Cleveland, C., Costanza, R., Hall, C., and Kaufmann R. (1984). Energy and the US Economy: A Biophysical Perspective. Science, 225: 890 897.

Gagnon, N., Hall, C., and Brinker, L. (2009). A Preliminary Investigation of the Energy Return on Energy Invested for Global Oil and Gas Production. Energies, 2:490-503.

Gladwell, M. (2000). The Tipping Point: How Little Things Can Make a Big Difference. New York: Little, Brown & Company.

Hall, C. (January 4, 2008). At $100 Oil – What Can the Scientist Say to the Investor?  http://www.theoildrum.com/node/3412

Hall, C. (April 1, 2008). Why EROI Matters (Part 1 of 6). Retrieved from http://www.theoildrum.com/node/3786 Hall, C., and Cleveland, C. (1981). Petroleum Drilling and Production in the United States: Yield per Effort and Net Energy Analysis. Science, 211: 576-579.

Hall, C., Cleveland, C., and Kaufmann, R. (1986). Energy and Resource Quality: The Ecology of the Economic Process. New York: Wiley-Interscience.

Hall, C., Lindenberger, D., Kummel, R., Kroeger, T., and Eichhorn, W. (2001). The Need to Reintegrate the Natural Sciences with Economics. BioScience, 51(8): 663-673.

Hall, C., and Klitgaard, K. (2006). The Need for a New, Biophysically-Based Paradigm in Economics for the Second Half of the Age of Oil. International Journal of Transdisciplinary Research, 1: 4-22.

Hall, C., Tharakan, P., Hallock, J., Cleveland, C., and Jefferson, M. (2003). Hydrocarbons and the Evolution of Human Culture. Nature, 26: 318-322.

Hall, C., Powers, R., and Schoenberg, W. (2008). Peak Oil, EROI, Investments and the Economy in an Uncertain Future. In David Pimentel (Ed.), Renewable Energy Systems: Environmental and Energetic Issues (pp. 113-136). London: Elsevier.

Hall, C., and Day, J. (2009). Revisiting the Limits to Growth After Peak Oil. American Scientist, 97(3): 230-237.

Hall, C.A.S., and K. Klitgaard. 2011. Energy and the Wealth of Nations. The Biophysical Origins of Wealth. Springer.

Hersch, R., Bezdec, R. and Wending, W. (2005). Peaking of World Oil Production: Impacts, Mitigation and Risk Management. U.S. Department of Energy. National Energy Technology Laboratory.

Huang, R., Masulis, R., and Stoll, H. (1996). Energy Shocks and Financial Markets. Journal of Futures Markets, 16(1): 1-27.

Hubbert, M. K. (1969). Energy Resources. In National Academy of Sciences, Resources and Man, a Study and Recommendations (pp 157-242). San Francisco: W.H. Freeman.

Hubbert, M. K. (June 4, 1974). Testimony before Subcommittee on the Environment of the Committee on Interior and Insular Affairs, House of Representatives, Ninety-Third Congress , Washington, D.C.

Rubin, Jeff (October 31, 2008) Just How Big is Cleveland, CIBC World Markets. Retrieved from http://research.cibcwm.com/ economic_public/download/soct08.pdf

Sauter, R., and Awerbuch, S. (2003). Oil Price Volatility and Economic Activity: A Survey and Review of Literature (International Energy Agency Research Paper). Paris: IEA. Retrieved from http://www.awerbuch.com/shimonpages/shimondocs/Oilprice- Volatility-03.doc

Soros, George. (1987). The Alchemy Finance: Reading the Mind of the Market. New York: John Wiley & Sons.

Tverberg, Gail (January, 2008). Peak Oil and the Financial Markets: A Forecast for 2008. Retrieved from
http://www.theoildrum.com/node/3382#more

 

 

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Charles Hall “Peak oil, declining EROI and the probability of degrowth”

Charles A. S. Hall . March 2010. Peak oil, declining EROI and the probability of degrowth.

Second Conference on Economic Degrowth for Ecological Sustainability and Social Equity March 26-29th 2010, Barcelona

Peak oil is not some fuzzy academic concern but a reality: for the US in 1970, for some 60 of 80 oil-producing countries and, at least for the moment, for the world since about 2005. In addition the net energy delivered to society (as opposed to the total) is declining in recent decades from 30 or more to one to ten or less to one as we have exhausted our largest, shallowest, closest to shore and highest quality oil and gas fields. While technological improvements have slowed the effects of depletion the net effects are that there is a declining EROI (Energy Return on Energy [and money] Invested). Most alternatives to oil and gas except hydroelectric or coal have a small or very small EROI, and even for these the highest EROI sites in the US are already dammed and coal has obvious environmental issues. All of these factors are affecting our economy.

In systems thinking we normally divide our problem into two controlling factors, those endogenous to the system under consideration and those exogenous. The latter are also called forcing functions . In recent decades most of our consideration of the economy has been dominated by those who focus on the endogenous factors and that believe that economies are most appropriately controlled by manipulating interest rates, the money supply and so on. The usual economic training emphasizes that fuels and other natural resources are commodities, and hence fungible, substitutable and of limited importance except for their market value. In fact the work of Reiner Kummel and others has shown energy to be THE most important input to economic production, far more important than the economists’ traditional labor and capital.

Probably most people at this conference are in the endogenous camp – i.e. believing that degrowth can and should be a consequence of deliberate decisions made for that purpose. But in fact degrowth, or at least a cessation of growth, has already occurred for the US and European economies without our slightest help, apparently due to the forcing of declining energy availability (and its increasing cost) and its impact on discretionary income. The latest available GDP estimates for the US economy give the GDP for the fourth quarter of 2009 as 13.1 trillion 2005 dollars, the same value as the first quarter of 2007. So for three years the US economy, according to these official numbers, has not grown at all, and since population has been growing per capita GDP has decreased by some 3 percent, as is painfully obvious to the unemployed.

While endogenous business cycles may generate economic constriction, in fact most recessions in the US are preceded by increases in energy price (Murphy and Hall 2010). During this same period the world has reached “peak oil” after many decades of steady growth, despite sharply rising prices during much of this period, as had been predicted by many geologists and others for decades (Figure 1). While it is not yet clear whether there will be a later, higher peak, it is clear that the production of oil, our most important energy source, is no longer growing (Figure 1). The US has also peaked, more or less, in the energy gained from coal (but not for tonnage used). Total US energy use has declined by about 5 percent starting even before the recession. Thus we might want to ask to what degree the two cessations in growth (energy and economic) are linked and whether future predicted restrictions in energy supplies (Figure 2) will continue to bring about degrowth independent of what this forum or anyone else may or may not choose to do for policy. In other words our future economy may be determined far more by external forcing rather than policy of this or any other group. Those who wish for degrowth might be able to capitalize upon this.

Growth has been, of course, the mantra of conventional (neoclassical) economics. However readers should be aware that conventional economics is under attack as never before, although in most cases working economists who routinely apply conventional economics are unaware of the attacks. But a near majority of the recent Nobel Laureates in economics have received their honors for, essentially, undermining the legitimacy of various aspects of the conventional neoclassical model. This includes Ostrum, Krugman, Kanahan, Ackerlof, Smith, Sen, Stiglitz and others. At a less lofty level economics is under even stronger attacks by Ecological Economics President John Gowdy (and many within that subdiscipline) as well as by myself and colleagues. Our main arguments are not that conventional neoclassical economics makes some errors by undervaluing nature, encouraging maldistribution, ignoring larger social needs (all of which are true) and so on. Rather it is that neoclassical economics is logically corrupt at its core and the mathematics, although often elegant, are inappropriately specified. This corruption begins with the basic system of firms and households that is familiar from every beginning text book in economics. This simplified model has incorrect boundaries, violates the laws of thermodynamics and has not been put forth as testable hypotheses (e.g. Hall 2001). The original Walrasian model was constructed by borrowing a model from physics but in fact not only was the model seriously incomplete it also violated the laws of thermodynamics that was the point of the original model in physics (e.g. Mirowski 1989). Of course many economic models can be parameterized from empirical data to “work”. For example the brilliant Egyptian mathematician Ptolemy could make a model of the solar system that “worked” (i.e. was a good predictor of the location of e.g. planets, the moon and so on) but that had the wrong essential structure (e.g. Ptolemy’s system had the Earth at the center of the Solar system, with epicycles for Venus and Mercury to explain their “erratic” behavior). It is easy to draw parallel critiques to economic models.

Economics is usually considered a social science, but why should that be since economics is mostly about stuff, and stuff must obey the laws of physics and many other constraints? We wish instead to generate a biophysical, instead of simply social, basis for economics (http://web.mac.com/biophysicalecon).  Money is not wealth, goods and services are, and they require energy to obtain them. Money is a medium of exchange (and a financial instrument). Some people think gold is wealth, but it is not either. When the Spaniards brought back gold from the new world to Europe they doubled the supply and halved its value. That is because the real wealth production (from farms, forests, fisheries, mines of useful metals, work of housewives and artisans) had not changed. The wealth was generated by the energy of the sun as captured by land and by the energy of labor, both of which transformed the materials of nature into what we want and call wealth. Energy is necessary to make wealth. There is no other way with a few minor exceptions in e.g. some art. Classical Political Economists, beginning with the Earl of Lauderdale, wrote extensively that the use values provided by nature were the source of wealth. That discussion was lost with the emergence and dominance of neoclassical economics, and needs to be reclaimed.

Energy and many materials will in all probability be unable to expand production for much longer (Heinberg 2007). Figure 2 shows some guesses of what the curves for oil, gas and coal might look like for the world. Some important materials (copper, gold, zinc) might look quite similar. Figure 3 shows that for US oil and gas drilling, market mechanisms do not work, i.e. that when prices and hence drilling rates increased in response to the “energy crises” of the 1970s production did not increase, and the converse. Figure 4 shows how the inflation corrected Dow Jones (as a sample financial indicator) tends to “snake around” the total US energy use. The ups and downs appear to be the psychological lemming actions of investors but that the general trend for 100 years is constrained by US energy use — which generates the real wealth but has plateaued and declined recently. Efficiency increases has some potential but I believe far less than generally believed.

All of these figures show the importance of energy and its potential restrictions for growth. The point is that energy use is what generates wealth (capital equipment is the means of using energy, but it is the energy that generates the wealth — wish Solow had got that right). Energy is a far better predictor of real economic activity over time than capital or labor or policy. Money is (or at least was once) how we keep track of wealth. Inflation is the ratio of money supply (times velocity) divided by energy use (times a nearly constant efficiency). On the upside (first 45%) of the Hubbert Curve we were generating more wealth every year so the government had to “create” more money via the Federal Reserve to lubricate the increased volume of transactions necessitated by growth or we would have enormous deflation. Thus when energy supply increased, the activities of the Central Bank and the Federal Reserve in “making” money makes sense. As long as energy use and hence production was expanding more money was needed to avoid deflation. However we may have, or may soon have, reached the point where energy use and hence real wealth production no longer increases. Then more money generated by the Federal Reserve just generates inflation, although this is buffered by the global demand for dollars as other countries have even more difficult economic problems. The problem is that we derived all our economic/financial principles on the left hand side of the Hubbert curve, when growth-based theory usually worked (recessions were a usually temporary exception) because the economy was growing through more energy use anyway. So then theories of the right, left, North, South, capitalists, communists, whatever ALL had a decent chance of success because the real economic potential tended to increase year after year regardless of policy because energy use increased at 2-3 percent per year. One could be fiscally conservative, prime pumps or whatever. Many financial institutions could make a great deal of money. Franklin Roosevelt’s debt became trivial as the economy grew and grew. But now if we paid off just Ronald Reagan’s debt to Japan and they used it to buy fish, rice, beef or fords it would take most of our remaining oil in US to make that stuff. Retiring today’s debt will be much tougher than FDRs as we will almost certainly not have an expanding energy supply and hence economy.

This is why we need a new economics for the second half of the age of oil. The “science” of economics can no longer even appear to “break” the laws of thermodynamics. Although it never did it thought it could, and few economists paid attention.

LITERATURE

Cleveland, C.J., R. Costanza, C.A.S. Hall and R. Kaufmann. 1983. Energy and the United States economy: a biophysical perspective. Science 225: 890-897.

Gowdy, J., C.A.S. Hall, K. Klitgaard and L. Krall. The end of faith-based economics. The Corporate Examiner. (New York) In press.

Hall, Charles, D. Lindenberger, Reiner Kummel, T. Kroeger, and W. Eichhorn. 2001. The need to reintegrate the natural sciences with economics. BioScience 51 (6): 663-673.

Hall, Charles A.S, Gowdy, John. 2007. Does the Emperor Have Any Clothes? Chapter 1. In Making Development Work: A New Role for Science. University of New Mexico Press, Albuquerque.

Hall, C.A.S., R. Powers and W. Schoenberg. 2008. Peak oil, EROI, investments and the economy in an uncertain future. Pp. 113-136 in Pimentel, David. (ed). Renewable Energy Systems:
Environmental and Energetic Issues. Elsevier London

Hall, C.A.S., Day, J.W. Jr. 2009. Revisiting the Limits to Growth After Peak Oil. American Scientist, 97: 230-237. Hall, C.A.S., Balogh, S., Murphy, D.J.R. 2009. What is the Minimum EROI that a Sustainable Society Must Have? Energies, 2: 25-47.

Heinberg, R. 2007. Peak Everything. New Society Press, Gabriola Island, B.C. Canada

Morowski, Phillip. 1989. More Heat Than Light: Economics as Social Physics, Physics as Nature’s Economics. Cambridge: Cambridge University Press, 1989.

Murphy, David J., Hall, Charles A. S. 2010. Year in review—EROI or energy return on (energy) invested. Annals of the New York Academy of Sciences. 1185, Special Issue: Ecological Economics Reviews:102-118

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Charles A. S. Hall “The End of Faith Based Economics”

Charles Hall deserves the Nobel Prize in Economics for his book “Energy and the Wealth of Nations” and “Making World Development Work: Scientific Alternatives to Neoclassical Economic Theory”

Gowdy, J., Hall, C., Klitgaard , K., and L. Krall. 2010. Losing Faith in Economics. The End of Faith Based Economics. The Corporate Examiner. 37: No. 4-5: 5-11.

The last century has seen the ascendancy, indeed intellectual dominance, of neoclassical welfare economics (NWE), also known as neoclassical economics. The basic NWE model represents the economy as a self-maintaining circular flow among firms and house-holds, driven by the psychological assumptions that humans act principally in a materialistic, self-regarding and predictable way. As such NWE violates a number of physical laws and is inconsistent with considerable empirical evidence about human behavior. The NWE model is unrealistic and a poor predictor of people’s actions, as an array of experimental and physical evidence and recent theoretical breakthroughs demonstrate.

Despite the abundance and validity of these critiques, few economists seriously question the neoclassical model that forms the foundation of their applied work. This is a problem because policy makers, scientists, and others turn to economists for answers to important policy questions. The supposed virtues of privatization, free markets, consumer choice and cost benefit analysis are considered to be self-evident by most practicing economists, as well as many in business and government.

We offer a review and synthesis of NWE, paying particular attention to the lack of connection of NWE to biophysical reality and its inadequate characterization of human behavior. We end by sketching alternative characterizations of human behavior and economic production. When all the criticisms are taken as a whole it is clear the NWE framework stands on an untenable foundation and that some other basis for interpreting economic reality must be found. It is clear that NWE is very limited in its usefulness and cannot guide us in our attempts to deal with the most important issues of our time, such as the depletion of oil and gas, climate change, financial crises, and the destruction of nature.

The edifice of NWE is built on myths and based on an outdated worldview. These myths are not merely harmless peccadilloes, because they provide the foundation upon which economic policy is made and cultural attitudes are distilled. Thus the worldview and policy prescriptions of most economists can only be described as “faith-based” because many fundamental tenets of economics are inconsistent with economic reality.

Myth 1: A theory of production can ignore physical and environmental realities.

Real economies are subject to the forces and laws of nature, including thermodynamics, the conservation of matter and a suite of environmental requirements. NWE does not reflect the fact that economic activity requires the inputs and services of a finite biophysical world which is usually degraded by that activity.

Myth 1a: The economy can be described independently of its biophysical matrix.

NWE is a model depicting abstract exchange relations considered only as goods and services and money within a world unrealistically limited to markets, firms, and households. Real economies require real material and energy to allow that exchange, and economic activities are limited by the material and energy transformations necessary for economic activity. Students are introduced to the misleading Circular Flow Model of the economy in the first days of Principles of Economics. This conceptual vision of the economy is one of a self-contained and self-regulating system independent of the biophysical system and its laws. There are but two sectors, households and firms, with goods and services going from firms to households, and productive inputs (land, capital and labor) going from households to firms.

Households serve as loci of consumption and possessors of property rights to the factors of production. Firms exist to produce and to hold property rights to the finished commodities. These property rights are willingly exchanged in markets for money. Neither monetary value nor physical materials are lost to heat or erosion as inputs are transformed into goods and services. Thus the NWE theory of production is not a model of production at all, but rather a model of the distribution of productive inputs and the goods they had produced previously. No specific primary inputs from nature are essential in this model.

The NWE notion of scarcity is disconnected from biophysical reality for it is never absolute but only relative to unlimited wants. In this model if we are confronted by the limits of one resource, the imaginative human mind, driven by the proper set of monetary incentives and protected property rights, will always create a substitute. No input is critical, therefore neither absolute scarcity nor the need of any particular resource is a problem in the long run. Thus in the NWE world the economy can simultaneously experience relative scarcity and infinite growth. Competitive prices, formed in markets, assure that resources flow to their best use.

Nicholas Georgescu-Roegen, and his student Herman Daly, were among the first to point out the absurdity of this depiction of production. Real economies cannot exist outside the global biophysical system, which is essential to provide energy, raw materials, and a milieu.

values a certain economic outcome depends on how much it is valued by others. It is also well established that the consumption of market goods cannot be equated with an individual’s happiness. Nevertheless, the fundamental behavioral assumptions of NWE require self- regarding consumers whose happiness depends upon their consumption of market goods. The cultural context of behavior is deemed irrelevant to economic analysis as the emphasis is entirely on the behavior of the isolated individual.

Myth 2a: Homo economicus is a scientific model that does a good job of predicting human behavior.
At the heart of standard economic theory is the model of human behavior embodied in Homo economicus or “economic man.” Economic texts usually begin with a very general statement about human nature that is soon codified into a set of rigid mathematical principles resting upon the idea that “people maximize their well-being by consuming market goods according to self-regarding, consistent, constant, well-ordered, and well-behaved preferences.” The assumption that people are self regarding has been falsified by considerable contemporary work in behavioral economics, neuroeconomics, and game theory (Gintis, 2000, Camerer and Loewenstein, 2004; Heinrich, 2001). For example, Henrich and colleagues, after examining the results of behavioral experiments in fifteen societies ranging from hunter-gatherers in Tanzania and Paraguay to nomadic herders in Mongolia conclude: “[T]he canonical [NWE] model is not supported in any society studied.” (Heinrich, 2001). Gintis describes several experiments showing that humans are both far more altruistic and far more vindictive than the rational actor model allows (Gintis, 2000). They will make decisions to punish persons they will never again encounter if those people cheat in experimental transactions, even if this means considerable monetary loss to themselves. In experimental settings and under real-world conditions, humans consistently make decisions that favor enforcing social norms over ones that lead to their own material gains.

The centrality of the behavior of isolated individuals is reflected in the notion that consumers are sovereign in a market economy. Ackerman and Heinzerling point out that the rise of economic orthodoxy put consumers at the center of analysis. The idea is that producers respond to consumer preferences rather than the reverse (Ackerman and Heinzerling, 2004). Yet we all know that, in fact, consumer tastes are manipulated and that firms barrage us with advertising in order to increase their market share. Nonetheless, the centrality and preeminence of the individual in orthodox economic analysis precludes any analysis or emphasis on the context of individual behavior. Myth 2b: Consumption of market goods can be equated with well-being and money is a universal substitute for anything. Most economic texts simply equate utility with happiness and assume that utility can be measured indirectly by income without any substantive or formal discussion of the matter (Frey and Stutzer, 2002). The higher the per capita income, the better off a particular society is supposed to be. Yet there is considerable evidence that past a certain point income is a positional good; that is, if everyone’s income goes up there is little or no long-term gain in social well-being. This implies that policies designed merely to increase per capita income may have little effect if the goal is to improve social welfare.

Psychologists have long argued and documented that well-being derives from a wide variety of individual, social and genetic factors. These include genetic predisposition, health, close relationships, marriage, and education — as well as income (Frey and Stutzer, 2002). It is generally true that people in wealthier countries are happier than people in poorer countries, but even this correlation is weak and the happiness data show many anomalies (Diener et al., l995). For example, some surveys show that people in Nigeria are happier than people in Austria, France and Japan (Brickman et al., 1978; Blanchflower and Oswald, 2000; Lane, 2000). Past a certain stage of development, increasing incomes do not lead to greater happiness. For example, real per capita income in the U.S. has increased sharply in recent decades but reported happiness has declined (Meyers, 2000).

When economists equate utility with income in the NWE model this affects the policy recommendations of economists which impact the natural world. According to Arrow and colleagues, “sustainability” means simply maintaining the discounted flow of income over time (Arrow et al., 2004). Leaving future generations the same or greater real income than the present leaves them at least as well-off no matter what happens to specific features of the natural world. By this reasoning if the present discounted value of a rainforest is $1 billion in ecosystem services if left intact, but can generate a discounted investment flow of $2 billion if it is clear cut and sold, then it is the moral responsibility of the present generation to cut down the rainforest. With $2 billion the future generation could buy another rainforest or something of equal value and have $1 billion left over. This is the logic that is used by economists to justify the extinction of a substantial portion of the planet’s ecosystems and species (Gowdy, 2004)

Why Theory Matters

It is in the policy arena that the ideological nature of NWE reveals itself most completely. Most economists substitute the mythical NWE world of rational agents, certainty and perfect information for the complex reality and uncertainty of real economies. Where reality and the neoclassical model disagree, reality is increasingly forced through policy to conform to the neoclassical model (Makgetla and Seideman, l989). Neoclassical economists generally assume that people always respond rationally and consistently to price signals, therefore the goal of economic policy is to assign property rights and get the prices right. The corollary assumption is that things of value to people have a price, and anything without a market formed price must lack value. Prices are theoretically capable of reflecting all the relevant attributes of any good or service and all that people value. The rest of us are asked to take the validity of their assumptions and analyses on faith, and to turn our complex decision making increasingly over to barely regulated markets and cost benefit analyses. This emphasis frequently leads to fundamental policy-related failures and problems that include the following:

1. The ultimate policy goal of NWE is not to correct any particular problem directly but rather to correctly value the problem in terms of everything else so that the calculating machine of the market can establish the pecking order of priorities. The focus on establishing general market equilibrium frequently means neglecting essential details of the policy problems under consideration, especially those for which it is difficult or impossible to determine a price (i.e. oil depletion, environmental degradation and global climate change).

2. The NWE model makes no qualitative difference between needs and wants, even the most trivial of them, or among commodities produced, or among specific productive inputs, including energy. Everything we find useful is treated like an abstract commodity substitutable for and by anything else. Absolute scarcity does not exist nor, within certain broad limits, are any specific conditions deemed necessary for human existence. Value is a relative matter expressed in relative prices. Because no single thing is essential, substitution among resources and commodities will occur until the marginal value of a commodity divided by its prices is the same for all commodities. At this point rational individuals have made optimal choices, and the sum of all optimal choices leads us to the “best of all possible worlds.”

3. The model assumes that aggregate income is a complete and sufficient measure of well- being. Operationally this means that total costs and benefits of policies can be determined by merely adding the monetary changes in the incomes of all isolated individuals affected. This implies that relative income effects don’t matter to the individual – for example a loss of $1,000 to a poor person can be more than compensated for by a gain in $1,100 to a billionaire. Similarly, preferences are considered to be exogenous to social context. Yet numerous studies have found that relative income effects matter and sometimes these effects can completely cancel out increases in total income which is always the primary goal of NWE. How much one person values a gain or loss depends on what others get, the income of each person relative to others, the fairness (or not) of the income change and a variety of other social factors which are not included in the NWE model.

4. “Sustainability” in the NWE model means sustaining only the discounted flow of per capita income, not anything else such as biodiversity, oil stocks, human health or social cohesiveness. This is known as weak sustainability. However, to live within nature’s limits, we need to arrive at the conditions of strong sustainability, which requires that the profits from the depletion of a resource or degradation of an ecosystem are reinvested in developing alternatives or restoring degraded systems. This entails looking at the bigger picture of how market systems function and interface with the biophysical world. Consequently one cannot arrive at a social decision to achieve an optimal macroeconomic scale by merely aggregating many separate efficient market outcomes. NWE dominates policy making yet provides an inadequate toolbox for confronting the major problems of the present world: global climate change, biodiversity loss, oil depletion, loss of wilderness and the recalcitrant problems of poverty and social conflict. We are led to believe that our most pressing environmental and social problems can be dealt with effectively by simulating efficient market outcomes as if this provides the elixir for all that ails us. Yet we know that the concept of market efficiency rests on an untenable and faulty foundation and that the real market economy is not best described in this framework. But the perpetuation of neoclassical economics, usually to the exclusion of other possible approaches, is essentially the substitution of faith for reason, science and empirical testing in many areas of economics. We must move beyond this “faith-based” economics and find a more illuminating way of understanding economic activity and informing decision making so that our policies will amount to something more than window dressing for the status quo.

References

Ackerman, F., and Heinzerling, L. (2004). Priceless: On Knowing the Price of Everything and the Value of Nothing. New York and London: The New Press.

Arrow, K., Dasgupta, P., Goulder, L., Daily, G., Ehrlich, P., Heal, G., Levin, S., Goran-Maler, K., Schneider, S., Starrett, D., Walker, B. (2004). Are We Consuming too Much? Journal of Economic Perspectives , 18(3): 147-172.

Ayres, R. and Warr, D. (2005). Accounting for Growth: The Role of Physical Work. Change and Economic Dynamics , 16(2):211-220.

Blanchflower, D., and Oswald, D. (2000). Well-Being over Time in Britain and the U.S.A . (NBER Working Paper No.7481). Cambridge, MA: National Bureau of Economic Research.

Brickman, P., Coates, D., and Janoff-Bulman, R. (1978). Lottery Winners and Accident Victims: Is Happiness Relative? Journal of Personality and Social Psychology , 36(8): 917-927.

Camerer, C., and Loewenstein, G., (2004). Behavioral Economics: Past Present and Future. In C. Camerer, G. Loewenstein, and M. Rabin (Eds.), Advances in Behavioral Economics (pp. 3-52). Princeton: Princeton University Press.

Cleveland, C., Costanza, R., Hall, C., and Kaufmann, R. (1984). Energy and the U.S. Economy: A Biophysical perspective. Science , 225: 890-897.

Daly, H. (1977). Steady-State Economics . W. H. Freeman, San Francisco.

Denison, E. (1989). Estimates of Productivity Change by Industry, an Evaluation and an Alternative . Washington, DC: The Brookings Institution.

Diener, E., Diener, M. and Diener, C. (1995). Factors Predicting the Well-Being of Nations. Journal of Personality and Social Psychology , 69 (55): 851-864.

Frey, B., and Stutzer, A. (2002). Happiness and Economics: How the Economy and Institutions Affect Well-Being . Princeton:Princeton University Press.

Georgescu-Roegen, N. (1975). Energy and Economic Myths. Southern Economic Journal , 41(3): 347-381.
Gintis, H. (2000). Beyond Homo Economicus: Evidence from Experimental Economics. Ecological Economics , 35(3): 311-322.

Gowdy, J. (2004). The Revolution in Welfare Economics and its Implications for Environmental Valuation. Land Economics,
80(2): 239-257.

Hall, C. (2000). Quantifying Sustainable Development: The Future of Tropical Economies . San Diego: Academic Press.

Hall, C., Lindenberger, D., Kummel, R., Kroeger, T. and Eichhorn, W. (2001). The Need to Reintegrate the Natural Sciences with Economics. BioScience , 51(8): 663-673.

Hall, C., Cleveland, C. and Kaufmann, R. (1986). Energy and Resource Quality: The Ecology of the Economic Process . New York: Wiley-Interscience.

Henrich, J. et al. (2001). Cooperation, Reciprocity and Punishment in Fifteen Small-Scale Societies. American Econ. Review,91(2): 73-78.

Lane, R. (2000). The Loss of Happiness in Market Economies . New Haven: Yale University Press.

Makgetla, N., and Sideman, R. (1989). The Applicability of Law and Economics to Policymaking in the Third World. Journal of Economic Issues , 23: 35-78.

Meyers, D. (2000). The Funds, Friends, and Faith of Happy People. American Psychologist , 55: 56-67. Wilson, E. (1998). Consilience: The Unity of Knowledge. New York: Alfred Knop

 

 

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More diesel for tractors & trucks, less gas for cars

The 1980 rationing plan would shift whatever petroleum was needed to agriculture and other essential services before making it available to the public via rationing.   This would be diesel since tractors, harvesters, trucks, and trains can’t and don’t burn gasoline.

Now that clean diesel can be made, you have to wonder why we make gasoline. Look at a few of the advantages of diesel engines. Why on earth do we make gasoline-burning cars (98% burn gasoline, 2% diesel)?

  1. Diesel engines are 45% efficient, gasoline engines 30%.
  2. Diesel fuel has 15% more energy than gasoline.
  3. Diesel engines last twice as long and are far more reliable.  It takes a lot of energy, minerals, and other resources to make new vehicles.  Now is the time to make things last and stop our “throw away” economic system
  4. Diesel fuel takes less energy to refine than gasoline
  5. Diesel fuel is less explosive, doesn’t release a large amount of flammable vapor, and has minimal carbon monoxide emissions
  6. Diesel engines create less waste heat in cooling and exhaust

What about burning diesel in gasoline engines?
You can’t.  Your engine probably wouldn’t start, and if it did, would run and smoke terribly. Your engine might be okay, but it would take a very expensive fuel system flush to get the diesel out. If you tried to put gasoline in a diesel vehicle, you’d almost certainly suffer catastrophic damage to the engine and damage the sensitive emissions control components and system.

Refineries should make more diesel than gasoline

Done. Because fracked natural gas is so cheap, America’s refineries can refine raw petroleum cheaper than refineries elsewhere, so we import oil, refine about a million barrels a day into diesel, and export it.  This also helps keep our remaining 149 refineries operating.  On May 16 2014, petroleum was refined as follows: 54% diesel, 24% gasoline, 16% kerosene (jet fuel), and 5% bunker fuel (ships, fuel oil). (EIA Petroleum & Other Liquids Weekly Refiner net production).

 

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Peak Resources and the Preservation of Knowledge

Peak Resources and the Preservation of Knowledge

By Alice Friedemann    January 6, 2006

“Peak oil will affect more people, in more places, in more ways, than anything else in the history of the world”. Walter Youngquist, author of Geodestinies

Summary

After worldwide oil production peaks, there are no substitutes ready to make up the energy shortfall.  The immediate problem will be a need for liquid transportation fuels.

Liquid, renewable fuels, such as ethanol and hydrogen, do not have a high enough Energy Returned on Energy Invested (EROI) to run civilization, let alone maintain the existing infrastructure, the majority of which was built when oil had an EROI of 40 to 100.[1]

Liquid, non-renewable fossil fuels that could be used to replace oil, such as liquefied coal, require a tremendous amount of expensive infrastructure that needs to be built at least ten years before the world peak production of oil, according to Robert Hirsch.[2]  We haven’t done that, nor is it likely we ever will, because after peak, fossil fuels will be rationed and apportioned to agriculture and other critical agencies.[3]

We’re likely to lose many of the books printed on acidic paper between 1850 and most of the 20th century within decades. For the last twenty years, many books and journals have been printed on non-acidic paper and put on microfiche.  Both can last for centuries if kept at an ideal temperature and humidity.  But that isn’t permanent enough.   Librarians are aware of this, and have turned to computers as a way to preserve knowledge.  Some libraries are stopping the delivery of many printed journals and have them online only.

But computers are the top card in the house-of-cards complex civilization we built with coal and oil, and computers will be the first to go when supply chains fail as global trade diminishes.

Declining energy supplies are likely to trigger a global depression, resulting in political instability, which may trigger resource wars.

Preservation of knowledge needs to start immediately, while nations are still stable and wealthy.  Now is the time to consider how to preserve knowledge with a material that won’t decay, rust, mold, or shatter easily.  We should leave our descendents knowledge they can use and be amazed by, information to fuel the next Renaissance.

Introduction

Since there are no alternative energy sources, except for fusion, which could possibly replace fossil fuels,[4] a priority should be the preservation of knowledge.  Fusion is unlikely to ever be harnessed as a source of energy, and certainly won’t be ready in time to save us from the impact fossil fuel decline will have upon civilization.

Fossil fuels enabled the human population to grow at a rate 133 times higher than all of human history before then.[5]   Fusion would allow exponential growth to continue until we used up all of the other resources on the planet (e.g. water, topsoil), and lead to an even greater loss of human life and biodiversity.

There aren’t any alternative energy sources that can replace fossil fuels in the window of time left.  If only we’d listened to Jimmy Carter, while there was still a chance of reducing the inevitable tragedy relying on non-renewable energy sources would bring.[6]

We are about to enter a time of social, political, and economic hardship and instability, and these human factors will exacerbate the problem of declining energy.

Our lives depend on oil, natural gas, and coal for our food, clean water, sanitation, transportation, electricity, cooling and heating, cooking, and health.   These fossil fuels are composed of complex hydro-carbon chains that provide the feedstock for over half a million products, including plastics, medicine, paint, chemicals, etc.   We are utterly dependent upon the fossil fuels entwined in all aspects of our lives.  They have enabled our population to grow from one billion before coal to six and a half billion now.[7]

The biggest mistake people make about the seriousness of “Peak Oil” is assuming there is a technical fix.  This is understandable, given how virtually all articles in the press and scientific journals are about advances and breakthroughs.

Plan B

There is a “Plan B”.  Hirsch’s stopgap measure, Peaking of World Oil Production: Impacts, Mitigation, & Risk Management,is the most likely plan to be attempted as the energy crisis worsens.  The solutions are heavy oil, gas-to-liquids & liquefied natural gas, enhanced oil recovery, efficient vehicles, and coal liquids.  Notice that nearly all depend on using low quality liquid fossil fuels (which would increase global warming).  Some highlights:

  • The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.
  • The problem of the peaking of world conventional oil production is unlike any yet faced by modern industrial society.
  • Oil is the lifeblood of modern civilization. It fuels the vast majority of the world’s mechanized transportation equipment – automobiles, trucks, airplanes, trains, ships, farm equipment, the military, etc. Oil is also the primary feedstock for many of the chemicals that are essential to modern life. This study deals with the upcoming physical shortage of world conventional oil–an event that has the potential to inflict disruptions and hardships on the economies of every country.
  • Use of petroleum is pervasive throughout the U.S. economy. It is directly linked to all market sectors because all depend on oil-consuming capital stock.
  • The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.
  • Even if efficient vehicles were mandated or a technology breakthrough occurred, it would take 10-15 years to replace the existing vehicle fleet. In 2004, …U.S. oil consumption was 20 MM barrels per day, two-thirds of which was in the transportation sector.
  • The implications for U.S. … mitigation of world oil peaking are troubling. To replace dwindling supplies of conventional oil, large numbers of expensive and environmentally intrusive substitute fuel production facilities will be required. Under current conditions, it could easily require more than a decade to construct a large coal liquefaction plant in the U.S. The prospects for constructing 25-50, with the first ones coming into operation within a three year time window are essentially nil.

Congressman Roscoe Bartlett (R-MD), a co-founder of the House of Representatives Peak Oil Caucus, said that we should not try to fill in the gap between supply and demand with the Hirsch plan, because after these measures run out, civilization will crash even harder, and these measures will damage the environment.

Another Plan B would be to build new nuclear power plants.   Since the issue that needs to be solved is liquid transportation fuel, nuclear power is irrelevant.  So are solar, tidal, and wind power.

Currently there is only enough uranium left to power existing plants for about fifty years.  If Generation IV nuclear power plants can be made to work, they could stretch U235 fuel for several millennia, as well as reduce nuclear waste considerably.

Per Peterson, chairman of the nuclear engineering department at the University of California, Berkeley, said that Gen IV might start being built around 2025-2030. These plants generate tremendously high heat, which could contribute to solving the liquid fuel problem by splitting hydrogen from water to convert low-grade heavy oils into high-energy fuel.   We’ve known since 1969 that we needed to build these types of reactors to stretch out nuclear fuel, but still haven’t figured out how to do this safely[8].

Saudi Arabian oil reserves

So here we are close to Peak Oil,[9] and we haven’t started on any Plan B.   We‘ll know we’re at Peak Oil production when Saudi Arabian oil extraction declines, because they have such a huge portion of the world’s remaining oil, nearly a quarter of it.  But Matt Simmons believes that they may have exaggerated their reserves and have other problems:[10]

1)      There’s a 35-40% probability that Saudi Arabian oil fields “could fall over a 30 month period of time by 50-70%”.   Fields that are produced too quickly, (which has happened in the past and may be happening now as well), can drop off suddenly and quite sharply, leaving oil behind that may never be recovered.

2)      Saudi Arabia claims to have 260 billion barrels of reserves, but the real number is probably less than half of that.

3)      The Saudis damaged their oil fields by over-producing in the early 1970s and again after Iraq invaded Kuwait in 1990. That changed the subsurface pressure, creating huge water problems that will make it harder to recover oil.

4)      Congress had evidence in the 1970s that the Saudi oil fields had only about 30 years of sustained production left but kept it secret.

5)      There are no new large oil fields likely to be discovered in Saudi Arabia

6)      The Saudi’s are mining their oil in ways that Hubbert hadn’t anticipated. They’re using new technology, which depletes the oil sooner, which makes the decline rate steeper than what Hubbert and others calculated.

7)      We’ve used up the vast majority of the world’s high flow rate, high quality oil. We still have a lot of oil. But it’s heavy, gunky, dirty, sour, contaminated oil.  It doesn’t come out fast, and it’s very energy intensive to get out.

So not only do the Saudis probably have a lot less oil than they claim, but extraction could fall off precipitously due to poor management in the past and the use of new technology, which is depleting the oil sooner than it otherwise would have been.  Worse yet, what’s left is poor quality, difficult and expensive to refine oil that’s hard to get out.

Consequences of a decline in oil

When world oil production declines, all nations will be affected.  The major likely consequences are global depression and civil disorder as decline continues, starvation as agriculture is affected, and World War III over the remaining resources.  Wars have been fought over minerals throughout history.[11] Colin Campbell has written a global depletion protocol to try to prevent this from happening, but at this point most governments are not even aware of it, let alone trying to implement this plan.[12]

As time goes on, shortages will occur, triggered not only by declining oil supplies, refinery breakdowns, and hurricanes destroying oil infrastructure, but also from revolutions and terrorists blowing up oil refineries, pipelines, and oil tankers.

The USA is down to oil reserves that could power our country, at current rates of use, for four years.  This vast country, with limited train and mass transit systems, combined with massive dependence on vehicles to reach sprawling suburbs, makes the United States very vulnerable to oil shocks.

There are plans in place for rationing should shortages strike, [13] [14] and there is room for demand destruction.  The U.S. rationing plan calls for agriculture to take what it needs off the top.  After that other critical agencies will get what they need.  Anything left over will be distributed to everyone else.

Natural Gas Depletion

Natural gas heats over half of all American homes and provides twenty percent of our electricity.  Natural gas is also used to make plastics, chemicals, fabric, carpets, packaging, and many other products. It is the feedstock and energy source used to create nitrogen fertilizers that grow up to four times more food than could be grown otherwise.  It’s also used to refine oil and tar sands.[15]

North America will face the depletion of natural gas within the next decades.  Natural gas extraction has a much steeper rate of decline than oil – current annual new well decline is 31% and half of the natural gas needed in 2012 is going to come from fields that haven’t even been discovered yet.[16]  This problem is as serious as oil depletion.

Replacing fossil fuels with some other energy source

At one time, the Energy Returned on Energy Invested (EROI) for oil was at least 100 to 1.1   We are reaching the point where the EROI of oil will be 1 and no more drilling will take place.[17] It was while the EROI of oil was high that most of our current infrastructure was built.

Evidence suggests that the EROI of corn ethanol is less than one, which means it takes more energy to make than you get out of it – an energy sink.

Pimentel and Patzek have shown that it takes twenty seven to fifty seven percent more fossil fuel energy to create ethanol or biodiesel than you get in the energy returned.  Worse yet, this is done at a tremendous environmental cost, since biofuel crops harm soil structure and remove the nutrients, deplete groundwater, pollute water with pesticides, insecticides, and herbicides, cause eutrophication of water via nitrogen runoff, increase soil erosion, and contribute to air pollution and global warming at the ethanol plant and when burned in cars.[18]

Even if the highest claim of a net energy for ethanol of 1.67 were true, a much greater EROI than .67 is needed to run civilization.   The 1 in the 1.67 is needed just to make the ethanol.  An EROI of .67 has 150 times less energy than oil when we started building American infrastructure.

Charles A. S. Hall, who has been studying net energy for decades, believes that you’d need an EROI of at least 5 to run civilization, because you need to include the energy to make the machines, mitigate environmental damage, feed and house the workers, etc.[19]

For example, consider a windmill composed of steel and concrete.  A windmill farm in the Escalante desert, built to produce 5.55 TWh of power, would require 13.8 million pounds of aluminum, 2.8 trillion pounds of concrete, 639 billion pounds of steel, etc.  The wind farm would occupy over 189 square miles.[20]  Pacca & Horvath don’t give the capacity factor for these windmills, but an often used number is 30% (i.e. wind blows hard enough 30% of the time), so a 5.55 TWh wind farm might serve around 175,000 to 350,000 people, depending on the wind speed and how close people were to the windmills, since power is lost via transmission over long distances.

In 1992 such a wind farm would cost 200 million dollars, which doesn’t include labor and maintenance costs, and would serve less than one percent of the United States population.  It would cost over $200,000,000,000 to build enough windmills to generate electrical power for everyone (though of course, you couldn’t, since not all areas have enough wind).  With energy prices many times higher now than in 1992, the cost would be far more expensive.

After fossil fuels are gone, the windmills must be able to generate enough energy to maintain themselves and build new windmills, including all of the equipment used to mine the metal and concrete components, forge metal into blades and towers, and build the trucks and roads that enable windmills to be delivered to their sites.  Windmill energy must also provide the energy to build and maintain the electric grid and storage battery infrastructure, and all of the people involved in the process.  Any extra energy could now be used to run civilization.

It’s often said that once oil goes to “x” dollars a barrel, alternative energy will become economically viable.  But this will never happen, because the alternative energy infrastructure is built with fossil-fuel inputs, so alternative energy sources will always cost more than oil. To even talk about energy using dollar figures makes no sense — you can’t stuff dollar bills down your gas tank.

Energy can be reduced to physics, to the laws of thermodynamics and other rules that the Big Bang bequeathed our universe.  Oil has been a free lunch, one that nature spent hundreds of millions of years making, reducing 196,000 pounds of plant matter into one gallon of gasoline – pure, unadulterated solar power that no alternative energy source but fusion could possibly hope to replace.[21]  Oil is also incredibly easy to use, ship, and store.

The number of scientists who insist that alternative energies can substitute for fossil fuels, and ignore or deny the basic laws of physics and thermodynamics is frightening.  It’s reminiscent of Lysenkoism.

United States Infrastructure

While the EROI of oil was high, we built a vast infrastructure to deliver clean water, treat sewage, built roads, bridges, dams, and so on.

Any non-fossil fuel type of energy will have a great deal of work just maintaining the existing infrastructure.  The American Society of Civil Engineers gave the following grades to our infrastructure in 2005.[22]

Grade  Infrastructure Components

C+       Solid Waste

C         Bridges

C-        Rail

D+       Aviation                      Transit

D         Dams                           Energy             Hazardous Waste        Roads     Schools

D-        Drinking Water           Wastewater     Navigable Waterways

Consider just the drinking water infrastructure, the main reason our life spans have increased so much.[23] In this century, all of the 600,000 miles of pipes delivering clean water to homes will need to be replaced.  Every component of the water system is aging.  The energy required to replace or maintain thousands of treatment plants, pumping stations, reservoirs and dams over the next century is staggering.[24]

Useful Life Matrix

Clean Water  Years               Component

80–100         Collections

50         Treatment Plants – Concrete Structures

15- 25         Treatment Plants – Mechanical & Electrical

25    Force Mains

50          Pumping Stations – Concrete Structures

15          Pumping Stations – Mechanical & Electrical

90–100         Interceptors

Drinking Water

50- 80         Reservoirs & Dams

60- 70         Treatment Plants – Concrete Structures

15– 25         Treatment Plants – Mechanical & Electrical

65– 95         Trunk Mains

60- 70         Pumping Stations – Concrete Structures

25    Pumping Stations – Mechanical & Electrical

65- 95         Distribution

And consider the energy required to deliver the water.  According to Allan Hoffman,  “Energy is required to lift water from depth in aquifers, pump water through canals and pipes, control water flow and treat waste water, and desalinate brackish or sea water. Globally, commercial energy consumed for delivering water is more than 26 Quads, 7% of total world consumption”.[25]

The fragility of global trade and infrastructure

Science fiction movies used to scare us with out-of-control robots bent on world destruction.  If there’s a runaway robot now, it’s global corporations doing what’s best for the shareholder rather than the citizens and nations of the world.  Pensions have been looted, health care benefits taken away, taxes avoided, and regulations ignored.

Risks are being taken that could bring down the global financial system.

One of the risks to global trade is due large computer and electronic companies using the same outsourcers for similar components from the same region — even the same place – such as an industrial park in Hsinchu, Taiwan.  The risk is a single source of failure.

Microprocessors depend on electricity, electricity depends on microprocessors

Business interruptions can cost a fabrication plant 20-30 million dollars in lost revenue.  For instance, a plant that had a four-hour long electricity outage had to spend the next four days recalibrating their equipment, resulting in a $5 million dollar loss. Insurance companies have responded with huge deductibles and capped the loss amounts.[28]

As unexpected energy shortages and outages grow more common in the future, this will wreak havoc on microprocessor production.

The electric grid was originally designed for analog devices, which are much less vulnerable to momentary disturbances in electric power. But a nearly imperceptible one-second sag in voltage or other momentary disturbance at a semiconductor-fabrication plant producing microprocessors could ruin an entire 30-hour batch of chips, and possibly the equipment itself, (EPRI 2003).

Any device with a microprocessor is vulnerable to the slightest disruption of electricity. Billions of microprocessors have been incorporated into industrial sensors, home appliances, and other devices. These digital devices are highly sensitive to even the slightest disruption (an outage of a small fraction of a single cycle can disrupt performance), as well as to variations in power quality due to transients, harmonics, and voltage surges and sags. Another example from EPRI of possible consequences is if a microprocessor running a paint gun in an auto plant failed from an electrical disruption, it could destroy the finish on one or more cars, and disrupt part of the assembly process.

Today about 10% of total electrical demand in the United States feeds or is controlled by microprocessors. By 2020 this level is expected to reach 30% or more (EPRI, 2003).

Microprocessors are essential to the modern world

Billions of chips are created every year for a myriad of applications: in autos, airplanes, ATMs, air conditioners, calculators, cameras, cell phones, clocks, DVDs, machine tools, medical equipment, microwave ovens, office and industrial equipment, routers, security systems, thermostats, TVs, VCRs, washing machines – nearly all electrical devices.

So when an earthquake struck Taiwan in 1999, world markets were shaken. Willem Roelandts of Xilinx immediately knew this had the possibility of hurting the world economy.  “There is not an electronic product in the world that does not contain a Taiwanese component”, he said.

Even though the factories were fine, electrical and transportation systems weren’t, so production and delivery of components stopped, which caused assembly lines in the United States to halt as well.  Wall Street traders sold off electronic firms, especially Dell, HP, and Apple.

You wouldn’t think the United States would build microchip factories offshore in industries that were essential to its national and economic security.  But low wages are irresistible to corporations.  Also, many foreign countries are closer to sources of natural gas, which is declining at an alarming rate in North America.

According to Jack Gerard, president and CEO of the American Chemistry Council, “ “Natural gas is a raw material for compounds used in thousands of consumer products — from agriculture, telecommunications and automobiles to pharmaceuticals…and food packaging. More than 96 percent of all manufactured goods are directly touched by chemistry.  The industries that rely on chemistry together represent more than a quarter of the nation’s entire workforce. Unaffordable natural gas is driving away investment, crippling our manufacturing base, and reducing job opportunities. It is transferring to foreign countries the advanced research and technology desperately needed in order to compete on the world stage. In effect, our nation’s energy policy has become its de facto manufacturing and national-security policies as well.[26]

Industries also like to locate factories where environmental regulations are less stringent.

The chemicals used to create computer parts have resulted in 29 superfund sites in Silicon Valley, the most concentrated number of superfund spots in America.  At the Advanced Micro Devices superfund site in Sunnyvale, California, chemicals are in the groundwater and soil that can cause death, cancer, brain and central nervous system damage, leukemia, anemia, convulsions, nausea, unconsciousness.  The zinc and copper at this site are toxic to plants, ruining what were once some of the best orchards in the world.

The need to go where costs are lowest is driven by the enormous amount of money it takes to build a mega-size wafer fabrication plants — nearly ten billion dollars.[27]

Part of this amount is due to very high insurance costs.  In 1997, an Hsinchu Taiwan fabrication plant had a fire that caused $421 million dollars in smoke and water damage.

Outsourced products are delivered just-in-time to the factory assembly.   According to Barry C. Lynn, “Our corporations have built a global production system that is so complex, geared so tightly, and leveraged so finely, that a breakdown anywhere increasingly means a breakdown everywhere, much in the way that a small perturbation in the electricity grid in Ohio tripped the great North American blackout of August 2003”.[29]

Less major blows to assembly lines have come from strikes, SARS, fires, explosions, and manufacturing mistakes, such as the ones that resulted in Chiron’s failure to deliver half of the American flu vaccine.   Fortunately, the impacts so far have been temporary and regional. But it’s not hard to imagine events that could result in worldwide disruptions leading to a global depression.

Energy shortages for instance.  Already many businesses in the chemical, agricultural, steel, glass, and other industries have failed or are in pain from high natural gas prices in America.[30] [31] [32]  When enough key suppliers of infrastructure components fail, this will stop the downstream assembly line.  Suppliers might also go out of business because of economic failure in the manufacturing country, civil or regional wars, and extreme weather.

Despite the risk, single-sourcing occurs because cutting costs is how you stay in business, so the cheapest supplier wins the race to the bottom.  Corporations have gone cuckoo with outsourcing; letting suppliers located in potentially shaky political and economic countries hatch their nest eggs.

When the fledglings hatch they often fly on Fed Ex, which is so reliable it seems as if the supplier were on the other side of town instead of across the world.  But the airline industry is reeling from higher energy prices, so it’s possible that the intricate, just-in-time, high-speed aircraft delivery of electronic gear will shift to ships, a much slower, less predictable way to deliver cargo “just-in-time”.

Most products traded globally travel by sea.  Over 50,000 large ships carry 80 percent of the worlds’ cargo. Shipping faces critical challenges in the future.

Oil and LNG tankers are increasingly failing from corrosion. Over 2400 tankers split up or nearly did so from 1995 to 2001 according to the International Association of Independent Tanker Owners.[33]

Another hazard to shipping is piracy or terrorism. According to Gal Luft, executive director of the Institute for the Analysis of Global Security (IAGS), and Anne Korin, director of policy and strategic planning at IAGS and editor of Energy Security:[34]

  • The number of pirate attacks on ships has tripled in the past decade.  In 2003, there were 445 attacks. 92 seafarers were killed, and 359 assaulted and taken hostage, in 19 hijackings and 311 boardings.
  • Three-quarters of the globe is covered in water that is thinly policed.
  • Pirates are often trained fighters armed with automatic weapons, antitank missiles and grenades. Most of the world’s oil and gas is shipped through the world’s most piracy-infested waters.  Piracy is becoming a tactic of terrorists, who see it as a lucrative source of revenue. They’ve attacked tankers near Iraq, Nigeria, Saudi Arabia, and Yemen.
  • 60 percent of oil is shipped in 4,000 tankers passing through bottlenecks where they’re vulnerable to attack.  If a tanker were set on fire at one of these vulnerable points, the sea-lanes would be blocked.
  • Many shipping companies don’t report piracy lest their insurance premiums go up, but what is reported amounts to over 16 billion dollars per year.

Terrorism is affecting the worlds’ energy infrastructure. U.S. Energy Secretary Spencer Abraham has repeatedly warned that “terrorists are looking for opportunities to impact the world economy” by targeting energy infrastructure. Nigeria, Columbia, and Iraq have seen many attacks in the past few years.  There have been 282 attacks on oil infrastructure and personnel in Iraq from June 2003 to November 2005.[35]

Trading Partners

Trading partners matter.  Strategically, it’s probably not a great idea to partner with China because of their bloody history, economic booms and busts, and a landscape so environmentally devastated millions of Chinese are on the brink of starvation.

But it’s corporations that are now making strategic decisions about what’s best long-term for U.S. citizens based on how profitable next quarter will be.  The United States relationship with China began with Motorola, and Wal-Mart consummated the marriage.

China is on the verge of being unable to feed itself. More than 900 square miles of land degrade into desert every year while even larger areas are losing their productivity.[36]  The soils are becoming acidic and lifeless, making the crops vulnerable to fungal attacks. Worse yet, this shift has caused grain yields to fall by 20%.[37]

Water is growing scarce for farmers because cities usually win the rights to it. Aquifers are depleting and irrigation wells are drying up, forcing farmers to abandon their land.

According to Lester Brown of World Watch, “The cheap food of the last century may soon be history.  China will soon have to buy grain on the world market, and given their 150-billion trade surplus, will be competing with Americans for food, at a time when the USA is also losing cropland to aquifer depletion and soil erosion”.[38]

Much of the country is an environmental disaster.  The Gobi desert grew 20,000 square miles in five years and is now within 150 miles of Beijing.  This has been brought on by over-farming, over-grazing, and destruction of forests.  The dust from this desert is starting to affect the whole world, and contains arsenic, cadmium, and lead.[39]


We’ve become so linked to China economically that their frequent booms and bus could do the same to our economy.  Many industries have China to thank for their good times, especially shipping lines, which are hauling enormous amounts of oil, 150 million tons of iron ore, coal, and other raw materials to China, and bringing back finished goods like electronics, furniture, and clothing.

China has surpassed the United states in the market for cell phones and color TV’s, and is on their way to outdoing us in buying PC’s and soon, perhaps, energy.

There are almost 120 boys for each 100 girls being born in China, due to the one-child policy leading parents to prefer boys to girls.   Historically, this skewed ratio has meant big trouble, and one of the ways societies coped was by starting wars.

Women are being kidnapped and sold as brides. From 2001 to 2003 China’s police freed more than 42,000 kidnapped women and children.  And it’s only likely to get worse; one estimate puts the number of bachelors over the next decade at 40 million.

This could pose a threat to China’s stability according to Valerie Hudson and Andrea Den Boer, authors of “Security Implications of Asia’s Surplus Male Population”, which cites two Manchu Dynasty rebellions in areas that were disproportionately male.  They believe that young adult men unlikely to find wives are “much more prone to attempt to improve their situation through violent and criminal behavior in a strategy of coalitional aggression.”

Whether China dissolves in internal chaos, kicked off by hunger and unhappy bachelors, or explodes outward militarily as resources grow scarce, remains to be seen.  But given China’s violent history, it’s a sure bet there’s a conflagration ahead.[40]

Stephen LeBlanc, Harvard archeologist, believes that throughout most of history we have been engaged in constant battles.  When trying to find out why war was so prevalent, he assumed people were fighting for real reasons, and he discovered that the fights were always over scarce resources, usually food and often women.

He has evidence that we have never been able to control our population growth, which inevitably resulted in over exploitation of the environment, as far back in time as you go.

The consequence of over-exploitation is scarce resources, and that usually leads to war.

LeBlanc concludes: “Humans starve only when there are no other choices. One of those choices is to attempt to take either food, or food-producing land, from someone else. People do perceive resource stress before they are starving. If no state or central authority is there to stop them, they will fight before the situation gets hopeless”.[41]

Jared Diamond looks at the recent example of the Rwandan genocide in “Collapse”.  Although most people think this was an ethnic struggle between the majority Hutu and ruling Tutsi, that’s because most people understand the world in terms of ethnic conflict.

Since there were areas where Hutu killed Hutu, Diamond concludes that the real reason for the slaughter was for ecological reasons: “Look at the land: steep hills farmed right up to the crests, without any protective terracing; rivers thick with mud from erosion; extreme deforestation leading to irregular rainfall and famine; staggeringly high population densities; the exhaustion of the topsoil; falling per-capita food production. This was a society on the brink of ecological disaster, and if there is anything that is clear from the study of such societies it is that they inevitably descend into genocidal chaos”.

If LeBlanc and Diamond are correct about hunger resulting in battles, then we’re in for a rough time, as oil and natural gas grow scarcer.  Food, from planting, fertilizing, harvesting, and distribution, is utterly dependant upon fossil fuels in the United States.

How America handles a declining standard of living, given our addiction to comfort and super-sized meals, with over half of Americans owning guns, and 30,000 people killed with guns in 2002, [42] remains to be seen.

Continued global trade at current levels cannot be sustained as energy declines.  At some point global trade will lessen due to a combination of declining fossil fuels, piracy, terrorism, energy shocks, pandemics, natural disasters, political turmoil, global depression, and a shortage of large, non-oil based vessels.

Global trade will not disappear, since moving freight over water is very efficient, but there will be several discontinuities as declining energy forces us to roll backwards though history.

Most cargo is shipped on enormous container vessels that can be over 1100 feet long with ten thousand containers stacked many stories high.

The first discontinuity will come when we have to retrofit ships to run on coal, and set up coal stations and tenders all over the world.

The second discontinuity will occur when coal gets scarce and container ships are moved by wind power (if this is even possible), with liquid fossil fuel only used when entering and leaving ports.  A further step down will happen when it’s too energy-intensive to keep harbors dredged deep enough accommodate large container ships.  It’s already very tricky getting these large ships into port, a local pilot is brought in and complex computer systems are used to delicately park these gargantuan ships along the wharf.[43]

These huge ships would have to remain offshore and unloaded to smaller ships, if that is possible, since they weren’t designed for this.

The third discontinuity will come when containerization can no longer be supported due to lack of fuel and/or electricity for cranes, trucks, and trains.  Containerization revolutionized the amount of cargo and the swiftness with which it could be loaded and delivered from origin to destination by orders of magnitude over earlier forms of transportation.

The final discontinuity will come when ships need to be built from wood, because the remaining mineral ore is too low quality and energy-intensive to process, and when we can no longer recycle the rusted and dispersed iron and steel.

The Fragility of Microprocessors

I work in the computer industry as a systems architect/engineer.  My father got in on the ground floor, programming computers with wires before there were even punch cards.   As far as I could tell, his job was to draw squares, circles, and triangles and connect them with arrows.  I used to fill the flow charts in with crayons when I was younger.

I took an introductory course to find out what Dad had been doing, and was hooked.  I couldn’t believe you could get paid to solve intricate and interesting puzzles.  I abandoned my plans to get a PhD in molecular biology and started working at EDS.

I think computers are the most amazing achievement of mankind.  I especially like being in touch with family, friends, and new acquaintances from around the world with common interests.

The first computer, the ENIAC, built in 1940, took up 1500 square feet.  The same floor space now could contain 1.4 million microchips, each with orders of magnitude more computing power.  A car now has more computing power than the first lunar spacecraft.

Microchip fabrication [44] [45]

Creating a chip begins by cutting a thin 12 inch slice, called a wafer, from a 99.9999999% pure silicon crystal, one of the purest materials on earth.  Wafers require such a high degree of perfection that even a missing atom can cause unwanted current leakage and other problems in manufacturing later on.  This is the platform that about 5000 computer chips will be built on. Each chip will contain millions of transistors, capacitors, diodes, and resistors built by punching and filling in holes in more layers than a Queen’s wedding cake.

Cleanliness

Particles 500 times smaller than a human hair can cause defects in microchips. The more particles that get on a wafer, the greater the chance there is of a killer defect. Some particles are worse than others — a single grain of salt could ruin all the chips on a wafer.  Sodium can travel through layers even faster than stray bits of metal.  Particles that outright kill a chip are caught during the testing phase at the factory.  Sometimes only 20% make to the end.  The traveling particles are insidious, and can cause a chip to malfunction, perform poorly, or die later on (hopefully before your warranty expires).  Consumer reports recommends not even trying to repair a personal computer after four years, and in the two to four year range it’s a tossup whether to repair or buy a new one.

Typical city air has 5 million particles per cubic foot.  There are processes that require a maximum of 1 particle per square cubic foot.

People are among the worst offenders, as far as particle generation goes.  If you walk at a good clip, you emit 7.5 million particles per minute.  Even sitting still, you are still emitting particles.  A smoker is a particle-emitting dragon long after the cigarette, and a sneezing worker is even worse, a veritable Krakatoa.

City water is not pure enough to be used — it’s full of bacteria, minerals, particulates, and other junk.  To make city water clean enough requires many filters, UV-light, and other water treatments.  Some fabrication plants use millions of gallons of water a day, requiring a huge investment in water processing and delivery systems.

Microchip fabrication is primarily a chemical process, requiring ultra-clean 99.9999% chemicals and 99.9999999% gases.   About one in five steps use water or chemicals to clean the wafers or prepare their surface for the next layer.

Firemen practically need a chemical engineering degree to inspect and fight fires in a chip fabrication plant.   During a fire, they risk being exposed to volatile, flammable, or combustible solvents, and chemicals like arsine, used in chemical warfare.

The chips also require humidity to be just right.  If the humidity is too high, the wafers accumulate moisture, and the layers won’t stick.  Too dry and static electricity will suck particles out of the air and practically glue them to the surface, they’re so hard to remove.

So it shouldn’t surprise you that it costs over 3 billion dollars to build a clean room. The inside is composed of non-shedding materials, especially stainless steel. Floors have sticky mats to pull dirt off of operators’ shoes.  Pens, notebooks, tools, and mops – everything is built of material that sheds as few particles as possible, but even so, equipment particles cause a third of the contamination.

How chips are made

Wafers move from workstation to workstation and have different operations performed on them at each one.  Wafer fabrication for a chip might involve 450 processes with operations that overall take several thousand individual steps. The machines that make this all happen include high-temperature diffusion furnaces, wet cleaning stations, dry plasma etchers, ion implanters, rapid thermal processors, vacuum pumps, fast flow controllers, residual gas analyzers, plasma glow dischargers, vertical furnaces, optical pyrometers, etc.

If you were shrunk to chip size and tied to a wafer, you’d go through the car wash from hell.  You’ll be moved along by robotic wafer handlers from one machine to the next, where you’d be layered with different materials, centrifuged, electro-polished, dyed, scraped, heated to 1,800 F, ultrasonically agitated, sputtered, doped, hard baked, dipped in toxic chemical baths, irradiated, blasted with ultrasonic energy, spray-cleaned, dry-cleaned, scrubbed, micro-waved, x-rayed, shot with metal, etched, and probed.

At various points, the “Survivor” show comes on.  Chips are examined at an atomic level for defects, and their electrical functioning tested. They’re usually thrown out if anything is wrong, since most mistakes can’t be fixed.

There are many problems that can cause a chip to fail besides contamination. The wafer must be perfectly flat in structure and while it goes through the workstations.  If the wafer were 10,000 feet high, you’d see bumps or holes no higher than 2 inches – more than that and the layering is thrown off.   If the wrong step was performed after 3,841 correctly performed steps, the chip was under or overheated, the layer didn’t fully stick, was improperly aligned before the next layer was added, or a chemical misapplied, the chip is thrown out.  It’s amazing any chips make it out the door.

After your makeover, you’d emerge in a designer outfit composed of up to 25 layers embedded with millions of transistors, diodes, and resistors.  You’ll find yourself “best in show” at tattoo competitions and irresistible to Terminator fans.

The Case for collapse starting sooner than later

Jared Diamond lists five main factors for the collapse of civilization.[46]  All five are evident. The first two reasons, collapse from environmental reasons and climate change are so evident they require no further comment.

The third factor is not being able to adapt to new conditions.  Dmitry Orlov makes a good case for the eventual collapse in the United States being much harder than the recent collapse in the former Soviet Union due to our cultural weaknesses.[47] Ecologists believe that we needed to have started adapting to the decline of energy in the 1970’s by reducing our population and encouraging small family farms to get people back to the land.

The fourth reason for collapse is “relations with hostile neighbors”.  There is reason to believe sleeper Jihad cells lie in wait of an opportunity to blow up key pieces of infrastructure in America.  Russia, China, and Europe may unite against the U.S. to prevent America from taking the lions’ share of the remaining oil.

On the fifth factor, relations with friendly nation, Diamond said: “Almost all societies depend in part upon trade with neighboring friendly societies, and if one of those friendly societies itself runs into environmental problems and collapses, that collapse may then drag down their trade partners. It’s something that interests us today, given that we are dependent for oil upon imports from countries that have little political stability in fragile environments”.

Diamond’s “loss of trading partners” factor is another reason computers won’t survive PetroCollapse.  As global shipping, factories, and countries have a hard time keeping the lights on; computers will stop being made as supply chains break down.  If even one of the dozens of types of single-sourced equipment or pure chemical suppliers goes out of business, the assembly line stops.

Andrew Gould, CEO of Schlumberger, said of the oil decline that “An accurate average decline rate is hard to estimate, but an overall figure of 8% is not an unreasonable assumption”.[48]

Matt Simmons also believes that an 8% rate of decline is possible, given how Saudi Arabia’s fields were mismanaged, the use of technology to extract the oil sooner than it would have otherwise been pumped, other super giant oil fields having depleted rapidly after their peak, and the likelihood that Saudi oil reserves are probably half of what is reported.

The decline after peak might initially be low, buying a few years of time, but if it does reach 8% per year, world oil extraction would decline by almost half in eight years.   That is likely to lead to the collapse of civilization, because there is too little time to adapt.

Preservation of Knowledge

A project to preserve knowledge may be unable to continue in an unstable society beset with power outages, hunger, and crime. Once rationing and shortages begin, agriculture and other essential services will receive the most energy.   Scientists will be unemployed.  It is very likely that resource wars will erupt all over the globe, so the military will be taking a large portion of the dwindling energy resources as well. [49] [50] [51] [52] [53] [54] [55]

The time to begin is now, before we begin the inexorable retreat to wood as civilizations’ main energy source.

We’ve reached the point where we need to be concerned about the preservation of knowledge.  This cannot be done with computers, which are the least likely component of all to survive long-term, but this is the main plan for storing knowledge at institutions dedicated to this issue.

Computers are the top cards in the civilization house of cards.  Knock out any below and it all crumbles.  Computers have too many complex, energy intensive inputs and dependencies (Hawken, Shaw 2004, Shaw 2005, Boberg)

How can it be done?

We may be able to cannibalize computers for parts to keep some machines running, but eventually all the knowledge stored in computers will be unavailable.  By that time, most of the paper in library books will have decayed, become nesting material for rodents, or burned to heat homes.

Although archival paper and microfiche can last for five hundred years when kept at ideal temperatures and humidity, power outages will make it impossible to maintain them for that long.

It’s likely the unprecedented stable weather we’ve had the past ten thousand years will change, not only given the earth’s past history, but from our chemical alteration of the atmosphere.  While there may be initial global warming, that could change quickly to an ice age, or to extreme weather, with the climate warming and cooling so quickly that agriculture becomes tenuous (Cox).

If it is possible to etch words into metallic or other extremely durable substances, we ought to do it, not only for the coming dark ages, but to enable some knowledge to survive through future climate changes.

After all, we once put a disk on a space probe to explain humanity to potential aliens, why can’t we do that for our descendants?

Clearly not everything in print can or should be saved.  Priority should be given to information that would be useful to a society far simpler than ours.

We should leave our descendents with information they can use and be amazed by. We owe it to them.  It’s the least we could do considering we’ve driven so many species to extinction and left much of the land a toxic, deforested, desert.  If we can spend billions on microchip factories that are out-of-date within two years, surely we have the resources to save some useful knowledge and music for our descendants.

We need to find better materials than paper and clay tablets to preserve knowledge.  Someday there will be a new renaissance.

Maybe it’s as simple as converting Coca-cola factories from making soda cans to printing aluminum texts.

References



[1] Charles Hall, T. Pradeep, J. Hallock, Cutler Cleveland, M. Jefferson. 20 Nov 2003. Hydrocarbons and the Evolution of Human Culture   Nature 426, pp. 318–22.

[2] Robert L. Hirsch, SAIC, Roger Bezdek, MISI, Robert Wendling,  MISI. Feb  2005. Peaking of World Oil Production: Impacts, Mitigation, & Risk Management

[3] Standby Gasoline Rationing Plan. June 1980. U.S. Department of Energy Economic

Regulatory Administration, Office of Regulations and Emergency Planning

[4] M. Hoffert, et al. November 1, 2002. Advanced Technology Paths to Global  Climate Stability: Energy

for a Greenhouse Planet. Science, 298: 981-987.

[5] Garrett Hardin. 1995. Living Within Limits: Ecology, Economics, and Population Taboos. Oxford

University Press

[6] Transcript of Jimmy Carter televised speech April 18, 1977

http://www.pbs.org/wgbh/amex/carter/filmmore/ps_energy.html

[7] Vaclav Smil. 2000. Enriching the Earth: Fritz Haber, Carl Bosch, and the Transformation of World Food Production. MIT Press.

[8]  “It is clear, therefore, that by the transition to a complete breeder-reactor program before the initial

supply of uranium 235 is exhausted, very much larger supplies of energy can be made available than

now exist.  Failure to make this transition would constitute one of the major disasters in human

    history.” National Academy of Sciences.  1969.  Resources & Man. W.H.Freeman, San Francisco. 259.

[9] K. Deffeyes. 2001. Hubbert’s Peak: The Impending World Oil Shortage. Princeton University Press

[10] Matthew Simons. 2005. Twilight in the Desert: the coming Saudi Oil Shock and the World Economy.

Wiley

[11] W. Youngquist. 1997. Geodestinies: The Inevitable Control of Earth Resources over Nations &

Individuals National Book Co.   Chapter 3: Minerals and War, and Economic and Political Warfare

[12] The Rimini Protocol: an Oil Depletion Protocol ~ Heading Off Economic Chaos and Political Conflict

During the Second Half of the Age of Oil.  2005

[13] M. Wendling.  June 21, 2005 Britain Considers Energy Rationing to Meet KyotoObligations http://www.cnsnews.com

[14] International Energy Agency. Feb 28, 2005. Saving Oil in a Hurry: Measures for Rapid Demand

    Restraint in Transport

[15] J. Darley. 2004. High Noon for Natural Gas: The New Energy Crisis. Chelsea Green.

[16] Energy Information Agency. 2000. Accelerated Depletion: Assessing its Impacts on Domestic Oil and

Natural Gas Prices and Production and Peter Dea, CEO of WGR (Western Gas Resources), Nov 12,

2005  at the Denver ASPO conference, http://www.theoildrum.com/story/2005/11/12/0150/4833

[17] J. Boxell. Oct 10, 2004. Top oil groups fail to recoup exploration costs.  New York Times.

[18] David Pimentel and Tad W. Patzek. March 2005. Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower. Natural Resources Research, Vol. 14, No. 1

[19] Charles Hall. June 2004. The Myth of Sustainable Development: Personal Reflections on Energy, its Relation to Neoclassical Econimics, and Stanely Jevons. Journal of Energy Resources Technology, Vol 126 pp. 85-89

[20] S. Pacca, D. Horvath 2002 Greenhouse Gas Emissions from Building & Operating  Electric Power Plants

in the Upper Colorado River Basin.Environmental Science & Technology /Vol 36, # 14  3194-3200

[21] S. Kruglinski.  April 2004. What’s in a Gallon of Gas? Discover Vol. 25 No.04

[22] American Society of Civil Engineers Report Card for America’s Infrastructure.  2005.

http://www.asce.org/reportcard/2005/index.cfm

[23] L. Garrett. 2001. Betrayal of Trust: The Collapse of Global Public Health. Hyperion

[24] United States Environmental Protection Agency, Office of Water . 2002. The Clean Water and Drinking

    Water Infrastructure Gap Analysis.  (4606M) EPA-816-R-02-020 www.epa.gov/safewater

[25] A. R. Hoffman. Aug 13, 2004. Water and Energy Security. Institute for the Analysis of Global Security.

[26] J. Gerard. Nov 1, 2005. A vulnerable natural-gas supply The Washington Times http://www.washtimes.com/op-ed/20051031-090107-9287r.htm

[27] C. Skinner, G. Gettel. 1998. Solid State Technology. p. 48.

[28] R. Buys. 1998. Fire department participation on a fast track construction project for the semiconductor industry.  http://www.usfa.fema.gov/pdf/efop/efo28646.PDF

[29] Barry c. Lynn. 2005. End of the Line: The Rise and Coming Fall of the Global Corporation. Doubleday.

[30] Associated Press. Jul 02, 2004.  Oil prices raising costs of offshoots By Associated Press http://www.tdn.com/articles/2004/07/02/biz/news03.prt

[31] Forbes. May 24, 2004 Soaring energy prices dog rosy U.S. farm economy.

http://www.forbes.com/business/newswire/2004/05/24/rtr1382512.html

[32] Washington Post. March 17, 2004. Chemical Industry in Crisis: Natural Gas Prices Are Up, Factories Are Closing, And Jobs Are Vanishing

[33] R. Martin.  June 2002. Blame it on super-rust, a virulent form of corrosion that has destroyed hundreds of ships and could sink the oil industry. Wired. http://www.wired.com/wired/archive/10.06/superrust.html

[34] G. Luft, A. Korin. Nov/Dec 2004.  Terrorism Goes to Sea. Foreign Affairs. http://www.iags.org/fa2004.html

[35] Institute for the Analysis of Global Security. 2005. Iraq Pipeline Watch Attacks on Iraqi pipelines, oil installations, and oil personnel.  http://www.iags.org/iraqpipelinewatch.htm

[36] E. Eckholm. July 30, 2000. Chinese Farmers See New Desert Erode Their Way of Life. http://www.nytimes.com/library/world/asia/073000china-farmers.html

[37] New Scientist. Sep 18, 2004. China’s changing farms damaging soil and water.

http://www.newscientist.com/news/news.jsp?id=ns99996399

[38] L. Brown. Mar 10, 2004 China’s Shrinking Grain Harvest. How Its Growing Grain Imports Will Affect World Food Prices. http://www.earth-policy.org/Updates/Update36.htm

[39] H. French. Apr 14, 2002.  China’s Growing Deserts Are Suffocating Korea. New York Times.

[41] S. LeBlanc. 2003. Constant Battles: The Myth of the Peaceful, Noble Savage.  St. Martin’s Press

[42]National Center for Injury Prevention and Control. 2002. Firearm related mortality. http://webapp.cdc.gov/sasweb/ncipc/mortrate10_sy.html (select firearm)

[43] Sandra Dibble. Grounded Ship draws Curious. Tugboats are unable to free it; crowds line beach to

   watch. Dec 31, 2005. San Diego Union-Tribune.

[44] P. Van Zant. 2004. Microchip Fabrication, fifth edition. McGraw-Hill.

[45] M. Quirk, J. Serda. 2001. Semiconductor manufacturing technology. Prentice Hall.

[46] Jared Diamond. 2004. Collapse:  How Societies Choose to Fail or Succeed. Viking

[47] D. Orlov. 2005. Post-Soviet Lessons for a Post-American Century. From the Wilderness website.

[48] Andrew Gould. April 4, 2005. Howard Weil Energy Conference. New Orleans, Louisiana.

[49] Paul Roberts. June 28, 2004.  The Undeclared Oil War. Washington Post.

[50] M. Scully. Oct 1, 2004. The End of Easy Oil. Chronicle of Higher Education.

[51] G. Luft. Feb 3, 2004. U.S., China Are on Collision Course Over Oil.  Los Angeles Times.

[52] S. Glain.  Dec 20, 2004.  Yet Another Great Game:  Beijing’s aggressive petro-diplomacy in Africa has put it on a collision course with Washington.   Newsweek.

[53] James H. Kunstler. February 3, 2005.  Kunstler on China. http://www.kunstler.com/mags_diary12.html

[54] G. Gordon. Apr 3,2005. Recession, famine and war seen if demand outstrips supply Experts fear day when oil runs low. Sacramento Bee.

[55] Robert S. McNamara   May/Jun 2005   Apocalypse Soon.   Foreign Policy.

Boberg, Mark. Jun 28, 2000. PV. http://groups.yahoo.com/group/energyresources/message/1608

Cox, John D. 2005. Climate Crash: Abrupt Climate Change And What It Means For Our Future. Joseph Henry Press

EPRI (Electric Power Research Institute). 2003. Electricity Technology Roadmap: Meeting the Critical Challenges of the 21st Century: Summary and Synthesis. Palo Alto, Calif.: EPRI.

Hawken, P. et al.. 1999. Natural Capitalism. Earthscan Publications. Chapter 3: “Waste Not”, pages 49-50.http://www.bml.csiro.au/susnetnl/netwl49E.pdf 14-15

Shaw, Chris (a.k.a. Feral Metallurgist). July 12, 2004. Energy is the Donut, economics is the Hole.  Unknown News. http://www.unknownnews.net/040712a-fm.html

Shaw, Chris. Apr 26, 2005. Come on in — the quicksand’s fine.  My part in the oil crisis …  Unknown News. http://www.unknownnews.net/040712a-fm.html

Posted in Preservation of Knowledge | Comments Off on Peak Resources and the Preservation of Knowledge

Gardening – Grow Your Own Food

Best Home or small farm method

I’ve taken many gardening and permaculture classes, but by far the best way to grow your own food is explained in John Jeavons’ book “How to grow more vegetables And Fruits, Nuts, Berries, Grains and Other Crops Than You Ever Thought Possible on Less Land Than You Can Imagine”. I also recommend taking his biointensive workshop in Willits CA. Jeavons has you plant at least 60% of your garden plot with high-calorie potatoes, corn, beans, and grains.

Grow food with calories that doesn’t need refrigeration

This is essential because it won’t be long before refrigeration goes away as the grid gets less reliable. You will need to grow as much of your own food as possible, and try to have supplies of dried corn, beans, and above all wheat, which stores the longest – up to 25 years if properly stored. Grains are the basis of civilization because of this. It was very common to have a year or more of bad harvests. Anyone who could afford to stockpile enough grain to see them through these years of hardship stood a better chance of surviving until growing conditions were good again.

Any kind of seed, whether its wheat, beans, corn or whatever, is chock full of nutrition, because it has to have everything a baby plant needs. They’re full of vitamins, minerals, essential healthy oils, fiber, and can also have a good amount of protein.

You need to start using whole grains and legumes now, don’t wait to plant them. I wrote a book called Whole Grain Artisan Chips and Crackers to teach people how to use any kind of grain, nut, legume, or bean flour to make crackers, flatbreads, and chips. Besides being delicious and easy to make, crackers can last up to a year, so they’re a good emergency food, and I eat them as my go-to snack since they never go stale like bread. This is the most simple food you can make — just mix flour and water.  You don’t have to buy the book, my website www.wholegrainalice.com has videos and recipes.

Plant an orchard with nut and fruit trees

Hazelnut trees are a good choice (see Woody Agriculture – On the Road to a New Paradigm)

 

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Human Nature is to blame

Many people have said this, as I run across examples in my archives I’ll add them to this post.

Catton would say that no one is to blame, overshoot and die-off is the fate of all species.

Ilargi at theautomaticearth:

“We have done exactly the same that any primitive life form would do when faced with a surplus, of food, energy, and in our case credit, cheap money. We spent it all as fast as we can. Lest less abundant times arrive. It’s an instinct, it comes from our more primitive brain segments, not our more “rational” frontal cortex. We’re …not more devious or malicious than more primitive life forms. It’s that we use our more advanced brains to help us execute the same devastation our primitive brain drives us to, but much much worse. That’s what makes us the most tragic species imaginable. We’ll fight each other, even our children, over the last few scraps falling off the table, and kill off everything in our path to get there. And when we’re done, we’ll find a way to rationalize to ourselves why we were right to do so. We can be aware of watching ourselves do what we do, but we can’t help ourselves from doing it. Most. Tragic. Species. Ever.

We are ready and willing to destroy our societies, and eventually our planet, over a few scraps falling off the big table, like a Mac Mansion, an iPod, an SUV, because that is who we really are. Because we can make ourselves believe those are not scraps, that we are indeed kings now, seated at the table, and heaven knows we have lived better than ancient kings of any age over the past decades.  And most of all because we are no good at all at planning long-term. We can pay into a pension plan, that seems long-term, but at the very same time we can’t figure out that if at some point there’s less new contributors than older ones, that plan must and will implode. We all will swear we love our children above anything in the world, and most would give their lives for their kids. And we honestly mean it when we say it. The reality, however, is that we leave our children with a world that is polluted beyond recognition, in which species disappear at a rate 1000 times faster than before, and in which everything we’ve trained our kids for is vanishing right before their eyes. Our “leaders” are psychopath lackeys of a long bankrupt financial system that uses its servants to gobble up the yet to be earned wealth of our progeny, and we just sit by and watch it happen”.

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Why our Capitalist Gene is pushing us to destruction

Why our Capitalist Gene is pushing us to destruction

Paul B. Farrell.   Feb 12, 2014. Marketwatch.

Yes, we’re all capitalists. Today 7.2 billion. Soon 10 billion humans, all with a Capitalist Gene that says “me first, climate later.” Human nature. Basic psychology, evolutionary biology, brain science. When the chips are down, our instinctual, fight-or-flight gut reaction for self-preservation wins. Protect yourself, your family.

Yes, you may want a sustainable planet for future generations. Maybe you drive a hybrid. Recycle. Eat organic. May you’re even on a crusade to save the planet or save civilization from eventual collapse. Save the environment from global-warming disasters: melting arctic glaciers, rain forests disappearing, urban smog, toxic pesticides, dying species, deserts killing farm lands, ozone burning, lost energy reserves, diseases, pandemics.

That’s capitalism at work. And we’re all capitalists. Soon we’ll pass a point of no return, with 10 billion on Planet Earth, unprepared, still demanding, burning energy, exhausting scarce resources, driven by our inner instinctual, me-first Capitalist Gene. Why? All warnings about climate change, global warming and environmental threats will never be as immediate and strong as our “daily bread” need, thirst and hunger pains, kids crying for a meal, a drink today.

Capitalist Gene drives us, whispering ‘me first, climate later’

The Capitalist Gene parallels what evolutionary biologist Richard Dawkins saw in his classic work, “The Selfish Gene,” the natural evolutionary process passing genes along. Personality traits from parent to child, to species, to future generations. The Capitalist Gene is in all humans, there before Adam Smith’s theories, before Keynes, before Alan Greenspan and Paul Ryan embraced Ayn Rand’s extreme capitalism, before Jack Bogle warned of “mutant capitalism” in his classic, “The Battle for the Soul of Capitalism.” The Capitalist Gene is in all humans, has been since the dawn of civilization.

When making economic decisions … when the capitalist brain chooses between saving and getting personally richer … between saving the environment or paying a new tax or losing a benefit or right, paying an extra fee … then the Capitalist Gene kicks in, and for most humans we’re biased toward short-term self-interest. Self-preservation today is our first priority.

The Capitalist Gene is our instinct for survival and instant gratification. It’s in our brains, our blood, our DNA structure, motivating our rational thinking process, while still hoping someone, somehow, somewhere will eventually solve all the world’s problems we created, will heal the world, someday, in the future, for future generations. While we take care of ourselves first. That’s capitalism.

Don’t believe me? That’s natural. You’re a capitalist, not some hard-core ideological climate-science denier. Skepticism is inherent in the capitalist mind-set, our brains, the collective conscience of all capitalists. Trust yourself.

Ready? So take a close look at the following profiles identifying the classic human Capitalist Gene in billions of capitalists across the world. See how many profiles fit America, the world’s 7.2 billion humans. How many are driven by our universal Capitalist Gene?

Now ask yourself: Who’s going to cut back. First? Voluntarily? Which nation, farmer, entrepreneur, logger in the Amazon? Who? Who will chose without being forced by some climate catastrophe, global war, pandemic, hunger, suffering in our competitive global capitalism arena? Read about a world of capitalists:

Big Oil Capitalists and Automobile Capitalists: An eternal love fest!

Not only do all humans need transportation, the automobile is a psychological status symbol. We have a deep love affair with our Mustang, Jaguar, Bentley. Want a better one next. There are more than 1 billion autos in the world, used by billions. America has 240 million. China 80 million. And Big Oil just keeps riding auto demand. A trillion dollars in annual revenues. Cutbacks? No way.

Consumer Capitalists: More is never enough

Rich, middle-class, poor, we all have a Capitalist Gene. 310 million Americans buy food, electronics, pay local taxes, drive the economy, make sure their kids get an education. Consumers want more money, goods, progress, a better future. Think about it, the American Dream is built on the Capitalist Gene, was deep in our collective conscience before the American Revolution. We want it all.

 

Retiree Capitalists: Save our Social Security first

Capitalism is fiercely competitive. AARP lobbyists fight for the best tax deals for 72 million boomers. Older folks are the fastest growing segment of global population, in America, China, throughout the world. All want security, earned entitlements, retirement nest eggs.

Worker Capitalists: Labor wants a bigger piece of the action

Wall Street, CEOs, shareholders and the Super Rich want to cut corporate taxes and workers benefits. While our capitalist economy favors the moneyed class, the inequality gap is widening, and like the Crash of 1929 will trigger a revolution and a new depression, with our working class demanding a broader share of capitalism’s rewards.

Food-stamp Capitalists: Below the poverty line, but upwardly mobile

“For the poor, ‘recovery’ is a mirage … Record 46M get food stamps,” headlined a USA Today special report. It’s worse today after a couple years: Capitalism is failing them, thanks to conservative obstructionists. Americans need jobs, income, new leaders creating policies so the 46 million get off food stamps, become consumer-capitalists driving a stronger economy.

Government Capitalists: Lobbyists, bureaucrats, politicians

Who really runs America? The 537 politicians elected to the White House, Senate and Congress? No. A bizarre network of 261,000 lobbyists, over 5,000 appointed bureaucrats, plus millions of civil servants, military, postal workers, state-government employees, teachers, police, firefighters, and private contractors. About 40 million labor-capitalists with personal interests in a continuing government payroll.

Hybrid Socialist-Capitalists Governments: China and developing nations

In “Every Nation for Itself: What Happens When No One Leads the World,” foreign policy expert Ian Bremmer illustrates how the Capitalist Gene drives sovereign nations into competition worldwide. The U.S. competes with China’s hybrid mix of capitalism, communism, socialist planning, state-owned banks, stock exchanges. Plus there’s fierce competition for global resources, like capital-rich/food-poor nations buying and hoarding worldwide agricultural lands for future domestic demands, depriving poor nations, setting up rebellions, wars, revolutions.

Philanthropic Capitalists: Balancing microcapitalists worldwide

Some philanthropists like Bill and Melinda Gates are actually encouraging capitalism among farmers in poor nations, where farming is the primary employment. New microcapitalists. Family planning and contraceptives are also freeing African farmers to increase incomes, tapping into the universal Capitalist Gene spirit of all farmers.

Silicon Valley Capitalists: Technology, entrepreneurs, private equity

A couple years ago MIT Technology Review asked “Why Can’t We Solve Big Problems?” The article made a strong point that leading technology minds are not only willing but also nurturing a new generation of entrepreneurs who will solve the tough challenges of the 21st century.

All the warnings about melting glaciers, rain forests vanishing, toxic urban smog, pesticides, dying species, farm lands becoming deserts, ozone burning, lost energy reserves, diseases, pandemics and so much more won’t matter much for capitalists in denial, when a crash, collapse, a massive wake-up call will be needed to knock some sense into our capitalist brains, maybe even jolt our Capitalist Gene into an evolutionary jump into a new dimension, collective rather than competitive … before it’s too late.

Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.

 

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Civilians caught in a war

[ It’s very likely that the U.S. will collapse hard post-peak with so little preparation, and if we all don’t shoot one another the paramilitaries, gangsters, mafias, and bandits will. Or loot or move into our homes. Here are some examples I found in these history books:

  1. Peter Englund’s “The Beauty and the Sorrow” (2011).
  2. Brian Hall. 1988. Stealing from a Deep Place. Travels in Southeastern Europe.
  3. Giles MacDonogh. 2007. After the Reich. The Brutal History of the Allied Occupation.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

Homes

By 1945 over 1,800,000 German civilians died and 3,600,000 homes had been destroyed (20% of total), leaving 7.5 million homeless. After the war, another 16.5 million Germans were driven from their homes. Of these, about 2,250,000 died. Germany was so destroyed by bombs that towns often had few homes remaining. Occupying forces took the best homes over. Many Germans lived in ruins or holes in the ground, especially orphaned children.

WWI: armies take over homes of the wealthy. The Germans had to retreat from this Polish home, which the returning owner described as: everything was torn, smashed, ripped out, spilled, hurled around, knocked over and fouled. Every drawer pulled out, every wardrobe emptied.  The smell was indescribably awful. The library had been completely vandalized. The contents of all the shelves were emptied, the floor invisible beneath a layer of torn books and papers, all of it trampled by rough boots.”  Every dish and plate was hurled on the floor after they were used.  Jars that used to have jam, honey, and vegetables had been eaten and replaced with human excrement. They hadn’t found the food hidden in the sofa. Food could not be bought with money, potatoes and eggs were the most expensive.

Budapest, Hungary WWII: One woman had a large, opulent home that was one of the few still intact. It was taken over by 3 armies during the war: Hungarian, German, and Russian. All of the armies let the family live in the basement.

Isolated farm houses are vulnerable

German farms after WWII were robbed by Polish and Russian gangs

Roads are choked with fleeing Refugees

Most people don’t flee until it’s too late, they wait for the sounds of battle, because they don’t believe all the rumors flying about.

WWI Poland:   “the population was pouring out of the city in long files, men, women, children, dogs, cows, pigs, horses, and carts all mixed up in one grand mélange. On carts, on foot, on horseback. Everyone making shift to save himself. All of them carrying away what they could. Exhaustion, dust, sweat, panic was on every face, terrible dejection, pain, and suffering. Their eyes were frightened, their movements fearful: ghastly terror oppresses them. I lie sleepless at the side of the road and watch this infernal kaleidoscope. There are even retreating military wagons, routed infantry, lost cavalry

Rape

From tribal societies to the modern soldiers of today, rape and pillaging have always been a motivation. Women try to prevent this by looking unattractive – nuns used to cut off their noses in hopes invading Vikings wouldn’t rape them, committed suicide, or slept with high-level officers for protection and/or food.

Pillage

WWII Germany: Russians took booty of all kinds back to Russia as “repayment” — millions of tons of industrial machinery, sewing machines, art work, etc.

Black Markets

Germany after WWII: In urban areas, the black market thrived near rail road stations, as did prostitution and the homeless. Cigarettes were the main currency. Other popular items were soap, gum, butter, flour, coffee, chocolate, alcohol, wood, and oranges. Buyer beware: some tins had nothing but filth, goods might be rotten.

City dwellers go out to the country seeking food

WWII Germany: Special trains took town and city folk to country areas to trade with farmers, who preferred that over taking the risk of going to the city and having all of their produce stolen. If no farmers were around, city folk harvested the farmer’s crops and paid nothing for them. The Farmers didn’t trust money – you had to exchange useful goods. Farmers also converted their crops to alcohol.

WWI: Farmers told food at very high prices on the black Market. Townspeople were very much harmed by this since they had nowhere to grow their own food, so some of them broke into shops to get food.

Getting water during war outside the home

WWII Budapest: “People helped each other, shared their food, protected each other. Like going down for the water. Down in the streets, with the water bottles on our heads, we couldn’t tell where shots were coming from. Peole in the houses all down the hill would stick their heads out of windows and tell us which way to go or they’d tell us to wait, if the shooting was too bad for the moment”.

Coping with the Cold

Romania (1980s): Everything is rationed: the gas, electricity, oil. There is hardly any wood to burn. No one has fuel for their cars, so the roads are empty. My grandmother has no heat in her house some days, and on the coldest days she has to go to another house. She spends the winter with rags tied around her feet, her neck, her hands—and some days she just sits, all day, under a cover. She doesn’t leave it because she will lose her heat”.

 

 

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