Global Warming, Peak Oil, and Economic Crisis

When Zach and I started this blog, we agreed that it should be in the technical domain, rather than the political one as much as possible. The hope was that with high quality information available to the political class and activists, the “solutions” would be forthcoming. As time goes on though, it seems that even as difficult as our energy challenges are, the political ones are tougher. This reality requires the Energy Strain blog to deal with issues that may be considered to be more in the political domain.

For the moment, the world seems focused on “Climate Change.” Climate change is the new term for what was originally termed “Global Warming.” It is difficult to figure out who changed “Global Warming” to “Climate Change.” I would argue that both of these names are actually very poor names for this problem. One thing that we know for sure is that the Earth’s climate has been changing for the entire time that it has existed. It seems to me that if you wanted to come up with a name to motivate people to action, you would not use a term that describes something that is “normal.”

Peak Oil is an equally poor name for the problems that people are using it to describe. Peak oil, when used in the M King Hubbert sense, is a perfectly correct term. Hopefully we all know of the work of M King Hubbert, and his curves describing how oil fields age. The problem with the way that “Peak Oil” is now used is that it now means hundreds of different things to different people. From the simplest and obviously correct meaning, that a mathematical curve can be applied to the theoretical extraction rate of an oil province, Peak Oil is now also being used as a substitute term for we’re running out of oil, Malthus was right, all problems are caused by running out of oil, and the end is coming.

Economic crisis is also a very poor name for a widely varied set of symptoms. Economists originally called it “Sub-Prime” Crisis, then “Recession,” and now their favorite seems to be “Economic Crisis.” The names are likely to change as the symptoms of the end of the Industrial Age present themselves.

After studying the end of the Industrial Age for about five years, it all seems quite simple to me. These problems are all related, and must be contemplated and solutions proposed for the actual problems, not just the symptoms, and not with solutions that “feel good,” but rather solutions that fit the physics of the problem.

The problem is simple.
Man found a substance in Earth’s “basement” that allowed him to temporarily overcome the normal limit of living on Earth, that limit being: living on the energy that comes from the Sun. Man used the energy from this substance to continuously increase the amount of energy available from this substance. He also created an economic system that automatically creates more interest debt as time passes, and thus requires economic growth in order that it remain plausible that the interest accumulation could be repaid. As he used this substance, he put the undesired components into the atmosphere, hoping that it would be OK.

Now Industrial Man finds himself in the following situation.
1. The net energy (gross energy minus the energy used in the extraction) from fossil fuel is in decline.
2. His financial system is collapsing because repayment of the interest is not plausible, and the economy cannot grow enough without more energy to make it plausible.
3. The Earths formerly sequestered carbon is now in the atmosphere, and he is not sure exactly what it means. But most agree it’s probably not good.

So Global Warming, Peak Oil, and financial collapse are the same problem.
Maybe we should name the entire situation “DADESFFC” for Dying and Dysfunctional Energy System Feeding Financial Collapse. Ok, so maybe it’s not a sexy acronym. Or maybe it’s too complicated for some to understand. But the point is that without understanding the big picture, and without looking for solutions to the actual problems, we are left in the dark shooting at the symptoms.

Lately “Climate Change” has been in the news with the negotiations in Copenhagen, Denmark. Some of the activists seem to be advocating that we solve the problems with massive redistribution of wealth. Their solutions are simple–take money from the polluters and give it to the less fortunate. Problem Solved. If only it were anywhere near this easy.

The reality is that the technologies that are available to “replace” the current fossil fuel technologies are not drop-in replacements. A society created from alternative energy technologies will be profoundly different. Here are some of the technical challenges along with the implications of a post fossil fuel economy:

1. Renewable energy sources are powered by low density energy.
Low density means that the systems will be very large, and consume huge quantities of resources and labor in order to construct. In an economic sense, this by necessity means that the systems will be expensive.

2. Renewable energy sources have low energy return on energy investment (EROEI). Low EROEI means that renewable energy systems will have low profitability for their investors, and will take many years to return their initial investment. It also means that there is not room for mistakes in the implementation of these systems. Small mistakes in implementation that cause increased energy consumption, will convert low EROEI energy “production” systems into energy “sinks,” i.e., they cause consumption rather than provide energy.

3. Renewable energy systems are not a drop-in for fossil fuel technologies. This means that much of the most expensive equipment in our fossil fuel powered industrial economy must be replaced. A replacement society that is powered from renewable energy sources will be less wealthy, and have less complexity than a fossil fuel powered one. This may mean that there is no excess wealth to transfer from the former “wealthy” countries to the “developing” countries.

Simply transferring wealth from the “wealthy” fossil fuel consumers to the “developing” countries is very likely to aggravate the problems. It could leave the “wealthy” countries without enough surplus capital to develop renewable technologies, and it could just cause increased energy consumption in the “developing” countries.

Converting to a post fossil fuel era will not be easy. Resources will be scarce and financial systems very unstable. This means that in order to successfully accomplish it, we will have to understand what we are really up against, not choose one symptom and propose a “solution” for it that aggravates the real problem.

If we cannot solve the technical problems of operating a modern society from renewable energy, the only “deal” that we may be able to make is to lower our standard of living to their standard of living, if they agree not to try to raise theirs.

It goes without saying that this will be a difficult political sell, and I fear that those who are pushing these large redistributions aren’t as concerned about the environment as they claim, meaning that this would not be an acceptable solution, even though it may be the only one that is technically feasible with our current technology.

3 thoughts on “Global Warming, Peak Oil, and Economic Crisis

  1. Leslie Martinez

    Pretty good article that simplifies the issues for those who maybe havent or can’t figure it out. Of course your article over simplifies some of the issues also. Your last line about “this may not be an acceptable solution, even though it may be the only one technically feisible at this time”. Which solution do you mean? The redistribution of wealth or total revamp of dependancy on fossil to alternatives?

    I would argue that Mary’s “major mind shift” occurred over 25 years ago with the last huge oil and energy crisis, for those older than dirt, and when the schools started indoctrinating. One of the problems that simultaneously Government started increasing and creating new and more entitlement programs that took care of more people and government buildings with more taxes on the very people who were turning Green. Due to economic’s and for the environment, that at that time was the Crisis of Global Cooling, so called education. Further at the time Global Cooling was spread, the fear was reinforced individually by large heating and air conditioning (evaporative cooler) bills in the summer. Even the most environmentally conscious in the early 80′s was installing wood stoves and cutting their own wood, and creating jobs for the wood cutters rather than buy trucks and trailers. Harming the hiways while creating jobs, saving on winter heat bills while polluting the air. Then the legislatures moved in, limited the wood stoves but gave tax credits for Solar and Double pane windows.

    OF course redistribution was in many of those entitlement and tax increases for low income housing etc. For those who own homes or didnt want the expense of utility and upkeep, they created jobs by updating houses, refinancing and generally trying to save money in the long run or incase of the global cooling or another energy crisis. (Now we actually are further subsidizing low income through PNM environmenal fees along with taxes). Now 30 years later, its “been there done that” and probably did it a couple of times.

    For those still trying to live and keep home bills low, refinance at lower than the 18% rate of 1981 interest, cost thousands in NM just to refinance mortagages. They went over the mortgage amount to get a tax break for the “newer energy windows, better insulation, solar etc”, raising the house payment but lowering the bills by that elusive 30%. Some in rural areas or with engineering bent or more money, even built the hi-tech solar windmills which regenerated energy back into PNM, but those were & are still are, way to expensive for the average Green homeowner. Many new or younger buyers of homes bought Green houses for more money, thinking utility bills would be really low, only to find rates and fees increases kept bills high by their new standards but not high by the older homeowner standards. THe old homeowner had house payments higher, but interest rates tremendously lower than the 1980′s rates and all the refinance fees paid to the State and BAnks.
    I guess my point is, we talk Cap and Trade, and since I am totally energy efficient except for the electric used by the Well, my neighbors don’t want a “noisey windmill” in the rural neighborhood for the well or for combined neighborhood use, and they are the NEW GREEN ENVIRONMENALISTS. Not in my backyard, even if it is the new technology, even if I could afford it or the neighbors went in as a consortium. HA!Meanwhile all my green, budget consciousness reason for updating and keeping the house efficient, leaves many older Greenies, with energy efficient homes with no air conditioning (cheaper in summer), larger house payments instead of paid off for retirement, and all our NM low income wages redistributed to the poor and renters through entitlement and fees, to the point where many of the poor are more middle income than older homeowners. Thats the difference between the true Greenie for economic reasons and the everyone else should be Green highwage earner. I wonder who hurts the environment more? The one who has to conserve and use less for economic reasons or the addict who thinks everyone can afford a jet and should pay more and redistribute the wealth, just as long as it doesnt inconvenience their lifestyle and abuse?
    Even if the technology were there for a truck or car with 4wheel drive for winter and large capacity for grandkids, could anyone afford to buy the new techology that fits all family size and terrain but Metro? In budgeting and problem solving there has to be short, and long range planning. Global Warming is a Long Term Crisis Goal to create jobs and manufacturing and innovation that is a “maybe” scenario. But short range, we have oil and gas plenty, right now, in the States and it is only Green/Environmental law and legislation that has contributed to the price and foreign oil increases, due to lag time in approval of applications for oil and refineries etc. Meanwhile, this is the 4th winter of cold and extremely high heating costs for people on gas, propane and electricity heat. With no legislator in New Mexico willing to regulate propane for safety and seniors. No increase in drilling or leases. No new Refineries etc. The Government and the Globalists and Greenies have totally abdicated responsibilities for the here and now and the current crisis of jobs and economy. Seen any ads for “Drill Now” since the election last year? Even Cap and Trade addresses how business will trade while individuals will bare the cost, but nobody says or suggests that homeowners who are financed to the helt keeping their “footprint low”, will get one trade or benefit because they don’t use air conditioning or have third generation windows or insulation.

    Wealth has already been redistributed in New Mexico and the U.S. The Global Crisis has produced all sorts of subsidies (ethanol, wind, solar) for limited use now and innovation in the future. But NO ONE has acted to fight or crush the Environmentalists and Lawyers, who lobby and litigate any move to create and use the abundance and resources that we have now. To allow homeowners and businesses with trucks and vehicles, a manageable and reliable method of heating and driving with what is technically available right now, or in the short term! Before credit cards and the ease of Mortage, we were forced to pay cash or lay away. Doctors and hospitals were often payments without interest or charge card fees and interest. Now often the doctors and dentists won’t even see you with insurance, unless you charge the deductibles and co pays, with the gazillion interest. The stupidest terms I hear are Political statements that say “you have to spend more to reduce the debt”. HUH?? Is that the problem with welfare and entitlements recipients? They think budgeting is spend more, create a higher poverty level, so that they will get more???? Ridiculous as it seems, that is how the legislators and professors of economics are teaching and legislating. It is a irrational and illogical statement and it has filtered down to the lowest levels from the most educated levels. If that had been true in the early 20th century, there would not be a middle class. Roosevelt did not spend his way out of the depression, the war created the crisis or jobs and product that was needed by the whole world. See why our State and Federal leaders “think” they can create the crisis to create ourown manufacturing and jobs? Think Internet and Technology Bubble? Same thing. Create the need and they will come! But what in GODS name about NOW?

    So yes, you are right all is intermingled and overlap. But commonsense says individuals can always go back to cash(almost) and try and live within income, but the truth is if you own anything, nobody can get blood from the turnip in lawsuit or poor credit rating. So many, living on subsidy at 200% of the poverty level, are often in much better freedom from fear situations, than those who went “Green” back in the 1980″s. Since income in New Mexico has moved up, only in the last 7 years, there are many who push for the $5.00 a gallon gasoline (and home fuel?) and most of these are University Professors who make much more than the average New Mexican. Heck $5.00 a gallon is nothing to the California or New York worker who makes on average $30,000 a year more than the same job in NM. But with our current one size fits all mentality, every State and every individual is figured on Average, not mean or median.
    Meanwhile, many went green to avoid having to “pay more” when that next energy crisis happened or the Global Freeze happened, when they planned retirement and budgeted. Does anyone wonder why people don’t trust the scientists or the Government, any more? Bait and switch its a heat wave coming instead of a freeze? Sure your still cold and paying for heat but pay out more for that heat crisis coming???? I’ll just freeze snow and ice in my Energy Star Freezer for the future, thank you very much.

    What they didnt foresee and have no control over, is the total idiocy and Greening of the Legislators and Lawyers who can’t plan for the future and yet provide for today commonsense. Can’t seem to see the forrest for the lobbiest trees in deregulation of existing energy needs, while legislating and subsidizing future alternate needs. Thus providing jobs and taxes and infrastructure improvements, at the same time encouraging and ok, subsidizing new means and jobs. Of course it would create jobs now for all the non college graduates who dont mind getting their hands dirty or doing a honest days work, along with engineers and capitalists. You know the ones who won’t do the work of the illegals? Oil wells and gas and shale drilling isnt glamorous but it is honest work with good wages, right here in the states. Wheres the deregulation and suspension of ridiculous environmental habitate law that prohibits our survival of the fitest growth or survival in our own national environment???

    That we buy more and more oil overseas is not because we don’t have natural resources! Water alone is getting scarce, but that didnt stop Washington from subsidizing and “creating jobs” for the corn and ethanol group, never lowering the cost of fuel for the cars.
    Your analysis was good, but many older homeowners and genXers can take the equation and confusion to the lowest level of family budgeting. Theres the future and the now, with environmenalization and with money. Both “Green”, but one very impractical and progressive redistribution with only some future time and jobs as the Goal and excuse.
    The other is practical with both long and short needs met through short and long range planning. Right now the budgeting green, is ignored and with the tax code and entitlements, totally out of whack with present and future planning. Except to make everyone totally dependent upon Government except the very rich. The middle class green will be gone and dependent upon the very rich to replace our solar, triple pane windows, come the near future energy crisis. Give me a thifty budget conscious homeowner anyday, over the ideolog, tunnel vision Environmentalist and their lobbies. They have educated generations and influenced 20 somethings and legislators into the deep hole of illogical finance and worst yet denial of the need for identifying real crisis when they see it. Nor to seek and ye shall find, reverence for answers from parents and grandparents that have already been there done that crisis management.

  2. Dan

    My point is that we have a real problem, not just a crisis that can be used to redistribute wealth. If we don’t start wrapping our minds around the real problem, and doing the best that we can to deal with it, it will do some really mean things to us. I also don’t think that the rich will be spared, at least the ones that are ignorant of thermodynamics, and the state of the fossil fuel system.


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