[FoRK] Closing funny bits, was Re: Malthusian machinations

Jeff Bone jbone at place.org
Wed Jun 16 06:16:02 PDT 2010



Sent from my iPad

On Jun 15, 2010, at 10:18 PM, "Ken Ganshirt @ Yahoo" <ken_ganshirt at yahoo.ca> wrote:

> --- On Tue, 6/15/10, Jeff Bone <jbone at place.org> wrote:
> 
>> ..... (Insert handwave here.) When oil hits say 200 / barrel and supply chains start to crumble, maybe less so.
>> 
> 
> Eugen is looking for the trigger. That's the trigger. But it's not just the price. The price has to be based on genuine supply shortage *and* it has to last. It can't be a blip like in the 70's and more recently.

Agreed.  Cf. "Peak X" for a variety of Xs.

Based on your quoting of at least one "peak oil myth" site I assume that you don't believe peak oil is imminent much less has already occurred.  But unless you are one of these wacky folks that believes the origins of oil are misunderstood and it replenishes at a vastly faster rate than current or anticipated demand, e.g. "God puts it there for us as needed," then it is a CERTAINTY that there will be a peak.  Even without demand increases it's a matter of when, not if.

Also, shortages don't occur by themselves.  A shortage occurs when demand outstrips supply.  The "trigger" event will not be some arbitrary price threshold, either in absolute terms or relative to today.  It will be when shortfalls In supply relative to demand are sustained and begin to grow at a noticeable rate relative to general price inflation for a while.  (You could argue this is already happening, just not fast enough yet for most folks to notice.  Don't worry, it will accelerate... ;-)

And we are currently poised to see the per capita demand on the part of 1/3 of the world's population (China, India) increase by an order of magnitude or more over the course of a generation, as it did in the U.S. over the course of a couple of generations.  I submit that even if peak has not occurred and does not occur during that period, even if we in fact increase supply much faster during that period than anyone believes credible, there's simply no way for us to avoid a prolonged or even permanent "shortage" condition absent some other means of satisfying energy demand, regardless of available reserves or any means to exploit them.  And as you've pointed out, some parts of our use of petrochem are more substitutable than others, and it's a bit of a hand wave to merely talk about per capita energy as if it was all one thing.

Contrary to Dave's point, present futures market conditions do not have this priced in; the instruments today do not operate on a long-enough time horizon to do so.  They may  encourage the necessary economic monotonicity to HELP bridge the gap at each tactical step along the way, but without more coverage of the future value curve by instruments with (much) longer tenor, I am skeptical that pure market forces in today's markets can accomplish the necessary allocations of capital required for building the bridge.  (Analogy: you can't easily build a large bridge by simply starting on one side and moving towards the other.  Or rather, even if you could, it's not the surest way to go about it.) And don't forget, I'm a big advocate  of the power of markets... ;-). In this case, though, the right things just aren't tradable or attractive to most traders.  And the former is easily cured, while the latter may simply be impossible.  (Who wants to buy 100-year oil futures contracts?)

The focus on EROEI misses the point, too: it doesn't tell the whole story.  Even sub-break-even is viable economically if, at a given time, the market cost of the input units is sufficiently less than the market price of the output units.  This may well be the case for various technologies at various points in time.  Again, you are correct, not all E is completely substitutable / fungible / interchangeable absent other specific technological advances.

As Geege jokingly reminds us:  we've got to do something.  Multiple somethings, in my opinion.

Finally, there's a lot of talk about sustainability.  Sustainability is a myth absent some discussion of other quantities: population, quality-of-life, technological context, growth in resource demands and expectation vs supply, etc.  Unless you cap the population AND all future expectations about resource allocation per capita, then you can only talk about it in terms of some finite time frame and set of assumptions about the other factors.  Let's discuss "more sustainable" rather than "sustainable." Horses, not unicorns.  

Even Eugen's probably-accurate assessment of  total usable solar only affords us a small number of order-magnitude increases per capita with static population.  Given the multiple-orders-magnitude increase in demand in this country alone in the last two generations, coupled with the likely global population growth due to technological improvements in instantaneous carry capacity, even the rosiest scenario gives us, maybe, 100-300 years.  Quite possibly within the lifespan of folks alive today, even absent some "miraculous" technological discontinuity.  Then demand forces one of several more extreme scenarios:  die-back, massive loss of technological civilization, massive social change to forcibly limit growth (or even force reduction) in all directions, diaspora, or a shift to in simulo, if either of the latter are even possible.

But hey, why borrow trouble.  We should solve today's problem today.  (Rather, tomorrow's problems today.). I just fear that the myth of "sustainability" will give us a false sense of security if we even get past the next few decades and break the oil cycle w/o serious disruption.  We won't be out of the woods yet, even then.

Finally, to lighten the mood while simultaneously enlightening...  not entirely apropos this discussion, but you may get a kick out of this:

  http://tiny.cc/h4yrz


As always, $0.02,


jb





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