2 Fundamental issues we face:
– The private creation of money as debt – have you heard..? ‘Money is just an IOU, and the banks are rolling in it.’ http://bit.ly/1rfcumz)
– Energy profit reduction (cost of production for fracking, tar sands, heavy oil is higher, so profits are less) is driving global economic woes, as we have less affordable energy available. The video below succinctly explains this in 2.5 minutes.
The 2005 Hirsch Report (NEARLY 10 YEARS AGO!!!) in the USA examined several scenarios relating to oil supply:
A 2005 analysis for the U.S. DOE ASSUMED CRASH PROGRAM IMPLEMENTATION:
[THIS IS] THE MOST OPTIMISTIC CASE
Scenario I – No action until peaking occurs – EXTREMELY BAD
Scenario II – Mitigation starts 10 years before peaking – SERIOUS TROUBLE
Scenario III – Mitigation starts 20 years before peaking – NO PROBLEM?
Note that the Hirsch Report was written pre 2008. The International Energy Agency’s Chief Economist Fatih Birol now states that Peak Oil occured in 2006: http://ab.co/1tdj3HH
Did you get that? We are around 10 years after the global peak in conventional oil production, and we’re really still not taking the need for mitigation, and now adaptation, seriously enough. Not by a long way!
If you feel you’re still not getting why this is so urgent now (we’ve heard about this as a future issue for a long time now), then this 15 minute lecture by Canterbury University’s Associate Professor Susan Krumdieck is a helpful look at the risks from the ‘forward operating environment’ that we face:
Feeling angry? Time for some radical ideas about a positive response!
Implications for Southland, and some more on suggested course of action:
Filed under How, What, When, Why
We need to ask, with the declining returns we’re seeing, when will the oil majors be unprofitable / insolvent…?
Aleklett's Energy Mix
Activity has been low at my Aleklett’s Energy Mix blog during the summer. However, now it is time to get busy again. Oil & Gas Journal is one of the journals that I regularly follow and today their daily reportage includes an article with the title,” Shell reshuffles US shale assets in two major deals”. They are selling their shale gas assets including, among others, their Haynesville and Pinedale assets for $2.1 billion. They are also swapping a few rights and selling production for a net value of $925 million. The fact that they are reinforcing their cashflow by more than $3 billion indicates that they have financial problems elsewhere. Rumors say that it is their losses in Eagle Ford that are causing them to restructure their gas activities. At the moment we are studying Eagle Ford and we see that the profitability for individual wells is low. One can…
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Why is it that reducing return on capital in the oil industry is combining with hugely problematic debt conditions globally to create a situation that many people are just plain misreading?
Our Finite World
There is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. My view of how energy and the economy fit together is very different. It is based on the principle of reaching limits in a finite world. Let me explain the issues as I see them.
Twelve Basic Principles of Energy and the Economy
1. Economic models are no longer valid, as we start getting close to limits.
We live in a finite world. Because of this, the extraction of energy resources and of resources in general operates in a way that is not at all intuitive as we approach limits. Economists have put together models of how the economy can be expected to act based on how the economy acts…
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An interesting piece on the enabling of pandemic by our economic system :
Economic growth or public health?
In our globally connected society, we are all just one direct flight away from a potential pandemic if we subvert public health mandates for economic growth. The coincidental African economic summit held this week in Washington DC is a snapshot of this problem—economic growth is the focus, and serious public health concerns are something to be discussed quietly in back rooms outside of media coverage, rather than prominently on the agenda. I can only imagine the quiet discussions, focused on the economic impact of curtailed air or other travel to countries.
If we shut down all travel, what would a shutdown to many African countries do to our global supply chain? What would a pandemic panic do to economic growth, unstable currencies, and stock markets? In a world where there’s only a 3 day supply of food on the shelves, even in prosperous countries, how can we possibly close borders, except with martial law? We’re all connected, and running at top efficiency with little resiliency in the system. What happens when the universal systemic mandate for economic growth conflicts directly with the general public health of a society? Which is worse, letting Nature have her way with us, or intentionally sticking a spoke in the wheel of our economic machine and bringing it to a sudden halt? What about the oil? Nigeria supplies critical oil and LNG to many countries, especially Europe, which is the largest regional importer of Nigerian oil. And so on.