Greece, the Limits to Growth, and My Paper

My paper, “Patterns for Navigating the Transition to a World in Energy Descent,” to be presented at the upcoming Fourth International Integral Theory Conference on July 18th, is about resource depletion (“energy descent”) and the unsustainability of current economic structures, which may indicate we are entering a new era signaled by the end of growth.

In a recent post entitled “The Limits to Growth and Greece: Systemic or Financial Collapse?“, Ugo Bardi writes, “could it be that all the financial circus that we are seeing dancing in and around Greece is just the effect of much deeper causes? The effect of something that gnaws at the very foundations not only of Greece, but of the whole Western World?

Let’s take a step back, and take a look at the 1972 study titled “The Limits to Growth” (LTG). Look at the “base case” scenario, the one which used as input the data that seemed to be the most reliable at the time…”

Bardi concludes: “If the LTG study is right and the crisis is generated by the gradually increasing costs of production of natural resources, (and there is plenty of evidence that these costs are increasing worldwide, see also here) then, collapse cannot be avoided, at best it can be mitigated by acting at the system level. By means of such measures as renewable energy, efficiency, and recycling, the system can be helped to cope with a reduced resource availability. But the economic contraction of the system is unavoidable. It is a contraction that we call financial collapse, but that is simply the result of the system adapting to lower quality (i.e. more expensive) resources.”

To corroborate, I will share an excerpt  from my paper mentioned above:

“…Richard Heinberg, senior fellow at the Post Carbon Institute believes we have reached The End of Growth (2011), as does energy economist Jeff Rubin (2012), who understands that “the real engine of economic growth has always been cheap, abundant fuel and resources.” However, this wasn’t the training he received as an economist:

Nearly every economics exam I wrote dealt with the idea of maximizing economic growth. It wasn’t until I had years of real-world experience under my belt as chief economist of an investment bank that I began to understand what the textbooks were missing…After watching GDP growth shrink in the face of steadily rising oil prices, I couldn’t escape the notion that growth might someday become finite. During my formal training, steeped in conventional economic theory, the idea of static growth was never even considered. It doesn’t matter which school of economic thought you subscribe to or where you belong on the ideological spectrum, the notion of growth is an unquestioned tenet of the discipline (ibid, pp. 26-27).

Thomas Piketty (2014) caused a sensation when his rigorous academic economics book was translated into English, and became a bestseller. Piketty provides good evidence that we will not likely see again the levels of growth experienced in the 20th century. One reference he cites is even less optimistic. Robert J. Gordon, economics professor at Northwestern University forecasts a 0.2 percent growth of real disposable income for the majority of the U.S. population over the next 25 to 40 years. He names four “headwinds” contributing to this self-described “gloomy forecast”: demographic shifts, educational attainment, increasing inequality, and the ratio of debt to GDP at all levels (Gordon, 2012; 2014). This projection does not include resource constraints.

“Rogue” or “heterodox” economists who recognize the validity of biophysical constraints (limits to growth) include E.F. Schumacher (1973), Nicholas Georgescu-Roegen (Gowdy and Mesner, 1998), Herman Daly (Daly & Cobb, 1994), and Peter Pogany (2006). Taking a thermodynamics perspective on economic growth, Pogany argues that entropy applies to matter, not just to energy. Therefore eternal substitution and recycling among materials is an illusion in a closed system (with regards to matter) such as our terrestrial sphere of earth and atmosphere. Technology cannot, in the end, overcome entropy, which means that the Pulse of Growth ultimately hits a peak, based on the availability of quality resources not yet dissipated.

In principle, they could replace copper wires with carbon polymers and make gold from scraps of copper, but in practice they could not do it if they had to pick through the ofals of low-entropy substance in search of other material inputs…between “can be done economically” and “cannot be done physically” there is a tipping point: “Can be done physically but not economically” (Pogany, 2006, p. 123).

Of course there are many economists who strongly dispute the voices above; but more and more are questioning the status quo, with some arguing that we need to embrace a “degrowth” alternative (Caradonna, et al., 2015). Certainly there is reason to pause and to question the idea of infinite economic growth on a finite planet. This is one more “myth of the given” that should not be taken for granted. Edgar Morin referred to “development” as:

The master word…upon which all the popular ideologies of the second half of this century converged…development is a reductionistic conception which holds that economic growth is the necessary and sufficient condition for all social, psychological, and moral developments. This techno-economic conception ignores the human problems of identity, community, solidarity, and culture… In any case, we must reject the underdeveloped concept of development that made techno-industrial growth the panacea of all anthroposocial development and renounce the mythological idea of an irresistible progress extending to infinity (Morin, 1999, pp. 59-63).

Addressing this “myth of the given,” Pogany pokes fun at his own profession:

Historically, geocapital [matter ready to be used to feed cultural evolution] has registered a net increase; additions and expansions more than offset exhaustions and reductions. This long-lasting successful experience led to the culturally ingrained confidence in the possibility of its eternal continuation. Economic growth theory keeps “deriving” the same conclusion over and over again: Optimally maintained economic expansion can continue forever. Translated from evolutionary scales to our own, this is analogous to “Since I wake up every morning I must be immortal” (2006, p. 118).”

References

Caradonna, J., Borowy, I. Green, T., Victor, P.A., Cohen, M., Gow, A. … Heinberg, R. (2015). A degrowth response to an ecomodernist manifesto. Retrieved from: http://www.resilience.org/articles/General/2015/05_May/A-Degrowth-Response-to-An-Ecomodernist-Manifesto.pdf

Daly, H. & Cobb, J.B. (1994). For the common good: Redirecting the economy toward the community, the environment, and a sustainable future. 2nd, updated edition. Beacon Press.

Gordon, R. J. (2012). Is U.S. economic growth over? Faltering innovation confronts the six headwinds. Center for Economic Policy Research, Policy Insight No. 63 (September 2012).
http://www.cepr.org/sites/default/files/policy_insights/PolicyInsight63.pdf

Gordon, R.J. (2014). The demise of U.S. economic growth: restatement, rebuttal and reflections. NBER Working Paper No. 19895 (February 2014).

Gowdy, J. and Mesner, S. (1998). The evolution of Georgescu-Roegen’s bioeconomics. Review of Social Economy Vol LVI No 2 Summer 1998. The Association of Social Economics. Retrieved from: http://homepages.rpi.edu/~gowdyj/mypapers/RSE1998.pdf

Heinberg, R. (2011). The end of growth: adapting to our new economic reality. Gabriola Island: New Society Publishers.

Morin, E. (1999). Homeland earth: a manifesto for the new millenium. Creskill: Hampton Press.

Morin, E. (2008). On complexity. Creskill: Hampton Press.

Piketty, T. (2014). Capital in the twenty-first century. translated by Goldhammer, A. Cambridge: The Belknap Press of Harvard University Press.

Pogany, P. (2006). Rethinking the world. Lincoln: iUniverse.

Pogany, P. (2013a). Al Gore, Stephen King, and Jean Gebser are related. How? Retrieved from: http://blog.gebser.net/

Pogany. P. (2013b). Thermodynamic isolation and the new world order. Retrieved from: http://mpra.ub.uni-muenchen.de/49924/

Rubin, J. (2012). The big flatline: oil and the no-growth economy. New York: Pallgrave Macmillan.

Schumacher, E.F. (1973). Small is beautiful: economics as if people mattered. London: Blond & Briggs.

Schumacher, E.F. (1977). Guide for the perplexed. New York: Harper & Row.

Join Me at Integral Theory Conference 2015

Registration for the Integral Theory Conference closes July 8th.  I’d love to see you there! The theme of the conference is “Integral Impacts: Using Integrative Metatheories to Catalyze Effective Change.”
I’m looking forward to hearing Karen O’Brien present about Climate Change and Transformation to Sustainability; Bill Torbert talk about The Kinds of Inquiry, Power, and Love Required…; and Eliza Maalauf on Integral Design in the Midst of Chaos…
I’m also looking forward to Ed Sarath talk about Integral Jazz; Nick Hedlund De Witt on an integral realist approach to climate change; Sean Esbjorn-Hargens and Zak Stein discussing whether Integral needs to drop spirituality to have a mainstream impact.  It will be hard to choose between some of the “Pioneers” presentations to attend: Don Beck, Terri O’Fallon, Bruce Alderman, Sean Esbjorn-Hargens, Gail Hochachka, Terry Patten, Zak Stein, Steve McIntosh, Bonnitta Roy, etc. 
I’m also hoping at least a few people attend my talk on Patterns for Navigating the Transition to a World in Energy Descent
Abstract:
This paper will consider current concerns about resource depletion (“energy descent”) and the unsustainability of current economic structures, which may indicate we are entering a new era signaled by the end of growth. Using the systems thinking tool of PatternDynamics™, developed by Tim Winton, this paper seeks to integrate multiple natural patterns in order to effectively impact these pressing challenges. Some of the Patterns considered include Energy, Transformity, Power, Pulse, Growth, and the polarities of Expansion/Contraction and Order/Chaos.
 
We tend to have horrible visions associated with downturns and “collapse.” Can we even entertain the possibility that we might be entering a period of decline in energy and standard of living?  Can we re-examine our assumptions about “growth” and “development”? Jean Gebser’s emphasis that every mutation of structure is preceded by a crisis will be considered, and Howard T. Odum’s ideas about energy as the basis of man and nature will inform the discussion. Edgar Morin’s dialogic Method of active inquiry in regards to the interplay of polarities assists in our understanding and response to the complex challenges we face.
You can download my paper here.
Here is the basic info about ITC 2015:
ITC 2015 will be held July 16-19 on the beautiful campus of Sonoma State University in the heart of California Wine Country. Come experience the world’s largest academic, professional, and artistic conference devoted to Integral Theory and its application.
EARLY BIRDS. For you there’s:

7:00AM – yoga and meditation practices (daily)

7:30AM – a groundbreaking art exhibition, In the Spirit of Wholeness: Integral Art and its Enchantment Aesthetic, curated by Michael Schwartz (daily; open all day)

8:30AM – a special event with Ken Wilber (Sunday)

9:00AM – keynote presentations by Karen O’Brien (Friday), Bill Torbert (Saturday), and Elza Maalouf (Sunday)

NIGHT OWLS. For you there’s:
Talented artists and cultural performers taking you on a journey every night.

8:30PMMETAPHORPHOSIS, embodied poetics and integral slam with six award-winning poets and spoken word artists, followed by a DJ Dance Party (Thursday)

7:30PMWRESTLING JERUSALEM, a solo performance and riveting display of integral consciousness and artistry in action (Friday)

7:30PMDEEPER THAN DAY, live music, theater, and dance with the brilliant musician Butterscotch headlining (Saturday)

Click here or the poster for details!

DAYDREAMERS. For you there’s:

11:30AM and 3:45PM – two full blocks of presentations by Integral Pioneers (Saturday & Sunday)

12:30PM – Pop-Up Playground Lunches organized by Marilyn Hamilton’s Integral City team (daily)

2:00PM – hot-topic panel discussions (Friday & Saturday)

The Mission of the Integral Theory Conference

  • To be the world’s premier conference dedicated to Integral Theory and its application in both academic and professional contexts.
  • To facilitate the theoretical development of Integral Theory by drawing on the most sophisticated integrative meta-theories and transdisciplinary scholarship currently available.
  • To provide a forum in which metadisciplinary and transdisciplinary scholars and practitioners can present research findings and best practices in an atmosphere of engaged, critical discourse with others of similar qualifications and interests.
  • To encourage robust production of professional and academic literature, provide networking opportunities, and enable collaborative project-creation among integral scholars and professionals.
  • To bring the quality of scholarship in metadisciplinary and transdisciplinary studies to a level fully on par with the standards of excellence expected by the mainstream academy, while simultaneously generating increased openness to multiperspectival approaches to the study of human society and its environment.
  • To foster a non-parochial, global academic community that is open to multiple frameworks and methodologies that would seek to engage issues of complexity and epistemological integration.
  • To offer students of Integral Theory, graduate students, and practitioners access to the world’s leaders in the field.
  • To explore the historical antecedents and cultural influences that have contributed to the creation of Integral Theory; these currently suggest that Integral Theory is the most recent expression of a mode of integrative thought and praxis that extends back to at least the mid-eighteenth century.

Creative Navigation of Energy Descent: Opportunities for Spiritual and Social Transformation

This blog has been quiet for a little while, as I’ve been busy trying to do some non-blog writing.

I’ve been invited to present a paper at the upcoming Integral Theory Conference in the San Francisco Bay area (July 17-19, ITC), so I’ve been working away at that paper for a while. For a sneak peak on the topic I’ll be presenting on there, check out my presentation in Bellingham, WA on May 21 (see below).  At the conference I get 20 minutes to present.  Here, speaking at the local Bellingham outpost of the Institute of Noetic Sciences (BIONS), I get 1 1/2 hours.
The original title I proposed for my paper was “Patterns for Navigating Transitions in a Descending Energy World.” I’m using the systems thinking tool of PatternDynamics(TM) to address the issue of what David Holmgren calls “Energy Descent,” i.e energy depletion, or “peak oil” – and its association with the idea of limits to growth. And its relationship to integral theory.  The paper has turned out to be a bigger project than originally envisioned, and will likely become a multi-part project.
The blurb for my presentation in Bellingham on May 21, 2015 is below.  For a good introduction to the Integral Theory Conference, check out Jeremy Johnson’s post on The Unthinkable Present.

May 2015 Event

CREATIVE NAVIGATION of ENERGY DESCENT:

Opportunities for Spiritual & Social Transformation

David MacLeod

We will explore the world in crisis and chaos as an opportunity for social and spiritual transformation as we form stronger connections to the earth’s natural patterns and to each other.

This presentation will consider appropriate responses to current concerns about resource depletion, climate change, and the unsustainability of current economic structures; all of which are leading some to argue that we are entering a new era signaled by the end of economic growth and declining fossil fuel energy.

We tend to have horrible visions associated with downturns and “collapse.” Can we even entertain the possibility that we might be entering a period of decline in energy and standard of living?  Can we redefine “growth” to refer to our human potential rather than to our GDP? Perhaps we can learn to expand our consciousness and increase cooperative behaviors as we ride the wave down the peak oil curve.

This presentation will be supported by a new systems thinking tool called PatternDynamics™. Inspired by Permaculture’s emphasis on natural patterns and principles, PatternDynamics combines the patterns of nature with the power of language. The result is a tool which helps us understand and communicate ways of supporting resilience. We will learn some of the dynamic patterns that could assist us in creatively navigating our way through an energy descending world.

David_MacLeodDAVID MACLEOD is a member of the PatternDynamics™ Community of Practice and is committed to community resilience as a co-initiator of Transition Whatcom. He was named an “Environmental Hero” by RE Sources for Sustainable Communities, and appointed to a city and county Energy Resource Scarcity/Peak Oil Task Force. He has contributed articles to Resilience.org, Integral Leadership Review, and Beams & Struts. David has been invited to present an academic paper on the topic of tonight’s discussion at the Integral Theory Conference this July in the San Francisco Bay area. David holds a BMus degree from Western Washington University, a Level II (b) accreditation in PatternDynamics™, and a Permaculture Design Certificate. He blogs at https://integralpermaculture.wordpress.com/.

This month’s event is co-sponsored by Transition Whatcom! http://transitionwhatcom.ning.com/

THURSDAY, MAY 21ST

7-9PM (Doors open at 6:30)

Fairhaven Branch Bellingham Library

Fireside Room (Under Steps)         

$5-10 Donation   (No one will be turned away)

Visit the BIONS Facebook page where you can also list your programs and get updates on BIONS events.  https://www.facebook.com/pages/Bellingham-Institute-of-Noetic-Sciences-Community/343430979582

IONS Websitenoetic.org
All views presented are not necessarily those of IONS or of the BIONS Team.

 

Richard Heinberg on “Our Renewable Future”

Today I would like to bring your attention to a recent essay by Richard Heinberg that has been received to high acclaim over at the Resilience.org. Resilience is a website operated by the Post Carbon Institute, for which Heinberg is a senior analyst. Heinberg has been writing about energy for 12 years, and is the author of books such as Cloning the Buddha: The Moral Impact of Biotechnology; The Party’s Over: Oil, War, and the Fate of Industrial Societies; Powerdown: Options and Actions for a Post-Carbon World; Peak Everything: Waking Up to the Century of Declines; Blackout: Coal, Climate and the Last Energy Crisis; The End of Growth: Adapting to our New Economic Reality.

In his latest essay, Our Renewable Future, Heinberg demonstrates that he is what I would call an energy realist. He does not demonize the fossil fuel industry, but he clearly lays out the formidable challenges we face as the climate crisis worsens and as easy access to these fuels continues to recede.  Nor does he communicate as would a lobbyist for the renewable energy industry, hyping the benefits and downplaying the problems in this field.

Instead, Heinberg approaches the problems from multiple perspectives and honestly conveys his own biases, and encourages us to broaden our thinking:

I consider myself a renewable energy advocate: after all, I work for an organization called Post Carbon Institute. I have no interest in discouraging the energy transition—quite the contrary. But I’ve concluded that many of us, like Koningstein and Fork, have been asking the wrong questions of renewables. We’ve been demanding that they continue to power a growth-based consumer economy that is inherently unsustainable for a variety of reasons (the most obvious one being that we live on a small planet with finite resources). The fact that renewables can’t do that shouldn’t actually be surprising.

What are the right questions? The first, already noted, is: What kind of society can up-to-date renewable energy sources power? The second, which is just as important: How do we go about becoming that sort of society?

As we’ll see, once we begin to frame the picture this way, it turns out to be anything but bleak.

I believe this to be an extremely important essay, and the embedded links provide even more depth, providing a great resource for essential 21st century energy literacy.

– David

Our Renewable Future

Or, What I’ve Learned in 12 Years Writing about Energy

(7000 words, about 25 minutes reading time)

Folks who pay attention to energy and climate issues are regularly treated to two competing depictions of society’s energy options.* On one hand, the fossil fuel industry claims that its products deliver unique economic benefits, and that giving up coal, oil, and natural gas in favor of renewable energy sources like solar and wind will entail sacrifice and suffering (this gives a flavor of their argument). Saving the climate may not be worth the trouble, they say, unless we can find affordable ways to capture and sequester carbon as we continue burning fossil fuels.

On the other hand, at least some renewable energy proponents tell us there is plenty of wind and sun, the fuel is free, and the only thing standing between us and a climate-protected world of plentiful, sustainable, “green” energy, jobs, and economic growth is the political clout of the coal, oil, and gas industries (here is a taste of that line of thought).

Which message is right? Will our energy future be fueled by fossils (with or without carbon capture technology), or powered by abundant, renewable wind and sunlight? Does the truth lie somewhere between these extremes—that is, does an “all of the above” energy future await us? Or is our energy destiny located in a Terra Incognita that neither fossil fuel promoters nor renewable energy advocates talk much about? As maddening as it may be, the latter conclusion may be the one best supported by the facts.

If that uncharted land had a motto, it might be, “How we use energy is as important as how we get it.”…

Read the full essay here.

Fossil Fueled Republicanism and the Six Myths About Climate Change that Liberals Rarely Question

In my final post in the Holiday Smorgasbord series, I want to share two articles that are each directed at (and finding fault with) different ends of the political spectrum. I don’t think the point of either of these articles is to demonize individuals who embrace either conservatism or liberalism, but rather to point out that in general we are not being served by the mainstream political discourse from either perspective. I find these articles by Michael Klare and Erik Lindberg to bring an appropriate balance to one another. I close with the alternative offered by Peter Pogany.

Fossil-Fueled Republicanism

Michael Klare’s latest post offers his take what the latest U.S. election results portends for the immediate future:

Pop the champagne corks in Washington!  It’s party time for Big Energy.  In the wake of the midterm elections, Republican energy hawks are ascendant, having taken the Senate and House by storm.  They are preparing to put pressure on a president already presiding over a largely drill-baby-drill administration to take the last constraints off the development of North American fossil fuel reserves.
The new Republican majority is certain to push their agenda on a variety of key issues, including tax reform and immigration.  None of their initiatives, however, will have as catastrophic an impact as their coming drive to ensure that fossil fuels will dominate the nation’s energy landscape into the distant future, long after climate change has wrecked the planet and ruined the lives of millions of Americans.
Six Myths About Climate Change that Liberals Rarely Question
This post by Erik Lindberg is, as of this writing, showing 551 comments on the Resilience.org site – by far the largest number of comments I have ever seen on a single post at that site. Some liberals are taking offense, but I think are missing the point, as I stated at the top of this post.

Myth #1:  Liberals Are Not In Denial 

“We will not apologize for our way of life” –Barack Obama

The conservative denial of the very fact of climate change looms large in the minds of many liberals.  How, we ask, could people ignore so much solid and unrefuted evidence?   Will they deny the existence of fire as Rome burns once again?  With so much at stake, this denial is maddening, indeed.  But almost never discussed is an unfortunate side-effect of this denial: it has all but insured that any national debate in America will occur in a place where most liberals are not required to challenge any of their own beliefs.  The question has been reduced to a two-sided affair—is it happening or is it not—and liberals are obviously on the right side of that.

If we broadened the debate just a little bit, however, we would see that most liberals have just moved a giant boat-load of denial down-stream, and that this denial is as harmful as that of conservatives.  While the various aspects of liberal denial are my main overall topic, here, and will be addressed in our following five sections, they add up to the belief that we can avoid the most catastrophic levels of climate disruption without changing our fundamental way of life.  This is myth is based on errors that are as profound and basic as the conservative denial of climate change itself.

Read more here.

Rethinking the World

Rethinking the WorldNow, if this is the situation we find ourselves in with mainstream political discourse, with its unwillingness to consider options other than continued growth (about which see yesterday’s post here) – is there hope for meaningful action?  If folks want to explore this further, consider the work of Peter Pogany, whom I’ve been reading lately. Pogany has pointed out that we currently live in a “world order” or “global system” (since approximately 1945) that is basically not capable of voluntarily moving beyond the paradigm of economic growth; therefore a chaotic transition to a new global system will be required :

“The current world order cannot deliver long-term sustainability on a planetary scale. By design, it is incapable of recognizing humanity’s thermodynamic reality. A new form of global self-organization is needed and it is probably waiting in the wings.” (http://blog.gebser.net/)

Pogany doesn’t mean there’s something all set up that we can easily and seamlessly transition to. On the contrary, he sees world history as a “thermodynamic process of self-organization,” which “precludes smooth transition from one relative, globally valid steady state to the next.” (quoted from his 2006 book Rethinking the World).
But he does see, based on his own work, as well as that of Jean Gebser (The Ever Present Origin) that after a period of chaotic transition, we will move “toward a new form of self-organization that would recognize limits to demographic-economic expansion. What will it take to go from the current hostile disgust with the dystopia of tightened modes of multilateral governance to people around the world on their knees begging for a planetary guild? It will take nothing less than a mutation in consciousness, as outlined in the oeuvre of Jean Gebser (1905-1973).” (quoted from his 2013 paper on Thermodynamic Isolation and the New World Order).

This is no fairy tale, and yes, human agency is definitely involved. Pogany’s approach is a systems thinking approach with a the laws of thermodynamics as a foundation, and built around his own expertise as an economist; he calls his approach new historical materialism.

“Only Cassandra may know whether the “best” (a quick global transformation), the “historically conditioned expectation,” or the worst (no global transformation, not even in the wake of an ecological disaster) is in the womb of time.”

Too woo-woo? Only if you consider previous transformations to be woo-woo. Pogany sees the French revolution as a chaotic transition to Global System 1, characterized as “laissez faire/metal money,” and two world wars and the Great Depression as the transition to the current Global System 2, characterized as “mixed economy/weak multilateralism.” What will it take to transform into a radically new Global System 3, which he expects to be characterized as  “two-level economy/strong multilateralism,” and which, he says “will favor cooperation over competition; acquiescence over indifference; responsible sociability over isolation; integrative open-mindedness over stubborn, perspectival dogmatism, altruism over extrasomatic hedonism.”

Sadly, Peter Pogany passed away in May of this year. May he rest in peace.

–  –  –  –  –  –  –  –

Review, in case you missed the previous posts in this series: A Holiday Smorgasbord of Recommended Reading, Listening, and Watching by David MacLeod

The primary deliverable from the IEA is the massive World Energy Outlook (WEO) report that is released annually in November. Concerned about peak oil, I began reading the Executive Summary to this report 10 years ago.
Here’s a story from KUOW’s Ashley Ahearn that aired on NPR on how climate change is affecting the glaciers in Washington State – focused on the Easton glacier on Mt. Baker, and the Skagit River it drains into.  Since 1900 we’ve lost about 50 percent of our glacier area, and this makes the Northwest “uniquely vulnerable to the effects of climate change.”
Yves Cochet’s Preface to the French edition of Permaculture: Principles and Pathways Beyond Sustainability.
There’s a lot of confusion going on right now – as the price of gasoline in the U.S. is declining, we are becoming ever more complacent….

Two voices that I have been following off and on for the last decade, and who have both been warning about limits to growth, and more importantly what we as individuals can do about it: Nate Hagens and John Michael Greer.

Responding to Limits to Growth: Embrace Life and Locate Your Values

In today’s installment of our Holiday Smorgasbord, I bring you two voices that I have been following off and on for the last decade, and who have both been warning about limits to growth, and more importantly what we as individuals can do about it.

Nate Hagens on Limits to Growth: Where We Are and What to Do About It

Nate Hagens, a former “wolf of Wall Street” stock trader/money manager, and then a popular writer (for a long time under the ‘Sasquatch’ nom de plume) at The Oil Drum website. Here is his presentation at the recent Degrowth conference in Vancouver, B.C.  It’s long – an hour and a half, but worth watching. Hagens talks about the big picture of energy, money, environment, behavior (how neurotransmitters and hormones motivate our behavior), where we are in 2014, and some take-aways on what we can do in our own lives. Along the way he shares his own story – and how he’s never been happier.  Interestingly at this “Degrowth” conference, Hagens makes it clear that he’s not advocating for degrowth – rather he thinks the end of growth is a reality, and we have to deal with it.  His top-level recommendation is to “embrace life.”  Nate Hagens – Limits to Growth: Where We Are and What to Do About It

Facts, Values, and Dark Beer

Another memorable post by John Michael Greer, wide ranging and addressing some deep questions, such as the meaning of life, especially in the context of a difficult future:

Claiming that one such sphere is the only thing that makes human life worthwhile is an error of the same kind. If Ervino feels that scientific and technological progress is the only thing that makes his own personal life worth living, that’s his call, and presumably he has reasons for it. If he tries to say that that’s true for me, he’s wrong—there are plenty of things that make my life worth living—and if he’s trying to make the same claim for every human being who will ever live, that strikes me as a profoundly impoverished view of the richness of human possibility. Insisting that scientific and technological progress are the only acts of human beings that differentiate their existence from that of a plant isn’t much better. Dante’s Divina Commedia, to cite the obvious example, is neither a scientific paper nor a technological invention; does that mean that it belongs in the same category as the noise made by hogs grunting in the mud?

…As for me—well, all things considered, I find that being alive beats the stuffing out of the alternative, and that’s true even though I live in a troubled age in which scientific and technological progress show every sign of grinding to a halt in the near future, and in which warfare, injustice, famine, pestilence, and the collapse of widely held beliefs are matters of common experience. The notion that life has to justify itself to me seems, if I may be frank, faintly silly, and so does the comparable claim that I have to justify my existence to it, or to anyone else. Here I am; I did not make the world; quite the contrary, the world made me, and put me in the irreducibly personal situation in which I find myself. Given that I’m here, where and when I happen to be, there are any number of things that I can choose to do, or not do; and it so happens that one of the things I choose to do is to prepare, and help others prepare, for the long decline of industrial civilization and the coming of the dark age that will follow it.

Read Facts, Values, and Dark Beer here.

What’s Going on with Low Gas Prices, Shale Oil, American Energy Independence, and OPEC?

Orlin Wagner/AP

(image source: Orlin Wagner/AP)

There’s a lot of confusion going on right now – as the price of gasoline in the U.S. is declining, we are becoming ever more complacent. Today we saw another steep drop in the price of oil to a four year low under $68/barrel. Is this a sign that peak oil is dead, and that we have indeed entered a new era of energy independence in the U.S., thanks to the fracking phenomena, giving us an expanding bonanza of shale oil and gas?  Today’s installment in our Holiday Smorgasbord series takes a look at these issues, and the significance of the decision made yesterday by OPEC to keep oil production at current levels.

The Collapse of Oil Prices and Energy Security

Let’s begin with this question: Why are oil prices collapsing, and why is gasoline getting cheaper? I think this is the question on many people’s minds. And then there is the further question, why might this be a problem?

There are a number of possible reasons why oil prices are decreasing. Check out Kurt Cobb’s piece to explore a number of these reasons. The reason that makes the most sense to me, and I think intelligent consensus has pretty much converged upon, is that OPEC is currently flooding the market with oil in an attempt to recapture market share from the higher cost unconventional shale oil being produced in the U.S.

Why might this be a problem? Ugo Bardi explained the situation quite well in a recent briefing he gave to the EU Parliament.  Bardi is a physical chemistry professor at the University of Florence, in Italy, and is a leading authority on resource depletion.

“I have to alert you that there is [an] ongoing crisis – perhaps much more worrisome – that has to do with crude oil. This crisis is being generated by the rapid fall in oil prices during the past few weeks. I have to tell you that low oil prices are NOT a good thing for the reasons that I will try to explain. In particular, low oil prices make it impossible for many oil producers to produce at a profit and that could generate big problems for the world’s economy, just as it already happened in 2008.”

Bardi further explains:

“Ultimately, it is the cost of production that generates the lower price limit. Here, we get into the core of the problem. As you see from the price chart above, up to about the year 2000, there was no problem for producers to make a profit selling oil at around 20 dollars per barrel. Then something changed that caused the prices to rise up. That something has a name: it is depletion.

Depletion doesn’t mean that we run out of oil. Absolutely not. There is still plenty of oil to extract in the world. Depletion means that we gradually consume our resources and – as you can imagine – we tend to extract and produce first the least expensive resources. So, as depletion gradually goes on, we are left with more expensive resources to extract. And, if extracting costs more, then the market prices must increase: as I said, nobody wants to sell at a loss. And here we have the problem…

So, you see that, with the present prices, a good 10% of the oil presently produced is produced at a loss. If prices were to go back to values considered “normal” just 10 years ago, around 40 $/barrel, then we would lose profitability for around half of the world’s production. Production won’t collapse overnight: a good fraction of the cost of production derives from the initial investment in an oil field. So, once the field has been developed, it keeps producing, even though the profits may not repay the investment. But, in the long run, nobody wants to invest in an enterprise at so high risks of loss. Eventually, production must go down: there will still be oil that could be, theoretically, extracted, but that we won’t be able to afford to extract. This is the essence of the concept of depletion. “

Read Ugo Bardi’s post: The Collapse of Oil Prices and Energy Security in Europe

For another view, see also Gail Tverberg’s piece on Oil Price Slide: No Good Way Out

Gail Tverberg:

“We have been hearing for so long that the problem of “peak oil” will be inadequate supply and high prices that we cannot adjust our thinking to the real situation. In fact, the two major problems of oil limits are likely to be shrinking debt and shrinking wages. The reason that oil supply will drop is likely to be because customers cannot afford to pay for it; they don’t have jobs that pay well and they can’t get loans.

In some ways, the oil prices situation reminds me of driving down a road where we have been warned to look carefully toward the left for potential problems. In fact, the potential problem is in precisely in the opposite direction–to the right. The problem gets overlooked for a very long time, because most of us have been looking out the wrong window.”

RelatedOil Price Slump to Trigger New U.S. Debt Default Crisis as OPEC Waits (Andrew Critchlow, The Telegraph)

Chris Martenson Crash Course, Chapter 21: Shale Oil

I’ve talked about shale oil a few times on this blog (Oil Company Woes: This is What Energy Depletion Looks Like, An Energy “Renaisance”?, Breaking: Go’vt Slashes Calif. Oil Estimate, and New Energy Report from IEA Forecasts Decline in North American Oil Supply), but this is very important, because, as Chris Martenson states, “the mainstream press has faithfully repeated every press and PR statement made by the shale producers,” and I believe the PR hype is misleading and very dangerous as it lulls us into a false sense that we’ll have an energy abundance for years to come, thanks to the miracle of hydraulic fracturing (“fracking”) . On the contrary, it is “expensive, over-hyped, and short-lived.”

And so let’s look at Chris Martenson’s Crash Course on Shale Oil. Martenson has a way of taking a complicated subject and presenting it in a way that is clear and easy to follow. This is a 28 minute video that provide some context for what follows below.

Check out the Peak Prosperity blog post and transcript on the Shale Oil Crash Course here.

An Energy System Under Stress and the Last Tango in Paris
On November 12th a cautious, mainstream, historically optimistic organization – the International Energy Agency (IEA) put out what is perhaps it’s most urgent warning yet in its major yearly World Energy Outlook report. As I pointed out in a previous post (Watching the Watchdogs: 10 Years of the IEA World Energy Outlook), the IEA has only very slowly come around to discussing possible supply disruptions. Serving the energy industry as well as trying not to offend mainstream political and economic sensibilities, and not wanting to disrupt financial markets, you can imagine a cautious approach to addressing issues such as peak oil or climate change.  And so, when they put out warnings, it probably means it’s very late in the game indeed.
In the above 39 minute video, IEA Chief Economist Fatih Birol calmly and methodically outlines the 2014 report, where we hear some of the following points:
  • Energy security is a heightened and growing risk – set to move up very high in the international policy agenda.
  • “…if the oil prices remain at the current (<$80) level, the capital spending in 2015 in the United States will decline up to 10% compared to 2014…a downward pressure on the investments in light tight oil (shale oil) as a result of these prices.”
  • Upward pressure on oil demand growth and downward pressure on price may lead to a growing reliance on Middle East oil, “where instability is the name of the game,” before 2020.
  • Regardless, we’re likely to see declining output from the U.S., Canada, and Brazil by 2020, by which time we’ll almost certainly be more dependent than ever upon the Middle East conventional oil to meet our oil supply demand [this after having stated in their 2010 report that conventional oil peaked in 2006. At that time they stated that it would be unconventional oil and natural gas liquids that would fill the gap and allow supply to grow through 2035].
  • The $550 billion in subsidies for fossil fuels needs to be reconsidered.
  • Climate talks scheduled to take place in Paris in 2015 may very well be our Last Chance to keep global warming to 2 degrees C.  This could be our “Last Tango in Paris.”

Fatih Birol:

“The main message, I believe, coming from our report, in terms of energy security there is a heightened risk, growing risk at present in a number of parts of the world that are strategically important from an energy perspective: Iraq, Middle East, Libya, North Africa, Russia, Ukraine – these are all signals to us, highlighting the importance of energy security and I believe energy security is set to move up high in the international policy agenda. Volatility  in the Middle East puts questions on the investment trends, and therefore it may well mean substantial challenges around 2020 for the oil supply…

“We do need to get a clear direction in Paris next year [2015 United Nations Climate Change Talks]. A “Last Chance in Paris,” we believe – like “Last Tango in Paris,” there is  Last Chance in Paris – and if we are not able to do that, we may well say goodbye to the world we used to see for several centuries. And we believe government policies, looking at the complexity and the amount of the challenges we are facing (energy security, climate change), government policies are crucial to steer the global energy system on to a better, safer course.”

Related: International Energy Agency Says: Brace for Impact (Tom Lewis, The Daily Impact)

OPEC Declines Action as World Oil Prices Hit Record Lows

The information above provides context for yesterday’s much anticipated OPEC meeting, where they declined to make any production changes. As Fatih Birol warned above, this non-action keeps a downward pressure on the oil price and poses big problems for the shale oil industry, which needs prices above $80 a barrel to keep their heads above water. And if the shale oil industry falters, so does the hope for even a short term respite from concerns about an adequate oil supply for world markets.

On NPR, Ari Shapiro introduced the story by saying “You don’t usually hear swearing when OPEC countries gather in the refined meeting rooms of Vienna, Austria. But the organization that once dominated world oil markets is now coming to terms with its dwindling clout.”

Reporter Peter Kenyon explained the problem: If OPEC were to cut production, they would cede market share to American producers of shale oil, whose current production has limited the ability of OPEC to control price. If OPEC does not cut production, that will hurt the less well-off OPEC producers who are in need of higher priced oil revenues. However, (as pointed out above), this more so hurts the Americans as OPEC tries to push the expensive to produce shale oil out of the market.

Kenyon quotes energy analyst Cornelia Meyer with the MRL Corporation, who confirms what is said by the varied sources above in this post: “You will obviously see less investment in the sector, especially with the shale oil production. They’re very cash flow driven. So if you see less investment there, that will translate pretty quickly in less production in the U.S.”

Listen to the story on NPR or read the transcript: OPEC Declines Action as World Oil Prices Hit Record Lows

And so we come to today, Nov. 28, 2014, where USA Today has just reported Dow ekes out record close; oil plummets 8.2%. “A barrel of Texas Intermediate crude was at $67.74 Friday afternoon Eastern Time — a whopping 8.2% drop.” In the short term, it’s a relief for consumers and markets, but the signals this sends for the medium term are troubling.

Related: See the various sources Bloomberg cites to back up their headline: Oil at $75 Means Patches of Texas Shale Turn Unprofitable

Again, as the recent IEA World Energy Outlook stated:

“The global energy system is in danger of falling short of the hopes and expectations placed upon it. The short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers.”