Insight and inspiration in turbulent times.
In Part 1 of this post, I pointed out that an economy is closely linked with the resources that underly it. Because of this, if there is really is a limit that prevents oil supply from rising endlessly, then there is also a limit that prevents debt from rising endlessly. I talked about seeing a two-way link between peak oil and peak debt…
KMO welcomes repeat guests Richard Heinberg and Dmitry Orlov back to the C-Realm Podcast to compare notes on the state of economic transition in which we find ourselves. In his new book, The End of Growth: Adapting to Our New Economic Reality, Richard makes the case that we have reached a crucial inflection point in economic history after which human progress and well-being must be de-coupled from economic growth. Dmitry describes a near-term future in which the United States has been dismantled by its creditors, whom he describes as trans-national mafias.
The world could soon be short of oil again, despite the worsening fiscal crisis, says the IEA. Although the turmoil in Europe threatened to engulf Italy – with the world’s third largest bond market – and the US budget standoff threatened its AAA credit rating, the Agency raised its 2012 oil demand growth forecast by 270,000 barrels/day.
Resource scarcity and climate change should be driving forward our transition to the energy systems of the future. Though this transition has started in important ways in several locations, change is not being undertaken at either the scale or speed required.
A new documentary, American Meat, is the first food documentary to really delve into how dependent our industrial food system is on fossil fuels. Using this vulnerability to help frame the discussion on the industrial versus the sustainable approach, director Graham Meriwether produces a film that helps make clear that in order to survive the decline in cheap energy, we need to ramp up our small scale sustainable farming efforts. He also focuses on the increasing profitability of such farms, and their ability to create more jobs.
World energy policy is gripped by a fallacy — the idea that coal is destined to stay cheap for decades to come. This assumption supports investment in "clean-coal" technology and trumps serious efforts to increase energy conservation and develop alternative energy sources. It is an important enough assumption about our energy future that it demands closer examination.
A midweekly roundup of peak oil news, including:
-Developments this week
-The IEA’s monthly report
Coal still plays a dominant role in the U.S. energy mix, accounting for almost 45% of American electricity production. But the economics of coal continue to change, making the resource look far less attractive today than it once was.
The Carbon Tracker initiative is a new way of looking at the carbon emissions problem. It is focused on the fossil fuel reserves held by publically listed companies and the way they are valued and assessed by markets. Currently financial markets have an unlimited capacity to treat fossil fuel reserves as assets. As governments move to control carbon emissions, this market failure is creating systemic risks for institutional investors, notably the threat of fossil fuel assets becoming stranded as the shift to a low-carbon economy accelerates.
The economy is closely linked with the physical resources that underly it. Most economists assume debt can rise endlessly, just as they assume GDP can rise endlessly. But if there really is a limit that prevents oil supply from rising endlessly, it seems to me that there is also a corresponding limit that prevents debt from rising endlessly.
On two past occasions, the average annual oil price has hit $100 per barrel and this has been followed by recession. At time of writing (7th July) the annual average for Brent was $95.4, on course to breach $100 some time in September. Will history repeat itself? Or has the global economy grown immune to high energy prices?
For years now, everyone thought that natural gas was cleaner than coal and more benevolent than oil. The blue flame just burned purely and wasn’t nearly as complicated or carboniferous as a lump of, well, bituminous coal…But shale gas, methane trapped in hellishly deep rock formations, has challenged this dated perception. In fact, the very stuff that energy experts champion as North America’s new energy wunderkind may be dirtier than coal, if not as extreme as Alberta’s dirty bitumen.
