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Thoughts about peak oil and economic growth.

Discussions about the economic and financial ramifications of PEAK OIL

Thoughts about peak oil and economic growth.

Unread postby some_math_guy » Thu 08 Jan 2009, 10:27:44

As described in Richard Heinberg’s The Oil Depletion Protocol, the most important peak oil mitigation strategy is simply to use less energy…in fact, less and less each year until oil has effectively ceased being a usable energy resource, in about 30-50 years or so. The common obstacle facing us is that nobody wants to change lifestyles. Aside from humanity’s resistance to change in general, when faced with the dire consequences, why do we do nothing?

Let’s think about what saving energy means. Generally speaking, it means doing things more manually. Eg.
• walking instead of driving
• hanging clothes to dry instead of tossing them in the dryer
• splitting wood, starting the fire, and keeping a wood stove stoked instead of just turning a dial for heat
• watching every kilowatt of electricity used
• taking the stairs instead of the elevator
• using a push-mower instead of a gas-powered ride-on mower
• using a shovel instead of a snowblower
• taking the bus or train instead of your car

Personally, since my wife and I both work in the city, we started taking the car together every day for work. Yes, it would be slightly cheaper to take the bus, even with us both buying bus tickets – but we would each spend an average of 1.5 hours more each day stuck on a bus, instead of at home doing what we really want to be doing. Given that my time is worth at least what I get paid at work for, it would actually cost me $50 more per day in terms of my life-energy to take the bus. Yes, you could mitigate it somewhat by say bringing a book, etc. but what I’m trying to get at is the perception of the value of people’s time as the key component of resistance to behavior change.

At the macro level, what we are really asking people to do is voluntarily trade their time doing things they want to do for things they would probably rather not be doing.

Back-to-the-landers believe that there is value in doing things ‘the old fashioned way’ and in a way that is respectful of the environment. Absolutely! High-powered executives could not imagine this approach having value, given the time 'wasted' by being denied instant communications, quick, cheap travel, comfort at the turn of a dial, etc. Absolutely! It all depends on your perspective about what’s important in life.

The problem with energy being so cheap for so long is that it has become unappreciated, taken for granted, a given. Although 'green' folks might say things like ‘slow economic growth’, most people like economic growth because it fuels hope and confidence in the future. Hope that the future will be better than right now, that our children will be better off than we are, and that things are looking up and moving forward. Politicians like economic growth because it fosters hope and confidence in that politician. The grim specter of peak oil is that without transformative change in almost everything we do, things will inevitably become worse, in fact worse and worse each year…forever! You can understand why no politician will touch that one!

Let us be clear about the importance of economic growth. Without economic growth, there could be no role for monetary interest. Under the current financial system, if you work 40 hours and ‘invest’ 1 hours-worth of salary, your 1 hour of work becomes perhaps 1.1 hours worth after one year if you are able to obtain a decent return on investment. How? Because your dollar was used to fund some enterprise which did some economic activity using energy – grew food, extracted resources, made something and sold it for more than it cost to produce it, etc, thus producing a profit and increasing assets and value. This is the basic idea of economic growth - your stored-up energy is used to do something which hopefully produces even more energy than you put into it. Your reward for helping to finance this operation is your return on your dollar.

A world with constrained or zero economic growth is a world where the amount of wealth you can control is constrained to the amount of work you do yourself. If you work 40 hours, you produce 40 hours worth of value. If you work 0 hours, you produce 0 hours worth of value. In today’s system however, if you save some of your ‘hours’ in a retirement fund, it grows substantially over time so that the value of your saved-up work becomes much larger than the work you put into it (eg. $100,000 of contributions become $400,000 after 30 years). This is the entire basis of pension plans, 401k’s, etc funding people’s livestyles for 20-30 years after they stop producing work. Without economic growth, you would have to save a far larger proportion of your pay from your working years in order to retire comfortably, or alternatively work much longer and retire much closer to the age when you die. As an example, if you worked for 30 years and lived for 30 more after you stopped working, you would have to save a whopping 50% of each pay from your working years to maintain the same income after you retire without the magic of compound interest. Right now the average worker contributes only about 6-8% of their pay in order to fund their entire retirement. The end of economic growth means the end of retirement for the vast majority of people.

I think it’s reasonable to assert that one of the near-universal features of humanity is the hope that your own children will have it better than you. Without economic growth, this is impossible for the masses by definition. For the vast majority, it will be a kind of steady-state subsistence living arrangement where the amount of wealth you command is roughly equivalent to the number of hours you work – that’s it, that’s all. Forget about modern-day euphanisms like ‘You can either work to make money, or make money work for you’. In the future, for the vast majority of people, you can only work to make money.

The new societal ideals of the low-energy world of the next 50 years must become something like creativity, self-expression, personal growth and spiritual development. In other words, focused on 'ideas' not 'stuff'.
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Re: Thoughts about peak oil and economic growth.

Unread postby mark » Thu 08 Jan 2009, 18:42:17

You've written an impressive article. However, I can't help thinking you've not seen the forest for the trees. If we were as responsible as your article assumes we wouldn't be in this mess, the mess that Dr. Bartlett or Karl Denninger have long predicted.

Now, we're not going to find the way out of this mess because no one is willing to suffer the pain now so that the future will be better. We will hit the wall at 100mph and splatter ourselves all over the place; such a mess. Out of that mess, that is now inescapable, we will forge something new that will be closer to a sustainable and soul satisfying life.
Who is John Galt?
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Re: Thoughts about peak oil and economic growth.

Unread postby Ludi » Thu 08 Jan 2009, 19:43:46

Mark, what are your personal efforts to create a more sustainable and soul-satisfying life? Or are you too just waiting to hit the wall?
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Re: Thoughts about peak oil and economic growth.

Unread postby mark » Fri 09 Jan 2009, 00:01:05

Ludi, that's an excellent question, one I've been pondering for the last two years.

Some days I want to join or create a community of farmers and like minded folk that may survive what's coming. Other days I'm convinced that the thing to do is to continue to live in Chicago and be a part of whatever change is coming. Before too long, it may be too late for the former. Well, that'll be okay too.

I've worked out that our purpose here is to love and learn as much as we can. Has there ever been a better time in history to do just that, even if it means I'll be a part of the roving hoard scratching for food on The Road.

I think all of us alive at these historic moments should pause and consider what's important to our evolving soul. Simply looking out for number one isn't it.The bigger picture must include so may others as well as ourselves, it's just the right thing to do. Conscious, of course, that we must first put on our own oxygen mask before helping others.
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Re: Thoughts about peak oil and economic growth.

Unread postby Last_Laff » Fri 09 Jan 2009, 00:31:22

Dark force at work :!:
"Panic is not a strategy." - BigTex
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Re: Thoughts about peak oil and economic growth.

Unread postby Narz » Fri 09 Jan 2009, 00:35:00

Let’s think about what saving energy means. Generally speaking, it means doing things more manually. Eg.
• walking instead of driving
• hanging clothes to dry instead of tossing them in the dryer
• splitting wood, starting the fire, and keeping a wood stove stoked instead of just turning a dial for heat
• watching every kilowatt of electricity used
• taking the stairs instead of the elevator
• using a push-mower instead of a gas-powered ride-on mower
• using a shovel instead of a snowblower
• taking the bus or train instead of your car

Yup, already there.

BTW, pstarr, WTF are you trying to say?

I know you feel as one of the last diehard doomers you absolutely must try to spit on any possible hope of human life continuing in any sort of orderly way but I'm just curious as to why, what are you getting out of this?
“Seek simplicity but distrust it”
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Re: Thoughts about peak oil and economic growth.

Unread postby MonteQuest » Fri 09 Jan 2009, 00:47:33

some_math_guy wrote:At the macro level, what we are really asking people to do is voluntarily trade their time doing things they want to do for things they would probably rather not be doing.


Or, to put it another way, to give up those 50 energy slaves.

A world with constrained or zero economic growth is a world where the amount of wealth you can control is constrained to the amount of work you do yourself. If you work 40 hours, you produce 40 hours worth of value. If you work 0 hours, you produce 0 hours worth of value.


That's what a sustainable future holds. To invest in a new factory means you will physically help build it.

The decades to come will see many things that are now done by machines handed back over to human beings, for the eminently pragmatic reason that it will again be cheaper to feed, house, clothe, and train a human being to do those things than it will be to make, fuel, and maintain a machine to do them.
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
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