Just a quick note that on CNBC World they have announced that Spanish unemployment rates have hit 20% in the first Quarter of the year.
So I have to ask: How are all those “Green Jobs” working out for you?
This is the problem of having governments run economies. They do it badly and based on political goals, not wealth creation goals.
So lots of things that sound good, or move money to politically connected parties are done, and things that create net wealth are not done. It feels good for a while, then the inevitable result. Economic decline and financial collapse.
We’ve now got two places strongly pushing a Green Agenda that are going down in flames. Spain and California (with our own version of Cap and Tax…)
It is not just a side effect of the recession. Other places, like China, Texas, and Brazil are doing much better. It is what is described by the old market saying “When the tide goes out you find out who has pants”. It’s the downturns that make the worst of the worst most visible.
And at this point it is pretty clear that “Green Jobs” and “Cap and Tax” are a clear path to wealth destruction and poverty. It’s called an existence proof, and we have more of them showing up every day.
Musings from the Chiefio 
Chiefio, I greatly respsect your deconstructions of surface temperature measurements, but find your political/economic selectivity strange. Are you implying that China’s economy is not run by the government, or that Brazil’s is not at least strongly steered by the government? Maybe Spain’s troubles derive from something other than their green activities. Wouldn’t a holistic analysis be better than jumping to a favored conclusion? Murray
I should have added that in 2009 China instituted the mother of all stimulus packages and is now seeing wage and real estate inflation, and that they keep their growth going by artificially pegging their currency, but hey, that;s just the free market working. Murray
Murray,
While I’m in favor of markets, I’m by no means a laizze faire advocate. But since the world is not at all at risk of hitting that end of the spectrum, I see no reason to dwell on the Risks Of Robber Barrons, the evils of Trusts and Monopolies, etc.
IMHO, the ideal form is what is called the “Mixed Economy” but just short of the Lange Type Socialism.
To the extent that evaluation is valid, then you will see economic improvement as you move toward it, from either side. But since there are no Laizze Faire systems in the world today, we can not see improvement from countries moving toward Socialism.
But we DO see improvements, and lots of it, with each move toward a Mixed Economy from the Socialist side.
So yes, China was a hard core Communist system. “Socialism in a hurry”. They moved toward a Mixed Economy (and, IMHO, have started to reach the Lange Type at this point – central control and planning of major industries, minor ones market based). As long as they continue to trend, they will continue to improve.
Brazil played with The Socialism Shiny Thing some decades back. Had a horrible time with economic instability. Had a revolution or two. Eventually they gave up on it and moved toward a Mixed Economy. They have seen spectacular improvement since.
The USA was a Mixed Economy, and has moved toward Lange Type Socialism. Apace we’ve hit the rocks, economically. It will get worse the more we go in that direction.
You can go through similar exercises for the Euro countries as well. An argument could be made that a very smart and carefully run Lange Type Socialism might be as effective as a Mixed Economy (it really is getting to splitting hairs at that point) and that explains cases like Germany and Sweden. But it is very easy to fall off that optimization perch and plunge into a lesser form of performance.
IMHO, that’s what is happening with Spain and the Green Jobs. They are squandering net national wealth.
There is a study (sorry, I don’t have a link to it. But I did meet the author at the ICCC in Chicago) that shows that for each “Green Job” financed in Spain, there is over unity job loss elsewhere in the Spanish economy. (If anyone has a link, please post!)
It is my belief that this is why Spain is hitting 20% unemployment. The centrally directed creation of jobs at the expense of consumption of net national wealth. Policy driven emptying of the purse instead of national wealth creation driven investment. (Though folks will try to dress up wealth consumption as ‘investment’, it isn’t.)
This is, IMHO, the same thing that lead to the “Housing Crisis”. We politically subsidized selling way over priced houses to anyone with a pulse. Misdirection of resources for centrally planned social goals with net national wealth destruction (and spread it internationally via SIVS and CDOs and such).
But putting all that kind of ‘inside baseball” economist speak into a general public posting tends to be tedious to the readers. So I usually don’t go into it. One of the early things you learn as an economist is that most folks have no interest what so ever in the field (and despite protests to the contrary, don’t even have much interest in money. They’d rather hand it to someone else and go watch football or TV or have dinner and a movie…) So the budding economist learns to chop it short, leave out the jargon, don’t admire the finer points, and make it punchy.
OK, the short form:
It’s not where on the Laizze Faire to Communist spectrum your economy sits, that determines your rate of growth: it’s the direction you are moving it. As long as your first derivative of type is moving toward the optimal point, you are having excess growth.
We could argue over where that optimal point might be, but the global existence proofs tend to point at somewhere in the area of Mixed Economy / Lange Type Socialism. I bias toward the Mixed Economy, but could easily make a decent case for a weak form of the Lange Type system.
There is also a very full body of literature extolling the evils of the Laizze Faire system, just as there is for the Communist system, so I don’t think it’s worth putting a lot of time into discussing how they fail…
That pretty much leaves the interesting bits at the “socialism to Mixed Economy” vector. Thus, that’s what I tend to point out.
Amazing! Every more or less rant you have made on politico/economics for the roughly 1 year that I have been lurking at your website led me to believe that you are a died in the wool “laissez-faire” free market capitalism believer and advocate. Now you come out with a position that is nuanced and probably mostly corect. I would disagree with, or maybe just try to refine a few points:
– “The USA was a Mixed Economy, and has moved toward Lange Type Socialism. Apace we’ve hit the rocks, economically. It will get worse the more we go in that direction.” I think we are still well on the side of the mixed economy. Government has moved to improve social welfare in desirable areas, but still does little or nothing to control or direct private enterprise, or to really direct allocation of capital. I have lived nearly half my life in places like Switzerland, France, Italy and the UK, and so probably have a different perspective than you, or to put it another way, my spectrum is more spread than yours. The recent stimulus can’t really be counted as a move to socialism, and the bail-out of GM was a very long way from a government run takeover as the Libertarians would have us believe.
– “This is, IMHO, the same thing that lead to the “Housing Crisis”. We politically subsidized selling way over priced houses to anyone with a pulse. Misdirection of resources for centrally planned social goals with net national wealth destruction (and spread it internationally via SIVS and CDOs and such).” Now that is a truly perverse take on the origins of the economic crisis. Let me copy you on a bit I wrote for another right of center free market friend some months ago:
Start – Congress got a bill, at least partly aimed at tightening regulation of F&F, (Fannie and Freddie) into the banking committee in 2005. As the bill was defeated, one or more Republicans must have voted against it. They had the majority and the chairmanship at that time..
In http://www.snopes.com/politics/business/easescredit.asp, note who were pushing F&F to relax their standards by 2005. Who do you think had more clout, a few minority senators or the shareholders and most of the mortgage and investment banking community?
Also consider 1999 when the Clinton Admin. pushed F&F to loosen up a little. There is no suggestion that they were pushed to go overboard, and conditions in 1999 were very different. The economy was booming, unemployment was very low, risk appeared minimal, and there wasn’t even a nascent housing boom. The housing boom took off after 2001 when further financial deregulation was enacted and 2002 when the Fed started the interest rate drop, that led to unprecedentedly low rates.
Note that yesterday, in committee hearing, Greenspan and the heads of the SEC and Treasury agreed that F&F were a contributor to but not the cause of the crisis. Further testimony suggested strongly that F&F were not even a primary contributor.
Greenspan also indicted risk models, SIVs (sophisticated investment vehicles), self-regulation, and lack of counterparty surveillance. He also admitted that his ideological faith in enlightened self-regulation was flawed, and said that this realization was a shock to him. What naivete!!
Greenspan said that sophisticated risk assessment mechanisms, that were developed and worked well over decades, broke down, and implied that the models, developed mainly during a long period of unbroken growth, did not provide for contraction. (Pretty big flaw!!). He also noted that the SIVs moved through the system so rapidly that initiating and intermediary investors did not even consider risk.
One other main contributor, not covered in committee when I was watching, was the accounting rule change in Q4 2007 that required “mark to market”, which is totally inapplicable for investment vehicles like securitized mortgage packages that are neither liquid nor mutually similar. That was what set the snow-ball rolling when Bear-Sterns failed.
So we have relaxed credit rules, deregulation, failure of both formal and self regulation, low interest rates, shareholder pressure, greed, failed risk assessments, flawed risk models, introduction of opaque and highly speculative investment vehicles, accounting rules changes (I haven’t even mentioned CDSs), all combining in a perfect storm to make and break a monumental bubble. Note that almost all of these ingredients were introduced or came to fruition during Republican administrations and/or congressional majorities.
The enablers of this mess were deregulation and low interest rates, the drivers were greed and short term outlook, the vehicles were opaque, speculative and largely unproductive financial inventions, the trigger was the accounting rules change, all supported by Republican/Libertarian free market ideology and Greenspan’s touching faith in enlightened self regulation.
One lesson for the Democrats from all of this: Don’t try to achieve liberal socialistic (and pretty reasonable) goals by means of risky, speculative, capitalist financial (free) market mechanisms. That has proven to be a lethal combination. – end
The SIVs created an apparent capitalization that was a large multiple of the value of the underlying assets, and subprime loans were pushed by mortgage brokers and banks that could quickly unload their risks. That was 100% free markey and had nothing to do with “political subsidization of overpriced houses”.
Note, I was a Goldwater Republican in my younger years, before years in Europe taught me not to replace political and economic thinking with slogans and mantras and paradigms, and showed me how well quasi socialism can work. Now I tend to be a social liberal and a fiscal conservative – maybe kind of Clintonesque. Also note the deficits we run up under Republican free market capitalist administrations.
I kind of think we are closer together than your previous position statements would suggest. Hope this hasn’t been too long. I really admire your breadth of interests and obvious intellectual capability, and have found your previous politico/economic positions jarringly inconsistent with them Murray
I would like to add one small point. In my reading of western, largely capitalist, history over the last 120 years or so, whenever free market competition in any small market segment gets too hot, the larger players try to create some form of cartel to limit competition, and not infrequently try to do so through legislation. Whenever the going gets tough, the free market boys are the first to invoke government direction of their little piece of the economy. The sophistry, or hypocrisy, or paradigm blindness or all of the above of free market advocates is limitless. The good news is that, in fact, even without socialism or government economic steering, there is almost no such thing as a free market.
Had to come back again. I googled on Spain, economy, and green to see how much government spending on green contributed to Spain “going down in flames”. I haven’t researched Spain’s fossil fuel costs, which would be the correct way of judging the value of their renewable subsidies, but I know that they have no NG, no oil, and very little coal, so they have to import energy. Anyway, following is the result of about 2 hours of googling. Your connection of Spain’s economic problems with their green energy program is based on one very bad paper, and is totally disconnected with reality. C’mon Chiefio, you can do better than that. I’ll bet you haven’t researched the valus of “Cap & Trade” either. I would suggest some books, but reckon you are already too backlogged.
Spain’s Economy – Cheap money because of membership in the eurozone, huge increase in household debt fueling a RE bubble, huge increase in immigrant labor to work in construction, and long term unsustainable labor laws reducing flexibility – and the bubble bursts, with the first trigger being a trucker’s strike. No mention of “greening”.
http://seekingalpha.com/article/113829-why-spain-s-economic-crisis-is-more-than-just-a-housing-slump
http://spaineconomy.blogspot.com/ more current input from Edward Hugh
http://www.monstersandcritics.com/news/business/news/article_1558081.php/Spain-s-economic-crisis-requires-far-reaching-reforms-IMF-warns Note – the absolute number of unemployed in Spain is nearly equal to the number of immigrant workers in Spain.
http://news.bbc.co.uk/2/hi/world/europe/10373564.stm big problem with labor laws.
http://www.spiegel.de/international/europe/0,1518,702567,00.html Pretty good description of the sources of Spain’s problems – did you see any mention of “greening”?
http://globalnation.inquirer.net/news/breakingnews/view/20100131-250505/Immigrants-bear-the-brunt-of-Spains-economic-crisis
http://en.wikipedia.org/wiki/Economy_of_Spain
http://kern.pundicity.com/5520/spain-economic-problems-are-getting-worse
http://www.cnsnews.com/public/content/article.aspx?RsrcID=46453 Here comes the green argument – but with big distortions
snip According to the Calzada’s study, Spain is a strong example of the government spending money on green ideas to stimulate its economy snip – but Spain wasn’t spending on green to stimulate the economy, they were doing it from 2000 to 2008 with an already overstimulated bubble in progress. Total immigration of workers during this period was 5M, total job creation in green energy was 50k.
Snip Michaels also said he was not surprised by the study’s finding that only one out of 10 jobs were permanent. Snip – but that wasn’t peculiar to the green jobs, it’s across the board in Spain, and operating jobs are always a small fraction of construction jobs.
Calzada shows the PV subsidy as 7x the pool price of electricity, but fails to note that the pool price is subsidized below cost, or to mention that PV provides peaking power, which can be 7x regular power in the USA also.
He gives the investment in wind as 14.7 ME(euros), and the installed capacity as 14.8 MW and then comes up with an installed investment of 1.1E/MW, 10% high.
Future committed subsidies for green power are stated as NPV calculated at a rate of 4%, without mentioning # of years, and then quoted as E1M/job created.
That is E30k/job year over 30 years. How much is fuel/job year for non renewable energy.?
Capital spent/job created in 2008 terms is compared to average fixed capital employed/worker from 1995-2005, to get the 2.2 jobs foregone per job created.
However fixed capital per worker is depreciated vs new capital spent at starting value, and there is no evidence that redirecting the subsidy would create other jobs.
At this point I quit reading. The study is very misleading, and the media reports even moreso.
@Murray Duffin:
I’m in the awkward position of being a hard core advocate of alternative energy, of any kind, and yet being against government subsidy programs as they are usually badly done and misallocate capital, so lead to a lower economic performance overall and a poorer performance on such indexes as unemployment rate and net increase in domestic product (I’d prefer a net domestic wealth increase, taking OUT things like cleaning up an oil spill where you are really undoing a harm, not increasing wealth, but that figure is not typically tracked).
If governments would be as careful with capital allocation as private enterprise, I’d have no complaints about government driven investments in such things as energy infrastructure. There might be some way to achieve this goal, but I’ve never seen it happen (with the possible exception of some communist countries where their investment plans actually did lead to massive rapid economic growth, but at the cost of crushing their populations and destruction of liberties. Not a trade I’d be willing to make… And perhaps the TVA and the Federal Interstate system along with the California Aquaduct system – but even for them we have the specter of potential misallocations with things like subsidized water intensive crops in California, the growth of LA, and the impact of the auto in the USA..)
So I’m not so much saying that the Green Jobs program causes all the collapse in Spain, so much as I’m saying it is an indicator of a government driven capital allocation style that fails generally. Basically, if you are willing to do the “green jobs” thing with each job costing about $300,000 (in the USA) but yielding about $80,000 of gain (being very generous) and sending $220,000 of wealth into the dumpster, you are most likely doing a lot of other equally silly things with your capital.
And, since the “Green Jobs” program was widely touted by the advocates as the answer to unemployment problems, it is perfectly reasonable to point out that it has failed miserably as a solution, and is really part of the problem.
(No, not the whole problem, and probably not even a significant cause of the problem, but a real part of the problem and a significant indicator of broken self rationalizing thinking rather than investment based on real business cases with a real wealth building outcome).
For Spain energy economics in particular, were I the Spanish Energy Czar, I’d be looking at the Rentech system for turning trash into motor fuels (in limited use in the USA). I’d also be building coal to liquids facilities (as is China) and buying very cheap coal instead of very expensive oil. For Solar, I’d put in place a financing plan that let folks get the capital needed to put solar water heaters on their homes where it made economic sense, but not subsidize the prices, and I’d consider a mandate (as in Florida and California I think…) that swimming pools must have solar heat (as it’s a complete no-brainer so anyone not doing it is being a bit stupid or lacking capital) but with a capital provision loan program. Waaayyy down the list would be the giant “Power Tower” type electrical generation facilities they are building (as much as I LOVE that technology… It is far more cost effective to insulate the walls and put a white roof on the house than it is to use a solar tower to make electricity to run the A/C…)
So do I think that building a power tower or two caused Spain to collapse? Nope. But I do think that a government that does such Taj Mahal expenditures is making a lot of other similar mistakes too (as is common in politically driven economic decision making as is common in socialist systems and direct democracies)? Absolutely. And I’m also pretty sure that they could have gotten much more bang for the investment buck elsewhere and would have had more total employment, at greater net wealth created, with some of the other types of investments listed above. (CTL, insulation, trash to liquids, etc.)
Per “Cap and Trade”: I’ve spent more time than I care to think about studying the whole area of ‘internalizing externality costs’. It was a hot topic when I was getting the Econ degree. That’s what Cap’nTax is supposed to do. Capture an externality (the uncharged cost of CO2 impacts on the world / economy) and internalize it (incorporate it into the cost of doing business).
The problem is that THERE IS NO EXTERNALITY to capture. CO2 has zero bad effect. It promotes plant growth, it MIGHT clip the cold excursions a little bit (all good everywhere, even the Polar Bears do better if it’s not hitting Oh My God cold as their prey don’t die off) and is mostly of no impact at all (other than plants). So if you set up a system that costs billions of dollars, and transfers trillions of dollars, you are grossly misallocating your capital (by definition, since you are signaling to move it based on a non-issue) and will get grossly distorted (i.e. worse) results from that misallocation.
If you want to cut oil consumption from OPEC (a very good thing, IMHO) there are far easier and more direct ways to do so that do NOT cause the gross capital miss-allocations of Cap’nTax. A trivial system would be simply putting a landing fee or tariff on imported oil. My favorite variation on this is a tariff that sets a floor under imported oil so that the alternatives are not subject to the risk of an OPEC price fixing move to the downside putting them out of business as has happened in the past. So set a tariff at $(80-Marketprice). The price has a floor at $80/bbl. Not much impact (you could make it $70 for zero impact) on present prices. Yet it tells the bankers and the ‘little guys’ that they can invest in a project making $50 synthetic oil with complete confidence. (And many companies can make synthetic oil at $50/bbl). Cap’nTax is presently forbidding those investments since nobody knows what the cost structure for a coal to oil plant will be AND they do know that OPEC can ‘open the tap’ and drive prices down if they want. (Saudi has expanded capacity to a few million bpd extra… just in case…)
One example: A CO2 based allocation will penalize coal the most. Coal is the cheapest, most widely available, and most economically suited alternative to oil. South Africa is running on it today (and has been since the 1970s when the world threatened an oil embargo); so we have an existence proof and the cost to their economy is nearly nil (or perhaps a net negative cost as they avoid all the ‘oil price shock’ dislocations). So a CO2 plan will prevent the best, most viable, most proven, and best capital allocation result that can most rapidly displace OPEC oil. Pretty dumb system…
BTW, this is NOT a theoretical. Right now we have China buying coal to liquids plants (note the plural – some from Sasol SSL and some from SYMX) and signing long term contracts to lock in coal supplies (from Wyoming in the USA and from other places too) and transport (Burlington Northern will be hauling that Wyoming coal to port. That’s part of why Birkshire Hathaway bought BNS, and since I own BRKA, I own part of that coal haulage business).
So I’m going to make money off of Cap’nTax via the China loophole. I’m expecting that hauling coal to China will pay me well. I’d rather have it turned into oil products IN Wyoming and kept in the USA and tell OPEC to stuff it. That would be the better capital allocation and best impact on US balance of trade. But Cap’nTax will lock in the poorer capital allocation; and lock in my rail road profits… Yeah, I’m not “talking my book”, I’m talking AGAINST my book. “Talking your book” is trader talk for when someone tries to talk up the value of stocks they hold. I just know that talking against my book will have no impact on my profits.
BTW, I have no problem at all with markets that trade in legitimate externalities. It can work well as a very efficient way to allocate the acceptable level of environmental impact to the more efficient uses. It does have some problems, all markets do, such as the ability of a very large player to out-bid small players via monopoly activity and result in net misallocations. Like the Hunt Brothers in Silver back in the 1970ish era. The problem I see is entirely the creation of a false externality that distorts markets rather than aligning them with their true costs to the society.
OK, back to Spain:
Yes, they participated in the equally stupid misallocation of investment in real estate. Governments all over the place, but the USA in particular, hopped on the Home Ownership bandwagon and began passing laws encouraging more real estate purchases. This, of course, causes an unsustainable increase in real estate prices, and makes the bubble. Excess purchases IS the bubble, and the government is pushing, hard, for excess purchases.
To me, it’s the same problem with the same cause as the “green jobs” process. Government distortion of capital allocation into unsustainable “growth”. Though at least with building houses, at the end of the day you have a net increase in national wealth (homes have value) though at the cost of excessive price inflation (that collapses with the bubble).
BTW, any time a misallocation of capital is removed, it is a net gain to the economy. You don’t need evidence that it would have gone to any other better investment, only that you removed the misallocation (and resultant loses).
Finally, per my “economic rants”, It’s really just that I hate waste. Strongly socialist economies lead to waste. Direct Democracies are prone to a particular kind of collapse that leads to catastrophic waste. When I see folks advocating to take either of those two broken paths, I share what I know about their failures. Pretty simple. And it’s not because I have some emotional dislike of either one! I’m just as emotionally driven to wanting “free health care for all” and “my vote counts” as anyone else. I’ve just read enough economic history to know where they both lead. As did our Founders when they wrote a constitution with a capitalist republic at it’s core.
If we were seeing Laizze-faire breaking out I’d be “ranting” about the hazards of the Robber Barrons and the horrid misallocations of capital under monopoly practices. (Strangely enough, monopolies are all prone to non-competition failure of a very similar sort, be they government monopolies or private enterprise monopolies…) But since those topics are already very well treated in the historical literature and in anti-trust laws ( modulo folks like Microsoft getting away with monopoly practices for decades… even the EU has been timid in dealing with them, though did find them guilty) and given that there is no Laizze-faire hazard in the world today, it seems pretty silly to “rant” against the monster that is dead and ignore the one chewing on our children…
Though I’m sorely tempted to put together a posting about how the Financial Reform in the USA is a big boost to the Oligopoly Power of the major money center banks and puts a dagger in the small regional banks who don’t have the staff to deal with a several thousand pages regulatory regime. But while this will hobble small business loans, that mostly come from small banks, and crush the heart of the economic recovery: I’m pretty darned sure that most folks have no interest at all in a tome on The Evils Of Excess Regulation And The Promotion Of Oligopoly Abuse Via Government Lobby.
But please, don’t accuse me of being “nuanced”, given the use of the term by folks like Kerry, it makes my skin crawl ;-)
So I mostly steer clear of the fine details of economic theory as it puts most folks soundly to sleep. Unless prompted, you will mostly get the ’30 second sound bite’ that covers the present situation and not the ’30 minute analysis’ that looks at the history, direction of change (first derivative), collateral impacts, and potential for ‘nuanced’ mitigation. There just isn’t much interest in it other than among economists and policy wonks. Folks don’t want to know how to make a stuffed pork chop, they want the chop on a plate and a fork.
Per USA Lange Type Socialism: We’re on that side with the purchase of GM, AIG, etc. As the government now owns chunks of major industries. IF we sell out of those positions, we will move back to Mixed Economy. The major distinction between the two being that in Lange Type the government owns major industries. (Minor ones are left in the capitalist arena). I could make a case that a large enough body of regulation is functionally the same as ownership control, but that would be stepping outside the formal definition. (Though I do think that Fin Reg et. al. is strongly headed that way.) A case is also clearly available for the Health Care Bill to amount to Government Takeover of the healthcare industry (and 1/6 of the economy under government control is sure looking like a Lange type approach – though we’ll have to see how directly they express that control. Like an owner or like a customer. Lange Type vs Monopsony.
Yeah, it’s a tepid toe into the Lange Type side, but it’s definitely there. (The Fanny Mae / Freddy Mac ownership of most of our home mortgages is another Lange Type moment… and we’ve seen where that one leads… but they are “quasi-government’ agencies, so again are strictly outside the definition. But for all practical purposes inside it.)
So to extend the “nuance” even further, I’d assert that we in the USA are trying desperately to build a clearly Lange Type Socialism, but are clothing it in the trappings of a free market so that it doesn’t look like what it is. So that it evades the definition. Yet it still acts the same and still fails in the same way. So just look at how much of total home mortgage debt is owned by Fanny, Freddy, and The Fed (another ‘quasi-government’ body), how much of the total economy is in the healthcare arena, and how many companies have had partial takeover via TARP and ‘bailouts’. To me, it’s clearly ACTING like a Lange Type Socialist government. It is just hiding behind the instruments commonly used in a capitalist system (stock ownership, regulation). So perhaps we need Yet Another Nuanced Name for it.
To that end, I propose to call it: Smith Type Socialism
A Lange Type system, disguised in capitalist clothing. (and potentially, a Lange Type system disguised in communist clothing – see below. Call that one Smith Type 2 Socialism). Government ownership of major industries via stock ownership, extreme regulation that amounts to ownership decision making, government monopsony and regulatory power working in coordination to effect control of an industry.
It happens at the boundary between the Mixed Economy and the Lange Type Socialism as one is transitioning to the other, but a clear endorsement of the change is not politically viable.
To that extent, I’d also assert that China is becoming a Smith Type Socialism but from the communist side, so Type Two. (at the boundary between communism and Lange Type Socialism). They still have all the central planning apparatus and the communist name; but have begun the transition to a Lange Type Socialism in that minor industries have been freed to be capitalist and the major industries are having stock IPO’s (but often with a controlling interest held by the Government). So they are keeping their old name “communist” while transitioning to Lange Type Socialism. And keeping all the old commissars and planning bureaus as it would be politically unacceptable to admit the change. Yet hiding them with stock issuance and IPOs et. al.
BTW, on GM in particular: It was NOT a bail out. It was a ‘take under”. But in this case it was not a takeover company screwing the stockholders (or as in a ‘failure’, the bond holders screwing the stock holders), it was the government screwing the bond holders and the stock holders. There is no doubt at all that the government chose to abrogate bond holder rights and do a takeover. The law says that the bond holders get the company and the stockholders get the boot. For the government to cook up a deal where the unions and the government take an ownership position ahead of the bond holders is a socialist takeover. What ought to have happened was a failure of GM, the pensions moved to the Pension Guarantee Corp, and abrogation of the union contracts, and the bond holders decide how to turn it back into a going concern. Obama gave a large political gift to the unions via a government takeover / takeunder. That’s not capitalism, nor is it US law. It’s a social agenda driven political result. The government is driving the bus at GM for a greater social good. That’s Lange Type Socialism. Time will tell if it was the right choice or not. I know I’ll never buy a GM product again, even used. And Ford sales are way up.
Per life in Europe vs USA. That knife cuts both ways. I’ve lived under a far more pure form of capitalism (back in the 1950s) than most folks. I’ve been through good times and even bad times – worse than we’ve had so far. The system is not all that bad (even with robber baron problems and a lack of a social safety net). You learn to be more dependent on yourself, and that’s a good thing. One of my major worries about the society today is that I see far too many folks turning to government for answers rather than looking to themselves. The American “Can Do” is melting away. I see the same thing in Europe, though a bit more advanced. Yes, I covet the warm cocoon of Euro-socialist “support”, but I also know that the comfortable nest is not where you learn to fly… Really fly.
And I KNOW folks have the answers inside themselves. I’ve seen them do it (in prior times). That loss of the inner self is the worst part of the nanny state dependence.
As this response is already too long, I’ll not add a full dissection of the Housing Mess. You start your analysis too late and leave out the root causes. It started with the first Community Reinvestment Act in 1977 and Fanny and Freddy as quasi-government agencies, but it really got rolling with the 1999 re-write. In that case, the Clintons and Barney Frank and friends pushed the system too far. The drug of government housing money was losing it’s punch and they needed another shot to feel good (and keep the Ponsey going). They REQUIRED banks to make bad loans or go out of business. In exchange for allowing that P.O.S. bill to pass, the Republicans demanded a removal of the regulatory harness. The Dim Dems were breaking up the furniture and lighting a match and the Radical Right demanded that the fire sprinklers and fire alarms be removed. A pox on both their houses.
At that point I can’t really fault the bankers for trying to find a way to move the crap loans off their books (and thus the growth of SIVs and CDOs and all the rest). They were mandated to sell the crap loans by the Dim Dems, and had nothing stopping them from selling the loans as ‘securities’ thanks to the Radical Republicans. A match made in hell.
Some day I’ll do a 5-10 page elucidation of the details, as they matter, but I don’t think anyone will really want to read it. It gores both sides and the only reasonable conclusion is that government from either side is self serving and idiotic. (So both sides toss rocks at me…)
How to fix it is not the 2300 page FinReg bill we’ve gotten, though. It’s to put back the 37 page Glass-Steagall financial regime and repeal the CRA. Oh, and I’d put Fanny and Freddy on their own as private – completely private -companies. We don’t need a social agenda ‘promoting home ownership for all’ nor do we need a robber baron driven agenda promoting cowboy banking.
But that would not suit the agenda of either side nor would anyone get bonus points for saying “We screwed up, we’re putting things back like they were”. Especially not Barney Frank who has been in the middle of all of it the whole time and has ownership of the mess (but likes to deny it’s his fault).
Hi Chiefio
I think your rant response is spot on. Let me add some more nitro to your gas tank wrt Green Jobs. Last summer I went jogging in a local park. There was a large green sign at the end of the parking lot at the top of the ski hill. It said something to the effect: “Funded by the National Stimulus Recovery Act. Your Tax Dollars at Work.” I looked over the hill and saw five individuals sitting at a table under a large green umbrella. They were observing a sixth person sweeping the steps to the winter ski-lift – it was July. All were wearing identical white t-shirts with green lettering.
I turned to my childrem and muttered, “Milton Friedman is turning over in his grave.” My rant to them was that it is intellectually dishonest – if not outright fraudulent – to claim that the Obama administration has reduced unemployment via these particular Green Jobs. The reason is that they were not providing any useful product or service that anyone in their right mind would be willing to pay for by forgoing some other REAL service or product. An honest categorization would be that they are unemployed and on welfare, including the supervisors and administrators of this program. It does not extend the productive capacity of the economy and lower prices, but rather has the opposite effect. It takes both capital and personal out of the potential pool of resources for growth and recovery.
Cheers
DB
It’s to put back the 37 page Glass-Steagall financial regime and repeal the CRA. Oh, and I’d put Fanny and Freddy on their own as private – completely private -companies.
wELL WE AGREE ON SOMETHING.
I think my problem with you is that you:
– tend too much to generalize from the particular (power towers in Spain indeed!)
– and to assume the extreme case. (Bailing out GM is a step toward Lange Socialism, as if the intent or motivation was to move the country to Lange Socialism through Fabian means rather than the real motivation of saving a very large number of jobs when the economy was on its knees.) Even the best ideas become somewhere between fallible and disastrous when taken to the extreme.
– With maybe a little tendency to conspiracy think thrown in.
Therefore we will disagree on a lot of the fine details, but at least I can now calibrate pretty well where you are coming from. Thanks, Murray
I’m sorry you “have a problem with” me, but frankly, that’s not “my problem”…
I learned long ago that most folks don’t want the novel, they want the crib notes. So I pick an interesting item, like power towers, and it becomes the ‘excerpt’. While I’d rather write long 20 page expositions (it’s an Aspe thing… every detail must be there…) I’ve learned that it does not work for most folks. So you get the smaller ‘sound bite’ approach. If it doesn’t work for you, well, at least know you know why it’s done. The “particular’ is there as the touchstone, then the ‘general’ is there as the ‘sound bite’; and I do not intend to have the 20 page tome that connects one to the other.
In the case of bailing out GM it is not a STEP toward Lange Type, it is an EXAMPLE. Government Ownership of a Major Industry. If you want rubber definitions, go right ahead, but they don’t work well for me. It is also a case of the government bypassing all established bankruptcy law for a ‘social good’ exactly as is done in a socialist system We are either a ‘rule of law’ and ‘capitalist’ country, or we are not. In this case, we are not. And if you are a ‘little bit pregnant’…
And the “motivation” is completely and utterly UNIMPORTANT. I don’t care what your motivation was when you became a ‘little bit pregnant’. It’s the condition, not the motivation, that matters.
So yes, we are utterly and certainly an owner of major industries. That’s Lang Type. No doubt about it. (Even if only ‘a little bit’.)
Per conspiracy: I don’t subscribe to conspiracy theories, but I do admire collusion when I see it. Read your Adam Smith. Especially the part about folks forming monopolies at the drop of a hat by coordinated efforts. That doesn’t make it a conspiracy theory, but it does make it a fact that folks work together to common ends. So yes, I’ll look for who is working with whom, because that’s what people do.
I regretably don’t have time to speak to your points one by one, but I’m pretty sure I can provide good exceptions to many of your positions. The problem is probably like climate – there are so many factors involved that it is too easy to oversimplify. eg
“(with the possible exception of some communist countries where their investment plans actually did lead to massive rapid economic growth, but at the cost of crushing their populations ”
How about Singapore and Malaysia? Of course they are small geographically and population-wise, and both benefited from, in effect, benevolent dictatorships.
In one of your investment pieces you made a strong point about the inherent inefficiency of markets, so government isn’t unique in suboptimization. At least governments can look forward (even if they frequently don’t) more than 6-12 months much better than markets.
Coal to liquids?? very inefficient way to use a very polluting resource (not CO2), and to accelerate the inevitable decline in availability. Better to use that capital for efficiency and renewables if its the best employment of capital that puts the burr under your blanket. Three to 5 decades from now your progeny would curse you for that choice. Declining availability of the energy we need to develop other forms of energy while postponing development of the alternative energy you support. Even governments can do that well.
Maybe I should have added one more problem above – Selective (I used that word when this exchange started) confirmation bias??
Although it may be hard to believe, and probably you don’t give a damn, I have not mentioned these problems as a put down – its just that, – Hell I don’t know how to express the frustration that your thought process gives me. You write long intelligent pieces, clearly based on wide ranging education, that end up presenting such damned and, to me, perverse and/or unjustified, absolutist conclusions.
Any way, I have enjoyed the exchange, and will drop it now.
Thanks again. Murray
Ah, found it!
The Adam Smith quote from The Wealth Of Nations:
Took a while, but I found it here via a google search:
http://www.acton.org/commentary/514_davos_capitalism_adam_smith_nightmare.php
Haven’t read the article and don’t know the site, but the Adam Smith quote is at the very top of the article. A brief scan of the first few paragraphs looks like it might be interesting, though.
So yes, I do look for folks “in a conspiracy against the public” as that is what people do. And have done forever.
But that is very distinct from embracing a “Conspiracy Theory”. After all, arrests and convictions for “conspiracy to do” FOO are very high on the favored tools of the police. So look at the stats. Conspiracies DO happen. But you look for them based on evidence and activities, not on theories.
Also found this rather good page that does a top level exploration of the different types of socialism that can be classed together as “Market Socialism”:
http://www.geodz.com/eng/d/market-socialism/market-socialism.htm
Of particular note is this quote:
So in the case of GM, we have a planning Czar in the Obama admin telling GM what to do and setting the rules for the “settlement” in a centrally planned action. We have the removal of price signals for market clearing (the stock was confiscated, in essence, and the car production was done based on the needs of the union and not of the stock holders nor the markets. They were told to cut models and dealers. Both ignoring market prices and clearing apparatus). Both for a “greater social good”. And most importantly, we have the “soft budget” of a foregone bankruptcy.
Well, to me, if it looks like a duck, and walks like a duck, and quacks like a duck, it is not an Eagle…
Now we could haggle quite a while over the exact level of industry ownership thats constitutes a Lange Type Socialism, but that the GM takeunder was SOME kind of Socialism is pretty darned clear. It’s in the definition. It is not by my choice. And it has nothing to do with “motivation”. It’s getting down to splitting mighty fine hairs to figure out what exact degree of which exact label of Socialism applies, and I think will not interest most folks.
The definition of Lange Type Socialism is NOT “Ownership of industry by Government UNLESS their motives are good or pure”. It’s just “ownership”. The government OWNS GM and OWNS the label that comes with it. Just like it owns AIG stock and large chunks of the banks. That’s some form of “Market Socialism” by definition and for the purposes of the ‘soft budget’ of foregone bankruptcy.
And it does not matter what I think, or what I want. It’s not about me. Nor is it about you. Reality just is.
As I said, time will tell if it was the right thing to do. I allow that it might well be. But rightness or wrongness does not change the definition nor the label. It IS socialism. If you don’t like that, talk to the folks who make the definitions. I don’t make ’em, I just use ’em.
Oh, just read your follow up. On CLT, we have about 250 to 400 years of known reserves, and that does not even speak to the oil shale that can also be used (more centuries).
Resource depletion is just not an issue.
We have the existence proof of South Africa to speak to the capital efficiency. It make a profit. Solar and wind don’t. That pretty much sums up the capital efficiency question…
But if you want to put that solar or wind into a vehicle, you take even more losses (both technical in energy conversion and storage loses and capital cost losses, so that picture will be even worse.)
But if you insist, solar and wind do not go into a gas tank. If you want to do that, you need to replace all the capital stock of the transportation industries. Just take a look at those $Trillions and you will find the capital waste to be enormous. (I have no problem AT ALL with starting to make e-cars and nuclear shipping right now, or even sailing ships… with the intent that in a dozen years when the fleet has naturally turned over we’re ready for more ‘alternative’ vehicles. Or 30 to 40 years for ships. But even then it’s kind of an issue how expensive e-cars are to make and run. But make ’em and sell ’em and let folks decide in an open market. Heck, I’d like to have an e-car if the price was attainable.)
FWIW, the other reasonable alternative that I’d love to see is the natural gas vehicle infrastructure / vehicles. We’ve got some, but the costs and inconvenience have typically kept it a niche market. (The tanks take your trunk… and cost a lot … and need expensive periodic government mandated inspections… and have low range and …)
So if you are going to dodge “fleet change” and conversion losses, you need gasoline and Diesel. They are very easy to make via the FT process from Coal (CTL) from natural gas (GTL) from trash and biomass, from anything with carbon in it. The cost is about $50 / bbl for most folks, lower for some. And the efficiency of conversion is not that much different from the efficiency of conversion to electricity.
It works. It’s efficient. And oh, it’s clean.
Yes, clean.
Look at the combined cycle gas generation process. The gasses get scrubbed. Pretty darned clean output. The ash is used ot make concrete for ‘green’ projects. (Deer got a LEED rating for a facility using ash based concrete).
I’ve spent a little over 40 years studying alternative energy. I could write several books on it. (But they would be redundant with what is already published.) The bottom line of it all is that CTL / GTL is THE best alternative to oil, by a long shot.
Supporting your side: (since you said you were stepping aside for a while)
Coal does have horrific damage to the land, especially in places like West Virginia. THE biggest argument against it is the destruction of land needed and the potential pollution of groundwater in the process. That one, I have not good answer for. We can’t run for 100 years just on the coal from open pit mines in Wyoming. (Besides, that coal is headed to China under contract.)
There is an entry barrier based on distribution of fueling facilities for any gasoline / Diesel alternative. It is unreasonable to expect an alternative to make the leap over that hurdle against a giant oligopoly all on it’s own. “Jump starting” an alternative is a reasonable thing to do. (Unfortunately, this requires the government to ‘pick a winner’ up front, and the are not very good at it. Look at the MTBE mandate and the push for biofuels.)
For most folks, limited range is not an issue most of the time. (a very large percentage of daily trips are under 40 miles.) In many ways we are already electrifying. Just make ‘plug in hybrids’ and we’re well on our way. Probably even faster than making all the CTL plants needed. (To which, I’d point out, the added electricity will still come from coal, at a 50% generation loss and about an added 25% conversion and storage losses… and that about 30% of fuel would still be needed in the form of gasoline or Diesel).
This kind of back and forth can go on a long ways, but the end game is really very simple.
We need to do them all.
e-cars. Plug in hybrids. CTL, GTL, Trash to liquids. Solar for peak demand in sunny hot places. Wind in places with lots of wind for gas displacement. Drilling for more oil. More gas. CNG cars. The works.
The one thing we can’t afford to do is the one we ARE doing:
Endless bickering over The One True Solution while we continue to shovel $Billions at OPEC for the same old same old imported oil.
Finally: If you don’t like my conclusions, I can’t help you with that. That’s up to you. There may well be some ‘self confirmation bias’ as everyone has it. And I’ve been known to be wrong from time to time. But there is a pretty darned good literature on the failures of Socialism and a pretty darned good history of folks using it going down in flames. As per the successes: Talk to me in 50 years.
The most pernicious thing about the collapse of a centrally run economy is that it takes a generation or so to happen most of the time. Once Socialism has a 200 year run under it’s belt, I’ll be willing to listen. So far, the record is more in the 50 to 100 year span. So you can find a 20 year, or even a 50 year good run. Then it goes splat.
Russia was looking pretty darned good about 1970. 1990, not so much. Nazi Germany went down faster, but that was more due to the fascist / dictatorial ambitions than due to the Socialist agenda economically. (But that is one of the failings of socialist regimes… they covet. A lot.) Cambodia? Viet Nam? (one of the hot stock markets right now…) China? again in transition away after a brief run of industrial expansion under central planning. So you can pick a place like, oh, Sweden, and say “Look how good it is!” And then you have to look at the loss of Volvo, Saab, etc. competitiveness and ask “how many years?…”
So citing examples working today is not enough. You need long term success stories on the order of 100 years.
Finally, on my style of reasoning and thought. It comes from being an ambidexter of equal verbal and non verbal styles. The gestalt does not always make it through the long laborious process of translation into words. Especially if I cut out enough to keep it under 20 pages+ and jump from “basis” to “answer”. I know many folks can’t do that, and I can’t help them. This medium does not lend itself well to a ‘full treatment’ and most folks glaze at anything longer than a single page. So you will just have to accept that that is the way ‘reality just is’ in this case.
Hi Chiefio:
You have travelled a long way from Spain going down in flames due to green programs, so I will stay away from all of that. Just a couple of things that may help. See the following URL for some info on coal:
http://www.energypulse.net/centers/article/article_display.cfm?a_id=832
If your referal to shales was for NG – I was sure surprised by the development from 2006 through 2008 of workable technology for horizontal drilling and fracking of shales to release NG. That has certainly prevented the decline in NG availability that I expected. However there is major concern about ground water contamination and I expect to see a major problem in the fairly near future that will again put NG supply in question.
If your reference was to oil shales, please see the following letters written back in 2005. (the more recent is first). Sorry for the length, but the analysis requires a lot of info. Any way – forget oil shale.
I feel confident that the free market cannot address these problems until forced by crisis, hence my hope for gov’t action. I don’t believe cap & trade is the best way to address energy issues, but it is a lot better than nothing, which seems to be the alternative. Cheers Murray
Daniel Kish
Senior Advisor to the Chairman
Chairman Richard Pombo
Committee on Resources
U.S. House of Representatives
202 226 9722
Dear Dan,
>
>See the following url for latest detail on shale oil history and implied
>practicality, as well as the attachment for a more detailed analysis of
>practicality. http://www.hubbertpeak.com/laherrere/OilShaleReview.pdf
>
>The Congressional testimony by Mut of Shell proves my prior contention
>that
>
>the 6:1 energy yield in the Shell press release was false. Further it seems
>the committee did not know the right questions to ask. A colleague of mine
>had the opportunity to question Shell further and found that the 3.5:1
>quoted by Mut as the yield from primary energy in the fuel to generate
>electricity to the energy in the light oil and gas produced was for a 60%
>efficient combined cycle gas plant, and did not include the energy needed
>for the screen wall freezing. For a typical coal plant, including the
>freezing, the energetic yield would be little more than 1:1, excluding all
>of the embedded energy, as I said in our earlier exchange.
>
>However it may be possible in the future to used AFR nukes as the energy
>source, and use the high temperature of the nuclear reaction to augment the
>electricity, thus approaching 60% efficiency for the total energy generated
>to heat the rock. (Using already scarce and declining NG is just not on).
>Then something close to 2:1 energy yield overall might be possible. Given
>that 200 sq mi could yield 20 Gb light oil equivalent, perhaps 8 nuclear
>plants, (one for every 25 sq mi square) could provide the necessary energy.
>While this is not an attractive option per se, it is a lot better than coal
>to liquids, which would have an energy return of 0.6:1.
>
>As I said before, the rate of production ensures that shale oil will not
>solve the problem of declining petroleum, but if we insist on using fossil
>fuels it can make a strategic contribution, at least to ensure military
>independance from outside sources. Whether we stay with fossil fuels,
>attempting to solve the problem with tarsands and oil shales, or whether we
>transition to hydrogen as our primary transport fuel, the indispensable key
>is to build superefficient light, weight, low rolling resistance vehicles.
>If we don’t move to at least 4x the present fleet mileage/gal we will not
>solve this problem. The sooner Washington holds Detroit’s feet to the fire
>the better. Now that the President is calling for conservation, it is time
>to demand efficiency also.
>
—–Original Message—–
From: Murray Duffin
To: Kish, Dan
Sent: Sat Jan 01 11:00:12 2005
Subject: RE: EnergyPulse Feedback – From Dan Kish
Dear Dan,
Paradoxically, I am encouraged by your reply for 2 reasons. First, you are not questioning peak oil. I have been sure for some time that President Bush and VP Cheney have been fully aware through briefings by Matt Simmons. VP Cheney even made a direct reference in a 1999 speech. It has been much less clear that anyone in the House was aware, or not in denial.
Second, I suspect that, being aware of peak oil, and unwilling to change “business as usual”, you and many others are looking only to supply side solutions, preferably fossil fuel supply side. In this condition it is easy to persuade oneself that there is an easy solution and hard to accept doubts cast upon that conclusion. If memory serves the psychological reaction to discrediting of cherished beliefs is something like anger, denial, frustration, reflection and acceptance. Your reply seems typical of denial and indicates that you readily passed anger. That’s good progress.
Addressing the specific points you made:
1)Putting money where mouth is. During 2001/2/3 I spent about $25,000. on research, transcription, duplication, postage and advertising trying to bring a clear energy message to Congressional decision makers, to say nothing of many. many hours. That’s about 5% of my total annual retirement income. From 1996 to 2010 Shell will probably spend less than $30M/yr getting to a decision re shale oil. That’s 1.5% of their Exploration plus R&D budget or 0.19% of their annual indirect cost. Note that I have no lobbying capabilities and no connections in Washington. so my odds of being listened to are near zero, but I try anyway. Why? Because I am convinced that our present energy path will lead straight to severe crisis, that could be avoided, or at least mitigated by an early change of course, and I feel a duty to try and help my country. I am quite prepared to do much more if I can find a way
,
I’m glad you mention “seeing the numbers”, because I really like to quantify
things, and not use terms like huge etc.
First we need to put Estonia in perspective. They use the bulk of their oil
shale for electricity generation, burning it like you would coal, at an
energy yield from the primary energy contained by the shale in the ground to
electricity delivered to the customer of 11%. For the small share they use
to produce oil, the energetic yield from ground to tank is 9%. World oil
shale yields from .14 b(barrels) shale oil/ton of shale for “lean shale” to
1.2 b/ton for “rich shale”. Average world shale oil that is considered
recoverable is estimated to yield 0.3 b (barrels) /ton of shale. The small
portion that Estonia uses for oil yields 0.9 b/ton, ie only their rich
fraction. They also estimate that they are competitive with oil at $25.00/b
for light crude. They generate 3000 MW of electricity from oil shale, much
less than 1% of USA generation. Estonia is not a model for the USA need of
replacing declining petroleum.
From World Energy Council 2001 (www.worldenergy.com), using USGS numbers, we
have USA proven reserves of 3.34x10e12 tons of shale that could yield 242
Gt kerogen or 1936 Gb at an average of .58 b/ton. Of this 560 Gb of shale
oil is considered “proven recoverable”. Estimated unproven is another 500
Gb. Total is about equal to world conventional oil reserves. Sounds great.
However the top grade (.5 to 1.2 b/ton) is about 30%, so at $40./b for light
crude, maybe 200 Gb of the proven are economically useful to replace light
crude and the rest is speculation. At our present consumption rate of >7
Gb/yr, the economically proven is 30 years. Not so great. Note Suncor gave
up on the Stuart development in Australia in 2002, and it was yielding
.5b/ton, with light crude at about $25.00/b. We can suggest that technology
will make things better, but from 1973 to 2002 several billion dollars were
spent on shale oil, so I doubt that much technology has been overlooked.
Shell suggests an energetic recovery of 6:1, but all other references I can
find say that 40% of the energy in the shale is used to generate the usable
shale oil. I.e. for 10b of shale oil in the shale you must consume the
equivalent of 4b to leave 6b useable. How do Shell get their 6:1? I will bet
all the money in my pocket against all the money in yours that the 6:1 is
the result of measurement in the lab of joules of heat in to a sample of
shale vs joules of primary energy contained in the shale oil produced. From
that point you have to take the electricity to heat efficiency, which will
be high in the lab, but not high in the rock being mined, and the efficiency
from the primary energy in the fuel used to the generation of electricity.
There will be a lot of heat dissipated in the rock mass that does not
generate shale oil, but lets optimistically assume 70% efficiency. If we use
coal to generate the electricity, we know the typical efficiency is about
35%, giving us a net of 25%, which reduces our 6:1 to 1.5:1, or about the
same as conventional processing. Shell is almost certainly using the well
developed disinformation trick of using a true statement without context, to
hide a less favorable real truth.
Worse, in situ, Shell admits that the heavy fracrions do not get recovered,
only the light fractions, while in the lab recovery might be close to 100%.
From other sources I find that the light fractions seem to be about 65% of
the total kerogen which would reduce our 200 Gb/30 yr to 130 Gb/20 yr.
Then we have to upgrade the shale oil to light oil equivalent (adding
hydrogen that has to come from somewhere) and then convert to gasoline
(unless we want to convert the entire car fleet to deisel) which requires
more energy, potentially bringing the net energy yield to 1.2:1. In
calculating the whole system energy returned on energy invested (EROEI) we
also have to include the portion of the energy embedded in all of the plant
and equipment that should be assigned to the final gasoline as well. If we
do that for everything from the coal mine through the refinery we probably
have energetic recovery less than 1, even for the Shell process.
Estonia has had to extract 25 cu. m. of ground water for every cu. m. of
shale mined, and the water has been high in sulfates, contaminating run off
area soil and streams. They are charged 1% of the cost of the shale by the
government for environmental remediation of old mines, which is less than
the cost of the remediation, and they internalize none of the pollution cost
to society. What is the real competirive price of their shale oil? We won’t
have the grounwater issue to any large degree in the Green River Basin, but
there are still real environmental costs that add to both the economic and
energetic burden. If we use the Shell in situ method for recovery, water may
not be a problem in the Green River Basin. If we use conventional mining and
pyrolitic processing, water will be the limiting factor on production rates,
because it is an area of very low water resource.
We could consider using the Eastern Black shales first, where water is not
so much of a problem, and have the additional benefit that these shales are
relatively high in Uranium, which could spread the economic cost. However
due to an unfavorable H:C ratio the light oil yield is low, or a large
fraction of hydrogen has to be added. Also the recoverable resource is much
less than the Green River.
Finally there is the issue of recovery rate. It doesn’t matter how big the
resource is, what matters is how fast it can be produced. Late 2004
production of light crude equivalent from Athabasca tar sands is just
getting to 1 Mb/day and is projected to be no more than 3 Mb/day by 2020. It
is unlikely to ever exceed 6 or 7 Mb/day, of which Canada will need 1/2 when
their oil declines sufficiently. Availability for the USA is unlikely to
ever exceed 3 Mb/day. Given the relative ease with which tar sand bitumen
can be made to flow, how fast can we ever produce shale oil? Maybe 2 or 3
Mb/day some time in the distant future, at least 20 or 30 years from now?
Shell doesn’t even intend to make a decision on going to production before
2010. Then if they do go ahead, they have to build a source of electricity,
as well as the rest of the recovery plant and then ramp up. Let’s assume
they build a 1000 MW nuclear plant as their electricity source. That plant
can produce 8 billion Kwh/yr of energy/yr, which is .033 quads. Even at the
claimed 6:1 energy yield that would give 0.2 quads of shale oil or about .16
quads of light crude equivalent per year. We use 40 quads of oil per year,
so that 1000 MW nuke plant would support production of 0.4% of our annual
oil consumption at the most optimistic energy assumption, equivalent to 80
thousand barrels/day. We would need 25 such nuke plants to support
production of the 2 MB/day I have suggested above as a max output. If the
Shell 6:1 ratio proves to be a still optimistic 3:1, we will need 50 nuke
plants. How many can we build by 2020? 2030?
Let’s assume petroleum production worldwide goes into decline in 2008 (which
is highly probable), and declines at an average rate of 3%/yr during the
first 20 years (starting at 1%/yr and growing to 5%/yr). UK North sea oil
went into decline in 1999 and is already at 5%/yr. With demand rising in all
other parts of the world the decline rate for USA availability is likely to
be higher than the world average, but let’s work with 3%/yr to be
optimistic. BY 2020 our petroleum availability has dropped to 67% of the
peak. If we assume a peak at 8 Gb/yr in 2008, (22 Mb/day), we will have lost
over 7 Mb/day by 2020, and tar sands plus shale oil will not have offset
more than 3Mb/day of that. By 2030 petroleum will be down by 11 Mb/day, and
the offset for tarsands plus shale oil might be up to 5 Mb/day. Our net
supply is still down 30% from the peak, using very optimistic assumptions.
Shale oil might provide a very, very small offset for a portion of oil
decline, but will never be a solution, or even a significant contributor to
a solution. It makes sense to develop to have for strategic military
reasons, but it cannot be something to pin a responsible National Energy
Policy on.
I encourage you to assign someone to check out my numbers and my reasoning.
I found all of the information on Estonia and oil shale resources by
Googling, in much less time than it took to write this letter.
Dan, I have been studying all aspects of energy for >500 hours/year for the
last 6 years. One of the many things I have learned is that Oil and Coal
companies spend a lot of money to put out disinformation, in the certainty
that they will get away with it 99+% of the time. Don’t believe numbers from
any of them without getting all of the details spelled out. I am totally
confident that you will find that the Shell 6:1 number is a typical example
of such disinformation. Finally, please read all of my 11 papers at
EnergyPulse. They have been written to paint an holistic picture of the
energy challenge we now face. Any one of them can stand alone, but you need
to read all of them ro get the whole picture. Anything less than the whole
picture will lead to less than the best decisions.
Sincerely yours, Murray
Murray Duffin
You have travelled a long way from Spain going down in flames due to green programs, so I will stay away from all of that.
Please note: The original theme of the article is NOT going down in flames because of green jobs. It is using the Green Jobs program as an EXAMPLE of how politically driven economic decisions are prone to failure. The Green Jobs item is used as an example of broken reasoning. (Remember that it was sold as the SOLUTION to Spains ills… clearly it failed).
Any economy can sustain a certain number of broken decisions during good times, it’s during bad times that the bad decisions show up. ( You find out who has no pants on when the tide goes out…) and we’ve found that Green Jobs does not cover much economically (and is, in fact, a net job and net wealth consumer).
The main thrust of the article is that politics ought not to make economic decisions as it does them badly. The examples of Green Jobs and Cap’nTax show how it fails.
I’ve not strayed from that assertion (and I will not.)
Per the coal link: Much of it I agree with. The “broken bit” is that they fall in the usual ‘reserves’ trap. Reserves are estimated based on the price. Raise the price “presto” more reserves. And it also ignores technology changes. Under the “No Shortage Of Energy” posting (See the World Economics category at the right edge) there is a pretty good treatment of it, so I won’t belabor it here. Just realize that the present “glut” of natural gas is entirely a result of things that the definition of “reserves” ignores.
Repeat after me: There is no energy shortage. There never has been, and there never will be. There is only a shortage of political will and willingness to take action.
About 1/3 of the USA sits on top of coal. Most of it not counted as an ‘economically recoverable reserve’ as it would cost more than the best mines in Wyoming do right now. That is a fallacy when looking at 200 year needs for ‘ultimately recoverable resources’. The ultimate recoverable limit is about 400 years (but may be even more since there are places we don’t even count in that, like the coal in California…)
Resource economics is a tricky field, and it’s very easy to make up any number you want for a ‘running out soon’ scare. ALL such scares are broken, due to that fault.
The ‘shale’ I was talking about was not the NatGas shale. It’s the bituminous shales. The “oil shale”. NG comes from ‘tight gas shale’. Yet another gigantic resource…
The resource sizes are measured in TRILLIONS of barrels of oil equivalent. You can get synthetic oil out of it, or you can turn it to gas and via FT turn that into gasoline and Diesel. It’s all a matter of relative costs. There are many different grades of oil shale, so all the analysis of them tends to pick the grade that supports there can / can’t bias. At about $70 / bbl you can get the oil out. Some more, some less. Yes, it take energy to do that. Given that nuke energy is unlimited, that’s not a problem.
FWIW, I’m hopeful that with the rate of drop of solar PV and large size wind they will become cost competitive with some types of fossil fuel for electric generation without subsidy in the next decade or two. I’m also hopeful that algae will be shown to be cheaper then coal for making biodiesel. (You can feed biomass into the same FT conversion plant used for coal, btw, so the capital to make CTL plants is NOT wasted if you later swap to a bio-source feed stock.)
Were I given a free hand to design the whole energy plan for the USA, it would be somewhat like this (a very limited version of what I fully embrace):
Build CTL starting NOW. Done building in 5 years, tell OPEC to go stuff it.
As economically viable, run nat gas into CTL (making it GTL facility). With proper design, a plant can take either.
Add on a “trash to liquids” front end to plants where possible. (Solves trash problems too…)
Begin planting very fast growth species for feedstock later (things like Timber Bamboo in the far south, high rate Eucalyptus in the West and southeast, and fast Populus species in the North). At the same time, start building proof of concept sized algae farms ( about 10 x the production per acre) and feed the oil into existing oil refineries hydrotreater step (makes propane from the glycerol, so a bit more efficient than the transesterification step used in small lots.) In about 10 years, start feeding some of the biomass into the CTL. (If cellulosic ethanol develops in time, some of the cellulose can go to it too).
Put in a major wind farm in Texas /’ Oklahoma. Displace natural gas use that way. Follow the Pickens Plan of converting fleet trucks to CNG using that displaced gas.
Start building more nuclear reactors of passive safe design. Use Thorium fuel bundles. Open Yucca Mountain (you don’t need 25,000 storage, only 200, then it’s the same radioactivity as the original ore…)
Do a couple of massive Solar PV farms in the California and Arizona desert. Use for A/C peak as it matches perfectly… Use displaced turbine GNC for trucks too.
Start a program to promote E-trucks for local delivery fleets. Ditto for ‘city government cars’ that don’t go over 150 miles from the motor pool. Have all new gas stations provide a charging station too (do NOT regulate price, just require availability). Require that all hybrid cars sold after, oh, 2015, have an external charge ability (‘plug in hybrid’).
I’ve already mentioned solar pool warmers…
For major interstates, pick stations at 150 mile spacings and pay them to install an e-charger station AND a CNG ‘pump’. Do not regulate the price.
Once cellulosic ethanol is shown to work, add an E-85 pump at each station.
You now have removed the major barrier to sales of “Flex Fuel ethanol” cars, e-vehicles, and CNG vehicles.
Oh, and that biodiesel can can also be used in ships, planes and trains…
OK, that’s the ‘big lumps’. More nuclear baseload electricity, more peaking solar and wind where it works, displaced CNG to vehicles, remove range barrier to entry for CNG, e-cars, and ethanol. Oh, and that tariff on OPEC oil to prevent them crashing the market.
Yeah, a fairly socialist program. Probably has lots of bad things it would cause… But I’m just as prone to arrogance of belief in my own righteousness as the next guy. And that is why we need to always guard against the ‘nice dictator’ telling us what to do. It might end up being me…
Per the exchange you posed on shale oil: Generally, yes, it’s the ‘always someday’ fuel. But the assertion that it’s impossible to get a net energy gain is broken. You can just BURN IT and get net energy gain (and LOTS of ash). So folks dream up scenarios that use more than that much energy to show it’s a net loser. (That’s the problem of central planning – government OR big business…) It’s the little guy who invents a new way that shows them wrong and makes new industries.
FWIW, the same arguments were made about Tar Sands in Canada in the early days. Cost was about $80/bbl when oil was $50. Energy in more than energy out. Some technology advances later we have Tar Sands oil at about $30 / bbl to produce and OPEC at $72 / bbl. Industry growing like a weed… Imperial Oil uses an in situ process and avoids all the mining and ash disposal issues.
So instead of doing mining and retorting of shale, perhaps we can use some of the techniques developed for in situ tar sands. (Though I’d displace the NatGas heat with nuclear process heat from a pebble bed gas cooled reactor).
And that leads to the final point I’d make:
For every “can not” scenario one person can make up, there is a “can do” scenario from someone else. Politics is a very lousy way to choose which one is right. Letting the “can do” guy spend his money to try it is a really good way to decide.
And that makes all the difference in the world.
Economic history is littered with the bones of “can not” folks stomped on by the “can do” folks. Yeah, they both dance on the graves of folks like De Lorean and Commodore. But in exchange we get the Apple, Microsoft, Suncor Oil, SASOL CTL, HP, Intel, Lockheed, etc. etc.
And those folks, net of the losers, beat the pants of central planning.
E.M.Smith:
(The ‘nice dictator’) might end up being me…
Well, at least you wouldn’t be using social engineers to direct the work in infrastructure re-engineering. OR WOULD YOU…?
Cheers
DB
Chief io I like the way you think. I have been studying the energy problem for over 50 years and I concur with most of your points. Burning fuels to make electricity is stupid. They are needed for liquid fuels for transportation and feed stocks for farm and industrial needs.
One thing you left out is a major up grade to the electrical grid, most likely DC inter-ties from major nuclear plants to others as in the internet to reduce chance of system collapse.
These stations would then feed the local private AC grids. This country really needs an interstate highway for electric power that can not be restricted by private tollgate keepers as is now the case. pg
Great . I agree with your “free hand energy plan”. Disagree with you on fossil fuel availability and CTL. Shale kerogen is not comparable to tar sand oil, and the can do guys have tried for decades.
FWIW – I led and taught TQM for years and one of the things I used to throw at our engineers (very high tech microelectronics) was the observation that good engineers could always give you good reasons why something could not or should not be done and in the meanwhile great engineers went ahead and did it. I share your faith in technology, but don’t buy your reserves argument, or your faith that the coal is there, but am prepared to learn. References??
“Remember that it was sold as the SOLUTION to Spains ills…” Rubbish! Spain didn’t even have the ills when the green energy was enacted.
Ciao, Murray
BTW – I live in Fl and have solar hot water and grid connected PV.
Murray Duffin:
EM doesn’t need my help here, but your claim seems wrong.
Spain went into a protracted recession starting in 1991 and hit 22% unemployment in 1994. 1997 unemployment: 20%. Electricity Act 54/1997 was passed to promote Green Jobs, no? Unemployment 2010: 20%.
Cheers,
DB
Hi Murray
It worse than I thought.
According to UNEMPLOYMENT IN THE OECD SINCE THE 1960s. WHAT DO WE KNOW?*, Spain’s unemployment rate from 1980 to 1995 averaged around 18.5%! Their problems began shortly after they lost their dictator, Franco. Before that, it was 2%, 3% unemployment.
They would definitely be better off with a benevolent Chiefio. :)
Cheers,
DB
@BlueIce2HotSea: Thanks for the “helping hand”. I had a couple of ‘minor issues’ that needed tending (chunk missing from fence, etc…) so you’ve saved me some time.
IMHO, “Social Engineering” is an oxymoron. Worst I’d do is to pay the guys on 150 mile centers to install the funny fuel pumps (and require them…) so I’d put them in an additional business ‘against their will’ but I’d pay them to do it “for the greater social good”…
@Murry: See the “no shortage of energy” posting I referred to above. Among other things it has a map of coal deposits in the USA. BTW, my “reserves argument” is how they are defined. Unless stated otherwise, ‘recoverable reserves’ means “economically recoverable reserves” and that means “At the present price”. Raise the price, more becomes recoverable. There are a half dozen different gradations of the terms, and the petroleum guys change the set they use about a decade back (almost the same definitions, but different names); but that’s how it’s done. The “ultimately recoverable” is what you care about, I think, it included ‘reasonably foreseeable technology’ improvements IIRC.
On oil shale: It IS recoverable. Has been done many times. Just not at a price that could compete with cheap oil. The “dig and retort” was used in most efforts (just like is done for a lot of the tar sands) but methods like SAGD might well work too. (Basically, retort it while it’s still in the ground via pumping energy in rather than lifting sand / shale out ). I only say “might” as I don’t know how the economics works out for shale. Works well on other tar in mineral deposits, though. But one must allow for the possibility that in situ retorting might not work out on shale.
Oh, and there is a pretty good history of folks, even back in the 1800s, ‘burning the rocks’ in stoves. Net energy gain from just digging and burning is pretty well an existence proof. It’s really messy though.
These folks are using solvent extraction:
http://encapsol.com/tar-sands-and-oil-shale-extraction/
they put the resource at about 6 Trillion Barrels of oil…
http://www.theoildrum.com/node/6230
Has a nice article showing that it’s recoverable at net energy gain, but not at a profit at present prices.
And these folks claim that Shell HAS done in situ:
http://dailyreckoning.com/oil-shale-reserves/
So take a look at those links, hit the ‘no shortage of energy” article and look at the USDOE coal map, then try to tell me that with darned near all of the USA sitting on top of either tar sands, oil shale, coal, or straight oil fields (with about 1/2 the oil still in them, just not ‘economically recoverable with present technology’) with that much energy, we’re ‘running out’.
Then take a look at the ULUM “Ultra Large Uranium Mining” ship article. Then the Thorium sands. Then …
We are so drowning in energy that we sell it for less than the price of milk or even bottled water. And THAT’S the problem. It prevents even modest cost alternatives from making a profit.
Oh, and per Green Jobs: Every time anyone talks about a solar or wind project, they talk about how it will create jobs and reduce unemployment. Do I really have to find citations for that? I’ve seen film of the folks in Spain saying the same thing. A few times. It’s a standard talking point. I’m just pointing out that it doesn’t work. It’s a net job loser. The Q1 unemployment number just confirms it.
FWIW, I’d LOVE to have a solar panel on my roof and a 1 kw wind turbine in my yard. Just I live in one of the lowest wind places in the country… and every time I price out solar it is just insanely uncompetitive. But I keep hoping.
Some friends are putting a micro-hydro system in on newly purchased property, and I hope to help.
Also, whenever I drive past the solar farms in the Mojave I curse the folks who stopped building more of them. It’s a perfect match to the AC peak demand that drives the Desert Southwest energy peak. Were it up to me there would be a giant field of Sterling cycle parabolic reflector solar thermal generators in the Mojave and near Phoenix. We ought to be able to run the whole place on nuclear baseload and solar thermal peaking plant. California and Arizona could make a great existence proof.
Oh, and we would take out a bunch more dams then too…
Off Florida, the most interesting proposal I’ve seen is to put large turbines anchored in the Gulf Stream. Fairly doable. Massive energy.
And one other disclosure: I own stock in a ocean power company that makes a giant bobber float system. About 150 kW per bouy. They are putting in a megawatt scale demo plant for the Navy in Hawaii. Much better than wind or tidal as there are always waves…
So please realize that I’m not advocating coal and tar sands out of some agenda driven behaviour. If I was driving things via agenda, I’d be advocating solar water heaters on every roof, solar thermal in the deserts, and ocean wave energy farms on every coast. (A 100 mile chunk of California coast would power the whole state…)
I’m simply doing an economic analysis that says the cheapest and fastest solution is CTL / GTL and right behind it is tar sands / oil shale. And they ‘win’ in part due to the avoidance of ‘fleet change’. Most folks, me included, can NOT afford to toss out their cars and buy new ones without using them up first. (Realize that even a rich person who DOES toss the car after a year has NOT removed it from the fleet. It goes to poor folks until used up… So ‘fleet change’ mandates hurt the poor the most.)
Here, I’ll even find the link for you:
So take a look at it. And just look at the quantity of coal on that coal map. Then realize that the places without coal tend to have oil or oil shales… (and the places without THOSE tend to have geothermal or hydroelectric…)
I travelled extensively in Spain in the early ’60s under Franco, and again in the early ’90s under socialism. In the ’60s Spain was 20 years behind the rest of Europe economically, even though their war ended several years earlier. In the ’90s they had largely caught up. Its easy to have low unemployment when everyone (I exaggerate a little) is a peasant, and donkey carts are the primary mode of rural transportation. Take out 5 million immigrant workers today and Spains unemployment disappears.. During the boom from about 2000 to late 2008 immigration was the only thing that kept unemployment high, and it was during that boom that the green energy program was implemented. Don’t blame green energy or conclude that it failed in its task. Blame uncontrolled immigration. BTW it was very tightly controlled under Franco. They wouldn’t even let Scots across the border if they were wearing kilts.
See my letter to Dan Kish on shale oil. Estonia burns shale directly with very low EROEI. I also address the Shell in situ process at length. Very low EROEI. But the main issue is flow. Doesn’t matter how high the stock is if the flow is low, and there is no practical way to get high flow. Even with new in situ process for tar sands flow is way behind estimates from only 6 years ago. I agree on uranium and thorium. My issue is with fossil fuels. Nukes are like renewables – they produce electricity not liquid fuels. I agree that there is no long run energy problem. But we will have a significant and prolonged energy crisis before we start doing the right things, and the free market is one of the major reasons, with coal producers being especially pernicious.
From applied experience I am confident that the USA could run on 1/2 the applied energy it uses today without impact on quality of life. We are grossly inefficient. Also the electricity we get from renewables is primary energy. The primary energy we get from eg coal yields only about 33% applied energy, so the conversion to renewables would cut primary energy needed by another 50%. To be conservative we could do nicely with 1/3rd of the primary energy we use today. But the fossil fuel guys fight efficiency improvements tooth and claw, and renewables even moreso. That is illustrative of my beef with free markets. Entrenched interests oppose progress.
Cheers, Murray
OK I visited your link. My problem with it is that you use a lot of descriptives and almost no quantification, and at least some of your limited quantification is at the very most generous – questionable.
Take Saudi Arabia. They have probably the most sophisticated petrolem exploration and analysis capability in the world. The status of their fields and unexploited (not unexplored) areas has been largely documented in hundreds of papers (see Matt Simmons). They have kept their flow high by going to MRC (maximum reservoir contact) drilling, and they pump water in to keep the flow going. When the water cut reaches those MRC pipes, its game over – no gaussian decline. Recovering oil left in the ground?? Sure it is done, at flow rates generally below 10% of the peak flow, usually well below. Back to the stock and flow issue.
Peak oil? You bet. Can’t produce what you haven’t found. Look at the discovery curve, and look at the development projects in the pipeline. The peak is already baked in the cake. And for importers it will be aggravated by “the export land model”.
I have done the research and quantified analysis of all of your suggestions, and you are beyond optimistic. However your main point remains correct, we do have lots of energy and lots of choices and there is no silver bullet. We have to do “all of the above”. I don.t see either time or cost as being a major issue, the issue is will, and the fossil fuel guys will fight that development until we have a crisis.
I think your invocation of Jevons is incorrect also. His paradox applies to the unlimited case, not to all conditions.
Don’t have time to reply to all of your points, but would like to add one you didn’t touch on – internalization of externalities. If the dreaded government simply required the fossil guys to internalize only the easily quantifiable costs they externalize, almost all of the alternatives would become competitive overnight. No need for government to (mis)manage anything. Just stop the societal subsidy. Murray
Oh yeah! The net job loser. It comes from one paper that is seriously flawed. Redone correctly there is no net job loss. I already addressed that above. Murray
1. Hotellings Rule.
ON emissions, externalities, markets, renewables, pollution, global warming, clean energy et al, think globally beyond just the USA and consider
2. Christian Gerondeau’s questions –
Question 1: “Is it possible that mankind would leave any oil, natural gas or coal that would be economically exploited in the planet’s underground?”
Question 2: “Is it possible to stop mankind’s use of oil, natural gas and coal resulting in the release of CO2 when burned?”
Question 3: “Is it realistic to try to prevent the continued increase in the concentration of CO2 in the earth’s atmosphere?”
Question 4: “Will CO2 emissions continue indefinitely?”
Question 5: “Are we heading for disaster?”
I would suggest that the answer to all those questions is ‘no’.
I would urge the citizens of the USA to stop trying to fight with both hands tied behind their backs, and to develop as much cheap energy of all forms as they possibly can. You cannot have too much cheap energy, it makes everything possible.
on July 10, 2010 at 5:02 am E.M.Smith
On oil shale: It IS recoverable. Has been done many times. Just not at a price that could compete with cheap oil. The “dig and retort” was used in most efforts (just like is done for a lot of the tar sands) but methods like SAGD might well work too. (Basically, retort it while it’s still in the ground via pumping energy in rather than lifting sand / shale out ). I only say “might” as I don’t know how the economics works out for shale. Works well on other tar in mineral deposits, though. But one must allow for the possibility that in situ retorting might not work out on shale.
As you might not have seen, I posted on WUWT about some undergrad work I did up near Meeker, CO., while at CSU so I know first hand the issues. The project was funded by DOE and titled: Revegetation of retorted oil shale (I was, after all, working on my soil science degree). The shale itself is a soft sandy clay shale that breaks into pieces when dropped from about three ft. The Piceance Basin is a beautiful area to nature buffs, treeless rolling green hills with some springs in the valleys. Personally, it has a certain majesty but I wouldn’t mind it being properly developed. The altitude change is not what one would expect for CO., perhaps 200ft top to bottom in most places. I continue to follow the development, as most of my family lives in CO.
About 5 yrs. Shell oil did a little pilot project on in-situ development, but had significant problems and the anticipated costs were enormous. They have since began development on a modified project and most of the information can be viewed here:
http://www.blm.gov/co/st/en/fo/wrfo/oil_shale_wrfo/shell_frontier_oil.html.
Back when I was working up there oil was priced around $10/bbl and they could MINE and recover shale oil for $20. I don’t think the mining costs have gone up near as much as the price of oil. Mining technology has improved significantly since the 1970’s as well as the retorting process. This site http://ostseis.anl.gov/guide/oilshale/index.cfm states:
Other impediments to development of the oil shale industry in the United States include the relatively high cost of producing oil from oil shale (currently greater than $60 per barrel), and the lack of regulations to lease oil shale.
The surface of the shale layer is only about 60 ft average below the surface, but the locals and the EPA stopped the strip mining possibilities. At some point in our future economic and politically incompetent downward spiral, it may be politically feasible to mine it again.
Hi Murray,
The poverty rate during the “boom time” (2000-2008) was 22-24%. Hmmm, how many peasants landed high paying jobs? :)
A Reuters report credits the doubling of per capita GDP during the boom time to a boom in foreign immigration! So that’s where the money went!
Seriously, the boom in foreign immigration is first choice for any socialist country facing a rapidly aging population.
Cheers,
DB
@Murry: You see the glass as half empty, and with a hole in it leaking fast. I see the glass as half full, and with technology putting more in every day.
When the oil resource is measured in Trillions of bbls for oils of various sorts, with proven technologies at acceptable costs (but above market prices); and measured in hundreds of years for coal, with literally dirt cheap prices; and with an existence proof of coal to liquids technologies in South Africa:
Well, yes, I’m optimistic. I know we could be making CTL plants and run them for the 40 year or so life of the plant on 1/10 the coal in the ground. So yes, I’m not really worried that it might not be sustainable into 2210. It just isn’t very important. And yes, having seen a continued increase in oil recovery from ‘spent’ fields, I’m quite comfortable to say we will continue to find better ways. But even if we don’t, even if what you say is true and we ‘only’ get 10% / year out of the ‘spent’ fields. OK, that just means it lasts longer.
Finally, the EROI misses a very important point: The different kinds of energy have different values. I really don’t give a fig about the EROI of lifting oil via a pump. I can always hook a nuke plant to the pump and use nuclear energy to do the lifting. (Or, for that matter, a solar panel and pump during daylight only). What I care about is MOTOR FUEL at a PRICE that is acceptable. Be that from CTL, GTL, nuke driven oil pumps, algae oil, whatever.
And the technology says the price does not need to ever go over $4 / gallon. Ever. And the quantity is always ‘more than we use now’. In perpetuity.
(Based on biomass conversion in a FT plant, in, oh, 50 to 100 years if coal got too costly or too environmentally problematic; and based on algae farms).
So I see no reason at all to throw away a fleet of vehicles costing $Trillions instead of letting them wear out in their own good time. And I see no reason to use a 150 mile range e-car when I can have a 450 mile range full sized bio-diesel one (and yes, mine is presently filled with B99 at $4.29 / gallon including taxes and ’boutique scale costs’) or running on CTL for the next 100 years at lower costs. And I see no reason to make gasoline and Diesel cost $5 or $6 / gallon for social engineering reasons when it is an artifice. And yes, I see no reason to worry about running low on coal in 100+ years when the CTL plant (and the fleet) will have turned over in 50 years (or 12 to 20 years for the fleet).
Call me a dreamer, but it sure looks doable to me. And for the simple reason that is been done (Brazil with sugarcane, South Africa with coal to liquids) and is BEING done with new suppliers (China, Biodiesel here), AND I’m making money on stocks of companies doing tertiary (and better) oil recover from ‘spent’ fields. But somehow when I’m up to my eyeballs in existence proofs, it doesn’t seem like much of a dream…
FWIW, I have an interesting book dated 1919. It has a projection of when the oil runs out. The same “50 years” that it has always been. Why? Because once you have 50 years of reserves in the bank, you stop looking for more. It was 50 years in 1950 too. And in 1970. And guess what the reserves are now, with our horrific ‘rate’ of production? Yup. 50 years.
So go ahead, plan that we have used everything up in 50 years. Plan that we all die of horrible fuel starvation in a Peak Oil world with non-gaussian decline.
Me? I’m buying stock in SSL, SU, IMO, APA, PBR etc and they will be printing money on new reserves. And in 2040 I’m pretty sure we will have 50 years of reserves…
Take a look at the PBR finds in deep water off Brazil. We’re finding oil at greater depth in the earth than classical theory says is possible for oil. That means the theory is wrong. And that means there is a whole new shell of ‘depth’ to explore over the whole planet.
Good luck with that ‘running out’ meme…