Here’s the latest reader question – which is more a commentary – along with my reply!
K writes: I’d like to introduce you to an interesting article and blog – if you don’t already know about it – they’ve reached a conclusion similar to your own, but come at it from a “the economy as energy” perspective:
“It’s only fair to note that the authorities very probably don’t anticipate like-for-like replacement of ICE cars with EVs, but they can hardly tell voters that car ownership is set to fall markedly.”
There are others (intelligent, thoughtful writers such as Gail Tverberg, JM Greer, etc.) who also have similar conclusions. It’s worth the trip down this particular rabbit hole. While they don’t dispute (out of PC necessity?) the climate warming narrative, they certainly don’t agree government or the renewable energy quacks are going to solve anything at all.
The issue is not that the cost of energy is rising, but that the energy cost of energy (especially oil) has now risen past the point where the surplus is sufficient to maintain economic growth in first (and second) world economies. Thus the financialization and monetary gimmickry of the past decade or two.
ECoE continues to rise, so much of the remaining oil is going to stay in the ground, and in all likelihood nothing will replace it. Their model accounts for a surprisingly large number of the issues you yourself have observed and discussed. Their comparisons of declining individual prosperity over the years in the US and elsewhere are especially disheartening but appear valid. More importantly, they match our own “lying eyes.”
The site also has a lot of useful data regarding the feasibility (lack thereof) of so-called renewable energy sources. Since I’ve no doubt the Coonman is not about to relinquish his grip any time soon, you might have time to delve into this particular can of worms at length whilst comfortably ensconced in the comfort of your home.
Thanks for all your work and content. I’d send you a tip but haven’t figured out a way to do it from China yet. Btw, I’m convinced I have more freedom here than you do. That’s not to say I have a lot:)
My reply: I had a look and the writer’s point about discretionary purchases being generally unaffordable absent financialization (i.e., credit) resonated with me. An interesting experiment would be to wave a magic wand and “vanish” all homes, cars and so on that are currently possessed on sufferance (i.e., credit). When you opened your eyes, you’d see hundreds of millions of homeless, destitute people. I cannot recall offhand the percent of Americans who actually own their homes but I would bet it is less than 5 percent. I have also heard that two-thirds of the population has less than $1,500 in cash savings that could be used for emergencies and exist “paycheck to paycheck.”
This transformation is relatively recent. The used of credit cards was fairly uncommon as recently as the ’60s – but today it is common for college kids without any income to be issued credit cards on the first day they arrive at campus. Car loans are now routinely six or even seven years long.
I agree, this cannot go on – and for that reason will not go on.
I disagree with the premise that the cost of energy extraction has reached a critical tipping point. There are sound reasons to believe that the reserves of energy (oil, natural gas) are vastly higher than almost anyone has dared to state.
My view is that the energy austerity being imposed is being imposed for just that reason. The elites cannot stand affordable/abundant energy because it empowers the average person and thus takes away from their control over the average person.
Still, it makes for interesting reading. And I find Greer fascinating, by the way!
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While there’s no doubt vast amounts of oil remain, the $64,000 question is whether or not tapping it will be viable. Certainly oil will be available for the foreseeable future, but will it be available/affordable for John Q Public? The fracking industry appears to be going down the tubes due to lack of profitability (https://www.nasdaq.com/articles/debt-market-runs-dry-for-us-shale-revolution-2020-12-11), and with it, much of America’s new-found “oil-independence.”
“The elites cannot stand affordable/abundant energy because it empowers the average person and thus takes away from their control over the average person.” I agree. I’m wondering if the non-renewable renewable energy replacement + climate change hysteria currently being hyped is actually a result of our rulers’ impatience with the failure of oil to convincingly and finally run out.
Could both perspectives offer some legitimate contribution to our understanding of reality? I suspect yes.
Amory Lovins at the Aspen Institute is the main promoter of purely renewable economy. He points to efficiency gain as the primary driver toward the new economy. The switch from incandescent to compact florescent to LED light bulbs is an example used often. The gains from solar panel design another. Lithium battery storage is still far too expensive but there’s been progress there as well. But his plan still relies on doing more with less, and higher capital costs.
Rooftop solar can be financed out 20 years, which will bring the installation cost to near-parity with traditional grid supply. If you have property that requires a long tie into the grid solar with battery backup might be cheaper than extending the power distribution plant to your home, with the added benefit of never having an electric bill and rolling the cost into a mortgage.
But once you want to use that power in a vehicle energy density becomes the primary issue to solve. The power to weight problem coupled with the fact that the entire infrastructure is built for vehicles that work well with internal combustion engines (look at some of the monster steam vehicles Jay Leno owns and wonder how they ever got around the city streets), and the constraints become insurmountable.
“Rooftop solar can be financed out 20 years, which will bring the installation cost to near-parity with traditional grid supply”
Making rooftop solar more expensive by adding the costs of interest over time makes it cheaper? I guess it might if inflation is considered.
Energy density is indeed the primary issue. Oil has it like nothing else, and if oil is truly becoming too expensive to extract, then we’re all hooped.