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Have We Reached the End of Economic Growth? (Non-Paid)

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    Re: Have We Reached the End of Economic Growth? (Non-Paid)

    Originally posted by BadJuJu
    I do not personally drive, so it would be impossible for me to say how much oil I consume with regards to food and such. Still, the amount of oil I consume for driving is 0.
    I assume you still move around though. Even if you travel via bus, plane, or boat rather than car, oil is still consumed. The goods you buy travel via truck. The plastic in bags, plumbing, insulators on electronics, etc etc come from oil. and so on and so forth.

    Equally, as I've noted before, you're a young single guy (I believe). The means by which you get around aren't so attractive for families with kids, seniors, those who have to travel to customers (vocations like plumbers, electricians, etc), and so forth.

    Originally posted by necron99
    I would argue that it is logical to analyze economics based on energy inputs as well as labor and capital, because most modern products use a lot of energy in their manufacture (and never forget transportation, which burns gigantic amounts of energy shipping everything all over the world these days). Back in Adam Smith's day, you couldn't say that, it was much more true that products were made using human labor and capital only, an transportation energy costs were typically negligible (horses and sail power!) And so that's why classical/neo-classical economics tends to ignore energy input. Today everything revolves around energy and I don't think economic theory has kept up. Some economic sectors use electricity but others don't, others use fossil fuels or other fuels, so when you argue that I'd get the same result from graphing electricity, all you are doing is making an incomplete subset of my case for me. Same goes for population growth, more or less -- if you're accurately modeling labor then that should include population growth inside your model. I think it's logical to try to account for energy as an economic input -- and then the minute you do, you also have to start worrying about EROI and related issues.
    You are somehow not equating human and animal labor as energy. Food is merely one form of energy - as the ethanol conversion shows.

    Equally so it is a mistaken assumption to think that somehow manufacturing in the past didn't involve energy - I suggest you look at the Peak Cheap Peat example.

    Be that as it may, the assumption that energy is the basis of everything is wrong because it discounts the impact of technology and innovation.

    The reality is that the amount of energy used to make most industrial products is far less than it used to be. The processes by which 1 kilogram of steel is made today consume far less energy than the equivalent 20 years ago or 100 years ago. This difference is innovation.

    Thus the massive amounts of energy you cite today are not a function of the efficiency of the processes, but rather the volume of the products.

    The volume of products are a function of affordability and prosperity - yet prosperity itself is not a measurable indicator. Was the massive 'prosperity' of the 2003-2007 real estate bubble in the US real? clearly not.

    I'd also point out that energy consumption isn't entirely, or even mostly household product or even private durable goods. The United States expended enormous amounts of energy to build the interstate highway system; this system requires much energy to maintain but much less than the original construction. The same can be said for bridges, dams, and other major forms of infrastructure, and also apply to things like building out telephone/cellular systems, electrical grids, sewage/water, and so forth.

    China's massive energy expenditure at present is as much because of their build out of the above as much as it is because of overproduction of apartment buildings.

    Originally posted by necron99
    I agree with you that as prices rise, wasteful uses of cheap energy will disappear, but I question whether the energy can be replaced at a fast enough rate to keep up the broad, nationwide economic growth that our modern finance system depends upon.
    Our finance system has zero basis on energy. Energy does have a relationship to the P/C (i.e. production/consumption) economy, but iTulip among others have long noted the divergence between FIRE growth and P/C growth.

    Equally I'd disagree with the notion that FIRE growth is in any way related to economic growth. The United States has not been significantly economically growing for well over a decade, but FIRE is doing just fine, thank you.

    Originally posted by necron99
    And then when you look at the substitutes for fossil fuels, you may be in for a rude awakening. Coal to liquids is probably the closest thing we have to a substitute for petroleum which is actually ready to go, because the technology is known. And that lets us keep a lot of our infrastructure. But it's terribly expensive, which is why it didn't help the Nazis win the war after we took their oil sources away. Too expensive to scale up even if your life depends on it. And then the minute you start planning on coal replacing petroleum oil, you quickly find out that the widely cited figures that "we have hundreds of years of coal left to us" assumes only the present rate of consumption. Once you mine additional coal to replace petroleum, maintain existing coal uses, and then apply population growth on top of both of those, suddenly you find estimates that we only have a few decades of coal left.
    I've posted a number of articles before on CTL - the fact is that CTL is nominally competitive at $60/barrel oil price. However, the cost of CTL plants is in the order of a coal fired electricity plant: $500M. The fact is that there isn't a strong incentive for capitalists to build such plants until it is absolutely certain that the investment will be profitable. I do think another 5 to 10 years of $80+ oil will do the trick, much less oil at $150 or $200.

    Thus scalability isn't nearly as much of an issue as you make out. The CTL plants can be built where the coal is, and pipelines can be built to take the CTL outputs elsewhere even if the existing coal transport infrastructure is not used. No new technology must be invented. No exploration/drilling deep sea or deserts. No foreign adventures. etc etc.

    Would the output be cheap and allow the FY2000 oil lifestyle to resume, much less the FY1970 oil lifestyle? no

    But that's a far cry from not being a viable economic alternative, especially if we're looking at $150/$200 or more oil.

    Note that the above doesn't take into account any actual national program to build out CTL infrastructure. If even 1/10th of the resources that went into solar or wind were devoted to CTL, they'd be all over the place.

    As for Germany in World War II: let's not forget that Germany was being bombed. This makes it quite challenging to build up an alternative liquid fuel ecosystem. Despite being cut off from oil, the accounts of German bombers, ships, tanks and so forth running out of fuel are quite few.

    Some info on German CTL:

    Originally posted by necron99
    The thing about forecasting doom is that your forecasts will be wrong time and time and time again, until one day they inevitably become right. Cornucopia doesn't last forever on this earth... or to phrase it from the opposite perspective, what did the farmer say when his cow died? "Gee, she's never done that before!"
    I agree, forecasting doom is very difficult - if for no other reason than nobody really wants it.

    It is, however, incumbent to look at realistic scenarios rather than linear extrapolations.

    My original point was also that the 'energy consumption' progression you note was almost entirely over a period where energy was cheap. From the advent of the oil age to the 1970s, energy was dirt cheap - so it isn't at all surprising to me that this wasn't taken advantage of.

    Even the 'oil shock' of the 1970s wasn't an existential threat; it was simply the sudden onset of 'cheap' oil suddenly becoming 'less cheap'.

    Put another way - energy costs for the US despite profligate American usage is quite far down the list in overall spending.

    It would seem housing cost is the far bigger issue!

    Lastly population. I'm a lot more sanguine about this than most.

    In my view, when we get to the point of too many people, that problem resolves itself. I am adamantly opposed to any person, group, organization, or whatever which proposes to 'solve' the population problem because every single one of these has turned out to be just using this as an excuse to crack down on 'unacceptables', to gain influence/power/money for themselves, or some equally repugnant objective.
    Last edited by c1ue; 10-01-12, 04:20 PM.