With global debt increasing exponentially, we likely won’t have many years of oil left.
No 2341 Posted by fw, July 30 2018
“Thus, as the cost of extraction due to depletion of low-cost reserves pushes the price of oil above $20, the difference must be made up with debt. At today’s $70 oil, which we burn about 96 million barrels per day, that works out to 96 * 365 * ($70-$20) = $1.8 trillion, which as predicted, is about the rate that global debt is increasing. If you believe we have many years of oil left, then you must also believe that debt can increase exponentially for many years without consequence on the value of money.” —Rob Mielcarski, un-Denial
In yesterday’s post, Rob Mielcarski, ex systems software developer and high-tech executive, entertained us with a short narrative about his high school “Reunion Faux Pas”. His article was also populated with hyperlinked gems to information about the “collapse of civilization”, “human overshoot”, “our genetic tendency to deny unpleasant realities”, “life after death”, and the only “solution” to the human predicament.
In today’s article, Rob is back with another short gem – this one simply titled: “On oil.” As it turns out, it ain’t so simple, unless you also happen to have, like Rob, an honors M.A.Sc. Electrical Engineering degree from UBC, and know the laws of thermodynamics and other stuff. But don’t let that deter you. Read Rob’s piece and make of it what you can, which is what I did.
As an aside – Who is JT Roberts? In his opening sentence, Rob credits someone named “JT Roberts” for the content of his article, but offers no bio on Roberts. However, in his Nov. 3, 2017 article titled By JT Roberts: On Resources and How the World Really Works, Rob refers to Roberts as “he” and then “she”, admitting: “I don’t know who JT Roberts is but he is very bright and is an excellent writer. I stumbled on some comments she made in a recent post …”. Rob subsequently refers to JT in the Comments section as “this mystery person.” — To which a reader responds:
“J T Roberts is probably an American sociologist called J Timmons Roberts, currently the Ittleson Professor of Environmental Studies at Brown University”
To which Rob tellingly responds:
“Good find, definitely seems plausible. Roberts understands the need to overcome denial, although he clearly needs to work on overcoming his own denial as evidenced by the wacky solutions he proposes here. This is a good example of why you should never trust “solutions” from anyone that is not well grounded in physics and thermodynamics.”
Below is my repost of Rob’s piece On Oil, with some minor bulleted reformatting and text highlighting. Alternatively, read the article on Rob’s website by clicking on the following linked title.
JT Roberts recently made an important and insightful observation which I paraphrase and elaborate here.
Oil is a non-renewable resource that we extract from the earth.
Oil companies are motivated by profit so they start with low-cost reservoirs and as those deplete they move to increasingly higher cost sources like water injection, offshore, tar sands, and fracking.
All economic activity depends on energy, as the laws of thermodynamics explain, and as the near perfect correlation between GDP and energy consumption confirms.
Oil is the keystone energy because oil is required to extract or capture all other forms of energy including coal, natural gas, wood, solar, wind, nuclear, and hydroelectric energy.
The cost of oil can be viewed as a tax on economic activity.
Our economy is configured to operate profitably on about $20 per barrel oil.
We have already captured most feasible energy efficiency gains making it difficult for our economy to operate profitably on oil over $20.
Thus, as the cost of extraction due to depletion of low-cost reserves pushes the price of oil above $20, the difference must be made up with debt.
At today’s $70 oil, which we burn about 96 million barrels per day, that works out to 96 * 365 * ($70-$20) = $1.8 trillion, which as predicted, is about the rate that global debt is increasing.
If you believe we have many years of oil left, then you must also believe that debt can increase exponentially for many years without consequence on the value of money.
Money has value because
Do you see our energy and climate predicament?
Do you see why our leaders deny we have a problem?
Do you see why the longer we deny the problem the worse the outcome will be?
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