Off On A Tangent

ABC censors it’s on-line polls and comment threads to exclude Ron Paul and Dennis Kucinich, who typically win these polls.  Yes, that’s right, the candidates who “can’t win” are winning on-line polls.  This “can’t win” moniker looks more and more like a fabrication of the media - the media which has a grand total of 4 different owners.  You get your news from 4 choices, and they all don’t want non-centrists like Kucinich or Paul to win.  But, if you sat most Americans down and asked them to pick which candidates they agreed with the most, these two are at the top.

Story about Kucinich

I think the general idea that things are not heading in a good direction
is not that uncommon. At Christmas, Dad and I spoke about issues
regarding the downward trajectory of the US in the World rankings for
quality of life and other parameters and the potential catastrophes that
might accompany such a decline (as US will still hold incredible
military might and may become less inhibited in using it. How often did
we hear calls to nuke Iraq rather than send in troops?). How will we
respond when China decides they deserve to have the same quality of life
we do and start protecting that right with their military (take over a
large oil rich country for example)?

To me there is no doubt that sometime over the next 2 decades major
changes in the way all people live will have to take place. I still
believe there is a reasonable chance that we will be able to make these
changes without total disruption of our civilization or nuclear
holocaust. Even as a natural skeptic I believe we have a tremendous
potential to rally once we’ve seen the light to make major changes much
more rapidly than we can now foresee. From what I read, we have the
technology to replace oil. It is not just a matter of generating
equivalent amounts of energy by other means, but reducing needs through
recycling, conservation technologies, and changes in life-style.
Already I believe there is a trend toward younger people living in
cities in condos. The suburban life-style was a failed experiment and
will fade. Lest the discussion become to depressing I see reason for
hope that as a society we will be forced to move in a direction that
brings us back into tighter communities where I believe the majority of
people will find greater happiness and fulfillment.

I guess what I’ve struggled with is trying to predict in what form the
changes are most likely to occur. With the exception of the Soviet
Union, every other world super power in history has gone down fighting
and had no choice but to surrender control. We have a choice and I
think there will be a lot of pressure to maintain our primacy at all
costs. (Fundamentalism in this country being a major difference between
the US today and the Soviet Union of the ’80s, when the rapture is
something to be looked forward to, then mutual annihilation doesn’t seem
so bad). So nuclear apocalypse is one way to go. Alternatively, we may
slip into a severe depression that could lead to rioting, general
upheaval, and Irag-style anarchy. Certainly other possibilities and
variations of these themes are also possible. To make any meaningful
plans we must first consider what we are planning for and how likely we
believe these to be. Plans for nuclear apocalypse might be considerably
different than an economic depression. My suggestion would be to
thoroughly discuss what the potential threats are, how they are likely
to play out, and what the probabilities are for best and worst cases.
Without such a common grounding I don’t think we could get too far in
making any plans because I am sure we all come into this discussion with
different information, different perspectives that it would be helpful
to share.

On another (but related) topic:

In one of your other articles, Mike, you discuss immigration as a moral
and economic imperative. I’ve been sympathetic to the immigrant
situation and have generally been in agreement with your arguments, but
more recently I have started to think that while it may be helpful short
term, we are in fact delaying and worsening the eventual crisis. We are
acting as a release valve for surplus population in poorer countries
instead of keeping pressure on to reduce growth. Europe would have
negative growth in population if it weren’t for immigration, we would be
almost static. That might hurt economically now, but would help us
prepare for the future that is to come and would help prevent the
World’s population from overrunning everything. If the developed
countries which use the most energy per capita were to stay static or
start to decline in population, that would help diminish the impact of
declining energy.

We won’t make a dent in suffering in underdeveloped countries by letting
them all come here. Even our attempts to help them by sending medicine
and food has done little more than provided a means to increase the
population and lead to more people suffering. The only solution I see
is to learn how to live sustainably within the resources of your own
country. Then export that knowledge. An important part of
sustainability is population control. It is a well-know biological
principal that, left unchecked, all species grow logarithmically until
they deplete there resources at which time the population collapses.
The resources typically are then replenished (food source regrows for
example) and the cycle repeats. We need to be our own check if we don’t
want this to happen. I now believe this should start at the borders of
developed nations, and spread to developing nations as quickly as
possible.

If developing countries shift toward slowing and eventually reversing
population growth as they develop (as might be expected based on EU and
US trends) this would further help the transition toward static or
declining growth.

Thanks for bringing up the discussion Mike, I think it’s a good
discussion topic to bring us together and is worthwhile pursuing to see
if we can come up with a consensus on what if anything we should be
doing as individuals and as a family.

I’ve been thinking for quite a while about how to start a meaningful family conversation about our futures, the nation’s future, and the world’s future. In the past 2 years, I’ve been learning about some very worrying things, things that keep me awake at night. Things that make me fear deeply for jaime’s and Ranya’s and Kelsey’s, Daniel’s and Jason’s futures. It has taken me all 2 years to absorb what the potential risks are and to be able to take it seriously enough to think that maybe taking action now is the thing to do.

The looming problem that is keeping me up at nights is known as “Peak Oil”. We’ve all heard various predictions that say we’ll run out of oil in 30 years, in 50 years, in 100 years. Predictions from long ago that we should already have run out. Unfortunately, such predictions are silly things made by people who didn’t have a rigorous understanding of the issue, or who were just trying to simplify the problem down into an 8-word soundbite. The phrase “Peak Oil” refers to a peak in oil production, and then a decline thereafter. The world’s problems don’t start when oil runs out - they start when oil production can no longer be increased. The reasons for this are somewhat complicated, but have to do with our reliance on fiat currency which depends on a growth model. Our economies grow mostly because each year, we use more energy than we did previously, and thus we produce more. When there isn’t more energy to be had, growth stops, and when growth stops, we can’t pay back our mortages, and our economy goes in the tank.

You can see the outlines of this enormous problem of a growth-dependent economy in the current housing bubble, in the rapid expansion of the money supply by the federal reserve, and by the amount of debt carried by the federal government, by all the state governments, and by all the individuals in the US, whose average savings rate dropped below 0% in 2005.

Of course, the problem is made worse by the fact that oil production doesn’t peak and then stabilize - it peaks and then declines, meaning we have a shrinking economy. And it never stops shrinking - it goes on shrinking and shrinking until we’ve stopped producing all our “discretionary” things, and continues shrinking even after we’ve started cutting into “non-discretionary” things, like food (which we basically grow using oil as fertilizer), and then people start dying.

Peak Oil isn’t a question of if, it’s a question of when. It’s a fairly conclusive fact that oil is a limited resource, and it’s an empirically verified truth (verified many times over) that the rate of production of oil declines after we’ve produced about half what was originally there. For instance, US oil production peaked in 1970 and has declined ever since. The North Sea oil production peaked in 1999. Most countries of the world are confirmed to be “post-peak” in their oil production. Mexico’s Canterall field has begun a steep decline in production, which will have a major impact on Mexico’s overall production, and therefore on the US economy, as they are our #2 foreign source of oil. The Canterall oil field is one of the 3 largest fields in the world, and with it’s now apparent decline, all oil fields in the world that produced more than 1 mbpd (million-barrels-per-day) but one are in decline. The one exception is Ghawar, which is the world’s largest oil field, is in Saudi Arabia, and no one can really know what’s going on there because Saudi Arabia does not make public information on it’s production specifics. However, many people who watch these things have found reasons to believe Ghawar is also in decline, and that Saudi Arabia is potentially post-peak too.

If Saudi Arabia is post-peak, then the world is post-peak, as there is no producer in the world capable of filling Saudi Arabia’s shoes - nor even a 5% yearly decline of Saudi Arabia’s shoes.

As of right now, world and Saudi Arabia peak oil production occurred in early 2005 - the world has produced less oil each month than it did in May of that year (I think it was May, I may be off a month). Saudi Arabia’s oil production has declined by an apparent 8% for the past two years.

That alone does not mean that peak oil is here (and passed), because there have always been ups and downs in oil production, which leads most people to point out that an oil peak can never be recognized except in hindsight - and so we’re waiting to see how world oil production behaves in the next few years, especially in the context of an historically high and possibly rising price for oil. Saudi Arabia claims it’s declines have been voluntary and motivated by a desire to prop up oil prices. Everyone has different opinions on this - some accept the explanation, some question it based on the fact that oil prices are higher than their stated price range preference ($25-30/barrel), and the fact that there are now countries in the world starving for oil because they’ve been priced out of the market (mostly countries in Africa that are now experiencing energy shortages).

I lean toward thinking peak oil is here now, mostly because of the price and the Africa situation. However, the up-and-coming summer driving season will be very telling. Demand will increase - already global oil stocks are falling (stored up reserves), and the question will be put to Saudi Arabia - can it increase production to meet the demand, or will demand outstrip supply and send oil prices up and up, possibly to $80, even $100/barrel by the end of the year.

When put in terms of price, the problem seems manageable - oil at $100/barrel, ok, we just have to tighten our belts a little, make fewer trips, rebudget a little here, a little there so we can buy our $4/gallon gas. But that’s not the problem. The problem is if we are at peak, this problem is only going to get worse each year, and it won’t stop getting worse just because people can no longer find anything else to cut from their budgets. When I lose my job because Lazer is no longer profitable, I won’t be able to find another one. And I won’t be able to fall back on my savings for a year or two and wait for the economy to pick up again - there will be no rebound, it’ll only get worse.

The optimistic peak oilers think peak oil will happen around 2010-2012. The most wildly optimistic peak-oil deniers say we’re good until 2030. The irony is that 23 years is probably still too short an amount of time for us as a society to adjust away from oil. There is no substitute for it in our transportation system. Energy-wise, solutions are expensive and not taken seriously right now. We could build nuclear power plants and run electric cars, but when you look at the numbers, it requires some ridiculous crash-course of plant building, like 1 new nuclear power plant per week between now and 2030 to do the job - which is unlikely to happen. Right now the plan involves more coal plants and coal-fueled ethanol plants, which are a disaster in and of themselves.

The difference between peak oil now and peak oil 2010 is hardly worth considering, except a date of 2010 gives individuals like us more time to prepare for our own destiny. If it’s now, I’m not sure there’s much we can do. But I want to talk about it as a family. As a family we have the most options, the best chance to survive by working together (yes, I am talking survival, not merely suffering). Also, when things get rough, people turn to their families. We all live a long long ways from each other, and we all have “friends”. Maybe even good friends. But when the shit really hits the fan, I know most of those friends will disappear as they turn to their families.

Links:

• Mexican Oil Production (Canterall Oil Field Specifically)
  
• Ghawar is Dying
• Saudi Arabian oil declines 8% in 2006
• Making Other Arrangements
• Science vs Economics
• $60/barrell too high a price already

As I get my mail today full of junk, a new Wired magazine with Al Gore in the front page winks at me. The man looks good in that shot.  Then I can help but wonder, what is he doing to deserve to be the main star on this edition of Wired?  So I am now forced to read the article while Mike tells me I am not paying attention to what has been going on with this dude and that he had a beard at some point. I am clueless about the world and I must be loosing my mind by thinking Al looks cute.

I used to believe the common (mis)perception that Social Security was doomed from the start due to its “pay-as-you-go” nature. The argument being that since current earners are always paying current retirees, and since people are living longer and longer while having fewer and fewer children, it just stands to reason that eventually the burden of supporting too many retirees by too few workers will break the system.

This argument suffers from three problems. First, and least important, extrapolating current trends is nearly always an error. Counter-acting forces usually crop up that bring the trend to an end, or even reverse it. In this case, there is most likely a maximum ratio of retirees to workers that would be very difficult to exceed.

Of course, the limit of this ratio could still conceivably be high enough to break Social Security. The second problem is that the argument ignores productivity increases. As productivity increases, it means fewer workers can accomplish the same work, which essentially means the same overall wealth can, in fact, be generated by fewer and fewer workers. For this reason, Social Security could remain solvent indefinitely if productivity keeps pace with the ratio.

The third problem with the argument, and its implicit conclusion that Social Security could work if only it had been set up as an individual retirement savings scheme, whereby each generation saves and invests money for its own retirement, is that whether the money is being drawn from current workers’ incomes or from stock market pension plans, the value of that money can only be supported by the efforts of current workers. In other words, if the ratio gets too high for the workforce to keep up, then the value of the stock market either crashes, or loses ground to rampant inflation. Whether you’re getting your money from income tax or from capital gains, you’re dependent on the current workforce producing enough to support the entire population - workers and retirees alike. Individual savings accounts is no solution to the problem.

Productivity increase is the only real solution to allowing people to retire in the future. And if productivity doesn’t keep up, then retirees will be forced back out of retirement, either by hardship, or by salaries so high they can’t refuse.

But what’s that have to do with immigration? IMO, it’d be ideal if there were no immigration quotas, and anyone who wanted to, could come to the US, work for a few years, and become a citizen. I see only two obstacles to that ideal: entitlement programs, whereby the working force supports non-workers, new immigrants included (think education, medicare, medicaid, social security, welfare, etc); and the basic ability of our economy to absorb new workers.

If we allow infinite immigration but keep all our entitlement programs, it could become impossible to keep up with the costs, as people come here and go on welfare until they can find a job, send their kids to schools, and wind up in the emergency rooms without health insurance. One can limit the entitlements that green card holders are entitled to, but we seem to have already decided, as a society, that there are some entitlements we are unwilling to withhold.

Of course, if the economy could absorb and employ infinite numbers of new workers each year, there’d be no problem, as everyone would have a job and the increase in the tax base and in the wealth produced would solve all the problems with the entitlements. But I know the economy can’t do that, though I’m not sure what it can absorb, exactly.

Even if everyone who comes doesn’t immediately get a job, our system can support some number of jobless immigrants. If we had fewer entitlements, that number would be greater. And the more immigrants come that eventually find jobs, the greater would be our resources to fund the entitlement programs.

Including Social Security.

I hope my point is clear: limit immigration at your own future economic risk. I do feel allowing as much immigration as possible is a moral issue, in addition to being an economically beneficial one. I think there are entitlements we would be better off without - education could be greatly trimmed, welfare could be phased out I think (I’m ignoring all other wasteful gov spending, such as much of the military and corporate welfare as being irrelevant to the issue of immigration). And if doing so allows more poverty-stricken people to come to the US and find new lives, I think there’s a good moral argument for doing so. But even though moral arguments are rarely persuasive, I’m not sure why the basic economic argument isn’t.