Category: Energy

By Steve St. Angelo: The Blood Bath Continues in the U.S. Major Oil Industry

top-3-us-oil-companies-free-cash-flow-minus-dividends-2011-2016

https://srsroccoreport.com/the-blood-bath-continues-in-the-u-s-major-oil-industry/

The carnage continues in the U.S. major oil industry as they sink further and further in the RED.  The top three U.S. oil companies, whose profits were once the envy of the energy sector, are now forced to borrow money to pay dividends or capital expenditures.  The financial situation at ExxonMobil, Chevron and ConocoPhillips has become so dreadful, their total long-term debt surged 25% in just the past year.

However, the rapidly falling oil price, since the latter part of 2014, totally gutted the profits at these top oil producers.  In just five short years, ExxonMobil’s net income declined to $7.8 billion, Chevron reported its first $460 million loss while ConocoPhillips shaved another $3.6 billion off its bottom line in 2016.  Thus, the combined net income of these three oil companies in 2016 totaled $3.7 billion versus $80.4 billion in 2011.

The combined CAPEX spending from these three oil companies fell 29% in 2016 versus 2015 and 46% since 2013.   Basically, ExxonMobil, Chevron and ConocoPhillips have cut their combined CAPEX spending in half in the past three years.  This is bad news for either building or at least maintaining oil production in the future.

Here we can see that the large dividend payouts by these three oil companies impacted their bottom line much worse than the figures shown in the Free Cash Flow chart above.  Thus, the free cash flow minus dividend payouts provides us evidence that these oil companies have been seriously in the RED since 2013, not just the past two years displayed in the Free Cash Flow chart.

As we can see, the group’s free cash flow minus dividends was a negative $32.8 billion in 2015 and a negative $29 billion last year.  Of course, these three companies may have sold some financial investments or assets to reduce these negative values, but a company can’t stay in business for long by selling assets that it would need to use to produce oil in the future.

When these three companies still enjoyed positive free cash flow in 2011 and 2012, after paying CAPEX and dividends, their long-term debt did not increase.  However, as their operating profits really started to decline, the debt on their balance sheets increased significantly.  As we can see, the combined long-term debt in these three companies balance sheets ballooned from $40.8 billion in 2012 to $95.7 billion in 2016.

By Tim Morgan: In Pursuit of Safety

This is an appropriate follow-up to my post on Trump being a symptom rather than a cause.

Tim Morgan does a very nice job here of explaining why citizens have good reason to be angry, and why our leaders do not understand and are surprised by the anger.

Morgan concludes the essay by saying the best path forward would be for the elites to break through their inherited denial of reality, except he is probably not aware of Varki’s theory and therefore does not use these terms.

https://surplusenergyeconomics.wordpress.com/2017/02/05/86-in-pursuit-of-safety/

A key point made here is that the economy is a great deal weaker than conventional data suggests, which in turn makes public dissatisfaction that much more understandable.

Though other issues are involved, the main cause of public dissatisfaction is widespread economic hardship, set alongside the conspicuous flaunting of wealth and power by a privileged minority. Economists who seem baffled by the weak performance of the world economy would be even more baffled if they were aware of what is really happening behind the published numbers.

Over the decade to 2015, official figures imply a 1.8% rate of compound growth, a figure which includes the post-2008 downturn and which, the consensus says, is likely to rise to an annual growth rate of between 3% and 4% going forward. Both of these readings are fallacious, because they take as reality GDP numbers inflated by the spending of borrowed money.

Given that almost $4 has been borrowed for each $1 of growth, you could be forgiven for supposing that, over an extended period, there has been no “real” growth at all. This is likely to be an exaggeration, but not much of one. Stripped of debt-fuelled consumption, growth in world GDP between 2005 and 2015 was probably about $7.6tn (rather than the reported $20tn), and trend growth may have been as low as 0.5% over that period as a whole. This, of course, includes the post-2008 recession, and current underlying growth is probably about 1.5%.

On this basis, world GDP in 2015 was probably nearer $94tn than the reported $114tn, which would make the global debt-to-GDP ratio about 280%, rather than the published 216%.

All of this, of course, is before adjustment for the trend cost of energy (ECoE) to define what Surplus Energy Economics terms “the real economy” (as opposed to “the financial economy”). In 2015, underlying output was $87tn on this basis, and ongoing growth in “real”, ex-ECoE terms is about 1.0%. That is still a positive number, but it is dwarfed by the rate at which debt continues to be accumulated.

This deterioration can be expressed in per capita terms, but it shows up in the day-to-day lives of the public in two distinct ways. The first is that the rise in the cost of household essentials continues to out-strip growth in nominal incomes. This is happening, primarily, because these essentials are highly leveraged to energy prices, and to commodities which are traded on world markets. Economists tend to assume that such commodities are priced in the same way as internally-consumed services, but the reality is that there is a huge difference between local and global pricing pressures.

As well as the cost of essentials, the other way in which economic deterioration is showing up in the lives of the public is in deteriorating provision for the future. Ultra-low interest rate policies, adopted to enable the world economy to co-exist with its debt mountain, are keeping borrowing cheap (and asset prices inflated) whilst destroying returns on capital. This is becoming glaringly obvious in pension fund deficits, but is also showing up in the continued escalation of debt.

The elites’ fervent hope, which is that popular discontent dies down, looks increasingly like a pipe-dream. As we have seen, the public is suffering in ways which are very real, but are not readily apparent in the data used by policymakers. This is leading those who take the key decisions into a position of genuine bewilderment – the data at their disposal simply does not tally with the popular mood, leading them to the false assumption that it is the public (rather than the data) which are wrong.

Marie Antoinette’s famous remark – that, if people are without bread, “let them eat brioche” – is probably apocryphal. But the point of the anecdote is that she was wholly ignorant of the circumstances of ordinary people, and this does seem to have been the case.

Today’s policymakers seem to be being lulled into similar complacency by economic data flattered out of all reality by the practice of mortgaging the future in order to inflate the present.

If the public are not going to back down, and the elites are determined to hang on to all of their power, wealth and privileges, the odds on social unrest may be pretty high.

The only way of averting unrest may be for the elites to awaken to the causes of popular discontent, and implement far-reaching reforms. This is not going to happen unless their complacency over the economy can be punctured. If that happens, then they might switch from denouncing “populism” and turn instead to tackling the root causes of popular discontent.

It’s Time to Get Real: Trump’s a Symptom, Not the Problem

I’ve lost patience with the widespread whining about Trump.

Trump’s a symptom, not the problem.

Unless we acknowledge and respond to reality there will be many more and worse Trumps to follow.

Lower and middle class citizens around the world are angry for good reasons:

  • Their incomes have been stagnant or falling despite governments telling them the economy is strong.
  • Their cost of living for things that matter has been rising despite governments telling them inflation is low.
  • They see the upper class getting richer and not being punished for crimes.
  • They carry a high debt load and see that interest rates have nowhere to go but up.
  • For the first time in a long time they worry that the future may be worse than the present.
  • They sense that something is broken and that leaders are not speaking the truth.

Their anger has resulted in:

  • Brexit
  • Trump
  • blame of others
  • extreme parties gaining power around the world
  • social unrest in many countries
  • war drums

The economic stresses experienced by many citizens (and by most countries) are real and have been caused by the depletion of low-cost oil.

The tricks of increasing debt and lowering interest rates have reached their limits and no longer work to mask the depletion of low-cost oil.

Governments have responded with reckless financial policies that guarantee a high-speed crash into a brick wall.

There is no solution to the depletion of low-cost oil.  It is not possible to operate our civilization as currently configured without low-cost oil. There is no substitute for oil.

We need to understand and accept that there will be much less of everything in the future.

We were lucky to witness the peak of human prosperity, and unlucky to witness the beginning of its decline.

No one is to blame. It’s reality.

We need a new story to unite us.

We need new government priorities focused on ensuring the necessities of life are available in the future.

We need to slow down as we approach the brick wall.

We need to stop wasting the precious oil that remains.

We need to get real and vote for wise people who understand what is going on.

We need to break through our inherited denial of reality.

By Tim Morgan: Perfect Storm Gets Nearer: Surplus Energy Economics Update

 

Here is the latest brilliant post by Dr. Tim Morgan, ex Global Head of Research at Tullett Prebon and author of the best financial research reports ever published from inside the finance industry, especially his last report from 2013 “Perfect Storm: Energy, Finance, and the End of Growth“.

https://surplusenergyeconomics.wordpress.com/2017/01/09/85-perfect-storm-gets-nearer/

What is Surplus Energy Economics?

Very briefly, SEE says that the economy is an energy system, not a monetary one. Prosperity is determined by surplus energy – that is, the energy available after the deduction of the energy which is always used up whenever we access energy.

Our entire history can be seen in this way. As hunter-gatherers, all the energy that people obtained from food was consumed obtaining that food, so there was no surplus, no economy and no society.

Agriculture was the “first great breakthrough” because it created the first energy surplus. Put simply, the greater efficiency of farming compared with hunter-gathering, plus the use of animal labour, enabled twenty people to be fed by the labour of nineteen, freeing the twentieth to do other things. This first energy surplus was small, and most people continued to undertake subsistence activities. But there was now an economy of sorts, and a society developed in parallel with it. People could now, for the first time, invest, sacrificing current consumption to create capital assets (such as barns, bridges, agricultural implements and rudimentary workshops) which would improve their lot in the future.

A vastly bigger energy surplus was created when we learned to tap fossil fuels, such as coal, oil and natural gas. This triggered two centuries of exponential growth, not just in economic output, but in population numbers and energy consumption as well. So sophisticated have economies become that, most notably in the West, very few people are engaged in producing food.

 

The end of growth?

For decades, people have speculated about the relationship between exponential growth and a finite planet. This debate rages on, but the balance is tilting, in two very obvious ways.

First, we are discovering the limitations of the earth as an ecosystem and, second, the surplus energy which has driven growth in economic output and population numbers is coming under mounting pressure.

Where fossil fuels – still well over 80% of our energy consumption – are concerned, two factors are in play. Depletion is robbing us of the gigantic, ultra-low-cost sources of energy which hitherto powered economic growth. Technology is endeavouring to offset this, both increasing the efficiency with which we access conventional fuels, and enabling us to tap energy from renewable sources.

Technology will doubtless continue to progress, but we are in danger of complacency over technological solutions. Renewables still account for barely 3% of global energy consumption, and no-one has yet worked out how to power a 747-size jet using renewables, or how to extract 1 tonne of ore from 500 tonnes of rock without using fossil fuels.

We should be optimistic about renewables, but also realistic. Renewables can supply energy more cost-effectively than fossil fuel sources discovered and brought on stream today. But my interpretation of the thermodynamic balance is that renewables are not going to take us back to an age of vast, low-cost, high-surplus energy from giant fields.

 

What next?

If the surplus energy interpretation of the economy is correct, growth should continue to prove elusive. But our system is so predicated on growth – a topic for another article – that we cannot accept even stagnation, let alone adjust to decline.

So we have been faking growth by borrowing. By 2008, the debt mountain had become so big that we could no longer afford to pay a normal rate of interest on it, so the authorities adopted ZIRP (zero interest rate policy) in order to prevent the economy being engulfed. But ZIRP, and other forms of monetary manipulation, cannot resolve the situation, and have their own costs. At zero- or near-zero rates, the economy cannot function normally, and it certainly cannot provide for the future, which is why huge deficits are now imperilling pension provision.

In theory, we might go on faking growth for many more years yet, and I’m pretty sure the authorities will be mightily tempted to try. But this would result in a further escalation of debt, which would also mean that raising interest rates significantly – let alone restoring them to something resembling normality – would become out of the question (which may already be the case). Comparing 2020 with 2015, and taking inflation out of the equation, the world seems likely to grow its GDP by close to $10tn, but to add at least $50tn to its $151tn non-financial debt mountain.

If (or, rather, when) debt escalation reaches crisis point, some kind of write-off might be tried, unless the authorities decide to unleash high inflation in an attempt to destroy the real value of debt. Inflation, which has been described as the “hard drug” of our economic system, can very rapidly get out of control.

So here we have some pointers to the future – debt escalation, and/or hyper-inflation, both of which would be insane choices, but neither of which are beyond the short-termism of the political class.

Ultimately, and whichever folly is chosen, faith in fiat currencies is likely to collapse, to which I will only add that there are already at least two major currencies that I, for one, would not want to hold. In the normal course of events, inflation strips money of its value, but this tends to be gradual – we have little widespread (though plenty of local) experience of what happens when a fiat currency falls apart.

People cannot be expected to accept any of the post-growth consequences described here with a resigned shrug. They are not doing so now – instead, and naturally, they are beginning to blame, and repudiate, established political leaderships, and this was the most significant trend to emerge in 2016.

If the economy – and, in the first instance, the financial system – does start to implode, governments are highly likely to resort to coercion, spouting precious claptrap about “the national interest” as they try to maintain their hold on power.

By Tim Clarke: The Demise of the Global Oil Industry: Best Case 2022

This analysis concludes that the oil industry will collapse by 2022.

The global economy and food system we depend on to survive will collapse a short time after the oil industry fails.

If some monkey somewhere makes a mistake collapse could occur sooner.

It’s a good thing monkeys rarely make mistakes.

Think about this for a moment. We are at best 10 years from collapse and it’s not even mentioned as an election issue.

Our inherited denial of reality is amazing!

http://www.feasta.org/2017/01/22/end-of-the-oilocene-the-demise-of-the-global-oil-industry-and-of-the-global-economic-system-as-we-know-it/

clarke18

Think of the Global Economy as the Titanic

The Captain and the owners (politicians, economists, corporate leaders) were warned many times (Limits to Growth 1973, Peak Oil, etc) that the course chosen (endless growth) would take the ship into dangerous waters (end of economic growth), but the stakes were high; reputations and money were at stake (corporate profits, political power); so – carry on regardless – full-steam ahead. The Titanic has now collided with the iceberg and is mortally holed; but still it carries on steaming with all the lights on. People on the deck (us) are still partying (taking on debt at fantastic rates) unaware of what is going on below decks; but water (thermodynamic depletion of oil energy, exponential unsustainable debt) is coming in fast.

The pumps (the real economy) are not keeping up (all indications of global trade are in decline) and the Titanic is sinking (exponential debt is overwhelming the global financial system). The pumps need energy (Oil: which powers 97% of transport, extraction and production of commodities including other energy sources, food etc), but this energy is depleting fast (EROI) and within a short time there will not be enough affordable energy for the pumps, which will slow, and water (debt) will pour rapidly in to flood the ship (financial contagion, derivatives exploding, banks collapsing). The Titanic (Global Economy), deemed unsinkable IS SINKING – fast.

We will not be aware of this until the cold water laps at our feet and the lights go out. Some people (BW Hill, Dr Arnoux, Richard Heinberg, and many others too numerous to mention) are shouting to the rest (society) to man the lifeboats (prepare for a systemic shock to the oil/energy/financial system) while there is still time. Who will listen?

By Alice Friedemann: Book Review of “Failing States, Collapsing Systems: Biophysical triggers of Political Violence by Nafeez Ahmed

9783319478142_p0_v3_s192x300

Dr. Nafeez Mosaddeq Ahmed is an investigative journalist that focuses on biophysical issues like over population, resource depletion, and climate change that underlie most of the wars and social unrest around the world.

Ahmed recently published a book titled “Failing States, Collapsing Systems: Biophysical triggers of Political Violence” and Alice Friedemann has written an excellent review of the book.

http://energyskeptic.com/2017/book-review-of-failing-states-collapsing-systems-biophysical-triggers-of-political-violence-by-nafeez-ahmed/

 

Since the 2008 financial crash, there’s been an unprecedented outbreak of social protest: Occupy in the US and Western Europe, the Arab Spring, and civil unrest from Greece to Ukraine, China to Thailand, Brazil to Turkey, and elsewhere. Sometimes civil unrest has resulted in government collapse or even wars, as in Iraq-Syria and Ukraine- Crimea. The media and experts blame it on poor government, usually ignoring the real reasons because all they know is politics and economics.

In the Middle East, experts should also talk about geology.  Oil-producing nations like Syria, Yemen, Egypt, Nigeria, and Iraq have all reached peak oil and declining government revenues after that force rulers to raise the prices of food and oil.  This region was already short on water, and now climate change (from fossil fuels) is making matters much worse with drought and heat waves causing even greater water scarcity, which in turn lowers agricultural production.  Many of these nations have some of the highest rates of population growth on earth at a time when resources essential to life itself are declining.

The few nations still producing much of the oil – Russia, Saudi Arabia, and the U.S. are about to join the club and stop exporting oil so they can provide for their domestic population.

 

ahmed-2017-peak-oil-fresh-water-population

 

Ahmed says that so far after peak oil production, Middle-Eastern economies have declined as revenues declined, leading to systemic state-failure in roughly 15 years, more or less, depending on how hard hit a nation was by additional (climate-change) factors such as drought, water scarcity, food prices, and overpopulation.

Saudi Arabia, and much of the rest of Arabian Gulf peninsula, may experience state-failure well within 10 to 20 years. If forecasts of Saudi oil depletion are remotely accurate, then by 2030 the country will simply not exist as we know it. Coupled with the accelerating impacts of climate-induced water scarcity, the Kingdom is bound to begin experiencing systemic state-failure at most within 20 years, and probably much earlier.

 

It is difficult to avoid the conclusion that as we near 2045, the European and American projects will face escalating internal challenges to their internal territorial integrity, increasing the risk of systemic state-failure. Likewise, after 2030, Europe, India, China (and other Asian nations) will begin to experience symptoms of systemic state-failure.

 

By Louis Arnoux: Twilight of the Oil Age: Out of Gas by 2030

The easy oil is gone. The oil that remains is hard and getting exponentially harder to find and extract, and to make a profit doing so. Each year it takes more energy to produce the same amount of energy meaning each year there is less energy left over for society. This is why people who think we have an energy glut are wrong.

Think of a coyote forced, because rabbits are becoming faster, to burn 2 rabbits worth of energy to catch 1 rabbit. Even though there are plenty of rabbits, the coyote is in serious trouble. The coyote could switch his diet to mice (solar & wind energy) but then he’d have to burn 3 mice of energy to catch 1 mouse. The coyote is able to lead a fairly normal life for a while because he burns fat (debt) that he built up in previous good years. The coyote knows it could make do with less food if it quit fighting, played slower games, and had fewer pups, but prefers not to change its lifestyle. Over time, the coyote becomes weak and sick, and then decides to change, but he no longer has the strength to catch any food.

This analysis by Louis Arnoux predicts we have between 6 and 13 years before society is out of gas.

This means that some time between 2022 and 2030, your gas stations and airports will be closed, and the global economy will be on its way to a complete collapse.

I’ve been following this issue for years and I think his prediction is in the ballpark.

I should point out that this oil centric perspective does not consider the current debt/growth instabilities of the economy. People studying that piece predict an economic collapse sooner than 2022. Nor a climate change centric view which suggests we have at best until the end of this century.

Let that sink in for a moment and then you might begin to understand why I am so fascinated by our inherited denial of reality. This information is available for anyone that cares to look, including the news media. No one looks.

Arnoux concludes the interview by pitching an alternate energy product idea he is trying to raise funds to develop. No information is disclosed on the technology but I did some searching to get the gist of it. It’s an interesting idea but has 0% chance of heading off the problem his research on oil depletion predicts.

His behavior is consistent with other researchers working on collapse related topics. For example, almost every climate scientist has a favorite scheme they think will save us whether it’s BECCS, or geoengineering, or nuclear energy. Most people would be unable to function in these roles unless they had some hope for the future. That’s our inherited optimism bias, the inverse twin of denial, at work.

Here is an audio interview with the author.

Here is the paper behind the interview:
Part 1
Part 2
Part 3

Hat tip to Alice Friedemann.

You know you are in trouble when…

Bizarro.com Our Extended Forecast

 

Examples of denial are both profound and unacknowledged.

The short-term solution to our problems is the long-term cause of our problems: economic growth

The long-term solution to our problems is the short-term cause of our problems: reduced consumption

Reduced CO2 emissions from an economic collapse caused by low-cost oil depletion is not sufficient to prevent civilization collapse from climate change caused by previously emitted CO2.

All political parties in all countries and almost all citizens, including the few citizens that understand our predicament, reject our best course of action: austerity

Most citizens have no idea how fortunate they are to be alive at this point in history: Blindspots and Superheroes

Despite wildly different beliefs about our predicament, there is one thing that almost everyone agrees on: I don’t want to change my behavior

The only problems society does not acknowledge, or discuss, or act on, are the only problems that matter: species extinction, limits to growth, debt, peak oil, overshoot, resource depletion, climate change, sea level rise, fisheries collapse & ocean acidification, nitrogen imbalance & tree decline 

Every country has similar economic problems and not one leader anywhere in the world connects the dots and publicly acknowledges the root cause, even after they leave office: declining energy surplus a.k.a. energy extraction cost + debt

Citizens believe the exact opposite of reality: technology creates wealth and energy rather than energy creates wealth and technology

Citizens misunderstand the root cause of social unrest and wars because the media presents these conflicts as political or economic problems and ignores their underlying forces: biophysical constraints

There is evidence that feedback loops are taking over and causing some problems to go exponential: climate change, CO2 emissions, ice loss, sea level rise, debt

The previous year’s worst case predictions are tending to become this year’s most likely prediction: sea level rise

Actions that improve the long-term worsen the short-term: air pollution masks 0.5C of warming, austerity and debt reduction, renewable energy, population reduction 

The only possible permanent solution is rejected by the belief systems of 90+% of citizens: population reduction

The only possible permanent solution is too slow to avoid the worst problems: population reduction laws

Countries fortunate to have a low birth rate often cancel their good fortune with immigration: Canada

The few people who understand the severity of our problems do not set good examples in their personal lives: leaders, climate scientists, environmentalists

History suggests that the consequence of not voluntarily contracting our economies as non-renewable resources deplete is an unthinkable war, so we don’t think about it: nuclear weapons

The quality of our leaders is declining because those people with high intelligence, wisdom, and integrity do not want to be in charge of our predicament, and because citizens are feeling the impact of overshoot, do not understand what is going on, and are angry: Trump

The leader of the free world denies science and issues daily, jaw-dropping, cringe-inducing tweets: Trump

The one world leader that did understand the problem and spoke out was rejected by the citizens and no longer speaks out: Jimmy Carter

We do not acknowledge that the world’s economic problems began with the peaking of a key non-renewable resource: conventional oil

Low energy prices have led citizens to believe we have a glut of fossil energy when in fact: all types of energy have peaked

We do not discuss or act on economic history research that shows countries always get into serious trouble when they permit an important ratio to exceed a threshold we long passed: debt to GDP

Bankers, the creators of money, do not understand the one thing that creators of money should understand: thermodynamics of wealth

The professionals with the most influence on public policy use models that violate the most trusted laws of physics: economists

The scientific theory that explains the relationship between the economy, energy, and climate is ignored by everyone that should understand it: Tim Garrett

The people who deserve the most respect and admiration get the least: scientists

The people who deserve the least respect and admiration get the most: celebrities

All types of non-fossil energy do not provide a substitute for the only energy we can’t live without: diesel for trucks, trains, ships, tractors, and combines, and mining machines; plus natural gas for fertilizer

Operating our economy on renewable energy is not renewable or feasible.

People who think the shale revolution will make America prosperous and energy independent ignore one thing: facts and more facts

Intelligent people who understand the climate change threats, like James Hansen and Bill Gates, and who want business as usual to continue, know that nuclear energy is the only option, but they ignore a problem: peak uranium

If climate deniers continue to win elections and try to maintain the existing electric grid they’ll find that strategy may not work for long: peak coal

A key component of our infrastructure appears durable but is not: reinforced concrete

Citizens most vulnerable to a fragile global supply chain with only a few days of inventory experience the strongest illusion of abundance and security: inhabitants of large cities

The “green” revolution, which increased food production to enable 7+ billion humans, was and is entirely dependent on fossil energy, and has long-term consequences that will make a return to traditional agriculture very difficult.

Most citizens are not even vaguely aware of the invention that enabled their existence and created about 50% of the nitrogen in their bodies: Haber-Bosch conversion of natural gas to fertilizer

Well meaning environmentalists demand that we stop subsidizing fossil energy companies without understanding the source of all that they cherish in modern civilization: fossil energy

Well meaning environmentalists demand that we stop subsidizing fossil energy companies without realizing that many fossil energy companies are going bankrupt: ExxonMobil

A solution frequently advocated makes things worse by accelerating growth and decreasing system resilience: efficiency

The best solution for removing CO2 from the atmosphere is being harmed by the same activity that creates CO2: planting more trees which are then injured or killed by ground level ozone

All climate science models that do not predict disaster now depend on an unproven technology that we probably can’t afford and other species definitely can’t afford: BECCS (bio-energy with carbon capture and storage)

We have not acted to prevent a predictable and very dangerous side effect of trying to maintain business-as-usual with low interest rates: increasing wealth gap

We still enjoy historically vast surplus wealth that could be deployed to improve our future lives but we are squandering it: military, airports, highways, new cars, high rises, etc.

Earth with its diverse complex life and a highly intelligent species is extraordinarily rare, precious, and worth fighting to protect, yet we dream of other barren homes: colonizing Mars

The tool that could be used to unite citizens in common purpose and useful action is instead being used to create tribes that reinforce preexisting beliefs: internet

Many people are hurting and lashing out in anger because they do not understand the cause of their pain: Brexit, Trump, Syria, Venezuela, etc.

The few sources of information that understand and communicate the truth are under threat: fake news

Few people study or heed the best predictor of the future: history

The majority of citizens share a common characteristic that makes the election of an intelligent and wise leader empowered to do the right thing unlikely: wacky beliefs

None of our schools teach skills useful and relevant to our future: growing food and other forms of lower complexity life skills

The thing that enabled the evolution of our high intelligence and its ability to understand and act on problems is the same thing that causes our problems and prevents us from acting on them: denial of reality

The theory that best explains our existence and our self-destructive behavior is ignored by everyone, including those people seeking to understand our problems: Varki and Brower’s Mind Over Reality Transition (MORT) theory

Readers are encouraged to submit additions to the list.

A good place to go next is What would a wise society do?

By Nafeez Ahmed: Brace for the Financial Crash of 2018

Good news!

Someone thinks we have another year.

And if this prediction comes true, CO2 emissions will fall.

https://medium.com/insurge-intelligence/brace-for-the-financial-crash-of-2018-b2f81f85686b#.1qn4wrwxa

80% of the world’s oil has already peaked, and the resulting oil crunch will flatten the economy.

A report by HSBC shows that contrary to industry mythology, even amidst the glut of unconventional oil and gas, the vast bulk of the world’s oil production has already peaked and is now in decline; while European government scientists show that the value of energy produced by oil has declined by half within just the first 15 years of the 21st century.

“In order to avoid the [oil] price affordable by the global economy falling below the extraction cost, debt piling (borrowing from the future) becomes a necessity, yet it is a mere trick to gain some time while hoping for something positive to happen,” said Meneguzzo. “The reality is that debt, basically as a substitute for oil, does not work to produce real wealth, as apparent for example from the decline of the industry value added as a percentage of GDP.”

Today, we are all supposed to quietly believe that the economy is in ‘recovery’, when in fact it is merely transitioning through a fundamental global systemic phase-shift in which the unsustainability of prevailing industrial structures are being increasingly laid bare.

By James Howard Kunstler: Forecast 2017: The Wheels Finally Come Off

Here is Kunstler’s year-end summary and predictions for 2017.

Kunstler does an amazing job of weaving many complex threads into an interesting, coherent, and (I believe) true story.

Long time students of overshoot won’t find any new ideas here but it’s an excellent refresher for experts, and a great place to start for newbies.

This year’s predictions are specific and very short-term so we won’t have long to wait to see if he’s right. If he is wrong, it will likely be in timing rather than outcomes.

Highly recommended.

http://kunstler.com/clusterfuck-nation/forecast-2017-wheels-finally-come-off/

“There is no other endeavor in which men and women of enormous intellectual power have shown total disregard for higher-order reasoning than monetary policy.” — David Collum