Beyond Economics

The End of Growth and Time for a New Era

Category Archives: Public Policy

The Future of Economics and Society as We Know It

Richard Heinberg delivers a clear and powerful message on the urgent need for the world to begin the transition to a sustainable future. He takes a big picture perspective on the interconnectedness of economics, energy, the environment, and society.

We are, and will be, seeing a cavalcade of environmental and economic disasters, not obviously related to one another, that will stymie economic growth in more and more ways.

Each will be typically treated as a special case, a problem to be solved so that we can get “back to normal”.

In September 2008, the global financial system nearly collapsed. The reasons for this sudden, gripping crisis apparently had to do with housing bubbles, lack of proper regulation of the banking industry, and the over-use of bizarre financial products that almost nobody understood. However, the oil price spike had played a critical (if largely overlooked) role in initiating the economic meltdown.

The end of growth is a very big deal indeed. It means the end of an era, and of our current ways of organizing economies, politics, and daily life. Without growth, we will have to virtually reinvent human life on Earth.


Interview of Nate Higgins on ChrisMartenson.com

So I’m not necessarily calling for a stock-market crash in the next decade, but I am calling for within the decade we probably won’t have a stock market. That’s a scary thing to contemplate, but this entire system is based on more every year, and we’ve extended the system by a decade or more by little bells and whistles and allowing people to buy houses with no money down and the repeal of Glass-Steagall.

And since 2008, the crash in private and household credit has been made up by government stepping in and providing 11% of our GDP just from deficit spending. And that bullet has now been spent. So the whole thing starts to unravel once they’ve spent all the bullets they have. And I don’t know that it really matters, really; stocks go down 10% or 50% or 100%, we have to restructure the way that we think about society.

Competing for nominal, digital wealth is going to go away as the main cultural objective. 

This is a fascinating, in-depth discussion of our economic, environmental, and societal predicament. If you have the time, this really ties it all together. Until recently, Nate Higgins was lead editor of The Oil Drum, one of the most popular and highly-respected websites for the analysis and discussion and global energy supplies, and the future implications of the energy decline that we are facing. He holds a Master’s Degree in Finance from the University of Chicago and recently completed his PhD in Natural Resources at the University of Vermont. Previously, he was President of Sanctuary Asset Management and a Vice-President at the investment firm Solomon Brothers and Lehman Brothers.

Nate Higgins Web Site

Additional Resources on Peak Oil

Post Carbon Institute
Founded in 2003, Post Carbon Institute is leading the transition to a more resilient, equitable, and sustainable world.

The Oil Drum
The Oil Drum seeks to facilitate civil, evidence-based discussions about energy and its impacts on the future of humanity, as well as serve as a leading online knowledge-base for energy-related topics.

How Companies Bypass the U.S. Corporate Income-Tax Rate

Gulf Oil Leak News, Images, Data, and Diagrams – 7/5

For More Technical Information and Updates

Atlantic Tropical Storm Forcast

A History Presidential Promises About Energy Policy
(From The Daily Show, 6/16)

Diagram of Relief Well Drilling Operation

First (large) diagram shows approximate scale for depth operations. Second (smaller) diagram shows current progress as of 7/5.

6/6 Update: Capture underway

The first image is the #4 cap before being placed on top of the BOP after the shear cut several days ago. The second image shows the cap in place with oil and gas escaping. Capture rates will be reported every morning. It was 10,000 BPD (barrels per day as of 6/6). This could be anywhere from 1/2 to more than 2/3 (BP’s CEO says “vast majority”) of the approximate total flow from the BOP, depending on what original flow estimate you use, ranging from 12,000 to 20,000. The maximum capture is 15,000 with the single existing recovery ship. More accurate estimates should be available soon, taking into account the increased flow from the full release (not limited by the kink) and also the increase that might occur from a relief of back pressure. The trick now is to increase the capture rate carefully to the maximum possible without sucking in sea water, i.e. there will, by necessity, have to be some oil escaping since there is not a tight seal. There is still the option of trying the diamond cut again to get a tighter seal. Note: the third diagram shows the contraption above the cap. Remember that there is a pipe within a pipe.

6/3: Fine Cut Fails: Back to Top Hat

Yesterday, the first cut of the major length of the riser pipe using the large “shear” cut method was successful. This took weight off the entire contraption. During the second cut at the top of the 5-story BOP (blowout preventer), the finer “diamond” cut saw jammed but was then freed. However, BP has now given up on the finer cut and will have to use the more crude shear cut method to remove the riser pipe. This means that they cannot get a nearly tight seal using the LMRP cap. They will now have to go back to the more open Top Hat device.

The bottom diagram shows the LMRP (Lower Marine Riser Package) Cap procedure. Also shown is a smaller BOP. BP has now been told by the government that they cannot attempt to install a second BOP because of problems within the current BOP. As a result of the failed top kill effort, it is not entirely clear how oil is making its way through and which systems within it are working. There is a risk that trying to block the current BOP with might create pressure within that could cause the entire unit to blow and release even more oil. Thus, the capture attempt that is underway until the long-term relieve wells can be drilled.

General Information Sources

How will the Gulf oil situation affect oil prices? Here is one take from Business Day at The New York Times:

Deepwater wells in the Gulf produce around 1.3 million barrels a day, against total global output of roughly 85 million. A two-year moratorium on new drilling would reduce potential output by only 300,000 barrels a day in 2015, the International Energy Agency calculates — a piffling 0.4 percent of current world production. Oil titans in the Middle East could easily pick up the slack. Saudi Arabia alone has four million barrels a day of spare capacity, PFC Energy reckons.

The fate of deepwater drilling in the United States does, of course, matter much more to the likes of BP and Exxon Mobil, which are shut out of many of the world’s biggest oil fields by national oil companies. But the United States government can afford to wait until oil majors show they know how to plug a deepwater well. America’s army of auto-crazy drivers won’t suffer.

Oil Flow Rates and Natural Seepage

BP initially claimed that only 1,000 bd (barrels per day) were being released. This was soon upped by the government and BP to 5,000 bd, a figure that was used for weeks even though some scientific observers estimated numbers in orders of magnitude higher. An internal BP memo from the 1,000 bd days was relased by Ed Markey today that indicated BP thought it was 14,000 bd even back then. BP is now claiming to be capturing about 15,000 bd with little visible reduction in the apparent flow rate. (It’s hard to say, other factors might also have increased the flow once the riser was cut. Nevertheless, BP has certainly underplayed this all along.

This diagram, in a post from The Oil Drum, compares natural seeps to “normal” oil spills/leaks which occur from oil exploration and drilling. For the Gulf of Mexico, natural seepage is about 2,700 bd, which may be the source of some of the stray tar balls and distant plumes and sheens. (So BP may be technically correct to claim that not everything is from the leak.) However, given the proportions shown in the diagram, normal spill rates would be only about 260-270 bd compared to to the at least 15,000 bd that BP is now recovering which may or may not be making a significant dent.

Technical Update Video
Although produced on 5/24, this is an interesting explanation and animation of the various methods that have recently been tried and will be tried in the next few weeks. It is from BP and contains some expected spin, but nevertheless it is very educational for those interested in the technological and logistical complexity.

BP’s Now Failed “Top Kill” Plan
On Saturday, the Top Kill method was abandoned after three days of intensive efforts including 16 Junk Shots (sending pieces of debris such as shredded tires into the blow-out preventer to try and jam it up).
Diagram from the latest issue of The Economist (detailed explanation)

Oil in the Marshes

More Images of the Disaster
This is an amazing set of pictures, both horrific and beautiful at the same time.

Other Videos & Illustrations