Models for Economic decline

Conservation isn't glamourous, although it can save money.

However conservation alone "can't save us" from an unsustainable future.

We need POLICY: (Heads up political representatives!)

Policy ought to:
1) Set a goal.
2) Draw a map to get there.
3) Measure progress.
4) Evaluate map effectiveness and adjust.
5) Evaluate goal effectiveness and adjust.
6) Repeat until goal reached.

Got it? I made that up, but it sounds BRILLIANT!

So where are we?
1) Set goal:
--> Increase U.S. oil consumption by 50% by 2020.
2) Draw a map:
--> Military force, subsidize oil companies, subsidize economic "growth" in any form.
3) Measure progress:
--> Oil consumption keeps increasing.
4) Evaluate for map effectiveness:
--> World oil space capacity plummets, prices skyrocket
--> Adjust? Spend more on military, oil companies, and encourage more debt everywhere.
5) Evaluate for goal effectiveness:
--> Looks pretty good, except for prices. I especially like A/C in my car on hot days because my house doesn't have A/C and I can sit inside my car in my driveway staying cool while watch the birds and squirrels through the windows and wonder how they stand the humidity and heat. Sometimes my car engine starts to overheat because it's sucking in it's own waste heat sitting in my driveway so I have to drive around the block for a while to cool the engine...
--> Adjust - Well, the summer is almost over, so I don't need A/C any more... Maybe next summer I'll try some conservation.

Seriously, we need a little better work on #5: OUR GOAL

MAYBE unlimited economic growth ISN'T the end-all be-all of existence!

Is it conceivable to not only accept limits to growth but actually admit we're already in "overshoot" and had better try reducing our consumption before nature forces us?

At least high oil prices (and Natural Gas I guess too) offer some hint for a different direction.

I believe President Carter in the 1970's set goals for limiting U.S. imports for oil.

Currently the U.S uses about 21 million barrels of oil per day and import 2/3 of it, and this fraction will relentlessly increase (if the world let's us).

What if we said: The U.S. will not import more than 50% of our oil consumption. i.e. Require domestic production to equal imports. Sounds good, but we have to back track from 65% now.

Okay, a map:
2005: 65% imports
2006: 60% imports
2007: 55% imports
2008: 50% imports
2009: 50% imports
...

Pretty good! The world will be grateful! With our conservation, world prices will likely drop dramatically, and we'll be happy.

Of course U.S. production continues to drop:
2005: 7.5mb/d - total 21mb/day consumption
2006: 6.75mb/d - total 16.9mb/day consumption
2007: 6.5mb/d - total 14.4mb/day
2008: 6.25mb/d - total 12.5mb/day
2011: 5.5mb/d - total 11 mb/day
2016: 5mb/d - total 10 mb/day
2021: 4.5mb/d - total 9mb/day
2026: 4mb/d - total 8 mb/day

WELL, made up numbers, but the serious response means we have to cut our consumption by 50% in 5 years! Are we up to it? I don't know because we're not looking that way! At least the imports are kept limited by our local production.

What would it be like to actually participate in an economic which VALUES decline?

Probably something fully unlike what we know today.

Okay, I'm dreaming, but it's late. I know it's a sad dream, worthy of lots of tears, but addicts sometimes need that, you know?

Price gouging?

Today I saw my first $2.99/gallon gasoline while biking to work.

Also I overheard a coworker today saying he planned to write to his comgressmen on the price gouging being done by oil and gasoline distributors and sellers.

I suggested that higher prices are what we need to "break the monopoly power" of gasoline and make alternatives competitive. He mistook my statement and "agreed" the "monopoly" power of a small number of oil companies was the problem.

I also mentioned my suggestion to raise the gasoline tax and two coworkers immediately responded with the "regressive tax" lament, how the poor won't be able to make it if prices are raised further.

It is almost funny to see how easy it is to "help" people (lower prices now) while enabling them to continue delaying unavoidable decisions. SURE we can HELP people by GIVING them money without any accountability. It's just funny how separated the big and little pictures are.

I said we ought to make it a national policy of projecting a $1.00/year gasoline tax INCREASE over the next 3 years (getting our taxes more on par with Europe), and directing that money to projects that reduce our demand for oil and promote alternatives. If it is POLICY - known and unavoidable, people WILL respond - and it will be MUCH more orderly than times like now with market-driven price spikes.

I'm actually overall disturbed how hard it is to convince well-educated, thoughtful people that higher prices for unsustainable economic activity as vital to our long term best interest. SURE, it is not what a "addict" wants to hear, but it's what we need.

I know, I feel helpless too, and compassionate towards those "on the bottom". Most people on the bottom don't make "informed" choices based on looking at their long term best interests. They make decisions on survival. They'll buy a 20 year old rust-bucket gas-hog car for $200 and run it until it needs repairs and repeat. They'll juggle each month which bills they are going to pay, and which one's can be paid late. Gasoline, food or electricity?

Who's responsible for this? Who's going to "lift" them up when times get even tougher? It's all well and good to say expand government programs, but there are limits, and what seems like struggling budgets now might be considered the promised land in a few years of renewed inflation and unemployment.

Lastly, I read an article that considered limits on gas station price increases - some states limit price changes to once/day, others limit the increase.

I'm just thinking, were I a station own, what's my choice? If I have a shipment of gasoline that requires a price of $3.00 to cover my costs, and the state says I can't increase it to more than $2.70 today, what do I do? Sell "at a loss" today? Close my pumps?

AND if there's ACTUAL shortages, what mechanisms exist to limit consumption BESIDES higher prices? I mean if my supplier says "No more shipments for 2 weeks", how should I conserve my remaining fuel? I might limit my hours open each day to spread it out. OR I might sell until I'm dry. OR I might raise prices to discourage excess buying.

I really can't see raising prices as harmful. I mean sure it can generate panick, but people need to get a clue. Fears of oil shortages CREATE panick and desire for stockpiling. I'd rather stations stockpile over individuals. If a few individuals REALLY want to stockpile $5/gallon gasoline, well, fine, pay me now! Why shouldn't I be able to do this as a station owner?

Anyway, my bicycle seems rather nice these days! Too bad about the coming winter...

Intellectual arrogance

I listened to a great interview online:
****
Queensland Australia Parliament member Andrew McNamara speaks to David Room about discovering peak oil, explaining oil depletion to his colleagues and his constituents, and previews his state's oil vulnerability task force. This appears be the world's first known study of a region's vulnerability to energy shortages due to global oil peak.
****
http://www.globalpublicmedia.com/interviews/466

I'm very impressed by his clarity of thought and understanding of the issues.

I just notice in comparison my own arrogance, pretending I know the issues, yet not taking much personal risk in spreading the word. This politician has risked his own electability to bring up an issue that the average American politician doesn't even believe exists.

Admittingly myself, I've been watching the weekly oil and gasoline price trends like a good baseball game or olympic event. (When will we beat the 4 minute mile? When will oil break the $120/bbl barrier or $4/gallon gasoline?)

If I were to bet 12 months ago whether oil would exceed $70/bbl now, I simply wouldn't have taken the bet. REALLY I accept statistically prices are fear-based as much as economic measure. People are BETTING on higher prices because demand isn't weakening, but the silly market can reverse quickly.

If I were to make a bet for the future (no risk), I'd "hope for" price spike time-table:
1) $90 oil by November 1, 2005
2) $120 oil by September 1, 2006 (Maybe we'll call it Hurricane Jack?)
3) $180 oil by September 1, 2007 (Civil war in OPEC exporter country X)

But if we're talking "extremes", we might as well guess:
1) $25 oil by Sept 1, 2006 (Due to global economic recession)
2) $15 oil by Sep 1, 2008 (Second recession)

In SHORT policy CAN'T be set by market prices.

I'd implement gasoline taxes: ($1.00 increase per year for 4 years)
1) Now ~$0.40/gallon (Federal+State)
2) January 2006 - $1.00/gallon
3) July 2006 - $1.50/gallon
4) January 2007 - $2.00/gallon
5) July 2007 - $2.50/gallon
6) January 2008 - $3.00/gallon
7) July 2008 - $3.50/gallon
8) January 2009 - $4.00/gallon

This policy is recommended by me is acceptable regardess of market prices - whether $10/bbl or $200/bbl. (Wholesale gasoline $0.30/gallon or $6.50/gallon)

Sure $10/gallon gasoline is frightening BUT if it happens, the high tax will continue doing exactly what we want - reducing demand and encouraging increased efficiency.

That's my "publicly" risky assertion, but of course I'm just blogging on a lonely corner of the internet.

LASTLY, there's at least a 50-50 chance that President Bush will authorize release of oil from the strategic reserve to counter short term losses from Hurricane Katrina. I've supported Bush's resistance to tap the reserves merely for high prices. I lean always against tapping reserves (What affect will tapping have on prices now VERSUS chances for lower prices in the future to restore the reserves?) I'd "compromise" tapping the reserves in exchange for a gasoline tax bill as suggested above, but I know it won't happen.

Well, that still goes back to my arrogance. I play the moral high ground for higher taxes, but I don't really want to play the bad guy and say so publicly. I can't overly attack polititians' weakness if I still have doubts on the policy.

At least higher prices have shown some of the fears have been exaggerated. (I remember Bob Dole in 1996 suggesting we repeal a $0.04/gallon gasoline tax to counter higher prices while he was running for president!) STILL, I accept the argument that "spikes" can be smoothed through rainy-day funds. Airlines can go months on $70/bbl oil, but not clearly years. Similarly small businesses and individuals have savings and credit options to try to run through the spike without changing behavior.

I accept the 18-month rule for economic lagging indicators. I accept if prices evens stay above $60/bbl (much less rise) for the next 18 months, there WILL be wide-spread economic woes as a result. Inflation in the least. Bankruptsy, foreclosures, and unemployment secondary.

Of course my wild demand for $4.00/gallon tax by 2009 is unrealistic on what the economy can handle. I can't ultimately defend it EXCEPT by necessity of fear.

Gasoline quotas

Today I was just curious what sort of number might come out of a communistic plot to give everyone in the world an equal share of the world's oil reserves.

Facts (Quick guesses)
World People: 6 billion
World Production: 84 million bbl/day
U.S. Automobile fraction: 40%
Gasoline per bbl of oil: 46 gallons
Cars average about 25 miles/gallon

That comes out to about 0.26 gallons of gasoline/person/day, and about 6.4 miles/day.

This number assumes everyone wants to drive that much. Of course also counts children, and one person per car, so actual drivers could get more. Maybe ignoring children/elderly, driving adults might claim 20 miles/day.

Assuming world oil production may likely never rise much higher than now, this number will decrease over time, as population continues to rise, and reserves continue to deplete.

Not as bad as I guessed perhaps, but rather a grim thought still.

Limits to oil

The recent "high" oil prices have interesting results. The first interesting result is that many people are not yet suffering from financial hardship, and so demand continues to increase despite the prices. This suggests that prices are still "too low".

Secondly there's the bigger issue of a finite nonrenewable resource. ANYTHING we do to increase production or decrease consumption which can bring down prices will as likely as not merely promote NEW increased consumption.

The oil optimists say as prices increase, supply will increase to meet the new demand, at least for the next 20-30 years. Right at this very moment, $65/bbl oil is making EVERYONE scramble to see how they can take advantage of this new price. Sure, there's short term speculators going for a hopeful quick profit, but there's others looking at the bigger picture of energy needs in the coming years and decades. Those people are the ones who theoretically will create the "production" that can keep our demand rising for another 20-30 years. AND the predictable profits from higher prices equally is making a scramble to see what alternatives can be found to replace our dependence upon oil. The optimists are sure we'll relatively smoothly transition to renewable energy that can scale to our projected ever higher needs in the indefinite future.

I'm not such an optimist. I see a declining nonrenewable resource that is ultimately irreplaceable in the scales of consumption compared to all alternatives. I expect higher prices to continue to the point that limits must be placed on consumption. I mean both individual decision and government decision.

Individuals will response to higher prices and learn to live without some of the "standard of living" expectaions that have grown too far. Governments will respond to foreign energy resources as undependable and seek methods to reduce overall consumption.

Conservation, as I've said, offers little in the bigger picture to cut into production, but it does offer us a little more breathing room.

Individual transporation accounts for 40% of our oil consumption, and there's surely a 50% drop possible under the most extreme conditions. The U.S. consumes about 21mbbl/day (25% of the world), and so that's about 8mbbl/day for personal travel, and so the U.S. could cut our consumption there by 4mbbl/day with some pain.

It is interesting to project such numbers. Of course an average 50% decline might seem "fair" if everyone did it. On the other hand, perhaps 50% of the people will find themselves unable to decrease consumption at all, or so they'll claim. That means the other 50% would have to cut 100% of their consumption to offset the stubborn half. That's clearly nonsense, so probably my 50% drop is wildly optimistic. More fair to say that 50% of people could cut consumption by an average of 50%, for a total drop of 25%, or 2mbbl/day. (and overall U.S. 10% drop)

Overall people who can cut consumption are rewarded by cutting their costs, but this is still "unfair" in the sense that conservation merely reduces prices which discourages others from conservating as well.

That's why I think fuel taxes are an ideal tool. Say the U.S. decides to reduce our consumption from 21mbbl/day to 15mbbl/day by 2008. On a free market, the more we conserve, the better chance prices will drop and reverse the conservation. However a floating tax could be created which rises and falls based on consumption. If world prices fall, the tax naturally increases to compensate. If consumption doesn't decline as desired, higher prices will force reduced consumption.

The other approach is consumption vouchers. Imagine every american adult (by SSN) was given a monthly gasoline voucher. The voucher could be spent on fuel. It could be sold to others if unneeded. Then market prices are free to respond to the lower demand by lowering prices.

The voucher system is better in that prices are kept lower, and conservation is rewarded to individuals, but would also take much more bureaucracy and also opens new forgery.

Of course even if the reduced consumption worked, all we've accomplished is made more oil available for other countries to use. PLUS since we compete against them, our higher prices will hurt our economic viability.

So obviously a world system would be better. But that opens a myriad of issues, especially considering the voucher system. Why does the U.S get 25% share now? Would we suddenly have to PAY China for their unsued vouchers to keep our economy going? It is a reasonable result in the sense of the bigger picture, but not something a country would accept willingly.

It is interesting that OPEC cartel is illegal because it attempts to fix prices. The obvious answer is that we shouldn't given them the monopoly power in the first place by diversifying our fuels that can be produced internally. The idea that I can't be told I can't limit my production to keep prices higher is silly. I can see the argument that resources that keep our economy running are better kept out of "private" control. I don't "own" oil because I'm producing it. I am given the right to produce it in the name of the government.

Of course that opens a wider perspective in ownership. Does "humanity" own the world oil, or just the governments who happen to control the territory of it.

I guess the U.S. was considering invading middle eastern countries in the 1970's oil embargo against us. An amazing assertion of power. Similar perhaps to Japan attacking pearl Harbor in response to U.S. blocking access to oil.

Even liberal John Kerry is urging Bush to demand the Saudi's increase production to reduce prices. There's a great sense of entitlement here.

I really HOPE that oil producers, like Venesuela, do try asserting their soverty by boycotting U.S. oil sales. The sooner the U.S. share of the oil pie is reduced, the better I see the odds that we'll get through the coming oil crises.

Sad scary business all around. OPEC is only scared of damaging U.S. economy which leads their market.

Ideally also, every oil exporting nation should keep a 10% "space capacity" and criteria for accessing it. I see the criterion is perhaps $200/bbl oil. As long as prices are cheaper, I'd promote OPEC to cut into production.

How can conservation be "illegal"? There's no reason for oil exporters to WANT to meet all demands of importers. The sooner this reality becomes clear to all, the sooner we'll be in a place to deal with our dependency honestly.

Creative foreshadowing?

The Revolution?

I read an article today, commenting on oil hitting a record $65/bbl today, and continued surprise that higher gasoline prices haven't clearly dampened demand yet.

On Monday I was surprised to see $2.49/gallon gasoline (while riding my bicycle!)

***** From article...
Even so, Cordier said he has been stunned by the recent runup in oil and gasoline prices and the lack of any response from motorists. Gasoline prices averaged $2.37 a gallon nationwide last week, while demand picked up by 1.4 percent from a year ago, according to the government data.
Cordier said prices at the pump may continue climbing "until consumers are crying uncle, which they're not.''
*****

Is there any response but surrender here? (Surrender to whatever prices demand?) Certainly I'm betting there's lots of grumbling out there.

Is there an assumption that prices are temporary? Even the President (with the near useless new Energy Bill) admits it won't help prices in the short term.

Overall, it seems yet a critical mass has decided prices are still acceptable. Maybe there is some slow response - maybe demand would have gone up faster had prices been lower? Maybe "slowing growth" is all we can do for now.

Certainly I think (ignoring profit issues) that higher prices are necessary. I'd let the government gain in higher prices, but people are silly.

I also was just looking at excise taxes. Federal tax is $0.18/gallon, and Minnesota $0.22/gallon tax. I tried comparing states, but it is a little confusing since some charge sales tax, or other fees as well.

Overall looks like only about $0.40/gallon as taxes. When gasoline was $0.99/gallon, it was 40% tax. Now at $2.50/gallon, it's ~15% tax. Untaxes gasoline has risen from say $0.60/gallon to $2.10/gallon, while oil has risen from $15/bbl maybe to now $65/bbl.

Oil prices are 4 times higher, and gas prices between 3-4 times. I accept probably there's overall higher profits now, somewhere, if not everywhere.

If oil hits $100-$200/bbl (under a crisis spike), gasoline could jump a factor of 1.5 to 3 to maybe $3.50 to $7/gallon.

Some people think these are a fair price for the "value" of energy contained in gasoline.

I'm not sure extreme spikes really help "the message" of conservation.

I'm ready for $100/bbl oil - sustained price. Easy to say on my bicycle, but I have to buy things too, and so I'll pay more all around like everyone else.

Will $100/bbl oil (or $3-4 gasoline) send consumers into Revolution?

I don't think so alone, but I guess if it was tied also with high unemployment, bankruptsy, and a deep recession, who knows?

I think we're basically sheep on this. What are we going to do?!

People are powerless. I more fear "what our government" will do - like if Venesuela suddenly offered an oil embargo against us, or whatever.

As always, my biggest fear is circumstances will change in the reverse and prices will tank again, and people will stop thinking about their consumption and dependence.



I

We're not afraid!?

http://www.werenotafraid.com
*************

• We are not afraid to ride public transportation.
• We are not afraid to walk down a crowded street.
• We are not afraid of each other.
• We are not afraid to say that terrorism in any form is never the answer.
• We’re not afraid is an outlet for the global community to speak out against the acts of terror that have struck London, Madrid, New York, Baghdad, Bazra, Tikkut, Gaza, Tel-Aviv, Afghanistan, Bali, and against the atrocities occurring in cities around the world each and every day. It is a worldwide action for people not willing to be cowed by terrorism and fear mongering.
• The historical response to these types of attacks has been a show of deadly force; we believe that there is a better way. We refuse to respond to aggression and hatred in kind. Instead, we who are not afraid will continue to live our lives the best way we know how. We will work, we will play, we will laugh, we will live. We will not waste one moment, nor sacrifice one bit of our freedom, because of fear.
• We are not afraid.

*************

Overall I find myself very underwhelmed by this website. I suppose it is largely because I'm not personally afraid of terrorism affecting my life and surrounding. I suppose I'd have the same response to the statement in regards to rainfall.

On the other hand, getting bit by a dog in 1996 inspired my own sort of "I'm not afraid" fantasy response. I imagined going back to that yard with a baseball ball and knocking that dog out senseless, if not into pulp. Of course as soon as my fantasy superiority ran its course, I had no need to follow through. I only had to know I COULD if I wanted to. I could defeat ANY DOG ANY WHERE, naked if I'm forced, with nothin' more than my fingers if that's all I have. Sure, I could get mauled, but that dog will not come away stronger than me. (On the other hand, a bear, well, maybe I'm not so cocky.)

Overall I AM AFRAID, but not overly of terrorists. I admit if I lived in Israel or Iraq, I would likely be afraid. I would offer some sort of fantasy warrior mentality to not let my fear keep me from doing what needs doing however. So if "We're not afraid" means "We're not going to let our fear limit us", well, at least I understand.

ON THE OTHER HAND, I guess I do have my own fears to confront. I don't fear physical harm, but I do fear for an uncertain future that I don't believe we are collectively prepared for.

Since the future doesn't yet exist, it is a much more scary enemy than a dog or a suicide bomber.

The WORST thing to think about when you fear for your own future, is you realize that the worst you can imagine is already being lived by others less forunate right now.

I think the website is harmless, but an underwhelming response to terrorism.

On a path of becoming more energy independent

I got an email from the Minnesota Republicans (GOP NEWSLINE August 4, 2005)

It contained the statement:
*****
President Bush and Congressional Republicans Get the Job Done
This week, President Bush marked major progress for the nation by passing several important pieces of legislation.
...
* Energy Policy Act, which will set us on a path of becoming more energy independent and provide a comprehensive energy policy.
...
*****

Unfortunately the email offered no other details.

I'm rather curious what aspect of the "Energy Policy Act" is supposed to help us be more energy independent. I can see two interpretations. Perhaps we're becoming LESS energy independent by say 4% per year, and now we're only becoming LESS energy independent by 3.9% per year. That might be a realistic interpretation.

The reality is the U.S. can NOT be more energy independent (imported oil) until we pass laws that can actually reduce our consumption.

And its not just oil going in the wrong direction. A key aspect of our future energy policy relies on importing LNG (Liquid natural gas) which demonstrates again our failure to conserve.

Earth Impact 2036?

A fun article online on a near-earth asteroid, heading close in 2029 and possibly an impact by 2036.
http://www.csmonitor.com/2005/0726/p01s04-stss.html?s=u July 26, 2005,
An asteroid, headed our way
http://www.cbsnews.com/stories/2005/07/26/tech/main711607.shtml Asteroid May Buzz Earth In 2029
ALSO from Wikipedia: 99942 Apophis
http://en.wikipedia.org/wiki/2004_MN4

I have my own astronomy program I wrote, and I included data for a fairly large set of asteroids. Here's a view perpendicular to the plane of the earth's orbit for today, August 2 of the inner solar system.

Above, I only include the largest (and some closest) some 300 asteroids, most between Mars and Jupiter, but a few in erratic orbits that can cross the Earth's orbit.

My orbits are very low-accuracy - using fixed orbital parameters, while the gravitational effects of the major planets, primarily Jupiter cause their orbits to meander over time. Resonance effects tend to hold asteroids near their current orbits, but a fraction of them are in very unstable orbits that can change quickly (over decades). Only very accurate measurements and orbit simulations can predict their paths many years ahead, and the smallest errors can lead to large deviations of expected paths.

What strikes my imagination first of all is that we have the capability of seeing the most dangerous asteroids, and second that we can, with care, accurately predict possible collisions with the earth, and lastly the possibility that we could use our predictive ability and given an expected crash, possibly use explosions to deflect their paths. The same uncertainty of minute differences in orbits that cause large differences later allow us to predict WHICH small deviations we might apply now, to cause the desired changes later.

This is a real "God's Billiards" game. Andwe have the power to play. It's a high responsibility game. Beyond predicting a collision with the earth, we might predict an actual likely location for collision on the surface. If we "let" an asteroid hit the earth "naturally", then it is a "Natural disaster". However if we deflect it at all, we're taking responsibility for the results. A collision might change from a "safe" one in an open desert to a disasterous one over a wide ocean causing wide-spread sunami (sp?) damages. Or a would-have-missed could be accidentally deflected into a direct hit, with a little bad knowledge.

The most interesting idea from the articles for me is the idea of placing a radio beacon on the asteroid to aid our ability to accurately determine it's position and velocity, and more accurately compute the threat of a collision.

Asteroids like Apophis are too small to easily see in telescopes until they are close. It makes sense to me that all "Near Earth Objects" perhaps would benefit from solar powered radio beacons that more easily allow us to track them.

Well, it's an expensive project even for a single asteroid, much less any sort of "all", and even if we could monitor all the "regular" threats, perhaps irregular ones like comets coming from the outer solar system may have as much long term risk.

Mostly I just like the idea of the radio beacons, like light houses in reverse. It is somehow a romantic idea to "claim" bodies of the solar sytem with a human presence, even just a radio beacon.

Overall, in the sense of rick-analysis, I'm betting there's much more important risks to consider, including our unsustainable culture of fossil fuels - that collision with energy depletion is a "sure thing" within 50 years.

Still, the night sky is magical, and to claim other worlds is also a claim on that magic.

If we are going to "waste" money on space exploration, I'll vote every time for the unmanned missions into the indefinite future.