Thursday, February 27, 2014

Frustrating Mess



It can't happen here
-Frank Zappa

When they knock down your front door
how you gunna come
with your hands on your head
or on the trigger of your gun?
- The Clash

But if you go carrying pictures of Chairman Mao
You ain't gunna make it with anyone anyhow
 - John Lennon

Greetings

      These are frustrating times.  Politics as usual seems dead locked.  Special interests appear to be the only ones getting ahead.  Meanwhile, we slide slowly in a slow motion ecocide.   

     This frustration can lead to reaching for straws in unlikely places.   Some times it seems that  "It can't get any worse" , But generally it can.

      So, I offer you two illustrations.,  The first is the views of Frank Rotering , who argues that to save the biosphere, capitalism must be replaced a centrally planned economy.  Second a plausible scenario from John Michael Greer, based on a recognizable historical analogue, where, in during confusing and painful times, a populace elected  a party promising sweeping reforms, and ends up with more than they bargained for.  (see below). 

       Rotering was recently interviewed at the Extra Environmentalist.  He points to the destruction of various biological system, and suggest that what is needed is -  less -  a contraction of economic activity to a level which would provide for peoples needs, rather than their desires (which are after all, infinite.)  

So far so good.     
  
      He recognizes that any move to such a system would be opposed by the powers that be,  and therefore concludes that it could not be achieved gradually through reforming the system.  To achieve this goal would require a revolution.  

Yes, the "R" word.

   Here's the argument from his website.    

  [But first, this caveat.   I want to state for the record ( Hello NSA!) that neither I, nor Peakster Enterprises, nor any affiliated groups, nor the recipients of these missives, endorse or support illegal activity. ]  

OK back to Rotering, who says

   To cut a long story short, I determined that resolving the ecological crisis is a revolutionary task.  Although a detailed examination of the required revolutions is beyond the scope of this article, I feel it is important to address the main objections that are typically raised against this approach:
1. Social change must be nonviolent.  The doctrine of nonviolence is based largely on distorted historical accounts of Gandhi’s anti-colonial tactics and Martin Luther King’s civil rights struggles.  It also ignores the fact that violence is pervasively used by global capitalism to maintain its dominant position, and that renouncing violence on principle is an implicit capitulation to this oppressive order.  For more on this important topic, I recommend How Nonviolence Protects the State, a slim but incisive book by US activist Peter Gelderloos.
2. Revolution is too slow; we must stick to reforms.  This is a false choice.  As historical experience has repeatedly shown, a revolutionary threat is the most effective way to achieve meaningful reforms.  The standard example is Roosevelt’s New Deal, which was forced on the US ruling class by the USSR-inspired revolutionary left.  Naomi Klein makes this point in Shock Doctrine (p. 301).
3. Revolution is too disruptive socially.  Revolution is indeed disruptive, but the continuation of capitalist rule, as Bolivian President Evo Morales has noted, will inevitably result in the biosphere’s destruction.   The stark choice that humankind now faces is between social upheaval and ecological demise.
4. Revolution is unrealistic because the enemy is too powerful.  This betrays a misunderstanding of the revolutionary process.  A ruling class is never defeated at the peak of its legitimacy and power.  The main task of a revolutionary movement is to undermine this strength, to weaken the resolve and silence the guns of ruling class defenders, to spawn a profusion of Bradley Mannings and Edward Snowdens.  If this objection were consistently heeded, revolutions would never occur, thereby entrenching the prevailing order and condemning humankind to historical stasis.
To conclude, I understand that a revolutionary posture is profoundly challenging for even the most dedicated progressives.  I can only respond that this choice is not capricious, but follows inescapably from humankind’s current predicament.  If we are truly serious about solving global warming and salvaging the biosphere we will adopt the contractionary perspective and grasp the nettle of revolutionary action.
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Below Greer's third essay on fascism, and the potential for tyranny in the US

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Fascism and the Future, Part Three: Weimar America


The discussion on fascism that’s taken up the last two weekly essays here on The Archdruid Report, and will finish up in this week’s post, has gone in directions that will very likely have surprised and dismayed many of my readers.  Some of you, in fact, may even be jumping up and down by this point shouting, “Okay, but what about fascism? We’ve heard more than enough about Depression-era European dictators in funny uniforms, and that’s all very well and good, but what about realfascism, the kind we have in America today?”
 
If this is what’s going through your head just now, dear reader, you’re in interesting company.  It’s a curious detail that in the last years of the Weimar Republic, a large number of avant-garde intellectuals and cultural figures were convinced that they already lived in a fascist country. They pointed, as many Americans point today, to the blatant influence of big business on the political process, to civil rights violations perpetrated by the administration in power or by state and local governments, and to the other abuses of power  common to any centralized political system, and they insisted that this amounted to fascism, since their concept of fascism—like the one standard in today’s America—assumed as a matter of course that fascism must by definition defend and support the economic and political status quo.

In point of fact, as Walter Laqueur showed in his capable surveyWeimar: A Cultural History, denouncing the Weimar Republic as a fascist regime was quite the lively industry in Germany in the very late 1920s and early 1930s. Unfortunately for those who made this claim, history has a wicked sense of humor.  A good many of the people who liked to insist that Weimar Germany was a fascist state got to find out—in many cases, at the cost of their lives—that there really is a difference between a troubled, dysfunctional, and failing representative democracy and a totalitarian state, and that a movement that promises to overturn a broken status quo, and succeeds in doing so, is perfectly capable of making things much, much worse.

It’s entirely possible that we could end up on the receiving end of a similar dose of history’s gallows humor. To an embarrassing degree, after all, political thought in modern America has degenerated into the kind of reflexive venting of rage George Orwell parodied in 1984 in the Two Minutes Hate. Instead of pouring out their hatred at a cinematic image of marching Eurasian soldiers juxtaposed with the sniveling face of Goldstein, the traitorous leader of the Brotherhood, the inhabitants of our contemporary Oceania have their choice of options neatly stapled to the insides of their brains. For Democrats, the standard target until recently was an image of George W. Bush dressed up as Heinrich Himmler, lighting a bonfire using the Constitution as tinder and then tossing endangered species into the flames; for Republicans right now, it’s usually a picture of Barack Obama dressed up as Ho Chi Minh, having sex with their daughters and then walking off with their gun collections. Either way, the effect is the same.

I wish I were joking. I know people who, during Dubya’s presidency, were incapable of passing a picture of the man without screaming obscenities at it, and I know other people who have the identical kneejerk reaction these days to pictures of the White House’s current inmate.  I’ve commented here before how our political demonology stands in the way of any response to the converging crises of our time. The same sort of denunciatory frenzy was all the rage, in any sense of that word you care to choose, in Germany during the Weimar Republic—and its most important consequence was that it blinded far too many people to the difference between ordinary political dysfunction and the far grimmer realities that were waiting in the wings.

To explore the way that unfolded, let’s engage in a little thought experiment. Imagine, then, that sometime this spring, when you visit some outdoor public place, you encounter a half dozen young people dressed identically in bright green T-shirts, surplus black BDU trousers, and army-style boots.  They’re clean-cut, bright, and enthusiastic, and they want to interest you in a new political movement called the American Peoples Party. You’re not interested, and walk on by.

A couple of months later you run across another dozen or so of them, just as bright and clean and enthusiastic as the first bunch.  Now the movement is called the National Progressive American Peoples Party, NPAPP for short, and it’s got a twenty-five-point program focused on the troubled economy. You take a flyer, mostly because the young person who hands it to you is kind of cute. The twenty-five points don’t seem especially original, but they make more sense than what either Obama or the Republicans are offering. What’s more, the flyer says that the economy’s a mess and peak oil and climate change are real problem that aren’t going away, and this impresses you.

Over the months to come you see more and more of them, handing out flyers, going door to door to invite people to local caucus meetings, and doing all the other things that political parties used to do back when they were serious about grassroots organizing. A news website you follow shows a picture of the party’s chairman, a man named Fred Halliot;* he’s an earnest-looking guy in his thirties, an Army vet who did three tours in Afghanistan and earned a Silver Star for courage under fire. You glance at his face and then go look at something more interesting.

(*Yes, it’s an anagram. Work it out yourself.)

Meanwhile, the economy’s getting worse in the same slow uneven way it’s been doing for years. Two of your friends lose their jobs, and the price of gasoline spikes up to $5.69 a gallon, plunges, and finds a new stable point again well above $4. Obama insists that the recovery is already here and people just need to be patient and wait for prosperity to get to them. The Republicans insist that the only reason the economy hasn’t recovered yet is that the rich still have to pay taxes. The media are full of cheery stories about how the 2014 holiday season is going to be so big a hit that stores may run out of toys and electronic gewgaws to sell; there are record crowds on Black Friday, or that’s what the TV says, but nobody you know has the spare money to buy much this year. Not until midway through January 2015 does the media admit that the shopping season was a disaster and that two big-box chains have just gone broke.

Through all this, the new party keeps building momentum. As spring comes, Halliot begins a nationwide speaking tour. He travels in a school bus painted green and black, the NPAPP colors, and a Celtic tree-of-life symbol, the party’s new emblem.  The bus goes from town to town, and the crowds start to build. A handful of media pundits start talking about Halliot and the NPPAP, making wistful noises about how nice it is to see young idealists in politics again; a few others fling denunciations, though they don’t seem to have any clear sense what exactly they’re denouncing.  Both mainstream parties, as well as the Libertarians and the Greens, launch youth organizations with their own t-shirts and slogans, but their lack of anything approaching new ideas or credible responses to the economic mess make these efforts a waste of time.

The speaking tour ends in Washington DC with a huge rally, and things get out of hand. Exactly what happened is hard to tell afterwards, with wildly different stories coming from the feds, the mass media, the internet, and the NPAPP headquarters in St. Louis. The upshot, though, is that Halliot and two of his chief aides are arrested on federal conspiracy charges.  The trial is a media circus. Halliot gives an impassioned speech justifying his actions on the grounds that the nation and the world are in deep trouble, radical change is needed to keep things from getting much worse, and civil disobedience is justified for that reason.  He gets sentenced to four years in prison, and the other political parties breathe a huge collective sigh of relief, convinced that the NPAPP is a flash in the pan.

They’re wrong. The NPAPP weathers the crisis easily, and publicity from the trial gives Halliot and his party a major boost. Candidates from the new party enter races across the country in the 2016 elections, seizing much of the limelight from the frankly dreary presidential race between Hillary Clinton and Haley Barbour.  When the votes are counted, the new party has more than three hundred city and county positions, forty-three seats in state legislatures, and two seats in the House of Representatives. The major parties try every trick in the book to overturn the results of each race, and succeed mostly in making themselves look corrupt and scared.

Then Halliot gets released from prison, having served only nine months of his sentence.  (Word on the internet has it that the whole point of locking him up was to keep him out of the way during the election—but is that simply a NPAPP talking point?  Nobody’s sure.) It turns out that he put the time to good use, and has written a book, A Struggle for the Soul of America, which hits the bookstalls the same week President Barbour is inaugurated. You leaf through a copy at the public library; it’s not exactly a great work of literature, and it’s written in a folksy, rambling style you find irritating, but it’s full of the kind of political notions that Americans swap over beers and pizza: the kind, in other words, that no mainstream party will touch.

The book has an edge that wasn’t in NPAPP literature before Halliot’s prison term, though.  The government of the parties, he insists, must be replaced by a government of the people, guided by a new values consensus that goes beyond the broken politics of greed and special interests to do what has to be done to cope with the disintegrating economy, the challenge of peak oil, and the impacts of climate change. Time is short, he insists, and half measures aren’t enough to avoid catastrophe; a complete transformation of every aspect of American life, a Great Turning, is the only option left.  Edgy though his language and ideas have become, you note, he’s still the only person in national politics who takes the economic, energy, and climate crises seriously.

The next autumn, as if on cue, the economic troubles go into overdrive.  Petroleum prices spike again—you start commuting via public transit when the price of gasoline breaks $8 a gallon—and a big Wall Street investment bank that had huge derivative bets the other direction goes messily broke.  Attempts to get a bailout through Congress freeze up in a flurry of partisan bickering. Over the next two months, despite frantic efforts by the Barbour administration, the stock market plunges and the credit markets seize up.  Job losses snowball. Through the fall and winter, NPAPP people are everywhere, leafleting the crowds, staffing impromptu soup kitchens, marching in the streets. You would pay less attention, but by spring you’re out of a job, too.

The following years are a blur of grim headlines, hungry crowds at soup kitchens, and marching crowds in green and black. In the 2018 election,  there are rumors, never proved, of NPAPP squads keeping opposition voters away from the polls in critical districts.  One way or another, though, Halliot’s party seats six senators and 185 representatives in Congress, and takes control of the governments of a dozen states. The three-way split in the House makes it all but impossible to get anything done there, not that the Democrats or Republicans have any idea what to do, and the administration copies its last two predecessors by flailing and fumbling to no noticeable effect. One thing of importance does happen; to get NPAPP support to push a stopgap budget through the House in 2019, President Barbour is forced to grant a full federal pardon to Halliot, removing the last legal barrier to the latter’s presidential ambitions.

Fast forward to the 2020 elections, which are fought out bitterly in a flurry of marches, protests, beatings, riots, and charges and countercharges of vote fraud. When the dust has settled, it turns out that no party has a majority in the electoral college.  The election goes to the House, and since neither of the major parties is willing to vote for the other major party’s candidate, Halliot ends up winning by a whisker-thin majority on the forty-second ballot. He is inaugurated on a bitterly cold day, surrounded by NPAPP banners and greeted by marching files of party faithful in green and black.  He announces that he’s about to call a constitutional convention to replace the government of the parties with a government of the people, get the country back on its feet, and sweep away everything that stands in the way of the Great Turning that will lead America and the world to a bright new future. The crowd roars its approval.

Later that year, the crowds go wilder still when the old constitution is scrapped and the new one enacted. Those with old-fashioned ideas find some aspects of the new constitution objectionable, as it lacks such minor details as checks and balances, not to mention meaningful and enforceable guarantees of due process and civil rights.  The media doesn’t mention that, though, because the “new values consensus” is enforced by Party officials—the capital letter becomes standard usage very quickly—and those who criticized the new constitution too forcefully, well, let’s just say that nobody’s quite sure where they are now, and most people know better than to ask.

And you, dear reader? At what point along that trajectory would you have decided that for all its seeming promise, for all the youth and enthusiasm and earnestness that surround it, the National Socialist German Workers Party and the folksy, charismatic veteran who led it were likely to be worse—potentially much, much worse—than the weary, dreary, dysfunctional mess of a political system they were attempting to replace?  Or would you end up as part of the cheering crowds in that last scene?  You don’t have to tell me the answer, but in the silence of your own mind, take the time to think it through and face the question honestly.

What almost always gets forgotten about the fascist movements of Europe between the wars is just how much promise they seemed to hold, and how many people of good will saw them as the best hope of the future.  Their leaders were young—Hitler was 43 when he became chancellor of Germany, the same age as John F. Kennedy at his inauguration, and Mussolini was only 39 when he became prime minister of Italy—and most of the rank and file of both men’s followers were younger still. Hitler’s party, for example, had a huge success among German college students long before it had a mass following anywhere else. Both parties also drew to a very great extent on the avant-garde culture and popular ideas of their time. How many people even remember nowadays that before the Second World War, the swastika was seen as a pagan symbol of life, redolent of ancient roots and primal vitality, with much the same cultural ambience that the NPAPP’s Celtic tree-of-life emblem might have in America today?

The fascist movements of the 1920s and 1930s were thus closely attuned to the hopes and fears of the masses, far more so than either the mainstream parties or the established radical groups of their respective countries. Unlike the imagined “fascism” of modern radical rhetoric, they were an alternative to business as usual, an alternative that positioned itself squarely in the abandoned center of the political discourse of their eras.  In terms of that discourse, in the context of their own times and places, the talking points of the fascist parties weren’t anything like so extreme as they appear to most people nowadays—and we forget that at our deadly peril.

That’s the thing I tried to duplicate in the thought experiment above, by changing certain details of  German national socialism so I could give the National Progressive American Peoples Party a contemporary slant—one that that calls up the same reactions its earlier equivalent got in its own place and time. Antisemitism and overt militarism were socially acceptable in Germany between the wars; they aren’t socially acceptable in today’s United States, and so they won’t play a role in a neofascist movement of any importance in the American future. What will play such roles, of course, are the tropes and buzzwords that appeal to Americans today, and those may very well include the tropes and buzzwords that appeal most to you.

There’s a deeper issue I’ve tried to raise here, too.  It’s easy, comfortable, and (for the manufacturers and distributors of partisan pablum) highly profitable to approach every political conflict in the simplistic terms of good versus evil. The habit of seeing political strife in those terms becomes a reliable source of problems when the conflict in question is actually between the good and the perfect—that is, between a flawed but viable option that’s within reach, and a supposedly flawless one that isn’t. The hardest of all political choices, though, comes when the conflict lies between the bad and the much, much worse—as in the example just sketched out, between a crippled, dysfunctional, failing democratic system riddled with graft and abuses of power, on the one hand, and a shiny new tyranny on the other.

It may be that there are no easy answers to that conundrum. Unless Americans can find some way to step back from the obsessive partisan hatreds that bedevil our political life, though, it’s probably a safe bet that there will be no answers at all—not, quite possibly, until the long and ugly list of the world’s totalitarian regimes gets another entry, complete with the usual complement of prison camps and mass graves. As long as the word “fascism” retains its current status as a meaningless snarl word that’s normally flung at the status quo, certainly, that last possibility seems far more likely than any of the alternatives.

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Wednesday, February 26, 2014

These are not the droids you're looking for


Businessmen, they drink my wine
Plowmen dig my earth
None of them along the line
Know what any of it is worth
-Bob Dylan

Give me money
That's what I want
-The Beatles


Greetings


      What's it like to be in the oil biz at the end of the oil era?     For a while it was pretty nice.  When the price you get for your product rises from $20 to $100, how bad can it be?   Profits rose, stock value rose.  Investors were happy.  There was plenty of cash for new projects.   Ahhh....

      But that was then.   Now things look a little different.   Now its hard to make a buck.  What happened?

     I just watched an hour long video of Steve Kopits, who is an energy consultant, with Douglas Westwood. Their clients are oil service companies and hedge fund.  They want to know whats next  for oil.   He puts together an interesting picture of the last ten years, which is quite different from the spin we hear from BP and IEA.

       The message we get from the oil companies is pretty straight forward:  "Nothing to see here, move along".   There is no reason to get off oil.   High oil prices are not a problem, they are the solution - the create more supply.  My favorite is " peak demand".   The reason that the US oil consumption dropped, had nothing to do with oil prices.  People just changed their habits, like their hairstyles.  "Its those zany kids with their I phones.  They all moved to the city and are rising around on light rail!"    Or "they don't even like to move around, they just text each other, they move around in cyber space"

       That's a very soothing narrative.  And it means there is no reason to do anything differently.  No reason to invest in mass transit, or improved rail service. The suburbs will be fine.  No reason to expect further economic disruptions.

         Kopits pokes a few holes in that story.  And it is worth watching. One aspect that is interesting is what we used to call  "demand destruction".   Oil use in the US dropped a lot .   The question is,  who is no longer using the oil?  Gas usage  was only down by 4% and diesel was slightly up .  Most of the drop was industrial oil  , and heating oil.  (down 35%)  The fact is, we love our cars!  And we won't give them up, till they pry them from our cold dead hands!    Why?  As, Kopits points out - in this country if you don't drive, you don't work.
   
          So, what happens next?    

       Since conventional oil production peaking in 2005, oil companies have been spending wildly to keep conventional production on a plateau.    But, the cost of the next barrel has been rising steadily.  Unfortunately, the price they can charge has gotten stuck.   Everyone thought it would be about  $150 dollars by now.    But its stuck around $100.     And this is too low!
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       According to Kopits half of the companies need a price of $120 , and 1/4 need  $130.  But, investors are saying "Show me the money!   Don't invest in money losing projects.  Send us dividends.   Stock buy backs".    Shell had to borrow money to pay dividends.  (!!)   Other companies are selling assets to raise money.

      So, now  comes "capex compression" i. .e  spending less on developing new wells.   Shell investments down 20%, Hess down 30%.     And less investment leads to less production.   At some point conventional production falls off the plateau

     Note that the above discussion relates solely to conventional production.  As we are all aware, unconventional has its own problems.  see e.g.  Chesapeake to sell Oilfield Services?    


'Rapid well declines threaten to spoil that promise. The average flow from a shale gas well drops by about 50 percent to 75 percent in the first year, and up to 78 percent for oil, said Pete Stark, senior research director at IHS Inc.
"The decline rate is a potential show stopper after a while," said Stark, a geologist with almost six decades in the oil patch. "You just can’t keep up with it."
The industry has so far been able to live with the decline curve problem because operators have been able to scratch out better initial production in wells, Stark said. "If you don't have that improvement, then you get stuck after a while and have to drill more and more wells just to stay even," Stark said.

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Below a nice summary from Gail Tverberg.



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Beginning of the End? Oil Companies Cut Back on Spending

Steve Kopits recently gave a presentation explaining our current predicament: the cost of oil extraction has been rising rapidly (10.9% per year) but oil prices have been flat. Major oil companies are finding their profits squeezed, and have recently announced plans to sell off part of their assets in order to have funds to pay their dividends. Such an approach is likely to lead to an eventual drop in oil production. I have talked about similar points previously (here and here), but Kopits adds some additional perspectives which he has given me permission to share with my readers. I encourage readers to watch the original hour-long presentation at Columbia University, if they have the time.
Controversy: Does Oil Extraction Depend on “Supply Growth” or “Demand Growth”?
The first section of the presentation is devoted the connection of GDP Growth to Oil Supply Growth vs Oil Demand Growth. I omit a considerable part of this discussion in this write-up.
Economists and oil companies, when making their projections, nearly always make their projections depend on “Demand Growth”–the amount people and businesses want. This demand growth is seen to be rising indefinitely in the future. It has nothing to do with affordability or with whether the potential consumers actually have jobs to purchase the oil products.
Kopits presents the following list of assumptions of demand constrained forecasting. (IOC’s are “Independent Oil Companies” like Shell and Exxon Mobil, as contrasted with government owned companies that are prevalent among oil exporters.)
Kopits 10 Assumptions of Demand Constrained ForecastingThus, it is the demand constrained view of forecasting that gives rise to the view that OPEC (Organization of Petroleum Exporting Nations) has enormous leverage. The assumption is made that OPEC can add or subtract as much supply as much as it chooses. Kopits provides evidence that in fact the Demand view is no longer applicable today, so this whole story is wrong. 
One piece of evidence that the Demand Model is wrong is the fact that world crude oil (including lease condensate) production has been nearly flat since 2004, in a period when China and other growing Eastern economies have been trying to motorize. In comparison, there was a rise of 2.7% per year, when the West, with a similar population, was trying to motorize.
Kopits 20 Motorization and Oil in Historical Context
Kopits points out that China’s big source of oil supply has been US main street: China bids oil supply away from United States, to satisfy its needs. This is the way that markets have made oil available to China, when world supply is not rising much. It is part of the reason that oil prices have risen.
Another piece of evidence that the Demand Model is wrong relates to the assumption thatsocial tastes have simply changed, leading to a drop in US oil consumption. Kopits shows the following chart, indicating that the major reason that young people don’t have cars is because they don’t have full-time jobs.
Kopits 35 Driving and Employment
Kopits makes a comparison of the role of oil in GDP growth to the role of water in plant growth in the desert. Without oil, there is less GDP growth, just as without water, a desert is starved for the element it needs for plant growth. Lack of oil can considered a binding constraint on GDP growth. (Labor availability might be a constraint, but it wouldn’t be a binding constraint, because there are plenty of unemployed people who might work if demand ramped up.) When more oil is available at a slightly lower price, it is quickly absorbed by markets.
“Supply Growth” is the limiting factor in recent years, because the amount of extraction is rising only slowly due to geological constraints and the number of users has risen to the point that there is a shortage.
Experience of Major Oil Producing Companies
Kopits presents data showing how badly the big, publicly traded oil companies are doing. He looks at two pieces of information:
  • “Capex” – “Capital expenditures” – How much companies are spending on things like exploration, drilling, and making of new offshore oil platforms
  • “Crude oil production” -
A person would normally expect that crude oil production would rise as Capex rises, but Kopits shows that in fact since 2006, Capex has continued to rise, but crude oil production has fallen.
Kopits 40 Oil majors capex and production
The above information is worldwide, not just for the US.  At some point a person might expect companies to start getting frustrated–they are spending more and more, but not getting very far in extracting oil.
Kopits then shows another version of Capex history plus a forecast. (This time the amounts are labeled “Upstream,” so the expenditures are clearly on the exploration and drilling side, rather than related to refineries or pipelines.)
Kopits 41 Upstream Spend continues Strong
The amounts this time are for the industry as a whole, including “NOCs” which are government owned (national) oil companies as well as IOCs (Independent Oil Companies), both large and small. Kopits remarks that the forecasts shown were made only six months ago. When talking about the above slide Koptis says,
People in the industry thought, “Capex has been going up and up. It will continue to do very well. We have been on this trajectory forever, and we are just going to get more and more money out of this.”
Now why is that? The reason is that in a Demand constrained model for those of you who took economics–price equals marginal cost. Right? So if my costs are going up, the price will also go up. Right? That is a Demand constrained model. So if it costs me more to get oil, it is no big deal, the market will recognize that at some point, in a Demand constrained model.
Not in a Supply constrained model! In a Supply constrained model, the price goes up to a price that is very similar to the monopoly price, after which you really can’t raise it, because that marginal consumer would rather do with less than pay more. They will not recognize [pay] your marginal cost. In that model, you get to a price, and after that price, there is significant resistance from the consumer to moving up off of that price. That is the “Supply Constrained Price.” If your costs continue to come up underneath you, the consumer won’t recognize it.
The rapidly growing Capex forecast is implicitly a Demand constrained forecast. It says, sure Capex can go up to a trillion dollars a year. We can spend a trillion dollars a year looking for oil and gas. The global economy will accept that.
I quote this because I am not sure I have explained the situation exactly that way. I perhaps have said that demand had to be connected to what consumers could afford. Wages don’t magically go up by themselves (even though economists think they can).
According to Koptis, the cost of oil extraction has in recent years been rising at 10.9% per year since 1999. (CAGR means “compound annual growth rate”).
Kopits 43 Costs are Rising Fast
Oil prices have been flat at the same time. On the above chart, “E&P Capex per barrel” is pretty much the same type of expenses as shown on the previous two charts. E&P means Exploration and Production.
Kopits explains that the industry needs prices of over $100 barrel.
Kopits 45 Industry needs oil prices over 100
The version of the chart I have up is too small to read the names of individual companies.  If you would like a chart with bigger names, you can download the original presentation.
Historically, oil companies have used a discounted cash flow approach to figure out whether over the long term, pricing for a particular field will be profitable. Unfortunately, this “standard” approach has not been working well recently. Expenses have been escalating too rapidly, and there have been too many new drilling sites producing below expectation. What Kopits shows on the above slide is the prices that companies need on different basis–a “cash flow” basis–so that each year companies have enough money to pay today’s capital expenditures, plus today’s expenses, plus today’s dividends.
The reason for using the cash flow approach is because companies have found themselves coming up short: they find that after they have paid capital expenditures and other expenditures such as taxes, they don’t have enough money left to pay dividends, unless they borrow money or sell off assets. Oil companies need to pay dividends because pension plans and other buyers of oil company stocks expect to receive regular dividends in payment for their equity investment. The dividends are important to pension plans.
In the last bullet point on the slide, Kopits is telling us that on this basis, most US oil companies need a price of $130 barrel or more. I noticed that Brazil’s Petrobas needs  a price of over $150 barrel. (OSX, Brazil’s number two oil company, recently went bankrupt.)
In the slide below, Kopits shows how Shell oil is responding to the poor cash flow situation of the major oil companies, based on recent announcements.
Kopits 46 The Majors Respond
Basically, Shell is cutting back. It no longer is going to tell investors how much it plans to produce in the future. Instead, it will focus on generating cash flow, at least partly by selling off existing programs.
In fact, Kopits reports that all of the major oil companies are reporting divestment programs. Does selling assets really solve the oil companies’ problems? What the oil companies would really like to do is raise their prices, but they can’t do that, because they don’t set prices, the market does–and the prices aren’t high enough. And the oil companies really can’t cut costs. So instead, they sell assets to pay dividends, or perhaps just to get out of the business. But is this sustainable?
Kopits 48 conventional oil production
The above slide shows that conventional oil production peaked in 2005. The top line is total conventional oil  production (calculated as world oil production, less natural gas liquids, and less US shale and other unconventional, and less Canadian oil sands). To get his estimate of “Crude Oil Normal Decline,” Kopits uses the mirror image of the rise in conventional oil production prior to 2005. He also shows a separate item for the rise in oil production from Iraq since 2005. The yellow portion called “crude production forward” is then the top line, less the other two items. It has taken $2.5 trillion to add this new yellow block. Now this strategy has run its course (based on the bad results companies are reporting from recent drilling), so what will oil companies do now?
Kopits 49 -Oil Majors Cut Capital Expenditures
Above, Kopits shows evidence that many companies in recent months have been cutting back budgets. These are big reductions–billions and billions of dollars.
Kopits 50 Majors Capex
On the above chart, Kopits tries to estimate the shape of the downslope in capital expenditures. This chart isn’t for all companies. It excludes the smaller companies, and it excludes the National oil companies, so it is about one-third of the market. The gray horizontal line at the top is the industry consensus back in October. The other lines represent more recent estimates of how Capex is declining. The steepest decline is the forecast based on Hess’s announcement. The next steepest (the dotted gray line) is the forecast based on Shell’s cutback.  The cutback for the part of the market not shown in the chart is likely to be different.
Oil and Economic Growth
Kopits offers his view of how much efficiency can be gained in a given year, in the slide below:
Koptis 54 Oil Efficiency and GDP GrowthIn his view, the maximum sustainable increase in efficiency is 2.5% in non-recessions, but a more normal increase is 1% per year. At current oil supply growth levels, OECD GDP growth is capped at 1% to 2%. The effect of constrained oil supply is reducing OECD GDP growth by 1% to 2%.
Conclusions
Kopits 59 ConclusionsWhile demand constrained models dominate thinking, in fact, a supply constrained model is more appropriate in recent years.
We seem to be short of oil. Whenever there is extra oil on the market, it is quickly soaked up. Oil prices have not collapsed. No one is nervous about a price collapse.
China recently has been putting little price pressure on the market–its demand is recently less high. Kopits thinks China will eventually return to the market, and put price pressure on oil prices. Thus, oil price pressures are likely to return at some point.
Gail’s Observations
An obvious point, which I thought I heard when I listened to the presentation the first time, but didn’t hear the second time is, “Who will buy all of these assets on the market, and at what price?” China would seem to be a likely buyer, if one is to be found. But when several companies want to sell assets at the same time, a person wonders what prices will be available.
The new strategy is, in effect, maintaining dividends by returning part of capital. It is clearly not a very sustainable strategy.
It will take a while for these cut-backs in Capex expenditures to find their way through to oil output, but it could very well start in a year or two. This is disturbing.
What we are seeing now is a cutback in what companies consider “economically extractable oil”–something that isn’t exactly reported by companies. I expect that what is being sold off is mostly not “proven reserves.”
In this talk, it looks like lack of sufficient investment is poised to bring the system down.  That is basically the expected limit under Limits to Growth.
In theory, if an expansion of China’s oil demand does bring oil prices up again, it could in theory encourage an increase in drilling activity. But it is doubtful that economies could withstand the high prices–they are already having problems at current price levels, considering the continued need for Quantitative Easing to keep interest rates low.
A recent news item was titled, G20 Finance Ministers Agree to Lift Global Growth Target. According to that article,
Mr Hockey said reaching the goal would require increasing investment but that it could create “tens of millions of new jobs”.
The cutback in investment by oil companies is working precisely in the wrong direction. If these cutbacks act to cut future oil extraction, it will bring down growth further.

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Sunday, February 23, 2014

Tell it like it is



Tell the truth
Tell me, whose been fooling who?
-Derrik and the Dominos

I heard it through the grapevine 
and I'm just about to lose my mind. 
-Marvin Gaye


Greetings

    Heinberg really hits it out of the park in this one.  Lots of inconvenient truths here.    Watch out, or you might step on one!   Good stuff about cherry picking,  data and studies,  putting on blinders , etc.

   I'm going to focus on two aspects.   The first one is that we can't meet the carbon buget targets and have economic growth.  That's no surprise to this group.  But Heinberg's endorsement should give it a wider circulation.   Here's what he says:


 "What if climate change is an even worse problem than most of us assume, and there is no realistic way to deal seriously with it and still have economic growth?
 
In the real world of US politics, many Democrats would agree with the first part of the sentence, many Republicans with the second. Yet both parties would flee from endorsing the statement as a whole. Nevertheless, this seems to be where the data are driving us. Actual climate impacts have consistently outpaced the worst-case forecasts that the UN’s International Panel on Climate Change (IPCC) has issued during the past two decades. That means curbing carbon emissions is even more urgent than almost anyone previously thought. The math has changed. At this point, the rate of reduction in fossil fuel consumption required in order to avert catastrophic climate change may be higher, possibly much higher, than the realistically possible rate of replacement with energy from alternative sources. Climatologist Kevin Anderson of the UK-based Tyndall Centre figures that industrial nations need to cut carbon emissions by up to 10 percent per year to avert catastrophe, and that such a rapid reduction would be “incompatible with economic growth.” What if Anderson is right?"  (emphasis added)

       That's not news around here.   But, it goes a long way in explaining why our government's policy is "all of the above"  and not "stay within the carbon budget"

        But, perhaps its useful to look a little closer.    No economic growth means, lower wages, lost jobs, less tax revenue.   Assuming that job, wages and benefits are roughly proportional to GDP, that means 10% less jobs wages, and benefits.       Whose wages, whose jobs, whose programs get cut?     Jobs, at universities, governments, NGO's?    Cuts in our hard won pension benefits?   Probably not, at least initially.   (  but see e.g Detroit pensions cut 10-34%   )

     Unless there is some incredible change in the way things are distributed in this country, the folks who will loose the jobs, wages, and benefits will by the (former) middle class, and proletarians.   Here's a stat from Forbes  (!) "Roughly one in three people born into middle class-households, those between the 30th and 70th percentiles of income, now fall out of that status as adults." 

 We've all seen the graphs:

Income_inequality_saez_piketty_marketwatch


 (Perhaps the carbon tax can be structured to accomplish a redistribution of income significant enough to counter balance this effect.   As far as I can tell it is not currently designed to do so - .e.g. carbontax.org " The overall effect of a carbon tax-shift could be equitable and perhaps even “progressive” (benefiting lower-earning households).  "   In order to address what Anderson described - a 10% reduction in GNP - would require significant progressivity.)

  

             Heinberg also makes a very interesting observation about substitution of "clean green" energy for fossil fuels.    There is a lot of talk about how we can do a great big build out of solar and wind and have "100% renewable power by 2030"   That sounds really good to me .    Heinberg pours a little  cold water on whether that can really be accomplished.   But he also addresses the carbon implications of such an endeavor.   Rebuilding the energy infrastructure would of course be an enormous undertaking.   The manufacture and installation  of all those turbines, and solar facilities, would create a tremendous carbon burp, during the 25 year build out period..   So, to keep the us under the carbon budget,  we would need to use less  fossil fuels for other purposes.      


      Heinberg says:


    
"The problem of transitioning quickly away from fossil fuels while maintaining economic growth is exacerbated by the unique characteristics of different energy sources.
 
Here’s just one example of the difficulty of replacing oil while maintaining economic growth. Oil just happens to be the perfect transport fuel: it stores a lot of energy per unit of weight and volume. Electric batteries can’t match its performance. Plug-in cars exist, of course (less than one percent of new cars sold this year in the US will be plug-in electrics), but batteries cannot propel airliners or long-haul, 18-wheel truck rigs. Yet the trucking and airline industries just happen to be significant components of our economy; can we abandon or significantly downsize them and grow the economy as we do so?
 
What about non-transport replacements for fossil fuels? Well, both nuclear power stations and renewable energy systems have high up-front investment costs. If you factor in all the financial and energy costs (something the solar, wind, and nuclear industries are reluctant to do), their payback time is often measured in decades. Thus there seems to be no realistic way to bootstrap the energy transition (for example, by using the power from solar panels to build more solar panels) while continuing to provide enough energy to keep the rest of the economy expanding. In effect, to maintain growth, the energy transition would have to be subsidized by fossil fuels—which would largely defeat the purpose of the exercise."  (emphasis added)"


So which US politician will be the first to propose less growth?    How about rotating brown outs to offset the carbon cost of wind turbines?    



------------------------------------------------------

The Purposely Confusing World of Energy Politics

by Richard Heinberg, originally published by Richard Heinberg's Museletter  | FEB 11, 2014
Life often presents us with paradoxes, but seldom so blatant or consequential as the following. Read this sentence slowly: Today it is especially difficult for most people to understand our perilous global energy situation, preciselybecause it has never been more important to do so. Got that? No? Okay, let me explain. I must begin by briefly retracing developments in a seemingly unrelated field—climate science.
Once upon a time, the idea that Earth’s climate could be changing due to human-caused carbon dioxide emissions was just a lonely, unpopular scientific hypothesis. Through years that stretched to decades, researchers patiently gathered troves of evidence to test that hypothesis. The great majority of evidence collected tended to confirm the notion that rising atmospheric carbon dioxide (and other greenhouse gas) levels raise average global temperatures and provoke an increase in extreme weather events. Nearly all climate scientists were gradually persuaded of the correctness of the global warming hypothesis.
 
But a funny thing happened along the way. Clearly, if the climate is changing rapidly and dramatically as a result of human action, and if climate change (of the scale and speed that’s anticipated) is likely to undermine ecosystems and economies, then it stands to reason that humans should stop emitting so much CO2. In practical effect, this would mean dramatically reducing our burning of fossil fuels—the main drivers of economic growth since the beginning of the Industrial Revolution.
 
Some business-friendly folks with political connections soon became alarmed at both the policy implications of—and the likely short-term economic fallout from—the way climate science was developing, and decided to do everything they could to question, denigrate, and deny the climate change hypothesis. Their effort succeeded: belief in climate change now aligns fairly closely with political affiliation. Most Democratic elected officials agree that the issue is real and important, and most of their Republican counterparts are skeptical. Lacking bipartisan support, legislative climate policy languished.
 
From a policy standpoint, climate change is effectively an energy issue, since reducing carbon emissions will require a nearly complete revamping of our energy systems. Energy is, by definition, humanity’s most basic source of power, and since politics is a contest over power (albeit social power), it should not be surprising that energy is politically contested. A politician’s most basic tools are power and persuasion, and the ability to frame issues. And the tactics of political argument inevitably range well beyond logic and critical thinking. Therefore politicians can and often do make it harder for people to understand energy issues than would be the case if accurate, unbiased information were freely available.
 
So here is the reason for the paradox stated in the first paragraph: As energy issues become more critically important to society’s economic and ecological survival, they become more politically contested; and as a result, they tend to become obscured by a fog of exaggeration, half-truth, omission, and outright prevarication.
 
How does one cut through this fog to gain a more accurate view of what’s happening in our society’s vital energy supply-and-support systems? It’s helpful to start by understanding the positions and motives of the political actors. For the sake of argument, I will caricature two political positions. Let’s personify them as Politician A and Politician B.
 
Politician A has for many years sided with big business, and specifically with the fossil fuel industry in all energy disputes. She sees coal, oil, and natural gas as gifts of nature to be used by humanity to produce as much wealth as possible, as quickly as possible. She asserts there are sufficient supplies of these fuels to meet the needs of future generations, even if we use them at rapidly increasing rates. When coal, oil, and gas do eventually start to run out, Politician A says we can always turn to nuclear energy. In her view, the harvesting and burning of fossil fuels can be accomplished with few incidental environmental problems, and fossil fuel companies can be trusted to use the safest methods available. And if Earth’s climate is indeed changing, she says, this is not due to the burning of fossil fuels; therefore, policies meant to cut fossil fuel consumption are unnecessary and economically damaging. Finally, she says renewable energy sources should not be subsidized by government, but should stand or fall according to their own economic merits.
 
Politician B regards oil, coal, and natural gas as polluting substances, and society’s addiction to them is shameful. He thinks oil prices are high because petroleum companies gouge their customers; nuclear energy is too dangerous to contemplate; and renewable energy sources are benign (with supplies of sunlight and wind vastly exceeding our energy needs). To hear him tell it, the only reason solar and wind still supply such a small percentage of our total energy is that fossil fuel companies are politically powerful, benefiting from generous, often hidden, government subsidies. Government should cut those subsidies and support renewable energy instead. He believes climate change is a serious problem, and to mitigate it we should put a price on carbon emissions. If we do, Politician B says, renewable energy industries will grow rapidly, creating jobs and boosting the economy.
 
Who is right? Well, this should be easy to determine. Just ignore the foaming rhetoric and focus on research findings. But in reality that’s not easy at all, because research is itself often politicized. Studies can be designed from the outset to give results that are friendly to the preconceptions and prejudices of one partisan group or another.
 
For example, there are studies that appear to show that the oil and natural gas production technique known as hydrofracturing (or “fracking”) is safe for the environment. With research in hand, industry representatives calmly inform us that there have been no confirmed instances of fracking fluids contaminating water tables. The implication: environmentalists who complain about the dangers of fracking simply don’t know what they’re talking about. However, there are indeed many documented instances of water pollution associated with fracking, though technically most of these have resulted from the improper disposal of wastewater produced once fracking per se is finished, rather than from the hydrofracturing process itself. Further, industry-funded studies of fracking typically focus on sites where best practices are in place and equipment is working as designed—the ideal scenario. In the messy real world, well casings sometimes fail, operators cut corners, and equipment occasionally malfunctions.
 
For their part, environmentalists point to peer-reviewed studies showing air, water, and human health problems associated with actual (far from ideal) fracking operations.
 
So, depending on your prior beliefs, you can often choose research findings to support them—even if the studies you are citing are actually highly misleading.
 
Renewable energy is just as contentious. Mark Jacobson, professor of environmental engineering at Stanford University, has co-authored a series of reports and scientific papers arguing that solar, wind, and hydropower could provide 100 percent of world energy by 2030. Clearly, Jacobson’s work supports Politician B’s political narrative by showing that the climate problem can be solved with little or no economic sacrifice. If Jacobson is right, then it is only the fossil fuel companies and their supporters that stand in the way of a solution to our environmental (and economic) problems. The Sierra Club and prominent Hollywood stars have latched onto Jacobson’s work and promote it enthusiastically.
 
However, Jacobson’s publications have provoked thoughtful criticism, some of it from supporters of renewable energy, who argue that his “100 percent renewables by 2030” scenario ignores hidden costs, land use and environmental problems, and grid limits (see herehere, and here. Jacobson has replied to his critics, well, energetically (here and here).
 
At the other end of the opinion spectrum on renewable energy is Gail Tverberg, an actuary by training and profession (and no shill for the fossil fuel industry), whose analysis suggests that the more solar and wind generating capacity we build, the worse off we are from an economic point of view. Her conclusion flatly contradicts that of this report, which aims to show that the more renewables we build, the more money we’ll save. Ecologist Charles Hall has determined that the ratio of energy returned to energy invested in capturing solar energy with photovoltaic (PV) panels is too low to support an industrial economy. Meanwhile the solar industry claims that PV can provide all of society’s power needsGlobal wind capacity may have been seriously over-estimatedBut then again, maybe not .
 
In sum, if you’re looking for quick and simple answers to questions about how much renewables can do for us, at what price, and over what time frame, forget it! These questions are far from being settled.
 
There’s a saying: For every Ph.D., there is an equal and opposite Ph.D. Does this mean science is useless, and objective reality is whatever you want it to be? Of course not. However, politics and cultural bias can and do muddy the process and results of scientific research.
 
All of this is inevitable; it’s human nature. We’ll sort through the confusion, given time and the hard knocks that inevitably come when preconceptions veer too far from the facts. However, if the more worrisome implications of climate science are right, we may not have a lot of time for sorting, and our knocks may be very hard indeed.
 
*          *          *
 
Here’s a corollary to my thesis: Political prejudices tend to blind us to facts that fail to fit any conventional political agendas. All political narratives need a villain and a (potential) happy ending. While Politicians B and A might point to different villains (oil companies on one hand, government bureaucrats and regulators on the other), they both envision the same happy ending: economic growth, though it is to be achieved by contrasting means. If a fact doesn’t fit one of these two narratives, the offended politician tends to ignore it (or attempt to deny it). If it doesn’t fit either narrative, nearly everyone ignores it.
 
Here’s a fact that apparently fails to comfortably fit into either political narrative:The energy and financial returns on fossil fuel extraction are declining—fast. The top five oil majors (ExxonMobil, BP, Shell, Chevron, and Total) have seen their aggregate production fall by over 25 percent over the past 12 years—but it’s not for lack of effort. Drilling rates have doubled. Rates of capital investment in exploration and production have likewise doubled. Oil prices have quadrupled. Yet actual global rates of production for regular crude oil have flattened, and all new production has come from expensive unconventional sources such as tar sands, tight oil, and deepwater oil. The fossil fuel industry hates to admit to facts that investors find scary—especially now, as the industry needs investors to pony up ever-larger bets to pay for ever-more-extreme production projects.
 
 
In the past few years, high oil prices have provided the incentive for small, highly leveraged, and risk-friendly companies to go after some of the last, worst oil and gas production prospects in North America—formations known to geologists as “source rocks,” which require operators to use horizontal drilling and fracking technology to free up trapped hydrocarbons. The energy returned on energy invested in producing shale gas and tight oil from these formations is minimal.While US oil and gas production rates have temporarily spiked, all signs indicate that this will be a brief boom that will not change the overall situation significantly: society is reaching the point of diminishing returns with regard to the economic benefits of fossil fuel extraction.
 
And what about our imaginary politicians? Politician A wouldn’t want to talk about any of this for fairly obvious reasons. But, strangely, Politician B likely would avoid the subject too: while he might portray the petroleum industry as an ogre, his narrative requires it to be a powerful one. Also, he probably doesn’t like to think that gasoline prices might be high due to oil depletion rather than simply the greed of the petroleum barons. Motives can be complicated; perhaps both feel the patriotic urge to cheer domestic energy production, regardless of its source and in spite of evidence of declining returns on investment. Perhaps both understand that declining energy returns imply really bad news for the economy, regardless which party is in power. In any case, mum’s the word.
 
Some facts seem to fit one narrative or the other but, when combined, point to a reality that undermines both narratives. What if climate change is an even worse problem than most of us assume, and there is no realistic way to deal seriously with it and still have economic growth?
 
In the real world of US politics, many Democrats would agree with the first part of the sentence, many Republicans with the second. Yet both parties would flee from endorsing the statement as a whole. Nevertheless, this seems to be where the data are driving us. Actual climate impacts have consistently outpaced the worst-case forecasts that the UN’s International Panel on Climate Change (IPCC) has issued during the past two decades. That means curbing carbon emissions is even more urgent than almost anyone previously thought. The math has changed. At this point, the rate of reduction in fossil fuel consumption required in order to avert catastrophic climate change may be higher, possibly much higher, than the realistically possible rate of replacement with energy from alternative sources. Climatologist Kevin Anderson of the UK-based Tyndall Centre figures that industrial nations need to cut carbon emissions by up to 10 percent per year to avert catastrophe, and that such a rapid reduction would be “incompatible with economic growth.” What if Anderson is right?
 
The problem of transitioning quickly away from fossil fuels while maintaining economic growth is exacerbated by the unique characteristics of different energy sources.
 
Here’s just one example of the difficulty of replacing oil while maintaining economic growth. Oil just happens to be the perfect transport fuel: it stores a lot of energy per unit of weight and volume. Electric batteries can’t match its performance. Plug-in cars exist, of course (less than one percent of new cars sold this year in the US will be plug-in electrics), but batteries cannot propel airliners or long-haul, 18-wheel truck rigs. Yet the trucking and airline industries just happen to be significant components of our economy; can we abandon or significantly downsize them and grow the economy as we do so?
 
What about non-transport replacements for fossil fuels? Well, both nuclear power stations and renewable energy systems have high up-front investment costs. If you factor in all the financial and energy costs (something the solar, wind, and nuclear industries are reluctant to do), their payback time is often measured in decades. Thus there seems to be no realistic way to bootstrap the energy transition (for example, by using the power from solar panels to build more solar panels) while continuing to provide enough energy to keep the rest of the economy expanding. In effect, to maintain growth, the energy transition would have to be subsidized by fossil fuels—which would largely defeat the purpose of the exercise.
 
Business-friendly politicians seem to intuitively get much of this, and this knowledge helps fuel their continued infatuation with oil, coal, and natural gas—despite the increasing economic problems (even if we disregard the environmental problems) with these fuels. But these folks’ way of dealing with this conundrum is simply to deny that climate change is a real issue. That strategy may work for their supporters in the fossil fuel industries, but it does nothing to avert the worsening real-world crises of extreme temperature events, droughts, floods, and storms—and their knock-on impacts on agriculture, economies, and governments.
 
So those on the left may be correct in saying that climate change is the equivalent of a civilization-killing asteroid, while those on the right may be correct in thinking that policies designed to shrink carbon emissions will shrink the economy as well. Everybody gets to be correct—but nobody gets a happy ending (at least as currently envisioned).
 
That’s because nearly every politician wants growth, or at least recognizes the need to clamor for growth in order to be electable. Because growth, after all, is how we currently define our collective, national happy ending. So whenever facts lead toward the conclusion that more growth may not be possible even if our party gets its way, those facts quickly get swept under the nearest carpet.
 
Masking reality with political rhetoric leads to delays in doing what is necessary-- making the best of the choices actually available to us. We and our political “leaders” continue to deny and pretend, walking blindly toward environmental and economic peril.
 
*          *          *
 
We humans are political animals—always have been, always will be. Our interests inevitably diverge in countless ways. Further, much of the emotional drive fueling politics comes from ethical impulses: perhaps for genetic reasons,different people assign different ethical principles a higher priority. Thus one politician’s concern for fairness and another’s passion for national loyalty can glide right past each other without ever shaking hands. Religion can also play a role in partisanship, along with the legacies of economic and social exclusion, historic rivalries, disputes, and atrocities. None of this can be dispelled with the wave of a magic wand.
 
Moreover, political engagement often leads to welcome outcomes. When people organize themselves to effect change, the result can be expansions of civil rights, women’s suffrage, and environmental protection. On the other hand, when people fail to speak up, social power tends to become monopolized by a small minority--and that never ends well. So, let’s not withdraw from politics.
 
But how to work effectively in a politically polarized environment? Hyper-partisanship is a problem in approving judicial appointees and passing budgets, and failure to do these things can have serious consequences. But when it comes to energy and climate, the scale of what is at stake runs straight off the charts. The decisions that need to be made, and soon (ideally 20 years ago!), on energy and climate may well determine whether civilization survives. The absence of decisive action will imperil literally everything we care about.
 
Energy is complicated, and there can be legitimate disagreements about our options and how vigorously to pursue them. But the status quo is not working.
 
I’ve struggled to find a hopeful takeaway message with which to end this essay.
 
Should I appeal to colleagues who write about energy, pleading with them to frame discussions in ways that aren’t merely feeding red meat to their already far too polarized audiences, encouraging them to tell readers uncomfortable truths that don’t fit partisan narratives? I could, but how many energy writers will actually read this essay, and how many of those are willing to examine their preconceptions?
 
Perhaps the best I can do is point out the existence of a small but enthusiastic subculture that actually understands these issues. This subculture is exemplified by Transition Initiatives promoting “small-scale local responses to the global challenges of climate change, economic hardship, and shrinking supplies of cheap energy” and the premise that life can be better without fossil fuels. For better or worse, this subculture is practically invisible to political elites and the mainstream media (except perhaps in parts of the UK).
 
Perhaps it’s fitting that this essay leaves both author and readers unsettled and uncomfortable. Discomfort can sometimes be conducive to creativity and action. There may be no solutions to the political problems I’ve outlined. But even in the absence of solutions there can still be better adaptive behaviors, and judo-like strategies that achieve desired outcomes—ones that could conceivably turn the tide on intractable global problems such as climate change—without directly confronting existing societal power structures. These behaviors and strategies can be undertaken even at the household scale, but we’re likely to achieve much more if we collaborate, doing what we can locally while using global communications to compare notes and share our successes and challenges.
 

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