economics

Summary: The report's two crucial conclusions are that the greenhouse problem can be solved by adoption of alternative technologies, and that this can be done at negligible cost to GDP.

The glaring fault in the Report is its failure to discuss the energy assumptions underlying these conclusions, which I argue are invalid.
The core assumption is that alternative energy technologies can be scaled up by the huge magnitudes required to replace fossil fuels.

There has been almost no study of this issue, i.e., the limits to renewable energy sources. The paper looks at the quantities of wind, solar, geo-sequestration etc. that would have to be provided if Garnaut's conclusions were to be achievable, and indicates why these quantities are impossibly large.

If these arguments are valid then it will not be possible to provide the amount of energy consumer capitalist society demands while achieving acceptable greenhouse targets. lt is argued that the greenhouse and energy problems must be seen as elements within the general limits to growth predicament, and that these and other alarming global problems cannot be solved without transition to some kind of Simpler Way.

The 12 page paper is dated 13-11-08 and can also be found at ssis.arts.unsw.edu.au/tsw/GarnautFinal.html Critical feedback on the paper would be welcome.

The Final Garnaut Report; A Radical Critique of its Energy Assumptions.

13.11.2008

The publication of the Final Garnaut report (2008) has made a significant contribution to increasing awareness of the magnitude and urgency of the greenhouse problem and it has moved Australia towards the implementation of carbon trading. However the lengthy and detailed report is based on crucial energy assumptions that are not discussed let alone established. The argument below is that these assumptions are invalid and therefore Garnaut’s conclusions are unsound and his policy recommendations are seriously misleading.

Like the Stern (2007) and IPCC Fourth Report Working Group 3 (2007) analyses of carbon mitigation Garnaut’s core conclusion is that the greenhouse problem can be solved by the adoption of alternative technologies at negligible cost to GDP. In other words, these three highly influential reports reaffirm the common belief that conservation effort, geo-sequestration, nuclear energy and renewable energy sources can cut greenhouse emissions to safe levels while GDP continues to grow at more or less historical rates. Remarkably, none of these reports considers the reasons for concluding that the alternatives cannot replace fossil fuels, at any economic cost. This case is detailed in my Renewale Energy Cannot Sustain Consumer Society, (Trainer, 2007a), and a more recent summary of the case is given in Trainer 2008. (Critiques of the Stern and IPCC Reports are given in Trainer 2007b, and Trainer 2007c.)

Garnaut’s treatment of the crucial assumption

Garnaut concludes that the desirable target for atmospheric CO2 concentration is 450 ppm (although he recommends a 550 ppm target on the grounds that the lower one is not likely to be accepted.) The IPCC estimates that the 450 ppm target would result in a 2 – 2.4 degree rise in temperature. Many would now say that this runs an unacceptable risk of global ecological damage. Hansen (2008) argues that the appropriate target is in the region of 380 ppm, which the world has already passed.

Garnaut aligns with the IPCC in saying that the target would require all carbon emissions to be eliminated by 2100. He anticipates that by 2100 Australian electricity consumption is likely to be 7 times as great as it is now, i.e., around 5.25 EJ/y. (Fig. 20.10.) His Fig. 20.18 anticipates that globally electricity will be generated at a rate that is 10.3 times the present rate, i.e., 103 TWh/y or 620 EJ/y. These figures represent huge increases on present electricity consumption rates, and Garnaut is saying they will be achieved without carbon emissions (p. 482) or significant economic cost. Apart from a few superficial remarks, no explanation, derivation or defence of these assumptions or conclusions is given in the 700 page Report. Almost no reference is made to the possible magnitudes of the contributions that might be made by renewable energy sources, geosequestration and nuclear energy. He simply assumes or states that alternative technologies will be able to cut emissions sufficiently. Almost all of the relevant statements in the 700 page report are given in the brief Appendix 1 to this paper.

The energy targets.

First, note again the magnitude of the problem. By Garnaut’s own account the 2100 global target is a 10 fold multiple of present electricity supply, and a 7.5 multiple for Australia, with 95% of it coming from non-carbon emitting energy sources.

It is not clear how Garnaut accounts Australia’s probable transport energy and the figures do not seem to add up. Fig. 21.4 shows transport emissions rising from 80 million t/y to 350 million t/y under business as usual, but falling to about 20 million t/y by 2100 under the Standard run. (p. 512.) It is assumed that by the end of the century zero-emissions fuels account for 90 per cent of fuel use in these transport modes. (p.. 513.) This would mean that transport energy demand would multiply by 4.375, to 4.725 EJ.

However Fig. 20.10 shows total electricity demand is expected to be 5.25 EJ by 2100, which would mean only .875 EJ would be left to meet direct electricity demand, which is already .7 EJ and increasing at around 3% p.a. If direct electricity demand increases only at the rate ABARE expects Australian energy demand to settle to to (1.9% p. by 2030), then by 2100 it will be 6 times as great as it is now, around 4.2 EJ/y. If we add to this the electricity Garnaut assumes for transport the total is 9.45 EJ, 13.5 times the present amount, not the 5.25 EJ Garnaut’s Fig. 20.10 indicates.

The faulty methodology; "Top down" modeling.

Like Stern and the IPCC Working Group 3 and virtually all analyses of carbon mitigation, Garnaut has relied solely on either "bottom up" modeling (costing each unit of replacement technology and multiplying by the amount that would be needed) or top down modeling (estimating the effect that overall measures such as a carbon tax would have on a choice of energy sources). Garnaut’s approach is in general "top down" although he says some of the studies referred to were "bottom up".

The logic of the former approach asks what amount of tax on carbon would raise the cost of carbon based energy to the point where users would turn to other sources. To answer this question satisfactorily we would need to know firstly what the other sources cost, and more importantly whether they can be implemented on the scale required. This second question is not asked by Stern, the IPCC, or Garnaut. The following section sketches some of the many reasons for concluding that the alternatives cannot be scaled up sufficiently.

The reasons why alternatives cannot replace carbon fuels.

Let us take the global electricity target Garnaut assumes, 620 EJ/y, and also assume one-third of this comes from geosequestration, wind and solar sources respectively.

Geosequestration.

If one-third of 620 EJ, i.e., 206 EJ was to come from coal via geosequestration which captured 90% of emissions (and it might be only 80%), this would be about 6 times the present amount of world electricity produced from coal. If 90% of emissions were captured, emissions from electricity generation alone would be about 1/2 of the present global total CO2 emission level, when the target must be zero. In addition at that rate of coal use the commonly estimated probably recoverable coal resource of 1 trillion tones would last less than 40 years. (However the Energy Watch Group, 2007 (see also Hienberg, 2007), believe resources are much more limited than has been generally assumed, and that coal supply could peak within about 2 decades.

Note that all this is only for the provision of electricity and other forms of energy would also need to be explained. At present 40% of Australian energy is not accounted for by electricity plus transport.

Wind

If 206 EJ of electricity was to come from wind, where would this amount of capacity be located? Garnaut notes that there could be a problem of "site availability" (p. 481.) Trieb (undated), a strong advocate of renewables, estimates that total on and off shsore European potential is only 4 EJ. Europe would have to draw from a far wider area such as Czisch (2004) advocates extending from Morocco to Khazakhstan. This would set problems to do with transmission loss and equity; i.e., the right of other people in those areas to a share of the wind energy they produce.

If Australia is to use 7 times its present .7 EJ/y of electricity, and one-third of this is to come from wind, then wind supply would be 1.7 EJ/y. This is 50 times the amount of wind energy that the Sustainable Energy Development Authority estimated in 2005 might be provided by wind farms in NSW. Australia would need about 156,000 windmills of 1.5 MW capacity (at global average capacity of .23; IPCC, although Australia is likely to exceed this.) Average annual mill production for replacement purposes would have to be about 6,000, costing perhaps $9 billion p.a., not including transmission line replacement.

If we assume that Australia has 5000 km of coast with ideal wind conditions, then at normal spacing (5 x 10 diametres) the mills would form a band 156 km wide. (This is a significant underestimate, given the fact that areas are excluded by prior use, and that wider spacing would be required in a continuous band.)

Photovoltaic energy.

To derive one-third of a world 620 EJ electricity supply from PV sources, at average Sydney insolation, yielding about .85 GJ/m/y, would require 242 billion square metres of panels, which would probably be 27 metres per person (for 2050 population). For most of the world insolation would be much lower than in Sydney.

If Australia was to derive 1.7 EJ p.a. from solar panels we would need 2 billion square metres of panels, possibly 66 square metres per person. At the present cost, including balance of system cost, this would come to $475,000 for a household of four for one-third of national electricity supply. These PV panels could only supply electricity for about 7 hours a day on average.

Nuclear energy.

Nuclear energy is almost irrelevant to a discussion of the long term global energy future in view of the limited Uranium plus Thorium resources, unless breeder or fusion technologies are assumed. (Trainer 2007, Chapter 9.) The commonly estimated 3.7 – 4 million tones of Uranium would generate a total of only about 600 EJ of electricity, i.e., the equivalent of one year’s demand at the 2100 global rate Garnaut anticipates. Taking the high resource estimates and adding Thorium might multiple the quantity by 6. (Zittel, 2006.)

Integration problems.

Even if these formidable quantities of wind and solar energy could be collected and afforded, the main problems surrounding renewables have not yet been raised. These are to do with the integration and storage problems they set. No matter how much wind and PV capacity we build they can provide no energy at all – on a calm night. Output from wind and solar sources rises and falls markedly, and can do so quickly. All PV capacity would come on stream within a couple of hours, but it can take many hours to ramp up a coal-fired plant to full output. (Gas plant can ramp up quicker than coal, but gas use will not be a significant component in a renewable world, because it emits CO2, and gas resources will be largely exhausted later in this century.)

These are not difficult problems when wind and sun contribute a small proportion of demand, say up to 15% each, because adjusting the surplus coal/nuclear generating capacity can accommodate their varying output.

Very large quantities of electricity cannot be stored. Pumped hydro systems are the best option, but can cope with only a small fraction of the demand. Hydroelectricity makes up only about 6% of Australian electricity supply. To store as hydrogen means that possibly 75% of the electrical energy generated would be lost, not including the embodied energy cost of building the elaborate hydrogen generating, processing, storing and electricity regenerating plant. (Bossell, 2004.) That is why a number of people believe we will never have a large scale "hydrogen economy." (See Trainer, 2007a, Chapter 6.) Garnaut devotes one sentence to this enormous storage problem, simply asserting that we can expect it to be solved. (p. 481.)

Note also that if the wind sector is large, for every 1000 MW of wind capacity added up to 1000 MW of coal or nuclear power might also have to be built, to use when the winds are down. This would add greatly to the capital cost of the new system, and clash with greenhouse goals.

If the PV contribution fell from 1.7 EJ to zero in a few hours a load equivalent to about 70 coal or nuclear power stations of 1000 MW capacity, twice our present total generating capacity, would have to be picked up by some other source.

Could solar thermal systems solve the problem?

Because solar thermal systems have the capacity to store heat that can be used to generate later they will probably be the most valuable contributors to a renewable energy world. However it seems that even in Central Australia, possibly the best solar thermal site in the world, these systems will not be ale to provide significant quantities of electricity over the three winter months at an acceptable cost. (For a more detailed discussion, see Trainer, 2008.)

In winter output from trough systems in use in the best US sites goes down to 20% of summer output. The analysis of relevant factors such as direct normal insolation levels, the probable performance of east west troughs in winter, operating and embodied energy costs, and transmission losses from distant sites, seems to leave little doubt that trough systems in winter would not be viable. Average 24 hour flows might be in the region of 10 W/m.

Dishes would be more effective than troughs, but output from the US Mod dish systems corresponds to a continual flow of 18-25 W/metre over a winter month. Performance data on other systems (Davenport, 2008) indicates c. 25 W/m flows. However such figures apply to use of efficient Stirling engines generating electricity at the focus of each dish and these are not applicable to our purpose, which requires heat storage.

The ANU group is exploring the use of ammonia dissociation (splitting into hydrogen and nitrogen) as a way of storing heat from dishes. (Lovegrove and Luzzi, 1996.) They believe the energy efficiency of the chemical process could be .7, and that half the energy entering the dish should be available for generating electricity after storage. This approach is very promising but its net energy efficiency seems to be problematic. For instance if the above Mod etc. winter output figure is reduced to .7 to take into account the ammonia storage process efficiency, and reduced again to take into account the lower efficiency of steam generation compared with Stirling engines, then the winter output would probably be significantly lower than the above 18-25 W/m reported for dish–Stirling systems. Note that at 25 W/m a large power station would need a 40 million square metre collection area, probably costing in the region of $(A)35 billion.

From this gross flow must be subtracted the embodied energy cost of building the collection plant and the heat storage plant involving large and heavy pressurised tanks for the ammonia process. The attempt to assess the embodied energy cost of this system in Trainer 2008 indicates high figures for very large scale systems. Fortunately the Whyalla project being built by Wizard Power will clarify some of these issues. Its developers say they are not yet clear about probable performance and in any case understandably will not make their technical information public.

Also to be deducted are the embodied energy costs of the very long distance transmission lines from central Australia to Eastern coasts. For European supply from Eastern Sahara these could be 15% of energy generated.

Perhaps the most difficult problem for solar thermal systems is set by the need for several days storage of energy in view of winter cloud occurrence. The climate data in Trainer 2008 shows that in central Australia in each winter month there might be two runs of 4 days with little sunlight. Heat storage capacity capable of coping with such runs would be extremely costly in terms of dollars and embodied energy. However if it is assumed that solar thermal is going to solve the intermittency problem set by other renewable source a far greater storage problem is set. This would require solar thermal plant to be equipped with the capacity to generate, accumulate, and store energy output from perhaps three times as much wind plus PV etc. plant as there is solar thermal plant, for several days.

For these reasons it seems that although solar thermal systems will probably be the most valuable contributors to a renewable energy world, they will not be able to guarantee electricity supply in winter even in Australia.

The conversion problem.

Discussions of the potential of renewable energy sources usually fail to take into account the need to convert energy from forms that are available to forms that are needed. Conversion is typically quite energy-inefficient, meaning that much more energy needs to be generated than might appear to be the case.

Electricity accounts for only about 20% of Australian final energy consumption. Garnaut does not explain where the perhaps 40% of energy other than direct electricity and transport energy is to come from, and he therefore does not deal with the losses of energy in conversion from one form to another Nor does Garnaut deal with the fact that sea and air transport cannot be fuelled by electricity.

It should be made clear that little of the global energy budget is likely to come from biomass. (Garnaut does not assume a large contribution.) In Chapter 5 of Trainer 2007a it is explained that if 9 billion people were to have the present Australian amount of transport energy per person from cellulosic ethanol, we would have to harvest a 23 billion ha plantation on a planet with only 13 billion ha of land. (Australia’s biomass potential is likely to be far greater than most countries.)

Energy conclusions.

At the very least the above discussion shows that there are several major difficulties and important issues which need to be resolved satisfactorily before confident conclusions can be arrived at, yet Garnaut does not deal with any of these. He anticipates an Australian electricity consumption that is 7.5 times the present amount, with 7 times the present amount coming from non-carbon based sources, and he anticipates global electricity consumption 10.3 times as great as at present but in a report of 700 pages gives no attention to showing that such huge multiples can be provided. This paper has pointed out that there are a number of impressive lines of argument supporting the conclusion that they cannot be provided.

All the issues raised above were presented to Garnaut as a mid-2008 response to the Interim Report, in the paper Trainer 2008. Receipt of this paper was acknowledged but it is not included in the list of submissions received in the Final Report.

It should be stressed that the points made above are not arguments against renewable energy. We must move to total dependence on renewables as quickly as possible and we can all live well on them, but not in an affluent-consumer-capitalist society.

The Limits to Growth position.

For some 50 years a "limits to growth" analysis of our situation has been accumulating, taking into account many more than energy issues. Its core point is that consumer society is grossly unsustainable because its levels of production and consumption are far higher than can be kept up for long or than all could ever rise to. The quest for affluence and growth is the direct cause of the many alarming global problems now accelerating. Just to note one of these impressive lines of argument, the Australian per capita footprint, around 8 ha of productive land, is about 10 times the amount of productive land that will be available on the planet by 2050 (even ignoring land losses.)

Considerations of this kind support the claim that consumer-capitalist society is not just grossly unsustainable, it cannot be made sustainable. A way of life which is rapidly destroying ecosystems and depleting resources, that is shared by only one-fifth of the world’s people but that all the rest are striving for, that insists on doubling consumption every 23 years, that is possible for a few only because they are taking far more than their fair share and condemning some 4 billion people to poverty – can’t be made sustainable or just.

Even though Garnaut actually briefly discusses the problem of resource limits (p. 69 and Table 3.3), he defers to the dominant ideology regarding the limits theme. He says there is no point considering any option to the greenhouse problem which threatens significant slowing of growth, let alone which involves a transition to much lower levels of production and consumption. He says, "It is neither desirable, nor remotely feasible, to seek to lower the climate change risk by substantially slowing the rise in living standards anywhere, least of all in developing countries. If such an approach were thought to be desirable in some expression of distant and idiosyncratic values, neither Australians, nor people in the developing countries, would accept it.(p. xxl.) Global and national mitigation is only going to be successful if reductions in emissions can be made and demonstrated to be consistent with continued economic growth and rising living standards." (p..)

For several decades some of us have been arguing that the only way out of the global predicament is by huge and radical transition to some form of Simpler Way, in which the core elements are non-affluent lifestyles, mostly small local economies under participatory social control and not driven by market forces or profit, and without any growth at all. (See The Simpler Way website, Trainer 2006.) Such a society would not be possible without equally radical change away from the competitive, acquisitive value syndrome that has driven Western culture for several hundred years.

There is now a small but rapidly growing global movement attempting to build an alternative of this general kind, most evident in the Global Ecovillage Movement and the Transition Towns initiative. Yet, given the overwhelming dominance of the commitment to material affluence and economic growth, the prospects for global transition to some kind of Simpler Way must be judged to be remote. This conclusion is powerfully reinforced by the failure/refusal of governments, media, bureaucracies, people in general, and the intelligentsia to recognise any need to question the commitment to pursuing limitless affluence and growth. Garnaut’s final Report powerfully reinforces the faith that there is no need to think about limits or transition to simpler ways, because alternative technologies will be able to eliminate the greenhouse problem while delivering with vastly greater quantities of energy, and at negligible cost.

Appendix 1. Statements relevant to the adequacy
of renewable energy sources.

- There is a path to Australia being a low-emissions economy by the middle of the
21st century, consistently with continuing strong growth in material living standards.(p. xvii.)
- The solutions to the climate change challenge must be found in removing the

- The interaction of the emissions trading scheme with support for research,
development and commercialisation and for network infrastructure will lead to
successful transition to a near-zero emissions energy sector by mid-century. (p. xliii.)
- Substantial de-carbonisation by 2050 to meet either the 450 or 550 obligation is

- The development of storage technologies and ongoing technical innovation is expected to combine with geothermal energy to begin to replace fossil fuels as the long term solution to our energy needs. Near zero emissions coal technology will have carried out its primary role and remain a significant energy source for some time. (p. 482.)

In Chapter 11 Garnaut makes it clear that he has not examined the potential of particular renewable energy technologies (p. 251) but he regards the most likely of these to be carbon capture and storage. The key numbers, such as those represented in Figure 11.1 stating costs associated with the 450 and 550 ppm targets, cannot sensibly be given without a detailed and convincing explanation of precisely what mix of alternatives might make their contributions and at what cost for each of them. No derivations of these conclusions are given.

- Technological development of any type is difficult to predict. When powerful incentives to innovation are introduced to a market environment, however, human ingenuity usually surprises on the upside. How will this ingenuity manifest itself in the face of high emissions prices and increased public support on a global scale for research, development and commercialisation of low-emissions technologies? We do not know, but there are good reasons to believe that, if we get the policy settings right over the next few years, the technological realities later in the century will be greatly superior to those which, for good reason, are embodied in the standard technology variants of the models used by the Review. (p. 273.)

The footnote says “2 The standard technology assumptions represent a best estimate of the cost, availability and performance of technologies based on historical experience, current knowledge and expected future trends. The standard scenario includes some technological cost reductions through learning by doing and improvements in existing technologies and the emergence and wide-scale deployment of some currently unproven technologies such as carbon capture and storage, hot rocks (geothermal) and hydrogen cars. It does not, however, include a backstop technology in any sector.” (p. 273.) No references are given.

- As one alternative to the standard technology assumptions, the Review
modeled an enhanced technology future, embodying various assumptions of more rapid technological progress, none of which seems unlikely. (p. 252.)

The essentials in the footnote are

- Faster energy efficiency improvements of an extra 1 per cent annually from 2013 to 2030, an extra 0.5 per cent from 2031 to 2040
- More effective carbon capture and storage in response to higher carbon prices
- The share of combustion CO 2 captured increases from 90 per cent to 99 per cent as the permit price rises from zero to $140/t CO2-e
- Faster learning by doing for electricity and transport technologies by increasing the parameter for the learning functions by 50 per cent relative to the standard assumptions over the whole simulation period, and
- Non-combustion agricultural emissions are eliminated when the carbon price exceeds $250/t CO-e. (p. 273.)

Each of the statements in this footnote lacks support, raises major problems and is open to radical criticism. Firstly, the future rate of energy efficiency improvement is highly uncertain and there are poor grounds for assuming particular rates regardless of whether or not the past yields clear figures. We are in an era of great uncertainty, risk and difficulties. Certainly in the short run the now greatly increased incentive is likely to generate considerable gains, but after the low hanging fruit have been picked there will probably be severely diminishing returns. Yet Garnaut assumes likely rates of improvement out to 2040, without supporting argument.

One of the most challengeable aspects of Garnaut’s optimism concerns geosequestration. In this passage he proceeds as if 99% capture and storage will be achieved. (E.g. pp. 273, 482.) It is generally assumed, including by the IPCC, that the limit is 80 -90%. In any case geosequestration can only be applied to that perhaps 50 - 60% of carbon emitting energy generating plant that is stationary. What’s more, Garnaut assumes without explanation that this rate will be possible at the relatively benign cost of $140/t – CO2e.

The third claim is not clear but seems to be, again without explanation, that the figures in the first (energy efficiency) paragraph can be increased by 50%.

In the fourth statement he baldly asserts an outcome which, to say the least, calls for serious examination. How are agricultural emissions to be eliminated, and how is this brought about by the carbon price of $250/t?

In Economic Modeling Technical Paper 1 it is said that there was a detailed treatment of renewable generation in the MMRF modeling, (p. 10), but no information is given.

The most appropriate statement Garnaut makes regarding the core problems is, “Many of the individual technologies are technically proven. Issues of scale, integration and economics are likely to be the greatest challenges. The challenge posed by the scale of the task is the most significant of these.” (p. 495). The reference to the scale of the problem is appropriate but no discussion is offered or referred to.

Again these statements are in effect all the Report includes which refer to, let alone defend the crucial assumption that alternative technologies can solve the problem. In other words almost no case is given and it has been simply assumed that sufficient alternatives can be found to provide more than ten times present electricity supply, while almost completely eliminating emissions.

by Professor Ted Trainer of UNSW.

Bossel, U., (2004), 'The hydrogen illusion; why electrons are a better energy carrier', Cogeneration and On-Site Power Production, March – April, pp. 55 – 59.

Czisch, G., (2004), Least-cost European/Transeuropean electricity supply entirely with renewable energies, www.iset.uni-kassel.de/abt/w3-w/project/Eur-Transeur-El-Sup.pdf

Davenport,

Energy Watch Group, (2007), Coal Resources and Future Production, April. http://www.energybulletin.net/28287.html

Garnaut, R., (2008), The Garnaut Climate Change Review; Final Report.
http://www.garnautreview.org.au/index.html

Hansen , J., (2008), http://www.worldchanging.com/archives/007829.html

Heinberg, R., (2007), “Peak coal; Sooner than you think”, On Line Opinion, 21, May,
http://www.onlineopinion.com.cua/view.asp?article=5869

Intergovernmental Panel on Climate Change, (2007), Intergovernmental Panel on Climate Change Fourth Assessment Report, Climate Change 2007: (Working Group 3), Mitigation of Climate Change, Summary for Policy Makers.

Lovegrove, K., Luzzi, A., (1996), "Endothermic Reactors for an Ammonia Based Thermochemical Solar Energy Storage and Transport System", Solar Energy, vol. 56, pp. 361-371.

Stern, N., 2006, Review on the Economics of Climate Change, H.M.Treasury, UK, Oct., . http://www.sternreview.org.uk

Trainer, T., (2006), The Simpler Way website, http//ssis.arts.unsw.edu.au/tsw/

Trainer, T., (2007a), Renewable Energy Cannot Sustain A Consumer Society, Dordrect, Springer.

Trainer, T., (2007b), The Stern Review; A critical analysis of its mitigation optimism, http://ssis.arts.unsw.edu.au/tsw/Stern.html

Trainer, T., (2007c), A critical discussion of the IPCC analyses of carbon emission mitigation possibilities and costs, http//ssis.arts.unsw.edu.au/tsw/IPCCcrit.html

Trainer, T., (2008), Assessing the limits of solar thermal power generation. http://ssis.arts.unsw.edu.au/tsw/solartherm.html

Trieb, F., (undated), Trans-Mediterranean Interconnection for Concentrating Solar Power; Final Report, German Aerospace Center (DLR), Institute of Technical Thermodynamics, Section Systems Analysis and Technology Assessment.

Zittel, W, et al., (2006), Uranium resources and nuclear energy, Energy Watch Group, Dec.

The The Final Energy Crisis (2nd edition), Pluto Press, UK, 2008 is a book like no other on the topic of energy and peak oil of which I am aware.

It went well beyond the usual formulaic basics and it satisfied my appetite for stimulation rather than repetition and reinforcement. It is designed to be read in parts and in no particular order. However, nearly all of the articles are a subject in their own right, to be absorbed and considered slowly. The sections and chapters are:

1. Introduction by Sheila Newman

Part I: Measuring Our Predicament

2. 101 Views from Hubbert's Peak by Sheila Newman
3. Prediction of World Peak Oil Production by Seppo Korpela
4. The Assessment and Importance of Oil Depletion by Colin Campbell
5. Coal Resources of the World by Seppo Korpela

Part II: Geopolitics

6. The Caspian Chimera by Colin Campbell
7. Update to the Caspian Chimera by Sheila Newman
8. The Battle of the Titans by Mark Jones
9. Dark Continent, Black Gold by Andrew McKillop
10. The Chinese Car Bomb by Andrew McKillop
11. Venezuela, Chavez and Latin american Oil on the World Stage by Sheila Newman

Part III: The Big Picture - False Solutions, Hopes and Fears

12. No Choice but International Energy Transition by Andrew McKillop
13. Population, Energy and Economic Growth: The Moral Dilemma by
14. by Ross McCluney
15. Peak Soil by Alice Friedemann
16. Notes on Terra Preta by Sheila Newman
17. Nuclear Fission Power Options by Sheila Newman
18. Fusion Ilusions by Michael Dittmar
19. Geothermal by Sheila Newman

Part IV: After Oil

20. France and Australia After Oil by Sheila Newman
21. North Korea: The Limits of Fossil-Energy Based Agricultural Systems by Antony Boys
22. How will Japan Feed itself without Fossil Energy? by Antony Boys
23. The Simpler Way by Ted Trainer
24. In the End: Thermodynamics and the Necessity of Protecting the Natural World by Sheila Newman

Like other books on the subject of 'peak oil' The Final Energy Crisis, (with engineering professor, Seppo Korpela and oil geophysicist Colin Campbell) does examine and test Hubbert's theory - for gas and coal as well as oil (and gives you the maths to test yourself in an appendix) - but the book doesn't stop with the usual (updated) depletion curves.

It is really the beginning of the elaboration of a new paradigm, which seriously examines (among other possibilities) nuclear fusion, nuclear fission, geothermal, terra preta/agrichar and the logistics of energy distribution in different social systems. It is like most books before this were explaining that society depends on fossil-fuels, but this book assumes you know that, and discusses the world within that knowledge perspective. It is for people who have already looked into the subject broadly but would like help to understand the limitations of different proposed technologies and political solutions. I read somewhere that the Editor had said that it was written for people who dealt with problems and fear by learning as much as they could.

Not limited to the 1000 word article or the one minute sound-bite, it also engages relevantly in original and sophisticated geopolitical and economic analysis, for instance about the history and future of Latin American oil and the possibility of realignments among ex-Soviet Union and third-world oil and gas producers.

The "Battle of the Titans", written in 2002 by the late Mark Jones, and also included in the first edition, is a prophetic piece which shows how the reckless and wasteful 'free market' energy policies since the days of President Reagan have caused the economy of the US to have become vastly less efficient than those of Europe and Russia. In coming months and years the energy vulnerability of the US will compound the problems caused by the collapse of its finance sector.

Newman assumes that her readers will be intelligent and adventurous and doesn't limit her authors to basic reviews of simple flow-energy technologies. Rather, she invites us to jump in the deep end and follow particle physicist, Michael Dittmar, as he dissects nuclear fusion technology in the 10 billion Euro International Thermonuclear Experimental Reactor (ITER) project on the basis of the durability of nuclear 'carpets' and the half-life of tritium.

Dittmar's description of the staggeringly complex and difficult technical problems to be overcome before the dream of unlimited cheap power held out by the proponents of nuclear fusion is to be realised left me in little doubt that further expenditure on ITER is a massive wast of public resources.

Similarly, in the chapter, "Peak Soil", Alice Friedemann, shows, in a lively and pithy analysis, that industrial bio-fuel production on a large scale will only make our energy and environmental circumstances worse and not better. Friedemann plunges head-first into a meter of topsoil to see the damage which destroying crop-stubble for cellulosic ethanol might pose to world food supply by destroying an environment which supports "ten 'biomass horses' underground for every horse grazing. Sadly, some of Friedemann's forebodings have become reality in recent months as the diversion of agricultural production to bio-fuels has caused food shortages in many countries.

Other technologies, which are somewhat more promising than the above two described in the book are geothermal and the other more familiar forms of renewable energy such as wind, solar, hydro-electric, tidal, etc, and even nuclear fission. However, as Ross McCluney shows in the chapter "Renewable Energy Limits", all have their limitations and problems. Ultimately we have no choice but to scale back our consumption of energy. We must certainly dispense with any expectation that we can continue to raise both our own material living standards and those in the Third World in a planet with an ever increasing population.

Nuclear fission writing is usually limited to very polemical argument for or contra. These polemics are discarded and nuclear is examined from a host of unusual perspectives, including the importance of trade economics and income from fuel recycling in preserving certain nuclear proliferation treaties, the influence of insurance costs in preserving old designs, why no-one is building thorium fueled fast breeder-reactors, but why India might take a lead in breeder reactor technology and thorium fuel. Newman admits that it is very difficult to evaluate the costs and returns of nuclear power plants, including the dangers, but describes a relatively simple method by which one might begin to evaluate and compare any fuel source and technology, including nuclear.

In the chapter "How Will Japan Feed Itself Without Fossil Energy", agricultural scientist, Antony Boys explores Japan's carrying capacity in the Edo period (1603-1867) and contrasts it with import reliance and nitrogen overload in the twenty-first century.

Already some societies have been forced to confront the challenge of depletion of fossil fuel, particularly petroleum. Two examples are given, both from the 'socialist' camp, Cuba and North Korea; one reputedly successful, the other a disaster. As Cuba transformed itself, in the 1990's, to cope with a dramatic drop in oil imports following the collapse of the Communist bloc in 1989, North Korea, also without its own deposits of gas or oil, descended into famine when its imported oil and gas supplies fell by more than 50% after 1990. This is described in the Chapter "North Korea: The limits of Fossil Energy-Based Agricultural Systems" by Antony Boys.

Sheila Newman, in the chapter "France and Australia after oil", raises the "Cuban solution" as an example of the principle of relocalisation. After analysing pre-fossil fuel France and her options for the future, Newman makes surprising and frightening political predictions for Australia, based on whether it adopts relocalisation or 'big' power options, such as nuclear and massive coal-operations. She identifies the big power options with the interests of infrastructure development lobby groups that are promoting big power developments in the expectation that these will service huge new cities of new immigrant consumers, supplied by Australia's huge and unpopular mass immigration program. Newman points out that the democratic interests of Australians are unlikely to be served by these corporate agendas, which she notes have also distorted the Australian water supply situation. She also seriously questions the costs of financing such schemes and the logistics of building and maintaining them. Reading her analysis, one starts to seriously doubt that the 'important people' who decide these things have actually done the maths.

For me, this is one of those rare books which left few questions begging. It seems as if the editors and the contributors had already gone nearly everywhere I had intended to go and a good many other places, besides, and had thoroughly researched the issues and thought through the questions posed. The orthodoxies of the mainstream environment movement and scientific community are held up to critical scrutiny and often rejected. This is particularly the case with the last two sections which are focused on proposed solutions and future prospects. Andrew McKillop's critique of 'free market' 'solutions' to the energy crisis, in particular the 'carbon finance and credits circus', in the chapter "No Choice But International Energy Transition" was particularly satisfying.

This is an enlightening rather than a depressing book. The editor, who writes the introductions for each section, has a good feeling for the absurd and finds humour and hope in unusual places. A message comes through not to panic, but to think. For all the absurd beliefs and ugly outlooks exposed by the various authors in this book, we find hope in unusual and unexpected places and a sense that, although answers will not necessarily come from the expected authorities, and the problems we face are extraordinary, there are ways we could slow down the crisis to a manageable pace, there are choices about the values that dictate our decisions, and politics are important.

See also: Review of The Final Energy Crisis by Mark O'Connor author of Overloading Australia (RRP AU$20) on page 8 of the December 2008 newsletter (pdf 923K) of Sustainable Population Australia, other customer reviews at amazon.com.

The following was adapted from Green's MLC Lee Rhiannon's media release "World Youth Day cost blowout: independent review needed" of 26 Nov 08 - JS

Those who have accepted the necessity of the current fire sale of NSW government assets included in the recent "slash and burn" budget, which is taking that state into recession, may be amazed to learn of the staggering cost blow-out of the World Youth Day celebrations held in Sydney from Tuesday 15 to Sunday 20 July 2008.

The NSW Auditor-General's report released on 26 November reported that the cost to NSW taxpayers increased from an initial estimate of AU$20million (all amounts in Australian dollars) to its final cost of over $120 million. In addition, the Federal Government contributed $20.5 million bringing the total cost to Australian taxpayers to over $140 million. As some costs incurred by NSW Government agencies may be unobtainable, the full cost to taxpayers may never be known. For its part, the Catholic Church contributed only $10 million to meeting the costs of the event.

The Sydney Morning Herald of 27 reports that the Department of State and Regional Development claimed that NSW had gained $152 million, but had yet to substantiate that claim.

On top of this, the NSW Government plans to throw tens of millions more taxpayer dollars at a planned #V8supercars">V8 supercar races to be held at Olympic Park. The Minister for State Development having given in principle support for NSW to incur losses of up to $86million over three years.

As consquence of the World Youth Day Fiasco Greens MP Lee Rhiannon says the NSW Auditor-General, not the government, should conduct an independent performance audit of World Youth Day because the government cannot be trusted to provide an impartial, comprehensive evaluation of the event.

The Auditor General today recommended that the government undertake a cost benefit review of its involvement in World Youth Day.

"It is not in the public interest to let the government conduct a post-event review of World Youth Day, as recommended by the Auditor-General today," Ms Rhiannon said.

"The history of this government suggests an internal post-event review would be shabby and unhelpful. A thorough review into all aspects of World Youth Day 2008 by an independent body like the Auditor General is required.

"In June this year I met with the Auditor-General to ask him to conduct a performance review to delve into the effectiveness, efficiency and economy of agencies involved in organising the event.

"The Auditor-General has powers to conduct a performance audit and investigate allegations of serious and substantial waste of public money.

"There are many aspects of World Youth Day 2008 that deserve to be put under the microscope, not just why the final cost was six times the original budget estimate.

"The Auditor-General could analyse whether the additional APEC like police powers given were excessive or appropriate, and uncover the full story behind the decision to use Randwick racecourse for the papal mass and the resulting compensation deal.

"Mr Achterstraat's office could also examine the continued failure of the government to publicly release key reports and papers detailing predicted costs and benefits, despite repeated demands before the event was held.

"The Rees government is keen to put Sydney back on the events circuit. The flawed decision to bring V8 supercar racing to Olympic Park is a prime example.

"A proper independent evaluation of World Youth Day by the Auditor General is important to learn lessons for the future of this state," Ms Rhiannon said.

See also: NSW Electricity Privatisation, "Youth day ran $100m over budget" in SMH of 27 Nov 08 and more subdued reporting in "World Youth Day bill $100m over budget" of 26 Nov 08 in Rupert Murdoch's Australian newspaper which lavishly promoted the event at the time, NSW Auditor-General's World Youth Day Report (pdf, 45K).

#V8supercars" id="V8supercars">Appendix: Community will Carry the Cost of V8s at Olympic Park

Greens Media Release of 26 Sep 08

New laws to ban compensation claims by local businesses adversely affected by V8 car racing at Olympic Park in addition to a $35 million injection of public funds shows that the community, not the organisers, will pay the costs of the Supercar event.

This legislation is reported to remove the right of local business operators to seek compensation for disruptions to their business caused by the event. It is also reported to circumvent environmental and planning legislation to stop legal challenges to the event.

“This government has a track record of arbitrarily removing citizens’ rights and throwing around government money to support private sector events. It does not have a track record of ensuring the public gets any return on that public investment,” said Ms Hale.

“Legislation to remove the rights of Olympic Park leaseholders is unacceptable. Leases were signed on the understanding that business owners had a suitable environment to operate their businesses. The government is taking that environment away to benefit another commercial enterprise.”

“If the government is going to renege on the promises it made in the leases, the V8 promoters should pay compensation.

“Similarly any attempt to remove the rights of local residents to take legal action in response to the months of disruption and the environmental damage that will be caused by holding the V8 event at Olympic Park is also unacceptable.”

“Today’s Auditor-General’s report into the $100 million blow out in public funding for World Youth Day shows just how inept this government is when it uses public funds to promote private events.”

“The V8 event at Olympic Park will have many negative impacts on local residents and businesses. The event should be moved to the existing motor racing precinct at Eastern Creek where the negative impact will be significantly less,” said Ms Hale.

See also: NSW Electricity Privatisation, "Why the V8 Supercars will be taxpayer-injected" in SMH of 29 Sep 08, "O'Farrell vows to restore free travel" on the ABC on 13 Nov 08, "Say no to v8 supercar racing at Olympic Park" on Lee Rhiannon's website, Parliamantary debate of V8 Supercar Races at Sydney Olympic Park of 24 Nov 08.

(lire la version française)

"Soon all men will be brothers"

We are told that we are in a time of globalisation. Soon all men will be brothers. The Internationale will be the new human race. The sin of Babel is forgiven. The sole language of tomorrow, English, is the chosen one. Already borders no longer protect the bad guys: all the virtuous are united against bin Laden, the butchers of Bosnia are tried in Holland, Interpol hunts burglars. Like Capital, the Proletariat will soon have no country either. The most marvelous thing is that this prodigious work was all done whilst we were sleeping; in the most natural way, apparently; without any special effort.

But then the alarm clock goes off and we open our eyes to a completely different reality.

Walls

Migratory patterns thousands of years old, as vital to human ecology as marine currents are to the life of oceans, have been criminalised. We try to make escape from the human reserves of Africa as difficult and as dangerous as moving from one neighborhood to another in Berlin once was. Sailing northwards, fear of the police, within sight of the Rock of Gibraltar, can pull you to your death. In this street, they have been at war forever with hereditary enemies on the opposite footpath. Europe is, of course, in process of unification, but little Belgium is no longer able to maintain peace between her Flemish and Walloon populations. Sporting matches open with processions of flags and screamed national anthems reminiscent of incitement of hysteria before big military bloodbaths. Indeed, how many peoples have known nothing but war for decades?

So… Are we living in a period dominated by globalisation or by the persistence or even the exacerbation of bellicose sanctification of flags and borders?

The Seven plagues of globalisation

Clearly, we are currently at an early stage of globalisation where only the seven plagues are globalised: globalization of mafias, commerce, financial robbery, man's exploitation of man, subordination of women, ransacking of natural resources and planetary poisoning… Against this background, the economic game is based on the simplest kind of rule: work travels to wherever it costs less. Your wages are not too terrible, you have reasonable social benefits, your government really tries to provide effective public education, health, transport, nature conservation services, DANGER, unemployment awaits! In the countries known as democracies, many people have understood this and have elected governments which are most likely to overturn social progress achieved over a century, and to feign a response to ecological emergencies, without taking the radical measures necessary. The day that British workers return to 19th century conditions, England will once again be the workshop of the world. It’s the law of competition, one of those famous incontrovertible ‘economic laws’.

Utopias

Here and there, however, a few utopians resist this suicidal course.

A utopian is someone who believes that humanity can and must use intelligence to guide his destiny, rather than laws - laws which, since the death of God, are no longer divine - but called ‘natural’ to hide the fact that, in reality, they only exist to protect the interests of the powerful.

Well, as it happens, here are some reflections that globalisation has inspired in one such utopian.

Globalisation is a formidable process which should be intensified.

It is true that competition profits peoples which have the most skillful workers, the most inventive engineers, the rarest minerals, soils and climates specially favourable for particular crops …

But, when the success of a product comes from its low price and that is due to meagre salaries, work done by children or prisoners, at the cost of public health services, education, transport, and to lack of respect towards natural environments, we should say, “We don’t want that money!” and send it back.

We don't want that money

It is relatively easy to work out how much of the cost of a product has been cut through lack of ecological and social policies. Industries which have their products manufactured in places where the costs are smallest, know very well how to do this. They know the value of that “economic and social differential” which causes them to knock on one door rather than another. The price of imported products would then be increased by a sum proportional to that differential, to compensate for the unhealthy basis of their cheapness. No customs taxes, which profit importing countries, would be involved, since the money obtained would be entirely reimbursed to the exporting countries. “We don’t want that money!” It would be up to the exporting countries then, whether they used this money to better the social condition of their population and to preserve their environment, or to add a few diamonds to the crowns of their oligarchies.

According to another – perjorative – meaning, the term ‘utopia’ refers to an absurd, impossible dream. Recent events have shown that nothing could better illustrate that notion of an aberrant utopia than a belief in progress based on the continuing unrestricted freedom of those who have taken all the worlds wealth for themselves.

Francis Ronsin
(Translated by Sheila Newman)

Francis Ronsin was Professor, Department of Contemporary History, at the Université de Bourgogne (Dijon). He has published several books and numerous articles that focus on the relationship between political struggles and private life: La Grève des ventres - Propagande néo-malthusienne et baisse de la natalité en France 19ème-20ème siècles (Aubier, Paris, 1980); Le Contrat sentimental - Débats sur le mariage, l'amour, le divorce, de l'Ancien Régime à la Restauration (Aubier, Paris, 1990) ; Les Divorciaires - Affrontements politiques et conceptions du mariage dans la France du XIXème siècle. (Aubier, Paris, 1992); Le Sexe apprivoisé -Jeanne Humbert et la lutte pour le contrôle des naissances (La Découverte, Paris, 1990) ; and La population de la France de 1789 à nos jours. Données démographiques et affrontements idéologiques (Le Seuil, Paris, 1997); La Guerre et l’oseille (Syllepse, Paris, 2003). He is also the principal organizer of the international research seminar Socialism and Sexuality.

Rights of partial or full reproduction of this article are forbidden without permission from Francis Ronsin.

(Illustration adapted from Goya's Saturn devouring his children)
[Note: This article was updated on 12 Oct 08 with S&P Graph]

#AreWeThere" id="AreWeThere">Are we there yet?

Global decline in total fuel available should manifest in reduction of total global economic activity.

Does the stock-market sector decline represent a reaction to decline in total economic activity resulting from high oil prices?

(Source is "Oil Price History and Analysis," WTRG Economics' Energy Economist Newsletter, www.wtrg.com/prices.htm. Prices are in 2006 dollars.)

The Dot Com led bubble in the stock market topped in early 2000 then fell pretty much continuously until 2003. Between 2000 and 2003, the market lost approximately 45%. In early 2003, Enron and Worldcom made the global market look as if it was really unraveling. Things looked so grim over 2000-2003 that everyone was very pessimistic. Oil prices had also begun to climb in 2000, but remained well below the levels of 1973 and 1979 oil shocks and dirt cheap compared to prices in 2008. (See diagram). It has also been suggested [1] that the Year 2K preparations had temporarily boosted the popularity of Dot Coms.

On the eve of the Iraq invasion the stock market reached bottom. When the US invaded Iraq, it bounced back.

(Historical NASDAQ composite graph adapted from www.nationmaster.com/encyclopedia/Nasdaq-Composite)

The speculative "dot-com bubble" in information technology over 1995-2001, with its spectacular correction made its former status seem so obviously artificial, that it was expected that the share market would return to more real trading volumes. Instead the market doubled between 2001 and 2006, equivalent to 14% compound interest in that time.

#PropertyBubble" id="PropertyBubble">Property Bubble

Much of this 2001-2006 bubble was predicated on
a) inflated land values which relied on a bull property development market, incorporating new suburbs, new shopping complexes, new roads, and population growth to fuel demand
b) cheap commodities (oil and materials)

The ‘boom’ in property development increased demand for materials and oil, but oil production barely increased at all. So, prices went up. They went up robustly for materials, but they increased spectacularly for oil, as well as increasing for every other form of fuel, energy and electricity – including, coal, gas and uranium.

When fuel and materials prices rose, the margin for profit in property development dropped. One of the ways that industry tends to mitigate the rising cost of fuel and materials is by reducing the cost of labour. Unfortunately, having converted a huge part of the economy to land speculation based on property development, wage reduction had to result in reduction of consumption of property as a commodity, notable by desperate lending and debt repackaging, which accelerated mortgage defaults.

#StockMarket" id="StockMarket">Stock market sound and fury signifying nothing?

The stock-market is an institution which can only survive on an economic surplus sufficient to support the fees it takes from investments. Whilst economic activity, much of it in the property development industry, was growing by up to 14%, fees of 1-3% seemed wearable and the size of the stock market industry grew just like the size of the real-estate industry did with the globalization and acceleration of land-transactions, assisted by new debt-packaging ‘commodities’ like sub primes. But, if real economic activity drops to 2-3% or below, such fees are untenable. To continue to exist in its current size and draw those kinds of fees, or any fees at all, the stock market must radically downsize.

Is what we are seeing in part the cutting back of personnel, agencies and activities in this sector itself?

#HowLow" id="HowLow">How low can the level of economic activities go?

If economic activity is only responding to short-term price variations in a bear market, rather than to total global petroleum limits, then we might expect market indicators in general to continue to see-saw and prices to see-saw. If it is responding to long-term depletion then the level should begin to see-saw between lower and lower parameters since economic activity will not be able to recover in the forseeable future. Any fuels called in to replace petroleum oil and gas will lack that crucial adaptability to our wheeled and air-transport dependent economy. Any developing new technologies for transport will require new infrastructures on a scale which will be difficult and probably impossible to provide without the vast petroleum reserves that the economy has depended on since WW2

#OilPeakWas1979" id="OilPeakWas1979">Global per capita oil peak was 1979

Oil production has not been keeping up with population growth since 1979 and there are signs that it may not be keeping up with economic activity either. There has been widespread belief – the ‘dematerialisation theory’- that the economy became less dependent on oil and other energy since the 1970s oil shocks and so had increased economic production despite declining increase in oil production.[2]

#decoupling" id="decoupling">Does increased efficiency really mean economic ‘decoupling’ from energy?

It is true that industry became less profligate in its use of energy and that real mechanical and technological efficiencies were achieved. A case can also be made that developed economies reduced the amount of fuel calories/joules they used per unit of production since 1973. There is however little or no real evidence to support the idea that using fewer fuel joules amounts to getting more work from less energy.

Investigation indicates that, in reality, industries began to be more careful about the kinds and forms of fuel they used for production, instead of just using any fuel for any operation. Calories and joules in themselves do not accurately reflect the real usefulness of different fuels. Adaptability of particular fuels to different kinds of production is crucial.[2]

Thus, as oil became more costly, we mostly stopped burning it in our home heaters and turned to coal, because coal could immediately be adapted for heating or electricity creation, but not so easily adapted to drive cars and planes. Because oil was immediately available to drive cars and fly planes, it was largely reserved for wheeled and air transport. An early exception to this rule was South Africa when oil was not available due to political embargos, and so oil was made from coal despite huge energy costs entailed by coal liquefaction. No doubt the slave labour conditions in South Africa assisted the economy to adapt.

We now see many more examples of this costly production of synthetic oil from coal, simply because the cost and supply of petroleum is increasingly problematic. China has been making oil from coal for several years now and Australia and other countries are also encouraging investment in this technology. It is not that the process of turning coal to oil has become substantially more efficient, it is that our expectations for economic production have diminished, although governments still rarely admit this. The effect of producing oil from coal will be higher cost for all industrial production using this coal-oil and a reduction in the amount, rate and profit margin of industrial production. As in South Africa, economies newly resorting to coal-oil will rely on reducing the cost of labour in production.

#ResourceAllocation" id="ResourceAllocation">Allocation of resources; wealth and fuel distribution

There was actually a global decline in economic growth from 1973 onwards, but first-world countries did not register this because access to fuels and energy was privileged for them and blocked for third world populations. So it was possible for many of us in the so-called developed economies to believe that there had been a complete recovery from the 1973 and 1979 oil shocks.[2]

Those of us who looked seriously at the decline in living standards, quality of life, ecological health, democracy and political stability in the third world were less confident in the façade of business as usual. Recently signs of similar declines in standards are apparent in the first world.

#OilDepletion" id="OilDepletion">Oil depletion back on the intellectual radar

When the concept of peak oil came back on the radar, especially via groups like Jay Hanson’s energyresources [ AT ] yahoogroups.org in the late 1990s, people who had been aware of the 1973 oil shock were ready to investigate Hubbert Peak calculations of timing of world oil peak and depletion and to look out for market and other signals of peak production not meeting human economic and population demands.

#relationship" id="relationship">Relationship between prices, depletion and demand

Oil prices are often interpreted as an indicator of geological depletion, but they are not reliable in the short term because speculation may drive these prices up, higher costs may cause short term increases in production because more money is available for production, and higher costs will reduce demand for oil, which will eventually cause oil-sellers to lower their prices.

It was generally felt that oil prices in an era of true geological depletion would follow a zig-zag course of supply and demand responses, where high prices would result in what is known as ‘demand destruction’, but would rise again as necessity reasserted demand.

Eventually oil would become a precious fuel and all those things in our economies which formerly relied upon oil would cease to exist except perhaps in some relic industrial communities which might manage to retain strategic access to remaining reserves.

The situation with the ‘First World’ since 1973 and 1979 could represent an early version of such a relic community monopolizing remaining reserves. The method of monopolization could be identified as market sequestration via currency manipulation. Having a currency equal to US dollars, OPEC standard currency from 1974, became the test for inclusion in the monopolizing countries. Oil became very expensive for any country whose currency was of low value vis a vis the USD.

Ironically Russia, which was the first developed country to fall below this access standard, now dominates considerable, if declining, oil and gas reserves, and the US, whose enormous reserves began to decline in the early 1970s, now roams the world in growing desperation, seeking to dominate other peoples’ reserves. Now with its dollar also losing sway, its capacity to monopolise oil reserves via currency domination looks increasingly moot..

#IsOilSupplyAdequate" id="IsOilSupplyAdequate">Are high oil prices an indicator that total oil supply is now not adequate to keep total world economic activity going at its recent rate?

C.J. Cleveland, R.K. Kaufmann, and D.I. Stern's research cited in [3] seemed to show clearly that fuel prices were closely aligned with the economic productivity of the uses they were put to. Expensive petroleum fuels are associated with the most productive industries. This would suggest that as petroleum prices rise there will not be much room for real adjustment by these industries. Passing on the costs to the consumer will result in 'demand reduction', which will result in a slowing of the economy and a smaller stock market index score. Basically, less petroleum means a smaller, slower economy.

The US and other countries' attempts to throw money at the banks in order to induce them to lend for renewed investment are made in the hope that the money will cause a response. Is the absence of response an indication that the banks cannot find any good investments to place? A failure to respond to this credit stimulus may signify that we really have reached a nexus of oil reserves and economic margins, meaning that continuous economic growth and material progress are now things of the past.

#WhatToDo" id="WhatToDo">What to do?

What slack remains in our economic system?

Time.

The pace of economic transactions now requires specialised industries and staff to keep up with. Ordinary people and processes cannot deal with the pace and impact of economic growthism on their environments. Governments have sacrificed democratic engagement to laissez-faire economics because they lack the manpower and time to dedicate parliaments to monitoring and controlling the rate of human engineered material change and disturbance. The languishing world property markets reached extremes of market propulsion before their current collapse.

A slowing down of the economy would be a godsend, but only if we adapt democratically to it.

We can adapt to a smaller, slower economy by forgiving debt, relocalising economies, and working and producing less material things. Operations on a large scale, such as internationally, including telecommunications and travel, should probably become the province of governments to operate, subject to democratic controls. A new, slow and smaller economy cannot afford massive property development just for the sake of cash profits, and it would have to relinquish the daily importation of food and materials from impoverished countries for continuous hectic economic activity. It would have to adapt to local supplies for most things.[4] Population policies, instead of encouraging rapid growth, would need to take advantage of the natural tendency to rein in growth when economic indicators clearly predict shrinking opportunity. We could take advantage of the aging population to slow down activity, anchor communities, and reduce demand. Instead of attempting to replace age with youth through high immigration, we can look forward to the passing of the babyboom through the Australia's demographic intestine and plan for an overall much smaller population.

One thing is for sure, we need a change in political elites, and by that I mean a change in CEOs and mainstream media owners, just as much as in all levels of government. We have been ruled by an elite with an uncritical faith in a reality-divorced notion of continuous economic growth and coasian cash economics. They are not equal to the task of adapting to thermodynamic realities and the system they support disregards serious input from any citizen not endorsed by their own corporate mediatocracy.

#Australia" id="Australia">Australia:

Any Australian having read Wizard Home Loans/Malcolm Turnbull's contribution to the Housing Affordability Inquiry should realise that the much touted genius of Turnbull is only an eidetic reflection of the kind of progress ideology and cash paradigm on which the financial community has pinned its successful ploy for total deregulation, privatisation and ecological vandalism on a grand scale. The opposition offers little or no relief in this leader to our current problems.

Further questions to be answered are: What is the relationship between NASDAQ, Dow Jones, the Australian All Ordinaries, the Hang Seng, FTSE and other stock market measures and total global economic activity?

Contributions to candobetter.org on this and other aspects of the global credit crisis are welcome. Submit them to the “Comments” here or send them to james [ AT ] candobetter org or sheila [ AT ] candobetter org and we will consider publishing them on the front page.

REFERENCES:

Acknowledgement: Thanks to Ilan Goldman for help in describing the recent gains and losses on the market. Thanks to Quark for help with better graph data.

[1] en.wikipedia.org/wiki/Dot-com_bubble (Accessed 8-10-08)

[2] Sheila Newman, “101 Views from Hubbert’s Peak” in The Final Energy Crisis, 2nd Edition, Pluto Press, 2008, citing A. Maddison, Monitoring the World Economy 1820–1992, OECD, Paris, 2000.

[3] Sheila Newman, “101 Views from Hubbert’s Peak” in The Final Energy Crisis, 2nd Edition, Pluto Press, 2008, citing C.J. Cleveland, R.K. Kaufmann, and D.I. Stern, “Aggregation and the Role of Energy in the Economy,” Ecological Economics, vol. 32, issue 2 (2000),
pp. 301–17

[4] Sheila Newman, “101 Views from Hubbert’s Peak” in The Final Energy Crisis, 2nd Edition, Pluto Press, 2008, citing Clive Hamilton, Growth Fetish, Allen & Unwin, Australia, 2003; Pluto Press, London, 2005, last chapter, especially, pp. 218–20:

Relocalization is obviously the best way to develop the solidarity and self-suffi ciency to reorganize work.

Political commentator and climate activist Clive Hamilton writes in Growth Fetish,
"Reduction in working hours is the core demand for the transition to postgrowth society. Overwork not only propels overconsumption but is the cause of severe social dysfunction, with ramifi cations for physical and psychological health as well as family and community life. The natural solution to this is the redistribution of work, a process that could benefit both the unemployed and the overworked."

He remarks that “Moves to limit overwork … directly confront the obsession with growth at all costs,” and talks about the liberation of workers “from the compulsion to earn more than they need.”

Because growth is sustained by a constant “barrage of marketing and advertising” Hamilton wants advertising taxed and removed from the public domain, and television broadcast hours limited so as to “allow people to cultivate their relationships, especially with children.”

By Earth's Newsdesk, a project of Ecological Internet (www.ecologicalinternet.org) by Dr. Glen Barry, +1 (920) 776-1075Friday 15 September 08. Originally published here.

- Ecological Internet warns converging economic, climate, food and fuel crises are symptoms of massive global ecological bubble, and that without ecosystems there can be no economy

(Earth) -- Current economic difficulties are largely caused by failing global ecosystems and resource scarcity, and are not an excuse to reduce environmental commitments, warns Ecological Internet. The bursting of the mortgage and financial bubbles, and food and energy price increases, are the logical and inevitable economic consequences of over-population, inequitable and unreasonable consumption, and unsustainable economic growth. Environmentalism is the solution to, not the cause of, economic hard times.

"The global growth machine is seizing up because it is hitting ecological limits and because of its own greed. Current global economic difficulties must not stop urgent ecological measures -- like dramatic emission reductions and natural habitat protection and restoration -- necessary to maintain a habitable Earth. Without ecosystems there can be no economic recovery," warns Dr. Glen Barry.

Sufficient environmental policies find it difficult to achieve political support even in times of rapid economic growth, yet this growth is the primary factor driving greenhouse gas emissions and other environmental ills. Human needs for water, air, food and housing are no less in hard times. More than ever ecological sustainability depends critically upon establishing a steady state economy, whereby production is right-sized to not diminish natural capital. Whole industries like coal and ancient forest logging will be eliminated even as new economic opportunities emerge in solar energy and ecological restoration.

This economic cooling may offer a welcome respite to reconsider the growth at any cost madness devouring the Earth’s life giving ecosystems. Growth and livelihoods based upon over resource use from dwindling ecosystems, that mostly benefit the elites, are a dangerous, unprecedented "ecological bubble" that threatens not only widespread economic hardship, but the future of civilization and terrible human suffering.

"In the mortgage bubble's bursting, we see signs of ecological bubbles to come. The world is not only at peak oil, but at or near peak water, land, climate, oceans, food and usable energy. The human enterprise and each global citizen's family size and consumption aspirations must be downsized to a scale appropriate to ecosystem limits. Or the Earth herself, with the assistance of the human created economic system, will do so brutally. Even the best high-yield financial instrument is ultimately only paper and cannot be eaten," observes Dr. Barry.

For further information : ecologicalinternet.org, phone Dr. Glen Barry on +1 (920) 776-1075, or e-mail info [AT] ecologicalinternet org

(Port Phillip Bay, Victoria, Australia)

The Inquiry into the economics of the Port Phillip Bay Channel Deepening project was released in the State Parliament today.

Greens MLC Greg Barber and committee member said; " The Committee's report confirms that the number of big ships that might need a deeper channel is quite small."

"This is one of the biggest unknowns, with the project's benefits highly sensitive to these sorts of estimates."

Government failed to provide and Committee failed to ask for the 'real' business case.

"On the economics of the project, the committee only looked at the information that was already in the public domain. The Government failed to provide and the committee
failed to ask for the 'real' business case. The Greens are now pursuing these secret documents under Freedom of Information, " Mr Barber said.

Committee ignored wider environmental and economic costs.

"The Committee didn't consider the wider environmental and economic costs. This still remains to be fully understood, " Mr Barber said.

Mr Barber claimed credit for the Greens in spotting the "white elephant" here. Mr Barber may be contacted on 0433 044711. http://www.parliament.vic.gov.au/council/SCFPA/

Citizen Activists our most important force

Of course, the role of Jenny Warfe, Len Warfe, and the Blue Wedges team has been fundamental in bringing then keeping this matter in the public attention. Many other organisations, not necessarily the big well-known ones, have joined them. Local radio programs such as 3RPP, Radio Port Phillip, have tried to be vigilant and supportive of Bay activists.

Jill Quirk and Sheila Newman first interviewed and filmed the Warfes in 2004, shortly before they left for a meeting with Steve Bracks. A little later, Quirk and Newman flew over the Queen of the Netherlands, filming the dredge 'test plume'. After that we interviewed divers from the Victorian Sub-Aquatic Association, who were devastated at what was happening to their Bay.

It has been horrifying but educational to understand the flimsiness of the Coasian economic case which seems to underpin all State economic policy and a lack of interest in democracy.

The problems have not gone away and neither has the public opposition and indignation.
On the other side of the Mornington Peninsula which separates Port Phillip Bay from Hastings Port, Catharine Manning leads investigations and public concern and protest about a proposed 400 ha industrial development, which it seems is partly a 20 year project to facilitate infrastructure and transport for importing automobiles.

It is amazing that in this age of looming petroleum depletion governments and banks obdurately behave as if industry will continue to expand without end. In fact it boggles the mind and humbles one to the sheer rigidity of many human minds and the total absence of regard that governments show their constituents when it comes to the crunch.

Illustration: Self-storage city by Sheila Newman

ABC Radio National's By Design program of 30 August ran a story which seemed to depict the growth of the 'self-storage' industry as somehow positive. The fact that so many of us can no longer store our accumulated possessions where we live and must, instead, resort to paying, in the case of program presenter Alan Saunders, AU$200 per month to rent the space necessary to store those possessions is yet another indicator of our declining standard of living. Undoubtedly, the economic activity entailed in the provision of a service that few of us once needed is counted in our country's Gross Domestic Product and, hence, as adding to our national prosperity.

The featured guest was Mark McCrindle of McCrindle Research. He appears to be a promoter of population growth, although one of the documents (pdf, 1.8M) on his web site is frank about one consequence of our population growing to an estimate 24 million (which would have to be an underestimate and must pre-date the announcement in May by Immigration Minister Evans of an increase in immigration) from 21.2 million some time this year. It states:

By 2020 energy consumption will have increase by one third and based on current technologies, greenhouse gas emissions will be 20% higher than today.

I posted the following comment to the By Design Guest Book

The fact that most of us no longer have enough of our own space to store our accumulated possessions is yet more evidence of how our standard of living has declined largely as a consequence of population growth.

Those of us who can't afford $200 month to store our possessions, as in Alan Saunders' case must either endure unacceptable clutter. Throwing out possessions is not always an acceptable solution either. I have come to regret having thrown out possessions including books and magazines.

Interesting that Mark McCrindle pointed out that more of us are renting and that we change jobs every four years. As one who has been made involuntarily to change my job a number of times in my life, I don't see either these statistics as indications that our society is moving forward.

Postscript: The above comment was read out (in essence) in full by Alan Saunders roughly half way through the By Design of Wednesday 10 September (repeated Sat 13 September). There is no one page for that program, but the components were Trends in Lighting, The humble brick, The shrinking office and Ludwig Hirschfeld-Mack and the Bauhaus in Australia. The audio file (25MB), which will be available until roughly 8 Oct 2008 can be found here. - JS 16 Sep 08

An oasis of sanity in a sea of growthist madness?
Could this be happening in the Land of MORE, MORE, MORE?
Bloomington, Indiana supports a steady-state economy!

You heard it right….

The City of Bloomington Environmental Commission issued a statement which identifies steady state conditions as being in the best interests of the community..

Apparently the Commission built on the work of:

1] Economist Herman Daly, who describes the economy as a "wholly owned subsidiary of the environment"

2] Eben Fodor, who demonstrated that population growth imposes capital costs far in excess of taxes that can be recouped from a community's new residents; and

3] The American Farmland Trust which showed that residential growth is a net economic drain on community resources.

Press Release, for immediate release, August 8, 2008
Contact: Kelly Boatman, Chair, City of Bloomington Environmental Commission
(812) 287-0031

Environmental Commission addresses growth

"The City of Bloomington Environmental Commission has adopted a position statement and completed a report to increase awareness of growth and sustainable development. The statement, “Position of the City of Bloomington Environmental Commission on Economic Growth in the United States” is modeled on similar statements issued by the United States Society for Ecological Economics and over 40 other groups inspired by the work of the Center for the Advancement of a Steady State Economy (CASSE). The statement advocates a steady state economy in which resource consumption and waste production are maintained within the environment’s capacity to regenerate resources and assimilate waste, emphasizing development as a qualitative, rather than quantitative, process.

“This position statement acknowledges that the human economy is contained within, and dependent on, a finite and depletable natural environment.”

“This position statement acknowledges that the human economy is contained within, and dependent on, a finite and depletable natural environment,” said Environmental Commission member Heather Reynolds. “Ever-increasing economic growth ultimately leads to resource consumption and waste production at rates greater than can be sustained by nature.” A steady state economy for the U.S. will depend in no small part on the efforts made by communities across the nation to achieve sustainable local economies. The first step is awareness and acceptance of the concepts, both of which it is hoped that the position statement will foster.

Report examines costs associated with residential growth

The report, “An Examination of the Costs Associated with Residential Growth in Bloomington” is modeled after similar studies in other communities. Such studies have shown that infrastructure costs to support growth often outpace the benefits of that growth to the city. A sustainable approach to development would mean ensuring long-term benefits outweigh costs.

The Commission’s report focuses on the City of Bloomington’s capital expenditures and how these expenditures are impacted by residential growth. The report is not intended to define the full costs of growth in Bloomington, but rather to illustrate that there are substantial costs incurred by the City to provide necessary infrastructure to residences. To fully examine costs, further analysis of not only facilities and infrastructure, but also social and environmental impacts is needed.

“The Commission’s report illustrates that the City incurs real costs that are associated with residential growth,” said Environmental Commission member Mike Litwin. “The Commission would like to see the costs of growth balanced against the benefits and incorporated into the decision-making process in order to promote sustainable development in Bloomington.” The report and position statement are available on the Environmental Commission website at http://bloomington.in.gov/environmental-commission.

Position of the City of Bloomington Environmental Commission on Economic Growth in the United States

(Adapted from the Position of the United States Society for Ecological Economics on Economic Growth in the United States and adopted on May 22, 2008 in a 4-2-0 vote following two years of discussion.)

Whereas:

1) Economic growth, as understood by most professional economists, policy officials and private citizens, is an increase in the production and consumption of goods and services, and;

2) Economic growth occurs when there is an increase in the multiplied product of population and per capita consumption, and;

3) Economic growth has long been a primary policy goal of U.S. society and government because of the belief that it leads to an enhanced quality of life, and;

4) Economic growth is usually measured by increasing gross domestic product (GDP), although this is an incomplete indicator of quality of life that excludes the equity of income distribution, other social factors such as physical health and level of crime, and ecological health, and;

5) The U.S. economy grows as an integrated whole consisting of agricultural, extractive, manufacturing, and services sectors (and the supporting infrastructure) that requires physical inputs of non-renewable resources, land and water, and that produces wastes, and;

6) Economic growth occurs in a finite and depletable biophysical context, and;

7) Continuing non-renewable resource-intensive economic growth is having unintended damaging consequences for ecosystems and human societies…

Therefore, the Bloomington Environmental Commission takes the position that based on the above evidence:

1) There is a fundamental conflict between economic growth and ecosystem health (in such areas as biodiversity conservation, clean air and water, and atmospheric stability) and the ecosystem services deriving from healthy ecosystems that underpin the human economy (for example, regeneration of renewable resources, decomposition and recycling of wastes, pollination of crops and other vegetation, and climate regulation), and;

2) Although technological progress and unregulated markets have had many positive effects they cannot be depended upon to fully reconcile the conflict between economic growth and the long-term ecological and social welfare of the U.S. and the world, and;

3) A sustainable economy (that is, an economy with a relatively stable, mildly fluctuating product of population and per capita consumption) is a viable alternative to a growing economy and has become a more appropriate goal for the U.S. and other large, wealthy economies, and;

4) A long-run sustainable economy requires its establishment at a size small enough to avoid the breaching of ecological and economic capacity (especially during supply shocks such as droughts and energy shortages) to promote the efficient use of energy, materials and water, and enable an accelerated shift toward the use of renewable energy sources, and;

5) A sustainable economy supports economic development, an increase in human welfare through strategic changes in the relative prominence of economic sectors and techniques (e.g. renewable vs. non-renewable energy) that maintains the human economy within the regenerative and assimilative capacity of the larger earth system, and;

6) While establishing a sustainable economy, it would be advisable for the U.S. to assist other nations in moving from the goal of economic growth to the goal of a sustainable economy, beginning with those nations currently enjoying adequate per capita consumption, and;

7) For many nations with widespread poverty, increasing per capita consumption through economic growth and often via more equitable distributions of wealth remains an appropriate goal."

[End of press release.]

Good grief. With a State Senator in Hawaii who supports a Steady State economy and a Democratic Socialist Senator in Vermont who wants closed borders and an end to runaway population growth maybe, just maybe there is hope that enough people in America want to stop the train from speeding off the tracks.

Tim Murray August 10/08

Oil Superspike and Forecasting Fatigue

If we take a flashback view on “official forecasts” from one year ago – in June 2007 – the unreality of those Cheap Oil Hopes jump from the page. While the OECD’s IEA is mutating quite fast into a Peak Oil friendly organization, able to admit that future oil supplies will not meet likely or probable demand, the US EIA and other diehards, ironically including the OPEC Secretariat and its far out underestimates of world oil demand growth, have not yet made that cultural revolution.

The chart below, from the US EIA’s June 2007 forecast, which for natural gas set a truly unreal forecast or wish-list 2008 average price, Henry Hub, of about 7.40 USD/mln BTU, is typical of how far out of line from reality some of the ‘official forecasting’ fraternity has got. For 2007-2008, the US EIA in June 2007 was hoping, very hard, the upward price spiral for oil was going to be trimmed back, to highly moderate, almost zero growth of average prices.

From Q3 2007 the graph of crude oil price change from previous year goes straight up – in the real world – not close to zero, as the US EIA hoped and wanted for 2008 and for 2009. For obvious reasons, the US EIA’s faith-based forecasters expected “nonOPEC supply” to ramp up, because OPEC was set to stay recalcitrant about unleashing its massive-mythic pent-up supply capacities. The US EIA placed its bet on new hopefuls like Angola and Azerbaijan + Kazakhstan, and tarsand grubbing Canada, and perhaps even hoped Russia, too, would ramp-up exports in a quest to grab petrodollars. Or maybe they would do this to please the outgoing G W Bush administration? Or because NOPEC producers have a special urge to exhaust their resource pile at record speed, drive down the oil price and national revenues, ending up as Price Takers peddling their cheap and tacky Sunset Commodity like they did for 15 years through 1985-2000. Dream on !

We all know that ‘supply side economics’ is the only economic policy music since at least 20 years, but supply siders also have one demand-side idea on oil. This is ‘price elastic’ demand shrinkage due to oil demanding consumers, habituated to cheap oil, waking up to unreal and exotic prices and suddenly using less. Certainly since 2005, as oil prices have racked their way up, the consumer-nation energy agencies led by the OECD’s IEA and the US EIA have manfully done what they could to talk down demand – on paper.

It might have been high last year but Boy ! Have we got news for you next year ! The slump in demand forecast for last year didn’t happen, as the world’s regular Teflon Herd consumer kept on gulping their gasoline, gasoil, cooking kerosene, aviation kerosene and other fuels, but this year everything is different. Rivaling each other in unreal forward demand estimates, and joined also by OPEC’s Secretariat for whatever dark or hidden motive, by the investment banks and by almost all analysts, the forecasting crowd today claims world oil demand in 2008 is “unlikely” to grow more than 1.1 mln b/d to 1.3 mln b/d.

Maybe these ‘experts’ don’t know the world automotive industry is in full-flood, with a likely 2008 output around 70 million cars, 27 million motorcycles and scooters, 8 million heavy vehicles including trucks, buses, tractors, harvesters and construction site vehicles, and 2 million other road and off-road vehicles. To be sure, 4WD monsters with 350 HP engines trundling round shopping mall car parks are no longer in vogue, in the US or Europe, but cars arent going out of fashion. The first thing buyers do with a new car is fill the tank, and the same for buyers of ‘Capemax’ cargo ships using up to 10 tons of oil per hour, or buyers of Airbus, Boeing and business jet planes and the bulldozers needed to build new airports for them to land on their oil-based tires.

Real world demand growth in 2008 is likely closer to 1.6 or maybe 1.7 mln b/d than 1.2 mln b/d, immediately swallowing June’s largesse from King Abdullah, to grace the world’s consumers with another 0.3 mln b/d (or was that 0.2 mln b/d ?). The headline number for world oil demand as a year average daily number, is likewise and constantly underestimated. One big reason for this is ignoring the rate of loss-to-production and losses through all downstream steps in the well-to-wheel chain. These add by my estimates to a year average near 1.4 mln b/d and are increasing at least 2 times faster than production growth (around 4% annual increase of losses for 2% production growth). By late this Summer, the peak annual bulge of demand can lift global demand beyond 90 mln b/d. Will production meet this ?

WORLD OIL DEMAND 2005 - 2008

NOTES:
1.Daily demand in Million barrels/day (Mbd) on “all liquids” base, including NGLs, refinery gains, other condensates, tarsand and syncrude oil, GTL (gas to oil), CTL (coal to oil) and the biofuels
2. Total demand includes all loss-in-production, loss in transport, storage and loss in break of bulk operations, estimated at 1.4 Mbd.
Net final demand for 2008, for example, is a day average of 89.5 – 1.4 = 88.1 Mbd.
3. First annual peak, 2007, was depressed due to exceptionally warm winter conditions in northern hemisphere.

200-dollar oil by Christmas ?

Since late April 2008, gathering numbers of analysts have come around to the simple logic I noted many times previously. From Jan 2007 to Jan 2008 oil prices swung from a month-low of 49.50 USD/bbl in 2007 to a month high above 100 USD/bbl in 2008. Doing that doubling operation one more time generates a Jan 2009 target of 200 USD/bbl. After Jeff Rubin of CITIC, we had GS analysts led by Arjun Murti, in a 5 May report titled “Has the Oil Super-Spike Endgame Begun ?” which concluded 200-dollar oil is not impossible. The few European analysts following Patrick Artuis of Natixis Bank, who more than 2 years ago forecast that 200-dollar or 300-dollar oil was far from science fiction by around mid-2009, come to the same ballpark estimates as Murti’s report.

Maybe we need to spike-up to 200 USD/bbl to achieve finance sector and global economic meltdown, but maybe also we don’t. Prices above 130 USD/bbl are going to do impressive things for US monthly oil trade deficits, on its 13 or 13.5 mln barrels/day of crude and products imports. India imports the same percent of its total consumption, about 65%, even if this only adds to a modest 2.2 mln b/d, but paying for cooking kerosene in a country where 300 million persons – exactly the same number as USA’s total population – live on about 1 dollar 50 cents-per-day means very big subsidies. If not, the rubber band breaks and India’s vanishing forests disappear even faster as firewood, and social tensions will burn in a country with a Muslim minority big enough to make it the third-biggest Muslim nation in the world, if it was a separate entity. Oil subsidies in India, loudly decried as market distortion by OECD finance ministers worried about gasoline prices for their consumer horde car fleets, and worrying fall-out in the airline industry, have spiraled to about 3% of India’s GNP. China’s impressive foreign exchange cashpile, like the US trade deficit but in exact reverse – China is a creditor nation – will surely start shrinking as 130 dollar-oil eats into it, but nowhere near so fast as shrinkage of Japan’s ‘traditional’ monthly trade surplus, already down 33% on one year previous. As economic growth slows, quite fast in India and also in China, quite fast in several European countries, very fast in some Latin American countries, inflation rises – usually described as ‘only due to oil’, but now surely helped by oil.

The club of big economies and countries with 20%+ annual inflation has now reached more than 20, and is growing. Inflation is not uniquely due to oil prices but helped by energy cost push, specially at over 100 USD/bbl, and when added to falling economic growth is the signal we have the rubber band of “seamless global growth” stretched near its limits. The detonator for a global economic explosion, triggering a crash landing for growth and inflation at 10% pa right across the OECD, and many times that outside the OECD, is easy to project. When sudden and repeated interest rate rises are brought to close proximity with existing high inflation the global economy can replicate 1979-1980. This was the last time oil prices in 2008 dollars were anything like today’s, probably around 95 to 110 USD/bbl when corrected for inflation. The real difference was that interest rates, at the time, were sky high, at over 10%pa in all OECD countries when the second Oil Shock hit.

Stress and Storm Signals

To be sure the situation is grave. June’s G-8 finance ministers meeting in Osaka, at which the Russian and Canadian ministers were perhaps not sincerely sure they wanted cheap oil, due to oil’s miracle effect on their budget balances, foreign exchange reserves and value of their national moneys, was held under special crisis conditions. The ministers posed for the family photo without neckties – a new Japanese custom for office-based salarymen who, without ties, can take temperatures at least 10°C higher than nekutai colleagues hooked on air conditioning. As everybody, or at least finance ministers believe, airconditioning is a big oil user in advanced economies burning 140 million-year-old fossil residues to change the world’s climate. We can ask: at 200-dollars for the barrel will the ministers pose naked ?

World finance and business leaders have to date in mid-June not come around to telling us what oil price is needed to make the band snap, which in fact is the real and interesting question. There are several parameters in the mix deciding when and how this happens, all of them daily-commented by finance and business players, analysts, and by consumers in the street, whether driving their car or buying food or anything else.

One way global economic explosion can happen is when or if the USD versus EUR, or Dollar/Euro struggle gets vicious. Today even Ben Bernanke wants a strong dollar, to curb both imported and domestic inflation, and is fast losing interest in bailing out subprime-addicted investment and other banks, asset reinsurers, and other Wall Street wailers for billion dollar Federal Reserve handouts. The Euro Central Bank’s Monsieur Trichet created the Euro in a pure atavistic dream of “saving Europe from inflation”, forever of course. This hasn’t worked. The outrageously overvalued Euro does not protect against inflation – it might even favor or generate it by its own heavy presence. No country feels the money is its own, and everybody feels they were cheated by the fiat exchange rate they had to accept, to get Euros.

As in Argentina, Venezuela, Russia or the GCC countries, real world inflation has really slipped out of Al-Din’s petro lamp in Europe, trashing ECB and official, as well as “consensus” CPI figures produced by consensus forecasters anxious to please the ECB. Europeans no longer believe inflation is low because, after all, flat screen TVs always cost less and “the Euro is strong”.

The USD/EUR pivot is exactly 1.50 USD for 1 Euro; when the Euro gets there it can fall and fast, with no floor, like it rose against the US dollar with no ceiling – which is par for a fiat money The Trichet gang will not take this lying down and will crank up interest rates. So will Bernanke. Pretty soon the US goes into real economy recession, like the Eurozone was already “but nobody knew” because 1.5%pa economic growth is normal for Europe’s obsolete, oil-intense and energy-intense “postindustrial” countries living like the USA with unreal dreams of economic power.

In the Europe of June 2008, retail gasoline and diesel prices around 9 to 10 US dollars per US gallon are already generating daily protests by the biggest energy-using and wasting industries and professions, from fishing and trucking through farming to taxis and ambulances. With a Euro buying only 1.18 USD, the famous “target rate” the ECB itself set, back in 1998 at the Euro’s launch, this shifts up to 11 dollars-a-gallon or more. How long do consumers take that ?

The Oil Price Trigger

The important point is this: current global oil supply/demand conditions can bring 2009 Super-Spike prices to the present anytime we get a geopolitical shock to layer on the shifting mix of factors making the rubber band very fragile. Even without this, completely spooking average analysts and business-as-usual deciders, pure physical shortage might tilt oil prices into Super-spike realms by mid-2009. Constantly underestimating demand, and overestimating new supply is a sure way to experience bad surprises.

We can say that if 130-dollar oil is a really bad dream for the real world economy, 200-dollar oil will be even more traumatic. With the USA’s oil trade deficit running at maybe 2 billion dollars-a-day, the Obama gang will need a lot more than friendly winks and gifts from Wall Street backers – and will have to radically cut US oil import demand. Exactly the same applies to European leaders painfully trying to fool European consumers they need a European passport and army, not affordable food, lodging and energy. In other words, the pussyfooting with bolt-on gadget “soft energy solutions” as our heartfelt contribution to fighting climate change will need to give way to simple and straight oil-saving and energy-saving. This will be the equivalent of what Jimmy Carter called a cultural revolution – and like his administration showed, these don’t happen without crisis.

Copyright Andrew McKillop, 2008
Andrew Mckillop

Also published at http://www.energypulse.net/centers/article/article_display.cfm?a_id=1798

It seems a perfect solution. Australia needs workers for seasonal and mining jobs; The Pacific Islands and East Timor, with high birth-rates and much of their populations under 25, have up to 65% youth unemployment. Let their young people come here as temporary labour. Neat. Two problems solved. Temporarily.

It is a dangerous stop-gap for the Islanders unless also family planning cuts family sizes down to four or less. These islands have populations growing to the degree that their own resources cannot support them. The average woman in East Timor has eight children = 64 grandchildren = 512 great-grandchildren. Despite all the causes of high death rates, the quite small island of East Timor, only 15,000 square km, with a rural economy and relying perhaps too heavily on future oil and gas revenue from the Timor Sea, and a population of under half a million in 1950 is now heading for going on two million by 2050. The islands of Tonga, population 45,000 in 1950, are now over 100,000 in only 50 years. The Solomon Islands, in only one hundred years, will grow from just over 100,000 in 1950 to a million in 2050. How many of these growing populations of the Islands can be employed as temporary labour or even be permanent immigrants to Australia? Not the scores of hundreds of thousands that will be needed. Surely family planning opportunities must be tied to all aid, with the Western countries set as examples of how higher standards of living are related to smaller families.

Secondly, countries no longer able to rely on their own resources and industries, like Tonga and the Philippines, (21 million in 1950, 79 million now, and heading for 157 million by 2050) are now relying heavily on funding sent by expats, which is now 70% of Tonga’s GDP. An Australian working in Tonga observes that this is encouraging Tongans to continue to have large families, so they can have more expatriate income. A disastrous strategy.

Aid for countries in trouble must focus primarily on how these countries can be viable in the global economy, without stripping their own resources, such as timber and fisheries.

#AustralianBenefits" id="AustralianBenefits">Australian 'benefits'

For Australia, short-term migrant workers may seem ideal – they work hard, and they are glad of wages and conditions that Australians refuse. If industries wane, there is no Australian problem of redundant workers.

But how, in the global economy, can our industries afford the wages and conditions that would attract Australian workers to these short- term or seasonal jobs? We have young unemployed Australians, including indigenous people accustomed to hot climates – how can they become employable? Outback communities sometimes have hardly anyone able to take on a fulltime job even in nearby mining industries, through problems of alcohol, illiteracy and no motivation. What sort of culture do we need for the experience of hard productive labour and different scenery to be an adventurous part of growing up? And a way to see how our industries work, of permanent value for their future employment, whatever it is. Indeed, how unbalanced are our patterns of youth employment?

Look ahead to what may be the demands for jobs to meet the challenges of climate changes, and possibly of some global economic chaos as well. Are we over-investing in jobs such as IT, PR, entertainment, financial money-making, law, and cafes? And too little in practical skills of growing, and making, and organizing productive businesses that underlie our present and future quality of life?

Even our program of importing skilled professionals under short-term visas is short-sighted - as we fail to give our own young people a decent chance to learn those skills, and other more needy countries pay the cost of training their exported skills.

Government ignores the rights of consumers to shun factory farming horrors

The horrors of mass-produced egg and chicken products were aired last night in Jamie Oliver’s revealing exposé “Jamie's Fowl Dinners”. In addition to the grand-scale cruelty of factory farming methods, what this documentary also revealed was a crisis in mass-produced animal-derived products, as much an issue in Australia as it is elsewhere in the world.

People are horrified when they know the reality

Although the horrified response of audience members exemplified the feelings of people faced with the reality of factory farming, Australian consumers in Australia are currently unable to identify the production methods of the majority of products on their supermarket shelves.

“With the proliferation of vague and meaningless product labels, many of which give no indication of the farming production method used, it is becoming impossible for consumers to make informed choices,” said Verna Simpson, Humane Society International (HSI) Director. “HSI has asked the Government to instigate an urgent review and reform of all legislation relating to the labelling of animal-derived food products, to ensure there is truth in product claims and clarity in product labelling.”

Min for Agriculture ignores cries for less cruelty

The response has been abysmal, with Tony Burke, Minister for Agriculture, Fisheries and Forestry, stating that he does not support the labelling of food according to the method of production, and claiming that simply putting the place of origin of foods on labels is enough for consumers to judge suitability based on animal welfare concerns. (Tony Burke's email address is Tony.Burke.MP[AT]aph.gov.au)

Disrespect for ethical concerns of consumers

“This response from Minister Burke is reproachable and demonstrates a complete lack of respect for consumer rights,” said Ms Simpson. “The government is effectively spitting in the face of consumers who have very real ethical concerns about animal welfare and the production methods of the food they are buying. The approach he is advocating is far too simplistic. It is bewildering how Minister Burke expects consumers to make informed choices with this labelling system that is devoid of any meaningful information on what is in the products they are purchasing, and how they are produced.”

Labelling standards must include animal welfare

HSI is calling for a reform of all federal, state and territory legislation and regulations applying to food labelling, branding and marketing, that must ensure the terms used on product labels are limited and clearly defined, and that these terms are linked to consistent national standards, including those for animal welfare.

From an HSI press release, Sydney, 24 July 2008

Contact: Verna Simpson on 02 9973 1728 or 0416 189482

HSI concentrates on the preservation of endangered animals and ecosystems and works to ensure quality of life for all animals, both domestic and wild. HSI is the largest animal protection not-for-profit organisation in the world, with over 10 million supporters globally and has been established in Australia since 1994.

Humane Society International Inc - Australian Office
PO Box 439 Avalon NSW 2107 Australia
Ph: 02 9973 1728 Fax: 02 9973 1729 www.hsi.org.au

Greed cannot be defined in conventional terms exclusively as a quest for more money or material possessions. It is simply a desire to have more and more. More than one needs. More than one can use. We know that billionaires don't need and can't use four yachts and a fleet of twenty antique cars but most North Americans have affluenza too. And our greed is manifested not just in our insatiable material appetites, but in our need for more activity. More hobbies, more “courses”, more “lessons”, more structured leisure events, and volunteering. All this in tandem with a double income work schedule.

Something must give. So what is deemed expendable? Small talk with friends. (Sorry, gotta go). Real talk with family. Time with pets. (North American dogs average a 20 minute nightly walk). Reading time. (remember novels?). Writing letters.(Emails mutilate the language ) Our sleep. (Canadians slept 9 ½ hours a night a century ago). Our health. (Indigenous people averaged 2 hours of work daily—the industrial revolution turned us into mindless robots.) In our contemporary society it is a sin to be seen not to be busy. I recall the words of Thoreau:

“If a man should walk in the woods for love of them of each day, he is in danger of being regarded as a loafer, but if spends his whole day as a speculator, shearing off those woods and making earth bald before time, he is esteemed an industrious and enterprising citizen.”

Above all we must be “goal-oriented”. We must have “plans”and “objectives”. The impression must be left that my life is not something to be experienced but rather like a career in the Cub Scouts where I get various performance badges to mark my “progress”. Just like the people who plaster their cars with the decals of National Parks to prove they had a good time. Well, I am an not a Japanese tourist and I feel more like just experiencing the moment rather than ruining it by recording it. I don't think life is like a carport that you have to fill up with junk —activities—so much to the point that there is no room for your car, that is, for what is essential.

In the 1950s people found time for people. Because they were satisfied with less. Satisfied and happy for the most part. When people had problems, my recollection was, hey, come over for a cup of tea, dear, and let's talk about it. Grandparents and their concerns were an integral part of the family. Mom was always home waiting for me to arrive from school with a cup of cocoa and a peanut butter sandwich, wanting to know how my day went. She could do that, because it took only one income to deliver what we wanted. A 950 square foot house, with three small bedrooms, one small bathroom, one icebox and one car for seven people. And no foreign vacations. A typical middle class lifestyle. Rich in time and quality of life.

But times have changed. 950sq feet is now a telephone booth for today's Canadians. Bathrooms are that size it seems. Some kids today have their own ensuites. I had to share my bathwater with two brothers, third in line, and one bath a week sufficed for hygiene. Many people in my boyhood were of the belief, like my parents, that Canada's wealth was not fairly shared, and that it was outrageous that there were poor among us who did not even have shelter or medical care. This situation is even worse today. But with one difference.

While folks like my parents, the socialists of the 1950s, believed that government services should assist the needy, they did not think, as apparently many people now do, that government should substitute for the care and assistance that friends, neighbours and relatives used to provide in the 1950s. The role of government in their view was to supplement what was already being done. Nothing is so debilitating as the notion that one has no individual responsibility, or community responsibility, to help people because we can just sit back and leave government to carry the ball. Or that we must await “funding” from government to proceed. In the post-carbon era we will have to return to the old Canadian pioneer ethic, get off our butts and help people ourselves. Barn-raising was not done by government employees. But by neighbours and friends who found time to help neighbours and friends. For nothing. No “funding” was available.

Presently, when an individual in obvious need of help or assistance is encountered the reflexive response is to offer the recommendation that he seek the help of some government agency or counseling service. That cup of tea that was offered in the 1950s is never proffered. There is a comfortable and convenient belief about that “these people” will be taken care of “if only” they will seek help. The fact is that if we spent 50% of our GDP on psychologists and counselors it would not take the place that stay-at-home moms, live-in-grandmas, and kindly neighbours did 5 decades ago. And given the choice between the fashionable trauma counselor of this century and my grandmother's apron, I'll take my grandmother any day of the week. The people who survived the London blitz didn't need psychologists—maybe if they had had them, they would have surrendered to Hitler. As it was, they just spent the time to help each other.

But the 50s will never return, you say. Just wait until the oil economy is done. You're going to get a crash course in Amish living and I am going back to the future… You'll have lots of time to slow down then and get re-connected with the people around you. But hey, you can do that now. You have time for me. Your day is 24 hours long just like mine. The point is, you will not make time for me because you have put too much on your plate and I am not a priority.

Now, I most probably should not be a priority. You have your family after all. But realize that is not external forces that are making you run so quickly on a treadmill. It is the force of your own greed to have it all. The bigger more expensive house, the higher paying more stressful job, the two cars, your yoga classes, the two kids, their music lessons, their soccer practices, your Mexican vacations that have to be financed by working over-time. etc. I didn't twist your arm to make those choices.

You “gotta go” because you are as “Type A” and wired into the system as is any Vancouverite, who at least doesn't have the hypocritical trappings of Island culture.

Have another expresso.

But one day, please read Leo Tolstoy's “How Much Land Does a Man Need?”

Tim Murray
June 13/06

See also: Living standards and our material prosperity of 6 Sep 2007 on Online Opinion and discussion.

The Australian Government is set to pass laws ending the single desk marketing of Australian wheat this week.

As reported by nineMSN, farmers have gathered in Canberra to protest the change. Wheat Growers Action Group chairman Peter Cannon, who helped organise the day of protests, said farmers were being dudded by the changes and wanted the public to know about it.

Wheat Export Market Alliance chairman Graham Blight also told the rally that growers' democratic rights were being ignored.

Without a single desk, "the weakest seller will determine the market", he said.

"The multinationals will come in and have a field day ... our government's given them a blank sheet".

Critics of single desk marketing have used the AWB/Iraq 'scandal' and one particularly heavy loss by Board to justify throwing out the whole single desk system. The opportunistic timing and predatory nature of their push for de-regulation is similar to the Disaster Capitalism modus operandi described by Naomi Klein in her book 'Shock Doctrine'.

The system preferred by many of these critics is - surprise, surprise - a free-market open-slather arrangement where the price of wheat can effectively be bid down to the lowest common denominator by the buyers. The buyers, in this case, would be the same sorts of multinational agri-business conglomerates that are lining up to market Australian wheat once the single desk is gone.

Not surprisingly, both Liberal (in the dubious form of Wilson Tuckey) and Labor (new Minister for Agriculture, Tony Burke) fully support the changes. Both operate in the mind-space of free-market economics, where any Government 'meddling' with the purity of the market is considered heretical.

Even when it helps Australian wheat farmers.

If there are problems with the way that AWB's been run, fix the problem. Don't change a structure that's served Australian wheatgrowers well for decades.

How do the politicians and the CBC define prosperity?

It is time we ask ourselves: Has this ”progress“ called ”Economic Growth“ (of which population growth is the main factor) really made our lives better? Politicians say it improves our lives. The CBC's host of ”The Sunday Edition“ Michael Enright said on his June 7, 2008 radio show that we need immigration-driven population growth in order to ”prosper“.

I would like to know what his definition of ”prosper“ is. Does Enright think that prospering means converting hundreds of thousands of hectares of Canadian land from biodiverse ecosystems into new roads, subdivisions, clearcuts, malls, parking lots, and open-pit mines to accommodate about 250,000 additional immigrants every year? Does that make life better for the average Canadian? Has real wealth per Canadian increased?

When I was born in 1980 there were only 24 million people in Canada. 28 years later, would a middle class person be able to afford more quality and quantity of real resources now than in 1980? I don't think so. In 1980, a middle class person could easily afford a 40 hectare hobby farm where the climate is mild such as Southern Ontario. Today, you'd have to be upper class to have that.

In 1980 a middle class person could afford more seafood with more varieties to choose from, thicker fillets and less chemical contamination in those fillets. In 1980 the furniture that the average person bought was made from solid wood, not particle board with a glued-on veneer that peels off when wet. In 1980 grocery stores in Canada gave patrons paper bags that could be used as tinder in your woodstove, used as mulch in your garden, or composted. Now we get non-biodegradable plastic bags, which are overflowing landfills, littering the countryside, and we are made to feel guilty for using them.

The lesson: ”Economic Growth“, or increasing the Gross Domestic Product (GDP) does so by increasing the population, which explains why it results in less real wealth per person. More people means less space and resources per person. No wonder ”progress“ has made life worse for the average Canadian

.

Brishen Hoff, President of Biodiversity First
(biodiversityfirst.googlepages.com/index.htm)

See also: Living standards and our material prosperity 6 Sep 08 concerning the quality of life in Australia

(illustration by Sheila Newman)
In “Population grows at record rate", an article by Tim Colebatch, The Age, June 6, 2008, an Australian journalist has once again been given license by the Fairfax Press to frame Australia’s overpopulation problem as some kind of triumph.

In an article akin to the spin used to sell large bags of potato crisps and sugar, caffeine and phenelalanine-laden soft drinks to adolescents, Tim Colebatch sells overpopulation to Age readers.

Whilst relating the latest ABS statistics, the journalist chooses resoundingly positive terms for this undemocratic and frightening complex phenomenon:

Australia “turned the corner” into 2007 by having ‘almost 21.2 million people'.
In Victoria, the state’s population grew by a “record” 82,430 people. Tasmania “reached a milestone” and is ‘now “on track” to reach 500,000 residents’

Portraying this bizarre engineered growth as some kind of race for supremacy, Colbatch comments that Victoria “lost slightly” ‘in net migration flows to other states.’ ‘Queensland (+25,647) was the “big winner” from interstate migration, as usual, while NSW (-24,028) was again the “big loser”.’

The article concludes with some of the costs of population growth in Australia, but without portraying them as costs. In contrast to the hyped up descriptors for the growing numbers, journalist Colbatch leaves right for the end a peculiarly unemotional account of some of the suffering involved:

“The rapid population growth is driven by business recruiting ready-trained skilled workers from poorer countries rather than training Australians. In the six months to April, almost 100,000 temporary workers arrived, while the Government has just increased the quota for permanent skilled migration from 102,500 to 133,500. Critics point out that there has been no increase in housing supply, so the arrivals are intensifying the housing shortage and helping to drive up rents.”

There is no warning of how the extra people will affect the chances of Australians to weather oil, soil and water depletion.

The statistical news is actually unrelievedly awful, especially as related with ghastly flourishes like these for Victoria:

‘VICTORIA's population has “soared” to more than 5.2 million, with the Brumby Government "claiming the biggest growth in 35 years”' and ‘Treasurer John Lenders said the figures were "an endorsement of our Government's record investment in making Victoria the best place to live, work and raise a family"’.

No mention at all of the growth in groups all over Victoria and the rest of the country protesting at the loss of democracy and control over their environments. This is not reporting. This is propaganda, pure and simple.

Please circulate this article to help to counteract mainstream-media propaganda for population growth.

France will soon become President of the European Union.

The French Parliament is scheduled to vote on the first of a new set of environmental laws, springing from an environmental summit - La Grenelle - profoundly reviewing the state of the Environment, before mid July 2008.

During the French presidential elections, which Sarkozy won, he promised to hold an important environmental summit founded on an historic 1968 one, Les accords de la Grenelle. The 1968 Grenelle (Summit) is remembered for having led to a 25% increase in social security benefits, marking the beginning of the famous “social dialogue” in France.

On France2 Public News of Thursday June 5, Nicolas Hulot, film-maker, t.v. star, and ecological militant, head of the Nicolas Hulot Foundation for Nature and Man, was asked to comment on progress made since the recent French summit on environmental law, which his Foundation provided much of the impetus for. Hulot said that the proposed laws were, “too little and too slow,” and he commented on the amount of resistance and lobbying.

He said that he must be careful not to disrupt a good dynamic. “In France’s summit we got a sum of objectives and measures that we have never had before and we are in a position that no country has been in before ; the country has come together and is readying itself for action, so I have to be objective.” He added, however, that France still has to look at things as they are and not kid herself.

“At the moment every environmental indicator shows that the situation is accelerating, so that, whatever becomes of the summit objectives, anything we achieve will be a catch-up.”

“A number of things agreed to in the Summit have lost ground, for example carbon taxes have been delayed … And, renovation of old buildings - because new construction is only 9% of the building stock - the rest is all old - renovation of old buildings was supposed to become the standard. And green wedges; there were supposed to be connections between all the ecological zones; this was supposed to be put in place, but it hasn’t happened. These things could be brought up the list again by the members of Parliament (les deputés).”

Hulot said that he hoped that Members of Parliament would not descend into the depths they did over Genetically modified crops law, and instead will vote responsibly together by unanimously voting the Environment summit law (la loi Grenelle)… and perhaps bring some things forward, because so much has been scheduled too far ahead, to 2015, 2020 etc.

Hulot was asked by the announcer on the French News: “It’s true that the context of things has changed, the process has accelerated. Take for example, the cost of petroleum, would you accede to the demands of the occupations that are angry about this… by softening the taxes to reduce the amount they pay?”

Hulot: “Of course not, although that is easy to say if one is not specifically suffering. The point is that everyone needs to get real. We are now in food crisis, energy crisis, crisis of natural resources and primary resources, all combined with the economic crisis, bringing us to one of the greatest crises that the world has ever known. So, what do we do? Do we wait until we run into dead-ends everywhere, or do we take strong measures? France cannot all by herself be virtuous.”

She could, however, improve the situation by leading the European community.

“France could do it with La Grenelle… correcting and enriching a number of provisions. She could find legitimacy at the moment when she enters the Presidency of the European Union to lead our partners into still more structured measures…more radical…”

Asked to talk about petroleum in this context, Hulot, exclaimed, “Excuse me, but on Petrol, we still don’t have a Plan B. Petrol has still not hit bottom. We cannot take short term measures permanently. Petrol is going to become rarer and rarer and therefore more and more expensive. Therefore, for example, in a number of sectors regulation will become necessary, and probably reconversion.”

The announcer asked, “So there is no point in trying to soften the pain of high prices in petrol…?”

Using the French metaphor, ‘Reculer pour mieux sauter’, Hulot said that, “We have to step back in order to be able to advance all together. To move in a united way.”

He was then asked, “But what should we say to the occupations that are hardest hit?”

Hulot: “Well, in the first place you have to look at their problems case by case, for instance, in fishing, 3 or 4% of the sector is responsible for the greatest draw-down on oil … this can be discussed…For road transports, we need to look at the overall transport situation …We cannot only look at road transport alone. All cannot be as it was before. If people think that everything can go on as it has done, and we react constantly in crisis mode, we are going to finish up in a massive recession. We know that those who will be hit hardest are those who are already in difficulty. For example, the fishing industry, agriculturalists, and truckies..”

“Now we need a real Marshall Plan, at the level of France and Europe, to orientate massively our investments in our economies for this transition, and for solidarity (mutual cooperation).”

(re-edited 7 June for clarity.)
Source: France2 8pm television news of 5 June 2008; "Grenelle de l'Environnement: Nicolas Hulot veut que le projet de loi de programmation soit "amendé à la hausse"", AP, 05.06.2008, 12:57 and "Le Grenelle de l’environnement, mode d’emploi", http://www.biodiversite2012.org/spip.php?article228, 12 February, 2008
Journalist and Translator: Sheila Newman

No-one with their eyes and ears open could miss the fact that economic and material prognostics are all pointing downwards for the world economy. Some may turn to fortune tellers and stock-market analysts, or even listen to politicians, at these times, but do any objective measures actually exist? A study in 2003 seems very pertinent today.

What do thermometers and spygmanometers actually measure when a physician uses them to test one person's health? They actually measure outward signs of microstates in the human body in thermodynamic terms of temperature and pressure. The measurements only mean something when compared to a range of averages over a wide number of bodies.

Taking a similar approach, but applying it to entire species, marine ecologists, Charles Fowler and Larry Hobbs, worked out a series of tests to assess the health and prognosis of our species and others in, "Is Humanity Sustainable?"

They wrote, "Avoiding abnormal or pathological conditions has long been standard practice in medicine. In recent decades, this has become recognized as a critically important tenet of management at all levels of biological organization. That is, management and restoration have the objective of keeping components of complex systems (e.g. individuals, species, ecosystems and the biosphere) within their normal range of natural variation in much the same way we do medically with body temperature, body mass, pulse or blood pressure for the individual human."

Objective assessment requires, of course, that humans be considered as "part of ecosystems and the biosphere, subject to the same natural laws and benefiting from the same supporting services as other species."

Does Homo sapiens fall "within the spectrum of variation observed among species"? Fowler and Hobbs tried to test whether the human species falls within the normal range for comparable species, using a range of measures that are also applicable to other species.

This scientific study proposed that the "principles and tenets of [good] management require action to avoid sustained abnormal/pathological conditions. For the sustainability of interactive systems, each system should fall within its normal range of natural variation."

"This applies to individuals (as for fevers and hypertension, in medicine), populations (e.g. outbreaks of crop pests in agriculture), species (e.g. the rarity of endangerment in conservation) and ecosystems (e.g. abnormally low productivity or diversity in 'ecosystem-based management')."

Almost every test showed that the human species was not ecologically normal. Tendencies in the human species usually varied way beyond the safe range.

The authors wrote, "For example, our population size, CO2 production, energy use, biomass consumption and geographical range size differ from those of other species by orders of magnitude."

These differences must have practical consequences, but these are not well known.

The full study may be downloaded at http://journals.royalsociety.org/content/cnvwhur9u2crk6le/fulltext.pdf

It is amazing that so many of us accept that it is our lot to work for others and to pay rent. Was it always so or did this come about through sophistry?

Whilst in part a review of aspects of Ellen Meiksins Wood's stimulating book,
The Origin of Capitalism, a longer view, Verso, London and New York, 2002, this article features a passage from that book. The passage analyses how John Locke's philosophy of the Law of Property characterises capitalism and documents changes to property law in England which created a massive landless labour force by facilitating dispossession on the pretext of efficiency.

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John Locke's work on property goes back to the end of the 17th century. To many it will seem eerily familiar because we hear constantly its echo in arguments about efficiency and enclosure. In Orwellian Waterworks: big-agribusiness and Victorian Government, the reader of this article may recognise that the same excuses are still being made for new enclosures of land. It is false to believe that these are the good old days and that our society protects us from legally sanctioned predation. For instance, it is no wonder that the people of the Riverina have scheduled a demonstration in front of Parliament in June 3 at 12.30pm. What is happening close by in country Victoria is of utmost seriousness.

In her book, Ellen Meiksins Wood sets out to find the origins of capitalism. Personally I think they go back further, but she is on the right trail and you won't find her work disappointing. Woods agrees that capitalism originated in England and recognises that things were and still are different in continental Europe, albeit she also recognises that capitalism culminates in the globalisation movement.

Half the book consists of a very thorough literature review where she disputes a number of well-known theories, both Marxist and ‘liberal’, on the grounds that they all wrongly assume that capitalism sort of emerged organically from simpler societies. This is in fact the deadening ideology preached daily by the world's syndicated Anglophone media and Anglophone governments. In jingles and visual noise more invasive than the muezzin, we constantly hear that "Capitalism is the culmination, the natural way, the only way, and we must overcome all its problems by being more productive in order to have endless growth. To go 'backwards' is to perish etc."

Yes, Wood also disputes the widespread inference that capitalism was an inevitable kind of human social progress. She disagrees with the idea that capitalism confers overwhelming benefits. Whilst many theories identify capitalism with cities, she sees capitalism as being born in rural agricultural society.

She describes capitalism as a special arrangement of capital, labour and market. She sees both the owners of capital and those who work for them as subservient to the market. In her view, the market is something that developed from the separation of power and economy.

She constructs an original and useful thesis that the commercial market in capitalism has developed a life of its own. The market now controls people rather than their controlling it and that it is a source of much unhappiness. Whilst she concedes that those who own the capital benefit from this situation for longer than those whom they oppress, no-one will escape in the end. At the bottom of it all is the elevation of profit above all other things, which means we cannot protect anything if destroying it will make someone a big enough profit.

At no time does she display an awareness of the role of fossil fuels in capitalism, but those of us who are aware of this, can supply the gaps. What she has done is create a framework.

Wood correctly identifies dispossession as fundamental to the emergence of capitalism in England. She locates the “first major wave of socially disruptive enclosure” as having occurred in the 16th C. (Some have placed it earlier but she does not mention this. Neither does she identify the mechanism which first permitted private property.)

She does, however, also correctly identify English society as different from societies on the European continent, with France typifying continental societies. She acknowledges that Dutch society was also different from other continental societies, but still dissimilar to England. She does not explain how Holland came to be different from the continental roman societies.

She does identify changes in the law as an important part of capitalism. The changeover from traditional (oral) and customary (mutual, often inherited, obligations) is known to be a fulcrum of abuse which permitted and still permits land-owners who were educated in written law to take advantage of peasants and hunter-gatherers who were and are not. She notes that written laws replaced tradition in passing, without dating the phenomenon or otherwise particularising it in relation to her theory. She stresses, however, a change in philosophy of property law, of which she does date some documents and events. These are, notably,

Document: Thomas Moore’s Utopia (1516)
Event: The Expropriation of Ireland (1610)
Document: Locke’s Theory of Property. (1690s)

John Locke

John Locke,, (1690s), cited by Ellen Meiksins Wood, pp110-115:

“Lock begins with the proposition that God ‘hath given the world to men in common’ (II.26), but he goes on to show how, nevertheless, individuals come to have property in particular things. In fact, he writes, such private, individual property is a God-given natural right. Men (and in his argument, it is always men) own their own persons, and the labour that they do with their hands and bodies is therefore their property too. So, he argues, a natural right of property is established when a man ‘mixes his labour’ with something, when, that is, by means of his labour he removes it from its natural state or changes its natural condition.

"Locke was certainly not the first thinker to propose that unoccupied land could be claimed by those who would render it fruitful, but, as he developed his labour theory of property, he introduced some enormously significant innovations. We shall consider some of their implications more closely in Chapter 7, in connection with the ideology of imperialism. For now, the central point is that Locke’s whole argument on property turns on the notion of ‘improvement’.

"The theme running throughout his discussion is that the earth is there to be made productive and profitable, and that this is why private property, which emanates from labour, trumps common possession. Locke repeatedly insists that most of the value inherent in land comes not from nature but from labour and improvement:

"‘tis labour indeed that puts the difference of value on everything’ (11.40).

"He even offers specific calculations of value contributed by labour as against nature. He suggests, for example, ‘it will be but a very modest Computation to say, that of the Products of the Earth useful to the Life of Man, 9/10 are the effects of labour,’ and then immediately corrects himself: it would be more accurate to say that 99/100 should be attributed to labour rather than to nature (II.40).

"Locke also makes it clear that the value he has in mind is not simply use value but exchange value. Money and commerce are the motivation for improvement; and an acre of land in unimproved America, which may be as naturally fertile as an acre in England, is not worth 1/1000 of the English acre, if we calculate ‘all the Profit an Indian received from it were it valued and sold here’ (II.43).

"Locke’s point, which not coincidentally drips with colonialist contempt, is that unimproved land is waste, so that any man who takes it out of common ownership and appropriates it to himself – he who removes land from the common and encloses it – in order to improve it has given something to humanity, not taken it away.

"There is, of course, something attractive about Locke’s idea that labour is the source of value and the basis of property, but soon becomes clear that there is something odd about it too. For one thing, it turns out that there is no direct correspondence between labour and property, because one man can appropriate the labour of another. He can acquire a right of property in something by ‘mixing’ with it not his own labour but the labour of someone else whom he employs. It appears that the issue for Locke has less to do with the activity of labour as such than with its profitable use. In calculating the value of the acre in America, for instance, he talks not about the Indian’s expenditure of effort, labour, but about the Indian’s failure to realize a profit. The issue, in other words, is not the labour of a human being but the productivity of property, its exchange value and its application to commercial profit.

"This emphasis on the creation of exchange value as the basis of property is a critical move in the theorization of capitalist property. Locke certainly was not the first to claim that people have a right to take possession of unoccupied and unused land, if they are able and willing to render it fruitful. His idea that property derives from labour is not so distant from that traditional notion. What makes his thesis truly distinctive is the association of ‘labour’ with the creation of exchange value, and the derivation of property from the creation of exchange value. This had implications not only for domestic property relations but also, as we shall see, for the justification of colonial expropriation. It could be used to defend the enclosure of ‘unprofitable’ land at home, as well as territory in the colonies that was not being put to commercially profitable use by indigenous populations.

"In a famous and much debated passage, Locke writes that ‘the Grass my Horse has bit; the Turs my Servant has cut; and the Ore I have digg’d in any place where I have a right to them in common with others, become my Property …’ (II.28). Much ink has been spilled on this passage and what it tells us about, for example, Locke’s views on wage labour (the labour of the servant who cuts the turfs). But what is truly striking about the passage is that Locke treats ‘the Turfs my Servant has cut’ as equivalent to ‘the Ore I have digg’d’. This means not only that I, the master, have appropriated the labour of my servant, but also that this appropriation is in principle no different from the servant’s labouring activity itself. My own digging is, for all intents and purposes, the same as my appropriating the fruits of my servant’s cutting. But Locke is not interested in simply passive appropriation. The point is rather that the landlord who puts his land to productive use, who improves it, even if it is by means of someone else’s labour, is being industrious, no less – and perhaps more – than the labouring servant.

"That’s a point worth dwelling on. One way of understanding what Locke is driving at is to consider common usage today. When the financial pages of the daily newspaper speak of ‘producers’, they do not normally mean workers. In fact, they are likely to talk about conflicts, for example, between automobile ‘producer’s and auto workers or their unions. The employers of labour, in other words, are being credited with ‘production’. We have become so accustomed to this usage that we fail to see tis implications, but it is important to keep in mind that certain very specific historical conditions were required to make it possible.

"Traditional ruling classes in pre-capitalist society, passively appropriating rents from dependent peasants, would never think for themselves as ‘producers’. The kind of appropriation that can be called ‘productive’ is distinctively capitalist. It implies that property is used actively, not for conspicuous consumption but for investment and increasing profit. Wealth is acquired not simply by using coercive force to extract more surplus labour from direct producers, in the manner of rentier aristocrats, nor by buying cheap and selling dear like pre-capitalist merchants, but by increasing labour-productivity (output per unity of work).

"By conflating labour with the production of profit, Locke becomes perhaps the first thinker to construct a systematic theory of property based on something like these capitalist principles. He is certainly not a theorist of a mature, industrial capitalism. But his view of property, with its emphasis on productivity and exchange value created in production, already sets him apart from his predecessors. His idea that value is actively created in production is already vastly different from traditional views that focus simply on the process of exchange, the ‘sphere of circulation’. Only William Petty, often called the founder of political economy, had suggested anything like a ‘labour theory of value’ in the seventeenth century, and that too in the context of agrarian capitalism – a theory he tested as a colonial agent in Ireland, where he served as Cromwell’s Surveyor General, just as Locke and his mentor, the first Earl of Shaftesbury, looked upon the American colonies as a laboratory of improvement.

"Locke in his economic works is critical of those landed aristocrats who sit back and collect rents without improving their land, and he is equally critical of merchants who simply act as middlemen, buying cheap in one market and selling at a higher price in another, or hoarding goods to raise their price, or cornering a market to increase the profits of sale. Both types of proprietor are, in his view, parasitic. Yet his attack on proprietors of this kind should not be misread as a defence of working people against the dominant classes. He certainly has good things to say about industrious artisans and tradesmen, but his idea seems to be the great improving landlord, whom he regards as the ultimate source of wealth in the community, what he calls, significantly, the ‘first producer’ – a man like Shaftesbury, capitalist landlord and investor in colonial trade, a man who is not only ‘industrious’ but whose vast property contributes greatly to the wealth of the community.

"Locke’s view of property is very well suited to the conditions of England in the early days of agrarian capitalism. It clearly reflects a condition in which highly concentrated landownership and large holdings were associated with a highly productive agriculture (again, productive in the sense not just of total output but also of output per unit of work). His language of improvement echoes the scientific literature devoted to the techniques of agriculture that flourished uniquely in England at this time – especially emanating from the Royal Society and the groups of learned men with whom Locke and Shaftesbury were closely connected. More particularly, his constant references to common land as waste and his praise for the removal of land from the common, and indeed for enclosure, had very powerful resonances in that time and place.

"We need to be reminded that the definition of property was in Locke’s day not just a philosophical issue but a very immediate practical one. As we have seen, a new, capitalist definition of property was in the process of establishing itself, challenging traditional forms not just in theory but also in practice. The idea of overlapping use rights to the same piece of land was giving way in England to exclusive ownership. From the sixteenth to the eighteenth century, there were constant disputes over common and customary rights. Increasingly, the principle of improvement for profitable exchange was taking precedence over other principles and other claims to property, whether those claims were based on custom or on some fundamental right of subsistence. Enhancing productivity itself became a reason for excluding other rights.

"What better argument than Locke’s could be found to support the landlord seeking to extinguish the customary rights of commoners, to exclude them from common land, and to turn common land into exclusive private property by means of enclosure? What better argument than that enclosure, exclusion, and improvement enhanced the wealth of the community and added more to the ‘common stock’ than it subtracted? And indeed, there were in the seventeenth century already examples of legal decisions in conflicts over land where judges invoked principles very much like those outlined by Locke, in order to give exclusive property precedence over common and customary rights. In the eighteenth century, when enclosure would accelerate rapidly with the active involvement of Parliament, reasons of ‘improvement’ would be cited systematically as the basis of title to property and as grounds for extinguishing traditional rights.

"This is not the only way in which Locke’s theory of property supported the interests of landlords like Shaftesbury. Against the background of his emphatic pronouncement that all men were free and equal in the state of nature, he nevertheless, like others before him, justified slavery. More particularly, as we shall see in Chapter 7, his views on improvement could easily be mobilized to justify colonial expansion and the expropriation of indigenous peoples, as his remark on the American Indian makes painfully obvious. If the unimproved lands of the Americas represented nothing but ‘waste’, it was a divinely ordained duty for Europeans to enclose and improve them, just as ‘industrious’ and ‘rational’ men had done in the original state of nature."

For any student of capitalism, Wood has produced a key book.

This article is based on highlights from a lecture by George Soros, at the London School of Economics to launch his new book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means (PublicAffairs, May 2008). Early in this lecture, Soros situated the beginning of current problems down to deregulation as practised by Thatcher and Reagan from 1980. He gave four reasons why he believed the US economy (and the world economy as it is impacted) will go into recession: 1. The decline in housing prices is still accelerating and is going to overshoot on the downside the same way as it overshot on the upside. We are not yet half way in the decline in housing prices. We will have at least 12 more months of increasing foreclosures and so on. 2. The consumers who have been relying on the double digit rise in housing prices for their ‘piggy-bank’ have withdrawn equity from their mortgages at a rate in excess of the current account deficit. This peaked at around between 8-900 billion USD in 2006. Now the outlook has changed and they are facing declining housing prices where at least 15% of regular mortgage-holders will be 'underwater' in their mortgages. Savings will therefore have to increase. The American consumer will cease to be the motor of the world economy which they were for the last 25 years. 3. The banking system is severely impacted, despite its 'quite impressive ability to raise capital'. The willingness of banks to lend to finance business is also going to impact capital and spending etc. 4. The situation now carries simultaneously the threat of inflation and recession. This is partly because the dollar has ceased to be the unquestioned accepted reserve currency, which up until recently allowed the American consumer to become the economic motor of the world and permitted the US to consume over 6% more than it produced. When asked if 'we' [the world] are heading for recession, Soros said, “Yes”. Asked about Europe, it was obvious that Soros saw the European economy as different from that of the US. He anticipated, for instance, problems for Spain, but not for Germany, because Spain has had a housing bubble but Germany has not. He expressed the opinion that these kinds of different outcomes will give rise to 'serious tensions' in the EU, because up until now the EU has been characterised by convergence rather than divergence'. Now there will be divergence. Also, the ECB (European Central Bank) has an 'asymmetric directive'. Its job is 'to prevent inflation, not to maintain growth'. As a result it is keeping interest rates steady rather than reducing them. That and, most importantly, the exchange rate, because lowering interest rates quite radically has led to a decline in the value of the dollar and that 'decline in the dollar has effectively exported the recession to Europe'. But 'the UK and the US will probably be more affected'. On the possibility that hope of continued growth might lie in the developing world "decoupling" from developed world: Might it be true to say that if the US consumer stops dragging the world along, the world will still be dragged along by China and India whose growth will mitigate the recession?. “There is a very substantial difference between the developing and the developed world which has positive and negative aspects. It may lead to avoiding a world wide recession but on the other hand it could be responsible for inflationary pressures which can make problems bigger for the developing world. There is a difference but there is no decoupling. We are Siamese twins tied together." Soros said that there is a "Need to improve the quality of regulation. It is not enough to regulate the money supply; you also have to regulate credit. This is because credit conditions do not always correspond to the money supply. Markets tend towards extremes of optimism and panic. Therefore you have to have minimum reserve requirements and optimum reserve requirements. They need to be made variable. That is the way to prevent asset bubbles from developing. Greenspan is right to say it is difficult to identify a bubble and to know when to interfere. It may be difficult but you cannot escape the duty. Keeping the economy on an even keel is an art, not a science. Regulators have to accept this additional duty … It is not enough to bail the system out when it collapses." Markets can behave faster and regulators are slower and more bureaucratic; you need both. Soros stated that he thinks that "market fundamentalism is a very convenient belief for the 'haves' because it justifies their having it. In other words, they prosper (that includes me, [he added] by the way, among the haves but I don't share this view on market fundamentalism). It's a wonderful excuse for pursuing your self-interest to the detriment of the common interest because there is a theory which says says that the common interest is best served by everyone pursuing their own interests. So its a very convenient belief and that is why it has such great currency and that's why you find that it is generally people with lots of money who are supporting and propagating this belief. There is a connection. The impact of the price of oil at $130 on US inflation... "I have given this a lot of thought because it is really quite disturbing, the price of oil. And I would say that there are four factors involved. One, the increasing difficulty and cost of finding and extracting oil. People talk about "Peak Oil, but that is a misnomer for increasingly expensive oil. So that is number one. "Secondly because of the decline of the dollar you now have a backward- sloping supply curve, that is to say, the more the price goes up the less incentive the oil-rich countries have to convert their oil reserves underground, which appreciate in value, into dollar reserves above ground, which depreciate in value so you have a backwards sloping supply curve. There are also other factors involved, namely that many of the oil reserve countries are in the hands of desperates who mismanage the economy ... Iran or Venezuela and so on... You know it's easy to be a Bolivarian revolutionary when you have oil at over $100. That's the second factor. "Thirdly the main areas of demand growth are in China and in the oil producing regions of the Gulf and Russia. And in those countries the price of oil is subsidised and therefore the rising prices don't have an effect on demand. In the US, yes. But in those countries and that's where the real growth is... the price does not influence demand. "And fourthly there is a trend following speculation and it is now having a major effect on the price of oil and you see that in the rise of far out delivery ... the real big move has not been in the cash price of oil but in the futures price several years out. And that does affect the cash price as well ... so there is now a bubble aspect also. So those four factors are responsible for the rise in oil. Again there is this sort of Greek tragedy aspect of it. Yes, if you have a serious recession in the developed world, it means that demand does go down and the the price will be affected, but first you have to have the recession for that to happen, and the rise in the price of oil actually hastens the outset of the recession and that is part of my argument why this crisis is different from the previous ones." You can download the entire lecture from the London School of Economics site at www.lse.ac.uk/resources/podcasts/publicLecturesAndEvents.htm.

Wednesday 21 May, News from France.

In France at the moment there are national strikes over government proposals to make people work for 41 years instead of 40 years in order to obtain full pensions. In 2015 there will be around 14m workers to 18m retirees, according to demographic trends.

For some time France has been preparing for this eventuality, whilst noting that there will be more employment for young people, currently suffering relatively high unemployment.

On the France2 television 8pm news two economists were interviewed for responses to the question of how to fund retirement.

Michel Godet, an economics lecturer at the National Conservatory of Arts and Trades, (CNAM) said, "People will have to work longer so that they can save for longer."

Liem Hoang-ngoc – University Paris 1 economist said, "Just by asking people to save for longer does not mean that they can save for longer, since employers are forcibly retiring people at younger and younger ages." He said that there were many other ways of tackling the situation. He proposed a stock options tax and a tax on corporate profits.

Michel Godet responded by saying, "Taxes on big business profits are anti-competitive… we live in an open market … taxing big business will make it go overseas."

Liem Hoang-ngoc didn't get a chance to respond.

My thought was that, if corporations went off-shore, France could then refuse to import goods from corporations that refused to pay tax. Another good reason for national economies - to have control over predacious big business.

Liem Hoang-ngoc's papers are on-line (in French) at http://matisse.univ-paris1.fr/ One is called, "Long live taxes!"

(Note that the French youth to age 'discrepancy' is quite a deal more severe than in Australia, but that, as with all thing, it will pass in its own time, like the proverbial goat through a boa-constrictor. It is the result of a baby-boom in the 1950s and 1960s. In 2050, the French population will begin to slim down to relatively equal age cohorts. )

Peace in this country will not survive a government which tells the poor to tighten their belts whilst it sells off vital assets and dines with ostentatious industry moguls seeking public-private partnerships. Our leaders must show that they are prepared for personal sacrifice if they are going to demand it of the rest of us.

President of ACTU, Sharon Burrow, claims that medium income families are paying $60-70 more a week for food and fuel. She says that the inflation is not their fault.

The government is, however, calling for wage restraint.

What is the cost of wages compared to the cost of rent, mortgages, and new roads, tunnels, and other infrastructure to service new suburbs?

What restraints to apply?

Although restraint has to come from somewhere, it would be better to restrain and rein-back housing prices and construction. This would lower a controllable living cost caused by government policy-driven land-speculation and debt. Since oil, the basis of the 20th century’s extraordinary growth is slowly drying up, the Rudd Government must stop supporting the continued expansion of our economy at State and Federal level. We need cooperation from the mainstream press on this, which needs to quickly stop marketing our real-estate globally via www.realestate.com and www.domain.com and similar business vehicles, since this is a major accelerant of land-price rises and real cost of living. Although the Australian CPI has never factored in the cost of land, claiming that it is not a consumable, it has been treated as such in recent times and has had the greatest impact on cost of living. Consolidation must be the order of the day and of our future. Banks, which rely on interest earned from financing this kind of expansion, will have to resign themselves to much lower profits than they have become accustomed to. There was a time when they and we were content with much less. Deposits must be protected at the expense of interest on accounts. The government must step in to prevent hard-won savings from being destroyed in bank crashes and Enron-like implosions.

and how?

Restraint must be equitable and the government must lead by example. Peace in this country will not survive a government which tells the poor to tighten their belts whilst it sells off vital assets to private companies and wines and dines with ostentatious industry moguls who want its support to expand their industries and profits. Our leaders must show that they are prepared for personal sacrifice if they are going to demand it of the rest of us. The press needs to support them in this and stop lobbying on behalf of consumerism and expansion. The ABC needs to drop its stable of developer and real-estate ‘consultants’ now.

The government has so far announced that it wants to maintain living standards by maintaining growth through increasing productivity but this means increasing draw down on oil, which will inflate prices even more as well as growing CO₂ fumes. It is arguable that ordinary people do not really benefit from ‘productivity’ growth when the owners of property and the means of production are in a position to match every wage increase. Productivity growth is not geared to increase wages, but to increase profits. Whilst wages are paid out of profits, profits these days must also cover expected constant rises in shareholder dividends and huge salaries for CEOs. Public companies have come to rely on a promise of continuous growth to retain and attract shareholders. Where essential industries cannot maintain profits, governments should consider taking these industries over to maintain their services.

How to cope with end of cheap oil?

Constant growth is no longer possible now that global oil production is no longer keeping up with population and economic demand. Per capita global oil production has been in decline since 1979. Western European countries have dealt with this decline earlier and better than the English speaking ones which have employed a Thatcher-Reaganite response of expansion based on debt, economic class divide, and asset stripping.

The Australian government has the task of mediating the impacts of economic decline in Australia. It cannot actually stop this economic decline but it can choose to insulate the poor or to insulate the rich. The pressure is on the government from the rich. Property developers and their financial industry allies are currently trying to get the government to divert budget surpluses to oil and materials intensive works, as reported in the Australian Finanacial review of 8 May 08:

“Industry leaders have urged the Rudd government to use part of future surpluses to fund infrastructure that is unlikely to attract private-sector finance and to dramatically increase the federal budget contribution to urban transport and other projects.”

Although infrastructure projects, the Keynesian economic cure for economic depressions, were valid when oil and materials were abundant, they are no longer valid in an oil scarce world with availability of many materials in decline and the cost of fertilizers and food production rocketing.

The government will need to fund sensible public transport and insulation initiatives to save fuel and ensure that vital services and food production are retained, but it cannot afford to engage any ephemeral budget surplus (if the Howard government really left one) in propping the unreasonable profits of private sector infrastructure corporations. Those industries have become accustomed to inequitable distribution of huge profits based on cheap fuel and a parasitic reliance on bringing in massive quantities of immigrants as customers and workers, which they have achieved by lobbying government.

Controlled end of economic growth urgently needed

This financial and development industry reliance on population growth to fund expansion is no longer economically viable even in the short-term It is contributing to the rise in the cost of water, power, food and housing. These high costs make manufacturing in this country extremely uncompetitive against other countries where the cost of land is much less. This has contributed to the destruction of our manufacturing industry and our import/export imbalance. These costs are within the control of the government through the reduction of costly economic activity which is based on the creation of debt for the profit of a few.

Employment is going to start to dry up and this is immediately very frightening if you are paying rent, mortgages or need to drive a car to get to food outlets. Once again, the government can mediate and mitigate the impact of employment decline. There is actually a positive way to deal with this. That is to halve the working day, share the work, and to reduce the costs of living (mentioned above) which are in Australia’s control. Slowing down our economy by stopping expansion will save fuel, save lives, and save time for quality of life and local community strengthening.

See also Mike Stasse on The Challenges of Powering Down

Murdoch's Queensland Courier Mail has long been in the business of marketing unacceptable development, but the April 9 2008 editorial read more like a medieval sermon on the benefits of floggings.

“Full story needed on big projects” began with some newspeak and then descended into arguments so crude that one suspected that lack of internal conviction was snarling up logical expression.

The editorialist started off by conflating ‘growth’ with ‘progress’, thus giving the concrete entombment of Brisbane a positive spin. Towards the end, in a kind of third-word medical metaphor for torture, s/he crudely compared undemocratic development with medicine and going to the doctor for an abdominal operation. We were not expected to like what we are told is going to happen, but it is clear that we must accept it. To object to being slashed open in order to …what?... would be unreasonable, apparently.

“Progress will sometimes hurt, but like an unpleasant visit to the doctor, it will hurt less if you are warned in advance of what to expect, rather than having a line drawn through your torso and told this is where the operation will happen.”

Shock treatment without a muscle relaxant would seem a little more congruent to the situation than abdominal surgery. Unless this is some kind of medieval operation to remove our persistent ‘bile’.

The writer (or the mad doctor) tells us that ‘We’ all want progress. It isn’t too clear what progress is, from the editorial, and the doctor seems to be hedging about the outcome of the operation, or its reason. Nonetheless, we must suffer for this abstract thing.

If, like most of us, you don’t want to suffer, and you aren’t sure what progress is anymore, you might feel that you are the only person in Brisbane who feels this way and you probably won’t dare raise your voice to protest.

The journalist-social psychiatrist hits potential protesters against the operation for progress with, not just NIMBYism, which isolates with the charge of selfish the person fighting to defend their territory, but with the dreaded “BANANA” acronym. (See 'Damn 'em all', 23 May Courier Mail, Brisbane, Australia.)

BANANA is even worse than ‘selfish’; it means Totally Unreasonable, maybe even certifyably insane; certainly indefensible. BANANA stands for, “Build Absolutely Nothing Anywhere Near Anything.”

The charge is that Queenslanders are objecting to nearly every development that goes up.

Well, Mr Editor-doctor, the fact is that Queensland is very densely populated and developed, so it is pretty difficult to find a place to develop which isn’t close to something else. And, with all this development, why should ‘we’ need, let alone ‘want’ more? We don’t like it, so we are protesting.

Brisbane has far less green space left than Sydney and Melbourne. It is obviously overdeveloped and overpopulated:

“ o•ver•pop•u•la•tion (vr-ppy-lshn) n.
Excessive population of an area to the point of overcrowding, depletion of natural resources, or environmental deterioration.”

We are suffering all three of these symptoms in Brisbane. Why can't we admit we have a problem and stop the cause rather than just trying to manage the effects! (Jennie Epstein in Victoria, slightly paraphrased.)

The editorialist-doctor sympathetically admits: “No one wants a freeway, chemical plant or a new power station at their back door …“but,” (s/he concludes harshly informing us that we cannot escape the symptoms of the progressive disease, or curse) “… these things are a fact of life if we are to cater for the needs of a rapidly growing state.”

The dishonest implication, from the main newspaper, the Murdoch voice of authority in Brisbane, is that Queensland’s extreme population growth is some kind of irresistible Brisbanite fate, like Sysiphus’s was to push a stone up a hill every day, except that, in Queensland, that stone gets bigger every day, and so does the propaganda we have to swallow.

What must Queenslanders have done to the Gods to provoke such punishment as

“freeways, chemical plants and new powerstations at their back door; transport corridors and dams which endanger the environment and destroy local communities ...”

... which the editorialist identifies as our inescapable fate?

The editorialist tells us moreover that many of us may be economically inconvenienced or have airports expanded on our “comfortable backyards.” (This was only to be expected, apparently, and we should have moved somewhere else if we didn’t want our surroundings to degenerate into overpopulated slums. Quite a few of us should perhaps have enquired more carefully before being born here.)

Incredibly, the editorialist equates these sufferings with “our very comfortable 21st century lifestyle.”

And that is not the end of our sufferings: No, we must endure dispossession if we are to avoid dying of thirst in the short term. Nevermind the long term.

Our water security is threatened by population growth, which for some reason we cannot question. That population growth was brought upon us by the developer-serving Queensland Government, which advertised far and wide for it, interstate and overseas. Now we have to put up with the ‘solutions’ for water security which the government that made our water insecure tells us it must foist on us.

For stealing fire from the Gods and giving it to men, Prometheus was chained to a rock. Every day an eagle came and tore his liver out and ate it. During the night it would grow back, only to be torn out again.

Was that the operation?

How bad must it get? It could get a lot worse if our progress takes on the shape of India’s or Africa’s or Chile’s. But, as that dear old man, Augustus Pinochet once said, “Sometimes democracy must be bathed in blood.”

We can be sure that we will be told that it is good for us when that happens.