Daniel is sore. Daniel dislikes falling down flights of stairs. He especially dislikes it when it happens in the dark when he is on his way to being drunk while playing poker at a friend's house. As a result, Daniel will no longer walk around with the lights off in places where he is not aware of his suroundings.

~A reminder to Daniel from his mind

The blog has been too depressing these days. Apologies all around.

So, for a change in trend...

We won!!

3-2 Oilers. Overall a way better played game than last Friday's, especially in the last half of the second period.

Hmmm, what else is new and good? Well, of course classes are done now. I'm pretty sure I miraculously managed to pass my math final somehow after entering it with a 55. So I'll probably have anywhere from a d- to d+ in that class. English and French should both be B's and International Relations should be passed with some sort of an A provided the final went alright.

Other than that...I know! The sun. The sun is out. There is nothing worse than grey snowy days so the fact that spring is here is wonderful. Everyone from myself to the dog are feeling the effects of that. Lucky spent the majority of the winter moping around the house and being whiney whereas now he spends his time outside smiling and lounging around while he chases that squeaky red and blue ball of his.

That's about it right now.

More Peak Oil Stuff

I long to dead, and sleep with the fishes under the sea/ they can swin through my head, and stop all the traffic jams.

~Matthew Good

Money. The horn in your car empties its insides again and again. It's eight in the morning and the streets are clogged. Money. The dirt in the field becomes more fickle as we try to suck more out of it. Damnit that food tastes good. Money. Your muscles burn like wood rubbing against wood as those pipes are carried farther and farther. Oil keeps us warm. Money. You kiss your son and daughter goodnight and tuck them in. I will go anywhere I need to so they can sleep like this at night. Money. Those briefcases exchange hands without a sound. There are dead men to be found around here. Money. It drives most things. Not all, but most.

I have yet to figure out which is more important. Money or production. Neither could exist without the other, but the proposition has certainly been put out there that if we were to break out of our current mind frames the latter could be done without the former. Personally, I'm not so sure that's a great idea given our current mind frames and problems with resource depletion.

Why am I typing any of this? Because I think a lot of people are going to die if there isn't some kind of dramatic wake up call in the next very short little while. It's kind of happening, but to what degree I'm entirely sure. Scores of books have been coming out in the last few years explaining the link between energy supplies and the complexity of a civilization. Thus, it follows if we can't continue to harness energy at the rate we've been doing do, and we refuse to set a crash course, quite simply, we're fucked.

Right now, most the pessimists say because alternative energies can't equal the amount provided per unit of energy that fossil fuels provide society can't continue.

While there are certainly valid concerns about the reaching length of alternative energies, the basic premise is, in my opinion, over exerted. The pessimists have perverted the issue with quality rather than quantity. As demand and supply rise, the price will go down. Everything, and I mean everything, is dependant upon price. But that's an issue for later. Right now is about here and now.

I said I would post some thoughts I've had on the matter in the next little while so here they are.

Economics and Limits

If someone needs a product, they trade a certain amount of a good (obviously in our system that good being money) that is considered to be of equal value to the work someone else will do to produce the good or service needed. It has, and still does today, worked marvelously on a social level. People need to consume and people also need to be kept busy; through the process of work these needs are met. If we consider what would happen in the absence of financial capital in a capitalistic society, the only other alternative seems to be a Machiavellian vacuum where realism tends to rule. Money would seem to be one of variables in the equation of A+B=C. The “A” being us as individuals, the “B” being the financial good, and “C” the product. If you change the value for any variable from this equation, you will not get the same answer. Following from this, if you have a large society with large needs, you will need a large numerical value for both B and C to support those needs. Today’s world is in this situation. Our A value is always increasing which demands an increasing C and B value.

This brings us to how money is created.

As is noted in any Macroeconomics 101 text book, the creation of money, as a paper product considered to be worth something of value, first arose when gold was used as currency. People would give their gold to goldsmiths to keep safe and goldsmiths would issue receipts to the individuals reflecting the amount of gold the individual had stored with the goldsmiths. Basically, goldsmiths were the equivalent of today’s banks. Overtime these receipts issued out to gold holding individuals came to be considered just as good as real gold itself, which in turn led to the individuals who had the gold stored not bothering to redeem it. They simply used the receipts as capital instead. As this trend continued to spread goldsmiths began to realize they always had more gold in storage than people would ever come to redeem in a day or a month. Eventually they realized they could offer interest earning loans to merchants, producers, or consumers at a higher ratio than the actual reserves they had stored. (Today this is known today as a fractional reserve system). These interest accumulating loans allowed goldsmiths to make a profit and increase money supply in their respective economy. In other words, we figured out how to increase our B value, which increased the C value- we learned how to grow our economy. (see the industrial revolution)

The same is done today, but instead of gold being stored as a reserve, banks use a paper currency, and issue out what are called demand deposits. These are loans issued out in the form of cheques or chequing accounts. In order to stimulate the economy and increase growth, banks offer these loans for people and businesses so they can buy things they normally wouldn’t have enough money in one transaction to buy. These things include cars, houses, land, computers, tools, etc, all of which add to GDP levels. In order to control the boom and bust cycle all capitalist economies experience, central banks use increasing or decreasing interest rates on loans to encourage or discourage spending.

With large consumption or spending habits of some countries though, in order to keep GDP levels growing (AKA: continue economic growth by off setting overspending in certain areas) sometimes the central banks, or governments, have to ask other central banks in foreign countries for loans. However, instead of taking out loans, as is done domestically between banks and people, the government or bank pays that foreign central bank by selling them bonds. A bond is basically the reverse of a domestic loan. Domestically, instead of a consumer taking out a loan from the bank, the consumer lends out money, with interest, to the government, and the government issues a receipt back of how much it will owe. When this is done internationally, either with a bank or a government selling a bond, the foreign bank buys the bond and adds the amount the selling country owes to its reserves.

Enter the United States. Because of the Iraq war, and rising oil prices, the government is having to sell more and more bonds to foreign banks to finance economic activity. With the large amount of money sitting in foreign banks during unstable times, these banks are becoming less and less sure of stability in the U.S dollar. If this instability continues foreign banks could start to become more and more reluctant to continue lending to the U.S. If you consider this on a micro level of a chartered bank refusing to give a loan out to a past undependable borrower it makes sense. If the borrower already has a bad credit rating, and you don’t expect him or her to pay you back, you’re probably not going to lend them more money.

This problem is compounded because this leaves the door open for the potential dumping of U.S reserves (which means banks would sell off their investments in the U.S dollar to offset larger potential future losses expected). The great risk, as Clyde Prestowitz, former trade advisor to Ronald Regan notes, is since investors are so prone to even the most mundane signals, all it might take is one bank selling their extra U.S currency to create a domino effect. Clyde points out that this almost happened when “a mid level official at the central bank of Korea used the word diversification”(The Australian) and the market fell by 100 points in 15 minutes because people thought South Korea might be shifting out of U.S dollars. If a foreign central bank actually did sell a significant amount of U.S reserve currency it could create a panic in the stock market where all buyers would start selling because they wouldn’t want to risk losing more money than they potentially could.

So what does all this have to do with peak oil?

As we examined section one, the primary, secondary, and tertiary industries are each dependant on each other existence (These are all things that add to the value of C). However, each of them owes their existence our ability to harness vast amounts energy in the form of fossil fuels. The flow of this energy is dependant upon people consuming to help the economy function (consumption adds to our B value which is money). As was proved in the Great Depression of the 1930’s, the amount of resources you have at your disposal is inconsequential if you do not have the monetary funds to harness them. Energy, at least in its cheapest form of oil and gas, is not going to be available in large quantities due to future cost constraints created by a falling supply and a rising demand. It is estimated supply will fall globally between 2 to 4% per year once peak oil hits. If we consider a 5 percent drop in production caused prices to quadruple in the 70s, which led to high inflation and interest rates, it’s not out of the realm of possibility that a 2 percent decline in production each year would eventually lead to hyperinflation and then stagflation. In theory, the lending power of chartered banks (banks where most financial transactions take place like BMO, Royal bank, TB, ETC) should decrease because private consumption will decrease and then investment costs for businesses will also rise. Thus the overall amount of GDP made by oil consuming nations will decrease. Domestically people won’t want to take out loans because interest rates will be too high and they’ll be trying to conserve. Internationally, a country like the U.S will need to take out more loans to finance economic activity, but won’t be able to because no one will trust them to be a reliable investment. This is related to our loan based economy because as Richard Heinberg points out “if new loans are not being made, then somewhere in the network people are will be finding it impossible to pay the interest on their existing loans and bankruptcies will follow (Heinberg 188)”. As many researching this subject have noted before me, if this occurs, industrial economies can eventually say bye-bye to growth.

It brings us back to the equation showed at the top of this section. Like any number of variables that combine to give you a product, if any numerical value is decreasing, a smaller c value will result. Go back to the equation at the top and rearrange it with negative values for at least one variable.

A-B= lower C value
A-C= lower B value
B-C= lower A value ?

If you subtract B (capital) from A (persons), instead of adding them, you will get a smaller C value (productivity). Likewise, if you algebraically switch B with C, changing the equation to A – C= B, your B value (the amount of capital made) will also have decreased because productivity decreased. And, as pessimists/realists have already pointed out, if an increase in A and B values spurred on an increase in C (during the industrial revolution), a constant decrease in the value of both C and B would surely lead to a decreased A value.

Compressed, the conundrum is this: In order to slow the rate of depletion we need to start consuming less, but in order to put up the infrastructure to replace our fossil fuel based one, we need to have the capital available to do so which involves keeping the wheels of consumerism turning. High oil prices sired by declining productivity will not allow for consumption, thus negatively affecting all industries in the modern industrial economy. The laws governing our industrialized economies demand we grow at a certain rate which will be difficult if not impossible

For an image of the precipice we’re looking over consider another excerpt from Richard Heinberg’s book, The Party’s Over:

“Try the following though experiment. Go to the center of a city and find a comfortable place to sit. Look around and ask yourself: Where and how is energy being used. What forms of energy are being consumed, and what work is that energy doing? Notice some the details of building, cars, buses, streetlights, and so on; notice also the activities of the people around you. What kinds of occupations do these people have, and how do they use energy in their work? Try to follow some of the strands of the web of relationships between energy, jobs, water, food, heating, construction, goods distribution, transportation and maintenance together that keep the city striving. After you have spent at least 20 minutes appreciating energy’s role in the life of this city, imagine what the scene you are viewing would look like there was ten percent less energy available. What substitutes would be necessary? What choices would people make? What work would they not get done? Now imagine the scene with 25 percent less available; with 50 percent less, 75 percent less energy(Heinberg 186).”

One thing I should note. When it comes to the bold section at the bottom of the post here, about wanting to cut down consuption but being worried about a depression mellowing the effects of a transition to renewables, I am no longer so sure about such a concern. In the 1970's oil shocks, as is noted in Stephan Leeb's "The Coming Economic Collapse,H ow you Can Thrive When Oil Hits 200 dollars a barrels", despite a lessened demand globally for oil, renewable energy projects and spending were still able to increase. If anything, a depression before the peak is exactly what's needed to make leaders and industry take a good long hard look at alternative energies.

Roloson kept us in there for the game. 54 saves out of 57 shots on net and the way it gets in is off an unlucky deflection from Murray.

Rem's gotta be hurting after that.

The Conservative think tank

"This will be followed by cuts to government programs. Environment Canada will be subject to an 80 per cent cut, including the entire Climate Fund."

On the Conservative chopping block:

* The $250 million dollar Climate Change Fund for renewable energy;

Dear Conservatives,

As a Canadian citizen I want to thank you and your government's position on the environment lately. I heard from CTV you guys plan to cut spending to Environment Canada by 80 percent. I say bravo! Its about time someone came out and did something about this hippy "lets be one with the environment" crap. I'm tired of my hard earned tax dollars going to things that aren't going to affect me here and now. Because that's what matters right? The here and now? People shouldn't have to pay money to things they don't like, it's undemocratic! That's why I like you guys, you're in it for the little people. I mean, I know I've heard about how big oil helped fund your last election campaign, but since you've said you're going to bring in better public accountability I'll simply trust you on instinct that you won't create loopholes for big business. As far as global warming goes, I think it's all a bunch of baloney anyways. After all, scientists who were funded by big oil said global warming is a naturally occurring phenomenon and there's nothing we can do about it. As those Tibetan monks say, "if a problem can't be solved, there's no use worrying about it". Best to focus on business as usual. Hey, maybe when the sea levels rise we'll get lucky and all those dirty Liberal voters on the West coast will get washed away! And another thing. What's all this junk about renewable energy? Why would we bother with that stuff when we'll probably find more oil from places like Nigeria, Alberta and um...else where. It'll be cheaper and as I've stated, I don't want anyone digging into my pockets for things I don't approve of. Anyways, I just thought I'd send a quick thanks your way.

God bless you and damn the Liberals to hell.

~A devoted follower

Great article examining the economics of high energy prices from the Daily KOS here.

A little excript:

...but at the same time, the dollars captured by the oil producers are re-invested in US Treasuries, thus lowering the interest rates and making it easier for Americans (and international investors) to borrow - thus leading to increased spending and increasing imports (thus worsening again the deficit), and inflated asset prices, and creating, strangely enough, a appearance of increased wealth...

On the topic of energy, I've finished my paper on peak oil now and think I'll start posting it in sections here sometime next week.

And I should note one more thing. Today I added a link to LATOC.net on the side bar. I've held off from doing so for quite sometime time now because the last thing I want to partake in is promoting an attitude of pessimism (despite the url of my blog). Time has always had a way of using unseeable variables to trump predictions made about the future and making claims of inevibilty usually does little but make you look like an ass. However, with that said, I think the site does an extraordinary job of illuminating the current problems facing society today. Bash it all you like, but until you can debunk any of the math involved I would suggest holding off. Like any question, the best way to address it is by understanding the variables involved. Take a look at the site if you haven't already. It's unpleasant but necessary.

The beast is here again; that’s nothing new I guess. It doesn’t speak and doesn’t allow me to either. That’s probably the most disconcerting thing since small talk usually lessens the discomfort while swelling the illusion of control. Since making cautionary glances in hopes of understanding what it is I’m up against doesn't work I abandon all pretense and just start staring. He stares right back. The funny thing is I doubt either of us knows why we’re there in the first place. Maybe that’s the point though, maybe we’re not supposed to know. Could be we’re just meant to make ourselves go insane by over thinking the matter.

Then again, what is control anyways? Free will? The lack of free will? People who believe they have none usually end up proving themselves correct and people who believe they do usually end up proving themselves wrong…well, at least in all those Greek myths. Greek play writes we’re amazing. Forget the global village and wire chained codes that make up our language conduits today. The Greeks had none of that and their stories still reached the far poles of the earth. They might have migrated slower than most things today, but in the end the meaning was their staying power, as it always should be.

But, I digress. What was I talking about? …Yes, control. Usually the best thing to do is forget about the whole mess in the first place and forget what powers this reality allows and negates you. Perhaps this is folly, but if something is not in your lexicon of language how can its meaning, for better or worse, affect you? Think of fear and imagine we don't have a word for it...

After all, a great deal of the social and political feats accomplished in the history of the world, whether they were monstrosities or social victories, were accomplished because the individuals who undertook them were:

A- Either insane and unaware of the odds they faced,

or

B- more concerned with being able to go to sleep at night than they were of facing the mountain of opposition waiting for them on the other side.

While convincing others certainly should be a goal in any cause, it shouldn't be the end sought by the means. The end sought should be the realization of whom it is you want to go to bed at night as.

Mountains create complacency; hills don't.