sourceType:: podcast author:: Nate Hagens sourcePublication:: Modern Wisdom ref:: https://overcast.fm/+L6FMUJn-c noteTitle:: #508 The World’s Coming Energy Catastrophe; Nate Hagens. (podcast)
#508 The World’s Coming Energy Catastrophe; Nate Hagens. (podcast)
everything that ends up in GDP requires energy input. without energy, technology is just culptures.
we assume we’ll always have the energy we have today.
Energy properties and qualities
Fossil energy
we extract fossil energy 10 million times faster than it was put there by the sun. oil.
this is the master resource that other resources (natural gas, gasoline, diesel, etc).
it underpins everything in globalization
average american uses 57 barrel of oil equivalent a day 1 barrel of oil == 5.7 million BTUs. translated to work potential = 1700 KwH of work. a human generates around 0.6 KWh of work.
1 barrel = about $100, displaces 4.5 years of human work potential. 1 gallon gas 2 months of work
as a global population, we use 100 billion barrels of oils equivalent per year, adding roughly 500 billion human worker output (to the 5 million real human workers). paying pennies on the dollar, because the econ system only pays for cost of extraction, not creation (10s of million ofyears of eation nor the pollution)
we treat it as interest, but in reality we’re drawing down the principle (10 million times faster than it was sequestered).. america used the easy oil first, then alaska, then gulf of mexico. now fracking shale oil - sucks out fast but depletes very fast. we’ve reached the origin rock in our country, there’s nothing left.
if we stopped drilling (eco, political, econ, whatever) production drops 40% first year, 25% second year, 20% third year because old wells are depleting rapidly.
what should energy cost?
we’ve conflated the cost the price and the value.
- cost: externalities, cost of extraction, etc.
- price: what our economic system ascribes to it
- value: what it can actually do for us. oil energy is indistringuishable from magic on human scales.
should probably be an order of magnitude more than it is today.
you can fill up a car and drive until it runs out of gas. then try to push it back: it would take weeks or months, if even possible. we totally take that for granted.
solar and wind
they’re viable and mature, not too expensive, but they are electricity. which is 21% of global energy use (vs heat, liquid fuel, transportation, etc.). and they’re intermittent - so must couple with natural gas or batteries. ….or use less…
Use Less
in america, each person eats 2,000 calories a day. but consumes 210,000 Kcalories worth of energy. 100x more than our bodies need for metabolism. Europe uses 50:1. US uses 4x the global average. because:
america was blessed with fossil carbons, and the most powerful country since bretton woods (US dollar seniorage), 85% of our own energy. these explain that 4x above.
but these won’t persist for centuries…
we’ll do whatever we can to keep using as much energy as we’re used to - until we can’t anymore, due to circumstances outside of our control. it’s imperative to get ahead of that and figure out ways to fulfill ourselves that don’t rely on this overconsumption.
we don’t think of this because it’s always been there. when there are financial crises and other issues, we paper them over with money. but you can’t do that with energy.
- appreciate how much energy we use and take for granted because of relatively cheap bills. by a purely energy-useage standpoint, we’re living lives richer than kings and queens of old.
Nuclear
Issues:
- like solar/wind, this is electricity. only 20% of global situation is electric (for now). 10x nuclear power today doesn’t solve oil decline problems.
- nuclear is always on and flat output (doesn’t flex with demand). comnbines very nicely with natural gas that can be made to go up or down.
- Takes a lot of capital, time, planning to produce. time lag to create.
- we don’t have the uranium to extend it beyond six or seven decades. better than oil, but not infinite.
- the cost - negative environmental costs are at the tail end. we’ve overreacted mostly to the issues that there have been, but if there is a breakdown of social cohesion and capacity, maintaining them becomes a critical issue. need to be maintained in perpetuity.
it should be added to the mix, but not 1:1 fix for everything.
Oil outside the US
600 triangle in saudi arabia/iran contains ~60% of the world’s remaining oil. (this explains our military bases in the middle east, eh?)
but flow rate: tar sands are harder and more complex to extract oil from, and at a lower flow rate. world uses 95 million barrels of oil a day. we have enough for ~60 million barrels a day for many decades. we’ve probably used about half of the whole pool.
the arctic most likely has oil. other places, too.
Limits on economic growth; how money is a claim on energy
we suspect we’ll keep finding new oil, so it’s not so much about running out totally, it’s more about having enough and at an economic price to maintain growth. once we can’t continue to grow economies (we’ve already peaked recently), we face a “music chairs scenario based around the amount of outstanding monetary claims on real resources”.
Money is created (fractional-reserve-banking-is-how-money-is-printed) without reference to amount of oil or natural resources that exist. we’re growing the monetary claims on our underlying physical reality.
everything you spend money on requires energy input to create. we’re growing the monetary claims, but the energy is inexorably declining. the delta between these two trends is worrying over the next decade. central bankers don’t have a solution to this.
you can print money, but you can’t print energy, only make rules such that it can be xtracted faster.
Q: Is money fundamentally energy, then? a way of trading energy, since at the end of the day evertying sort of is energy/is created by energy?
A: money is a claim on energy. debt is a claim on future energy.
borrowing money is an increase in the world’s future claims on energy.
The ultimate answer is to [[]]❌.
worth and fulfillment
our system is designed to measure our success and status based on the size of our energy use. GDP is a measure of how much stuff we burn in the world - everything that is created and ends up in the world econ system started somewhere as a small fire in a factory. underpinned by energy.
our favorite things aren’t included in GDP: making love, walking dogs, hiking, etc.
how do we get the emotional and spiritual states of our ancestors while using less energy. what is an economy for?
our eyes are opening ([[russia-ukraine-conflict-2022]]❌) to the gulf between a monetary representation of reality and a biophysical representation of reality (energy, materials, etc).
Product creation and materials
product creation requires: technology + energy + materials.
in the last century we’ve grown our material footprint by ~2.8%/year which is about the same as our economic growth. if we double our economy, we’ll double our material need (and nearly double our energy requirement.)
Embedded growth obligation
embedded-growth-obligation-is-partially-created-by-loans
“in our economic system, we’ve self-organized around this bolus of fossil sunlight”. our ancestors knew where their wealth came from: the soil, forest, animals, their muscles, the sun, etc. they used these products to create the economy.
but then these magical “fossil workers” came out of the ground and added their work product to the economy and we lost the connection to the natural world. re-built the economic system saying that this giant increase in output was attributed to human ingenuity and cleverness and built an economic system that says “growth and GDP is the answer, the goal”:
when you get a loan, the bank creates claims on future energy, but it doesn’t create the interest that needs to be paid back. you need to do that. the global net result of this is an imperitive on growth to maintain prior financial claims.
this growth also draws down our natural capital and creates externalities that aren’t included in our prices.
why aren’t people talking about this?
we are papering over the these problems with central banking largesse, quantitative-easing, too-big-to-fail guarantees, artificially low interest rates. these all prop up the system (and send money to oil drillers.) ^zq3mju3
the energy decline hasn’t really started yet. 2018 may have been the peak of energy extraction, but we probably won’t feel that until 10 years later.
these things don’t seem real as long as you can still get gas, turn the heat on, get a loan, etc.
europe is starting to feel this though… turning off traffic lights, recommending fewer showers, winter heat warnings.
Random notes
if we found a crazy cheap source of energy, we’d just use the fuck out of it and the externalities would still be there.
we’re an 8 billion population social animal that are self-organizing to optimize profits which are directly linked to energy which is linked 85% to finite fossil energy and the whole thing is creating waste.
low-hanging fruit access to oil has made getting energy easy and cheap. we haven’t offset the cost of that generation (10M years of sun), nor much of the externalities. problems going forward: we set ourselves with a level of comfort and convenience at this energy level - but if energy availability decreases, you’ll have an ugly imbalance. so either increase the supply or decrease the demand.
issue: humans are overusing energy in order to not get a return on human flourishing and happiness. if anything that we do with our lives requires energy and at the same time people feel like “something is wrong” with their local/social/political etc. world - not getting what they want. but they’re using 50x-100x more energy than they need to survive.
we’re over-leveraged in terms of how much energy we’re using to get mostly unfulfilling lives. we have an imbalance between energy use and fulfillment. the energy availability will most likely decrease - energy usage will likely need to come down. so get ahead of that in order to discover how we can live more fulfilling lives with less energy. figure this out now before it’s too late.