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Collapse 101 Gail Tverberg, Age of Limits, May 25, 2013

Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

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Page 1: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Collapse 101

Gail Tverberg, Age of Limits, May 25, 2013

Page 2: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

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Page 3: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Why does collapse happen?

Finite Earth

Depletion and Pollution

Note: Images from Wikipedia

Population Growth

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Page 4: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

On a finite world, populations ebb and flow:

Cycles can be very sharp, if population finds a new energy resource.

Note: Chart from dieoff.org; shows reindeer population on Reindeer Island based on work of David R. Klein, Univ. of Alaska 4

Page 5: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Close balance level

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  Population has to be very low   Need to stay in balance with local predators   For primates like chimpanzees, gorillas ~ 100,000 to 200,000

  What close balance would look like   Eat raw food   A few simple tools – don’t overpower predators   No use of fire   Probably no clothes   Shelters: Caves; sticks pulled together   Live only where climate is “right”

Page 6: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Human population rises rapidly, the way a population that finds a new resource grows

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Humans Reindeer – Matthews Island

Source: Dieoff.org based on work of David Klein.

Page 7: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Humans had three great “leap forwards” in energy use

1.  Discovery of control of fire, 1,000,000 + ago 2.  Discovery of agriculture ~ 10,000 years ago 3.  Ability to use fossil fuels ~ 200 years ago

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Page 8: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Each new discovery had a huge impact   Use of fire

  Cook food   Eat wider range of foods   Cut chewing time   More food energy for brain – Made humans smart?

  Better tools   Heat treated stone blades sharper

  Used in hunting   Expand habitat to cooler areas

  Expanded population from 150,000=> 7 million   50 fold increase, over long period

  Wiped out many predator species

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Page 9: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Population grew with each discovery

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Control of fire

Agriculture

Global exploits

Fossil fuels

Page 10: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

What does history of collapses say?   Overshoot and collapse studied by many

  “Secular Cycles” by Peter Turchin and Sergey Nefedov

  Population typically found a new resource   Cleared land for farming   Or began using irrigation   Current situation: Began using fossil fuels about 1800

  Problems developed over 200+ years   Combination of rising population, depleting resources, more

pollution (salt from irrigation)

  Civilizations eventually disappeared   Replaced by others elsewhere

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Page 11: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

In collapse scenarios, problems appeared as FINANCIAL PROBLEMS

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  Greater wage dispersion   Greater use of debt   Government had problems collecting enough taxes

  Tainter calls problem “complexity,” but complexity has cost

  Revolts, epidemics, resource wars

  Quite different from what many think of as “peak oil”

Page 12: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

General Shape of Collapse

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Growth 100+ Years

Stagflation 50-60 Years

Crisis 20-50 Years

Intercycle

Based on Secular Cycles by Peter Turchin and Sergey Nefedov.

Page 13: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Limits we are reaching now

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Page 14: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Future world energy supplies: How “financial collapse” estimate fits in

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Page 15: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Three distinct view of the future events

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  Business as Usual   Climate change high/ low   Chief concern is CO2; climate change

  Peak Oil View   Liquids are the big issue   Renewables might possibly increase fuel supply

  Might also help climate change

  Financial Collapse   Issue is Financial Collapse, due to high fuel prices   Renewables added to grid make fuel prices higher yet

Page 16: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Financial collapse: Reason for high prices (oil, natural gas, fresh water, etc.)

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  Price becomes more expensive as more is extracted

  Reason: We extract the cheapest-to-extract first   Wages don’t rise correspondingly   Limit is what customers can afford

Page 17: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Why rising oil prices are a problem

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  Wages don’t rise, as oil price rises   Less money for discretionary expenditure

  Cars   New homes   Charitable giving

  Layoffs in the above sectors   More debt defaults

  Bank bailouts needed

  Governments especially at risk   Lower taxes; higher expenditures

Page 18: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

My view: Financial Collapse Scenario

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Page 19: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Financial Collapse Scenario

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  Problem is a financial collapse – lack of “demand”   Governments can’t collect enough taxes   Too many people unemployed   Looks like Greece, Spain, Argentina   Or Syria and Egypt

  Problem is not a lack of oil in the ground   Problem is that oil is high-priced   Also, that the particular country is not competitive in the

world market   Adding high-priced renewables makes the situation worse

Page 20: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Financial Collapse Scenario (cont.)

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  A big issue is collapsing governments   Takes energy/money to maintain government   Better off parts want to secede   Lots of services provided => Very difficult to maintain

  Least expensive government: Local dictator

  Money loses value if government collapses

  International trade may be disrupted

Page 21: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Former Soviet Union is an example of a Financial Collapse

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Page 22: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Even if a country does not collapse itself, it can be hurt by others collapsing elsewhere

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  Oil exporter collapses from low price   Reduces exports on the world market

  Banks affected by failure of banks overseas   May lead to local bank failures   Credit availability may be affected

  Less world trade—harder to get spare parts for essential manufacturing   Example: Computers

Page 23: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Financial collapse affects all types of energy supplies at once

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  Problems   Fewer jobs   Less money for goods of all kinds   Less credit availability   Perhaps no central government; banks closed   Perhaps money available, but nothing to purchase

  People can’t afford oil, gas, or electricity   High priced new renewables make the problem worse

  Electric prices higher; government deficits higher

  Deforestation may become a problem

Page 24: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Financial collapse: Timing could be very soon

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  Europe, Japan, US especially vulnerable

Page 25: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Financial collapse is likely to affect population as well

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Page 26: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Even recently, population continues to rise

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Page 27: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

If fossil fuel use declines, world population will likely decline

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  Fossil fuel use enables many basic things:   Tractors   Herbicides and pesticides   Modern fences   Most irrigation   Most metal making   Making of modern metal alloys   Most transportation   Hydroelectric, wind turbines, solar PV panels

  There is no “reverse gear” on our economy

Page 28: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Issues are not the same as many “peak oil” people have imagined

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  Oil prices may not be high

  Solution may not be “using less”

  Electricity may not work as a substitute

  Collapse may occur before oil decline begins

Page 29: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Why is my view different from Hubbert’s?

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  Hubbert only forecast shape of oil decline, if another fuel took over first

  This avoids the collapse issue!

Source: M. King Hubbert, Nuclear Energy and the Fossil Fuels, 1956.

Page 30: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Oil in the ground means nothing, if people can’t afford it

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Page 31: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

How does climate change fit in?

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Climate Change

Loss of Bees

Loss of Fish

Ocean Acidification Water

Shortage

Soil Quality

Air Pollution

High oil Price

High food Price

Population Growth

Antibiotic Resistance

Entropy

Financial Problems

Page 32: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Fossil fuel forecasts used in climate change estimates are very high

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Page 33: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

If realistic fuel estimates were used, CO2 forecasts would be much lower

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Source: Luis de Sousa and Euan Mearns, IEA WEO 2008 – Fossil Fuel Ultimates and CO2 Emission Scenarios, TheOilDrum.com, Dec. 2, 2008

Page 34: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Off-shoring manufacturing raises emissions

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Page 35: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Climate change scientists are confused

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  Models don’t consider energy and other limits

  Economists suggesting solutions almost equally confused   Electric cars use coal quicker, leave more oil for China/India   Carbon sequestration raises costs, pushes along collapse   Carbon taxes encourage more manufacturing in China

  New paper “Energy budget constraints on climate response,” Otto et al., Nature Geoscience, May 13, 2013, says climate story is not as dire as 2008 IPCC report says

Page 36: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

What can we do?

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  Get as much positive out of each day as we can   Look for beauty in nature   Develop simple hobbies   Spend time with family   Don’t obsess over the future

  Take positive steps   Start a garden   Build a network of friends   Learn skills that might help if job loss

  Keep larger-scale plans cheap, easy to implement   Car-sharing plan in cities   Alternatives that worked years ago—boats, canals

Page 37: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

What can we do? (cont.)

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  Don’t count on money to be available/worth as much in the future   Buy needed tools now

  Flexibility is important   Things are likely to change   It may be necessary to move suddenly

  Seek help from religion, meditation   Man’s story has been miraculous to date   Perhaps more miracles are ahead   Focus can be on comforting verses and songs, helping others

Page 38: Collapse 101 - WordPress.com · Financial Collapse Scenario 19 Problem is a financial collapse – lack of “demand” Governments can’t collect enough taxes Too many people unemployed

Contact information

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  Gail Tverberg   OurFiniteWorld.com   [email protected]   (407) 443-0505