Oil decline: Price makes the story

So oft in theologic wars,
The disputants, I ween,
Rail on in utter ignorance
Of what each other mean,
And prate about an Elephant
Not one of them has seen!

--The Blind Men and The Elephant by John Godfrey Saxe

When the world's business editors sent their reporters canvassing to find out what is behind the recent plunge in the world oil price, they were doing what they do almost every day for every type of market: stocks, bonds, currencies, commodities and real estate.

In financial journalism more often it's the price that makes the story rather than the story that makes the price. If a story is about something very surprising which almost no one can know in advance--a real scoop--say, an unexpected outcome in a major court case affecting a company's most profitable patent, then the story will move the price of the company's stock.

World War III: It's here and energy is largely behind it

I've been advancing a thesis for several months with friends that World War III is now underway. It's just that it's not the war we thought it would be, that is, a confrontation between major powers with the possibility of a nuclear exchange. Instead, we are getting a set of low-intensity, on-again, off-again conflicts involving non-state actors (ISIS, Ukrainian rebels, Libyan insurgents) with confusing and in some cases nonexistent battle lines and rapidly shifting alliances such as the shift from fighting the Syrian regime to helping it indirectly by fighting ISIS, the regime's new foe.

There is at least one prominent person who seems to agree with me, the Pope. During a visit to a World War I memorial in Italy last month Pope Francis said: "Even today, after the second failure of another world war, perhaps one can speak of a third war, one fought piecemeal, with crimes, massacres, destruction."

In citing many well-known causes for war, he failed to specify the one that seems obvious in this case: the fight over energy resources. It can be no accident that the raging fights in Syria, Iraq, Libya, and the Ukraine all coincide with areas rich in energy resources or for which imported energy resources are at risk. There are other conflicts. But these are the ones that are transfixing the eyes of the world, and these are the ones in which major powers are taking sides and mounting major responses.

Irony alert: Yergin gets award named after peak oil realist Schlesinger

Where is George Orwell when you need him?

It is a supreme irony that cornucopian oil industry mouthpiece and consultant Daniel Yergin should receive America's first medal for energy security named after James Schlesinger, the first U.S. energy secretary. For those not familiar with the late Dr. Schlesinger's views, in a keynote speech he told attendees at a 2007 conference sponsored by the Association for the Study of Peak Oil (ASPO) the following:

Conceptually, the battle is over. The peakists have won. I was sitting next to an oil executive in New Mexico just recently, and he said to the audience, "Of course, I'm a peakist. We're all peakists. I just don't know when the peak comes." But that represents part of a conceptual victory. And, therefore to the peakists I say, you can declare victory. You are no longer the beleaguered, small minority of voices crying in the wilderness. You are now mainstream. You must learn to take yes for an answer and be gracious in victory.

This was not a one-off announcement from Schlesinger. Nor did he fail to understand the context in which he was speaking for he said it all over again in 2010 at a conference sponsored by the U.S. affiliate of ASPO:

Some five years ago in Italy, I concluded a talk by saying that like the inhabitants of Pompeii, who ignored the neighboring volcano Vesuvius until it detonated, the world ignores peak oil at its peril.

Taking a short break--No post this week or next

I'm taking a short break this week and next and expect to post again on Sunday, October 5.

Are we on the path of 'Limits to Growth'?

Probably the most important thing you need to know about the 1972 book entitled Limits to Growth is that it makes no predictions. Rather, the much maligned study provides scenarios for thinking about the future of resource use, pollution, population, food, and industrial production.

Limits to Growth detailed three scenarios originally, one of them called business-as-usual or BAU. Since then, countless scenarios have been run using the same model--called World3--and some of them are discussed in updates to the book, the most recent published in 2004. Many of the scenarios including BAU result in a collapse of industrial production and population some time this century.

What has surprised those reviewing the model used by Limits to Growth researchers is how closely reality has tracked the original BAU scenario. A recent review suggests that the signs of societal collapse may be around the corner based on the observed trends. But the components of that model have yet to turn in deleterious directions which would suggest trouble.

The more uncertain we are, the more careful we should be

It is a staple of apologists for the chemical and fossil fuel industries to say, "We have no proof that what you are talking about is dangerous." Let me restate that in probabilistic terms: "We are highly uncertain about the harm of what you are talking about."

When stated in probabilistic terms, uncertainty about harm becomes much more alarming. Nassim Nicholas Taleb has added to a working paper which I discussed last week entitled "The Precautionary Principle: Fragility and Black Swans from Policy Actions." As I suggested in last week's piece, climate change is an obvious candidate for the precautionary principle because climate change involves the risk of systemic ruin.

In his addendum Taleb explains that climate change deniers who criticize climate models for their uncertainty don't have the slightest clue what that implies. Rather than suggesting that we should ignore such models, the uncertainty suggests that we should be even more diligent about mitigating climate change since the high uncertainty means, probabilisticly speaking, that we have larger exposure to catastrophic outcomes.

Ruin is forever: When the precautionary principle is justified

If you are dead, you cannot mount a comeback. If all life on Earth were destroyed by, say, a large comet impact, there would be no revival. Ruin is forever.

The destruction of all life on Earth is not 10 times worse than the destruction of one-tenth of all life on Earth. It is infinitely worse. A fall of 1 foot is not one-tenth as damaging to the human body as a fall of 10 feet, nor is it one-hundredth as damaging as a fall of 100 feet (which is very likely to be lethal). Walking down a stairway with one-foot-high steps, we are typically immune to any damage at all. Thus, we can say in both instances above that the harm rises dramatically (nonlinearly) as we move toward any 100 percent lethal limit.

It is just these properties--scope and severity--that most humans seem blind to when introducing innovations into society and the environment according to a recent paper entitled "The Precautionary Principle: Fragility and Black Swans from Policy Actions." The paper comes from the Extreme Risk Initiative at the New York University School of Engineering and one of its authors, Nassim Nicholas Taleb, is well-known to my readers.

Why does anyone even care about the future?

The human community spans not only space but time. Naturally, we include in our community those closest to us--family and friends--and then in concentric circles of affiliation our co-workers; our fellow churchgoers (if we do that kind of thing); members of a civic group, a book club or a sports team to which we belong; the inhabitants of our town or city, of course; and our country. Some people even count themselves as citizens of the world.

And, while we tend to reserve our deepest feelings for those closest to us, worldwide telecommunications makes it possible for nearly everyone around the globe to feel something for those very far away who lead very different lives. Recently, for example, our sympathies have been directed toward those suffering and dying from the Ebola virus.

But, the human community also spans time. We include not only those alive today, but those who've lived before us. They might be departed parents and grandparents. They might have disappeared generations ago and exist now only on a family tree and as an association with an heirloom. We might also remember a whole culture (say, ancient Greece or Rome) now gone and which we know only through its artifacts and writings. We look for guidance from the ancients, from founders of our respective countries and from those considered wisest in our history both through written accounts and now increasingly through audio and video captured while they were alive.

I'd be happier if I didn't write this stuff!

Thus happiness depends, as Nature shows,
Less on exterior things than most suppose.
                  --William Cowper

For years my father--who is a really great guy--has been telling me that I'd be a happier person if I didn't write about all the converging threats bearing down on the human race. Turns out he's right!

Here's what a new study said on the matter:

Recent evidence suggests that a state of good mental health is associated with biased processing of information that supports a positively skewed view of the future. Depression, on the other hand, is associated with unbiased processing of such information.

Ebola and the weak link of public health

It has long been my contention that one of the chief symptoms of the age of constraints we have now entered would be the decline of public health systems globally. This comes at a time when our vulnerability to a worldwide epidemic is increasing because of widespread international travel, the proliferation of densely populated megacities and the general trend toward urban living. Of course, urban environments are ideal for spreading disease because of the proximity of the residents.

The sudden re-emergence of the deadly Ebola virus is testing whether public health systems are adequate to the job of containing such threats. While we know that there is a link between the general health of a population and public health expenditures, it is difficult to find statistics on expenditures worldwide by country to assess the direction of public health spending. We do have evidence that declining health spending in Greece in the aftermath of the financial crisis there was followed by demonstrably worse outcomes. And, the medical community thinks the United States is spending too little on public health, just $251 per person (in 2012). Keep in mind that this is distinct from spending on medical care which totaled $8,086 per person.

So let's be clear; public health refers to the following according the American Heritage Dictionary:

The science and practice of protecting and improving the health of a community, as by preventive medicine, health education, control of communicable diseases, application of sanitary measures, and monitoring of environmental hazards.