Monthly Archives: August 2016

What Comes After Oil?

By: Tom Chatham

If we follow the premise that all things on Earth are finite such as the physical resources we use then we must assume that at some point we will begin to run out of these resources as they are more heavily utilized. Our use of energy is one such item that should be addressed by the average person before we hit the wall of limited and then lack of these resources.

There are those that think solar and wind will be the salvation of our energy problems but these people fail to take into account the limitations of these energy sources. It still requires energy to extract the raw materials needed to build solar panels and these must be replaced at some point. Wind turbines require steel, concrete, fiberglass and copper just to name a few of the resources needed to make these things work and they too must be replaced every few decades as they wear out.

One problem with solar that I have talked about to people is the fact that massive amounts of energy must be stored in order for it to power the grid continuously. One person recently calculated that batteries to store enough energy to power the U.S for one day would require batteries covering 923 sq. miles and costing 41 trillion dollars. While I am an advocate of wind and solar I do not believe they are capable of powering our grid reliably. I think their benefits can only be utilized as stand alone systems on individual buildings.

Those that think solar and wind can replace oil do not understand our energy requirements at the present time and certainly do not understand the power requirements of things such as ships, trains and semi trucks that move the bulk of our commodities around the world. Cheap oil has made the current world trade system possible and the lack of cheap energy will cause a collapse of the status quo. The collapse of our current energy system will cause widespread chaos and depressed living standards if we do not address this issue now. It is for this reason that we need to look forward to the energy we will use in the future.

Hydrogen is more akin to a storage battery as it takes energy to separate the hydrogen from other elements to utilize in most cases. Fusion is still a promising energy source that we still do not know how to produce and maybe in the future if we figure it out it will change things but that is some time off. Things such as oil, natural gas and coal are heavily used today but they will only last so long and a growing population is using them at a faster rate as time goes on insuring their demise at some point. Nuclear power plants are filled with controversy and their future is uncertain unless something changes.

If our fossil fuel system begins to erode we will have to fall back on what we know. In this case the most available source of energy available to the population is that age old element, wood. As archaic as it sounds if our energy grid begins to shut down wood may be the go to system for individuals at the local level. A mature wood lot can produce about ¾ of a chord of wood per acre per year. When utilized within these limits it becomes sustainable for the long term.

A small homestead with a good woodlot and some solar and wind power may be the future we are forced to embrace until some new energy source becomes available in large enough quantities to fulfill our needs on a large scale. Now is the time to begin this conversion before we are forced to do so when the materials we need are no longer available to the masses. There are many people that have made this change and live off the grid today and are very happy about it.

Wood is also a viable source of energy for vehicles utilized in the local area. Wood gas can provide the energy to power much of the agricultural equipment we need to maintain the food supply. While this is a step back it will likely become a necessity at some point if we wait too long. With wood gas a conservative estimate of wood power indicates about 20 pounds of wood equals a gallon of gasoline when utilized in a motor vehicle. There is some power loss with wood and production efficiencies vary from system to system.

Much of the population growth of the world has been made possible by the availability of cheap energy and the loss of this cheap energy will cause a drastic adjustment to the population on this planet as we run into resource scarcity. The abundance of food we now produce depends on vast quantities of cheap, available energy. Nature has a way of balancing things out if we refuse to do so on our own. People need to understand this.

While a small homestead with solar and wind power and equipment powered by wood may not be the ideal plan, it is one you can be working towards while you can do so with minimal disruption to your lifestyle. In the near future if energy prices and availability should become more of an issue than it is now, having alternative energy systems will minimize the effect on your quality of life. I suggest you have a plan that works for you and your family before you are forced into one by events.

A plan to deal with an energy shortage will not only protect you from a shortage but also from manmade and natural disasters that would curtail or eliminate the timely delivery of energy to the masses. The ability to provide the majority of your own energy needs makes you less vulnerable to shocks that can send society into panic and disrupt many lives. Over time things change. This can be beneficial or detrimental to our well being and your ability to adapt to those changes will determine your quality of life in the years to follow.

Our energy resources may be stable for many years to come. Then again they could change drastically in a matter of weeks. Walking into the future with your eyes closed knowing full well you could fall off a cliff is a dangerous way to live, especially when you could take steps to minimize the dangers and insure your quality of life if something does happen.

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The Reason Our Standard of Living Will Fall

By: Tom Chatham

The prosperity we once knew as a nation was made possible because of cheap oil. When the EROI, Energy Returned On Invested, was at 30/1 we had unprecedented prosperity. The EROI is now falling below 10/1 and is taking prosperity with it. The EROI is the amount of energy we expend to get energy, in this case oil, out of the ground. We are getting 10 units of energy for every unit we expend to get it. Shale oil production results in 5 units of energy for every unit we expend.

This matters because everything we use depends on cheap energy to maintain the status quo. An EROI of 10/1 is necessary to maintain our current standard of living. The Hills Group project oil will drop to $11.76 by 2020. This may sound good on the surface but cheap oil will not mean much if you have no job and no money to buy it. As the next depression sets in many more people will lose their job and as a result prices will collapse. They project by 2020 we will have 75% fewer gas stations as a result of collapsing oil.

Today most of our population lives in the city. When jobs see their final collapse those people will have no way to survive. Living in the city requires stuff being brought in from other places. Those living in the city must pay for this stuff with the pay they earn. No jobs mean no pay and no goods.

During the last great depression many city dwellers had family in the country to move back in with to stay fed but most city dwellers today are several generations removed from the country life and no longer have living family members in the country to move in with.

Many of the farms that were left to city dwelling children after the parents died were sold and the money either spent or put into paper assets for retirement. When those paper assets evaporate those people will have nothing to fall back on.

I have said before that when this next depression hits it will devastate everyone and the only way people will be able to get by is if they produce most of their basic goods themselves. This will require a small farm and a family to help run it.

The U.S labor department has reported that productivity has declined for the third straight quarter. The real hourly wage increase reported in the first quarter at 4.2% has been revised to a decrease of .4%. GDP growth annualized for the first two quarters is 1%. S&P 500 companies are reporting declining earnings for the fifth quarter in a row. Economic growth is at its weakest rate since 1949. Gold is up 25% this year so far. All of these metrics are indicative of a stagnant or declining economy at a time when we are told everything is doing great.

The massive amount of money being printed is the only thing holding the economy in place right now but we are now moving beyond the point where that is even effective. From here on out more money will only cause more damage and it will compound the effects when the economy finally fails in earnest. Those that do not see this train wreck coming will still be sitting calmly as everything falls apart around them. They will be lucky to survive the impact and will be totally helpless in the days following. Those that see the danger will have gotten off a long way back and will be in a better position to help themselves and their family.

It is good to help others but you can only do so after you have taken steps to help yourself. The carnage we are about to see in world markets will affect everyone in some way. The best way to help is to understand what is coming and be prepared to deal with the realities that will follow. Global markets will revert back to local markets and those prepared for these changes will survive the initial collapse and thrive in the aftermath.

You can read more about EROI at https://srsroccoreport.com/the-coming-breakdown-of-u-s-global-markets-explained-what-most-analysts-missed/