PeakTrader.com

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PeakTrader:

Since the mid-2000s, we had to employ increasingly more resources to extract the same barrel of oil, which reduces living standards.

However, it likely raises U.S. GDP (through more domestic production and less imports, although the higher price slows consumption of oil and other goods).

Nonetheless, the U.S. remains in a deep, and long, depression. Final Q1 2014 real GDP growth is predicted to be revised down from -1.0%, perhaps to -2.0%.

http://www.advisorperspectives.com/dshort/updates/Real-GDP-Per-Capita.php

http://stockcharts.com/articles/tac/2014/06/sy-harding-worry-about-the-second-quarter-q1-is-history.html

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PeakTrader:

The mix of energy consumption in the U.S. has changed over time. Chart:

http://en.wikipedia.org/wiki/File:US_historical_energy_consumption.png

Although, the U.S. is abundant in coal, consumption has declined substantially in recent years.

Energy growth has been in natural gas and, to a much smaller extent, in renewables (biomass, e.g. ethanol, accounts for roughly half of renewables).

It seems, to offset a decline in petroleum significantly, we need more natural gas, coal, nuclear, and, to a smaller extent, renewables, over the next few decades, along with more domestic oil production, including in the Gulf of Mexico, California, Alaska, etc..

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Also, I may add, increasing domestic production of fossil fuels would create more jobs, including through a multiplier effect, to create taxpayers, instead of people collecting government benefits, while idle capital would be put to work, and oil prices would fall somewhat.

GDP would rise, and government would have more tax revenue to spend on renewable energy subsidies.

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Nick G:

The purpose of renewable subsidies is to “internalize” the real cost of pollution, and reduce the burning of fossil fuels.

You agree that pollution is a real cost, right?

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PeakTrader:

Maybe, in a few decades. There are many kinds of negative externalities.

More production of fossil fuels will employ some of the trillions of dollars of capital (earning enough for capital preservation), and employ some of the millions of unemployed Americans (collecting government benefits, including unemployment), along with paying for renewable energy subsidies.

You do agree losing $10 for $1 in net pollution savings isn’t worth it?

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Nick G:

Climate Change has it’s largest cost in the future (although I think insurers would take exception to the idea that we can ignore them), but others like asthma, mercury poisoning, Black Lung Disease, smog and acid rain happen fast. And, of course, we’re spending $100s of billions on security costs (including military and Homeland Security) to indulge our addiction to oil.

The external costs of coal are more than 10 cents per kWh, while the subsidies for wind are only about 1 cent (over it’s lifetime: the PTC ends after 10 years).

Well, we actually save $10 in net external costs (including pollution), while spending $1 in subsidies, by going to renewables.

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PeakTrader:

There has been climate change for billions of years. There’s no scientific evidence people have a significant effect on climate change.

Of course, some people believe they’re more important than they are.

Because of the tremendous rise in living standards from fossil fuels, civilization was able to afford massive and extensive regulations, make greater and faster improvements in medicine, spend and squander lots of money on renewables, etc..

The benefits from fossil fuels far exceed the costs, unlike renewable energy.

And, U.S. national defense spending as a percent of GDP was much higher before most Americans could find the Middle East on a map.

I suspect, without fossil fuels, average U.S. life expectancy would still be in the 40s.

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Even if we knew all the variables that cause climate change, we don’t have the data to measure the effects of those variables. We don’t understand how all the variables interrelate and interact in climate change models.

And, how do you know curbing fossil fuels, at a steady and realistic rate, will have any effect on reducing temperatures?

Why forgo trillions of dollars of output for something no one understands?

And, the cheap energy of fossil fuels caused an explosion of output and population growth.

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Clean coal technology may be more promising than wind mills and solar panels, over the next few decades.

Here’s what one engineer stated:

“Howard Herzog, principal research engineer for the Massachusetts Institute of Technology’s Energy Initiative, says coal, which already generates 50% of the nation’s electricity, is here to stay — like it or not.

“Coal is abundant and cheap, and we have increasing energy demand,” he says “We can wish all we want, but people are going to do what it takes to keep the lights on. And that means coal.””

Duke Energy is now awaiting an air permit from Indiana for a $2 billion, 630-megawatt coal plant, large enough to power about 200,000 homes a year.

Considered only average-size as traditional plants go, it would become the world’s largest coal-fired power plant to use a new, cleaner technology called integrated gasification combined cycle, or IGCC.

“It’s a technology that has the ability to take air pollution out of the debate over coal,” says John Thompson, director of the Coal Transition Program at the Clean Air Task Force, a Boston-based environmental group that supports the plant. “The day that plant opens, the 500 or so coal plants in the U.S. are obsolete.”

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Animated Chart & More Comments:

http://econbrowser.com/archives/2014/06/energy-demand-and-gdp

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PeakTrader:

Yes, there’s been a strong correlation between the supply of output and the supply of oil.

The higher price of oil only compensates for the lower supply of oil.

Unfortunately, generating a mass hysteria in climate change has come at the wrong time, reducing supply and demand of fossil fuels, and worsening the deep depression, which began after the Bush recession ended in June 2009.

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In the 1970s, we were worried about global cooling, and in the 2000s, we worried about global warming.

Over a hundred years, the net change may be zero, and in the context of millions of years, it may amount to nothing.

Real progress has been made with fossil fuels. They’re up to 99% cleaner than in the 1970s, and progress continues.

Wind and solar cannot keep up with demand, because they’re not worth the costs.

The goal is to raise living standards, not reduce them.

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The reality is output and population growth grew at a faster exponential rate, because of fossil fuels (for example, the difference between 1% annual per capita growth and 2% annual per capita growth over time is huge – even a small difference makes a big difference over 100 years). Without fossil fuels, living standards and life expectancy would be much lower.

You can’t have a economic contraction without an economic expansion, and the contractions are much smaller than the expansions.

Wind and solar haven’t been able to take up the slack, even with subsidies.

At one time, the “experts” were sure the sun rotated around the earth. It’s arrogance and politics to assume we understand the interrelationships and interactions of natural forces, and can build a much more complex model than a general equilibrium model of a large economy, which we can’t do, in part, because of the many dimensions.

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