In “now that the recession is here”, one of my readers says bluntly that we’re doomed. For the rest of you, let’s start by saying that since I know Prince Hydrajak (the commentor, not his namesake – sheesh) personally I can tell you that his claims of education are true. The main difference between us is he’s more pessimistic about the future than I am. I think one of the main reasons is the fact I lived through the 1970s. And I’ve been watching a couple of interesting other trends. And so… Let’s get longwinded.
The big deal of the 1970s for the US was the climb in oil prices. Yes, OPEC was pushing them up, but that was also when US continental oil fields rolled over their Hubbert peaks. What we as a nation discovered then is that there is a lot of slop and waste in our wealth generation system.
There is an argument that we are not “at the Hubbert Peak” for global production. While I say we are, the whole argument is immaterial. Because the main issue is not how much oil is being produced. The main issue is how much oil we demand, and whether we’re producing that much. As I’ve noted more than once before, we reached the point where demand and supply converge a couple of years ago. Any supply increase will be met with a near-instantaneous increase in demand. Add to this the fact that everyone in the field believes the peak is real, it’s just a matter of when – four years ago, today, or as far as 20 years from now (pretty much the max).
In some ways this appears counterintuitive to the fix found in the 70’s. That is, “get more efficient with what you use.” There is an argument that what you save will be snatched up by the rest. And there is some validity to the argument. But it assumes the amount of wealth you can generate from that unit of energy is the same. It isn’t.
Basically, if you can generate more wealth from a unit than everyone else, then you can afford YOUR need regardless. To some extent we’ve been bludgeoning everyone already with our wealth — wasting it, really. This will force us to knuckle down. (It may mean the US quits being top dog. That’s already true – and the fall of a hegemon is both always interesting and always painful, and complicates everything else tremendously.) Umm, necessary digression. Fall from top dog does not mean fall to the bottom. We’re still too big to do that. What it means is that others will share that top dog status – much as we used to do with the USSR, only with more nations. When the USSR fell there were a lot of people who warned of this. shrug – Cassandra never gets credence. Anyway…
Our recession will be painful, and will last longer than ‘normal’. It may skirt close to – even become – a depression. It won’t be forever, however. Let me discuss why it’ll be so deep before I go to why it won’t be forever.
I’d like to tell you that the depth will be due to what PH notes – so much of our industry is based on oil. Actually, that so much of our industry – to include the workers – relies upon cheap transportation, and THAT is driven by oil. The vast majority of our oil use is transportation – fuel for cars, trucks, trains and airplanes. And oil will make minor dips, but the demand is going to keep prices high for some time — more nations, to include ours, will be getting less of what we want. The price increases will have an impact. But the shortfall is actually a long-term issue, one which will impact us over the long run, but which might be surmountable. It’s slow motion, but finally being obvious. “Surmountable?” I hear PH scoff. I’ll get to that in a bit.
One reason for the depth has to do with how much of our current wealth is in surprisingly few hands. One of the major factors for the depth of the Great Depression was just that — when things went Just a Bit Further than normal, people couldn’t quite cope. Yes, the rich got even richer — and then they started to hurt as well. It’s one of the Ayn Rand flaws, the assumption that if you’re not a Captain of Industry, you’re not only a peon but you don’t matter. Once upon a time that was true. Today… no. Our society is far too complex and relies on too many others. You can excel, but you cannot decide nobody else matters. You can pretend, of course. Right up till your pretense bites you. There’s an adage that a rising sea lifts all boats. There’s a reverse, of course. An ebbing sea drops all boats.
So, increasing prices of some core goods while the majority of those able to spend have less slack. It’s … sort of stagflation. Add to this the fact that we’re going to see some major financial institutions have major pain – not just the “stock market”, but banks – and the shock will be large.
Prices rising? hoard money. Banks failing? Crap, don’t put it in banks. MATTRESS… Who cares that a big-screen TV costs half what it did a year ago, I CAN’T AFFORD GAS AND FOOD. sigh.
During the 1980s, the S&L crisis came within a hair’s breadth of being the “Second Great Depression.” The two things that kept it from being so were the fact that we were finally solving our oil problem AND it was “only” the Savings and Loans. The “trusted banks” were available as working alternatives.
The upcoming years will be at least as painful as the 1970s, may be the recession of 1980 revisited, and there is a chance it’ll rhyme with the 1930s. (History doesn’t repeat, it rhymes.) But there is a light at the end of the tunnel – and it’s worth noting that here is where PH and I disagree.
Let’s begin by once more agreeing with PH – though only in part. Nuclear – fission and fusion – is at best a stopgap. Fusion isn’t here. And when it does get here there’s every reason to believe it’ll be as easy to set up as fission. That is, ten years minimum to build the plant, and the plant will use raw materials that are (functionally) finite. (Blunt truth – He3 is most available on the moon. If/when we solve the whole issue of mining in space, He3 becomes a low-need item. I’ll revisit this in another post someday.)
Five years ago I’d have said solar and wind were also “not enough”. I had a really, really smart wind advocate walk me through the problems, so bear with me while I give the poor man’s summary. 1) Wind is only available in some places, some of the time. 2) Sun is only avaible some of the time. Are we seeing the problem? Let me be redundant, anyway. Storage is the big deal for energy. Oh, there is more. Basically, wind is only good in certain areas and isn’t expected to come close to fulfilling the needs of our society. And sun – “solar efficiency”. What portion of the sun’s energy can be converted to electricity, anyway?
Add in biofuels – with a giggle. Seriously. The energy return from sugar cane is such that converting it to fuel is efficient. But there’s no way to grow enough for our current demand. Corn is, well, it’s a joke. And of course – if you’re growing fuel, where’s the food?
I could stop there, and I’d be right in line with PH. But I’m not going to stop there.
The second-biggest jump in all this is solar power. There are two competing solar industries that have made magnitude-level jumps. As a result, we will – no, we ARE SEEING huge changes in two constriction points: watts per square unit, and price of panel per watt produced For almost 20 years, we were seeing US$4 to US$8 per watt for a panel – though the panels got smaller and smaller. (Or rather, the number of watts per square foot increased.) The projection is for prices under US$1 per watt.
The big jump is in batteries. Now, Stanford’s (actually, Cui and his group AT Stanford) appear to have solved the silicon anode problem. Simply stated, a lithium battery with silicon anode has about 10 times the energy of the current battery. However, the anode ‘breaths’ – expands and contracts during use – and so shatters itself. Cui and his group figured out how to make it work without self-shattering. However, there are some steps between their prototypes and any full production, so you won’t see them tomorrow.
On the other hand, Toshiba has made a threefold increase in the storage capacity of a ” standard” Lion (Lithium Ion) battery — and may (we’ll see over time) have increased the number of cycles the battery is good for by a magnitude.
More energy per battery. More cycles of life. Energy without oil.
OK, before I come across as all sunshiny about the future – not tomorrow. Here’s the big deal, though. I remember the 1970s. When we got crunched, we started putting serious examination into alternatives. There are a lot of things that have had, well, trickle levels of money that have made serious advancement anyway. And even then there were HUGE changes in efficiency made – huge meaning they made a difference within a few short years. Most of those changes have been tossed or left to wither on the vine – though some upkeep has remained. But, well…
It is apparent to me that we have enough solutions in low-level production and/or prototype level that our way out exists. We just have to sacrifice some to get there. And the sacrifice is coming – we have no choice.
A last point. We – the US in particular – aren’t driven by “greater good”. We’re driven by basic selfishness. Way back in the dawn of time I was one of those who said the 48K computer was enough – for businesses. And we were right. What it was NOT enough for was games. But people wanted fun – wanted games, and pretty pictures. And some of those got captured by businesses who suddenly had the extra power, and, well, I think you see where I’m going. Our desire for FUN – for the ability to roll down the highway if we want to – is another creative force. All creativity carries destructive elements, and can be completely destructive if allowed to be so. This will be no different.
We will not get to Mad Max. The fixes exist – both short-term and long.
That won’t stop the need for us to change a bit, and won’t stop the upcoming pain. It’s merely noting a light at the end of the tunnel which is NOT the oncoming train.