Where is the US and world economy headed?

[pbleighton]

"why is it so hard to "believe" that as oil and energy gets too expensive we can pull something off the shelf that will work."

 

Mike, I have no doubt that we will solve the problem. We are a very ingenious (though self-destructive) species. The issue is timing. If you think we can convert from an oil based economy to whatever alternative we will use in a few years, I have a bridge I'd like to sell you.

 

Peter

[arrows]

It's not a political issue. It's really technical.

 

it's neither, it's economic.

 

 

You are worried about sky fallen.

we have a problem because the oil price is not high enough so that no enough incentive for people to search substitute.

 

layback, relax, and playing brige:) let the nature of mankind takes it course.

[hrothgar]

"That is certainly the "strategy" of Bush and co. Wait to fall off the oil cliff, and THEN invent a parachute"

 

why is it so hard to "believe" that as oil and energy gets too expensive we can pull something off the shelf that will work.

 

The inventing occurs before the drop off the cliff, the pulling off the shelf happens at that point.  The steam engine was invented before horse power or whale power was too expensive.  It was pulled of the shelf and exploded in logarthmic fashion once the sail, and oar power was too expensive......

The reason that some of us are skeptical is that things don't always work out that well...

 

By definition, anyone who is posting in this thread is a survivor. Our ancestors and our culture managed to make it past any/all bottlenecks that wiped out ever so many different civilizations. Of course we managed to replace whale oil with coal/natural gas. If we hadn't we wouldn't here to post about it. (Please note, a more apt analogy would be replacing wind / water power with coal and oil. Its interesting to note that we're returning to the "basics")

 

However, don't think for a minute that this means that we're going to weather the next bit of nastiness that comes down the pike. The world is full of civilizations and cultures that died out. In many cases, these failures were a result of resource problems.

 

Jared Diamond published a good book titled "Collapse" which studied a number of different cultures which failed to make it. (some of the respresentative examples included Rwanda, the Anasazi, Easter Island, the Mayans, and the Greenland Norse)

[Al_U_Card]

You can never get out of a hole by digging.

[mike777]

You can never get out of a hole by digging.

Sure you can....

 

Richard may come full circle back to the issue of what does it mean to be human and in what form will we "humans' survive. I remain hopeful and prayful.

[pbleighton]

"Sure you can...."

 

Yes, but it takes along time to dig to China B)

 

Peter

[jdeegan]

;) Geez guys. There is always going to be the next recession. The only question is when. Recessions happen when imbalances build up in the system (or so says A. Greenspan who learned this in school and then from experience). This is starting to happen - we see too many foreign exchange reserves with the Bank of China and $70 oil. But, I don't see that things are sufficiently awry as yet. Nothing like the dot.com and fiber optic cable excesses of 2000-01. Also, there is no inverted yield curve in the U.S. (I looked).

 

As for petroleum, it is a typical mining industry. It moves in a long cycles of 25 to 30 years. The current boom looks to have a few more years left. There are no signs of an end of it yet. Also, the political risk of a major supply disruption is no longer very important now that American & British soldiers are in a position to physically occupy and control 80% of the middle east oil with ease if need be.

[whereagles]

Thank goodness the physics is only half or less of the problem. The economics will be a large part of the solution that is driven home in the near future.

Well, what Economics does is making difficult things feasible. It doesn't turn impossible things into possible. Example:

 

Problem 1:

- Tar sands oil is hard and time-consuming to extract and process.

 

Physical solution 1:

- You need lots of heavy machinery to do it.

 

Economical solution 1:

- With oil at $100 a barrel it's profitable to extract it with that heavy machinery and mega-refinery. That's certainly feasible, so that's what we'll do.

 

 

Problem 2:

- The Abqaiq field has 12 billion barrels of oil. Can we take 20 billions out of it?

 

Physical solution 2:

- No way you can take 20 billions out. Unless someone blundered in reserve estimation, that will be impossible.

 

Economical "solution" 2:

- We took 11,9 billions out, but suddently, no matter how much water we injected into the well, 99.99% of what came out is the same water we pumped in. This is not profitable so we just decided to shut down the field.

 

 

I like to think the Laws of Physics superseed those of Economics :)

[helene_t]

2. Research is not linear. It is logarithmic-random. We have thousands of PhDs nowadays because we're at a stage where any advance requires a bucket-load of effort. If it were easy to make progress, 10 bright guys would be all we needed :)

I don't think that's true. Allthough it's certainly hard to measure scientific progress, and to compare today's science to that of the past, I think basically science is becomming more and more productive.

 

Think of what the Internet has done for science.

 

Books on the history of science tend to report on a few very succesful scientists. This may give you the impression that scientists were very succesive in the past.

 

Also, it takes a lot of immagination to believe that the 21st century will bring as much progress as did the 20th. Some 200 years ago, the British minister of industry argued that the governement stopped subsidizing technological research, since, in his opinion, everything that could possibly be invented was allready invetented.

[whereagles]

I was thinking more of progress in a given field, not the whole of research. E.g. take, for instance, nuclear physics. It's been done from 1930s to 1970s. After that not much progress was made, despite lots of funding.

 

Actually, nuclear physics does still have lots of work to be done, but all of that needs the breakthrough of finding what is called a "non-perturbative formulation of quantum chromodynamics".

[helene_t]

Some kind of progress is not even logarithmic but merely negative-exponential. Think of the efficiency of a combustion engine, to take something relevant to this thread. It won't exceed 100%. The life span of a human body is probably in the same cathegory, if not in theory then at least in practice.

 

The speed of a microprocessor, or the information density of an USB device, are more controversial issues. Surely they are bounded by laws of nature. But I think we will see tremendous progress in information technology in the 21st century:

 

- Today most computers are idle most of the time, average CPU and memory usage is properly less than 1% (my guess). A global market for CPU time and data storage, in which virtual agents bye and sell resources on our behalf, will allow us to do the same information processing with 1% of the capacity we need today.

 

- Quantum computing will allow us to solve NP-complete problems.

 

- Bioprocessors will reduce CPU and memory costs to nil. Just add a tablespoon of sugar and a grain of dried computer-building yeast to a glass of water and next day you have a computer.

 

- Integration of the human brain with the internet will make user interfaces obsolete. Google and Wikipedia will be part of every persons memory.

[whereagles]

Think of the efficiency of a combustion engine, to take something relevant to this thread. It won't exceed 100%.

Actually, thermodynamics tells us it won't even exceed the Carnot engine efficiency, which is about 70-75% for internal combustion engines.

 

But yeah, I agree there are some breakthroughs possible, after which it normally proceeds logarithmically B)

[P_Marlowe]

<snip>

Problem 2:

- The Abqaiq field has 12 billion barrels of oil. Can we take 20 billions out of it?

 

Physical solution 2:

- No way you can take 20 billions out. Unless someone blundered in reserve estimation, that will be impossible.

 

Economical "solution" 2:

- We took 11,9 billions out, but suddently, no matter how much water we injected into the well, 99.99% of what came out is the same water we pumped in. This is not profitable so we just decided to shut down the field.

<snip>

 

I like to think the Laws of Physics superseed those of Economics B)

There is a economic solution to this problem:

Use less Oil for your processes, i.e. make them

more efficient and receycle unused stuff.

 

If the amount of money to pay is high enough the above

mentioned solution will be economic.

 

With kind regards

Marlowe

[Al_U_Card]

To solve or repair a problem you need focus and attention to detail....To understand the cause of a problem and how to avoid it requires an overall perspective. Humans tend to be highly detailed task-oriented problem solvers. Only the philosophical element of our society has the wherewithal to lead us in a direction that makes sense. Unfortunately we are falling in line behind the neo-conservative, profiteering special interestistas. Gas prices rising do not foretell the arrival of alternative energy sources. (This should have been foreseen and implemented 50 years ago.) It is time for a revolution of thought, my friends.

[Winstonm]

Here is what I see in the bond market: http://www.treasury.gov/offices/domestic-f...ate/yield.shtml

 

The yield on 6-month, 1-year, and 2-year is higher than the yield on the 10-year.

Doesn't this indicate that risk for shortish term inflation is significant?

 

Oil prices recently jumped to over $75 U.S. before settling back to $74 U.S. How much longer and higher can prices go before the inflationary inpact of oil prices spreads to other areas of the economy? Recently, the U.S. airlines have raised ticket prices to offset increased fuel costs - at a time when historically price wars have occurred and seat prices dropped.

 

Another interesting side note is the cost of refinancing - when the cost of refinance becomes prohibitive, how much impact will that have on consumer spending?

 

Seems we may have created quite an economic bubble that wouldn't take much to pop.

[Gerben42]

Seems we may have created quite an economic bubble that wouldn't take much to pop.

 

All this economic bubble stuff is mostly just for people invovled with stocks and all. The huge majority of the world population did not invest in the IT stocks and as such were hardly hurt when those stocks went down the drain.

 

I'm not an economy expert but all these horror scenarios after the tech bubble burst were not so horrible after all.

 

What will happen is that everything that cost energy will become more expensive relative to things that cost less energy. This is a GOOD thing. If driving your car becomes more expensive then maybe you should think about ways of not doing that, like taking public transport or perhaps live closer to work, etc.