The world seems determined to thrash us into empiricism.

(Via.)

If there is a trend, it shows up more persuasively in the erratic sequence of consistently-escalating negative oil price shocks.

ADDED: Patri Friedman helpfully points to Hotelling’s Rule.

(Via.)

Something like two decades of low energy prices ahead, if the established pattern is prolonged. There’s either a valuable futurist building-block there, or a provocation for futurological discussion.

Clearly, though, the attempt to strangle the new tight-oil industry in its cradle is a blatantly telegraphed dimension of the present Saudi oil-pricing strategy, and one conforming to a consistent pattern. If Mullaney’s figures can be trusted, things could get intense:

… data from the state of North Dakota says the average cost per barrel in America’s top oil-producing state is only $42 — to make a 10% return for rig owners. In McKenzie County, which boasts 72 of the state’s 188 oil rigs, the average production cost is just $30, the state says. Another 27 rigs are around $29.

If oil-price chicken is going to be exploring these depths, there’s going to be some exceptional pain among the world’s principal producers. Russia is being economically cornered in a way that is disturbingly reminiscent of policy towards Japan pre-WWII, when oil geopolitics was notoriously translated into military desperation. Venezuela will collapse. Iran is also under obvious pressure.

How is it possible that a world run by manic Keynesians gets to quaff on this deflationary tonic? It should hide a lot of structural ruin, at least in the short term. Global economic meltdown is deferred — and ultimately deepened — once again. (We’ll probably get the war first.)

ADDED: “Saudi Arabia, OPEC’s biggest oil producer, has reportedly said the oil price should stabilize at about $60 per barrel … Many OPEC members have been put under budgetary pressure by the lower oil price,as exporting countries rely heavily on oil revenues. Iran needs a price at $140 per barrel to balance its budget. Saudi Arabia needs a price of $90.70 per barrel, as it can count on huge reserves. Qatar needs $77.60 per barrel, and the United Arab Emirates $73.30 per barrel. […] In early November, OPEC officials said the price of $70 per barrel is a threshold at which other member countries could start panicking.”

ADDED: Some oil geopolitics musings from Fernandez.

No surprise, then, that John Michael Greer finds many attentive readers in our camp. His latest (and still incomplete) series on Dark Age America resonates with particular strength. The most recent installment, which discusses the impending collapse of the market system, through quasi-Marxist crisis, on its way to many centuries of neo-feudalism, is bound to raise some tech-comm eyebrows, but it nevertheless occupies the same broad forecast space. If people are stocking their basements with ammo, silver coins, and dried beans for Greer reasons rather than Stockman ones, they might cut back a little on the coins, but they’re not going to stop stocking the basement. Differences seem to lie in the details.

The differences in the details are actually fairly substantial. Even if Winter is coming, we’re not necessarily talking about the same thing. To begin with, Greer is not a figure of the Outer-Right at all, because his (extremely interesting) cybernetic engine of descent is ecological and resource-based, carried by a deep eco-historical ‘correction’ or dominating (negative) feedback cycle whose proxy is fossil-fuel abundance. Modernity, roughly speaking, simply runs out of gas. His cultural criticism is ultimately anchored in — and limited to — that. When describing (drawn-out, and incremental) civilizational collapse, he forecasts the automatic nemesis of a system doomed by its unsustainable excess. Further engagement with this model belongs elsewhere. It’s an important discussion to have.

The more immediate concern, here, is with the very different components of ‘winter’ — of which three, in particular, stand-out. Each is, in itself, huge. The directions in which they point, however, are not obviously coherent.

(1) Closest to the Greer vision are bad global-systems dynamics. These tend to prevail on the Outer-Right, but they typically lack the theoretical resolution Greer provides. It is understandable that those who strongly identify with specific declining ethnies (or Super-Phyles), whether theologically, racially, or traditionally conceived, are disinclined to distinguish their progressive dilapidation from a generalized global calamity. This is certainly not merely stupid, however much it offends prevailing moral fashion. The extent to which it supplies an adequate preparation for the events to come is questionable, nevertheless. Without an explicit defense of its specificity, it can all too easily confuse its own winter sicknesses with a universal predicament.

(2) What can easily be under-estimated is the localization of the unfolding disaster, in a specifically Occidental collapse. This is, of course, Spengler’s Decline of the West, among other things, and even though this is a work Greer explicitly acknowledges, the inherent globality of his model tends to eclipse its particularism. For Greer, the impending decline of China (for instance) follows upon its complicity in fossil-fueled industrial modernity, even if, for rhetorical effect, it is to be permitted a few decades of comparative ascendancy. The Outer-Right tends to be Greerian in this respect, although without equivalent positive reason. It is not asked, often enough, how much of the deepening winter is — quite narrowly — ours. Greer has an argument for why Western Modernity has consumed the future for everyone. Unless the fundamentals of this theory are accepted, is there any reason to accept its predictive consequences?

(3) The third ‘winter’ is modeled by the rhythmic troughs of the Kondratiev cycle. This tends to localize in time, rather than space, dividing the merely seasonal from the cumulative, secular trend. While a comprehensive attribution of our malaise to such a cycle would constitute an exit from the Outer-Right, passing into a far more complacent diagnosis of the global, or merely Western, calamity, to dismiss it entirely from consideration is to court profound cognitive (and predictive) imbalance. In the opinion of this blog, Greer’s model is grievously afflicted by such imbalance, and — once again — this seems to be a syndrome of far wider prevalence. Scarcely anybody on the Outer-Right is prepared for rhythmic amelioration of significant modern pathologies, through renewal of techno-commercial vitality even under conditions of secular civilizational decline. Yet even glancing attention to the working of the (~ half century) long waves suggests that such neglect is simply unrealistic. Unless the K-wave is now dead — an extraordinarily extreme proposition, which surely merits explicit assertion — some proportion of the present decay is inherently transitional. New industrial structures based on blockchained communications — and thus designed to route around socio-cultural sclerosis — will support an explosion of innovation dwarfing any yet imagined (including synthetic economic agents, quantum computing, neuromorphic chips, large-scale space activity, applied genomics, VR media systems, drone-robotics, commercialized security … maybe Urbit). Even if Greer is absolutely right about the deep historical pattern being played out — and I’m fully confident he isn’t — the next K-wave upswing is going to be vast, dazzling, and, almost incomprehensibly distracting. There’s perhaps a decade remaining in which uncompromising gloom-core will make sense, after which the Outer-Right risks utter eclipse during two decades of upswing euphoria. It would make a lot of sense to pre-adapt to it, beginning with a reminder that the Outer-Right case is not that everything will continually deteriorate.

I’ve run out the clock on myself for now … but I’ll get back to this.

Since World War II, we’ve generally been focused on the Great Concentration, while another story was developing in the shadows. Its focus: the de-concentration of power in what the Bush administration used to call the Greater Middle East, as well as in Africa, and even Europe. Just how exactly this developed will have to await a better historian than I and perhaps the passage of time. But for the sake of discussion, let’s call it the Great Fragmentation.

This is why, now in my eighth decade, I can’t help but wonder just what planet I’m really on and what its story will really turn out to be.

Quickly following upon the recommendation to readers here that the Archdruid Report contained some highly intelligent discussion of historical models (or ‘time shapes’), Left Troll turned up, in a slightly less deranged fury than usual, to denounce ‘our’ flirtation with druidic villainy. After scolding ‘us’ for the “ignorance displayed in this thread about the latest happenings in fusion research … [which] is just astounding”  (remedial education here), he noted that “No one has mentioned methane hydrate.”

Insofar as it can be unscrambled from the snark, this is not actually an unreasonable point — and nor it it one that I think the druidic hordes here would disagree with. The world is awash with hydrocarbon deposits, whose magnitude is most probably vastly greater than even the most optimistic estimates anticipate. If anyone has been vindicated by recent energy economics, it is the much-derided market fundamentalists (such as Daniel Yergin), who have persistently argued that price signals matter far more than geology when it comes to the unlocking of resources. When geophysics ventures into this territory, it is typically blind to the perspective constraints set by existing price conditions. What is ‘really’ there depends hugely upon the incentives to find it. The idea that scientific experts enjoy superior insight to market actors is a classical example of academic hubris.

Peak Oil is an intriguing theory, because — when strictly defined — it has to be true. It is near-impossible to refuse its claim, when it is abstracted to something like: Fossil fuel reserves are finite, and the consumption of any particular type of hydrocarbon deposit will tend to accelerate to a peak, followed by decline, characterized by rising extraction costs, and approximately described by a bell-shaped curve. Such a claim tells us much less than its most enthusiastic proponents pretend, however, since hydrocarbon resources are immensely heterogeneous, in chemical type and mode of geological confinement. A Hubbert production curve for Texas petroleum tells us almost nothing about the global prospects for hydrocarbon exploitation, in which the nature of ‘reserves’ can undergo sporadic, revolutionary revision.

Beyond denial, dismissal, and under-estimation of market dynamics, Peak Oil promoters have resorted to two main lines of argument, in order to keep their favored narrative on a rising curve. Firstly, they have incorporated Global Warming Weirding scares into their models, hoping perhaps to substitute a loosely-coupled moral panic for resource depletion concerns. (I’m going to bracket this topic for now, due in part to its fundamental irrelevance.)

Secondly, they have turned to the concept of EROEI (Energy Returned On Energy Invested), in an attempt to over-ride market dynamics with a second-order geophysical argument. The beauty of EROEI, from the Peak Oil perspective, is that it calculates hydrocarbon extraction in purely energetic — rather than economic — terms. A declining EROEI, even given extreme price incentives, still describes a collapsing energy economy. Alberta oil sands, for example, have a dismal EROEI that can be as low as 3:1 (you can’t get fuel out of the muck without heating the dirt). Unfortunately, for those binding their case to this type of calculation, the EROEI of hydrocarbon fracking is in the region of 85:1 (!). There’s no continuing trend (of EROEI-deterioration) to hang on to.

No surprise, then, to learn that central Peak Oil discussion hub The Oil Drum is being shuttered. The very last reason to read Greer is to bask in the wisdom of his Peak Oil analysis (whose principal merit is its comparative sobriety and moderation). In his sharply comical description of financial boom-and-bust, Greer ruthlessly skewers the “This time it’s different” mentality of band-wagon climbers. Peak Oil, too, is a “This time it’s different” story, and there’s no fracking reason to believe it.

As for methane hydrate, the principal point right now is that we don’t even need it yet. There’s still a lot of gas left in the tank.

ADDED: Greer contra fracking (and technological fixes in general). Money quote: “The current fracking phenomenon, in other words, doesn’t disprove peak oil theory.  It was predicted by peak oil theory. As the price of oil rises, petroleum reserves that weren’t economical to produce when the price was lower get brought into production, and efforts to find new petroleum reserves go into overdrive; that’s all part of the theory.  Since oil fields found earlier are depleting all the while, in turn, the rush to discover and produce new fields doesn’t boost overall petroleum production more than a little, or for more than a short time; the role of these new additions to productive capacity is simply to stretch out the curve, yielding the long tail of declining production Hubbert showed in his graph, and preventing the end of the age of oil from turning into the sort of sudden apocalyptic collapse imagined by one end of the conventional wisdom. ”
More here.

ADDED: A brief hydrocarbons extraction technology update.