[Steve_American]

Steve Keen: "On the Origins of Energy Blindness" | The Great Simplification #108 || Nate Hagens.

Steve starts with some French proto-economists, who said that "land" is the source of all wealth. Land being the area of solar collectors called wheat and other plants, so we can see energy there with our hindsight. Then Adam Smith in 1776 changed that to "labor" is the source of all wealth. Then in the 1879s they said labor and capital (machines) are the source of wealth. Etc. Note energy was never there and Smith removed what little it may have been seen to be there.
Late in the talk Steve says that a mainstream economists assumed that energy is 4% of GDP, so if Germany lost 50% of the energy it was using because it imported much less from Russia, it would reduce its GDP by just 0.5 X 0.4 = 0.2) =20%. So, bad, but not a big deal.

Remove the [==] to view it.
https://www.you[==]tube.com/watch?v=lrMWSkzrMYg&list=TLPQMTYwMzIwMjTyC26Aax4Gug&index=27

.

[late]

There is a Youtube notice saying that video is unavailable.

I agree with what it's saying, the entire German economy is based on oil and gas. By that I mean the products that are used to make the products that are sold are derived from petroleum.

Germany is headed into economic trouble.

[Steve_American]

There is a Youtube notice saying that video is unavailable.

I agree with what it's saying, the entire German economy is based on oil and gas. By that I mean the products that are used to make the products that are sold are derived from petroleum.

Germany is headed into economic trouble.

When I posted it the video was there. It got a problem later.
I added the [==] so you can see it now.

Prof. Steve Keen has proved with data that there is a very close to a 1 for 1 ratio of energy use to GDP in developed nations. So, a 50% reduction in energy use will result in an about 50% reduction in GDP, not a 20% drop. [Steve actually says a 10% reduction in energy means a 4% drop in GDP. I made it bigger to be more dramatic and closer to the real reduction in energy that Germany can import gong forward.]

The main point is that mainstream econ. assumes infinite substitutability of all required resources. When it ignores the role of energy in production, it was easy for economists to fail to see that there is NO ability to substitute any other "thing" for energy.

This also applies to elements in many cases. For example, living things need phosphorus to make their metabolism work. No other atom can be substituted. So, phosphorus is needed in fertilizer to add it to the soil to keep crop yields high. I think that I saw a report that Norway discovered a huge deposit of phosphorus. Bigger than all known deposits combined. So, this is just an example. OTOH, doubling the known reserves just adds one more doubling time before it is all gone, IF the rate of use keeps increasing exponentially at the same rate.

[paeng]

I think Gail Tverberg also showed that there was a correlation between oil use and global GDP rates.

Meanwhile, there's also EROI.

https://www.scientificamerican.com/arti ... ic-growth/

[Unthinking Majority]

Isn't oil and electricity bought and sold like everything else? Unless self-produced, e.g. solar panels on your roof.

[Steve_American]

Isn't oil and electricity bought and sold like everything else? Unless self-produced, e.g. solar panels on your roof.

I'm not sure what your point is. So, I'll guess what your point is.

Yes, energy is sole and bought.

However, a barrel of oil has many BTU of energy in it. Even allowing for wastage by humans, a barrel has 4 to 5 man-years of energy=work in it, it now costs about $80. So, it is way underpriced compared to the value it is producing.

.

[Unthinking Majority]

I'm not sure what your point is. So, I'll guess what your point is.

Yes, energy is sole and bought.

However, a barrel of oil has many BTU of energy in it. Even allowing for wastage by humans, a barrel has 4 to 5 man-years of energy=work in it, it now costs about $80. So, it is way underpriced compared to the value it is producing.

.

If it was producing more value then why wouldn't it sell for more? It's obviously valuable, but if it's also plentiful then its value would be less valuable. Oil is cheap because there's tons of it. Like the income of a western-trained doctor vs a low-skilled factory worker in China. Supply and demand.

[Steve_American]

If it was producing more value then why wouldn't it sell for more? It's obviously valuable, but if it's also plentiful then its value would be less valuable. Oil is cheap because there's tons of it. Like the income of a western-trained doctor vs a low-skilled factory worker in China. Supply and demand.

Well, that is part of the reason.
The other part of the reason is that the cost of extraction is low. We only pay something fairly close to the cost of extraction.

In any case, basing the damage to the economy if the amount of oil available is reduced on its selling price as a share of the economy/GDP when something so powerful, and so, is so valuable is being sold so cheap is just stupid.
.