Please check out this recent VBS.tv series on the Pacific Ocean’s ‘garbage island’ if you do not yet have a sense of just how massively human beings are screwing up the Earth’s ecosystem.

For years we’ve been reading about a patch of garbage the size of Texas floating in the middle of the Pacific Ocean, ingeniously dubbed the Great Pacific Garbage Patch. Basically, any trash that gets dumped in the water rides the currents to this one spot and joins an ever-increasing flotilla of crap. For all the breathless accounts of the mess and its impact on the area’s sealife, however, no one seemed to have a picture of the buildup.

In order to sate our own curiosity, VBS joined the crew of a research vessel studying the trash and sailed out into one of the most remote spots of open water in the world, the North Pacific Gyre, in search of this mythical garbage island. What we discovered once we got there was an ecological disaster beyond any of our expectations and possibly the single worst thing human beings have done to the planet and ourselves. Hope you’re into cancer and sex-reversal!

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For a while now, people who really do not want to admit to themselves what is happening have allowed themselves to get lulled into the fantasies that fantastically complex and difficult oil finds in deep waters and various highly unstable and barely controllable parts of the world are somehow going to do more than barely make up for the already existing decline rates. Even with oil prices hitting US $112 per barrel…

Today’s news should help put a damper on such unbridled, and utterly foundationless, optimism.

Russian oil production has peaked and may never return to current levels, one of the country’s top energy executives has warned, fuelling concerns that the world’s biggest oil producers cannot keep up with rampant Asian demand.
[…]
Leonid Fedun, the 52-year-old vice-president of Lukoil, Russia’s largest independent oil company, told the Financial Times he believed last year’s Russian oil production of about 10m barrels a day was the highest he would see “in his lifetime”. Russia is the world’s second biggest oil producer.

Mr Fedun compared Russia with the North Sea and Mexico, where oil production is declining dramatically, saying that in the oil-rich region of western Siberia, the mainstay of Russian output, “the period of intense oil production [growth] is over”.
Financial Times

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The predictions about the results of oil price increases are hard to really get a sense of, though I found an interesting analysis of this matter, from I think about 2003, though it’s not dated:

Conventional economic reasoning, embodied in the notion of ‘price elasticity’ of demand, is that large oil price rises will necessarily cut oil demand and economic growth, perhaps resulting in zero economic growth, or recession. The higher the rise of oil prices, the faster it is assumed that ‘price elastic’ responses will play. Higher oil prices will “of course” reduce economic growth, may generate stock exchange panics and will produce inflation, leading to monetary and financial instability. Higher interest rates, and even a plunge into recession will then be needed to combat this through rapidly ‘decompressing’ the economy, thus cutting world oil demand, and reducing its price in a context where oil supply is always thought of as growing as fast, or faster than demand.

No received wisdom has any utility unless it can be demonstrated and proved, if it is have any more than the status of belief. The relation between oil prices and economic growth is in fact complex. The notion that price elastic responses describe inevitable, real and worldwide responses, and that any oil price rise necessarily and immediately reduces economic growth is in fact a travesty of the facts. From today’s price levels for oil (around $30/barrel in the USA for light crudes), ‘extreme’ price levels would be needed before world economic growth fell. Until very elevated oil prices are achieved – probably well above $70/barrel in 2003 dollars – world economic adjustment mechanisms will always result in higher oil demand through the economic expansion, with or without inflation, that higher oil prices bring about at the world, or ‘composite global’ economic level.
GasAndOil.com

It’s interesting to see how the world is scrambling to try to figure out what is happening and fit it into some model or other when the sad fact is there is no model to fit it into, because nothing like this has every happened on a global scale before.

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Today there are food riots in many countries in the world, for example. Oil is now around US $112 bbl, US dollar is weak and about to go weaker if current tendencies continue. The only reason it’s not hitting like a revolt or bang is that the systems involved are so massive and intertwined that inertia keeps things going, the question is what happens, what is the cost of that inertia, long term.

Things are incredibly challenging at this moment, stuff is hitting so fast it’s stunning, same is happening in climate change and related research, at every level the Club of Rome’s Limits to Growth is hitting real time, and nothing is coming to change that so far, although it could have had we started seriously when the first real warnings came in around 1970.

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Here’s some things to think about, courtesy of the Market Ticker. I’m not sure, as I will try to say again and again, who is 100% right, but what is becoming more interesting is who has tended to be right, especially in the macro areas of the economy and other global issues. One cost of globalism, of course, is now clearly being revealed: problems quickly escalate to a global level.

Let me be clear – if we cross this line in the sand there will be no warning and no way to “take it back” once it happens. Consider your daily life – could you survive for more than two weeks if you suddenly had no access to credit of any sort? If you were forced to pay for each and every thing you buy, from gasoline to groceries, with cash from your bank? If your credit card was suddenly reduced to “zero available”, irrespective of how much you paid off?
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A more appropriate response would be to go after the lenders who made knowingly-inappropriate loans to people, and force them to eat the bad paper in a court of law. That would take courage too – get some injunctions against the bad actors, including the Wall Street investment banks who securitized and effectively bribed the ratings agencies, halt the process, and let it grind through the courts. Get a few “unconscionable contract” rulings and voila – we have a couple of insolvent Wall Street “icons” and we can sell their office buildings off to pay the judgements.
[…]
Where’s the truth – you can’t spend more than you make for very long, and now the gravy train has run out!

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