Gail Tverberg is an actuary and the editor of Our Finite World, a website that focuses on “how energy limits and the economy are really interconnected.” In this episode, she discusses oil and coal’s continued dominance of the global energy mix, why the world is “running out of affordable energy,” why raising interest rates to tame inflation won’t work, and why renewable energy’s “true value is close to zero.” (Recorded August 11, 2022.)
Robert Bryce 0:04
Hi, everyone, welcome to the power hungry Podcast. I’m Robert Bryce. On this podcast, we talk about energy, power, innovation and politics. And I’m pleased to welcome for the first time on the podcast, Gail Verburg. She is the editor of our finite world.com. Gail, welcome to the power hungry podcast.
Gail Tverberg 0:22
Thank you for inviting me.
Robert Bryce 0:24
Now, I didn’t warn you. So I ambush my guests on a regular basis. I didn’t, I didn’t warn you that I’m going to have you introduce yourself. Now, given your title. And I know that your work is published in various in many places. But if you don’t mind, imagine you’ve arrived somewhere and you don’t know anyone. And you have a minute or so to introduce yourself, please do so.
Gail Tverberg 0:41
Okay, well, let’s put it this way. I am really an actuary by background, am I making forecasts for the insurance industry. And so I had gone through and I was involved with doing things for medical malpractice and worker’s compensation, a lot of things that pay out very slowly. And I figured out at that point that, you know, it’s just really strange that, you know, everything could go on. And, you know, if there was 7% growth, you’re gonna have 7% growth forever, at least if you use the, you know, short forecast that was done by actuaries. You know, you just look at the last 10 years and whatever it looked like, maybe including inflation, you just assume that was gonna go on forever? Well, I could see that this whole thing didn’t work that way. And so I was very aware that the, that the whole kind of forecast that was being done didn’t make sense. I mean, and of course, I worked for a consulting company that did forecasts for things like pensions. I wasn’t an actuary who worked on pensions, but some other people did. So I thought, well, if I’m going to look at this any further, I will just, you know, leave the consulting business. Because I basically have a conflict of interest. I can’t talk about, you know, what the answer is that my employer are giving is giving is wrong, I need to go someplace else, and look at this issue. So I decided, you know, to take early retirement, and just look at a little bit and I hadn’t really thought through too much about what I would do. At that point, people were setting up websites. And there was a seminar on how you could set up your own website. And actually, I had written a couple of published articles too, before I actually started on this. And
Robert Bryce 2:48
then just I’m sorry to interrupt but you’re saying that you’re the reason we’re that you’re on the show your work on energy, population, demographics, economy, that that’s what we’re talking about that you had started to work on that when you were working as an analyst
Gail Tverberg 3:00
still, yeah, I had started working on it while I was there working at Tillinghast, which is has been, you know, as part of Willis towers, Watson, who you know, all of these different mergers you get, so they keep going under different names. So I started doing those things. Then, I started writing on our finite world, there was a website called the oil drum that discovered my work. And so they asked to reprint some of my articles. And then they asked me to come and eventually be an editor there. And then we had a parting of ways because I saw things differently than they did. And of course, they went out of business, but I didn’t so. And it turned out that, you know, this was the best choice that could be made, because then people could follow me directly, instead of having my work diluted by all of their things. And when I did this, then there were all kinds of different research groups that found my work, it would be people that were working for university systems. And so they were doing different kinds of work that they were publishing. And they would invite me to come to their conferences, and give a talk at their conferences. Right. So I got involved with a number of different researchers. I also met quite a few people who wrote articles that were published in the oil drum and corresponded with them. So I got very much involved when the American Petroleum Institute invited me to come to visit quite a few of their installations. So and
Robert Bryce 4:52
so if I’m sorry to interrupt, but it seems like you’ve you’ve kind of become, for lack of a better term, just pause from accidental expert here and terms of,
Gail Tverberg 5:00
I kind of have gradually been become an expert. But you know, I really don’t have, you know, university training in economics as such. I mean, I don’t follow the standard economic. I certainly wasn’t an economics major in college or graduate school. That was math major.
Robert Bryce 5:22
Right. And that’s what I see here this year. You have an MS from the University of Illinois, Chicago and math. And you’re a fellow of the Casualty Actuarial society, right and a member of the American Academy of Actuaries. But if you don’t mind I’m just going to interrupt because you know, I followed your work for now some time you wrote for the oil drum for six years. A friend of mine Robert rapier wrote for them for many years but your work if I can cut to the chase here why I wanted to have you on the on the podcast is to talk about your work about inflation, about oil, about your your views on an academic paper you published a decade ago oil supply limits and the continuing financial crisis. You’re looking at your as I see it, if I can, maybe maybe you’ll agree with me on this or not. But your work as an actuary and a mathematician has informed your work about how you look at the the world economic system and and the world as an energy system, because that’s what I see in your recurring theme and your work on our finite world is that this that focus on the limits to growth, which I’m going to go I want to talk about one of the things that you’re you’re you’re focused on. So if you don’t mind, just, I’m gonna cut to the chase here in terms of where we are now, because you keep making a similar you make in many of your articles, a similar point about energy availability, and how the limits to energy availability are, are affecting the global economy. Where are we now in terms of where we have super high natural gas prices, particularly in Europe? coal prices are 8x what they were in beginning of 2020, or 7x? What’s going on in the global economy now? And are things going to get worse from here? Let me ask that provocative question.
Gail Tverberg 7:08
I think the situation is that we’re running into energy limits on practically everything simultaneously. And it is really the Limits to Growth situation, that what happens is that the cost of extraction becomes too high to pass on to customers. And for them to be able to afford it. And the whole system starts binding up, we kind of work around the situation for a long time by adding more and more debt at lower and lower interest rates, to try to make things more affordable, houses more affordable, and cars more affordable. But at some point, this just doesn’t work anymore. And what we’ve reached a situation where energy supply per capita is a hit rate reached a peak, if you could call the peak, but anyhow, in 2018, and it started to trend downward. And so what we’re seeing is that, you know, oil supply is a problem, you know, there was a big step down in 2020. But it had already started down before then. But coal has been a problem. And now natural gas is not keeping up, you know, all of the LNG from Australia, they need some of it for themselves. You know, there’s, and, you know, solar, we’re finding, you know, the costs are going up instead of down. Hydroelectric doesn’t work real well, when you have a drought. You know, there’s all kinds of issues that people didn’t stop to think through.
Robert Bryce 8:52
Well, so let me ask this question. Because one of the things that attracted me to you and I had followed you when you were at the oil drum years ago, and then your name kept coming across my you know that I read a lot. And I know you do as well, but I kept reading and I thought, well, you’re here, I’m just going to be, you know, you’re relatively odd or novel, I guess would be I don’t mean, in a pejorative way, a novel analyst in that you’re asked you to introduce yourself, you’re in Atlanta or outside of Iran, is that right? And if you don’t mind, how old are
Gail Tverberg 9:25
you? I’m 75. So,
Robert Bryce 9:29
I mentioned when we chatted on the phone the other day, and in some ways you remind me a little bit of Meredith Angwin, who’s a friend of mine who wrote this great book recently called shorting the grid, that you’re you’ve reached a level of acceptance or a notoriety in forecasting and Energy Economics and at a part of your career, that would be for many people the tail end of the career, but it’s an you’re an unusual or novel analyst in this field, right in that you’re not working for a big forecasting outfit you’re working and in your dining room and rocking, writing, these aren’t
Gail Tverberg 10:06
working my dining room, you know, and I know all kinds of people, you know, I know Dennis Meadows personally, I know lots of these different people who’ve worked in that field for years. So, so I kind of came at this in a different direction. But I don’t really tell exactly the same story as anybody else. Quite a few people do read my work. So they pick up pieces of it, and they kind of bring it through in their writings like Charles Hugh Smith. And you know, we’ll mention a few things that he probably got from mine and James Kunstler, kind of, you know, he has in his background, he kind of seems to look a little bit at mine. And you know, there’s different other ones that look at my things.
Robert Bryce 10:55
So how does, I wanted to ask this question, because my dad was in the insurance business, I have two brothers that have been in the insurance business, one of them still in it? How does being an actuary affect your outlook? And does it give you a different a different view on the world? And if so, how would you describe that?
Gail Tverberg 11:13
Well, I guess I would think about is I kind of have a practical approach to how economics works, and how, you know, these are the monies that maybe not the money system as much, but you know, the fact you know, people think of money as being a store of value. While it can only be a store of value, if the goods and services that you want to buy five years from now, really are there five years for now, if those goods and services aren’t really there, then your money isn’t going to be worth anything. So somehow or other, the system has to come apart or failed to offer you what’s needed. And so it’s not as obvious not terribly obvious how that works out. Is it just inflation? Or is it the Empty Shelf problem? Or is it some other consumers dying off around the world, or what happens? But you can’t make the system work? You know, when you trying to give money to everybody, but there are goods to match the the money?
Robert Bryce 12:26
Well, as you said that, and as I was thinking about some of the other things that you’ve written you, you focus a lot on oil and the availability of oil. And I want to talk first, or this piece that you published on July 5, called why raising interest rates to reduce inflation may work out very badly. And I want to read this, because I want the people who are listening watching to understand where you’re coming from, he said, My concern is that the current attempt to bring inflation down will lead to falling energy supply and a world economy that is rapidly changing for the worse. He went on, you said world leaders are not able to face the possibility. The world is already running seriously short of oil and coal, future supplies are likely to be much lower and much more expensive if they are available at all other energy types, including natural gas, nuclear, hydro, wind, and solar are simply add ons to a system built using coal and oil. You also wrote that once the economy starts heading downward, is not clear the economy can never catch itself and start back on an upward path again, even for a short while. That’s pretty dire. I mean, I’m not. I’m not adding anything. I mean, but That’s right. Right. Yeah. Outlook. So let me ask you this, this question. Are you a pessimist? Or are you a realist?
Gail Tverberg 13:44
Well, I think I am a realist. You know, at the same time, I figure, you know, I’ve talked to enough BookOut attorneys to know that, you know, they talk and they say, Well, you know, we’re looking for a textbook, we can sell for 20 years. And we would really like it to be something that doesn’t scare the students. And we’d like it something that will that we could sell 20 years from now. And it would be as valid valid 20 years from now as it is now. And I’m thinking, I’m not going to waste my time, I’m not going to work. You know, and there might be some that will let me tell part of the story or something or if it has a small enough audience, maybe they might think about it, but it’s not something that you’re going to see in the mainstream press. And I guess at some point, I’m a little worried about making people too depressed to if they read a piece of the story, and they get away from it for a while and then come back. You know, it might be tolerable, but you can’t just tell somebody, you know, the world is coming to an end, but we’re not quite sure when it maybe it’s there’s a 20 year or 30 year or whatever. 40 year downslope, and maybe some places do better than others, and maybe things will work out some places. But you can’t just go tell him well, in the fourth quarter, everything’s gonna fall apart. And that’s the end. You really don’t know that.
Robert Bryce 15:16
Right? We’re screwed. Messages are very popular one or one that’s bankable, I guess would be
Gail Tverberg 15:23
a No, that isn’t one it doesn’t, ya know, and by the time you get your book written, it can’t be published anyhow.
Robert Bryce 15:30
Well, one of the things that is I have been reading what you’ve written in in just talking to you what am i right to say that you’re, if I boil your work down to the nut of it, and what you’ve written about, for a great deal on your site are finite world.com. And art Berman has said this on the podcast, that energy that oil is the economy energy is the economy. And if we don’t have enough the economy starts to go down. Is that is that? Is that a fair summary of how you’re looking at all these issues?
Gail Tverberg 16:03
Yes, I think so. Oil is definitely the high priced fuel, you know that you we get we coal and natural gas or supplements. But oil and coal both have the characteristic that they can be transported. Without fancies, special purpose goods, I mean, you can put oil in any kind of a tank or it could be a boat, it could be on a train, you can have pipelines, you know, the guide different ways of doing it. And coal is you can pick it up with a shovel, even people carrying it on boards on the top of their heads is something you can transport. When you start to get into natural gas, you got to keep it tight. Me and close, you got to get it from door to door. It’s a very much more difficult material to work with.
Robert Bryce 17:01
Well, well, that’s interesting point I hadn’t thought of, but I’ll reflect back when a friend of mine was talking to some I think some Pakistanis is an American guy, and they were at a conference and they were talking about coal demand and what’s where it’s going in Asia. And and as I recounted from him, that the Pakistani guys will say, we’re saying, Well, yeah, we’re gonna build a coal fired power plant, because it’s easy to store, we can put it on the ground if we have to, and it doesn’t have to be levelled ground. So that that characteristic, the thickness of the thing, the thickness of the oil, the thickness of the coal, is one of the key reasons why they’re so dominant in the in the in the economy. Is that, is that?
Gail Tverberg 17:37
Yeah, yeah, that’s it, you know, once you start getting to natural gas, then it’s much, much more difficult. You know, hydroelectric, you’ve got to store that too. And it evaporates and, you know, at certain times of the year, and so you’ve got a lot of issues with that as well.
Robert Bryce 18:01
Yeah. On that same piece, where you’re talking about why raising interest rates, because this is, and I want to get your view on the Manchin Schumer bill, right, the reconciliation measure that’s now pending, which I’ve written quite a bit about. But back to this issue about rising interest raising interest rates, you went on, you said that the if the problem is an inadequate supply of finished goods and services due to broken supply lines and low wages for workers, then raising interest rates is entirely the wrong medicine, it will cause even fewer automobiles and appliances to be made, it will cause many current workers to be laid off such an approach when the world is trying to deal with too few workers will tend to make the situation worse rather than better. So you’re talking now about monetary policy right? And why monetary policy always matters. But what’s the right monetary policy now to keep interest rates low? Is that what you’re arguing? Or if you’re saying raising interest rates will make things worse, then leave them alone? What’s your recommendation there?
Gail Tverberg 19:03
Well, between 1980 and fairly recently, the strategy that was used was to lower interest rates for a very, very long period, you know, we had interest rates up at what 18% or something in 1980. And then we brought them down to just about zero and below zero, if you were in Europe or Japan, and then trying to bring them back up, you know, as long as you’re lowering them, that gives people more buying power, and for the same monthly payment, we’ll say, and so they keep adding more and more debt. But once you try to turn that around, you have real difficulty. You know, the, it costs to it adds cost to absolutely everything. So then that consumers find that they A have to that their wages just don’t go far enough, right. And of course, it’s the low income people, especially who are affected because food becomes a bigger piece of the total, and transportation becomes a bigger piece of the total. And rent becomes a very big piece of the total. And they find they just don’t have enough to go around. And so they’re especially get upset. And when you look at consumer confidence, it looks just terrible. But the top 1% And the ones that own the businesses and things, they say, Oh, we can just pass it on to our customers, you know, so the businesses can be fairly upbeat about the whole situation. At the same time, the consumers are not so happy. So it varies as to who sees it which way.
Robert Bryce 21:02
So if I’m going to just refine what you were saying about the the inflation issue, then raising rates is simply going to reduce output and then potentially increase unemployment and earning power, then that starts to feed on itself then,
Gail Tverberg 21:17
right, right. Yeah, that’s, that’s what tends to happen. Because, well, first of all, the consumers can’t buy the goods, or they can buy so many fewer goods, they’re not going to go buy a new sofa, for example, a sample, if there’s not food to put on the table, you know, the food is going to take preference, they’ll use whatever they had before indefinitely before they’re going to buy a new sofa. So there’s going to be a cutback and all kinds of discretionary goods and services. And the, the manufacturers are going to find that they need to that their costs borrowing are higher. So they’re going to have to raise their prices. So that’s going to make the price of a new sofa more expensive, making it doubly hard for anybody to buy one. So the whole thing counts, you know, the system starts going back down to just providing the basics, you know, food and water and maybe someplace for people to live, but in much more cramped quarters than they are right now. And I don’t know what happens to transportation. But you can’t provide very much.
Robert Bryce 22:36
Well, it was a point you made to I think it was in the most recent piece you published on our finite world, that what you’re talking about here is affordability and kind of across the board. Right, you’re tying and and that’s one of the issues that’s been raised around food supplies now where with shortages of fertilizer, the disruptions in supply chains, because of grain out of Ukraine and Russia, that the wealthier countries will be able to afford higher priced wheat, soy, corn, whatever the lower income countries won’t, so that there’s going to be a further stratification based on this debate about around purchasing power. Is that is that is that fair?
Gail Tverberg 23:17
Yeah, to some extent. Yeah. The I think already back in 2020, I think what we saw was that, you know, if you shut down the wealthy countries, say tourism stops, then you’re going to have the poor people in poor countries, especially being hurt, because the people you know, in Vietnam or in Colombia, or wherever it is, that used to work in the tourism industry, are going to discover that their jobs are gone. But the countries are rich enough to provide them with the income they need to replace it to buy food and everything they need for their families. So it’s those poor people who especially can they get squeezed out? They and it may just be that their health deteriorates. So they catch some disease that happens to be going around when it comes around. And they especially maybe the children die off earlier, or maybe the elderly don’t live as long. It’s the people who are most vulnerable, who would be most subject to die.
Robert Bryce 24:35
So we’re headed for some hard times.
Gail Tverberg 24:38
It looks that way. Right? Budget, so it tends to be the bottom tier that tends to get squeezed out first. I think the idea was raising interest rates is that you for say for the US to raise interest rates as you attract all the investment to the US because It’s, you know, the best horse in the glue factory kind of saying,
Robert Bryce 25:04
the best house in a bad neighborhood. Yeah, best house
Gail Tverberg 25:07
in a bad neighborhood? Yeah, whatever it is, you know, it at least has some energy resources. So it has some possibilities going forward. But it’s not that that the US has great, terribly long rage. Look, that looks very good long term. But it’s more that
Robert Bryce 25:32
relative to the relative relative to the other countries that
Gail Tverberg 25:36
doing well, and the debts defaulting in China. And, and we don’t know about Russia, but you know, there’s all kinds of problems wherever you look.
Robert Bryce 25:45
Right? Well, so one thing that, and I wrote it down here, Gail, was that my guest, again, is Dr. Gail Verburg. She is the editor of our finite world.com. You can find her work there. And there’s a lot on her website. It’s quite remarkable. But you’re not you’ve already said this, that you took early retirement, you’re these other outlets, Zero Hedge and oil price and other places, they’re using your work, they’re not paying you. So you’re not getting rich on this. And I’m assuming Why do you care so much? Why I mean, why, especially if you’re, then I mean, this no pejorative disrespect, but at age 75, you could be playing bridge or golfer so I don’t know, why are you doing this? Why do you care so much about it?
Gail Tverberg 26:31
Well, I guess it seemed like, you know, things just work together that I fell into this and sort of like it, it’s almost been revealed to me, you know, I certainly I never had a physics course in high school or in college. And I have people writing to me about the physics of the situation. So you know, I learned enough so that I can kind of put it together. But I can’t say I’m going to be giving a physics lecture tomorrow, you know, but it it’s been very strange. Because, way back in 1973 74, I was heavily involved at the time, interest rates changed. And I’ve been involved for such a long period, at a high enough level in insurance companies that I saw the, you know, the big changes that took place with changes in interest rates. And I saw how things worked way back when and all along, I’ve just, you know, all these people have been put in my path. And they’ve contacted me, as opposed to I contacted them. So, you know, it’s kind of been very strange. I thought, well, I guess I just go with how it seems to work. And my health has been fine. And you know, I feel like I’m 35 or 25, whatever. So when people say, because this morning, I neighborhood and I go fast. And that’s right. You know,
Robert Bryce 28:00
it’s funny, because while I’m 62 and I woke up this morning, I felt like I’m 95 or something. So maybe we need to switch. But well, that’s interesting. And I it’s kind of thrilling, honestly, and it’s one of the joys of this podcast, I get to talk to people who are my only hurdle for the podcast, I think I told you this game, who do I think is interesting, right? Who do I want to talk to, though, and talk to for an hour that I think would be interesting. And what I what to me is kind of is thrilling about what you were just saying is that what I’m paraphrasing, what you said is that this is what you’re meant to do?
Gail Tverberg 28:29
Yeah, it seems like I’ve just fallen into it and sort of like, God has opened doors in this direction, that direction and the other direction. And you know, I never called up the American Petroleum Institute and asked him to go there to all of these different sites, but the American Petroleum Institute called the oil drum and said, Oh, we’d like to invite somebody to come, you know, we invite various reporters for newspapers, we like to invite some people who are writing about it on websites as well. And the others all said, Well, we have full time, jobs in academia, or, you know, we’re graduate students or whatever. So none of us can go and I said, Yeah, I’ll go. So, but I also took calls from, you know, solar companies who told me this was the next best thing, you know, and I, and I made the effort to try to find places all along where I could find out more about, exactly, I went to conferences, let’s put it that way, like down at Georgia Tech, early on, and I heard people say, you know, carbon capture and storage does not look like it will ever work. You know, and I’m going oh, this is the scientists that carbon. And this was like when I first got into this so they were saying you know, it’s going to escape and it’s going to suffocate the people. And this is just not an idea for the future. Maybe You can see Quester it for five years, but you’re not going to see Quester it forever.
Robert Bryce 30:06
Yeah, that’s a page out of my book, I just published a piece in real clear just the other day on. I just republished a piece I wrote a dozen years ago in the New York Times about carbon capture and why it’s a bad idea. So bad ideas just keep coming back. But that’s just the nature of things. I suppose people forget, oh, this is a good idea. No, this is an old idea. That was a bad idea back then it’s still a bad idea now.
Gail Tverberg 30:28
So I went to a lot of different conferences to try to build up my knowledge level a little bit to about some of these things.
Robert Bryce 30:37
We’ll see what this What the What does it mean to you now? What does success look like to you then?
Gail Tverberg 30:44
What is success? Well, success is, you know, every day is a good day, I guess. You know,
Robert Bryce 30:52
and you get to keep working on these issues that your view or that your life has steered you toward that that’s the success that you’re after.
Gail Tverberg 31:00
And I guess that’s the success I’m after, right? My husband still teaches part time. For a university. He actually teaches from home.
Robert Bryce 31:09
What is his name? And what does he teach?
Gail Tverberg 31:12
Oh, he’s been banned. Ben Setzer, and he chooses teaches computer science for Kennesaw State University. He has classes have been online recently. So which is convenient to spend recording lectures? Just recently, because the term starts on August 15.
Robert Bryce 31:33
Gotcha. So in talking about the limits to growth, which is the was the paper that was published by the Club of Rome, if I’m remembering right, in 72, some of the themes that you’re working on, remind me of that, but then, have you Are you familiar with this new book by Peter Zion, it’s got a lot of attention. And design has gotten a lot of attention, the end of the world is just the beginning is the title, in which he talks about demographics and energy supplies and some of these other things, but I’m just curious whether you are familiar with his work,
Gail Tverberg 32:05
I think it’s one of the books I have sitting in a stack next to my desk, that I intend to read, but hasn’t quite gotten there. You know, he sees parts of the picture, but not all of the picture. You know, but, but definitely, there’s a demographic issue in there. You know, that, you know, when you have limited energy, you have everybody from children to the oldest adult, contributing, all lifelong, whole process of trying to get food and housing, whatever, limited other things, you have clothing, probably, but you can’t. And then as you add more and more energy to the system, you can reduce the number, the share of the years that you’re actually working in the workforce, you know, you can have children in school longer, and you can let people retire. Well, we made all kinds of promises to people and said, Oh, you can all go to graduate school, and then you can retire early, and then you can. And then we’ll give you a pension until you die, which is going to be at 100. And whatever people we have remaining in the workforce, which going to support you, well, it just doesn’t work that way. Because especially if your energy supply is going straight down, you know, somebody’s going to have to say you, the people who are working have to get priority on this. Because you know, you have to feed your workers, right. If you can’t feed your workers, the work isn’t going to continue.
Robert Bryce 33:48
So you want to move on to this piece in 2020, you wrote a sharp piece called why a great reset based on green energy isn’t possible. And I really reacted to this because I’ve been critical of renewables for a long time. I’m critical. Now I’ll be critical tomorrow. They’re in my view, there’s just no way they will ever scale to the dimensions that make a difference in terms of a real difference in terms of the global energy use, but that anyone’s been watching what I’ve been doing. That’s that’s clear. But you said you wrote this, you said even though the economy looks like something made by humans, it really is extremely different. In physics terms. It is a dissipative structure is able to grow only because of energy consumption, such as oil to power trucks and electricity to power machines. And then you make these very provocative statements, which I gotta say I just totally love on a standalone basis, intermittent renewables have very limited usefulness, their true value is close to zero. The true cost of wind and solar has been hidden from everyone using subsidies who, whose total cost is hard to determine. And then you went on we do indeed appear to be headed headed for a great reset. There is little chance that green energy can play more than a small role. However, leaders are are often confused because of the erroneous modeling that has been done. Given that the world’s oil and coal supply seems to be declining in the near term, the chance that fossil fuel production will ever rise as high as assumptions made in the IPCC reports seems very slim, it is true that some green energy devices may continue to operate for a time. But as the world economy continues to hit downhill, it will be increasingly difficult to make new renewable devices and to repair existing systems. Wow. I mean, that is a a very blunt assessment. So how much money you’re getting from Exxon, I have to
Gail Tverberg 35:36
write, right, except that Exxon can’t really do anything either. You know, they, I mean, they can’t keep ramping up their oil and natural gas supply, you know, they can try to get subsidies from the government to make, you know, whatever ESG goals that there are being pushed right now. But it’s very hard for any company to actually make money in the oil business long term. Because governments have great incentive to try to hold prices down. And when they try to hold prices down, that’s what stops the production of oil.
Robert Bryce 36:18
Right? Well, and we see that conflict in the Biden administration, right, where they’re trying to restrain production and then lecture the industry because they’re not maybe they’re not producing enough, which, you know, makes no sense. But, but it tells me this or explore that she said, on a standalone basis, intermittent renewables have very limited usefulness, their true value is close to zero. Why?
Gail Tverberg 36:38
Well, it going forward, you know, all of their value is based on a model of what they’re going to do in the future. And so what happens? Well, at least that’s part of the problem. But part of the problem is that is not there when you need it. So you have to have your full infrastructure, as if they’re not there, you know, as if they’re just going to close down. So you still have to have your gas pipelines and your gas infrastructure, you need to have your workers, you can’t just send them home for part of the year, maybe you can, but it’s hard to hire a back again, for the rest of the year. You know, it’s hard to make the whole system work.
Robert Bryce 37:29
Because you have to replicate, you have to have two systems, then you build the renewables. But you can’t You’re not replacing the thermal systems is that if that be the succinct way to put it,
Gail Tverberg 37:39
exactly. And, and what you have really is a 12 month a year problem. And you have to be able, you know, it’s, especially in the cold countries, like in Europe, you have to be able to have enough heat for the people in winter, and your solar just doesn’t do anything. Very cold, dark country. You know, do you depend on wind? But if the wind isn’t there, you’re in real tough luck.
Robert Bryce 38:07
Sure. And we’ve seen that and it’s been remarkable, the power prices in Europe fluctuating by depending on how much wind is blowing, which to me is just a remarkable, I guess the way I boil it down to boil it down is that if we’re facing more extreme climate, hotter, colder, more extreme for longer, making our energy systems dependent on the weather is the height of foolishness, or the depth of foolishness. I’m not sure which, but but it makes no sense if we are facing more extreme weather don’t make the system dependent on the weather.
Gail Tverberg 38:39
Exactly. And especially if you’re talking about climate change, you’re gonna say, Oh, well, yeah, we planned that for how the wind was blowing that year. And that changed. And it’s not that part of the country that where the wind is blowing as much anymore.
Robert Bryce 38:54
Right? Well, so we talked a lot about these different asset classes. And this is a question I asked a lot of people, because I’m just curious, right? Because we live in a very topsy turvy world. Let’s be clear. I don’t know that that’s a technical term, but topsy turvy. There’s a lot of unrest. There’s a lot of uncertainty in the world. You’ve talked a lot about energy commodities. We haven’t talked about crypto cryptocurrency, or gold or soybeans or whatever. But you’re an actuary. You’ve been around for a while you’ve worked for insurance companies. What asset class makes sense to you? I’m not asking for investment advice. But you know, if you had I gave you $10,000 Today, where would you put it on? What what what makes sense to you if you were going to invest that and you wanted to get a return on it?
Gail Tverberg 39:42
Well, I guess I’ve told people who I’m not sure that investing and when I make a return, I think it’s more the opposite of you’ve got investments you don’t want to lose your shirt.
Robert Bryce 39:54
Okay. I don’t care about the return on my money. I care about the return of my turn. Is my money? Will Rogers great line? Yeah. All right.
Gail Tverberg 40:03
And so what you want to do is diversify in some sense. And I, I think that it’s quite unlikely that governments will kick people out of their houses, or their apartments. So even if you stop paying your mortgage or your rent, there’s a pretty good chance that government is going to come up with some program that says, Yeah, you can still stay there, you know, we’re going to have free rent for a temporary period of six months, well, maybe it’ll be a year, maybe it’ll be two years. And then the government fails. And so you still have your rent it but the, so if you’ve got something that you can continue to use, that’s physical, yeah, a car or a house, it may not be near any job, you know, so it’s not sure it’s going to be that good. So that is a thing of value, I suppose shovels and things that will help you have a garden might be a value. But when it comes to asset classes, otherwise, I think you want to diversify, you say, well, what’s the government most likely to bail out? You know, you maybe you want a life insurance policy as part of this, maybe you want, you know, bank accounts. Right now, I would not be out there putting money in the stock market, or I think a lot of bonds are going to be failing. You know, it’s, it’s one of those things like it, well, you know, gold and silver, maybe you have a little bit of it, I think silver is more of the right size or value could actually trade it, you know, you’re not going to take some kind of a coin that’s worth $1,500 or something to the store and buy a loaf of bread with it. So it becomes more of a problem.
Robert Bryce 42:13
But silver is more fungible because it’s of lower value and it could be handled as a coin that’s it
Gail Tverberg 42:18
could be handled as a coin Right. Right.
Robert Bryce 42:21
So I’m sorry to interrupt but it just so you’re kind of almost a back to basics, kind of I mean, even you’re talking about physical commodities that you can touch that you can handle makes sense to you is that what I’ve right
Gail Tverberg 42:35
right right that you have an extra bag of rice in your kitchen and you try to get a solar cooker and you’ve got a few things like that you’re trying to figure out what you’re going to do when the electricity goes off next time and it doesn’t come back on for days on end
Robert Bryce 42:52
well so when I have to So are you a prepper Do you have dried food you have a whole house generator How are you preparing?
Gail Tverberg 42:59
Not a whole lot actually i mean i i stopped and thought about it I said well how long would I have to prepare for to make any difference and I’m going well it doesn’t matter you know you know you want to prepare for a week long power outage maybe or something of that sort. But there’s really you know, the whole idea that you can prepare enough so that you can live through a winter till the next summer to the next fall harvest and grow enough to feed yourself you know you know I’ve tried a little bit of growing things and my success rate you know, I’ve tried doing it without all of the sprays and things like that and I and fences and other things you need and you discover the the animals eat half your produce and you know you need sprays if you don’t if you want your patients to actually have peach trees and peaches on it and it just really doesn’t work all that well then you can’t grow grain in the city on a Sunday house lot you know so I’d never feed myself or my family so you know I there’s no point and you know even if I were younger you know if as long as there’s a government there they’re gonna want taxes for part of it you gotta pay do more than just feed your family you have to be able to pay taxes to the government and do whatever all else to keep the whole system going.
Robert Bryce 44:42
No, no I look I you know raising food i and even hunting or even fishing I think foods cheap in the supermarket and a lot easier to get there than trying to manage it myself. So I’m with you there. Well, so the you had a recent post and you’re Forgive me for not looking at this one just yet. But it’s, you said that no one will win in the Russia Ukraine conflict. And you posted this in in late March. And you’re you make the point here is I’m just scanning it, you’re saying that the war is happening at the same time, we’re seeing depletion of other resources. So, but the war has been going on now for six, seven months. Do you think it gets worse to these supply interruptions get worse, what does this mean? Have you looked at Europe in terms of where you know where they are now with regard to Russian energy supplies? What? Give me your look into your crystal ball and tell me how this works out?
Gail Tverberg 45:42
Well, I think that Europe is in dreadful condition in terms of energy supplies that they it was, the population grew up to be a huge number a long time ago. And so you know, it’s densely populated. It’s mostly used up it’s coal supply, it’s pretty much used up its natural gas supply, except up in Norway. It’s all oil supply, you know, has kind of increased and then it went down again. So needs do it, import everything. So, you know, Europe is in terrible situation with respect to energy. And in fact, the prices were going way up, you know, last what, November, December,
Robert Bryce 46:35
last fall, last fall, they were spiking before the invasion, yeah.
Gail Tverberg 46:38
before the invasion. So the invasion kind of came along. And where I was pushed along, to try to give the impression that this was the cause of all of it. And I think when I looked at it, I forget what the number was the price was $98 a barrel or something like that, at the time of the invasion, and you’re going oh, and so what did the invasion do to make the price so much higher? I don’t think I understand. But it gave the government’s something they could talk about, as if that that was the problem, and not something else.
Robert Bryce 47:19
Right? Well, I’m looking at the, what you wrote here, world economic growth, he’s had very much depends on growing energy consumption. But in John Constable, who was on the podcast a few weeks ago, we talked about this very thing, same thing that if energy consumption in Europe starts to fall, and it certainly appears that way, that that’s exactly what’s happening. And you in the in the UK, in particular, you’ve seen dramatic reductions in overall energy consumption. So that’s gonna mean lower economic growth. But then we talked about this a little bit before, but what I’m just recalling what she said, if that energy consumption starts falling, economic growth starts to fall, too. And then that becomes a virtuous cycle. A not a virtuous cycle, but a cell shifts to a self feeding cycle that that that tends to think to further increase the velocity downward. Is that Is that what you think will happen then? And you’re up until something else that can occur to where they start producing more hydrocarbons? What, what is that? What? Are we seeing this downward spiral? And what what if anything can happen to make them to help them pull out of it?
Gail Tverberg 48:25
Well, I don’t think you can, can really pull out of it. What you can do is try to you know, that 2020 shutdowns were a way of reducing the non necessities, keep everybody at home, have them operate over zoom, as opposed to actually going to meetings, for example, right? You know, there are things you can do to reduce the non net unnecessary kinds of parts of the system. Maybe you close gyms, and you tell people, women that they can’t go get their fingernails done anymore with a fancy false fingernails and whatnot. And maybe you come up with a list of things that are considered, you know, frivolous and unnecessary. Well, in and actually, I think that what happens is the economy starts figuring out things, the businesses fail, you know, some of the restaurants fail because they don’t get enough customers. So what tap tends to happen is people tend to eat at home more. And it’s a much simpler economy. And it revolves around food and water and homes, heating homes, trying to heat the homes at least to some minimal amount, when it’s cold out and maybe ventilation when it’s hot out because you’re really can’t do very much. Right. But yeah, it’s.
Robert Bryce 50:06
So you’ve you’ve you’ve mentioned, you mentioned nuclear in passing here, and I’m a big proponent of nuclear have been for a long time. Talk about that, if you don’t mind what what do you see as the we you’ve talked about oil and coal and their fungibility their transportability? That limits on renewables and the limits on gas? what’s your what’s your view on nuclear energy?
Gail Tverberg 50:29
Well, it’s a good question. I know where I live, I’ve been paying for the new volatile reactor reactors, here in Georgia. So you know, Atlanta will be one of the areas that we’re supposedly will have electricity from nuclear, if other places have problems with natural gas and all of these other things. Yeah, so if you can make it work, it probably is good. But there’s lots of problems. But while it’s partly because people are afraid of it, I think there’s also this really long supply line, Russia is in the middle of the supply line, I understand that they’re involved in processing, I forget what it is 60 or 70%, of the uranium. And that was it. Kazakhstan is the world’s biggest producer of uranium. Of course, they were riots earlier this year in Kazakhstan? Because I guess, partly because people weren’t getting paid enough. Now, you might guess that uranium prices were too low. While there are lots of other prices were too low, they are oil exporter. But they, you know, a lot of parts of the system weren’t really working too well. You know, so you have to get your
Robert Bryce 51:58
supply. The supply chains matter for nuclear, just like they do for every
Gail Tverberg 52:04
theoretically, can reprocess it. But you got to build those plants. And, and apparently, it’s very, it’s a very high cost process.
Robert Bryce 52:13
Right? Well, so in the same piece, you’re talking about Ukraine and Russia, and what’s going on there, and no one will win in the Russia Ukraine conflict. But I just wanted to ask this, because you’re talking about major issues, the huge amount of debt most countries of the world have. With a rapidly slowing world economy, paying debt with interest will become impossible debt defaults will wreak further havoc with the world economic system. We don’t know the exact timing of how this will play out, but the situation does not look good. So we talked about asset classes, well, what about currencies, because you talk here about the US dollar is now the world’s reserve currency. Zion talks about this a little bit as well, that by having a reserve currency, the US is in a very enviable position relative to other countries. So is there do you like the dollar Do you are there other currencies that you think make sense more than the dollar? Or do you are not suggesting you’re a currency expert? I’m certainly not. But I mean, which we’ve talked about bed best house in bad neighborhoods, which which currencies there is what currency is the best house has the best house?
Gail Tverberg 53:16
I, I guess what I have seen is happening is that while the US dollar has been the reserve currency, we have kind of we’ve not uphold held our role in that way, what we’ve done is we’ve printed more and more money we’ve got, we’ve inflated and we’ve got added more and more ability to buy things with $1 Just under use unreasonable rate. And so all of the countries that depend on oil priced in dollars and such things and found themselves less able to buy oil and other commodities. It’s the fact that in these food commodities, as well as oil prices are tied to the dollar that has made it hard for the other countries. So, you know, what I see is happening is the system has to split at some point that the that the you end up with maybe some other currencies, maybe rubles in one, and there may be some IMF money of some sort, but the system cannot go on with the dollar rising indefinitely. It just doesn’t work that way. Yeah, so
Robert Bryce 54:52
I, but the Euro has been falling in value, right? It’s near near par with the dollar. I mean, the only other currency that I you know, comes to mind is where to Talking about this is like the Swiss franc, right? But you know, I’m not, again not asking for investment advice, but it’s just well, what, again, given how unusual the current situation is how much how much conflict, how much uncertainty there is, I’m just again asking what again, what makes sense in the world today, because I don’t mean to keep pounding on this. But as I read your different articles, and by the way, this article, you had 4000 responses on your website? Yeah,
Gail Tverberg 55:30
well, yeah. Discussing, I only put up an article every three weeks or so. So sometimes we’ve been discussing other things in between, you know, things that have been in the news and such. So it’s not responses exactly to that article.
Robert Bryce 55:49
Right. But still, that’s a lot of traffic. So Well, I’m just since I’m looking at that. So how many? How many followers do you have? Are you do you pay attention to that on your website? How many people? I mean, you have 2600 replies on this wire, great reset based on green energy isn’t possible. I mean, these are pretty large numbers. I’m, you know, I’m not an expert on everybody’s website. But that’s those are pretty stout numbers. Well,
Gail Tverberg 56:15
I have on my website, like I say, well, it would be, I think it’s like 21,000. Or maybe it’s a lot more than that. People who follow it, you know, get notifications on our finite world, from our finite world. And then there are some others, they get it from Facebook, or from this or that or the other source. So you know, but then, like, I was saying before, my articles are copied over into other publications, too. And quite often, well, not quite often, but when I’ve looked in the past, some of the more popular articles might have 100,000 hits on my site, you know, and people will go back and read old articles, you know, a year later or five years later. So there are people who do reread the, read the articles and reread them, I have quite a few people who cite my articles, even in academic articles.
Robert Bryce 57:22
Well, that’s pretty stout. Well, I’m interrupting again here, because that’s what we’ll hear you have blog stats, and 14 million hits. Have you thought and I know we’ve talked about your you know, that you’re not working early retirement substack, a lot of writers are going to substack and charging a subscription, if you so you haven’t considered that not charging people to read it to read what you’re writing, or that just and you’re not motivated by the money?
Gail Tverberg 57:46
Well, I always feel like if I charge people for reading, you know, then I would be less willing to have other organizations repost my articles. And, you know,
Robert Bryce 58:01
you want your stuff to be read,
Gail Tverberg 58:03
I want my stuff to be read, you know, what I’m going to, I can die with more money in my bank account. Well, as long as things don’t fall apart, that’s not going to do a whole lot
Robert Bryce 58:14
more more rice in your pantry, as we’ve been discussing is
Gail Tverberg 58:18
in my pantry, right, but it just doesn’t, it doesn’t add that much to it. You know, it wasn’t that I felt like I badly needed the money. And I thought, well, this is just sort of my gift. You know, people can read this. And if they want to read it, they can and you know, people in who are not well off financially can read it, if they like and what’s kind of happened to is you end up with a club of constantly changing club of readers who are interested in this object, and they’re worried about it, and they want to go and talk to others about it. So it ends up being a discussion group sometimes and some issues that aren’t really too closely related to a particular article.
Robert Bryce 59:09
Right. But I think that’s interesting. It’s something somewhat similar it rhymes a little bit with how I see what I’m doing is that um, you know, I’ve thought about substack and trying to charge and then I thought, well, there’s a lot of power in free you know that free How do you argue about well, it’s free you don’t like it don’t eat it if it’s if it’s free, it’s so I have a newsletter. It’s free. Well, okay, there you go. I’m not. Well, so just two last questions, if you don’t mind Gail and these are questions I put to all of my guests and again, my guest is Gail Verburg. She has gained quite a significant following on her website, our finite world.com is where you can find her work, but also on oil price and before that oil drum and Zero Hedge and other places. So what are you reading? You mentioned that you have Zions book, I have it on my Kindle. What else are you reading these days? What books are of your caught your attention?
Gail Tverberg 1:00:00
Well, I Let’s see her now there you see, there’s a book on green girls, and I’m trying to remember exactly what the name of it is, where are they getting point out how ridiculous the whole system is. But I really haven’t been trying to follow too many of these books that are out recently, and I don’t think I can remember things off the top of my head that well,
Robert Bryce 1:00:31
no, no problem. was the last question then what gives you hope? I mean, you. I, we talked about whether you’re a pessimist or a realist, we’re and you know, some of your articles you do kind of end them, many of them on a note that says, Well, you know, this is the way things are, and it looks pretty grim. And what makes you hopeful?
Gail Tverberg 1:00:51
Well, everything I can see says that the whole system has its like I say, it’s powered by energy. And there has to be some kind of a, I would call it literal, higher power. Or we could say, God, that made that system. And we really don’t understand how this all works. But it certainly looks like this Hauer, this system. And the self organizing nature of this system was created by our higher power that also gave us the laws of physics, and all of these other things. So we really don’t know what’s the head, you know, it may be that there is eternal life. Or we don’t know that, you know, I am doubtful that any one religion has precisely the right answers. But I think you know, there is some someone something overseeing what actually is happening, and making things kind of work together in ways that we would never expect. And you know, they’re very well, maybe life after death. We just don’t understand how this whole system works.
Robert Bryce 1:02:06
So your faith in that higher power is what gives you hope.
Gail Tverberg 1:02:10
That That certainly is helpful. Yes.
Robert Bryce 1:02:14
Well, that’s a good place as any to stop then. Gail, it’s been a joy to talk to you. Thanks for coming on the power hungry podcast.
Gail Tverberg 1:02:21
Well, thanks for inviting me. All the homework you did. Well, I’m
Robert Bryce 1:02:25
trying to keep up there’s a lot. There’s a lot going on. My guest has been Gail Verburg. She’s the editor of our finite world.com You can find her work there. It is thoughtful and thought provoking. So, Gail, thanks again. And to all of you in podcast land. Thanks for tuning into this episode of the power hungry podcast. Come back for another one. See you