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05 August 2009

Thoughts from Alcatraz





More than a month passed on the ASPO-TheOilDrum summit at the Libera Università di Alcatraz at Perugia, but only now I had the time to go through my notes. To match the summit's informal framework, this time, instead of the usual one paragraph digest of each presentation, there's just a collection of thoughts I brought back home.

The Setting

Alcatraz is an Arab word referring to the large, white sea bird that through linguistic migration and evolution came to be known in English as albatross. I have yet no idea how it also came to be the name of a sanctuary/touristic venue in the hills north of Perugia, but that's where the so called Peak Summit took place. It is a wonderful site, deep within the luxurious North Italian forest, composed of a few scattered houses built around a central complex where lies a reception, a small bar, a self-service restaurant and a sort of conference house. The central buildings were decorated with eerie post-modern wall paintings figuring a good number of bare breasted ladies, plus some scattered sculptures in the same vein of alien art. The staff is warm and laid back, leaving the central buildings pretty much to the guests, easily making everyone at home. But what makes the place really special is the total isolation from the outside world, away from the cities, their traffic and noise. In a subtle invitation to introspection we would wake up to the chants of dozens of small birds in the morning and when it got warmer our ears would be flooded by the callings of a million cicadas.

The attendants were about sixty and were able to fit all in the conference house, a sort of elementary school class room with a projection screen in place of the black board. This class room environment, the proximity of speaker to audience, the extended debate sessions, the overall setting proportioned by the Nature engulfing Alcatraz, all together provided for a unique experience, a close share of ideas without any of the formalities imposed by a more academic (or larger) event. Discussion erupted naturally during presentations and went on to the feeding zone and into the night.

Without a shadow of doubt this summit was a capital idea by Ugo and Rembrandt that was put to practice in quite a successful way. Congratulations and thanks to both.

Beyond Energy

One major difference from this summit to previous ASPO gatherings was the small number of presentations directly aimed at energy production and/or consumption. Perhaps a consequence of Peak Oil being now history for many, perhaps the current economic crisis forcing a new perspective on the issue, truth is, the wider implications of the perceived end to energy growth were the main dish of this event. The impact on raw materials production, the impact on Food production, the impact on the Economy, the impact on Social Equity, any one of these subjects can eventually exacerbate the scarcity of energy itself, triggering Social convulsions of enormous scale, but more than that, masking the root problem of the finitude of fossil fuels.

A very common concern is the Social impact of an extended period without physical economic growth (physical, as opposed to statistic GDP growth, e.g. based on Inflation). As many times discussed at this forum, and pointed clearly by Herman Daly, this growth interruption will immediately translate into a degradation of Social Equity under the Western Socio-Economic framework, with less wealthier folk being the first to loose access to scarce goods and services. When the numbers of those hurt by unemployment, rampant energy prices, inaccessible products, crime waves, etc, becomes large enough, all the technicalities of the energy transition go overboard.

Whilst avoiding that sort of Social breakdown is the underlying motivation of all those giving their time to the energy problematics, it may be exactly there Society is set to go. As Nate would explain in his wrap-up address, with everyone set to compete their way into the 20% of individuals that own 80% of the wealth, northing short of re-instating growth will do. In his words “we need to compete for something else”. It is very possible that Social Policy will need to find a larger place in this whole fossil fuels debate. How to do so without darting right down into daily politics fait-divers is the difficult thing.


Planned Economics

Another important point common to many speakers is the necessity of changing the current Economic Paradigm in order to avoid the outright onset of the Social convulsions discussed above. Tweak the Market in order to avoid the depletion of rare chemical elements and foster the use of more common ones, foment the recycling processes to keep matter circulating in the Economy, manage food consumption reducing dependence on imports, change rules to facilitate the build up of alternative energy infrastructure, were among the strategies discussed. The speakers at the summit had funny names for it: “Managed Austerity”, “War Time Economics”; at school there was a much more recognizable definition for it: Planned Economics.

Unfortunately, today the term Planned Economics carries on it a political semantics that distorts its true being. Planed Economics is about setting long term goals and objectives and devising the strategies and tactics to achieve them. It doesn't have to be about ending or limiting private entrepreneurship, by the contrary, it can be used as a means to actually foster it, but in ways that lead to a different overall outcome for Society.

Wind power is en interesting case, well known to readers of this forum. This energy source has been assessed as having a relatively high EROEI, even factoring in storage losses, well in excess of 10:1 and comparable to other mature electricity production systems. But when entering the market, Wind presents itself as financially disadvantageous, a disconnect imposed by the current financing framework that penalizes projects where the largest share of investment is made upfront. Without the feed-in tariffs aimed facilitating the scale up of this energy source, most of the infrastructure already in place in Europe would not exist.

Programmes like the EU 20-20-20 goals can be seen as an archetype of an Economic Plan, with the lay down of a structured set of long term objectives. Unfortunately in this particular case, the tactics to achieve these goals either do not exist or are too vague to assure success.

As the Peak Oil community moves from pre-peak warning mode to post-peak mobilization mode it might become important to address Planned Economics in a scientific, politically bare way, exploring its possibilities in times of scarcity.






The “classroom” at Alcatraz.



The Roman Empire and Money

Ugo's talk was one of the most stimulating, and links to many of the issues discussed during those two days, with the difference that it was laid down from an historical perspective. In short, empires go through several cycles of good and bad times, but always increasing Complexity, up to some point beyond which it can't increase any longer. Henceforth investments cannot keep up with capital depreciation and the decline unfolds.

Ugo referenced in his talk a very interesting theory about the collapse of Rome. The crucial element that the Romans brought about and made the Empire possible was the professional military. The English word soldier (as in many other languages) evolved from the Latin soldato, a man on salary, formed in its turn from the word soldo, pay or salary. This was the great Roman invention, whereas up to that point war in Europe was waged either by mercenaries or farmers, defending or taking capital (land, crops, etc), legions were composed by men dedicated entirely to the military activity, receiving a fixed income, either engaged at war, stationed as peace keepers or at training. This meant that the Empire had to maintain a constant flow of precious metals to its legions. As long as the Empire kept expanding geographically this was easily attained, with plunder and more precious metals mines under its domain, assuring the maintenance of the military machine. The expanding territory meant an expanding Money Supply.

Some historians say that the Roman Empire expanded to wherever vines and olive trees could be farmed. Either imposed by Climate or other factors, the truth is, when the Empire reached certain foreign environments, such as Scotia or Germania, it stopped expanding. Beyond then it was a only a matter of time before Money Supply would stop growing. The number of mines producing silver and gold stopped increasing but at the same time precious metals would leave the economy either looked out as wealth storage or sent abroad through Trade (taxation had a special role on this, flowing money to Rome that would be spent on luxuries). At some point, the flow of money from mining was outpaced by the outflow and it became impossible to maintain the usual numbers of military. Some point to the depletion of silver at the Rio Tinto mines as the catalyst for this reversal.

Other reasons can be pointed for the collapse of the Empire, Pollution, Disease, Climate Change and more, it might even have been a combination of factors, but the Money thesis has several attractivenesses. It presents a clear token for Complexity, and more, it postulates that it weren't exactly production constraints that brought the Empire down. Gold and silver, even more then than now, had no practical usefulness, they don't grow crops and are too malleable to produce hand tools, their value emanates solely from their exquisite chemical properties (density and durability). This leads to a very interesting perspective of the Roman Empire running out of the tokens to maintain its Complexity.

On a more technical speech, the lines above outline an Economy where Money Velocity is relatively low and constant and Money Supply is the main macro-economic variable. With the mines depleting Rome debased the currency and increased taxes, trying to prop up Money Velocity, but it failed nonetheless, because under those conditions being a soldato became a much less interesting profession. This starts the bridge for today's Economic Crisis and it's relationship with Fossil Fuel depletion. There's an essential difference from today to Roman times, there is no physical constraint on Money Supply. This is an advantage, but there's a catch, money is today created as debt, the promise of future growth, not as a token for the real energy (Complexity) that flows through the Economy. Without growth this system can stop working, and that may exactly be what the present Crisis is about. While the Oil Empire is in no clear way better prepared than the Roman Empire for Peak Complexity, it may have some interesting options the latter didn't had. Money can actually be a key element in the transition away from Finite Energy.

And a final note on this thematic, it is at least discussable that Money Velocity has today the same properties of back then. It is hence with some appallment that one sees the debate on the Economy relationship with Energy almost always subject to a rather strict Monetarist perspective. This was patent at the summit, as is in the daily discussion among the ASPO-TheOilDrum community. Some open mindedness on the subject is in order.

Squealer

A common thematic at this sort of gatherings is the apparent difficulty in bringing the fossil fuel depletion home with politicians and stakeholders in general. Being such an obvious and pressing issue, why are the power structures largely ignoring it? Or at least pretending to ignore it?

In my perspective there's an old book that may explain why: Animal Farm. It is the story of a farm where the animals working there revolt against their masters and take power. They are leaded by the pigs, the brightest of the four-feet, that learn to read. The story ends up with the pigs simply replacing the men, enforcing their power on other animals (mainly sheep) with fierce dogs. Written originally as an allegory for the rise of Communism in Russia, it has actually much more wider reach than that, it can be interpreted as a book on human condition itself.

The supreme leader of the Animal Farm is a pig called Napoleon, who takes that position by learning how to teach and control the dogs. But throughout the book he looses protagonism, with the practical leadership relying on another pig: Squealer. He is a brilliant, charismatic speaker on which the other animals completely invest their confidence. Squealer is at first able to make the animals understand the miserables lives imposed on them by men and then convince them into revolt and freedom. Unfortunately, that blind confidence is later used to bring back the animals to a sort of slavery.

The point is: there is no Peak Oil Squealer. Surely, there are bright minds and special individuals in the this realm, starting with M. King Hubbert himself, and going through the many others that readers of these lines know pretty well. But none of them has the charisma of someone like Al Gore, for instance. Since his first involvement with the cause, then as US Senator of the state of Tennessee, he dedicated a good part of the last 20 years raising awareness to the possible effects of the increase of global atmospheric CO2. He became a venerable person, a man the masses are willing to listen and follow. He encloses the authority that Nate writes about, to the point that the man is sometimes confusable with the cause itself. He is the Squealer of Global Warming.

While there's no Squealer for Peak Oil (or more broadly, Fossil Fuel depletion) it might be actually good that there isn't one. There isn't such a thing as “ a solution” for Peak Oil, there may exist answers at different levels and different places, but as of now, there's no silver bullet, no magic formula, that can solve every problem right away. Cassandras are not charismatic, Squealer wasn't only telling the other animals they were doomed, he was also telling them precisely how to act upon it. A Peak Oil Squealer con only emerge presenting a solution to the masses, and coming that to be the case, chances are good of him being wrong.

Women

The most important for last and not because of the interest this word naturally generates. Last year TheOilDrum conducted a survey revealing that less than 10% of its readership is of the female sex. The same with the website's staff, where presently only two members are women (although producing more and much more regularly than the men). Similar figures could be draw from a statistic on the summit's attendance.

On his wrap-up lightning address Nate briefly referenced that Men have steeper discount rates than Women. The obvious question was raised by Ugo during the ensuing and final debate session: being so, why were so few women at Alcatraz that day? Somewhat surprisingly Nate couldn't give an objective answer, saying that it was possibly a combination of several factors. But one of the female attendants had a pretty objective thesis to bring forth: it is all a problem of communication. So we were left with the perspective of institutions like TheOilDrum or ASPO being unable to communicate properly with about half of the world's population.

This subject would dominate what was left of the summit. After dinner I entailed a rather long dialogue with that female attendant that brought up the issue of Communication. It was a serious mind opener for an issue that I'd never realized to be so profound and horizontal to Society. Adding those new elements to Nate's approach on human behaviour, I walked away convinced I really understood it all. And that may be exactly the problem.

TheOilDrum has definitely to try to reach the female audience, not only to broaden the community aware of the issues discussed in its pages, but because women may bring different ways to deal with them. That is something that possibly only women can do, so I guess I can say we want to hear from you. Writing for TheOilDrum is pretty close to being in that classroom at Alcatraz, no formalities, scant rules (mainly directed at format, not content) it's just a blank sheet of paper ready to nourish your thoughts.

See you at the next ASPO/TheOilDrum gathering.

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