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Three Crises - A UK Perspective

Energy, Finance, Population/Environment

Alex Ayscough

on 19 October 2012

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Transcript of Three Crises - A UK Perspective

Three Crises a UK perspective Alternative Energy Matrix UK has been blessed with energy self sufficiency for a large part of the last 200 years.

This has come to an end and we are now increasingly reliant on imports for our energy. Oil to rise from $70 to $85 per barrel by 2025
Gas Rise from 58p to 71p per therm by 2025
Coal would fall to $80 per tonne by 2025

Currently (Feb 2012) we have :
Oil at $100 a barrel
Gas at 79p per therm (cold snap)
Coal prices as at May 2011 $122 per ton UK Central Planning Assumptions May 2010 UK energy production declines have come at a time of rising prices as other countries increase their usage of energy whilst global production has not increased significantly As UK energy output has declined world oil production seems close to peaking despite high prices For those looking for replacements for oil; not all energy sources are equivalent. A key metric is the amount of energy returned on that invested. On the whole this is declining as the easiest sources are extracted first. What is clear is that nothing is as portable or as energy dense as oil. The combination of falling energy production and the financial crisis are both in part responsible for Britain having one of the largest dollar GDP declines of any country in this crisis. Global GDP seems to be tied to energy usage. So peak energy production may mean no more growth.
In fact due to declining net energy GDP will contract faster than total energy usage.
Is infinite growth feasible on a finite planet? Meanwhile the UK and US debt levels carry on rising - these projections could well be optimistic. Energy Costs are also a large component of food Costs Beware of Normalcy Bias Mental State when facing disaster
People underestimate possibility of disaster happening and effects
Tend to interpret warning in most optimistic way possible.
Seize on any ambiguities to infer a less serious situation e.g. Promises of shale oil , fracked gas as long term solution.
People are used to growth and growth of energy usage paradigm. This is going to change.
If future growth is questionable then governments running budget deficits is also questionable.
There will be mini-recoveries. But the overall picture will be one of continued decline. Global Economy Personal and Public Debt levels high (chart below is US but UK and many countries similar positions).
Quantitative Easing for ever?
No sign of any normal return to growth - in a depression.
Fallout from Greece and other Eurozone Economies
Normal interest rates would crash house prices and economy
Magnitude of Economic problems appear beyond politicians ability to solve them.
Given what has happened in Greece anyone who suggests increasing debt to "stimulate" the economy is insane. Normalcy Bias: Concordia Captain couldn't believe his ship was going to sink. Lives were lost. When Energy production declines will population? http://www.greatchange.org/ov-cherfuka,WEAP.html ...."This leaves the question of what such a population decline would look and feel like. All I can say is that it will be catastrophic beyond anything humanity has experienced or imagined. The loss of life alone beggars belief. In the most serious part of the decline, during the two or three decades spanning the middle of this century, even with a net birth rate of zero we might expect death rates between 100 million and 150 million per year. To put this in perspective, World War II caused 10 million excess deaths per year, and lasted a scant 6 years. This could be 50 times worse"... http://www.greatchange.org/ov-cherfuka,WEAP.html Not only is peak energy going to be a problem, but
overfishing , declining water tables and soil erosion
may be leading to an population overshoot. As energy prices rise then this causes recessions.
Consumers spend less and retailers suffer
from higher costs leading to lower profits . There may be brief periods of optimism and recovery (often after temporary price falls) before the decline continues. As countries oil production peaks their consumption
may still rise thus leading to much reduced exports
available on the world market. A good indication of overshoot can be seen when governments and populations begin oppressing each other. For instance, here Darfur. But also Egypt, Syria other African countries. Another indication is when a tide of migrants arrive from collapsing countries. Energy : The UK has gone from a net gas and oil exporter to an importer of both. At the current rate of progress the UK may start experiencing blackouts by the middle of this decade. Finance: the western world is in the middle of
a debt crisis. But the actions they are taking
seem to be putting off the resolution leading
to a potentially catastrophic final outcome Population: even as the world's resource production is peaking population continues to inexorably rise leading to less for all and further environmental degradation Government Goals Replacement
Old Government Paradigm:
Economic Growth, Centralisation, Borrowing, Globalisation.
New Paradigm should be:
Managed Decline (inc Population), Austerity,
De-Centralisation, securing and rationing energy and food resources.
Manhatten project for electricity replacement - could thorium be a solution?
Triage - what is best that can be saved. Anything not critical to be discarded. Dmitry Orlov's Stages of Collapse

Stage 1: Financial collapse. Faith in "business as usual" is lost. The future is no longer assumed resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings are wiped out, and access to capital is lost.

Stage 2: Commercial collapse. Faith that "the market shall provide" is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down, and widespread shortages of survival necessities become the norm.

Stage 3: Political collapse. Faith that "the government will take care of you" is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance. Collapse: Couldn't happen here?
Is happening in Greece?
Will happen here in 3 years?
Failure to act decisively will
lead to government becoming
an irrelevance.
Government doesn't seem capable
of resolving Greek situation.
Are the creditors (bankers) being
protected too much?
Is Government too sclerotic to
do anything about it though? Tragedy of the commons It makes no sense for individual governments to risk unpopularity whilst voluntarily
cutting back on greenhouse gases
through increased taxation whilst
other countries continue to industrialise.
It also makes no sense for individuals to have smaller families. In the third world children
are often the only pension parents have. UK dependency on imports of
fossil fuels continues to rise but policy seems based on incorrect price assumptions source: Energy Trends 2011 Incorrect assumptions lead to incorrect policy UK must recognise this is biggest crisis since
World War II and plan accordingly. Urgent Action needs to be taken on which alternative technologies to implement - here is one person's opinion The energy slides are a summary
of what is contained in this
35 minute film. This is a geological event - a long-lasting one. If treated as such people may be brought together. US and locals work together in the Japan Tsunami clean up operation. Future Scenarios Optimistic Government joins opposition to try and find common ground to mitigate effects of problem.
Coalition of all the parties sits down and works out what part of government is critically important.
Rationing / Tradeable Energy Quota scheme introduced
Manhatten project for alternative energy
Thorium Nuclear plants found to be viable alternative.
Workfare scheme for unemployed -Allotments.
Transition with buses/ light rail replacing cars.
Population Reduction Program - through reduced migration and childbirth Pessimistic (but more likely?) Business as usual attempted but fails
Government debt continues to skyrocket
Disaffected youth riot again in Summer 2012
Around 2016 the first black outs start.
Metal theft continues to degrade infrastructure
Austerity and Deflation is followed by hyperinflation.
Orlov's stages of collapse becomes reality. Could Last year's riots and societal breakdown become a common occurence? "There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises

True or false? Capitalism ... basically a two-factor model in which production depends only on labor and reproducible capital. Land and resources, the third member of the classical triad, have generally been dropped…

http://steadystate.org/what-is-the-limiting-factor/ Are we heading for a new natural Holocaust? This guy would then be right Mitigating Steps Rationing 3 types of Rationing

Rationing by Price - Only the rich can afford to eat/travel - social unrest follows
Rationing by running out. Government mandates maximum price. Shortages follow
A well thought out Rationing system similar to World War II or Tradeable Energy Quotas - preferably before we have another world war
The choice is between attempting continued consumption levels supporting a rapidly falling population or hopefully reduced consumption levels supporting a gently declining population.
Most would rather eat tomorrow than fly today.
Full transcript