Snap, Crackle and Pop?

I was sitting at the breakfast table last Monday reading, as one does, the side of the cereal box.

Each serving of Rice Crispies contains 630kJ of energy it proclaimed. That got me thinking. With 3.6MJ of energy in a kilowatt hour, that would mean I would need 5,7 bowls of cereal to power my two kW electric heater for half an hour (assuming a 100% conversion efficiency). That’s a lot of rice crispies or otherwise!

What scared me was the realisation that this has a massive implication for world energy and the associated economic growth.

To put it into perspective, we get about 20 servings out of a R40 packet of this cereal – or R2 per bowl, which equates to a kWh rate for energy of R11.4 per kWh, more than 10 times greater than what I presently pay on my electricity bill.

An average labourer maybe gets paid R150 per day and can produce at most 3kWh’s of physical labour per day. On the same basis, if he was paid the average megaflex rate for his work, he would earn less than R2 per day, which is less than 1/3rd of the UN starvation line.

All of this goes to support the contention that by far the major portion of economic growth over the history of all economic activity can be attributed to humanity’s use of fossil fuels; what some refer to as “compressed sunlight”. Without this cheap and abundant fuel, and admittedly of course the human ingenuity to harness its power, such growth would not have been possible. We simply do not have the human or animal power to do what we have done on our own without help in the form of fossil fuels.

Consulting the adjacent chart on the left, it becomes clear that the exponential growth in world GDP happened to coincide with our ability to effectively harness oil and coal. The steam engine enabled coal to be used to perform useful work, and the discovery of electricity as the means to transport energy in a convenient form created a huge change in the way we could do things and the value we could extract from these masses of stored energy.

From the 1950’s the climb became almost vertical, attributable to the massive increase in personal transportation that was enabled by the technological innovations driven by the two world wars. In other words, the ability to mass produce motor cars, trucks, ships and aeroplanes vastly increased the rate at which we could apply the consumption of fossil fuel energy to our economic well-being.

The problem though, is that we don’t know when we have too much of a good thing. This is expressed by Dr Albert Bartlett from the University of Colorado, in his talk entitled “Are people cleverer than bacteria?” In  this he espouses that the greatest failing of the human race, namely our inability to understand in our lifetimes the implications of simple exponentiation mathematics. No matter how long it may have taken to get to half full – even a million years, a jar in which the microbes are doubling in quantity every day will eventually only have one day left, before it is completely full.

The same principle applies to the use of scarce resources, particularly fossil fuels, and these ideas are encapsulated in concepts such as “Peak Oil” and “Peak Coal”.

Consider the “GDP growth enabling feedback loop” (shown below on the left) between energy and the economy that is embedded in our political structures.

Non-discretionary needs (Energy) are “affordable” BECAUSE they are cross subsidised by discretionary spending. But discretionary spending is itself reliant on affordable (read cheap) energy. If this postulate is correct, then we would expect to see a direct link between the price of energy and economic growth. A good proxy for the price of energy is oil production, as the price of oil and the level of production tend to be closely correlated (shown below in the graph on the right).

Furthermore, we can demonstrate that online casino australia each of the four most recent economic recessions coincided with a peaking of the oil price (shown below). The question of the direction of causality is left open.

The most important aspect of all of the strategies devised by government to overcome poverty and to improve the lot of the citizenry is that they have at their core the assumption that continued economic growth is a realistic possibility. But is this possible in an energy constrained world?

If our economic growth is to be based on the factors that caused it to occur in the last two centuries, and those factors largely fail, then it would seem that in the absence of some significant shift that economic growth is simply not possible. It is much more likely and plausible that economies will shrink.

Yet there is also no doubt that we are an ingenious species, and that solutions to the energy dilemma can be found. Harnessing the power of the sun, being able to convert its energy to a useful form and to store it in a convenient way, will be a key element in securing economic growth in the future. Of course, nuclear generation may also be a possibility. These are really the only long term non-depletable resources, although the latter has some significant safety challenges. Probably that confirms a very good reason why the primary global scale nuclear reactor in our immediate vicinity is located 93 million miles away from us.

So economies that learn to replace their source energy and simultaneously become more energy efficient are likely to be the longer term successful economies. There will be a trend in which energy inefficient productive economies will have declining or negative economic growth, whilst those low productivity economies that are also energy inefficient will, if they choose to reorganise the energy side of their economies, tend toward greater economic growth.

South Africa, which is an energy inefficient economy and also a low productivity economy has the opportunity to move towards the middle ground. As it happens, it is also a country with amongst the highest rates of solar irradiation in the world. It is therefore ideally placed to capitalise on the unique attributes that can make for a highly successful economy in a fossil fuel energy constrained world. In other words it has the opportunity to successfully adapt to constrained energy flows. This may well require some downsizing and relocalisation.

Of course, many will argue that high energy prices are strangling our economy. But in the face of the aforegoing, this is simplistic. High energy prices will force energy efficiency, and will also attract the capital that will enable the conversion of our economy from a predominantly fossil fuel based economy to one that is not so constrained.

Put another way, high energy prices may seem on the face of it to be a constraint to our economic growth, but in reality they will be the cause of our future prosperity – albeit a prosperity defined in a different way.

Snap, Crackle, Pop!

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