Heinberg, Kunstler, Foss, Orlov & Chomsky on A Public Affair

Richard Heinberg joins James Howard Kunstler, Nicole Foss, Dmitri Orlov and Noam Chomsky in a panel discussion. The discussion begins after the news bulletin and lead-in music (about 7:00 into the audio)

Jan 2 2012 by WORT-FM in Energy Bulletin | Jan 6 2012

Transcript:

[BBC news]

7:12
Host: And good afternoon and welcome to A Public Affair here on WORT, the first Public Affair of the year 2012 and starting off there with a little bit of Steve Forbert's song "The Oil Song" that came out some 20-plus years ago and sort of setting the tone for our conversation today. We're going to be looking at the future, looking forward from 2012, and particularly focusing on the topics of oil and the changing climate. This program today partly grew out of a series that the Nation magazine has been running on their blog.

With me here in the studio, Nicole Foss, co-editor of The Automatic Earth, has been chronicling and interpreting the ongoing credit crunch among other things, as well as the situation of finance, energy, the environment and population. We'll be talking with her during the program.

Also joining us, by telephone, Dmitry Orlov, an engineer and writer on subjects related to peak oil. Born in Leningrad and moved to the United States at the age of 12, Orlov was an eye witness to the collapse of the Soviet Union. His latest book is "Reinventing Collapse" and his article "Closing the Collapse Gap" compares the collapse preparedness of the USA and the USSR.

Also joining us by telephone, James Howard Kunstler, and his blog, kunstler.com which has predictions for 2012 and we'll be talking about those coming up in just a moment. And then finally also joining us by telephone, is Richard... I'm missing your biography here. I apologize, Richard, I'm going to have to ask Richard Heinberg to introduce himself because I don't have your bio on this printout.

9:07
Richard Heinberg: That's okay. I'm senior fellow with Post Carbon Institute and author most recently of "The End of Growth: Adapting to Our New Economic Reality."

9:20
Host: Thank you very much. James and Dmitry if you could both each say hello as well.

James Howard Kunstler: Hello, Dmitry.

Dmitry Orlov: Hello.

9:25
Host: Let me start off with you, Dmitry Orlov, and talking about these issues of preparedness. One of the things that's very much in the news right now is the threatened close of the Straits of Hormuz. How does a single incident like that affect the preparedness or lack of preparedness of a country like the United States.

9:51
DO: There's really no plan in the United States at any level to survive a shutoff in the flow of oil of the magnitude that the Iranians could cause simply by making a plausible threat because the oil tankers are not insured against a ballistic missile attack, I believe. So they basically would just have to stay in port. They wouldn't be able to traverse the strait once the threat is made good on. What will probably happen is a disruption at gas stations at that level in not too long. After that, I think a lot of supply chains will break down. The availability of goods at every level will dwindle. So what people have to do to prepare at every level is stockpile whatever materials are needed to reboot into a very different economic mode, where you're really just relying on local sources for everything because the global supply chain is no more.

10:58
Host: Now how does what's happening with the economy in Europe, particularly the euro crisis we've been witnessing over the past year or so. How does that relate to these issues of the world economy?

11:10
DO: Europe is poised to weather dwindling oil supplies a lot better than the United States. First of all, it's very compact geographically. Secondly, it relies on barge and railroad transportation to much greater extent. Thirdly, there're fewer private cars and people rely on private automobiles less. All things would speak in their favor.

11:39
Host: Now also with us on the phone, Richard Heinberg, author of ten books, including "The End Growth," "Peak Everything," and "The Party's Over." Richard, one of the things you have written about as I understand it, is the XL pipeline and tar sands oil. Is this something that is going to be exploited more in the coming year to try and ease this crude crisis and what is the environmental cost of that?

12:07
RH: Certainly the Canadians want to ramp production from the tar sands. There's no question about that, but their ability to do so is hampered by the nature of the resource itself. Production increase is going to be slow and it will be ultimately limited by the scale of the needed technology and the requirement for fresh water, natural gas and other resources. We're talking about a really, really low grade hydrocarbon here. Producing oil from the tar sands is really scraping from the bottom of the barrel. I'm not sure what the latest production figures are--I think it's in the range of a couple million barrels per day, which is substantial for Canada, but we have to put that in context and remember that the US uses something like 18 million barrels of oil per day. Canada's ability to ramp up from that 2 million a day, as I say, it's going to be a very slow process. Maybe we'll get to a maximum of 3 million barrels a day before it levels off. We're talking about years before that will happen.

13:33
Host: Here in the studio with me is Nicole Foss, who is co-editor of theautomaticearth.blogspot.com but formerly was also editor of The Oil Drum Canada and runs a thing called Agri-Energy Producers Association, focusing on farm-based bio-gas projects and grid connections for renewable energy. You live in Canada in the land where this tar stands exploitation is beginning. Talk a little bit about the impact of tar sands and the alternatives that your organization works with.

14:13
Nicole Foss: I should point out I no longer run the agri-energy producers association of Ontario because these days I work full-time for the automatic earth. I travel all over the world, lecturing so I parted company with that job April 2010. That was focusing on Ontario and the Feed-in Tariff programs for renewable power, and so I have taken a broader view now. In terms tar sands, basically the environmental cost is horrendous because the water flows north. It doesn't end up in very populated areas so people don't realize just how horrendous some of the health impacts actually are in the people who are affected. There are tremendous cancer rates in places like Fort Chipewyan which is downstream from the tar sands.
The main point with tar sands, however, is that the net energy is so poor that you hardly get more energy out than you put in. It's an arbitrage between natural gas that's currently cheap and syncrude that's currently fairly expensive. You can make money at it. You're really not producing hardly any energy at all. So the environmental impact is really not as a result of exploiting a genuine energy source. This is simply a way to generate money. And it's also critically dependent on the price of oil. Now, despite the fact the Straits of Hormuz appear to be under threat, I actually think the next move for oil prices will be down and possibly significantly because we're coming off the back of another speculative bubble in oil like we saw in 2008 where people had bid up the price in advance of what the fundamentals would justify. I think we're on the verge of seeing a breakdown in those prices as speculation goes into reverse and demand starts to fall as the Chinese bubble is bursting as well. I actually oil prices will fall and that will mean that basically everything in the tar sands is uneconomic.

Plus, the natural gas that's required is also going to be problematic. Shale gas is an absolute mirage. Right now, they're using what's left of conventional natural gas--a whole gas field from Northern Alberta--for the purpose of tar sands. But conventional natural gas in North America peaked in 2001. When we realize we actually do not have a hundred year's worth of shale gas sitting in the wings--we might have five--then all of the sudden we're going to realize natural gas is not going to be cheap in the future. That arbitrage will no longer work. So the economics of tar sands get completely blown out of the water in the next few years. I don't think that pipeline will ever be built because by the time you could possibly build it, the demand won't be there and the money to build it won't be there either.

16:45
Host: We're kind of drifting into the area of predictions and so I want to bring in now James Kunstler who is also joining us by phone. His books include "The Long Emergency" and "The Geography of Nowhere." He's also written a number of works of fiction as well. James Kunstler, you have a blog at kunstler.com and you just put up your 2012 predictions a few moments ago on that blog and it begins with the phrase "a bang and a whimper." Talk to us about the 2012 forecast.

17:25
JHK: My theme du jour is wishful thinking and it's the subject of my next book. It seems to me that our society is getting absolutely lost down a rabbit hole of wishful thinking about how technology is going provide rescue remedies for us so we can continue running Walmart and Walt Disney World and suburbia by other means. And we don't have any other plan besides that. It's not a plan so we're just going to get into a lot of trouble.

18:05
Host: Talk about these rescue remedies because we just heard a little bit about the idea of bio-gas as an alternative to oil and of course we had the brief flirtation with green economy here in the US. At least the promise of a green economy. What about these technological solutions to a climate problem?

18:33
JHK: More to the point, why do people who ought to know better speak about these things so untruthfully, including the President of the United States and the Secretary of Energy. When the President of the United States comes out as he did last February and tells the public that we have a hundred year's worth of shale gas, he's simply putting over a false story that is going to give people a very unrealistic view of what their future is going to be like. And doing a tremendous disservice to them. The idea that Steven Chu, the Secretary of Energy, would advise him to say that is just unbelievable.

However, I think the cognitive dissonance that now clutters our collective mind-space is so tremendous that we simply can't think clearly about these things. The environmental movement is an interesting case in point. I went to the Aspen Environmental Forum for two years in a row and I'm going again next June and whenever the subject of our oil problem comes up, or our car dependency problem, the only thing that they want to talk about is running all the cars differently by other means. They don't want to talk about walkable neighborhoods, they don't want to talk about inhabiting the landscape differently, they don't want to talk about public transit, they don't want to talk about fixing the conventional railroad system because, by the way, we're not going to put together a high speed rail system, we missed the boat on that one, and forgive me for the mixed metaphor, but all these other nations were able to do that they got in during the window of the 1970s, 80s, and 90s when there were still a lot of capital in the world. Now we're facing a problem of capital scarcity that will be every bit as challenging for us as the energy resource scarcities we face. Getting back to my point, when the creme of the environmental movement at the Aspen yearly environmental forum cannot think clearly about our predicament, who are you going to turn to, to do the thinking for your society? It's kind of disgraceful that that is the tenor of the conversation we're having about our predicament.

21:10
Host: Kind of a dark scenario, Dmitry Orlov...

21:16
JHK: No, it's not a dark scenario. It's portrait of how we are behaving in reality. It's not a fairy tale.

21:24
Host: Okay, I'm not questioning whether it's a fairy tale, but I'm saying its dark in the sense that it says we missed the boat. Do we have a chance to recover that boat? Let me toss it back to Dmitry Orlov. What do we need to do to be prepared for these coming energy crises?

21:45
DO: We need to get started and I think part of getting started is getting this mental difficulty where uncontroversial facts are too distressing for most people. So you cannot actually speak about them in public. Very few people, I have found, can get past very simple statements of fact about energy, about the climate. Really can't talk about it and this is peculiar to the United States to a large extent. I've seen similar things in Russia, for instance, where climate change denial is pretty rampant, but in Europe, for instance, people are much more receptive, and much more able to deal with the facts as they are and then base their decisions on them than here in the United States. I'm not a mental health professional so I can't really offer any advice on that. I rely people being able to take facts on board and if they can't do that, then I can't work with them. That's a big problem for me right now.

22:57
Host: Richard Heinberg, "Peak Everything" and "The Party's Over" are titles of some of your books. Is the party over and what are we going to do about it?

23:10
RH: As you've been hearing, I think the likelihood of a coherent national, government-led strategy to adapt to the end of cheap energy and to the end of easy credit and so on is just not going to happen. I think all of us on the phone and many of others have been working for years to try to increase public understanding of these issues and I've certainly walked the halls of Congress and knocked on doors of senators and congresspeople and tried to help them get to understand some of these things. We're working against public perception and also against those who would manipulate public perception. There was an article in the Wall Street Journal a few weeks ago now which pointed out that the US is now exporting more refined petroleum products than it's importing. This is a pretty trivial matter because we're talking about a few hundred thousands barrels a day and it's just a matter of refinery capacity and so on, but it was framed in such a way as to make readers think that the US is now exporting more oil than it's importing, which is certainly not true. We're still importing 12 million barrels a day or something like that. But this has become, this has been taken up by news sources all around the country as a fact. Just over the Christmas vacation I was with in-laws in New Orleans at a party and someone comes up to me and says, "Well, what do you think about the fact that the US is exporting more oil than it's importing?" and it took me five minutes to explain the situation to this person but multiply that by millions and you get some idea of the misperceptions, the misunderstanding that's been deliberately sown in the American psyche. Once again, I have to agree with my colleagues that the likelihood of our coherently understanding all of this and working our way out is vanishingly small. Which means it's really up to individuals, and households, and communities to do the best we can under the circumstances and not give up efforts to try to change perceptions, change policy and so on, but I think we have to assume the worst.

26:04
Host: Dmitry Orlov, I know that you have to leave in a couple of minutes, I'm just going to let you jump in here real quick and tell us what lessons can we learn from looking at what happened to the former Soviet Union.

26:19
DO: I've been looking at that angle for a long time, and I think that Richard is absolutely right. We should not expect any sort of preparation or any reasonable program to emerge at the national level. So my hopes right now are that it is possible to convince some people who have financial resources to invest in the remnants of industrial production that will be needed to bootstrap into a new mode of local production, cottage industry, to provide for people's needs when the imports are not there and when the local supply chains is all that remains because the global ones have gone away. It remains to be seen whether it is possible to talk sense to people who have access to financial resources. I'm not convinced that that's going to work, but I don't see what else would.

27:13
Host: Okay, Dmitry Orlov, engineer and writer on subjects related to peak oil. Born in Leningrad and moved to the United States at the age of 12. His latest book, "Reinventing Collapse," and his recent article, "Closing The Collapse Gap: Comparing the Preparedness of the United States and the USSR." Thank you for joining us on this program. Our other gusts will stay with us throughout the hour. We'll be bringing in another special guest in just a moment but I want to toss this now to Nicole Foss.

For me one of the interesting issues, I remember doing some programs around the anniversary of Earth Day back in 1990 and comparing what did recycling mean in 1969 versus what it meant in 1989. In 1969, recycling meant you took your glass jar, you washed it out, you brought it back to the co-op and you filled it again. 1989 meant you handed that jar to someone else, who smashed it up, reprocessed it and turned it into a new glass jar. It's a whole shift in the mindset of what "green" and "sustainable" and "recycling" and everything else meant. Now here we are, 20 years after that, and it seems like the word "green economy" is the buzzword and people look at these technological solutions and yet all of them ultimately, I think, based in a capitalist market economy. What about the question of oil and the question of peak oil, in particular, and is there a technological solution that gets us out of this? Is bio-gas part of that?

28:53
NF: Bio-gas isn't an energy source if you do it properly. It's a way of reducing energy throughput. You capture the energy from high energy waste streams and you use that rather than simply seeing it all be landfilled. So it doesn't help you in the sense of providing a new energy source. Neither do most of the things that are being discussed at the moment because the net energy is simply so low. Some of them can be very useful in small, niche applications. You can use ethanol on farms for instance, made locally. You can use wood gas to run a tractor. But you don't run an industrial society on it. Not one of these things will scale up to be able to deal with the level of demand we currently have. This is really our problem. A friend of mine, Nate Hagen, has said we don't so much have a shortage of energy as a longage of expectations and that really is the heart of the problem. We expect to continue business as usual. Business as usual will not be possible under circumstances where energy is constrained. It determines what is physically possible to do. It's the capacity to do work. There is no way to decouple economic growth from the availability of energy. If you do not have a certain amount of energy, you're not going to be able to do what you've done before. When Dick Cheney said that the American lifestyle was not negotiable, I would say that's true because reality isn't going to negotiate with you, it's going to dictate. There are many things we can do energy wise, not one of them is a solution in the sense of getting us business as usual. We have adjust the way our society runs at a much simpler, more low energy level and having done that, we can then hope to supply those much lower levels of demand.

30:34
Host: Nicole Foss joining us here in the studio. Also on the phone James Kunstler, his blog at kunstler.com, "Predictions for 2012," and also Richard Heinberg, author of numerous books, including "Peak Everything" and "The Party's Over." Also joining us now by telephone, very pleased to bring on Professor Noam Chomsky, noted linguist at MIT, media critic and long time friend of WORT community radio as well. Welcome to the program.

31:08
Noam Chomsky: Glad to be with you.

31:10
Host: Very pleased to have you with us today. As you just joined us, you just heard the tail end of this discussion. We're looking at the issues of the future of oil consumption, the end of oil as we know it, and also the other issues of climate change surrounding the energy lifestyle that we have chosen to live, I think we could say. You talked actually about 15 years ago about the fact that the market price of oil is actually based on subsidies by the US Pentagon's expenditures. I wonder if you could talk about how the US supports the oil economy that we are a part of.

31:59
NC: I suspect that's a reference to a technical study, one of the few that have ever been done from government sources as far as I know, that tried to estimate the extent to which Pentagon costs of say, controlling the Middle East and other oil producing regions, the extent to which they amount to basically a subsidy to the energy producing industries and the figure was quite high.

32:37
Host: 30% of the market price of oil I think is what you had quoted in that 1996 article.

32:48
NC: It's not much of a market place. For one thing, energy industries--it's an oligopoly, there's not very much in the way of competition. There's a kind of a market, but it's very closely linked to a state controlled and state expenditures are on as well. We pour a huge amount of money into maximizing the use of energy. This goes back very far. So you go back to right after the Second World War for example. There were major efforts to shift the entire economy to highly wasteful hydrocarbon use. Eisenhower's national highway program, for example--it was called National Defense Highway because you had to throw the word defense in to justify expenditures--but it was basically part of a general program of undermining efficient, lower cost transportation. Rail, in particular, and to replace it by government-subsidized, high fuel use systems like highways, airpots and so on. That actually followed on a literal conspiracy, a conspiracy judged so by the courts, between several major producers... actually it was General Motors, Standard Oil of California, Firestone Rubber, who got together to buy up the quite efficient electric rail system in Los Angeles and elsewhere in California and to replace it by busses, trucks, and roads and so on. They actually were brought to court for conspiracy and I think fined about enough to pay for their victory dinner or something like that. That was a part of an extensive program of suburbanization, shifting the economy to roads, trucks, airplanes, high fuel use and that continues right up to the present.

In fact, some of the programs that were carried are kind of almost surreal. For example, in the late Eisenhower years, must have been '58 or so, there was a government decision to use up our Texas oil resources, instead of using much cheaper Middle East, mostly Saudi, resources. The reason was basically a gift to Texas oil producers, and it went on for about 15 years I think. In effect, the government policy was to use up domestic resources and then later when that's proceeded, to build big holes in the ground and fill it with imports--that's called the strategic reserve. It was very conscious. There were actually quite conservative critics, like Adelman, who's an oil specialist at MIT, who was bitterly critical of this on national security grounds as well as economic grounds. But it's part of the way these programs continue and it continues right now.

For example, there's now a lot excitement and hype even in places where I wouldn't expect to see it, like the London Financial Times, a mostly sensible newspaper, about the claim that the United States might have oil independence for a hundred years and therefore be able to maintain its global hegemony, I'm virtually quoting, by high tech methods of accessing shale oil, sand oil, and so on, fracking, all the rest of it. They think all that's wonderful. What's going to happen to the world, if the United States goes on for a hundred years, maximizing the use of hydrocarbons? Well, that question doesn't come up but we know the answer. In fact, it would be a very good thing if we were approaching something like peak oil. Unfortunately, it's being deferred for a long time, which is a disaster for the world.

38:03
Host: We're speaking today with professor Noam Chomsky joining us by telephone. Also, James Kunstler and his blog kunstler.com, and Nicole Foss here in the studio with me, and also Richard Heinberg, author of numerous books on the topic of peak oil. Earlier in the program, we had Dmitry Orlov also joining us but he had to go. Let me take off from what Professor Chomsky just said about the highway program under Eisenhower. One thing that was interesting about that to me looking back on it is a case where the government basically just said we're going to build this highway system across the country and it happened in a very short period of time. Comparing that to what did or didn't happen in terms of green energy and so on and so forth in the early days of the Obama administration. Let me toss this to you, James Kunstler, because you were talking about how we haven't had the national will to move forward on these reforms to our system of energy consumption and that maybe now it's too late.

39:17
JK: What we're seeing is a campaign to sustain the unsustainable. Largely because we have made over-investments in it and we're stuck in the psychology of previous investments. We have spent our national treasure on building this suburban living arrangement and the most characteristic thing about it is that is has no future because we're not going to be able to power it, and get around in it, and use it. There's so much of it and it's become so intwined with our national identity that we can't even think about reforming it or letting go of it. All of our efforts are now being bent into service of sustaining this living arrangement that has no future.

40:06
Host: James Kunstler, author of among other things "The Geography of Nowhere" and "The Long Emergency." Let me ask you, Richard Heinberg, your area of research, and your books including the "End of Growth," have talked about the urgent need to transition away from fossil fuels. How can this message be gotten out to people in a way that it's palatable?

40:38
RH: With great difficulty. As I was saying earlier, in terms of general perception, the US is moving toward, as professor Chomsky said, energy independence. That's the perception. The reality is something very different from that. Looking, for example, at the back end shale in North Dakota, the perception that's being sown in the general American psyche, is that this is an enormous boom, and it's just taking off now, and within a few years, North Dakota will be basically powering the rest of the country. Shale oil from other places come online and we'll be exporting oil to the rest of the world. This is a meme that you can find in the Wall Street Journal and conservative news outlets and even in some mainstream liberal news outlets. You start looking closely at what's actually going on and the picture's very, very different. Actual production in North Dakota is something like 500,000 barrels a day. Again, US uses 18 million barrels of oil per day. This is significant for North Dakota. North Dakota's never produced anything like 500,000 barrels of oil per day before, but what it is the actual potential for ramping that up? It may get to possibly twice what it is today and that's a very, very optimistic forecast. More likely 600,000, 700,000 barrels a day before production levels off and starts to decline within the next four years or so.

Looking at different areas around the country, basically the same situation. Now, we had this before. US oil production peaked in 1970, started to decline, and very soon there was a big boom with the North Slope of Alaska--the biggest new oil producing province in US history. We're still seeing production from North Slope but it's been declining for the last couple of decades. It's continuing to decline and it will decline to nothing. The North Slope provided a little bump on the way down as US oil production continued to generally decline over the past 40 years. Same thing with the oil from the Gulf of Mexico. Huge claims for deepwater and ultra-deepwater in the Gulf of Mexico. That province is still in increasing but probably only for the next three or four years and then we'll start to see declines beginning there. We're grasping at straws, in fact, but public perception is that we're on the verge of abundance and bounty. So as long as that public perception is being managed in such as a way as to prevent people from seeing what's really going on, I think it's very difficult to change people's minds and change people's behaviors.

What ends up happening is that there's this serious conversation among people who do understand energy issues and there're many, many thousands and tens of thousands and probably hundreds of thousands around the country. People are doing sensible things. They're becoming energy independent in terms of their households, they're growing more of their own food, they're getting in touch with their neighbors and starting to think about contingency possibilities and so on. For the country as a whole, I see very little prospect of change in energy policy that would bring us closer to reality.

44:56
Host: What about these small movements for change, Nicole Foss, in Canada? Is there more support for alternative energies and growing your own food than there is here in the States per capita, obviously. You talked earlier about things that you can't scale up and that's always an issue is what can be scaled up and what has to happen bio-regionally.

45:20
NF: Actually, I find in Canada, although there are some things that are being done--there's the Feed-in Tariff program for renewable power in Ontario--it really is not going to make any difference because there's not the available grid capacity. What it can deliver is actually really limited. I find that in a lot of ways, in Canada, there's very low awareness of a lot of the things I write and speak about--energy and finance--because there's this sense that Canada's an energy superpower, these are other people's problems. Canada's living in an enormous property bubble at the moment, when you're at the height of the bubble you don't see it for what it is, so I actually spend almost no time in Canada because there's almost no audience there for questioning the assumptions that our society is built upon. So I spend far more time int he US and Europe.

It's not just the question of scale, it's also absolutely critical to underline net energy when it comes to looking at these energy sources. When net energy is really low, so the energy profit ratio is minimal, you get hardly more out than you put in, then you do not have some thing that is effectively an energy source. Their net energy will define what is and is not an energy source for any given society. You have to look at the energy profit ratio our society is based on and if we have less than that, we are forced to simplify. All these sources of energy people talk about, it's not just a matter of scale, it's a matter of the net energy: what did you have to put in to produce what they produced in North Dakota? It's an enormous amount of energy. This is not leading to energy independence.

Oil shale is being used in a way that shale gas was, in a sense to create this enormous hype that all of the sudden we're swimming in energy. This is going crash prices for oil, it's going to be part of the crashing price of oil, along with speculation going into reverse and a lot less demand in China. The perception of glut will drive prices down. When we had the perception of scarcity, it drove prices up in advance of the fundamentals. We then had a 78% fall in 2008 as those speculations went into reverse. We're on the verge of something like that this time. That whole hype will play into the perception of glut and result in prices in crashing so that a lot of the alternatives will never get off the ground because they simply are too expensive to operate in competition with oil prices that low.
Prices can crash even although we are facing imminent scarcity. Natural gas is a perfect example. The perception of shale gas hype has crashed prices to the point of where almost all shale gas is being produced uneconomically. These companies are piling on massive amounts of debt. They're taking huge financial risks. They're not even going to be there probably in a few years time. When we realize that we probably have perhaps 5-10 years of shale gas, not a hundred, all of the sudden that perception of glut will go away but then it will be too late to do anything about it and we'll realize we were in a natural gas crisis all along. The same thing will happen with oil, just a little bit further down the line. We're in the process of creating perception of glut, which is completely is untrue. That will crash prices for a while and the expense of making it drastically worse later when we haven't got the supply later on when need it.
We really are facing monetary issues as well. We haven't really looked at that today, but this is a lot of what I write about--the effect of the credit crunch. Simply taking the money out of the system so that capital will be incredibly scarce, all the complex, expensive techniques for producing energy rely on vast amounts of capital and also the economic visibility to say, this project has a 20, 30, 40 year timeline, this is what I expect to make in terms in profits, so I will make the decision to go ahead with this. When you get to a visibility of next to nothing, maybe weeks if you're lucky, you don't make those investments so you crash supply down the line because you crash investment in the process. We haven't really seen anything in terms of credit crunch yet. It is absolutely coming. It's starting in Europe so that contagion is very much going to spreading around the global banking system. 2008 didn't tell us really anything what a credit crunch really means. This time we're going to find out. 2012 will be the beginning of finding out what that really means and it is going to drive what happens in the energy sector enormously.

49:46
Host: That's Nicole Foss, co-editor of the blog, theautomaticearth.bogspot.com. We're also speaking with James Kunstler and Richard Heinberg and joining us also by telephone is Professor Noam Chomsky. Professor Chomsky, let me toss that back to you now. Talking about the world economy and the crisis that Europe is currently facing, the crisis that Nicole points to that we're going to facing here in North America soon. How does all of that tie in to the Occupy Wall Street movement?

50:20
NC: We've switched to a totally different topic, but let me just say on the last topic that I think there's a lot of uncertainty among real specialists, not just Wall Street editors, on whether there's going to be a major u-turn, a sharp increase in hydrocarbon supplies that people like Daniel Yergin and others believe, or whether it won't, but I think that we should focus on a different aspect of this. If there is a glut, then we're in real trouble. If it turns out to be just hype, it'll be a problem, but not as bad as if we actually do get years and years, maybe as predicted, a century of ability to rely on Canadian shale and so on and so forth. That would really be a catastrophe. Major catastrophe.

51:18
JK: I hope you don't take Mr. Yergin seriously. He's the oil industry's chief public relations prostitute.

51:25
NC: Oh, absolutely not. He's a serious analyst and the same is true of the Financial Times and others. But that's missing the point. Suppose he's right. Then it's a disaster.

51:38
JK: He's not right.

51:39
NC: It's a disaster if there is an oil glut.

51:41
JK: He's putting out a story to help the oil industry generate investment, to generate other people's money.

51:50
NC: That's still missing the point. The more that there is available use of hydrocarbons, the worse off we are.

51:59
JK: That's self-evident, I'm not missing that point.

52:02
NC: Okay, that's self-evident and therefore we have to focus on it. The other questions are uncertain. There's a lot of debate among specialists, technical specialists and others about just how far you can go with this but it's kind of beside the point. The more peak oil is removed, the worse off we are and I think that ought to be kept in mind. The point before about the huge programs in the 1950s and since to shift us to a fossil fueled based economy and why that worked and why green technology doesn't, I don't think it's a matter of us having made that decision, that has to do with corporate profits, and the government's commitment to maximizing corporate profits. The highway act of the 1950s was not put to public judgment, any more than the development of computers and the internet was. These are government programs that are carried out in the interests of concentrations of private capital, which have an enormous influence on government policy and the population is left out of it.

Going back to your current question, there are serious economic problems and what's going on Europe should be regarded as a class war. The ECB, the European Central Bank, and other major financial institutions are imposing a regime on Europe, which from an economic point of view, makes very little sense. Plenty of economists are pointing that out. It is driving the countries towards low growth, probably greater debt, because low growth means inability to pay the debts, and imposing austerity when they should be stimulating growth. But if you look at it from the point of view of class war, it makes sense. These are ways to undermine the welfare state, to undermine labor, to weaken labor's power, and that's very much in the interests of those who are making policy. We can see similar things here.

For example, there's a recent book that just came out from the Economic Policy Institute, called "Failure by Design," which is a review of their studies of the last 30 years on the policies that have led to the situation that the Occupy Movements are now beginning to confront--very narrow concentration of wealth, incredible concentration at the top 1/10th of one percent of the population, mostly in the financial sector--hedge fund managers, corporate executives, and so on. Along with pretty much stagnation for the majority. People have been getting by, by heavier workloads, much higher than Europe; by debt, which is of course unsustainable; and by the bubbles that have been created ever since the Reagan years, largely through deregulation. Concentration of wealth leads to concentration of political power which leads to legislation that carries the vicious cycle forward. Going back to their book, it's called "Failure by Design" and the stress is on the word design. These policies are designed. They don't happen by the laws of nature or for economic reasons, any more than the highway program and the destruction of the electric rail and regular rail system did. These are choices and they're choices that aren't made by the population. They're very harmful to the general welfare but with the deterioration of the functioning democratic system--which is no secret to the population, just look at the poll results on popularity of congress--with that, policy is designed and carried out in a way in which the public interest doesn't matter. The same is true going back to fossil fuels--of the efforts to try to maximize fossil fuel use with it's destructive consequences.

57:00
Host: We're speaking with Professor Noam Chomsky, joining us by telephone. Also, James Howard Kunstler, and also Richard Heinberg, and here in the studio, Nicole Foss. We're almost out of time for this program. Again, building this program on a series of interviews done by The Nation magazine, as part of their series on peak oil and the changing climate. Richard Heinberg, I want to bring you in for just one last minute as we're wrapping up here to talk for a moment about clean coal. I was amazed to see how much money was being put in to advertising for clean coal at both the Democratic and Republican conventions in 2008. Recently seen a lot of advertising on television for clean coal. We haven't really touched on it yet but how does that play into the issues of peak everything and the party being over and the end of growth as your books talk about.

58:09
RH: Clean coal is a mirage. It's a public relations deliberate mirage. Reality is that the scale of technology required to capture and bury the CO2 from all the coal power plants in the US would be roughly equivalent to the scale of the entire oil and gas industry in North America. Imagine the cost and the investment required to produce that size of infrastructure. Not to actually produce more energy, but simply to mitigate some of the environmental impacts from current energy production. Obviously that will add to the cost of electricity. It only begins to make sense if we assume that coal is going to be cheap from now until kingdom come, which is a false assumption. China's coal consumption has been rising at about 8% per year for the past few years. China is starting import coal. China would like to import coal from the United States. What this means is that coal is going to be less affordable globally as time goes on and that means that extra cost from carbon capture and storage simply cannot be borne because of the high cost of coal. The reality is that as coal costs increase, almost any other source of electricity--even solar--will be cheaper by comparison than clean coal. Clean coal is a technology without a future.

59:91
Host: Okay, Richard Heinberg, thank you so much for joining us. Also, James Kunstler and his brand new predictions for 2012 on his blog kunstler.com. Nicole Foss here with us in the studio

[audio cuts off]

Editorial Notes

Transcribed by heroic EB contributor Rickey Chang who writes: "I enjoyed this panel so much I decided to transcribe it. I thought you might like this as well."

Audio for the program is also at:
http://www.postcarbon.org/audio/657788-heinberg-kunstler-foss-orlov-chom...
http://archive.wort-fm.org/mp3/wort_120102_120001apamon.mp3

Rhisiart Gwilymhas a long comment on the program at Media Lens:

Between them, these extraordinary clearseers analyse precisely the catastrophic crises which -- amongst many other things -- are bringing on the steady, relentless collapse of the US empire.

... No-one has any expectation of anything remotely useful coming from the top down to cope in any realistic way with the harsh unbuckable facts of the Synergising Global Crises. All (except Noam, who offers no comment on this matter) are reduced to saying that the only hope left seems to be with local preparation, if you can manage to alarm and energise enough people even at this small scale to pile into action as a matter of now-very-urgent priority. ...

-BA

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