Energy Efficiency

Over the last few years, I have talked about the need for energy efficiency; this need was driven from 2 perspectives, reducing demand on energy consumption and the benefit of reduced greenhouse gas emissions. The other side of energy is the cost and how financial institutions have focused their attentions on manipulation of the many facets including shares; the more profitable a company the greater the investors are prepared to pay for future growth; the key operative being growth.

But the reality is that the system – driven by greed – has tempted one too many and delivered on one too few investments; the king has no clothes and soon his subjects will join him.  The larger the energy dependent and consuming the country, the farther they will fall. Those least dependent on energy and well versed on making ends meet will suffer as well, but practice will have given them the edge.  Those closest to living off the land will be least under threat.

So did it have to end like this ? Well the answer is yes; we don’t recognize limitations like our ancestors did; population growth was policed by the immediate environment to support a community; cheap energy in this day and age meant we could ship food from anywhere around the world; however, two things have happened, disproportionate population growth in resource rich countries have translated into these highly exporting countries scaling back exports to support their own populace before the populace rebel and take over.

Now, the realization is that there is a bottom of the barrel, resources are finite and if ‘we’ sell \them off to the highest bidder, regardless of the jobs it may create, at the end of the day we are left with big holes in the ground and the profit has disappeared off-shore with some locals receiving blood money to sell out.

In the ‘great depression’, a small proportion of the population was mobile, looking for work just for a meal, these days there is far less arable land, a higher incidence of food is imported and farming communities have long suffered from poor prices, drought and interest rates that drove many farmers to their own private depression and even suicide.

As disposable income shrinks, people are looking for ways to reduce their exposure to debt, but the ripple effect reduces everyones ability to get in front; financial institutions have pushed the envelope too far and humanity will hit a wall that is immovable.

The G20 meeting in Washington was largely ineffective; no significant actions came out of the meeting and the our Leaders showed no comprehension, no understanding and no foresight for any actions that will mitigate or prevent the financial collapse. A little known Baltic Dry Index (a ocean shipping volume index) is at record lows, dropping to 841 this week from a record high of over 11,473 just last May. That means that the cost to charter an ocean-going vessel is at or below the cost per ton to crew and fuel the vessel.

A Ukrainian operator of about 55 vessels, filed for bankruptcy last month and Zodiac Maritime Agencies Ltd. (a shipping line managed by Israel’s billionaire Ofer family), said last month it may idle 20 capesize ships which typically haul coal and iron ore. That’s about 5 percent of the fleet operating in the spot market. Why the collapse ? Banks refuse to issue Letters of Credit because the S&P GSCI index of 24 raw materials has dropped 31 percent this month, its worst performance since at least recession.

If cargo trade stops, a whole lot of supply chain disruption starts; wheat doesn’t get exported, the mills have nothing to grind into flour; no flour means bakeries and food processors can’t produce bread and pasta and other foods means there is no foods in the shops no foods in the shops means people go hungry; if families go hungry, people will riot and governments fall, but before that anarchy will take hold and it will be survival of the fittest.

Nations like Russia and China seem to be heading toward the former (after signing a 20 year multi-billion $ loan-for-oil swap, which guarantees China a place at the head of the line, when crude oil supplies start to dwindle from Russia.  So, will falling crude oil supplies, shrinking water resources, shared cross-boarder aquifers and harder to extract minerals be hoarded by nations or shared between nations? What conflicts will result from this?

Are you getting just a little concerned ?