Re: [A-List] The Peso is a "Derivative" of the Dollar

[Mark Jones <markjones011@xxxxxxxxxxxxx>]

Henry, thanks for the invaluable discussion of value! I have a few points
to raise about that, but it is wonderful stuff. But here first is my 2
cents about Chinese use of energy:
Henry wrote:

> As for Mark's concern about a properous China consuming energy, I have two
> comments.  I have calculated that at the rate of the past two decades, it
> will take
> China two centuries to catch up with the US in per capita consumption.
> Secondly,
> China's romance with market captalism will be very short lived as reality
> will fail
> to deliver the fancy promises of market fundamentalism.  My view is that
> pretro
> energy will be replaced within the next century.  There was a time when it was
> thought that if the world kept building fireplaces, there won't be any
> trees left
> to fuel them. Then the world found coal, and oil and gas and nuclear
> power.   We
> have not even began to tap geo-thermal enegery.  The energy problem is a sunk
> investment problem, totally solvable but not without some serious
> Schumpeterean
> creative destruction.

The best official source I know of is the US government's Energy
Information Administration. The EIA webpage on China is at
http://www.eia.doe.gov/cabs/china.html

The EIA says:

> China currently is the world's third largest oil consumer, behind the
> United States and Japan. Consumption of petroleum products totalled 4.78
> million barrels per day (bbl/d) in 2000, up from 4.36 million bbl/d in
> 1999. China is expected to surpass Japan as the second largest world oil
> consumer within the next decade and reach a consumption level of 10.5
> million bbl/d by 2020, making it a major factor in the world oil market.

Current global oil consumption is of the order of  77 million bbl/d.
Various estimates of future demand show consumption of 110 million bbl/d
(some more, some less) by 2020. But this flies in the face of the view
strongly argued by petrogeologists such as Colin Campbell that world oil
production is peaking and may already have peaked. Therefore, if this view
is correct (I believe it is) the world oil industry will be incapable of
meeting increased demand. At the End of the Oil Age, the crunch will be a
contest fought primarily between the world's two largest consumers: the USA
and China. Given the centrality to modern economies of oil and natural gas
as energy (80 of all transport) and as raw material feedstock, the danger
is obvious that the world energy supply position is precarious in the
extreme and that growth in consumption by China (but not only China,
obviously; all industrial states continue to increase consumption) is
unsustainable.

The official US government view is that there is no problem because oil
supply will rise to meet demand. The unofficial view is--well, what ARE
they doing in Iraq?

Henry argues that as or if oil runs out, substitutes will be found, and the
main problem he sees is that it will be necessary to write off the world's
huge capital investment in the existing energy-supply base: pipelines,
refineries, tankers, the billion-plus global vehicle park etc. I take his
point. At the End of Big Oil there sure is going to be a lot of rusting
scrap metal out there. But finding substitutes will not be easy and the
past is no guide.
Shell's energy scenarios to 2050 -
www.shell.com/downloads/publications/51852.pdf
is interesting and upbeat about renewables, geothermal etc. But the scale
of the problem is this. Renewable energy from all sources  includes
hydropower, solar, wind, tide, geothermal, solid biomass and animal
products, biomass gas and liquids, industrial and municipal wastes and
amounts to less than 10% of total global energy consumption. I think there
are many reasons why oil is irreplaceable, in time or at all, without there
first being a general crisis of capitalism.


Mark