Yes - Population Growth Spurs Higher Commodity Prices

In 1980, the prescient Stanford ecology professor Paul Ehrlich (author of :"The Population Bomb") made a bet with University of Maryland economist Julian Simon related to population increase and material wealth embodied in commodity prices. The bet was for $1,000 - not a mammoth sum but not unreasonable given the implicit uncertainties. The bet was that the inflation-adjusted prices of five metals (chromium, tin, copper tungsten,  and nickel would rise by 1990 (Ehrlich) or fall (Simon.) Simon ended up winning the bet, but that may only have been because of dumb luck in timing and choosing those particular commodities.

Ehrlich was right in one way: the population continued to soar from 4.5 billion in 1980 to0 5.3 billion in 1990. More importantly, a recent paper discloses Ehrlich was only off by two decades and would have trumped Simon had the bet been extended (but then there was no assurance both would be alive toil validate it - as it is Simon died in 1998).

This new paper "Front Boom to Bust:  A Typology of Real Commodity Prices in the Long Run" - from the National Bureau for Economic Research and authored by David S, Jacks, found that over the long run "Real commodity prices of both energy and non-energy commodities have been on the rise from 1950 across all weighting schemes".   Further:

"There is a consistent pattern, in both past and present, of commodity price super cycles which entail decades long positive deviations from these long run trends with the latest set of super cycles likely at their peak. The commodity super cycles are punctuated by booms and busts which are historically pervasive and becoming more exacerbated over time."

In other words, the Jacks' paper portrayed commodity prices as a bit like the stock market: over time the Dow Jones Industrial Average has risen. However, that doesn't mean that during any given year or even decade the prices of stocks will rise. In summary, the Jacks' paper found that:"Cumulatively, the picture emerging from this exercise is a clear patter of real, rising commodity prices from at least 1950."

In effect, the Malthusians(we who believe human population growth will lead to scarcity and destitution) ought to have won the bet. Even the Economist's "free exchange" blog pointed out that while Simon may have won the specific bet, the Cornucopians haven't yet proven their position is correct. The blog points out:

"The paper does suggest that while innovation, substitution and conservation can reduce the price impact of rising demand for fundamentally scarce resources, they can't necessarily eliminate it entirely ."

Further:

"Of course, rising demand itself might come to an eventual end given new technologies - or to validate Mr. Ehrlich - the ultimate decline and stabilization of the global population. It may still be too early to tell whether humanity faces Malthusian limits or not."


In fact, it's not too early at all. We know already that Peak Oil occurred internationally in 2005, which means we are now on a downward energy spiral with net energy in the negative bracket. Thus the oil needed to run our energy intense civilization (including for food production) will be harder and harder to extract and lead to more energy consumed for extraction than the (degraded) oil can deliver. Hence, continual net energy loss.  This means economies of all scales will show continued regression (recession) as population increases. In other words, the era of unmitigated growth is over.

Readers interested in learning the details of how Peak Oil impinges our economic future and renders all market (as well as their commodities) volatile and contracting are advised to read the introductory material at :

www.dieoff.org

Hanson in his brief makes a good case for more than half the existing human population being killed off - likely by starvation, disease or violence. The starvation will come because of dwindling oil supplies available for mass food production. There are currently barely 1.2 liters per person per day available for food production, storage and transport in a world of 7.3b people. This compares to 2.2 L in the 1970s when there were 2.7- 3.0b fewer mouths to feed. From 2005 this will diminish by 2-4% per year contingent on population growth - currently at 85m a year. By the time the population reaches 9-10 billion by 2050, that production level may be barely 0.5 L per person which telegraphs mass starvation.

Perhaps nearly half as may will be felled by disease, especially bacterial that we'd earlier controlled through the use of antibiotics. But by 2050 - likely much earlier - all the pathogenic bacteria will be antibiotic resistant. One simple cut - say even a paper cut - could be a death sentence.


During all this time available commodities will be plummeting, especially the metals, but also grains. Quite possibly grains to support meat production will cease being available by 2025 because the cost will be so prohibitive.

Violence is a given as populations press each other for scare resources, including critical commodities. When the old energy order finally breaks down- with power grids collapsed because of excess demand during extended global warming heat waves- it will literally be every man for himself.  In such a brutish world that beckons 'survival of the fittest'  it's difficult to imagine even the much ballyhooed brain neuroplasticity (proposed by Steven Pinker) saving the day- say encouraging the better angels of our nature.  When water and food are scarce, and energy supplies adequate to even fill a gas tank or pump water are non-existent, there is the potential for all kinds of violence.

Is there a way out? Hanson doesn't hesitate to assert there is, but it entails replacing capitalism with democracy. Capitalism is not and never has been democratic because it asymmetrically  bestows the power of resource control and ownership only on the very few. Worse, capitalism is the single worst thing for the environment because it consumes actual wealth in the form of natural resources (and energy) to convert most into useless consumer waste. In doing so it fuels a preposterous "growth" that is at the basis of making the Malthusian future a reality.

The Cornucopians get it wrong because they don't see population growth for the toxin it is, and can't put 2 plus 2 together to see how it leads to the Malthusian nightmare.  All of this comes back to net energy which is that energy humans need to survive. If the oil taken from the ground, say by fracking, only has a ratio of 1:1 (for energy produced to energy consumed) then it is useless to extract it. The same amount of oil-energy you are using up to get it, is basically what it carries. There is no net gain.

It is the net gain that has allowed humans to reproduce and cover the globe. It is the retraction of net gain that will eliminate a majority of  humans. In effect, for breakeven oil one finds Q(net) = 0.  We are fast approaching the last 700 bbl of oil - which we are fast approaching - calculations show Q(net) = - Q  so that the energy extracted - say from shale oil or tracking - will always be less that the energy that can be delivered. Worse, the difficulty of extracting this type of degraded oil-energy always comes with fearsome ecological costs - essentially destroying the future natural wealth of the planet.

Unless the human population is radically reduced  to the carrying capacity limit, there is no way we can avoid the Malthusian future to which we are headed. The math simply doesn't support it and the fact that so many economists don't see that merely confirms Jay Hanson's point that economics is no longer based on reality but on fantasy. (He notes that the very notion of "Pareto Optimality" bears this out.)

Alternative sources of energy are a possibility, but their diffuse nature again means a limited human population is presumed for them to work. You are simply not going to run glass factories and tanks or jet plane plants on solar energy - or even a combination of solar, wind and geothermal. It's just not going to happen.

Last, the capitalist's favorite barometer, the GDP, needs to be replaced by the sustainability index of Herman Daly. Only in that way will be able to see how much real wealth we have left, and how much has been consumed by a reckless, wretched system designed to pillage the planet to enrich the very few.

A World Of 7 Billion: Not So Nice!

Roughly on the date of October 31, 2011, according to the UN Population Fund, 7 billion humans will inhabit the planet. This will represent the latest in an exponentiating increase of humans - all competing for fuel, food, water and jobs. To put it in perspective, according to demographers, the world's population didn't reach 1 billion until 1804 - that is more than five thousand years from the first agricultural societies to get to 1 billion!

It then took 123 years to hit the 2 billion mark in 1927, and only another 32 years to hit the 3 billion mark, in 1959. Merely 15 years later, 4 billion, and 5 billion in 1987, then 6 billion in 1998. Thus, only 13 years after that high mark we are hitting 7 billion. Essentially, the global population has doubled in merely 46 years. Is this a good thing or bad?

Depends on which perspective you take! According to the Pew Research Center, in a report released last Wednesday, U.S. birth rates are declining owing to the recession. The analysis, based on data from all 50 states and the District of Columbia, suggested women were putting off having babies while the economy was weak.

Well duh! I mean, if you can't even feed your existing family, say of two kids, why in the world would you add a third and have to worry over that extra mouth to feed too?

Anyway, according to preliminary data from 2010, the rates dropped to 64.7 births per thousand women ages 15 to 44, from 69.6 births per thousand women in 2007, the year the recession began. The report analyzed data from the National Center for Health Statistics and the Census Bureau.

Others, mainly of the Right, have seen these stats as a bad omen. Since their economic model is predicated on capitalism - which requires an endless procession of "consumers" for its products - say to keep the GDP stable (70% of GDP is provided by ordinary consumption), then it stands to reason it will want as many of these consuming "units" as possible. Since the young are the greediest consumers, the preference will always also be for new babies as opposed to more old people! It is also obvious that this shtick carries over to their other arguments, including the canard-based one that we need ever more workers to support the benefits of elderly beneficiaries. They fret that the current ratio of barely 3 workers to each retiree is not enough.

Nowhere, certainly in the corporo-media, is any of this codswallop skewered as it ought to be! For example, demanding endless consumers requires massive impacts on the natural resource base, including oil, to support the manufacture and distribution of said products. At some point, putatively passed in 2005 (the date for Peak Oil applied to conventional oil stores) there must be diminishing returns and there are.

As we've also seen, when major financial crises strike citizens have no choice but to pull back in spending, in order to pay off existing debts etc. With this comes a harsh realization, as expressed by one letter writer in today's WSJ (p. A16) that: "30 years of unhealthy income distribution has led to too many years of artificial living standards built on credit".

Indeed. so the question becomes:Why - in an era with proclaimed "higher efficiencies" do we need more people to support social insurance beneficiaries? The reason is that instead of using capital for job formation it has been used for war making, for speculation in risky markets using risky devices (derivatives) and sending the capital overseas to support foreign jobs instead! Thus, the claim we "need more workers" must be taken with a grain, because the actions of our pols and companies don't support or resonate with that contention.

The other part of the argument that falls apart, is the fact the more worker promoters don't grasp they are endorsing a population Pyramid scheme. Because if we push American females to have 15 million more kids - then what will we need to do to support them in their old age? Obviously we will have to massively cut their benefits, or bring in millions of foreign workers. Then...who will support them...or do we just intend to tell them, 'Hasta la vista! You've been useful to helping us, now go home!"

Another weakness of this argument: How can you assert there is a need for more workers to support Social security recipients, when there are already 24 million under- or unemployed? How about hiring that lot first, before demanding women make more babies which will merely add to the expanding surplus labor force. (Indeed, the country's added population since 2000 is about 20% higher than the total number of the unemployed.)

The actual fact, as the graphics attached show, is that the planet can ill afford more people! One of the grossest effects has been the human impact on ecosystems. Over the past 50 years alone, humans - by thier numbers and consumption - have altered more ecosystems than any other period in history. This has been primarily to meet rapidly growing demands for food, fresh lumber for shelters, fresh water, and fuel. Fuel is an especially parlous resource. As Geologist Colin Campbell has pointed out, we're now consuming about 31 billion bls. a year with about 7 billion humans, but by 2050 - when the world is expected to have 9 billion, there will only be a supply of about 14 billion bls. a year. In other words, the supply will be more than halved, as the population is 22% larger.

This is a recipe for a crash, a population crash, since then the extra 22% will not be able to find enough food, water, fuel etc. to survive. Water is obviously the biggest constraint. In the ‘State of the World’ report (2000, pp. 46-47), it is noted that the ever increasing water deficits will likely spark “water wars” by 2025. As they note (p. 47):

“When a country’s renewable water supplies drop below 1,700 cubic meters per capita (what some analysts call the water stress level) it becomes difficult for the country to mobilize enough water to satisfy all the food, household, and industrial needs of its population.”

The same State of the World’ report notes at present rates of decline and even without factoring in the worst global warming influences – the number of people living in water-stressed countries will rise from 470 million to 3 billion by 2025. More than a sixfold increase. Add in projected new climate change data and likely effects (see. eg. recent issues of Eos) and the stressed populations increase nine or tenfold.

Meanwhile, the latest meme to emerge, from Nicholas Eberstadt, is that we don't really have a population explosion but a "health explosion". E.g.

http://www.nytimes.com/roomfordebate/2011/10/16/fewer-babies-for-better-or-worse/not-a-population-explosion-but-a-health-explosion?scp=4&sq=Population&st=cse

He insists we shouldn't be fretting over third world population growth but rather the increasing number of humans in all nations able to live longer because of health enhancements, treatments and prevention.

So what, should we take all the elderly and line them up at the age of 65, then shoot them? Is that the implied solution?

The crux of the argument is the world’s population profile is being transformed by a very different sort of demographic phenomenon than poor people's birth rates: namely, a growing and seemingly unstoppable worldwide march toward sub-replacement fertility, population aging, and (in a growing number of countries already) long-term population decline. Well, mayhap the guy didn't check out the Sunday Denver Post population story ('7 Billion and counting') and the photo of a Ugandan's family with 14 children.

Adds an expert demographer (John Bongaarts) quoted in the piece, in referring to the coming population spike in Africa:

"Most of that growth will be in Africa's cities and in those cities it will be almost all in slums where living conditions will be horrible."

In addition, because the production of babies will outpace job creation, vast hordes of young people in Congo, Uganda, Zaire, Malawi, Burundi etc. will join "rebel" gangs, be issued AK-47s and told to fight for their freedoms. Of course, they'll also be told that includes raping and plundering. Such are the spoils when there is too great a demographic imbalance caused by poorly thought out population plans.

By far the worst aspects will manifest when both Peak Oil and climate change attain their respective critical points (or catastrophe cusps), which I project to be at or near 2025. We will then be experiencing massive disruptive climate upheaval across the planet almost every month, even as the energy supplies needed to abate it - or even reconstruct afterwards- are almost nil.

People, fasten your seat belts, because you will need them!

Human Population Growth is Unsustainable!

Reading the Wall Street Journal article, Can The World Feed Itself? (p. A13, today) showed me that the global corporate elites, in this case Nestle's Peter Brabeck-Letmathe, really don't get it. They don't grasp that the increasing human population is unsustainable even over the short term, far less until 2050 when it's expected to top 9 billion.

Now consider this for a minute. In the era of recent history, 1960 and the election of John F. Kennedy to be exact, the world's population stood at just one half of what it is today. By 2050, the projections (some of them) run to THREE times the global population in 1960. And what is Mr. Peter Brabeck-Letmathe's answer to the question posed by the header?


(with a dismissive wave of the hand..)

"We can feed nine billion people and we can provide them with water and fuel. But only if we let the market do its thing!"

Is this character serious? The Market "do its thing"? And what is that, may I ask? Privatize water supplies as attempted in Bolivia? (Leaving people having to break the law and try to catch rain water). Or privatize pensions as occurred in Chile, with the people then having to go out and beg for food and medicines for their kids? What planet is this guy living on? Not the one I'm on!

When one reads the article in detail one does see legitimate complaints, but these still don't confirm or give confidence for his answer. For example, he notes the converson of a food crop like corn to ethanol instead of to use for food for hungry people, like in Somalia. But he forgets or isn't aware that even if the entire U.S. corn crop had been used for food and not fuel there still wouldn't be adeqaute supplies to feed the hungry. The reason is because the Chinese, newly fueled by their economic advances, are making enormous corn crop purchases to feed their livestock for a (now) meat-loving populace:

http://brane-space.blogspot.com/2011/08/chinese-appetites-and-commodities.html


As noted in my earlier blog, in July alone, China ordered 21 million bushels of corn from the U.S. in "one hit". This was more than the U.S. expected the Chinese to buy in one year!

Now, let's go to this CEO's other misunderstanding of the "market", though again he does have the correct base argument. He says (ibid.):

"And the demand for meat has a multiplier effect of ten. You need ten times as much land, ten times as much feed, ten times as much water to produce one calorie of meat as you do to produce one calorie of vegetables or grain."

Which, of course, is true, but at contretemps to his market claims. For if one is subscribing to the FREE market, as opposed to a coercive market, the market is doing exactly what it should! It is responding to the FREE choice and purchase options of millions of Chinese, for example - as well as Indians - who, having "arrived", now wish to gorge on meats such as beef and pork, like Americans do!

So, what is Brabeck-Letmathe saying then? That he wants to have a coercive market replace the free one, and then dictate to people what their food choices must be: Little meat, mostly grains and veggies! Granted, this will increase the ability to feed the starving millions, but not to the extent of providing for 9 billion by 2050.

For one thing, climate change will ensure massive droughts continue to limit crop outputs as they have the past two years (with the wheat crop failure in Russia last year, and major parts of the U.S. corn crop this year). If anything, they will get worse. The other aspect is to put a continued drain on water resources, already stretched to the breaking point. The ‘State of the World’ report (Worldwatch Institute, 2000, pp. 46-47), it is noted that the ever increasing water deficits will likely spark “water wars” by 2025.As they note (p. 47):


Quote:
________________________________________
When a country’s renewable water supplies drop below 1,700 cubic meters per capita (what some analysts call the water stress level) it becomes difficult for the country to mobilize enough water to satisfy all the food, household, and industrial needs of its population.
________________________________________


Market “solutions” are absurd on their face since water is an absolute life necessity – not a commercial commodity, or one that a vast population can simply "move to" in order to access! (Hint: nations with their own water may not appreciate it!) One cannot and nations will not, “bargain for water” or permit privatized solutions, such as recently met with major political crisis in Bolivia!

Thus, Brabeck-Letmanthe's arguments are contradictory: if he genuinely desires free market solutions, he cannot even remotely think of constraining supply or demand for meats by the burgeoning populations of Asia, or still in the U.S. If he truly wishes the free market to work (as a proper capitalist), he must allow those populations to make the food choices on their own, irrespective of any "multiplier" effects.

The real problem then is just that the human population growing in excess of the planet to support it. One of the best indicators for this is provided by the Global Footpoint Network, at:

http://www.footprintnetwork.org/



According to this site, we currently need not one but one and one half EARTHS to sustain our current rate of consumption. This means it requires on average 1.5 years for the Earth to regenerate the resources humanity uses in one year. Clearly, at its rate of extrapolation, we'd need three Earth's by 2050 - which simply isn't going to occur short of colonizing another two earthlike planets. And since the manned space program has essentially been scuttled, the Pollyannas can kiss that one goodbye. So, the only other option is a population crash and "die off", e.g.

http://www.dieoff.org/


Even now, most people don't comprehend or process that adding 2.5 billion humans by 2050 is the carbon equivalent of adding two United States to the Earth. The total added population mass with its CO2 pollution, incepted loss of habitat and drain on water supplies, will be an unmitigated disaster. But instead of facing reality, people's brains - most - are wired for what I call "technological Pollyannism" - hoping and pining for some techno-fix that will make everything all right at the last moment. Well, don't hold your collective breath, kiddies!

Another claim made by Brabeck-Letmathe is that "the energy market is 20 times as big in calories, as the food market"

In other words, if only those energy supplies were used judiciously then everyone would get his or her fill even in a world of 9 billion! This claim can be quantitatively checked, given 1 cal = 4.18 J. In concrete terms, roughly 500 billion barrels of relatively cheap oil remain, and about 32 billion barrels of year are consumed per year for a global population of 7.5 billion.

Let us assume each of those ought to get at least 2,000 calories of food per day, and there are 4.18 J per calorie, then we are talking about a global caloric load of 6.27 x 10^13 J. This is also a condition in which nearly 3 billion are under-nourished or get much less than 2,000 calories per day.

Now, each barrel of oil has and energy equivalent of 6.117 × 10^9 J. Then for 32 billion barrels actually produced, we obtain an energy total of: 1.9 x 10^20 J. However, how much of this is used for transportation and other machinery-production processes? Well, nearly 90% or 1.7 x 10^20 J, leaving only: 2 x 10^19 J, but 95% of that is used for energy production to generate heat, air conditioning or other energy input uses. Still, there should be enough to provide food calories if the processes for production were energy-efficient. The problem is they aren't - especially with annual food wastage, loss of crops to pests, etc.

More pertinent, as Albert Bartlett notes (‘Physics Today’, November 2004, p. 18 – letter rebuttal to naysayers on effects of population), the average rate of personal oil consumption is 4 liters per person per day. Of this, roughly, 0.6 liters goes to the direct or indirect production, transport or manufacture of food – including pumping the water needed for agriculture.

Note this consumption rate is nearly TWICE the peak oil production of 2.2 liters per person per day from 1971, and more than twice the current oil production rate of 1.7 liters per person per day. And this is with “more than 3 billion malnourished” (cf. p. 18, and cited World Watch Report, Sept.-Oct. 2004, p. 22)

Projecting ahead to 2050, the key problem is that the quality of the oil itself will decline in relation to its energy value today. By 2020 the food allocation will be less than 0.3 liters per person per day. Thus it will be halved when the population is an estimated 1.5 billion greater. Someone must starve, billions will starve! That is, unless a true coercive market is enforced, of the type Brabeck -Letmanthe fantasizes: prohibiting the global population from consuming any more than maybe 5 oz. of meat a week.

This gets even more precarious when one figures in the degradation in quality of oil sources, especially now that the world's light sweet crude supply is bottoming out. Jon Thompson, company president for Exxon-Mobil in a 2003 paper posted on the Exxon-Mobil Exploration website (ibid.) noted realistically:

“By 2015 we will need to find, develop and produce a volume of new oil equal to EIGHT out of every TEN barrels produced today. In addition, the cost of this new oil is expected to be CONSIDERABLY more than is now spent.”

In other words, we will have to produce an additional oil barrel equivalent (vis-a-vis today) of 58 billion barrels per year by 2015! (Making for a total production of 87bbl + 58 bbl= 145bbl a year!)Yet the demand for more oil is increasing by 1.5% per year even as easily accessible oil supply fields are drying up, leaving only the most difficult (and costly) deep ocean or Arctic fields. This means even if the energy is available, which I doubt, the cost will be much too high for people to afford - likely more than $150 a bl.

How many will be able to eat in that environment? Well, just look back to 2008 when the per barrel of oil costs hit $120, food prices quadrupled and people were rioting in the streets from Kingston to Mumbai to Nairobi.

The sad fact is that unless we pare our numbers down, we face a merciless population crash in the near future. This is as certain as the Sun rising tomorrow.

Lastly, the dirty little truth of population increase is one the politicos are keeping well hidden, though they must know what's up. For example, how many of our ordinary citizens realize or know that if our population had been stable since 2000 we likely wouldn't have 14 million unemployed today? Consider, each month population increase adds 140,000 to the employment seeking rolls. That is 140,000 new job competitors added per month. That is 1, 680,000 added per year.

Over the last ten years then, the total number added to the employment- seeking rolls via population increase in the U.S. alone has been 16.8 million, or equal to all the unemployed and likely 2.8 million of the "discouraged" or those who've stopped to search for work altogether.
The conclusion is that had we zero population growth in the past decade, there plausibly wouldn't be 14 million out of work now, or at least no where near that many. We might be looking at 4-6% unemployment, as opposed to 9.1%!

But what are our illustrious political parties doing about it? Playing the ass! The Goopers and their knuckle-dragging ilk have continued to wage war on contraceptive services for women everywhere - and particularly wish to deny it for women here in the U.S. Meanwhile, the wimpy Dems aren't much better: while they mostly do support family planning they find it "politically incorrect" to talk about population itself.

Which bring us back to physicist Albert Bartlett's admission of the "silent lie" (regarding human population increase) among he and his own peers which keeps this toxin brewing. (Physics Today, July, 2004, p. 53) Bartlett avers that “scientists’ general reticence stems from the fact that it is politically incorrect or unpopular to argue for stabilization of population – at least in the U.S. Or perhaps scientists are uncomfortable stepping outside their specialized areas of expertise”.

Whatever the reason, Bartlett argues it is equivalent to perpetuating a “silent lie”, a term derived from a Mark Twain quote:

“Almost all lies are acts, and speech has no part in them…I am speaking of the lie of silent assertion: we can tell it without saying a word.”

The problem is that this "silent lie" - a manifestaton of extreme cowardice by our leaders and scientists, may be the ruin of us all.