This afternoon I was outside splitting firewood in preparation for winter heating. As my body worked my mind got some exercise as well thinking about how to approach this post about the 3E’s, those being the economy, energy, and the environment. I’ve been promising to write more about this pretty much since I started this blog a few months ago because it is such an important framework I use to understand what is really going on around me and to help guide my decisions. The aim is to better take advantage of the opportunities available to me now and leave me better positioned for our likely future.
(Please note some of the links in this blog post are affiliate links. What this means is that should you click through them and make a qualifying purchase I will receive a commission which I’d certainly appreciate since it helps support this blog project. However, this shouldn’t increase your cost any, and certainly don’t ever feel like I’m pressuring you to buy things through the links I offer or anywhere else. I’m all about being frugal first!)
The very activity I was engaged in, splitting firewood, is an outgrowth of my personal insights from the 3E’s framework. To best explain this I feel like I should start by discussing each of the 3 E’s a bit. I’ll do my best at this, but honestly I’d be doing you all a disservice if I didn’t also direct you to the work of Chris Martenson, where I first learned of this. I’d highly recommend watching his free video series, The Crash Course, in the long form version. There is an accelerated version condensed down to be about an hour in length. While not free like the online video versions there is also the Crash Course book which is certainly worth reading.
So the economy is the first E. I’m going to first explore this from a macro view. Later I’ll return to this from a micro or personal level. For the vast majority of us the economy centers around money. The interesting thing about pretty much all our current monetary systems is that they are debt based. What does that mean, you may ask? It means the currency is created through debt. It’s borrowed into existence. When someone goes to a bank for a home loan for example, the bank isn’t taking money out of some vault to lend, nor is it deducting it from some digital pile of cash. It is creating the money right then and there out of thin air, increasing our money supply.
So every dollar you have in your wallet represents a dollar someone owes to a financial institution. Here’s the added quirk that makes this all so fun. Each dollar in existence is not just owed, but owed with interest! Where does that money to pay that interest come from? Here in lies the systemic problem. It comes from new loans/currency created in the time between when the original loan was made and when it is due to be paid back. Of course those new loans will also have to be paid back, with interest, and they will rely on even more new loans of ever greater amounts to be able to supply the extra currency needed for the interest portion. In other words, for this system to work well our economy must be growing at a rate at least equal to the interest owed. Since interest is an exponential function that therefor means that the economy must also grow exponentially. As long as we are just dealing with numbers and math this is perfectly fine. Of course it doesn’t just stay within the realm of abstract mental imaginings of numbers. It gets thoroughly enmeshed with the physical world of energy and environmental resources.
Another interesting observation about debt based currency as compared to older forms of money such as gold and silver coins is that its value comes from the future use of energy and resources to pay back the loan. With a gold coin on the other hand the value comes from past expenditures of energy and resources to mine, smelt, and mint the metal into the coin. When I have $1000 my monetary asset is a liability of at least $1000 for someone else. When I have a coin whose value is in the metal itself my asset is not a liability for another. It’s the difference between past work done and the expectation of future work being done.
The next E will be energy, a critical force powering everything. For the vast bulk of our existence as a species we’ve lived on the more or less immediate solar budget, the energy the sun is streaming to us every day. It gets temporarily stored in places like the wind and moving water as well as those organic solar panels we call plants and trees which store the energy in their wood, leaves, fruit, etc. This is also transferred to the animals that eat those plants, or the animals that eat the animals that eat the plants. When we look around at a natural environment it is teaming with stored solar energy. The catch is that it’s pretty much all low density storage. This makes it harder to utilize to do high energy forms of work.
Fossil fuels on the other hand are exceptionally rich, dense forms of stored energy relative to wind, trees, and chipmunks. When we as a species learned how to tap into this resource radical changes happened in our cultures because suddenly we had an immense surplus of dense, high quality energy. We’ve used that surplus to transform our environments, lifestyles, and cultures to an impressive degree over the last few hundred years. These power sources have allowed us to grow and expand as a species far beyond what was possible with the normal solar budget. Granted fossil fuels are still stored solar energy, but for all practical purposes on the time scale of a species they are something rare, unique, and immensely valuable.
Like any other creature with sudden access to a fantastic energy source we’ve been using it prodigiously. Because there was so much of it we’ve been able to grow for so many generations now that it’s simply become the life we know and take for granted. We’ve been able to increase our extraction of these fossil fuels to support this growth not just linearly but exponentially.
The catch today is that we seem to be just past, at, or rapidly approaching the peak extraction rates of these various fossil energy sources. Compounding this issue is something known as energy returned on energy invested, often called EROEI. Our society doesn’t really run on the energy resources extracted, rather we run on the energy resources left over after all the energy costs of extraction are deducted. We’ve naturally gone after all the easy high net energy sources first. What’s left is increasingly more costly in energetic terms, if not economic terms, to extract. Where as the energy of a barrel of oil used to yield 100 or more barrels in return now it’s more like 30 in conventional oil fields, and far less when talking about tar sands, or fracked oil.
You might think I’m saying that we are at risk of suddenly running out of fossil fuels. It’s common to think that’s what phrases like “peak oil” mean. I’m not saying that at all. In some ways I’m saying just the opposite. At the peak we have more energy resources at our disposal than ever before in all of known human history. We are absolutely swimming in this energy. The abundance is fantastic!! However, this abundance is not going to keep growing at exponential or even linear rates, and there in lies the problem if we try to maintain systems and cultures of constant growth. We have massive amounts of energy available, but not to fuel the growth rates we now take for granted. Such observations often get one labeled as having a doomer mentality. If you feel endless growth is necessary for a quality life then, yeah, doom is coming. However, I don’t think we really need such levels of growth to have a highly fulfilling life, so this need for change is an opportunity to build new ways of living.
The final E is the environment. What do I say here? I imagine you already have a pretty good idea how much our ecosystems are suffering as a result of the generations of exponential growth in our human populations and the cultural lifestyles we’ve developed. It’s very scary and depressing. I’m not going to dwell on this aspect of the environment here. What I do want to point out is that even if the energy E suddenly found a solution through some fabulous technological development of zero point energy or some other thing, the environmental resources we rely on being able to use and/or extract are also peaking in many instances. Here I’m talking about things like topsoil, fish stocks, metal ores, concentrated mineral sources of phosphorous, etc. Like our fossil fuel supplies we’ve high graded these other resources as well, meaning we went after the richest easiest to get supplies first. There may still be an abundance left but it’s requiring more and more energy to get. For example copper ores used to have about 10% copper, now it’s usually a fraction of one percent. The example Chris Martenson uses in his Crash Course series is the Bingham Canyon Mine in Utah. The ore body there is now about .2% copper. If an ore body was 10% copper then it would only take mining and processing 10 pounds of it to get 1 pound of copper. At .2% however, we now need to mine and process 500 pounds of ore to get that same 1 pound of copper! That’s immensely more work and energy use.
Again though, I want to point out that peak resources doesn’t mean we are almost out of them. It means we have a greater abundance available right now than we ever have in our history! It also means we will never have a greater amount so using systems that rely on endless growth will be a problem.
You may have noticed already how these are interrelating. We have an economy with a monetary system that must grow at continuous exponential rates to function well. This in turn drives people to consume energy and environmental resources at those exponential rates in order to generate wealth to pay off the debt formed with the creation of the debt based money. This has been working pretty good for a few generations now, however we are reaching planetary limits on the exponential extraction of resources. As both the high grade sources of fossil fuel energy and other environmental resources are used up moving us toward lower and lower grades, it takes ever increasing amounts of energy to extract, also making it more expensive to the economy. In other words our current systems are designed for infinite growth on a finite planet, and we seem to be reaching those planetary limits now. Something’s gotta give and change. At the same time something new will naturally develop, but we are aware we strive to guide it’s development, within certain limits.
I think I’m going to break this up and save my micro, or personal, level look at the 3 Es for another post. While I’m still at the macro level though let me share a couple other observations I’ve had.
Whenever I hear a politician promising how much they’re for the environment then, often in the same breath, start talking about how they’re going to grow our economy I have to conclude they are either ignorant of how these system interrelate, trying to greenwash the whole thing, or just flat out lying. It’s probably a combination of all three to some extent. Transitioning to “green” jobs is great, but if one is actually growing the economy in the process then what is really happening is still environmental decline. At best you are only slowing the pace of destruction.
In the politicians defense I don’t think anybody is likely to get elected by promising to cut everyone’s standard of living in half in order to just begin dealing with our energy and environmental problems, even if this process can improve our quality of life. For this reason I don’t look to the political sphere as the potential source of any effective change. This change needs to happen on the micro/personal level first to a large enough degree that our broader cultures have been transformed, before a politician could make anything more than token changes happen. You are welcome to disagree, but that’s where my thinking is these days.
Another macro level observation stemming from my understanding of the 3 Es that’s probably not appealing to most deals with stock market investing. In the FIRE movement (financial independence retire early) in particular there is a generally accepted wisdom that one should simply invest in particular index funds which are basically investing in everything in the market. The theory is that in the long term the market always goes up so if you are invested in it all your wealth will rise right along with it. Historically this has been a good strategy based on looking at past numbers. I just can’t bring myself to do it though because my understanding of the 3 Es tells me this is a classic case of expecting endless exponential growth to continue indefinitely into the future. It may continue to grow for some time, but signals from our energy and environmental sectors suggest that the notion that “the stock market always rises over time” is a truism about to be proved false.
So to bring this back around to the firewood splitting I began this blog entry with let me finish with this little tidbit of the 3Es being transferred to the micro level. I determined that heating my home with wood saved me a ton of money, increasing the strength of my personal economic situation. I don’t need to use our rare and precious concentrated fossil fuel energy sources for what are really the minor energetic needs of heating my home. The much more diffuse energy source of firewood is perfectly suitable. In this way I’m also reducing my environmental impact by not introducing more fossil carbon into the atmosphere. Plus the whole process of cutting, splitting, and burning firewood is far more low tech than using furnaces with propane production and delivery, resulting in less overall economic activity and resource consumption.
In my next post I hope to explore the 3 Es more as they relate to my life at the personal level. I feel like a lot of exciting opportunities open up when you can understand how these things are working together allowing you to utilize them to your advantage. One thing I hope to explore next time is a constant question I’m trying to understand and answer. How is it that we in the western world who are living at the peak of resources (meaning we have a stupendous abundance available to us, greater than at any point in history) are so often living poor, impoverished lifestyles, or at least ones where we must be constantly working all the time to pay the bills?
Studio Snippet
Today’s studio snippet probably isn’t that exciting, at least at this stage of the game. I’m working on a couple commissioned pieces for one of my best collectors. They are both larger scale pieces, raised from 12 inch disks of copper. At this point I have them raised and filled with wax in preparation for the chasing process where I’ll be hammering in all the detailed design work. The wax is a substance that provides me a nice balance of support and give. The support is to keep the whole thing from collapsing inwards as I hammer on the exterior. The give is needed to still allow the metal to move in somewhat as I hammer on it to create the designs.
Chasing these two pieces on this scale is likely going to take me several weeks, so don’t be surprised if you see these again in future studio snippets.
I’m happy to have a site where I can again allow comments. (I had to shut them off on my main website because the spam was simply uncontrollable!) So please I encourage you to share thoughts of your own. My general rule about comments though is just to play nice. Differing views are fine, but I’m not interested in engaging in or moderating verbal fights. If I feel things get out of hand, by whatever criteria I decide, I’ll just start blocking or deleting things.
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