Saturday, November 30, 2013

The Internet as an information overcrowding experiment

Luis De Souza, well known for his posts at "The Oil Drum" reports a weird, but not uncommon, story in his blog "At the Edge of Time". One of his texts has been extensively reproduced on another blog, without quoting the source. This kind of event is becoming more and more common in a Web which is booming with data and information and where many people seem to choose the weapon of volume, rather than of quality, in order to get attention.

What's especially interesting here is the aggressive reaction of the author of the offending piece when Luis managed to contact him. It looks like internet crowding is making people react like rats in those experiments on overcrowding. Fortunately, these aggressive reactions in the virtual world is virtual, too. So far, at least.

Here is Luis' post, reproduced from his blog


27 November 2013

Help! My blog was plagiarised

Have you ever experienced that feeling when you reach for you briefcase and something is missing? Or arriving at home and understanding someone had been there before you? That feeling of being burglarised was what I felt when I accidentally bumped on an article with the breif title: The real problem with Solar: Panel Prices in Free Fall, and the Fuel is Free: Corporations don’t Know how to Make Money Here (Oprisko). It is published by an Australian web site named The Zero Room and its authorship attributed to George Oprisko, Executive Director of the Public Research Institute in the US.

As it happens, about one third of this article reproduces ipsis verbis parts of The Price of Solar Power post, one of the most popular in this blog, that was also published by the EuropeanTribune and TheOilDrum. Even section titles were copied, but I'm nowhere acknowledged as author. This is in clear breach of the EUPL v1.1 licence under which the contents of this blog are published.

My first reaction was to contact those running The Zero Room, asking for conformance with the EUPL. There are no contact addresses available in the site though, e-mail or other. I then tried to leave a comment on the article; I submitted the first comment on the weekend before last, by the 16th of November and have since submitted similar others. Invariably, these met the following message:
Your comment has been queued for review by site administrators and will be published after approval.
So far none of these comments has been published by The Zero Room.

I moved then to another lead, the first sentence of the article: "a guest column for Informed Comment". There's no link to this hypothetical source (the only link in the whole article is to George Oprisko's profile), but a web search could reveal something. DuckDuckGo tells me that there are at least two blogs that go by the name of "Informed Comment" but none posts content authored by George Oprisko. The Zero Room is indeed the only web site that search engines can find publishing the offending the article.

I thus insisted on this shady Australian web site, filling in a form that supposedly allows for registration. I thought that once registered I could eventually get access to some contact channel with those responsible. I promptly received the following e-mail:
Date: Sat, 23 Nov 2013 19:48:09 +1100
To: luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com
Subject: Account details for lads at The Zero Room (pending admin approval)
Sender: mjd[@t]mjd[d0t]id[d0t]au
From: mjd[@t]mjd[d0t]id[d0t]au


Thank you for registering at The Zero Room. Your application for an account is currently pending approval. Once it has been approved, you will receive another e-mail containing information about how to log in, set your password, and other details.

-- The Zero Room team
And never heard from them again.

I thus followed the only link in the article: that to George Oprisko's profile. Luckily, contacts are available at the Public Research Institute; I decided to drop a message:
Date: Sat, 23 Nov 2013 19:08:20 +0100
Subject: Article attribution
From: =?ISO-8859-1?Q?Luís_de_Sousa?= <luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com>
To: goprisko[@t]publicresearchinstitute[d0t]org

Dear Mr Oprisko,

Days ago I bumped on an article credited to your name with the following title: "The real problem with Solar: Panel Prices in Free Fall, and the Fuel is Free: Corporations don=92t Know how to Make Money Here (Oprisko)" [1]. This article reproduces ipsis verbis without proper attribution extensive content originally published in a blog post of my authorship [1].

All contents published in my blog are protected by the European Union Public Licence v1.1 [2], which demands attribution in any sort of reproduction or replication. If you are indeed responsible for the article published by the web site "The Zero Room", I would ask you to reformulate it in way to fully comply with the aforementioned Licence as soon as possible.

Best regards,

Luís de Sousa



The reply didn't took long:
Date: Sat, 23 Nov 2013 13:41:44 -0500
From: George Oprisko <goprisko[@t]publicresearchinstitute[d0t]org>
To: =?windows-1252?Q?Luís_de_Sousa?= <luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com>
Subject: Re: Article attribution


I have been trying to find you.......... these many days..........

But up until now........... you have been lurking behind a paywall ...........

That is a front for NSA data mining..............

How nice to hear directly from you.................

Only problem with the article you mention..........

I didn't write it!

It is a paraphrase of a post of mine...... which made attribution to "Various Sources".

But I have authored the attached .............

Dr. George
Confused? I was too. Beyond the vehement denial of authorship of The Zero Room article, this e-mail resembles more a soup of cryptic messages. The documents attached are white papers from the Public Research Institute that are irrelevant to this story.

Apparently, George Oprisko was either himself victim of plagiary, or is name was being used by a third party, or both. I replied asking for details:
Date: Mon, 25 Nov 2013 18:57:35 +0100
Subject: Re: Article attribution
From: =?ISO-8859-1?Q?Luís_de_Sousa?= <luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com>
To: George Oprisko <goprisko[@t]publicresearchinstitute[d0t]org>

Dear Mr. Oprisko,

I very much appreciate your swift reply, knowing that you didn't write this article put this story in completely new perspective. If I'm allowed, I would advise you to pursuit legal action against the "The Zero Room" web site. I'll also equate similar options from my side.

I don't fully understand what you mean by "have been lurking behind a paywal" and "front for NSA data mining". I'd be grateful if you could clarify this.

Finally I'd also ask you for a link to that post of your you refer to. And thank you for the papers.

Best regards,

Luís de Sousa
The reply was nothing short of surprising:
Date: Mon, 25 Nov 2013 17:13:19 -0500
From: George Oprisko <goprisko[@t]publicresearchinstitute[d0t]org>
To: =?windows-1252?Q?Luís_de_Sousa?= <luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com>
Subject: Re: Article attribution

I visited your site, hoping to arrange a collaboration.............

It is impossible to post comments thereon....... unless you succumb to having your gmail or facebook contacts recorded........

Your site has no way to directly contact you...........

This is in direct contravention to the way we at the Institute conduct our affairs....

Our site is hosted by ourselves, has no advertizing whatever, and our direct contact information is freely available.

Also, our research is freely available to colleagues to encourage collaboration and the advancement of a carbon neutral economy.

You, on the other hand, like many associated with The Oil Drum have set your self up as an exclusive "expert" on the topic.

You, are arrogant, and as far as I am concerned too interested in making money off your ideas.

You, seem to have assumed that everyone should kiss your ass.

And, In case you don't understand where I am coming from.......

I have no intent whatever to sue anyone who attributes ideas to me or the Institute.

That is what we are here for.........

That is to foment critical out side the box thinking.........


I don't give a rat's ass how that get's accomplished .........


So, George Oprisko had been trying to contact me, but didn't succeed. My e-mail address is available in my TheOilDrum profile (from where most folk known me), also in my EuropeTribune profile and my Blogger profile is public. Beyond that there's also a link to my employer's corporate web site in the About Me widget of this blog. I can't possibly believe that someone willing to wont succeed contacting me. In any case I added my e-mail in a more explicit way to my public Blogger profile, for less web savvy readers. As for the hate speech against me and other former TheOilDrum contributors I leave for you to judge.

The "goals regardless of means" tone of George Oprisko's discourse shattered any trust in his previous denial of authorship, but the silence from The Zero Room was also compromising. I was back to square one, unknowing the precise perpetrator of the plagiary.

I went back to the Informed Comment lead. On a closer look, Juan Cole's blog seemed the most likely to harbour content on Solar Power. I thus queried him:
Date: Tue, 26 Nov 2013 13:51:50 +0100
Subject: Help with plagiary
From: =?ISO-8859-1?Q?Lu=EDs_de_Sousa?= <luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com>
To: jrcole[@t]umich[d0t]edu

Dear Mr. Cole,

Days ago I came across an article attributed to George Oprisko titled: "The real problem with Solar: Panel Prices in Free Fall, and the Fuel is Free: Corporations don=92t Know how to Make Money Here (Oprisko)" published by an Australian web site [1]. This article reproduces ipsis verbis without proper attribution extensive content originally published in a blog post of my authorship [2]. All contents published in my blog are protected by the European Union Public Licence v1.1 [3], which demands attribution in any sort of reproduction or replication.

So far I have failed to contact those responsible for the site "The Zero Room", but I have managed to contact Mr Oprisko himself. He denies to have ever written the article but has lashed hateful remarks against myself and (an energy forum to which I contributed for 7 years). I'm thus not sure at this stage who is to blame for the plagiary.

However, a short sentence in the offending article hints at your blog, Informed Comment, as the source of Mr. Oprisko's article. Although there is nothing of the sort in your blog, you might perhaps have some insight to share on this case. Have you published in the past anything written by Mr. Oprisko? Do you know Mr. Oprisko? Do you know who may be responsible for the web site "The Zero Room" and how to contact them?

Thankful for you attention. Best regards,

Luís de Sousa



In the meantime I contacted fellow bloggers and researchers seeking to get into contact with The Zero Room. Among other replies, Gav from Peak Energy noted that there are a few dead links to a post at Informed Comment with the same title of the offending article at The Zero Room.

The story was becoming clear, by I needed a confirmation from Juan Cole to be sure. Fortunately he was kind enough to reply:
Date: Tue, 26 Nov 2013 21:27:27 -0500
Subject: thx
From: Juan Cole <jricole[@t]gmail[d0t]com>
To: "luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com" <luis[d0t]a[d0t]de[d0t]sousa[@t]gmail[d0t]com>

Hi Luis. Mr Oprisko did submit an essay to IC and it went up briefly until I noticed what seemed to me to be attribution problems. I immediately took it back down, in a matter of hours. I don't however retain any records of the matter.

cheers. Juan
In essence: George Oprisko is indeed the author of the plagiary, and apparently tried to lure Juan Cole. In his first e-mail George Oprisko tried to lure myself falsely denying authorship. His second e-mail is probably a reaction to "legal action".

What I still don't understand is The Zero Room's connivance with George Oprisko. In any case I'll do all in my reach to force the removal of the offending article.

As to George Oprisko himself I'm not certain yet how to proceed. Public exposure might be enough, but on the other hand, the violation of an open source licence is something that should not go without consequence. Everyone should understand that open source does not equate to the relinquish of rights over original work.

How can you help? First of all by exposing George Oprisko too, especially if you are a blogger yourself; it might be your blog to get plagiarised next time. Secondly by sharing your experience on plagiary and/or the violation of open source licences. Any information or advise on how to best proceed are welcome.


I'd like to thank Juan Cole for clarifying this story. I'd also like to thank Antonio, Leanan, Gav and Ugo for the information provided. 

Saturday, November 23, 2013

The return of gold as currency?

This post is part of a series on gold as currency that originates from the study of mineral resources done for the book "The Plundered Planet". Previous posts were: The Physics of Money, The Strategy of Dragons, and "The Lady doesn't wear gold"

Shops that convert gold into banknotes have made their appearance everywhere in the world. In a sense, it is the return of gold as currency. This post examines the current situation starting with Roman times and arriving to discuss a question that surely many of us have been considering: is there a convenience in investing in gold today?

There is a lot of interest in gold as currency, nowadays. With the world's financial system in turmoil, it is not surprising that some people are advocating a return to the gold standard and that others are busy at buying gold coins and gold-based assets. There has even been a proposal for a return to the Arab gold dinar as the basis of trade. But what could be the advantages of a return to gold? And is it really worth investing in gold; maybe physical gold in the form of gold coins?

As it is often the case, past history can tell us a lot about the present. Here, we find that the disappearance of the gold (and silver) as currency is an unusual event. With only one major exception, the late Roman Empire and early Middle Ages, for thousands of years, gold has been recognized everywhere as the basic medium of commerce. In modern times, gold coins were still circulating in the world throughout in mid 19th century but they became increasingly rare and, with the 20th century, they disappeared completely. Silver resisted a bit longer, the last silver coins meant as currency were minted in mid 20th century, but never really circulated. It was around that time that currency officially ceased to be based on gold. It had become what economists call "fiat money" borrowing a world from the Bible as to indicate a supernatural act of creation (something, that, incidentally, tells us something about the way a banker's mind works).

These are well known events, but what happened that had so deeply changed our attitude towards money that made us accept pieces of paper instead of metal coins? There follow some considerations of mine on this subject; mainly dedicated to gold, but generally valid also for silver. I argue that the disappearance of gold was due to its physical properties that made it scarcely suitable for the size of modern commerce. I also argue that the rapid inversion of several world trends, including the movement toward a new concentration of wealth in the hands of few people, may bring back gold as currency in a not too remote future. Finally I discuss whether it is worth investing in gold, today.

This text is part of the research I performed on the mineral history of the world that I wrote in the form of a book titled "Plundering the Planet". I don't claim that it is the last word on the subject but, if you bear with me, then you'll tell me what's your impression.

1. Gold as currency

Gold as currency is a commodity and its diffusion in the market depends on the balance of demand and supply; as it happens with all commodities traded in markets. Demand for gold has always been strong as everybody seems to love it (except for hermits, philosophers, and like minded characters). But the supply of gold is limited by its cost, in turn determined by its physical characteristics.

In a previous post, "the physics of money", I examined the factors that limit the amount of gold available as currency to the economy. One is the cost of producing it: it can be mined, raided, or traded, but in any case, these activities require considerable investments. The other factor is the density of metallic gold which dictates that a gold coin cannot weigh less than 3-4 grams (around 0.1 Oz.), otherwise it would be difficult to handle. These factors combine in limiting the number of gold coins that can exist at a given time. This number seems to have remained roughly constant over history; in the range of around 10 coins per person, perhaps less than that. (incidentally, silver could provide about ten times as many)

Clearly, you can't base an economic system on ten coins per person, not any more than we could base our current system on $100 bills only. Smaller denominations are needed for everyday transactions, say, buying groceries at the market. Before paper currency was developed, that could be done using coins made of lower value metals, typically copper coins, or copper-silver alloys. Gold was way too expensive for that but, as it often happens for expensive goods, it could still occupy the top layers of the market. Gold was money only for the rich; "prestige money" for large transactions. The 10 coins per person were far from being equally distributed: the rich had plenty, while the poor were not supposed to have any. In ancient times, up to relatively modern ones, it is likely that a peasant wouldn't ever see a gold coin in his or her life.

Even though expensive, gold has been well entrenched in its niche market for most of the known history. What could make it disappear? As we said, the market for gold as a currency is determined by supply and demand. So, the first thing we may imagine as the reason for the disappearance of gold is a reduction of the supply. In that case, prices would rise so that the market niche of gold as currency would shrink so much that it would become just too small to be exist at all. Imagine that peak oil reduces crude oil production so much that gasoline prices rise to - say - $100/liter ($350/gallon). Then, most of us won't simply reduce their use of cars: we'd have to stop using them. Having private cars would make no sense anymore and gasoline would disappear as a commodity for private users.

Something like that, a sharp rise in gold prices due to increasing rarity, may have taken place during the declining phase of the Western Roman Empire and in early Middle Ages. The Roman Empire, in more than a sense, was created by the wealth of gold that the Romans could mine in Northern Spain. But when the mines were depleted, the Roman gold started disappearing; spent for purchasing luxury items from abroad or for paying foreign mercenaries. At this point, it is likely that gold coins started to be perceived as very valuable and even relatively rich people would be wary of using them as currency, preferring to wait for better times (that never came). As a result the remaining gold was hoarded (or "vaulted"); it completely disappeared as a currency for several centuries (something that, incidentally, may have originated the many legends of dragons hoarding great treasures in their caves). Silver underwent the same fate and the whole European Economy had to adapt to the lack of currency during that period (they found some clever ways, but it wasn't so practical). A consequence of this phenomenon was that gold started to be used as jewelry for personal use, rather than as a currency, something that the Romans of better times would have considered tacky.

Fast forward to the disappearance of gold in our times: did our economic system go through something similar to the fate of the late Roman Empire? Apparently not, at least not in terms of availability of gold until very recent times. First of all, there is no evidence of a rise in gold prices in 19th century in correspondence to the disappearance of gold coins. Then, you can see below how the gold supply varied in comparison with the world's GdP (data from Maddison, 2010 for the world's GdP and from the Gold Money Foundation for the gold stock)

As you see, gold production from mines more than matched the growth of the world's GdP up to the 1940s. By then, gold coins had disappeared from common usage for almost a century and the convertibility of banknotes in gold was already purely theoretical, although that would be officially sanctioned only with the demise of the Bretton-Woods agreement in 1971. Clearly, we are seeing something different here that what we can imagine had happened during the last phase of the Roman Empire.

There were two main factors which drained gold coins from the market. Both are due to physical facts: gold is limited in amounts and gold is heavy. Let's see how these facts affected the economy.

2. Why gold disappeared:
   The sheer growth of the economy

We saw that the ratio of the amount of gold to the economy didn't decrease, it actually increased up to ca. 1940. But that didn't help to solve a problem related to the sheer size of transactions in the modern world. To explain this point, let's say that you want to buy a house with gold coins. Assuming that the house costs $100,000, at the present price of 40 $/gram you need around 2.5 kg of gold - less than one thousand 3 gram coins. Even an expensive mansion would not require quantities of gold so large to be impossible to handle and transport.

We have records that transactions in ancient times - e.g. buying and selling houses - involved actually paying the total amount in gold (e.g Verboven 2009). That doesn't mean that it was strictly necessary to move these amounts of gold. The Roman trapezitai (the way ancient bankers were called, from a Greek term for "table") could easily have taken care of that by using equivalents of the modern letters of credit. But, as we said, gold was associated with "prestige" and the fact of showing off one's gold assets had a certain value in itself - just like today people use expensive and impractical SUVs for transportation.

But, then, consider the enormous expansion of the economy in 19th century. It was the result of the availability of fossil fuels, mainly coal, that created gigantic commercial flows. And, at this point, large transactions, millions of dollars and even much larger, were no more the exception, but the rule. Not that there wasn't enough gold, but, if moving around hundreds of tons of gold each time would have becom really awkward.

At this point, there was a logic solution and it was adopted: store the gold as bullion inside bank vaults and use bills as currency. These bills were pegged to the stored gold, but were much easier to move and store. So, gold coins were melted and disappeared into the vaults of banks. They may still be there. We know that, at the end of the 19th century, a total of about 30,000 tons had been mined. Assuming that most of that gold was in the form of coins at that time, it may not be a coincidence that, today, the amount of governments' gold reserves in the world is about the same; about 30,000 tons. These are the gold coins that circulated in the world two hundred years ago!

  The rise of the middle class in the West

There is a second possible reason why gold currency disappeared from the economy. It is related to the rise of the middle class in the 19th century and the fact that this class claimed a share of the wealth that, as a consequence, was not monopolized by the elites any more.

The data on social equality trends are very uncertain, but it seems clear that in 19th century, the newly gained riches that came from commerce and conquest led to a considerable decrease in social inequality in Western Europe and in North America - as we can read in a hugely interesting paper by Joerg Baten and others. It turns out that, up to recent times, in the "rich" world the poor were becoming less poor, sharing a higher fraction of the national wealth. That makes sense in light of the growing economy and the rise of democracy, of political parties, of workers' movements and more. From the same paper by Baten et al., we see how this development was being paid with a considerable increase in inequality in Asia, Africa, and other regions of the world, but let's not consider that, right now.

So, with the progress of the 19th century, more and more people had access to the market and for this reason, they needed money. But gold couldn't provide it. As we said, there has never been enough gold in the world to provide coins for the pockets of everyone, and that's likely to have been true even for that fraction of the population that we call "middle class".

The member of this class had access to some wealth, but not enough that they could have so many gold coins as the rich would have in earlier times. So, they tended to see gold as rare and valuable and they would hoard it in the form of jewelry. Probably, every middle class family in the west, still today, has at least several grams of gold stored as jewelry: rings, necklaces, watches and the like. That's where another large fraction of the newly mined gold went from mid 19th century onward. It never had a chance to become "currency." Probably, this gold amounts to the difference of the total of gold mined (around 150,000-170,000 tons) minus the amount stored as government's reserves. In this case, it should total some 120,000-140.000 tons. (The amount of "technical gold" that has gone in circuitry and other devices is probably much smaller in comparison).

3. The end of the gold standard

So far, we have been discussing of gold as currency (i.e. something that actually circulates) which is something different from gold as a standard, (i.e. something stored in governments' vaults).  From late 19th century to 1971, most of the world's currencies were pegged to an equivalent amount of gold. Theoretically, every paper bill in circulation could have been redeemed into a certain amount of gold. But that concept officially disappeared when the United States unilaterally abandoned the Bretton Woods agreement in 1971.

If we go back to the figure presented before we see that the demise of the Bretton Woods agreement came after that the gold supply had started to collapse in comparison with the rapidly growing world's GdP. What had happened, probably, is that the economy, at this point, had fully "decoupled" from gold and had become pegged to fossil fuels. It was the acceleration of a trend that had been ongoing for decades but that, in the post-war period, had become impossible not to notice. Unlike what was the rule in ancient times, at this point the wealth of nations was not measured in gold any longer, but in oil, coal, and gas.

Gold had ended its monetary role because there was far too little of it to use it as a standard for what we call "currency" today, unless its price were to skyrocket to impossibly high levels.  It has been estimated that all the gold mined by the end of 2011 totalled 171,300 ton. At a price of US$1500 per troy ounce, reached on April 2013, one ton of gold has a value of approximately US$48 million. The total value of all gold ever mined should be around US$8.2 trillion. Compared to the world's GdP as it is estimated today (ca. 85 trillion) it is way too little.

A lot of people thought that the sky would fall because of the loss of gold standard, but nothing horrible happened, at least not right away. The end of the Bretton Woods agreement didn't mean that currency had become truly "fiat" - that is unpegged from any physical commodity. Currency just became pegged to another, and more important commodity: not gold any longer, but crude oil. As long as the US military will control the flow of oil in the empire we call "globalization", the US dollar will remain pegged to oil and it will remain the monetary standard of the world. That cannot last forever, of course, but for the time being it is the way things are.

4. The future of gold currency

As it is the rule in history, things always change. The trends that have brought the present situation with gold and all the related monetary issues are rapidly changing. So, what can we expect for the future?

The main problem for the economy, at present, seems to be able to maintain oil production to the levels which have created the globalized empire. In this sense, our situation is very similar to that of the Romans of the 1st-2nd centuries A.D. who were desperately trying to maintain gold production to the levels which had created their empire. In the case of crude oil, depletion is biting hard on traditional producers and gigantic investments are needed just to maintain things as they stand. So, far, it has been possible, but that won't last forever. Already now, the need of these gigantic investments for the extractive industry are draining resources from all the other sectors of the economy. The industrialized West, the backbone of the empire, is becoming progressively poorer. And we know that when society becomes poorer, hardship is not equally distributed.

Today, we are seeing the inversion of the trends that were leading to increasing social equality as the result of the increasing wealth brought by cheap oil. In the early 1970s, the US saw its local "peak oil" and, with it, what was deemed "the great U-turn of the US economy" by Bennett Harrison and Barry Bluestone. The Gini coefficient started increasing, indicating growing inequality. The rich were becoming richer and the poor poorer. The same trend appeared in later years in Europe

The trend spread all over the world and, today, we see it in full swing. As a result, middle-class families in Western countries keep becoming poorer and, possibly, the very concept of "middle class" is on its way to disappearing. People relentlessly pushed into poverty are exchanging their gold for their groceries with pawn shops acting as intermediaries. In practice, they are returning to the elites the gold they had hoarded as jewelry and, by now, the elites must be really awash in gold. It has been said that crude oil had made Arab sheiks so rich that they would use toilets made in solid gold (you can read this story in Oriana Fallaci's book "An Interview with History" - but it is a horrible book, not suggested). These Arab golden toilets are probably just a legend, but real solid gold toilets - exist, even though are reported to be not for sale. Bathroom fixtures in solid gold seem to be available for whoever wants to purchase them.

Apart from this show of tacky gadgetry, will we see the a return of gold as currency? Possibly yes, especially if the world's economy shrinks considerably as the result of the decline of the production of fossil fuels. But not immediately. As long as crude oil keeps flowing, the dollar remains strong as the world's currency. But, if (when) oil production starts to dwindle, a lot of things will change and, at some point, people will start losing their trust in small pieces of paper showing the face of Benjamin Franklin.

Then, a new market for gold will develop. That doesn't mean a return to the gold standard - although that might happen. But, more likely, it will mean the development of parallel markets in which some highly valuable goods and services will be paid in gold. Right now, mafia bosses, drug cartel leaders, and assorted local criminals and warlords are using dollars for their transactions (maybe you know that by far the largest number of $100 bills is found outside the United States). That could become a good market for gold coins. After all, gold coins were invented, back in the 6th century BCE, as a way to pay mercenaries and it may well be that the military all over the world will focus their sights on gold, after that they discover that oil is not so interesting anymore. Some things in history never change. But, as in the past, gold as a currency will not be for everybody and don't expect to be able to use gold coins to buy your groceries!

5. Investing in gold.

After so much reasoning, we are arrived to the focal point - investing in gold. If you are reading Cassandra's blog, you probably belong to the Western middle class and you know that it is an endangered species. If you have some liquid assets left, you may wonder if it is appropriate to transform them into gold. Is it worth investing in gold based funds or to buy gold coins to keep well hidden somewhere at home or in a bank safe?

Here, obviously, we enter a slippery ground and I can only propose my opinion on this matter, with the caveat that I take no responsibility for what may happen to you if you decide to follow my advice. This said, let's see to examine the question.

First, investing in gold in the form of stocks and futures, well, it is very risky. It is said that gold is a safe refuge from the financial crisis, but in the great collapse of 2008, gold lost about 25% of its previous value. It is also true that it fared better than oil, which lost  2/3 of its value in 2009. Consider, though, that in recent times gold has lost again more than 30% of its value, while oil has maintained its high prices. So, there is no guarantee that investing in gold assets you would make money (or you'll be able to buy crude oil on the cheap). Besides, you are still tied to the financial system and, if things get really bad, you can hardly claim your physical share of a gold that exists (if it exists) as ingots vaulted somewhere far away.

Then, you could buy physical gold in the form of coins or ingots. These are nice things to have, but suffer from the same problem as gold financial assets - it is not obvious at all that you'll make money when you trade in your coins or your ingots. Then, there is the obvious problem that physical gold can be stolen; so you may have to pay for a bank safe and even that may not be completely safe (in 1933, President Roosevelt ordered the confiscation of all physical gold owned by everyone in the country).

Nevertheless, if things get really bad, it may be a good idea to keep some gold at hand as an emergency tool that you may use, for instance, to bribe the custom officers and leave the country before it is too late. But also remember that gold, just like paper money, has no value in itself. In a sense, all currencies are "fiat" currencies. Gold has value only if someone is willing to accept it in exchange for goods; that depends on the availability of goods and also on the social conventions that drive exchanges. In our society, it is legal and acceptable for everyone to own gold but that may change in the future.You probably know one version or another of the story of the peasant who found a treasure of gold coins. Sometimes, the story has a good ending, but the lot of the peasant in the story is always to face great difficulties. In ancient societies, you just couldn't be a peasant and have gold at the same time. That was either illegal or unacceptable (or both) and, normally, when it happened society proceeded to redress the situation by removing the gold from the peasant (or removing the peasant from society). It is not just fiction, it may be a real story as the one that as Ali Morteza Samsam Bakhtiari tells us in his book "The Last of the Khans."

In the long run, as the very concept of "middle class" disappears, if you have managed to keep some gold with you, you may find yourself in troubles even in exchanging it for groceries, because groceries may become more valuable than gold. In any case, remember that your local warlord or mafia boss can take your gold without having to give you anything in exchange (it is a small scale version of what, on a large scale, is called "taxation"). So, a few gold coins may be fine to keep, but remember the advice of Lao Tzu in the "Tao Te Ching" "A house full of gold and jade cannot be defended".

h/t Tatiana Yugay for a suggestion on an improvement of this article

Wednesday, November 20, 2013

MIneral depletion: where do we stand?

This is a written version of the talk that I gave in Stuttgart on Nov 12th for the “Resource Efficiency and Circular Economy Congress". It is not a transcription of my speech, but a version written from memory that maintains the gist of what I said

Ladies and gentlemen, first of all I would like to thank the organizers of this meeting because it is a pleasure and a honor to be here today. It is a pleasure, mainly, to see that the government of Baden-Wurttemberg is taking seriously the problem of mineral depletion and its environmental consequences, and that so much high quality work is being done on this subject here.

This said, I have 20 minutes to tell you how we stand in terms of worldwide mining trends. As you may imagine, it is not an easy task. The world's mineral industry is an unbelievably huge machine that extracts all kinds of minerals and processes billions of tons of materials. If we look at the data of the United States Geological service, the USGS, we find a listing of about 90 mineral commodities; but each commodity includes several varieties of the same, or related, compounds. So, it is really a complicated story to tell.

Nevertheless, myself and 16 coworkers set up to try to analyze the situation with a book that we titled "Plundering the Planet". It is a study that was sponsored by the Club of Rome. It is, actually, the 33rd report to the Club. Here is the cover of the book we published on this subject:

Of course, this study doesn't claim to be a complete survey of what's being done in the world's mineral industry, otherwise we would have had to put together an encyclopedia in 24 volumes or more. But I think that at least we were able to catch the main trends and, here, I can summarize the main results for you.

So, where do we stand in terms of mining? Or, asking the question explicitly: are we going to run out of something? And, if so, when?

At this point, the typical answer that you can find on the web or in most studies on the subject is a list of the available reserves of this or that mineral. Allow me to tell you that once you enter in this kind of evaluation, you enter a true minefield. The concept of "reserve" is a curious beast, a sort of chameleon that changes color depending on where it stands. Reserves are, by definition, mineral deposits that can be extracted, but what will actually be extracted depends on what you need and on what you can afford. As you may imagine, these concepts vary a lot with the vagaries of the economy. Then, there is another problem: the data about reserves are often proprietary and, in most cases, producers' assets are more valuable if they can list more reserves in their portfolio. That doesn't mean that the data are fraudulent but in the past some producers have been caught at, let's say, "inflating" a bit their resources. So, if you want to estimate for how long a certain mineral resource will be extracted at reasonable costs - which is what we are interested in - well, doing that is a difficult matter. It is an activity notoriously prone to mistakes; even large ones.

So, let me take a different view of the situation. I'll not be listing reserves, here, but I'll show you mainly historical production data and price trends. From that, we'll see if we can say something about the future.

First of all, where do we stand in terms of overall mineral production? Let me show you the most recent aggregated data available, from USGS.

(Rogich, D.G., and Matos, G.R., 2008, The global flows of metals and minerals: U.S. Geological Survey Open-File Report 2008–1355, 11 p., available only online at

This image comes from a 2008 paper and is updated to 2005. From then, the trends haven't changed much. As you see, we are still growing in terms of total amounts produced. We have been moving billions of tons of materials during the past century and we are continuing to do so. In particular, construction materials, for instance cement, keep growing: it is a nearly exponential trend that shows no sign of abating. But, we can't live of cement, alone and I think you are more interested in the trends relative to fossil fuels - surely crucial for not just for the economy, but for our physical survival. So, let me show you some recent data.

Clearly, we don't seem to be running out of fossil fuels, at least as long as we measure production in terms of tonnage (Mtoe stands for "million tons of oil equivalent"). But note some trends: natural gas, and especially coal, are both rapidly growing - this is a bad thing, especially for coal, because coal's emissions of greenhouse gases are the largest of the three for the same amount of energy produced. Even natural gas, which is sometimes touted as a "clean" (or even "green") fuel also emits greenhouse gases and the problem of methane losses during extraction may make it as polluting as coal.

Notice also how the production of crude oil has been basically static during the past 7-8 years. That's important because crude oil is a crucial commodity for our transportation system and the fact that it has not been growing is telling us something. You have surely heard of the "new oil" story and how new technologies have revolutionized oil production giving to us a new age of abundance. Well, from these data it seems that, at best, these technologies have been able to avoid decline; not more. One reason is because these technologies have been used only in the United States; maybe they'll spread. But it is also true that after the great boom of "fracking" of the past few years, there are already signs of impending decline in the US. In any case, there is a general point that we should remember and that should dampen a bit the enthusiasm about new extractive technologies: the faster you extract it, the faster you run out of it.

There are further problems that this aggregated figure hides. One is that we should consider not just the total oil produced, but the oil produced per person. Here it is, in a graphic courtesy of Jean Laherrere.

You see, here, that if we consider the increase in population, the actual availability of crude oil per person has been declining after a peak that was reached in the early 1970s. It was the time of the great oil crisis that, apparently, never truly ended.

And you should also consider that, in Europe, we are all consumers of oil, not producers, so what we are interesting in is not really how much oil is produced in total, but how much oil we can import from producing countries. That depends, of course, on their internal consumption. Here, I could show you some data which indicate that several producers have big problems with their internal consumption increasing and that makes difficult for them not just increasing their oil exports but even in exporting any oil. But let me not go into the details.

These data show you that we are not running out of fossil fuels, not at all, but also that things are not easy. What's happening is that the industry needs to use more and more expensive technologies in order just to avoid a decline in production. And if we are spending more to produce oil, it means that prices must be rising; of course nobody ever would sell oil at a loss. So, here are the data for "Brent" oil, one of the industrial standards of oil.

Image by Ugo Bardi from EIA data

So, you can clearly see a rising trend here. It is not speculation. It is difficult to think that someone could speculate on a market of several trillion dollars per year but, even it they could, speculation is usually short lived. Here, we have an increasing price trend that started with the turn of the century and it is still ongoing.

We can justify these prices considering actual data on how much extracting oil costs. This is a difficult evaluation, of course, but it appears that the most expensive oil on the market, the so-called "marginal barrel", doesn't cost less than about 80 dollars. It is so expensive because it comes from remote fields, it requires deep drilling, it is high viscosity oil, contaminated oil, all sorts of factors that contribute to high costs.  These costs can be measured in terms of energy needed to lift, purify, refine, etc. You can print as much money as you want, but that won't help you in lifting oil out of the ground. For that, you need energy.

And, please, note another important point. The prices of oil (and its cost), at present do not include pollution costs. When you buy gasoline for your car, you are not paying for the costs of global warming. And I don't have to tell you that, as we are discovering in this moment, after the tragedy of the Philippines, these costs are very high and that someone has to pay for them - sooner or later. To clean up the mess we ourselves are creating, we need energy.

Now, there is an interesting conclusion, here. It is that if we want to keep production at these levels, we must accept these prices. Prices are an indicator that says that energy and material resources must be channeled to the oil industry in order to make it able to keep production at the present levels. If we want to reduce prices, then we must accept a reduced production. And if we'll see a reduction in oil prices in the near future (which seems to be the recent trend) we'll see also production going down. This is the situation: surely not one of abundance even though, as I said, we are not running out of oil.

There would be a lot more to say about fossil fuels, obviously, but let me stop here. As I said, my idea was to give you some general idea of how the world's mineral industry is performing, so let me give you another example: copper. Here are the productive trends.

Now, copper is another critical commodity for the world's industry and I think this figure provides some food for thought for all of us. You see that production is growing - even here we can say that we are not running out of anything. But the growth is slowing down. Copper production is not continuing the exponential growth it had been following in earlier times. What's happening? Let's give a look to the price trends.

As you see, copper prices have been following the same pattern we saw for crude oil. And that's not surprising: in order to extract copper, you need oil. It is a general rule that in order to extract anything - even oil - you need energy in one form or another. It is known that the extractive industry is a voracious consumer of energy. The quantitative estimates are variable, but we can say that perhaps about 10% of the total primary energy produced in the world is used for the extraction of minerals. Of this energy, a large fraction, (about 35% according to some estimates) is in the form of diesel fuel for mining machines; for bulldozers and the like. So, no wonder that a rise in oil prices has caused a rise in the price of most minerals.

There is also another problem and it is that not only the energy needed to extract copper is more expensive. It is also that it is becoming gradually more expensive to extract copper because the energy needed is increasing. It is a general problem: for any mineral, the high grade ores are the first to be extracted. But, as you run out of high grade ores, you must move to lower grade ores and processing lower grade ores is more expensive. That's the main effect of depletion. As I said, we are not running out of minerals; but we can say that we are running out of cheap minerals.

Now, I could tell you a lot more, but let me say that there are still some minerals that show a healthy growing trend, one is aluminum, for instance. That's due to the fact that high grade aluminum ores are still abundant and also that aluminum extraction requires a lot of electric energy and that energy is often generated by renewables, hydropower, for instance. So, aluminum is not subjected to the same problem of copper and other metals.

So, the production of some commodities is still increasing; what we can say in terms of a general rule is that we have a general problem of rising prices. Evidently, extraction costs are increasing everywhere and for all mineral commodities. Here are some data for an average of a few of them (incidentally, showing to you the difference that inflation makes; it is there, but it doesn't change the fact that there has been a huge increase in prices, recently):

 Average price index for aluminum, copper, gold, iron ore, lead, nickel, silver, tin and zinc (adapted from a graphic reported by Bertram et al., Resource Policy, 36(2011)315)

Let me show you just a final example. The situation seems to be especially difficult for rare and expensive commodities and you surely have heard of the problem of rare earths; important minerals for applications in electronics. Here are the productive trends.

Production has not been increasing for at least five years and it is clear that there is a problem, here, even though the trends are not so clear as in other cases. About price trends, rare earths are a relatively small market and so what has been happening is a huge speculation phenomenon that caused prices to skyrocket. But, then, the bubble burst up and prices came down again in recent years. But not to the initial values, before speculation. Rare earth prices remain today about a factor 5 higher than they were 5-10 years ago.

We know is that the main producer of rare earths in the world is China and during the past few years China's production has been going down. Some people have said that China wants to use rare earths as a commercial weapon, but I think that is not the case. The fact is that mining rare earths is expensive and polluting and the Chinese government has been trying to clean up the operation. And that is expensive. As I said earlier on, pollution costs are an integral part of the cost of mining, even though that is not usually taken into account.

So, let me summarize the situation in just a few lines:

1. Overall mineral production still on the increase

2. Per capita production static or decreasing

3. Costs of production everywhere increasing

4. Pollution damage also increasing

All that is not surprising, actually it was expected. I said that "The Plundered Planet", is a report to the Club of Rome and you probably know the Club in reason of their first report, the one that was published in 1972 under the title "The Limits to Growth". It was a set of scenarios for the future that took into account mineral scarcity as one of the main parameters. The calculations have been redone and updated; here is the latest version of the main results, from the 2004 version

From "The Limits to Growth, the 30-year update" by D. Meadows et al. 

Without going into the details of how the trajectory of the world's economy is modeled in this study, let me just say that it is based on physical factors - the main one being the increasing cost of extraction of mineral resources. This increasing costs was supposed to grow proportionally to the amount extracted. And you see, in the figure, how the curve for "resources" goes down with time, but also that troubles start much before running out of anything. It is because the high costs of extraction (and also the cost of pollution) are weighing down the economy, so much that it becomes impossible to keep industrial and agricultural production growing.

Now, the above shouldn't be taken as a prophecy; not at all. It was just one of the many possible trajectories that the world's economy could have taken. But, unfortunately, it looks like we have been following a trajectory close to this model. For instance, it seems clear that, as we approach the peak of industrial production that the model predicts, we are having problems in maintaining the growth of industrial production as we would like it to do. Here are some data for the industrial production in Europe (sorry that this image has labels in Italian, but I think you can understand it anyway):

Here, you see that after the crisis of 2008 there has been a certain return in industrial production. Germany almost managed to go back to the pre-2008 levels, but most European countries couldn't do that. So, I think this image tells us that the 2008 crisis wasn't just a financial crisis. It was something deeper and more structural. We can't say for sure that it is the start of that general decline of the worldwide industrial production that the scenario I showed to you sees for some moment around 2020; but it could be.

In any case, we clearly have big problems related to the high prices of mineral commodities which ar deeply affecting the economies of the world. Let me show you some data for Italy and Germany

As you see, we are dealing with huge sums spent for importing mineral commodities- several tens of billions of Euros. About the data above, note that we have the data for the imports of fossil fuels only, but to that we should add the cost of importing all the other mineral commodity. For Italy, I can tell you that it almost doubles the total: in 2012 the net balance amounted to some 113 billion Euros that Italy spent and that represents about 7.5% of Italy's GDP. I think that you should consider a similar fraction for Germany. Huge sums, as I said.

Now, consider that all these commodities have shown an increase in price of a factor that goes in the range of 3 to 5. You see that in the past few years, the added burden on the economies of countries which import mineral commodities has amounted to at least a few points of their GDP. Now, this is a heavy burden: we are talking of something of the order of 70 billion euros extra to pay for Italy alone - that can't fail to have an effect. And, as you surely know, it wasn't a good effect. The Italian economy is in deep trouble and I think that these extra costs are a major factor in the problem.

Germany survived increasing commodity prices better than Italy because the burden is lower in relative terms. This is because Germany produces some of its energy from domestic sources: coal and nuclear (which Italy doesn't have) and has also done a remarkable effort in renewable energy; which is also a domestic source. The difference is clear: here are some data (source: World Bank, elaborated by Google):

You see the difference in the graph and, if you happen to live and work in Italy, you feel the difference yourself. Germany has more or less recovered from the 2008 crisis, Italy hasn't. And I think that Italy's near complete dependency on imported mineral commodities is the crucial factor that makes the difference.

So, it is time now to recap and to conclude: clearly we have a problem here; and it is a big problem. But not one that's impossible to solve if we recognize it before it is too late. The solution lies, mainly, in the concept of "circular economy" that we are examining in this congress. And we know what that means: recycling, reusing, and being more efficient. But let me tell you one thing that I learned living in Italy: in order move towards a circular economy, you need resources and energy. Recycling has an energy cost, reusing does too - because you have to re-design practically everything. And even being more efficient has a cost: I see that in my job, which involves helping companies to make better products. Right now, Italian companies can't afford being efficient. It looks like a contradiction in terms, but think about that: they are fighting for survival;  how can they invest in higher efficiency if the rewards for this will come only years in the future?

In short, if we don't have energy we can't do anything. If we have energy, we can recycle, we can reuse, we can be efficient and we can keep mining the resources which are still there, while we gradually move towards a circular (or "closed") economy.

This is the fundamental point, but it also has to be said in the right way, because it can be misunderstood and has been misunderstood. We need energy, but of the right kind: non polluting and not subjected to depletion. It should be clear that fossil fuels are not a solution: they can't solve the depletion problem, they can only worsen it. The faster you extract them, the faster you run out of them. And I can't stress enough that the problem we face is not just depletion, it is pollution in terms of climate change. The climate problem may be much more difficult and intractable than depletion.

So, the right word about energy is "renewable". And we can use the German term "energiewende" to indicate the energy transition. In the figure below, I am reporting some words by the British economist William Stanley Jevons, slightly modified (he was talking about "coal" rather than about "energy"; but the sense is the same)

So, we know what we have to do. But are we doing it? I am afraid that we aren't, at least not fast enough worldwide. Let me show you some data:

You see that the investments for fossil fuels dwarf those for renewable energy. Think of how much money is spent just to maintain more or less constant the production of fuels! And if you look at more general sectors, investments in sustainability compared to investments for infrastructure related to fossil fuels, you'll see that the trend is the same. Much more is spent to maintain business as usual - a society based on fossil fuels - than it is spent to create the energiewende, the transition to a cleaner, healthier, and more equitable society.

Note also a worrisome trend: investments in renewable energy went down in 2012 in comparison to 2011. Unfortunately, that points at the fact that when there is competition for scarce resources, the strongest competitor wins. And the fossil fuel industry is gigantic; with revenues in the range of several trillions of dollars per year for oil and gas alone. If the economic crisis continues, it is possible that we'll see the support for renewables shrink, while we'll see even more frantic and desperate efforts to pour everything we have into the fossil fuel industry in order to squeeze the last drops of fossil fuels out of the ground.

Why are we doing this? Who has decided to invest these huge sums for perpetuating an activity that is doing us gigantic damage and that we'll have to abandon anyway in a not too remote future?

I think we can say that it is us; most of us, at least. It is because we have been seeking for short term profits in our investments and - if we remain within that paradigm - we'll keep digging fossil fuels until we destroy our civilization and wreck the whole ecosystem.

On the other hand, it is also true that paradigm shift do exist. If we look at the figure above, we can see things in a more optimistic way. Think of how fast renewable energy - and sustainability in general - has been growing. Today we manage to spend some 250 billion dollars per year on renewable energy alone. Twenty years ago, it was almost nothing in comparison. So, that has been a remarkable progress that can make us optimistic for the future.

In the end, the way we spend our remaining resources is our decision. A decision that we make as professionals, as political leaders, as citizens of Europe, as citizens of the world, as human beings. And it is not impossible to take wise decisions if we just move our horizon a little farther than that of immediate financial returns.

To conclude, I would like to thank the whole staff of the Club of Rome for having made this report possible. 

Sunday, November 17, 2013

The Lady doesn't wear Gold

This Byzantine Madonna comes from the 8th century AD and is kept today in the Church of S. Marco in Florence. Image courtesy of Umberto Fedele

This post is part of a series on gold as currency that originates from the study of mineral resources done for the book "The Plundered Planet". Previous posts were: The Physics of Money and The Strategy of Dragons

Take a moment to look at the image above; a splendid Byzantine Madonna that you can admire today in the Church of S. Marco, in Florence, Italy (the original mosaic goes back to the 8th century AD, and it is within the central rectangle, the figures outside were painted in later times). I was looking at that image just a few weeks ago when I was suddenly struck by a small revelation: something I had never realized before.

We see, here, a noble woman of high rank, as shown by her elaborate dress and jewelry. But notice one thing: although she is portrayed against a golden background, she herself wears almost no gold - except, perhaps, a couple of bracelets - they may be, actually, buckles. All her jewelry seem to be pearls and other stones that may be agate or carnelian.

Maybe you would think that the Mother of Jesus shouldn't wear gold, but that may be just a modern way of seeing things. In the same church, just nearby, you can see a 16th century sculpted Madonna waring a heavy gold crown - the perception of what was proper to wear for the Holy Mother had changed a lot in a few centuries.

Besides, not wearing gold jewels seems to have been typical of all Roman noble women, not just of the Mother of Christ. Look at the image below:  Empress Theodora of Byzantium, wife of Justinian 1st, who lived in the 6th century AD. (image from the Church of San Vitale, in Ravenna, Italy)

See? the powerful empress is shown against a golden background and there may be some gold in her crown, but probably just as a support for her elaborate set of pearl strings and for the precious stones she wears: red agate, green malachite and, perhaps, blue opal.

Would you like to have one more example? Here is another Roman empress, this time truly Roman, not Byzantine. Here is the only realistic portrait we have of Galla Placidia, who reigned in the Western Roman Empire during the 5th century AD. (portrait from a gold medallion kept in Ravenna)

Here, the only color we can see is gold, but it is clear that the Empress is wearing pearls, not gold.

So, it seems that in Roman times, wearing gold ornaments for a lady of high rank was considered somewhat tacky. And there are probably good reasons for that: the relation of ancient Romans with gold was completely different from what it is today. You see, for rich Romans, gold was relatively common. It was currency, it was money, and it was a commodity to be use for commerce. As such, it wasn't supposed to be something "noble;" no, it had its place  in coffers and safes, in the form of coins. It was not supposed to be worn as crowns or necklaces - that would be bad taste, as it would be for us to flaunt around a stack of $ 100 bills. Pearls and precious stones were considered (and actually were) rarer and more valuable; indeed "nobler" than gold, something fit for a lady of high rank to wear.

It also makes sense that, in medieval times, the perception of what gold was to be used for had completely changed. The concept of "golden crown," an ornament that kings and queens would wear, originated from that time; when it was something supposed to be worn also by the Mother of Christ in the iconography of the time.

The reason for that? Rather simple: in medieval times gold had ceased to be a currency. With the depletion of the Spanish mines that had created the Roman wealth, the Empire had collapsed and all the gold had vanished: spent or stolen abroad, or hoarded underground. With it, golden coins had disappeared; currency had disappeared altogether. Only in relatively late Middle Ages, Europe could create a new currency system based on silver. But during the whole period, gold remained a rare and expensive item to be treasured and that could be worn without feeling tacky - if you were rich enough to have some (and powerful enough to be able to keep it!).

The oscillating way of seeing gold; as a currency medium and as an ornament, can be seen also in a fashion that existed already in late Roman times but that became more common in Medieval times; that of using gold coins as decorative elements in jewelry. The example below is the "Fosbrook Pendant", presently at the British Museum.

This pendant goes back, probably, to the 7th century AD, but the coin inside is a Roman Solidus showing the face of Emperor Valentinian II from the 4th century AD. So, more than two century after that the coin was minted, it had lost its character of currency. It didn't circulate any more; it had become too precious to be used for commerce in an Europe that, at the time, was badly depleted in precious metals.

And in our times? Well, it seems that our perception of gold is more like that of Medieval Times, rather than of  Roman times, because we don't feel that it is bad taste for a woman to wear gold jewels. And that makes sense because for us gold is not a currency; not something to be used for commerce and hence it is more "noble" than it would otherwise be. But we have much more gold than was available in medieval times in Europe and so gold jewels are not only for queens and empresses; probably, today most people belonging to the "middle class" have at least some gold at home in the form of jewelry.

That, of course, begs the question of why we don't use gold as currency any more, even though we seem to have plenty of it. But that's a complicated question to answer and, for the time being, this discussion just gives us some idea of how subtle, complex, and multifaceted is our relation with gold, a true wonder metal that has fascinated our ancestors for millennia and still fascinates us.

Tuesday, November 12, 2013

PV or not PV? An interview with Marco Raugei

Marco Raugei is currently with Oxford Brookes University (UK), and with the Pompeu Fabra University in Barcelona (Spain). His interest is in photovoltaics and, in general, with renewable energy. You can read this recent post of him on PV energy on Cassandra's legacy.

At this link, you can hear an intereview that Marco gave on "PodOmatic", the site kept by Tom O'Brien, on photovoltaic energy and how this is a technology already mature today. PV can be a critical element in helping us to go through the "energy transition" and get rid, once and for all, of fossil fuels.

Thursday, November 7, 2013

Turning electricity into food

Our paper published in the "Journal of Cleaner Production" where we discuss the possibility of using renewable electric energy to power all the phases of the agricultural process. For a copy of this paper, send a message to ugo.bardi(whirlywhirl)

You know that when energy in agriculture is discussed, the paradigm is energy production in the form of biofuels. But the idea of biofuels manufactured from agricultural products is monumentally wrong. Modern food production depends nearly completely on fossil fuels: agriculture is a consumer of energy, not a producer.

The problem is that gradual depletion is making fossil fuels more and more expensive. And higher prices of fuels immediately generate higher food prices.  It has been happening and it is a big problem especially for the poor people of the world (graph below from FAO data)

So, how are we going to do? We need energy for agriculture, there is no doubt about that. To obtain this energy we could go back to human work and pack animals, as in the past. It is the concept of the "50 million farmers" (in the US alone) proposed by Richard Heinberg. But the work of the farmer of old was anything but pleasant and not even very efficient. Pre-industrial agriculture produced only a modest surplus at the expense of the suffering of a large number of people. There is no doubt that the coming of modern, mechanized agriculture was seen everywhere as a great advance in freeing people from the slavery of the heavy manual work of farming. (Image below (1971) courtesy of Stefan Landsberger)

So, can we eliminate fossil fuels in agriculture without having to go back to the back-breaking practices of the past? Myself and some colleagues started asking this question already some years ago and that led us to study the idea of using renewable energy (NOT intended as biofuels) to power agricultural machinery. We noted that modern renewable technologies (mainly wind and solar) produce electricity as output and that transforming electric power into fuels is expensive and inefficient. So, the idea we developed was to use directly electricity to power agriculture.

The result was the "Ramses project" that led us to develop a prototype agricultural vehicle that wasn't just a tractor, but a multipurpose vehicle for a variety of tasks, including energy storage (in the foto below, from left to right, Toufic El Asmar, Paolo Pasquini, and Ugo Bardi).

The Ramses vehicle was a success as a prototype, and it has been used in various farm activity for a few years, first in Lebanon and now in Italy. It taught us several things; one is that, making the appropriate calculations, today, electric mechanization in agriculture is still marginally more expensive than conventional, fossil fuel based, engines. Because of this marginally higher costs, farmers still use conventional engines and the Ramses is still just a prototype.

But things are gradually changing and, eventually, because of both depletion oan climate change, we will have to "wean" agriculture away from fossil fuels. This idea led us to a more comprehensive examination of the agricultural process. If the Ramses demonstrated that we can use electric power for many tasks that require mechanical energy, it is also true that agriculture needs much more: it needs fertilizers, pesticides, transportation, refrigeration, and more. Can we perform all those tasks using the electric energy produced by renewable sources?

That is what our recent paper on the "Journal of Cleaner Production" discusses (authors U. Bardi. T. El Asmar and A. Lavacchi, vol. 19, pp. 2034-2048 - 203). It is an extended examination on how energy is used in agriculture and how, in the future, we could obtain this energy from renewable sources, moving away from fossil fuels while at the same time maintaining the high productivity of modern agriculture.

The results? As you can imagine, it will not be an easy task; but it is not an impossible one, either. As modern renewables (wind and solar) increase in efficiency and come at lower costs, it is perfectly possible to think of integrating them with the agricultural process, first reducing and then fully eliminating the need of locally using fossil fuels.

Then, of course, agricultural production is not just based on the local use of fossil fuels: fertilizers, for instance, are produced on large industrial plants. These plants can be powered by renewable energy and it turns out that, for instance, there exist known methods for using electricity to generate ammonia as fertilizer without the need of using methane or hydrogen as feedstock. Even so, even abundant energy can't solve all problems, for instance the gradual depletion of mineral phosphate resources. For that, only the careful management of what we have can maintain the availability of the necessary phosphate based fertilizers

So, the end result of our study is that modern renewable energy can be a tremendous help to agriculture, but not for the wasteful and unsustainable agriculture of today. It is possible to turn electricity into food and we don't need to go back to the back-breaking practices of old. But we need to imagine and build an agriculture that doesn't destroy the resources it uses.

For a copy of our paper on the "Journal of Cleaner Production" write to me at "ugo.bardi(swirlingthing)

Monday, November 4, 2013

The Club of Rome Reloaded

The ideas brought by the Club of Rome with the famous 1972 report "The Limits to Growth" went through a period of eclipse starting with the mid 1980s. It was the result of a campaign of demolition that succeeded in convincing everyone that the report had made "wrong predictions" about the future.

It wasn't so; there were no wrong predictions in the book and, as time goes by, the relevance of the Club's warnings in the 1970s appear more and more clear. The debate on the subject of the effects of mineral depletion on the economy is picking up strength and interest and the work of the Club is more and more cited and reviewed (e.g. Ugo Bardi's book "The Limits to Growth Revisited" and the latest Club's report "Plundering the Planet")

A new book that deals with the same issues is Tapio Kanninen's "Crisis of Global Sustainability." You wouldn't guess that from the title, but the book is mainly a history of the Club of Rome and how the ideas that the Club proposed have fared over the years. In several respects, you can see it as a companion book to "The Limits to Growth Revisited", although more focussed on the historical record and less on the details of the modeling methods.

Kanninen's book is not just about the story of the Club of Rome, but it also includes an extensive discussion about the present crisis and about the factors that have led to a slowdown in the efforts to stop problems such as climate change and resource depletion. It is part, anyway, of the general return of interest in the Club of Rome - being "reloaded" in a way!

Saturday, November 2, 2013

Throwing the books into the waste bin

I did it. I threw them into the waste paper bin at an edge of the road. I threw them in: four supermarket bags full of books. Not waste paper, not leaflets, not magazines: books, perfectly legitimate books. Travel guides, cookbooks, novels, essays, manuals, textbooks, dictionaries, all that. Some were in bad shape, but several were in perfect conditions. Just not interesting any more: totally superseded by the Internet. What do you need books for, anyway?

As I walked away from the bin, I felt curiously elated; it was almost a sense of liberation. And, in another way, I felt guilty. For a few days, the flight of the books into the waste bin hovered in my mind. In a certain way, it had been a desecration; the destruction of holy objects.

I remembered the story of the burning of the library of Alexandria, the largest of the ancient world. I remembered the loss of the "Tyrrenikà", the lost book of wisdom of the Etruscans written by Emperor Claudius in person. I remembered Fahrenheit 451, the novel by Ray Bradbury that describes a world where burning books is a duty. I remembered the Great Book of the Gummi Bears.

It is said that the ability of the human mind to remember historical events doesn't go much beyond the stories that one hears from a grandfather (or, more likely, from a grandmother). So, in a few generations, all events and facts are consigned to the great repository of the dreamtime: the world of myths and heroes. It is only with books that we can keep records that go to earlier times, that keep the names and the dates of remote events. And that can do that even without an aged grandmother singing to you the songs of old times. So, the loss of a book may be the loss of an entire civilization, as it has happened when the last copy of the Tyrrenikà was thrown into someone's fireplace.

Books are so easily turned into smoke, paper destroyed by fire or humidity. But how about the Internet? Tiny bits of information encoded somewhere; readable only if you have the right kind of equipment and, more than all, if you have energy. How long will the records of our civilization last?

I have many more of those things; I think more than five thousands of them at home. I'll do it again.


Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)