Welcome to the second issue of View from the Rainbow Bridge, the research newsletter of Ecocosm Dynamics, Ltd. (EDL).
A January 1, 2005, editorial of The New York Times, authored by Jared Diamond, was entitled "The Ends of the World as We Know Them." He describes how societies have collapsed due to, among other things, abuse of the environmental resources that constitute the human habitat. This may sound melodramatic, but Diamond's concern echoes ours--that humanity is moving toward self-destruction by purposely managing economic growth at a historical level of around 4% per year, a level which results in environmentally destructive exponential consumption growth. The consequences of this growth are pervasive, and profoundly affect the world socio-economic system.
As Diamond suggests, we may be facing a time of transition for all nations. The brutal terrorist attack of September 11, 2001, in New York, the school bombing in Russia, the genocides carried out in many countries, and other such worldwide events indicate that a crisis is brewing. Fundamental changes are needed in human behavior, both individually and collectively. It is our hope that humanity can steer this transition toward a better, sustainable world rather than allowing it to take its own course. In order to make progress toward sustainability, not only must the interwoven societal causes of the present crisis be ameliorated, but also the modes of human behavior that fuel the crisis must be thoroughly understood both from a short-term and a long-term perspective.
This issue of our newsletter is the first in a series, each of which will examine a particular perspective or "view" of the world environmental crisis. The feature article of this issue addresses the energy perspective under normal conditions. Specifically, it addresses some of the important economic, financial, political, and environmental feedback loops in the world system that have interacted to produce the changes in the price and physical flow of oil in and through the world economy during most of the last century. A century of using inexpensive oil to fuel the energy sources designed into the technologies developed by the extremely innovative scientists of the 20th century has made humanity dangerously over-dependent on oil to fuel its economic growth now, at the time when oil is no longer cheap and abundant. Had technology been as effective at developing innovative renewable energy sources as it was at developing power-hungry machinery, oil would not be, as it actually is, the most important resource in the sustenance of the growth of world human consumption.
How humanity is handling the transition from oil to its renewable energy replacement, whatever that may turn out to be, is being driven by human needs, attitudes, emotions, and motivations as people respond to the conditions of the times in which they find themselves. Miss Adkins, my high school English teacher , used to say, "In times of crisis, people revert to type." We are seeing now, in tragic examples, some of these reversions. Like all crises, the oil crisis is, in the ultimate analysis, a crisis of the human spirit. We invite you to read this newsletter on the energy perspective thoughtfully, and give us the benefit of your comments and observations.
Luis T. Gutierrez
In our first newsletter we described the world environmental crisis and its basic underlying cause, the exponential growth of world human consumption. The great success of free enterprise and democracy to fuel this growth in highly developed nations is now being increasingly realized by third-world nations via economic globalization. The environmental crisis is, therefore, not just about the physical and biological aspects of the world ecosystem, but also about the entire human socio-economic system that so profoundly affects it. In fact, we believe that the socio-economic system must be transformed so that it evokes a sustainable response from humanity, and that such a transformation will ultimately be the result of a change in humanity's collective mindset.
In order to envision what such a transformed society might look like, we first must understand in more detail how our current, unsustainable socio-economic system works to produce the current environmental crisis and related socio-economic crises. This newsletter is the first in a series that will strive to construct this detailed picture. Each newsletter in the series will address a different perspective of the picture (the topic of this one is energy), and in the end, we will bring the entire picture into focus. Our hope is that by going through the process of developing, refining, and understanding this "big picture", we can begin to imagine how to transform it.
The Energy Perspective: Oil and the Magical 4%
by Willard R. Fey
This article analyses the influence of oil in the world system, and focuses on normal economic and financial feedback controls. A future, second article will address economic and oil dynamics under crisis conditions and also consider the impact of oil on world population and global life support system operations.
The prices and physical flows of the world oil system are controlled by a complex geometry of information feedback loops. We present these in a series of loop diagrams, with related groups of loops introduced incrementally one group at a time. Each loop is analyzed by itself and in relation to the emerging total system.
For a brief explanation on reading loop diagrams, please go to:
The EDL Feedback Loop Primer
Oil industry dynamics arise within and strongly influence the global economic system that has evolved to a condition of "managed growth." The governments and financial ministers of the developed nations cooperate to influence interest rates, currency exchange rates, money supplies, prices of gold and oil, stock index prices, tax rates, government spending, and other policy variables as best they can to maintain economic growth of the individual nations and of the total world economy at an annual rate of about 4%.
This growth objective can only be achieved when the oil industry provides increasing daily flows of oil to support growing world consumption at an oil price that stays low enough to meet the profit/cost requirements of the world's oil producers, refiners, users and speculators. If management of the oil system and/or the world economy becomes ineffective for any reason, the well-being of humanity could be threatened very quickly. More than half of the world's oil comes from the politically volatile Middle East, so some political influence loops are included in the analysis. Given that the world runs on oil and stops without it, it is important to understand how the current system functions.
The later, second article will consider the dynamics of the normal system under various crisis conditions and of various system modifications that might be or have been proposed to prevent major global disruptions. The transition from oil to other energy sources slowly is happening. At some future time, it will become rapid and unavoidable. Transition dynamics should be considered carefully now by the international community, if much human suffering is to be avoided when the transition is forced upon the world by likely problems, such as exhaustion of oil reserves, political crises, and environmental degradation, or by unexpected crises.
We strongly encourage you to read the entire article to gain an appreciation of the careful analysis that has been done:
To view highlights, click on the links below
|Introduction: Review of the Major World Feedback Control Loops||          ||
Figure 1. Major World Feedback Control Loops Producing the Environmental Crisis
Figure 2. World Gross Domestic Product from Various Sources
|The Central Role of Petroleum in the World Economy||          ||Figure 3. Oil Price History Compared with Other Financial Variables|
|Green Feedback Loops (A - F) that Maintain the 4% Growth Channel of the World Economy||          ||
Figure 4. Left Side of Figure 1 with Additional Variables Shown
Figure 5. Financial Variable Loops C, D, E & F that maintain the 4% annual growth rate
Figure 6. The Historical Maintenance of the 4% Annual Growth Rate
Figure 7. Historical Stock Prices and Gold Futures
|Red Feedback Loops (G - K) that Control the Flow and Price of Oil to Maintain 4% Global Growth||          ||
Figure 8. Oil Variable Loops G & H that regulate typical supply and demand scenarios
Figure 9. Oil Variable Loops I, J & K that try to maintain sufficient reserves
|Red Feedback Loops (L - N) that Control Oil's Impact on Consumption through Forces Outside the Oil Industry||          ||Figure 10. Oil Variable Loops L, M, & N that relate the oil industry to the world economy|
|Blue Feedback Loops (O - T) that Control Some of the Political Forces Associated with the Oil System||          ||
Figure 11. Blue Political Variable Loops O, P, Q, R, S & T that influence the oil industry
Appendix A: Descriptions of Feedback Loops (all loops in Figure 11)
|Conclusion of Oil Industry Analysis, Part 1||          ||Notes (on Economics) and References|
The EDL Links Directory
by Luis T. Gutierrez
The EDL links directory is a customized relational database. It is, basically, a directory of hyperlinks to websites hosting relevant information content. To a significant extent, it is a "directory of directories", for many of the links point to websites that provide directories of links to information in specific areas. Our current database has five columns:
Therefore, each row of the table identifies a web site, classified with regard to discipline, sub-discipline, institutional source, and information category. The table can then be sorted to show all the web sites grouped by some combination of these four dimensions. The current table includes 995 websites covering 17 disciplines, 300+ sub-disciplines, hundreds of institutional sources, and 9 categories of information content.
It is not practical to set boundaries around the information and knowledge required for Ecocosm Dynamics research. The links database is one way to collect the websites that contain relevant content. But new insights lead to new questions that were never asked before. We are researching other methods of information and knowledge management, as well as methods to communicate new insights (and new questions!) more effectively. Stay tuned.
EDL Links Directory
The Ecocosm Dynamics Website
by Ann C. W. Lam
Our website, www.EcocosmDynamics.org , has three primary purposes:
We would like to hear from you. Send your suggestions and feedback about the website to webmaster@EcocosmDynamics.org.
Items for Reflection
"Nothing is so powerful as
an exponential whose time has come."
"A society grows great when old men plant trees
whose shade they know they shall never sit in."
Notes to the Reader:
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