Modern Wisdom - #508 - Nate Hagens - The World's Coming Energy Catastrophe

Episode Date: August 4, 2022

Nate Hagens is the Director of The Institute for the Study of Energy & Our Future. Energy drives our entire world. It keeps our GDPs growing, our cars moving and our hospital's working. If there was a shortage of energy, life would change very dramatically. Nate has spent 20 years researching the state of our current energy reliance and creating an assessment and philosophy for the future. Expect to learn how energy is intrinsically linked to our economy, why solar and wind are not a solution, why the things that humans value needs to change if we want to continue flourishing, what would happen if the price of energy went up by even a small margin, the real reason that the USA has a ton of bases in the Middle East and much more... Sponsors: Get 10% discount on all Optimal Carnivore’s products at www.amazon.com/optimalcarnivore (use code: WISDOMSAVE10) Get 15% discount on the amazing 6 Minute Diary at https://bit.ly/diarywisdom (use code MW15) (USA - https://amzn.to/3b2fQbR and use 15MINUTES) Get over 37% discount on all products site-wide from MyProtein at https://bit.ly/proteinwisdom (use code: MODERNWISDOM) Extra Stuff: Check out Nate's website - https://www.thegreatsimplification.com/  Get my free Reading List of 100 books to read before you die → https://chriswillx.com/books/ To support me on Patreon (thank you): https://www.patreon.com/modernwisdom - Get in touch. Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx YouTube: https://www.youtube.com/modernwisdompodcast Email: https://chriswillx.com/contact/  Learn more about your ad choices. Visit megaphone.fm/adchoices

What's happening people? Welcome back to the show. My guest today is Nate Hagins, he's the director of the Institute for the Study of Energy and Our Future. Energy drives our world, it keeps our GDPs growing, our cars moving and our hospitals working, if there was a shortage of energy, life would change very dramatically. Nate has spent 20 years researching the state of our current energy reliance and creating an assessment and philosophy for the future. Expect to learn how energy is intrinsically linked to our economy, why solar and wind are not a solution, why the things that humans value need to change if we want to continue

flourishing, what would happen if the price of energy went up by even a small margin, the real reason that the USA has tons of bases in the Middle East and much more. This conversation is quite scary. Nate is unbelievably well researched and everything that he puts across seems to make quite a bit of sense to me and he isn't the sort of person with the kind of personality or agenda to overblow things and that makes me even more concerned. I really, really hope that this opens your eyes as much as it did for me and I can definitely see Nate's ideas and his platform growing ridiculously over the next few years. This seems like something that pretty much everybody needs to know about. So yeah, they're ready for this one.

But now, ladies and gentlemen, please welcome Nate Hagen's Welcome to the show. Good to see you Chris. Good to see you as well. So what I find particularly interesting about your work is that you're looking at energy, you're also looking at human flourishing, you're also looking at economics, you're looking at the past, the present, the future. Given the fact that many of the people listening won't be familiar with your world view and your work,

what is important in the story of how we got here? So what do we need to know about our history before we can assess where we're at at the moment? It's a big question. I think we live in a culture that focuses on technology and human ingenuity and money as the things that describe our wealth and our future trajectory. And I think future trajectory and I think culturally, educationally, we misunderstand or fail to recognize the importance of ecology and energy to our lives. And we live as part of a system.

So for the last 20 years, I've tried to connect the dots of how the pieces of the human ecosystem fit together. You mentioned economy, which is technology and materials and energy and human ingenuity. There's also the environment and climate change and other species and biodiversity and ecosystem health. There's also anthropology and neuroscience, which I know you spend a lot of time on who we are as evolved animals have arrived here after 300,000 years. But because our brains and our bodies were shaped from the past and we are biological organisms, and energy is the central currency in nature. Animals were the first investors, and we just think of investing money, but everything

we do requires energy. Every single thing that ends up in a good or service that contributes to GDP or gross domestic product, our size of our economy requires energy to invent, to mine the materials for it, to create, to distribute, to operate, to maintain, to fix, and to dispose of. Without energy, all of our technology would just be sculptures. And so without energy, our cities would be museums. And this makes sense, right? Except we assume that we will have the energy we have now indefinitely,

and that's where the risk comes in. And I think what's happening in Ukraine and Russia right now is causing people to become a little bit more aware of, oh my god, we really depend on energy. Well, in this case, Germany and Europe are really recognizing what's happening. So long story short, we live as part of a system. And the things that have been supporting the system since you and I have been alive are unlikely to continue for too much longer. And so we're going to have to change how we get our evolutionary neurotransmitters, the emotional states of our ancestors probably with using less energy and materials than we do today. Why are things going to have to change in future?

Ah. Okay, so let's talk a little bit about energy properties and energy quality. So there are lots of different forms of energy. And we use predominantly fossil energy, which we are pulling out of the ground 10 million times faster than it was trickle-charged by daily photosynthesis of the sun. So the master resource in the global economy now is crude oil. From that come diesel fuel and gasoline and kerosene and jet fuel and bunker fuel and 6,000 other plastic precursors. Oil is the master resource. Oil is found where there were ancient oceans,

and it so happens that you and I live in a country where a lot of ancient oceans were. And so America has used more oil in the last 20 years and the last 50 years since the dawn of time than any other country. Let me tell you how powerful oil is. Even for a super fit guy like you, Chris, and I have an emotional memory of when we had dinner in Austin a few weeks ago, the happiness

on your face when you realized that there were larger plates and you could pile more food on your plate. You look like a kid on Christmas morning when you figured you could put more food on your plate. You look like a kid on Christmas morning when you figured you could put more food on your plate. But the average American today uses 57 barrel of oil equivalents of crude oil, natural gas, and coal if we convert those things into oil. One barrel of oil has 5.7 million British thermal units worth of energy. If you translate that into work potential, it's 1,700 kilowatt hours worth of work. And you or I, in one day, could generate around 0.6 kilowatt hours of work. You're pretty fit, so you might be able to 0.8 or 1 maybe. But on average, human working eight hour day generates around 6 tenths of a kilowatt hour of work,

meaning a barrel of oil, which we pay $100 for, can displace 4.5 years of yours or my physical labor. A gallon of gasoline is like two months of our work. So we are using as a global culture 100 billion barrel of oil of equivalents of colloil natural gas every year. So if each of those is worth 4 and a half years of human labor, we're adding roughly the equivalent of 500 billion human worker equivalents to the real 5 billion human worker equivalents. We're paying pennies on the dollar for this because what we're doing is

all our economic system is doing is paying for the cost of extraction. How much does it cost us to go into the Permian basin and pull that ancient sunlight out and add it to our economies? That's what the economists look at. We're not paying for the tens of millions of years of creation nor of the pollution, like climate change and ocean acidification. So why is this a problem? Because this stuff, we are treating it culturally as if it were interest, but the reality is we're

drawing down the principle. As I said, 10 million times faster than it was sequestered. So what we did in the United States is we used the Beverly Hillbilly's oil, the really high quality, easy to access oil first. Then we went to the North Slope of Alaska, which isn't even contiguous to us, but it's part of our country, and got that oil. Then we went into the Gulf of Mexico, and went under the ocean to access oil. Now, in the last 10 years, we've had the

shale oil revolution, which is we drill down and have these horizontal fracturing technology that sucks it out really fast, but it depletes really fast. So, one of these new horizontal shale wells will deplete at 80% in the first 18 months. We need to drill again to get more. What's happening now is we've reached the source rock, the formations in our country where the oil originated, all the oil that we've had for the last 50, 60, 70 years originated there.

There's nothing left after that. So let me tell you this fact, and this is something that hardly anyone pays attention to, because why? Because we can get plenty of energy today. It's a little more costly, but they're still plenty available. If we were to stop drilling for environmental reasons, for lack of capital, for political reasons, for any reason at all,

our oil production in the United States, which is around 12 million barrels a day right now, and we consume 20 million, by the way. So we're still importing a good deal of what we consume. If we stop drilling, our oil production would drop by 40% the first year, and by like 25% the second year and 20% the third year. And that's because all the oil wells that we've drilled in the past are depleting rapidly and a higher and higher percentage of our oil production is this tidal oil, the shell oil that depletes rapidly. So we're like this red-que queen, Alice in Wonderland scenario,

where we have to run faster and faster just as day in place. And so the reason this is a problem is, oil is the master resource, and it underpins everything in globalization, our transportation, global supply chains, the complexity of our system. And the other aspect of energy that we don't quite understand is people say,

oh, well, if oil's running out, we'll just go to solar and wind. And solar and wind are viable, they're robust, they're mature, they're not terribly expensive. But first of all, they are electricity. Okay, so solar, wind, geothermal, all those things produce electricity. And electricity is only around 21% of global energy use. The rest is heat and liquid fuels and other things like transportation, things like that. The other challenge with renewables is that they're intermittent. So we have to either couple them with something like natural gas, which we can turn on right away when there's a power demand. You live in Texas, you know what's happening right now this week.

People are, you can't have everything running and everything growing. There are limits. And if you have a heat wave like you do right now, and it's really still, and the wind isn't blowing, you could have five times as much wind installed as you do today, and it's still not gonna give you power, so you have to have natural gas or something like that as a compliment or batteries,

or, or use less. And the use less part is not in our political conversation, but it's coming in my opinion. And the sooner that individual people start changing their perception of energy services and what does it really mean to live a good life? Do I need all this energy and stuff? The more pilots and examples we'll have

of different cultural paths. So you're a, well, I don't even know that you are. You just look like you are a body builder and a weightlifter. So you think you probably think about calories and things like that. So the average American consumes via our mouth around 2000 calories, kilocalories a day. We actually consume more than that because we waste a lot, so it's like 3000, but in our bodies, our bodies internally eat, consume 2000 calories

a day, but the average American consumes 210,000 kilocalories a day worth of energy. In if you take the 330 million people in America and then you divide that into all of the energy that we use, the coal, the oil, the natural gas, the solar, the wind, the nuclear, it works out to about every human living in America consumes 210,000 kilocalories a day. One hundred times more than our bodies need for physical metabolism. Now, we need probably more than that. We need a roof over our heads.

We need food. We need hospitals and things like that. But do we need a hundred to one? So Europe uses 50 to one, 50 times more than their bodies need. But the United States uses around four times the global average terms of energy. Well, we, first of all,

happened to be born in a country that was blessed with a geology of having lots of fossil hydrocarbons here. Secondly, we had the most powerful country in the world, the last century. And so we were able to do during various Bretton Woods plaza cords. The international financial order is revolves around the US dollar. So the US dollar receives the seniorage or the economic benefit from being the world's reserve currency because other countries need the same things that we do, but they have to buy them because they're denominated in US dollars. So it's this huge international economic tailwinds

for the United States because we have 85% of our own energy. Whereas Europe is like a tiny fraction of that. Japan has hardly any of their own energy. So we have this energy bounty that is the foundation of our economies and we have the world's reserve currency and the largest most trusted central bank. But these things are not, they're not, you know, are, are God given right and they don't naturally given right and they don't naturally persist for centuries, I think in the next decade, a lot more people are going to understand how central energy is to our lives. So to kind of try and conclude everything there, the access that we've had specifically to oil

the access that we've had specifically to oil that has been low hanging fruit for the last hundred years, hundred and fifty years, something like that, the access that we've had there has meant that getting energy has been relatively easy and it's also been relatively cheap compared with how much, how hard it's going to be we haven't offset the cost of The generation of that energy in the past which was Sun for 10 million years or whatever it is and We also haven't offset much of the externalities that come out the side of using that energy One of the problems that we're going to have as we look forward is we have set ourselves as civilization a particular barometer, a status of energy usage, which you could see as convenience

or a level of comfort or a level of convenience in life. That is the level that we like to be at. And as we continue to move forward, if energy becomes more difficult for us to extract and use, and yet we need to continue at the same degree of convenience, comfort and lifestyle that we have at the moment, you're going to begin with an imbalance there. The demand is going to stay the same, but the supply is going to drop. That therefore means that there is going to be an increasing further around getting energy, which means that we need to either increase the supply or decrease the demand in order to level things out. How close am I there?

Pretty darn close. Good. It's only taking me a couple of weeks after going for dinner with you. So, first question, nuclear. Why can't we use nuclear? Nuclear is a strange thing. It's like what everyone always immediately asks, well, yeah, what about nuclear? Okay, so here's a quick review of nuclear. Like solar and wind, it is electricity. So only 20% of our global current situation is electric. Now we could change more things to electric and we probably should. But if all of a sudden we miraculously had 10 times

as much nuclear power today, it still wouldn't solve some of these problems because oil is a declining liquid fuel. That's step number one, or point number one. Point number two is just like solar and wind have different production profiles that are different than the human demand. If you look at Texas when the most energy is used in the late afternoons because people are coming home and they have air conditioning on and then the middle of the night there's a there's a trough

because people are sleeping. So what the perfect energy source is like natural gas, because you can turn it on when you need it, and you can turn it off when you don't need it. Nuclear, you can't really turn off. It's just always on and it's flat. So nuclear plus natural gas, good combination. Solar and wind plus natural gas, good combination. Nuclear alone can't meet the variability

of human energy use so far. Point number two, point number three is it takes a lot of capital and a lot of time and a lot of complexity to build out nuclear and some of the issues that I'm talking about are coming this decade. We haven't talked about money yet. I don't know if you want to,

but that's a central part of this story. So there's a long time lag on nuclear. Point number four, we don't have the uranium for nuclear to extend probably beyond six or seven decades. I mean, their uranium is much more abundant than high quality oil at this point, but it's also not infinite. Point number five would be the cost of nuclear,

the negative environmental costs are always at the tail end. And it's true that I think people have overreacted to Chernobyl and Fukushima and the cancer risks there. But it's because we've had this cohesive world system that's held together and we have 450 odd nuclear plants in the world. What if there was some event that caused a breakdown in social complexity and an inability

to maintain these nuclear plants, the environmental cost would then be discovered. So we have to kind of maintain these things in perpetuity for there not to be some meltdown things. So those are the few of things, but I do personally feel probably we're going to need nuclear, a lot more nuclear as part of the mix going forward this century, but it's not a direct one-for-one solution

to these problems. Oh, here's another point, Chris. And this gets into the anthropology part of the discussion, but if humans today found a two-cheap to meter energy source, a nominal view of that would be, oh my gosh, problem solved. But our economic system is one that consumes and grows. And if we had something that was unbelievably cheap, suddenly oil would no longer be a problem. Energy would not be a problem, but our oceans and our biosphere

and the number of other species that are declining and all these other things that are externalities, as you say, of the human system would get far worse. So even a cheap alternative to our situation doesn't solve those issues. What about if we were to find more oil and coal and natural gas outside of America? How close are we to being able to dig down to the bottom of the Pacific and there's a ton there. I don't know, but I'd heard, I remember reading a long time ago, about how there is way more fossil fuel opportunity out there than we've tapped into so far, and it's a case of scouting more, and we've only

scratched the surface in terms of the allowance that we could dig into. There's a lot of research in this. We have far more than scratched the surface. Every single year we find less and less oil and oil discoveries, and you have to discover oil before you produce it, peaked 50 years ago, and have been in a steep decline since then. There is a lot of oil outside of the borders of the USA. But for the moment, let's set aside geopolitics because I think once the pie starts to shrink, that turns us into a phase shift of different human behavior.

But for instance, if you draw a 600 mile triangle around Jeddah, Saudi Arabia into Iran, approximately 60% of the world's remaining oil reserves are in that 600 mile triangle. So there's lots of oil left in the world. The issue is partially where it's located, and that would explain why we have those military bases in the Middle East. But the other issue is one of flow rate. So Venezuela has something called the Orinoco sands. And Alberta, Canada has a tar sands. Tar sands are like uncompleted oil that is basically oily sand. That you have to apply more energy and heat to to turn it into usable oil. So that's a huge

complex, rubed goldberg machine process up there, and we can get oil out of that, but it's the flow rate of how quickly it gets out. So the world uses 95 million barrels a day of oil today. Certainly there's enough for 50, 60 million barrels a day for many decades, but the total amount, the total pool, is not infinite. I would argue that we've used about half. How do you know where the oil is, what's left, how much is left, are there any hopes that there could be oil outside of the places that we've already done surveys? There almost certainly is oil left in places that we haven't discovered yet, including the Arctic, in places that we haven't discovered yet, including the Arctic, which once the glaciers melt,

people will be accessing the Arctic shelf to access oil. There are many, many different geological surveys that look at reserves that are available how many years are left at a certain price. And those range from 10 years to 30 years, and then they expect that we will discover some in the future, and that number is always changing. So the issue really isn't that we're running out of oil.

We were running out of oil from when the first well was drilled in 1859. The issue is that we're running out of enough oil at an affordable price to maintain economic growth. And once we can't continue to grow our economies, and the economic growth now is at a 50-year low economic growth for our country peaked in the early 1970s. And we've grown the whole time since then, but we've grown at lower amounts every year. Once we are able to grow, we face this metaphorical or not so metaphorical, musical chair situation because of the amount of monetary claims on

real resources. So money is created by commercial banks making loans without any reference to how much oil or environmental services or natural resources or materials exist. So we keep growing our monetary claims on our underlying physical reality. And every time you spend a dollar from your wallet or from your bank, you spend it on something that requires energy. So we keep growing the amount of monetary claims we have when our energy is actually slowly and exorably declining.

So that's the thing that I'm worried about in the next decade is the delta between those two trends. And you can see the central bankers of the world are just running around like an aunts nest just got kicked. They don't really have a strategy for this because they want to continue to grow the economies. And yet at the same time, they don't want inflation and they can print money, but they can't print energy.

They can only make the rules so we can extract energy faster. Is that what you mean by natural capital? Natural capital is our soil, it's our forests, it's our ecosystems, it is also the resources under the ground that we are mining at at very fast rates, copper, water, sand, oil, yes. Right. And if you extend the boundary of your concern or your ethics, natural capital would also include termites and mangoes and elk and lions and geese etc. Is money fundamentally energy in one way then? Is money just a way of trading energy?

Because ultimately everything comes down to it that nothing can be produced without it. Money is a claim on energy. And debt is a claim on future energy. So when a country, when a person, or a country, runs into financial difficulties and they can't afford what they want or need, financial difficulties and they can't afford what they want or need, they will borrow money to do that. And that borrowing is an increase in the world's future claims on energy. And so the challenge we're going to have in coming decades is we have all these financial claims on a dwindling pool of energy and resources. And the ultimate answer, and we won't choose this answer until we have to, is we're going to have to use less.

And that doesn't have to be a disaster. And all of my work is preparing individuals and cultures and communities and maybe policies for that inevitable moment. We look, Chris. Most people know that the current economic system is not really working for them. There's this intuitive recognition that all this energy and stuff isn't really making us happy and healthy and you've explored some of these things on your show.

After basic needs are met, the best things in life are free. Our economic system is geared toward measuring our success, measuring our progress by the size of our energy use. GDP is really just a measure for how much stuff we burn in the world. How do you mean? Every single product that ends up in the world economic system that's counted as a good or service started somewhere on the planet with a small fire in some factory. There was energy underpinning it all. Why is that this embedded growth obligation? Well, one could argue from an evolutionary sense that animals, when they're young, they need more calories to grow. And humans too, when we're 10 years old,

when we're 12 years old, we're eating, we want to grow. But then we reach 20 something and we stop growing. Our economic system is different because we've self-organized around this bolus of fossil sunlight that our ancestors not too long ago knew where their wealth came from. It came from the sun and the hydrologic cycles

and the soil and the work of their muscles and their animals to create things, a blacksmith and a forrester and a baker and a craftsman. And we would use the products of the forest and such to build an economy. Then, we basically, all these fossil workers came out of the ground and were added to our economies, and we lost that connection with the natural world defining our limits and our aspirations. And we started to create economic rules

that all this giant increase in average human consumption per capita and a lot more people per capita. A lot more capita. We started to attribute that to human cleverness and ingenuity. And so we then started to build an economic system that lauded growth as the answer. I mean GDP when it was first created was around World War II, and it wasn't meant to be a goal. It was just created as a scorecard of how much stuff we were

creating. But then the money thing got involved. And I don't know how much you know about how money is created, but 95% of our money is created at commercial banks when they make a loan. They are not loaning out existing capital. They are creating money as long as there's a credit worthy borrower, but what they're not creating is the interest on the loan. So right there, there's an embedded growth obligation in our system. I can break this down in a short example. Say that you go into the bank of Austin

and you have a cool business idea and they like you and you have a credit worthy personality and history and they are in good standing with the Federal Reserve. Chris, here's a million dollars. At that point, they put a million dollars into your account at the bank and simultaneously, that's your asset. And simultaneously, they put Chris Oza's a million dollars on their asset ledger. So in the world nothing has happened. You both have a million and you owe a million. And they both gave a million

and they are owed a million. But two other things happened that people don't often talk about. Number one is there's a million dollars more of purchasing power in our world, in our economic system that is a claim on future energy and resources. You could invest that in a business or you could just take a cruise or buy a yacht to go tool around Lake Austin or whatever you want, but it's all a potential future claim on energy and resources. The second thing is they did not create the interest for you.

So during your job or whatever you do, you have to eventually pay them back the million dollars, and every year in the meantime, you have to pay the interest 50 grand or whatever the percentage rate on that is. So if you add that up globally, there is an imperative that we have to grow to maintain prior financial claims. Simultaneously, that growth draws down our natural capital and creates environmental externalities that you pointed out before pretty much are not included in our prices. Didn't I see you explain about how certain countries are including prostitution and drug sales in their GDP in an effort to keep the debt to capital ratio correct? Yes.

to capital ratio, correct? Yes. Countries in Europe in order to maintain their standing with the European Central Bank, where the European Central Bank still allows them to borrow. They can only borrow if their debt to GDP is under a certain threshold. And so as they have more and more debt, their GDP isn't growing enough to stay under that threshold. So they're adding new things into the definition of GDP like prostitution and drugs, what we're previously illicit drug sales. Now, that's a tiny example, but it also gives us a glimpse of what are the things that we really care about, because there's a lot of things that you and I do in our lives, possibly our most

favorite things that aren't included in GDP. Make in love with your partner, go on for a walk in the woods, play in with your dogs, and none of those things are included in GDP. So, this question of how can we get our evolutionary emotional states of our ancestors with using less energy and materials, in other words, what is an economy for? This is like front and center going to start to be a real question. But yeah, I think Europe is going to face these issues before we do already because there were cracks in the mortar before Russia and Ukraine. But now definitely because of Russia and Ukraine and the fact that Germany is a manufacturing hub. They import resources from other countries and then they have technology and they make high quality stuff but Russia is a

resource hub they have the largest energy reserves in the world Pretty much and you can argue Saudi Arabia but Russia has a lot of natural resources. And so that is the eyes are being opened for the disparity between a monetary representation of reality and a biophysical representation of reality, like energy and materials. Materials is not something that we've talked about, but real quickly. When we create a product, there's three things that are required. There's the technology of how to combine things and how to package it.

There's the energy and there's the materials. The materials could be copper or aluminum or sand or lithium or any of these things, but in the last century, we've grown our material footprint at 2.8% a year, which is about what we've grown our economy at. So pretty much if we double the size of our economy, we're going to double the size of our need for materials and nearly double the size of our energy requirement. I'm going to try and summarize, I think, where we've got to now. So one of the issues that we have is that humans are overusing energy to not get a return in terms of flourishing or happiness. Now that's not to say that the air conditioning has just come on, it's 105 degrees outside, I like the fact that we've got air conditioning. But did I need to have my TV on while I looked at my phone last night? Did I need the Bluetooth

speaker? So the question is that if anything that we want to do with our lives requires energy, that can be represented as money or whatever, but if anything that we do with our lives is requires energy, at the same time as a lot of people in the world feel like there's something wrong, feel like the current cultural and political and local social world is not giving them a sense of nourishment in the way that they want it to yet they are using 100,000 times or a thousand times more than 100 times more 100 times more energy than they actually need in order to survive Maybe you could probably knock that down to 50 because yet the hospital visit that you go once per year the air conditioning that stops you from dying

You know the water that you need to blah blah blah blah the point being that we are way way way over leveraged in terms of How much energy we are using to give ourselves a life that for many people they don't feel fully fulfilled with. The disparity between those two things kind of again is like the supply and demand thing, but this time we're talking about the supply or the demand that we need for energy and the supply in terms of how much happiness that energy actually gives us. There is an imbalance there.

And what you're suggesting is that by hook or by crook, at some point in the future, the energy is going to slow down because our access to the low hanging fruit is going to limit. That there is only one outcome unless we find some other form of energy that is able to supplant that. We're going to have to have our energy uses constrained and given that fact, front loading and idea around, what do we actually want to do with our lives? What is it that makes us happy?

How can we use energy in the most flourishing, efficient way would be a good model to get into our heads right now. It's no wonder you have a very popular podcast. You've summarized it quite nicely. And as far as the hook or the crook, we are not going to voluntarily choose this. Look at what's happening right now with Biden. He's flying to Saudi Arabia, fist bumping the prints because we want Saudi Arabia to boost their oil production because we want lower oil prices so people can continue to consume and have the convenience that they have. At the same time, President Biden is very worried about climate change, so he wants us to use less fossil fuels. But the momentum, the metabolism of our civilization is such that we will use everything

that we can, and we will even create rule changes to access more until we can't. It's the until we can't moment that I'm trying to create a social discourse around. And it's exactly what you said. I think the first step is to remove the energy blinders, to actually have energy appreciation. Oh my god, look at the amount of things in my house. There's 60 items that draw an energy all the time. And I take it for granted because I pay $150 a month for my electricity bill or whatever.

That's peanuts, that's nothing. It's always been available. But we've, from a metabolic standpoint, are living material lives richer than kings and queens of old, just the average among us. And the reason that we're not having this conversation is because it's always been there. And when there's a short-term crisis,

like in the 1970s or the financial crisis in 2009 or COVID, is we paper it over with money, and there's a little bit of an acute feeling of discomfort, but then it goes away. But in the not-too-distant future, we won't be able to increase oil production no matter how much we drill. And it's not like the energy is going away.

It's just the amount of the really cheap stuff is going away to power our current expectations. So you summed it quite well, Chris. How much should energy cost? How much should a barrel of oil cost if you were to absorb in the millions of years of sunlight and all of the externalities? Have you ever run that figure? There are people, well let's first talk about coal. Coal costs around $0.5 a kilowatt hour, and there are people that have looked at the environmental externalities. And if you include all the negative pricings, it should be over $0.20. So 400% higher than it is.

But where do you draw the boundaries on that? Because some of the externalities are things that we don't even care about. Like one of the externalities would be, I don't know enough about your personal life if you're married or have kids, but one day you'll have kids and maybe grandkids. What are your grandkids gonna use for energy? So is that an externality that we should include

in our price? What we've done is we've conflated the cost, the price, and the value. The cost is the externalities and how much it costs us to pull it out of the ground. The price is what our economic system ascribes to it, and the value is what it really can do for us. This stuff is like super magical pixie dust, indistinguishable from magic on human time

scales. And I don't know what price it would be, but an order of magnitude, ten times, a hundred times more than it is today, for what it can accomplish for us. You can put some of this stuff in a 3,000 pound vehicle and drive hundreds of miles for 20 bucks. So imagine you and your weightlifting buddies filling up your car and driving to the hill country in Texas until your car runs out of gas and then pushing that car back to Austin. It would take weeks, if not months, if you could do it at all. And we just take that for granted because we can. So, but here's the thing. One of my projects is

something called Untax where we're working with Imperial College and London and people in the US government, looking at how we might tax non-renewable inputs to our economy, like oil, but not only oil, and remove the tax on humans. So 95% of our taxes right now are on humans and corporations. So if all that was removed, and if you made 50 grand a year, you get to keep 50 grand,

but these things would be a lot more costly, and things that require a lot of resources would be more costly, but that would do two things. One, it would make a lot of resources would be more costly, but that would do two things. One, it would make a lot of things more expensive. So our innovation would be more aligned with a biophysically constrained future that I expect. Number two, we would conserve. People would say, I'm not going to spend my money on that. That doesn't really make me happy. But it's so difficult

to add any tax to our system because people don't want to give up their comfort at all. It's hard to add a tax to our system even though there is one there, even if you were to let go of it. I remember this example from Rory Sutherland where he was talking about how they were trying to encourage people in their 20s who had full-time jobs to increase their pension contributions. And what they were saying is, look, this is how much money you would make over time. This is why you should give us 5% instead of 2% or whatever, and the compliance rate was just nothing.

No one wanted to do it. However, they came up with an idea that when people got a raise, an increased percentage of the increased money that they were about to get paid on their salary would be put across to one side on their pension. So people are prepared to give away portions of money that they haven't yet got or haven't yet gotten used to. And this is just anchoring bias, right? It's all it is anchoring bias. But when what you're saying here is people have gotten used to paying a particular amount for their iPhone or their internet usage or their air conditioning or whatever.

And even if you were to give them all of them when you back from the tax or the corp tax on businesses or the VAT or whatever, they would still because of anchoring bias, the pain of the new cost would be seen as more difficult to deal with than the pleasure taken from the lack of tax. And there's a lot of neuroscience explanations for that. I know you know a lot about cognitive biases. One of them is loss aversion, which is if you start with $10,000 and you get a 1,000 windfall and they measure your brain scan and you get a little bit of dopamine and serotonin and happiness.

And then you go from 11,000 down to 10,000. You feel your negative feeling is much stronger than your positive feeling from going up. And that's what I'm afraid is going to happen to our society, which is why we need to have individuals recognize, you know what, we're really not going to prepare ahead of time for this as a society.

But as a community, as a family, as an individual, I can recognize this and start to value energy services and start to change the things that give me meaning and happiness away from energy intensive activities. And if you have enough of those little rocks in the river around the country, then that acts as a buffer to when we start down this lower energy and material sort of cultural transition. What ways could you be wrong about this? I've asked myself that. I've been doing this for 20 years, Chris. Three or four times, I've started over, like start from scratch and look at who we are as

biological beings, look at the relationship between energy and technology, the relationship between energy and technology, the relationship between energy and money. I think if you squint and look at the future, I don't think I'm wrong about the general direction. The specifics, I could be wrong if we invent some new energy technology that adds to our productivity and allows us to grow for a while longer. But if that happens, I won't be wrong

about the pending six mass extinction or the ocean issues or the climate change because those would get worse. I could be wrong if they do miraculously find a way that turned the carogen, which is basically oil, shale, rock under the green river basin, which there are trillions of barrels of technical recover resources there, but it takes almost as more energy to process

that into oil than the oil that we would get. So it's really not viable. I wrote my PhD thesis on something called Net Energy, which is measuring the cost of things in energy terms instead of in dollar terms. So there's a lot of these things that you look at that on the surface look like solutions because they create energy. But if you look at a wide boundary, like what are all the energy materials that

are required to produce that, then the benefit to society looks less. I could be wrong if people suddenly change their behavior and willingly accept less material throughput and vote to keep carbon in the ground. I don't think I'm going to be wrong about that. I could be wrong if nuclear fusion actually delivers. This has always been the energy of the future. There's a lot of private companies investing in nuclear fusion, which is basically trying to recreate the dynamics of the hydrogen, helium, cycle on the

sun in a factory in a chamber. And that would extend the runway. But the fundamental problem here isn't climate change, and it isn't energy depletion. It's a social animal that is a population now of 8 billion of us that are self-organizing as families, as small businesses, as corporations, as nation-states, to optimize profits. The profits are directly linked to energy. The energy is directly linked 85% to fossil energy,

which is finite, and the whole thing is creating waste. So until we change that system, I don't think I'll be wrong about the general direction of the story I've told you. Are you worried about population collapse? I'm not worried about it, per se. First of all, a lot of people have very strong opinions about population. My first answer when asked about population is we have two population problems. Eight billion humans is not sustainable for the long run.

But we also have a population of things because a lot of those humans have three cars and refrigerator and a bunch of air conditioners and other things. So every year we're adding 80 million more humans to the planet, net after births and deaths, 80 million. And every year we're adding 100 million, 3,000 pound vehicles to the planet, which use energy and materials and lithium and cobalt and asphalt and all that. So my own opinion is the human population will continue to grow the next 20 or 30 years. We'll probably reach 9 billion, maybe 10 billion, but that the average person will be

poorer to considerably poorer materially during that time. I pretty much disagree with Elon Musk that thinks our decline in population is our clear and present danger because he's thinking about that from a labor perspective. But what I'm worried about is the population of inanimate humans added to our system, the 500 billion workers are going to be retiring in the not-too-distant future. So, yes, population is an issue because we need diapers and toys and schools and pension funds and all these things to continue to prop up our current system. But I don't think population is in my top five worries for the next decade. Yeah, for the next decade, I would agree.

I think looking at it more long term, I wonder whether a potential solution to the energy scarcity that we're facing is going to perhaps be an ever more elderly set of countries across the planet. Because if you've got them under replacement rate, you're going to need to make more inanimate objects per human in order to continue with the current level of energy usage. So if we end up, if you know, the Jordan Peterson's right, and he thinks that we peak at 9 billion, and then we slowly decline

down to whatever sustainable rate it is that we end up with where everybody, almost everybody is African because that currently the only place is that above replacement, if that is the case, would that not be a potential solution? Would population collapse oddly not actually be something that would be an energy scarcity solution? Yeah, we're going to have to reduce the amount that we consume as a global culture that could happen with less people or less consumption per person or some combination. I just don't see that directly happening where there's, because the UN and Jordan Peterson and others forecast of population are energy blind. They don't, they look at, so standard economic thinking is that energy is not important. Energy is just one

of 50 different inputs into our system. So it's the cost share of energy. If energy cost $10, it's worth $10 of pencils or $10 of energy drink or $10 of cupcakes. They treat them all the same. But what energy does for us is orders of magnitude more than its cost share. So if we look at all these UN World Bank IEA forecasts into the future, they don't look at the fundamental dynamic between energy and money. And I know that probably sounds extreme to you. I've got a lot of other people I could introduce you to that are saying the same thing. And forget about my PhD or my books or the people in my network. Just think about it from anyone listening to this.

Can in five minutes look up on the internet how much energy is in a barrel of oil and then do the math on how much we can do as a physical person and look at the relationship between the two. They could also figure out, obviously, a sixth grader can figure out that this stuff is being regenerated at one 10 millionth the pace that we're consuming it. So this is a challenge. This is an issue. So I don't pass the next 10 or 20 years. I don't believe in those population forecasts from the UN, etc. If this is the case, if your model of what's going on and what is to come is accurate, why is it that I'm not hearing this

be shouted from the rooftops? Because we're being anesthetized, not purposefully, but there's a homeostasis kind of like one of those gyroscopes you hold in your hand and you try to move it and it stays the same. We are papering over these problems with central bank, large S, with gargantuan, quantitative easing, and too big to fail guarantees and artificial low interest rates,

and things to stabilize the system. And all those things also send capital to the oil drillers, et cetera. So the reason that we aren't hearing this story is the energy decline hasn't really started yet. It's just beginning, the United States. I would argue that the world hit its maximum in oil extraction at the end of 2018. It's possible we might grow a little bit more in the next year or two, but I think 2018 was the top.

We're not going to really notice that until 10 years after that happened. So as long as you can get energy at the pump, as long as you can pay your utility bills and turn on all your stuff, as long as you can still go to the bank and get alone, these things seem like chicken little. and turn on all your stuff, as long as you can still go to the bank and get alone, these things seem like chicken little. But I think people in Europe, today, the head of the IEA, Fatibiral, said that Europe has to immediately cut their energy used by 15% or they're going to have a disastrous winter. So that's some real stuff that's coming down the pike. I mean, they're now turning off the traffic lights in Berlin after 2am in the morning.

They're recommending that people only shower once a week and they're changing their grocery habits and all kinds of little things like that, that I would hope that we would have a plan for and also people already being mentally flexible that they don't need all these things in the future. And I know it's a long shot. I know, you know, we had dinner together,

we had some laughs, I'm a funny guy. If I wasn't aware of all this stuff, I would rather be like a farmer or a stand-up comic or something different than this. I just recognize what's happening and I want to start a conversation about people living differently. I don't enjoy telling this story

and I'm quite aware that it's kind of a buzzkill. People want to know dating advice or how to be more fit or how to have more mental clarity and this stuff is the perfect storm for the human brain to ignore, to deny, it's complex, it's abstract, it's in the future. No one famous is saying these things. There are no immediate solutions. Let me go switch the channel I don't know if that answer your question Dude, I'm so impressed with how lucid you are around this stuff with being able to take what is your right and unbelievably Multi-faceted very very complex situation and put it out so that

Everybody can understand. It's very very impressive Going back to the current conversation culturally and socially, are you frustrated with the fact that so much energy in terms of mental expenditure and awareness and attention and focus is on environment and the green movement at the moment. And yet it seems like the primary focus of this is firstly turning a lot of people off to arguments that may have more salience in one way or another. And also that it's kind of pointing the finger at the wrong thing. Everybody's concerned about whether coral reefs are dying, which is not nothing, right? But it's not the energy

requirements of 8 billion humans being chopped in half within the next few decades. First of all, I don't, chopped in half might be too much, but chopped down by a third is feasible, I would think. Yeah, this gets to identity, it gets to ethics, it gets to personal meaning. So just to be clear, I care most about the natural world. And we are at the early stages of a six-mass extinction. The number of species that we've lost isn't that many, but the populations of animals are down by 70 percent, animal-fishing bird populations are down by 70 percent since I was born. Why? Why? Because of over-encroachment of human development, because of pesticides, because of over-fishing, because of over- because of pesticides, because of overfishing, because of over harvesting,

partially due to climate change, there's a lot of reasons, including insects are down by 40% during that time and declining at over 1% a year. So these are the things at the end of the day at my deathbed that I care the most about is the millions of other species that we share the

planet with and the future for future humans and other species. Climate change is a big part of that. I think climate is over-exaggerated at times, but the truth is it is the granddaddy of all risks during our lifetime. But I think climate is a symptom of these other issues. And so I don't think, look, there was a survey by the New York Times earlier this week that asked, what are the things that you were number one concerned about? One percent of Americans said climate change, three percent of Democrats.

By far, like 23 percent or so was inflation or the economy. So I do care deeply about the environment, but I think the larger issue that more people are not talking about is how we are going to economically transition to a lower energy and material throughput society in the coming decades. Because all of our cultural plans, our institution, our government plans, are expecting more in the future.

And not only are they expecting more, but the emotional clues that we're getting from the stimulus package and from the stipends and the artificial management of the financial system, all give us this complacency that these things can't happen. But I expect they will happen and something like the 1930s is going to happen again to our country. So having said that, I deeply care about the environment, I'm trying to protect the environment by protecting the human social contract while all this happens, if that makes sense.

What would you do or what would you advise people to do? We don't have a God's eye perspective where we can coordinate the entire world. There is a tragedy of the commons every time that somebody tells me that I'm supposed to turn off my lights earlier on a nighttime and switch to expensive, but more lower energy consuming bulbs. I always think about all of the unused hotel rooms in hotels that have got air conditioning blasting all the time and it makes me resentful. What would you say to people, what do you say to people when it comes to preparing themselves? Let's say that this does end up coming down the pike. What can people do right now psychologically to and in terms of life strategy in terms of energy usage that will not only make the future better for everybody else, but also for themselves too. First of all, you have to change how you think about your time on the planet. There's no one size fits all the answer to your question.

to your question. There are immediate things we can do, intermediate and long-term things. There are things that we can do globally, nationally, at a community, at an individual level. What you're asking me now is on the individual level, kind of, in the near term. And I think the first thing is recognition of energy awareness. Oh my God, I just look around your house and your daily life, just one day of your life and just notice how ubiquitous energy is. Then you start to change your definition of your net worth, more aligned with your self-worth. And I think we're going to have a major mental health crisis in this country in the coming decades because people aren't really coping already. And some of your

guests have talked about that. I think social capital is we need to stop measuring our success with how much money we have and start widening the definition to natural capital, social capital, human capital. And about the biggest asset a human being could have is friends and a social network where you can process these things. I have a lot of psychiatrists and psychologists in my network who are friends and they say that when you are struggling with a problem, if you talk to another friends, and they say that when you're struggling with the problem, if you talk to another human being about it, even if you can't find a solution,

you're the process of talking the way that you and I are talking now, reduces cortisol, which is a stress hormone, it boosts your helper T cells, which are good for the immune system, and the irony is, Chris, that we are so rich as a culture, that we can sit in our houses and order stuff from those little brown trucks that deliver it right to our house. We're so rich that we don't need human interaction. And we're going to need human interaction again.

And so one of the core things I would say to people is to start replacing financial, start recognizing that financial capital is a marker for real capital. And as far as turning your lights off versus the hotels that leave everything on, I think you have to develop your own practices that are just like brushing your teeth or flossing that are just kind of hygienic and make sense for you. Just turning the lights off when you leave room. That makes sense. It saves me a little bit of money and it's the right thing to do.

But I tell my students, the time is now not to minimize our impact on the planet, but to maximize it. So if you like hamburgers and you don't want to drive an electric vehicle or get solar panels, do what you have to do and consume what you feel appropriate and consuming, but make a difference at a larger scale on our cultural transition ahead. For instance, I could live in a little shack on my back 40, not using a lot of energy and not traveling at all.

And I would be effectively one eight billionth of the problem I would be solving one eight billionth of the problem a little bit better. Having said that, I have all this complicated equipment that I am able to broadcast with you and I met you in Austin because I took a flight there. I'm trying to be effective at larger scales. If everyone did that and changed the cultural conversation away from conspicuous consumption of stuff as our cultural scorecard towards some more holistic, meaning,

joy, interconnection with the natural world, real human relationships, then I think we're on a better path. The first time that Hodey talked about changing the cultural scorecard socially, I just thought it's going to be very difficult to do that. A person who's lived his entire life in nightclubs, so conspicuous consumption of big bottles of vodka is something that I mean unbelievably familiar with. And I was like, I don't really understand. Until you get older. Until you get older. Yeah, and then you do something else. I wasn't sure. It didn't convince me. But then I went back to a conversation that I had

with a guy called Will Stor, that wrote the status game. So he did a ton of research, anthropology, he went and I think he might have even visited some basically sort of uncontacted or at least did some observation stuff on uncontacted tribes. And he me this story about a this particular tribe where men compete for status on the size of the yams that they can grow. And these men end up growing these absolutely monstrous things, right? And it takes a wheelbarrow and six people to move it. And then they come in and it's the man that has the biggest yam. And although that's funny and kind of ridiculous, and we look at it and go, oh, look how silly that is. Objectively, there's not much that is more silly about that

than the person that has the Ferrari. The only difference is that the Ferrari, like, functionally, has a little bit more lifespan, and there's like things you can do with the Ferrari. Dude, I've spent a lot of time and written a lot on this. I can send you some articles. Humans are status seeking creatures.

Biology, you know, a peacock has that ornate feathers at three fitness hits. One, their more energy materials have to go to create the tail. Number two is it's more conspicuous to predators. And number three of a predator sees you. It's less likely that you'll get away. All three of those negative fitness hits are evolutionarily natural selection sexually selected for by the female PN preferring that. So humans before the agricultural revolution, we are biological creatures too. We're midway between a tournament and a pair bonding species,

which is why men are on average six inches taller than women world over. There are plenty of women that are taller than plenty of men. But physiologically, we have this history. And status was always very important. Consumption was egalitarian for most of our history, but how we competed back in the day, meaning 50,000 years ago, was by kindness or hunting ability or storytelling ability.

Yams, it was Yams. Well, Yams would be one example, but the point is that we do compete in the potlatch Indians in Northwest Washington. They would compete by throwing the most lavish ceremony and party to give away the wealth of the chief to the neighbors. And however much they could give away was the signal of how much status they would have. So the key is you're absolutely right. Right now we're competing for bank accounts and shopping centers and pecuniary wealth and expensive watches and night plumbing or whatever.

But if our society suddenly, the women preferred the best gardeners that grew the largest tomatoes, the Rodal books at Amazon and Barnes and Noble would be sold out in a weekend. So yes, how we get our status, and right now a lot of us get it on Facebook and Instagram likes, and it's even a fake status. It's a super normal stimuli version of the status, but we're not going to stop comparing ourselves to others. Full stop. we're not going to stop comparing ourselves to others.

Full stop. We are not going to do that. We can change how we compare ourselves to others in ways that end up using less energy and materials. And I think there's zillions of ways for pilots and examples of young people. And young people are ready. My students, a lot of them don't even have drivers licenses because they don't want to buy a car, not because they're doing the right thing for the planet, but the economic circumstances are they can't afford it. And so I think this is going to evolve. And what do we, what will be the things that are really cool culturally? I wanna be like them. Well, in your and my lifetime, that's the Ferrari and the fancy house and the corporate jet or whatever,

that's going to change because it's gonna have to change. And I think we can all play a role in what that might look like. I don't know what it looks like. But you could adapt it to something which not only continues to, you're right, you can't get rid of the fact that status of, status seeking is going to be something that we do. But you can align that which you get status from with that which has positive externalities

which may not only be good for you but good for everybody else as well. Dude, I love it. I love it. I, you reckon that this was going to take four hours for you to explain everything and you've managed to do it in an hour and 13 minutes. So I really appreciate you. I really appreciate the work. I think that it's a fascinating area of discussion. I think for me as somebody that's kind of, because I've been into ex-risk for so long, and the climate change conversation in terms of how it's typically presented to me is just so not seductive. I find it annoying, I find it overblown, I feel like everyone should

be talking about nanotechnology or bio weapons or whatever it might be. And yet you've given me a way to think about energy. It is to do with climate and ecology and stuff like that too, a way to think about energy. It is to do with climate and ecology and stuff like that too, where it justifies me putting that right at the front of my mind. I think the works great, man. So congratulations on your thinking and being able to communicate it so lucidly. Well, I've spent 20 years connecting this story. Have you watched my 30-minute animated movie that I just made? Okay, so that tells the story. I'm still learning Chris and one thing that you told me at dinner with your large plate of food that I recall, as you said, everyone eventually converges on the biggest problem. And I do think this

decade we will converge on this problem, which is how do we use less energy materials to get the same or more or different experiences that are more sustainable. I think that will be the conversation of our time. Nate Hagen's Ladies and Gentlemen, if people want to check out the animated video that you spoke about and all of the other stuff that you do, why would you send them? They can go to thegreatsimplification.com or the Nate Higgins YouTube channel and I have a podcast and there's lots of videos, etc. Nate, I appreciate you. Thank you for today.

Thanks Chris. Get away, get away, get away