The limits to growth and declining living standards

For some light relief as to the recent theatrics, let’s take stock. There seem to be several things not going entirely as expected or planned, and they are a little bit more than down to the antics of one man. Even if his name is Vladimir Putin…

I was listening to a couple of punters bemoaning the energy crisis and saying that the Government really should do something about this, to which the obvious question is, how do they go about doing that?

Energy is pretty much about oil and gas at this stage. You may not like that very much, but let’s start with where we are. If you look at a list of oil producers in the world, the top five in 2021 are the US, Russia, Saudi Arabia, and Iraq, in that order. The first three are the big hitters, responsible for about 30 billion barrels a day, and Russia and the US are about neck and neck at ~10bbl/day. Slightly ominously, they say of the top three “since 2014 all three have been producing near their peak rates of 9 to 11 million barrels per day” and Russia and Saudi are the top exporters. We have decided to stand with Ukraine, so that’s the second largest exporter we have declared persona non grata.

What do we use for energy? Fossil fuels, bar the shouting…

the UK energy mix. Don’t be fooled – despite the whacking great three pin pug symbol, I read this as total energy usage, not that used to generate electricity, of which more later

If you look at the UK’s energy mix, it is three-quarters oil and natural gas combined, in about equal portions. So even if we did have a disciplined functioning government that hadn’t had enough of experts, there’s a serious limit to what can be done. I’m not taking an opinion here about the virtue of standing with Ukraine – history does show that it is sometimes necessary to tolerate privation in the interests of a wider goal, but if you want to know why energy costs are rising, well removing a large source of supply for what is basically an imported product will tend to push the price up.

Vlad the bad has played a good hand

I’m not a Putinversteher, IMO he’s is a psychopathic nutcase who is mad a box of frogs, just not randomly mad. He’s sitting on a massive resource that people want – gas and oil, and our Vlad has spent most of his life understanding power. If you are going to have enemies, it pays not to underestimate them. Sure, Putin and/or his military ballsed up some of the initial parts of their invasion, but they seem to be learning from their mistakes. I am not saying this is a good thing in the round, but it is good for Putin and his aims. Putin is right in one respect, in that the much vaunted Western sanctions are a weapon that fires on both ends. In raising the price of energy by restricting sources of supply, Putin doesn’t have to sell as much to raise the same revenue. Well done us. Perhaps there was no other way, but strangulating his cash base only works if the West was like it was before the Millennium, a much larger part of the world economy. The world is multipolar now. Sanctions may have other effects in the longer run, but it’s not a quick win, and energy prices will be higher for a fair while as a direct result. It is interesting that 50 years ago this was predicted. Not in the Nostradamus sense of

Two great men yet brothers not make the north united stand
Its power be seen to grow, and fear possess the eastern lands

which is just as well, because the West is  short of great men, we seem to be scraping the barrel of late. More in the sense of Asimov’s Foundation, with the role of the Second Foundation played by the 50 year old Club of Rome Limits to Growth crew. A couple of recent updates comparing the track we are on shows the future not being terribly rosy even with everybody’s high-tech dreams coming good.

LtG World3 model, with lots of technology (left) and business as usual (right). From Graham Turner on the Cusp of Global Collapse

on the left is the high-tech dreams of Wired magazine – even with that industrial output doesn’t continue rising on the trend of up to now. If we look at extracted resources specifically

LtG World3 model, comparing actual results with model results with lots of technology (CT) (top) and business as usual (bottom). There’s some support in the observed model for the comprehensive tech track relative to BAU, so that’s collapse averted, eh, but growth still ain’t going to carry on as before.

there is some evidence we are more high-tech than BAU. So that’s all right then? Well, Gaya Herrington tells us a little bit about the world your children will be growing up in

CT represents the technologist’s belief in humanity’s ability to innovate out of environmental constraints. It assumes unprecedented technological innovation in a world that otherwise does not change its priorities much. The new technologies do in fact help avoid an outright collapse. However, CT still depicts some declines (Figure 3) because the technology costs become so high that not enough resources are left for agricultural production and health and education services.

There was a nice little radio play about the preparation of the original model, still on BBC sounds

Back to our dictator, who is perhaps a symptom how the LtG model is playing out. Like Asimov’s psychohistory, they did not claim to foresee the individual track the future plays out, just the broad sweep of history rattling in the channel of the available resources. The resource curse means that petro-states tend to be unsavoury, and in the past perhaps we could afford to be precious about our values. These days there is more realism, yes Saudi Arabia did most likely top that Khashoggi bloke but we want their oil so perhaps we need to STFU about that sort of thing.

Putin has willing customers for his oil, which is more transportable than gas due to its value by volume. India seems to taking up a fair amount of Russian oil and China will take some of the gas off Putin’s hands. The leverage of gas is very high because of the same thing – it’s hard to reroute supply for producer and consumer alike. Germany has made itself exceptionally exposed to Russian supplies through Ostpolitik, combined with a historical anti-nuclear stance.

Atomkraft Nein Danke – that’ll cost ya

There’s a cost to Atomkraft, Nein Danke, and the bill has just landed on the doormat with a Cyrillic stamp that says hefty fee to pay, our product our rules. It’s understandable for the country that anticipated invasion through the Fulda Gap for years to try and play nice with the big bad bear, but there’s a cost to singing Kumbaya like that, in the end you get to rely on Russian gas. As the old saying goes “When you have them by the balls, hearts and minds will follow”. It could be a long winter, and Germany is already rationing gas.

Before we think stupid Germans, I suspect we will see energy rationing this winter. Germany has relatively deep pockets and will drive up the price of gas from other sources. You just can’t knock out a leading supplier of energy and carry on as normal. Italy seems quite exposed too, so perhaps we will see another Euro crisis. I don’t know how Greece will fare…

The Ermine as a nipper can remember Britain before central heating became widespread in the 1970s. Insulate Britain is wrong – British houses in the 1960s were far less insulated than now, they were draughty and often heated with coal fires, which needed a decent airflow from outside to get enough draw. People generally heated only one room – the one with the fire in it. If you wanted to heat another room you got to do that with open bar electric fires, or the sort you wouldn’t be allowed to even think of now. A mustelid kit learned something interesting about the power of electricity with a screwdriver and one of those.

People got cold. Ice would appear on the inside of the single glazed window panes. People survived. They used coats, jumpers, blankets, tea and hot water bottles. That is how we will deal with less energy. We aren’t going to ponce about insulating the bejesus out of homes that serviceably sheltered earlier, hardier generations and were never designed for insulation. They worked OK then. They will serve people again.

You will have to be better off to heat your home to the levels we have been accustomed to. Others will use hot water bottles, electric blankets and coats and jumpers, as previous generations did. You don’t have to take my word for it – look at the photo at the top of Martin Lewis’s guide to heat the human, not the home for how many people will be doing it this winter. And many more… This used to be common knowledge before the 1980s. We have become decadent and wasteful with heating, and fewer people will be able to afford to do that.

Heating isn’t the only problem with energy. Energy is an inbuilt cost for a lot of things that keep life as you know it running. Take t’internet. One of the myths is that it was designed to reroute around damage, to survive a nuclear strike. This puff piece in the WaPo repeats this meme. Like many myths, it is founded on a truth, a distributed network of packet-switching nodes has no single point of failure. What it does need is more power – inherent in that redundancy is the need for idling capacity. The deafening noise of the fans in a server farm is the first stage in handling that power off to the HVAC system that will take it away from the system. While an analogue Strowger telephone exchange was a bloody noisy place the noise wasn’t made by cooling fans, and in general the power trend for modern communications is up.

We are a fair way from that being a major issue, but for those of you with grandchildren, I hazard a guess that their children may see a day when it becomes economically unviable to service the power demands of the Internet in its present form, never mind the vastly more power-hungry variants that will be developed in the meantime. It is possible that we will be running data centres off unicorn shit or mini nuclear reactors, but not that likely. If you say you’ll use your mobile data, good luck with that, there’s an hour or so of standby. Lancaster went through the experience of day long power failures in the Storm Desmond flooding. Observe the serious lack of resilience of the communications network, analogue plain old telephone service held up best of all¹.

The resilience myth isn’t even true any more. The early Internet was one where the end-to end principle was king, because geeks love its purity. In a previous life an Ermine observed the development of some of this as it became more widely adopted in the late 1980s and early 1990s. The end to end principle was terrific for the ability of the network to self heal and reroute around the proverbial nuke, although routing protocols would probably not have scaled to today. There two serious flaws, however. The end to end principle meant that the intelligence resided at the edge, so people had to run servers. I ran an SMTP mail server personally rather than for work, for a time in the 1990s. I ran a web server in Telehouse. It was an absolute pain in the arse, and expensive. Moxie Marlinspike was right

People don’t want to run their own servers, and never will

This is how we ended up with Facebook, and Twitter, and the centralised surveillance model of t’internet. Not so much because it’s better, but because it’s easier.

The end-to-end principle died because people didn’t want to become geeks and grub about with the plumbing. So they ceded it to Facetwitter, and their asses were handed to Facebook, Amazon and Google to follow them all over the net. This is not your father’s internet, Maya Millennial.

Technology will be much more targeted if energy goes short. Tech boosters will say we are all going to use wind power or unicorns on treadmills and it’s quite true that there’s more that enough energy streaming in to Earth from the great fusion reactor in the sky that this is theoretically possible. It’s just such a bitch that this energy is so goddamn diffuse, which makes the engineering challenge hard, particularly as we have been ODing on the highly concentrated liquid fuels made with ancient sunlight, heat, pressure and hundreds of thousands of years, spaffed in a couple of hundred years. “since 2014 all three have been producing near their peak rates of 9 to 11 million barrels per day” tells us there isn’t much spare capacity in the system. That means it’s not so easy for one of the Big Three to amp up their production to compensate for the loss of Russian supply, and the price rises on trying to knock out a major supplier are proving the point. We have set everything up for highly concentrated sources of energy, because it’s easier and cheaper that way.

Unless you are of the opinion that somebody is going to whup Vlad’s ass so hard he will back down, expect to pay more for energy for the foreseeable future. Martin Lewis has been on t’telly making cataclysmic warnings of rising prices and demanding the Government Must Do Something. There is nothing the government can do. It can’t whup Putin’s ass, and Putin doesn’t need to carry public opinion at home. So we are left with two choices, pay more or use less, it’s as simple as that.

It isn’t just heating our homes or watching endless cat videos or WFH on Zoom that we have increased our energy usage compared to 50 years ago. We commute longer distances to work – my Dad got the bus to work. I walked to school, whereas in the town I live in, which is small enough that I consider pretty much everywhere walkable, I see a stream of 4x4s dropping the kids off to school, nary a bike to be seen. Although I drove most days it was 15-20 minutes, not hours, I was able to cycle to the Firm. Now lots of you well-paid white-collar people will be able to WFH more and therefore reduce those costs a bit, but the minimum wage droids that wrangle physical stuff for you can’t do that. You’re going to have to pay more for those goods and services or do without. Just like in the 1970s, dearer energy makes other things dearer. Hello inflation, my old friend.

Tiggerish Technology aside – the Great Inflection is coming

That’ll be Graeme Leach, with a book to sell, telling us that the coming decade will see the ‘Roaring Twenties’ due to a technology led surge in productivity growth.

If you buy that, I have a bridge to sell you. Let’s all try and forget what came after the Roaring Twenties last time, it didn’t end well. In theory it might be possible, if everything went right. I don’t know how Graeme is going to power all this fancy tech, but let’s run with the idea that this can be done. Let’s first look at AI. It seems to cover a multitude of sins, self-organising information processing that often gives you the right answer but you can’t say how and it won’t show you. One of the problems with that as an engineering approach is you can’t fix problems, because you can’t isolate them and separate the variables as to why does this break in that way. That’s dandy in many areas but not all. Take Tesla AI, which seems to have a problem discerning stationary fire trucks in the highway right in front of you, particularly is the pesky blighter in front of you is a non-artificial intelligence that swerved to avoid the obstacle rather than pile right into it.

“Traffic-Aware Cruise Control cannot detect all objects and may not brake/decelerate for stationary vehicles, especially in situations when you are driving over 50 mph (80 km/h) and a vehicle you are following moves out of your driving path and a stationary vehicle or object is in front of you instead.”

Wait but what? The only thing that’s funny about this is Wired dedicating a whole article to how this is perfectly reasonable and isn’t a problem, really. I could probably teach a five-year old, or a pigeon to recognise a stationary fire truck in the middle of the highway, even if the meatsack driving the car in front switches lane. Y’know, so that they miss running into the stationary fire truck in the middle of the road, which is the bleedin’ obvious course of action to their non-artificial intelligence. A horse wouldn’t faceplant on that stationary truck either.

Boosters will say yes but statistically by miles driven humans create a lot more accidents so therefore a few people getting mashed in the back of emergency vehicles is overall better. I’m not sure there are enough Tesla AI miles driven to substantiate the assertion, but let’s say it’s true. Logic is on their side, but that’s a tough sell. Hey, buy this Tesla and you can watch DVDs or have a cheeky shag in the back at 70mph, if you accept this disclaimer and the .0001% risk of ending up a thin paste decorating some stationary piece of street furniture. Perhaps we will get used to it. I note we don’t do that with aircraft or trains², despite this being an more controlled environment with professional drivers and an overall supervisory control system (signalling for trains and ATC for flying), which makes these systems much more suited to automatic control.

Let’s say that Leach’s AI electric dreams aren’t tainted by Elon Musk. The social problem is that technology is an amplifier of ability. In business, tech, particularly IT, often amplifies high-level design and innovation. And while there’s something a little bit swivel-eyed in this fellow’s article as a whole, he nails the problem space

The lynchpin of all these new technologies is the rapid rise of machine learning/AI (although whether anything at present is truly AI is debatable), which is accelerating a lot of these trends. It results in the value gap between the most productive workers and the least productive, growing at any ever accelerating rate.

Which is pretty much what we have been seeing with work over the last few decades. Those who use computers to magnify their capabilities do well. As an example, I earned some pin money over the last couple of years doing some CAD. I didn’t have mechanical design experience, but an inquisitive snout and thirty years of general engineering experience amplified by the power of Google’s AI and open-source FreeCAD meant I could design these parts, send them off through the Internet to get them laser-produced and it all fitted together right. That’s the above the API part of the pyramid in Maya Millennial. Those that take their orders from computers are below the API, like Uber drivers, Amazon pickers etc. They end up on zero-hours contracts told what to do by an app, and treated like shit. Somehow I’m not sure that Leach’s utopia will be experienced that widely, since it is the nature of the pyramid that there’s a lot more below the API than above it. However, I offer you his counterfactual here

From a business perspective, over the past two decades, the Baby Boomers were still in charge and therefore ‘didn’t necessarily get it’ with regard to digital business models.

So there we go. I can’t appreciate the Kool-Aid because I am a recalcitrant old git. I still want to know how he is going to power all this shit, and fix the problem of all the angry young men who end up taking orders from computers on minimum wage. Flattening any hierarchical pyramid creates more human misery, because the odds of getting off the bottom get worse.

The cost of living crisis is a misnomer

Because it names the symptom, not the cause. The problem is that there is a slow-motion energy and pollution crisis, and the value of money is declining. We have decided, on balance, that our most favoured source of energy since the industrial revolution pollutes too much. And the trouble is that Western capitalism is built on a foundational myth of limitless growth. There’s another myth in the Tiggerish technologists that say human ingenuity and resourcefulness will always prevail in the end. It is true that you need a lot less energy to make a unit of GDP in the West nowadays than back in the 1970s, but the world population is a lot bigger and there are more people in the global economy than there used to be. So energy use is not declining, and we are using all the oil we can pump. True, the West has decided it can do without Putin’s oil, but India and China seem to be taking it off his hands. So let’s replace this with renewables, eh?

The diffuse nature of renewables and so-called clean tech make them expensive. They involve intricate trade-offs – David McKay’s Without the Hot Air is a decent exposition of the problem space. There are many things you can do now that you won’t be able to do in a sustainable energy future.

If you are looking to renewables to preserve your current lifestyle then you are going to be disappointed. The inestimable Michael O’Leary summed up the problem with his own style :

The best thing you can do with environmentalists is shoot them. These headbangers want to make air travel the preserve of the rich. They are luddites marching us back to the 18th century. If preserving the environment means stopping poor people flying so the rich can fly, then screw it.

Quite. The cost of living crisis is not so much a cost of living crisis as a symptom of the fact that for an increasing number of people in the West living standards are going down. That doesn’t mean everything is getting worse all the time, just that some of the important things are getting worse. You smartphone is better than it was. Your computer is better than it was. Your TV is sharper and more reliable, and doesn’t take up half your room. You can control your heating by talking to it, at the cost of having everything you say in your house sent to Amazon/Google to do with it as it sees fit. Your car is better than it was, both in not rusting and also in being more reliable, though when it does go wrong it’s much dearer to fix it.

But your children can’t afford to buy a house. Going to university is better³ in that it is more widespread and a lot worse in being much more expensive. Your pension is a lot more expensive and less predictable in outcome than your father’s was. Your job is a lot less secure and predictable that your parents’ jobs, and for an increasing proportion of the workforce you are treated like absolute shit. Again, the misery isn’t evenly spread – for some people the opportunities are far richer. At the bottom end parasitic middlemen like agencies steal part of your earnings and part of your rent, despite the Internet being supposed to be the great disintermediator. You can’t find an NHS dentist and your doctor’s surgery sheds load by making appointments really inconvenient to get. Oh and there’s talk of 50 year mortgages so that

The idea has been floated within government as it could allow people to buy a bigger home than they otherwise might be able to afford.

No mention about being able to afford that house. We have a name for people who buy more than they can afford. Debtor and spendthrift are two. It’s not a good look.

Welcome to the Elephant Curve, Maya Millennial standing proxy for what used to be called the middle class in the rich world. The things that are important to people – being able to have stable relationships, having a reasonably stable place to live with some security of tenure, a job that doesn’t treat you like shit, being able to heat your home in winter and feed your kids, these have become harder for many people in the West. It’s in the nature of a PF blog that readers may be further along the rise of the elephant’s trunk, so you may not recognise that. Although it took me longer to pay off my mortgage than it did my Dad, overall I can’t complain. But an increasing number of Britons can.

In a capitalist economy the role of the price mechanism to to shed excess load through demand destruction. The limits to growth do mean that there will be some march back to the past, though 200 years of knowledge will not go away. We won’t be using whale oil or candles but probably LED lamps. It is a moot point whether we will be heating the whole house in winter. You won’t be flying on city breaks every month in 20 years’ time because this. O’Leary again

“The airline business is it is mostly run by a bunch of spineless nincompoops who actually don’t want to stand up to the environmentalists and call them the lying wankers that they are.”

Things that can’t go on generally don’t, in the end. The environmentalists may or may not stop his plans. But the increasing cost of fuel may be less susceptible to his invective.

Oil production has pathologies of its own, because of the long lead times and high cost of exploiting increasingly hard to access resources, there will be a tendency towards a stop-go pricing and investment cycle. The Covid reduction put an impulse into this unstable system, and it will rattle around.

It’s not all Covid

A lot of money was created to tackle Covid, and it’s easy to blame that for inflation. The UK has the additional drip-drip-drip of Brexit-disadvantaged trade, but high inflation affects the US and the EU to a similar degree.

It’s not like there wasn’t a problem before Covid, the (US) tale of Maya Millennial sums up the problem. Building wealth is harder now, on average, and an increasing number of people are getting left behind. The middle-class bastion of wealth-building, housing, is less and less an option for the children of those wealth-builders, because they vote for governments that do their damnedest to never let house prices fall in nominal terms, and if they do they vote them out. In this benighted island the middle-class ate their children’s housing prospects because property is my pension, innit. Hence this pean to the noble and hard put-upon BTL landlord, dispensing services to the unmoneyed multitudes. I find it hard to drum up compassion, if you couldn’t read the tea-leaves ever since Osborne, never mind the increasing proportion of renters who are shat upon by your obnoxious Rachmanism then you shouldn’t be investing, mate.

Let us look at what a generation of this has done. In 2002 London house prices were on a 6.7 multiple of annual earnings, for the UK as a whole this was 4.9. 20 years later the respective multiples are 13.7 and 9. Let’s ignore the specific bonkers nature of the Great Wen. Your average Brit first-time buyer hypothecates almost a third of their working life to buy a house, and worse still, that earnings multiple is before tax. It means someone now has to allocate twice as much of their lifetime earnings to buying a house than their parents. That’s a fall in living standards across a generation.

At the same time there is the slow energy crisis, raising the price of a lot of things. There is the result of the decade of ultra-low interest rates after the GFC which has allowed many morbid forms to appear. And now that the horseman of inflation is there, that economic tightening is meant to happen, though the central banks are timid, more Alan Greenspan than Paul Volcker.

If you overpaid for a house, inflation is your friend, provided you keep a job, and provided you have the leverage to get that to track inflation. Otherwise, not so much.

Eight years ago, a cynical devil working for Terry Smith at Tullet Prebon titled his report “Thinking the unthinkable: might there be no way out for Britain? Project Armageddon – the final report”.  One could argue that His Tim-ness jumped the gun by eight years, because none other that The Office of Budget Responsibility comes along and say pretty much the same thing,

Factoring in a stylised estimate of the asymmetric costs associated with inevitable periodic shocks would push debt up to 100 per cent of GDP by 2047-48 and nearly 320 per cent of GDP in 50 years. These figures are based on a simple reading of post-war UK fiscal history.

Faced with that, there’s only one response, eh?

What do we want? Tax cuts. When do we want them? NOW

Hmm, the leadership hopefuls don’t seem to have gotten the memo. They’re vying with each other to see who can propose the biggest, baddest tax cuts. I guess they have to impress the pale male elderly party members who brought us the multifarious talents of Boris Johnson. I am not sure that’s quite what the OBR says should happen, but what the hell. Experts, schmexperts, we don’t need to think about this, the people of this country have had quite enough of experts. So that’s all right then.

I note from the summary of tax cut promises that the fellow least of the way along the fairy dust axis is Rishi Sunak. That’s his hopes done for, since he is presumably an expert having been chancellor for a couple of years, and we’ve had quite enough of experts. Magical thinking and fairy dust is the order of the day. No wonder the West is in the shit. Previous generations  built its capital with a serious amount of brutality and Niall Ferguson’s killer apps, none of which include magical thinking, fairy dust, Cosmic Ordering or Rhonda Byrne’s The Secret, but apparently that’s the big sell nowadays in Toryland.

While an Ermine would gain from a 1% income tax cut, 43% of adults in the UK don’t pay income tax, as the Daily Fail fulminated, so an income tax cut is definitely looking after the better off. Daily Fail by name, Fail by nature –

The group of adults who pay no income tax includes the unemployed and home-makers with no earnings, as well as retirees, and anyone who earns less than the tax free allowance.

This retiree does pay income tax you innumerate gits, it is NI that retirees don’t pay, in most cases.

Welcome to our new overlords

Welcome to our new overlords – unicorns, fairies and magical thinking. We’ve had quite enough of numerate analysis – feelgood is what matters now.

This ain’t gonna end well. Last time we had loads of people believing in magical thinking and The Secret, Americans were borrowing money on liar loans and flipping McMansions and it all went bang. In the battle between reality and Cosmic Ordering fairydust, reality always wins in the end. Fairydust has its place, but don’t bet the farm on it.

What can you do about it

You can’t forestall the decline, it is a cultural and practical problem. You can reduce your exposure to it, but that generally involves paying money or foregoing consumption. It’s probably not an apocalyptic collapse, but a steady slip-sliding away, along with sudden jolts along the way – the current energy price rises and inflation being one example of that sort of jolt.

In practice, if you want to save energy, focus on anything that reduces electricity consumption, and favour heating with gas. It goes directly against the electrify everything shibboleth, and that is because your individual interest is not the same as the common good. Much of this is because of government action, loading the cost of carrying a lot of passengers onto electricity.

Britain generates a third of its electricity using gas, but the problem is that all the green crap is loaded onto the price of electricity, which has a much higher cost per kWh than gas, because policymakers figure it’s much harder to do without electricity. It may be good for the country, but I don’t want to carry these passengers. If I want to invest in renewables I will do that myself and take the income, or which more later.

UK electricity mix – gas is still the big hitter. Note that mots of the achieved win is acheived by using less, and note the painfully slow progression of renewables – it’s just not that easy, and the easy renewable sites will be picked off first.

So I have attacked electricity consumption. Anything that heats or cools is a target in the first instance. Forget about your mobile phone chargers, and while it may have made sense for you grandparents to charge around the house telling the kids to turn the lights off when they used 60-100W a shot that’s less important when they use less than 10W. The first win was switching from the electric shower back to the gravity-fed shower that is heated with cas from the hot water tank. The second win was taking out an old electric cooker and replacing this with one that is an induction hob, which targets the heat much better by heating the pan. This needs a greater capital cost, though the old cooker was fairly decrepit.

Energy saving in itself isn’t going to win the fight, so the next step is to invest in energy, both BP and Shell for the income and TRIG, ORIT and UKW to start to make some of the green crap work for me rather than be a cost centre. I have invested in this mainly in my GIA to try and use the £2000 dividend allowance, this is additionally to my ISA not instead of. My aim is to lift my tax-free income above the increase in power costs, and using roughly energy-related investments to do that. If power prices come down then the value of these will fall, so I am taking capital risk. More so with oil than the renewables, because oil has a serious feast or famine volatility pattern, as well as being susceptible to PR disasters like Macondo. Renewables tend to have inflation-linked price guarantees, this is part of the problem of the loading of the green crap onto the price of electricity. You can’t stop the government doing dumb things in fiddling with the market, but like Help to Buy, you can try and get on board for the ride.

a non-financial investment in resilience

The final step was replacing an old gas fire with a wood burner, and getting a supply of logs. This is more for resilience than for energy saving.

All these are part of a general philosophy that given the decrease in the value of money as indicated by inflation, it is good to bring forward investments, both in terms of financial investments, given the bear market, and in capital and non-financial investments. That, however, is an approach from a relatively privileged position. For most, I would say the priority is to get out and stay out of debt⁴, and to use less. I can’t see how tax cuts are going to anything at all to help the people that will be hardest hit – by definition if tax cuts make a difference to you, you are one of the better off half of the adult population. Perhaps there’s a case for removing VAT on domestic fuel, but this is a 5% reduction on an almost 100% increase in two years.As David McKay said in without the hot air, Tesco are wrong, Every Big helps.

I pinched the title from the Club of Rome’s 1972 book/report called the Limits to Growth, produced after another energy malaise, the 1970s oil crisis precipitated by American production peaking and starting to decline, which was exacerbated in 1973 with the Arab-Israeli war. The model has stood the test of time for 50 years, and the prognosis isn’t great. It doesn’t have to be dire, but we shall see. I find Gaya Herrington’s sustainable world model Pollyannish at best, but then she is a couple of decades younger than me, perhaps Maya Millennial will save the world.

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1. Provided your wired phone had a handset with a curly lead rather than a DECT wireless gizmo. That won’t be an option from 2025 – the market drives out resilience because it doesn’t want to pay for it. ↩
2. Yes, I know, Docklands Light Railway and the Stansted terminal trains, I have survived both. I don’t think you need AI to have an automatic train system. ↩
3. I am not convinced that half of school leavers going to university is a better thing it it becomes an unaffordable luxury at the same time, but that’s what we seem to want. ↩
4. I am more hard line than Monevator. I include a mortgage in debt, after retirement age, although it is an unfashionable view, and arguably I would have been able to reduce income variation carrying it a little bit longer. ↩

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