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Saturday, March 21, 2015

Book Review: Smaller Faster Denser Lighter Cheaper

The book Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving The Catastrophists Wrong by Robert Bryce is a celebration of technical progress, in particular progress fueled by capitalism. As someone in the Peak Oil camp, I was curious to take a look at some of the more optimistic views of the future. Although I do not disagree with Bryce's assessment of the past, the weaknesses within his analysis did not really cause me to reassess my gloomier long-term outlook.

Book Description

The book was published in May 2014 by "PublicAffairs", and is 400 pages long. The author is a senior fellow at the Manhattan Institute, has been published by a variety of publications, and previously authored the book Power Hungry.

The book discusses technology at an easy-to-understand level, and is aimed at a wide audience. He also includes some background information about various corporations that are involved with the discussed technologies in sidebars.

The book has one quirky feature: wherever any of the words "smaller", "faster", "lighter", "denser" or "cheaper" appear in the text, he Capitalises the Words. As someone who previously proofread documents, I may be particularly sensitive to this, but this breaks the flow of reading, as you stop to look for missing punctuation. The typographical standard is to use italics to emphasise words in text, but I guess unconventional capitalisation is perhaps to be expected from a publisher that bills itself as "PublicAffairs".

I have the ebook version of the text, and so I refer "location numbers" rather than page numbers for my quotes.

A Good Partisan Split

It seems like a safe bet that the enjoyment of this book would be fairly evenly split upon ideological lines. The author is associated with a conservative American think tank, and does not lose any opportunity to either make fun of the environmentalist left, Democratic politicians, or celebrate the wonders of unfettered capitalism. This triumphalism also leads to some sloppy logic. Just because your political opponent says something incorrect does not automatically imply that what you believe is correct.

To a certain extent, the arguments miss their mark. I am unaware of any (credible) critic of modern industrial capitalism arguing that capitalism was doomed because it would be impossible to shrink the size of transistors within integrated circuits, or achieve other forms of engineering efficiency. The criticisms that matter involve resource (and pollution) constraints. Meanwhile, the Jevons Paradox (Wikipedia link) suggests that increasing efficiency may do little to help deal with resource constraints. (It is perhaps not too surprising that Jevons Paradox did not make its way into this book, even though it appears critical for discussing the interaction of engineering efficiency and resource constraints.)

Bryce highlights the long history of incorrect predictions about running out of resources. This is why one should not forecast an immediate collapse based on hitting some natural limit. Correspondingly, I am not one of "Catastrophists" that he refers to in the subtitle of the book. That said, there is a long and storied history of declinists. Since all civilisations that are no longer amongst us declined and fell, we declinists have plenty of historical ammunition to allow us to argue that it is just a question of waiting.

I do not want to focus on these larger issues within this review. I will instead just look at the sections of most interest to myself, which discuss education, energy and agriculture. The interesting part is that I largely agree with what he writes in those areas; it's just that Bryce appears unwilling to look at the uglier implications of resource constraints.

Education: Getting Cheaper?

Online learning - whether it's a lesson on tying a bow tie, or mastering differential equations - is giving more peopl access to high-quality education than ever before. We've gone more monks to MOOCs, We've gone from a system in which only the wealthy could afford tutors and books (dutifully hand-copied by monks) to a system where nearly everyone on the planet can, in theory, have access to some of the world's best teachers through massive open online courses (MOOCs). (Chapter 15, location 2915)
One of the drivers of inflation in the United States has been the out-of-control spiral in tuition. Can online learning reverse that inflation? If so, that would be of great interest to inflation-linked bond investors,

There is no doubt that it is possible to gain knowledge very rapidly using online tools. For example, one can learn far more about macroeconomics by reading blogs and the occasional post-Keynesian textbook than you would get by studying economics at any number of "Ivy League" universities.

Unfortunately, the point of a university degree in the current era is not to acquire knowledge, it is to gain credentials. Since access to the best jobs is based upon getting credentials from the best universities, the bureaucrats running those universities know that they essentially have a license to print money. Until the flow of student loans is cut off to starve their revenue source, they have no reason to cut back spending or tuitions. Online teaching techniques would just be used to increase "profit margins" (more accurately, salaries for the top administrators).

Online courses are more likely to have a greater impact where teaching matters more than positioning, such as for trade schools. My reading of Bryce's text is that his description is consistent with my views expressed here, although I put it in much more cynical fashion.

N2N: Natural Gas To Nuclear

As someone in the Peak Oil camp, I was amused by his only mention of the topic.
Some extreme environmentalists as well as some neo-Malthusians think that finding and using so many resources is not only bad news, but also an indicator of imminent ruination. All of the planet's resources are limited, the fearmongers remind us, and because they are limited, it must be true that we are running out of them - despite few indications that that will happen anytime [sic] soon. Remember the "peak oil" theorists, who got loads of media attention in the 1990s and 2000s? They are on the run. Hate the oil and gas industry if that's what makes you happy, but the history of that sector is one of remarkable ingenuity. Prices and technology are always combining to unlock hydrocarbons once thought unreachable. Put another way, the more oil and gas we find, the more oil and gas we find. (Location 374 in the Introduction.)
To say that this misunderstands Peak Oil is an understatement. Peak oil was not a theory that we are in danger of "running out of" oil, rather that production will peak and then inexorably decline given the declining productivity of the remaining oil sources. Given the declining productivity, we will never "run out": oil will become too uneconomic to exploit, and it will remain in the ground.

Although some unrealistic analyses insisted that oil production would follow a bell curve; economics makes it more likely that the trajectory of production resemble a plateau, with localised peaks corresponding to the economic cycle. And this is what we are seeing, Given the carnage in the oil sector, it looks like we will have another production peak in 2015-2016, near levels that are not a whole lot higher than the previous peak that occurred around 2007. Ramping up drilling activity raised production, but at the cost of making the downward production slope steeper (since the sweet spots are drilled out earlier).

Furthermore, technology advances did not appear to help the small firms caught up in the fracking bubble. Firms are dropping like flies now that oil prices have dropped, and financing cut off. This is despite the fact that oil prices only started to fall about six months ago. If these companies were truly able to produce shale oil and gas efficiently, they should have been able to build up a cash cushion. It may be that all the oil and gas industry has proved is that it can destroy investor capital almost as efficiently as the tech sector.

Even though Bryce dismisses Peak Oil, he actually echoes the associated analysis.
  • He ties wind and solar energy to environmentalists, and points out that they are not dense sources of energy, which makes them of limited use for transport (excluding the important case of sail-powered boats)* and limits their maximum output. That is exactly what Peak Oil theorists have pointed out for years, and it is why they worried about "Peak Oil", and not "Peak Energy".
  • He points out that biofuels are disaster, It was well known that corn ethanol has a Energy Return On Investment that is below 1; that is it takes more energy to produce the ethanol than is released by burning it. 
  • He argues that we need to move towards what he refers to as "N2N": Natural Gas to Nuclear in the long term. Although he justifies this on Global Warming grounds, it is the course of action societies will probably attempt to follow once global oil production heads down after the peak (logic he avoids). 
The chapter on nuclear power is somewhat interesting, in that it is calling for greater government involvement in the economy.
Although the report ["How to Make Nuclear Cheap" by The Breakthrough Institute] doesn't single out one reactor design as the "best", it makes a critical point about the need for more governmental involvement. More government commitment is needed to streamline the licensing process for new nuclear technologies. It's also needed to enable innovation in materials science. "The history of the commercial power industry is one in which commercialization in virtually all contexts has depended upon heavy state involvement," states the report. (Chapter 22, location 4439.)
He seems somewhat uncomfortable with how this contradicts his free market world view, quoting Jerry Taylor who described nuclear power as "solar power for conservatives" (chapter 22, location 4440). Bryce seems to hold out the hope that another wave of government subsidies will allow nuclear power to finally become economically viable. But the reality is that I grew up in the 1970s reading yellowing library books in which the proponents of nuclear power promised that wonders like breeder reactors were waiting just around the corner (never mind fusion, which even Bryce avoids touching).

His argument that nuclear power is "dense" is disingenuous. Uranium fuel is indeed dense, but it takes a lot of processing and refining of non-dense ore to get there (as the Iranians can attest). Furthermore, it is unclear how close we are to "Peak Uranium". The fuel currently being used in reactors now is generally coming from decommissioned nuclear warheads; it is unclear how well matched mining supply is to reactor demand once those ex-military stockpiles are exhausted. Nuclear power is a tiny residual in most long-term global energy forecasts, and there is little evidence to believe that will change.

He appears correct in arguing that natural gas will be increasingly important. However, it is not particularly well suited for transport, given its lower energy density. More importantly, natural gas production will also peak, just at a later date than will oil.

In summary, his description of the current situation is reasonable. However, his hope that technological progress can somehow eliminate declining extraction rates does not have a whole lot of support behind it. We will have to wait and see how much is left of the oil and gas sector before we can determine how economically viable the fracking industry is across the cycle. The "proven reserves" figures he focuses on are largely meaningless; the question is what volume of oil can be profitably extracted at prices than can be afforded by consumers.

Peak Food

His coverage of the constraints on industrial agriculture was non-existent. Instead, his argumentation revolves around the problems with organic farming.

He argues:
McWilliam's point is essential: farmers must be able to produce more food without increasing the size of their farms. In other words, the density of production must increase.  (Chapter 13, location 2729)
More accurately, an increase in yields would be welcome, but there is no reason that the laws of nature must give us what we want. Although there have historically been large increases in yields per acre, those advances were low-hanging fruit. At this point, the marginal value of agricultural advances appears to be decreasing.

And resource constraints are tightening their grip. Fresh water is increasingly coming under supply pressure, with the recent news flow out of California as an example. (Furthermore, the fracking processes which are needed to keep up unconventional hydrocarbon production consume a great deal of water, and are possibly contaminating yet more. This creates a tension between his beliefs that we can always increase hydrocarbon and agricultural output.) Natural gas is needed in the processes to fix nitrogen in fertilizer. Meanwhile, it is unclear how far we are from "Peak Phosphorus", as phosphate mine productivity appears to be declining.

Genetic science cannot overcome the laws of thermodynamics and evolution. A plant needs water, nitrogen, phosphorus as well as other minerals in top soil in order to convert sunlight into plant cells. There are upper limits to the efficiency of that operation. At the same time, industrial farmers are fighting against evolution, as plant and insect pests are selected to develop defenses to the various herbicides and pesticides in use. Any weed that develops immunity to favoured pesticides spreads rapidly through highly fertilized soils, with only the crop plants for competition.

He completely ignores externalities. Global fish stocks are collapsing due to over-fishing, as well as the creation of dead zones due to fertilizers being washed offshore. (The self-immolation of deep sea drilling rigs does not help matters either.) Wild fish stocks are currently a major source of protein, and that protein source will need to be replaced somehow. ("Farmed" fish are often fed scraps from wild fish; it is unclear how viable aquaculture will be once the flow of wild fish drops.)

Pointing out inadequacies in organic agriculture does nothing to deal with these underlying constraints to industrial agriculture.

Concluding Remarks

My impression is that Robert Bryce is so worried about scoring partisan points that he is unwilling to look too carefully at their internal logic. As he highlights, a great deal of problems have been solved by the use of more efficient and "dense" technological solutions. Industrial agriculture is a sterling example. Even previous resource bottlenecks (coal) have been worked around. But in all of these cases, the solutions were the result of relying upon petroleum powered infrastructure. Unfortunately, there is no convincing replacement for petroleum within that infrastructure. (If you disagree, try to attempt modern coal-mining techniques using coal-powered equipment.) So there is no debate that industrial agriculture provides higher yields now; rather the issue is that it will be impossible to continue with that model as inputs become increasingly scarce.

This book is relatively unsatisfying. If you are feeling depressed, perhaps being reminded about previous successes will do the reader some good. But at the same time, extrapolating past successes without looking at the science of the physical constraints to production just looks like wishful thinking.

The book is available at Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong (affiliate link)


* It is possible to convert less dense sources of energy into forms that are more concentrated, such as the "hydrogen economy" proposals. However, thermodynamics implies that energy is lost during this conversion, and so a greater amount of non-dense energy is needed to accomplish the same tasks as the dense source.

(c) Brian Romanchuk 2015


  1. Thanks for that review!

    I've been feeling optimistic about solar power and electric cars, though I'm by no means an expert on these subjects. What are the limits to electric vehicles in replacing petroleum fueled vehicles for transportation?

    1. The current limits that matter revolve around battery life. They presumably can be improved, however, there is a large energy investment in the batteries. The Tesla is expensive for a reason, and I doubt that small production volumes is the only reason.

      The long-term catch is that other energy sources are needed, and there are transmission losses, etc. With gasoline, not a whole lot of energy is lost in distribution. These distribution losses imply that you need a higher amount of energy produced to get the same effective output. Therefore, projections that show just the total energy production are misleading, as the ratio of useful output/energy production will degrade over time.

    2. Thanks for the response.

      Do you see "sail-powered boats" making a comeback for other than recreational use? Natural gas seems to be the way forward for the near term future. Do you see an age of natural gas? If so, how long would that last?

      Thanks again. Really appreciate your insights in this area.

    3. I had read about some ships that had metal "sails" to boost power, not sure if that ever got into production (but it is obviously not common). At some point, I could see clippers making a comeback. They are labour-intensive, but that is OK for a lot of countries. (I imagine that a lot of small commercial boats in the developing countries are sail powered.) Water-based transport is exceedingly efficient, so that would be last area where there would be a retreat from fossil fuels. (The story I heard that it consumes less fuel to haul a container across the Pacific than it takes to haul it 60 miles(?) inland.)

      Natural gas is likely to become much more prominent. I do not have a strong idea when "peak gas" would be reached, but it is definitely not 100's of years from now. ( I am not an expert on energy, but I did follow what was happening with oil as part of my inflation-watching.) I believe that the downward production slope is much worse than is the case for oil, so it will not be a bell-shaped production curve. North America appears to be in better shape than Europe and Japan for natural gas, so there may be regional differences.

    4. Thanks again. Human ingenuity will no doubt be sorely tested, but let's keep trying.

  2. China and India have large Thorium development programmes running now, they seem to think that's worth a shot?

    1. From the outset, I may have developed too much cynicism about nuclear power from reading peak oil literature. It is possible that nuclear technology will be economically viable if fossil fuels get relatively more expensive (which is certainly not happening right now).

      I looked at Thorium reactors some time ago. I believe that they are the modern version of what were called breeder reactors. So the cynical response is that the OECD had development programmes decades ago, but they were largely abandoned.

      Nuclear proponents argue that the new technologies will make these latest generation plants viable. And the advantage of this technology is that thorium is more abundant than uranium.

      I do not have the expertise to say those experts are wrong, but at the same time, if the technology was commercially viable, my expectation would be that the private sector would be pushing for it much harder.

  3. Thanks for answering. I've not read Bryce, but as you point out its rather ironic that he would acknowledge an entrepreneurial state view for energy given his politics. My understanding of Thorium is that it would breed fuel, but in molten salt form, meaning it happens at high temperature and low pressure. Alvin Weinburg proved the breeder bit in the early 70s. It's the salt research that's the loss leader and a barrier to commercial entry. Watch this spot.

    1. Yes, the molten salt reactors have a big advantage for safety. I am unsure what are the negatives are. One of the issues in the 1960s was that they were not useful for weapons, which is hopefully not an issue going forward.

  4. Brian,

    A thoughtful review, which I enjoyed reading. A few comments, if I may:

    1) The peak oil story is likely to get interesting after 2015-16. Economics has kept us on a plateau for now, but many of the large IOCs were struggling even at $100 a barrel, and were reducing CAPEX. Since shales have been the only real source of supply growth in the last decade, and they seem to be waning fast at present, it's hard to see where any further growth can come from, while the old super giant fields get that much more depleted with every year. In the past, growth in oil production has helped fuel a positive feedback loop in which ever more oil was extracted. I find myself worrying about what happens if that feedback loop flips direction, as seems possible.

    2) Nuclear is probably fairly limited in what it can achieve over the next decade or two. I believe that some Indian plants recently had to shut down due to uranium shortages, and it's hard to see many more large mines starting up any time soon.

    23 Your comments about aquaculture are spot on. In the north sea, many farmed cod are fed meal which is made from sand eels. Sand eel stocks have, in recent years, undergone their own collapse. Aquaculture is still far from sustainable, and is very environmentally damaging in its own way.

    4) Depletion of topsoil, as well as water, is a significant issue regarding global food production. A large amount of topsoil is lost annually, and is very difficult to replace. Desertification in areas of China and India is a concern. China and India are also drawing down their fossil aquifers at a terrifying rate. When these run dry, they will do so extremely rapidly (as happened in Saudi Arabia a few years ago) and the results will not be pretty. Indeed, a recent paper in the ecologist looked at production rates of renewable resources (things like grain, chicken, wood) and found that many of their rates of yield increase peaked around a decade or so ago, and are now decelerating.

    1. I'm not an expert, but the issues in food production may be more pressing than energy. It's a getting old, but "The End of Food" (by Paul Roberts) was an excellent introduction to the topic. The title is somewhat misleading in that his tone is not apocalyptic. The problem is that there are a variety of constraints, such as topsoil. A global slowdown may drop energy consumption - which will push "Peak Oil" way away from headlines - but I imagine that people still want to eat.

  5. I think that they're all likely to feed back into one another. Climate change will make food and water issues harder to solve, and they'll certainty require more energy, but peak oil will make that harder too.


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