Nate Hagens speaks at Peters Science Hall on Tuesday, July 27, 2010 on the campus of Kansas Wesleyan University. Hagen formerly worked for the investment bank Lehman Brothers and spoke about debt and energy issues. (photo by Jeff Cooper/ Salina Journal) | Buy Journal Photos


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Hagens: U.S. addicted to energy, debt

By MICHAEL STRAND Salina Journal

In spite of what you might have heard, the planet may never run out of oil.

Fat lot of good that’ll do when it takes a barrel’s worth of energy to get a barrel of oil out of the ground.

And we’ve long since used all of the easy-to-extract oil, says Nate Hagens, speaking Tuesday night at Kansas Wesleyan University on how communities can learn to adapt to declining resources, energy included.

Hagens is a former vice president for both Lehman Bros. and Salomon Bros. investment firms but quit that career several years ago and last week completed his Ph.D. in natural resources studies at the University of Vermont.

Until recently, he was also editor of, a website dealing with global energy supply.

Hagen pulls from those areas, and others, such as evolutionary biology, to explain why America and other developed nations are addicted to both energy and debt, and how those addictions work against our long-term good.

Hagens came to Salina at the invitation of The Resliience Group, made up of local people looking for regional solutions to coping with economic disruption, energy depletion and climate change, and the Topeka-based Great Plains Alliance for Clean Energy.

U.S. oil production peaked in 1970, Hagens said, and discovery of new supplies globally peaked in 1964; we’re now pumping three or four barrels out of the ground for each new barrel discovered.

Hagens allowed that new technology can pull more oil out of fields than in the past, “but at a cost.”

And, he said, that cost goes beyond mere dollars, to the point that no matter how high oil prices go, it’s not worth the cost.

For example, he said, in the 1930s, the energy generated from one barrel of oil could pull another 100 barrels out of the ground. But as remaining oil became more distant, in less-accessible places, that ratio dropped, to 30-to1 in the 1970s, and to 10-to-1 in the 1990s, and “now it’s even lower than that.”

“There’s a lot of oil there, but if it costs more than one barrel to get a barrel, you’re out of gas,” he said.

Within just the past few years, he said, the amount of oil produced globally has peaked, and the decline has started.

Part of what’s shielding us from skyrocketing fuel prices as supplies drop, Hagens said, is that the worldwide economic decline has lead to lower consumption.

“Economic contraction will outpace resource depletion, in the short term,” he said.

In the present

The reason such large-scale problems aren’t being dealt with, Hagens said, is that a large part of people’s behavior is hard-wired, and hard-wired for primitive conditions.

To illustrate, he roared and lunged at the audience; those close to him recoiled.

“Now you all know Wes isn’t going to invite some psycho,” he said, referring to Land Institute founder and president Wes Jackson, who’s part of the Resilience Group. “But you reacted anyway.”

In fact, Hagens said, “animals who thought about the future don’t survive … think of a bear who finds some honeycomb, and says ‘I’ll come back for that next week.’ It won’t be there.”

In addition, numerous studies, on both animals and people, have shown that we gradually get used to a stimulus, Hagens said, whether it’s fats and sugars, winning at gambling, drugs, or even the Internet.

Couple that with the desire to attract mates, by finding ways to stand out — Hagens said Darwin was enraged that the male peacock would put so much energy into a tail that made him so visible to predators and unable to get away — and the result is an instinctive desire for more.

If, that is, you believe that sort of thing; Hagens showed results of a poll of industrialized countries, asking residents if they believed evolution — the poll showed 39 percent of Americans did, placing us one slot above Turkey, a largely Islamic country.

Citing both various studies — and his personal experience with billionaire investment clients — Hagens said people typically think they’d be happy with some level of income, but when they reach it, want that much more, and that the gap between what they have and what they want widens.

Cheap money

That increasing consumption was for a few decades fueled by a combination of cheap energy and cheap credit, Hagens said, to the point that the economy had to constantly grow in order to pay the debts from the past — resulting in government policies such as “Cash for Clunkers” in which the government borrowed money to give to people to buy cars so the car factories could stay open.

Cheap credit also made the financial industry a much larger part of the economy than ever; today, he said, agriculture and forestry are about 1 percent of the economy, mining another 1 percent, while financial services make up 20 percent.

Such an inversion became possible when the whole idea of money changed.

It used to be, Hagens said, a “marker” for an actual resource, such as gold, and “dollars were supposed to represent something in the real economy.”

What’s next

To cope, Hagens said people need to begin to think more locally and regionally, as global commerce needs cheap energy to function.

But more important than that for for being happy in the future, he said, is finding ways to be happy with less. One of his final slides depicted the correlation of wealth to happiness, and showed that after a certain point, acquiring more wealth doesn’t really make one happier.

“The correlation isn’t really there,” he said. “We just think it is.”

“Take this knowledge to improve your own life,” he said. “Trick your brain, not to help the planet, but to help your own life. “

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