Rising Energy Costs Lead to Recession; Eventually Collapse

How does the world reach limits? This is a question that few dare to examine. My analysis suggests that these limits will come in a very different way than most have expected–through financial stress that ultimately relates to rising unit energy costs, plus the need to use increasing amounts of energy for additional purposes:

  • To extract oil and other minerals from locations where extraction is very difficult, such as in shale formations, or very deep under the sea;
  • To mitigate water shortages and pollution issues, using processes such as desalination and long distance transport of food; and
  • To attempt to reduce future fossil fuel use, by building devices such as solar panels and electric cars that increase fossil fuel energy use now in the hope of reducing energy use later.

We have long known that the world is likely to eventually reach limits. In 1972, the book The Limits to Growth by Donella Meadows and others modeled the likely impact of growing population, limited resources, and rising pollution in a finite world. They considered a number of scenarios under a range of different assumptions. These models strongly suggested the world economy would begin to hit limits in the first half of the 21st century and would eventually collapse.

The indications of the 1972 analysis were considered nonsense by most. Clearly, the world would work its way around limits of the type suggested. The world would find additional resources in short supply. It would become more efficient at using resources and would tackle the problem of rising pollution. The free market would handle any problems that might arise.

The Limits to Growth analysis modeled the world economy in terms of flows; it did not try to model the financial system. In recent years, I have been looking at the situation and have discovered that as we hit limits in a finite world, the financial system is the most vulnerable part of the system because it ties everything else together. Debt in particular is vulnerable because the time-shifting aspect of debt “works” much better in a rapidly growing economy than in an economy that is barely growing or shrinking.

The problem that now looks like it has the potential to push the world into financial collapse is something no one would have thought of—high oil prices that take a slice out of the economy, without anything to show in return. Consumers find that their own salaries do not rise as oil prices rise. They find that they need to cut back on discretionary spending if they are to have adequate funds to pay for necessities produced using oil. Food is one such necessity; oil is used to run farm equipment, make herbicides and pesticides, and transport finished food products. The result of a cutback in discretionary spending is recession or near recession, and less job availability. Governments find themselves in  financial distress from trying to mitigate the recession-like impacts without adequate tax revenue.

One of our big problems now is a lack of cheap substitutes for oil. Highly touted renewable energy sources such as wind and solar PV are not cheap. They also do not substitute directly for oil, and they increase near-term fossil fuel consumption. Ethanol can act as an “oil extender,” but it is not cheap. Battery powered cars are also not cheap.

The issue of rising oil prices is really a two-sided issue. The least expensive sources of oil tend to be extracted first. Thus, the cost of producing oil tends to rise over time. As a result, oil producers tend to require ever-rising oil prices to cover their costs. It is the interaction of these two forces that leads to the likelihood of financial collapse in the near term:

  1. Need for ever-rising oil prices by oil producers.
  2. The adverse impact of high-energy prices on consumers.

If a cheap substitute for oil had already come along in adequate quantity, there would be no problem. The issue is that no suitable substitute has been found, and financial problems are here already. In fact, collapse may very well come from oil prices not rising high enough to satisfy the needs of those extracting the oil, because of worldwide recession.

The Role of Inexpensive Energy

The fact that few stop to realize is that energy of the right type is absolutely essential for making goods and services of all kinds.  Even if the services are simply typing numbers into a computer, we need energy of precisely the right kind for several different purposes:

  1. To make the computer and transport it to the current location.
  2. To build the building where the worker works.
  3. To light the building where the worker works.
  4. To heat or cool the building where the worker works.
  5. To transport the worker to the location where he works.
  6. To produce the foods that the worker eats.
  7. To produce the clothing that the worker wears.

Furthermore, the energy used needs to be inexpensive, for many reasons—so that the worker’s salary goes farther; so that the goods or services created are competitive in a world market; and so that governments can gain adequate tax revenue from taxing energy products. We don’t think of fossil fuel energy products as being a significant source of tax revenue, but they very often are, especially for exporters (Rodgers map of oil “government take” percentages).

Some of the energy listed above is paid for by the employer; some is paid for by the employee. This difference is irrelevant, since all are equally essential. Some energy is omitted from the above list, but is still very important. Energy to build roads, electric transmission lines, schools, and health care centers is essential if the current system is to be maintained. If energy prices rise, taxes and fees to pay for basic services such as these will likely need to rise.

How “Growth” Began

For most primates, such as chimpanzees and gorillas, the number of the species fluctuates up and down within a range. Total population isn’t very high. If human population followed that of other large primates, there wouldn’t be more than a few million humans worldwide. They would likely live in one geographical area.

How did humans venture out of this mold? In my view, a likely way that humans were able to improve their dominance over other animals and plants was through the controlled use of fire, a skill they learned over one million years ago  (Luke 2012).  Controlled use of fire could be used for many purposes, including cooking food, providing heat in cool weather, and scaring away wild animals.

The earliest use of fire was in some sense very inexpensive. Dry sticks and leaves were close at hand. If humans used a technique such as twirling one stick against another with the right technique and the right kind of wood, such a fire could be made in less than a minute (Hough 1890). Once humans had discovered how to make fire, they could use it to leverage their meager muscular strength.

The benefits of the controlled use of fire are perhaps not as obvious to us as they would have been to the early users. When it became possible to cook food, a much wider variety of potential foodstuffs could be eaten. The nutrition from food was also better. There is even some evidence that cooking food allowed the human body to evolve in the direction of smaller chewing and digestive apparatus and a bigger brain (Wrangham 2009). A bigger brain would allow humans to outsmart their prey. (Dilworth 2010)

Cooking food allowed humans to spend much less time chewing food than previously—only one-tenth as much time according to one study (4.7% of daily activity vs. 48% of daily activity) (Organ et al. 2011). The reduction in chewing time left more time other activities, such as making tools and clothing.

Humans gradually increased their control over many additional energy sources. Training dogs to help in hunting came very early. Humans learned to make sailboats using wind energy. They learned to domesticate plants and animals, so that they could provide more food energy in the location where it was needed. Domesticated animals could also be used to pull loads.

Humans learned to use wind mills and water mills made from wood, and eventually learned to use coal, petroleum (also called oil), natural gas, and uranium. The availability of fossil fuels vastly increased our ability to make substances that require heating, including metals, glass, and concrete. Prior to this time, wood had been used as an energy source, leading to widespread deforestation.

With the availability of metals, glass, and concrete in quantity, it became possible to develop modern hydroelectric power plants and transmission lines to transmit this electricity. It also became possible to build railroads, steam-powered ships, better plows, and many other useful devices.

Population rose dramatically after fossil fuels were added, enabling better food production and transportation. This started about 1800.

Figure 1. World population based on data from "Atlas of World History," McEvedy and Jones, Penguin Reference Books, 1978  and Wikipedia-World Population.

Figure 1. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and UN Population Estimates. 

All of these activities led to a very long history of what we today might call economic growth. Prior to the availability of fossil fuels, the majority of this growth was in population, rather than a major change in living standards. (The population was still very low compared to today.) In later years, increased energy use was still associated with increased population, but it was also associated with an increase in creature comforts—bigger homes, better transportation, heating and cooling of homes, and greater availability of services like education, medicine, and financial services.

How Cheap Energy and Technology Combine to Lead to Economic Growth

Without external energy, all we have is the energy from our own bodies. We can perhaps leverage this energy a bit by picking up a stick and using it to hit something, or by picking up a rock and throwing it. In total, this leveraging of our own energy doesn’t get us very far—many animals do the same thing. Such tools provide some leverage, but they are not quite enough.

The next step up in leverage comes if we can find some sort of external energy to use to supplement our own energy when making goods and services.  One example might be heat from a fire built with sticks used for baking bread; another example might be energy from an animal pulling a cart. This additional energy can’t take too much of (1) our human energy, (2) resources from the ground, or (3) financial capital, or we will have little to invest what we really want—technology that gives us the many goods we use, and services such as education, health care, and recreation.

The use of inexpensive energy led to a positive feedback loop: the value of the goods and service produced was sufficient to produce a profit when all costs were considered, thanks to the inexpensive cost of the energy used. This profit allowed additional investment, and contributed to further energy development and further growth. This profit also often led to rising salaries. The additional cheap energy use combined with greater technology produced the impression that humans were becoming more “productive.”

For a very long time, we were able to ramp up the amount of energy we used, worldwide. There were many civilizations that collapsed along the way, but in total, for all civilizations in the world combined, energy consumption, population, and goods and services produced tended to rise over time.

In the 1970s, we had our first experience with oil limits. US oil production started dropping in 1971. The drop in oil production set us up as easy prey for an oil embargo in 1973-1974, and oil prices spiked. We got around this problem, and more high price problems in the late 1970s by

  1. Starting work on new inexpensive oil production in the North Sea, Alaska, and Mexico.
  2. Adopting more fuel-efficient cars, already available in Japan.
  3. Switching from oil to nuclear or coal for electricity production.
  4. Cutting back on oil intensive activities, such as building new roads and doing heavy manufacturing in the United States.

The economy eventually more or less recovered, but men’s wages stagnated, and women found a need to join the workforce to maintain the standards of living of their families.  Oil prices dropped back, but not quite a far as to prior level. The lack of energy intensive industries (powered by cheap oil) likely contributed to the stagnation of wages for men.

Recently, since about 2004, we have again been encountering high oil prices. Unfortunately, the easy options to fix them are mostly gone. We have run out of cheap energy options—tight oil from shale formations isn’t cheap. Wages again are stagnating, even worse than before. The positive feedback loop based on low energy prices that we had been experiencing when oil prices were low isn’t working nearly as well, and economic growth rates are falling.

The technical name for the problem we are running into with oil is diminishing marginal returns.  This represents a situation where more and more inputs are used in extraction, but these additional inputs add very little more in the way of the desired output, which is oil. Oil companies find that an investment of a given amount, say $1,000 dollars, yields a much smaller amount of oil than it used to in the past—often less than a fourth as much. There are often more up-front expenses in drilling the wells, and less certainty about the length of time that oil can be extracted from a new well.

Oil that requires high up-front investment needs a high price to justify its extraction. When consumers pay the high oil price, the amount they have for discretionary goods drops.  The feedback loop starts working the wrong direction—in the direction of more layoffs, and lower wages for those working. Companies, including oil companies, have a harder time making a profit. They find outsourcing labor costs to lower-cost parts of the world more attractive.

Can this Growth Continue Indefinitely?

Even apart from the oil price problem, there are other reasons to think that growth cannot continue indefinitely in a finite world.  For one thing, we are already running short of fresh water in many parts of the world, including China, India and the Middle East.  Topsoil is eroding, and is being depleted of minerals. In addition, if population continues to rise, we will need a way to feed all of these people—either more arable land, or a way of producing more food per acre.

Pollution is another issue. One type is acidification of oceans; another leads to dead zones in oceans. Mercury pollution is a widespread problem. Fresh water that is available is often very polluted. Excess carbon dioxide in the atmosphere leads to concerns about climate change.

There is also an issue with humans crowding out other species. In the past, there have been five widespread die-offs of species, called “Mass Extinctions.” Humans seem now to be causing a Sixth Mass Extinction. Paleontologist Niles Eldredge  describes the Sixth Mass Extinction as follows:

  • Phase One began when first humans began to disperse to different parts of the world about 100,000 years ago. [We were still hunter-gatherers at that point, but we killed off large species for food as we went.]
  • Phase Two began about 10,000 years ago, when humans turned to agriculture.

According to Eldredge, once we turned to agriculture, we stopped living within local ecosystems. We converted land to produce only one or two crops, and classified all unwanted species as “weeds”.  Now with fossil fuels, we are bringing our attack on other species to a new higher level. For example, there is greater clearing of land for agriculture, overfishing, and too much forest use by humans (Eldredge 2005).

In many ways, the pattern of human population growth and growth of use of resources by humans are like a cancer. Growth has to stop for one reason or other—smothering other species, depletion of resources, or pollution.

Many Competing Wrong Diagnoses of our Current Problem

The problem we are running into now is not an easy one to figure out because the problem crosses many disciplines. Is it a financial problem? Or a climate change problem? Or an oil depletion problem? It is hard to find individuals with knowledge across a range of fields.

There is also a strong bias against really understanding the problem, if the answer appears to be in the “very bad to truly awful” range. Politicians want a problem that is easily solvable. So do sustainability folks, and peak oil folks, and people writing academic papers. Those selling newspapers want answers that will please their advertisers. Academic book publishers want books that won’t scare potential buyers.

Another issue is that nature works on a flow basis. All we have in a given year in terms of resources is what we pull out in that year. If we use more resources for one thing–extracting oil, or making solar panels, it leaves less for other purposes. Consumers also work mostly from the income from their current paychecks. Even if we come up with what looks like wonderful solutions, in terms of an investment now for payback later, nature and consumers aren’t very co-operative in producing them. Consumers need ever-more debt, to make the solutions sort of work. If one necessary resource–cheap oil–is in short supply, nature dictates that other resource uses shrink, to work within available balances. So there is more pressure toward collapse.

Virtually no one understands our complex problem. As a result, we end up with all kinds of stories about how we can fix our problem, none of which make sense:

“Humans don’t need fossil fuels; we can just walk away.” – But how do we feed 7 billion people? How long would our forests last before they are used for fuel?

“More wind and solar PV” – But these use fossil fuels now, and don’t fix oil prices.

“Climate change is our only problem.”—Climate change needs to be considered in conjunction with other limits, many of which are hitting very soon. Maybe there is good news about climate, but it likely will be more than offset by bad news from limits not considered in the model.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.
This entry was posted in Financial Implications and tagged , , , , , . Bookmark the permalink.

606 Responses to Rising Energy Costs Lead to Recession; Eventually Collapse

  1. Scott says:

    Hello, It does look like a steady decline over time to me unless something happens. I know Gail see a financial crisis and so do I so that could bring in trouble early, but for now we are limping along it seems

    Keeping an eye on interest rates and inflation for now and of course resource availability.


  2. mf says:

    the world population increased explosively because of sudden drop in the mortality of the young, not increased use of energy. As cultures adjusts, population growth abates. Stop this catastrophism

    • Jan Steinman says:

      “the world population increased explosively because of sudden drop in the mortality of the young, not increased use of energy.”

      And what caused the mortality drop? Could it be more doctors, more hospitals? Are not those things a direct result of increased access to energy?

      “As cultures adjusts, population growth abates.”

      Paul Erlich came up with “I = P * A * T” where “I” is ecological Impact, “P” is Population, “A” is Affluence, and “T” is Technology. But I think the “A” factor should actually be “Access to energy.”

      You keep hearing how educating women reduced birth rates, and as soon as all the women in the world are educated, population will stabilize, somewhere around mid-century at 9 billion, they tell me.

      Hogwash! What reduces birthrates as women get educated is that they have more access to more energy. They no longer have to breed a labour force or old-age-care force, since they are now able to access energy in order to pay others to do these things. Or at a more basic level, when the village gets a well with an electric pump, they no longer need to breed a slave to walk five miles for water.

      The “adjustment” that culture makes to abate population growth is to use more energy.

      So what happens if more energy is not available? They go back to breeding a slave labour force. They go back to breeding their old-age care.

      But don’t take my word for it. The show is about to begin.

  3. SomeoneInAsia says:

    Dear Gail,

    Greetings. (And greetings to everyone here as well by the way.) I have been reading with great interest some of the articles in your blog. Certainly I find them most convincing in stating the case for a finite world. (Actually the fact that our world is finite should seem common sense, but I guess what we call common sense actually isn’t that common after all…)

    I have a question if you don’t mind. (Maybe you’ve already addressed this question elsewhere but I missed it.) The question is: do you know of any other energy sources in existence — besides oil, obviously — for tapping into which (1) we can construct (and maintain) the required hardware using JUST THE ENERGY ITSELF? I’m talking about using solar power itself to make solar panels, or nuclear energy itself to make nuclear reactors — to indulge a fancy for now. Or is it the case that (2) all known sources of energy ultimately still need fossil fuels to build and maintain the hardware required for tapping into them? I’m very interested in this because if (1) is the case, then perhaps our energy predicament might not be that bleak after all; if the oil really gets depleted, we’ll still be able to build and maintain some energy sources indefinitely into the future, albeit on a small scale.


    • Hubbert- of the Hubbert curve for peak oil envisioned the nuclear power revolution to take off in the 70s when the US hit peak oil- and allowing 30 years of transition to an electric economy. Technically it would be possible to switch to an electric economy- build high speed rail like France to replace long distance road freight and travel and short haul flight. If the EV of the 90s had been allowed to developed rather than crushed then the business would be maturing now. Construction, agricultural and mining vehicles would still have access to fossil fuel oil- but at reduced consumption. Iron smelters would still have access to high grade coal [which is not used for power generation]. Hydrogen can be made with electricity from water and recombined with CO2 to make natural gas. Roads can be technically made from sand and bacteria- and with reduced freight, local traffic- they would last longer.
      The world’s largest vehicle – a mining machine is electric and hooked straight into the power station with possibly the world’s largest extension lead http://en.wikipedia.org/wiki/Bagger_288

      So technically the electric economy, with hydrogen and reduced oil inputs and coal and gas being used for fertilizer manufacture as raw materials and furnace coal for smelting could be achieved.

      It would take 25 or more years for all the cars and trucks to be naturally replaced from oil to electric [or freight]. the military would need to stick with oil although they are looking into replacements. Our lives would also be modified with the loss of the private car- although cities would be cleaner.

      And it would cost a fortune. Even $110 barrel of oil is way cheaper than solar or wind. EV batteries are $10,000 + before you hook them up to a car- Nuclear- that was supposedly to cheap to meter in the 1950s is one of the few technologies that gets more expensive [and long term waste and decommisioning has still to be sorted].

      Politically no one seems to want to admit that energy prices are rising and growth of the past is gone forever- so it is unlikely anyone would vote for a party that pledged a doubling in energy costs.

      Economically we are now running out spare resources- if the transition had occurred 25 years ago then there would have been 20years of oil peaking to have paid for it. instead we blew the wealth on tax cuts, flat screen tvs, mobile networks, super fighter air craft and broadband [and several $trillions on a couple of wars]

      So technically.

      • Chris Johnson says:


        Good essay, Jules. The Economist had a good spread on EVs last April that argued strongly in favor of EV’s, noting that the cost are dropping steadily, and should be approaching parity of ICE in a few years. However, with the Chinese grabbing a corner on Lithium and other REEs, we may be in for the first ‘resource war’ of the century.
        One factor that requires addressal by a trained economist is determining the fractional impact that incremental growth of EVs will have on fuel prices. For example, in a few years, if/when EV’s compose 5% of new vehicle sales, what would be the impact? How about 10%? If EV owners are ‘filling up’ at a cost of fifty cents per gallon (equivalent), then that would appear to put some strong pressure on the oil companies, no?

        • The optimist in me would love to see the transition to that clean sci-fi future I was promised as a kid- At the age of eight I saw the moon landings on tv and 2001 in the cinema. However I think Gail’s posts demonstrate the limitations on an economy built on $30 barrel oil- there is huge resistance to transition and the ludicrous denial of peak oil by politicians and business who point to every new find as proof peak is not going to happen. The Brazilian deepwater field is technically difficult with 12 billion barrels- 24 weeks of world oil consumption!

          The lack of oil, the lack of wealth which has been replaced by recession, debt, QE and low interest rates does not make the economic future particularly stable. I think [and I am really just guessing] is the problem is a political problem or rather the politics of growth born from the economy of abundance is ill equipped to deal with the challenges.

          If the EV, highspeed electric train and non fossil fuel energy were cheaper I would be more optimistic. Perhaps the decline in oil and its increased costs will be gradual and alternatives may reduce in cost to take over. We should have done 20 years ago but when has forethought even been a human driver?

  4. cal48koho says:

    Gail,your statement:”The economy eventually more or less recovered, but men’s wages stagnated, and women found a need to join the workforce to maintain the standards of living of their families. ”
    I question the term recovered. In terms of GDP, it did recover after a few decades but what really happened was an economy that underwent morphologic change from a productive making things economy into a financialized ,trading paper, military industrial complex, services economy. We stopped adding wealth increasing GDP by using resources and instead added wealth by virtue of leveraged bets using debt. My contention is that the economy didn’t really recover except in a GDP sense. Growth really ended in about the 1970’s. As you state, wages stopped growing for all but a few elites. I find it curious that cheap energy persisted for 30 years after the 70’s allowing machines to engage in one last infrastructure buildout orgasm but even this buildout did not raise average incomes or living standards. You know we are assembling at our muster stations on the deck of the Titanic when we hear our clueless politicos promising to bring back jobs and restoring growth! Thank you for another well written piece.

    • Your description of the economy never really recovering is right. I have talked about the economy hitting the “stagflation” stage in the early 1970s. A large part of the “growth” is indeed debt-related. After stagflation, the next step down in collapse, I am afraid.

    • Chris Johnson says:

      @cal48koho & Gail:
      Obviously I agree wholeheartedly with your analyses. I would like to offer a few minor corrections, however. First, growth continued in the 80s, 90s and 2000 first decade in the form of electronic technology. Computers, the web and fiber optics was more than mere banking slight of hand. Those technologies added up to improved productivity — or at least they are hyped thereby.
      Regarding energy costs, the real driver was OPEC, and their rebellion in 1973 was due to Milhouse shedding the gold standard, which depreciated their oil earnings. All they wanted was to get as much for their black gold as they were getting yesterday. It’s still the driving force. The only problem is accelerated dollar depreciation. We shout, but if you were Saudi, how would you feel?
      Elizabeth Warren gives a good analysis of the ‘housing boom’: for all the money spent, comparing 1960 house with 2004 house got you one extra bedroom or one extra bathroom, not both. Hmmm, how did those prices climb so high….The problem was that the market and government favored splurging on the burbs. Ds and Rs both chased it for the votes and patronage. Detroit and Big Oil loved it for their obvious reasons.
      The ‘big infrastructure splurge’ is just a politician’s sales pitch. Granted we do need them, but more roads just means more congestion now and later…
      Here’s a link to a Bloomberg story about how the Chinese are building suburbs 40 miles away from the city. The trouble is that there are no stores in the suburb, which limited to housing / bedrooms only. So they have to drive and drive and drive everywhere several times a day… Ain’t life wonderful though…
      Cheers, Chris

  5. poorboy says:

    I must say this is a good discussion. Lot’s of viewpoints on the issues and facts, compared with other venues which too often deal in personalities and venom.

    I’d like to illustrate the importance of total life cycle costs with an example in my locale of western Washington state. As a retired engineer, I now enjoy part-time farming. In my area the dairies have been disappearing and moving to eastern Washington, due to a combination of economics and stricter environmental regulations here. This tends to make locally-produced milk more expensive.

    There has been a push by well-meaning local government and environmental activists to reverse this trend and promote “locally grown” food, in large part because “as everyone knows” it reduces transportation fuel resources. What this shallow perspective doesn’t realize is that it costs much more fuel to move (heavy) hay over the Cascades than to move (light) milk! So the higher costs of locally produced milk actually represent not only total life-cycle realities, but also corresponding environmental disadvantages.

    So, another confirmation that total (life cycle) product costs are an importand indicator of efficient use of resources. An enlightening book I’d recommend is “Eco Fads” (subtitle “How the rise of trendy environmentalism is harming the environment”) by Todd Myers. He gives many intriguing examples of similar situations and how they are affected by economics, politics and media coverage.

    • That is a good point. Very often, what is cheapest is in some sense what is “best,” because the cheap cost indicates that the total direct and indirect energy inputs are low. What is claimed to be greenest just has costs that are hidden farther away in the chain, so they are harder to measure.

      The whole trendy environmentalism business seems to be based on the assumption that using a little less is helpful. It doesn’t work for a variety of reasons. One is that people tend to spend their salaries. If they conserve in one area, they are more likely to spend in other areas, and all of the areas use energy.

      The other issue is what kind of problem are we running into. The standard explanation has been that there would be high oil prices, and we would have to use less. This story is right for a while, but in the long run, it isn’t, even if the peak oil community has been backing this story.

      The real story is that oil companies find that they cannot make profits selling energy products because the cheap to extract oil has already been extracted, and what is left is too expensive to get out at prices can afford to pay. Low interest rates and lots of borrowing can hide this for a while, but eventually problems surface (higher interest rates, or defaults, or government shutdown), so they reduce their drilling. We get back to recession and collapse. We end up with many more people without jobs. They can’t buy goods, even if products made with energy are available. We get to many debt defaults, and a failing financial system. The government finds it can’t collect enough taxes from its people. The issue we need really would like to avoid is collapse, but reducing energy use is not helpful for solving this problem. We really need more cheap energy use, creating more jobs, to get away from collapse. But unless we are willing to go with cheap coal (or something pretty much equivalent), it is difficult to solve our problem.

      • Jan Steinman says:

        “The whole trendy environmentalism business seems to be based on the assumption that using a little less is helpful.”

        “At best, it [conservation] means we will run out of energy a little more slowly,” said that paragon of environmental values, Ronald Reagan!

        “… people tend to spend their salaries. If they conserve in one area, they are more likely to spend in other areas, and all of the areas use energy.”


        “Trendy environmentalists” are fond of citing “voluntary simplicity,” which is a watered-down version of what Henry David Thoreau advocated: voluntary poverty.

        While perhaps not the only way, the surest way of reducing your impact is to make way less money. That’s a bitter pill for most to swallow. But I also think it is the best way of developing coping strategies; if you can learn to live cheaply now, when you don’t need to, you’ll have those skills when you need them.

        I started reducing my income in 1993. I’m now living quite comfortably on under 2% of my peak income. It has required radically changing the structure of my life. (Living in a country with free health care helps, too, but who knows how long that will last.)

        ” we… really would like to avoid… collapse, but reducing energy use is not helpful for solving this problem.”

        Personally, I think the problem is the solution! Don’t avoid collapse; embrace it!

        There are certain things people will always need: food, clothing, shelter, alcohol. Figure out how to supply those things to people, and you’ll have a job as long as there are people.

        But if you’re a middle-manager, advertising agency executive, or (forgive me, Gail!) an actuary, those kinds of work may be slipping away quickly, with things like engineering, law, most government, and probably even most medicine probably close behind.

        • Unless you plan on living in a box under a bridge I cant see how the system even allows you to live on such little an income here in Norway at least. Surely there is a big country with lots of forest and places where one could settle down, but the problem is as always: someone owns the land! So you need to buy a piece of land and that requires money. Then there is food. If you live closer to the coast and have access to a boat you might catch fish for “free”, but inland you need a permit for fishing in rivers and certainly to capture and eat any animal. Some of these permits are very expensive due to the market price of the meat here. Heating and you need to chop down trees and burn or install a solar panel/windmill (expensive), or be able to build passivhaus with expensive materials.

          So its generally a problem that housing is also extremely expensive, so basically even a humble small 50 square meter apartment will cost you 1,5 million+ NOK ($200.000) and generally require you to have a decently paid job and pay down the loans for 20 to 25 years. So you are immediately caught in the system of generating capital even if you choose to live sparingly and consume as little as possible (you still need energy for cooking and heating even if you choose to have no light). I am sure it would be possible to live on a very tight budget, but the fact that you need a roof over your head really commits yourself to capitalism and its emissions right off the bat.

          Been considering what my family and I can do for “voluntarily poverty”, surely it would be possible to relocate to another place further away from the city and possibly even pay the full price for the house with market price increase of the home we are paying on now (still a lot of loans but around 40% of the value). But then there is the kids, uprooting them from their place and friends, don’t particularly like that so most likely I will have to wait until they have moved out at least which is a long time to, and ofc we want to have them close too if we can. We have held on to our old car for a long time now (15 years old now), but its close to illegal to drive now due to misc faults which will cost me a lot to fix (and I have no skills in fixing cars). So we are planning on getting an EV as electricity is so cheap here in Norway and coming from hydro power its also very low emissions from “filling up the tank”. Even though I know EV’s is probably a blind alley in all of this, since its basically a product of carrying on business as usual but with a “greener profile”. And there will still be insurance and maintenance costs to handle. At least I have changed to electric public transit now to and from work so surely I have had a rather big drop in CO2 emissions from what I used to have. If we move out of town then I would have to find new work or some other income as the trek to and from work would be a killer (perhaps a home office would be doable). Wife and kids walk to and from school (where she also work), but the car is still used a bit since one of my kids is part of a gymnastics group training 3 days a week and the place is just too far away for us to use public transit without committing an hour just to get to and from the place each day as well. Wouldn’t have minded that if I could cut e.g. work hours down to 75% to get the rat-race to work out. I guess this is fairly typical for many people caught in the “way of living” in industrial civilization.

          We have been trying to cut down electricity and warming and so far that has been a slow one even though its going down by a few percent compared to last year. But nowhere near what I had hoped to be able to do. Stuff like fridge, dishwasher and washing machine is basically using most of the electricity. Our heating comes from warm water from a central incineration plant but the past 3 cold winters have more or less cancelled any saving we have had from being more careful. Also I have noticed that the plumbing and system for controlling seems to be of terrible quality, requiring expensive maintenance every 4-5 years. Not what I had in mind when we chose this kind of heating (which generally is much more efficient than electric heating).

          And then there is flying… the main polluter for the majority of westerners. My wife is from another country, and her family is of course still living there so we generally have one long vacation to visit her family which generally means flying once a year. Fortunately I don’t have a job that includes a lot of travelling, besides some social arrangements. But our work generally likes to travel once a year to some other country (last time it was London so not so far away). Still its yet another CO2 source for my lifestyle… and I guess I could just choose to not take part of these social arrangements even if they are by far the most interesting ones… Hard call… and ofc not sustainable and part of the problem. I have noticed that talking about limiting travelling by plane is not a very popular discussion theme, and the fact that a lot of CO2 emissions from each person comes from this habit, often makes people feel that climate change isnt “that serious” – at least not serious enough for them to cancel their holiday… Struggling with getting the message across, and struggling with getting myself to accept this – and maintain some kind of peace with family and friends. Its not easy being a rebel. :)

          But I guess some sort of rebellion is the only way forward if we are to see any change to our planet wrecking habits…

          • Jan Steinman says:

            “Unless you plan on living in a box under a bridge I cant see how the system even allows you to live on such little an income…”

            As I mentioned, I had to restructure my life.

            When one says that, one imagines cutting back on driving, living in a smaller house, etc. But I really re-structured my life!

            I put all my savings into purchasing a portion of a shared property, in the form of co-op shares. I am a full-time volunteer for the co-op, which covers my food and lodging. My Internet connection, land-line, and a few other perks are covered by the co-op. When this computer dies, the co-op will replace it. I donated my vehicles to the co-op, and pay the co-op a per-km charge to use them, as others can do.

            I’m convinced cooperative situations are the future of free people. The alternative will be serfdom — or if you’re very lucky, smart, and greedy, perhaps you can be a lord over the serfs.

            I’m planning for property rights to be maintained by the rich, keeping a small profile, and hiding under that umbrella. To the outside world, it will look like another fiefdom. Internally it will be egalitarian. Wish me luck! Or come and help!

            • That’s a very nice EcoVillage you are part of! And you have put a lot of work into documenting all your harvests as well – must take a bit of accounting to keep those numbers. I see the goat(s) have been productive! You know here in Norway brown goat-cheese is fairly popular, and I personally prefer a mix of goat+cow for the sweet brown cheeses.

              I am impressed by your system and I really hope we can have more of these started as I wouldn’t mind to be part of one myself some day. The sharing of tools and such seems to become more and more popular here too, and even sharing of a car pool. Been thinking of perhaps starting something like that in our small housing community, even if only to enable others to use my tools whenever I don’t use them myself. Its pretty silly today as each garage is packed with the same stuff in every house.

              No doubt you prove that its possible to live on much less and even if you don’t make enough on your own land, a small part time job for a few in the community is probably enough to make ends meet. As a computer engineer, I have always enjoyed optimizing code for maximum speed, and you are basically doing this with the least amount of consumption and planet abuse.

              What do you do about housing? Do you have houses built on your 43 acres of farmland? Or are people living in other places near to the farm area?

          • In today’s economy, especially in a country like Norway with an affluent lifestyle, there are certainly a lot of costs.

            When I visited India, I was surprised at how little it took to live. With warm temperatures outside, there was no need for a sturdy home. In fact, we saw people sleeping out in public, or sitting on the ground. A piece of blue tarp seemed to almost provide a “home”.

            It was not too many years ago that people did not “own” land–land was divided up, without payment, if I understand the situation. Some rural homes are very simple–low cost to put together with local materials. Walking seemed to be a standard method of transportation.

          • Jan Steinman says:

            John Christian Lønningdal says: “What do you do about housing? Do you have houses built on your 43 acres of farmland? Or are people living in other places near to the farm area?”

            First off, thank you for your kind encouragement. I am convinced this is the best path forward for most ordinary people. But there are significant hurdles.

            For example, well-meaning laws intended to protect farmland actually make it difficult to house people on farmland.

            Where we are in British Columbia, Canada, a single tax lot in the Agricultural Land Reserve can only have two houses — no matter how big the property. The basic idea is that farmland should not be used for non-farm housing, but this is a terrible way to implement such protection!

            And yet, the Agricultural Land Reserve Act says that habitation of farmland shall be limited to the labour needs of the land. We did a formal study, and found that our land needs thirteen full-time workers, and thus we are going to propose re-zoning to allow us to have thirteen dwellings, clustered tightly so as to disrupt a minimal amount of farmland. All housing will be owned by the co-op — not “free market” housing — and habitants must formally agree to take part in agricultural activities as a condition of living here.

            But the bureaucrats say, “What happens when you sell?” So we’re in the process of getting a affordable housing Charity (Canada’s term for a tax-advantaged non-profit, similar to a 501c3 in the US) as co-owner on title, hoping that will assuage the bureaucrats.

            We currently have two houses and a number of what are classified as “temporary dwellings,” which includes anything on wheels. But trailers and caravans are not year-round housing in this climate; the eventual goal is a cluster of duplexes connected by solaria, meeting passivhaus standards.

            We can house farmers on farmland for about half the market price, but there are other hurdles. For example, you cannot get a mortgage on co-op shares, and the co-op isn’t about to risk it’s equity on someone’s ability to make payments. So financing must be private. (I actually consider this to be a feature, not a bug, but it means we need a few “deep pockets” so that others of more modest means can take part.)

            Things are moving slowly. People are not yet so desperate that they see any need for cooperative living.

            • Can your land really supply 13 workers, plus dwellings, and their families? This is a question I would look at closely. It is much better to err on the too low side, than on the too high side.

              It is not just food for this group that the people need to be produced–it also needs to produce enough to pay for taxes, and to either make the buildings directly, or to sell to buy the materials to make the buildings, and to make such things as wells. Without soil amendments, land may need to be left idle, to restore fertility. Quite a large share of crops will need to go to animals and insects living in the area. The amount needs to be sufficient in lean years as well as good years.

              The number of people land can support has skyrocketed with the use of fossil fuels. It is hard to back this down enough to consider the situation without fossil fuels.

        • poorboy says:

          Congratulations on the ability to live on a much reduced income. Hope that works our for you!

          One fact of interest is that the countries with the highest current standards of living also have the best environments. This is because, in the absence of a dire hand-to-mouth existence, thay value and can support a cleaner environment. When you are almost starving, you are not too concerned with air or water quality. (China is just beginning to make the transition).

          I also believe that the world’s biggest problem is not “inequality” (as many are currently advocating) but “poverty.” If we had always been most concerned about inequality, when Bill Gates had made his first billion we would have taken it away and given it to starving third-world populations (and perhaps chained him in the cornfield to produce more crops). As things have developed his technology advancements have contributed much to overall world betterment (including our ability to easily have this on-line conversation). Gates is now expending his billions to promote education and fight disease in those third-world countries.

        • I agree that people will want food, clothing, shelter, and alcohol as long it is available. The problem may be for them to find a way to pay for it/have something to trade in return.

          • Jan Steinman says:

            “people will want food, clothing, shelter, and alcohol as long it is available. The problem may be for them to find a way to pay for it/have something to trade in return.”

            It may well be labour — the last resort! “Will work for food” may well be the theme for the future.

            • As long as the labor of would-be workers can produce enough, we are in good shape. In prior collapses, diminishing returns meant that the productivity of individuals dropped too low (too many people relative to arable land as well as declining quality of arable land due to erosion, salination). This loss of productivity led to low wages and need for excessively high tax rates in comparison.

  6. José from France says:

    “To produce the clothing that the worker wears.”
    I’m OK to go to work naked in summer ;-)
    More seriously, do you allow me to translate this paper to french (qutoing my source, of course)?

  7. Chris Johnson says:

    @ Andrew Gray
    “What do you see?” Well, sir, I have to admit that I see snapshots rather than moving picture video, and a fair amount of them are from decades ago. If one tries to reconcile or combine influences such as ‘Blade Runner’ with Deuteronomy, the results can be explosive. How much Heinlein have you read? Do any of his paradigms fit any of the more likely futures that we can conjure up today? You want some fodder to blast away at? Okay, here are some ‘potentials’ unfettered by recent economic / political history.

    But first, let me ask a few questions: How many serious ‘look ahead’ think tanks are out there squeezing the high IQ brains of people who are actually getting paid to think about these issues?

    How many years will it take us to really solve the energy conundrum? (And I don’t mean solar and wind, but genuine deep hot rock geothermal and fusion.) US Department of Energy pointed out that there is 50 thousand times as much energy at 10 km depth than all the fossil fuel in the world. This should be that difficult, but we’re still working with 300 degree water and 10% efficiency rankine engines. Which leaves the idiot politicians and the wind and solar barons in place to peddle their very inefficient wares.

    How many years will it take to develop a system to grow graphene sheets that can be used to build structures? Of all types: boats, cars, aircraft, spacecraft, space ladders and elevators, etc.
    And use to make batteries and electronic devices of all sorts that can replace (or inexpensively substitute for) silicon, Rare Earth Elements, as well as power storage and propulsion systems.

    For those who are not familiar with graphene, please google it. It’s one atom thick carbon sheet, hexagonal like chicken wife, and is about 200 times as strong as steel, conveys electrons without friction (no heat build up), can store massive volumes and densities of electrons (the equivalent of a soccer field of electrons in the mass of your thumbnail) and also discharge huge quantities of electrons as power. It also could be used to make a car (or other craft) that weighs just a few hundred kilograms, et cetera, et cetera, et cetera, to quote the King of Siam.

    Graphene and its associated production technologies could provide the kind of very lightweight, very powerful thrust craft that could get us to the moon and Mars affordably. Perhaps further. I won’t waste our time by trying to list all the ‘on earth’ uses.

    How about Warp Drive? Believe it or not, there are people working on it. Ditto with hydrogen fusion power that is scalable and could be adapted to propulsion drives.

    Okay, Andrew, those are some ‘visions’ I can actually see. I also see farmers and peasants all over the world, and the traffic of our wonderful congested freeways and lots of other crap that we’ve managed to screw up badly. I think most of us will tend to share lots of ‘visions’ we’ve accumulated over the years. You got any you’d like to share?

    Cordially, Chris

    • Andrew Gray says:

      @ Chris Johnson
      Well, some of your questions I have credentials to answer (google “theory of intermittent electrons”).
      1) There are not too many high IQ brains out there (IMHO) who are qualified to make future “guestimations”, especially brains blinded by U.S. Propaganda. I think that there are really FEW U.S.ers who actually see what is REALLY coming. So any realistic “guestimations” about the future would have to come from outside the U.S.
      2) Fusion? No. Physics is in a Dark Age. Quantum Mechanics is clueless gobbledygook. They do not have a clue about microscopic reality. I sh#% you not, they even claim that “there is no microscopic reality”. Physicists still do not know what a nucleus is yet, much less how to fuse nuclei together. It will be another generation (or two) before physics pulls its head out. Geothermal has more potential than fusion right now.
      3) Warp Drive? No. Even if a spacecraft could be propelled up to nearly the speed of light, the space wanderer could not “slow down” upon arrival at the destination. He would just fly right by at nearly the speed of light. He would have to take as much mass-energy with him to slow down as he used to speed up in the first place.
      4) Graphene is coming. Electric cars are coming. But NOT fast enough to avert a 15 meter sea level rise. Florida is doomed, as is New York City and New Orleans. So what? By then we will be overrun with 10 BILLION people, no fish in the oceans to speak of, and perhaps economic calamity.

      So Chris, you see lots of “farmers and peasants” along with “lots of highway traffic” and other “screwed up things”. How screwed up do you see things? Are the farmers and peasants armed with rifles guarding their fields for dear life? Is the traffic fleeing the urban jungle for the countryside where all the land is really already spoken for? You really did not complete much of a vision. You just asked more questions. Is your future vision just so cloudy that nothing appears? Or do you see a weird Heinleinian Deuteronomy BladeRunner mixture of a society that you do not really care to think about?
      Andrew Gray

    • We need fossil fuel subsidies to get any of these new ideas to the expandable and workable stage. How long do we really have enough fossil fuel subsidies to do this?

      • Chris Johnson says:

        @ Gail Tverberg

        Gail, Please forgive my thickheadedness, but I don’t understand the use of the word ‘subsidies’ when added to ‘fossil fuel’. Are you saying that the government should subsidize our use of fossil fuels? Or that the government should subsidize the use of ‘energy souces other than fossil fuels’ – – as the government did with solar and wind and some other ‘clean renewables’.
        Good intentions and the road to hell redux; it gets money flowing and politicians elected, what could be better?
        I’m not ready to jump off the Golden Gate Bridge just yet. For the wannabe historians among us, perhaps your next blog could be something like, ‘has humanity ever been in a worse predicament?’

        With admiration, Chris

        • I am saying that fossil fuels provide the subsidies that are needed for all kinds of so-called renewable energy. Without subsidies from fossil fuels, they are dead in the water.

          • Chris Johnson says:

            Thanks Blog Lead. Copy all. I just have insufficient knowledge to address or argue one way or the other. Howsomever, I accept your statement as accurate.
            Cheers, Chris

  8. Justin Williams says:

    I believe we have a comfort problem, we humans are highly insecure in our ability to perform at our full potential. Discontinuing consuming resources is an uncomfortable thought and quality of life diminishing isn’t believed to be an option.

  9. Chris Johnson says:

    @ Andrew Gray:
    What do I see after 5 or 10 or 20 years? More of the same, but with some changes, mostly moderate and mostly based on ideals that architects and artists concocted. As far as human behavior is concerned, that won’t change much. Humanity will scrape by, and might even make some big strides.
    Your comments about nuclear fusion triggered my view that ‘science is always wrong, by definition.’ A lot of people’s nose gets out of joint when they hear this, but when you think that science is always improving its and our understandings, it means that the previous understandings were wrong. Ergo, science is always wrong. That’s a good thing.
    If you were to compare Deuteronomy with Blade Runner, which would you say is more gruesome? Are you capable of comparing Deuteronomy with 2nd Kings (latter days and the fall)?
    If you have studied this, then you’ll agree that the fearful warnings in Deuteronomy were far less gruesome than what actually transpired. Why is that important? Maybe it’s not, but maybe we should consider that the warnings of Deuteronomy apply to us as well, and that the Almighty can unleash His wrath, or the final days, whenever He chooses. For those (mostly non-believers) who are offended by the ‘vicious god of the bible’, I can only offer the discomfort that the actuality will likely be much more severe than the warning for those who choose to disregard His Word.
    In another sense, Is it worth trying to combine biblical with scientific or science fiction ‘end of days’? I don’t know, of course. Nor do I know if it’s even worthwhile asking such questions; scripture warns against trying to predict the day or the hour.
    And finally, should any contributor to this blog be allowed to force his personal religious opinions on others? I don’t know. All I do know is that nobody is forcing anyone else to read anything. If I have offended, I apologize. And I promise to read whatever responses may arrive.
    How about you, Andrew? What do you see?
    Cordially, Chris

  10. Chris Johnson says:

    @ Andrew Gray:

    Thanks for the challege and the citation, which I duly googled and read. I could have given you a Tang poem in characters to get a similar effect — but I can’t do those anymore either. I’m impressed not only with your engineering and scientific inclinations, but that you also studied a difficult foreign language, albeit one of limited utility — unless you’re a genuine optimist…

  11. Andrew Gray says:

    @ Chris Johnson

    Chris, I must admit that I do not see “more of the same” after 20-25 years. I see this, which was published in Nat Geo:

    However, (IMHO) the Great Collapse of 2030 (as seen in the graph) has been put off until 2040 because of the fracking boom in oil and gas. You see, as Gail has pointed out, economic collapse and cheap energy disappearance go hand-in-hand. So luckily, I will be 84 by the time of the Great Collapse of 2040. The 9,000,000,000 people on Earth at that time will be some of the most unfortunate in the history of mankind. I just do not see humanity as an optimist right now. The lead nation on Earth right now, the United States, has far too many SHEEPLE and greedy corporations. So I do not see a turnaround in my crystal ball. NO GENERATION wants to be THE generation that stops the “exponential economic growth and exploitation” cycle and then suffers the consequences. And many people of good “religious character” are STILL calling for more human “economic growth” to supply more jobs to those “poor working families”. But Poor Mother Earth should be a MUCH GREATER CONCERN. The “be fruitful and multiply crowd” is going to win out over the Greenpeace crowd, mark my word. This “more of the same” majority has doomed the coming generations to a Dark Age. I think that the only change that can come now is “change by crisis” or “change after collapse”.

    Chris, are you young enough to be affected? If so, how do you feel about moving to the country and surviving on a small farm, defending your vegetables from marauding/starving migrants? Does your religious background allow you to share so they take all of your corn at the expense of your family? Or will you blast a hole in one of the marauders’ heads at 60 yards with a high powered rifle and then dispose of the body after the rest have run off? Or if your grandson gets antibiotic resistant tuberculosis, will you let him suffer unmercifully as he dies, or will you “put him out of his misery” and euthanize him? Religious morals and choices get more extreme and difficult in a Dark Age, now don’t they Chris? What say you?

    Andrew Ancel Gray

    P.S. I am not familiar enough with the Old Testament to make the analyses that you request. And even tho’ I am not religious, I would tend to think that the “turn-the-other-cheek” man has more relevant things to say than the writers of the Old Testament about the coming Great Collapse. Perhaps his philosophy will become much more relevant again when we go back to regional tribal government and desperate gangs roving the countryside (until the human population gets back into equilibrium with non-cheap-oil-supported-levels).

  12. Chris Johnson says:

    @ Andrew Gray:
    Happy Veteran’s Day, Andrew. There are some things I would say that may be inappropriate for this public forum. I would appreciate you shouting at me at cwjwashdc@gmail.com.
    Cheers, Chris

Comments are closed.