Converging Energy Crises – And How our Current Situation Differs from the Past

At the Age of Limits Conference, I gave a talk called Converging Crises (PDF), talking about the crises facing us as we reach energy limits. In this post, I discuss some highlights from a fairly long talk.

A related topic is how our current situation is different from past collapses. John Michael Greer talked about prior collapses, but because both of our talks were late in the conference and because I was leaving to catch a plane, we never had a chance to discuss how “this time is different.” To fill this gap, I have included some comments on this subject at the end of this post.

The Nature of our Current Crisis

Figure 1

Figure 1

The first three crises are the basic ones: population growth, resource depletion, and environmental degradation. The other crises are not as basic, but still may act to bring the system down.

Figure 2

Figure 2

Humans have found a series of ways to keep deaths down, each adding more control of external energy.

  • Control of fire, starting over 1 million years ago. This allowed humans to cook their food, making it possible for more energy to go to develop the brain, and less to developing teeth and digestive apparatus. Humans could also extend their range into colder areas.
  • Agriculture, starting about 10,000 years ago. We grew desirable plants and animals and excluded other species, thus increasing the amount of food produced.
  • Coal, starting around 1800 C. E. With coal, we could make metals in quantity since we didn’t need to cut down trees for smelting. We could also make concrete and glass in quantity. With these, we could build hydroelectric power plants, and build electric transmission lines.
  • Oil, ramping up after World War II. Oil allowed the use of cars for personal transport, plus trucks to deliver goods precisely where they were needed. It also improved agricultural productivity through irrigation, refrigeration, herbicides, pesticides. The ability to use airplanes enabled globalization.

As humans’ control of energy improved, human population grew and the population of other species fell. According to Niles Eldredge, the Sixth Mass Extinction began 100,000 years ago, when there were fewer than 100,000 people on the planet, back in the days of hunter-gatherers. The extent of die-off of other species has grown as we added agriculture, and later added coal and oil use.

Humans are not doing anything “wrong.” Humans are reacting to the same instinct that all species have, namely to make use of available energy to allow more of the species to live to maturity. Population growth stops when a species reaches a limit of some sort–lack of food because the species eats too much of its would-be food supply; too much pollution; epidemics (related to crowding and poor nutrition); or limits associated with gathering external energy.

Individuals can change their personal actions, but built-in instincts tend to guide the direction of civilizations as a whole. Thus the population of civilizations tend to rise until bottlenecks are reached.

Resource Depletion is Particularly a Problem for Oil

We are seeing depletion in many areas right now, including fresh water aquifers, soil erosion, the number and size of fish in the ocean, the number of pollinators, and deforestation. The mineral concentration of ores we are mining keeps getting lower as well. For the purpose of the talk, I will concentrate on oil, however.

Right now, oil is suffering from depletion but prices don’t seem very high.

Figure 3.

Figure 3

The cost of extracting oil keeps rising, whether or not the prices consumers pay rise, because the cheapest to extract oil was pulled out first. The problem now is that oil prices are too low for producers, at the same time that they are very high for the consumer. The low prices for producers mean that oil companies must take extraordinary measures, such as adding more debt, or selling land they planned to develop, to have enough money to pay dividends. Companies extracting oil from shale formations are in particularly tough shape because they tend to be small and have poor credit ratings.

The low-price oil situation looks likely to reach a crisis stage in the near term. What has been holding the situation together is today’s low interest rates. With these low interest rates, investors who are desperate for higher yields will invest in “iffy” companies, like shale oil companies. In addition, oil producing companies can borrow at low rates, helping to keep costs down.

It is hard to see a fix for the problem oil producing companies are now having. If oil prices rise to help them, consumers will find that the higher oil prices “squeeze” their discretionary income. As a result, we will be pushed back into recession. So no oil price works.

How Decline in Oil Supply Can Be Expected to “Work”

Many people are of the view that if oil production declines, it will decline slowly, more or less over the same time-period it rose, in a symmetric “Hubbert” Curve. My expectation is that the downslope will be much steeper than the upslope. I also expect that all fuels will fall in use, more or less simultaneously. This pattern occurs because of the networked way the world economy is constructed and because of the role of debt, which I will describe later.

The Hubbert Curve was constructed in the special case where another fuel took over before fossil fuels started to decline (Figure 4), a situation which does not exist today.

Figure 4

Figure 4

In my view, a more realistic view of the expected downslope is shown in Figure 5, below.

Figure 5. Estimate of future energy production by author. Historical data based on BP adjusted to IEA groupings.

Figure 5. Estimate of future energy production by author. Historical data based on BP adjusted to IEA groupings.

It is my expectation that the supply of all fuels will decrease in use, more or less together, because of credit related financial problems that will affect the economy as a whole.

Peter Turchin and Surgey Nefedov analyzed how eight agricultural civilizations collapsed  in the book Secular Cycles. First, there is a long period of growth and population expansion, as the group makes increasing use of a new resource available (such as land cleared for agriculture). This is followed by a “stagflation” period of 50 to 60 years after population reaches the carrying capacity of the new resource. Stagflation is followed by a crisis period of 20 to 50 years, when debt defaults became common, governments collapse, and population decreases. I show this pattern in Figure 6, below.

Figure 6

Figure 6

My forecast energy downslope in Figure 5 is  intended to follow roughly the shape of the curve of prior collapses, depicted in Figure 6. The sharpness of the points in Figure 6 occur because I plotted only 5-year points–annual points would have produced a smoother curve.

Environmental Degradation Takes Many Forms

Figure 7

Figure 7

The environmental degradation issue that gets the most “press” is climate change. If any one limit is modeled, whether it is soil problems, or the mass extinction of many species that seems to be currently taking place, or ocean acidification, it is likely to show that that particular problem is likely to take civilization down. To get a balanced view of what is ahead, a person would need to model all limits at once.

Climate change modelers are of course mainly interested in their limit. They have started to incorporate some information of the effect of other limits into the “low end” of their range (that is, the 2.6 degree scenario), but the “high estimate”–which gets much of the press–assumes no limits of any other sort. It includes far more carbon from fossil fuels than seems reasonable, in my view.

The Financial System is Terribly Important, and Debt Problems Can Bring it Down

Today’s economy is a network of interconnected businesses and consumers, regulated by governments. The financial system is extremely important to this network. In a way, the financial system is like the operating system of a computer. It telegraphs what products are needed, where, and what resources are available to meet these needs from one part of the economy to another. It allows businesses to profitably meet these needs.

Debt plays a surprisingly important role in our current economy. Increasing the amount of debt available increases the amount of goods a person can buy. For example, if a consumer has a job paying $40,000 a year, and gets a loan for $20,000 to buy a new car, the effect is similar to having $60,000 in income for that year. Similarly, if a business can borrow money for a new factory, it can add to jobs to the economy.

When the growth in debt turns to contraction (this happens if consumers default in large numbers, or if they buy fewer homes and cars), it has a huge impact on the economy. The shrinking debt tends to push the economy into contraction. Because there is less demand for commodities like oil, coal and natural gas, the prices of these commodities tend to fall. In fact, a credit contraction seems to be precisely what happened in July 2008, when oil prices took a steep drop. Prices of other fuels also dropped at the same time.

Figure 8

Figure 8

In fact, since 2008, the US economy is still struggling with inadequate growth in debt. The underlying reason is that consumers’ wages are lagging, so they cannot afford more debt. The government tries to make up for the lack of growth in consumer debt by borrowing more money itself and by keeping interest rates artificially low, through Quantitative Easing.

A basic underlying issue is the fact that our salaries don’t rise as oil prices rise. Similarly, our salaries don’t rise with rising interest rates. Both oil prices and interest rates very much affect what we need to pay, however. Oil prices affect food and transportation costs, and interest rates affect mortgage and auto loan payments. If interest rates rise again, or if oil prices rise, many consumers will be forced to cut back on discretionary spending. As a result, the economy is likely to shift back into recession. Prices of commodities such as oil, gas, coal, and uranium are likely to fall again.  Ultimately production of these commodities can be expected to fall, because without debt, they become unaffordable for most consumers.

Government Funding Issues

One issue noted by Turchin and Nefedov is that in prior collapses, government funding is generally a problem. This occurs because the government is funded by surpluses of an economy. If an economy is reaching diminishing returns, citizens find it harder and harder to get good-paying jobs at the same time that the government needs more funding to handle the problems it is confronting, such as the need for a larger army. As a result, it becomes very hard to collect enough taxes. If tax rates are raised too high, citizens find themselves unable to afford an adequate diet. With poor nutrition, citizens become more vulnerable to epidemics–one of the major causes of die-offs during collapses.

We are seeing the issue of inadequate government funding now. US publicly held debt has been soaring since mid 2008 (Figure 9).

Figure 9

Figure 9

Inadequate High-Paying Jobs Go with Too Little Energy

Figure 10

Figure 10

An early sign of lack of adequate energy is a lack of good-paying jobs for young people. Also, the jobs that are available tend to be low-paying service jobs that don’t require much energy.

Of course, if we have to go back to growing food without today’s energy inputs, there will be a huge number of manual labor jobs available. But these are not the jobs most people are thinking about.

Electrical Grid Problems

Figure 11

Figure 11

There is a popular myth that electricity will save us. This view is based on the belief that our problem is simply a liquid fuels problem. Our problem is really very much deeper–a systems problem that threatens to take down the financial system and the consumption of all types of fuels simultaneously. Thus, the same problems that bring down oil consumption threaten to bring down electricity consumption.

But even apart from the systems problem, it is clear that oil problems lead to electric grid  problems. The electric grid needs constant repairs. New parts must be transported using oil, and the supply lines of companies manufacturing these parts must continue to operate, again using oil. Trucks or helicopters using oil products are needed to put grid replacement parts in place. Workers need transportation for their work on the grid, as well.

The claim that wind and solar PV will save us is silly, if we have an unsolvable grid problem. The place for solar PV is off-grid. Wind also works off-grid, in uses such as pumping water. Of course, wind turbines used for this purpose are tiny compared to today’s electricity generating turbines.

Geopolitical Problems

Figure 12

Figure 12

As we become more resource constrained, we can expect more fighting among countries. Perhaps new alliances will  be formed, in an attempt to squeeze our current energy hogs–US, Europe, and Japan. It is possible that the US dollar will lose its status as reserve currency, leading to a lower standard of living for US citizens.

Solutions to Converging Crises

Figure 13

Figure 13

You may think I am kidding with respect to the last item, “We need help from a Higher Power,” but I am not. Our universe seems to have been created by a Big Bang. But big bangs don’t just happen. We live in a very orderly universe. According to Newton’s Laws of Motion, for every action, there is an equal and opposite reaction. We also know that useful energy is balanced by friction. This, in fact, is a necessary balance, or the system would spin out of control. We also would not be able to drive down the road in a car without friction.

If a big bang happened, it seems likely to me that there was a major force behind the big bang. We can call this force Nature or a Higher Power. I am doubtful that the force behind the big bang would fix the world situation so that humans can continue along their current destructive path on earth. But the force might fix the situation in some other way–perhaps make the transition for humans easier to bear, or produce a new kind of big bang supporting an afterlife for humans as envisioned by various religions.

How This Time is Different

Greer, in his talk, mentioned several points about prior collapses:

  • Typically 95% of the population died off.
  • The time between civilizations tended to be about 500 years.
  • The 5% who survived were able to go about doing things, pretty much as had been done in the past.
  • The downslopes often had jogs and bumps in them, and could be slow.

The question arises as to how helpful this information is with respect to what is ahead. As I see the situation, civilizations that failed in the past were not fossil fuel dependent or electricity dependent. While there was specialization of labor, there was much less specialization than there is today. While there was some trade, the majority of food and clothing was locally produced. The biggest problems were

  • Growing population
  • Arable farmland that did not expand to meet growing population
  • Soil problems (loss of fertility, erosion, salinity)
  • Deforestation
  • Competition from neighboring civilizations
  • Government collapse
  • Debt problems

I view the 500 year gap between civilizations as including what I show as the “inter cycle” period between civilizations in Figure 6, above. This is the gap that took place before new growth could occur.

The big problem in the past with civilizations that collapsed was that humans were using renewable resources faster than they could renew. Population continued to expand as well. The combination of rising population and depleting soil and forest resources led to diminishing returns, lower wages for many workers, and difficulty funding governments. A 500 year gap between civilizations took the population pressure off an area. Forests were able to regrow, and soil was able to renew (at least partly through regeneration of soil by erosion of base rock).

Today, we sill have the problems we had in the past, but we have some new ones as well:

  • We are depleting aquifers much more rapidly than they regenerate. In many cases, the water table is far below what can be reached with simple tools. It will take thousands of years for these aquifers to regenerate.
  • We are depleting minerals of all kinds, so that we now need “high tech” methods to extract the low ore concentrations. These minerals will be out of reach, without the use of electricity and fossil fuels. In fact, the vast majority of fossil fuel energy supplies will also be out of reach, without today’s high tech methods. Eventually this may change, with new fossil fuel formation and with earthquakes, but the timeframe is likely to be millions of years.
  • Most people today do not know how to live without fossil fuels and electricity. If fossil fusel and electricity disappeared, most of us would not know how to produce our own food, water, and other basic necessities.
  • Most of us could not just “pick up and do as we did before,” with respect to our current jobs, if the government and 95% of the population disappeared. Our jobs are often supported by global supply chains that would disappear, as well as direct use of fossil fuels and electricity.
  • The world is sufficiently networked that most of it is likely to be drawn into a world-wide collapse. In the past, areas that did not collapse continued to function. These areas could act as a back-up, if functions were lost.

In the past, the 500 year gap was enough to allow regeneration of forests and soil, once population pressures were reduced. If that were our only problem now, we could expect the same pattern again. Such a regeneration would allow a reasonably large group of people (say 500 million people) to get back to a non-fossil fuel based civilization in 500 years, with new governments, roads and other services.

In such a new civilization, we would likely have difficulty using much metals, because ores are now quite depleted. Even reprocessing of existing metals is likely to require more heat energy than is easily available from renewables sources.

We are now so dependent on fossil fuels and electricity that any collapse that does take place seems likely to be faster than prior collapses. If the electric grid goes down in an area, and cannot be repaired, most business functions will be lost–practically immediately. If oil supply is interrupted, it also will bring a halt to most business in an area, because workers can’t get to work and raw materials cannot be transported.

We are bing told, “Renewables will save us,” but this is basically a lie. Wind and solar PV are just as much a part of our current fossil fuel system as any other source of electricity. They will only last as long as the weakest link–inverters that need replacing, batteries that need replacing, or the electric grid that needs fixing. We are being told that these are our salvation, because politicians need to have something to point to as a solution–not because they really will work.


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.
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749 Responses to Converging Energy Crises – And How our Current Situation Differs from the Past

  1. Don Stewart says:

    Dear Gail and All
    Here are a few thoughts about important but cloudy subjects.

    First, Herman Daly has written a thoughtful article:

    I particularly call to your attention the three diagrams and the accompanying explanations. Also his discussion of Maximum Entropy Production Principle, which seems to be popular with some on this blog.

    His concluding thoughts are about the Steady State: ‘The remaining strategy is the steady-state subsystem. It does not attempt to eliminate the subsystem boundary, either by expanding it to coincide with the whole system or by reducing it to nothing. Rather, it affirms both the interdependence and the qualitative difference between the human economy and the natural ecosystem.’

    Second, I would like to call your attention to Brian Kaller’s article:

    Look at the picture of people moving, and read the description of the experiment. Note these words:
    ‘Carteret pointed out that this kind of complexity is very difficult to organise in some kind of top-down command structure, but appears organically in complex systems.’

    Third, I would like you to recall the hundreds of descriptions you have read or personally experienced of what one might call resilient living, or permaculture places, or biological gardening places. Do those places fit into any of Daly’s diagrams? I don’t think so. What happens when a farm or a ranch or a garden is converted from industrial to biologically based systems is that the diversity of life explodes. E.O. Wilson will complain that endangered species are not protected, but there is no doubt that biological life multiplies by many times. But is the biological life multiplied in the favored ranch or farm or garden at the expense of biological life somewhere else on the planet? And the answer is “No, the inputs from outside are reduced’.

    I would similarly like you to think about the people spontaneously organizing themselves in Carteret’s description and then do some digging on the soil food web and it’s ability to self-organize…once you stop poisoning it. If you do dig into the facts, you will find that there is mind boggling complexity among billions of soil critters that a mere human could not possibly hope to manage on a top-down basis.

    Are biological systems destined for the dust-bin because of the Iron Law of the Maximum Entropy Production Principle? After all, the biological system is Regenerative, rather than Entropy producing. The answer I think, following Daly, is that we have a choice.

    The third thing I would like to call to your attention is the female romance book for reading on airplanes and at the beach. The heroine is always rich, rebellious, gorgeous, and smart…but she runs into a dangerous male (typically a Scottish Laird or, in past decades, a Pirate). Then starts an intricate dance which inevitably ends up with the female having trained the male sufficiently that a Power Couple is born.

    Now let’s think about a story from the time of my childhood…70 years ago. A plain but honest boy marries a plain but honest girl and they have a farm where they work hard and have three children. But then the husband is killed by the reaper (known as the widow-maker). The girls spends a couple of days grieving, but then must think about the practicalities. A woman on a farm with three young children needs a man around the house. She isn’t gorgeous, rich, particularly smart, and not rebellious. She will never be part of a Washington Power Couple. So she talks to a parson, who puts the word out that Hannah is thinking about remarriage. But a month later, the only suitor who has appeared is an older man who has lost his wife, and has himself 2 older children and would like a female’s help to manage the household. The man is in pretty good shape, still having most all of his teeth. So the two lonely people get together and form a new couple.

    My point in thinking about those two stories is that they are analogous to Daly’s drawing of hard lines between the economy and humanity. In the airplane book it may be necessary kiss a lot of frogs to find your prince, but in the end life will be everything you could ever hope it to be. In my story about the new couple forming, there is plenty of room for both rational calculations and also human emotions. There is room for the growth of emotions over time, as the bride learns to love the widower’s children. In short, drawing hard boundaries is probably not a very productive enterprise in the second story, and is delusional in the first story.

    My conclusion is that biological systems are very similar to the people organizing themselves in Carteret’s experiment, or the widow and widower getting together. Yes, some outputs from industrial systems are very useful: solar powered fences, for example, or iron based metal implements built in water powered mills, or a one thousand watt PV system on the roof powering some DC appliances. But such scenarios are not well-described by Daly’s diagrams. Permaculture diagrams come closer, and actual examples are much better instructors.

    Don Stewart

    • I am not a fan of Herman Daly’s, the current piece included. We are dealing with self-organized systems, similar to biological organisms. These are dissipative structures, with temporary lifespans.

  2. MJ says:

    Gwynne Dyer is always interesting to listen to and this recent interview holds to surprising insights that he reveals.
    Now, he does not hold to the view here, but he does recognize to “limits to growth” and “climate change” and has a different take on the future.

  3. Pingback: Edito | Blog de Yoananda

  4. interguru says:

    I just read the introduction to Thomas Piketty’s “Capital in the Twenty First Century” . It is a heavy economics treatise ( 700 pages of fine print, almost 3 lbs ) which for a time was number one on Amazon’s best seller list. [Spoiler Alert] It shows that inequality is intrinsic to capitalism ( that is it is a feature, not a bug ). He has created and tapped into historical economic databases covering up to 300 years in 20 countries. The reduction in inequality from WWII to the 1970’s was an anomaly.

    After only a few pages I discovered a real surprise — the book is written in simple readable English ( ably translated from French ). No jargon and very minimal mathematics. The best summary is by Larry Summers ( You can see links to 10 reviews here ( ).

    I want to discuss one aspect of the book relevant to Our Finite World. Piketty completely ignores the role of energy, or more exactly oil, in the economic history of the last three centuries. The index shows four entries for petroleum and for three for oil, all dealing with inequality. (For example, the uneven distribution of oil resource leads to inequality among nations). This does not invalidate his book because he is looking at capital and wealth.

    I want to add a side comment. Using his model, the recent rise in inequality is not a sign of oncoming economic collapse, but a return to the normal state of capitalism. We had rampant inequality 100 years ago without leading to a civilizational collapse.

  5. Paul says:

    Across America, Police Departments Are Quietly Preparing For War

    That’s Plan B…

    • Thanks! I suppose this is left-over military stuff, but it still is not helpful.

    • Stilgar Wilcox says:

      “That’s plan B.” Yeah Paul, guaranteed; if we’ve been able to read between the lines to figure out what is coming, TPTB certainly know as well. Unrest, mayhem, chaos. I think it’s starting to take shape already with random shootings, like the cops eating pizza or the police killings in Canada by a Rambo type character. Almost every day now there is some kind of a multiple shooting. Since desperate fiscal policies are serving the top 1%, it would seem likely the priority will be to protect them from the 99%. At some point after the next market crash, small random acts will become more widespread. The final acts of desperation in the wake of an energy predicament, MSM not only fails to acknowledge but even rejects with rah-rah-sis-boom-bah cheerleading of supposed US energy independence and oil & NG exportation. We are not only suppose to buy all the phony govt. carefully defined stats on inflation, GDP (that now includes 500 billion in intangibles – illegal street drug sales) and unemployment, but that we are actually in the opposite of an energy predicament in spite of 110 dollar Brent oil. The frustration level is building and will spark at some point, and the only possible way to combat it will be military equipment and trained riot police/soldiers. The 99% will become the enemy of TPTB.

  6. Look at the last 3 headline articles “9th June”

    1. WTI Trades Near 3-Day High on U.S. Economy; Brent Rises
    2. Oil Prices Rise On Macroeconomic Buoyancy
    3. World Needs Record Saudi Oil Supply as OPEC Convenes

    Keep your eye on WTI & Brent I suspect they will start to rise over the coming months in a similar trajectory to 2008.

    It seems our 2015 prediction could come true.

    • kesar says:

      Add Russia’s decision to trade oil and gas in Euro and Rubel in new contracts. They already signed some appendices to several past contracts.

    • MJ says:

      Obviously, the industrial leaders realize we can not dip into another “official” recession and must have a plan “B” to deal with the upcoming situation. If need be, a makeshift deal with Iran may be forthcoming to bring needed supplies onto the marketplace.
      The problem is the world is on the Dollar standard (tied to the oil supply), just as the world was tied to England on the Gold standard back in the 1920’s. Unfortunately, just as then, when England could no longer afford to be the World’s Banker,, the United States finds itself in the same position and can no longer afford to be it today. Read the book “The Lords of Finance” by Linquant Ahamed. The one book Ben Bernanke cited for reference during the financial crisis of 2008!
      Of course, the situation is different today with globalization and increase of population and resource depletion and environmental issues.
      Seems, the “system” is more fragile and prone to derail without major surgery.

    • It is hard to see how WTI and Brent rise. More that they fall. My (about) 2015 projection is a drop in oil consumption. That could come from either high or low price.

  7. Lulu Pequena Ardilla says:

    Many concerns, very frightening. We need more growth, we need more debt. Let us bring the printing presses to the forefront, quantitative easing at the rate of 900 billions a week, all problems solved. Back to growth.

  8. Lulu Pequena Ardilla says:

    Low interest rates, cheap stocks, booming economy, cheap oil, our infinite world

  9. David SNELGROVE says:

    Dec 8, 2014 Dear Leslie Anne: This is one blog I tend to read quite thoroughly because, outside of the call to a higher power, this lady makes a lot of sense. You might subscribe to this blog! Dave,the old DVD burner, Snelgrove Date: Thu, 29 May 2014 21:31:19 +0000 To:

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