Will China Bring an Energy-Debt Crisis?

It is easy for those of us in the West to overlook how important China has become to the world economy, and also the limits it is reaching. The two big areas in which China seems to be reaching limits are energy production and debt. Reaching either of these limits could eventually cause a collapse.

China is reaching energy production limits in a way few would have imagined. As long as coal and oil prices were rising, it made sense to keep drilling. Once fuel prices started dropping in 2014, it made sense to close unprofitable coal mines and oil wells. The thing that is striking is that the drop in prices corresponds to a slowdown in the wage growth of Chinese urban workers. Perhaps rapidly rising Chinese wages have been playing a significant role in maintaining high world “demand” (and thus prices) for energy products. Low Chinese wage growth thus seems to depress energy prices.

(Shown as Figure 5, below). China’s percentage growth in average urban wages. Values for 1999 based on China Statistical Yearbook data regarding the number of urban workers and their total wages. The percentage increase for 2016 was based on a Bloomberg Survey.

The debt situation has arisen because feedback loops in China are quite different from in the US. The economic system is set up in a way that tends to push the economy toward ever more growth in apartment buildings, energy installations, and factories. Feedbacks do indeed come from the centrally planned government, but they are not as immediate as feedbacks in the Western economic system. Thus, there is a tendency for a bubble of over-investment to grow. This bubble could collapse if interest rates rise, or if China reins in growing debt.

China’s Oversized Influence in the World

China plays an oversized role in the world’s economy. It is the world’s largest energy consumer, and the world’s largest energy producer. Recently, it has become the world’s largest importer of both oil and of coal.

In some sense, China is the world’s largest economy. Usually we see China referred to as the world’s second largest economy, based on GDP converted to US dollars. Economists use an approach called GDP (PPP) (where PPP is Purchasing Power Parity) when computing world GDP growth. When this approach is used, China is the world’s largest economy. The United States is second largest, and India is third.

Figure 1. World’s largest economies, based on energy consumption and GDP based on Purchasing Power Parity. Energy Consumption is from BP Statistical Review of World Energy, 2017; GDP on PPP Basis is from the World Bank.

Besides being (in some sense) the world’s largest economy, China is also a country with a very significant amount of debt. The government of China has traditionally somewhat guaranteed the debt of Chinese debtors. There is even a practice of businesses guaranteeing each other’s debt. Thus, it is hard to compare China’s debt to the debt level elsewhere. Some analyses suggest that its debt level is extraordinarily high.

How China’s Growth Spurt Started

Figure 2. China’s energy consumption, based on data from BP Statistical Review of World Energy, 2017.

From Figure 2, it is clear that something very dramatic happened to China’s coal consumption about 2002. China joined the World Trade Organization in December 2001, and immediately afterward, its coal consumption soared.

Countries in the OECD, whether they had signed the 1997 Kyoto Protocol or not, suddenly became interested in reducing their own greenhouse gas emissions. If they could outsource manufacturing to China, they would be able to reduce their reported CO2 emissions.

Besides reducing reported CO2 emissions, outsourcing manufacturing to China had two other benefits:

  • The goods being manufactured in China would be cheaper, allowing Americans, Europeans, and Japanese to buy more goods. If more “stuff” makes people happy, citizens should be happier.
  • Businesses would suddenly have a new market in China. Perhaps the people of China would start buying goods made elsewhere.

Of course, a major downside of moving jobs to China and other Asian nations was the likelihood of fewer jobs elsewhere.

Figure 3. US Labor Force Participation Rate, as prepared by Federal Reserve Bank of St. Louis.

In the early 2000s, when China started competing actively for jobs, the share of people in the US workforce started shrinking. The drop-off in labor force participation did not level out until mid-2014. This is about when world oil prices began to fall, and, as we will see in the next section, when China’s growth in average wages began to fall.

Another downside to moving jobs to China was more CO2 emissions on a worldwide basis, even if emissions remained somewhat lower locally. CO2 emissions on imported goods were not “counted against” a country in its CO2 calculations.

Figure 4. World carbon dioxide emissions, split between China and Rest of the World, based on BP Statistical Review of World Energy, 2017.

At some point, we should not be surprised if countries elsewhere start pushing back against the globalization that allowed China’s rapid growth. In some sense, China has lived in an artificial growth bubble for many years. When this artificial growth bubble ends, it will be much harder for China’s debtors to repay debt with interest.

China’s Rapid Wage Growth Stopped in 2014

Rising wages are important for making China’s growth possible. With rising wages, workers can increasingly afford the apartments that are being built for them. They can also increasingly afford consumer goods of many kinds, and they can easily repay debts taken out earlier. The catch, however, is that wage growth cannot get ahead of productivity growth, or the price of goods will become too expensive on the world market. If this happens, China will have difficulty selling its goods to others.

China’s wage growth seems to have slowed remarkably, starting in 2014.

Figure 5. China’s percent growth in average urban wages. Values for 1999 based on China Statistical Yearbook data regarding the number of urban workers and their total wages. The percentage increase for 2016 was estimated based on a Bloomberg Survey.

This is when China discovered that its high wage increases were making it uncompetitive with the outside world. Wage growth needed to be reined in. Its growth in productivity was no longer sufficient to support such large wage increases.

China’s Growth in Energy Consumption Also Slowed About 2014 

If we look at the annual growth in total energy consumption and electricity consumption, we see that by 2014 to 2016, their growth had slowed remarkably (Figure 6). Their growth pattern was starting to resemble the slow growth pattern of much of the rest of the world. Energy growth allows an economy to increasingly leverage the labor of its workforce with more energy-powered “tools.” With low energy growth, it should not be surprising if productivity growth lags. With low productivity growth, we can expect low wage growth.

Figure 6. China’s growth in consumption of total energy and of electricity based on data from BP Statistical Review of World Energy, 2017.

It is possible that the increased rate of electricity consumption in 2016 is related to China’s program of housing migrant workers in unsalable apartments that took place at that time. The fact that these apartments were otherwise unsalable was no doubt influenced by the slowing growth in wages.

This decrease in energy consumption most likely occurred because the price of China’s energy mix was becoming increasingly expensive. For one thing, the mix included a growing share of oil, and oil was expensive. The proportion of coal in the mix was falling, and the replacements were more expensive than coal. There was also the issue of the general increase in fossil fuel prices.

Lower Wage Growth in China Likely Affected Fossil Fuel Prices

Affordability is the big issue with respect to how high fossil fuel prices can rise. The issue is not just buying the oil or coal or natural gas itself; it is also being able to afford the goods made with these fuels, such as food, clothing, appliances, and apartments. If wages were depressed in the developed countries because of moving production to China, then rising wages in China (and other similar countries, such as India and the Philippines) must somehow offset this problem, if fossil fuel prices are to remain high enough for extraction to continue.

Figures 7 and 8 (below) show that oil, natural gas, and coal prices all started to slide, right about the time China’s urban wages growth began shrinking (shown in Figure 5).

Figure 7. Oil and natural gas prices, based on BP Statistical Review of World Energy data.

Figure 8. Coal prices between 2000 and 2016 from BP Statistical Review of World Energy. Chinese coal is China Qinhuangdao spot price and Japanese coal is Japan Steam import cif price, both per ton.

The lower recent increases made China’s urban wage growth look more like that of the US and Europe. Thus, in 2014 and later, Chinese urban wages present much less of a “push” on the growth of the world economy than they had previously. Without this push of rising wages, it becomes much harder for the world economy to grow very rapidly, and for it to have a very high inflation rate. There is simply not enough buying power to push prices very high.

It might be noted that the average Chinese urban wage increases shown previously in Figure 5 are not inflation adjusted. Thus, in some sense, they include whatever margin is available for inflation in prices as well as the margin that is available for a greater quantity of purchased goods. Because of this, these low wage increases may help explain the recent lack of inflation in much of the world.

Quite likely, there are other issues besides China’s urban wage growth affecting world (and local) energy prices, but this factor is probably more important than most people would expect.

Can low prices bring about “Peak Coal” and “Peak Oil”?

What does a producer do in response to suddenly lower market prices–prices that are too low to encourage more production?

This seems to vary, depending on the situation. In the case of coal production in China, a decision was made to close many of the coal plants that had suddenly become unprofitable, thanks to lower coal prices. No doubt pollution being caused by these plants entered into this decision, as well. So did the availability of other coal elsewhere (but probably at higher prices), if it is ever needed. The result of this voluntary closure of coal plants in response to low prices caused the drop in coal production shown in Figure 8, below.

Figure 8. China’s energy production, based on data from BP Statistical Review of World Energy, 2017.

It is my belief that this is precisely the way we should expect peak coal (or peak oil or peak natural gas) to take place. The issue is not that we “run out” of any of these fuels. It is that the coal mines and oil and gas wells become unprofitable because wages do not rise sufficiently to cover the fossil fuels’ higher cost of extraction.

We should note that China has also cut back on its oil production, in response to low prices. EIA data shows that China’s 2016 oil production dropped about 6.9% compared to 2015. The first seven months of 2017 seems to have dropped by another 4.2%. So China’s oil is also showing what we would consider to be a “peak oil” response. The price is too low to make production profitable, so it has decided that it is more cost-effective to import oil from elsewhere.

In the real world, this is the way energy limits are reached, as far as we can see. Economists have not figured out how the system works. They somehow believe that energy prices can rise ever higher, even if wages do not. The mismatch between prices and wages can be covered for a while by more government spending and by more debt, but eventually, energy prices must fall below the cost of production, at least for some producers. These producers voluntarily give up production; this is what causes “Peak Oil” or “Peak Coal” or “Peak Natural Gas.”

Why China’s Debt System Reaches Limits Differently Than Those in the West

Let me give you my understanding regarding how the Chinese system works. Basically, the system is gradually moving from (1) a system in which the government owns all land and most businesses to (2) a system with considerable individual ownership.

Back in the days when the government owned most businesses and all land, farmers farmed the land to which they were assigned. Businesses often provided housing as part of an individual’s “pay package.” These homes typically had a shared outhouse for a bathroom facility. They may or may not have had electricity. There was relatively little debt to the system, because there was little individual ownership.

In recent years, especially after joining the World Trade Organization in 2001, there has been a shift to more businesses of the types operated in the West, and to more individual home ownership, with mortgages.

The economy acts rather differently than in the West. While the economy is centrally planned in Beijing, quite a bit of the details are left to individual local governments. Local heads of state make decisions that seem to be best based on the issues they are facing. These may or may not match up with what Beijing central planning intended.

Historically, Five-Year Plans have provided GDP growth targets to the various lower-level heads of state. The pay and promotions of these local leaders have depended on their ability to meet (or exceed) their GDP goals. These goals did not have any debt limits attached, so local leaders could choose to use as much debt as they wanted.

A major consideration of these local leaders was that they also had responsibility for jobs for people in their area. This responsibility further pushed them to aim high in the amount of development they sought.

Another related issue is that sales of formerly agricultural land for apartments and other development are a major source of revenue for local governments. Local leaders did not generally have enough tax revenue for programs, without supplementing their tax revenue with funds obtained from selling land for development. This further pushed local leaders to add development, whether it was really needed or not.

The very great power of local heads of state and their administrators made these leaders tempting targets for bribery. Entrepreneur had a chance of getting projects approved for development, with a bribe to the right person. There has been a recent drive to eliminate this practice.

We have often heard the comment, “A rising tide raises all boats.” When the West decided to discourage local industrialization because of CO2 concerns, it gave a huge push to China’s economy. Almost any project could be successful. In such an environment, local rating agencies could be very generous in their ratings of proposed new bond offerings, because practically any project would be likely to succeed.

Furthermore, without many private businesses, there was little history of past defaults. What little experience was available suggested the possibility of few future defaults. Wages had been rising very rapidly, making individual loans easy to repay. What could go wrong?

With the central government perceived to be in control, it seemed to make sense for one governmental organization to guarantee the loans of other governmental organizations. Businesses often guaranteed the loans of other businesses as well.

Why the Chinese System Errs in the Direction of Overdevelopment

In the model of development we are used to in the West, there are feedback loops if too much of anything is built–apartment buildings (sold as condominiums), coal mines, electricity generating capacity, solar panels, steel mills, or whatever else.

In China, these feedback loops don’t work nearly as well. Instead of the financial system automatically “damping out” the overcapacity, the state (or perhaps a corrupt public official) figures out some way around what seems to be a temporary problem. To understand how the situation is different, let’s look at three examples:

Apartments. China has had a well-publicized problem of  building way too many apartments. In about 2016, this problem seems to have been mostly fixed by local governments providing subsidies to migrant workers so that they can afford to buy homes. Of course, where the local governments get this money, and for how long they can afford to pay these stipends, are open questions. It is also not clear that this arrangement is leading to a much-reduced supply of new homes, because cities need both the revenue from land sales and the jobs resulting from building more units.

Figure 9 shows one view of the annual increase in Chinese house prices, despite the oversupply problem. If this graph is correct, prices have increased remarkably in 2017, suggesting some type of stimulus has been involved this year to keep the property bubble growing. The size of an apartment a typical worker can now afford is very small, so this endless price run-up must end somewhere.

Figure 9. Chinese house price graph from GlobalPropertyGuide.com.

Coal-Fired Power Plants. With all of the problems that China has with pollution, a person might expect that China would stop building coal-fired power plants. Instead, the solution of local governments has been to build additional power plants that are more efficient and less polluting. The result is significant overcapacity, in total.

May 2017 article says that because of this overcapacity problem, Beijing is forcing every coal-fired power plant to run at the same utilization rate, which is approximately 47.7 % of total capacity. A Bloomberg New Energy Finance article estimates that at year-end 2016, the “national power oversupply” was 35%, considering all types of generation together. (This is likely an overestimate; the authors did not consider the flexibility of generation.)

Beijing is aware of the overcapacity problem, and is cancelling or delaying a considerable share of coal-fired capacity that is in the pipeline. The plan is to limit total coal-fired capacity to 1,100 gigawatts in 2020. China’s current coal-fired generating capacity seems to be 943 gigawatts, suggesting that as much as a 16% increase could still be added by 2020, even with planned cutbacks.

It is not clear what happens to the loans associated with all of the capacity that has been cancelled or delayed. Do these loans default? If “normal” feedbacks of lower prices had been allowed to play out, it is doubtful that such a large amount of overcapacity would have been added.

If China’s overall growth rate slows to a level more similar to that of other economies, it will have a huge amount of generation that it doesn’t need. This adds a very large debt risk, it would seem.

Wind and Solar. If we believe Darien Ma, author of “The Answer, Comrade, Is Not Blowing in the Wind,” there is less to Beijing’s seeming enthusiasm for renewables than meets the eye.

According to Ma, China’s solar industry was built with the idea of having a product that could be exported. It was only in 2013 when Western countries launched trade suits and levied tariffs that China decided to use a substantial number of these devices itself, saving the country from the embarrassment of having many of these producers go bankrupt. How this came about is not entirely certain, but the administrator in charge of wind and solar additions was later fired for accepting bribes, and responsibility for such decisions moved higher up the chain of authority.

Figure 10. China current view of solar investment risk in China. Chart by Bloomberg New Energy Finance.

Ma also reports, “Officials say that they want ‘healthy, orderly development,’ which is basically code for reining in the excesses in a renewable sector that has become yet another emblem of irrational exuberance.”

According to Ma, the Chinese National Energy Administration has figured out that wind and solar are still about 1.5 and 2.5 times more expensive, respectively, than coal-fired power. This fact dampens their enthusiasm for the use of these types of generation. China plans to phase out subsidies for them by 2020, in light of this issue. Ma expects that there will still be some wind and solar in China’s energy mix, but that natural gas will be the real winner in the search for cleaner electricity production.

Viewed one way, we are looking at yet another way Chinese officials have avoided closing Chinese businesses because the marketplace did not seek their products. Thus, the usual cycle of bankruptcies, with loan defaults, has not taken place. This issue makes China’s total electricity generating capacity even more excessive, and reduces the profitability of the overall system.


We have shown how low wages and low energy prices seem to be connected. When prices are too low, some producers, including China, make a rational decision to cut back on production. This seems to be the true nature of the “Peak Coal” and “Peak Oil” problem. Because China is reacting in a rational way to lower prices, its production is falling. China is already the largest importer of oil and coal. If there is a shortfall elsewhere, China will be affected.

We have also given several examples of how the current system has been able to avoid defaults on loans. The issue is that these problems don’t really go away; they get hidden, and get bigger and bigger. At some point, all of the manipulations by government officials cannot hide the problem of way too many apartments, or of way too much electricity generating capacity, or of way too many factories of all kinds. The postponed debt collapse is likely to be much bigger than if market forces had been allowed to bring about earlier bankruptcies and facility closures.

Chinese officials are now talking about reining in the growth of debt. There is also discussion by heads of Central Banks about raising interest rates and selling QE securities (something which would also tend to raise interest rates). China will be very vulnerable to rising interest rates, because of stresses that have been allowed to build up in the system. For example, many mortgage holders will not be able to afford the new higher monthly payments if rates rise. If interest rates rise, factories will find it even harder to be profitable. Some may reduce staff levels, to try to reach profitability. If this is done, it will tend to push the system toward recession.

We likely now are in the lull before the storm. There are many things that could push China toward an energy or debt crisis. China is so big that the rest of the world is likely to also be affected.



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 financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,825 Responses to Will China Bring an Energy-Debt Crisis?

  1. grayfox says:

    This looks interesting. Technology…the more complex the better, right? In for a penny in for a pound.
    Are you a believer?

    • Davidin100millionbilliontrillionzillionyears says:

      $80 million is peanuts…

      well, not to me, but certainly to him.

      I wonder…

      how will this “smart city” survive in the AZ desert when there is no more A/C because of the depletion of fossil fuels?

      Bill, oh Bill, I can’t hear you!

      • karl says:

        2 KW of solar per 1000 sq. ft. of dwelling is more than enough to keep it cool if built right. Az. has some sun.

    • Fast Eddy says:

      I so want to believe….

      • Greg Machala says:

        I want to believe too. But the reality is solar PV doesn’t scale, it is intermittent and expensive (even more so with batteries that have to be replaced every 5 to 7 years).

    • Lastcall says:

      Industrial Civilisation is having everything thrown at it to keep it alive. In the same way the elderly and infirm consume the most expensive/exotic and extravagant medical procedures in the latter stages, so too is our way of life being maintained via extraordinary interventions.

      Hallucinations by the patient, as per this article, are par for the course.

      2007 GFC was our defibrillation moment, QE was the shot of adrenaline, negative interest rates the intravenous drip and Tesla is an attempt at chelation therapy to purge those nasty toxins, the FF. Plenty of money being made by the inner circles as the patient more and more resembles the walking de.ad.

      Get the popcorn and the toilet pan; going to get messy!

      • Interesting analogies!

        • Lastcall says:

          It seems that the side effect of each treatment requires ever more adventurous interventions. We seem to be at the point where the ‘masters’ will never see the root cause because they have long ago forgotten what a healthy economy looks like. Instead time reveals ever more bizarre side effects which take so much time to untangle that a return to basics is too far back to see in their rear view mirror.

          Its akin to someone being born today being told there was once a heavy covering of trees through the middle east. Doesn’t one country have a cypress tree on its flag?

    • xabier says:

      ‘Smart cities’ is the idea behind Europe’s Project Stardust.

      Guess what: not only will the cities be smart, surrounded by wind turbines and covered in panels, with ‘intelligent lighting’ (?) they’ll ‘create lots of new economy jobs’.

      Look up at the skies: they are shining with hope, brilliant with stardust!

      • xabier says:

        Anyone seen more news about the solar-powered road’ which was opened in France a while bacK?

        • Slow Paul says:

          It’s probably fully lit… when the sun is shining!

        • Lastcall says:

          Its running alongside the yellow brick road, last I heard…

        • Fast Eddy says:

          France opens world’s first solar panel road, but it sure ain’t cheap

          But the technology comes with a mighty price tag: The stretch of road cost 5 million Euros (US$5.2 million) to build, leaving some experts questioning the project’s value.

          “It’s without doubt a technical advance, but in order to develop renewables there are other priorities than a gadget of which we are more certain that it’s very expensive than the fact it works,” Marc Jedliczka, vice-president of Network for Energetic Transition (CLER), told Le Monde.


          • Thanks! People don’t understand that we need very cheap electricity that is easily available around the clock.

            According to the article, “Officials will see if the technology, called Wattway, can provide enough energy to power street lighting in the town of 3,400 residents over the next two years, according to The Guardian.”

            If they plan to use the electricity to power street lights, they need to add batteries to the already high cost.

    • zenny says:

      Oh… he gout around to checking under the cushions in the couch. Lets just hope he can find some water.

    • It seems like water is an issue for any city in Arizona as well. Besides all of the food needing being trucked in from a distance, using oil.

  2. Pingback: Mideast Turmoil: Follow the Oil, Follow the Money - You-Blog.Club

  3. Baby Doomer says:

    Does a change in price of fuel affect GDP growth? An examination of the US data from 1950-2013 (Hall, & Aucott, 2014)

    Studies have suggested that in the USA if the amount of national income spent on energy exceeds 5.5% the economy crashes.


  4. Third World person says:

    here another elon musk type of actor

    this guy saying he clean up Great Pacific garbage patch in 2022
    through his technology

    • Third World person says:

      after watching this i have also idea of cheap energy to vc

      cow dung will power the world

    • I would agree that a passive approach to cleanup would make a lot more sense then an approach based on burning a lot of oil directly. But it is likely any of our pollution issues–easy to put off. Even a passive approach uses energy and materials of various kinds.

  5. Tim Groves says:

    Speaking of major events, there are now reports of a coup that is not a coup against President Robert Mugabe in Zimbabwe:

    “Although it doesn’t look like a coup, it is a coup,” Zimbabwe analyst Alex Magaisa, a senior Zimbabwe legal analyst based in the UK, told The Telegraph.


  6. Robert Mugabe is 93 years old. I expect that he should have retired a long time ago.

    Zimbabwe is right on the edge of the countries being hit by plague. I expect it is next in line to be impacted.

    Zimbabwe’s per capita GDP was $1,009 per person in 2016, or less than $3 per person per day. (And GDP includes more than wages.)

    Zimbabwe’s top exports are gold, raw tobacco and nickel ore. Its top imports are refined petroleum, telephones, packaged medicines, corn, rice, wheat, and soybeans.

    • Tim Groves says:

      A little background: In Rhodesia under Ian Smith’s government, the streets of Salisbury were clean, tidy and orderly, and Ian himself boasted that the whites had “created a high standard of civilization here. We have actually given our black people more than, for example, the British gave any black people in countries to the north of us that they colonized.”

      But the Ndebele ZAPU leader Joshua Nkomo—who by the way sounds more British to my ears in this 1976 interview than most Britons I meet today— was not impressed one bit. “No, no, we’re not talking about race here. We’re talking about a people getting the right to decide their future. And to say that it (independence) should come slowly, it would mean that people believe that the Africans are not as human or equal human beings as the white people. So why does it come slowly? We are saying the population of this country, not just blacks, the population of this country together, must make decisions.”

      A few years after Independence, Nkomo was forced to flee the country when he was accused of plotting a coup d’état after South African double agents in Zimbabwe’s Central Intelligence Organization, attempting to cause distrust between ZAPU and ZANU, planted arms on ZAPU owned farms and then tipped Mugabe off to their existence.

      In exile, he stated that “nothing in my life had prepared me for persecution at the hands of a government led by black Africans.”

      From WIkipedia: After the Gukurahundi massacres, in 1987 Nkomo consented to the absorption of ZAPU into ZANU, resulting in a unified party called ZANU-PF, leaving Zimbabwe as effectively a one-party state and leading some Ndebeles to accuse Nkomo of selling out. These Ndebele individuals were in such a minority that they did not constitute a meaningful power base within the cross-section of ZAPU. In a powerless post and with his health failing, his influence declined.

      When asked late in his life why he allowed this to happen, he told historian Eliakim Sibanda that he did it to stop the murder of the Ndebele (who supported his party) and of the ZAPU politicians and organizers who had been targeted by Zimbabwe’s security forces since 1982. “Mugabe and his Shona henchmen have always sought the extermination of the Ndebele,” he said.

      Rhodesia. How long ago that all seems now.

      • Fast Eddy says:

        I was on a ship in the Arctic some years ago … there was a panel of experts taking questions on the ship … two were Inuit — one was a female lawyer…

        When assaulted by one of the wealthy prick white man from Toronto who accused her as follows ‘we have done everything for you but you have messed it up’

        She replied ‘we were doing much better before you did everything for us – thanks’

        I think Gandhi mentioned something along these lines as well… cant locate the quote

  7. Curt Kurschus says:

    According to Fatih Birol of the IEA, the USA is to become a net oil exporter within the next ten years:


    Which is odd, given Birol’s past warnings about future oil supply. Does he not see the unsustainability of tight oil extraction from shale plays?

    • Niko says:

      This story has been bouncing around everywhere and is making the hopium addicts sleepy… very sleepy…

      Net exporter of low EROI, high cost fuels from a nearly bankrupt industry, that due to decline rates would last a few years at best (if it’s even a remote possibility, which I doubt).

    • Baby Doomer says:

      We Promise an Oil Independent America

    • Baby Doomer says:

      IEA is totally wrong. The idea that US shale oil production can increase year after year after year is silly….

  8. jupiviv says:

    So a question – what about Iceland? They have approached energy independence with their genuinely viable hydro and geothermal. How will collapse screw it all up for them?

    • DJ says:

      Supply chains and spent fuel ponds. And starvation.

      • Tim Groves says:

        You’re forgetting they have an endless supply of bananas growing in geothermally heated greenhouses and frozen fish fingers. And Bjork! They have Bjork!

    • Fast Eddy says:

      Try operating this

      Without the mines that supply the ores that are smelted in smelters and formed into spare parts in the factories and put on ships and delivered from China and Germany and other countries… to Iceland…

      Iceland will be just as f789ed as every other place on earth post BAU

  9. Greg Machala says:

    I was thinking about truly disruptive technologies that actually replaced an existing technology. For example, when I was a kid slide rules were used to do mathematical calculations. Today, calculators have completely replaced the slide rule. The car has replaced the horse. Things of this nature seem to be the exception though. Most of our technology today seems to be additive not displacing.

    When speaking of energy, none of our energy supplies over the last 50 years have been replaced or displaced at all. This, despite the discovery of nuclear energy. Transportation has gone largely unchanged in 75 years or more. Still largely the same old internal combustion engine technology. Yes there are more bells and whistles, but the underlying technology is still the same.

    Medicine has made advances. However, the costs are astronomical and benefits questionable at times.

    It seems to me we are just tweaking and adding to what has already been discovered/invented. We are not really displacing/replacing much of any existing technology. Does anyone else see this trend? Or, is it my imagination?

    • Niko says:

      It is not your imagination. Here’s a great analysis of exactly that:


      • Greg Machala says:

        Interesting find. I’ll give it a read.

        • Greg Machala says:

          “Try convincing someone in 1965 that the U.S. would not have a human space launch capability 50 years later, or that we would retreat from far-flung human exploration after 1972 and they would think you to be stark-raving mad” – This is a good point in the dothemath article.

          • Greg Machala says:

            It seems to me that for progress and inventions to continue to increase at the same pace as the did from 1885 to 1950 two things would have to happen:
            1) We would need more of every element on the periodic table
            2) We would need a lot more elements on the periodic table

            • Niko says:

              And 3) We would need another fuel bonanza many times more potent than the fossil fuels that drove development during that period.

            • energy and fuel just moves levers.

              what we have done over the past 250 years is find fresh ways to move levers more efficiently, in order to move things and make things

              there doesnt seem to be any new ways that levers can be moved for our benefit.

              i might have missed something though

            • I think you have found the key.

      • Tum Murphy teaches physics at University of California San Diego. A while back, he wrote a number of very good posts. This is one of them. I agree; we don’t have nearly as many breakthroughs now as we did then.

    • Slow Paul says:

      Yes I have also noticed this and I use this argument sometimes when discussing with my cornucopian friends. We are more or less using the same technology as we did 50 years ago, just refined or evolved from that point. That’s why we will never go to Mars or create a techno-utopia etc, we just have too much baggage, both mentally and infrastructure-wise. Oh, and the lack of cheap fuels.

    • psile says:

      The greatest labour saving device ever invented was the washing machine. It’s been downhill from there ever since.

    • DJ says:

      People are not impressed they can leave their jobs unattended for a couple of weeks to travel through air inside a metal object to the other side of the planet.

      No, they are impressed they can book this over internet and pay without using cash.

  10. Niko says:

    It is not your imagination. Here’s a great analysis of exactly that:


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