Will the World Economy Continue to “Roll Along” in 2018?

Once upon a time, we worried about oil and other energy. Now, a song from 1930 seems to be appropriate:

Today, we have a surplus of oil, which we are trying to use up. That never happened before, or did it? Well, actually, it did, back around 1930. As most of us remember, that was not a pleasant time. It was during the Great Depression.

Figure 1. US ending stocks of crude oil, excluding the Strategic Petroleum Reserve. Amounts will include crude oil in pipelines and in “tank farms,” awaiting processing. Businesses normally do not hold more crude oil than they need in the immediate future, because holding this excess inventory has a cost involved. Figure produced by EIA. Amounts through early 2016.

A surplus of a major energy commodity is a sign of economic illness; the economy is not balancing itself correctly. Energy supplies are available for use, but the economy is not adequately utilizing them. It is a sign that something is seriously wrong in the economy–perhaps too much income disparity.

Figure 2. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.

If incomes are relatively equal, it is possible for even the poorest citizens of the economy to be able to buy necessary goods and services. Things like food, homes, and transportation become affordable by all. It is easy for “Demand” and “Supply” to balance out, because a very large share of the population has incomes that are adequate to buy the goods and services created by the economy.

It is when we have too much income and wage disparity that we have gluts of oil and food supplies. Food gluts happened in the 1930s and are happening again now. We lose sight of the extent to which the economy can actually absorb rising quantities of commodities of many types, if they are inexpensive, compared to wages. The word “Demand” might better be replaced by the term “Quantity Affordable.” Top wage earners can always afford goods and services for their families; the question is whether earners lower in the wage hierarchy can. In today’s world, some of these low-wage earners are in India and Africa, or have no employment at all.

What is Going Right, As We Enter 2018?

[1] The stock market keeps rising.

The stock market keeps rising, month after month. Volatility is very low. In fact, the growth in the stock market looks rigged. A recent Seeking Alpha article notes that in 2017, the S&P 500 showed positive returns for all 12 months of the year, something that has never happened before in the last 90 years.

Very long runs of rising stock prices are not necessarily a good sign. According to the same article, the S&P 500 rose in 22 of 23 months between April 1935 and February 1937, in response to government spending aimed at jumpstarting the economy. By late 1937, the economy was again back in recession. The market experienced a severe correction that it would not fully recover from until after World War II.

The year 2006 was another notable year for stock market rise, with increases in 11 out of 12 months. According to the article,

Equity markets rallied amidst a volatility void in the lead-up to the Great Recession. Markets would make new all-time highs in late 2007 before collapsing in 2008, marking the worst annual returns (-37%) since the aforementioned infamous 1937 correction.

So while the stock market consistently rising looks like a good sign, it is not necessarily a good sign for market performance 6 to 24 months later. It could simply represent a bubble forming, which will later pop.

[2] Oil and other commodity prices are recently somewhat higher.

Recently, oil prices have been too low for most producers. Now, things are looking up. While prices still aren’t at an adequate level, they are somewhat higher. This gives producers (and lenders) hope that prices will eventually rise sufficiently that oil companies can make an adequate profit, and governments of oil exporters can collect adequate taxes to keep their economies operating.

Figure 3. Monthly average spot Brent oil prices, through December 2017, based on EIA data.

A major reason for the recent upward trend in commodity prices seems to be a shift in currency relativities for Emerging Markets.

Figure 4. Figure from Financial Times showing currency relativities based on the MSCI Emerging Market currency index.

While the currency relativities for emerging markets had fallen quite low when commodity prices first dropped, they have now made up most of their lost ground. This makes commodities more affordable in Emerging Market countries, and allows them to do more manufacturing, thus stimulating the world economy.

Of course, if China runs into debt problems, or if India runs into problems of some sort, or if oil prices rise further than they have to date, the run-up in currency relativities might run right back down again.

[3] US tax cuts create a bubble of wealth for corporations and the 1%.

With low commodity prices, returns have been far too low for many corporations involved with commodity production. “Fixing” the tax law will help these corporations continue to operate, even if commodity prices remain low, because taxes will be lower. These lower tax rates are important in helping commodity producers to avoid collapsing as a result of low commodity prices.

The problem that occurs is that the change in tax law opens up all kinds of opportunities for companies to improve their tax situation, either by changing the form of the corporation, or by merging with another company with a suitable tax situation, allowing the combined taxes to be minimized. See this recent Michael Hudson video for a discussion of some of the issues involved. This link is to a related Hudson video.

Groups evaluating the expected impact of the proposed tax law did their evaluations as if corporate structure would remain unchanged. We know that tax accountants will help companies quickly make changes to maximize the benefit of the new tax law. This is likely to mean that US governmental debt will need to rise much more than most forecasts have predicted.

In a way, this is a “good” impact, because more debt helps keep commodity prices and production to rise, and thus helps keep the economy from collapsing. But it does raise the question of how long, and by how much, governmental debt can rise. Will the addition of all of this new debt raise interest rates even above other planned interest rate increases?

[4] We have been experiencing artificially low oil prices since 2013. This helps the economic growth to be higher than it otherwise would be. 

In February 2014, I published an article documenting that back in 2013, oil prices were too low for oil producers. If a person looks at Figure 3, oil prices were over $100 per barrel that year. Clearly, oil prices have been much too low for producers since that time.

Unfortunately, it looks like these artificially low oil prices may be coming to an end, simply because the “glut” of oil that developed is gradually being reduced. Figure 5 shows the timing of the recent glut of oil. It seems to have started early in 2014.

Figure 5. US Stocks of crude oil and petroleum products (including Strategic Petroleum Reserve), based on EIA data.

If we look at the combination of oil prices and amount of oil in storage, a person can make a rough estimate of how this glut of oil might disappear. Quite a bit of it may be gone by the end of 2018 (Figure 6).

Figure 6. Figure showing US oil stocks (crude plus oil products) together with the corresponding oil prices. Rough guess of how balance might disappear and future prices by author.

Of course, one of the big issues is that consumers cannot really afford high-priced oil products. If consumers could not afford $100+ prices back in 2013, how would it be possible for oil prices to rise to something like $97 per barrel by the end of 2018?

I am not certain that oil prices can really rise this high, or that they can stay at this level very long. Certainly, we cannot expect oil prices to rise to the level they did in July 2008, without recession causing oil prices to crash back down.

What the Economy Needs Is Rising Energy Per Capita

I have published energy per capita graphs in the past. Flat spots tend to represent problem periods.

Figure 7. World per Capita Energy Consumption with two circles relating to flat consumption. World Energy Consumption by Source, based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects (Appendix) together with BP Statistical Data for 1965 and subsequent, divided by population estimates by Angus Maddison.

The 1920-1940 flat period came shortly after the United Kingdom reached Peak Coal in 1913.

Figure 8. United Kingdom coal production since 1855, in figure by David Strahan. First published in New Scientist, 17 January 2008.

In fact, the UK invaded Mesopotamia (Iraq) in 1914, to protect its oil interests. The UK wasn’t stupid; it knew that if it didn’t have sufficient coal, it would need oil, instead.

There were many other disturbing events during this period, including World War I, the 1918 flu pandemic, the Great Depression, and World War II. If there are not enough energy resources to go around, many things tend to go wrong: countries tend to fight for available resources; jobs that pay well become less available; deflation becomes more likely; population becomes weakened, and epidemics become more likely. I wrote about the 1920 to 1940 period in a recent post, The Depression of the 1930s Was an Energy Crisis.

The 1980-2000 flat period included the collapse of the Soviet Union, in 1991. The Soviet Union was an oil producer. The Soviet Union collapsed after prices had been low for a long time.

Figure 9. Former Soviet Union oil consumption, production, and inflation-adjusted price, all from BP Statistical Review of World Energy, 2015.

Even many years after the collapse of the Soviet Union, population growth in former Soviet Union countries and its affiliates was much lower than in the rest of the world.

Figure 10. World population growth rates between 2005 and 2010. Source: https://en.wikipedia.org/wiki/List_of_countries_by_population_growth_rate

Lower population (through falling birth rates, rising death rates, or rising emigration) are a major way that economies self-adjust because of falling energy per capita. Economies tend to fix the low-energy per capita problem by adjusting the population downward.

Recently, we have again been hitting flat periods in energy consumption per capita.

Figure 11. World per capita consumption of oil and of total energy, based on BP Statistical Review of World Energy data and UN 2017 population data.

The slowdown in world energy consumption per capita in 2008-2009 was clearly a major problem. Oil, coal and natural gas consumption fell simultaneously. Oil consumption per capita fell more than the overall mix, especially affecting countries heavily dependent on oil (Greece with its tourism, but also the US, Japan, and Europe).

The recent shift in political strategy to more isolationist stances also seems to be the result of flat energy consumption per capita. It is doubtful that Donald Trump would have been elected in the US, if world energy consumption per capita had been growing robustly, and if wage disparity had been less of a problem.

The primary cause of the 2013 to 2016 flat trend in world energy consumption per capita (Figure 11) is falling coal consumption (Figure 12). Many people think coal is unimportant, but it is the world’s second largest source of energy, after oil. We don’t have a good way of getting natural gas production to rise enough, to make up for loss of coal production.

Figure 12

Wind and solar simply do not work for solving our problem of flat or shrinking energy consumption per capita. After spending trillions of dollars on them, they make up only a tiny (1%) share of world energy supply, according to the International Energy Agency. They are part of the little gray “Other” sliver on Figure 13.

Figure 13. Figure prepared by IEA showing Total Primary Energy Supply by type from this IEA document.

Something Has to “Give” When There Is Not Enough Energy Consumption per Capita

The predicament we are facing is that energy consumption per capita seems to be reaching a maximum. This happens because of affordability issues. Over time, the price of energy products needs to rise to keep up with the rising cost of creating these energy products. But if energy prices do rise, workers earning low wages cannot afford to buy goods and services made with high-priced energy products, plus honor all of their other commitments (such as mortgages, auto loans, and student loans). This leads to debt defaults, as it did in the 2008-2009 recession.

At some point, the affordability problem can be expected to hold down energy consumption. This could happen in many ways. Spiking prices and affordability issues could lead to a worse rerun of the 2008-2009 recession. Or if oil prices stay fairly low, oil-exporting countries (such as Venezuela) may collapse because of low prices. Even if oil prices do rise, we may find that higher prices do not lead to sufficient additional supply because investment in new oil fields has been low for many years, because of past low prices.

As long as the world economy is expanding (Figure 14), individual citizens can expect to benefit. Jobs that pay well are likely to be available, and citizens can afford to buy goods with their growing wages. People who sell shares of stock and people who get pension benefits can all receive part of this growing economic output.

Figure 14. Author’s image of an expanding economy.

Once the economy starts to shrink (Figure 15), we start having problems with dividing up the goods and services that are available. How much should retirees get? Governments? Today’s workers? Holders of shares of stocks and bonds? Not all commitments can be honored, simultaneously.

Figure 15. Author’s image of declining economy.


One obvious problem in a shrinking economy is that loans become harder to repay. The problem is that there is less left over for other goods and services, after debt plus interest is subtracted, in a shrinking economy.

Figure 16. Figure by author.

Changing interest rates can to some extent help offset problems related to higher energy prices and shrinking supply. The danger is that interest rates can move in the wrong direction and make our problems worse. In the lead-up to the Great Recession of 2008-2009, the US raised short-term interest rates, helping to puncture the sub-prime mortgage debt bubble.

Figure 17. Figure comparing Case-Shiller Seasonally Adjusted Home Price Index and Federal Reserve End of Quarter Target Interest Rates. See Oil Supply Limits and the Continuing Financial Crisis for details.

We now hear a lot of talk about raising interest rates and selling QE securities (which would also tend to raise interest rates). If growth in energy consumption per capita is already flat, these changes could make the problems that the economy is facing even worse.

Our Economy Works Like a Bicycle

Have you ever wondered why a two-wheeled bicycle is able to stay upright? Research shows that a bicycle will stay upright, as long as its speed is greater than 2.3 meters (7.5 feet) per second. This is the result of the physics of the situation. A related academic article states, “This stability typically can occur at forward speeds v near to the square root of (gL), where g is gravity and L is a characteristic length (about 1 m for a modern bicycle).”

Thus, a bicycle will be able to continue in an upright manner, as long as it goes fast enough. If it slows down too much, it will fall down. Our economy is similar.

Gravity plays an important role in determining the speed of a bicycle. If the bicycle is going downhill, gravity gives an important boost to the speed of the bicycle. If the bicycle is going uphill, gravity very much pulls back on the bicycle.

I think of the situation of an economy having rising energy consumption per capita as being very much like riding on a bicycle, speeding down a hill. The person operating the bicycle would not need to provide much extra energy to keep the bicycle going.

If energy consumption per capita is flat, the person riding the bicycle must provide the energy to make it go fast enough, so it doesn’t fall over. This is somewhat of a problem. If energy consumption per capita actually falls, it is a true disaster. The bicyclist himself must provide the energy necessary to push the bicycle and rider uphill.

In fact, there are other ways that a speeding bicycle is analogous to the world economy.

Figure 18. Author’s view of analogies of speeding upright bicycle to speeding economy.

The economy needs a constant flow of outside energy. In the case of the bicycle, the human rider can provide the energy flow. In the case of the economy, the energy flow comes from a mixture of various fuel types, typically dominated by fossil fuels.

Growing debt (front wheel) is important as well. It tends to pull the economy along, because this debt can be used to pay wages and to buy materials to make additional goods and services. Thus, the effect of this increase in debt is indirect; it ultimately works through the bicyclist, the gears, and the back wheel.

In fact, the financial system as a whole is important for the “steering” of the economy. It tells investors which investments are likely to be profitable.

The gearing system of the bicycle plays a modest role in the system. Changing gears allows greater efficiency in the use of the energy that is available, under certain circumstances. But energy efficiency, by itself, cannot operate the system.

If the human rider does not provide sufficient energy for the bicycle to go rapidly enough, the bicycle glides for a while, and then falls over. The world economy seems to be similar. If the world economy does not obtain enough energy per capita, economic growth tends to slow and eventually collapses. The collapse can relate to the whole world economy, or to parts of the economy.

The Problem of Parts of the Economy Not Getting Enough Energy

We can think of the economy as being made up of many bicycles, operated by bicycle riders. At the beginning of the post, I talked about the problem of wage disparity. This issue occurred at the time of the 1930’s Great Depression and is occurring again now.

We might call wage disparity “too low a return on the labor of some workers.” In groups of animals in ecosystems, too low a return on the effort of these animals is what causes ecosystems to collapse. For example, if fish have to swim too far to obtain additional food, their population will collapse. It should not be surprising that economies tend to collapse, when the return on the efforts of part of their workers falls too low.

Wage disparity has to do with how well the operators of bicycles are doing. Are the operators of these bicycles receiving enough calories, so that they can keep pumping their bicycles fast enough so that the speed is high enough to remain upright?

If energy consumption per capita is growing, this greatly helps the operation of the economic system. If there is growing availability of inexpensive energy, machines of various types, including trucks, can be used to increasingly leverage the labor of workers. This increased leveraging helps each worker to become more “productive.” This growing productivity, thanks to growing energy consumption, allows more goods and services to be produced in total. It also allows the wages of the workers to stay high enough that they can afford to buy a reasonable share of the output of the economy. When this happens, “gluts” of unaffordable goods are less of a problem.

If energy consumption per capita is flat (or worse yet, falling), greater “complexity” is needed, to keep output of goods and services rising. Greater complexity involves more specialization and more training of individual members of the economy. Greater complexity leads to larger companies, more government services, and more wage disparity. Unfortunately, there are diminishing returns to complexity, according to Joseph Tainter in “The Collapse of Complex Societies.” Ultimately, increased complexity fails to provide an adequate number of high-paying jobs. Wage disparity becomes a problem that can cause an economy to collapse.

If there is not enough economic output, the physics of the economy tries to “freeze out” workers at the bottom of the hierarchy. Workers with low wages cannot afford homes and families. The incidence of depression rises. Debt levels of disadvantaged groups (such as young people in the US) may rise.

So the situation may not be that the whole world economy fails; it may be that parts of the economy collapse. In fact, we are already seeing evidence that this is taking place. For example, life expectancies for US men have been falling for two years, because of growing problems with drug overdoses.


In 2017, the world economy seemed to be gliding smoothly along because the economy has been able to get the benefit of artificially low energy prices and artificially low interest rates. These artificially low prices and interest rates have given a temporary boost to the world economy. Countries using large amounts of energy products, including the US, especially benefitted.

We cannot expect this temporary condition to continue, however. Low oil prices have already started to disappear, with Brent oil prices at nearly $69 per barrel at this writing. The trends in oil prices and oil stocks in Figure 6 are disturbing. If oil prices begin to rise toward the price needed by oil producers, they are likely to trigger a recession and a drop in world energy consumption, just as spiking prices did in 2008-2009. There is a significant chance of collapse in the next 12 to 24 months. It is hard to know how widespread such a collapse may be; it may primarily affect particular countries and population groups.

To make matters worse, our leaders do not seem to understand the situation. The world economy badly needs rising energy consumption per capita. Plans to raise interest rates and sell QE securities, when the economy is already “at the edge,” are playing with fire. If we are to keep the world economy operating, large quantities of additional energy supplies need to be found at very low cost. It is hard to be optimistic about this happening. High-cost energy supplies are worthless when it comes to operating the economy because they are unaffordable.

Many followers of the oil situation have had great faith in Energy Returned on Energy Invested (EROI) analysis telling us which kinds of energy supplies we should increase. Unfortunately, EROI doesn’t tell us enough. It doesn’t tell us if a particular product is scalable at reasonable cost. Wind and solar are great disappointments, when total costs, including the cost of mitigating intermittency on the grid, are considered. They do not appear to be solutions on any major scale.

Other researchers looking at the energy situation have not understood how “baked into the cake” the need for economic growth, rising per capita energy consumption, and rising debt levels really are. Rising debt is not an error in how the financial system is put together; a bicycle needs a front wheel, or it cannot operate at all (Figure 18). I have written other articles regarding why debt is needed to pull the economic system forward.

This economic growth cannot be “fake growth” either, where a debt Ponzi Scheme seems to allow purchases that real-life consumers cannot afford. Quite a bit of what is reported as world GDP today is of a very “iffy” nature. If China builds a huge number of apartments that citizens cannot afford without subsidies, should these be counted as true GDP growth? How about unneeded roads, built using the rising debt of the Japanese government? Or recycling performed around the world, because it makes people “feel good,” but really requires substantial subsidies?

At this point, it is hard for us to know where we really are, because every government wants to make GDP results look as favorable as possible. It is clear, however, that 2018 and 2019 can be expected to have more challenges than 2017. We have interesting times ahead!

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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2,782 Responses to Will the World Economy Continue to “Roll Along” in 2018?

  1. Baby Doomer says:

    Fear builds walls -Roger Waters

  2. Baby Doomer says:

    This is what Dennis over at Peakoilbarrel posted

    “Oil prices will increase and use of hybrids, plugin hybrids and EVs will increase as the cost of these newer technologies fall and the price of oil, natural gas and coal increase due to depletion.

    In addition, coal and natural gas prices will increase while the cost of wind and solar continue to fall and much of the electricity produced by coal and natural gas may be replaced by wind and solar output, along with hydro, geothermal, pumped hydro, batteries, fuel cells, and vehicle to grid.

    If these substitutes are adopted at the speed with which smartphone adoption occurred. We get a “fast” energy transition.”

    • Baby Doomer says:

      All I can say about this is way too many “If’s”:….LOL

    • There are a lot of people who believe this stuff. You can’t add these at the rate of speed of the smart phones, because of the huge energy use required, which we don’t have. Also the cost, relative to wages. Intermittent electricity is very expensive, once a person includes the cost of getting rid of the intermittency. We need dispatchable electricity to operate our current system. Prices can’t rise very much, or the system collapses.

    • Fast Eddy says:

      It would suck if one had the IQ of Dennis.

    • DJ says:

      A smartphone costs €400 and is normally in use for 2-3 years.

      An EV costs €40k+ and a car is normally in use for 20 years.

      • Fast Eddy says:

        Even if BAU was not going down… I doubt anyone would be getting 20 years out of an EV…. the cost of replacing the battery would preclude that

        But then again …. there are many many many very stooooopid hewmans on this planet…. and some of them might keep forking out big dollars because they are saving the planet by doing so

        • DJ says:

          I meant when everyone had a dumbphone all it took was 2-3 years and a decision to part from €400 savings to “transit”.

          ICE cars I believe lasts up to 20 years. So faster than 20 years takes a whole lot of people scrapping perfectly useful cars. If you have a 7 years old Toyota are you really a candidate for a new €70k (subsidies has to go if everyone goes EV) EV?

          Another thing is. A smartphone was a big improvement over a dumbphone. An EV is still only a car.

        • Baby Doomer says:

          Another big thing is only around 1/3 of all car owners in America have a garage..And even less in Asia..Most people who live in cities park in the streets….So you would have to build millions of charging stations..And people would have to drive to a charging station every single day and wait 30 mins (Assuming nobody else is charging) to fill up your car…People barely have the nerves to wait five mins at MacDonald for a cheeseburger. Let alone do that every day before work etc…

          • DJ says:

            My friends have informed me this is no problem. You just pull right to the charge lane and charge as you drive. Simple!

          • meliorismnow says:

            Do you have a source for the 1/3 of car owners? I could believe 1/3 of households (eg excluding those who don’t own a car and those who park in multifamily garages). In any case, those who street park generally live in cities and have below average wealth/income. The latter isn’t a near term candidate for EVs (maybe a used one) and the former generally has a very short commute that would not require daily charging, even with a first gen EV. And in most US cities there are plenty of places to charge, including workplaces. I leased two LEAFs over a five year period (once in a large city, once in a small town) without home charging and had very few problems/hassles except for roadtrips (which were therefore curtailed).

            Obviously there are people who EVs won’t work for and even more who would refuse any hassle but these groups are constantly getting smaller as options, technology, and affordability improve.

            • DJ says:

              I think in europe 1/3 living in houses, max 1/2 is correct. And also well paid are living closest to the city core. Also car commuting to work is not the norm among the best paid 20%.

              You can’t buy a car on the strategy of charging it while at the super market or kids soccer practice.

              Charging will be a BIG obstacle getting over 50% in europe. Of course the plan was never to replace all cars with EV, just getting rid of ICE 😉

          • Well, it’s kind of stupid to own new car for a long haul without a proper garage in the first place! The temperature swings and weather impact tend to accelerate aging of everything from electronics to plastics..

            • People with homes where they can recharge buy new electric cars, so little public charging is needed. After a while, they want to resell the cars to others, and discover the demand is awful. Typical used car buyers don’t have garages. If they all did buy electric cars, we would likely have a big recharging problem.

              We have at least as much problem with maintaining grid electricity production as oil production. Keeping up roads will be a problem if we are short of either. It is hard for me to understand the reason for the craze in the first place.

          • Fast Eddy says:

            It’s the Tweet generation

    • Greg Machala says:

      “In addition, coal and natural gas prices will increase while the cost of wind and solar continue to fall” – This is contradictory. If coal and natural gas prices increase then the costs to build solar and wind power will increase. The only reason solar and wind turbine prices have come down is due to the slumping global economies and depressed resource and commodity prices.

  3. Baby Doomer says:

    Richest one percent made 82% of wealth created last year — report

    Ahead of World Economic Forum in Davod, Oxfam findings show poorest half of the world received none of 2017’s financial bounty

  4. Siobhan says:

    Exclusive: Philadelphia Energy Solutions to file for bankruptcy – memo

    (Reuters) – Philadelphia Energy Solutions LLC, the owner of the largest U.S. East Coast oil refining complex, announced to its employees on Sunday that it plans to file for Chapter 11 bankruptcy, according to an internal memo reviewed by Reuters.

    • This is a company owning two of the East Coast refineries that got into financial trouble before. According to the article:

      East Coast refiners have lower profit margins than other refineries across the country, largely because of a reliance on crude imports from West Africa and other markets.

      Philadelphia Energy Solutions had strong profits in 2014 and 2015 because of investments in rail terminals that allowed the refiner to bring in discounted Bakken crude oil in mile-long trains from North Dakota.

      But the boom turned to bust by the end of 2015 as oil prices plummeted and the discount for North Dakota crude disappeared. The fallout hit oil and gas explorers and producers hard, with scores of them, such as Linn Energy Inc and Breitburn Energy Partners LP, filing for bankruptcy in 2016.

      It is not clear that there is any actual intent to discontinue operations. According to the article:

      Following an agreement with its creditors, the company has secured access to $260 million in new financing, and said it expected the bankruptcy filing to have no immediate impact on its employees, according to the memo, which was confirmed by a spokeswoman for Philadelphia Energy Solutions.

      Looking for another bailout, I suppose.

  5. JH Wyoming says:

    The person being interviewed in that video link is a kick to listen to. He just tells it like it is and holds nothing back. Says the US stock market has continued to go up lately because other parts of the world don’t have any good investments. He says when that doesn’t work and all else fails they take you to war. Oh my. He may be right.

    • Greg Machala says:

      The inequality gap has to widen or the resource base would collapse. Imagine if all this “on paper” wealth was redistributed to the consuming middle and lower income classes. Well, they would spend it on “stuff”. The demand on resources would increase and we would quickly hit a wall in resource availability. We are in a predicament for sure.

      • JH Wyoming says:

        The masses are quickly reaching a point in which their existence in such huge numbers is no longer needed for the few remaining owners. What happens now? Does this game hit reset or does the list of owners shrink even more? Is a world war started to cull the masses to the benefit of the owners? Something has to give.

      • DJ says:

        Good point.

        If we could realize our real estate and stock profits we could all buy a few EVs each, maybe even autonomous, and discover where the limits to lithium and cobalt and coal and everything are.

  6. jupiviv says:

    New article up on Steve Ludlum’s blog:


    “Having burned through a large percentage of our non-renewable resource base (wealth), asset price inflation is about all we have left. We Americans live for the bigger number. When our numbers shrink we can blow our brains out or get drunk. Or we go to the government and demand bigger numbers as our birthright.”

    • Unfortunately, finite resources is not a topic we can talk about. I am also not convinced that it is something that we can really do anything about. We can create metrics that make wind and solar look much better than they really are, and convince ourselves that we can substitute these for finite resources. But eventually, the whole story will come out. Right now, we are experiencing huge asset inflation that makes owners of these assets feel good. It is not really sustainable, however.

      • jupiviv says:

        “We can create metrics that make wind and solar look much better than they really are, and convince ourselves that we can substitute these for finite resources.”

        Even wind and solar energy need to be collected using finite resources. No matter how we look at it, the problem is one of shrinking numbers. 2018 is looking to me like the year when that fact gains wider acceptance.

  7. Fast Eddy says:

    Pop-up Quiz.

    What is this?

    Why is it so funny?

  8. Fast Eddy says:

    The green groopies with their iphones ipads i this i that…. who rail against plastic bags….

    Need to splurge and buy this

    • grayfox says:

      Is it okay to rail against plastic bags if I’ve never owned a smart phone/cell phone of any kind? Plastic bags have to go. I think bringing a reusable bag to go shopping is a reasonable thing to ask of the public. I use a canvas bag which is maybe 20 years old and still good for another 10 years at least if I don’t lose it. Bring it with me to the store is not an inconvenience. Stop being a carbuncle on the butt of sensible movements.

      • DJ says:

        What difference does it make?

        (I bring an used plastic bag if I remember because they are so expensive.)

        • DJ says:

          Sweden: plastic bag (actually 85% sugar cane), used a few times and then finally as a trash bag. Probably burned for energy.

          (Not) developing world: plastic anything thrown straight into the ocean.

        • JH Wyoming says:

          “What difference does it make?”

          It will make a huge difference to the lives of sea life. Sea birds eat bits of plastic thinking its food, get sick and die.

          • DJ says:

            Does it make a big difference to sea birds if my plastic (well 85% sugar cane) bag is burned or never manufactured?

            • JH Wyoming says:

              My response was meant in regards to regular plastic.

            • DJ says:

              Anyway, lets pretend regular 100% plastic bags existed. What difference does it make? It is burned anyway.

              Pretend worst case a person buys five plastic bags each week, this is probably about 1% of all waste they throw. You buy and throw away more plastic as package.

              And it doesn’t end up in the ocean.

            • Fast Eddy says:

              Yep – the bags are made from petroleum … so burning the bags or burning oil directly …. what does it matter. Particularly if high heat incinerators are used (powered by gas of course!).

              The green grooopies should run down the street chasing cars and scream at the drivers telling them to walk!

              The futility of the situation is beyond epic.

      • Davidin100millionbilliontrillionzillionyears says:

        most reusable bags are highly contaminated with bacteria…

        I like paper AND plastic…

        either way, they are reused as trash bags, so there’s a double use to each bag.

      • Fast Eddy says:

        The thing is…

        If you put a plastic bag into the garbage and you live in the first world — you are NOT causing this:

        Your plastic waste is NOT being dumped in the ocean.

        When you see plastic in the ocean it is coming from the THIRD world.

        So it does not matter if you bring your own bag. That does not reduce the amount of trash that ends up in the ocean.

        If you want to do something the next time you vacation in a third world country hand out some reusable bags to the poor.

  9. JH Wyoming says:


    Wages not fully paid are being made up for with bricks in China.

    • Interesting! In Cuba, workers we saw who were making the standard $20 per month in wages in a cigar factory received some cigars to sell in addition to tourists, to “top up” their wages.

      • JH Wyoming says:

        Probably made more selling the cigars.

        • The workers had access to “bands” of high priced cigars. They could add the bands to the cheap cigars, and sell them at a fairly high price.

          • JH Wyoming says:

            That’s a nice trick, until the consumer coughs and wonders why their special cigar isn’t so special, but I guess by then the sale has been consummated. I’m sure the workers have to barter a lot of hours for those special bands. Oh my, we do have it much better here in developed countries, at least until it doesn’t work anymore.

    • xabier says:

      In the excellent book ‘In Siberia’, Colin Thubron met a man who was paid one day in sheets of plate glass. That was just after the Soviet collapse. He had no idea what to do with them, but that was all his boss had to offer.

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