Our Energy Problem Is a Quantity Problem

(This post consists of a short overview article I recently wrote for Transform, a magazine for Environment and Sustainability Professionals, plus six related Questions and Answers.)

Reading many of today’s energy articles, it is easy to get the impression that our energy problem is a quality problem—some energy is polluting; other energy is hoped to be less polluting.

There is a different issue that we are not being told about. It is the fact that having enough energy is terribly important, as well. Total world energy consumption has risen quickly over time.

Figure 1. World Energy Consumption by Source, based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data for years 1965 and subsequent.

In fact, the amount of energy consumed, on average, by each person (also called “per capita”) has continued to rise, except for two flat periods.

Figure 2. 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.

There is a good reason why energy consumed has risen over time on a per capita basis. Every human being needs energy products, as does every business. Energy is what allows food to be cooked and homes to be heated. Energy products allow businesses to manufacture and transport goods. Without energy products of all kinds, workers would be less productive in their jobs. Thus, it would be hard for the world economy to grow.

When energy consumption per capita is rising, it is easy for workers to become more productive because the economy is building more tools (broadly defined) for them to use, making their work easier. Manufacturing cell phones and computers requires energy. Even things like roads, pipelines, and electricity transmission lines are built using energy.

Once energy consumption growth flattens, as it did in the 1920-1940 period, the world economy is negatively affected. The Great Depression of the 1930s occurred during the 1920-1940 period. Problems, in fact, started even earlier. Coal production in the United Kingdom started to drop in 1914, the same year that World War I began. The Great Depression didn’t end until World War II, which was immediately after the 1920-1940 period.

In the 1920-1940 period, many people, especially farmers, were not able to earn an adequate living. This is a situation not too different from the one today, in which many young people are not able to earn an adequate living. Strange as it may seem, this type of wage disparity is a sign of inadequate energy per capita, because jobs that pay well require energy consumption.

The 1980-2000 flat period was in many ways not as bad as the earlier one, because the lack of growth in energy consumption was planned. The United States changed to smaller, more energy-efficient cars in order to reduce the amount of gasoline consumed. Oil-powered electricity generation was taken out of service and replaced with other types of generation, such as nuclear. Heating of homes and businesses was changed to more efficient systems that did not burn oil.

The indirect effect of the planned reduction in oil consumption was a drop in oil prices. Low oil prices adversely affected all oil exporters, but the Soviet Union was especially affected. Its central government collapsed, at least partly because of its reduced revenue stream. Member republics continued to operate, somewhat as in the past. Russia and Ukraine cut back greatly on their industrialization, leading to less use of energy products. Population tended to drop, as citizens found better work prospects elsewhere.

Eventually, in the early 2000s, oil prices rose again. Russia was able to become a major oil exporter again, but Ukraine and other industrialized areas were permanently handicapped by the collapse. Countries affiliated with the Soviet Union (including Eastern European countries, North Korea, and Cuba) found themselves permanently lagging behind the US and Western Europe.

Recently (2013-2017), the world economy seems to have again reached a period of flat energy consumption, on a per capita basis.

Figure 3. Based on data of BP Statistical Review of World Energy, 2017, and 2017 UN Population Estimates.

In fact, in many ways the flattening looks like that of the 1920 to 1940 period. Increased wage disparity is again becoming a problem. Oil gluts are again becoming a problem, because those at the bottom of the wage hierarchy cannot afford goods using oil, such as motorcycles. Young people are finding their standards of living falling relative to the living standards of their parents. They cannot afford to buy a home and have a family. Governments are becoming less interested in cooperating with other governments.

Why is world energy consumption per capita flat, or actually falling slightly, after 2013? The answer seems to be diminishing returns with respect to coal production. Diminishing returns refers to the fact that while at first coal is inexpensive to extract, the cost of extraction rises after the thickest seams and those closest to the surface have been extracted.

A chart of China’s energy production shows how China’s coal production first rose as low cost made its usage advantageous, and then fell due to diminishing returns. China experienced a major ramp-up in coal production after it was added to the World Trade Organization in 2001.

Figure 4. China’s energy production, based on data from BP Statistical Review of World Energy, 2017.

As the extraction of coal progressed, China found itself with many mines with rising production costs. Coal prices did not rise to match the higher cost of production, so a large number of unprofitable mines were closed, starting in about 2012.

A major reason for the flat world per capita energy consumption starting in 2013 is the fall in China’s coal production after 2013. Coal production is falling in quite a number of other countries as well, as the cost of production rises, and as users become aware of coal’s environmental issues. Other sources of energy have not been rising sufficiently to keep total per capita energy consumption rising. A person can see in the China chart that wind and solar production are not rising sufficiently to offset its loss of coal production. (Wind and solar are part of Other Renewables.) This situation occurs elsewhere, as well.

What role do wind and solar play in maintaining world energy supply? The truth is, very little. While a great deal of money has been spent building them, wind and solar together amounted to only about 1% of total world primary energy supply in 2015, according to the International Energy Association.

A major problem is that wind and solar do not scale well. As larger quantities are added to electricity networks, more workarounds for their intermittency (such as batteries and long distance transmission) are needed. Bid prices for wind and solar give a misleadingly low impression of their real cost, unless the projects include many hours’ worth of storage to offset the impact of intermittency.

The key to rising energy consumption seems to be the falling cost of energy services, when efficiency is included. For example, the cost of delivering a package of a given size a given distance must be falling, relative to inflation. Similarly, the cost of heating a home of a given size must be falling. Governments must be able to tax producers of energy products, rather than providing subsidies.

Globalization requires ever-expanding energy supplies to meet the needs of a rising world population. To maintain globalization, we need a growing supply of energy products that are very cheap and scalable. Unfortunately, wind and solar don’t seem to meet our needs. Fossil fuels are no longer cheap to extract, because we extracted the resources that were least expensive to extract first. Our problem today is that we have not been able to find substitutes that are sufficiently cheap, non-polluting, and scalable.

A Few Related Questions and Answers:

(1) What is the biggest impediment to raising total energy consumption?

We cannot get the price of oil and of other fuels to rise high enough, for long enough, to encourage the production of the fossil fuel supplies that seem to be in the ground. What happens, instead, is that energy prices hit an affordability limit and fall back.

Figure 5. NASDAQ three month price chart for Brent Crude oil. Source: NASDAQ

The recent strike in Brazil over high diesel prices shows the kind of issues that occur. Oil prices are still far below what many oil exporters (such as Norway, Venezuela, and Iraq) really need, when needed taxes are included.

Of course, the problem with not being able to get prices high enough also discourages the use of alternatives to fossil fuels, such as wind and solar.

(2) Aren’t wind and solar low-cost approaches?

It is easy to think that wind and solar will be huge improvements over burning fossil fuels directly for fuel, but nearly all of these analyses overlook the problems that are added by introducing intermittency to the electric grid. The assumption was made in early analyses that with enough scale, intermittency in one location would tend to offset intermittency in another location. Also, it was hoped that electricity consumption could be shifted to different times of day.

There have been several recent analyses that look more closely at these assumptions. Jean-Marc Jancovici has shown that if sufficient storage is added for wind and solar to make it “dispatchable,” it takes an order of magnitude more physical resources to produce wind and solar compared to what it takes to produce the dispatchable nuclear electricity used in France. Both have low long-term operating costs. Thus, we would expect the true cost of wind and solar to be far higher than France’s nuclear electricity.

Roger Andrews, writing on Euan Mearns site Energy Matters, shows that some recent solar and wind auction prices appear to be far below actual costs, when reasonable minimum cost assumptions are used.

Regarding “Demand Response” as a solution to intermittency, Roger Andrews shows how little time of day pricing for consumers affects consumption curves. It appears that people don’t stop eating dinner after they get home in the evening, no matter how high the cost of electricity is at that time.

Interruptible supply is another way of reducing demand. This link describes some of the issues encountered when interruptible supply was tried on a large scale in California.

(3) Can’t we simply get along using less energy? That is what everyone tells us is possible.

The historical record in Figure 2 doesn’t give much indication that this is possible. Whenever there is even a small drop in energy consumption per capita, it seems to have an adverse effect. On Figure 3, even the small dip in energy consumption per capita in 2008 and 2009 led to a serious recession in many countries of the world.

The people who talk about getting along with less energy haven’t thought through the likely ramifications of this. There would be fewer jobs that pay well, because jobs such as those for construction workers would disappear. The economy would shrink, because of the fewer jobs, in a much worse recession than the Great Recession of 2008-2009.

We know that in past collapses, one of the big problems was inability of governments to collect enough taxes. We would likely encounter the same problem again, if there are fewer people making high wages. Most of the tax dollars for the US Federal Government are paid by private citizens (as income taxes or as Social Security funding), rather than by corporations.

Figure 7. Sources of US Federal Governments Revenue, based on US Bureau of Economic Analysis data.

The last year shown on Figure 7 is 2017, which is before the recent corporate tax reduction. This change will tend to shift the burden on Federal Taxes even further in the direction of payroll related taxes.

(4) How about efficiency savings? Can’t efficiency savings fix our problem?

There are two issues involved. If we were really efficient at fuel savings, as we were in the early 1980s, oil and other energy prices would drop dramatically. This would push oil, coal, and gas producers worldwide toward bankruptcy. Governments of oil exporting countries, such as Venezuela and Saudi Arabia, would have difficulty collecting enough tax revenue. They would likely collapse from lack of tax revenue, substantially reducing supply.

A second issue is that historically we have been adding efficiency. In fact, efficiency is what has tended to make fuel more affordable. As noted in the article, energy use could grow, as the cost of energy services fell.

Figure 8. Total Cost of Energy and Energy Services, by Roger Fouquet, from Divergences in Long Run Trends in the Prices of Energy and Energy Services. The cost of energy services combines (a) the cost of energy with (b) the impact of efficiency savings.

Some of the changes we have been making recently go in the opposite direction of efficiency. For example, the recent article, Biggest Ever Change in Oil Markets Could Send Prices Higher, discusses a new regulation requiring the use of low-sulfur fuel oil for ships. Doing this would greatly reduce the quantity of sulfur being released to the atmosphere as emissions. This is not a change toward efficiency; it is a change toward higher cost of production, which is the opposite of efficiency. Regulators plan to use part of our energy supply to eliminate the excess sulfur before the oil is sold.

As undesirable as sulfur pollution is, the problem is affordability and higher cost. Wages are not high enough for workers around the world to afford the required higher cost of food (because food production and transport use oil) to support the new regulation. So, the likely result of the regulation is to push the world toward recession. Beyond a certain affordability point, it is hard to push oil prices higher, because wages don’t rise at the same time.

(5) Could you explain further why flat energy consumption per capita is not sufficient for the world economy–this amount really has to grow?

Perhaps looking at charts of recent trends in energy consumption of a few countries can help explain what happens when overall per capita energy consumption is flat.

Joseph Tainter in The Collapse of Complex Societies explains that economies often use “complexity” to work around problems as they approach resource limits. In the particular version of complexity tried in this case, manufacturing was increasingly globalized. Workers suddenly found themselves competing for wages with workers from much lower wage countries. Wage disparity became more of a problem.

When workers are increasingly poor, they can afford to purchase fewer goods and services. This can be seen in energy consumption per capita data. Figure 9 shows energy consumption per capita for three European countries experiencing difficulties. In all three, energy consumption per capita has been falling for several years. When manufacturing was sent to Asia, workers found themselves earning less, so they were able to purchase fewer goods made with energy products. Also, European products were less competitive on the world market, with the new competition from low-cost markets.

Figure 9. Energy Consumption per Capita for three European Countries, based on BP Statistical Review of World Energy data and UN 2017 population estimates.

The countries that have been able to grow more rapidly in response to globalization (such as those in Figure 10) need to keep up their patterns of growth, or they start encountering financial problems because their prior growth was generally financed with debt. Without sufficiently rapid growth, they have difficulty repaying debt with interest.

Figure 10. Energy Consumption per Capita for five countries that recently have been growing rapidly. Based on BP Statistical Review of World Energy data and UN 2017 population estimates.

Brazil’s energy consumption per capita has recently fallen, and it is encountering severe problems. Argentina is a country with flattening energy consumption growth. China’s growth in energy consumption has slowed as well; we often read statements about its debt problems.

One of the problems that these rapidly growing countries encounter is currency fluctuations. As long as their particular country seems to be growing rapidly, the currency level of their country can remain high, relative to the US dollar or the Euro. But if obstacles are encountered, such as the low price of their major export, or slower economic growth, the currency of the country may fall relative to major currencies.

A falling currency relative to major currencies is a problem for these rapidly growing countries for three reasons. For one, imports become expensive. For another, any debt denominated in a foreign currency (such as the US dollar) becomes more difficult to repay. The reason why this is an issue is because rapidly growing countries often do not find enough credit available locally, so are forced to borrow internationally. A third problem with slowing growth and a falling currency relativity is that it becomes more difficult to attract new investment to the country. Instead, outside investors may decide to leave; they want to seek the next growth opportunity, in different, more rapidly growing country.

Turkey and Argentina both seem to be having problems with their currencies falling relative to the US dollar.

Another issue that makes flat worldwide per capita energy consumption unworkable is “diminishing returns” as resources become depleted. For example, wells for fresh water must be dug deeper, ores of metals include higher percentages of waste materials, and oil wells must be sunk in less convenient locations. These problems can be worked around, but they require increased energy consumption. All of these uses for energy products leave less for the rest of the economy. Thus, if we deduct the extra energy needed to compensate for diminishing returns, what at first looks like flat per capita energy consumption worldwide really equates to declining per capita energy consumption.

(6) Isn’t there anything that we can do to reduce carbon dioxide emissions?

The task of reducing carbon dioxide emissions is much more difficult than it appears to be, because the world economy requires energy consumption in order to operate.

The best thing I can see that an individual can do is reduce his or her consumption of meat and other animal products (fish, cheese, milk, leather). To offset, a major increase should be made in the consumption of vegetables that are filling to eat (such as potatoes, beets, carrots, beans, sweet potatoes, taro root, turnips, and corn). Some of these perhaps can be grown locally. Humans’ use of animal products adds to carbon dioxide levels, partly because of the quantity of food that needs to be grown and transported to feed the animals, and partly because of the direct emissions of some animals (including cattle, pigs, buffalo, chicken, sheep and goats).

In fact, cutting back on highly processed food of all sorts (particularly sugars, high fructose corn syrup, and oils) would seem to be worthwhile, as well. Growing, processing, and transporting the crops used in these highly processed foods all add to CO2 emissions.

Our problem is that we have grown attached to the flavors of these foods, and we have become convinced that they help us grow big and strong. While they may do this, they also set us up for problems in old age. Starchy vegetables have played a major role in the diets of long lived people. We may need to start giving them, and other less processed foods, a more prominent role again.











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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1,749 Responses to Our Energy Problem Is a Quantity Problem

    • Harry Gibbs says:

      And world population is growing at around 1.1% annually, so there is a per capita increase. Which is kind of comforting – but of course that per capita increase is predicated on the addition of unsustainable quantities of debt and increasingly problematic forms of financialisation.

      • theblondbeast says:

        If we didn’t increase debt, how would the money supply increase in order to allow more spending in a larger economy?

    • Sven Røgeberg says:

      Would be interesting to hear Gail comment on the BO report when she is back from the conference.

    • Rodster says:

      “The UN does not take into account that the injection of energy into human life, at present volumes, cannot possibly continue into the coming years. Therefore, the world’s population shall have to diminish at the pace at which the production of oil diminishes.

      The fall in the amount of energy injected into human life will have the effect of reducing the world’s population, just as the previous growth of energy input produced the growth of human population. The inevitable conclusion is that the years from here to 2100 will prove to be catastrophic for humanity.”


    • Davidin100millionbilliontrillionzillionyears says:

      “World energy consumption grew by 2.2% in 2017.”

      okay, but who used this additional 2.2%?

      did the families of the upper 1% or 10% use it all?

      or did they use more than the 2.2%?

      and if so, how much of an energy decrease was there for the bottom 90%?

      so many questions…

      so few answers…

  1. Baby Doomer says:

    Bond king Jeff Gundlach sounds alarm on America’s ‘exploding’ debt


  2. Fast Eddy says:

    How to control the world:

    1 Own the reserve currency
    2. Control interest rates


    • Fast Eddy says:

      The Fed has these charts

      So why?

      • Pintada says:

        Because they are only “in control” in your mind. The reality is that they – and no-one – is in control. Some people and entities have influence at times, but no-one can control a self-organizing system the size of the economy, or the world.

        To believe that god, or “the elders” are in actual control of the world is infantile at best.

  3. Pintada says:


    The FOMC simply does not know what is going on. They have drunk their own cool-aid.

    No, they are NOT in control.

    • Fast Eddy says:

      He who sets the interest rates and prints the reserve currency is in control.

      The only question I have is why would the owners of the Fed be raising rates when they can obviously see the world is drowning in debt — when they have — for 10 years now — engaged in bond buying on an epic scale for the purpose of DRIVING INTEREST RATES LOWER — so that this enormous pile of debt could be serviced.

      What do they know/see that I do not that is forcing their hand?

      Alternatively do they have another agenda? e.g. create a major crisis — as they did in 2008 by letting Lehman go down — then using the crisis to justify the introduction another slate of extreme policies?

    • That’s an uninformed and really preposterous statement as the post GFCI reaction has been revealed in quite technical detail during past several years, incl. the machinations of the other branches of that same global financial superstructure in Europe (BLICS) and also partly in Asia. So, it’s beyond reasonable doubt this is not about self-organizing non sense and or competing national politics only, but rather tightly coordinated action of specific monopolistic entity owning the world’s money (and the derivative universe) to put it shortly.

      • Fast Eddy says:

        Well said — although I do still recognize the self-organizing aspect … it’s kinda like how a world cup team is self organizing … the players on the team got there because they were the best at scoring and defending … if they were not then other players with those skills would have made the team…

        And in terms of decisions made – if those players (Fed/football) — were not the best suited for the conditions … they would get knocked off by others who made better decisions

        The owners of the Fed understand this — that is why they leave no stones unturned…they employ teams of the greatest minds to model everything — just like the US military models everything — and they make decisions based on thorough research…. if we pull lever A … what happens … if we push button 4 what happens … see the Butterfly effect…

        They will of course not always be right … but they will not act on a policy without thinking it through… so far they have been mostly right — otherwise we would not be here…

        • theblondbeast says:

          I found this a good two part series on the FED and “independence” of central banks. I agree they have been pretty right so far – up until now when they are raising rates. I think their real mandate is the same at the end of the day: A combination of equal parts “whatever it takes” and “it seemed like a good idea at the time.”

        • Yes, that sounds about right. Perhaps the early phase of forming such super structure of global money monopoly, could be pointed towards the period roughly spanning the end of 30yrs war ~1648 and the end of feudalism ~1848, plus minus few decades for some outliers, specific countries on their own pace. Because during that period we have already ample evidence of royal houses and proto industries dependent on the very same international banking houses, yet the control of the bankers is yet not “full spectrum” style complete as in recent centuries.

          • xabier says:

            In the 1660’s, the diarist Samuel Pepys met the founder of what became one of the oldest London banks who told him that politicians knew nothing, and that they should step aside and allow everything to be run by the bankers – who were the ones really running the show. Early days of the system, but already their intentions were clear.

            • Fast Eddy says:

              If one ignores the propaganda telling us that the politicians or the deep state runs the show …

              It becomes pretty obvious that is is the central banks (mothership the Fed) that is running the show…

            • milan says:

              @ Xabier

              upon seeing the roaring 20’s the central,banker Paul Warburg was so full of contempt for politicians and said and rightly so:

              “The world lives in a fools paradise based upon fictitious wealth, rash promises and mad illusions. We must beware of booms based upon false prosperity which has its roots in inflated credits and prices.”

              For me no quote ever written surmises the insanity of what has been and is occurring than this one quote.

              Real estate is especially the prime example of this. In fact I have a friend who is losing his home because the landlord is selling it for 600,000 dollars and this after paying only 260,000 just 2 years ago. I imagine when the new owner takes over he will be expecting in a few years to do the same and were into what the millions?

              Politicians really don’t know what they are doing and never have though I guess there are a few exceptions here and there although I must they eventually are dispatched through mysterious circumstances?

        • el mar says:

          “They” are in control, until they are suprised by the next bifurcation-point!
          This can happen every day, triggerd by a black swan!

      • jupiviv says:

        There is a global financial superstructure, but it has no more control over the globe than the global transport/media/energy superstructure. Similar or interactive actions by various institutions on a large scale do not necessarily require preordained & predetermined conspiracies. All available evidence in the real world points in the opposite direction – that the finance sector is even more oblivious to reality than the average Joe.

        Of course, you can point out any number of instances of global control if you have an imaginative mind, but in my experience these tend to be conjunction fallacies aka “look at all the things that would be explained if…”

        • You have not provided any evidence..
          I linked *several times various hard data how the CBs across the pond +dubious entities chartered as tax heavens printed out and recycled trillions reserves in the wake of GFC and did it synchronized-coordinated fashion. More importantly look at the situation downstream from this (stock market, industrial, real estate, ..) then behaved accordingly to the desired outcome, i.e. kept the BAU going for a while longer..

          *not even mentioning the 101 basics of this site how CBs are on purpose smoothing the stalling prosperity since late/early 1970/80s.., Gail wrote about it numerous times already..

          • jupiviv says:

            Again, none of that proves unified control. The “desired outcome” in a global economic crisis is the same for everyone in a global economy, so cooperation and synchronisation is hardly surprising. You also seem to think BAU itself was near extinction during GFC, but if it was, mere money printing+austerity+moar bad speculation would have been useless.

            And the most obvious question is why “they” didn’t use all of their control much more prudently. There are elites and there is control, but neither is absolute or universal.

            • Fast Eddy says:

              They’ve done a great job — without prudent decisions we would have gone the way of the dodo in 2008

  4. Sven Røgeberg says:

    This is the English version of the video “trailer” that President Donald J. Trump showed Chairman Kim Jong Un during their historic summit on 6/12/18. This is a HQ rip from the official White House Facebook page, where they posted the video.
    I can’t believe it’s possible to produce this kind of kitsch. Thank you, now I have hope for the future.

  5. Rodster says:

    “The UN does not take into account that the injection of energy into human life, at present volumes, cannot possibly continue into the coming years. Therefore, the world’s population shall have to diminish at the pace at which the production of oil diminishes.

    The fall in the amount of energy injected into human life will have the effect of reducing the world’s population, just as the previous growth of energy input produced the growth of human population. The inevitable conclusion is that the years from here to 2100 will prove to be catastrophic for humanity.”


  6. Baby Doomer says:

    Israel condemned by the UN today..

  7. Rodster says:

    “If current rates of global soil degradation continue, it’s estimated we may only have 60 years of farming left.”


    • Davidin100millionbilliontrillionzillionyears says:

      so then that’s a very minor present concern…

      most of us won’t even be here by then…

      “current rates” – and all trends eventually end…

      and the crashing reversal of the population overshoot will mean that the few tens or hundreds of millions of survivors will have plenty of (irradiated) soil to grow their food…

      • Rodster says:

        I posted this info on Peak Prosperity and an individual who runs a permaculture farm responded by saying that won’t affect permaculture farms.

        Oh, really? I’m sure the “Food Zombies” will be knocking on his families door once they realize it’s either starve to death or eat his food he’s grown or it’s eating rats, dogs or cats. He better have lots of firepower ready cause his family will need it. He needs to read up on societal collapses like in Venezuela or Argentina.

  8. Davidin100millionbilliontrillionzillionyears says:

    another record:


    “Prices were pulled down by another rise in U.S. oil production, which hit a weekly record of 10.9 million barrels per day (bpd) last week, according to the Energy Information Administration (EIA) on Wednesday.”

    it could be repeated that the surplus energy from this 10.9 is far less than the surplus energy from the old 1970 record production…

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