Why we get bad diagnoses for the world’s energy-economy problems

The world economy seems to be seriously ill. The problem is not overly high oil prices, but that does not rule out energy as being a major underlying problem.

Two of the symptoms of the economy’s malaise are slow wage growth and increasing wage disparity. Tariffs are being used as solutions to these issues. Radical leaders are increasingly being elected. The Bank for International Settlements and the International Monetary Fund have raised concerns about the world’s aggregate debt levels. The IMF has even suggested that a second Great Depression might be ahead if major banks should fail in the manner that Lehman Brothers did in 2008.

Figure 1. Ratio of Core Debt Growth (non-financial debt including governmental debt) to GDP, based on data of the Bank of International Settlements.

If the economy were a human being, we would send it to a physician for a diagnosis regarding what is wrong. What really is needed is a physician who has a wide overview, and thus can understand the many symptoms. Hopefully, the physician can also provide a reasonable prognosis of what lies ahead.

Individual specialists studying the world’s economic and energy problems tend to look at these problems from narrow points of view. Some examples include:

  •  Curve fitting and cycle analysis using economic data by country since World War II, as is often performed by economists
  • Analysis of oil supply based on technically recoverable reserves or resources
  • Analysis of fresh water supply problems
  • Analysis of population problems, including rising population relative to arable land, and rising retiree population relative to working population
  • Analysis of ocean problems, including rising acidity and depleting fish stocks
  • Analysis of the expected impact of CO2 production from fossil fuels on climate
  • Analysis of rising debt levels

In fact, we are facing a combined problem, but most analysts/economists are looking at only their own piece of the problem. They assume that the other aspects have little or no influence on their particular result. What we really need is an analysis of the overall economic malady from a broader perspective.

In some ways, the situation is analogous to having no physician with a sufficient overview of where the world economy is headed. Instead, we have a number of specialists (perhaps analogous to a psychiatrist, a urologist, a podiatrist, and a dermatologist), none of whom really understands the underlying problem the patient is facing.

One point of confusion regarding whether today’s oil prices should be of concern is the fact that the maximum affordable oil price seems to decline over time. This happens because workers around the world increasingly cannot afford to buy the goods and services that the world economy produces. Inadequate wage growth within countries, growing globalization and rising interest rates all contribute to this growing affordability problem. To make matters confusing, this growing affordability problem corresponds to “falling demand” in the way economists frame the issues we are facing.

If we believe the technical analysis shown in Figure 2, the maximum affordable West Texas Intermediate oil price has declined from $147 per barrel in July 2008 to $76 per barrel recently. The current price is about $62 per barrel. The chart suggests that downward price resistance might be reached at $55 per barrel, assuming no major event occurs to change the current trend line. Any upward price bounce would appear to leave the price still much lower than oil producers need in order to reinvest sufficiently to allow future oil production to be maintained at current levels.

Figure 2. Down sloping diagonal line at the top of chart gives an estimate of the trend in maximum affordable West Texas Intermediate (WTI) oil prices. The downward trend line starts in July 2008, when oil prices hit a maximum. This high point occurred when the US real estate debt bubble started unwinding. Later maximum points correspond to points when oil prices stopped rising and crude oil reservoirs started refilling. Chart prepared by Amit Noam Tal.

Thus, our concern about adequate future oil supplies should perhaps be focused on keeping oil prices high enough. It takes a growing debt bubble to keep oil demand high; perhaps our concern should be keeping this debt bubble high enough to allow extraction of commodities of all kinds, including oil. Figure 1 seems to show a recent downward trend in Debt to GDP ratios for the Eurozone, the United States and China. This may be part of today’s low price problem for commodities of all types.

Needless to say, climate analyses do not consider the severity of our energy problems, nor do they consider the extent to which there is a connection between energy supply and the ability of the economy to operate as usual. If the real issue is a near-term financial crash that will radically affect future fossil fuel consumption, the climate analysis will certainly miss this event.

The Real Nature of the Limits to Growth Problem

To truly understand the headwinds that the economy is facing, we should be looking at the combined effect of all of the limits that the individual specialists have been studying. We might also include other issues not listed. The 1972 book The Limits to Growth presents an early computer model of how at least some of the limits of a finite world might be expected to play out.

Figure 3. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil” http://www.esf.edu/efb/hall/2009-05Hall0327.pdf

This early approach reflected an engineering view of the problem, considering expected diminishing returns with respect to resources of all types. Other considerations included likely resource needs based on prior economic and population growth trends and efficiency gains. The Base Scenario shown in the 1972 book (Figure 3) showed collapse taking place about now–in other words, in the early part of the 21st century.

In the time since the 1972 Limits to Growth analysis was prepared, there has been a major discovery relating the importance of energy to the economy. Ilya Prigogine tackled the problem of the physics of thermodynamically dynamic open systems, earning a Nobel Prize for his efforts in 1977. When energy flows are available, many structures, called dissipative structures, can grow and change over time. Examples include plants and animals, hurricanes, stars (they expand in size, then collapse at the end of their lives), ecosystems, and economies. These structures are utterly dependent on energy flows. The economy needs energy in almost the same way that humans need food. Without sufficient energy flows, the world economy will collapse.

It is because of the laws of physics and energy flows that markets are able to set price levels. Indirectly, physics sets the maximum affordable price for energy products based upon the total quantity of goods and services individual workers can afford. These maximum affordable prices may be invisible, but they are very real. Economists may talk about “demand” for energy products, but the real issue is affordability: “Will the laws of physics allow prices to stay high enough to provide the commodities the world economy needs?”

It is because of the laws of physics that debt can play a major role in the economy. Debt can provide time-shifting services if an economy does not have sufficient energy supplies to permit the equivalent of bartering of finished goods and services for new capital goods. Debt can allow future goods and services (manufactured with energy products) to serve as payment for capital goods and other goods purchased using debt. Thus, debt acts as a promise of future energy supplies. These future energy supplies may not, in fact, actually be available at prices that consumers can afford. This is why debt bubbles so often collapse and have a devastating impact on economies.

In theory, the new physics discoveries might also be added to the Limits to Growth model. If this were done, I would expect the downslopes in Figure 3 to be much steeper. Also, the date when the population decline starts would likely move forward, relative to other declines. The actual dates of the declines would of course be expected to change as well, because of updated knowledge regarding resources, population, and other factors.

Including the physics aspect of the economy would lead to many periods when sharp changes take place. When these sharp changes take place, there might be wars, collapsing governments, and epidemics, all causing large numbers of deaths. Debt bubbles might pop, causing deflation and widespread banking problems. These types of events are similar to those that economies have experienced in the past. There is no reason to expect that today’s world economy will have unusual lasting power.

Of course, modeling one piece of the economy at a time, as described at the beginning of this post, leaves out such troublesome implications. Economists tell us all we need to worry about is price fluctuations as the economy substitutes one product for another. If a person has blinders on, perhaps this a good description of the world we live in. Otherwise, the model leaves a lot to be desired.

Implication of the Laws of Physics Being in Charge of How the Economy Operates

Politicians would very much like us to believe that they are in charge. They would like us to believe that adding more technology can solve all of our problems. They would like us to believe that citizens can make a significant difference by voluntarily cutting back on their own energy consumption. They would also like us to believe that countries can cut back on their debt levels without the whole Ponzi Scheme unraveling.

Anyone who has watched bread rise in a bowl can see the implications of growth within a finite structure. It doesn’t take very long for the volume growth of bread dough to exceed the space available. Even if the bread maker pushes the dough back down again, the effect is only temporary. The bread dough quickly rises again to overfill the bowl it is in.

One possible implication of the 2008 financial (and oil price) crash is that we are very close to limits, right now. Regulators can try to fine tune how the economy operates by raising and lowering interest rates (sometimes using Quantitative Easing (QE) in the process), but they are, in some sense, playing with fire. Figure 4 shows the dramatic impact that popping the real estate debt bubble seems to have had in 2008. It also shows the impact that adding and removing QE has had.

Figure 4. Figure showing collapsing debt bubble at the time US oil prices peaked. Figure also shows the use of Quantitative Easing (QE) to stimulate the economy, and thus bring oil prices back up again. Ending US QE seems to have had the reverse effect.

By raising interest rates, regulators could easily send part, or all, of the world’s economy to a financial crash that is worse than 2008’s. Or the economy could again reach limits, by itself, with just a little economic growth. In some sense, the world economy is very close to filling the bread bowl, as it was before the 2008 crash pushed it back down.

The World Economy Is Reaching Limits in Many Areas Simultaneously

Many people believe that we are reaching limits in at most a few areas of the economy, such as “running out of oil.” The evidence suggests that because of the networked nature of the economy, we are really reaching limits in many places, simultaneously. The following represent some problem areas:

(1) Too Low a Return on Labor for Workers Whose Jobs Are Easily Exportable. With globalization, workers are indirectly competing with workers around the world regarding who can produce goods and services most cheaply. They are also competing with computers and robots that can easily replicate their functions. The net impact is a world where a large share of the citizens find themselves living at a level not much above the subsistence level. In more developed countries, young people may live with their parents longer and may delay having children almost indefinitely, because wages are not keeping up with living costs. Many studies have shown rising wage disparity. In some ways, the wage disparity now seems to be as bad as in the 1930s.

Figure 5. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.

(2) Interest Rates. Interest rates are the lever that economists like to adjust upward or downward to try to stimulate the economy or push the economy downward. Short term interest rates, up until about the end of 2015, were at the level they were at during the Depression of the 1930s.

Figure 6. Monthly average 3-month term treasury bill rates in chart prepared by FRED. Amounts shown through October 2018. Grey bars indicate recessions.

Raising interest rates is like adding a little more dough to the already over-full bread bowl. With these higher interest rates, borrowers need to pay more for monthly payments, making the strain on their finances even worse than it was previously. Figure 6 shows that raising interest rates very often creates a recession. In fact, the Great Recession of 2008-2009 seems to be the result of an increase in short term interest rates. This time we are being told that the increase will be gentle, but if the bread bowl is already overly full (in the sense that affordability of the output of the economy is already way too low, for many workers), what difference does “gentle” make?

(3) Return on Capital Investment/Added Debt. Falling long-term interest rates between 1981 and 2016 seem to be an indirect reflection of falling long-term return on capital investment. If capital returns had been higher, there would be more demand for debt, forcing interest rates up to levels closer to where they had been when the economy was growing more quickly.

Figure 7. Monthly average 10-year US Treasury interest rates in chart prepared by FRED. Amounts shown through October 2018. Grey bars indicate recessions.

Another way we can look at how productive the addition of debt has been is by comparing the debt increase each year with the GDP increase (including inflation) each year. We use current year GDP as the denominator in both calculations. Figure 8 shows the indications for what the Bank for International Settlements calls “Core Debt” (that is, Total Non-Financial Debt, Including Government Debt).

Figure 8. Dollar Increase in US Core Debt as % of GDP, shown beside GDP dollar increase, as percentage of ending GDP. Amounts based on FRED data.

Comparing the red and blue lines on Figure 8, GDP rose fairly reliably in the pre-1981 period, as the amount of core debt rose. The core debt increases tended to be higher than the GDP increases, but not a great deal higher. Thus, the US ratios on Figure 1 could be close to 1.0 in early years.

Once interest rates started falling after 1981 (see Figures 6 and 7), core debt growth and GDP growth greatly diverged. I expect that quite a bit of this change was related to asset price inflation as interest rates fell. With lower interest rates, assets of all types started becoming more affordable. Thus, a greater number of buyers could be expected, driving up prices of assets of all kinds, including homes, stores, and factories. Owners of these assets could “take the equity out” as prices rose and could use the equity to purchase other goods and services. In theory, these activities might somewhat stimulate the economy. Figure 8 suggests that the benefits of these activities with respect to the “goods and services” portion of the economy (red line) were slight at best, however.

Figure 9. Dollar Increase in US Financial Debt as % of GDP, shown beside GDP dollar increase % of ending GDP. Amounts based on FRED data.

Figure 9 shows Financial Debt amounts corresponding to the Core Debt amounts shown in Figure 8. At first glance, it appears that Financial Debt (blue line ) has provided no benefit whatsoever for the Goods and Services part of the economy (red line). But clearly the bankers who created these financial products benefitted from the income they received from them. So did the low-income home buyers who bought homes that they could not really afford in the early 2000s. Home building was stimulated, and inflation in home prices was stimulated. Banks benefitted by being able to transfer their problem home loans to unsuspecting buyers. Whether this whole arrangement had any net benefit to the economy, other than to create pseudo-solutions for people who could not really afford the homes they were purchasing, is doubtful. But when the economy is near limits, strange solutions to stimulating the economy are attempted.

(4) Commodity Prices. If we have a supply problem with one kind of commodity, we likely have a supply problem with many kinds of commodities at the same time. The reason why this happens is because the prices of many types of commodities tend to move together, in response to general market conditions. This is why the US government talks about inflation in oil and food prices as a separate category of Consumer Price Inflation.

If prices for commodities are generally low, as they have been since 2014, this means that commodity investors have received low rates of return for several years. With low rates of return, producers of many commodities have cut back on reinvestment. With inadequate reinvestment, supply crunches are likely to occur across a broad spectrum of commodities simultaneously. A recent Wall Street Journal article says, Supply Crunch Looms in Commodities Markets. The article mentions copper, zinc, aluminum and nickel. Other articles talk about oil in a similar fashion.

The question becomes, “Can consumers bid up the prices of all of these minerals sufficiently, to encourage enough reinvestment to solve the world’s commodity supply problem?” Food prices would likely need to be bid up as well, because oil is used heavily in the production and transport of food.

It was possible to bid up commodity prices in the 1970s, because the economies of the United States, Europe, Japan, and the Soviet Union were all growing rapidly. Also, women were joining the labor force in large numbers. It was possible to bid up commodity prices in the 2002 to 2008 era, because China and other Asian nations were rapidly ramping up their demand for goods and services of all kinds.

Figure 10. China energy production by fuel plus its total energy consumption, based on BP Statistical Review of World Energy 2018 data. The difference between the production figures shown and the black line consumption total is imports.

Now we are facing a much different situation. China is in much worse shape than most people recognize because its coal supply seems to have passed peak production. This has happened because the cheap-to-extract coal is mostly depleted, making it unprofitable to increase coal production without significantly higher prices. Imported coal and natural gas are expensive options. China also has a serious debt problem.

Because of China’s problems, the country will necessarily need to cut back on manufacturing, road building and home building in the years ahead. (This would happen, with or without Trump’s tariffs!) For some minerals, China currently represents over 50% of the world’s demand. China is the largest oil importer in the world. It is doubtful that China can make major cutbacks in its use of commodities without lowering prices for many commodities worldwide.

Persistence of Outdated Models

We are dealing with a situation where a large number of people suspect, at least vaguely, that the world economy is like bread dough about to outgrow its bowl, but this is not an issue anyone really wants to quantify. Everyone wants solutions; they don’t want a better delineation of the problem. Repeated publication of climate change forecasts is, in a sense, a denial of the possibility that we may be facing resource limits that are close at hand. Such publication is saying, in effect, that the closest limit that citizens need to worry about is the climate limit.

Also, the reliance of researchers on the past work by others in the same field tends to reinforce what are essentially incorrect models. Cross-pollination across fields is difficult, given the technical nature of today’s academic research. Furthermore, it becomes increasingly difficult to properly model a situation that is very complex and depends upon non-linear interactions.

Putting All of These Issues Together

The focuses of today’s narrow research can give a surprisingly distorted overview of where the economy is. A few areas in particular stand out:

(a) The choice of the word “Demand” instead of “Affordable Quantity” makes it sound like the buyer has more control over purchases than he really does. Growing demand seems to depend on continually increasing debt. This is the reason for the debt bubble problem.

(b) Framing the energy problem as “running out of oil” makes it sound like searching for substitutes will be a fruitful area for solution. Because of the affordability issue, this search is futile unless the substitutes are truly cheaper, when all costs are considered. Declining availability of many minerals because of persistently low commodity prices could be an issue as well.

(c) If limits are being reached in many areas simultaneously, incentives for countries to co-operate seem likely to go downhill quickly. Bullies who claim to be able to obtain a bigger share of the shrinking total supply will tend to be elected.

(d) The physics tie between energy and the economy makes major energy consumption cutbacks virtually impossible, without risking economic collapse.

(e) Adding technology isn’t really a solution to the debt problem, because it tends to make the affordability problem worse. The problem is that while adding technology seems to lead to more employment for a few elite workers, it tends to displace lower-wage workers at the same time. The spending of lower-wage workers is really needed if adequate demand for commodities is to be maintained. Additionally, the ownership of the technology-related capital goods tends to be concentrated among the elite; this further shifts wealth from the non-elite to the elite.

The long term prognosis for the world economy seems pretty grim, when all of these issues are put together. Defaulting debt and a resulting collapse in asset prices of all kinds is of particular concern. The default of subprime housing debt was an issue in the US at the time of the Great Recession; the next round of defaults is likely to start elsewhere. Debt defaults could start fairly soon, perhaps in the next 6 to 12 months. The more hostile political situation we have been seeing recently seems to be evidence that limits are close at hand.






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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2,136 Responses to Why we get bad diagnoses for the world’s energy-economy problems

  1. Third World person says:

    Fury as £4billion British foreign aid budget used fixing POTHOLES abroad

    FURIOUS campaigners have slammed the government for spending nearly £4billion of foreign aid money on improving infrastructure in countries such as Pakistan and India – including railways and potholes in roads.

    haha thanks uk for improved the roads of india

    • Fast Eddy says:

      Most of the plastic in the oceans originates in 3rd world countries….

      Green Grooooopies are insisting that we must stop using plastic…. so now I am buying plastic bin lining bags… because grocery stores don’t provide plastic bags in NZ….

      Yet the plastic is accumulating in the oceans….

      So imagine if the MSM exposed the real situation … and the Green Parties around the world… ran on the platform of a significant Plastic Tax to be used to provide waste disposal services in 3rd world countries….

      There would of course be some wealthy DelusiSTANIS who would continue to vote for the Greenies….

      • Greg Machala says:

        Its all Eco-Plastic….so no worries FE.

        • Fast Eddy says:

          Did I mention there are bin liners that are made from corn starch or some biodegradable stuff….

          Cost is around triple the plastic bin liners….

          I bought the plastic bin liner bags….

  2. Hubbs says:

    More difficult to integrate “new discoveries” in a system so complex that it is difficult to identify the development as beneficial or destabilizing due to unintended consequences i.e., taking into account increased energy requirements, additional debt, or social consequences?
    eg. Internet vs Facebook

    • doomphd says:

      facebook is an application run on the internet. without the internet, facebook would not exist. is that your point?

      • Hubbs says:

        Yes, sort of. Many advantages (albeit some downsides obviously) with the internet. Any clear cut benefits with Facebook…. or even cryptocurrencies? (Huge energy requirements for mining for starters) Well, maybe, but less clear. In a more complex world created for example by internet, meaningful and useful advances may be harder to come by.

        • Greg Machala says:

          So-called “social media” is just electrons on a spinning disc in a server room somewhere in the middle of Montana. It isn’t real except in people’s minds. Bitcoin isn’t real either. I say if it doesn’t work without electricity it isn’t money. Credit cards and debit cards are not money in my book. A check is close. A certified check is closer. $100.00 bills – I consider money – for now. 🙂

  3. Uncle Bill says:

    Well, well, well…seems someone is listening to FE!!!! Imagine that and we thought spewing our gibberish here was just amusement among an elite group…
    However, some researchers believe that the building of these plants has more to do with boosting the local economy in China than with boosting emissions.
    “The new coal power plant builds are most probably about keeping the economy ticking along, particularly from a provincial government perspective, rather than being needed for future electricity generation
    “Coal power plants run only about half the time in China, and one could argue the new capacity is not needed,” said Glen Peters, from the Centre for International Climate Research in Oslo, who was not involved with the report

    “This new evidence that China’s central government hasn’t been able to stop the runaway coal-fired power plant building is alarming – the planet can’t tolerate another US-sized block of plants to be built,” said Ted Nace, from CoalSwarm

    That’s too bad

    • It is not clear to me that China has the coal to run all of these plants, even if the electricity from the plants could find something useful to do.

      The cheap to extract and transport coal is depleted to a significant extent. High priced coal is no doubt theoretically available everywhere in the world. The problem is that goods made with high-priced coal are not really ones that people want-too expensive relative to salaries.

  4. Fast Eddy says:

    Despite the easing of taboos and the rise of hookup apps, Americans are in the midst of a sex recession.

    These should be boom times for sex.

    The share of Americans who say sex between unmarried adults is “not wrong at all” is at an all-time high. New cases of HIV are at an all-time low. Most women can—at last—get birth control for free, and the morning-after pill without a prescription.

    If hookups are your thing, Grindr and Tinder offer the prospect of casual sex within the hour. The phrase If something exists, there is porn of it used to be a clever internet meme; now it’s a truism. BDSM plays at the local multiplex—but why bother going? Sex is portrayed, often graphically and sometimes gorgeously, on prime-time cable. Sexting is, statistically speaking, normal.


    Perhaps subconsciously they sense that there is no future… and the breeding instinct has shut down…

    Japan has a similar problem

    • Lastcall says:

      Haven’t read article, but my understanding has been as the proportion of wimin with higher ed rises, the pool of males they are willing to consider falls.

      As an aside, a recent year 13 history exam used the word ‘trivial’ in a question involving major historical events. A significant number of students thought the meaning was the opposite to its correct use. They have petitioned to get away with this mistake; poor dears, maybe they were reading the question using ‘context’ huh?
      These are students preparing to go on to higher education I kid you not!


      I do believe they will be marked on the basic arguments used. Their ignorance will be excused/overlooked. Get use to the seneca cliff in educated professional standards.

      Be warned this is a radio station run by earnest educated non-binary anti-male feminazi’s with a tendency towards verbal-fry.

      We are so fracked.

    • Lastcall says:

      Haven’t read article, but my understanding has been as the proportion of wimin with higher ed rises, the pool of males they are willing to consider falls.

      Rest of comment in moderation…

      • Jason says:

        Maybe if you grow up with open access to porn, when you finally get a chance for real world sex, it doesn’t live up to what you expected.

    • Davidin100millionbilliontrillionzillionyears says:

      very long article, but one of my most favorite subjects…

      “Rates of anxiety and depression have been rising among Americans for decades now, and by some accounts have risen quite sharply of late among people in their teens and 20s. Anxiety suppresses desire for most people. And, in a particularly unfortunate catch‑22, both depression and the antidepressants used to treat it can also reduce desire.”

      many other issues… complicated, not at all simple…

      but, this will very likely get worse as Creeping Collapse closes in…

      or better, to look at it another way, since a lower birth rate means less humans who will suffer in collapse…

      • There are studies that show that animals (rodents) cut back their birth rates when the conditions get too crowded. This happens even though there is plenty of food and water. There seem to be other needs of humans/animals besides just food and water.

  5. Fast Eddy says:

    A burst of delusion from the bbc…

    The strange homes designed for Mars

    CalEarth believe their quick to build, sustainable homes, inspired by the architecture of nature, could be the answer to the global housing crisis.


  6. Greg Machala says:

    Growth is still positive – two tailgates on trucks now:


  7. Greg Machala says:

    • Chrome Mags says:

      Greg, maybe they got the idea from the movie Alien, in which the monster has a mouth within a mouth. lol.

  8. Chrome Mags says:


    ‘Saudi Arabia is slashing oil shipments to US, a tactic that boosts prices and may rile Trump’

    “ClipperData figures show the Saudis are loading roughly 600,000 bpd on tankers bound for the United States this month, down from more than 1 million bpd in July and August.”

    That’s a reduction of 400 mbd. That seems substantial. Can that amount be easily replaced from another exporter?

  9. https://www.wsj.com/articles/u-s-deals-on-iran-oil-dampen-prices-spark-clash-with-saudis-1542396490

    Saudis Move to Counter U.S. Oil Strategy:
    Riyadh wants to cut the world’s oil supply after U.S. government deals allowed Iranian oil to flow onto world markets, driving down prices

    Saudi Arabia is moving to cut the world’s oil supply after U.S. government deals allowed hundreds of thousands of barrels a day of Iranian oil to flow onto world markets, driving down prices.

    The deals put Saudi Arabia at odds with Washington at a time when relations are already strained by the murder of journalist Jamal Khashoggi. The kingdom wants to trim production to boost oil prices to about $80 a barrel in support of its economy, Saudi advisers say. President Trump has warned against a production cut and called for lower prices. . . .

    Saudi oil officials say they are considering advocating a production cut of as much as 1.4 million barrels a day at the Organization of the Petroleum Exporting Countries’s next meeting on Dec. 6.

    • Chrome Mags says:

      Yeah, that was pretty interesting. At first Trump was adamant that no country will receive Iranian oil or else, then as the sanctions date got closer Trump realized oil price would rise sky high, so he quickly provided 8 countries access to Iranian oil, including China and South Korea, just to name two. Now it comes back to bite him and the rest of us, but isn’t 400,000 barrels for an entire month not all that much? The US imports around 6-7 mbd?

      • The recent IEA report that I mentioned in another comment says

        OPEC crude output rose 200 kb/d in October to 32.99 mb/d, up 240 kb/d on a year ago. Losses of 0.4 mb/d from Iran and 0.6 mb/d from Venezuela were offset by increases from others. The call on OPEC crude falls to 31.3 mb/d in 2019, 1.7 mb/d below current output.

        The 400,000 barrels per day cutback seems to be slightly more than offset the 200,000 to 240,000 barrels per day current overage in production.

        IEA expects that overage to grow to 1,700,000 barrels per day in 2019. This is why they are talking about a 1.4 million barrels per day cut in production for 2019.

        I would not be surprised if the peak in world oil production comes from a cutback in oil production because prices were too low, such as precisely what we are seeing now. IEA is pretty much telling OPEC how much to cut back on its production.

  10. CTG says:


    Why can’t humans understand that we cannot create anything more superior than humans?

    Robots can only do repetitive jobs well. Ither than that they are hopeless. Humans fantasized on robots building robots. It can happen but all must follow the standard instructions. Nothing special.

    AI – pure delusion. Anything that requires brute processing power to process is not AI. Thebprogram just do it very fast.bit is not smart. Facial recognition is not AI. The know-how existed a log time ago. With fast computers, they can do it real time but that does not mean they are smart.

    • Third World person says:

      but have you see the comments on zerohedge for this article

      almost everyone is blame Indian guy instead of dumb robots

    • Slow Paul says:

      Yes, it is kind of interesting that so few humans appreciate the mind-boggling levels of complexity that make up the human body, which we never will fully understand, but so many think of technology as the pinnacle of existence.

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